Good day and welcome to the Cracker Barrel Fourth Quarter 2012 Conference Call. Today's call is being recorded and will be available from today at 1 pm Eastern Time through October 4, 2012, at 11.59 pm Eastern by dialing 719-457-0820 and entering the pass code. At this time, for opening remarks and introductions, I would like to turn the call over to Coco Kyriopoulos. Please go ahead.

Thanks, Nicole. Good morning, and welcome to Cracker Barrel's fourth quarter fiscal 2012 conference call and webcast. This morning we issued a press release announcing our fourth quarter and full fiscal year results and outlook for the 2013 fiscal year. In this press release and on this call we will refer to non-GAAP financial measures for the fourth quarter and the 2012 fiscal year, adjusted to exclude charges and tax effects related to severance and to the proxy contest concluded at the company's annual meeting of shareholders last December. We will also refer to non-GAAP financial measures for the previous fiscal year and fourth quarter adjusted to exclude charges and tax effects related to an impairment net of a gain on the sale of a property, severance and the proxy contest. The company believes that excluding these charges, gains, and tax effects from its financial results provides information that may be more indicative of the company's ongoing operating performance, while improving comparability to prior periods. This information is not intended to be considered in isolation or as a substitute for financial information prepared in accordance with GAAP. The last page of the press release includes the reconciliation from the non-GAAP information to the GAAP financials. The press release can be found in the Investors section of our website, crackerbarrel.com. In that press release and during this call statements may be made by management of their beliefs and expectations of the company's future operating results or expected future events. These are what are known as forward-looking statements, which involve risks and uncertainties and in many cases are beyond management's control and may cause actual results to differ materially from expectations. We urge caution to our listeners and readers in considering forward-looking statements and information. Many of the factors that could affect…

Thanks, Coco. Good morning, everyone. Today is the 43rd anniversary of the founding of Cracker Barrel and we are very pleased to celebrate by reporting positive news. As you can see from today's press release, our fourth quarter and fiscal year were a success on many fronts. We exceeded our previously stated expectations for sales and earnings in the fourth quarter which concluded a strong year for Cracker Barrel and our shareholders. Over the course of the last year, we remained focused and executed remarkably well on our six business priorities that we laid out in the first quarter. broad based enhancements to our core business contributed to top line and EPS performance specifically in the fourth quarter, we believe our national advertising, menu development, and strong execution from the operations team worked together to drive our third consecutive quarter positive traffic. There were many accomplishments during the fourth quarter in fiscal 2012 and here are a few highlights. Traffic to our stores during the fourth quarter was up 1.4% over last year. This marks three consecutive quarters of positive year-over-year sales and traffic and three consecutive quarters of beating the Knapp-Track casual dining index. We improved our operating profit and margins despite continued food commodity pressures. This lead to an 18.8% increase in adjusted earnings per share for the fourth quarter and 13.9% increase in adjusted earnings per share for fiscal '12 compared to fiscal '11. During 2012, we generated $220 million in cash from operations, which allowed us to pay down debt, repurchase shares, increase our dividend to shareholders and continue investing in our future. We were voted number one in the 2012 Consumer Picks survey conducted by Nation's Restaurant News. This is the second year the magazine has performed the survey and the second time that Cracker…

Good morning, everyone and thank you, Sandy. I would like to begin by discussing our financial performance for the fourth quarter of fiscal 2012 and the full fiscal year and then our outlook for the 2013 fiscal year. In this morning's release, we reported that our fourth quarter net earnings on a GAAP basis was $34.7 million or $1.47 per diluted share compared to $17.5 million or $0.75 per diluted share in the prior year quarter. When adjusted for the impact of the 53rd week in the current year, and certain charges in the prior year, our adjusted net earnings were $1.20 per diluted share, and 18.8% increase over our adjusted net earnings of $1.01 per diluted share in the prior year quarter. For the full fiscal year, we reported GAAP net income of $103.1 million or $4.40 per dilute share. On a comparable 52 week basis, and adjusted for certain charges and gains in the current and prior year, our adjusted net earnings for the full fiscal year were $4.34, 13.9% increase over the prior year's adjusted earnings per diluted share of $3.81. Our revenue in the quarter was $700 million. Adjusting for $51 million impact of the additional week, our adjusted revenue for the fourth quarter was $649 million an increase of 5.9% compared to $612.9 million in the prior year quarter. On an adjusted basis, restaurant revenues increased 6.0% to $526.9 million and retail revenues increased 5.5% to $122 million. Our comparable store restaurant sales increased 3.8% as traffic increased 1.4% and average check increased 2.4%. The increase in average check reflected menu price increases of approximately 2.2% and a favorable mix impact of 0.2%, due primarily to the higher priced items in this year's summer promotion. Our comparable store retail sales increased 3.1%. Our total cost…

(Operator Instructions). Due to time, we would appreciate if you would limit your questions to one and one follow-up question and then get back in the queue. (Operator Instructions). We will take our first question from Jeff Framer from Wells Fargo.

You talked on this but what would you point as the two or three most significant drivers of your same store sales momentum? Especially rolling in there to July, you expect that to continue in coming quarters?

Well, we had a lot of things going in the fourth quarter, Jeff. Our strategy of enhancing our core business was focused on driving traffic from our current guests. They know it and they love it and we wanted to increase the frequency and we really did that through a combination of a very successful LTO and in this case an additional enhancement to our core menu which was our salad promotion and I was very pleased with the success that we had with that. Additionally, we had increased the reach of our advertising as we previously announced. We focused our advertising spend this year in the second and the fourth quarter. So we the national TV and spot radio to support the brand and the salad promotion. I think both of those were very effective. Our operators did a phenomenal job of delivering the experience. We have spent a lot of time focused on service enhancements over the year so that we can ensure that we are providing a consistent quality experience and I think our operators absolutely did that. We got some help from gas prices that came down. So I think it was a strong travel season and the miles driven was good. I think the fourth of the July being in the middle of the week helps a little. It gives us two strong weekends on either end. So just across the board, I think we had a number of things that contributed to the performance in the fourth quarter.

Okay, and then just as a quick follow-up, just going back and recapping what happened last year, you began FY12 pointing to, I believe, $4.05 to $4.20, that would be excluding the proxy expenses. It looks like you raised the guidance in every quarter before finally delivering the $4.61 for the year, this year. So looking at what happened last year, any reason for us to believe that you haven’t been equally as conservative with the FY13 guidance?

Jeff, the guidance of the $4.50 to $4.70, yes, we exceeded our guidance and much of Wall Street's expectations for the fourth quarter but the other thing that happened in the fourth quarter, United States experienced a historic drought. Many restaurant companies have adjusted our food cost outlook for the next four quarters and what is particular in our 2013 fiscal year for the back half of the year, in terms of what the commodity cost outlook is, we are now looking at an acceleration of our commodity cost through the course of the year, so that we are probably looking in the first quarter at something in the 2% to 3% range which can potentially by the fourth quarter be in the 7% to 9% range. At the time that we initially offered our $4.50 to $4.70 guidance at the end of the third quarter, we were probably being a little more modest than we are now in terms of the same store sales except didn’t know about the food cost impact that we saw as a result of the drought over the summer. We, at that time, were actually anticipating a bumper corn crop and now it seems that this will one of the smallest crops in the United States in many years.

Our next question comes from Joe Buckley from Bank of America-Merrill Lynch.

Can I just focus, maybe, on the first quarter guidance for a minute? You did have some unusual items. You had them going both ways and you have look like net net maybe was a plus $0.09 to earnings. So looking at the guidance, going up against the only quarter of negative comps and what you just described as fairly modest food cost inflation for the first quarter, just kind of walk us through your thinking on the first quarter guidance.

Sure, Joe. Let me walk you through some numbers from first quarter last year, all right. Last year, we reported earnings per share on a GAAP basis of $1.03 and we said at that time that we had about $0.06 worth of expenses related to the proxy contest that would result in an adjusted number of $1.09. We further spoke about a litigation settlement of $3 million or about $0.10 a share which was a non-recurring benefit in the first quarter last year and additionally a positive adjustment to our worker's compensation reserves which was a non-recurring benefit that we said was at the time would be a on-recurring benefit of $2.6 million or of $0.09 a share. Factoring those items out of last year's first quarter, we are still anticipating substantial year-over-year earnings per share growth on a comparable basis or on an adjusted basis in this year's first quarter versus last year's fist quarter.

Larry, wasn’t the manager's conference expense though, which I think was about $2.6 million in last year's first quarter?

There was a manager's conference expense which I failed to mention and was a perfectly offsetting adjustment to our employee health care reserves. So those cancel, Joe.

Let me just ask one more question on the first quarter. Does the guidance reflect any greater concern on sales in the first quarter than you might have had previously?

We have roughly the same sales outlook for the first quarter now that we had when we shared our initial guidance in May. We think there is potentially some more risking of those sales as a result of some of the environmental concerns Sandy mentioned earlier.

Our next question comes from Bob Derrington from Northcoast Research.

If I could follow-up on that question about the guidance, one thing that I am scratching my head over is, your same store sales guidance of 2% to 3% basically implies is in fact you are able to report that the strongest two year same store sales in seven years. Given the concerns that you expressed early about the economy et cetera, I am just trying to understand as the comp compares to dramatically tougher beginning in the second quarter, what gives you the confidence that you can report the 2% to 3% same store sales growth? Is it higher traffic? Is it higher menu pricing? Is it mix? What is it that we need to understand here about that?

Well, Bob, I think it's the initiatives really that I have outlined, already the work that we are doing to continue to enhance the menu. We do have a price increase embedded in our numbers but we have got a number of initiatives to further enhance and build on the effectiveness of our advertising program to build retail sales, to menu news on both the LTO side and the core menu side, continued enhancements on the service side. So it's all the things that I highlighted as the initiatives for 2013.

As a follow-up, if same store sales, if we just assume that the first quarter, 2% to 3% in line with your guidance comes through, that implies a substantial deceleration on a two year basis for the first quarter. Is there some reason that we should expect or again, is your guidance just conservative? How do we think about that? Particularly given that we are halfway through the quarter.

I think in the first quarter we have got, as we mentioned, we continue to have a fairly conservative outlook about the consumers. It is a little bit unclear to us the impact of the election and the noise that that’s going to cause in our market where we continue to see very aggressive advertising and discounting from our competitors and I think that we are being cautious about our outlook on the consumer for the first quarter. We also, as you recall, we have focused our advertising in Q2 and Q4. So while we do intend to run radio again in the fall which we did last year to support our fall promotion. We won't be running TV this quarter.

We have a question from David Carlson from KeyBanc.

Real quick on the cost to goods sold. It came in well below what we were expecting for the fourth quarter, a portion of which, I believe, you mentioned was on the retail side. On the restaurant side, what was the gross inflation during the fourth quarter?

Yes, commodity inflation in the fourth quarter was 2.5% so that it was slightly ahead of the increase in average check and was more than fully offset by the initiatives we have had in place on the food production side that has successfully reduced food waste.

Also on the advertising front, should we expect higher percentage of revenues dedicated to marketing spend in fiscal year '13? Any commentary you can provide around the level of spend would be greatly appreciated.

We expect our advertising spend for the full fiscal year as a percentage of total revenue to be roughly the same as in fiscal '12.

Which was about 2%?

2.2%, to be exact, yes.

(Operator Instructions) We will take a question from Jeff Omohundro from Davenport & Company. Brian Ward - Davenport & Company: This is Brian Ward calling in for Jeff Omohundro. Hope everybody is doing well and congratulations on the quarter.

Thank you, Brian.

Thank you, Brian. Brian Ward - Davenport & Company: My question is, have you had the opportunity to evaluate patient protection and affordable care act as it relates to the potential cost increases the company might see in the coming years?

Brian, we are in the process of evaluating what, as we currently understand it, what the implications of that act will be on our business and what our choices will be and how we intend to address it. So I am not prepared to discuss it at this time but we are spending a lot of time on that internally.

We have a follow-up question from Bob Derrington from Northcoast Research.

Yes, Sandy, you mentioned, I think it was in the fall menu that you expect to include a new section on the menu with some more controlled calorie information. Is that, I assume, a precursor to ultimately adding calorie information to the menu and when would you anticipate doing that?

Well, it's not in the fall menu. We are going to be testing it in the second quarter and hope to roll it by the end of the year. I mentioned it was internally its Wholesome Fixins and it will offer the guest a variety of breakfast options that has calories less than 450 and then some lunch dinner options at less than 600. We think it will absolutely address the need for lighter fresher and dedicated categories for those guests who are looking to ensure they can get a healthy option. It does help us as we move towards providing the nutritional information. But most of all, we think, this is as clearly as what guests are looking for and that it is currently a barrier to usage right now with guest that love us but say they sometimes restrict usage because they are not sure they can find something that’s within the calories they are looking for. So we are going to try to point all of that out, form it and organize it in a way to make it easy for them to find.

Got you, and a follow-up, Larry. If you could help me for a second, within the press release, you talked about the total revenue for the company on both the restaurants and retail on a comparable 13 and 52 week period basis. Do you have the actual results for the restaurant and retail which was a 14 week period?

Yes, and let me walk you through what the sales impact and the cost of good sold impact were of the 53rd week, Bob. Sales, as we said, the sales impact of the 53rd week was $51 million which broke about approximately $42 million restaurant, $9 million in retail. Our cost of good sold for the 53rd week for restaurant was about $11.2 million and for retail about $4.1 million, meaning our 53 week COGS for restaurant was the same, 26.7%, as it is on an adjusted basis and for retail it is 49.0% as compared to the adjusted number of 49.2%.

We have a follow-up from David Carlson from KeyBanc.

Just one final question. Can you comment at all on the impact of the shift in July 4 or July 4 taking place on a different day may have had on a similar strong sales during the quarter?

Yes, I comment related the holiday being in the middle of the week does allow us to get two good weekends of travel versus concentrating at one which tends to happen more when the holiday falls obviously at one end or the other of the weekend. So I would say, overall, I was pleased that it fell this week on a Wednesday.

We have our final question from Joe Buckley.

Just a couple of quick ones. You mentioned in the first quarter you would do radio advertising but not TV? Is that the same year-over-year or was there some TV in the first quarter a year ago?

No, we did radio last year. So it’s the same.

Then, just a question on the CapEx numbers. Larry, it looks like, I think they are coming in a little lower than what you described at the analyst meeting in April. So I am just trying to verify that and maybe ask you why that’s the case and then with respect to the new restaurants, where are you in terms of somewhat less costly prototype that I believe you have been working one?

First of all, in terms of the answer to your question about our CapEx numbers for the 2012, they are lower than the numbers that we had anticipated at the investor analyst meeting. Some of that is just we had some remodeling programs that we just found we were doing fewer of than we had anticipated in April. So as I mentioned that we are anticipating for 2013, $90 million to $100 million of CapEx, of which about $40 million will be new stores, about $40 million will be maintenance CapEx and the balance will basically be our sales driving and cost reduction initiatives. Then, as far as our cost reduction efforts with respect to the new restaurant prototype, the best way to characterize it is it’s a work in progress.

And at this time, I would like to turn the call back over to Sandy Cochran for any closing remarks.

Thank you. Thank you all for joining us today. As we head into the first quarter, the fiscal year, I am pleased with the progress we have made on our strategic priorities in 2012 and with the momentum that’s carrying us into fiscal 2013. I look forward to building on the success and executing our new priorities and I remain confident that we have the right strategy and the right leadership in place to move this brand forward and to drive shareholder value. We appreciate your interest and support. Thank you.

Once again, ladies and gentlemen, that concludes today's conference. We appreciate your participation today.