PAGE 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10Q
(Mark One)
__X__ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1994
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 1-10046
TCBY ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Delaware 71-0552115
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
425 West Capitol Avenue, Little Rock, AR 72201
(Address of principal executive offices) (Zip Code)
(501) 688-8229
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 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 ___
On September 30, 1994 there were 25,594,264 shares of the registrant's
common stock outstanding.
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<TABLE>
TABLE OF CONTENTS
<CAPTION>
Part I. FINANCIAL INFORMATION Page
<S> <C> <C>
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets
August 31, 1994 and November 30, 1993 3
Consolidated Statements of Income
Quarter and Nine months ended
August 31, 1994 and 1993 5
Consolidated Statements of Cash Flows
Nine months ended August 31, 1994 and 1993 6
Notes to Consolidated Financial Statements
August 31, 1994 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
</TABLE>
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<PAGE>
PART 1
FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS (UNAUDITED)
TCBY ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
August 31, November 30,
1994 1993
____________ ____________
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 5,709,845 $ 10,167,074
Short-term investments 8,669,213 14,826,289
Receivables:
Trade accounts 20,821,696 10,859,638
Notes 2,229,671 2,577,182
Allowance for doubtful accounts
and notes (400,381) (650,547)
_____________ _____________
22,650,986 12,786,273
Refundable income taxes - 487,394
Deferred income taxes 611,914 611,914
Inventories 13,775,945 11,476,837
Prepaid expenses and other assets 3,528,858 2,539,461
_____________ _____________
TOTAL CURRENT ASSETS 54,946,761 52,895,242
PROPERTY, PLANT AND EQUIPMENT
Land 4,127,523 3,879,175
Buildings 23,208,174 22,519,574
Furniture, vehicles and equipment 51,817,157 49,932,263
Leasehold improvements 9,812,560 11,020,257
Construction in progress 5,161,490 743,493
Allowances for depreciation
and amortization (38,484,049) (34,179,906)
_____________ _____________
55,642,855 53,914,856
OTHER ASSETS
Notes receivable, less current portion
(less allowance for doubtful notes
1994 - $934,224; 1993 - $1,517,943) 8,648,879 10,146,885
Intangibles (less amortization
1994 - $3,772,528; 1993 - $2,705,816) 5,926,313 6,122,354
Other 9,608,086 5,611,799
_____________ _____________
24,183,278 21,881,038
_____________ _____________
TOTAL ASSETS $134,772,894 $128,691,136
============= =============
See notes to consolidated financial statements.
</TABLE>
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<PAGE>
TCBY ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
August 31, November 30,
1994 1993
____________ _____________
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 1,572,500 $ 1,199,737
Accrued expenses 5,970,904 5,276,677
Income taxes payable 2,660,322 -
Deferred franchise fee income 366,984 265,227
Current portion of long-term debt 2,092,841 2,092,761
_____________ _____________
TOTAL CURRENT LIABILITIES 12,663,551 8,834,402
LONG-TERM DEBT, less current portion 9,913,777 11,486,736
DEFERRED INCOME TAXES 3,138,784 3,138,784
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Preferred stock, par value $.10 per share;
authorized 2,000,000 shares - -
Common stock, par value $.10 per share;
authorized 50,000,000 shares; issued-
1994 - 26,848,933; 1993 - 26,804,385 2,684,893 2,680,439
Additional paid-in capital 24,480,234 24,255,981
Retained earnings 91,302,854 87,705,993
_____________ _____________
118,467,981 114,642,413
Less treasury stock, at cost
(1,317,069 shares in 1994 and 1993) (9,411,199) (9,411,199)
_____________ _____________
109,056,782 105,231,214
_____________ _____________
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $134,772,894 $128,691,136
============= =============
See notes to consolidated financial statements.
</TABLE>
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<PAGE>
TCBY ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
August 31, August 31,
1994 1993 1994 1993
____________ ____________ _____________ _____________
<S> <C> <C> <C> <C>
Sales $46,691,476 $33,824,848 $108,878,526 $ 85,923,279
Cost of sales 27,105,673 17,541,107 63,990,315 45,346,145
____________ ____________ _____________ _____________
GROSS PROFIT 19,585,803 16,283,741 44,888,211 40,577,134
Franchising revenues:
Initial franchise and
license fees 284,128 112,000 1,017,828 695,500
Royalty income 3,699,076 3,289,250 8,379,169 7,652,544
____________ ____________ _____________ _____________
Total franchising
revenues 3,983,204 3,401,250 9,396,997 8,348,044
____________ ____________ _____________ _____________
23,569,007 19,684,991 54,285,208 48,925,178
Selling, general and
administrative expenses 16,825,023 13,925,011 43,160,108 40,269,627
____________ ____________ _____________ _____________
6,743,984 5,759,980 11,125,100 8,655,551
Interest expense (173,287) (192,631) (482,411) (655,331)
Interest income 208,137 322,326 726,049 997,458
Other income (expense) 41,643 246,160 (38,099) 125,422
____________ ____________ _____________ _____________
76,493 375,855 205,539 467,549
____________ ____________ _____________ _____________
INCOME BEFORE
INCOME TAXES 6,820,477 6,135,835 11,330,639 9,123,100
Income taxes:
Current 2,340,886 1,674,653 3,909,070 2,713,325
Deferred - 458,778 - 458,778
____________ ____________ _____________ _____________
2,340,886 2,133,431 3,909,070 3,172,103
____________ ____________ _____________ _____________
NET INCOME $ 4,479,591 $ 4,002,404 $ 7,421,569 $ 5,950,997
============= ============= ============= =============
NET INCOME PER SHARE $ 0.18 $ 0.16 $ 0.29 $ 0.23
============= ============= ============= =============
Average shares
outstanding 25,518,767 25,625,837 25,501,297 25,635,158
============= ============= ============= =============
Cash dividends paid
per share $ 0.05 $ 0.05 $ 0.15 $ 0.15
============= ============= ============= =============
See notes to consolidated financial statements.
</TABLE>
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<PAGE>
TCBY ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
August 31,
1994 1993
_______________________________
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 7,421,569 $ 5,950,997
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Depreciation and amortization 6,308,485 5,827,401
Amortization of intangibles 468,848 400,232
Provision for doubtful accounts 901,708 831,537
Provision for deferred income taxes - 458,778
Loss on disposal of property and equipment 315,465 37,897
Changes in operating assets and liabilities:
Accounts receivable (11,697,651) (6,439,281)
Inventories (2,299,108) (151,408)
Prepaid expenses (989,397) 136,377
Intangibles and other assets (4,957,338) (2,503,437)
Accounts payable and accrued expenses 1,066,990 1,117,450
Deferred revenues 101,757 (184,036)
Income taxes 3,147,716 1,627,052
_____________ _____________
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES (210,956) 7,109,559
INVESTING ACTIVITIES
Purchases of property, plant and equipment (8,260,222) (5,377,577)
Proceeds from sale of property and equipment 596,517 1,526,079
Origination of notes receivable (1,297,530) (1,217,583)
Principal collected on notes receivable 3,726,766 2,557,089
Purchases of short-term investments (4,384,779) (17,144,501)
Proceeds from sale of short-term investments 10,541,855 18,180,353
_____________ _____________
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 922,607 (1,476,140)
FINANCING ACTIVITIES
Proceeds from long-term borrowings - 14,622,357
Proceeds from sales of common stock 228,707 99,289
Dividends paid (3,824,708) (3,838,575)
Purchases of treasury stock - (708,643)
Retirement of long-term debt (1,572,879) (17,327,344)
_____________ _____________
NET CASH USED IN FINANCING ACTIVITIES (5,168,880) (7,152,916)
_____________ _____________
Decrease in cash and cash equivalents (4,457,229) (1,519,497)
Cash and cash equivalents at beginning of period 10,167,074 17,055,288
_____________ _____________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,709,845 $ 15,535,791
============= =============
</TABLE>
See notes to consolidated financial statements.
ments.
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PAGE 7
TCBY ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
August 31, 1994
NOTE A -- FINANCIAL STATEMENT PRESENTATION
The notes to the consolidated financial statements do not include all notes
which would be included in the annual report to stockholders and reference
to the footnotes contained in the annual report to stockholders for the
year ended November 30, 1993, will give additional information on such
items as significant accounting policies, long-term debt, income taxes,
lease commitments, contingencies and employee benefit plans. However, in
the opinion of management, all footnotes have been included for disclosures
required for compliance with the Securities and Exchange Commission rules,
as contained in Accounting Series Release No. 177. Also in the opinion of
management, all adjustments (consisting of normal recurring accruals) which
are necessary for a fair statement of the results for the interim periods
have been included.
NOTE B -- RECLASSIFICATIONS
Certain amounts in the 1993 consolidated financial statements have been
reclassified to conform to the 1994 presentation.
NOTE C -- INVENTORY
<TABLE>
<CAPTION>
August 31, November 30,
1994 1993
___________ ___________
<S> <C> <C>
Manufacturing materials and
supplies $ 4,157,109 $ 3,775,732
Finished yogurt products and
other food products 4,832,981 3,281,552
Equipment and other products 4,785,855 4,419,553
___________ ___________
$13,775,945 $11,476,837
=========== ===========
</TABLE>
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PAGE 8
NOTE D -- ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
August 31, November 30,
1994 1993
____________ ____________
<S> <C> <C>
Rent $ 859,218 $ 1,031,718
Compensation 1,755,680 1,714,336
Other 3,356,006 2,530,623
___________ ___________
$ 5,970,904 $ 5,276,677
=========== ===========
</TABLE>
NOTE E -- CONTINGENCIES
A purported investor in a former franchisee has claimed approximately $26
million in trebled damages, plus costs and prejudgment interest, from the
former franchisee for alleged fraudulent acts. The compensatory damages
requested are $8.7 million. The Company has also been named in this suit
as a defendant and has cross-claimed the former franchisee. The Company
believes the plaintiff's claims against the Company to be without merit,
and the Company is vigorously contesting the suit.
Other than as set forth above, there is no material litigation pending
against the Company. Various legal and administrative proceedings are
pending against the Company which are incidental to the business of the
Company. The ultimate legal and financial liability of the Company in
connection with such proceedings and that discussed above cannot be
estimated with certainty, but the Company believes, based upon its
examination of these matters, its experience to date, and its discussions
with legal counsel, that resolution of these proceedings will have no
material adverse effect upon the Company's financial condition, either
individually or in the aggregate; of course, any substantial loss pursuant
to any litigation might have a material adverse impact upon results of
operations in the fiscal quarter or year in which it were to be incurred,
but the Company cannot estimate the range of any reasonably possible loss.
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ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Total sales for the third quarter of fiscal 1994 increased 38 percent from
sales for the third quarter of fiscal 1993. Total sales for the first nine
months of fiscal 1994 increased 27 percent from sales for the first nine
months of fiscal 1993.
The following table sets forth sales by category within the Company's
primary segments of operation:
<TABLE>
<CAPTION>
Quarter Ended August 31 Nine Months Ended August 31
% of % of % of % of
1994 Sales 1993 Sales 1994 Sales 1993 Sales
______ _____ ______ _____ ______ _____ ______ _____
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Food Products:
Yogurt sales to
Martin-Brower and
other food service
distributors $18,132 39% $16,989 50% $ 42,533 39% $42,027 49%
Retail sales by
Company-owned
stores 6,950 15% 8,314 25% 17,223 16% 21,432 25%
Yogurt sales to the
retail grocery
trade 16,191 35% 3,791 11% 34,570 32% 8,981 10%
_______ _____ _______ _____ ________ _____ _______ _____
41,273 89% 29,094 86% 94,326 87% 72,440 84%
Equipment:
Sales by the
Company's equip-
ment distributor 4,123 9% 2,564 7% 11,115 10% 6,809 8%
Sales of manufac-
tured specialty
vehicles 1,063 2% 1,935 6% 2,783 2% 5,828 7%
_______ _____ _______ _____ _______ _____ _______ _____
5,186 11% 4,499 13% 13,898 12% 12,637 15%
Other 232 0% 232 1% 655 1% 846 1%
_______ _____ _______ _____ ________ _____ _______ _____
Total Sales $46,691 100% $33,825 100% $108,879 100% $85,923 100%
======= ==== ======= ==== ======== ===== ======= =====
</TABLE>
($ rounded to nearest thousand)
Sales from the Company's food produc ts segment include (i) wholesale sales
of frozen yogurt products to The Martin-Brower Company, which distributes
yogurt and other products to TCBY locations, and to other food service
distributors, which distribute to non-traditional locations such as
airports, on-premises business cafeterias, hospitals, sporting arenas, toll
road plazas, etc., (ii) retail sales of yogurt and related
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PAGE 10
food items by Company-owned stores, and (iii) sales of "hardpack" frozen
yogurt and refrigerated "traditional style" yogurt for distribution to
retail groceries. Third quarter sales in the food products segment
increased from $29.1 million in fiscal 1993 to $41.3 million in fiscal
1994. The food products segment represented 89 percent of the Company's
total sales in the third quarter of fiscal 1994 and 86 percent in the third
quarter of fiscal 1993. For the first nine months, sales in the food
products segment increased from $72.4 million in fiscal 1993 to $94.3
million in fiscal 1994. The food products segment represented 87 percent
of the Company's total sales in the first nine months of fiscal 1994 and 84
percent in fiscal 1993. Within the food products segment, wholesale sales
of soft serve frozen yogurt mix increased 7 pe rcent during the third
quarter of fiscal 1994 and increased 1 percent during the first nine months
of fiscal 1994 from the same periods in fiscal 1993. These increases are
due to a greater number of non-traditional locations operating during the
fiscal 1994 periods compared to the same periods in fiscal 1993 and, for
the nine month period, was partially offset by a reduction in the number
of traditional "TCBY" stores (Company-owned and franchised stores) in
operation. The Company expects a continuation of growth in the number of
non-traditional locations during the remainder of fiscal 1994. While the
Company experienced a stabilization in the combined number of franchised
and Company-owned stores operating in the third quarter, the Company may
experience a decline in operating stores during the remainder of fiscal
1994.
The table below sets forth location activity for the third quarter and
first nine months of fiscal 1994 and 1993.
<TABLE>
<CAPTION>
FRANCHISED COMPANY NON-TRADITIONAL
STORES STORES LOCATIONS TOTAL
1994 1993 1994 1993 1994 1993 1994 1993
_____ _____ ____ ____ ______ ____ ______ ______
<S> <C> <C> <C> <C> <C> <C> <C> <C>
For the third quarter:
Locations at
beginning of period 1,341 1,383 114 137 1,117 631 2,572 2,151
Opened/Added 54 15 1 0 170 188 225 203
Closed (24) (22) (15) (2) (26) (11) (65) (35)
Net locations purchased
(sold) between fran-
chisees and Company 1 3 (1) (3) 0 0 0 0
_____ _____ ____ ____ ______ ____ ______ ______
Locations at
August 31 1,372 1,379 99 132 1,261 808 2,732 2,319
====== ===== ==== ==== ====== ==== ====== ======
</TABLE>
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<TABLE>
<CAPTION>
FRANCHISED COMPANY NON-TRADITIONAL
STORES STORES LOCATIONS TOTAL
1994 1993 1994 1993 1994 1993 1994 1993
______ ______ ____ ____ ______ ____ ______ ______
<S> <C> <C> <C> <C> <C> <C> <C> <C>
For the first nine months:
Locations at
beginning of period 1,364 1,401 121 147 989 292 2,474 1,840
Opened/Added 74 45 1 1 389 541 464 587
Closed (71) (80) (18) (3) (117) (25) (206) (108)
Net locations purchased
(sold) between fran-
chisees and Company 5 13 (5) (13) 0 0 0 0
______ ______ ____ ____ ______ ____ ______ ______
Locations at
August 31 1,372 1,379 99 132 1,261 808 2,732 2,319
================================================================
</TABLE>
Included in total locations above are 122 and 115 "TCBY" stores closed for
relocation or for the season at August 31, 1994 and August 31, 1993,
respectively.
Sales by Company-owned stores declined 16 percent during the third quarter
of fiscal 1994 as compared to the same period in fiscal 1993. Sale s by
Company-owned stores declined 20 percent during the first nine months of
fiscal 1994 as compared to the same period in fiscal 1993. These declines
result primarily from a reduction of Company-owned stores operated during
the periods including the closing of 6 stores in Ohio, 4 stores in Georgia,
and 5 stores in other markets. The Company expects the number of
Company-owned stores to stabilize at approximately 90 stores by the end of
fiscal 1994. However, the Company will continue to evaluate opportunities
to refranchise stores.
Sales of yogurt to the retail grocery trade increased 327 percent during
the third quarter of fiscal 1994 as compared to the third quarter of fiscal
1993. Sales of yogurt to the retail grocery trade increased 285 percent
during the first nine months of fiscal 1994 as compared to the first nine
months of fiscal 1993. This increase is a result of expanded geographic
distribution of both "hardpack" frozen and "traditional style" refrigerated
yogurt products. The Company plans to continue to expand the distribution
of yogurt products in the retail grocery trade during the remainder of
fiscal 1994.
Sales from the Company's equipment segment include (i) sales from the
distribution of equipment to the food service industry and (ii) sales of
manufactured mobile kitchens and other specialty vehicles primarily to
businesses and governments. Sales in the equipment segment increased 15
percent during the third quarter of fiscal 1994 from $4.5 million in fiscal
1993 to $5.2 million in fiscal 1994. Sales by the equipment segment
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PAGE 12
represented 11 percent and 13 percent of the Company's total sales during
the third quarter of fiscal 1994 and fiscal 1993, respectively. This
increase in sales results primarily from increased sales by the Company's
equipment distributor due to sales of equipment packages to international
franchisees.
Sales in the equipment segment increased 10 percent for the first nine
months in fiscal 1994 from $12.6 million in fiscal 1993 to $13.9 million in
fiscal 1994. Sales by the equipment segment represented 12 percent of the
Company's total sales during the first nine months of fiscal 1994 as
compared to 15 percent during fiscal 1993. The increase in sales by the
Company's equipment distributor is primarily due to sales of equipment
packages to international franchisees and inclusion of a full nine months
of sales for AIMCO Equipment Company, which was acquired in April 1993.
The increase was partially offset by the completion in the second quarter
of 1993 of an $11 million contract with a foreign government that was
accounted for on a percentage-of-completion basis. The Company's equipment
manufacturing subsidiary has not entered into any additional contracts of
this magnitude.
Combined same store sales (the comparison of fiscal 1994 individual
traditional "TCBY" store sales with sales by the same stores operating
during the same period of fiscal 1993) increased 6 percent in the third
quarter of fiscal 1994. Same store sales for Company-owned stores
increased 2 percent and franchised stores increased 7 percent in the third
quarter of fiscal 1994. Combined same store sales increased 3 percent in
the first nine months of fiscal 1994. Same store sales for Company-owned
stores decreased 1 percent and franchised stores increased 4 percent in the
first nine months of fiscal 1994. The overall improvement in same store
sales in the quarter and for the nine month period reflects the Company's
continuing efforts to increase sales through national media advertising
(ended June 1994) and local media advertising, menu extensions, store decor
upgrades and relocations. The restaurant industry continues to be highly
competitive. Even with the implementation of these programs, same store
sales may decline and store closings may occur.
The ratio of cost of sales to sales was 58 percent for the third quarter of
fiscal 1994 as compared to 52 percent for the third quarter of fiscal 1993.
The ratio of cost of sales to sales for the food products segment and
equipment segment in the third quarter of fiscal 1994 was 56 percent and 81
percent, respectively, compared to 49 percent and 74 percent, respectively,
in the third quarter of fiscal 1993. The increase in the cost of sales to
sales ratio is attributed primarily to a change in sales mix. Retail sales
through Company-owned stores declined while wholesale sales to the
grocery trade and private label customers (which are made at a higher cost of
sales to sales ratio) increased. A major component of the Company's cost of
sales of food products is milk. Average milk prices are expected to increase
in the fourth quarter of fiscal 1994 over the same period in fiscal 1993.
The cost of sales to sales ratio for the equipment segment increased due to
an increase in sales for equipment with lower gross profit margins.
The ratio of cost of sales to sales was 59 percent for the first nine
months of fiscal 1994 as compared to 53 percent for the first nine months
of fiscal 1993. The ratio of cost of sales to sales for the food products
segment and equipment segment in the first nine months of fiscal 1994 was
56 percent and 80 percent, respectively, compared to 49 percent and 79
percent, respectively, in the first nine months of fiscal 1993. The
changes in the cost of sales ratios for the nine month period are for the
same reasons as noted above for the third quarter.
Franchising revenues consist of initial franchise and license fees and
royalty income. In the third quarter of fiscal 1994, initial franchise and
license fees increased 154 percent and royalty income increased 12 percent
from fiscal 1993. In the first nine months of fiscal 1994, initial
franchise and license fees increased 46 percent and royalty income
increased 9 percent from fiscal 1993. The increase in franchise and
license fees results primarily from domestic and international franchising
activity. The increase in royalty income results from international
franchise activity and a higher number of non-traditional locations.
Selling, general and administrative (SG&A) expenses increased 21 percent in
the third quarter of fiscal 1994 compared to the third quarter of fiscal
1993. This increase is due primarily to an increase in expenses (e.g.,
hiring of additional salespersons and administrative staff and higher
selling costs such as consumer marketing expenses, trade allowances, and
brokerage fees due to the growth in sales volume achieved by the Company in
an effort to expand the geographic distribution of the Company's yogurt
products within the retail grocery trade) and the continued development of
non-traditional locations. The increase referred to above was partially
offset by a reduction in the number of Company-owned stores operating
during the third quarter of fiscal 1994 (see location activity schedule
above) which results in a decrease in the amount of total operating
expenses within Company-owned stores. As a percentage of combined sales
and franchising revenues, SG&A expenses were 33 percent and 37 percent for
the third quarter of fiscal 1994 and 1993, respectively. The Company plans
to continue the development of sales opportunities in non-traditional
locations and the retail grocery trade. As a result of this plan and as a
response to increased competitive activity, this will result in increased
selling costs in the remainder of fiscal 1994.
Selling, general and administrative expenses increased 7 percent in the
first nine months of fiscal 1994 compared to the first nine months of
fiscal 1993 for the same reasons as noted
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PAGE 14
above for the third quarter. As a percentage of combined sales and
franchising revenues, SG&A expenses were 36 percent and 43 percent for the
first nine months of fiscal 1994 and 1993, respectively.
Interest expense decreased approximately $19,000 in the third quarter of
fiscal 1994 compared to the third quarter of fiscal 1993. Interest expense
decreased approximately $173,000 in the first nine months of fiscal 1994
compared to the same period of fiscal 1993. These decreases are due to a
reduction in the principal balances of outstanding long-term debt. In
future periods, interest costs may increase as funds are borrowed to
finance the expansion of the Company's yogurt manufacturing facility, which
is discussed in greater detail below.
Interest income decreased approximately $114,000 in the third quarter of
fiscal 1994 compared to the same period of fiscal 1993. Interest income
decreased approximately $271,000 in the first nine months of fiscal 1994
compared to the same period of fiscal 1993. These decreases are due to
reductions in the outstanding balances of interest earning assets.
Income taxes as a percentage of income before income taxes was 34 percent
in the third quarter and first nine months of fiscal 1994. This
approximates the effective rate recorded for the comparable periods in
fiscal 1993.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically generated cash from operations sufficient to
meet its normal operating requirements. The Company's cash and short-term
investments decreased approximately $ 4.5 million from November 30, 1993 to
August 31, 1994. This decrease resulted primarily from (i) an increase in
trade accounts receivable and other assets (e.g., slotting fees paid),
primarily attributed to the seasonal increase in these accounts along with
expansion into the Private Label and Retail Grocery Trade markets, (ii)
purchases of property, plant and equipment, including the purchase of the
building previously being leased by AIMCO and various construction
projects; the construction of modular Treatt EExxpress Units; reconfiguration
of the vault refrigeration system and modifications to the novelty products
equipment line at the production facility in Dallas, Texas; and the
construction of new and relocated Company-owned stores, and (iii) cash
dividends of fifteen cents per share or $3.8 million paid in fiscal 1994.
The Board of Directors authorized the Executive Committee to spend up to
$7.5 million on capital expenditures on various projects designed to expand
the production capabilities of "hardpack" frozen yogurt products at the
Company's manufacturing facility in Dallas, Texas. Long term bank
financing is expected to be utilized to fund the various projects related
to this expansion. Commitments or expenditures have been made for
approximately $3 million related to this project.
Sequential Page No. 14
<PAGE>
PAGE 15
On August 31, 1994, working capital was $42.3 million compared to $44.1
million on November 30, 1993. The current ratio was 4.34 to 1.0 on August
31, 1994 and 5.99 to 1.0 on November 30, 1993.
The long-term debt to equity ratio was .09 to 1.0 at August 31, 1994 and
.11 to 1.0 at November 30, 1993. The Company has a tangible net worth of
$103.1 million at August 31, 1994.
On September 15, 1994, the Company's Board of Directors declared a five
cents per share dividend payable on October 11, 1994 to the stockholders of
record on September 26, 1994. The Company will consider adjustments to the
dividend rate after giving consideration to return to stockholders,
profitability expectations and financing needs.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There were no changes from previously reported litigation.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
27 - Article 5, Financial Data Schedule for the Third Quarter
Fiscal 1994 10-Q
99(a) - Press release, dated September 15, 1994, "TCBY
Reports Net Income and Revenues Up 25% Year-To-Date, Board Declares
Dividend"
99(b) - Press release, dated September 16, 1994, "Terry
Elliott Joins TCBY Enterprises As Senior VP of Corporate Development"
99(c) - Press release, dated September 20, 1994, "TCBY
Enterprises, Inc. Announces $7.5 Million Expansion of Its Manufacturing
Facility"
99(d) - Press release, dated September 28, 1994, "TCBY
Enterprises, Inc. Announces Promotion of Gene Whisenhunt to Senior Vice
President"
99(e) - Press Release, Dated September 28, 1994, "TCBY
Enterprises, Inc. Announces Promotion of John Rogers to Senior Vice
President"
99(f) - Press Release, Dated September 30, 1994, "Gary Talley
Joins TCBY Retail Division as VP of Sales"
b) The Company did not file any reports on Form 8-K during the
three months ended August 31, 1994.
Sequential Page No. 15
<PAGE>
PAGE 16
SIGNATURES
__________
Pursuant to the requirements 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.
TCBY ENTERPRISES, INC.
Date: 10/12/94 /s/ Frank D. Hickingbotham
__________________________
Frank D. Hickingbotham,
Chairman of the Board and
Chief Executive Officer
Date: 10/12/94 /s/ Gale Law
__________________________
Gale Law,
Senior Vice President,
Chief Financial Officer
Sequential Page No. 16
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF AUGUST 31, 1994 AND THE CONSOLIDATED
STATEMENT OF INCOME FOR THE NINE MONTHS ENDED AUGUST 31, 1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> AUG-31-1994
<CASH> 5,709,845
<SECURITIES> 8,669,213
<RECEIVABLES> 23,051,367
<ALLOWANCES> 400,381
<INVENTORY> 13,775,945
<CURRENT-ASSETS> 54,946,761
<PP&E> 94,126,904
<DEPRECIATION> 38,484,049
<TOTAL-ASSETS> 134,772,894
<CURRENT-LIABILITIES> 12,663,551
<BONDS> 9,913,777
<COMMON> 2,684,893
0
0
<OTHER-SE> 106,371,889
<TOTAL-LIABILITY-AND-EQUITY> 134,772,894
<SALES> 108,878,526
<TOTAL-REVENUES> 118,275,523
<CGS> 63,990,315
<TOTAL-COSTS> 63,990,315
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 482,411
<INCOME-PRETAX> 11,330,639
<INCOME-TAX> 3,909,070
<INCOME-CONTINUING> 7,421,569
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,421,569
<EPS-PRIMARY> .29
<EPS-DILUTED> .29
<PAGE>
</TABLE>
Sequential Page No. 17
PRESS RELEASE
EXHIBIT 99(a)
FOR IMMEDIATE RELEASE
THURSDAY
SEPTEMBER 15, 1994
CONTACT PERSON: STACY DUCKETT
DIRECTOR, CORPORATE COMMUNICATIONS
(501) 688-8229
TCBY REPORTS NET INCOME AND REVENUES UP 25% YEAR-TO-DATE
BOARD DECLARES DIVIDEND
LITTLE ROCK, AR - SEPTEMBER 15, 1994 - TCBY ENTERPRISES, INC. (NYSE:TBY)
today announced an increase in net income of 25% in the first nine months
of fiscal 1994; net income was $7,421,569 or $.29 per share, as compared
to $5,950,997 or $.23 per share for the first nine months of fiscal 1993.
Sales and franchising revenues in the first nine months of fiscal 1994
and 1993 were $118,275,523 and $94,271,323, respectively, a 25% increase.
Net income was $4,479,591 or $.18 per share as compared to $4,002,404 or
$.16 per share for the third q uarter ended August 31, 1993, an increase
of 12%. Sales and franchising revenues for the third quarter ended
August 31, 1994 and 1993 were $50,674,680 and $37,226,098, respectively,
a 36% increase.
Same store sales for franchised and Company-owned stores combined
increased 6% in the third quarter of fiscal 1994 as compared to the same
period of the previous year. Franchised same store sales increased 7%
while Company-owned same store sales increased 2% in the third quarter of
fiscal 1994 as compared to the same period of the previous year.
TCBY had 2,732 total locations at the end of the third quarter
(consisting of 1,372 franchised stores, 99 Company-owned stores and 1,261
non-traditional locations) as compared to 2,319 at the end of the third
quarter of fiscal 1993, a net increase of 413 locations. During the
third quarter of fiscal 1994, the TCBY system opened 225 new locations
worldwide, consisting of 55 traditional stores and 170 non-traditional
locations.
Frank D. Hickingbotham, Chairman of the Board and Chief Executive Officer
said, "During the third quarter, the Company con-
Sequential Page No. 18
<PAGE>
tinued its national television campaign, and introduced several new
products in the Company-own ed and franchised stores. The Company's
expansion of its consumer packaged goods into the retail markets
continued. During the third quarter of 1994, Consumer Packaged Goods
sales increased 250% as compared to the same period of fiscal 1993 which
we believe was a result of the Company's significant investment into the
market development and promotion of its retail products. We are pleased
with these positive results in the third quarter, and they represent the
eighth consecutive quarter of earnings improvement over comparable
quarters of the previous year."
The Board of Directors of the Company declared a $.05 per share cash
dividend. This dividend is payable on October 11, 1994 to shareholders
of record as of September 26, 1994.
TCBY Enterprises, Inc., through subsidiary companies, manufactures and
sells soft serve frozen yogurt, hardpack frozen yogurt, novelty products,
custom foodservice vehicles, and markets traditional style cup yogurt and
foodservice equipment. The Company is the largest franchisor, licensor
and operator of frozen yogurt stores in the world.
TCBY Enterprises, Inc.
Selected Financial Highlights
(000, Except Per Share Amounts)
(Unaudited)
Three Months Ended Nine Months Ended
August 31, August 31,
1994 1993 1994 1993
Operating Results
Sales & Franchising Revenue $ 50,675 $ 37,226 $118,276 $ 94,271
Net Income $ 4,480 $ 4,002 $ 7,422 $ 5,951
Net Income Per Share $ .18 $ .16 $ .29 $ .23
Average Shares Outstanding 25,519 25,626 25,501 25,635
Dividends Paid Per Share $ .05 $ .05 $ .15 $ .15
August 31, November 30,
1994 1993
Financial Position
Current Assets $ 54,947 $ 52,895
Current Liabilities $ 12,664 $ 8,834
Property, Plant & Equipment, Net $ 55,643 $ 53,915
Total Assets $134,773 $128,691
Long-term Debt, less current portion $ 9,914 $ 11,487
Stockholders' Equity $109,057 $105,231
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Sequential Page No. 19
<PAGE>
EXHIBIT 99(b)
PRESS RELEASE
FOR IMMEDIATE RELEASE
FRIDAY
SEPTEMBER 16, 1994
CONTACT PERSON: STACY DUCKETT
DIRECTOR, CORPORATE COMMUNICATIONS
(501) 688-8229
TERRY ELLIOTT JOINS TCBY ENTERPRISES AS
SENIOR VP OF CORPORATE DEVELOPMENT
LITTLE ROCK, AR - September 16, 1994 - TBCY Enterprises, Inc. (NYSE:TBY)
has announced that Terry Elliott has joined the Company effective
September 12 as its new Senior Vice President of Corporate Development.
This is a newly created position.
Mr. Elliott brings to the Company 26 years of financial and management
experience with a focus on improving operations of companies.
Mr. Elliott previously served as Senior Partner and Office Managing
Partner with Ernst & Young's Little Rock office.
"We are extremely pleased to have Mr. Elliott join our management team at
TCBY. His guidance and insights will be instrumental in the development
and execution of the Company's long-term plans," said Frank D.
Hickingbotham, Chairman and CEO.
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Sequential Page No. 20
<PAGE>
EXHIBIT 99(c)
PRESS RELEASE
FOR IMMEDIATE RELEASE
TUESDAY - SEPTEMBER 20, 1994
CONTACT PERSON: STACY DUCKETT
DIRECTOR
CORPORATE COMMUNICATIONS
TCBY ENTERPRISES, INC. ANNOUNCES $7.5 MILLION EXPANSION OF ITS
MANUFACTURING FACILITY
LITTLE ROCK, AR - SEPTEMBER 20, 1994 - TCBY ENTERPRISES, INC. (NYSE:TBY)
announced a $7.5 million expansion of its manufacturing facility,
Americana Foods in Dallas, Texas increasing the plant's overall capacity
by more than fifty percent. Americana Foods manufactures the frozen
yogurt and ice cream products for the Company - soft serve, hardpack and
novelties. Since 1986, TCBY has invested over $35 million in this
manufacturing facility.
A four-phase expansion will add equipment and space to meet expanded
production levels. A new freezing system will be added to improve
efficiencies, while the trailer staging area will be enlarged to handle
the number of trucks moving products.
The current plant was built in June of 1986. In 1988, a new freezer and
refrigeration plant was added. Two years later, after additional
expansion, the manufacturing facility doubled the capacity of the
original plant.
"We are very excited about this expansion at Americana Foods," said Frank
D. Hickingbotham, Chairman of the Board and Chief Executive Officer of
TCBY Enterprises. "We will be able to better serve our existing and new
customers both domestically and internationally."
This year Americana Foods will export products to over twenty countries.
Employment increased 26% in 1994, and should increase another 26% in 1995
after new construction is completed.
TCBY Enterprises, Inc., through subsidiary companies, manufactures and
sells soft serve frozen yogurt, hardpack frozen yogurt, novelty products,
custom foodservice vehicles, and markets traditional style cup yogurt and
foodservice equipment. The Company is the largest franchisor, licensor
and operator of frozen yogurt stores in the world.
Sequential Page No. 21
<PAGE>
EXHIBIT 99(d)
PRESS RELEASE
FOR IMMEDIATE RELEASE
FRIDAY
SEPTEMBER 28, 1994
CONTACT PERSON: STACY DUCKETT
DIRECTOR, CORPORATE COMMUNICATIONS
(501) 688-8229
TCBY ENTERPRISES, INC. ANNOUNCES PROMOTION OF
GENE WHISENHUNT TO SENIOR VICE PRESIDENT
LITTLE ROCK, AR - SEPTEMBER 23, 1994 - TCBY ENTERPRISES, INC. (NYSE:TBY)
has announced that Gene Whisenhunt has been promoted to Senior Vice
President of National Sales and Subsidiary Controller, for the Company.
While retaining his responsibility for various financial functions of
some of the Company's subsidiaries, he will now be responsible for
operational and financial functions for the National Sales Division, the
division which operates the Company's foodservice locations.
Mr. Whisenhunt has been with the Company for five years. Prior to
join ing TCBY, he was a manager at Ernst and Young accounting firm. He
obtained his undergraduate degree in accounting from Ouachita Baptist
University, and a master's degree in Business Administration from
Louisiana Tech. He holds a CPA certification.
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Sequential Page No. 22
<PAGE>
EXHIBIT 99(e)
PRESS RELEASE
FOR IMMEDIATE RELEASE
FRIDAY
SEPTEMBER 28, 1994
CONTACT PERSON: STACY DUCKETT
DIRECTOR, CORPORATE COMMUNICATIONS
(501) 688-8229
TCBY ENTERPRISES, INC. ANNOUNCES PROMOTION OF
JOHN ROGERS TO SENIOR VICE PRESIDENT
LITTLE ROCK, AR - SEPTEMBER 23, 1994 - TCBY ENTERPRISES, INC. (NYSE:TBY)
has announced that John Rogers has been promoted to Senior Vice
President, Information Systems and Corporate Controller, for the Company.
Mr. Rogers' primary responsibilities will involve Management Information
Systems, budgeting, SEC compliance and overall financial compliance of
the Company.
Mr. Rogers has been with the Company for eight years.
Mr. Rogers received his undergraduate degree in accounting and data
proces sing from the University of Southern Mississippi. He holds a CPA
certification.
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Sequential Page No. 23
<PAGE>
EXHIBIT 99(f)
PRESS RELEASE
FOR IMMEDIATE RELEASE
FRIDAY
SEPTEMBER 30, 1994
CONTACT PERSON: STACY DUCKETT
DIRECTOR, CORPORATE COMMUNICATIONS
(501) 688-8229
GARY TALLEY JOINS TCBY RETAIL DIVISION AS VP OF SALES
LITTLE ROCK, AR - SEPTEMBER 23, 1994 - TCBY ENTERPRISES, INC. (NYSE:TBY)
has announced that Gary Talley has joined the Company as Vice President
of Sales for TCBY Specialty Products. This division of the Company is
responsible for the sale and distribution of "TCBY" branded consumer
packaged goods. Mr. Talley will manage the division's sales staff.
Mr. Talley has over 20 years of experience in the consumer packaged goods
field. Prior to joining TCBY Specialty Products, he was Director of
Sales and Marketing for the Special Dairy Products Division of
Mid-America Farms (Dairymen) Inc., the country's largest dairy
co-operative. His sales experience also includes positions with Lever
Brothers, Inc. and Colonial Baking Company.
A Missouri native, Mr. Talley received his undergraduate degree from
Southwest Missouri State University.
TCBY Enterprises, Inc., through subsidiary companies, manufactures and
sells soft serve frozen yogurt, hardpack frozen yogurt, novelty products,
custom foodservice vehicles, and markets traditional style cup yogurt and
foodservice equipment. The Company is the largest franchisor, licensor
and operator of frozen yogurt stores in the world.
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Sequential Page No. 24
<PAGE>
