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<SEC-DOCUMENT>0001005794-05-000791.txt : 20050926
<SEC-HEADER>0001005794-05-000791.hdr.sgml : 20050926
<ACCEPTANCE-DATETIME>20050926142043
ACCESSION NUMBER: 0001005794-05-000791
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 14
CONFORMED PERIOD OF REPORT: 20050729
FILED AS OF DATE: 20050926
DATE AS OF CHANGE: 20050926
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: CBRL GROUP INC
CENTRAL INDEX KEY: 0001067294
STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812]
IRS NUMBER: 621749513
STATE OF INCORPORATION: TN
FISCAL YEAR END: 0731
FILING VALUES:
FORM TYPE: 10-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-25225
FILM NUMBER: 051102591
BUSINESS ADDRESS:
STREET 1: PO BOX 787
CITY: LEBANON
STATE: TN
ZIP: 370880787
BUSINESS PHONE: 6154439217
MAIL ADDRESS:
STREET 1: PO BOX 787
CITY: LEBANON
STATE: TN
ZIP: 37087
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>cbrlgroup10k092205.txt
<DESCRIPTION>ANNUAL REPORT
<TEXT>
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 July 29, 2005
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from to __________
Commission file number
000-25225
---------------------
CBRL GROUP, INC.
(Exact name of registrant as specified in its charter)
Tennessee 62-1749513
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
305 Hartmann Drive, P.O. Box 787 37088-0787
Lebanon, Tennessee (Zip code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (615) 443-9869
----------------------
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
(Par Value $.01)
Common Stock Purchase Rights
(No Par Value)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
-- --
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. __
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2) Yes X No
-- --
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes No X
-- --
The aggregate market value of voting stock held by nonaffiliates of the
registrant, by reference to the price at which the common equity was last sold,
or the average bid and asked price of such common equity, as of the last
business day of the registrant's most recently completed second fiscal quarter
which ended January 29, 2005, was $1,915,969,523. 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 16, 2005, there were 46,668,926 shares of common stock
outstanding.
<PAGE>
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 Part II
for the fiscal year ended
July 29, 2005 (the "2005 Annual Report")
2. Proxy Statement for Annual Part III
Meeting of Shareholders
to be held November 22, 2005
(the "2005 Proxy Statement")
2
<PAGE>
PART I
PAGE
----
ITEM 1. BUSINESS 4
ITEM 2. PROPERTIES 13
ITEM 3. LEGAL PROCEEDINGS 15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 15
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 18
ITEM 6. SELECTED FINANCIAL DATA 18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 18
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 18
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 19
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE 19
ITEM 9A. CONTROLS AND PROCEDURES 19
ITEM 9B. OTHER INFORMATION 19
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 21
ITEM 11. EXECUTIVE COMPENSATION 21
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 21
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 21
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 21
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 22
SIGNATURES 23
3
<PAGE>
Except for specific historical information, the matters discussed in this
Form 10-K, as well as the 2005 Annual Report that is incorporated herein by
reference, are forward-looking statements that involve risks, uncertainties and
other factors which may cause actual results and performance of CBRL Group, Inc.
(the "Company") 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 factors. Forward-looking
statements generally can be identified by the use of forward-looking terminology
such as "assumptions," "target," "guidance," "outlook," "plans," "projection,"
"may," "will," "would," "expect," "intend," "estimate," "anticipate," "believe,"
"potential" or "continue" (or the negative or other derivatives of each of these
terms) or similar terminology. Factors which could materially affect actual
results include, but are not limited to: the effects of uncertain consumer
confidence, higher costs for energy, mortgage or other consumer debt payments,
or general or regional economic weakness on sales and customer travel,
discretionary income or personal expenditure activity; the ability of the
Company to identify, acquire and sell successful new lines of retail
merchandise; competitive marketing and operational initiatives; the ability of
the Company to sustain or the effects of plans intended to improve operational
execution and performance; the effects of plans intended to promote or protect
the Company's brands and products; the effects of increased competition at
Company locations on sales and on labor recruiting, cost, and retention; the
availability and cost of acceptable sites for development and the Company's
ability to identify such sites; the ability of the Company to open and operate
new locations successfully; changes in foreign exchange rates affecting the
Company's future retail inventory purchases; commodity, workers' compensation,
group health and utility price changes; changes in building materials and
construction costs; consumer behavior based on negative publicity or concerns
over nutritional or safety aspects of the Company's products or restaurant food
in general; changes in or implementation of additional governmental or
regulatory rules, regulations and interpretations affecting accounting, tax,
wage and hour matters, health and safety, pensions, insurance or other
undeterminable areas; practical or psychological effects of terrorist acts or
war and military or government responses; the ability of and cost to the Company
to recruit, train, and retain qualified hourly and management employees; changes
in interest rates affecting the Company's financing costs; disruptions to the
company's restaurant or retail supply chain; the actual results of pending,
future or threatened litigation or governmental investigations and the costs and
effects of negative publicity associated with these activities; implementation
of new or changes in interpretation of existing accounting principles generally
accepted in the United States of America ("GAAP"); effectiveness of internal
controls over financial reporting; changes in capital market conditions that
could affect valuations of restaurant companies in general or the Company's
goodwill in particular; and other factors described from time to time in the
Company's filings with the Securities and Exchange Commission ("SEC"), press
releases, and other communications. References to years (e.g. "2005") are to the
Company's fiscal year unless otherwise specified.
PART I
ITEM 1. BUSINESS
OVERVIEW
CBRL Group, Inc. (the "Company") is a holding company that, through
subsidiaries, is engaged in the operation and development of the Cracker Barrel
Old Country Store(R) and Logan's Roadhouse(R) restaurant and retail concepts.
The Company was organized under the laws of the state of Tennessee in August
1998 and maintains an Internet website at cbrlgroup.com. We make available free
of charge on or through our Internet website our periodic and other reports
filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and
Exchange Act of 1934 (the "Exchange Act") as soon as reasonably practicable
after we file such material with, or furnish it to, the SEC.
CONCEPTS
Cracker Barrel Old Country Store
- --------------------------------
Cracker Barrel Old Country Store, Inc. ("Cracker Barrel"), headquartered in
Lebanon, Tennessee, through its various affiliates, as of September 23, 2005,
operated 534 full-service "country store" 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 2005,
for the 15th consecutive year, Cracker Barrel was named the "Best Family Dining
Restaurant" in the Restaurants & Institutions magazine "Choice in Chains" annual
consumer survey. For the 12th consecutive year, Cracker Barrel was ranked as the
"Best Restaurant Chain" by Destinations magazine poll. For the 4th consecutive
year, Cracker Barrel was named "The Most RV Friendly Sit-Down Restaurant in
4
<PAGE>
America" by The Good Sam Club. In the 2004 J. D. Power and Associates' inaugural
study of customer satisfaction in the restaurant industry, Cracker Barrel scored
the highest among family dining chains in overall customer satisfaction in its
core market regions and the second highest in those regions among all family and
casual dining chains.
Except for Christmas day, when they are closed, and Christmas Eve when they
close at 2:00 p.m., Cracker Barrel restaurants serve breakfast, lunch and dinner
daily between the hours of 6:00 a.m. and 10:00 p.m. (closing at 11:00 p.m. on
Fridays and Saturdays) and feature home style country cooking from Cracker
Barrel's own recipes using quality ingredients and emphasizing authenticity.
Menu items are moderately priced and include country ham, chicken, fish, roast
beef, beans, turnip greens, vegetable plates, salads, sandwiches, pancakes,
eggs, bacon, sausage and grits among other items. The restaurants do not serve
alcoholic beverages. The stores are constructed in a trademarked rustic, old
country store design with a separate retail area offering a wide variety of
decorative and functional items featuring rocking chairs, holiday and seasonal
gifts and toys, apparel, cookware and foods, including various old fashioned
candies and jellies among other things. Cracker Barrel offers items for sale in
the retail store that are also featured on, or related to, the restaurant menu,
such as pies or cornbread and pancake mixes. A typical store will offer
approximately 3,000 stock-keeping units (SKU's) for sale at any one time. The
Company believes that Cracker Barrel achieves high retail sales per square foot
(over $450 per square foot of retail selling space annually) both by offering
interesting merchandise and by having a significant source of retail customers
from its high volume of restaurant customers, an average of over 8,000 per week
in an average store.
Stores are located primarily along interstate highways; however, as of
September 23, 2005, 67 stores are located near "tourist destinations" or are
considered "off-interstate" stores. In 2006, Cracker Barrel intends to open all
of its new stores along interstate highways as compared to approximately 88% in
2005. The Company believes it should focus primarily in the near term on
available interstate locations where Cracker Barrel generates the greatest brand
awareness. Off-interstate locations are expected to represent a meaningful part
of Cracker Barrel's efforts to expand the brand in future years. The Company has
identified over 500 trade areas for potential future development with
characteristics that appear to be consistent with those believed to be necessary
to support a successful Cracker Barrel unit.
Logan's Roadhouse
- -----------------
Logan's Roadhouse, Inc. ("Logan's"), headquartered in Nashville, Tennessee,
as of September 23, 2005, operated 127 Logan's restaurants in 16 states.
Independent franchisees operated an additional 23 Logan's restaurants in four
states, including three states where there presently are no Company-operated
Logan's restaurants. The Logan's concept is designed to appeal to a broad range
of customers by offering generous portions of moderately-priced, high quality
food in a very casual, relaxed dining environment that is lively and
entertaining. Logan's restaurants feature steaks, seafood, ribs and chicken
dishes among other items served in a distinctive atmosphere reminiscent of an
American roadhouse of the 1930s and 1940s. In addition to local awards received
in communities in which Logan's restaurants operate, in May 2005, Logan's
received the Nation's Restaurant News Menu Masters Award for "Best Menu Revamp"
for its successful introduction of new and improved appetizers and other menu
items including several new seafood items.
Logan's restaurants are open seven days a week, except for Thanksgiving and
Christmas Days. Logan's serves lunch and dinner between the hours of 11:00 a.m.
and 10:00 p.m. (closing at 11:00 p.m. on Fridays and Saturdays) and offers full
bar service. The Logan's menu is designed to appeal to a wide variety of tastes,
and emphasizes extra-aged, hand-cut on-premises, USDA choice steaks and
signature dishes such as baked sweet potatoes and made-from-scratch yeast rolls.
The fun atmosphere is enhanced by display cooking of grilled items and buckets
of complimentary roasted in-shell peanuts on every table, which guests are
encouraged to enjoy and let the shells fall on the floor. Alcoholic beverages
represented slightly less than 9% of Logan's net sales in 2005.
OPERATIONS
Cracker Barrel Old Country Store
- --------------------------------
Store Format: The format of Cracker Barrel stores consists of a trademarked
rustic, old country-store style building. All stores are freestanding buildings.
Store interiors are subdivided into a dining room consisting of approximately
26% of the total interior store space, and a retail shop consisting of
approximately 21% of such space, with the balance primarily consisting of
kitchen, storage and training areas. All stores have stone fireplaces, which
burn wood except where not permitted. All are decorated with antique-style
furnishings and other authentic and nostalgic items, reminiscent of and similar
to those found and sold in the past in 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.
5
<PAGE>
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 77% of Cracker Barrel's total revenue in 2005, offer home-style
country cooking featuring Cracker Barrel's own recipes that emphasize
authenticity and quality. The restaurants offer breakfast, lunch and dinner from
a moderately priced menu. Breakfast items can be ordered at any time throughout
the day and include juices, eggs, pancakes, bacon, country ham, sausage, grits,
and a variety of biscuit specialties, such as gravy and biscuits and country ham
and biscuits. Prices for a breakfast meal range from $2.29 to $8.49, and the
breakfast day-part (until 11:00 a.m.) accounted for approximately 22% of
restaurant sales in 2005.
Lunch (11:00 a.m. to 4:00 p.m.) and dinner (4:00 p.m. to close) day-parts
reflected approximately 36% and 42% of restaurant sales, respectively, in 2005.
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. The Company periodically features new items as off-menu
specials to enhance customer interest and identify potential future additions to
the menu. Lunches and dinners range in price from $3.49 to $12.99. In 2004,
Cracker Barrel introduced a new menu featuring several new products, including
daily dinner features that showcase a popular dinner entree for each day of the
week and a low-carbohydrate section on both its breakfast and lunch/dinner
menus. During 2005, Cracker Barrel began offering seasonal menus for the
holidays, winter, spring, summer and fall in addition to the regular menu. The
seasonal menus each offer new and interesting menu items intended to appeal to
guests during each season of the year. Some of the items that were featured on
seasonal menus in 2005 were Pepper Mill Sirloin Grill, Hashbrown Chicken Bake,
Pecan Crusted Grilled Trout, Grilled Reuben Sandwich Platter and Strawberry
Pecan Chicken Salad. The average check per guest for fiscal 2005 was $7.99.
Various menu price increases were instituted during 2005, averaging 2.9% for the
year.
The retail operations, which generated approximately 23% of Cracker
Barrel's total revenue in 2005, offer a wide variety of decorative and
functional items such as rocking chairs, seasonal gifts, toys, apparel, cast
iron 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, syrups and other food items. The typical Cracker Barrel
retail shop features approximately 3,000 SKU's. Many of the food items are sold
under the "Cracker Barrel Old Country Store" brand name. Cracker Barrel offers
items for sale in the retail store that also are featured on, or related to, the
restaurant menu, such as cornbread and pancake mixes. The Company believes that
Cracker Barrel achieves high retail sales per square foot (over $450 per square
foot of retail selling space annually) both by offering appealing merchandise
and by having a significant source of retail customers from the high volume of
restaurant customers - an average of over 8,000 per week in a typical store. 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: Cracker Barrel maintains a product
development department, which develops new and improved menu items in response
either to shifts in customer preferences or to create customer interest.
Coordinated seasonal promotions are used regularly in the restaurants and retail
shops. The Cracker Barrel merchandising department attempts to select
merchandise for the retail shop that reinforces the nostalgic theme of the
restaurant. In 2005, Cracker Barrel partnered with Grammy(R) Award-winners
Alison Krauss and Union Station to produce an exclusive CD titled "Home on the
Highways" featuring favorite songs selected by Ms. Krauss and her band. Cracker
Barrel also sponsored the Alison Krauss and Union Station Tour "2005 Lonely Runs
Both Ways." In 2005, Cracker Barrel announced additional music compilation
partnerships with Charlie Daniels, scheduled to begin sales in October 2005, and
Sara Evans, scheduled to begin sales in February 2006. These partnerships
complement Cracker Barrel's existing proprietary line of first editions of
"American Music Legends" series of CD's featuring music stars from Elvis Presley
to Patsy Cline and other music celebrities. Cracker Barrel also offers for sale
in its retail shops its proprietary line of "Heritage Music" CDs featuring
various styles of traditional American music from bluegrass, to blues, to Cajun,
to gospel and other styles. In 2005, Cracker Barrel entered into an agreement to
sponsor the Grand Ole Opry(TM), the showcase of country music and, with nearly
80 years on the air, America's longest running radio program
Store Management and Quality Controls: Cracker Barrel store management,
typically consisting of one general manager, four associate managers and one
retail manager, are responsible for an average of 100-120 employees on two
shifts. The relative complexity of operating a Cracker Barrel store requires an
effective management team at the individual store level. As a motivation to
store managers to improve sales and operational performance, Cracker Barrel
maintains a bonus plan designed to provide store management with an opportunity
to share in the profits of their store. The bonus plan also rewards managers who
6
<PAGE>
achieve specific operational targets. To assure that individual stores are
operated at a high level of quality, Cracker Barrel emphasizes the selection and
training of store managers. It also employs district managers to support
individual store managers and regional vice presidents to support individual
district managers. 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
background and experience verification, Cracker Barrel conducts testing designed
to identify those applicants most likely to be best suited to manage store
operations. Those candidates who successfully pass this screening process are
then required to complete an 11-week training program consisting of seven weeks
of in-store training and four weeks of training at Cracker Barrel's corporate
facilities. This program allows new managers the opportunity to become familiar
with Cracker Barrel operations, culture, management objectives, controls and
evaluation criteria before assuming management responsibility. Cracker Barrel
provides its managers and hourly employees with ongoing training through its
various development courses taught through a blended learning approach,
including hands-on, 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: Cracker Barrel negotiates directly with food
vendors as to specification, price and other material terms of most food
purchases. When practical, Cracker Barrel coordinates with the purchasing
department at Logan's to seek possible volume purchases from combined
activities. Cracker Barrel is a party to a prime vendor contract with an
unaffiliated distributor with custom distribution centers in Lebanon, Tennessee;
McKinney, Texas; Gainesville, Florida; Elkton, Maryland; and Ft. Mill, South
Carolina. This vendor's contract currently runs through 2007 with minimal price
increases each year in 2006 and 2007. The contract requires the Company to pay
for market fuel prices that exceed certain designated prices. The contract will
remain in effect until both parties mutually modify it in writing or until
terminated by either Cracker Barrel or the distributor upon 180 days written
notice to the other party. Cracker Barrel purchases the majority of its food
products and restaurant supplies on a cost-plus basis through this unaffiliated
distributor. The distributor is responsible for placing food orders and
warehousing and delivering food products to Cracker Barrel's stores. Deliveries
generally are made once per week to the individual stores. Certain perishable
food items are purchased locally by Cracker Barrel stores.
Four food categories (beef, dairy (including eggs), pork and poultry)
account for the largest shares of Cracker Barrel's food purchasing expense at
approximately 14%, 14%, 12% and 10%, respectively, but each category does
include several individual items. The single food item within these categories,
accounting for the largest share of Cracker Barrel's food purchasing expense,
was chicken tenderloin at approximately 6% of food purchases in 2005. Cracker
Barrel purchases its beef through six vendors, pork through eight vendors, and
poultry through eight vendors. Cracker Barrel purchases its chicken tenderloin
through two vendors. Dairy and eggs are purchased through numerous vendors
including local vendors. Should any food items from these vendors become
unavailable, management believes that these food items could be obtained in
sufficient quantities from other sources at competitive prices.
The majority of retail items (approximately 72% in 2005) are centrally
purchased directly by Cracker Barrel from domestic and international vendors and
warehoused at the Company's owned 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 Cracker
Barrel's automated replenishment system and generally ships the retail orders
once a week to the individual stores by a third-party dedicated freight line.
The contract with this freight line requires the Company to pay for market fuel
prices that exceed certain designated prices. Certain retail items, not
centrally purchased and warehoused at the distribution center, are drop-shipped
directly from Cracker Barrel's vendors to its stores. Approximately 28-30% of
Cracker Barrel's retail purchases in 2005 were directly from vendors in the
People's Republic of China. During 2005, Cracker Barrel entered into a
relationship with a foreign buying agency to source product and supplement
product development.
Cost and Inventory Controls: Cracker Barrel's computer 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
7
<PAGE>
by the computer 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: Cracker Barrel is committed to providing its guests a
home-style, country-cooked meal, and a variety of retail merchandise served and
sold with genuine hospitality in a comfortable environment, in a way that evokes
memories of the past. Cracker Barrel's commitment to offering guests a quality
experience begins with its employees. Its mission statement, "Pleasing People,"
embraces guests and employees alike, and the Company's employees are trained on
the importance of that mission in a culture of mutual respect. Cracker Barrel
also is committed to staffing each store with an experienced management team to
ensure attentive guest service and consistent food quality. Through the regular
use of guest surveys and store visits by its district managers and regional vice
presidents, management receives valuable feedback, which it uses in its ongoing
efforts to improve the stores and to demonstrate Cracker Barrel's continuing
commitment to pleasing its guests. Cracker Barrel also has for many years had a
guest-relations call center that takes comments and suggestions from guests and
forwards them to operations or other management for information and follow up.
Cracker Barrel has public notices in its menus, on its website and posted in its
restaurants informing customers and employees about how to contact Cracker
Barrel by Internet or toll-free telephone number with questions, complaints or
concerns regarding services or products. Cracker Barrel conducts training in how
to gather information and investigate and resolve customer concerns. This is
accompanied by comprehensive training for all store employees on Cracker
Barrel's public accommodations policy and its commitment to "pleasing people."
In 2005, the Company implemented an anonymous, unannounced, third-party store
testing program, to ensure compliance with its guest satisfaction policies and
commitments. In 2006, Cracker Barrel expects to introduce an improved
interactive voice response ("IVR") system to monitor operational performance and
guest satisfaction at all stores on an ongoing basis. Cracker Barrel has used an
IVR system in the past to monitor the performance of new restaurants and to
provide insight into the performance of under-performing stores.
Marketing: Outdoor advertising (i.e., billboards and state department of
transportation signs) is the primary advertising medium utilized to reach
consumers in the primary trade area for each Cracker Barrel store and also to
reach interstate travelers and tourists. Outdoor advertising accounted for
approximately 60% of advertising expenditures in 2005, with approximately 1,700
billboards at year-end, of which 135 were provided without charge to Cracker
Barrel for a limited period of time by their owners to celebrate the Company's
35th anniversary. In recent years Cracker Barrel has utilized other types of
media, such as radio and print, in its core markets to maintain customer
awareness, and outside of its core markets to increase name awareness and to
build brand loyalty. Cracker Barrel defines its core markets based on average
weekly sales, geographic location, longevity in the market and name awareness in
each market. Cracker Barrel plans to maintain its overall advertising spending
at approximately 2% of Cracker Barrel's revenues in 2006, as it generally has
since 2000. Outdoor advertising should continue to represent approximately 60%
of advertising expenditures in 2006. New store locations generally are not
advertised in the media until several weeks after they have been opened in order
to give the staff time to adjust to local customer habits and traffic volume.
Logan's Roadhouse
- -----------------
Store Format: Logan's restaurants generally are constructed of rough-hewn
cedar siding in combination with bands of corrugated metal outlined in red neon.
Interiors are decorated with murals and other artifacts depicting scenes or
billboard advertisements reminiscent of American roadhouses of the 1930s and
1940s, with concrete and wooden planked floors and neon signs. The lively,
upbeat, friendly, relaxed atmosphere seeks to appeal to families, couples,
single adults and business people. The restaurants feature display cooking and
an old-fashioned meat counter displaying ribs and hand-cut USDA choice steaks,
and also include a spacious, comfortable bar area. While dining or waiting for a
table, guests may eat complimentary roasted in-shell peanuts and toss the shells
on the floor. In the waiting area they also may watch as cooks prepare steaks
and other entrees on gas-fired mesquite grills. During 2006, Logan's plans to
begin installation of complimentary jukeboxes in the waiting or bar area of all
its restaurants to allow guests to select some of their favorite music. These
features are intended to emphasize a welcoming, lively, roadhouse-type
environment in order to enhance the differentiation of the concept with
consumers. Logan's has developed, designed and opened one new prototype
restaurant that it is testing and expects to open regularly, beginning in 2007.
Products: Beginning in 2004, Logan's began revamping its menu and expanding
its offerings of appetizers and entrees to broaden the appeal of the Logan's
concept, while still offering affordable high-quality steaks. In 2005, Logan's
introduced specialty appetizers, including Smokin' Hot Grilled Wings, Lightnin'
Hot Shrimp Bucket, and San Antonio Chicken Wraps and new "craveable" entrees and
salads including Santa Fe Tilapia, Southern Fried Catfish, Filet and Grilled
Shrimp Combos and Logan's Kickin' Chickin' Salad. The Logan's dinner menu
features an assortment of specially seasoned USDA choice steaks, extra-aged, and
8
<PAGE>
cut by hand on premises. Guests also may choose from slow-cooked baby back
ribs, mesquite-grilled chicken, seafood items and an assortment of hamburgers,
salads and sandwiches. All dinner entrees include made-from-scratch yeast rolls
and a choice of two side items which include dinner salad, brown sugar and
cinnamon sweet potato, baked potato, mashed potatoes, grilled vegetables, fries
or other side items at no additional cost. Logan's express lunch menu provides
specially priced items to be served in less than 15 minutes. All lunch salads
are served with made-from-scratch yeast rolls, and all lunch sandwiches are
served with home-style potato chips. In 2005, lunch and dinner accounted for
approximately 35% and 65% of Logan's sales, respectively. Prices range from
$4.99 to $8.99 for lunch items and from $5.69 to $19.99 for dinner entrees. The
average check per customer for 2005 was $12.32, including alcoholic beverages.
Slightly less than 9% of Logan's net sales in 2005 were from alcoholic
beverages. In most of its restaurants Logan's offers a happy hour intended to
increase responsible alcohol sales. The happy hour emphasizes responsible
alcohol service through training and operational standards. Various price
increases were instituted during 2005 and averaged 3.2% for the year.
Product Development: Logan's employs a full-time Vice President of Menu and
Culinary Innovation who is dedicated to enhancing and developing the brand
through improved and appealing product offerings. Logan's tests various new
products in an effort to select items with high guest appeal in response to
changing customer tastes. In order to maximize operating efficiencies and cost
effectively provide fresh ingredients for its food products, purchasing
decisions are made by Logan's corporate management. Management believes that
Logan's has adequate flexibility to meet future shifts in consumer preference on
a timely basis.
Restaurant Management and Quality Controls: Logan's restaurant management
typically consists of a general manager, one kitchen manager and two to four
assistant managers who are responsible for approximately 80 hourly employees.
Each restaurant management team typically is comprised of one to two persons who
were promoted into management positions from non-management positions and three
to four managers with previous management experience. Each restaurant employs a
skilled meat-cutter to cut steaks from USDA choice beef. The general manager of
each restaurant is responsible for the day-to-day operations of the restaurant,
including maintaining high standards of quality and performance established by
Logan's corporate management. The complexity of operating a Logan's restaurant
requires an effective management team at the individual restaurant level. As a
motivation to restaurant managers to increase revenues and operational
performance, Logan's maintains an incentive bonus plan that rewards managers for
achieving sales and profit targets as well as key operating cost measures. To
assure that individual restaurants are operated at high standards of quality,
Logan's has regional managers to support individual restaurant managers along
with one director and two regional vice presidents of operations to support
individual regional managers. Each regional manager typically supports five to
six individual restaurants. The director of operations supports four regional
managers and the regional vice presidents of operations support ten regional
managers each. Through regular visits to the restaurants, the regional vice
presidents, the director of operations, the regional managers and other senior
management ensure that the Logan's concept, strategy and standards of quality
are being adhered to.
Logan's requires that its restaurant managers have significant experience
in the full-service restaurant industry. All new managers are required to
complete up to eight weeks of training at a Logan's restaurant and one week of
classroom training conducted at the Logan's training facility in Nashville. The
course emphasizes the Logan's operating strategy, procedures and standards.
Logan's also has a specialized training program required for managers and hourly
service employees on responsible alcohol service.
Purchasing and Distribution: Logan's strives to obtain consistent high
quality ingredients at competitive prices from reliable sources. Logan's
negotiates directly with food vendors as to specifications, price and other
material terms of most food purchases. When practical, Logan's coordinates with
the purchasing department at Cracker Barrel to seek possible volume purchases
from combined activities. Logan's purchases the majority of its food products
and restaurant supplies on a cost-plus basis through the same unaffiliated
distributor that is used by Cracker Barrel. The distributor is responsible for
placing food orders and warehousing and delivering food products for Logan's
restaurants. Certain perishable food items are purchased locally by the
restaurants.
The single food item accounting for the largest share (approximately 36%)
of Logan's food cost is beef. Steaks are hand-cut on the premises, in contrast
to many in the restaurant industry that purchase pre-portioned steaks. Logan's
presently purchases its beef through one supply contract. Should any beef items
from this supplier become unavailable for any reason, management believes that
such items could be obtained in sufficient quantities from other sources at
competitive prices.
9
<PAGE>
Cost and Inventory Controls: Management closely monitors sales, product
costs and labor at each of its restaurants. Daily sales and weekly restaurant
operating results are analyzed by management to detect trends at each location,
and negative trends are addressed promptly. Financial controls are maintained
through management of an accounting and information management system that is
implemented at the restaurant level. Administrative and management staff
prepares daily reports of sales, labor and customer counts. On a weekly basis,
condensed operating statements are compiled by the accounting department and
provide management a detailed analysis of sales, product and labor costs, with a
comparison to budget and prior year performance. These systems also are used in
the development of budget analyses and planning.
Guest Satisfaction: Logan's is committed to providing its guests prompt,
friendly, efficient service, keeping table-to-server ratios low and staffing
each restaurant with an experienced management team to ensure attentive guest
service and consistent food quality. Through the regular use of marketing
research, guest feedback to the managers while in the restaurant and an
outsourced guest satisfaction survey program, management receives valuable
feedback, which it uses to improve restaurant operations and monitor guest
satisfaction. The satisfaction survey program delivers 50-150 guest survey
responses per restaurant each month. Each selected guest is invited to take the
survey via a random invitation on the guest receipt and receives a discount of
$3.00 off their next food purchase. The program allows Logan's to identify and
focus on key drivers of guest satisfaction and monitor long-term trends in guest
satisfaction and perception.
Marketing: Logan's employs an advertising and marketing strategy designed
to establish and maintain a high level of name recognition and to attract new
customers. Management's goal is to develop a greater number of restaurants in
certain markets to support and enhance the use of television, radio and outdoor
advertising. In 2005 Logan's spent approximately 1.0% of revenues on advertising
and expects to spend approximately 1.5% of revenues in 2006. In 2004, with
changes in Logan's management and the resulting refocus of management priorities
on improving the brand and clarifying its media message, Logan's spent less on
advertising. In 2005, Logan's developed and tested a new advertising and
marketing program, including new television and radio advertising, which it
plans to introduce in 2006 in markets encompassing approximately half its
company-owned restaurants. Logan's also engages in a variety of promotional
activities, such as contributing personnel, money and complimentary meals to
charitable, civic and cultural programs, in order to increase public awareness
of Logan's restaurants. Logan's also has certain relationships with the National
Football League's Tennessee Titans, including two concession facilities (named
"Logan's Landing") inside the Nashville, Tennessee Coliseum and various
promotions during and around the games as well as other events, such as home
football games for Tennessee State University.
Franchising: Prior to the Company acquiring Logan's Roadhouse, Inc.,
Logan's had entered into certain area development agreements and accompanying
franchise agreements. As of September 23, 2005, two franchisees operate 23
Logan's restaurants in four states, and have rights under the existing
agreements, subject to development terms, conditions and timing requirements, to
open up to 18 additional locations in those same states plus parts of Nevada.
Certain of the agreements have provided for the possible acquisition of the
franchise locations in the territory by Logan's. Management is not currently
planning any other franchising initiatives in the near future beyond the current
agreements, although Logan's believes additional franchising could become an
opportunity in the future. Logan's offers no financing, financial guarantees or
other financial assistance to its franchisees and has no ownership interest in
any franchisee properties or assets.
UNIT DEVELOPMENT
Cracker Barrel opened 25 new stores in 2005. Cracker Barrel plans to open
26 new stores during 2006, five of which already were open as of September 23,
2005.
Logan's opened 17 new company-operated restaurants and three new franchised
restaurants in 2005. Logan's plans to open 22-24 new company-operated
restaurants and four franchised restaurants during 2006, and three of the
planned company-operated restaurants already were open as of September 23, 2005.
Of the 534 Cracker Barrel stores open as of September 23, 2005, the Company
owns 384, while the other 150 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 194 seats in the restaurant. Cracker Barrel
plans to modify the prototype in 2006 to provide additional seating and
operational flexibility.
10
<PAGE>
Of the 150 Logan's restaurants open as of September 23, 2005, 23 are
franchised restaurants. Of the remaining 127 Logan's restaurants, 63 are owned
and 64 are ground leases. The current Logan's restaurant prototype is
approximately 8,200 square feet with 284 seats, including 22 seats at the bar.
Logan's has recently developed and designed a new prototype restaurant, the
first of which opened in early 2006. The Company plans to evaluate the
effectiveness and cost of the new prototype and incorporate changes into a
revised design expected to begin to be used in 2007 openings.
EMPLOYEES
As of July 29, 2005, CBRL Group, Inc. employed 29 people, of whom 12 were
in advisory and supervisory capacities and 6 were officers of the Company.
Cracker Barrel employed approximately 64,000 people, of whom 508 were in
advisory and supervisory capacities, 3,176 were in store management positions
and 35 were officers. Logan's employed approximately 11,000 people, of whom 89
were in advisory and supervisory capacities, 632 were in restaurant management
positions and 9 were officers. Many restaurant personnel are employed on a
part-time basis. None of the employees of the Company or its subsidiaries are
represented by any union, and management considers its employee relations to be
good.
COMPETITION
The restaurant industry is intensely competitive with respect to price,
service, location, and food quality. The Company competes 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, traffic patterns, and the
type, number, and location of competing restaurants. 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 the Company's 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, the Company is not dependent
upon single sources of supplies or raw materials. The Company's ability to
maintain consistent quality throughout its restaurant system depends in part
upon its 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, the Company 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. The Company's 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 the Company's retail product is distributed to its stores
through a single distribution center. Disruption of the Company's retail supply
chain could be more difficult to overcome, but the Company is evaluating ways to
mitigate such disruptions.
ENVIRONMENTAL MATTERS
Federal, state and local environmental laws and regulations have not
historically had a significant impact on the operations of the Company; however,
the Company cannot predict the effect of possible future environmental
legislation of regulations on its operations.
TRADEMARKS
Cracker Barrel and Logan's deem the trademarks and service marks owned by
them or their affiliates to be of substantial value. Their policy is to obtain
federal registration of their trademarks and other intellectual property
whenever possible and to pursue vigorously any infringement of trademarks.
RESEARCH AND DEVELOPMENT
While research and development are important to the Company, these
expenditures have not been material due to the nature of the restaurant and
retail industry.
11
<PAGE>
SEASONAL ASPECTS
Historically, the profits of the Company have been lower in the first three
fiscal quarters and highest in the fourth fiscal quarter, which includes much of
the summer vacation and travel season. Management attributes these variations
primarily to the increase in interstate tourist traffic and propensity to dine
out during the summer months, whereas after the school year begins and as the
winter months approach, there is a decrease in interstate tourist traffic and
less of a tendency to dine out due to inclement weather. The Company's retail
sales historically have been highest in the Company's second fiscal quarter,
which includes the Christmas holiday shopping season.
WORKING CAPITAL
In the restaurant industry, substantially all sales transactions occur
either in cash or by third-party credit card. Like most other restaurant
companies, the Company is able to, and may often, operate with a working capital
deficit. Restaurant inventories purchased through the Company's principal food
distributor are on terms of net zero days, while restaurant inventories
purchased locally generally are financed through normal trade credit. Because of
its retail operations, which have a lower product turnover than the restaurant
business, the Company carries larger inventories than many other companies in
the restaurant industry. Retail inventories purchased domestically generally are
financed from normal trade credit, while imported retail inventories generally
are purchased through letters of credit and wire transfers. These various trade
terms are aided by rapid product turnover of the restaurant inventory. Employee
compensation and benefits payable generally may be related to weekly, bi-weekly
or semi-monthly pay cycles, and many other operating expenses have normal trade
terms.
12
<PAGE>
ITEM 2. PROPERTIES
The Company's corporate headquarters are located on approximately eight
acres of land owned by the Company in Lebanon, Tennessee. The Company uses
10,000 square feet of office space for its corporate headquarters.
The Cracker Barrel corporate headquarters and warehouse facilities are
located on approximately 120 acres of land owned by Cracker Barrel in Lebanon,
Tennessee. Cracker Barrel utilizes approximately 110,000 square feet of office
space for its corporate headquarters and decorative fixtures warehouse. Cracker
Barrel also utilizes 367,200 square feet of warehouse facilities and an
additional 13,800 square feet of office and maintenance space for its retail
distribution center.
The Logan's corporate headquarters and training facility are located in
approximately 35,000 and 6,000 square feet, respectively, in Nashville,
Tennessee, under two leases, both of which expire on February 28, 2015.
In addition to the various corporate facilities, the Company has 32
properties (owned or leased) for future development, a motel used for housing
management trainees and for the general public, and five parcels of excess real
property and improvements including one leased property, which the Company
intends to dispose of.
13
<PAGE>
Cracker Barrel and Logan's own or lease the following store properties as
of September 23, 2005:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
State Cracker Barrel Logan's Combined
----- -------------- ------- --------
Owned Leased Owned Leased Owned Leased
----- ------ ----- ------ ----- ------
Tennessee 35 12 12 5 47 17
Florida 39 13 4 2 43 15
Texas 25 4 11 11 36 15
Georgia 27 9 7 5 34 14
Alabama 17 9 8 5 25 14
Indiana 21 5 6 5 27 10
Ohio 23 9 1 2 24 11
Kentucky 19 9 - 5 19 14
Michigan 14 3 2 12 16 15
Virginia 19 4 6 2 25 6
North Carolina 22 8 - - 22 8
Illinois 21 2 - - 21 2
Pennsylvania 9 11 - - 9 11
South Carolina 11 7 - - 11 7
Mississippi 8 3 2 3 10 6
Missouri 12 3 - 1 12 4
Louisiana 7 2 3 2 10 4
Arkansas 4 6 1 1 5 7
West Virginia 3 5 - 2 3 7
Arizona 2 7 - - 2 7
New York 7 1 - - 7 1
Oklahoma 4 2 - 1 4 3
New Jersey 2 4 - - 2 4
Kansas 4 1 - - 4 1
Wisconsin 5 - - - 5 -
Colorado 3 1 - - 3 1
Maryland 3 1 - - 3 1
Massachusetts - 4 - - - 4
Iowa 3 - - - 3 -
New Mexico 2 1 - - 2 1
Utah 3 - - - 3 -
Connecticut 1 1 - - 1 1
Minnesota 2 - - - 2 -
Montana 2 - - - 2 -
Nebraska 1 1 - - 1 1
Delaware - 1 - - - 1
Idaho 1 - - - 1 -
New Hampshire 1 - - - 1 -
North Dakota 1 - - - 1 -
Rhode Island - 1 - - - 1
South Dakota 1 - - - 1 -
Total 384 150 63 64 447 214
</TABLE>
See "Business-Operations" and "Business-Unit Development" in Item I of this
Annual Report on Form 10-K for additional information on the Company's and its
subsidiaries' properties.
14
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
Part I, Item 3 of the Company's Annual Report on Form 10-K/A for the year
ended July 30, 2004 is incorporated herein by this reference.
Item 7.01 of the Company's Current Report on Form 8-K filed with the
Commission on September 9, 2004 is incorporated herein by this reference.
See also Note 10 to the Company's Consolidated Financial Statements filed
or incorporated by reference into 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.
15
<PAGE>
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 the executive
officers of the Company, as of September 23, 2005:
<TABLE>
<S> <C> <C>
Name Age Position with Registrant
- ---- --- ------------------------
Michael A. Woodhouse 60 Chairman, President & Chief Executive Officer
Lawrence E. White 55 Senior Vice President, Finance & Chief Financial
Officer
N. B. Forrest Shoaf 55 Senior Vice President, Secretary and General Counsel
Norman J. Hill 63 Senior Vice President, Human Resources
Patrick A. Scruggs 41 Vice President, Accounting and Tax, & Chief
Accounting Officer
Cyril J. Taylor 51 President and Chief Operating Officer of Cracker
Barrel Old Country Store, Inc.
David L. Gilbert 48 Chief Administrative Officer of Cracker Barrel Old
Country Store, Inc.
G. Thomas Vogel 41 President and Chief Operating Officer of Logan's
Roadhouse, Inc.
</TABLE>
The following information summarizes the business experience of each
executive officer of the Company for at least the past five years:
Mr. Woodhouse has been employed by the Company or its subsidiaries in
various capacities since 1995. Mr. Woodhouse served the Company as Senior Vice
President of Finance and CFO from January 1999 to July 1999, as Executive Vice
President and Chief Operating Officer ("COO") from August 1999 until July 2000,
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 21 years of experience in the restaurant
industry and 13 years of experience in the retail industry.
Mr. White has been employed by the Company in his current capacity since
September 1999. Prior to that, he was Executive Vice President and Chief
Financial Officer of Boston Chicken, Inc., where he was part of a new management
team brought in for an operational and financial turnaround. Mr. White has 18
years of experience in the restaurant industry and 6 years of experience in the
retail industry.
Mr. Shoaf began his employment with the Company in April 2005. Prior to
that, 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 2000-2003,
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.
Mr. Hill has been employed by the Company or its subsidiaries since 1996.
He assumed his current position in January 2002. Mr. Hill has 26 years of
experience in the restaurant industry and nine years of experience in the retail
industry.
Mr. Scruggs has been employed by the Company or its subsidiaries in various
capacities since 1989. He assumed his current position in 2003. Mr. Scruggs has
16 years of experience in the restaurant and retail industries.
16
<PAGE>
Mr. Taylor started his career with Cracker Barrel in 1978 as a Restaurant
Management Trainee and has regularly been promoted to positions of increasing
responsibility and authority, becoming Senior Vice President of Operations in
July of 2003. Prior to becoming Senior Vice President of Operations, Mr. Taylor
was Senior Vice President of Restaurant Operations from August of 2002 to July
of 2003, Divisional Vice President of Restaurant Operations from August of 2000
to July of 2002 and Vice President of Operations Administration from August 1999
to July 2000. Mr. Taylor has 27 years of experience in the restaurant and retail
industries.
Mr. Gilbert joined Cracker Barrel in July 2001. Prior to that, he was
employed by Shoney's Inc. as its Executive Vice President and Chief
Administrative Officer from January 1999 to July 2001 and its Senior Vice
President of Real Estate from January 1998 to January 1999. Mr. Gilbert has 27
years of experience in the restaurant industry and four years of experience in
the retail industry.
Mr. Vogel joined Logan's in August 2003. Prior to that, he was employed by
Darden Restaurants Inc. since August 1991 serving in various capacities for its
Red Lobster concept, including Senior Vice President of Operations,
West/Southeast Divisions from June 1999 to August 2003, Vice President of Food
and Beverage from November 1997 to June 1999, and Concept Development Director
from March 1995 to November 1997. Mr. Vogel has 19 years of experience in the
restaurant industry.
17
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
The Company's Common Stock is traded on The Nasdaq Stock Market (National
Market System) ("Nasdaq") under the symbol CBRL. There were 13,293 shareholders
of record as of September 16, 2005.
The table "Market Price and Dividend Information" contained in the 2005
Annual Report is incorporated herein by this reference. 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
- ---------------------------------------
There were no equity securities sold by the Company during the period
covered by this Annual Report on Form 10-K that were not registered under the
Securities Act of 1933, as amended.
Issuer Purchases of Equity Securities
- -------------------------------------
The following table sets forth information with respect to purchases of
shares of the Company's common stock made during the quarter ended July 29, 2005
by or on behalf of the Company or any "affiliated purchaser," as defined by Rule
10b-18(a)(3) of the Exchange Act:
<TABLE>
<S> <C> <C> <C> <C> <C>
Total Number Maximum
of Shares Number of
Purchased as Shares that
Part of May Yet Be
Total Number Average Publicly Purchased
of Shares Price Paid Announced Under the
- Plans or Plans or
Period Purchased (1) Per Share (2) Programs Programs (3)
------ ------------- ------------- ------------ ------------
4/30/05 - 5/27/05 385,000 $39.66 385,000 1,121,081
5/28/05 - 6/24/05 300,000 $40.48 300,000 821,081
6/25/05 - 7/29/05 -- -- -- 821,081
Total for the quarter 685,000 $40.02 685,000 821,081
</TABLE>
(1) All share repurchases were made in open-market transactions
pursuant to publicly announced repurchase plans. This table
excludes shares owned and tendered by employees to meet the
exercise price of option exercises and shares withheld from
employees to satisfy minimum tax withholding requirements on
option exercises and other equity-based transactions. The
Company administers employee cashless exercises through an
independent, third-party broker and does not repurchase stock
in connection with cashless exercises.
(2) Average price paid per share is calculated on a settlement
basis and includes commission.
(3) On February 25, 2005, the Company announced a 2,000,000 share
common stock repurchase program with no expiration date.
ITEM 6. SELECTED FINANCIAL DATA
The table "Selected Financial Data" contained in the 2005 Annual Report is
incorporated into this Item of this Report by this reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
18
<PAGE>
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," contained in the 2005 Annual Report, is incorporated into this Item
of this Report by this reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," contained in the 2005 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 2005 Annual
Report, are incorporated into this Item of this Report by this reference.
See Quarterly Financial Data (Unaudited) in Note 13 to the Consolidated
Financial Statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
The Company's management, with the participation of its principal executive
and financial officers, including the Chief Executive Officer and the Chief
Financial Officer, evaluated the effectiveness of the Company's disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(f) promulgated
under the Exchange Act). Based upon this evaluation, the Chief Executive Officer
and the Chief Financial Officer concluded that as of July 29, 2005, the
Company's disclosure controls and procedures were effective for the purposes set
forth in the definition thereof in Exchange Act Rule 13a-15(e).
There have been no changes (including corrective actions with regard to
significant deficiencies and material weaknesses) during the quarter ended July
29, 2005 in the Company's internal controls over financial reporting (as defined
in Exchange Act Rule 13a-15(f)) that have materially affected, or are reasonably
likely to materially affect, the Company's internal controls over financial
reporting.
19
<PAGE>
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. We do not expect that our disclosure controls
and procedures or our internal controls will prevent all error 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 July 29,
2005, based on these criteria.
In addition, Deloitte & Touche LLP, an independent registered public
accounting firm, has issued an attestation report on management's assessment of
internal control over financial reporting, which is included herein.
/s/Michael A. Woodhouse
-----------------------
Michael A. Woodhouse
Chairman, President and Chief Executive Officer
/s/Lawrence E. White
--------------------
Lawrence E. White
Senior Vice President, Finance and Chief Financial Officer
ITEM 9B. OTHER INFORMATION
None.
20
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item with respect to directors of the
Company is incorporated into this Item of this Report by this reference to the
section entitled "Proposal 1: Election of Directors" in the 2005 Proxy
Statement. 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 sections entitled "Board of Directors and
Committees" and "Executive Compensation" in the 2005 Proxy Statement. The
matters labeled "Compensation and Stock Option Committee Report" and
"Shareholder Return Performance Graph" are not, and shall not be deemed to be,
incorporated by reference into this Annual Report on Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated into this Item of
this Report by this reference to the sections entitled "Stock Ownership of
Management and Certain Beneficial Owners" and "Executive Compensation-Equity
Compensation Plan Information" in the 2005 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated into this Item of
this Report by this reference to the section entitled "Certain Transactions" in
the 2005 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 2005 Proxy Statement. No other portion of the section of the
2005 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.
21
<PAGE>
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) List of documents filed as part of this report:
1. The following Consolidated Financial Statements and the Report of
Independent Registered Public Accounting Firm of Deloitte &
Touche LLP of the 2005 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 22, 2005
Consolidated Balance Sheet as of July 29, 2005 and July 30, 2004
Consolidated Statement of Income for each of the three fiscal
years ended July 29, 2005, July 30, 2004 and August 1, 2003
Consolidated Statement of Changes in Shareholders' Equity for
each of the three fiscal years ended July 29, 2005, July 30, 2004
and August 1, 2003
Consolidated Statement of Cash Flows for each of the three fiscal
years ended July 29, 2005, July 30, 2004 and August 1, 2003
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
22
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CBRL GROUP, INC.
By: /s/Michael A. Woodhouse
-----------------------
Michael A. Woodhouse
President and Chief Executive Officer
September 26, 2005
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 and in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
Name Title Date
- ---- ----- ----
/s/Michael A. Woodhouse
- -----------------------
Michael A. Woodhouse Chairman, President and Chief Executive September 26, 2005
Officer
/s/Lawrence E. White
- --------------------
Lawrence E. White Senior Vice President, Finance and Chief September 26, 2005
Financial Officer (Principal Financial Officer)
/s/Patrick A. Scruggs
- ---------------------
Patrick A. Scruggs Chief Accounting Officer September 26, 2005
(Principal Accounting Officer)
/s/James D. Carreker
- --------------------
James D. Carreker Director September 26, 2005
/s/Robert V. Dale
- -----------------
Robert V. Dale Director September 26, 2005
/s/Richard J. Dobkin
- --------------------
Richard J. Dobkin Director September 26, 2005
/s/Robert C. Hilton
- -------------------
Robert C. Hilton Director September 26, 2005
/s/Charles E. Jones, Jr.
- ------------------------
Charles E. Jones, Jr. Director September 26, 2005
/s/B.F. Lowery
- --------------
B.F. Lowery Director September 26, 2005
- ---------------------
Martha M. Mitchell Director September 26, 2005
/s/Erik Vonk
- ------------
Erik Vonk Director September 26, 2005
- --------------
Andrea M. Weiss Director September 26, 2005
- ------------------
Jimmie D. White Director September 26, 2005
</TABLE>
23
<PAGE>
INDEX TO EXHIBITS
Exhibit
- -------
3(I), 4(a) Charter (1)
3(II), 4(b) Bylaws (1)
4(c) Shareholder Rights Agreement dated 9/7/1999 (2)
4(d) Indenture, dated as of April 3, 2002, among the Company, the
Guarantors (as defined therein) and Wachovia Bank, National
Association, as trustee, relating to the Company's zero-coupon
convertible senior notes (the "Notes") (3)
4(e) Form of Certificate for the Notes (included in the LYONS
Indenture incorporated by reference as Exhibit 4(d) hereof)(3)
4(f) Form of Guarantee of the Notes (included in the LYONS
Indenture filed as Exhibit 4(d) hereof) (3)
4(g) First amendment, dated as of June 19, 2002, to the LYONS
Indenture (4)
4(h) Second amendment, dated as of July 30, 2004, to the LYONS
Indenture (4)
4(i) Third amendment, dated as of December 31, 2004, to the LYONS
Indenture (5)
4(j) Fourth amendment, dated as of January 28, 2005, to the LYONS
Indenture (6)
4(k),10(a) Credit Agreement dated 2/21/2003, relating to the $300,000,000
Revolving Credit Facility (7)
10(b) Lease dated 8/27/1981 for lease of Macon, Georgia store
between Cracker Barrel Old Country Store, Inc. and B. F.
Lowery, a director of the Company (8)
10(c) The Company's Amended and Restated Stock Option Plan, as
amended (9)
10(d) The Company's 2000 Non-Executive Stock Option Plan (10)
10(e) The Company's 1989 Non-Employee Director's Stock Option Plan,
as amended (11)
10(f) The Company's Non-Qualified Savings Plan
10(g) The Company's Deferred Compensation Plan (8)
10(h) The Company's 2002 Omnibus Incentive Compensation Plan
("Omnibus Plan") (12)
10(i) Amendment No. 1 to Omnibus Plan
10(j) Form of Restricted Stock Award
10(k) Form of Stock Option Award under the Amended and Restated
Stock Option Plan
10(l) Form of Stock Option Award under the Omnibus Plan
10(m) Executive Employment Agreement dated as of August 1, 2005
between Michael A. Woodhouse and the Company
24
<PAGE>
10(n) Change-in-control Agreement for Lawrence E. White dated
10/13/1999 (9)
10(o) Change-in-control Agreement for N.B. Forrest Shoaf dated
5/12/2005
10(p) Change-in-control Agreement for Norman J. Hill dated
10/13/1999 (10)
10(q) Change-in-control Agreement for David L. Gilbert dated
10/3/2001 (10)
10(r) Change-in-control Agreement for Tom Vogel dated October 3,
2003 (12)
10(s) Change-in-control Agreement for Patrick A. Scruggs dated
October 13, 1999 (12)
10(t) Master Lease dated July 31, 2000 between Country Stores
Property I, LLC ("Lessor") and Cracker Barrel Old Country
Store, Inc. ("Lessee") for lease of 21 Cracker Barrel Old
Country Store(R) sites (13)
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 9 Cracker Barrel Old
Country Store(R) sites*
10(v) Master Lease dated July 31, 2000 between Country Stores
Property II, LLC ("Lessor") and Cracker Barrel Old Country
Store, Inc. ("Lessee") for lease of 23 Cracker Barrel Old
Country Store(R) sites*
10(w) Master Lease dated July 31, 2000 between Country Stores
Property III, LLC ("Lessor") and Cracker Barrel Old Country
Store, Inc. ("Lessee") for lease of 12 Cracker Barrel Old
Country Store(R) sites*
10(x) 2005 Long-Term Incentive Plan (14)
10(y) 2005 Annual Bonus Plan (14)
10(z) 2006 LTI Plan (15)
10(aa) CBRL Group, Inc. Targeted Retention Plan (15)
10(bb) CBRL Group, Inc. Stock Ownership Achievement Incentive Plan
(15)
10(cc) 2006 Annual Bonus Plan (15)
10(dd) Summary of Executive Officer and Director Compensation (15)
10(ee) Form of Mid-Term Incentive and Retention Plan Award Notice
13 Pertinent portions of the Company's 2005 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
32 Section 1350 Certifications
*Document not filed because essentially identical in terms and conditions to
Exhibit 10(t).
(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).
(2) Incorporated by reference 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 the Company's Quarterly Report on Form
10-Q under the Exchange Act for the quarterly period ended May 3, 2002.
25
<PAGE>
(4) Incorporated by reference to Amendment No. 1 to the Company's Annual
Report on Form 10-K/A under the Exchange Act for the fiscal year ended
July 30, 2004.
(5) Incorporated by reference to the Company's Quarterly Report on Form
10-Q under the Exchange Act for the quarterly period ended January 28,
2005.
(6) Incorporated by reference to the Company's Current Report on Form 8-K
under the Exchange Act filed on February 2, 2005.
(7) Incorporated by reference to the Company's Quarterly Report on Form
10-Q under the Exchange Act for the quarterly period ended January 31,
2003.
(8) Incorporated by reference to the Company's Registration Statement on
Form S-7 under the Securities Act (File No. 2-74266).
(9) Incorporated by reference to the Company's Annual Report on Form 10-K
under the Exchange Act for the fiscal year ended July 30, 1999.
(10) Incorporated by reference to the Company's Annual Report on Form 10-K
under the Exchange Act for the fiscal year ended August 2, 2002.
(11) 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).
(12) Incorporated by reference to the Company's Annual Report on Form 10-K
under the Exchange Act for the fiscal year ended August 1, 2003.
(13) Incorporated by reference to the Company's Annual Report on Form 10-K
under the Exchange Act for the fiscal year ended July 28, 2000.
(14) Incorporated by reference to the Company's Quarterly Report on
Form 10-Q under the Exchange Act for the quarterly period ended
October 29, 2004.
(15) Incorporated by reference to the Company's Current Report on Form 8-K
under the Exchange Act, filed August 1, 2005.
26
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>2
<FILENAME>cbrlgroup10k092205ex10f.txt
<DESCRIPTION>NON-QUALIFIED SAVINGS PLAN
<TEXT>
Exhibit 10(f)
CBRL GROUP, INC.
2005 NON-QUALIFIED SAVINGS PLAN
Effective January 1, 2005
<PAGE>
<TABLE>
<S> <C> <C>
TABLE OF CONTENTS
-----------------
Page
----
Section 1. Operation of Plan and Definitions...............................................................1
Section 2. Participation...................................................................................5
Section 3. Contributions...................................................................................5
3.1. Supplemental Savings Contributions..............................................................5
3.2. Supplemental Matching Contributions.............................................................5
3.3. Crediting of Contributions......................................................................5
Section 4. Investment of Accounts..........................................................................6
4.1. Investment Direction............................................................................6
4.2. Investment Funds................................................................................6
Section 5. Valuations and Crediting........................................................................6
5.1. Valuations......................................................................................6
5.2. Credits to and Charges Against Accounts.........................................................6
5.3. Expenses........................................................................................7
Section 6. Vesting and Separation from Service.............................................................7
6.1. Vested Percentage...............................................................................7
6.2. Forfeiture......................................................................................7
Section 7. Benefits........................................................................................8
7.1. Forms of Benefit Payments.......................................................................8
7.2. Retirement Benefit..............................................................................8
7.3. Death Benefit...................................................................................8
7.4. Beneficiary Designation ........................................................................8
7.5. In-Service Distributions due to Unforeseeable Emergency.........................................9
7.6. Distributions on a Specified Date...............................................................9
7.7. Withholding.....................................................................................9
Section 8. The Plan Administrator..........................................................................9
8.1. Plan Administrator..............................................................................9
8.2. Engagement of Assistants and Advisors..........................................................10
8.3. Compensation...................................................................................10
8.4. Indemnification of the Plan Administrator......................................................10
Section 9. Authority and Responsibilities of the Company..................................................10
Section 10. Claims Procedures..............................................................................11
10.1. Claims.........................................................................................11
10.2. Appeal of Adverse Benefit Determinations.......................................................11
10.3. Notification of Benefit Determination on Review................................................12
10.4. Definitions....................................................................................13
Section ll. Amendment, Termination, Mergers and Consolidations.............................................14
11.1. Amendment......................................................................................14
11.2. Termination....................................................................................14
11.3. Permanent Discontinuance of Contributions......................................................14
<PAGE>
Section 12. Participating Employers........................................................................14
12.1. Adoption by Other Corporations.................................................................14
12.2. Requirements of Participating Employers........................................................15
12.3. Designation of Agent...........................................................................15
12.4. Eligible Person Transfers......................................................................15
12.5. Discontinuance of Participation................................................................15
12.6. Plan Administrator's Authority.................................................................15
Section 13. Miscellaneous Provisions.......................................................................15
13.1. Nonalienation of Benefits......................................................................15
13.2. No Contract of Employment......................................................................15
13.3. Severability...................................................................................15
13.4. Successors.....................................................................................16
13.5. Captions.......................................................................................16
13.6. Gender and Number..............................................................................16
13.7. Controlling Law................................................................................16
13.8 Title to Assets................................................................................16
13.9. Payments to Minors, Etc........................................................................16
13.10. Acknowledgments................................................................................16
13.11. Entire Agreement; Successors...................................................................16
13.12. Tax Effects....................................................................................16
</TABLE>
<PAGE>
CBRL GROUP, INC.
2005 NON-QUALIFIED SAVINGS PLAN
RECITALS
WHEREAS, effective January 1, 1996, Cracker Barrel Old Country Store, Inc.
established the Cracker Barrel Old Country Store, Inc. Non-Qualified Savings
Plan (the "NQSP"); and
WHEREAS, effective as of January 1, 2003, CBRL, Inc. assumed sponsorship of
the NQSP and amended and restated the NQSP in its entirety as the CBRL Group,
Inc. Non-Qualified Savings Plan (the "Prior Plan"); and
WHEREAS, in order to comply with the requirements of the Code, as amended
by the American Jobs Creation Act of 2004 (the "Act"), it is necessary to amend
and restate the Prior Plan with respect to the portion of each Participant's
Account which is subject to the requirements of the Act;
NOW, THEREFORE, effective as of the Effective Date, CBRL, Inc. hereby
adopts the CBRL Group, Inc. 2005 Non-Qualified Savings Plan (the "Plan"), as set
forth herein or as hereafter amended, for the purpose of assuring compliance
with the Code with respect to deferrals of compensation on or after January 1,
2005.
The Plan shall provide as follows:
Section 1. Operation of Plan and Definitions. This Plan shall be deemed to
have amended and restated the Prior Plan and, commencing on the Effective Date,
shall govern all amounts credited to a Participant's Account other than Prior
Plan Deferrals. The terms of the Prior Plan shall remain in effect with respect
to the portion of a Participant's Account consisting of Prior Plan Deferrals.
For the purposes of this Plan, the following terms will have the meanings
assigned in this Section, which will be equally applicable to the singular and
plural forms of such terms, unless the context requires otherwise, when used in
this Plan;
"Account" means the account maintained for a Participant under the Plan. A
Participant's Account will consist of his or her Supplemental Savings Account
and Supplemental Matching Account, plus investment earnings, if any, credited to
those Accounts.
"Affiliate" means any Employer and any entity if such entity, with the
Employer, constitutes (a) a controlled group of corporations (within the meaning
of Section 414(b) of the Code), (b) a group of trades or businesses under common
control (within the meaning of Section 414(c) of the Code), (c) an affiliated
service group (within the meaning of Section 414(m) of the Code), or (d) a group
of entities required to be aggregated pursuant to Section 414(o) of the Code and
the regulations thereunder.
"Beneficiary" means the beneficiary under the Plan of any deceased
Participant.
1
<PAGE>
"Board of Directors" means the board of directors of the Company.
"Change in Control" means: (i) a person becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 20% or more of
the combined voting power of its then outstanding voting securities, unless that
acquisition was approved by a vote of at least 2/3 of the members of the Board
of Directors in office immediately prior to the acquisition; (ii) that during
any period of 2 consecutive years, individuals who at the beginning of the
period constitute members of the Board of Directors cease for any reason to
constitute a majority of the Board of Directors unless the election, or the
nomination for election by the shareholders of the Company, of each new member
was approved by a vote of at least 2/3 of the members of the Board of Directors
then still in office who were members at the beginning of the 2-year period;
(iii) a merger, consolidation or reorganization of the Company (but this
provision does not apply to a recapitalization or similar financial
restructuring which does not involve a material change in ownership of equity of
the Company and which does not result in a change in membership of the Board of
Directors); or (iv) a sale of all or substantially all of the assets of the
Company.
"Code" means the Internal Revenue Code of 1986, as now or hereafter
existing, amended, construed, interpreted, and applied by regulations, rulings
or cases.
"Company" means CBRL Group, Inc., and any successor thereto.
"Compensation" means any form of compensation received by an Eligible
Person from an Employer while the Eligible Person is a Participant, including
basic salary or wages, bonuses, cash incentive plan payments, vacation, holiday
and sick pay or, except as otherwise provided herein, any other direct current
compensation which is required to be reported as income for purposes of federal
income tax for the Plan Year, without giving effect to any reduction of
compensation resulting from pre-tax saving contributions under the Qualified
Plan or any other salary reduction arrangement pursuant to Section 125 of the
Code. Compensation shall not include: any amount attributable to an Eligible
Person winning a gift or contest sponsored by the Employer; Employer
contributions to Social Security; "earned income credit" as reported on the
Employer's payroll system; other contributions to, or distributions from, this
or any other deferred compensation plan or program; severance pay; stock
options; any and all long-term disability income payments, without regard to
whether they are paid through the Employer's payroll system; any and all
state-sponsored short-term disability income payments, without regard to whether
they are paid through the Employer's payroll system; any and all amounts related
to relocation expense reimbursement; deferred commission payments; any amounts
paid to compensate an Eligible Person for taxes attributable to his living
outside the United States for purposes of his service to the Employer; or the
value of any other fringe benefits provided at the expense of the Employer,
which shall include, but not be limited to, the following items as reported
through the Employer's payroll system: excess life insurance; commuter car
mileage; gift card fringe benefits; "Rocking Chair Compensation"; payment of
membership in athletic facilities; and "health card dividends." The Compensation
taken into account for a Participant for a Plan Year will include compensation
in excess of the limit under Section 401(a)(17) of the Code.
"Effective Date" means January 1, 2005.
2
<PAGE>
"Election Date" shall mean, with respect to regular Compensation or
Performance-Based Compensation earned during a Plan Year, December 31 of the
Plan Year preceding the Plan Year during which the services giving rise to such
Compensation are performed. Provided, however, that for the first Plan Year in
which an individual becomes an Eligible Person, the Election Date shall mean the
30th day after the individual first became an Eligible Person, but an Enrollment
and Change Designation filed by such individual shall apply only to Compensation
otherwise payable after the date on which the Enrollment and Change Designation
is filed.
"Eligible Person" means any person who is a member of a select group of
management or highly compensated employees and who either (i) was eligible to
participate in the Prior Plan immediately prior to the Effective Date, or (ii)
is employed by the Employer in a category of employment designated by the
Employer on Exhibit A as eligible for participation in the Plan.
"Employer" means the Company and any Affiliate which, with the consent of
the Board of Directors, adopts this Plan and joins in the Trust Agreement.
"Enrollment and Change Designation" means an agreement, on a form or by a
method prescribed by the Plan Administrator, between a Participant and his or
her Employer providing for any of the following: (i) reduction of the
Participant's Compensation and the crediting of Supplemental Savings
Contributions by the Employer to the Participant's Supplemental Savings Account,
(ii) in accordance with Section 7.1, the form of payment of the Participant's
Account; and (iii) designation of one or more Investment Funds with respect to
the Participant's Accounts.
"ERISA" means the Employee Retirement Income Security Act of 1974, as now
or hereafter existing, amended, construed, interpreted, and applied by
regulations, rulings or cases.
"Investment Fund" means a fund managed by one or more investment managers,
including a regulated investment company, or any other investments designated by
the Company from time to time.
"Normal Retirement Date" means the first date on which a Participant's age
and Years of Vesting Service total 65 or more.
"Participant" means any Eligible Person who has been admitted to
participation in the Plan by filing an Enrollment and Change Designation with
the Plan Administrator, and who has not ceased participation in the Plan.
"Performance-Based Compensation" shall mean Compensation where (i) the
payment of the Compensation or the amount of the Compensation is contingent on
the satisfaction of organizational or individual performance criteria, and (ii)
the performance criteria are not substantially certain to be met at the time a
deferral election is permitted. Performance-Based Compensation may include
payments based upon subjective performance criteria, but (i) any subjective
performance criteria must relate to the performance of the Participant, a group
of service providers that includes the Participant, or a business unit for which
the Participant provides services (which may include the entire organization);
and (ii) the determination that any subjective performance criteria have been
met must not be made by the Participant or a family member of the Participant
(as defined in ss. 267(c)(4) of the Code, applied as if the family of an
individual includes the spouse of any member of the family). Performance-Based
3
<PAGE>
Compensation may also include payments based on performance criteria that are
not approved by a compensation committee of the Board of Directors or by the
stockholders of the Company. Notwithstanding the foregoing, Performance-Based
Compensation does not include any amount or portion of any amount that will be
paid either regardless of performance, or based upon a level of performance that
is substantially certain to be met at the time the criteria is established, or
that is based solely on the value of, or appreciation in value of, the Company
or the stock of the Company.
"Plan" means the CBRL Group, Inc. 2005 Non-Qualified Savings Plan, as set
forth herein and as the same may from time to time be amended.
"Plan Administrator" means the person, committee or other entity appointed
by the Company to administer the Plan or, in the absence of such appointment,
the Company.
"Plan Year" means the calendar year.
"Prior Plan" means the CBRL Group, Inc. Non-Qualified Savings Plan, as in
effect immediately prior to the Effective Date of this Plan.
"Prior Plan Deferrals" means the amount which, immediately prior to the
Effective Date, was credited to the Participant's Account and which on such date
was not subject to forfeiture, and any investment earnings allocated to such
amount since the Effective Date.
"Qualified Plan" means the Cracker Barrel Old Country Store, Inc. and
Affiliates Employee Savings Plan, a profit sharing plan with a cash or deferred
feature, as the same may from time to time be amended.
"Specified Employee" means a key employee (as defined in Section 416(i) of
the Code, but without regard to paragraph (5) thereof) of the Company. Provided,
however, that no Participant shall be considered to be a Specified Employee as
of any date unless on such date the stock of the Company is publicly traded on
an established securities market or otherwise.
"Separation Date" means the date a person is no longer employed by any
Affiliate.
"Supplemental Matching Account" means the portion of the Account of a
Participant consisting of Supplemental Matching Contributions and adjusted for
investment earnings or losses, if any, on those contributions, as provided under
the Plan.
"Supplemental Matching Contribution" means the amount credited by the
Employer under Section 3.2.1.
"Supplemental Matching Performance Based Contribution" means the amount, if
any, credited by the Employer under Section 3.2.2.
4
<PAGE>
"Supplemental Savings Account" means the portion of the Account of a
Participant consisting of Supplemental Savings Contributions and adjusted for
investment earnings or losses, if any, on those contributions, as provided under
the Plan.
"Supplemental Savings Contribution" means the amount credited by the
Employer under Section 3.1 as a result of a Participant's election on an
Enrollment and Change Designation to reduce his or her Compensation.
"Trust Agreement" means the trust agreement entered into between the
Company and the Trustee in connection with this Plan, as the same presently
exists and as it may from time to time hereafter be amended.
"Trustee" means the party or parties acting as such under the Trust
Agreement.
"Trust Fund" means all of the assets held by the Trustee at any time under
the Trust Agreement.
"Unforeseeable Emergency" means a severe financial hardship to the
Participant resulting from an illness or accident of the Participant, the
Participant's spouse, or of a dependent (as defined in Section 152(a) of the
Code) of the Participant, loss of the Participant's property due to casualty, or
other similar extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant. The circumstances that will
constitute an Unforeseeable Emergency will be determined by the Plan
Administrator depending upon the facts of each case.
"Valuation Date" means the last day of each Plan Year and each other
interim date on which the Plan Administrator directs the allocation of
distributions, contributions and earnings on Participants' Accounts.
"Year of Vesting Service" means a 12 month period of continuous service by
the Company as an employee or an Eligible Person.
Section 2. Participation. An Eligible Person may become a Participant for a
calendar year by filing with the Plan Administrator an Enrollment and Change
Designation on or before the Election Date for that calendar year.
Section 3. Contributions.
3.1. Supplemental Savings Contributions. The Employer will credit the
Participant's Supplemental Savings Account with a Supplemental Savings
Contribution on behalf of a Participant equal to the portion of the
Participant's Compensation (in increments of 1%, but not to exceed 50% (or 100%
in the case of Performance-Based Compensation) designated in the Participant's
Enrollment and Change Designation. Before the Election Date for each Plan Year,
each Participant will be entitled to submit or modify an Enrollment and Change
Designation which will change the amount of Supplemental Savings Contributions
that will be made to this Plan for the Plan Year. Participants may submit
separate Enrollment and Change Designations for regular Compensation and
Performance-Based Compensation.
5
<PAGE>
3.2. Supplemental Matching Contributions.
3.2.1. Ordinary Supplemental Matching Contributions. The Employer may
credit the Participant's Supplemental Matching Account with a Supplemental
Matching Contribution equal to 25% of the Participant's Supplemental Savings
Contributions, but determined without regard to any Supplemental Savings
Contribution which, when added to the Participant's elective deferrals to the
Qualified Plan, exceeds 6% of the Participant's Compensation.
3.2.2. Performance-Based Supplemental Matching Contributions. The Employer
may credit a Participant's Supplemental Matching Account with a Supplemental
Matching Contribution equal to a percentage, as determined by the Employer, of
the Participant's Supplemental Savings Contributions that are solely
attributable to Performance-Based Compensation.
3.3. Crediting of Contributions.
3.3.1. The Employer may establish a Trust Fund which shall consist of
assets which the Employer may use to offset its liability for payments due to
Participants under the Plan. The Trust Fund will, at all times, be subject to
the claims of judgment creditors of the Employer and will otherwise be on such
terms and conditions as will prevent taxation to Participants and Beneficiaries
of any amounts held in the Trust Fund or credited to Participant's Accounts
prior to the time payments are made to them. The Trust Agreement shall prohibit
the location of trust assets outside the United States or the transfer of trust
assets outside the United States. Rights to payments will not be limited to
assets held in the Trust Fund. The Plan constitutes a mere promise by the
Employer to make benefit payments in the future. It is the intention of the
Employer and the Participants that the Plan be unfunded for tax purposes and for
purposes of Title I of ERISA.
3.3.2. In the event of a Change in Control, or at other times in its
discretion, the Employer will contribute to the Trust Fund an amount equal to
all Supplemental Savings Contributions and Supplemental Matching Contributions
accrued by Participants. Such contribution shall be made within 60 days after
the date of a Change in Control or, for amounts accrued after the date of the
Change in Control, during or within a reasonable time after the end of the Plan
Year in which the contribution is credited to the Participants' Account.
Section 4. Investment of Accounts.
4.1. Investment Direction. Each Participant will have the right to submit
to the Company a request that investment returns on the Participant's Account be
determined on the basis of the performance of one or more of the Investment
Funds. Such Participant request shall not result in any assurance to a
Participant that Supplemental Savings Contributions or Supplemental Matching
Contributions will actually be invested by the Trustee in one or more of the
Investment Funds. A Participant may make or change an investment request in
accordance with rules established by the Plan Administrator, by notifying the
Plan Administrator (or such other person or entity as may be designated by the
Plan Administrator) of such election or change in the manner designated by the
Plan Administrator from time to time.
6
<PAGE>
4.2. Investment Funds. The Plan Administrator will select three or more
Investment Funds according to criteria established by the Plan Administrator.
The Plan Administrator will have the right to merge or modify any existing
Investment Funds, or to designate or create additional Investment Funds. The
assets of the Trust Fund shall be allocated among such investments as the
Administrator, in its sole and absolute discretion, shall designate from time to
time, unless such investments would cause the Trust Fund to fail to constitute a
valid trust under applicable law, in which case the Trustee shall determine
applicable Trust Fund investments in accordance with the Trust Agreement.
Section 5. Valuations and Crediting.
5.1. Valuations. The amount credited to each Participant's Account will be
determined by the Plan Administrator as of the close of business on each
Valuation Date.
5.2. Credits to and Charges Against Accounts. As of each Valuation Date,
all crediting to and charging against Accounts will be made as follows:
5.2.1. First, there will be determined the net adjusted Account by (a)
charging all distributions and withdrawals made during the period from the
previous Valuation Date to the current Valuation Date, (b) crediting
contributions to the Account since the preceding Valuation Date, and (c) at the
option of the Plan Administrator, charging specifically against the Accounts of
Participants all or a portion of administrative expenses relating to the
maintenance of such Accounts.
5.2.2. Second, all earnings or losses of the Investment Funds will be
allocated by the Plan Administrator in its discretion among the Participants'
Accounts according to their net adjusted Accounts and the relative portions of
such Accounts which are deemed by the Plan Administrator to be allocated to each
Investment Fund.
5.3. Expenses. All brokerage fees, transfer taxes, and other expenses
incurred in connection with the investment of the Trust Fund will be added to
the cost of such investments or deducted from the proceeds thereof, as the case
may be. All other costs and expenses of administering the Plan will be paid or
reimbursed from the Trust Fund, except to the extent that the Employer elects to
pay such costs and expenses without reimbursement.
Section 6. Vesting and Separation from Service.
6.1. Vested Percentage.
6.1.1. A Participant will at all times be fully vested in his or her
Supplemental Savings Account.
6.1.2. A Participant's Supplemental Matching Account will become fully
vested in the event of the Participant's death prior to otherwise separating
from the service of the Employer.
7
<PAGE>
6.1.3. Except as otherwise provided in this Section, a Participant's vested
interest in the Participant's Supplemental Matching Account will be determined
under the following table:
Years of Continuous Employment Vested Percentage
less than 1 0%
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
6.2. Forfeiture. The nonvested portion of the Supplemental Matching Account
of a Participant who has incurred a Separation Date prior to the occurrence of
an event specified in Section 6.1.2 will be forfeited.
Section 7. Benefits.
7.1. Forms of Benefit Payments. Except as otherwise provided in this
section, a Participant or Beneficiary will receive any benefit to which he or
she is entitled in the form of a single cash distribution.
7.1.1 Provided, however, that if a Participant (i) incurs a Separation Date
after reaching the Normal Retirement Date, (ii) has so elected in an Enrollment
and Change Designation, and (iii) has a vested Account balance (or portion of
the vested Account balance to which the installment election applies) that
exceeds $5,000 on the Participant's Separation Date, then distribution of a
Participant's Account may be made in quarterly installments over a period not to
exceed 10 years.
7.1.2 Payment to a Participant or Beneficiary will commence within three
(3) months of the Participant's Separation Date. Provided, however, that for any
Specified Employee, distribution may not begin before the earlier of (i) six (6)
months after the Separation Date, or (ii) the date of the Participant's death.
7.1.3 A Participant may file a separate request for payment in installments
under this section 7.1 with respect to the portion of the Participant's Account
attributable to the Supplemental Savings Contributions and Supplemental Matching
Contributions for each Plan Year. Such a request must be made on the
Participant's Enrollment and Change Designation and filed with the Plan
Administrator by the Election Date for the Plan Year and, once made, may not be
revoked except in accordance with the provisions of this Plan or the Treasury
Regulations.
7.2. Retirement Benefit. Upon incurring a Separation Date, the Participant
will receive in accordance with Section 7.1 a retirement benefit in an amount
equal to the undistributed vested portion of the Participant's Account. The
Participant's Account shall be valued as of the Valuation Date coinciding with
8
<PAGE>
or as soon as administratively practicable preceding the date of the
distribution. Notwithstanding the foregoing, if a Participant dies before
receiving a distribution of his or her vested Account, his or her Beneficiary
will receive a death benefit, as determined under Section 7.3, below.
7.3. Death Benefit. If a Participant dies before receiving a distribution
of his or her vested Account, the Participant's Beneficiary will receive a death
benefit, in lieu of the retirement benefit, equal to the undistributed balance
in the Participant's Account. The Participant's Account shall be valued as of
the Valuation Date coinciding with or as soon as administratively practicable
preceding the date of the distribution.
7.4. Beneficiary Designation.
7.4.1. A Participant's death benefit will be paid to the Beneficiary
designated by the Participant under the Qualified Plan unless the Participant
makes a separate Beneficiary designation under this Plan. A Participant may
designate and from time to time change the designation of one or more
Beneficiaries or contingent Beneficiaries to receive any death benefit. The
designation and consent will be on a form supplied by the Plan Administrator.
All records of Beneficiary designations will be maintained by the Plan
Administrator.
7.4.2. In the event that the Participant fails to designate a Beneficiary
under both the Qualified Plan and this Plan, or in the event that the
Participant is predeceased by all designated primary and contingent
Beneficiaries under the Qualified Plan and this Plan, (a) if the Participant is
survived by a spouse, the death benefit will be payable to the Participant's
surviving spouse who will be deemed to be the Participant's designated
Beneficiary for all purposes under this Plan, or (b) if the Participant is not
survived by a spouse, the death benefit will be payable to the Participant's
estate.
7.5. In-Service Distributions due to Unforeseeable Emergency. A Participant
may apply for and receive an early payment of any or all vested amounts held in
the Account of such Participant upon an Unforeseeable Emergency. Provided,
however, that the amount which may be distributed to a Participant as the result
of an Unforseeable Emergency may not to exceed the least of (i) the amount
credited to such Participant's Account, (ii) the amount requested by the
Participant, or (iii) the amount determined by the Plan Administrator as being
reasonably necessary to satisfy the need created by the Unforseeable Emergency,
plus amounts necessary to pay taxes reasonably anticipated as a result of the
distribution, after taking into account the extent to which such need is or may
be relieved through reimbursement or compensation by insurance or otherwise or
by liquidation of the Participant's assets (to the extent the liquidation of
such assets would not itself cause severe financial hardship). Distributions
under this Section will be deemed to be made as of the Valuation Date coinciding
with or as soon as administratively practicable preceding the date of
distribution and will be charged against a Participant's Account in such manner
as the Plan Administrator determines. A Participant who has received a
distribution from this Plan pursuant to this Section 7.5. will not be eligible
to make any Supplemental Savings Contributions or be credited with any
Supplemental Matching Contributions for 12 months after the distribution.
7.6. Distributions on a Specified Date. A Participant may file a request
for payment of all or a portion of the Participant's Account on a date specified
by the Participant. Such a request may be made with respect to the portion of
the Participant's Account attributable to the Supplemental Savings Contributions
9
<PAGE>
and Supplemental Matching Contributions for each Plan Year. The request must be
made on the Participant's Enrollment and Change Designation and filed with the
Plan Administrator by the Election Date for the Plan Year and, once made, may
not be revoked except in accordance with the provisions of this Plan or the
Treasury Regulations.
7.7. Withholding. The Employer may withhold from payments due under the
Plan any and all taxes of any nature required by any government to be withheld.
Section 8. The Plan Administrator.
8.1. Plan Administrator. The Plan Administrator will interpret the Plan and
determine in its sole and absolute discretion all questions arising in the
administration, interpretation and application of the Plan and the amount of
benefits payable thereunder. The Plan Administrator's interpretations and
determinations will be final and binding on all persons absent fraud or the
arbitrary and capricious abuse of the wide discretion granted to the Plan
Administrator. The Plan Administrator will provide the Trustee with instructions
regarding payments of benefits. The Plan Administrator will provide directions
to the Trustee with respect to the declaration of Valuation Dates and all other
matters when called for in the Plan or requested by the Trustee. The Plan
Administrator may waive any period of notice required under the Plan. The Plan
Administrator will provide procedures for the determination of claims for
benefits.
8.2. Engagement of Assistants and Advisors. The Plan Administrator will
have the right to hire such professional assistants and consultants as it, in
its sole discretion, deems necessary or advisable. To the extent that the costs
for such assistants and advisors are not paid or reimbursed from the Trust Fund,
they will be paid by the Employer.
8.3. Compensation. All expenses of the Plan Administrator will be paid or
reimbursed by the Trust Fund, and if not so paid or reimbursed will be paid by
the Employer.
8.4. Indemnification of the Plan Administrator. The Plan Administrator will
be indemnified by the Employer against costs, expenses and liabilities
(including reasonable attorneys' fees but excluding amounts paid in settlements
to which the Employer does not consent) reasonably incurred by him or her in
connection with any action or investigation to which he or she may be a party by
reason of his or her service as Plan Administrator, except in relation to
matters as to which he or she may be adjudged in such action to be personally
guilty of willful misconduct in the performance of his or her duties. The
foregoing right to indemnification will be in addition to such other rights as
the Plan Administrator may enjoy as a matter of law, under the Company's
Certificate of Incorporation or By-Laws or by reason of insurance coverage of
any kind, or otherwise. Service as an Plan Administrator will be deemed in
partial fulfillment of the member's function as an Eligible Person, officer
and/or director of the Employer, if he or she serves in such capacity as well.
No amendment of this Section diminishing the right to indemnification provided
herein will apply to any action or investigation commenced prior to the adoption
of such amendment.
10
<PAGE>
Section 9. Authority and Responsibilities of the Company. The Board of
Directors of the Company will have the following authority and responsibility:
(a) To appoint the Trustee and the Plan Administrator and to monitor
each of their performances;
(b) To communicate such information to the Plan Administrator and to
the Trustee as each needs for the proper performance of its duties; and
(c) To perform such duties as imposed by applicable law and to serve
as the Plan Administrator in the absence of an appointed Plan
Administrator.
Section 10. Claims Procedures.
10.1 Claims. Any claim for benefits not received upon termination of
employment shall be made in writing to the Plan Administrator. The Plan
Administrator will handle claims in accordance with the following provisions:
10.1.1. General Rule. If a claim is wholly or partially denied, the Plan
Administrator shall notify the Participant or Beneficiary claimant, in
accordance with paragraph (c) of this Section, of the Plan's adverse benefit
determination within a reasonable period of time, but not later than 90 days
after receipt of the claim by the Plan, unless the Plan Administrator determines
that special circumstances require an extension of time for processing the
claim. If the Plan Administrator determines that an extension of time for
processing is required, written notice of the extension shall be furnished to
the Participant or Beneficiary claimant prior to the termination of the initial
90-day period. In no event shall such extension exceed a period of 90 days from
the end of such initial period. The extension notice shall indicate the special
circumstances requiring an extension of time and the date by which the Plan
expects to render the benefit determination.
10.1.2. Calculating Time Periods. For purposes of this Section 10.1, the
period of time within which a benefit determination is required to be made shall
begin at the time a claim is filed in accordance with the Plan's claim
procedures, without regard to whether all the information necessary to make a
benefit determination accompanies the filing.
10.1.3. Manner and Content of Notification of Benefit Determination. The
Plan Administrator shall provide a Participant or Beneficiary claimant with
written notification of any adverse benefit determination. The notification
shall set forth, in a manner calculated to be understood by the Participant or
Beneficiary claimant--
(a) The specific reason or reasons for the adverse determination;
(b) Reference to the specific Plan provisions on which the
determination is based;
(c) A description of any additional material or information necessary
for the Participant or Beneficiary claimant to perfect the claim and an
explanation of why such material or information is necessary;
11
<PAGE>
(d) A description of the Plan's review procedures as described in
Section 9.2 and the time limits applicable to such procedures, including a
statement of the Participant or Beneficiary claimant's right to bring a
civil action under Section 502(a) of ERISA following an adverse benefit
determination on review.
10.2 Appeal of Adverse Benefit Determinations. Within 60 days after the
receipt from the Plan Administrator of any written denial of a claim for
benefits (including denial of an application for a withdrawal), a Participant or
Beneficiary whose claim is denied may request, by written application to the
Plan Administrator, a review by the Plan Administrator of the decision denying
the payment of benefits.
10.2.1. Submission of Additional Information. In connection with an appeal
of an adverse benefit determination under this Section 10.2, a Participant or
Beneficiary shall be entitled to submit written comments, documents, records,
and other information relating to the claim for benefits. Review of an appeal
under this Section 10.2 shall take into account all comments, documents,
records, and other information submitted by the Participant or Beneficiary
relating to the claim, without regard to whether such information was submitted
or considered in the initial benefit determination.
(a) Review of Relevant Information. The Participant or Beneficiary
shall also be provided, upon request and free of charge, reasonable access
to, and copies of, all documents, records, and other information relevant
to the Participant or Beneficiary's claim for benefits. For purposes of
this Section, the determination of whether a document, record, or other
information shall be considered "relevant" shall be made in accordance with
the definition in Section 10.4.3.
10.3 Notification of Benefit Determination on Review.
10.3.1. Manner and Content of Notification of Benefit Determination on
Review. The Plan Administrator shall provide a Participant or Beneficiary
claimant with written notification of the Plan's benefit determination on
review. In the case of an adverse benefit determination, the notification shall
set forth, in a manner calculated to be understood by the Participant or
Beneficiary claimant:
(a) The specific reason or reasons for the adverse determination;
(b) Reference to the specific plan provisions on which the
determination is based;
(c) A statement that the claimant is entitled to receive, upon request
and free of charge, reasonable access to, and copies of, all documents,
records, and other information relevant to the claimant's claim for
benefits. For purposes of this Section, determination of whether documents,
records, and other information shall be considered "relevant" shall be made
in accordance with the definition provided in Section 10.4.3;
(d) A statement of the Participant or Beneficiary claimant's right to
bring a civil action under Section 502(a) of ERISA.
12
<PAGE>
10.3.2. Timing of Notification of Benefit Determination on Review.
(a) General Rule. Except as provided in paragraph (b) of this Section,
the Plan Administrator shall notify a Participant or Beneficiary claimant
in accordance with paragraph (a) of this Section of the Plan's benefit
determination on review within a reasonable period of time, but not later
than 60 days after receipt of the claimant's request for review by the
Plan, unless the Plan Administrator determines that special circumstances
require an extension of time for processing the claim. If the Plan
Administrator determines that an extension of time for processing is
required, written notice of the extension shall be furnished to the
claimant prior to the termination of the initial 60-day period. In no event
shall such extension exceed a period of 60 days from the end of the initial
period. The extension notice shall indicate the special circumstances
requiring an extension of time and the date by which the Plan expects to
render the determination on review.
(b) Special Rule in Case of a Committee Serving as Plan Administrator.
In the event that the Company has designated more than one person to serve
by committee as Plan Administrator, and the committee serving as Plan
Administrator holds regularly scheduled meetings at least quarterly,
paragraph (a) of this Section shall not apply, and the Plan Administrator
shall instead make a benefit determination no later than the date of the
meeting of the committee that immediately follows the Plan's receipt of a
request for review, unless the request for review is filed within 30 days
preceding the date of such meeting. In such case, a benefit determination
may be made no later than the date of the second meeting following the
Plan's receipt of the request for review. If special circumstances require
further extension of time for processing, a benefit determination shall be
rendered not later than the third meeting of the committee following the
Plan's receipt of the request for review. If such an extension of time for
review is required because of special circumstances, the Plan Administrator
shall provide the claimant with written notice of the extension, describing
the special circumstances and the date as of which the benefit
determination will be made, prior to the commencement of the extension. The
Plan Administrator shall notify the claimant, in accordance with paragraph
(a) of this Section, of the benefit determination as soon as possible, but
no later than 5 days after the benefit determination is made.
(c) Calculating Time Periods. For purposes of this Section 10.3, the
period of time within which a benefit determination on review is required
to be made shall begin at the time an appeal is filed in accordance with
the reasonable procedures of a Plan, without regard to whether all the
information necessary to make a benefit determination on review accompanies
the filing. In the event that a period of time is extended as permitted
pursuant to paragraph (a) or (b) of this Section due to a claimant's
failure to submit information necessary to decide a claim, the period for
making the benefit determination on review shall be tolled from the date on
which the notification of the extension is sent to the claimant until the
date on which the claimant responds to the request for additional
information.
10.4 Definitions. For purposes of Section 10, the following terms shall be
defined as follows:
10.4.1. Adverse benefit determination. "Adverse benefit determination"
means any of the following: a denial, reduction, or termination of, or a failure
13
<PAGE>
to provide or make payment (in whole or in part) for, a benefit, including any
such denial, reduction, termination, or failure to provide or make payment that
is based on a determination of a Participant's or Beneficiary's eligibility to
participate in the Plan.
10.4.2. Notice or notification. "Notice" or "Notification" means the
delivery or furnishing of information to an individual in a manner that
satisfies the standards of 29 CFR 2520.104b-1(b) as appropriate with respect to
material required to be furnished or made available to an individual.
10.4.3. Relevant. A document, record or other information shall be
considered "relevant" to the Participant or Beneficiary's claim if such
document, record or other information:
(a) was relied upon in making the benefit determination;
(b) was submitted, considered, or generated in the course of making
the benefit determination, without regard to whether such document, record,
or other information was relied upon in making the benefit determination;
and
(c) demonstrates compliance with the administrative processes and
safeguards designed to ensure and to verify that benefit claim
determinations are made in accordance with the Plan and that, where
appropriate, the Plan provisions have been applied consistently with
respect to similarly situated Participants or Beneficiaries.
Section 11. Amendment, Termination, Mergers and Consolidations.
11.1. Amendment. The provisions of this Plan may be amended at any time and
from time to time by the Company; provided, however, that:
11.1.1. No amendment will increase the duties or liabilities of the
Trustee without the consent of the Trustee.
11.1.2. No amendment will decrease the vested balance in any Account.
11.1.3. No amendment shall adversely impact the Participants' rights
to receive payment under the Plan with respect to vested Participant
Accounts.
11.1.4. No amendment will decrease any Participant's vested percentage
of his or her Account.
11.2. Termination. While it is the Company's intention to continue the Plan
indefinitely in operation, the Company nevertheless reserves the right to
terminate the Plan in whole or in part. On termination of the Plan, the Trustee
will pay over to each Participant (and deferred vested former Participant) the
value of his or her vested Account, and thereupon dissolve the Trust Fund.
11.3. Permanent Discontinuance of Contributions. The Company reserves the
right at any time to permanently suspend or discontinue all Employer
contributions.
14
<PAGE>
Section 12. Participating Employers.
12.1. Adoption by Other Corporations. With the consent of the Board of
Directors, any Affiliate may adopt this Plan and all of the provisions hereof as
to all or any category of its Eligible Persons, as a participating Employer, by
a properly executed document evidencing the intent and will of the board of
directors of the other corporation.
12.2. Requirements of Participating Employers. Each participating Employer
will be required to use the same Trustee and Trust Agreement as provided in this
Plan, and the Trustee will commingle, hold and invest as the Trust Fund all
contributions made by participating Employers, as well as all increments
thereof.
12.3. Designation of Agent. With respect to all relations with the Trustee
and Plan Administrator, each participating Employer will be deemed to have
irrevocably designated the Company as its agent.
12.4. Eligible Person Transfers. If an Eligible Person is transferred
between Employers, the Eligible Person involved will carry with him or her the
Eligible Person's accumulated service and eligibility, no such transfer will
effect a Separation Date hereunder, and the participating Employer to which the
Eligible Person is transferred will thereupon become obligated with respect to
such Eligible Person in the same manner as was the participating Employer from
whom the Eligible Person was transferred.
12.5. Discontinuance of Participation. Any participating Employer may
discontinue or revoke its participation in the Plan. At the time of any such
discontinuance or revocation, satisfactory evidence thereof and of any
applicable conditions imposed will be delivered to the Trustee.
12.6. Plan Administrator's Authority. The Plan Administrator will have
discretionary authority to make any and all necessary rules or regulations,
binding upon all participating Employers and all Participants, to effectuate the
purposes of the Plan.
Section 13. Miscellaneous Provisions.
13.1. Nonalienation of Benefits. None of the payments, benefits, or rights
of any Participant or Beneficiary will be subject to any claim of any creditor
of such Participant or Beneficiary, and, to the fullest extent permitted by law,
all such payments, benefits, and rights will be free from attachment,
garnishment, or any other legal or equitable process available to any creditor
of such Participant or Beneficiary. No Participant or Beneficiary will have the
right to alienate, anticipate, commute, pledge, encumber, or assign any of the
benefits or payments which he or she may expect to receive, contingently or
otherwise, under the Plan, except the right to designate a Beneficiary.
13.2. No Contract of Employment. All benefits created by the Plan
constitute a voluntary act on the part of the Employer and are not to be deemed
or construed to be a part of any contract of employment. Neither the action of
the Employer in establishing the Plan nor any action hereafter taken by the
15
<PAGE>
Employer or the Plan Administrator will be construed as giving to any Eligible
Person a right to be retained in the service of the Employer or any right or
claim to any benefits under the Plan except as expressly provided in the Plan.
13.3. Severability. If any provision of this Plan is held invalid or
unenforceable, such invalidity or unenforceability will not affect any other
provision hereof, and this Plan will be construed and enforced as if such
invalid or unenforceable provision had not been included.
13.4. Successors. This Plan will be binding upon the heirs, executors,
administrators, personal representatives, successors, and assigns of the
parties, including each Participant and Beneficiary, present and future.
13.5. Captions. The headings and captions herein are provided for
convenience only, will not be considered a part of the Plan, and will not be
employed in the construction of the Plan.
13.6. Gender and Number. Except where otherwise clearly indicated by
context, the masculine gender will include the feminine gender, the singular
will include the plural, and vice versa.
13.7. Controlling Law. This Plan will be construed and enforced according
to the laws of the State of Tennessee to the extent not preempted by federal
law, which will otherwise control. This Plan is intended to comply with the
requirements of Section 409A of the Code, and shall be interpreted in accordance
with such intent.
13.8. Title to Assets. No Participant or Beneficiary will have any right
to, or interest in, any assets of the Trust Fund, upon termination of his or her
employment or otherwise. The Employer will remain primarily liable to pay
benefits under the Plan. However, the Employer's liability under the Plan will
be reduced or offset to the extent benefit payments are made from the Trust
Fund. The provisions of the Trust Fund are incorporated by reference.
13.9. Payments to Minors, Etc. Any benefit payable to or for the benefit of
a minor, an incompetent person or other person incapable of receipting therefore
will be deemed paid when paid to such person's guardian, to a trustee holding
assets for such person or to the party providing, or reasonably appearing to
provide, for the care of such person, and such payments will fully discharge the
Trustee, the Plan Administrator, the Employer and all other parties with respect
thereto.
13.10. Acknowledgments. The Participants specifically understand and
acknowledge that the value of the Accounts may increase or decrease and that any
such decrease will reduce the benefits payable under this Plan.
13.11. Entire Agreement; Successors. This Plan, including any election
agreements and any amendments thereto, will constitute the entire agreement
between the Company and the Participant with respect to the amounts payable
under the Plan. No oral statement regarding the Plan may be relied upon by the
Participant. This Plan and any amendment will be binding on the parties thereto
16
<PAGE>
and their respective heirs, administrators, trustees, successors and assigns,
and on all Beneficiaries. By becoming a Participant, each Eligible Person will
be conclusively deemed to have assented to the provisions of the Plan and the
Trust Agreement and to any amendments thereto.
13.12. Tax Effects. None of the Employer, the Plan Administrator, and any
firm, person, or corporation, represents or guarantees that any particular
federal, state or local tax consequences will occur as a result of any
Participant's participation in this Plan. Each
Participant should consult with his or her own advisors regarding the tax
consequences of participation in this Plan.
CBRL Group, Inc.
By:
---------------------------------------
Title:
------------------------------------
17
<PAGE>
CBRL GROUP, INC.
NON-QUALIFIED SAVINGS PLAN
EXHIBIT A
ELIGIBLE EMPLOYEES
In accordance with Section 1 of this Plan Document, employees who are members of
a select group of management or highly compensated employees and who either (i)
were eligible to participate in the Prior Plan immediately prior to the
Effective Date, or (ii) are employed by the Employer in a category of employment
designated below shall be eligible for participation in the Plan. In all cases,
however, the Committee shall have final authority and discretion to determine
those positions and employees who will be eligible to participate in the Plan,
regardless whether such positions or employees are listed below.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
CBRL GROUP CRACKER BARREL LOGAN'S ROADHOUSE
- ---------- -------------- -----------------
All officers and MIP employees All officers, MIP employees, District All officers, Senior Directors,
Managers, and General Managers Directors and Regional Managers
</TABLE>
<PAGE>
ALTERNATIVE REPORTING AND DISCLOSURE STATEMENT
FOR PENSION PLANS FOR CERTAIN SELECTED EMPLOYEES
------------------------------------------------
To the Secretary of Labor:
In compliance with the requirements of the alternative method of reporting
and disclosure under Part 1 of Title I of the Employee Retirement Income
Security Act of 1974 for unfunded or insured pension plans for a select group of
management or highly compensated employees, specified in Department of Labor
Regulations, 29 C.F.R. ss.2520.104-23, the following information is provided by
the undersigned employer.
Name and Address of Employer: CBRL Group, Inc.
----------------
P. O. Box 787
-------------
Lebanon, TN 37085-0787
-----------------------
Employer Identification Number: 62-1749513
----------
CBRL Group, Inc. maintains plans primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees.
Number of Plans and
Participants in Each
Plan: 2 Plans covering 9 and 1,000 Employees, respectively.
- - -----
Dated: ___________, 2005.
CBRL Group, Inc.
By
-------------------------------
Title: Assistant Secretary
--------------------------
This form should be mailed to:
Top Hat Plan Exemption
Pension and Welfare Benefits Administration
Room N-5644
U.S. Department of Labor
200 Constitution Avenue, NW
Washington, DC 20210
(Send certified mail to evidence filing requirement satisfied)
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>cbrlgroup10k092205ex10i.txt
<DESCRIPTION>AMENDMENT NO. 1 TO OMNIBUS PLAN
<TEXT>
Exhibit 10(i)
Amendment No. 1
to
CBRL GROUP, INC.
2002 OMNIBUS INCENTIVE COMPENSATION PLAN
(Approved by shareholders 11/23/04)
1. Sections 1, 6, 19, 24 and 26 of the 2002 Omnibus Incentive Plan each are
amended by deleting the references to "Outside Director Option" or "Outside
Director Options" each time those terms appear and replacing them respectively
with "Outside Director Award" or "Outside Director Awards".
2. Section 2.20 of the 2002 Omnibus Incentive Plan is hereby amended by
deleting the present section in its entirety and substituting the following:
2.20 "Outside Director Award" means either a Director Option or a Director
Stock Award or combination thereof awarded to an Outside Director under Section
27.
3. Section 27 of the 2002 Omnibus Incentive Plan is hereby amended by
deleting the present section in its entirety and substituting the following:
AWARDS TO OUTSIDE DIRECTORS.
27.1 Application. The provisions of this Section 27 apply only to Outside
Director Awards made in accordance with this Section. Except as expressly set
forth herein, the Committee shall have no authority to determine the timing of
or the terms or conditions of any Outside Director Award.
27.2 Awards, Restrictions and Conditions.
a. At the Effective Date, each person elected to serve as an Outside
Director on that date will receive a non-qualified stock option
(within the meaning of Section 8.1) to purchase 5,000 shares of
Common Stock. The date on which the election occurs is the date
of this grant. The exercise price per share of each option
granted pursuant to this Section 27.2a. shall equal the Fair
Market Value per share of Common Stock on the last business day
immediately prior to the date of this grant. These options shall
vest and become exercisable in 3 equal annual installments, with
the first 1/3 vesting on the first anniversary of the date of
this grant.
b. On the date of each Annual Meeting of Shareholders of the Company
following the Annual Meeting of Shareholders in 2004, unless this
Plan has been previously terminated, each Outside Director who
will continue as a director following the meeting will receive
either (1) a non-qualified stock option
-1-
<PAGE>
(within the meaning of Section 8.1) to purchase up to 5,000
shares of Common Stock (a "Director Option"), (2) a Stock Award
of up to 2000 shares of Common Stock or Units of Common Stock (a
"Director Stock Award"), or (3) any combination of Director
Option or Director Stock Award, each subject to the maximum
amounts set forth in clauses (1) and (2). The date on which the
Annual Meeting of Shareholders occurs shall be deemed the date of
the grant of either a Director Option or a Director Stock Award.
The exercise price per share of a Director Option shall equal the
Fair Market Value per share of Common Stock on the last business
day immediately prior to the date of the grant. Both Director
Options and Director Stock Awards shall vest (and, in the case of
Director Options, become exercisable) in 3 equal annual
installments with the first 1/3 vesting on the first anniversary
of the date of the grant. Before the end of each fiscal year, the
Committee shall designate the number of shares (or Units) of
Common Stock (up to the maximums set forth above) that will be
subject to Director Options and/or Director Stock Awards at
succeeding Annual Meeting of Shareholders. Unless there is a
change in designation, any designation made in a prior year shall
continue until modified or rescinded.
c. If any person who was not previously a member of the Board is
elected or appointed an Outside Director following the Effective
Date, but prior to the July 31 immediately preceding the first
annual meeting of shareholders following his or her election or
appointment, that Outside Director will receive a Director Option
to purchase 5,000 shares of Common Stock. The date prior to July
31 on which the election or appointment occurs shall be deemed
the date of the grant. The exercise price per share of a Director
Option granted pursuant to this Section 27.2.c. shall equal the
Fair Market Value per share of Common Stock on the last business
day immediately prior to the date of the grant. These options
shall vest and become exercisable in 3 equal annual installments,
with the first 1/3 vesting on the first anniversary of the date
of this grant.
d. No Director Option shall be exercisable prior to vesting. Each
unexercised Director Option shall expire on the 10th anniversary
of the date of grant.
e. The exercise price of a Director Option may be paid in cash or in
shares of Common Stock which have been owned for at least 6
months (or any shorter or longer period necessary to avoid a
charge to the Company's earnings for financial reporting
purposes), and including shares of Common Stock subject to a
Director Option.
f. Outside Director Awards shall not be transferable without the
prior written consent of the Board other than transfers by the
Outside Director (i) to a member of his or her Immediate Family
or a to trust for the benefit of the Outside Director or a member
of his or her Immediate Family, directly or by will or by the
laws of descent and distribution, or (ii) to a fund affiliated
with him or her.
g. Grantees of Outside Director Awards shall receive and Award
Notice setting forth other terms and restrictions as provided in
-2-
<PAGE>
this Plan and, in the case of a Director Option, the exercise
price.
h. Upon termination of an Outside Director's service as a Company
director, (i) all Outside Director Awards that are vested and/or
exercisable and held by that Outside Director will remain vested
and/or exercisable through their expiration dates and (ii) all
remaining Outside Director Awards held by that Outside Director
will vest and/or become exercisable to the extent of any shares
that would have vested and/or become exercisable within a
12-month period ending on the anniversary date of termination of
service. Any Director Options which vest under this provision
must be exercised, if at all, within that same 12-month period,
unless the director has qualified for retirement from the Board
by reaching at least 50 years of age and having served at least 7
years as a director of the Company. After reaching retirement
status, a director whose Board service ends will be permitted to
exercise all options vested pursuant to these provisions until
the stated expiration date of the options. Any unvested Outside
Director Award held by the Outside Director on the date of
termination of service will lapse and be forfeited to the extent
that they do not vest and/or become exercisable pursuant to the
preceding sentences. The Board may, in its sole discretion, elect
to accelerate the vesting of any Outside Director Award in
connection with the termination of service of any individual
Outside Director.
i. Outside Director Awards shall be subject to Section 26. The
number of shares and the exercise price per share of each
existing Director Option shall be adjusted automatically when,
and in the same manner as, the number of shares and the exercise
price of Stock Options under Section 19 are adjusted pursuant to
Section 19. The number of shares underlying potential future
Director Options shall be adjusted automatically when, and in the
same manner as, the number of shares underlying outstanding Stock
Options are adjusted pursuant to Section 19.
j. The Board, in its sole discretion (and absent other express
action, without affecting the size of future option grants), may
reduce the size of any Outside Director Award prior to grant or
to postpone or extend the vesting and exercisability of any
Outside Director Award prior to grant.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>cbrlgroup10k092205ex10j.txt
<DESCRIPTION>FORM OF RESTRICTED STOCK AWARD
<TEXT>
Exhibit 10(j)
CBRL GROUP, INC.
RESTRICTED STOCK AWARD NOTICE
This Award Notice (the "Notice") is dated this ____________________, from
CBRL Group, Inc., a Tennessee corporation (the "Company") to __________________
of the Company (the "Employee").
WHEREAS, the Compensation and Stock Option Committee of the Company's Board
of Directors has authorized an award to the Employee of ______________ shares of
the Company's $0.01 par value common stock (the "Restricted Stock") pursuant to
the terms and provisions of the CBRL Group, Inc. 2002 Omnibus Incentive
Compensation Plan (the "Plan");
NOW, THEREFORE, for and in consideration of the premises and other good and
valuable consideration, including the services to be rendered to the Company by
the Employee, the Company does hereby award the Restricted Stock to the
Employee, and the Employee, by his/her signature hereto, accepts such Restricted
Stock, on the following terms and conditions:
(1) Grant of Restricted Stock. The Company hereby grants to the Employee
______________________shares of Restricted Stock, subject to all the
restrictions, limitations and other terms and provisions of the Plan and this
Notice. Upon vesting, the Company shall cause a certificate evidencing the
Restricted Stock to be issued by the Company's stock transfer agent, who will
release such Restricted Stock to the Employee solely upon the written
instructions of the Company.
(2) Restrictions. Until the Restricted Stock vests and becomes
distributable in accordance with the Plan and this Notice, the Employee shall
not have any of the rights of a shareholder of the Company with respect to the
Restricted Stock, including the right to vote the shares or to receive any cash
dividends.
(3) Vesting. The Restricted Stock, subject to all the restrictions,
limitations and other terms and provisions of the Plan and this Notice, shall
vest and become distributable in accordance with the following schedule, and the
restrictions shall lapse so long as the Employee is employed by the Company on
the applicable vesting date:
Vesting Date Number of shares vesting Cumulative shares vested
------------ ------------------------ ------------------------
(4) Non-transferability. Unvested Restricted Stock is not transferable by
the Employee.
1
<PAGE>
(5) Notice Subject to Plan. This Notice does not undertake to express all
conditions, terms and provisions of the Plan. The grant of the Restricted Stock
is subject in all respects to all of the restrictions, limitations and other
terms and provisions of the Plan, which, by this reference, is incorporated
herein to the same extent as if copied verbatim.
(6) Tax Withholding and Section 83(b) Elections. At the time the Employee
shall become subject to federal income taxation with respect to the Restricted
Stock (normally upon vesting, unless the Employee files an election under
Section 83(b) of the Code), the Employee shall pay to the Company the amount of
any Federal, state, local and other taxes required to be withheld by the Company
with respect to the Restricted Stock. If the Employee files an election under
Section 83(b) of the Code with the Internal Revenue Service to include the fair
market value of any shares of Restricted Stock in gross income while they are
still subject to any restrictions, the Employee shall promptly furnish to the
Company a copy of such election. The Company may make such provisions and take
such steps as it may deem necessary or appropriate for the withholding of all
Federal, state, local and other taxes required by law to be withheld upon the
vesting of the Restricted Stock. Unless otherwise determined by the Committee,
the Employee will be permitted to elect to surrender a sufficient number of
shares of the vested Restricted Stock to satisfy the Company's minimum tax
withholding obligation.
(7) Acceptance of Restricted Stock. The Employee hereby accepts the
Restricted Stock subject to all the restrictions, limitations and other terms
and provisions of the Plan and this Notice.
WITNESS the action of the Company effective as of the day and year first above
written.
The foregoing is acknowledged and accepted:
- -------------------------------------------
CBRL Group, Inc.
By: _________________________
Name ________________________
Title _______________________
2
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>5
<FILENAME>cbrlgroup10k092205ex10k.txt
<DESCRIPTION>FORM OF STOCK OPTION AWARD
<TEXT>
CBRL GROUP, INC.
Exhibit 10(k)
CBRL Employee
CBRL Employee Address
CBRL Employee Address
RE: STOCK OPTION ACCEPTANCE
DEAR Employee:
Pursuant to the terms and conditions of CBRL GROUP, INCORPORATED'S AMENDED AND
RESTATED STOCK OPTION PLAN (the "Plan"), you have been granted a Non-Qualified
Stock Option to purchase ___ shares (the 'Option') of common stock as outlined
below.
Granted To: EMPLOYEE NAME Employee Number XXXX
Grant Date: XXXX
Options Granted: XXX
Option Price per Share: $XX.XX Total Cost to Exercise For ___ Shares $XXXXX
Expiration Date: XX/XX/XX
Vesting does not begin, pursuant to the Plan, and the terms and conditions of
this award, until ONE YEAR AFTER THE DATE OF THE GRANT.
Vesting Schedule: 3 Year Plan
Shares Vested Total Shares Vested at Date
__ on Date ___ on Date
__ on Date ___ on Date
__ on Date ___ on Date
Subject to the terms and conditions of the Plan and this award, this Option
shall be exercisable as to vested shares, in whole or in part, beginning one
year from the Grant Date, but not after the day which is 10 years after the
Grant Date.
You will be notified by email on how to access the plan document and plan
prospectus, both of which provide additional detail regarding the stock option
plan.
You are not required to acknowledge your stock option grant. Retain this letter
for your files.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>6
<FILENAME>cbrlgroup10k092205ex10l.txt
<DESCRIPTION>FORM OF STOCK OPTION AWARD
<TEXT>
CBRL GROUP, INC.
Exhibit 10(l)
CBRL Employee
CBRL Employee Address
CBRL Employee Address
RE: STOCK OPTION ACCEPTANCE
DEAR Employee:
Pursuant to the terms and conditions of CBRL GROUP, INC. 2002 OMNIBUS INCENTIVE
COMPENSATION PLAN (the "Plan"), you have been granted a Non-Qualified Stock
Option to purchase ___ shares (the 'Option') of common stock as outlined below.
Granted To: EMPLOYEE NAME Employee Number XXXX
Grant Date: XXXX
Options Granted: XXX
Option Price per Share: $XX.XX Total Cost to Exercise For ___ Shares $XXXXX
Expiration Date: XX/XX/XX
Vesting does not begin, pursuant to the Plan, and the terms and conditions of
this award, until ONE YEAR AFTER THE DATE OF THE GRANT.
Vesting Schedule: 3 Year Plan
Shares Vested Total Shares Vested at Date
__ on Date ___ on Date
__ on Date ___ on Date
__ on Date ___ on Date
Subject to the terms and conditions of the Plan and this award, this Option
shall be exercisable as to vested shares, in whole or in part, beginning one
year from the Grant Date, but not after the day which is 10 years after the
Grant Date.
You will be notified by email on how to access the plan document and plan
prospectus, both of which provide additional detail regarding the stock option
plan.
You are not required to acknowledge your stock option grant. Retain this letter
for your files.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>7
<FILENAME>cbrlgroup10k092205ex10m.txt
<DESCRIPTION>EXECUTIVE EMPLOYMENT AGREEMENT
<TEXT>
Exhibit 10(m)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), effective as of August 1, 2005
("Effective Date"), is made and entered into by and between CBRL GROUP, INC.
(the "Company") and MICHAEL A. WOODHOUSE ("Executive").
W I T N E S S E T H:
WHEREAS, Executive currently is serving as the Chairman, President and
Chief Executive Officer of the Company pursuant to an employment agreement dated
as of August 4, 2001 (the "Prior Employment Agreement") and also is a party to a
retention agreement dated as of October 8, 1999 (the "Retention Agreement") (the
Prior Employment Agreement and the Retention Agreement being hereinafter
referred to as the "Prior Agreements"); and
WHEREAS, the Prior Agreements currently expire on July 30, 2006; and
WHEREAS, the Company's Board of Directors (the "Board") recognizes that the
Executive's contribution to the growth and success of the Company during prior
years has been substantial and the Board now desires, and deems it to be in the
best interests of the Company and its shareholders, to provide for the continued
employment of the Executive and to make certain changes in the Executive's
employment arrangements with the Company which the Board has determined will
reinforce and encourage the Executive's continued attention and dedication to
the Company. and
WHEREAS, the Executive is willing to commit himself to continue to serve
the Company on the specified terms and conditions; and
WHEREAS, in order to effect the foregoing purposes, to terminate the Prior
Agreements as of the Effective Date and to provide for the employment
relationship of the Executive to be embodied in this single document, the
Company and the Executive wish to enter into this employment agreement on the
terms and conditions set forth below;
NOW, THEREFORE, for and in consideration of the premises, the mutual
promises, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. EMPLOYMENT.
-----------
Subject to the terms and conditions of this Agreement, the Company hereby
employs Executive as its Chief Executive Officer. During the term of this
Agreement, subject to Section 3.1, Executive also shall serve as either the
Company's Chairman or President.
2. DURATION OF AGREEMENT.
----------------------
1
<PAGE>
2.1 Initial Term. This employment shall begin as of the Effective Date, and
shall continue until it terminates pursuant to this Agreement. For purposes of
this Agreement, each anniversary of the Effective Date shall be referred to as
an "Anniversary Date," and the one-year period between the Effective Date and
the first Anniversary Date, and thereafter from each Anniversary Date to the
next, shall be referred to as a "Contract Year." Unless extended pursuant to
Section 2.2, or earlier terminated pursuant to Sections 5, 6, 7, 8, 9 or 10,
this Agreement will automatically terminate on July 31, 2008. The specified
period during which this Agreement is in effect is the "Term."
2.2 Extensions of Term.
2.2.1 By Agreement. The Term may be extended to a specified future
date at any time by the specific written agreement of the parties signed
prior to the original expiration date specified in Section 2.1, or any
subsequent expiration date established pursuant to Section 2.2.2.
2.2.2 Annual Extension. On each Anniversary Date, beginning August 1,
2008, unless either party to this Agreement has notified the other in
writing not less than twelve (12) months prior to such Anniversary Date of
that party's intention to allow this Agreement to expire and not be renewed
at the end of the then current Term, the Term shall automatically be
extended for one Contract Year on and from each Anniversary Date.
2.2.3 Extension Because of Change in Control. In the event of a Change
in Control (as hereinafter defined) of the Company, the Term shall
automatically be extended for two (2) Contract Years effective as of the
date of the Change in Control (the effect of this extension being that
following a Change in Control, Executive's employment shall continue for
the remainder of the Term of this Agreement, as the Term may have been
extended prior to the Change in Control pursuant to Section 2.2.2 above,
plus an additional two (2) Contract Years), at which time Executive shall
be entitled to exercise the rights and receive the benefits of this
Agreement that are described in Section 10. For purposes of this Agreement,
a "Change in Control" of the Company ---------- shall mean a change in
control of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); provided,
however, that, without limitation, such a Change in Control shall be deemed
to have occurred if during the Term: (a) any "person" (as such term is used
in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing more than
thirty-five percent (35%) of the combined voting power of the Company's
then outstanding voting securities unless that acquisition was approved or
2
<PAGE>
ratified by a vote of at least 2/3 of the members of the Board in office
immediately prior to the acquisition; or (b) all or substantially all of
the assets of the Company are sold, exchanged or otherwise transferred
(other than to secure debt owed by the Company); or (c) the Company's
shareholders approve a plan of liquidation or dissolution; or (d)
individuals who at the beginning of the Term constitute members of the
Board of Company cease for any reason other than at the request or with the
concurrence of the Executive to constitute a majority thereof unless the
election, or the nomination for election by the Company's shareholders, of
each new director was approved by a vote of at least a majority of the
directors then still in office who were directors at the beginning of the
Term.
3. POSITION AND DUTIES.
--------------------
3.1 Position. Executive shall serve as the Company's Chief Executive
Officer. Executive shall report to the Board and perform such duties and
responsibilities as may be prescribed from time-to-time by the Board, which
shall be consistent with the responsibilities of similarly situated executives
of comparable companies in similar lines of business. So long as Executive is
serving as Chief Executive Officer, the Company shall nominate Executive for
election as a member of the Board at each meeting of the Company's shareholders
at which the election of Executive is subject to a vote by the Company's
shareholders and to recommend that the shareholders of the Company vote to elect
Executive as a member of the Board. From time to time, Executive also may be
designated as Chairman of the Board or as President of the Company and to such
other offices within the Company or its subsidiaries as may be necessary or
appropriate for the convenience of the businesses of the Company and its
subsidiaries; provided, however, during the Term, he shall, in addition to the
title of Chief Executive Officer, also hold the title of either Chairman or
President.
3.2 Full-Time Efforts. Executive shall perform and discharge faithfully,
diligently and to the best of his ability such duties and responsibilities and
shall devote his full-time efforts to the business and affairs of the Company.
Executive agrees to promote the best interests of the Company and to take no
action that in any way damages the public image or reputation of the Company,
its subsidiaries or its affiliates.
3.3 No Interference With Duties. Executive shall not (i) engage in any
activities, or render services to or become associated with any other business
that in the reasonable judgment of the Board violates Article 14 of this
Agreement; or (ii) devote time to other activities which would inhibit or
otherwise interfere with the proper performance of his duties, provided,
however, that it shall not be a violation of this Agreement for Executive to (i)
devote reasonable periods of time to charitable and community activities and
industry or professional activities, or (ii) manage personal business interests
and investments, so long as such activities do not interfere with the
performance of Executive's responsibilities under this Agreement. Executive may,
with the prior approval of the Board (or applicable committee), serve on the
boards of directors (or other governing body) of other for profit corporations
or entities, consistent with this Agreement and the Company's policies.
3.4 Work Standard. Executive hereby agrees that he shall at all times
comply with and abide by all terms and conditions set forth in this Agreement,
and all applicable work policies, procedures and rules as may be issued by
Company. Executive also agrees that he shall comply with all federal, state and
local statutes, regulations and public ordinances governing the performance of
his duties hereunder.
3
<PAGE>
4. COMPENSATION AND BENEFITS.
--------------------------
4.1 Base Salary. Subject to the terms and conditions set forth in this
Agreement, the Company shall pay Executive, and Executive shall accept, an
annual salary ("Base Salary") in the amount of Eight Hundred Seventy-five
Thousand and No/100 Dollars ($875,000). The Base Salary shall be paid in
accordance with the Company's normal payroll practices and may be increased from
time to time at the sole discretion of the Board.
4.2 Incentive, Savings and Retirement Plans. During the Term, Executive
shall be entitled to participate in all incentive (including, without
limitation, long term incentive plans), savings and retirement plans, practices,
policies and programs applicable generally to senior executive officers of the
Company ("Peer Executives"), and on the same basis as such Peer Executives,
except as to benefits that are specifically applicable to Executive pursuant to
this Agreement. Without limiting the foregoing, the following provisions shall
apply with respect to Executive:
4.2.1 Incentive Bonus. Executive shall be entitled to an annual bonus,
the amount of which shall be determined by the Compensation and Stock
Option Committee of the Board (the "Committee"). The amount of and
performance criteria with respect to any such bonus in any year shall be
determined not later than the date or time prescribed by Treas. Reg. ss.
1.162-27(e) in accordance with a formula to be agreed upon by the Company
and Executive and approved by the Committee that reflects the financial and
other performance of the Company and the Executive's contributions thereto.
Throughout the Term, the Executive's annual target (subject to such
performance and other criteria as may be established by the Committee)
bonus shall be no less than one hundred fifty percent (150%) of the Base
Salary.
4.2.2 Welfare Benefit Plans. During the Term, Executive and
Executive's eligible dependents shall be eligible for participation in, and
shall receive all benefits under, the welfare benefit plans, practices,
policies and programs provided by the Company (including, without
limitation, medical, prescription, dental, disability, executive life,
group life, accidental death and travel accident insurance plans and
programs) ("Welfare Plans") to the extent applicable generally to Peer
Executives.
4.2.3 Vacation. Executive shall be entitled to an annual paid vacation
commensurate with the Company's established vacation policy for Peer
Executives. The timing of paid vacations shall be scheduled in a reasonable
manner by the Executive.
4.2.4 Business Expenses. Executive shall be reimbursed for all
reasonable business expenses incurred in carrying out the work hereunder.
Executive shall follow the Company's expense procedures that generally
apply to other Peer Executives in accordance with the policies, practices
and procedures of the Company to the extent applicable generally to such
Peer Executives.
4
<PAGE>
4.2.5 Perquisites. Executive shall be entitled to receive such
executive perquisites, fringe and other benefits as are provided to the
senior most executives and their families under any of the Company's plans
and/or programs in effect from time to time and such other benefits as are
customarily available to Peer Executives.
4.3 Restricted Stock.
4.3.1 Shares. Subject to all of the conditions (including, without
limitation, satisfaction of the performance goals described in Section
4.3.2, the time of vesting and right to receive) and restrictions set forth
in this Section 4.3.1, Company hereby grants to Executive an award of
125,000 shares (the "Restricted Shares") of the Company's $0.01 par value
common stock (the "Shares"). Subject to satisfaction of the performance
goals described in Section 4.3.2, the Restricted Shares shall become vested
in, and shall be distributed to, the Executive in three (3) installments on
each of the dates set forth below (each of which shall be referred to as a
"Distribution Date," with the three (3) dates being collectively referred
to as the "Distribution Dates") in the following respective amounts:
Number of
Distribution Date Shares
----------------- ---------
September 15, 2008 75,000 (60%)
September 15, 2009 25,000 (20%)
September 15, 2010 25,000 (20%)
-------
Total 125,000 (100%)
=======
Immediately following each Distribution Date, the Company shall promptly
cause its transfer agent to issue a certificate to the Executive evidencing
the Restricted Shares that became distributable to the Executive on the
Distribution Date. The Company's obligation to cause the issuance of any
stock certificate to Executive shall be subject to any applicable federal,
state, or local tax withholding requirements. If, prior to a Distribution
Date, the Executive's employment is terminated pursuant to Section 5 or
Section 8 (if the termination is not for "Good Reason," as defined
therein), all rights of the Executive in any Restricted Shares awarded
under this Section 4.3.1 that, as of the date of such termination, have not
become distributable to the Executive shall thereupon immediately terminate
and become forfeited. If, prior to a Distribution Date, the Executive's
employment is terminated for any reason other than pursuant to Section 5 or
Section 8 (if the termination is not for "Good Reason," as defined
therein), or if Executive's employment is not extended as provided in
Section 2.2.2, provided, in either case the Performance Goals (pro-rated
appropriately, if necessary, through the last day of Executive's
employment) described in Section 4.3.2 have been achieved, a stock
certificate for all the Restricted Shares (without pro-ration) that would
have become distributable to Executive on the succeeding Distribution Date
after cessation of Executive's employment (less any Restricted Shares
previously issued) shall thereupon be issued to Executive. Executive shall
not have any rights as a shareholder with respect to any Restricted Shares
until the issuance of a stock certificate evidencing the Restricted Shares.
The number of Restricted Shares awarded the Executive under this Section
4.3.1 shall be proportionately adjusted to reflect any stock dividend,
5
<PAGE>
stock split or share combination of the Shares or any recapitalization of
the Company occurring prior to a Distribution Date. Except as provided in
the preceding sentence, no adjustment shall be made on the issuance of a
stock certificate to the Executive as to any dividends or other rights for
which the record date occurred prior to a Distribution Date. The right of
the Executive to receive the Restricted Shares shall not be assignable or
transferable otherwise than by will or the laws of descent and
distribution. If in the opinion of its counsel, the issuance of any Shares
hereunder shall not be lawful for any reason, including the inability of
the Company to obtain from any regulatory body having jurisdiction or
authority deemed by such counsel to be necessary for such issuance, the
Company shall not be obligated to issue any such Restricted Shares, but, in
such event, shall be obligated to provide Executive with cash or non-cash
consideration having equivalent after tax value which is acceptable to the
Executive in the exercise of Executive's reasonable discretion. Upon
receipt of Restricted Shares at a time when there is not in effect under
the Securities Act of 1933, as amended, a current registration statement
relating to the Restricted Shares, the Executive shall represent and
warrant in writing to the Company that the Restricted Shares are being
acquired for investment and not with a view to the distribution thereof and
shall agree to the placement of a legend on the certificate or certificates
representing the Restricted Shares evidencing the restrictions on transfer
under said Act and the issuance of stop-transfer instructions by the
Company to its transfer agent with respect thereto. No Restricted Shares
shall be issued hereunder unless and until the then applicable requirements
of the Securities Act of 1933, the Tennessee Business Corporation Act, the
Tennessee Securities Act of 1980, as any of the same may be amended, the
rules and regulations of the Securities and Exchange Commission and any
other regulatory agencies and laws having jurisdiction over or
applicability to the Company, and the rules and regulations of any
securities exchange on which the Shares may be listed, shall have been
fully complied with and satisfied. Company shall use its best efforts to
cause all such requirements to be promptly and completely satisfied.
4.3.2 Vesting and receipt of the Restricted Shares is subject to
Executive achieving the performance criteria relative to Earnings Before
Interest, Taxes, Depreciation, Amortization and Rent (the "Performance
Goals") as of the end of each of the fiscal years immediately prior to each
Distribution Date. The Performance Goals are being established by the
Board's Compensation and Stock Option Committee (the "Committee")
contemporaneously with entering into this Agreement and prior to the
beginning of the measurement period for earning the Restricted Shares. The
Committee also shall certify in writing prior to each Distribution Date
whether the applicable Performance Goal was achieved.
6
<PAGE>
5. TERMINATION FOR CAUSE.
----------------------
This Agreement may be terminated immediately at any time by the Company
without any liability owing to Executive or Executive's beneficiaries under this
Agreement, except Base Salary through the date of termination and benefits under
any plan or agreement covering Executive which shall be governed by the terms of
such plan or agreement, under the following conditions, each of which shall
constitute "Cause" or "Termination for Cause":
(a) Any act by Executive involving fraud and any breach by
Executive of applicable regulations of competent authorities
in relation to trading or dealing with stocks, securities,
investments and the like or any willful or grossly negligent
act by Executive resulting in an investigation by the
Securities and Exchange Commission which, in each case, a
majority of the Board determines in its sole and absolute
discretion materially adversely affects the Company or
Executive's ability to perform his duties under this
Agreement;
(b) Attendance at work in a state of intoxication or otherwise
being found in possession at his place of work of any
prohibited drug or substance, possession of which would amount
to a criminal offense;
(c) Executive's personal dishonesty or willful misconduct in
connection with his duties to the Company;
(d) Breach of fiduciary duty to the Company involving personal
profit by the Executive;
(e) Conviction of the Executive for any felony or crime involving
moral turpitude;
(f) Material intentional breach by the Executive of any provision
of this Agreement or of any Company policy adopted by the
Board;
(g) The continued failure of Executive to perform substantially
Executive's duties with the Company (other than any such
failure resulting from incapacity due to Disability, and
specifically excluding any failure by Executive, after good
faith, reasonable and demonstrable efforts, to meet
performance expectations for any reason), after a written
demand for substantial performance is delivered to Executive
by a majority of the Board that specifically identifies the
manner in which such Board believes that Executive has not
substantially performed Executive's duties.
The cessation of employment of Executive shall not be deemed to be for Cause
unless and until there shall have been delivered to Executive a copy of a
resolution duly adopted by the affirmative vote of not less than two-thirds of
the entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to Executive and Executive is
given an opportunity, together with counsel, to be heard before the Board),
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finding that, in the good faith opinion of such Board, Executive is guilty of
the conduct described in any one or more of subparagraphs (a) through (g) above,
and specifying the particulars thereof in detail.
6. TERMINATION UPON DEATH.
-----------------------
Notwithstanding anything herein to the contrary, this Agreement shall
terminate immediately upon Executive's death, and the Company shall have no
further liability to Executive or his beneficiaries under this Agreement, other
than for payment of Accrued Obligations (as defined in Paragraph 9(a)(1)), the
timely payment or provision of Other Benefits (as defined in Paragraph 9(d)),
including without limitation benefits under such plans, programs, practices and
policies relating to death benefits, if any, as are applicable to Executive on
the date of his death, plus an additional amount equal to the Base Salary in
effect for the Executive at the date of the death of the Executive. This payment
shall be paid in a lump sum to the Executive's estate within 90 days after the
Company is given notice of the Executive's death. The rights of the Executive's
estate with respect to stock options and restricted stock, and all other benefit
plans, shall be determined in accordance with the specific terms, conditions and
provisions of the applicable agreements and plans; provided, however, that the
Restricted Shares granted under Section 4.3.1 of this Agreement shall
immediately vest and become distributable upon the death of the Executive.
7. DISABILITY.
-----------
If the Company determines in good faith that the Disability of Executive
has occurred during the Term (pursuant to the definition of Disability set forth
below), it may give to Executive written notice of its intention to terminate
Executive's employment. In such event, Executive's employment with the Company
shall terminate effective on the 30th day after receipt of such written notice
by Executive (the "Disability Effective Date"), provided that, within the 30
days after such receipt, Executive shall not have returned to full-time
performance of Executive's duties. If Executive's employment is terminated by
reason of his Disability, this Agreement shall terminate without further
obligations to Executive, other than for payment of Accrued Obligations (as
defined in Paragraph 9(a)(1)), the timely payment or provision of Other Benefits
(as defined in Paragraph 9(d)), including without limitation benefits under such
plans, programs, practices and policies relating to disability benefits, if any,
as are applicable to Executive on the Disability Effective Date plus an
additional amount equal to the difference, if any, between the amount of
disability benefits paid to Executive for what would otherwise be the remainder
of the Term and the amount of Base Salary (in effect on the Disability Effective
Date) Executive would have received for the remainder of the Term that is in
effect as of the Disability Effective Date. The rights of the Executive with
respect to stock options and restricted stock, and all other benefit plans,
shall be determined in accordance with the specific terms, conditions and
provisions of the applicable agreements and plans; provided, however, that the
Restricted Shares granted under Section 4.3.1 of this Agreement shall
immediately vest and become distributable upon the Disability Effective Date.
For purposes of this Agreement, "Disability" shall mean: (i) a long-term
disability entitling Executive to receive benefits under the Company's long-term
disability plan as then in effect; or (ii) if no such plan is then in effect or
the plan does not apply to Executive, the inability of Executive, as determined
by the Board of the Company, to perform the essential functions of his regular
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duties and responsibilities, with or without reasonable accommodation, due to a
medically determinable physical or mental illness which has lasted (or can
reasonably be expected to last) for a period of six consecutive months. At the
request of Executive or his personal representative, the Board's determination
that the Disability of Executive has occurred shall be certified by two
physicians mutually agreed upon by Executive, or his personal representative,
and the Company. Without such independent certification (if so requested by
Executive), Executive's termination shall be deemed a termination by the Company
without Cause and not a termination by reason of his Disability.
8. EXECUTIVE'S TERMINATION OF EMPLOYMENT.
--------------------------------------
Executive's employment may be terminated at any time by Executive for Good
Reason or no reason. For purposes of this Agreement, "Good Reason" shall mean:
(a) Other than his removal for Cause pursuant to Section 5, without the
written consent of Executive, the assignment to Executive of any
duties inconsistent in any material respect with Executive's position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities as in effect on the Effective
Date, or any other action by the Company which results in a
demonstrable diminution in such position, authority, duties or
responsibilities (including without limitation a shift of material
responsibility from the Chief Executive Officer position to the
Chairman position if Executive does not serve in both capacities),
provided, however, it is expressly understood and agreed that so long
as Executive is serving as the Chief Executive Officer, the
designation of another person as either Chairman or President (but not
both) shall not be "Good Reason" and also excluding for this purpose
an isolated, insubstantial and inadvertent action not taken in bad
faith and which is remedied by the Company promptly after receipt of
notice thereof given by Executive;
(b) A reduction by the Company in Executive's Base Salary as in effect on
the Effective Date or as the same may be increased from time to time;
(c) A reduction by the Company in Executive's annual target bonus
(expressed as a percentage of Base Salary) unless such reduction is a
part of an across-the-board decrease in target bonuses affecting all
other Peer Executives; provided, however that in any event, the
Company may not reduce Executive's annual target bonus (expressed as a
percentage of Base Salary) below one hundred fifty percent (150%) of
the Base Salary;
(d) The failure by the Company to continue in effect any "pension plan or
arrangement" or any "compensation plan or arrangement" in which
Executive participates or the elimination of Executive's participation
in any such plan (except for across-the-board plan changes or
terminations similarly affecting other Peer Executives);
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(e) The Company's requiring Executive, without his consent, to be based at
any office or location more than fifty (50) miles from the Company's
current headquarters in Lebanon, Tennessee;
(f) The material breach by the Company of any provision of this Agreement;
or
(g) The failure of any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had
taken place.
Good Reason shall not include Executive's death or Disability. Executive's
continued employment shall not constitute consent to, or a waiver of rights with
respect to, any circumstance constituting Good Reason hereunder, provided that
Executive raises to the attention of the Board any circumstance he believes in
good faith constitutes Good Reason within ninety (90) days after occurrence or
be foreclosed from raising such circumstance thereafter. The Company shall have
an opportunity to cure any claimed event of Good Reason (other than under
subparagraph (g) above) within 30 days of notice from Executive.
If Executive terminates his employment for Good Reason, upon the execution
and effectiveness of the Release attached hereto as an addendum and made a part
hereof (the "Release"), he shall be entitled to the same benefits he would be
entitled to under Paragraph 9 as if terminated without Cause or Paragraph 10 as
if terminated after a Change in Control, but not both, as applicable. If
Executive terminates his employment without Good Reason, this Agreement shall
terminate without further obligations to Executive, other than for payment of
Accrued Obligations (as defined in Paragraph 9(a)(1)) and the timely payment or
provision of Other Benefits (as defined in Paragraph 9(d)).
9. TERMINATION WITHOUT CAUSE.
--------------------------
If Executive's employment is terminated by the Company without Cause prior
to the expiration of the Term (it being understood by the parties that
termination by death, Disability or expiration of this Agreement shall not
constitute termination without Cause), then Executive shall be entitled to the
following benefits upon the execution and effectiveness of the Release;
provided, however, that Executive shall not be entitled to payments under this
Paragraph 9 if he is entitled to payments under Paragraph 10:
(a) The Company shall pay to Executive commencing after the later of
the date of termination or the execution and effectiveness of the
Release, the aggregate of the following amounts:
(1) in a lump sum in cash within 30 days, the sum of (i)
Executive's Base Salary through the date of
termination to the extent not theretofore paid, (ii)
a pro-rata portion of amounts payable under any then
existing incentive or bonus plan applicable to
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Executive (including, without limitation, any
incentive bonus payable under Paragraph 4.2.1) for
that portion of the Contract Year through the date of
termination; (iii) any accrued expenses and vacation
pay to the extent not theretofore paid, and (iv)
unless Executive has elected a different payout date
in a prior deferral election, any compensation
previously deferred by Executive (together with any
accrued interest or earnings thereon) to the extent
not theretofore paid (the sum of the amounts
described in subparagraphs (i), (ii), (iii) and (iv)
shall be referred to in this Agreement as the
"Accrued Obligations");
(2) in installments ratably over twenty-four (24) months
in accordance with the Company's normal payroll cycle
and procedures, the amount equal to three (3) times
Executive's annual Base Salary in effect as of the
date of termination; and
(3) With respect to Paragraph 9(a)(2), the Company may,
at any time and in its sole discretion, make a lump
sum payment of all amounts, or all remaining amounts,
due to Executive; and
(b) The Restricted Shares granted under Section 4.3.1 of this
Agreement shall vest and become distributable in accordance with
that section. In addition, all stock options held by the
Executive that are vested prior to the effective date of the
termination shall be exercisable in accordance with their terms.
With respect to any stock options held by the Executive that, by
their terms do not immediately vest and become exercisable upon a
termination of employment without Cause, the Executive shall
receive, within 30 days after the termination, a lump sum cash
distribution equal to: (a) the number of Shares that is subject
to options held by the Executive which are not vested on the date
of termination of employment but which would otherwise vest
during the Term as in effect on the date of termination;
multiplied by (b) the difference between: (i) the closing price
of a Share as of the day prior to the effective date of
termination of employment (or, if the United States securities
trading markets are closed on that date, on the last preceding
date on which the United States securities trading markets were
open for trading), and (ii) the applicable exercise price(s) of
the non-vested options; and
(c) The Executive's participation in the life, medical and disability
insurance programs in effect on the date of termination of
employment shall continue until the later of (i) twenty-four (24)
months after Executive's date of termination, or (ii) the
expiration of the Term (as in effect at the time of termination);
provided, however, that notwithstanding the foregoing, the
Company shall not be obligated to provide such benefits if
Executive becomes employed by another employer and is covered or
permitted to be covered by that employer's benefit plans without
regard to the extent of such coverage; and
(d) To the extent not theretofore paid or provided, the Company shall
timely pay or provide to Executive any other accrued amounts or
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accrued benefits required to be paid or provided or which
Executive is eligible to receive under any plan, program, policy
or practice or contract or agreement of the Company (such other
amounts and benefits shall be referred to in this Agreement as
the "Other Benefits").
10. CHANGE IN CONTROL.
------------------
(a) Except as otherwise provided herein, if, at any time during the
Term in effect after a Change in Control (as it may have been
extended by Sections 2.2.2 and 2.2.3) (i) Executive is
involuntarily terminated by the Company for reasons other than
Cause or (ii) Executive shall voluntarily terminate his
employment with the Company for Good Reason as defined in
Paragraph 8, Executive shall be entitled to receive the benefits
described in this Paragraph 10.
(b) Subject to the execution and effectiveness of the Release, upon a
termination described in Section 10(a), Executive shall be
entitled to receive the following benefits:
(1) The Company shall pay to Executive, in a lump sum in
cash within 30 days after the later of the date of
termination or the execution and effectiveness of the
Release, the aggregate of the following amounts:
(i) the Accrued Obligations (as defined in
Paragraph 9(a)(1)); and
(ii) the amount equal to three (3) times the sum
of (x) Executive's average annual Base
Salary for the three fiscal years prior to
the termination, and (y) Executive's
Applicable Annual Bonus (as defined below).
For purposes of this Agreement, "Applicable
Annual Bonus" means the greater of
Executive's actual annual incentive bonus
from the Company earned in the fiscal year
immediately preceding the fiscal year in
which Executive's termination date falls or
Executive's target annual incentive bonus
(e.g., 80% of Base Salary) for the year in
which Executive's termination date falls;
and
(2) The Restricted Shares granted under Section 4.3.1 of
this Agreement shall vest and become distributable in
accordance with that section. In addition, all stock
options held by the Executive that are vested
(including, without limitation, those vested by
reason of any Change in Control occurring prior to
the Executive's termination) prior to the effective
date of the termination shall be exercisable in
accordance with their terms. With respect to any
stock options held by the Executive that, by their
terms do not immediately vest and become exercisable
upon a termination of employment without Cause or for
Good Reason, the Executive shall receive, within 30
days after the termination, a lump sum cash
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distribution equal to: (a) the number of Shares that
is subject to options held by the Executive which are
not vested on the date of termination of employment
but which would otherwise vest during the Term as in
effect on the date of termination; multiplied by (b)
the difference between: (i) the closing price of a
Share as of the day prior to the effective date of
termination of employment (or, if the United States
securities trading markets are closed on that date,
on the last preceding date on which the United States
securities trading markets were open for trading),
and (ii) the applicable exercise price(s) of the
non-vested options; and
(3) The Executive's participation in the life, medical
and disability insurance programs in effect on the
date of termination of employment shall continue
until the later of (i) thirty-six (36) months after
Executive's date of termination, or (ii) the
expiration of the Term (as in effect at the time of
termination); provided, however, that notwithstanding
the foregoing, the Company shall not be obligated to
provide such benefits if Executive becomes employed
by another employer and is covered or permitted to be
covered by that employer's benefit plans without
regard to the extent of such coverage; and
(4) To the extent not theretofore paid or provided, the
Company shall timely pay or provide to Executive any
Other Benefits (as defined in Paragraph 9(d)).
11. EXCISE TAX GROSS-UP.
--------------------
11.1 Anything in this Agreement to the contrary notwithstanding and except
as set forth below, in the event it shall be determined as provided below that
any payment or distribution by the Company to or for the benefit of Executive
(whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional
payments required under this Paragraph 11) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties are
incurred by Executive with respect to such excise tax (such excise tax, together
with any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by Executive
of all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payments.
11.2 All determinations required to be made under this Paragraph 11,
including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be used in arriving at such
determination, shall be made by the tax department of an independent public
accounting firm (the "Accounting Firm") which shall be engaged by the Company
prior to the time of the first Payment to Executive. The Accounting Firm
selected shall not be serving as accountant or auditor for any individual,
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entity or group effecting a Change in Control. The Accounting Firm shall prepare
and provide detailed supporting calculations both to the Company and Executive
within 15 business days of the later of (i) the Accounting Firm's engagement to
make the required calculations or (ii) the date the Accounting Firm obtains all
information needed to make the required calculation. Any determination by the
Accounting Firm shall be binding upon the Company and Executive. All fees and
expenses of the Accounting Firm shall be borne solely by the Company.
11.3 Any Gross-Up Payment, as determined pursuant to this Paragraph 11,
shall be paid by the Company to Executive within five (5) days of the receipt of
the Accounting Firm's determination if the Payment is then required to satisfy
an assessment or other current demand for payment made of the Executive by
federal or state taxing authorities. Gross-Up Payments due at a later date shall
be paid to the Executive no later than fourteen days prior to the date that the
Executive's federal or state payment is due. If required by law, the Company
shall treat all or any portion of the Gross-Up Payment as being subject to
income tax withholding for federal or state tax purposes. Amounts determined by
the Company to be subject to federal or state tax withholding will not be paid
directly to Executive but shall be timely paid to the respective taxing
authority.
11.4 As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that Executive
hereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of
Executive. Conversely, if it is later determined that the actual required
Gross-Up Payment was less than the amount paid to the Executive, the Executive
shall refund the excess portion to the Company but only to the extent that the
Executive has not yet paid the excess amount to the taxing authorities or is
able to obtain a refund from the respective taxing authorities of amounts
previously paid. The Company may pursue at its own expense the refund on behalf
of the Executive.
12. COSTS OF ENFORCEMENT.
---------------------
If either party brings suit to compel performance of, to interpret, or to
recover damages for the breach of this Agreement, the finally prevailing party
shall be entitled to reasonable attorneys' fees in addition to costs and
necessary disbursements otherwise recoverable.
13. PUBLICITY; NO DISPARAGING STATEMENT.
------------------------------------
Executive and the Company covenant and agree that they shall not engage in
any communications which shall disparage one another or interfere with their
existing or prospective business relationships.
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14. BUSINESS PROTECTION PROVISIONS.
-------------------------------
14.1 Preamble. As a material inducement to the Company to enter into this
Agreement, and its recognition of the valuable experience, knowledge and
proprietary information Executive gained from his employment with the Company,
Executive warrants and agrees he will abide by and adhere to the following
business protection provisions in this Article 14 and all sections thereof.
14.2 Definitions. For purposes of this Article 14 and all sections thereof,
the following terms shall have the following meanings:
(a) "Competitive Position" shall mean any employment, consulting, advisory,
directorship, agency, promotional or independent contractor arrangement between
the Executive and any person or Entity engaged wholly or in material part in the
restaurant or retail business that is the same or similar to that in which the
Company or any of its affiliates (collectively the "CBRL Entities") is engaged
whereby Executive is required to or does perform services on behalf of or for
the benefit of such person or Entity which are substantially similar to the
services in which Executive participated or that he directed or oversaw while
employed by the Company. Without limiting the generality of the foregoing, the
following companies and concepts would be included within those that would be
deemed the same or similar to CBRL Entities and/ or the businesses in which the
CBRL Entities are engaged: Advantica Restaurants, Applebee's International,
Avado Brands, Inc., Bob Evans Farms, Brinker International, Cheesecake Factory,
Inc., Darden Restaurants, Inc., Eateries, Inc., Il Fornaio Corporation,
O'Charley's, Outback Steakhouse, RARE Hospitality and Roadhouse Grill.
(b) "Confidential Information" shall mean the proprietary or confidential
data, information, documents or materials (whether oral, written, electronic or
otherwise) belonging to or pertaining to the CBRL Entities, other than "Trade
Secrets" (as defined below), which is of tangible or intangible value to any of
the CBRL Entities and the details of which are not generally known to the
competitors of the CBRL Entities. Confidential Information shall also include:
any items that any of the CBRL Entities have marked "CONFIDENTIAL" or some
similar designation or are otherwise identified as being confidential.
(c) "Entity" or "Entities" shall mean any business, individual,
partnership, joint venture, agency, governmental agency, body or subdivision,
association, firm, corporation, limited liability company or other entity of any
kind.
(d) "Restricted Period" shall mean two (2) years following termination of
Executive's employment hereunder; provided, however that the Restricted Period
shall be extended for a period of time equal to any period(s) of time within the
two (2) year period following termination of Executive's employment hereunder
that Executive is determined by a final non-appealable judgment from a court of
competent jurisdiction to have engaged in any conduct that violates this Article
14 or any sections thereof, the purpose of this provision being to secure for
the benefit of the Company the entire Restricted Period being bargained for by
the Company for the restrictions upon the Executive's activities.
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(e) "Territory" shall mean each of the United States of America.
(f) "Trade Secrets" shall mean information or data of or about any of the
CBRL Entities, including, but not limited to, technical or non-technical data,
recipes, formulas, patterns, compilations, programs, devices, methods,
techniques, drawings, processes, financial data, financial plans, product plans
or lists of actual or potential suppliers that: (1) derives economic value,
actual or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use; (2) is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy; and (3) any other information
which is defined as a "trade secret" under applicable law.
(g) "Work Product" shall mean all tangible work product, property, data,
documentation, "know-how," concepts or plans, inventions, improvements,
techniques and processes relating to the CBRL Entities that were conceived,
discovered, created, written, revised or developed by Executive during the term
of his employment with the Company.
14.3 Nondisclosure; Ownership of Proprietary Property.
(a) In recognition of the need of the CBRL Entities to protect their
legitimate business interests, Confidential Information and Trade Secrets,
Executive hereby covenants and agrees that Executive shall regard and treat
Trade Secrets and all Confidential Information as strictly confidential and
wholly-owned by the CBRL Entities and shall not, for any reason, in any fashion,
either directly or indirectly, use, sell, lend, lease, distribute, license,
give, transfer, assign, show, disclose, disseminate, reproduce, copy,
misappropriate or otherwise communicate any such item or information to any
third party or Entity for any purpose other than in accordance with this
Agreement or as required by applicable law, court order or other legal process:
(i) with regard to each item constituting a Trade Secret, at all times such
information remains a "trade secret" under applicable law, and (ii) with regard
to any Confidential Information, for the Restricted Period.
(b) Executive shall exercise best efforts to ensure the continued
confidentiality of all Trade Secrets and Confidential Information, and he shall
immediately notify the Company of any unauthorized disclosure or use of any
Trade Secrets or Confidential Information of which Executive becomes aware.
Executive shall assist the CBRL Entities, to the extent necessary, in the
protection of or procurement of any intellectual property protection or other
rights in any of the Trade Secrets or Confidential Information.
(c) All Work Product shall be owned exclusively by the CBRL Entities. To
the greatest extent possible, any Work Product shall be deemed to be "work made
for hire" (as defined in the Copyright Act, 17 U.S.C.A. ss. 101 et seq., as
amended), and Executive hereby unconditionally and irrevocably transfers and
assigns to applicable CBRL Entity all right, title and interest Executive
currently has or may have by operation of law or otherwise in or to any Work
Product, including, without limitation, all patents, copyrights, trademarks (and
the goodwill associated therewith), trade secrets, service marks (and the
goodwill associated therewith) and other intellectual property rights. Executive
agrees to execute and deliver to the applicable CBRL Entity any transfers,
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assignments, documents or other instruments which the Company may deem necessary
or appropriate, from time to time, to protect the rights granted herein or to
vest complete title and ownership of any and all Work Product, and all
associated intellectual property and other rights therein, exclusively in the
applicable CBRL Entity.
14.4 Non-Interference With Executives.
Executive recognizes and acknowledges that, as a result of his employment
by Company, he will become familiar with and acquire knowledge of confidential
information and certain other information regarding the other executives and
employees of the CBRL Entities. Therefore, Executive agrees that, during the
Restricted Period, Executive shall not encourage, solicit or otherwise attempt
to persuade any person in the employment of the CBRL Entities to end his/her
employment with a CBRL Entity or to violate any confidentiality, non-competition
or employment agreement that such person may have with a CBRL Entity or any
policy of any CBRL Entity. Furthermore, neither Executive nor any person acting
in concert with the Executive nor any of Executive's affiliates shall, during
the Restricted Period, employ any person who has been an executive or management
employee of any CBRL Entity unless that person has ceased to be an employee of
the CBRL Entities for at least six (6) months.
14.5 Non-competition
Executive covenants and agrees to not obtain or work in a Competitive
Position within the Territory during the Term or during the Restricted Period;
provided, however, that the restrictions set forth in this Section 14.5 shall
not be applicable following the expiration of the Term as a result of the
Company's notice to Executive, pursuant to Section 2.2.2, that it intends to
allow the Agreement to expire and not be renewed at the next Anniversary Date.
Executive and Company recognize and acknowledge that the scope, area and time
limitations contained in this Agreement are reasonable and are properly required
for the protection of the business interests of Company due to Executive's
status and reputation in the industry and the knowledge to be acquired by
Executive through his association with Company's business and the public's close
identification of Executive with Company and Company with Executive. Further,
Executive acknowledges that his skills are such that he could easily find
alternative, commensurate employment or consulting work in his field that would
not violate any of the provisions of this Agreement. Executive acknowledges and
understands that, as consideration for his execution of this Agreement and his
agreement with the terms of this covenant not to compete, Executive will receive
employment with and other benefits from the Company in accordance with this
Agreement.
14.6 Remedies.
Executive understands and acknowledges that his violation of this Article
14 or any section thereof would cause irreparable harm to Company and Company
would be entitled to an injunction by any court of competent jurisdiction
enjoining and restraining Executive from any employment, service, or other act
prohibited by this Agreement The parties agree that nothing in this Agreement
shall be construed as prohibiting Company from pursuing any remedies available
to it for any breach or threatened breach of this Article 14 or any section
thereof, including, without limitation, the recovery of damages from Executive
or any person or entity acting in concert with Executive. Company shall receive
injunctive relief without the necessity of posting bond or other security, such
bond or other security being hereby waived by Executive. If any part of this
Article 14 or any section thereof is found to be unreasonable, then it may be
amended by appropriate order of a court of competent jurisdiction to the extent
deemed reasonable. Furthermore and in recognition that certain severance
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payments are being agreed to in reliance upon Executive's compliance with this
Article 14 after termination of his employment, in the event Executive breaches
any of such business protection provisions or other provisions of this
Agreement, any unpaid amounts (e.g., those provided under Paragraphs 8 or
9(a)(2)) shall be forfeited and Company shall not be obligated to make any
further payments or provide any further benefits to Executive following any such
breach. Additionally, if Executive breaches any of such business protection
provisions or other provisions of this Agreement or such provisions are declared
unenforceable by a court of competent jurisdiction, any lump sum payment made
pursuant to Section 10(a)(1)(ii) shall be refunded by the Executive on a
pro-rata basis based upon the number of months during the Restricted Period
during which he violated the provisions of this section or, in the event such
provisions are declared unenforceable, the number of months during the
Restricted Period that the Company did not receive their benefit as a result of
the actions of the Executive.
15. RETURN OF MATERIALS.
--------------------
Upon Executive's termination, or at any point after that time upon the
specific request of the Company, Executive shall return to the Company all
written or descriptive materials of any kind belonging or relating to the
Company or its affiliates, including, without limitation, any originals, copies
and abstracts containing any Work Product, intellectual property, Confidential
Information and Trade Secrets in Executive's possession or control.
16. GENERAL PROVISIONS.
-------------------
16.1 Amendment. This Agreement may be amended or modified only by a writing
signed by both of the parties hereto.
16.2 Binding Agreement. This Agreement shall inure to the benefit of and be
binding upon Executive, his heirs and personal representatives, and the Company
and its successors and assigns.
16.3 Waiver Of Breach; Specific Performance. The waiver of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other breach. Each of the parties to this Agreement will be entitled to enforce
its or his rights under this Agreement, specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in its or his favor. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its or his sole
discretion apply to any court of law or equity of competent jurisdiction for
specific performance or injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.
16.4 Indemnification and Insurance. The Company shall indemnify and hold
the Executive harmless to the maximum extent permitted by law against judgments,
fines, amounts paid in settlement and reasonable expenses, including reasonable
attorneys' fees incurred by the Executive, in connection with the defense of, or
as a result of any action or proceeding (or any appeal from any action or
18
<PAGE>
proceeding) in which the Executive is made or is threatened to be made a party
by reason of the fact that he is or was an officer of the Company or any
affiliate. In addition, the Company agrees that the Executive is and shall
continue to be covered and insured up to the maximum limits provided by all
insurance which the Company maintains to indemnify its directors and officers
(and to indemnify the Company for any obligations which it incurs as a result of
its undertaking to indemnify its officers and directors) and that the Company
will exert its best efforts to maintain such insurance, in not less than its
present limits, in effect throughout the term of the Executive's employment.
16.5 No Effect On Other Arrangements. It is expressly understood and agreed
that the payments made in accordance with this Agreement are in addition to any
other benefits or compensation to which Executive may be entitled or for which
he may be eligible, whether funded or unfunded, by reason of his employment with
the Company. Notwithstanding the foregoing, the provisions in Sections 5 through
10 regarding benefits that the Executive will receive upon his employment being
terminated supersede and are expressly in lieu of any other severance program or
policy that may be offered by the Company, except with regard to any rights the
Executive may have pursuant to COBRA.
16.6 Tax Withholding. There shall be deducted from each payment under this
Agreement the amount of any tax required by any governmental authority to be
withheld and paid over by the Company to such governmental authority for the
account of Executive.
16.7 Notices.
All notices and all other communications provided for herein shall be in
writing and delivered personally to the other designated party, or mailed by
certified or registered mail, return receipt requested, or delivered by a
recognized national overnight courier service, or sent by facsimile, as follows:
If to Company to: CBRL Group, Inc.
Attn: General Counsel's Office
P.O. Box 787
305 Hartmann Drive
Lebanon, TN 37088-0787
Facsimile: (615) 443-9818
If to Executive to: Michael A. Woodhouse
417 Bethlehem Road
Lebanon, TN 37087
All notices sent under this Agreement shall be deemed given twenty-four (24)
hours after sent by facsimile or courier, seventy-two (72) hours after sent by
certified or registered mail and when delivered if personal delivery. Either
party hereto may change the address to which notice is to be sent hereunder by
written notice to the other party in accordance with the provisions of this
Paragraph.
19
<PAGE>
16.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Tennessee (without giving effect to
conflict of laws).
16.9 Entire Agreement. This Agreement contains the full and complete
understanding of the parties hereto with respect to the subject matter contained
herein and this Agreement supersedes and replaces any prior agreement, either
oral or written, which Executive may have with Company that relates generally to
the same subject matter including, as of the Effective Date, the Prior
Agreements.
16.10 Assignment. This Agreement may not be assigned by Executive without
the prior written consent of Company, and any attempted assignment not in
accordance herewith shall be null and void and of no force or effect.
16.11 Severability. If any one or more of the terms, provisions, covenants
or restrictions of this Agreement shall be determined by a court of competent
jurisdiction to be invalid, void or unenforceable, then the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect, and to that end the provisions hereof shall be deemed
severable.
16.12 Paragraph Headings. The Paragraph headings set forth herein are for
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement whatsoever.
16.13 Interpretation. Should a provision of this Agreement require judicial
interpretation, it is agreed that the judicial body interpreting or construing
the Agreement shall not apply the assumption that the terms hereof shall be more
strictly construed against one party by reason of the rule of construction that
an instrument is to be construed more strictly against the party which itself or
through its agents prepared the agreement, it being agreed that all parties
and/or their agents have participated in the preparation hereof.
16.14 Mediation. Except as provided in subsection (c) of this Section
16.14, the following provisions shall apply to disputes between Company and
Executive: (i) arising out of or related to this Agreement (including any claim
that any part of this agreement is invalid, illegal or otherwise void or
voidable), or (ii) the employment relationship that exists between Company and
Executive:
(a) The parties shall first use their best efforts to discuss and
negotiate a resolution of the dispute.
(b) If efforts to negotiate a resolution do not succeed within 5
business days after a written request for negotiation has been made, a
party may submit to the dispute to mediation by sending a letter to the
other party requesting mediation. The dispute shall be mediated by a
mediator agreeable to the parties or, if the parties cannot agree, by a
mediator selected by the American Arbitration Association. If the parties
cannot agree to a mediator within 5 business days, either party may submit
20
<PAGE>
the dispute to the American Arbitration Association for the appointment of
a mediator. Mediation shall commence within 10 business days after the
mediator has been named.
(c) The provisions of this Section 16.14 shall not apply to any
dispute relating to the ability of the Company to terminate Executive's
employment pursuant to Section 5 or Section 9 of this Agreement nor shall
they apply to any action by the Company seeking to enforce its rights
arising out of or related to the provisions of Article 14 of this
Agreement.
16.15 Voluntary Agreement. Executive and Company represent and agree that
each has reviewed all aspects of this Agreement, has carefully read and fully
understands all provisions of this Agreement, and is voluntarily entering into
this Agreement. Each party represents and agrees that such party has had the
opportunity to review any and all aspects of this Agreement with legal, tax or
other adviser(s) of such party's choice before executing this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed, or caused their duly
authorized representative to execute, this Agreement as of this 1st day of July,
2005.
CBRL GROUP, INC.
By: /s/ Robert V. Dale
------------------------
Robert V. Dale, Chairman
Compensation and Stock Option Committee
"EXECUTIVE"
/s/ Michael A. Woodhouse
-----------------------
Michael A. Woodhouse
21
<PAGE>
Addendum to Employment
Agreement with Michael A. Woodhouse
RELEASE
THIS RELEASE ("Release") is made and entered into by and between Michael A.
Woodhouse ("Employee") and CBRL GROUP, INC. and its successor or assigns
("Company").
WHEREAS, Employee and Company have agreed that Employee's employment with
CBRL Group, Inc. shall terminate on -------------------;
WHEREAS, Employee and the Company have previously entered into that certain
Employment Agreement, dated _____________, 2005 ("Agreement"), and this Release
is incorporated therein by reference;
WHEREAS, Employee and Company desire to delineate their respective rights,
duties and obligations attendant to such termination and desire to reach an
accord and satisfaction of all claims arising from Employee's employment, and
his termination of employment, with appropriate releases, in accordance with the
Agreement;
WHEREAS, the Company desires to compensate Employee in accordance with the
Agreement for service he has or will provide for the Company;
NOW, THEREFORE, in consideration of the premises and the agreements of the
parties set forth in this Release, and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby covenant and agree as follows:
1. Claims Released Under This Agreement In exchange for receiving the
severance benefits described in Paragraphs 8, 9 or 10 of the Agreement and
except as provided in Paragraph 2 below, Employee hereby voluntarily and
irrevocably waives, releases, dismisses with prejudice, and withdraws all
claims, complaints, suits or demands of any kind whatsoever (whether known or
unknown) which Employee ever had, may have, or now has against Company and other
current or former subsidiaries or affiliates of the Company and their past,
present and future officers, directors, employees, agents, insurers and
attorneys (collectively, the "Releasees"), arising out of or relating to
(directly or indirectly) Employee's employment or the termination of his
employment with the Company, including but not limited to:
(a) claims for violations of Title VII of the Civil Rights Act of 1964, the
Age Discrimination in Employment Act, the Fair Labor Standards Act, the Civil
Rights Act of 1991, the Americans With Disabilities Act, the Equal Pay Act, the
Family and Medical Leave Act, 42 U.S.C. ss. 1981, the National Labor Relations
Act, the Labor Management Relations Act, Executive Order 11246, Executive Order
11141, the Rehabilitation Act of 1973, or the Employee Retirement Income
Security Act;
1
<PAGE>
(b) claims for violations of any other federal or state statute or
regulation or local ordinance;
(c) claims for lost or unpaid wages, compensation, or benefits, defamation,
intentional or negligent infliction of emotional distress, assault, battery,
wrongful or constructive discharge, negligent hiring, retention or supervision,
misrepresentation, conversion, tortious interference, breach of contract, or
breach of fiduciary duty;
(d) claims to benefits under any bonus, severance, workforce reduction,
early retirement, outplacement, or any other similar type plan sponsored by the
Company; or
(e) any other claims under state law arising in tort or contract.
2. Claims Not Released Under This Agreement In signing this Release,
Employee is not releasing any claims that may arise under the terms of the
Agreement, that enforce his rights under the Agreement, that arise out of events
occurring after the date Employee executes this Release, that arise under any
written non-employment related contractual obligations between the Company or
its affiliates and Employee which have not terminated as of the execution date
of this Release by their express terms, that arise under a policy or policies of
insurance (including director and officer liability insurance) maintained by the
Company or its affiliates on behalf of Employee, or that relate to any
indemnification obligations to Employee under the Company's bylaws, certificate
of incorporation, Tennessee law or otherwise. However, Employee understands and
acknowledges that nothing herein is intended to or shall be construed to require
the Company to institute or continue in effect any particular plan or benefit
sponsored by the Company and the Company hereby reserves the right to amend or
terminate any of its benefit programs at any time in accordance with the
procedures set forth in such plans. Nothing in this Agreement shall prohibit
Employee from engaging in protected activities under applicable law or from
communicating, either voluntarily or otherwise, with any governmental agency
concerning any potential violation of the law.
3. No Assignment of Claim. Employee represents that he has not assigned or
transferred, or purported to assign or transfer, any claims or any portion
thereof or interest therein to any party prior to the date of this Release.
4. Compensation. In accordance with the Agreement, the Company agrees to
pay Employee, or if he becomes eligible for payments under Paragraphs 8, 9 or 10
but dies before receipt thereof, his spouse or his estate, as the case may be,
the amount provided in Paragraphs 8, 9 or 10 of the Agreement.
5. No Admission Of Liability. This Release shall not in any way be
construed as an admission by the Company or Employee of any improper actions or
liability whatsoever as to one another, and each specifically disclaims any
liability to or improper actions against the other or any other person, on the
part of itself or himself, its or his employees or agents.
6. Voluntary Execution. Employee warrants, represents and agrees that he
has been encouraged in writing to seek advice from anyone of his choosing
regarding this Release, including his attorney and accountant or tax advisor
2
<PAGE>
prior to his signing it; that this Release represents written notice to do so;
that he has been given the opportunity and sufficient time to seek such advice;
and that he fully understands the meaning and contents of this Release. He
further represents and warrants that he was not coerced, threatened or otherwise
forced to sign this Release, and that his signature appearing hereinafter is
voluntary and genuine. EMPLOYEE UNDERSTANDS THAT HE MAY TAKE UP TO TWENTY-ONE
(21) DAYS TO CONSIDER WHETHER OR NOT HE DESIRES TO ENTER INTO THIS RELEASE.
7. Ability to Revoke Agreement. EMPLOYEE UNDERSTANDS THAT HE MAY REVOKE
THIS RELEASE BY NOTIFYING THE COMPANY IN WRITING OF SUCH REVOCATION WITHIN SEVEN
(7) DAYS OF HIS EXECUTION OF THIS RELEASE AND THAT THIS RELEASE IS NOT EFFECTIVE
UNTIL THE EXPIRATION OF SUCH SEVEN (7) DAY PERIOD. HE UNDERSTANDS THAT UPON THE
EXPIRATION OF SUCH SEVEN (7) DAY PERIOD THIS RELEASE WILL BE BINDING UPON HIM
AND HIS HEIRS, ADMINISTRATORS, REPRESENTATIVES, EXECUTORS, SUCCESSORS AND
ASSIGNS AND WILL BE IRREVOCABLE.
Acknowledged and Agreed To:
"COMPANY"
CBRL GROUP, INC.
By:______________________________
Its:______________________________
I UNDERSTAND THAT BY SIGNING THIS RELEASE, I AM GIVING UP RIGHTS I MAY HAVE. I
UNDERSTAND THAT I DO NOT HAVE TO SIGN THIS RELEASE.
"EMPLOYEE"
- -------------------------
- -------------------------------------
Date
Michael A. Woodhouse
3
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>8
<FILENAME>cbrlgroup10k092205ex10o.txt
<DESCRIPTION>CHANGE IN CONTROL AGREEMENT
<TEXT>
Exhibit 10(o)
May 12, 2005
Mr. N. B. Forrest Shoaf
6008 Hillsboro Pike
Nashville, TN 37215
Re: Employee Retention Agreement
Dear Forrest:
The Board of Directors of the CBRL Group, Inc. recognizes the contribution
that you have made to CBRL Group, Inc. or one of its direct or indirect
subsidiaries (collectively, the "Company") and wishes to ensure your continuing
commitment to the Company and its business operations. Accordingly, in exchange
for your continuing commitment to the Company, and your energetic focus on
continually improving operations, the Company promises you the following
benefits if your employment with the Company is terminated in certain
circumstances:
1. DEFINITIONS. As used in this Agreement, the following terms have the
following meanings, which are equally applicable to both the singular and plural
forms of the terms defined:
1.1 "Cause" means any one of the following:
(a) personal dishonesty;
(b) willful misconduct;
(c) breach of fiduciary duty; or
(d) conviction of any felony or crime involving moral turpitude.
1.2 "Change in Control" means: (a) that after the date of this Agreement, a
person becomes the beneficial owner, directly or indirectly, of securities of
the Company representing 20% or more of the combined voting power of the
Company's then outstanding voting securities, unless that acquisition was
approved by a vote of at least 2/3 of the directors in office immediately prior
to the acquisition; (b) that during any period of 2 consecutive years following
the date of this Agreement, individuals who at the beginning of the period
constitute members of the Board of Directors of the Company cease for any reason
to constitute a majority of the Board unless the election, or the nomination for
election by the Company's shareholders, of each new director was approved by a
<PAGE>
vote of at least 2/3 of the directors then still in office who were directors at
the beginning of the 2-year period; (c) a merger, consolidation or
reorganization of the Company (but this provision does not apply to a
recapitalization or similar financial restructuring which does not involve a
material change in ownership of equity of the Company and which does not result
in a change in membership of the Board of Directors); or (d) a sale of all or
substantially all of the Company's assets.
1.3 "Change in Control Period" means a 2-year year period beginning the day
after a Change in Control occurs.
1.4 "Change in Duties or Compensation" means any one of: (a) a material
change in your duties and responsibilities for the Company (without your
consent) from those duties and responsibilities for the Company in effect at the
time a Change in Control occurs, which change results in the assignment of
duties and responsibilities inferior to your duties and responsibilities at the
time such Change in Control occurs (it being understood and acknowledged by you
that a Change in Control that results in two persons of which you are one having
similar or sharing duties and responsibilities shall not be a material change in
your duties and responsibilities); (b) a reduction in your salary or a material
change in benefits (excluding discretionary bonuses), from the salary and
benefits in effect at the time a Change in Control occurs; or (c) a change in
the location of your work assignment from your location at the time a Change in
Control occurs to any other city or geographical location that is located
further than 50 miles from that location.
2. TERMINATION OF EMPLOYMENT; SEVERANCE. Your immediate supervisor or the
Company's Board of Directors may terminate your employment, with or without
cause, at any time by giving you written notice of your termination, such
termination of employment to be effective on the date specified in the notice.
You also may terminate your employment with the Company at any time. The
effective date of termination (the "Effective Date") shall be the last day of
your employment with the Company, as specified in a notice by you, or if you are
terminated by the Company, the date that is specified by the Company in its
notice to you. The following subsections set forth your rights to severance in
the event of the termination of your employment in certain circumstances by
either the Company or you. Section 5 also sets forth certain restrictions on
your activities if your employment with the Company is terminated, whether by
the Company or you. That section shall survive any termination of this Agreement
or your employment with the Company.
2.1 Termination by the Company for Cause. If you are terminated for Cause,
the Company shall have no further obligation to you, and your participation in
all of the Company's benefit plans and programs shall cease as of the Effective
Date. In the event of a termination for Cause, you shall not be entitled to
receive severance benefits described in Section 3.
2.2 Termination by the Company Without Cause Other Than During a Change in
Control Period. If your employment with the Company is terminated by the Company
without Cause at a time other than during a Change in Control Period, you shall
2
<PAGE>
be entitled to only those severance benefits provided by the Company's severance
policy or policies then in effect. You shall not be entitled to receive benefits
pursuant to Section 3 of this Agreement.
2.3 Termination by the Company Without Cause During a Change in Control
Period. If your employment with the Company is terminated by the Company without
Cause during a Change in Control Period, you shall be entitled to receive
Benefits pursuant to Section 3. A termination within 90 days prior to a Change
in Control which occurs solely in order to make you ineligible for the benefits
of this Agreement shall be considered a termination without Cause during a
Change in Control Period.
2.4 Termination By You For Change in Duties or Compensation During a Change
in Control Period. If during a Change in Control Period there occurs a Change in
Duties or Compensation you may terminate your employment with the Company at any
time within 30 days after the occurrence of the Change in Duties or
Compensation, by giving to the Company not less than 120 nor more than 180 days
notice of termination. During the notice period that you continue to work, any
reduction in your Compensation will be restored. At the option of the Company,
following receipt of this notice, it may: (a) change or cure, within 15 days,
the condition that you claim has caused the Change in Duties or Compensation, in
which case, your rights to terminate your employment with the Company pursuant
to this Section 2.4 shall cease (unless there occurs thereafter another Change
in Duties or Compensation) and you shall continue in the employment of the
Company notwithstanding the notice that you have given; (b) allow you to
continue your employment through the date that you have specified in your
notice; or (c) immediately terminate your employment pursuant to Section 2.3. If
you terminate your employment with the Company pursuant to this Section 2.4, you
shall be entitled to receive Benefits pursuant to Section 3. Your failure to
provide the notice required by this Section 2.4 shall result in you having no
right to receive any further compensation from the Company except for any base
salary or vacation earned but not paid, plus any bonus earned and accrued by the
Company through the Effective Date.
3. SEVERANCE BENEFITS. If your employment with the Company is terminated as
described in Section 2.3 or 2.4, you shall be entitled to the benefits specified
in subsections 3.1, 3.2, and 3.3 (the "Benefits") for the period of time set
forth in the applicable section.
3.1 Salary Payment or Continuance. You will be paid a single lump sum
payment in an amount equal to 2.00 times the average of your annual base salary
and any bonus payments for the 3 years immediately preceding the Effective Date.
The determination of the amount of this payment shall be made by the Company's
actuaries and benefit consultants and, absent manifest error, shall be final,
binding and conclusive upon you and the Company.
3.2 Continuation of Benefits. During the 2 years following the Effective
Date that results in benefits under this Article 3 (the "Severance Period"), you
shall continue to receive the medical, prescription, dental, employee life and
group life insurance benefits at the levels to which you were entitled on the
day preceding the Effective Date, or reasonably equivalent benefits, to the
extent continuation is not prohibited or limited by applicable law. In no event
3
<PAGE>
shall substitute plans, practices, policies and programs provide you with
benefits which are less favorable, in the aggregate, than the most favorable of
those plans, practices, policies and programs in effect for you at any time
during the 120-day period immediately preceding the Effective Date. However, if
you become reemployed with another employer and are eligible to receive medical
or other welfare benefits under another employer-provided plan, Company payments
for these medical and other welfare benefits shall cease.
4. EFFECT OF TERMINATION ON STOCK OPTIONS AND RESTRICTED STOCK. In the event of
any termination of your employment, all stock options and restricted stock held
by you that are vested prior to the Effective Date shall be owned or exercisable
in accordance with their terms; all stock options held by you that are not
vested prior to the Effective Date shall lapse and be void; however, if your
employment with the Company is terminated as described in Sections 2.3 or 2.4,
then, if your option or restricted stock grants provide for immediate vesting in
the event of a Change in Control, the terms of your option or restricted stock
agreement shall control. If your option or restricted stock agreement does not
provide for immediate vesting, you shall receive, within 30 days after the
Effective Date, a lump sum cash distribution equal to: (a) the number of shares
of the Company's ordinary shares that are subject to options or restricted stock
grants held by you that are not vested as of the Effective Date multiplied by
(b) the difference between: (i) the closing price of a share of the Company's
ordinary shares on the NASDAQ National Market System as reported by The Wall
Street Journal as of the day prior to the Effective Date (or, if the market is
closed on that date, on the last preceding date on which the market was open for
trading), and (ii) the applicable exercise prices or stock grant values of those
non-vested shares.
5. DISCLOSURE OF INFORMATION. You recognize and acknowledge that, as a result of
your employment by the Company, you have or will become familiar with and
acquire knowledge of confidential information and certain trade secrets that are
valuable, special, and unique assets of the Company. You agree that all that
confidential information and trade secrets are the property of the Company.
Therefore, you agree that, for and during your employment with the Company and
continuing following the termination of your employment for any reason, all
confidential information and trade secrets shall be considered to be proprietary
to the Company and kept as the private records of the Company and will not be
divulged to any firm, individual, or institution, or used to the detriment of
the Company. The parties agree that nothing in this Section 6 shall be construed
as prohibiting the Company from pursuing any remedies available to it for any
breach or threatened breach of this Section 6, including, without limitation,
the recovery of damages from you or any person or entity acting in concert with
you.
4
<PAGE>
6. GENERAL PROVISIONS.
6.1 Other Plans. Nothing in this Agreement shall affect your rights during
your employment to receive increases in compensation, responsibilities or duties
or to participate in and receive benefits from any pension plan, benefit plan or
profit sharing plans except plans which specifically address benefits of the
type addressed in Sections 3 and 4 of this Agreement.
6.2 Death During Severance Period. If you die during the Severance Period,
any Benefits remaining to be paid to you shall be paid to the beneficiary
designated by you to receive those Benefits (or in the absence of designation,
to your surviving spouse or next of kin).
6.3 Notices. Any notices to be given under this Agreement may be effected
by personal delivery in writing or by mail, registered or certified, postage
prepaid with return receipt requested. Mailed notices shall be addressed to the
parties at the addresses appearing on the first page of this Agreement (to the
attention of the Secretary in the case of notices to the Company), but each
party may change the delivery address by written notice in accordance with this
Section 7.3. Notices delivered personally shall be deemed communicated as of
actual receipt; mailed notices shall be deemed communicated as of the second day
following deposit in the United States Mail.
6.4 Entire Agreement. This Agreement supersedes all previous oral or
written agreements, understandings or arrangements between the Company and you
regarding a termination of your employment with the Company or a change in your
status, scope or authority and the salary, benefits or other compensation that
you receive from the Company as a result of the termination of your employment
with the Company (the "Subject Matter"), all of which are wholly terminated and
canceled. This Agreement contains all of the covenants and agreements between
the parties with respect to the Subject Matter. Each party to this Agreement
acknowledges that no representations, inducements, promises, or agreements,
orally or otherwise, have been made with respect to the Subject Matter by any
party, or anyone acting on behalf of any party, which are not embodied in this
Agreement. Any subsequent agreement relating to the Subject Matter or any
modification of this Agreement will be effective only if it is in writing signed
by the party against whom enforcement of the modification is sought.
6.5 Partial Invalidity. If any provision in this Agreement is held by a
court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
6.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Tennessee, and it shall be enforced or
challenged only in the courts of the State of Tennessee.
6.7 Waiver of Jury Trial. The Company and you expressly waive any right to
a trial by jury in any action or proceeding to enforce or defend any rights
under this Agreement, and agree that any such action or proceeding shall be
5
<PAGE>
tried before a court and not a jury. You irrevocably waive, to the fullest
extent permitted by law, any objection that you may have now or hereafter to the
specified venue of any such action or proceeding and any claim that any such
action or proceeding has been brought in an inconvenient forum.
6.8 Miscellaneous. Failure or delay of either party to insist upon
compliance with any provision of this Agreement will not operate as and is not
to be construed to be a waiver or amendment of the provision or the right of the
aggrieved party to insist upon compliance with the provision or to take remedial
steps to recover damages or other relief for noncompliance. Any express waiver
of any provision of this Agreement will not operate, and is not to be construed,
as a waiver of any subsequent breach, irrespective of whether occurring under
similar or dissimilar circumstances. You may not assign any of your rights under
this Agreement. The rights and obligations of the Company under this Agreement
shall benefit and bind the successors and assigns of the Company. The Company
agrees that if it assigns this Agreement to any successor company, it will
ensure that its terms are continued.
6.9 Certain Additional Payments by the Company.
a. The Company will pay you an amount (the "Additional Amount") equal to
the excise tax under the United States Internal Revenue Code of 1986, as amended
(the "Code"), if any, incurred by you by reason of the payments under this
Agreement and any other plan, agreement or understanding between you and the
Company or its parent, subsidiaries or affiliates (collectively, "Separation
Payments") constituting excess parachute payments under Section 280G of the Code
(or any successor provision). In addition, the Company will pay an amount equal
to all excise taxes and federal, state and local income taxes incurred by you
with respect to receipt of the Additional Amount. All determinations required to
be made under this Section 6.9 including whether an Additional Amount is
required and the amount of any Additional Amount, will be made by the
independent auditors engaged by the Company immediately prior to the Change in
Control (the "Accounting Firm"), which will provide detailed supporting
calculations to the Company and you. In computing taxes, the Accounting Firm
will use the highest marginal federal, state and local income tax rates
applicable to you and will assume the full deductibility of state and local
income taxes for purposes of computing federal income tax liability, unless you
demonstrate that you will not in fact be entitled to such a deduction for the
year of payment.
b. The Additional Amount, computed assuming that all of the Separation
Payments constitute excess parachute payments as defined in Section 280G of the
Code (or any successor provision), will be paid to you at the time that the
payments made pursuant to Section 3.1 is made unless the Company, prior to the
Severance Period, provides you with an opinion of the Accounting Firm that you
will not incur an excise tax on part or all of the Separation Payments. That
6
<PAGE>
opinion will be based upon the applicable regulations under Sections 280G and
4999 of the Code (or any successor provisions) or substantial authority within
the meaning of Section 6662 of the Code. If that opinion applies only to part of
the Separation Payments, the Company will pay you the Additional Amount with
respect to the part of the Separation Payments not covered by the opinion.
c. The amount of the Additional Amount and the assumptions to be utilized
in arriving at the determination, shall be made by the Company's Accounting
Firm, whose decision shall be final and binding upon both you and the Company.
You must notify the Company in writing no later than 30 days after you are
informed of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Additional Amount. You must also
cooperate fully with the Company and give the Company any information reasonably
requested relating to the claim, and take all action in connection with
contesting the claim as the Company reasonably requests in writing from time to
time.
If all of the terms and conditions in this Agreement are agreed to by you,
please signify your agreement by executing the enclosed duplicate of this letter
and returning it to us. At the date of your return, this letter shall constitute
a fully enforceable Agreement between us.
CBRL GROUP, INC.
By: /s/Michael A. Woodhouse
------------------------
Michael A. Woodhouse
Chairman, President and CEO
The foregoing is fully agreed to and accepted by:
Company Employee's Signature: /s/ N.B. Forrest Shoaf
----------------------
Please Print or Type Name: N.B. Forrest Shoaf
------------------
Please Print or Type Title: Sr. Vice President, General Counsel and Secretary
-------------------------------------------------
7
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>9
<FILENAME>formofmtirpaward.txt
<DESCRIPTION>EX-10, FORM OF MTIRP AWARD
<TEXT>
Exhibit 10(ee)
CBRL GROUP, INC.
MID-TERM INCENTIVE AND RETENTION PLAN AWARD NOTICE
This Mid-Term Incentive and Retention Plan Award Notice (the "Notice") is
dated this ____ day of ________, 20__, from CBRL GROUP, INC., a Tennessee
corporation (the "Company") to ____________________, ______________________ of
the Company (the "Employee").
WHEREAS, the Compensation and Stock Option Committee of the Company's Board
of Directors has authorized an award to the Employee of
________________________________ (_______) shares of the Company's $0.01 par
value common stock (the "Restricted Stock") [and cash in the amount of
$____________] pursuant to the terms and provisions of the FY ____ Mid-Term
Incentive and Retention Plan (the "Plan") and this Notice;
NOW, THEREFORE, for and in consideration of the premises and other good and
valuable consideration, including the services to be rendered to the Company by
the Employee, the Company does hereby award the Restricted Stock to the
Employee, and the Employee, by [his][her] signature hereto, accepts such
Restricted Stock, on the following terms and conditions:
(1) Grant of Restricted Stock. The Company hereby grants to the Employee
_____________________ (_______) shares of Restricted Stock, subject to all the
restrictions, limitations and other terms and provisions of the Plan and this
Notice. Upon vesting, the Company shall cause a certificate evidencing the
Restricted Stock to be issued by the Company's stock transfer agent, who will
release such Restricted Stock to the Employee solely upon the written
instructions of the Company.
(2) Restrictions. Until the Restricted Stock vests and becomes
distributable in accordance with the Employment Agreement, the Plan and this
Notice, the Employee shall not have any of the rights of a shareholder of the
Company with respect to the Restricted Stock, including the right to vote the
shares or to receive any cash dividends.
(3) Vesting. The Restricted Stock, subject to all the restrictions,
limitations and other terms and provisions of the Plan and this Notice, shall
vest and become distributable without further or additional conditions at the
end of the Company's ____ fiscal year.
(4) Non-transferability. Unvested Restricted Stock is not transferable by
the Employee.
[(5) Grant of Cash Award. The Company hereby awards to the Employee cash in
the amount of $____________ (the "Cash"), subject to all the restrictions,
limitations and other terms and provisions of the Plan and this Notice.]
(6) Notice Subject to Plan. This Notice does not undertake to express all
conditions, terms and provisions of the Plan. The grant of the Restricted Stock
[and Cash] is subject in all respects to all of the restrictions, limitations
and other terms and provisions of the Plan, which, by this reference, is
incorporated herein to the same extent as if copied verbatim.
(7) Tax Withholding and Section 83(b) Elections. At the time the Employee
shall become subject to federal income taxation with respect to the Restricted
Stock (normally upon vesting, unless the Employee files an election under
Section 83(b) of the Code), the Employee shall pay to the Company the amount of
any Federal, state, local and other taxes required to be withheld by the Company
with respect to the Restricted Stock. If the Employee files an election under
Section 83(b) of the Code with the Internal Revenue Service to include the fair
market value of any shares of Restricted Stock in gross income while they are
still subject to any restrictions, the Employee shall promptly furnish to the
Company a copy of such election. The Company may make such provisions and take
such steps as it may deem necessary or appropriate for the withholding of all
Federal, state, local and other taxes required by law to be withheld upon the
vesting of the Restricted Stock. Unless otherwise determined by the Committee,
the Employee will be permitted to elect to surrender a sufficient number of
shares of the vested Restricted Stock to satisfy the Company's minimum tax
withholding obligation.
(8) Acceptance of Restricted Stock and [Cash]. The Employee hereby accepts
the Restricted Stock [and Cash] subject to all the restrictions, limitations and
other terms and provisions of the Plan and this Notice.
[Signature page follows.]
<PAGE>
WITNESS the action of the Company effective as of the day and year first
above written.
The foregoing is acknowledged and accepted:
- -------------------------------------------
CBRL GROUP, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>10
<FILENAME>cbrlgroup10k092205ex13.txt
<DESCRIPTION>PORTIONS OF ANNUAL REPORT TO SHAREHOLDERS
<TEXT>
Exhibit 13
CBRL Group, Inc.
Selected Financial Data
<TABLE>
<S> <C> <C> <C> <C> <C>
(Dollars in thousands except share data)
For each of the fiscal years ended
July 29, July 30, August 1, August 2, August 3,
2005 2004(c) 2003 2002 2001 (d)(e)(f)
--------------------------------------------------------------------------------------------
Selected Income Statement Data:
Total revenue $2,567,548 $2,380,947 $2,198,182 $2,071,784 $1,967,998
Net income 126,640 111,885 105,108 90,444 48,550
Net income per share:
Basic 2.65 2.29 2.13 1.67 0.86
Diluted 2.45 2.12 1.97 1.59 0.85
Dividends paid per share(a) $ 0.47 $ 0.33 $ 0.02 $ 0.02 $ 0.02
As Percent of Revenues:
Cost of goods sold 33.0% 33.0% 32.0% 32.7% 33.8%
Labor and related expenses 36.6 37.0 37.3 37.5 37.2
Other store operating expenses 17.4 17.0 17.3 17.1 18.2
Store operating income 13.0 13.0 13.4 12.7 10.8
General and administrative
expenses 5.1 5.3 5.6 5.6 5.2
Operating Income 7.9 7.7 7.8 7.1 4.9
Income before income taxes 7.5 7.3 7.4 6.8 4.2
Memo: Depreciation and
amortization 2.6 2.7 2.9 3.0 3.3
Selected Balance Sheet Data:
Working capital (deficit) $ (104,862) $ (39,195) $ (66,880) $ (51,252) $ (34,701)
Total assets 1,533,272 1,435,704 1,327,165 1,264,673 1,213,797
Long-term debt 212,218 185,138 186,730 194,476 125,000
Other long-term obligations 48,411 36,225 30,454 25,992 19,697
Shareholders' equity 869,988 873,336 789,362 778,881 843,340
Selected Cash Flow Data:
Cash provided by operating activities $ 279,903 $ 200,365 $ 240,586 $ 196,277 $ 147,859
Purchase of property and equipment 171,447 144,611 120,921 96,692 91,439
Share repurchases 159,328 69,206 166,632 216,834 36,444
Selected Other Data:
Common Shares outstanding at
end of year 46,619,803 48,769,368 47,872,542 50,272,459 55,026,846
Stores Open at End of Year:
Cracker Barrel 529 504 480 457 437
Logan's company-operated 124 107 96 84 75
Logan's franchised 23 20 16 12 8
Comparable Store Sales(b):
Average Unit Annual Sales:
Cracker Barrel restaurant $ 3,313 $ 3,217 $ 3,157 $ 3,150 $ 3,082
Cracker Barrel retail 955 988 939 945 946
Memo: Cracker Barrel number of
stores in comparable base 466 445 430 414 376
Logan's company-operated $ 3,160 $ 3,040 $ 2,915 $ 2,959 $ 3,041
Memo: Logan's number of restaurants
in comparable base 93 83 71 59 40
Period to period increase (decrease)
in comparable store sales:
Cracker Barrel restaurant 3.1 % 2.0% 0.5 % 5.3% 4.6%
Cracker Barrel retail (2.7) 5.3 (0.4) 2.3 1.1
Logan's company-operated 3.4 4.8 0.0 2.4 (1.1)
</TABLE>
<PAGE>
(a) On September 23, 2004, the Company's Board of Directors (the "Board")
increased the quarterly dividend to $0.12 per share per quarter (an annual
equivalent of $0.48 per share). During 2005, the Company paid such
dividends of $0.12 per share during the second, third and fourth quarters
of 2005. Additionally, on September 22, 2005, the Board declared a dividend
of $0.13 per share payable on November 8, 2005 to shareholders of record on
October 14, 2005. This dividend reflects an 8.3% increase from the previous
quarterly dividend.
(b) Comparable store sales and traffic consist of sales and calculated number
of guests, respectively, of units open six full quarters at the beginning
of the year; and are measured on comparable calendar weeks. Average unit
volumes are normalized to 52 weeks for fiscal 2001.
(c) Includes charges of $5,210 before taxes, as a result of settlement of
certain lawsuits against the Company's Cracker Barrel Old Country Store,
Inc. ("Cracker Barrel") subsidiary (see Note 10 to the Company's
Consolidated Financial Statements).
(d) Includes charges of $33,063 before taxes, principally as a result of
exiting the Carmine Giardini's Gourmet Market(TM) business and closing four
Cracker Barrel units and three Logan's Roadhouse restaurants, as well as an
accrual for a settlement proposal for a collective action under the Fair
Labor Standards Act, which was later settled as part of the item noted in
(c) above.
(e) The Company's fiscal year ended August 3, 2001 consisted of 53 weeks. As a
result, comparisons to fiscal 2002 also reflect the impact of having one
more week in fiscal 2001 than in fiscal 2002.
(f) Includes a sale-leaseback transaction under which $138,300 of long-term
debt was paid down.
MARKET PRICE AND DIVIDEND INFORMATION
The following table indicates the high and low sales prices of the Company's
common stock, as reported by The Nasdaq Stock Market (National Market), and
dividends paid.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Fiscal Year 2005 Fiscal Year 2004
Prices Prices
------------------------------- Dividends ------------------------------- Dividends
High Low Paid High Low Paid
- --------------------------------------------------------------------------------------------------------------------------------
First $37.09 $30.00 $0.11 $39.02 $32.25 -
Second 43.14 36.08 0.12 42.07 36.61 $0.11
Third 44.60 38.38 0.12 41.24 37.09 0.11
Fourth 42.12 37.75 0.12 38.11 30.55 0.11
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of the Company's
consolidated and financial condition. The discussion should be read in
conjunction with the Consolidated Financial Statements and notes thereto. Except
for specific historical information, the matters discussed in this Annual Report
to Shareholders, as well as the Company's Annual Report on Form 10-K filed with
the Securities and Exchange Commission ("SEC") for the year ended July 29, 2005,
contain forward-looking statements that involve risks, uncertainties and other
factors which may cause actual results and performance of the Company to differ
materially from those expressed or implied by these 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 factors. Forward-looking statements generally
can be identified by the use of forward-looking terminology such as
"assumptions," "target," "guidance," "outlook," "plans," "projection," "may,"
"will," "would," "expect," "intend," "estimate," "anticipate," "believe,"
"potential" or "continue" (or the negative or other derivatives of each of these
terms) or similar terminology. Factors which could materially affect actual
results include, but are not limited to: the effects of uncertain consumer
confidence, higher costs for energy, mortgage or other consumer debt payments,
or general or regional economic weakness on sales and customer travel,
discretionary income or personal expenditure activity; the ability of the
Company to identify, acquire and sell successful new lines of retail
merchandise; competitive marketing and operational initiatives; the ability of
the Company to sustain or the effects of plans intended to improve operational
execution and performance; the effects of plans intended to promote or protect
the Company's brands and products; the effects of increased competition at
Company locations on sales and on labor recruiting, cost, and retention; the
availability and cost of acceptable sites for development and the Company's
ability to identify such sites; the ability of the Company to open and operate
new locations successfully; changes in foreign exchange rates affecting the
Company's future retail inventory purchases; commodity, workers' compensation,
group health and utility price changes; changes in building materials and
construction costs; consumer behavior based on negative publicity or concerns
over nutritional or safety aspects of the Company's products or restaurant food
in general; changes in or implementation of additional governmental or
regulatory rules, regulations and interpretations affecting accounting, tax,
wage and hour matters, health and safety, pensions, insurance or other
undeterminable areas; practical or psychological effects of terrorist acts or
war and military or government responses; the ability of and cost to the Company
to recruit, train, and retain qualified hourly and management employees; changes
in interest rates affecting the Company's financing costs; disruptions to the
company's restaurant or retail supply chain; the actual results of pending,
future or threatened litigation or governmental investigations and the costs and
effects of negative publicity associated with these activities; implementation
of new or changes in interpretation of existing accounting principles generally
accepted in the United States of America ("GAAP"); effectiveness of internal
controls over financial reporting; changes in capital market conditions that
could affect valuations of restaurant companies in general or the Company's
goodwill in particular; and other factors described from time to time in the
Company's filings with the SEC, press releases, and other communications.
All dollar amounts reported or discussed in Management's Discussion and
Analysis of Financial Condition and Results of Operations are shown in
thousands. References in Management's Discussion and Analysis of Financial
Condition and Results of Operations to a year or quarter are to the Company's
fiscal year or quarter unless otherwise noted.
EXECUTIVE OVERVIEW
CBRL Group, Inc. (the "Company," "our" or "we") is a publicly traded
(Nasdaq: CBRL) holding company that, through certain subsidiaries, is engaged in
the operation and development of the Cracker Barrel Old Country Store(R)
("Cracker Barrel") and Logan's Roadhouse(R) ("Logan's") restaurant and retail
concepts. The Company was organized under the laws of the state of Tennessee in
August 1998 and maintains an Internet website at cbrlgroup.com.
We are in the business of delivering excellent guest dining experiences,
and we strive to do that in 41 states at more than 650 company-owned and 23
franchised units. While each restaurant concept offers its own unique atmosphere
and an array of distinct menu items, both are equally committed to executing
outstanding guest service while focusing on delivery of high quality products at
affordable prices. During 2005 we served approximately 212 million meals in
Cracker Barrel and approximately 30 million meals in Logan's.
<PAGE>
Restaurant Industry
Our businesses operate in the full-service segment of the restaurant
industry in the United States. The restaurant business is highly competitive
with respect to quality, variety and price of the food products offered. The
industry is often affected by changes in the taste and eating habits of the
public, local and national economic conditions affecting spending habits, and
population and traffic patterns. There are many segments within the restaurant
industry, which overlap and often provide competition for widely diverse
restaurant concepts. Competition also exists in securing prime real estate
locations for new restaurants, in hiring qualified employees, in advertising, in
the attractiveness of facilities and among competitors with similar menu
offerings or convenience.
Additionally, seasonal, economic and weather conditions also affect the
restaurant business. Historically, interstate tourist traffic and the propensity
to dine out have been much higher during the summer months, thereby attributing
to higher profits in our fourth quarter. While retail sales in Cracker Barrel
are made substantially to restaurant customers, such sales are strongest in the
second quarter, which includes the Christmas holiday shopping season. A rapid
increase in gasoline and energy prices that began in 2004, continued in 2005,
and apparently exacerbated by disruptions from hurricanes in 2006, appears to
have affected consumer discretionary income and dining out habits. Severe
weather can and has affected sales adversely from time to time.
Key Performance Indicators
Management uses a number of key performance measures to evaluate the
Company's operational and financial performance, including the following:
Comparable store sales and traffic consist of sales and calculated number
of guests, respectively, of units open six full quarters at the beginning of the
year; and are measured on comparable calendar weeks. This measure highlights
performance of existing stores as the impact of new store openings is excluded.
Percentage of restaurant sales by day-part assists management in
identifying the breakdown of sales provided by meals served for breakfast, lunch
or dinner. This measure not only provides a financial measure of revenues by
type of meal, but also assists operational management in analyzing staffing
levels needed throughout the day.
Percentage of retail sales to total sales indicates the relative proportion
of spending by guests on retail product at Cracker Barrel stores and helps
identify overall effectiveness of our retail operations and initiatives.
Management uses this measure to analyze a store's ability to convert restaurant
traffic into retail sales since the substantial majority of our retail guests
are also restaurant guests.
Average check per person is an indicator which management uses to analyze
the dollars spent in our stores per guest. This measure aids management in
identifying trends in guest preferences as well as the effectiveness of menu
price increases and other menu changes.
Turnover rates are considered separately for both hourly turnover and
managerial turnover. These indicators help management to anticipate future
training needs and costs, as well as helping management to recognize trends in
staffing levels that would potentially affect operating performance.
Store Operating Margins are defined as total revenue less cost of goods
sold, labor and other related expenses and other store operating expenses, all
as a percent of total revenue. Management uses this indicator as a primary
measure of operating profitability.
<PAGE>
Results of Operations
The following table highlights operating results over the past three years:
<TABLE>
<S> <C> <C> <C> <C> <C>
Period to Period
Relationship to Total Revenue Increase (Decrease)
-------------------------------------------------------------------
2005 2004
2005 2004 2003 vs 2004 vs 2003
- -----------------------------------------------------------------------------------------------------------------
Total revenue: 100.0% 100.0% 100.0% 8% 8%
Cost of goods sold 33.0 33.0 32.0 8 12
Gross profit 67.0 67.0 68.0 8 7
Labor and other related expenses 36.6 37.0 37.3 7 7
Other store operating expenses 17.4 17.0 17.3 10 6
Store operating income 13.0 13.0 13.4 8 5
General and administrative 5.1 5.3 5.6 4 4
Operating income 7.9 7.7 7.8 10 6
Interest expense 0.4 0.4 0.4 3 (5)
Interest income - - - 1,820 -
Income before income taxes 7.5 7.3 7.4 11 7
Provision for income taxes 2.6 2.6 2.6 7 8
Net income 4.9 4.7 4.8 13 6
=================================================================================================================
</TABLE>
The Company recorded charges of $5,210 before taxes, during the quarter ended
July 30, 2004, as a result of a settlement in principle of certain previously
reported lawsuits against its Cracker Barrel subsidiary (see Note 10 to the
Company's Consolidated Financial Statements). The charge increased general and
administrative expense in the Company's Consolidated Statement of Income in
dollars and as a percent of total revenue for the year ended July 30, 2004 by
$5,210 and 0.2%, respectively.
Total Revenue
The following table highlights the components of total revenue by
percentage relationships to total revenue for the past three years:
<TABLE>
<S> <C> <C> <C>
2005 2004 2003
----------------------------------------
Net Sales:
Cracker Barrel restaurant 66.1% 66.1% 67.3%
Logan's company-operated 14.6 13.4 12.4
- -------------------------------------------------------------------------------------------------------------------------------
Total restaurant 80.7 79.5 79.7
Cracker Barrel retail 19.2 20.4 20.2
- -------------------------------------------------------------------------------------------------------------------------------
Total net sales 99.9 99.9 99.9
Franchise fees and royalties 0.1 0.1 0.1
- -------------------------------------------------------------------------------------------------------------------------------
Total revenue 100.0% 100.0% 100.0%
===============================================================================================================================
</TABLE>
The following table highlights comparable store sales* results over the past two
years:
<TABLE>
<S> <C> <C> <C> <C>
Cracker Barrel Logan's
Period to Period Period to Period
Increase (Decrease) Increase
------------------- --------
2005 vs 2004 2004 vs 2003 2005 vs 2004 2004 vs 2003
(466 Stores) (445 Stores) (93 Stores) (83 Stores)
- ---------------------------------------------------------------------------------------------------------------------------------
Restaurant 3.1% 2.0% 3.4% 4.8%
Retail (2.7) 5.3 -- --
Restaurant & Retail 1.8 2.8 3.4 4.8
=================================================================================================================================
</TABLE>
*Comparable store sales consist of sales of units open six full quarters at the
beginning of the year; and are measured on comparable calendar weeks.
<PAGE>
Cracker Barrel comparable store restaurant sales increased 3.1% for 2005
versus 2004 at an average of $3,313 per store. Comparable store restaurant sales
increased 2.0% in 2004 versus 2003. The increase in comparable store restaurant
sales from 2004 to 2005 was due to an increase in average check of 4.0%,
including a 2.9% menu price increase and 1.1% of product mix changes, and a
decrease in guest traffic of 0.9%.
Cracker Barrel comparable store retail sales decreased 2.7% for 2005 versus
2004 at an average of $955 per store. Comparable store retail sales increased
5.3% in 2004 versus 2003. The comparable store retail sales decrease from 2004
to 2005 was due to exceptionally strong retail sales in 2004, restaurant guest
traffic decreases, uncertain consumer sentiment and reduced discretionary
spending, and weaker than expected response to the retail assortments, which
included fewer new product lines than presently is expected to be featured in
the future.
In 2005 total net sales (restaurant and retail) in the 466 Cracker Barrel
comparable stores averaged $4,268. Restaurant sales were 77.6% of total net
sales in the comparable 466 stores in 2005 and 76.6% in 2004.
Logan's comparable store sales increased 3.4% for 2005 versus 2004 at an
average of $3,160 per restaurant. Comparable store sales increased 4.8% for 2004
versus 2003. The increase in comparable store sales from 2004 to 2005 was due to
an increase in average check of 3.9% and a decrease in guest traffic of 0.5%.
The higher check included a 3.2% menu price increase and 0.7% of product mix and
other changes including fewer complimentary meals.
Total revenue, which increased 7.8% and 8.3% in 2005 and 2004,
respectively, benefited from the opening of 25, 24 and 23 Cracker Barrel stores
in 2005, 2004 and 2003, respectively, and the opening of 17, 11 and 12
company-operated and 3, 4 and 4 franchised Logan's restaurants in 2005, 2004 and
2003, respectively. Average weekly sales (net sales divided by operating weeks
in company-owned units) were approximately $63.3 per week for Cracker Barrel
restaurants in 2005 (compared with $61.7 in 2004 and $60.9 in 2003), $18.4 for
Cracker Barrel retail (compared with $19.1 for 2004 and $18.2 for 2003), and
$61.0 for Logan's (compared with $59.5 for 2004 and $57.0 for 2003).
Cost of Goods Sold
Cost of goods sold as a percentage of total revenue in 2005 remained flat
compared to 2004 at 33.0%. This was due to higher commodity costs for beef,
pork, poultry and produce and higher markdowns on retail merchandise offset by
higher menu pricing and a lower percentage of retail sales, which have a higher
cost as a percent of sales than do restaurant sales, and higher initial mark-ons
of retail merchandise.
Cost of goods sold as a percentage of total revenue increased in 2004 to
33.0% from 32.0% in 2003. This increase was due to higher commodity costs for
beef, butter, bacon and other dairy, including eggs, all of which had high
single-digit percentage increases due to unfavorable market conditions. Also
affecting cost of goods sold in 2004 was a higher mix of retail sales as a
percent of total revenue (retail has a higher product cost than restaurant) and
higher markdowns of retail merchandise versus the prior year. Management
believes that increases in 2004 were unusual in both magnitude and the breadth
of commodities affected. These increases were partially offset by higher menu
pricing and higher initial mark-ons of retail merchandise.
Labor and Related Expenses
Labor and other related expenses include all direct and indirect labor and
related costs incurred in store operations. Labor expenses as a percentage of
total revenue were 36.6%, 37.0% and 37.3% in 2005, 2004 and 2003, respectively.
The year to year decrease from 2004 to 2005 was due to higher menu pricing and
lower bonuses under unit-level bonus programs, partially offset by higher hourly
wage rates and manager wages versus the prior year. The year to year decrease
from 2003 to 2004 was due to higher menu pricing, lower hourly labor, including
wage rates and decreased workers' compensation and group health costs offset
partially by increases in manager wages and bonuses versus the prior year.
Other Store Operating Expenses
Other store operating expenses include all unit-level operating costs, the
major components of which are operating supplies, utilities, repairs and
maintenance, advertising, rent, depreciation and amortization. Other store
operating expenses as a percentage of total revenue were 17.4%, 17.0% and 17.3%
in 2005, 2004 and 2003, respectively. The year to year increase from 2004 to
2005 was due to higher utilities, advertising and maintenance expenses offset
partially by higher menu pricing versus the prior year. The decrease from 2003
to 2004 was due to lower advertising and depreciation and higher menu pricing
versus the prior year offset partially by higher losses on disposition of
property and equipment versus the prior year.
<PAGE>
General and Administrative Expenses
General and administrative expenses as a percentage of total revenue were
5.1%, 5.3% and 5.6% in 2005, 2004 and 2003, respectively. The year to year
decrease from 2004 to 2005 was due to lower legal fees compared to prior year,
which included a legal settlement and an insurance recovery relative to
litigation settlements and related expenses incurred in prior years discussed
earlier (also see Note 10 to the Consolidated Financial Statements), offset
partially by higher salaries versus prior year. The year to year decrease from
2003 to 2004 was due to lower professional fees and lower bonus accruals
reflective of lower performance against financial objectives offset partially by
the legal settlement discussed earlier (also see Note 10 to the Consolidated
Financial Statements).
Interest Expense
Interest expense increased to $8,693 in 2005 from $8,444 in 2004, which
represented a decrease from $8,892 in 2003. The year to year increase from 2004
to 2005 was due to higher average outstanding debt and higher interest rates,
offset partially by lower amortization of deferred financing costs and higher
capitalized interest. The decrease from 2003 to 2004 resulted from lower average
outstanding debt as compared to the prior year.
Provision for Income Taxes
Provision for income taxes as a percent of income before income taxes was
34.6% for 2005, 35.9% for 2004 and 35.5% for 2003. The reason for the decrease
in the tax rate from 2004 to 2005 reflected the passage of the Work Opportunity
and Welfare to Work federal tax credit legislation signed on October 22, 2004
retroactive to January 1, 2004. The reason for the increase in the tax rate from
2003 to 2004 was the expiration of the same federal tax credit legislation on
January 1, 2004.
Recent Accounting Pronouncements Not Yet Adopted
In December 2004, the FASB issued SFAS No. 123 (Revised 2004) "Share-Based
Payment" ("SFAS No. 123R"). SFAS No. 123R replaces SFAS No. 123, "Accounting for
Stock-Based Compensation" and supersedes APB Opinion No. 25, "Accounting for
Stock Issued to Employees." SFAS No. 123R requires that the cost of employee
services received in exchange for equity instruments issued or liabilities
incurred are recognized in the financial statements. Compensation cost will be
measured using a fair-value-based method over the period that the employee
provides service in exchange for the award. As disclosed in Note 2 to the
Company's Consolidated Financial Statements, based on the current assumptions
and calculations used, had the Company recognized compensation expense based on
the fair value of awards of equity instruments, net income would have been
reduced by approximately $8,799 for the year ended July 29, 2005. This
compensation expense is the after-tax net of the stock-based compensation
expense determined under the fair-value based method for all awards and
stock-based employee compensation included previously in reported net income
under APB No. 25. This statement will apply to all awards granted after the
effective date and to modifications, repurchases or cancellations of existing
awards. SFAS No. 123R is effective as of the beginning of the first annual
reporting period that begins after June 15, 2005 and, therefore, the Company
will adopt in its first quarter of 2006. Partly in anticipation of these new
accounting rules, the Company modified its compensation plans to limit
eligibility to receive share-based compensation and shifted a portion of
share-based compensation primarily to cash-based incentive compensation. We
expect the 2006 impact of the adoption of SFAS 123(R) combined with the
modifications to the Company's compensation plans to be approximately $0.14 to
$0.16 per diluted share. The effect of future awards will vary depending on
timing, amount and valuation methods used for such awards, the past awards are
not necessarily indicative of future awards. SFAS 123(R) also requires the
benefits of tax deductions in excess of recognized compensation cost to be
reported as a financing cash flow, rather than as an operating cash flow as
required under the current rules. This requirement will reduce net operating
cash flow and reduce net financing cash outflow by offsetting and equal amounts.
In November 2004, the FASB issued Statement No. 151, "Inventory Costs, an
amendment of ARB No. 43, Chapter 4" ("SFAS No. 151"). SFAS No. 151 clarifies
that abnormal inventory costs such as costs of idle facilities, excess freight
and handling costs, and wasted materials (spoilage) are required to be
recognized as current period charges and require the allocation of fixed
production overheads to inventory based on the normal capacity of the production
facilities. The provisions of SFAS No. 151 are effective for inventory costs
incurred during fiscal years beginning after June 15, 2005 and, therefore, the
Company will adopt in its first quarter of 2006. The Company does not expect the
adoption of SFAS No. 151 to have a material impact on the Company's consolidated
results of operations or financial position.
In May 2005, the FASB issued Statement No. 154, "Accounting Changes and
Error Corrections-a replacement of APB Opinion No. 20 and FASB Statement No. 3."
This Statement is effective for accounting changes and corrections of errors
made in fiscal years beginning after December 15, 2005. Early adoption is
permitted for accounting changes and corrections of errors made in fiscal years
<PAGE>
beginning after the date this Statement was issued. This Statement does not
change the transition provisions of any existing accounting pronouncements,
including those that are in a transition phase as of the effective date of this
Statement.
Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk. The Company is subject to market risk exposure related
to changes in interest rates. As of September 26, 2005, the Company has in place
a $300,000 Revolving Credit Facility, which matures February 21, 2008. The
facility bears interest, at the Company's election, either at the prime rate or
a percentage point spread from LIBOR based on certain financial ratios set forth
in the loan agreement. At July 29, 2005, the Company had $21,500 outstanding
borrowings under the Revolving Credit Facility, and the Company's percentage
point spread from LIBOR was 1.25%, as it was through all of 2005. The percentage
point spread will remain 1.25% for the first quarter of 2006. The percentage
point spread from LIBOR for the second, third and fourth quarters of 2006
remains to be determined. While changes in the prime rate or LIBOR would affect
the cost of funds borrowed in the future, the Company believes that the effect,
if any, of reasonably possible near-term changes in interest rates on the
Company's consolidated financial position, results of operations or cash flows
would not be material.
Commodity Price Risk. Many of the food products purchased by the Company
are affected by commodity pricing and are, therefore, subject to price
volatility caused by weather, production problems, delivery difficulties and
other factors which are outside the control of the Company and which are
generally unpredictable. Four food categories (beef, dairy, including eggs, pork
and poultry) account for the largest shares of the Company's food purchases at
approximately 19%, 12%, 10% and 9%, respectively. Other categories affected by
the commodities markets, such as produce, seafood and coffee, may each account
for as much as 6% of the Company's food purchases. While the Company has some of
its food items prepared to its specifications, the Company's food items are
based on generally available products, and if any existing suppliers fail, or
are unable to deliver in quantities required by the Company, the Company
believes that there are sufficient other quality suppliers in the marketplace
that its sources of supply can be replaced as necessary. The Company also
recognizes, however, that commodity pricing is extremely volatile and can change
unpredictably and over short periods of time. Changes in commodity prices would
affect the Company and its competitors generally, and depending on the terms and
duration of supply contracts, sometimes simultaneously. The Company also enters
into supply contracts for certain of its products in an effort to minimize
volatility of supply and pricing. In many cases, or over the longer term, the
Company believes it will be able to pass through some or much of the increased
commodity costs by adjusting its menu pricing. From time to time, competitive
circumstances, or judgments about consumer acceptance of price increases, may
limit menu price flexibility, and in those circumstances increases in commodity
prices can result in lower margins for the Company, as happened in 2004 and
2005.
Liquidity and Capital Resources
The following table presents a summary of the Company's cash flows for the
last three years:
<TABLE>
<S> <C> <C> <C>
2005 2004 2003
- ---------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities $279,903 $200,365 $240,586
Net cash used in investing activities (170,066) (143,666) (118,953)
Net cash used in financing activities (121,439) (42,313) (122,318)
- ---------------------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents $(11,602) $ 14,386 $ (685)
=================================================================================================================================
</TABLE>
The Company's cash generated from operating activities was $279,903 in
2005. Most of this cash was provided by net income adjusted by depreciation and
amortization, increases in accounts payable and deferred income taxes and other
adjustments to net income from the tax benefit realized upon exercise of stock
options, accretion on zero coupon contingently convertible senior notes and loss
on disposition of property. Increases in other long-term obligations, accrued
employee benefits, income taxes payable, taxes withheld and accrued and deferred
revenues and decreases in prepaid expenses were partially offset by increases in
other assets, accounts receivable and inventories and decreases in other accrued
expenses and accrued employee compensation.
The Company had negative working capital of $104,862 at July 29, 2005
versus negative working capital of $39,195 at July 30, 2004. In the restaurant
industry, substantially all sales are either for cash or third-party credit
card. Like many other restaurant companies, the Company is able to, and may from
time to time, operate with negative working capital. Restaurant inventories
purchased through the Company's principal food distributor are on terms of net
<PAGE>
zero days, while restaurant inventories purchased locally generally are financed
from normal trade credit. Retail inventories purchased domestically generally
are financed from normal trade credit, while imported retail inventories
generally are purchased through letters of credit and wire transfers. These
various trade terms are aided by rapid turnover of the restaurant inventory.
Employees generally are paid on weekly, bi-weekly or semi-monthly schedules in
arrears for hours worked, and certain expenses such as certain taxes and some
benefits are deferred for longer periods of time.
Capital expenditures (purchase of property and equipment) were $171,447,
$144,611 and $120,921 in 2005, 2004 and 2003, respectively. Costs of new
locations accounted for the majority of these expenditures.
The Company's internally generated cash, along with cash at July 30, 2004,
proceeds from stock option exercises, the Company's available revolver and the
Company's new operating leases, were sufficient to finance all of its growth,
share repurchases and other cash payment obligations in 2005.
In 2002, the Company issued $422,050 (face value at maturity) of Notes,
maturing on April 2, 2032, and received proceeds totaling approximately $172,756
prior to debt issuance costs. The Notes require no cash interest payments and
were issued at a discount representing a yield to maturity of 3.00% per annum.
The Notes are redeemable at the Company's option on or after April 3, 2007, and
the holders of the Notes may require the Company to redeem the Notes on April 3,
2007, 2012, 2017, 2022 or 2027, and in certain other circumstances. In addition,
each $1 (face value at maturity) Note is convertible into 10.8584 shares of the
Company's common stock (approximately 4.6 million shares in the aggregate) if
any of the following conditions occur: 1) the closing price of the Company's
common stock exceeds a specified price (initially, 120% of the accreted
conversion price, and declining .08474% per quarter thereafter to approximately
110% of the accreted conversion price on the last day of the quarter ending
January 30, 2032, with a specified price of $49.19 at July 29, 2005); 2) the
Company exercises its option to redeem the Notes; 3) the credit rating of the
Notes is reduced by Moody's and Standard and Poor's to or below both Ba3 and
BB-, respectively; or 4) certain specified corporate events.. The Company's
closing share price, as reported by Nasdaq, on July 29, 2005 was $39.17. The
holders of the Senior Notes had the option to require the Company to repurchase
the Senior Notes on April 3, 2005. That option was not exercised. After the
adoption of EITF No. 04-08, "The Effect of Contingently Convertible Debt on
Diluted Earnings Per Share," in the second quarter of 2005, the Company was
required to include approximately 4.6 million shares in its diluted shares
outstanding related to its convertible debt. Additionally, diluted consolidated
net income per share is calculated excluding the after-tax interest and
financing expenses associated with the Notes, since these Notes are treated as
if converted into common stock although at the end of 2005 the Notes were not
actually converted into stock, nor did the requirements exist that would have
allowed them to be converted.
As mentioned previously, the Company has a $300,000 Revolving Credit
Facility, which expires on February 21, 2008. At July 29, 2005, the Company had
$21,500 outstanding borrowings under the Revolving Credit Facility.
At the beginning of 2005, the Company had 2,892,000 shares remaining under
repurchase authorizations previously in effect at the end of 2004. During 2005,
the Company's Board of Directors (the "Board") authorized the repurchase of up
to an additional 2 million shares of the Company's common stock. The repurchases
are to be made from time to time in the open market at prevailing market prices.
During 2005, the Company completed repurchases of 4,070,919 shares of its common
stock for a net expenditure of $159,328 or approximately $39.14 per share. The
Company presently expects to repurchase the remaining 821,081 shares authorized
during 2006, although there can be no assurance that such repurchases actually
will be completed in that period of time. The Company's principal criteria for
share repurchases are that they be accretive to net income per share and that
they do not unfavorably affect the Company's investment grade debt rating and
target capital structure.
During 2005 the Company received proceeds of $39,341 from the exercise of
stock options to acquire 1,921,354 shares of its common stock and tax benefit
upon exercise of stock options of $12,990.
During the first quarter of 2005, the Board approved a quarterly dividend
of $0.12 per common share (an annual equivalent of $0.48 per share), an increase
from a quarterly dividend of $0.11 approved in 2004. The Company paid such
dividends of $0.12 per share during the second, third and fourth quarters of
2005 and the first quarter of 2006. Additionally, on September 22, 2005, the
Board declared a dividend of $0.13 per share payable on November 8, 2005 to
shareholders of record on October 14, 2005. This dividend reflects an 8.3%
increase from the previous quarterly dividend.
The Company estimates that its capital expenditures (purchase of property
and equipment) for 2006 will be approximately $205,000 to $210,000, most of
which will be related to the acquisition of sites and construction of 26 new
Cracker Barrel stores and 22-24 new Logan's restaurants and openings that will
occur during 2006, as well as for acquisition and construction costs for
locations to be opened in early 2007.
<PAGE>
Management believes that cash at July 29, 2005, along with cash generated
from the Company's operating activities, stock option exercises and available
borrowings under the Revolving Credit Facility, will be sufficient to finance
its continued operations, its remaining share repurchase authorization, its
continued expansion plans and its dividend payments through 2006. At July 29,
2005, the Company had $278,500 available under its Revolving Credit Facility.
The Company estimates that net cash provided by operating activities will exceed
cash used for purchase of property and equipment by $50,000 or more in 2006,
which would make 2006 the sixth consecutive year in which this has happened. The
Company intends to use this excess cash along with proceeds from the exercise of
stock options in 2006 to apply toward completing its remaining 821,081 share
repurchase authorization, possible future share repurchase authorizations and
dividend payments or other general corporate purposes.
Off-Balance Sheet Arrangements
Other than various operating leases, as disclosed more fully in the
Material Commitments section below and Note 10 to the Company's Consolidated
Financial Statements, the Company has no other material off-balance sheet
arrangements.
Material Commitments
For reporting purposes, the schedule of future minimum rental payments
required under operating leases, excluding billboard leases, uses the same lease
term as used in the straight-line rent calculation. This term includes certain
future renewal options although the Company is not currently legally obligated
for all optional renewal periods. This method was deemed appropriate under SFAS
No. 13, "Accounting for Leases," to be consistent with the lease term used in
the straight-line rent calculation, as described in Note 2 to the Consolidated
Financial Statements.
The Company's contractual cash obligations and commitments as of July 29,
2005, are summarized in the tables below:
<TABLE>
<S> <C> <C> <C> <C> <C>
Payments due by Year
- ---------------------------------------------------------------------------------------------------------------------------------
Total 2006 2007-2008 2009-2010 After 2010
- ---------------------------------------------------------------------------------------------------------------------------------
Convertible debt $190,718 -- -- -- $190,718
Revolving credit facility 21,500 -- $21,500 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Long-term Debt (a) 212,218 -- 21,500 -- 190,718
Operating lease base term and exercised options -
excluding billboards (b) 449,412 $33,310 66,672 $65,145 284,285
Operating lease renewal periods not yet
exercised - excluding billboard (c) 336,836 190 953 2,119 333,574
Operating leases for billboards 39,404 21,854 17,400 150 --
Trade letters of credit 4,343 4,343 -- -- --
Capital leases 402 235 167 -- --
Purchase obligations (d) 317,269 274,306 42,803 160 --
Other long-term obligations(e) 22,820 -- 258 194 22,368
- ---------------------------------------------------------------------------------------------------------------------------------
Total contractual cash obligations $1,382,704 $334,238 $149,753 $67,768 $830,945
=================================================================================================================================
Amount of Commitment Expirations by Year
- ---------------------------------------------------------------------------------------------------------------------------------
Total 2006 2007-2008 2009-2010 After 2010
- ---------------------------------------------------------------------------------------------------------------------------------
Revolving credit facility $300,000 -- $300,000 -- --
Standby letters of credit 32,436 $32,436 -- -- --
Guarantees (f) 4,134 467 934 $934 $1,799
- ---------------------------------------------------------------------------------------------------------------------------------
Total commitments $334,320 $30,653 $300,934 $934 $1,799
=================================================================================================================================
</TABLE>
(a) The convertible debt was issued at a discount representing a yield to
maturity of 3.00% per annum. The $190,718 balance is the accreted carrying
value of the debt at July 29, 2005. The convertible debt will continue to
accrete at 3.00% per annum and if held to maturity on April 2, 2032 the
obligation will total $422,050. The Company had $21,500 outstanding under
<PAGE>
its variable rate Revolving Credit Facility as of July 29, 2005. The
Company repaid $11,500 on August 9, 2005 and $10,000 on August 29, 2005. In
conjunction with these principal repayments the Company paid $70 in
interest. The Company paid $634 in non-use fees (also known as commitment
fees) on the Revolving Credit Facility during 2005. Based on the Company's
outstanding revolver balance of $21,500 at July 29, 2005 and the Company's
current unused commitment fee as defined in the Revolving Credit Agreement,
the Company's unused commitment fees in 2006 would be $696; however, the
actual amount will differ based on actual usage of the Revolving Credit
Facility in 2006.
(b) Includes base lease terms and certain optional renewal periods that have
been exercised and are included in the lease term in accordance with SFAS
No. 13.
(c) Includes certain optional renewal periods that have not yet been exercised,
but are included in the lease term for the straight-line rent calculation,
since at the inception of the lease, it is reasonably assured that the
Company will exercise those renewal options.
(d) Purchase obligations consist of purchase orders for food and retail
merchandise; purchase orders for capital expenditures, supplies and other
operating needs and other services; and commitments under contracts for
maintenance needs and other services. We excluded long-term agreements for
services and operating needs that can be cancelled within 60 days without
penalty. We included long-term agreements for services and operating needs
that can be cancelled with more than 60 days notice without penalty only
through the term of the notice. We included long-term agreements for
services and operating needs that can be cancelled with a penalty through
the entire term of the contract. Due to the uncertainties of seasonal
demands and promotional calendar changes, our best estimate of usage for
food, supplies and other operating needs and services is ratably over
either the notice period or the remaining life of the contract, as
applicable, unless we had better information available at the time related
to each contract.
(e) Other long-term obligations include the Company's Non-Qualified Savings
Plan, Deferred Compensation Plan and the FY2005 Mid-Term Incentive and
Retention Plan. The obligation for the Non-Qualified Savings Plan is
$20,211 (see Note 11 to the Consolidated Financial Statements and Exhibit
10(f)). The Company has a corresponding long-term asset that is available
to fund the liability. The obligation for the Deferred Compensation Plan is
$2,399 (see Exhibit 10(g)). The obligation for the FY2005 Mid-Term
Incentive and Retention Plan is $210 (see Note 7 to the Consolidated
Financial Statements and Exhibit 10(x)).
(f) Consists solely of guarantees associated with properties that have been
subleased or assigned. The Company is not aware of any non-performance
under these arrangements that would result in the Company having to perform
in accordance with the terms of those guarantees.
Critical Accounting Policies and Estimates
The Company prepares its Consolidated Financial Statements in conformity
with GAAP. The preparation of these financial statements requires the Company to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reporting period (see Note 2 to the Company's Consolidated Financial
Statements). Actual results could differ from those estimates. Critical
accounting policies are those that management believes are both most important
to the portrayal of the Company's financial condition and operating results, and
require management's most difficult, subjective or complex judgments, often as a
result of the need to make estimates about the effect of matters that are
inherently uncertain. The Company bases its estimates on historical experience,
outside advice from parties believed to be experts in such matters, and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying value of assets and liabilities that are not readily apparent from
other sources. Judgments and uncertainties affecting the application of those
policies may result in materially different amounts being reported under
different conditions or using different assumptions. The Company considers the
following policies to be most critical in understanding the judgments that are
involved in preparing its Consolidated Financial Statements.
Impairment of Long-Lived Assets and Provision for Asset Dispositions
The Company assesses the impairment of long-lived assets whenever events or
changes in circumstances indicate that the carrying value may not be
recoverable. Recoverability of assets is measured by comparing the carrying
value of the asset to the undiscounted future cash flows expected to be
generated by the asset. If the total expected future cash flows are less than
the carrying amount of the asset, the carrying amount is written down to the
estimated fair value of an asset to be held and used or over the fair value, net
of estimated costs of disposal, of an asset to be disposed of, and a loss
resulting from impairment is recognized by a charge to income. Expected future
cash flows are based on planning estimates used for the Company's related assets
in general and/or plans and objectives established for the asset and responsible
management specifically. Judgments and estimates made by the Company related to
the expected useful lives of long-lived assets are affected by factors such as
changes in economic conditions and changes in operating performance. As the
Company assesses the ongoing expected cash flows and carrying amounts of its
long-lived assets, these factors could cause the Company to realize a material
<PAGE>
impairment charge. During the third quarter of 2005, the Company determined
that an impairment existed with respect to a Cracker Barrel store that was
approved to relocate to a stronger site in the same market and recorded a charge
of $431. From time to time the Company has decided to exit from or dispose of
certain operating units. Typically such decisions are made based on operating
performance or strategic considerations and must be made before the actual costs
of proceeds of disposition are known, and management must make estimates of
these outcomes. Such outcomes could include the sale of a property or leasehold,
mitigating costs through a tenant or subtenant, or negotiating a buyout of a
remaining lease term. In these instances management evaluates possible outcomes,
frequently using outside real estate and legal advice, and records in the
financial statements provisions for the effect of such outcomes. The accuracy of
such provisions can vary materially from original estimates, and management
regularly monitors the adequacy of the provisions until final disposition
occurs. In addition, at least annually, the Company assesses the recoverability
of goodwill and other intangible assets. The impairment tests require the
Company to estimate fair values of its restaurant concepts by making assumptions
regarding future cash flows and other factors. This valuation may reflect, among
other things, such external factors as capital market valuation for public
companies comparable to the operating unit. If these assumptions change in the
future, or if operating performance declines, the Company may be required to
record impairment charges for these assets and such charges could be material.
Insurance Reserves
The Company self-insures a significant portion of expected losses under its
workers' compensation, general liability and health insurance programs. The
Company has purchased insurance for individual claims that exceed $500 for 2003
and to $1,000 for certain coverages for 2004, 2005 and going forward. The
Company has decided not to purchase such insurance for its primary group health
program, but its offered benefits are limited to not more than $1,000 during the
lifetime of any employee (including dependents) in the program. The Company
records a liability for workers' compensation and general liability for all
unresolved claims and for an actuarially determined estimate of incurred but not
reported claims at the anticipated cost to the Company as of the end of the
Company's third quarter and adjusting it by the actuarially determined losses
and actual claims payments for the fourth quarter. The reserves and losses are
determined actuarially from a range of possible outcomes within which no given
estimate is more likely than any other estimate. In accordance with SFAS No. 5,
"Accounting for Contingencies," the Company records the losses at the low end of
that range and discounts them to present value using a risk-free interest rate
based on actuarially projected timing of payments. The Company records a
liability for its group health program for all unpaid claims based primarily
upon a loss development analysis derived from actual group health claims payment
experience provided by the Company's third party administrator. The Company's
accounting policies regarding insurance reserves include certain actuarial
assumptions or management judgments regarding economic conditions, the frequency
and severity of claims and claim development history and settlement practices.
Changes in these factors in the future may produce materially different amounts
of expense that would be reported under these insurance programs.
Tax Provision
The Company must make estimates of certain items that comprise its income
tax provision. These estimates include employer tax credits for items such as
FICA taxes paid on employee tip income, Work Opportunity and Welfare to Work
credits, as well as estimates related to certain depreciation and capitalization
policies. These estimates are made based on the best available information at
the time of the provision and historical experience. The Company files its
income tax returns many months after its year end. These returns are subject to
audit by various federal and state governments years after the returns are filed
and could be subject to differing interpretations of the tax laws. The Company
then must assess the likelihood of successful legal proceedings or reach a
settlement, either of which could result in material adjustments to the
Company's Consolidated Financial Statements and its consolidated financial
position.
Unredeemed Gift Cards and Certificates
Unredeemed gift cards and certificates represent a liability of the Company
related to unearned income and are recorded at their expected redemption value.
The Company makes estimates of the ultimate unredeemed gift cards and
certificates in the period of the original sale for those states that exempt
gift cards and certificates from their escheat laws and in the period that gift
cards and certificates are remitted to the state for other states and reduces
its liability and records revenue accordingly. These estimates are determined
based on redemption history and trends. Changes in redemption behavior or
management's judgments regarding redemption trends in the future may produce
materially different amounts of deferred revenue to be reported. If gift cards
and certificates that have been removed from the liability are later redeemed,
the Company recognizes revenue and reduces the liability as it would with any
redemption. Additionally, the initial reduction to the liability would be
reversed to offset the redemption. If gift cards and certificates that have been
<PAGE>
remitted to a state are later redeemed, the Company will request the previously
remitted cash back from the state. At that time the Company will increase its
liability for gift cards and certificates to offset the reduction to this same
liability when the card was redeemed.
Legal Proceedings
In addition to the litigation discussed in Note 10 to the Company's
Consolidated Financial Statements in the Annual Report, the Company and its
subsidiaries are parties to other legal proceedings incidental to their
business. In the opinion of management, based upon information currently
available, the ultimate liability with respect to these other actions will not
materially affect the Company's Consolidated Financial Statements.
<PAGE>
<TABLE>
<S> <C> <C>
CBRL GROUP, INC.
CONSOLIDATED BALANCE SHEET
- -------------------------------------------------------------------------------------------------------------------------
(In thousands except share data)
ASSETS July 29, July 30,
2005 2004
- -------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $17,173 $ 28,775
Receivables 13,736 9,802
Inventories 142,804 141,820
Prepaid expenses 7,238 8,369
Deferred income taxes 9,532 14,274
- -------------------------------------------------------------------------------------------------------------------------
Total current assets 190,483 203,040
- -------------------------------------------------------------------------------------------------------------------------
Property and Equipment:
Land 328,362 298,233
Buildings and improvements 709,730 662,682
Buildings under capital leases 3,289 3,289
Restaurant and other equipment 359,533 315,512
Leasehold improvements 228,859 193,859
Construction in progress 34,275 28,739
- -------------------------------------------------------------------------------------------------------------------------
Total 1,664,048 1,502,314
Less: Accumulated depreciation and
amortization of capital leases 445,750 383,741
- -------------------------------------------------------------------------------------------------------------------------
Property and equipment - net 1,218,298 1,118,573
- -------------------------------------------------------------------------------------------------------------------------
Goodwill 93,724 93,724
Other Assets 30,767 20,367
- -------------------------------------------------------------------------------------------------------------------------
Total $1,533,272 $1,435,704
=========================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 97,710 $ 53,295
Current maturities of long-term debt
and other long-term obligations 210 189
Taxes withheld and accrued 36,396 34,539
Income taxes payable 22,211 18,571
Accrued employee compensation 49,283 49,466
Accrued employee benefits 43,631 39,290
Deferred revenues 20,818 19,347
Other accrued expenses 25,086 27,538
- -------------------------------------------------------------------------------------------------------------------------
Total current liabilities 295,345 242,235
- -------------------------------------------------------------------------------------------------------------------------
Long-term Debt 212,218 185,138
- -------------------------------------------------------------------------------------------------------------------------
Other Long-term Obligations 48,411 36,225
- -------------------------------------------------------------------------------------------------------------------------
Deferred Income Taxes 107,310 98,770
- -------------------------------------------------------------------------------------------------------------------------
Commitments and Contingencies (Note 10)
Shareholders' Equity:
Preferred stock - 100,000,000 shares of
$.01 par value authorized; no shares
issued -- --
Common stock - 400,000,000 shares of $.01
par value authorized; 2005 - 46,619,803
shares issued and outstanding; 2004 -
48,769,368 shares issued and outstanding 466 488
Additional paid-in capital -- 13,982
Retained earnings 869,522 858,866
- -------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 869,988 873,336
- -------------------------------------------------------------------------------------------------------------------------
Total $1,533,272 $1,435,704
=========================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<S> <C> <C> <C>
CBRL GROUP, INC.
CONSOLIDATED STATEMENT OF INCOME
- ------------------------------------------------------------------------------------------------------------------------------
(In thousands except share data)
Fiscal years ended
July 29, July 30, August 1,
2005 2004 2003
- ------------------------------------------------------------------------------------------------------------------------------
Total revenue $2,567,548 $2,380,947 $2,198,182
Cost of goods sold 847,045 785,703 703,915
- ------------------------------------------------------------------------------------------------------------------------------
Gross profit 1,720,503 1,595,244 1,494,267
- ------------------------------------------------------------------------------------------------------------------------------
Labor & other related expenses 939,849 880,617 819,957
Other store operating expenses 447,506 405,139 380,534
- ------------------------------------------------------------------------------------------------------------------------------
Store operating income 333,148 309,488 293,776
General and administrative 130,986 126,501 121,898
- ------------------------------------------------------------------------------------------------------------------------------
Operating income 202,162 182,987 171,878
Interest expense 8,693 8,444 8,892
Interest income 96 5 73
- ------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 193,565 174,548 163,059
Provision for income taxes 66,925 62,663 57,951
- ------------------------------------------------------------------------------------------------------------------------------
Net income $ 126,640 $ 111,885 $ 105,108
==============================================================================================================================
Net income per share - basic $ 2.65 $ 2.29 $ 2.13
==============================================================================================================================
Net income per share - diluted $ 2.45 $ 2.12 $ 1.97
==============================================================================================================================
Basic weighted average shares
outstanding 47,791,317 48,877,306 49,274,373
==============================================================================================================================
Diluted weighted average shares
outstanding 53,382,007 54,952,633 55,581,127
==============================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
<TABLE>
<S> <C> <C> <C> <C> <C>
CBRL GROUP, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
- ---------------------------------------------------------------------------------------------------------------------------------
(In thousands except share data)
Additional Total
Common Stock Paid-In Retained Shareholders'
Shares Amount Capital Earnings Equity
- --------------------------------------------------------------------------------------------------------------------------------
Balances at August 2, 2002 50,272,459 $503 -- $778,378 $778,881
Cash dividends declared - $.02 per share -- -- -- (1,043) (1,043)
Exercise of stock awards 2,938,783 29 $59,620 -- 59,649
Tax benefit realized upon exercise of stock options -- -- 13,399 -- 13,399
Purchases and retirement of common stock (5,338,700) (53) (73,019) (93,560) (166,632)
Net income -- -- -- 105,108 105,108
- --------------------------------------------------------------------------------------------------------------------------------
Balances at August 1, 2003 47,872,542 479 -- 788,883 789,362
Cash dividends declared - $.33 per share -- -- -- (21,556) (21,556)
Exercise of stock awards 2,666,126 27 50,183 -- 50,210
Tax benefit realized upon exercise of stock options -- -- 12,641 -- 12,641
Purchases and retirement of common stock (1,769,300) (18) (48,842) (20,346) (69,206)
Net income -- -- -- 111,885 111,885
- --------------------------------------------------------------------------------------------------------------------------------
Balances at July 30, 2004 48,769,368 488 13,982 858,866 873,336
Cash dividends declared - $.48 per share -- -- (22,991) (22,991)
Exercise of stock awards 1,921,354 19 39,322 -- 39,341
Tax benefit realized upon exercise of stock options -- -- 12,990 -- 12,990
Purchases and retirement of common stock (4,070,919) (41) (66,294) (92,993) (159,328)
Net income -- -- -- 126,640 126,640
- --------------------------------------------------------------------------------------------------------------------------------
Balances at July 29, 2005 46,619,803 $466 $ -- $869,522 $869,988
================================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<S> <C> <C> <C>
CBRL GROUP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
- ---------------------------------------------------------------------------------------------------------------------------------
(In thousands)
Fiscal years ended
July 29, July 30, August 1,
2005 2004 2003
- ---------------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $126,640 $111,885 $105,108
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 67,321 63,868 64,376
Loss on disposition of property and
equipment 3,654 3,334 903
Impairment 431 -- --
Accretion on zero-coupon contingently
convertible senior notes 5,579 5,408 5,254
Tax benefits realized upon exercise of
stock options 12,990 12,641 13,399
Changes in assets and liabilities:
Receivables (3,934) (652) (691)
Inventories (984) (5,800) (11,327)
Prepaid expenses 1,131 563 2,792
Other assets (11,465) (4,863) (3,136)
Accounts payable 44,415 (28,877) 8,366
Taxes withheld and accrued 1,857 2,436 3,422
Income taxes payable 3,640 10,394 (7,349)
Accrued employee compensation (183) (687) 6,691
Accrued employee benefits 4,341 508 5,361
Deferred revenues 1,471 3,712 2,673
Other accrued expenses (2,679) 6,356 928
Other long-term obligations 12,396 5,755 4,562
Deferred income taxes 13,282 14,384 39,254
- ---------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 279,903 200,365 240,586
- ---------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of property and equipment (171,447) (144,611) (120,921)
Proceeds from sale of property and
equipment 1,381 945 1,968
- ---------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (170,066) (143,666) (118,953)
- ---------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 609,700 150,000 353,200
Proceeds from exercise of stock options 39,341 50,210 59,649
Principal payments under long-term debt
and other long-term obligations (588,388) (157,125) (366,287)
Purchases and retirement of common stock (159,328) (69,206) (166,632)
Dividends on common stock (22,764) (16,191) (1,043)
Other -- (1) (1,205)
- ---------------------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (121,439) (42,313) (122,318)
- ---------------------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents (11,602) 14,386 (685)
Cash and cash equivalents, beginning of year 28,775 14,389 15,074
- ---------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $17,173 $28,775 $14,389
=================================================================================================================================
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest, net of amounts capitalized $ 1,178 $ 1,108 $ 1,604
Income taxes 37,848 26,501 15,229
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
CBRL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(In thousands except share data)
1. Description of the Business
CBRL Group, Inc. and its affiliates (collectively, in the Notes, the
"Company") are principally engaged in the operation and development in the
United States of the Cracker Barrel Old Country Store(R) ("Cracker Barrel")
restaurant and retail concept and the Logan's Roadhouse(R) ("Logan's")
restaurant concept.
2. Summary Of Significant Accounting Policies
GAAP - The accompanying Consolidated Financial Statements have been
prepared in accordance with generally accepted accounting principles in the
United States ("GAAP").
Fiscal year - The Company's fiscal year ends on the Friday nearest July
31st and each quarter consists of thirteen weeks unless noted otherwise.
References in these Notes to a year or quarter are to the Company's fiscal year
or quarter unless noted otherwise.
Principles of consolidation - The Consolidated Financial Statements include
the accounts of the Company and its subsidiaries, all of which are wholly owned.
All significant intercompany transactions and balances have been eliminated.
Financial instruments - The fair values of cash and cash equivalents,
accounts receivable, and accounts payable as of July 29, 2005, approximate their
carrying amounts due to their short duration. The carrying value and fair value
of the Company's zero-coupon contingently convertible senior notes (the "Senior
Notes") in long-term debt at July 29, 2005 were $190,718 and $202,584,
respectively. The fair value of the Senior Notes in long-term debt is determined
based on market prices using the average of the bid and ask prices as of July
29, 2005.
The Company adopted Emerging Issues Task Force ("EITF") No. 04-8, "The
Effect of Contingently Convertible Debt on Diluted Earnings Per Share" ("EITF
04-8") issued by the Financial Accounting Standards Board ("FASB"), in the
second quarter of 2005. EITF 04-8 requires the use of "if-converted" accounting
for contingently convertible debt regardless of whether the contingencies
allowing debt holders to convert have been met. EITF 04-8 was effective for
reporting periods ending after December 15, 2004 and required retroactive
restatement of prior period diluted net income per share, which restatement is
reflected for historical periods included herein. The adoption of EITF 04-8
resulted in the Company's Senior Notes (see Note 4 for the impact on the net
income per share calculation and Note 5 for a description of these Senior Notes)
representing a dilutive security and requiring approximately 4.6 million shares
to be included in diluted weighted average shares outstanding for the
calculation of diluted net income per share. Additionally, diluted consolidated
net income per share is calculated excluding the after-tax interest and
financing expenses associated with the Senior Notes since these Senior Notes are
treated as if converted into common stock. The change in accounting affects only
the calculation of diluted net income per share, and has no effect on the
financial statements themselves or on the terms of the Senior Notes.
Cash and cash equivalents - The Company's policy is to consider all highly
liquid investments purchased with an original maturity of three months or less
to be cash equivalents.
Inventories - Inventories are stated at the lower of cost or market. Cost
of restaurant inventory is determined by the first-in, first-out (FIFO) method.
Approximately 70% of retail inventories are valued using the retail inventory
method and the remaining 30% are valued using an average cost method. Valuation
provisions are included for retail inventory obsolescence, returns and
amortization of certain items.
Store pre-opening costs - Start-up costs of a new store are expensed when
incurred, with the exception of rent expense under operating leases, in which
the straight-line rent includes the pre-opening period during construction, as
explained further under the Operating Lease Section of this Note 2 to the
Consolidated Financial Statements.
Property and equipment - Property and equipment are stated at cost. For
financial reporting purposes, depreciation and amortization on these assets are
computed by use of the straight-line and double-declining balance methods over
the estimated useful lives of the respective assets, as follows: Years
Years
- --------------------------------------------------------------------------------
Buildings and improvements 30-45
Buildings under capital leases 15-25
<PAGE>
Restaurant and other equipment 2-10
Leasehold improvements 1-35
- --------------------------------------------------------------------------------
Depreciation expense was $66,687, $62,304 and $62,552 for 2005, 2004 and
2003, respectively. Accelerated depreciation methods are generally used for
income tax purposes.
Capitalized interest was $870, $615 and $463 for 2005, 2004 and 2003,
respectively.
Gain or loss is recognized upon disposal of property and equipment, and the
asset and related accumulated depreciation and amortization amounts are removed
from the accounts.
Maintenance and repairs, including the replacement of minor items, are
charged to expense, and major additions to property and equipment are
capitalized.
Impairment of long-lived assets - The Company evaluates for possible
impairment of long-lived assets and certain identifiable intangibles to be held
and used in the business whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. An impairment is
determined by comparing estimated undiscounted future operating cash flows to
the carrying amounts of assets on a location by location basis. If an impairment
exists, the amount of impairment is measured as the sum of the estimated
discounted future operating cash flows of such asset and the expected proceeds
upon sale of the asset less its carrying amount. If applicable, assets held for
sale are reported at the lower of carrying amount or fair value less costs to
sell. During the third quarter of 2005, the Company determined that an
impairment existed with respect to a Cracker Barrel store that was approved to
relocate to a stronger site in the same market and recorded a charge of $431 in
other store operating expenses.
Operating leases - The Company has ground leases and office space leases
that are recorded as operating leases. Most of the leases have rent escalation
clauses and some have rent holiday and contingent rent provisions. In accordance
with FASB Technical Bulletin ("FTB") No. 85-3, "Accounting for Operating Leases
with Scheduled Rent Increases," the liabilities under these leases are
recognized on the straight-line basis over the shorter of the useful life, with
a maximum of 35 years, or the related lease life. The Company uses a lease life
that generally begins on the date that the Company becomes legally obligated
under the lease, including the pre-opening period during construction, when in
many cases the Company is not making rent payments, and generally extends
through certain of the renewal periods that can be exercised at the Company's
option, for which at the inception of the lease, it is reasonably assured that
the Company will exercise those renewal options.
Certain leases provide for rent holidays, which are included in the lease
life used for the straight-line rent calculation in accordance with FTB No.
88-1, "Issues Relating to Accounting for Leases." Rent expense and an accrued
rent liability are recorded during the rent holiday periods, during which the
Company has possession of and access to the property, but is not required or
obligated to, and normally does not, make rent payments.
Certain leases provide for contingent rent, which is determined as a
percentage of gross sales in excess of specified levels. The Company records a
contingent rent liability and corresponding rent expense when sales have been
achieved in amounts in excess of the specified levels.
The same lease life is used for reporting future minimum lease commitments
as is used for the straight-line rent calculation. The Company uses a lease life
that extends through certain of the renewal periods that can be exercised at the
Company's option.
Advertising - The Company expenses the costs of producing advertising the
first time the advertising takes place. Net advertising expense was $44,409,
$38,442 and $39,782 for 2005, 2004 and 2003, respectively.
Insurance - The Company self-insures a significant portion of expected
losses under its workers' compensation, general liability and health insurance
programs. The Company has purchased insurance for individual claims that exceed
$500 for 2003 and $1,000 for certain coverages for 2004, 2005 and going forward.
The Company has decided not to purchase such insurance for its primary group
health program, but its offered benefits are limited to not more than $1,000
during the lifetime of any employee (including dependents) in the program. The
Company records a liability for workers' compensation and general liability for
all unresolved claims and for an actuarially determined estimate of incurred but
not reported claims at the anticipated cost to the Company as of the end of the
Company's third quarter and adjusting it by the actuarially determined losses
and actual claims payments for the fourth quarter. The reserves and losses are
determined actuarially from a range of possible outcomes within which no given
estimate is more likely than any other estimate. In accordance with Statement of
Financial Accounting Standards ("SFAS") No. 5, "Accounting for Contingencies,"
<PAGE>
the Company records the losses at the low end of that range and discounts them
to present value using a risk-free interest rate based on actuarially projected
timing of payments. The Company records a liability for its group health program
for all unpaid claims based primarily upon a loss development analysis derived
from actual group health claims payment experience provided by the Company's
third party administrator. The Company's accounting policies regarding insurance
reserves include certain actuarial assumptions or management judgments regarding
economic conditions, the frequency and severity of claims and claim development
history and settlement practices. Unanticipated changes in these factors may
produce materially different amounts of expense.
Goodwill -- Goodwill represents the excess of the cost over the net
tangible and identifiable intangible assets from the acquisition of Logan's in
1999. Effective August 4, 2001, the Company elected early adoption of SFAS No.
142, "Goodwill and Other Intangible Assets." SFAS No. 142 eliminated the
amortization for goodwill and other intangible assets with indefinite lives.
Intangible assets with lives restricted by contractual, legal, or other means
will continue to be amortized over their useful lives. Goodwill and other
intangible assets not subject to amortization are tested for impairment annually
or more frequently if events or changes in circumstances indicate that the asset
might be impaired. SFAS No. 142 requires a two-step process for testing
impairment. First, the fair value of each reporting unit is compared to its
carrying value to determine whether an indication of impairment exists. This
valuation may reflect, among other things, such external factors as capital
market valuation for public companies comparable to the operating unit. If an
impairment is indicated, then the implied fair value of the reporting unit's
goodwill is determined by allocating the unit's fair value to its assets and
liabilities (including any unrecognized intangible assets) as if the reporting
unit had been acquired in a business combination. The amount of impairment for
goodwill and other intangible assets is measured as the excess of its carrying
value over its implied fair value. The Company conducted the initial test of the
carrying value of its goodwill, as required by SFAS No. 142, during the second
quarter of 2002 and concluded that there was no current indication of impairment
to goodwill. The Company performed its annual assessment with assistance from an
outside valuation specialist in the second quarters of 2004 and 2005, and
concluded that there was no current indication of impairment. This annual
assessment is performed in the second quarter of each year. Additionally, an
assessment is performed between annual assessments if an event occurs or
circumstances change that would more likely than not reduce the fair value of a
reporting unit below its carrying amount.
Revenue recognition - The Company records revenue from the sale of products
as they are sold. The Company provides for estimated returns based on return
history and sales levels. Initial fees received from a franchisee to establish a
new franchise are recognized as income when the Company has performed all of its
obligations required to assist the franchisee in opening a new franchise
restaurant, which is generally upon the opening of that restaurant. Continuing
royalties, which are a percentage of net sales of franchised restaurants, are
accrued as income when earned.
Unredeemed Gift Cards and Certificates - Unredeemed gift cards and
certificates represent a liability of the Company related to unearned income and
are recorded at their expected redemption value. When gift cards and
certificates are redeemed, the Company recognizes revenue and reduces the
liability. For those states that exempt gift cards and certificates under their
escheat laws, in the quarter of the gift card and certificate sale, the Company
estimates the percentage of the ultimate unredeemed gift cards and certificates
sold that quarter and reduces its liability and records revenue accordingly. The
Company does not reduce its liability for unredeemed gift cards and certificates
that will eventually be remitted to the states under their escheat laws, until
such time the gift cards and certificates are remitted to the state. For those
states the Company estimates the ultimate unredeemed gift cards and certificates
of the remaining balances and reduces its liability by the actual cash remitted
to the state, which is less than the remaining due to administrative fees
permitted to be deducted by the state, and the amount of the ultimate unredeemed
gift cards and certificates, which are recorded as revenue.
Income taxes - Employer tax credits for FICA taxes paid on employee tip
income are accounted for by the flow-through method. Deferred income taxes
reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes (see Note 8).
Net income per share - Basic consolidated net income per share is computed
by dividing consolidated net income by the weighted average number of common
shares outstanding for the reporting period. Diluted consolidated net income per
share reflects the potential dilution that could occur if securities, options or
other contracts to issue common stock were exercised or converted into common
stock. Additionally, diluted consolidated net income per share is calculated
excluding the after-tax interest and financing expenses associated with the
Senior Notes since these Senior Notes are treated as if converted into common
stock (see Note 5). The Company's Senior Notes, outstanding employee and
director stock options and restricted stock issued by the Company represent the
only dilutive effects on diluted net income per share.
<PAGE>
Comprehensive income - Comprehensive income is defined as the change in
equity of a business enterprise during a period from transactions and other
events and circumstances from non-owner sources. Comprehensive income for 2005,
2004 and 2003 is equal to net income as reported.
Stock-based compensation - The Company accounts for its stock based
compensation under the recognition and measurement principles of Accounting
Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations, and has adopted the disclosure-only
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," (see Note
6) and below is providing disclosures required by SFAS No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure." Under APB Opinion No. 25,
no stock-based compensation cost is reflected in net income for grants of stock
options to employees because the Company grants stock options with an exercise
price equal to the market value of the stock on the date of grant. The reported
stock-based compensation expense, net of related tax effects, in the table
represents the amortization of restricted stock grants to three executive
officers of the Company.
Had the Company used the alternative fair value based accounting method for
stock compensation expense prescribed by SFAS Nos. 123 and 148, the Company's
net income and earnings per share for the past three years would have been
reduced to the pro-forma amounts illustrated in the following table:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
2005 2004 2003
- ----------------------------------------------------------------------------------------------------------------------------
Net income - as reported $126,640 $111,885 $105,108
Add: Total stock-based employee compensation
included in reported net income, net of related tax
effects 76 74 298
Deduct: Total stock-based compensation expense
determined under fair-value based method for all
awards, net of tax effects (8,875) (10,900) (11,496)
- ----------------------------------------------------------------------------------------------------------------------------
Pro forma, net income $117,841 $101,059 $ 93,910
- ----------------------------------------------------------------------------------------------------------------------------
Net income per share:
Basic - as reported $2.65 $2.29 $2.13
- ----------------------------------------------------------------------------------------------------------------------------
Basic - pro forma $2.47 $2.07 $1.91
- ----------------------------------------------------------------------------------------------------------------------------
Diluted - as reported $2.45 $2.12 $1.97
- ----------------------------------------------------------------------------------------------------------------------------
Diluted - pro forma $2.29 $1.92 $1.77
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Segment Reporting - The Company accounts for its segment in accordance with
SFAS No. 131, "Disclosure About Segments of an Enterprise and Related
Information." SFAS No. 131 requires that a public company report annual and
interim financial and descriptive information about its reportable operating
segments. Operating segments, as defined, are components of an enterprise about
which separate financial information is available that is evaluated regularly by
the chief operating decision maker in deciding how to allocate resources and in
assessing performance. SFAS No. 131 allows aggregation of similar operating
segments into a single operating segment if the businesses are considered
similar under the criteria established by SFAS No. 131. Utilizing these
criteria, the Company manages its business on the basis of one reportable
operating segment (see Note 9).
Derivative instruments and hedging activities - The Company adopted SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities," in 2000
and its subsequent amendments, SFAS Nos. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133," and 138, "Accounting for Certain Derivative Instruments and
Certain Hedging Activities, an Amendment of FASB Statement No. 133," in 2001 and
SFAS No. 149, "Amendments of Statement 133 on Derivative Instruments and Hedging
Activities," in the fourth quarter of 2003. These statements specify how to
report and display derivative instruments and hedging activities. The adoption
of these statements did not have a material effect on the Company's Consolidated
Financial Statements. During 2005, 2004 and 2003, the Company had no derivative
financial instruments that required fair value accounting treatment.
The Company is exposed to market risk, such as changes in interest rates
and commodity prices. To manage the volatility relating to these exposures, the
Company nets the exposures on a consolidated basis to take advantage of natural
offsets. The Company does not hold or use derivative financial instruments for
trading purposes. The Company's historical practice has been not to enter into
derivative financial instruments.
The Company's policy has been to manage interest cost using a mix of fixed
and variable rate debt (see Notes 5, 10 and 12).
<PAGE>
Many of the food products purchased by the Company are affected by
commodity pricing and are, therefore, subject to price volatility caused by
weather, production problems, delivery difficulties and other factors which are
outside the control of the Company and generally are unpredictable. Changes in
commodity prices would affect the Company and its competitors generally and,
depending on terms and duration of supply contracts, sometimes simultaneously.
In many cases, the Company believes it will be able to pass through some or much
of increased commodity costs by adjusting its menu pricing. From time to time,
competitive circumstances or judgments about consumer acceptance of price
increases may limit menu price flexibility, and in those circumstances,
increases in commodity prices can result in lower margins for the Company.
Use of estimates - Management of the Company has made certain estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent liabilities at the date of the Consolidated Financial
Statements and the reported amounts of revenues and expenses during the
reporting periods to prepare these Consolidated Financial Statements in
conformity with GAAP. Management believes that such estimates have been based on
reasonable and supportable assumptions and that the resulting estimates are
reasonable for use in the preparation of the Consolidated Financial Statements.
Actual results, however, could differ from those estimates.
Recent Accounting Pronouncements Not Yet Adopted - In December 2004, the
FASB issued SFAS No. 123 (Revised 2004) "Share-Based Payment" ("SFAS No. 123R").
SFAS No. 123R replaces SFAS No. 123 and supersedes APB Opinion No. 25. SFAS No.
123R requires that the cost of employee services received in exchange for equity
instruments issued or liabilities incurred are recognized in the financial
statements. Compensation cost will be measured using a fair-value based method
over the period that the employee provides service in exchange for the award. As
disclosed above, based on the current assumptions and calculations used, had the
Company recognized compensation expense based on the fair value of awards of
equity instruments, net income would have been reduced by approximately $8,799
for the year ended July 29, 2005. This compensation expense is the after-tax net
of the stock-based compensation expense determined under the fair-value based
method for all awards and stock-based employee compensation included previously
in reported net income under APB No. 25. This statement will apply to all awards
granted after the effective date and to modifications, repurchases or
cancellations of existing awards. SFAS No. 123R is effective as of the beginning
of the first annual reporting period that begins after June 15, 2005 and
therefore the Company will adopt in its first quarter of 2006. Partly in
anticipation of these new accounting rules, the Company modified its
compensation plans to limit eligibility to receive share-based compensation and
shifted a portion of share-based compensation primarily to cash-based incentive
compensation. We expect the 2006 impact of the adoption of SFAS 123(R) combined
with the modifications to the Company's compensation plans to be approximately
$0.14 to $0.16 per diluted share. The effect of future awards will vary
depending on timing, amount and valuation methods used for such awards, the past
awards are not necessarily indicative of future awards. SFAS 123(R) also
requires the benefits of tax deductions in excess of recognized compensation
cost to be reported as a financing cash flow, rather than as an operating cash
flow as required under the current rules. This requirement will reduce net
operating cash flow and reduce net financing cash outflow by offsetting and
equal amounts.
In November 2004, the FASB issued Statement No. 151, "Inventory Costs, an
amendment of ARB No. 43, Chapter 4" ("SFAS No. 151"). SFAS No. 151 clarifies
that abnormal inventory costs such as costs of idle facilities, excess freight
and handling costs, and wasted materials (spoilage) are required to be
recognized as current period charges and require the allocation of fixed
production overheads to inventory based on the normal capacity of the production
facilities. The provisions of SFAS No. 151 are effective for inventory costs
incurred during fiscal years beginning after June 15, 2005. The Company does not
expect the adoption of SFAS No. 151 to have a material impact on the Company's
consolidated results of operations or financial position.
In May 2005, the FASB issued Statement No. 154, "Accounting Changes and
Error Corrections-a replacement of APB Opinion No. 20 and FASB Statement No. 3."
This Statement is effective for accounting changes and corrections of errors
made in fiscal years beginning after December 15, 2005. Early adoption is
permitted for accounting changes and corrections of errors made in fiscal years
beginning after the date this Statement was issued. This Statement does not
change the transition provisions of any existing accounting pronouncements,
including those that are in a transition phase as of the effective date of this
Statement.
3. Inventories
Inventories were composed of the following at:
July 29, July 30,
2005 2004
- --------------------------------------------------------------------------------
Retail $101,604 $104,148
<PAGE>
Restaurant 21,588 19,800
Supplies 19,612 17,872
- --------------------------------------------------------------------------------
Total $142,804 $141,820
================================================================================
4. Consolidated Net Income Per Share and Weighted Average Shares
Basic consolidated net income per share is computed by dividing
consolidated net income by the weighted average number of common shares
outstanding for the reporting period. Diluted consolidated net income per share
reflects the potential dilution that could occur if securities, options or other
contracts to issue common stock were exercised or converted into common stock.
Additionally, diluted consolidated net income per share is calculated excluding
the after-tax interest and financing expenses associated with the Senior Notes
(as described in Notes 2 and 5) since these Senior Notes are treated as if
converted into common stock. The Senior Notes, outstanding employee and director
stock options and restricted stock issued by the Company represent the only
dilutive effects on diluted net income per share. The following table reconciles
the components of the diluted net income per share computations:
<TABLE>
<S> <C> <C> <C>
July 29, July 30, August 1,
2005 2004 2003
- ------------------------------------------------------------------------------------------------------------------------
Net income per share numerator:
Net income $126,640 $111,885 $105,108
Add: Interest and loan acquisition costs
associated with Senior Notes, net of
related tax effects 4,330 4,485 4,408
-------- -------- --------
Net income available to common
shareholders $130,970 $116,370 $109,516
======== ======== ========
Net income per share denominator:
Weighted average shares outstanding for
basic net income per share 47,791,317 48,877,306 49,274,373
Add potential dilution:
Senior Notes 4,582,788 4,582,788 4,582,788
Stock options and restricted stock 1,007,902 1,492,539 1,723,966
----------- ----------- ----------
Weighted average shares outstanding for
diluted net income per share 53,382,007 54,952,633 55,581,127
==========================================================================================================================
</TABLE>
5. Debt
Long-term debt consisted of the following at:
<TABLE>
<S> <C> <C>
July 29, July 30,
2005 2004
- ------------------------------------------------------------------------------------------------------------------------
$300,000 Revolving Credit Facility
payable on or before February 21, 2008
(interest rate ranges from 4.73% to 6.25% at July 29, 2005) $ 21,500 $ --
3.0% Zero-Coupon Contingently
Convertible Senior Notes payable on
or before April 2, 2032 190,718 185,138
- ------------------------------------------------------------------------------------------------------------------------
Long-term debt $212,218 $185,138
========================================================================================================================
</TABLE>
At July 29, 2005, the Company had $21,500 outstanding borrowings under the
Revolving Credit Facility, which bears interest, at the Company's election,
either at a lender's prime rate or a percentage point spread from LIBOR based on
certain financial ratios set forth in the loan agreement. At July 29, 2005, the
Company's percentage point spread from LIBOR was 1.25% and will remain the same
for the first quarter of 2006. The percentage point spread from LIBOR for the
second, third and fourth quarters of 2006 remains to be determined.
The financial covenants related to the Revolving Credit Facility require
that the Company maintain an interest coverage ratio (as defined in the
Revolving Credit Facility) of 2.5 to 1.0, a lease adjusted funded debt to total
capitalization ratio (as defined in the Revolving Credit Facility) not to exceed
0.5 to 1.0 and a lease adjusted funded debt to EBITDAR (earnings before interest
expense, income taxes, depreciation and amortization and rent expense) ratio (as
defined in the Revolving Credit Facility) not to exceed 3.0 to 1.0. At July 29,
2005, the Company was in compliance with all of those covenants.
<PAGE>
In 2002, the Company issued $422,050 (face value at maturity) of Senior
Notes, maturing on April 2, 2032, and received proceeds totaling approximately
$172,756 prior to debt issuance costs. The Senior Notes require no cash interest
payments and were issued at a discount representing a yield to maturity of 3.00%
per annum. The Senior Notes are redeemable at the Company's option on or after
April 3, 2007, and the holders of the Senior Notes may require the Company to
redeem the Senior Notes on April 3, 2007, 2012, 2017, 2022 or 2027, and in
certain other circumstances. The holders of the Senior Notes had the option to
require the Company to repurchase the Senior Notes on April 3, 2005. That option
was not exercised. In addition, each $1 (face value at maturity) Senior Note is
convertible into 10.8584 shares of the Company's common stock (approximately 4.6
million shares in the aggregate) if any of the following conditions occur: 1)
the closing price of the Company's common stock exceeds a specified price
(initially, 120% of the accreted conversion price, and declining .08474% per
quarter thereafter to approximately 110% of the accreted conversion price on the
last day of the quarter ending January 30, 2032, with a specified price of
$49.19 at July 29, 2005); 2) the Company exercises its option to redeem the
Senior Notes; 3) the credit rating of the Senior Notes is reduced by Moody's and
Standard and Poor's to or below both Ba3 and BB-, respectively; or 4) certain
specified corporate events. The Company's closing share price, as reported by
Nasdaq, on July 29, 2005 was $39.17.
All subsidiaries of the Company have fully and unconditionally guaranteed
on a joint and several basis the obligations under the Revolving Credit Facility
and the Senior Notes. Each guarantor is, directly or indirectly, a wholly-owned
affiliate of the parent company, CBRL Group, Inc., which has no independent
assets or operations.
The aggregate maturities of long-term debt subsequent to July 29, 2005 are
as follows:
Year
- --------------------------------------------------------------------------------
2006 --
2007 --
2008 $21,500
2009 --
2010 --
2011 and thereafter 190,718
- --------------------------------------------------------------------------------
Total $212,218
================================================================================
6. Stock Compensation Plans
The Company's employee compensation plans are administered by the
Compensation and Stock Option Committee (the "Committee") of the Board. The
Committee is authorized to determine, at time periods within its discretion and
subject to the direction of the Board, which employees will be granted options
and other awards, the number of shares covered by any awards granted, and within
applicable limits, the terms and provisions relating to the exercise of any
awards.
The CBRL Group, Inc. 2002 Omnibus Incentive Compensation Plan (the "Omnibus
Plan") allows the Committee to grant awards for an aggregate of 2,500,000 shares
of the Company's common stock. The Omnibus Plan authorizes the following types
of awards to all eligible participants other than non-employee directors: stock
options, stock appreciation rights, stock awards, restricted stock, performance
shares, cash bonuses, qualified performance-based awards or any other type of
award consistent with the Omnibus Plan's purpose. Under the Omnibus Plan,
non-employee directors are granted annually on the day of the annual
shareholders meeting an option to purchase up to 5,000 shares of the Company's
common stock, or awards of up to 2,000 shares of restricted stock or restricted
stock units. If an option is granted, the option price per share will be at
least 100% of the fair market value of a share of the Company's common stock
based on the closing price on the day preceding the day the option is granted.
Additionally, non-employee directors newly elected or appointed between an
annual shareholders meeting (typically in November) and the following July 31
receive an option to acquire 5,000 shares of the Company's common stock or
awards of up to 2,000 shares of restricted stock or restricted stock units. If
an option is granted, the option price per share will be at least 100% of the
fair market value of a share of the Company's common stock based on the closing
price on the day the option is granted. Options granted to date under the
Omnibus Plan become exercisable each year at a cumulative rate of 33% per year
and expire ten years from the date of grant. At July 29, 2005, there were
1,740,191 shares of the Company's common stock reserved for issuance under the
Omnibus Plan.
The CBRL Group, Inc. 2000 Non-Executive Stock Option Plan ("Employee Plan")
covers employees who are not officers or directors of the Company. The stock
options were granted with an exercise price of at least 100% of the fair market
value of a share of the Company's common stock based on the closing price on the
<PAGE>
day the option is granted and become exercisable each year at a cumulative
rate of 33% per year and expire ten years from the date of grant. An aggregate
of 4,750,000 shares of the Company's common stock were authorized under this
plan; at July 29, 2005, no shares are available to be granted under this plan.
The Employee Plan expired on July 29, 2005
The Company also has an Amended and Restated Stock Option Plan (the "Plan")
that originally allowed the Committee to grant options to purchase an aggregate
of 17,525,702 shares of the Company's common stock. At July 29, 2005, there were
1,253,236 shares of the Company's common stock reserved for issuance under the
Plan. The option price per share under the Plan must be at least 100% of the
fair market value of a share of the Company's common stock based on the closing
price on the day the option is granted. Options granted to date under the Plan
generally have been exercisable each year at a cumulative rate of 33% per year
and expire ten years from the date of grant.
In 1989, the Board adopted the Cracker Barrel Old Country Store, Inc. 1989
Stock Option Plan for Non-employee Directors ("Directors Plan"). The stock
options were granted with an exercise price equal to the fair market value of
the Company's common stock as of the date of grant and expire one year from the
retirement of the director from the Board. An aggregate of 1,518,750 shares of
the Company's common stock was authorized by the Company's shareholders under
this plan. Due to the overall plan limit, no shares have been granted under this
plan since 1994.
A summary of the status of the Company's stock option plans for 2005, 2004
and 2003, and changes during those years follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
(Shares in thousands) 2005 2004 2003
- ------------------------------------------------------------------------------------------------------------------------------
Weighted- Weighted- Weighted-
Average Average Average
Fixed Options Shares Price Shares Price Shares Price
- ------------------------------------------------------------------------------------------------------------------------------
Outstanding at beginning of year 5,817 24.52 7,599 $20.73 9,504 $20.23
Granted 708 37.08 1,146 38.35 1,907 23.85
Exercised (1,896) 20.70 (2,634) 19.68 (2,922) 20.90
Forfeited or canceled (241) 29.69 (294) 23.76 (890) 21.54
---------- ---------- ----------
Outstanding at end of year 4,388 27.91 5,817 24.52 7,599 20.73
========== ========== ==========
Options exercisable at year-end 2,556 23.52 3,011 20.62 3,696 20.69
Weighed-average fair value per share of options
granted during the year $12.50 $14.14 $10.20
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 2005, 2004 and 2003:
<TABLE>
<S> <C> <C> <C>
2005 2004 2003
- -----------------------------------------------------------------------------------------------------------------
Dividend yield range 1.1%-1.3% 0.1% - 1.4% 0.1%
Expected volatility range 33% - 38% 22% - 42% 41% - 45%
Risk-free interest rate range 3.3% - 4.1% 1.3% - 4.0% 2.2% - 3.8%
Expected lives (in years) 5 1-8 5-8
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Expected volatility has been measured based on an average of past daily
fluctuations in the share price of the Company's common stock.
The following table summarizes information about fixed stock options
outstanding at July 29, 2005:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
(Shares in thousands) Options Outstanding Options Exercisable
- ---------------------------------------------------------------------------------------------------------------------------------
Weighted-Average
Number Remaining Weighted-Average Number Weighted-Average
Range of Exercise Prices Outstanding at Contractual Life Exercise Price Exercisable at Exercise Price
7/29/05 7/29/05
- ---------------------------------------------------------------------------------------------------------------------------------
$ 5.09 - 10.00 31 1.04 $ 7.07 31 $ 7.07
$10.01 - 20.00 620 4.22 15.24 620 15.24
$20.01 - 30.00 1,897 5.44 23.38 1,411 23.22
$30.01 - 40.00 1,258 7.77 35.71 363 34.16
$40.01 - 41.25 582 8.65 40.43 131 40.26
---------------- -------------------
$ 5.09 - 41.25 4,388 5.18 27.91 2,556 23.52
=================================================================================================================================
</TABLE>
<PAGE>
The Company recognizes a tax deduction, subject to certain limitations
imposed by the Internal Revenue Code, upon exercise of non-qualified stock
options in an amount equal to the difference between the option price and the
fair market value of the common stock on the date the option is exercised. These
tax benefits, when realized, are credited to additional paid-in capital.
7. Common Stock
Pursuant to the Omnibus Plan, the Company granted 165,000 and 7,500 shares
of restricted stock during 2005 and 2004, respectively. No restricted shares
were granted during 2003, however the Company recorded compensation expense
related to grants in years prior to 2003 that had not yet vested. The Company's
compensation expense, net of forfeitures, for these restricted shares was $494,
$116 and $462 in 2005, 2004 and 2003, respectively.
The Committee established the FY04 Revenue Growth and Return on Capital
Transitional Incentive Plan ("Transitional LTI") pursuant to the Omnibus Plan,
for the purpose of rewarding certain executive officers for company financial
performance during 2004. The Transitional LTI plan was earned during 2004 based
on the Company's achievement of qualified financial performance measures. The
Company's compensation expense during 2004 for this award was $424. The Company
issued 12,761 unrestricted shares of common stock for this award in 2005.
The Committee established the FY2005 Mid-Term Incentive and Retention Plan
("2005 MTIRP") pursuant to the Omnibus Plan, for the purpose of rewarding
certain officers for company financial performance during 2005. The 2005 MTIRP
award was earned during 2005 based on achievement of qualified financial
performance measures, but restricted until vesting occurs on the last day of
2007 and will then be paid out on the first day of 2008. Therefore, the 2005
MTIRP reward is expensed over the vesting period with one-third of the earned
reward expensed in each of 2005, 2006 and 2007. The award will be paid in the
form of either 50% restricted stock and 50% cash or 100% restricted stock, based
upon the election of each officer at the beginning of 2005 or upon their hiring
or promotion. At July 29, 2005, the restricted stock and cash earned under the
2005 MTIRP was 46,461 shares and $210, respectively. Additionally, cash
dividends on the restricted stock earned shall accrue from July 29, 2005 and be
payable, along with the remainder of the award, to participants on the payout
date in 2008.
The Committee established the Stock Ownership Achievement Plan ("Stock
Ownership Plan") pursuant to the Omnibus Plan, for the purpose of rewarding
certain executive officers of the Company for early achievement of target stock
ownership levels in 2005 and in the future. Upon meeting the stock ownership
levels at an earlier date than required and upon approval by the Committee, the
Company will award unrestricted shares to those certain officers on the first
Monday of the next fiscal year. The Stock Ownership Plan reward is expensed over
the year during which those certain officers achieve the stock ownership target,
beginning when the target is met. The Company's compensation expense during 2005
for this award was $98. On August 1, 2005 the Company issued 2,500 unrestricted
shares of common stock to the certain executive officers that earned the award
in 2005.
<PAGE>
8. Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
Significant components of the Company's net deferred tax liability
consisted of the following at:
<TABLE>
<S> <C> <C>
July 29, July 30,
2005 2004
- -------------------------------------------------------------------------------------------------------------------------------
Deferred tax assets:
Financial accruals without economic performance $ 27,816 $ 24,818
Other 4,359 3,637
- -------------------------------------------------------------------------------------------------------------------------------
Deferred tax assets $ 32,175 $ 28,455
- -------------------------------------------------------------------------------------------------------------------------------
Deferred tax liabilities
Excess tax depreciation over book $ 96,713 $ 89,627
Other 33,240 23,324
- -------------------------------------------------------------------------------------------------------------------------------
Deferred tax liabilities 129,953 112,951
- -------------------------------------------------------------------------------------------------------------------------------
Net deferred tax liability $ 97,778 $ 84,496
===============================================================================================================================
</TABLE>
The Company provided no valuation allowance against deferred tax assets
recorded as of July 29, 2005 and July 30, 2004, as the "more-likely-than-not"
valuation method determined all deferred assets to be fully realizable in future
taxable periods.
The components of the provision for income taxes for each of the three
years were as follows:
<TABLE>
<S> <C> <C> <C>
2005 2004 2003
- ------------------------------------------------------------------------------------------------------------------------------
Current:
Federal $49,768 $44,006 $17,214
State 3,875 4,273 1,483
Deferred:
Federal 11,069 13,172 36,113
State 2,213 1,212 3,141
- ------------------------------------------------------------------------------------------------------------------------------
Total income tax provision $66,925 $62,663 $57,951
==============================================================================================================================
</TABLE>
A reconciliation of the provision for income taxes and the amount computed
by multiplying the income before the provision for income taxes by the U.S.
federal statutory rate of 35% was as follows:
<TABLE>
<S> <C> <C> <C>
2005 2004 2003
- ------------------------------------------------------------------------------------------------------------------------------
Provision computed at federal
statutory income tax rate $67,748 $61,092 $57,071
State and local income taxes, net of federal
benefit 5,896 5,578 4,399
Employer tax credits for FICA taxes paid on
employee tip income (5,334) (4,781) (4,323)
Other-net (1,385) 774 804
- ------------------------------------------------------------------------------------------------------------------------------
Total income tax provision $66,925 $62,663 $57,951
==============================================================================================================================
</TABLE>
9. Segment Information
Cracker Barrel units represent a single, integrated operation with two
related and substantially integrated product lines. The operating expenses of
the restaurant and retail product lines of a Cracker Barrel unit are shared and
are indistinguishable in many respects. Likewise, Logan's units are restaurant
operations with investment criteria and economic and operating characteristics
similar to those of Cracker Barrel. The chief operating decision makers
regularly evaluate the Cracker Barrel and Logan's restaurant and retail
components in determining how to allocate resources and in assessing
performance. Accordingly, the Company manages its business on the basis of one
reportable operating segment. All of the Company's operations are located within
the United States. The following data are presented in accordance with SFAS No.
131 for all periods presented.
<PAGE>
<TABLE>
<S> <C> <C> <C>
2005 2004 2003
- ------------------------------------------------------------------------------------------------------------------------------
Net sales in Company-Owned stores:
Restaurant $2,071,011 $1,892,487 $1,753,361
Retail 494,160 486,433 443,397
- ------------------------------------------------------------------------------------------------------------------------------
Total net sales 2,565,171 2,378,920 2,196,758
- ------------------------------------------------------------------------------------------------------------------------------
Franchise fees and royalties 2,377 2,027 1,424
- ------------------------------------------------------------------------------------------------------------------------------
Total revenue $2,567,548 $2,380,947 $2,198,182
==============================================================================================================================
</TABLE>
10. Commitments and Contingencies
As reported in the 2004 Form 10-K/A, Cracker Barrel agreed in principle, as
of September 8, 2004, to settle certain litigation (five separate cases)
alleging violations of the Fair Labor Standards Act ("FLSA"), as well as
allegations of discrimination in employment and public accommodations. Four of
those cases have been settled and dismissed. In the fifth case (a FLSA
collective action with approximately 10,000 plaintiffs), settlement reflecting
the agreement in principle reached in August 2004 is still awaiting court
approval. On May 27, 2005, a joint motion by the Company and the plaintiffs
seeking approval of the settlement was filed with the court. This filing set in
motion the final approval process, which the Company expects will be concluded
(with final approval granted) on or before October 18, 2005. Of the total
payment agreed to by Cracker Barrel to settle the five cases, approximately
$2,250 related to the fifth case is still accrued and expected to be paid on or
before December 31, 2005.
The Company and its subsidiaries are parties to other legal proceedings
incidental to its business. In the opinion of management, based upon information
currently available, the ultimate liability with respect to these other actions
will not materially affect the Company's Consolidated Financial Statements.
The Company makes trade commitments in the course of its normal operations.
As of July 29, 2005 the Company was contingently liable for approximately $4,343
under outstanding trade letters of credit issued in connection with purchase
commitments. These letters of credit have terms of three months or less and are
used to collateralize obligations to third parties for the purchase of a portion
of the Company's imported retail inventories. Additionally, the Company was
contingently liable pursuant to standby letters of credit as credit guarantees
to insurers. As of July 29, 2005, the Company had $32,436 of standby letters of
credit related to workers' compensation, commercial general liability insurance
and retail purchases. All standby letters of credit are renewable annually.
The Company is secondarily liable for lease payments under the terms of an
operating lease that has been assigned to a third party. The operating lease has
a remaining life of approximately 8.2 years with annual lease payments of $361.
The Company's performance is required only if the assignee fails to perform the
obligations as lessee. At this time, the Company has no reason to believe that
the assignee will not perform and, therefore, no provision has been made in the
accompanying consolidated financial statements for amounts to be paid as a
result of non-performance by the assignee.
The Company also is secondarily liable for lease payments under the terms
of another operating lease that has been sublet to a third party. The operating
lease has a remaining life of approximately 11.2 years with annual lease
payments of $107. The Company's performance is required only if the sublessee
fails to perform the obligations as lessee. The Company has a liability of $444
in the accompanying consolidated financial statements for estimated amounts to
be paid in case of non-performance by the sublessee.
The Company maintains insurance coverage for various aspects of its
business and operations. The Company has elected, however, to retain all or a
portion of losses that occur through the use of various deductibles, limits and
retentions under its insurance programs. This situation may subject the Company
to some future liability for which it is only partially insured, or completely
uninsured. The Company intends to mitigate any such future liability by
continuing to exercise prudent business judgment in negotiating the terms and
conditions of its contracts. See Note 2 for a further discussion of insurance
and insurance reserves.
As of July 29, 2005, the Company operated 148 Cracker Barrel stores and 62
Logan's Roadhouse restaurants in leased facilities and also leased certain land
and advertising billboards (see Note 12). These leases have been classified as
either capital or operating leases. The interest rates for capital leases vary
from 5% to 17%. Amortization of capital leases is included with depreciation
expense. A majority of the Company's lease agreements provide for renewal
options and some of these options contain escalation clauses. Additionally,
certain store leases provide for percentage lease payments based upon sales
volume in excess of specified minimum levels.
<PAGE>
The following is a schedule by year of future minimum lease payments under
capital leases, together with the present value of the minimum lease payments as
of July 29, 2005:
<TABLE>
<S> <C>
Year
- ------------------------------------------------------------------
2006 $235
2007 124
2008 43
- ------------------------------------------------------------------
Total minimum lease payments 402
Less amount representing interest 35
- ------------------------------------------------------------------
Present value of minimum lease payments 367
Less current portion 210
- ------------------------------------------------------------------
Long-term portion of capital lease obligations $157
==================================================================
</TABLE>
The following is a schedule by year of the future minimum rental payments
required under operating leases, excluding leases for advertising billboards, as
of July 29, 2005. Included in the amounts below are optional renewal periods
associated with such leases that the Company is currently not legally obligated
to exercise; however, it is reasonably assured that the Company will exercise
these options.
<TABLE>
<S> <C> <C> <C>
Year Base term and Renewal periods not Total
exercised options* Yet exercised**
- ------------------------------------------------------------------------------------------------------------------------------
2006 $ 33,310 $ 190 $ 33,500
2007 33,348 343 33,691
2008 33,324 610 33,934
2009 33,243 880 34,123
2010 31,902 1,239 33,141
Later years 284,285 333,574 617,859
- ------------------------------------------------------------------------------------------------------------------------------
Total $449,412 $336,836 $786,248
==============================================================================================================================
</TABLE>
*Includes base terms and certain optional renewal periods that have been
exercised and are included in the lease term in accordance with SFAS No. 13 (see
Note 2).
**Includes certain optional renewal periods that have not yet been
exercised, but are included in the lease term for the straight-line rent
calculation. Such optional renewal periods are included because it is reasonably
assured by the Company that it will exercise such renewal options (see Note 2).
The following is a schedule by year of the future minimum rental payments
required under operating leases for advertising billboards as of July 29, 2005:
<TABLE>
<S> <C>
Year
- --------------------------------------------------------------
2006 $21,854
2007 12,491
2008 4,909
2009 150
- --------------------------------------------------------------
Total $39,404
==============================================================
</TABLE>
Rent expense under operating leases, excluding leases for advertising
billboards are recognized on a straight-line, or average, basis and include any
pre-opening periods during construction for which the Company is legally
obligated under the terms of the lease, and any optional renewal periods, for
which at the inception of the lease, it is reasonably assured that the Company
will exercise those renewal options. This lease period is consistent with the
period over which leasehold improvements are amortized. Rent expense for each of
the three years was:
<TABLE>
<S> <C> <C> <C>
Minimum Contingent Total
- -------------------------------------------------------------------------------------------------
2005 $35,531 $913 $36,444
2004 33,111 852 33,963
2003 31,084 753 31,837
- -------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Rent expense under operating leases for billboards for each of the three
years was:
<TABLE>
<S> <C> <C> <C>
Minimum Contingent Total
- ---------------------------------------------------------------------------------------------
2005 $23,374 -- $23,374
2004 23,042 -- 23,042
2003 22,811 -- 22,811
- ---------------------------------------------------------------------------------------------
</TABLE>
11. Employee Savings Plans
The Company sponsors a qualified defined contribution retirement plan
("Plan I") covering salaried and hourly employees who have completed one year of
service and have attained the age of twenty-one. Plan I allows eligible
employees to defer receipt of up to 16% of their compensation, as defined in the
plan.
The Company also sponsors a non-qualified defined contribution retirement
plan ("Plan II") covering highly compensated employees, as defined in the plan.
Plan II allows eligible employees to defer receipt of up to 50% of their base
compensation and 100% of their eligible bonuses, as defined in the plan.
Contributions under both Plan I and Plan II may be invested in various
investment funds at the employee's discretion. Such contributions, including the
Company matching contribution described below, may not be invested in the
Company's common stock. In 2005, 2004 and 2003, the Company matched 25% of
employee contributions for each participant in either Plan I or Plan II up to a
total of 6% of the employee's compensation. Employee contributions vest
immediately while Company contributions vest 20% annually beginning on the
participant's first anniversary of employment. In 2005, 2004, and 2003, the
Company contributed approximately $1,250, $1,321 and $1,524, respectively, under
Plan I and approximately $473, $345 and $280, respectively, under Plan II. At
the inception of Plan II, the Company established a Rabbi Trust to fund Plan II
obligations. The market value of the trust assets of $20,211 is included in
other assets and the liability to Plan II participants of $20,211 is included in
other long-term obligations. Company contributions under Plan I and Plan II are
recorded as other store operating expenses.
12. Sale-Leaseback
On July 31, 2000, Cracker Barrel completed a sale-leaseback transaction
involving 65 of its owned units. Under the transaction, the land, buildings and
building improvements at the locations were sold for net consideration of
$138,325 and were leased back for an initial term of 21 years. Equipment was not
included. The leases include specified renewal options for up to 20 additional
years and have certain financial covenants related to fixed charge coverage for
the leased units. At July 29, 2005 and July 30, 2004, the Company was in
compliance with all those covenants. Net rent expense during the initial term is
$14,963 annually, and the assets sold and leased back previously had
depreciation expense of approximately $2,707 annually. The gain on the sale is
being amortized over the initial lease term of 21 years.
13. Quarterly Financial Data (Unaudited)
Quarterly financial data for 2005 and 2004 are summarized as follows:
<TABLE>
<S> <C> <C> <C> <C>
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter (b)
----------- ----------- ----------- ---------------
2005
Total revenue $612,653 $667,189 $627,999 $659,707
Gross profit 412,811 430,800 424,297 452,595
Income before income taxes 46,048 49,533 40,625 57,359
Net income 29,930 32,578 26,571 37,561
Net income per share - basic $ 0.61 $ 0.68 $ 0.56 $ 0.80
Net income per share - diluted (a) $ 0.57 $ 0.63 $ 0.52 $ 0.74
- --------------------------------------------------------------------------------------------------------------------------------
2004
Total revenue $576,365 $612,801 $584,282 $607,499
Gross profit 390,465 399,274 393,564 411,941
Income before income taxes 43,313 44,828 40,273 46,134
Net income 27,851 28,648 25,815 29,571
Net income per share - basic $ 0.58 $ 0.58 $ 0.53 $ 0.61
Net income per share - diluted (a) $ 0.53 $ 0.53 $ 0.49 $ 0.56
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Diluted net income pre share reflects the potential dilution effects of the
Company's Notes (as discussed in Notes 2, 4 and 5) for all quarters
presented for 2005 and 2004.
(b) The Company recorded charges of $5,210 before taxes during the quarter
ended July 30, 2004, as a result of a settlement in principle of certain
previously reported lawsuits against its Cracker Barrel subsidiary (see
Note 10).
<PAGE>
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. We do not expect that our disclosure controls
and procedures or our internal controls will prevent all error 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 July 29,
2005, based on these criteria.
In addition, Deloitte & Touche LLP, an independent registered public
accounting firm, has issued an attestation report on management's assessment of
internal control over financial reporting, which is included herein.
/s/Michael A. Woodhouse
-----------------------
Michael A. Woodhouse
Chairman, President and Chief Executive Officer
/s/Lawrence E. White
--------------------
Lawrence E. White
Senior Vice President, Finance and Chief
Financial Officer
<PAGE>
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of CBRL Group, Inc.:
We have audited the accompanying consolidated balance sheets of CBRL Group, Inc.
and subsidiaries (the "Company") as of July 29, 2005 and July 30, 2004, and the
related consolidated statements of income, changes in shareholders' equity, and
cash flows for each of the three fiscal years in the period ended July 29, 2005.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company at July 29, 2005 and
July 30, 2004, and the results of its operations and its cash flows for each of
the three fiscal years in the period ended July 29, 2005, in conformity with
accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of the Company's
internal control over financial reporting as of July 29, 2005, based on the
criteria established in Internal Control-Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission and our report
dated September 23, 2005 expressed an unqualified opinion on management's
assessment of the effectiveness of the Company's internal control over financial
reporting and an unqualified opinion on the effectiveness of the Company's
internal control over financial reporting.
Nashville, Tennessee
September 23, 2005
<PAGE>
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of CBRL Group, Inc.:
We have audited management's assessment, included in the accompanying
Management's Report on Internal Control over Financial Reporting, that CBRL
Group, Inc. and subsidiaries (the "Company") maintained effective internal
control over financial reporting as of July 29, 2005, based on criteria
established in Internal Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. The Company's management is
responsible for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial
reporting. Our responsibility is to express an opinion on management's
assessment and an opinion on the effectiveness of the Company's internal control
over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, evaluating management's assessment, testing and evaluating
the design and operating effectiveness of internal control, and performing such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinions.
A company's internal control over financial reporting is a process designed by,
or under the supervision of, the company's principal executive and principal
financial officers, or persons performing similar functions, and effected by the
company's board of directors, management, and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial
reporting, including the possibility of collusion or improper management
override of controls, material misstatements due to error or fraud may not be
prevented or detected on a timely basis. Also, projections of any evaluation of
the effectiveness of the internal control over financial reporting to future
periods are subject to the risk that the controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
In our opinion, management's assessment that the Company maintained effective
internal control over financial reporting as of July 29, 2005, is fairly stated,
in all material respects, based on the criteria established in Internal
Control-Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission. Also in our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of
July 29, 2005, based on the criteria established in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission.
We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated financial
statements as of and for the year ended July 29, 2005 of the Company and our
report dated September 23, 2005 expressed an unqualified opinion on those
consolidated financial statements.
/s/Deloitte & Touche LLP
Nashville, Tennessee
September 23, 2005
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>11
<FILENAME>cbrlgroup10k092205ex21.txt
<DESCRIPTION>SUBSIDIARIES OF THE REGISTRANT
<TEXT>
EXHIBIT 21
Subsidiaries of the Registrant
The following is a list of the significant subsidiaries of the Registrant as of
July 29, 2005, all of which are wholly-owned:
State of
Parent Incorporation
- ------ -------------
CBRL Group, Inc. Tennessee
Subsidiaries
Cracker Barrel Old Country Store, Inc. Tennessee
Logan's Roadhouse, Inc. Tennessee
CBOCS Distribution, Inc.
(dba Cracker Barrel Old Country Store) Tennessee
CBOCS Properties, Inc.
(dba Cracker Barrel Old Country Store) Michigan
CBOCS West, Inc.
(dba Cracker Barrel Old Country Store) Nevada
Rocking Chair, Inc. Nevada
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>12
<FILENAME>cbrlgroup10k092205ex23.txt
<DESCRIPTION>CONSENT OF ACCOUNTING FIRM
<TEXT>
EXHIBIT 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement Nos.
2-86602, 33-15775, 33-37567, 33-45482, 333-01465, 333-63442, 333-71384,
333-81063 and 333-111364 on Form S-8 and Registration Statement Nos. 33-59582,
333-90996-02 and 333-90996-13 on Form S-3 of CBRL Group, Inc. and subsidiaries
of our reports dated September 23, 2005, relating to the consolidated financial
statements of CBRL Group, Inc. and subsidiaries, and management's report on the
effectiveness of internal control over financial reporting appearing in and
incorporated by reference in the Annual Report on Form 10-K of CBRL Group, Inc.
and subsidiaries for the year ended July 29, 2005.
/s/DELOITTE & TOUCHE LLP
Nashville, Tennessee
September 26, 2005
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>13
<FILENAME>cbrlgroup10k092205ex31.txt
<DESCRIPTION>RULE 12A-14(A)/15D-14(A) CERTIFICATIONS
<TEXT>
EXHIBIT 31 A
CERTIFICATION
I, Michael A. Woodhouse certify that:
1. I have reviewed this Annual Report on Form 10-K of CBRL Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be
designed under our supervision, to ensure that
material information relating to the registrant,
including its consolidated subsidiaries, is made
known to us by others within those entities,
particularly during the period in which this report
is being prepared; and
(b) Designed such internal control over financial
reporting, or caused such internal control over
financial reporting to be designed under our
supervision, to provide reasonable assurance
regarding the reliability of financial reporting and
the preparation of financial statements for external
purposes in accordance with generally accepted
accounting principles; and
(c) Evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in
this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the
end of the period covered by this report based on
such evaluation; and
(d) Disclosed in this report any change in the
registrant's internal control over financial
reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal
quarter in the case of an annual report) that has
materially affected, or is reasonably likely to
materially affect, the registrant's internal control
over financial reporting;
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses
in the design or operation of internal control over
financial reporting which are reasonably likely to
adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
<PAGE>
(b) Any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal control over
financial reporting.
Date: September 26, 2005
/s/ Michael A. Woodhouse
- ------------------------
Michael A. Woodhouse, Chairman, President and
Chief Executive Officer
<PAGE>
EXHIBIT 31 B
CERTIFICATION
I, Lawrence E. White certify that:
1. I have reviewed this Annual Report on Form 10-K of CBRL Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be
designed under our supervision, to ensure that
material information relating to the registrant,
including its consolidated subsidiaries, is made
known to us by others within those entities,
particularly during the period in which this report
is being prepared; and
(b) Designed such internal control over financial
reporting, or caused such internal control over
financial reporting to be designed under our
supervision, to provide reasonable assurance
regarding the reliability of financial reporting and
the preparation of financial statements for external
purposes in accordance with generally accepted
accounting principles; and
(c) Evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in
this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the
end of the period covered by this report based on
such evaluation; and
(d) Disclosed in this report any change in the
registrant's internal control over financial
reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal
quarter in the case of an annual report) that has
materially affected, or is reasonably likely to
materially affect, the registrant's internal control
over financial reporting;
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses
in the design or operation of internal control over
financial reporting which are reasonably likely to
adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
<PAGE>
(b) Any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal control over
financial reporting.
Date: September 26, 2005
/s/ Lawrence E. White
- ---------------------
Lawrence E. White, Senior Vice President, Finance and
Chief Financial Officer
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>14
<FILENAME>cbrlgroup10k092205ex32.txt
<DESCRIPTION>SECTION 1350 CERTIFICATIONS
<TEXT>
Exhibit 32 A
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of CBRL Group, Inc. (the "Issuer") on Form
10-K for the fiscal year ended July 29, 2005, as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Michael A. Woodhouse,
Chairman, President and Chief Executive Officer of the Issuer, certify, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Issuer.
Date: September 26, 2005 By: /s/ Michael A. Woodhouse
------------------------
Michael A. Woodhouse,
Chairman, President and Chief
Executive Officer
<PAGE>
Exhibit 32 B
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of CBRL Group, Inc. (the "Issuer") on Form
10-K for the fiscal year ended July 29, 2005, as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Lawrence E. White,
Senior Vice President and Chief Financial Officer of the Issuer, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Issuer.
Date: September 26, 2005 By: /s/Lawrence E. White
--------------------
Lawrence E. White,
Senior Vice President, Finance and
Chief Financial Officer
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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