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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
_x_ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended November 30, 1994
_x_ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from __________ to __________
Commission File No. 1-10046
TCBY ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Delaware 71-0552115
(State of incorporation) (I.R.S. Employer Identification No.)
425 West Capitol Avenue - Suite 1100
Little Rock, Arkansas 72201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (501) 688-8229
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
____________________________ _________________________________________
Common stock, $.10 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. __x__
The registrant (1) has filed all reports required to be filed by Section 13 or
15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months
and (2) has been subject to such filing requirements for the past 90 days.
Yes __x__ No _____
The aggregate market value of common stock ($.10 par value) held by
non-affiliates of the Registrant (see item 12 hereof) on January 1, 1995:
$79,950,000.
The number of shares of the Registrant's Common Stock ($.10 par value)
outstanding as of January 1, 1995: 25,594,264.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the fiscal year ended
November 30, 1994 are incorporated by reference into Parts I and II.
Portions of the Proxy Statement for the annual meeting of stockholders to
be held April 12, 1995 are incorporated by reference into Part III.
PART I
Item 1. BUSINESS
The Company manufactures and sells soft serve frozen yogurt, hardpack frozen
yogurt, and novelty food products through Company-owned and franchised retail
stores ("TCBY stores"), non-traditional locations (e.g., airports, schools,
hospitals, and travel plazas), and the retail grocery trade (e.g., grocery
stores and wholesale clubs). In addition, the Company markets refrigerated
yogurt through the retail grocery trade and manufactures and sells equipment
related to the foodservice industry. Industry segment data for the Company's
two primary business segments, food products and equipment, for the years ended
November 30, 1994, 1993, and 1992 included on pages 17 through 20 and pages 30
and 31 of the Company's 1994 Annual Report to Stockholders is incorporated
herein by reference.
The Company was incorporated under the laws of the State of Delaware on January
10, 1984 and is the successor to businesses which opened the first
Company-owned TCBY store in September 1981 and first franchised TCBY stores in
June 1982. Unless the context otherwise requires, the term "Company" includes
TCBY Enterprises, Inc., its predecessors and its wholly owned consolidated
subsidiaries. The Company's principal subsidiaries are: TCBY Systems, Inc.
(which markets, franchises and licenses domestic and international TCBY
locations; operates certain domestic TCBY locations and sells yogurt and
novelty products to the retail grocery trade); Americana Foods Limited
Partnership (which manufactures and distributes yogurt and other frozen dessert
products); Riverport Equipment and Distribution Company, Inc. which is composed
of the Riverport Division (which sells and distributes restaurant equipment and
supplies primarily to TCBY locations) and the AIMCO Division (which sells and
distributes foodservice equipment and supplies primarily to customers outside
of the TCBY system); and Carlin Manufacturing, Inc. (which manufactures special
purpose vehicles and produces soft serve vending carts and kiosks).
FOOD PRODUCTS SEGMENT
TCBY Stores and Non-traditional Locations
The Company's food products are marketed as a treat, dessert, snack or light
meal item. The domestic franchised, Company-owned, international licensed
stores, and non-traditional locations operate under the name TCBY THE COUNTRY'S
BEST YOGURT, and are referred to herein as TCBY locations.
On November 30, 1994 there were 2,801 TCBY locations, including 1,245 domestic
franchised stores, 96 Company-owned stores, 141 international licensed stores,
and 1,319 non-traditional locations. Information regarding TCBY location
activity for fiscal 1994 and 1993 is incorporated by reference to the
information contained in the table on page 17 to the Company's 1994 Annual
Report to Stockholders.
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The Company currently manufactures its TCBY brand of premium frozen yogurt.
The frozen yogurt is served in a variety of ways, including cups, cones,
sundaes, and shakes, and with a variety of toppings. TCBY locations also sell
a changing variety of flavors of frozen yogurt, prepared and pre-made cakes and
pies, and novelties from display freezer cases. A bakery program offering
selected freshly baked cookies, muffins, brownies, and gourmet coffee is
included in some of the domestic TCBY stores. The Company introduced the new
"TCBY" Treats concept in 1994, which is optional for existing TCBY stores and
generally required for new or relocated TCBY stores. The "TCBY" Treats concept
features "TCBY" soft serve frozen yogurt, but adds "TCBY" hand-dipped frozen
yogurt, hand-dipped premium ice cream, Paradise Ice shaved ice, frozen custard,
and the "TCBY" bakery items.
Domestic Franchised Stores
TCBY domestic franchised stores are located primarily in shopping centers, free
standing locations, and shopping malls. Generally, a TCBY store occupies 800
to 1,600 square feet and accommodates both carryout and in-store business. The
Company estimates that the total initial investment required for the
establishment of a franchised TCBY store ranges from approximately $113,500 to
$341,900 ($91,000 to $114,000 for Express stores), excluding real property
costs. These costs vary depending upon the size and location of the store.
This investment includes construction costs and leasehold improvements,
equipment, furniture and signs, initial inventory and supplie s, opening
expenses, initial working capital, and the appropriate initial franchise fee.
Franchises for TCBY stores are usually granted for a period of ten years with
an option to renew for ten years at then current terms being offered by the
Company. A franchisee pays an initial franchise fee and a royalty and service
fee of 4% of its net revenues. In addition, a franchisee must contribute an
amount not in excess of 3% of its net revenues to a separate national
advertising fund which is used to promote TCBY products. Substantially all
franchisees pay the continuing fees to the distributor for the TCBY franchise
system, The Martin-Brower Company ("Martin-Brower"), a leading international
foodservice distributor to restaurant chains, through a surcharge per case on
frozen yogurt and certain other food purchases. Martin-Brower remits the
surcharge to the Company on a weekly basis. The Company may spend in any
fiscal year an amount greater or less than the aggregate contributions of
"TCBY" stores to the Fund in that year and the Company may make loans to the
Fund bearing reasonable interest to cover any deficits of the Fund and cause
the Fund to invest any surplus for future use by the Fund.
The site of a franchised store is subject to Company approval. All food
products as well as furniture, fixtures, and equipment used by a franchisee
must conform to the Company's specifications and standards. The Company is the
only approved supplier of frozen yogurt mix products. Prior to the opening of
a franchised TCBY store, a franchisee must attend a ten day training program.
A franchisee is required to maintain the confidentiality of the Company's trade
secrets and is prohibited from engaging in competitive activities during the
term of the franchise, and generally for two years thereafter. The Company has
the right to terminate the franchise for cause and has the option to purchase a
franchisee's store upon such termination or upon expiration of the franchise.
The Company has the right of first refusal upon any assignment by the
franchisee, as well as the right to approve an assignee.
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The Company has a field inspection program to help maintain the high standards
of quality and cleanliness required in TCBY stores and to assist franchisees
with operational problems.
The Company has 703 domestic franchisees operating in all 50 states, of which
216 own more than one store and 32 own five or more stores. As of November 30,
1994, franchise agreements had been executed for 80 stores to be opened in the
United States, some of which are currently expected to open in 1995. However,
some of these franchise agreements may terminate without the related stores
opening.
During fiscal 1994, a total of 89 domestic stores were closed by franchisees.
Each franchised store closed is the result of the franchisee's evaluation of
its financial condition, cash flow, profitability, and store operations, among
other things. Included in the 1,482 stores (franchised and Company-owned)
reported open at November 30, 1994 were 152 TCBY stores closed for relocation
or the season. Stores closed for relocation have been closed with the intent
to relocate the store to a more suitable location subject to site approval by
the Company. Some of these agreements may be terminated by the Company for
failure to reopen in a timely manner. Stores closed for the season are stores
closed during winter or off-peak months, with the intent to reopen the store
during the warmer months.
While historically the Company has offered to qualified domestic franchisees
financing for the purchase of the equipment, furniture, and signage package
required to open new stores, currently the Company generally does not finance
these purchases. However, the Company has made and may make available
financing for the purchase of existing stores, leasehold improvements, and
working capital in certain circumstances.
The Company is currently working with unaffiliated financing companies to
provide leasing or financing programs for certain equipment purchases for TCBY
stores and non-traditional locations. These programs would be available at the
option of the franchisee or licensee.
Company-owned stores
The Company owns and operates TCBY stores in several markets within the United
States including Atlanta, Arkansas, California, Dallas/Ft. Worth, Seattle,
Oklahoma and Las Vegas. On November 30, 1994, the Company operated 96
Company-owned TCBY stores. From time to time the Company evaluates the
possibility of acquiring stores. The Company intends to only acquire stores
and locations that are contiguous to existing Company markets or where the
number of stores are sufficiently large to constitute a separate market.
During 1994, the Company opened 2 and closed 22 Company-owned stores. The
decision to close a Company-owned store is made after consideration of, among
other things, store sales, store profitability, store cash flow, lease terms,
and market conditions. The Company expects to operate approximately 90 stores
during fiscal 1995. However, the Company will continue to evaluate
opportunities to refranchise stores.
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International Licensed Locations
Generally, the Company adopts a license agreement form of relationship for its
international development. A licensee is granted the right to develop a
specified number of TCBY locations in the defined territory within a certain
time period. The Company determines, on a country by country basis, whether it
will export frozen yogurt products from the United States to that country or
license the production of frozen yogurt locally. In addition, the Company may
grant to the licensee the distribution rights of TCBY branded products in the
defined country.
As of November 30, 1994, there were 141 locations including TCBY stores in
Japan (32), Mexico (27), Thailand (25), Korea (15), China (13), Canada (9),
Egypt (4), Aruba (3), The Bahamas (3), Qatar (3), Bahrain (2), Saudi Arabia
(1), United Arab Emirates (1), Grand Canary Isles (1), Jamaica (1), and
Indonesia (1). TCBY has also finalized agreements for the development of TCBY
locations in St. Maarten, Kuwait, Hong Kong, Oman, Costa Rica, Macao, Dominican
Republic, and Chile. Revenues from any single country is not expected to be
material in fiscal 1995. In the aggregate, revenues from international
locations are expected to be comparable to fiscal 1994.
Non-traditional Locations
TCBY non-traditional locations operate in airports, toll road travel plazas,
hospitals, office buildings, schools, sports arenas, convenience stores, and
other foodservice outlets. Generally, these non-traditional locations offer a
limited menu as compared to a TCBY store and serve TCBY products through mini-
shops, kiosks, soft serve vending carts and counter top display units. The
principal difference between non-traditional locations and domestic franchise
stores is the "captive" nature of the location (as opposed to being open to the
general public; for example, an airport location tends to serve only people
that are physically at the airport for reasons other than the purchase of
"TCBY" brand soft-serve frozen yogurt and other store products). Recognizing
the uniqueness of these locations, their generally high costs of occupancy, and
their inherent marketing value, the Company has in some instances waived the
requirement for participation in local or national programs, and sometimes
assisted in the purchase of equipment for use at these locations.
As of November 30, 1994 there were 1,319 non-traditional locations open. A
total of 693 of these locations are airport locations, toll road travel plazas,
and other non-commercial foodservice outlets, which are operated under a joint
venture agreement with Marriott Corporation.
As of November 30, 1994 the Company had approximately 100 non-traditional
locations under development. The Company expects a continuation of growth of
yogurt sales to non-traditional locations during fiscal 1995.
Retail Grocery Trade
The Company sells hardpack frozen yogurt, refrigerated yogurt, and frozen
novelties for distribution to the retail grocery market for resale primarily in
grocery stores and wholesale clubs. The Company does employ a small direct
sales force; however, a broker network is the primary means of sales and
service to the retail grocery trade. The retail grocery trade has limited
retail and warehouse shelf space and the competition for such space continues
to intensify. To obtain shelf space for TCBY products requires the payment of
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distribution allowances (See Note #1 to the Consolidated Financial Statements).
Once shelf space is obtained, the movement of the product determines the length
of time that benefit is received from these distribution allowances. On-going
marketing support is essential to maintaining movement of TCBY products.
At November 30, 1994, the Company had approximately 300 retail grocery trade
customers.
Food Products Production
The Company's frozen yogurt product sold in TCBY stores and non-traditional
locations is produced at the Company's manufacturing facility in Dallas, Texas.
Raw materials used in the production of the Company's yogurt consist primarily
of fresh milk, cream and sweeteners. Each of these materials is generally
available from several sources. During fiscal 1994, raw materials were
available in adequate quantities to meet the Company's requirements. The
Company believes that raw materials will be available from a number of
suppliers to meet the Company's anticipated requirements in the future.
The Company also manufactures TCBY hardpack frozen yogurt products and other
frozen dessert products such as ice cream and frozen novelties under private
label and various trade names for distribution to the retail grocery trade and
restaurants. The Company considers and utilizes other channels of distribution
for such products to accommodate its customers.
The Company has contracted with a dairy to manufacture refrigerated yogurt
which the Company sells to the retail grocery trade.
Neither the Company's yogurt manufacturing subsidiary nor the Company's co-
packer have experienced a significant backlog of orders in the past.
Trademarks
The Company claims common law rights to its service marks "TCBY", "TCBY The
Country's Best Yogurt", "TCBY Yogurt", and "All the Pleasure. None of the
Guilt". The Company has sought to maximize legal protection of these marks by
registering them on the Principal Register of the United States Patent and
Trademark Office. Registrations for the service marks have been issued and the
registrations have become incontestable.
The Company has pending, or is in the process of filing, applications for
trademark registrations in a number of foreign countries. In some of these
countries it may not be possible to register the name TCBY where the laws do
not permit the registration of acronyms. Similarly, registering offices in
some jurisdictions may refuse to register the mark THE COUNTRY'S BEST YOGURT by
taking the position that it is merely descriptive of the product. In some
foreign countries, unrelated third parties have filed applications for
registration of TCBY and similar trademarks. Upon discovery of such filings,
the Company routinely contests such applications to preserve the Company's
ability to register its trademarks in those countries.
EQUIPMENT SEGMENT
Riverport Equipment and Distribution Company, Inc. offers for sale a complete
equipment, furniture, and signage package in order to assist TCBY franchisees
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in opening their stores in a timely manner. Such TCBY store packages cost a
franchisee between $51,000 and $131,000 for a domestic TCBY store, or between
$78,500 and $85,000 for an Express store. The Company also sells equipment to
facilitate non-traditional location openings when it is needed. In fiscal
1994, the average equipment package for a non-traditional location cost $5,755.
In addition, Riverport offers for sale replacement equipment and supplies.
Riverport operates at a relatively low gross profit margin and its sales are
tied primarily to new store and location development.
AIMCO Equipment Company, located in Little Rock, Arkansas, is a regional
distributor of equipment to the foodservice industry and serves customers
primarily outside of the TCBY franchise system.
Carlin Manufacturing, Inc., located in California, produces and sells
manufactured mobile kitchens and other specialty vehicles primarily to
businesses and governments.
Equipment Production and Distribution
Carlin Manufacturing's production facility has not experienced a significant
backlog in the past. Raw materials used in the production process consist
primarily of common building materials which are generally available from
several sources. During fiscal 1994, raw materials were available in adequate
quantities to meet the Company's requirements. The Company believes that raw
materials will be available from a number of suppliers to meet the Company's
requirements.
Patents and Trademarks
Carlin Manufacturing has a patent in the U.S.A. and a design patent in the U.K.
and in Germany for its CK-1E Containerized Field Kitchen which is designed for
use by military organizations; a European patent application covering several
countries is pending. Carlin Manufacturing has registered trademarks for the
name "Carlin", "Commander", and the phrase "Driven by a Passion for
Perfection".
SEASONALITY
Generally, sales of the Company's food products segment have been greater in
the spring, summer and fall months, and tended to be lower in the winter
months. Sales for the equipment segment have not been a s seasonal in nature.
See Note 11 of the Notes to Consolidated Financial Statements of the Company's
1994 Annual Report to Stockholders incorporated by reference for information
regarding unaudited quarterly results of operations for fiscal 1994 and fiscal
1993 on a consolidated basis.
COMPETITION
The Company is the nation's largest franchisor, licensor, and operator of
stores serving primarily soft serve frozen yogurt. TCBY stores compete with
numerous other frozen yogurt stores, including stores affiliated with smaller
yogurt chains (the largest of which has approximately 250 stores), and with ice
cream parlors, especially those that serve premium ice cream. Frozen yogurt
has been added as a menu item by certain national restaurant chains and
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in recent years there has been an overall increase in the number of foodservice
locations serving frozen yogurt. TCBY locations compete with restaurant chains
and other foodservice locations, including snack food or dessert item
restaurants. Frozen yogurt may also be offered in supermarkets, grocery
stores, and wherever convenience food operations are conducted. The bakery
program offering cookies, muffins, and brownies further expands the area of
competition to include specialty stores serving cookie and bakery products.
Any addition of expanded menu items currently being tested would further expand
the amount and intensity of competition with the Company's products.
Competition continues to increase in the area of airports, theme parks,
sports stadiums, etc., as some of the chains and other frozen yogurt
manufacturers market their product in these non-traditional locations. Some of
these competitors have greater financial resources, more outlets or are better
known than the Company.
The retail grocery trade is a highly competitive market and competition is
expected to increase as new competitors and products enter the field. The
Company competes with national suppliers, which are larger than the Company, as
well as regional suppliers. Some of these competitors have greater financial
resources, larger market shares, a broader product line, and more experience in
the market. The Company plans to continue to expand the distribution of yogurt
products in the retail grocery trade during fiscal 1995, however, not
necessarily at the same rate experienced in fiscal 1994. As a result of the
increasing competition, the introduction of new competitors, the introduction
of new products in the market and expanding the distribution of yogurt
products, the Company will experience increased selling costs in fiscal 1995,
such as consumer marketing expenses, trade allowances, distribution allowances,
and broker fees.
Riverport competes primarily with local or regional equipment companies (both
domestic and international) that are in close proximity of TCBY stores.
AIMCO competes primarily with other domestic competitors of approximately equal
size in the sale of equipment, fixtures, and other necessary items to
restaurants and other foodservice operations.
Carlin Manufacturing competes primarily with other domestic competitors of
approximately equal size in the sale of mobile kitchen products.
EMPLOYEES
As of November 30, 1994, the Company employed approximately 650 full-time and
500 part-time associates who were engaged primarily in the management,
manufacture, sale, and distribution of frozen yogurt products and foodservice
equipment. This compares to approximately 700 full-time and 600 part-time
associates employed on November 30, 1993. None of the Company's employees are
covered by collective bargaining agreements.
RESEARCH AND DEVELOPMENT
Research and development costs were not material in 1994.
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REGULATION AND ENVIRONMENTAL MATTERS
Some states have statutes regulating franchise operations, including
registration and disclosure requirements in the offer and sale of franchises
and the application of statutory standards regulatin g franchise relationships,
such as termination and non-renewal of franchises. The Company is also subject
to the Federal Trade Commission regulations relating to disclosure requirements
in the offer and sale of franchises.
Each TCBY location is subject to licensing and regulation by the health,
sanitation, safety, fire, and other applicable departments of the state or
municipality where it is located, as well as the federal government in the
areas of health and labeling. The Company's frozen dessert production is also
subject to similar licensing and regulation by federal, state, and municipal
authorities at its facility in Dallas, Texas, and in the states to which it
ships its products. Difficulties or failures in obtaining or maintaining the
required licensing or in meeting regulatory standards could result in delays or
cancellations in the opening of new locations and could adversely affect the
production of yogurt and other frozen dessert products.
Carlin Manufacturing must comply with applicable California Health and Building
Codes, and vehicles built by Carlin Manufacturing must comply with Federal
Motor Vehicle Safety Standards.
To the best of its knowledge, the Company believes that it is presently in
substantial compliance with all existing applicable environmental laws and does
not anticipate that such compliance will have a material effect on its future
capital expenditures, earnings or competitive position with respect to its
business.
Item 2. PROPERTIES
The Company's executive offices, which are leased pursuant to a ten year lease
which commenced in April 1988, occupy approximately 89,200 square feet in the
TCBY Tower, a 40 story office building located in downtown Little Rock, of
which approximately 10,900 square feet has been sub-leased. In connection with
the lease, the Company owns a small equity interest in the building.
The Company currently owns and leases to third parties its former executive
office building, which contains 29,000 rentable square feet of space, in Little
Rock, which is included in the industry segment titled "Other".
The Americana Foods Limited Partnership's yogurt manufacturing facility in
Dallas, Texas occupies approximately 181,000 square feet. The facility produces
TCBY frozen yogurt mix and other frozen dessert products and is classified in
the industry segment titled "Food Products". Demand for products grew in 1994,
resulting in a decision to expand production capacity at Americana Foods. A
project is in place to expand hardpack and novelty production facilities, and
to implement a new freezing system which will accelerate overall production
time for all product lines. This approximately $7.5 million project is
scheduled to be completed and operational during the second quarter of 1995.
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Substantially all of the Company-owned stores are operated from premises which
are leased. See Note 6 of Notes to Consolidated Financial Statements in the
Company's 1994 Annual Report to Stockholders incorporated by reference for
information regarding store rental obligations.
The Riverport equipment distribution operation is currently located in a
building in Little Rock which contains approximately 60,000 square feet of
warehouse space and 11,000 square feet of office space. The building is
located next to the AIMCO facility and contains approximately 37,000 square
feet of
warehouse space and 3,000 square feet of office space. Both warehouses are
designed to handle the distribution of equipment packages for new TCBY stores,
and reorders of equipment and supplies from TCBY locations. During fiscal
1994, AIMCO purchased the building it formerly leased, which contains
approximately 54,400 square feet of warehouse and service space and 5,600
square feet of office space. All buildings are classified in the industry
segment titled "Equipment".
Carlin Manufacturing owns a 34,000 square foot facility in Fresno, California
for the purpose of manufacturing specialty vehicles, vending carts, and kiosks
which is classified in the industry segment titled "Equipment".
The Company believes that these facilities are well maintained, suitably
equipped, and in good operating condition.
Item 3. LEGAL PROCEEDINGS
As of November 30, 1994 there were no material proceedings to which the Company
was a party reportable pursuant to the requirements of Form 10-K except as set
forth below.
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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to stockholders during the fourth quarter of fiscal
1994.
EXECUTIVE OFFICERS OF TCBY ENTERPRISES, INC.
The following sets forth certain information regarding executive officers of
the Company:
Frank D. Hickingbotham, age 58, has been the Chairman of the Board and Chief
Executive Officer of the Company and its predecessors since 1970.
Herren C. Hickingbotham, age 36, has been a director of the Company since 1982.
He has been the President of the Company since March 1988.
F. Todd Hickingbotham, age 31, has been a director of the Company since 1990.
He has been President of Riverport Equipment and Distribution Company, Inc.
since 1988.
Terry A. Ell iott, age 49, became an Executive Vice President in December 1994.
He had been Senior Vice President since joining the Company in September 1994.
Prior to joining the Company, Mr. Elliott had been a partner with Ernst & Young
LLP since 1979.
Jim H. Fink, age 37, became an Executive Vice President in December 1994. He
had been Senior Vice President, Finance and Chief Accounting Officer since June
1991. Prior to that he had been Vice President, Finance since joining the
Company in March 1987.
Gale Law, age 49, became a director of the Company in March 1989. He became
Senior Vice President, Finance, Chief Financial Officer and Treasurer of the
Company in December 1991. Mr. Law has been the Chief Financial Officer since
joining the Company in 1984.
Thomas R. Tipps, age 48, became President of Americana Foods, Ltd. in March
1992. Mr. Tipps was previously General Manager of the frozen products division
of Colombo, Inc. from 1987 to November 1991.
Bette D. Clay, age 52, Senior Vice President Administration and Secretary and
Assistant Treasurer, has served the Company and its predecessors in various
executive and administrative capacities since 1978.
William P. Creasman, age 42, joined the Company as Senior Vice President and
General Counsel on February 23, 1987.
Jim Sahene, age 34, became President of Systems, Inc. in April 1994. Prior to
that he was Executive Vice President and Chief Operation Officer of TCBY
Systems, Inc. Mr. Sahene joined the Company in 1986.
Gene Whisenhunt, age 34, became Senior Vice President and Chief Accounting
Officer in December 1994. Prior to that he was Senior Vice President National
Sales/Subsidiary Controller. Mr. Whisenhunt joined the Company in 1989.
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John Rogers, age 33, became Senior Vice President, Chief Information Officer
and Assistant Treasurer in December 1994. Prior to that he was Senior Vice
President and Corporate Controller. Mr. Rogers joined the Company in 1986.
Hartsell Wingfield, age 49, became President of the International Division in
December 1990. Mr. Wingfield joined the Company in 1987.
Walt Winters, age 57, became President of Specialty Products in December 1993.
Mr. Winters joined the Company in 1982.
Ralph H. Goldbeck, age 38, became President of Carlin Manufacturing, Inc. in
July 1993. He had been Vice President of Operations since December 1988.
All executive officers of TCBY Enterprises, Inc. were elected to serve at the
pleasure of the Board of Directors following the annual meeting of stockholders
in 1994 and until their successors are elected and qualified; executive
officers employed by subsidiary companies were elected to serve at the pleasure
of the applicable subsidiary company. Frank D. Hickingbotham is the father of
Herren C. Hickingbotham and F. Todd Hickingbotham. Frank D. Hickingbotham is
the brother-in-law of Walt Winters. No other family relationships exist among
any of the above named individuals or among such individuals and any director
of the Company.
PART II
Item 5. MARKET FOR TCBY ENTERPRISES, INC. COMMON STOCK AND
RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded on the New York Stock Exchange under the
symbol "TBY". The high and low sales prices for the Common Stock and dividends
paid per share in the last two fiscal years are incorporated by reference to
the information contained on page 32 under the captions "Common Stock" and
"Dividend Policy" in the Company's 1994 Annual Report to Stockholders. As of
January 31, 1995, there were approximately 5,800 stockholders of record.
Item 6. SELECTED FINANCIAL DATA
Selected financial data is incorporated by reference to information set forth
under the caption "Ten Year Summary of Selected Financial Data" on page 32 in
the Company's 1994 Annual Report to Stockholders.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Management's discussion and analysis of financial condition and results of
operations is incorporated by reference to pages 17 through 20 of the Company's
1994 Annual Report to Stockholders.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and report of independent auditors are
incorporated by reference to pages 21 through 31 of the Company's 1994 Annual
Report to Stockholders.
Sequential Page No. 13
<PAGE>
Quarterly results of operations are incorporated by reference to page 31 (Note
11) of the Company's 1994 Annual Report to Stockholders.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF TCBY
ENTERPRISES, INC.
Information with respect to directors of the Company is incorporated by
reference to the information included under the caption "Nominees For Election
As Directors" in the Company's 1995 Proxy Statement.
Information with respect to executive officers of the Company follows Item 4,
Part I hereof under the caption "Executive Officers of TCBY Enterprises, Inc."
in the Company's 1995 Proxy Statement.
Item 11. EXECUTIVE COMPENSATION
Information with respect to executive compensation is incorporated by reference
to the information included under the caption "Remuneration" in the Company's
1995 Proxy Statement.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information with respect to security ownership of certain beneficial owners and
management of the Company is incorporated by reference to the information under
the caption "Principal Stockholders" in the Company's 1995 Proxy Statement.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to certain relationships and transactions is
incorporated by reference to the information included under the caption
"Remuneration" and "Certain Transactions" in the Company's 1995 Proxy
Statement.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a) (1) and (2) The response to this portion of Item 14
is submitted as a separate section of this report.
(3) The exhibits, as listed in the Exhibit Index set
forth on pages E-1 through E-5, are submitted as
a separate section of this report.
Sequential Page No. 14
<PAGE>
(b) No current reports on Form 8-K were filed during the quarter ended
November 30, 1994.
(c) See Item 14 (a) (3) above.
(d) The response to this portion of Item 14 is submitted
as a separate section of this report.
Sequential Page No. 15
<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.
TCBY ENTERPRISES, INC.
(Registrant)
BY Frank D. Hickingbotham*
_______________________
Frank D. Hickingbotham,
Chairman of the Board and
Chief Executive Officer
February 23, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the
registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
Frank D. Hickingbotham* Director, Chairman of the Board 2-23-95
and Chief Executive Officer
(Principal Executive Officer)
Herren C. Hickingbotham* Director and President 2-23-95
Gale Law* Director, Senior Vice President 2-23-95
Finance, Chief Financial Officer
and Treasurer
(Principal Financial Officer)
Daniel R. Grant* Director 2-23-95
F. Todd Hickingbotham* Director, President Riverport 2-23-95
Equipment and Distribution
Company, Inc.
Marvin D. Loyd* Director 2-23-95
Hugh H. Pollard* Director 2-23-95
Don O. Kirkpatrick* Director 2-23-95
William H. Bowen* Director 2-23-95
</TABLE>
*BY /s/ Gale Law Individually and as Attorney-in-Fact.
Gale Law
Sequential Page 16
<PAGE>
ANNUAL REPORT ON FORM 10-K
ITEM 14 (a) (1) and (2); (c) and (d)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
CERTAIN EXHIBITS
FINANCIAL STATEMENT SCHEDULES
YEAR ENDED NOVEMBER 30, 1994
TCBY ENTERPRISES, INC.
LITTLE ROCK, ARKANSAS
Sequential Page No. 17
<PAGE>
FORM 10-K -- ITEM 14 (a) (1) AND (2)
TCBY ENTERPRISES, INC. AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of TCBY Enterprises, Inc. and
subsidiaries, included in the annual report of the registrant to its
stockholders for the year ended November 30, 1994, are incorporated by
reference in Item 8:
Consolidated balance sheets -- November 30, 1994 and 1993
Consolidated statements of income -- Years ended
November 30, 1994, 1993 and 1992
Consolidated statements of stockholders' equity --
Years ended November 30, 1994, 1993 and 1992
Consolidated statements of cash flows -- Years
ended November 30, 1994, 1993 and 1992
Notes to consolidated financial statements --
November 30, 1994
The following consolidated financial statement schedules of TCBY Enterprises,
Inc. and subsidiaries are included in Item 14 (d):
Schedule VIII -- Valuation and qualifying accounts
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
Sequential Page No. 18
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS
TCBY ENTERPRISES, INC.
Column A Column B Column C Column D Column E
_____________________________________________________________________________________________________________________________
Additions
____________________________________
Balance at
Beginning Charged to Costs Charged to Other Deductions Balance at End
Description of Period and Expenses Accounts-Describe Describe of Period
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <
YEAR ENDED NOVEMBER 30, 1994 c> <C>
Reserves and allowances deducted
from asset accounts:
Allowance for doubtful accounts
and notes $ 2,168,490 $ 1,469,630 $ --- $2,359,736 (A) $ 1,278,384
===================================================================================
YEAR ENDED NOVEMBER 30, 1993
Reserves and allowances deducted
from asset accounts:
Allowance for doubtful accounts
and notes $ 2,333,422 $ 1,079,630 $ --- $1,244,562 (A) $ 2,168,490
===================================================================================
YEAR ENDED NOVEMBER 30, 1992
Reserves and allowances deducted
from asset accounts:
Allowance for doubtful accounts
and notes $ 1,648,761 $ 2,317,512 $ --- $1,632,851 (A) $ 2,333,422
===================================================================================
Sequential Page No. 19
</TABLE>
Note A -- Uncollectible accounts written off, net of recoveries
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description Page No.
___________ ___________ ________
<S> <C> <C>
3 (a) (vii) Restated Certificate of Incorporation of TCBY
Enterprises, Inc. (Incorporated by reference
to Exhibit 3(a) (vii) to the Company's Annual
Report on Form 10-K for the fiscal year ended
November 30, 1988)
(b) (i) Amended and Restated By-Laws of TCBY Enter-
prises, Inc. (Incorporated by reference to
Exhibit 3(b) of Registration Statement
No. 33-8338)
(b) (ii) Article IX, Section 5 of the By-Laws of TCBY
Enterprises, Inc., as amended March 25, 1987
(Incorporated by reference to Exhibit 3(b) (ii)
to the Company's Annual Report on Form 10-K for
the fiscal year ended November 30, 1987)
(b) (iii) Article II, Sections 8, 9 and 10 of the By-Laws
of TCBY Enterprises, Inc., as amended
December 3, 1990 (Incorporated by reference to
Exhibit 3(b) (iii) to the Company's Annual
Report on Form 10-K for the fiscal year ended
November 30, 1990)
4 (i) (a) Specimen Common Stock Certificate (Revised
September, 1988) (Incorporated by reference to
Exhibit 4(i) (b) to the Company's Annual Report
on Form 10-K for the fiscal year ended
November 30, 1988)
(ii)(a) Loan Agreement between TCBY Enterprises, Inc.
and Bank One, Dallas, N.A. dated June 11, 1993
for $14,610,000 to refinance four notes pay-
able to First Interstate Bank of Texas, N.A.
(Incorporated by reference to Exhibit 4(ii)a of
the Company's Quarterly Report on Form 10-Q
for the quarter ended May 31, 1993)
E-1
Sequential Page Number 20
<PAGE>
Exhibit No. Description Page No.
___________ ___________ ________
<S> <C> <C>
(ii)(b) Amended and Restated Loan Agreement between
TCBY Enterprises, Inc. and Bank One, Texas,
N.A., dated November 28, 1994 to include a
$7,500,000 term promissory note dated
November 28, 1994 ............................... Attached
(ii)(c) Term promissory note between TCBY Enterprises,
Inc. and Bank One, Texas, N.A., dated
November 28, 1994 to finance expansion of the
Company's facility in Dallas, Texas ............. Attached
10 (a) Original form of Franchise Agreement
(Incorporated by reference to Exhibit 10(a) to
Registration Statement No. 2-89398)
(b) Form of Franchise Agreement (Revised December
1982) (Incorporated by reference to Exhibit 10(b)
to Registration Statement No. 2-89398)
(c) Form of Franchise Agreement (Revised April 1983)
(Incorporated by reference to Exhibit 10(c) to
Registration Statement No. 2-89398)
(d) Form of Franchise Agreement (Revised January
1984) (Incorporated by reference to Exhibit
10(d) to Registration Statement No. 2-89398)
(e) Form of Franchise Agreement (Revised July 1985)
(Incorporated by reference to Exhibit 10(e) to
Registration Statement No. 2-99324)
(f) Form of Franchise Agreement (Revised February
1986) (Incorporated by reference to Exhibit 10(f)
to the Company's Annual Report on Form 10-K for
the fiscal year ended November 30, 1986)
(g) Form of Franchise Agreement (Revised March 1987)
(Incorporated by reference to Exhibit 10(g) to
the Company's Annual Report on Form 10-K for
the fiscal year ended November 30, 1987)
(h) Form of Franchise Agreement (Revised February
1991) (Incorporated by reference to Exhibit
10(h) to the Company's Annual Report on Form
10-K for the fiscal year ended November 30, 1990)
(i) Form of Franchise Agreement (Revised July 1991)
(Incorporated by reference to Exhibit 28(a) to
the Company's Quarterly Report on Form 10-Q for
the quarter ended August 31, 1991)
E-2
Sequential Page Number 21
<PAGE>
Exhibit No. Description Page No.
___________ ___________ ________
<S> <C> <C>
(j) Form of Franchise Agreement (Revised December
1991) (Incorporated by reference to Exhibit
10(j) to the Company's Annual Report on Form
10-K for the fiscal year ended November 30, 1992)
(k) Employment Agreement with Charles Cocotas dated
February 17, 1992 (Incorporated by reference to
Exhibit 10(k) to the Company's Annual Report on
Form 10-K for the fiscal year ended November 30,
1992)
(l) Employment Agreement with Thomas Tipps dated
March 3, 1992 (Incorporated by reference to
Exhibit 10(l) to the Company's Annual Report on
Form 10-K for the fiscal year ended November 30,
1992)
(m) Form of Executive Security Agreement entered
into with certain executives of the Company
dated December 1, 1990 (Incorporated by refer-
ence to Exhibit 10(k) to the Company's Annual
Report on Form 10-K for the fiscal year ended
November 30, 1990)
(n) 1984 Stock Option Plan, as amended and restated
(Incorporated by reference to Exhibit 4 to Post-
Effective Amendment No. 1 to Registration State-
ment No. 2-97039)
(o) 1989 Stock Option Plan (Incorporated by refer-
ence to indented paragraphs following the
caption "Approval of 1989 Stock Option Plan" on
pages 7 and 8 of the Company's definitive Proxy
Statement of February 21, 1989 for the 1989
Annual Meeting of Stockholders)
(p) 1992 Employee Stock Option Plan (Incorporated by
reference to Exhibit I of the Company's March 18,
1992 Proxy Statement)
(q) 1992 Nonemployee Director Stock Option Plan
(Incorporated by reference to Exhibit II of the
Company's March 18, 1992 Proxy Statement)
(r) Lease Agreement between the Company, as tenant,
and Capitol Avenue Development Company, a
limited partnership, as landlord, dated April 20,
1987 (Incorporated by reference to Exhibit 10(q)
to the Company's Annual Report on Form 10-K for
the fiscal year ended November 30, 1987)
E-3
Sequential Page Number 22
<PAGE>
Exhibit No. Description No. Page No.
___________ _______________ ________
<S> <C> <C>
(s) Master License Agreement between TCBY Systems,
Inc. (a wholly owned subsidiary of the Company),
as licensee, and Mrs. Fields Development Corpora-
tion, as licensor, dated September 13, 1991
(Incorporated by reference to Exhibit 10(q) to
the Company's Annual Report on Form 10-K for the
fiscal year ended November 30, 1991)
(t) Master License Agreement (revised and restated)
between TCBY Systems, Inc. (a wholly owned
subsidiary of the Company) as licensee, and Mrs.
Fields Development Corporation, as licensor,
dated August 31, 1992 (Incorporated by reference
to Exhibit 28(c) of the Company's Quarterly
Report on Form 10-Q for the quarter ended August
31, 1992)
13 Management's Discussion and Analysis of Financial
Condition and Results of Operations; Report of
Ernst & Young LLP, Independent Auditors, Con-
solidated Balance Sheets; Consolidated Statements
of Income; Consolidated Statements of Stock-
holders' Equity; Consolidated Statements of Cash
Flows; and Notes to the Consolidated Financial
Statements included in the Registrant's Annual
Report for the year ended November 30, 1994 ..... Attached
21 Subsidiaries of TCBY Enterprises, Inc. .......... Attached
23 Consent of Independent Auditors ................. Attached
24 Powers of attorney .............................. Attached
27 Article 5, Financial Data Schedule for the Fiscal
Year 1994 10-K .................................. Attached
99 (a) Press release, dated October 18, 1994, "Top
Green International Introduces China to TCBY" ... Attached
99 (b) Press release, dated November 3, 1994, "TCBY
Chosen for Inclusion in Standard & Poor's
Small Cap Stock Price Index" .................... Attached
99 (c) Press release, dated November 14, 1994, "TCBY
to Expand to Hong Kong and Macao" ............... Attached
99 (d) Press release, dated December 13, 1994, "TCBY
Continues Far East Expansion" ................... Attached
E-4
Sequential Page Number 23
<PAGE>
Exhibit No. Description No. Page No.
___________ _______________ ________
<S> <C> <C>
99 (e) Press release, dated December 30, 1994, "TCBY
Enterprises, Inc. Announces Promotion of Jim Fink
to Executive Vice President"..................... Attached
99 (f) Press release, dated December 30, 1994, "Terry
Elliott Promoted to Executive Vice President
of TCBY Enterprises" ............................ Attached
99 (g) Press release, dated December 30, 1994, "TCBY
Enterprises, Inc. Announces Promotion of Gene
Whisenhunt to Senior Vice President and Chief
Accounting Officer" ............................. Attached
99 (h) Press Release, dated December 30, 1994, "TCBY
Enterprises, Inc. Announces Promotion of John
Rogers to Senior Vice President, Chief Informa-
tion Officer and Assistant Treasurer" ........... Attached
99 (i) Press Release, dated January 11, 1995, "TCBY
Reports Record Total Sales and Franchising
Revenues for 1994" .............................. Attached
99 (j) Press release, dated January 23, 1995, "TCBY to
Roll Out Treats Concept Nationwide".............. Attached
</TABLE>
Exhibit 4(ii)b
AMENDED AND RESTATED LOAN AGREEMENT
BETWEEN
BANK ONE, TEXAS, N.A.
AND
TCBY ENTERPRISES, INC.
DATED
November 28, 1994
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
SECTION 1. DEFINITIONS 1
1.1. Defined Terms 1
1.2. Accounting Terms 13
1.3. Singular and Plural 13
SECTION 2. COMMITMENT, INTEREST AND FEES 14
2.1. Commitment 14
2.2. Term Loan 14
2.2.1. Term Facility 14
2.2.2. Lender's Obligations 14
2.2.3. Note 14
2.2.4. Interest 14
2.3. Renewals and Extensions 14
2.4. Maximum Interest 14
2.5. Fees. 16
2.5.1. Preparation Fees 16
2.5.2. Fixed Rate Conversion Fee 16
2.6. Changes in Commitment and Prepayments 16
2.6.1. Termination or Reduction in Commitment Amount 16
2.6.2. Optional Prepayments 16
2.7. Basis of Payments 16
2.8. Notice and Manner of Borrowing and Conversion of Stated Rate
Loans and Eurodollar Loans 16
2.9. Notice and Manner of Conversion to Fixed Rate Loan 17
2.10 Conditions to Loan Conversion 17
2.11 Duration of Interest Periods 17
2.12 Changed Circumstances Applicable to Eurodollar Loans 17
2.13 Payments Not at End of Interest Period 19
SECTION 3. CONDITIONS PRECEDENT TO OBLIGATIONS OF LENDER 19
3.1. Conditions to Borrowing 19
3.1.1. Documents Executed 19
3.1.2. Certified Resolutions 19
3.1.3. Certified Articles 19
3.1.4. Certified Bylaws 20
3.1.5. Certificate of Good Standing 20
3.1.6. Certificate of Incumbency 20
3.1.7. Opinions of Counsel 20
3.1.8. UCC Lien Search 20
3.1.9. Approval of Lender Counsel 20
3.1.10. Other Information and Documentation 20
SECTION 4. WARRANTIES AND REPRESENTATIONS 20
4.1. Corporate Existence and Power 20
4.2. Authorization and Approvals 21
4.3. Valid and Binding Agreement 21
4.4. Actions, Suits or Proceedings 21
4.5. Subsidiaries 21
4.6. No Liens, Pledges, Mortgages or Security Interests 21
4.7. Accounting Principles 22
4.8. No Adverse Changes 22
4.9. Conditions Precedent 22
4.10. Taxes 22
4.11. Compliance with Laws 22
4.12. Indebtedness 22
4.13. Material Agreements 22
4.14. Margin Stock 22
4.15. Misrepresentation 23
4.16. Forfeiture 23
SECTION 5. AFFIRMATIVE COVENANTS. 23
5.1. Financial and Other Information 23
5.1.1. Annual Financial Reports 23
5.1.2. Interim Financial Statements 23
5.1.3. Compliance Certificate 23
5.1.4. Adverse Events 23
5.1.5. Reports 24
5.1.6. Other Information as Requested 24
5.2. Insurance 24
5.3. Taxes 24
5.4. Maintain Corporation and Business 24
5.5. Use of Loan Proceeds 25
5.6. Leverage Ratio 25
5.7. Current Ratio 25
5.8. Profitability Ratio 25
5.9. Fixed Charge Coverage 25
SECTION 6. NEGATIVE COVENANTS 25
6.1. Liens and Encumbrances 25
6.2. Subsidiary Indebtedness 25
6.3. Extension of Credit and Investments 25
6.4. Guarantee Obligations 26
6.5. Subordinate Indebtedness 26
6.6. Property Transfer, Merger or Lease-Back 26
6.7. Investments 26
6.8. Misrepresentation 27
6.9. Margin Stock 27
6.10. Compliance with Environmental Laws 27
6.11. Principal Place of Business 27
6.12. Repurchase of Stock 27
SECTION 7. EVENTS OF DEFAULT - ENFORCEMENT - APPLICATION OF
PROCEEDS 27
7.1. Acceleration of Indebtedness 27
7.2. Cumulative Remedies 27
SECTION 8. MISCELLANEOUS 27
8.1. Independent Rights 27
8.2. Covenant Independence 28
8.3. Waivers and Amendments 28
8.4. GOVERNING LAW 28
8.5. Survival of Warranties, Etc. 28
8.6. Attorneys' Fees 28
8.7. Payments on Non-Business Days 28
8.8. Binding Effect 28
8.9. Notices 29
8.10. Counterparts 29
8.11. Headings 29
8.12. Capital Adequacy 29
8.13. Indemnification and Reimbursement by the Borrower 29
8.14. Gender 30
8.15. Joint Borrowers 30
8.16. Severability of Provisions 30
8.17. Assignment 30
8.18 Amendment and Restatement 30
8.19. NO ORAL AGREEMENTS 31
</TABLE>
<TABLE>
<CAPTION>
LIST OF EXHIBITS AND SCHEDULES
<S> <C>
<C>
Exhibit/Schedule Content
Reference In Agreement
Exhibit A Form of Borrower's Compliance
Certificate Section 1.1 definition of "Compliance Certificate"
Exhibit B Notice of Eurodollar Conversion
Section 2.8
Exhibit C Notice of Fixed Rate Conversion
Section 2.9
Schedule 1.1 Permitted Liens
Section 1.1 definition of "Permitted Liens"
Schedule 4.4 Actions, Suits and Proceedings
Section 4.4
Schedule 4.5 Ownership of Subsidiaries
Section 4.5
Schedule 4.11 Noncompliance with Laws
Section 4.11
Schedule 4.12 Indebtedness
Section 4.12
Schedule 4.13 Material Agreements
Section 4.13
</TABLE>
AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT is made and delivered as of
November 28, 1994 by and among Bank One, Texas, N.A. and TCBY Enterprises,
Inc.
SECTION 1. DEFINITIONS.
1.1. Defined Terms. As used herein, the following terms shall have
the following meanings:
"Adjusted Eurodollar Rate" shall mean, as applicable to any Interest
Period, a rate per annum determined pursuant to the following formula:
AER = [ IOR ]*
----------------
[ 1.00 - RP ]
AER = Adjusted Eurodollar Rate
IOR = Interbank Offered Rate
RP = Reserve Percentage
*The amount in brackets shall be rounded upwards, if necessary,
to the next higher 1/100 of 1%.
Where:
"Interbank Offered Rate" applicable to any Eurodollar Loan for
any Interest Period means the rate of interest determined in accordance
with subpart (a) or (b) below which Lender shall, in its sole discretion,
designate: (a) the interbank offered rate for dollar deposits in the
London market that is quoted to Lender by Knight-Ridder Money Center
Services (or such comparable service as Lender may, in its sole discretion,
designate) two Business Days before the first day of such interest period;
or (b) the rate, determined by the Lender, to be the prevailing rate per
annum at which deposits in U.S. dollars are offered to the Lender by
first-class banks in the interbank Eurodollar market in which it regularly
participates on or about 10:00 a.m. (Dallas time) two Business Days before
the first day of such Interest Period in an amount approximately equal to
the principal amount of the Eurodollar Loan to which such Interest Period
is to apply for a period of time approximately equal to such Interest
Period; provided, however, that Lender shall not designate the rate of
interest determined pursuant to clause (b) above unless Lender actually
participates in the Eurodollar market for purposes of "match-funding" the
applicable Eurodollar Loan.
"Reserve Percentage" applicable to any Interest Period means the
rate (expressed as a decimal) applicable to the Lender during such Interest
Period under regulations issued from time to time by the Board of Governors
of the Federal Reserve System for determining the maximum reserve
requirement (including, without limitation, any basic, supplemental,
emergency or marginal reserve requirement) of the Lender with respect to
"Eurocurrency liabilities" as that term is defined under such regulations.
The Adjusted Eurodollar Rate shall be adjusted automatically as
of the effective date of any change in the Reserve Percentage.
"Agreement" shall mean this Loan Agreement.
"Americana" shall mean Americana Foods Limited Partnership.
"Bankruptcy Code" shall mean Title 11 of the United States Code, as
amended, or any successor act or code.
"Base Rate" shall mean that rate of interest per annum published
by the Lender as its base rate (or equivalent rate) and which is charged by
the Lender from time to time. The Base Rate may not necessarily be the
lowest rate charged by the Lender.
"Borrower" shall mean and, if more than one, shall refer jointly
and severally to the Person named below together with each such Person's
successors and assigns (provided that no consent to any succession or
assignment shall be inferred herefrom):
State of Chief
Borrower Type of Entity Formation Executive
Offices
TCBY Enterprises, Inc. Corporation Delaware
Little Rock, AR
"Borrower's Address" shall mean:
425 West Capitol Avenue, #1100
Little Rock, Arkansas 72201
Attn: Mr. Gale Law
Fax No.: (501) 688-8284
Telephone No.: (501) 688-8213
"Business Day" shall mean (a) for all purposes other than as
covered by subpart (b) below, any day on which the Lender is open to carry
on its normal commercial lending business and (b) with respect to all
notices and determinations in connection with, and payments of principal
and interest on, Eurodollar Loans, any day that is a Business Day described
in subpart (a) above and that is also a day for trading by and between
banks in United States Dollar deposits in the interbank Eurodollar market.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, or any corresponding provision or provisions of any
succeeding law.
"Commitment Amount" shall mean the principal balance outstanding
on Term Note #1 on the date hereof plus $7,500,000 or such lesser amount to
which the Commitment Amount may be reduced from time to time pursuant to
this Agreement. The recital of a Commitment Amount does not mean that the
Lender shall be obligated to advance such amount except in strict
accordance with the terms, provisions, and conditions of this Agreement.
"Compliance Certificate" shall mean a certificate in the form of
Exhibit A to this Agreement, completed in all appropriate respects and
executed by the chief executive or chief financial officer of the Borrower.
"Contract Rate" shall mean, as of any date of determination, the
Term Loan Contract Rate.
"Current Assets" shall mean, as of any applicable date of
determination, all cash, nonaffiliated customer receivables, United States
government securities, inventories and any other assets of a Person that
should be classified as current in accordance with GAAP.
"Current Liabilities" shall mean, as of any applicable date of
determination, all liabilities of a Person that should be classified as
current in accordance with GAAP.
"Current Maturities of Long Term Debt" shall mean the principal
portion of current maturities of long term indebtedness of any Person and
current obligations of any Person on long term capital leases, as
determined according to GAAP, for the next succeeding period of twelve (12)
calendar months.
"Debt" shall mean, as of any applicable date of determination,
the sum of: (a) all items of indebtedness, obligation or liability of a
Person, whether matured or unmatured, liquidated or unliquidated, direct or
indirect, absolute or contingent, joint or several, that should be
classified as liabilities in accordance with GAAP; plus (b) the Guarantee
Obligations of such Person; plus (c) without duplication of any liabilities
described in (a) or (b) above, all liabilities of such Person with respect
to letters of credit, commercial paper, banker's acceptances and similar
financial transactions.
"Default" shall mean a condition or event which, with the giving
of notice or the passage of time or both, would become an Event of Default.
"Default Rate" shall mean a fluctuating per annum interest rate
at all times equal to the lesser of (a) the Maximum Legal Rate (such
interest rate to be adjusted simultaneously with any change in the Maximum
Legal Rate) or (b) the sum of the Contract Rate plus two percent (2.0%);
provided, however, subject to all provisions of Section 2.4, if at any time
the Default Rate shall be computed on the basis of the Maximum Legal Rate,
any subsequent reduction in the Default Rate shall not reduce such interest
rate thereafter payable hereunder below the Maximum Legal Rate until the
aggregate amount of such interest that is accrued and payable equals the
total amount of interest that would have accrued if interest had at all
times been computed solely on the basis of the rate specified in subpart
(b) above. Subject to Section 2.4 hereof, interest computed at the Default
Rate shall be computed on the basis of a year of 365 days and actual days
elapsed. In the event the laws of the State of Texas are applicable,
unless preempted by Federal law or other state laws now or hereafter in
effect and applicable hereto, the applicable interest rate ceiling shall be
the "indicated rate ceiling" from time to time in effect under Texas
Revised Civil Statutes Annotated, Article 5069-1.04, as amended.
"Environmental Laws" means any and all federal, state, and local laws,
rules, regulations, orders and requirements pertaining to health, safety,
or the environment, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
e9601 et seq., the Resource Conservation and Recovery Act of 1976, 42
U.S.C. e6901 et seq., the Occupational Safety and Health Act of 29 U.S.C. e
651 et seq., the Clean Air Act, 42 U.S.C. e7401 et seq., the Clean Water
Act, 33 U.S.C. e1251 et seq., the Toxic Substances Control Act, 15 U.S.C.
e2601 et seq., and all other laws, regulations, and requirements of any
governmental authority or agency having jurisdiction over Borrower or any
other Loan Party or any of their respective properties or assets, as such
laws, regulations, and requirements may be amended or supplemented from
time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, or any successor act or code.
"ERISA Affiliate" shall mean any Subsidiary or subsidiary of a
Loan Party or trade or business (whether or not incorporated) which is a
member of a group of which the Borrower or any Loan Party is a member and
which is under common control with the Borrower or such Loan Party, or
within the same affiliated service group as the Borrower or such Loan
Party, within the meaning of Section 414 of the Code (such rules and
regulations shall also be deemed to apply to foreign corporations and
entities).
"Eurodollar Loan" shall mean any portion of the Term Loan bearing
interest at a rate determined with reference to the Adjusted Eurodollar
Rate.
"Event of Default" shall mean the occurrence of any of the
following:
(a) Failure to Pay Indebtedness. If any principal of or
interest on the Note, any fees under this Agreement or any other Loan
Document or any other Indebtedness shall not be paid within five (5)
Business Days after the same becomes due; or
(b) Misrepresentation. If any warranty or representation of the
Borrower or any other Loan Party in connection with or contained in this
Agreement or any other Loan Document, or if any financial data or other
information now or hereafter furnished to the Lender by or on behalf of the
Borrower, any Subsidiary or any other Loan Party, shall prove to be false
or misleading in any material respect; or
(c) Noncompliance with Loan Documents. If the Borrower or any
Subsidiary or any other Loan Party shall fail to perform any of its
obligations and covenants under this Agreement or under any other Loan
Document; or
(d) Noncompliance with Other Agreements. If the Borrower or
Guarantor shall fail to comply with any of the provisions of any other
agreement with the Lender pursuant to which the Lender extends credit to
the Borrower or the Guarantor, and such failure shall continue for
forty-five (45) days after written notice from the Lender to the Borrower
of such failure;
(e) Noncompliance with Financial Covenants. If the Borrower
shall fail to perform any financial covenant set forth in Sections 5.6,
5.7, 5.8, and 5.9 of this Agreement, and same shall be continuing for
thirty (30) days;
(f) Other Defaults. If the Borrower or any Material Subsidiary
or any other Loan Party shall default in the due payment of any of its
Material Indebtedness (other than the Indebtedness, which shall constitute
an Event of Default under subpart (a) above) or in the observance or
performance of any term, covenant or condition in any agreement or
instrument evidencing, securing or relating to such Material Indebtedness
and such default shall be continued for a period sufficient to permit
acceleration of such Material Indebtedness, whether or not any such default
shall be forgiven or waived by the holder thereof; or
(g) Judgments. If: (i) there shall be rendered against the
Borrower or any Material Subsidiary or any other Loan Party, one or more
judgments or decrees involving an aggregate liability of $1,000,000.00 or
more, which has or have become nonappealable and shall remain undischarged,
unsatisfied by insurance or unstayed for more than 10 days, whether or not
consecutive; or (ii) a writ of attachment, sequestration or garnishment
against the property of the Borrower or any Material Subsidiary or any
other Loan Party shall be issued and levied in an action claiming
$1,000,000.00 or more and not immediately released or appealed and bonded
in a manner satisfactory to the Lender; or
(h) Business Suspension, Bankruptcy, Etc. If the Borrower or
any Material Subsidiary or any other Loan Party shall voluntarily suspend
transaction of its business; or if the Borrower or any Material Subsidiary
or any other Loan Party shall not pay its debts as they mature or shall
make a general assignment for the benefit of creditors; or proceedings in
bankruptcy, or for reorganization or liquidation of the Borrower or any
Material Subsidiary or any other Loan Party, under the Bankruptcy Code or
under any other state or federal law for the relief of debtors shall be
commenced by the Borrower or any Material Subsidiary or any other Loan
Party; or any such proceedings shall be commenced against the Borrower or
any Material Subsidiary or any other Loan Party and shall not be
permanently discharged within ninety (90) days following the commencement
thereof; or a receiver, trustee or custodian shall be appointed for the
Borrower or any Material Subsidiary or any other Loan Party or for any
substantial portion of its properties or assets; or
(i) ERISA. If any of the following events shall occur: (i)
Borrower, any Loan Party or an ERISA Affiliate, or any of their agents or
representatives shall engage in any conduct which constitutes a "prohibited
transaction" (as defined in sections 406 or 407 of ERISA or section 4975 of
the Code) which could, in Lender's opinion, be expected to result in a
material liability (as such term is hereinbelow defined) to Borrower or
such Loan Party or any ERISA Affiliate; (ii) any "accumulated funding
deficiency" (as defined in section 302 of ERISA or section 412 of the
Code), whether or not waived, shall exist with respect to any PBGC Plan or
Multiple Employer Plan, if such accumulated funding deficiency would give
rise to a material liability of Borrower, any Loan Party or any ERISA
Affiliate; (iii) Borrower, any Loan Party or any ERISA Affiliate shall
apply for or be granted a funding waiver under section 302 of ERISA or
section 412 of the Code, which waiver or request for waiver is for a
material amount (as such term is hereinbelow defined) ; (iv) a Termination
Event shall occur with respect to any PBGC Plan, Multiemployer Plan, or
Multiple Employer Plan, which Termination Event is likely, in Lender's
opinion, to give rise to a material liability of Borrower, any Loan Party
or any ERISA Affiliate; (v) any Lien arising under sections 302(f) or 4068
of ERISA or section 412(n) of the Code shall attach to the assets or
property of Borrower, any Loan Party or any ERISA Affiliate which could, in
Lender's opinion, be expected to result in a material adverse effect; (vi)
Borrower, any Loan Party or any ERISA Affiliate shall permit, through
action or failure to act, any Pension Plan to fail to meet the requirements
of section 401(a) or 403(a) of the Code and such failure would give rise to
a material liability of Borrower, any Loan Party or any ERISA Affiliate;
(vii) Borrower, any Loan Party or any ERISA Affiliate shall fail to pay
when due any amount owed by it to any Pension Plan, Multiemployer Plan,
Welfare Plan, government agency, or other Person that, when aggregated with
all other such amounts in default, exceeds $1,000,000.00; (viii) Borrower,
any Loan Party or any ERISA Affiliate shall be obligated to contribute to a
Pension Plan or Welfare Plan (other than a Multiemployer Plan or a Multiple
Employer Plan) whose Accumulated Benefit Obligation (as defined in FASB 87)
exceeds the fair market value of its assets by more than $1,000,000.00;
(ix) any other event or condition shall occur or exist with respect to any
Pension Plan, Multiemployer Plan, or Welfare Plan which, either alone or in
the aggregate, either gives rise or, in Lender's opinion, is likely to give
rise, to a material liability of Borrower, any Loan Party or any ERISA
Affiliate; or (x) any event or condition described in (i) through (ix)
above (determined without regard to whether the event or condition taken
alone would or could result in a material liability) shall occur or exist
with respect to a Pension Plan, Welfare Plan, or Multiemployer Plan which
individually or in combination with one or more of any events described in
(i) through (ix) above (determined without regard to whether the event or
condition taken alone would or could result in a material liability), if
any, would likely subject Borrower, any Loan Party or any ERISA Affiliate
to any material excise tax, penalty, addition to tax or other liability.
For purposes of this definition, the terms "material liability" and
"material amount" mean any liability or amount, as applicable, which
exceeds $1,000,000.
"Financial Statements" shall mean all those balance sheets,
earnings statements and other financial data (whether of the Borrower, any
Subsidiary, any other Loan Party or otherwise) which have been or may
hereafter be furnished to the Lender in connection with this Agreement or
the transactions contemplated hereby including, but not limited to, the
consolidated balance sheets, income statements and statements of cash flow
and consolidating balance sheets and income statement of the Borrower and
the Subsidiaries as of the fiscal year ending November 30, 1993, and the
fiscal quarter ending as of August 31, 1994.
"Fixed Rate" shall mean the rate of interest specified in subpart
(c) of the definition of Term Loan Contract Rate.
"Fixed Rate Conversion Fee" shall mean a fee equal to one quarter
of one percent (0.25%) of the outstanding principal balance of the Term
Loan on the effective date of conversion of the Term Loan to a Fixed Rate
Loan.
"Fixed Rate Loan" shall mean that portion, if any, of the Term
Loan evidenced by Term Note #1 as it bears interest determined with
reference to the Fixed Rate.
"GAAP" shall mean, as of any applicable date of determination,
generally accepted accounting principles consistently applied.
"Good faith" and "good faith" shall have the same meaning
ascribed to such term in Section 1.201(19) of the UCC.
"Guarantee Obligations" shall mean, as of any applicable date of
determination, all items of obligation or liability of a Person which
arise, directly or indirectly, from any guarantee or other agreement or
undertaking by which such Person is or becomes, in any way, responsible for
the obligations of another Person, whether by agreement to purchase the
indebtedness of such other Person, agreement to furnish funds to any such
other Person (whether through the furnishing of goods, supplies or
services, by way of Stock purchase, capital contribution, advance or loan
or otherwise) for the purpose of paying or discharging (or causing the
payment or discharge of) the indebtedness or obligations of any other
Person (except for the endorsement of negotiable instruments in the
ordinary course of business for deposit or collection and, with respect to
the Borrower or any Subsidiary, the continuing liability of any such
Person, as lessee, pursuant to an operating lease that is assigned to and
assumed by a franchisee in connection with such franchisee's acquisition of
a yogurt store from the Borrower or such Subsidiary.
"Guarantor" shall mean each and every Person (other than the
Borrower) who may now or hereafter be or become obligated or liable for the
payment or performance of all or any portion of the Indebtedness including,
without limitation, the following Person:
Guarantor Address for Notice
Americana Foods Limited Partnership 425 West Capitol Avenue,
#1100
Little Rock, Arkansas 72201
Attn: Mr. Gale Law
Fax No.: (501) 688-8284
Telephone No.: (501) 688-8213
"Guaranty" shall mean each and every agreement or undertaking on
the part of any Person other than the Borrower to be or become obligated or
liable for the payment or performance of all or any portion of the
indebtedness together with all renewals, extensions, increases,
restatements, amendments and other modifications made from time to time
with respect thereto including, without limitation, those executed in favor
of the Lender on the dates and by the Person named below:
Guarantor Date
Americana Foods Limited Partnership June 11, 1993, amended
and restated November 28, 1994
"Hazardous Substance" means any substance, product, waste,
pollutant, material, chemical, contaminant, constituent, or other material
which is or becomes listed, regulated, or addressed under any Environmental
Law, including, without limitation, asbestos, petroleum, and
polychlorinated biphenyls.
"Indebtedness" shall mean (a) all loans, advances, indebtedness,
obligations and liabilities of the Borrower to the Lender under this
Agreement or any other Loan Document, (b) all other loans, advances,
indebtedness, obligations and liabilities whatsoever of the Borrower to the
Lender, whether liquidated or unliquidated, direct or indirect, absolute or
contingent, joint or several, due or to become due, now existing or
hereafter arising, and (c) all indebtedness, obligations, and liabilities
now or hereafter owing to the Lender by any other Loan Party under any Loan
Document whether liquidated or unliquidated, direct or indirect, absolute
or contingent, joint or several, due or to become due.
"Interest Period" shall mean, with respect to each Eurodollar
Loan, the period commencing on the date of the making or continuation of or
conversion to such Eurodollar Loan and ending thirty, sixty, ninety, or one
hundred eighty days thereafter, as the Borrower may elect in the applicable
Notice of Eurodollar Conversion;
provided that:
(i) any Interest Period (other than an Interest Period
determined pursuant to clause (ii) below) that would otherwise end on a day
that is not a Business Day shall be extended to the next succeeding
Business Day;
(ii) any Interest Period applicable to any portion of the
Term Loan that would otherwise end after the final maturity date of the
Term Loan shall end on said final maturity date; and
(iii) notwithstanding clause (ii), no Interest Period
applicable to a Eurodollar Loan shall have a duration of less than thirty
days, and if any Interest Period applicable to a Eurodollar Loan would be
for a shorter period, such Interest Period shall not be available
hereunder.
Notwithstanding anything to the contrary stated in clause (i)
above, with respect to any Interest Period that is applicable to any
Eurodollar Loan which accrues interest at the Interbank Offered Rate that
is determined in accordance with subpart (b) of the definition of such term
(as such term is defined in the definition of "Adjusted Eurodollar Rate"
set forth in Section 1.1 above) then: (aa) any Interest Period (other than
an Interest Period determined pursuant to clause (ii) above) that would
otherwise end on a day that is not a Business Day shall be extended to the
next succeeding Business Day unless such Business Day falls in the next
calendar month, in which case such Interest Period shall end on the
immediately preceding Business Day; and (bb) any Interest Period that
begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end
of such Interest Period) shall, subject to clause (ii) above, end on the
last Business Day of a calendar month.
"Lender" shall mean Bank One, Texas, N.A., a national banking
association, and its successors and assigns.
"Lender's Address" shall mean:
a. For payment of the Indebtedness:
Bank One, Texas, N.A.
1717 Main Street, 3rd Floor
Dallas, Texas 75201
Attn: Gina Norris and Lisa Peterson
b. For notice purposes:
Bank One, Texas, N.A.
1717 Main Street, 3rd Floor
Dallas, Texas 75201
Attn: Gina Norris and Lisa Peterson
Fax No. for Lisa Peterson: (214) 290-2683
Telephone No. for Lisa Peterson: (214) 290-2614
Fax No. for Gina Norris: (214) 290-2765
Telephone No. for Gina Norris: (214) 290-2713
"Lien" shall mean any valid and enforceable interest in any
property, whether real, personal or mixed, securing an indebtedness,
obligation or liability owed to or a claim by any Person other than the
owner of such property, whether such interest is based on the common law or
any statute or contract and including, but not limited to, a security
interest, pledge, mortgage, assignment, conditional sale, trust receipt or
lease, consignment or bailment for security purposes.
"Loan" shall mean the Term Loan.
"Loan Documents" shall mean, collectively, this Agreement, the
Note, the Guaranty and any and all other agreements, instruments,
certificates and other documents executed or delivered or contemplated to
be executed or delivered in connection with this Agreement or the
transactions that are the subject matter hereof, as such agreements,
instruments, certificates and other documents may be renewed, extended,
restated, supplemented, increased, amended or otherwise modified from time
to time.
"Loan Party" shall mean the Borrower, the Guarantor and each
other Person who shall be liable for the payment or performance of all or
any portion of the Indebtedness or who shall own any property that is
subject to (or purported to be subject to) a Lien which secures all or any
portion of the Indebtedness.
"Loan Purposes" shall mean:
(a) with respect to the indebtedness evidenced by Term Note #1,
the refinancing of the indebtedness evidenced by the following described
instruments:
(i) Promissory Note dated as of June 1, 1988, executed
by the Borrower and the Guarantor and made payable to the order of First
Interstate Bank of Dallas in the original principal amount of
$9,000,000.00, with an outstanding principal balance as of the date of this
Agreement equal to $6,030,444.20;
(ii) Promissory Note dated as of June 1, 1988, executed
by the Borrower and the Guarantor and made payable to the order of First
Interstate Bank of Dallas in the original principal amount of
$10,000,000.00, with an outstanding principal balance as of the date of
this Agreement equal to $5,838,643.94;
(iii) Promissory Note dated as of June 1, 1988,
executed by the Borrower and the Guarantor and made payable to the order of
First Interstate Bank of Dallas in the original principal amount of
$2,967,671.62, with an outstanding principal balance as of the date of this
Agreement equal to $975,912.49; and
(iv) Promissory Note dated as of June 1, 1988, executed
by the Borrower and made payable to the order of First Interstate Bank of
Dallas in the original principal amount of $3,314,371.00, with an
outstanding principal balance as of the date of this Agreement equal to
$1,764,776.01; and
(b) with respect to the indebtedness evidenced by Term Note #2,
to finance the construction of new expanded plant facilities owned by
Americana located in Redbird Industrial Park West, City of Dallas, Dallas
County, Texas, which costs are required to be capitalized in accordance
with GAAP.
"Material Indebtedness" shall mean (a) any single item of Debt of
any Person in an amount equal to $250,000.00 or more, (b) any series of
related items of Debt of any Person which in the aggregate equal $500,000
or more and/or (c) the total Debt owed by any Person to the same creditor
or obligor (or group of creditors or obligors) if the aggregate amount of
such Debt equals or exceeds $500,000 to the extent, but only to the extent,
that the Debt described in clause (a), (b) or (c) above was incurred in
connection with a loan or other financial transaction (including, without
limitation, liabilities arising in connection with letters of credit,
commercial paper, banker's acceptances and similar financial transactions.
"Material Subsidiary" shall mean (unless otherwise agreed to by
the Lender in writing): (a) the Subsidiaries specifically identified
below; (b) each other Subsidiary, whether now or hereafter existing, which
may at any time hereafter, hold assets with a book value that is equal to
or greater than five percent (5%) of the book value of all assets held by
the Borrower and all Subsidiaries on an aggregate basis; and (c) each other
Subsidiary which holds assets, performs services or conducts a business or
other operation that the Lender in good faith believes could, if adversely
affected, have a material adverse effect on the financial conditions,
operations or business of the Borrower or any other Material Subsidiary:
Americana Foods Limited Partnership, a Texas limited
partnership
Carlin Manufacturing, Inc., an Arkansas corporation
Food Services Leasing, Inc., an Arkansas corporation
FSL, Inc., a Nevada corporation
Riverport Equipment and Distribution Company, Inc., an Arkansas
corporation
TCBY of Georgia, Inc., a Georgia corporation
TCBY of Texas, Inc., a Texas corporation
TCBY Systems, Inc., an Arkansas corporation
Without limiting the foregoing, it is understood that, as of the
date of this Agreement, the following Subsidiaries do not constitute
Material Subsidiaries: American Best Care, Inc.; For Future Use VI, Inc.;
TCBY International, Inc.; TCBY International Foreign Sales Corporation;
TCBY of Aruba, Inc.; TCBY of Saudi Arabia, Inc.; TCBY of Qatar, Inc.; TCBY
of Mexico, Inc.; and TCBY United Kingdom, Inc.
"Maximum Legal Rate" shall mean the maximum rate of interest per
annum from time to time permitted under applicable law after taking into
account, to the extent required by applicable law, any and all relevant
payments, charges and calculations.
"Multiemployer Plan" shall mean a multiemployer plan as defined
in sections 3(37) or 4001(a)(3) of ERISA or Section 414 of the Code (or any
similar type of plan established or regulated under the laws of any foreign
country) to which the Borrower or any Loan Party or any ERISA Affiliate is
making, is required to make, or has made, or is accruing, has accrued, or
is required to accrue or have accrued, an obligation to make contributions.
"Multiple Employer Plan" shall mean any employee benefit plan
within the meaning of section 3(3) of ERISA (or any similar type of plan
established or regulated under the laws of any foreign country) other than
a Multiemployer Plan, to which the Borrower or any other Loan Party or any
ERISA Affiliate and an employer other than an ERISA Affiliate or Borrower
or any Loan Party contribute, is required to contribute, or is required to
accrue an obligation to contribute.
"Net Income" shall mean, as of any applicable date of
determination, earnings of a Person from continuing operations after
deduction of income taxes for such period and excluding any nonrecurring or
extraordinary items, all as determined in accordance with GAAP.
"Noncash Charges" shall mean, as of any applicable date of
determination, depreciation, amortization, deferred income taxes, and
additions to reserves (insurance, taxes, bad debt, insurance, or otherwise)
of a Person, all as determined in accordance with GAAP.
"Note" shall mean and refer jointly to Term Note #1 and Term Note
#2 or, separately, to either such Note, as the context requires.
"Notice of Eurodollar Conversion" shall have the meaning assigned
to such term in Section 2.8.
"Notice of Fixed Rate Conversion" shall have the meaning assigned
to such term in Section 2.9.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
successor thereof established pursuant to ERISA.
"PBGC Plan" shall mean any Pension Plan subject to Title IV of
ERISA (or any similar type of plan established or regulated under the laws
of any foreign country).
"Pension Plan" shall mean any employee pension benefit plan as
defined in section 3(2) of ERISA (or any similar type of plan established
or regulated under the laws of any foreign country) in which any personnel
of Borrower or any Loan Party or any ERISA Affiliate participate, excluding
any Multiemployer Plan, including any plan established or maintained by
Borrower or any Loan Party or any ERISA Affiliate, or to which the Borrower
or any Loan Party or any ERISA Affiliate contributes, is required to
contribute, accrues an obligation to contribute, or is required to accrue
an obligation to contribute, under the laws of any foreign country to the
extent applicable.
"Permitted Liens" shall mean:
(a) Liens and encumbrances in favor of the Lender;
(b) Liens for taxes, assessments or other governmental charges
incurred in the ordinary course of business and not yet past due or being
contested in good faith by appropriate proceedings and, if reasonably
requested by the Lender, bonded in a manner satisfactory to the Lender;
(c) Liens not delinquent created by statute in connection with
worker's compensation, unemployment insurance, social security and similar
statutory obligations;
(d) Liens of mechanics, materialmen, carriers, warehousemen,
landlords or other like statutory or common law liens securing obligations
incurred in good faith in the ordinary course of business that are not yet
due and payable;
(e) Encumbrances consisting of zoning restrictions,
rights-of-way, easements or other restrictions on the use of the properties
of the Borrower and/or any Subsidiary, none of which encumbrances impairs
the use of such property in the operation of the business for which it is
used or intended to be used and none of which is violated in any respect by
any existing or proposed structure or use to the extent that such
impairment could materially and adversely affect the financial condition or
business of the Borrower and/or any Material Subsidiary;
(f) Liens encumbering the properties and/or assets of the
Borrower and/or any of the Subsidiaries, which secure Debt up to, but not
in excess of, $5,000,000.00 in the aggregate provided that such Liens
secure purchase money obligations incurred by the Borrower or a Subsidiary
in good faith in the ordinary course of its business and the obligations
that are secured are not yet due and payable;
(g) UCC Financing Statements filed by the lessor of goods
pursuant to Section 9.408 of the UCC (or comparable provision of any other
applicable Uniform Commercial Code), as a precautionary matter (nothing
contained in this subpart shall, however, be deemed to authorize the
Borrower or any Subsidiary to enter into a lease which is actually intended
as security except to the extent such financing transaction would otherwise
be permitted pursuant to this Agreement); and
(h) Existing Liens described as Permitted Liens on Schedule 1.1
attached hereto.
"Person" shall mean any individual, corporation, partnership,
joint venture, association, trust, unincorporated association, joint stock
company, government, municipality, political subdivision or agency or other
entity.
"Replacement CapEx" shall mean, as of any applicable date of
determination, the sum of all capital expenditures incurred by a Person to
maintain and/or replace existing plant, property, and equipment.
"Stated Rate" shall mean the rate of interest specified in
subpart (a) of the definition of Term Loan Contract Rate.
"Stated Rate Loan" shall mean the portion or portions of the Term
Loan as such portion(s) bears interest determined with reference to the
Base Rate.
"Stock" shall mean any capital stock or other equity rights,
bonds, notes, or other instruments convertible into capital stock or other
equity interests and options, warrants or other rights to acquire capital
stock or other equity interests.
"Subsidiaries" shall mean any corporation or other entity of
which securities or other ownership interests having ordinary voting power
to elect a majority of the board of directors or other Persons performing
similar functions are, at the time, directly or indirectly owned,
collectively, by the Borrower and any Subsidiaries of the Borrower (the
term includes Subsidiaries of Subsidiaries and so on), including, without
limitation, those set forth on Schedule 4.5.
"Tangible Net Worth" shall mean, as of any applicable date of
determination, the excess of (a) the book value of all assets of a Person
(other than patents, patent rights, trademarks, trade names, franchises,
copyrights, licenses, goodwill, research and development expenses unless
prepaid and similar intangible assets) after all appropriate deductions
(including, without limitation, reserves for doubtful receivables,
obsolescence, depreciation and amortization), all as determined in
accordance with GAAP, over (b) all Debt (other than Guarantee Obligations
and contingent liabilities arising with respect to letters of credit) of
such Person.
"TCBY" shall mean TCBY Enterprises, Inc.
"Termination Event" shall mean (i) a "reportable event" as
defined in section 4043 of ERISA (or which would be so defined if a plan
were subject to Title IV of ERISA); (ii) the withdrawal of the Borrower or
any Loan Party or any ERISA Affiliate from a Multiple Employer Plan during
a plan year in which it was a "substantial employer" as defined in
4001(a)(2) of ERISA; (iii) the filing of a notice of intent to terminate a
PBGC Plan or a Multiple Employer Plan or the treatment of a plan amendment
as a termination under section 4041(c) of ERISA; (iv) the institution of
proceedings to terminate a PBGC Plan or a Multiple Employer Plan by the
PBGC; (v) any other event or condition which might constitute grounds under
section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any PBGC Plan or a Multiple Employer Plan; (vi) the
occurrence of an event described in section 4068(f) of ERISA with respect
to a PBGC Plan; (vii) the occurrence of an event described in sections
302(f), 4069, 4070, or 4212(c) of ERISA or sections 401(a)(29) or 412(n) of
the Code, with respect to a PBGC Plan, Multiple Employer Plan, or
Multiemployer Plan; (viii) any complete or partial withdrawal from a
Multiemployer Plan as defined in sections 4203 or 4205 of ERISA, any
termination of a Multiemployer Plan within the meaning of section 4041A of
ERISA or any Multiemployer Plan being insolvent or in reorganization status
under section 4241 or 4245 of ERISA; or (ix) any occurrence similar to any
of those referred to clauses (i) to (viii) above under the applicable laws
of a foreign country.
"Term Loan" shall mean the advances made by the Lender to the
Borrower under Section 2.2 of this Agreement.
"Term Loan Contract Rate" shall mean, as of any date of
determination, the fluctuating per annum rate of interest which equals the
lesser of the Maximum Legal Rate (such interest rate to be adjusted
simultaneously with any change in the Maximum Legal Rate) or: (a) with
respect to Stated Rate Loans, the Base Rate less three quarters of one
percent (0.75%) (such interest rate to be adjusted simultaneously with any
change in the Base Rate); (b) with respect to Eurodollar Loans, one percent
(1.0%) plus the Adjusted Eurodollar Rate; and (c) with respect to Fixed
Rate Loans, one and one-half percent (1.5%) plus the rate for United States
Treasury Bills with a stated term which approximates, as closely as
possible, the period that commences on the date that the Term Loan is
converted to a Fixed Rate Loan and ends three and one-half years
thereafter; provided, however, subject to all provisions of Section 2.4, if
at any time the Term Loan Contract Rate payable hereunder shall be computed
on the basis of the Maximum Legal Rate, any subsequent reduction in the
Term Loan Contract Rate shall not reduce such interest rate thereafter
payable below the Maximum Legal Rate until the aggregate amount of such
interest accrued and payable under this Agreement equals the total amount
of interest which would have accrued if such interest had been at all times
computed solely on the basis of the rates specified in subparts (a), (b)
and (c) above. Subject to the provisions of Section 2.4 hereof, interest
computed at the Term Loan Contract Rate shall be computed on the basis of a
year of 365 days and actual days elapsed. In the event the laws of the
State of Texas are applicable, unless preempted by federal law or other
state laws now or hereafter in effect and applicable hereto, the applicable
interest rate ceiling shall be the "indicated rate ceiling" from time to
time in effect under Texas Revised Civil Statutes Annotated, Article
5069-1.04, as amended.
"Term Loan Interest Payment Date" shall mean: (a) with respect to a
Eurodollar Loan, the date upon which the Interest Period therefor ends; and
(b) with respect to a Stated Rate Loan or the Fixed Rate Loan, the 1st day
of each calendar month, commencing on July 1, 1993, and continuing
regularly and monthly thereafter for the term of such Stated Rate Loan or
Fixed Rate Loan; provided, however, if any such payment date does not occur
on a Business Day, then the Term Loan Interest Payment Date shall be the
next succeeding Business Day.
"Term Loan Maturity Date" shall mean:
(a) with respect to the portion of the Term Loan evidenced by
Term Note #1, June 1, 2000;
(b) with respect to the portion of the Term Loan evidenced by
Term Note #2, December 31, 2001; or
(c) whether or not any such portion of the Term Loan is
evidenced by Term Note #1 or Term Note #2, such earlier date on which the
entire unpaid principal amount of such portion of the Term Loan shall
become due and payable whether by the lapse of time, acceleration or
otherwise;
provided, however, if such date is not a Business Day, then the
Term Loan Maturity Date shall be the next succeeding Business Day.
"Term Note #1" shall mean that certain Term Promissory Note,
dated June 11, 1993 executed by the Borrower payable to the order of the
Lender in the maximum principal amount of $14,609,776.64 together with all
renewals, extensions, restatements, supplements, increases, amendments and
other modifications made from time to time with respect thereto.
"Term Note #2" shall mean that certain Term Promissory Note,
dated November 28, 1994 executed by the Borrower payable to the order of
the Lender in the maximum principal amount of $7,500,000.00 together with
all renewals, extensions, restatements, supplements, increases, amendments
and other modifications made from time to time with respect thereto.
"UCC" shall mean the Uniform Commercial Code as in effect in the
State of Texas or as in effect in any other state, the laws of which are
required by Section 9.103 of the Texas UCC to be applied, as any such UCC
may be amended from time to time.
"Welfare Plan" shall mean an employee welfare benefit plan as
defined in section 3(1) of ERISA (or any similar type of plan established
or regulated under the laws of any foreign country) in which any personnel
of Borrower or any Loan Party or any ERISA Affiliate participate, excluding
any Multiemployer Plan, but including any such plan established or
maintained by Borrower, any Loan Party or any ERISA Affiliate, or to which
the Borrower, any Loan Party or any ERISA Affiliate contributes, is
required to contribute, accrues an obligation to contribute, or is required
to accrue an obligation to contribute, under the laws of any foreign
country.
1.2. Accounting Terms. All accounting terms not specifically defined
in this Agreement shall be construed in accordance with GAAP.
1.3. Singular and Plural. Where the context herein requires, the
singular number shall be deemed to include the plural, and vice versa.
SECTION 2. COMMITMENT, INTEREST AND FEES.
2.1. Commitment. Subject to the terms and conditions of this
Agreement, the Lender agrees to make credit available to the Borrower
pursuant to this Section 2, up to the aggregate principal amount not to
exceed the Commitment Amount.
2.2. Term Loan.
2.2.1. Term Facility. Subject to and on the terms and
conditions of this Agreement, the Lender hereby agrees to make the Term
Loan, as evidenced by Term Note #1 and Term Note #2. The portion of the
Term Loan evidenced by Term Note #1 was initially funded in whole as a
single Eurodollar Loan with a ninety (90) day Interest Period. That
portion of the Term Loan evidenced by Term Note #2 shall initially be
funded in whole as a single advance on or before December 30, 1994;
provided, however, that in no event shall the Lender be obligated to
advance the portion of the Term Loan evidenced by Term Note #2 unless the
advance is made on or before December 30, 1994, the Borrower gives the
Lender at least three (3) Business Days' prior written notice of the
Borrower's desire for such advance and such notice is signed by an
authorized officer of the Borrower and specifies the proposed date for the
advance, the principal amount thereof and all other information required by
Section 2.8 below. Advances on the Term Loan shall be made by Lender, at
Borrower's request, by crediting TCBY of Texas, Inc. Account No. 1884830314
maintained by the Borrower with the Lender or any substitute deposit
account approved by the Lender in writing.
2.2.2. Lender's Obligations. The Lender shall not be
obligated to make any portion of the Term Loan if any of the conditions
precedent set forth in Section 3 of this Agreement shall not have been
satisfied or waived by the Lender in accordance with Section 8.3 of this
Agreement.
2.2.3. Note. The Term Loan shall be evidenced by Term Note #1
and Term Note #2, and the same shall be due and payable in installments as
provided in each such Note with the entire unpaid principal balance and all
accrued unpaid interest on each such Note being due and payable on the Term
Loan Maturity Date that is applicable thereto.
2.2.4. Interest. Subject to the provisions of Section 2.4
below, the portions of the Term Loan evidenced by Term Note #1 and Term
Note #2 shall, respectively, bear interest on the principal balance from
time to time outstanding at the applicable Term Loan Contract Rate until
the applicable Term Loan Maturity Date (and after the applicable Term Loan
Maturity Date, at the Default Rate). Interest on the Term Loan shall be
payable, to the extent then accrued, on each Term Loan Interest Payment
Date.
2.3. Renewals and Extensions. Renewals and extensions, if any, of the
Term Loan, or any portion thereof, shall be at the Lender's discretion and
shall be evidenced by such documents and instruments as the Lender may
require in its sole discretion. The Lender shall not be obligated to
accommodate any such renewals or extensions.
2.4. Maximum Interest. The following provisions shall control this
Agreement, the Note and the other Loan Documents:
(a) No agreements, conditions, provision or stipulations
contained in this Agreement or in any other Loan Document, or the
occurrence of a Default or an Event of Default, or the exercise by the
Lender of the right to accelerate the payment of the maturity of principal
or interest, or to exercise any option whatsoever contained in this
Agreement or any other Loan Document, or the arising of any contingency
whatsoever, shall entitle the Lender to collect, in any event, interest
exceeding the maximum amount allowed from time to time by applicable state
or federal laws as now or as may hereinafter be in effect (the "Maximum
Amount") , and in no event shall the Borrower or any other Loan Party be
obligated to pay interest exceeding the Maximum Amount, and all agreements,
conditions or stipulations, if any, which may in any event or contingency
whatsoever operate to bind, obligate or compel the Borrower or any other
Loan Party to pay interest exceeding the Maximum Amount shall be without
binding force or effect, at law or in equity, to the extent only of the
excess of interest over such Maximum Amount. In the event any interest is
charged or collected in excess of the Maximum Amount (the "Excess"), the
Borrower and each other Loan Party acknowledge, agree and stipulate that
any such amount shall be the result of an accidental and bona fide error,
and any such charge shall be canceled and any such Excess that is collected
shall be, first, applied to reduce the principal of any obligations due,
and second, returned to the Borrower or to such other Person who may be
entitled thereto by law, it being the intention of the parties hereto not
to enter at any time into an usurious or otherwise illegal relationship.
The parties hereto and each other Loan Party recognize that with
fluctuations in the Base Rate from time to time an unintentional result
could inadvertently occur. By the execution of this Agreement, the
Borrower and each other Loan Party covenant that (i) the cancellation,
credit or return of any Excess shall constitute acceptance of such Excess,
and (ii) neither the Borrower nor any other Loan Party shall seek or pursue
any other remedy, legal or equitable, against the Lender based, in whole or
in part, upon the charging or receiving of any interest in excess of the
Maximum Amount. For the purpose of determining whether or not any Excess
has been contracted for, charged or received by the Lender, all interest at
any time contracted for, charged or received by the Lender in connection
with the Borrower's obligations or any other Loan Party's obligations shall
be amortized, prorated, allocated and spread in equal parts during the
entire term of this Agreement and the other Loan Documents.
(b) The provisions of Section 2.4(a) shall be deemed to be
incorporated into every Loan Document or communication relating to the
Indebtedness, whether or not any provision of Section 2.4(a) is referred to
therein. All such documents and communications and all figures set forth
therein shall, for the sole purpose of computing the extent of the
obligations asserted by the Lender thereunder, be automatically recomputed
by the Borrower or any other Loan Party, and by any court considering the
same, to give effect to the adjustments or credits required by Section
2.4(a).
(c) If the applicable state or federal law is amended in the
future to allow a greater amount of interest to be charged under this
Agreement or any other Loan Document than is presently allowed by
applicable state or federal law, then the limitations on interest hereunder
and thereunder shall be increased to the maximum allowed by applicable
state or federal law, as amended, which increase shall be effective
hereunder on the effective date of such amendment, and all interest charges
owing to the Lender by reason thereof shall be payable upon demand.
(d) The provisions of Chapter 15 of the Texas Credit Code
(Vernon's Texas Civil Statutes), Article 5069-15, as amended, are
specifically declared by the parties hereto not to be applicable to this
Agreement or any of the other agreements executed in connection herewith or
therewith or to the transactions contemplated hereby or thereby.
2.5. Fees.
2.5.1. Preparation Fees. Subject to Section 2.4,
contemporaneously with the execution of this Agreement, the Borrower shall
pay to the Lender the amount of the Lender's expenses (including attorney's
fees and disbursements, which shall not exceed $2,500.00) incurred by the
Lender in connection with the preparation of this Agreement and other Loan
Documents.
2.5.2. Fixed Rate Conversion Fee. Subject to Section 2.4, the
Borrower agrees to pay the Fixed Rate Conversion Fee to the Lender on the
date specified in Section 2.9 of this Agreement.
2.6. Changes in Commitment and Prepayments.
2.6.1. Termination or Reduction in Commitment Amount. The
Commitment Amount shall be reduced automatically at the time and in the
amount of each payment or prepayment of principal made on the Term Loan
whether such payment or prepayment is voluntary or involuntary.
2.6.2. Optional Prepayments. The Term Loan may be prepaid at
any time, in whole or in part, without premium or penalty, upon five (5)
Business Day's notice; provided that interest accrued on the amounts so
paid to the date of such payment must be paid at the time of any such
payment and, provided further, in the case of any Eurodollar Loan, that the
prepayment is made on the last day of the applicable Interest Period.
Prepayments of the Term Loan shall be applied in such manner as the Lender
may elect which may include application to installments of principal due
thereunder in the inverse order of their maturities; provided, however,
that Borrower may designate in writing whether a specified prepayment shall
be applied to the portion of the Term Loan evidenced by Term Note #1 or the
portion thereof evidenced by Term Note #2.
2.7. Basis of Payments. All sums payable to the Lender under this
Agreement shall be paid directly to the Lender in immediately available
funds, without set-off, deduction or counterclaim at the place designated
for payment in the definition of Lender's Address set forth in Section 1.1
of this Agreement or at such other place in the United States of America as
Lender may designate in writing delivered in accordance with the notice
provisions of this Agreement.
2.8. Notice and Manner of Borrowing and Conversion of Stated Rate
Loans and Eurodollar Loans. Whenever the Borrower desires to borrow the
$7,500,000 to be evidenced by Term Note #2 or Borrower desires to continue
any portion of the Term Loan as a Eurodollar Loan or to convert all or any
portion of the Term Loan into a Stated Rate Loan or Eurodollar Loan, the
Borrower shall, by and through its chief executive officer, chief financial
officer, chief accounting officer, or corporate controller, notify the
Lender (which notice shall be irrevocable) by telex, telegraph, telecopier
or telephone received no later than 10:00 a.m. Dallas, Texas time on the
date three (3) Business Days before the day on which the advance on Term
Note #2 is to be made or, as applicable, any portion of the Term Loan is to
be continued as a Eurodollar Loan or converted to a Stated Rate Loan or
Eurodollar Loan. Such notice shall specify (a) if Borrower desires to
borrow $7,500,000 to be evidenced by Term Note #2, the effective date for
the advance and the respective amounts thereof that shall constitute a
Stated Rate Loan and a Eurodollar Loan, (b) in the case of any portion of
the Term Loan then outstanding, the effective date and amount of each
portion thereof to be continued or converted, (c) the interest rate option
to be applicable to each portion of the Term Loan to be borrowed, continued
or converted, and (d) if the Term Loan or applicable portion thereof will
be a Eurodollar Loan, the duration of the applicable Interest Period, if
any (subject to the provisions of the definition of Interest Period and
Section 2.11). Each such notification (a "Notice of Eurodollar
Conversion") shall be immediately followed by a written confirmation
thereof by the Borrower in substantially the form of Exhibit B hereto;
provided that if such written confirmation differs in any material respect
from the action taken by the Lender, the records of the Lender shall
control absent manifest error.
2.9. Notice and Manner of Conversion to Fixed Rate Loan. On or before
November 1, 1994, the Borrower may convert the Term Loan, in its entirety,
to a Fixed Rate Loan. Should the Borrower desire to convert the Term Loan
into a Fixed Rate Loan, the Borrower shall, by and through its chief
executive officer, chief financial officer, chief accounting officer, or
corporate controller, deliver to the Lender no later than 10:00 a.m.
Dallas, Texas time on the date ten (10) Business Days before the day the
Term Loan is to be converted to a Fixed Rate Loan (a) the Fixed Rate
Conversion Fee and (b) notification (which notice shall be irrevocable) by
telex, telegraph, telecopier or telephone specifying the effective date of
such conversion. Such notification ("Notice of Fixed Rate Conversion")
shall be immediately followed by a written confirmation thereof by the
Borrower in substantially the form of Exhibit C hereto; provided that if
such written confirmation differs in any material respect from the action
taken by the Lender, the records of the Lender shall control absent
manifest error. If the Borrower converts the Term Loan to a Fixed Rate
Loan, all rights to thereafter make conversions to Eurodollar Loans or
Stated Rate Loans shall cease and terminate.
2.10 Conditions to Loan Conversion. The Borrower may not convert or
continue any portion of the Term Loan into a Eurodollar Loan or a Fixed
Rate Loan if a Default or Event of Default shall have occurred and be
continuing. Furthermore, no more than two (2) Eurodollar Loans shall be
outstanding at any one time. Subject to all conditions set forth in this
Agreement, conversions may be made on any Business Day (which, in the case
of a conversion of a Eurodollar Loan, shall be the last day of the Interest
Period applicable to such Eurodollar Loan).
2.11 Duration of Interest Periods.
(a) Subject to the provisions of the definition of Interest
Period, the duration of each Interest Period applicable to a Eurodollar
Loan shall be as specified in the applicable Notice of Eurodollar
Conversion.
(b) If the Lender does not receive a notice of election of
duration of an Interest Period for a Eurodollar Loan within the applicable
time limits specified herein, or if, when such notice must be given, a
Default exists, the Borrower shall be deemed to have elected to convert
such Eurodollar Loan into a Stated Rate Loan on the last day of the then
current Interest Period with respect thereto.
(c) Notwithstanding the foregoing, the Borrower may not select
an Interest Period for any Eurodollar Loan that would end, but for the
provisions of the definition of Interest Period, after the maturity date of
the Term Loan.
2.12 Changed Circumstances Applicable to Eurodollar Loans.
(a) In the event that:
(i) on any date on which the Adjusted Eurodollar Rate
would otherwise be set, the Lender shall have determined in good faith
(which determination shall be final and conclusive after inquiry) that
adequate and fair means do not exist for ascertaining the Interbank Offered
Rate; or
(ii) at any time the Lender shall have determined in
good faith (which determination shall be final and conclusive) that:
(aa) the continuation of or conversion of the Term
Loan (or any portion thereof) to a Eurodollar Loan has been made
impracticable or unlawful by (1) the occurrence of a contingency that
materially and adversely affects the interbank Eurodollar market or (2)
compliance by the Lender in good faith with any applicable law or
governmental regulation, guideline or order or interpretation or change
thereof by any governmental authority charged with the interpretation or
administration thereof or with any request or directive of any such
governmental authority (whether or not having the force of law); or
(bb) the Adjusted Eurodollar Rate shall no longer
represent the effective cost to the Lender for U.S. dollar deposits in the
interbank market for deposits in which it regularly participates;
then, and in any such event, the Lender shall forthwith so
notify the Borrower thereof. Until the Lender notifies the Borrower that
the circumstances giving rise to such notice no longer apply, the
obligation of the Lender to allow selection by the Borrower of the
Eurodollar Loan shall be suspended. If at the time the Lender so notifies
the Borrower, the Borrower has previously given the Lender a Notice of
Eurodollar Conversion but such conversion has not yet gone into effect,
such notification shall be deemed to be void.
(b) In the event any change in law, regulation, treaty or
official directive or the interpretation or application thereof by any
court or by any governmental authority charged with the administration
thereof or the compliance with any guideline or request of any central bank
or other governmental authority (whether or not having the force of law):
(i) subjects the Lender to any tax with respect to
payments of principal or interest or any other amounts payable hereunder by
the Borrower or otherwise with respect to the transactions contemplated
hereby (except for taxes on the overall net income of the Lender imposed by
the United States of America or any political subdivision thereof); or
(ii) imposes, modifies or deems applicable any deposit
insurance, reserve, special deposit or similar requirement against assets
held by, or deposits in or for the account of, or loans by, the Lender
(other than such requirements as are already included in the determination
of the Adjusted Eurodollar Rate); or
(iii) imposes upon the Lender any other condition
with respect to its performance under this Agreement,
and the result of any of the foregoing is to increase the cost to
the Lender, reduce the income receivable by the Lender or impose any
expense upon the Lender with respect to the Term Loan, the Lender shall
notify the Borrower thereof. The Borrower agrees to pay to the Lender the
amount of such increase in cost, reduction in income or additional expense
as and when such cost, reduction or expense is incurred or determined, upon
presentation by the Lender of a statement in the amount and setting forth
the Lender's calculation thereof and an explanation of the change which has
resulted in such increase in cost, reduction in income, or additional
expense, which statement shall be deemed true and correct, absent manifest
error.
2.13 Payments Not at End of Interest Period. If the Borrower for any
reason makes any payment of principal with respect to any Eurodollar Loan
(other than regularly scheduled installments of principal) on any day other
than the last day of an Interest Period applicable to such Eurodollar Loan,
or fails to continue or convert to a Eurodollar Loan after giving a Notice
of Eurodollar Conversion pursuant to Section 2.8, or if any Eurodollar Loan
is accelerated, the Borrower shall pay to the Lender an amount computed
pursuant to the following formula:
L = (R - T) x P x D
---------------
365
L = amount payable to the Lender
R = interest rate on such Loan
T = effective interest rate per annum at which any readily
marketable bond or other obligation of the United States, selected at the
Lender's sole discretion, maturing on or near the last day of the then
applicable Interest Period of such Loan and in approximately the same
amount as such Loan can be purchased by the Lender on the day of such
payment of principal or failure to borrow or continue or convert
P = the amount of principal prepaid or the amount of the
requested Loan
D = the number of days remaining in the Interest Period as
of the date of such payment or the number of days of the requested Interest
Period
The Borrower shall pay such amount upon presentation by the
Lender of a statement setting forth the amount and the Lender's calculation
thereof pursuant hereto, which statement shall be deemed true and correct,
absent manifest error.
SECTION 3. CONDITIONS PRECEDENT TO OBLIGATIONS OF LENDER.
3.1. Conditions to Borrowing. The obligations of the Lender under
this Agreement are subject to the occurrence, prior to or simultaneously
with execution of this Agreement, of each of the following conditions, any
or all of which may be waived in whole or in part by the Lender in writing:
3.1.1. Documents Executed. The Borrower and each other Loan
Party shall have each executed (or caused to be executed) and delivered
each of the Loan Documents to the Lender.
3.1.2. Certified Resolutions. The Borrower and each other
Loan Party shall have each furnished to the Lender a copy of resolutions of
the Board of Directors (or, if the Borrower or such Loan Party is not a
corporation, comparable evidence of authorization) of the Borrower and each
other Loan Party authorizing the execution, delivery and performance of the
Loan Documents to which such Person is a party or by which it or any of its
assets are bound, which shall have been certified by the Secretary or
Assistant Secretary of the Borrower or such other Loan Party (or, if the
Borrower or such Loan Party is not a corporation, comparable verification
shall be provided) as of the date of this Agreement.
3.1.3. Certified Articles. The Borrower and each other Loan
Party shall have each furnished to the Lender a copy of its articles of
incorporation, including all amendments thereto, and all other charter
documents of the Borrower and each other Loan Party, (or, if the Borrower
or such other Loan Party is not a corporation, copies of all documents by
which such Person was created and governed) all of which shall have been
certified by the state agency issuing the same as of a date reasonably near
the date of this Agreement (or, if the Borrower or such other Loan Party is
not a corporation, comparable verification shall be provided).
3.1.4. Certified Bylaws. The Borrower and each other Loan
Party shall have each furnished to the Lender a copy of its bylaws (or, if
the Borrower or such other Loan Party is not a corporation, copies of all
documents by which such Person was created and governed), which shall have
been certified by the secretary or assistant secretary of the Borrower or
such other Loan Party as of the date of this Agreement (or, if the Borrower
or such other Loan Party is not a corporation, comparable verification
shall be provided).
3.1.5. Certificate of Good Standing. The Borrower and each
other Loan Party shall have each furnished to the Lender a certificate of
good standing (or, if the Borrower or such Loan Party is not a corporation,
comparable evidence of its continued existence), which shall have been
certified by the state agency issuing the same as of a date reasonably near
the date of this Agreement (or, if the Borrower or such other Loan Party is
not a corporation, comparable verification shall be provided).
3.1.6. Certificate of Incumbency. The Borrower and each Loan
Party shall have each furnished to the Lender a certificate from its
secretary or assistant secretary (or, if the Borrower or such Loan Party is
not a corporation, from the Person(s) who exercises managerial control over
its business), certified as of the date of this Agreement, as to the
incumbency and signatures of the officers or other representatives of the
Borrower or such other Loan Party signing this Agreement, the Note or any
other Loan Document.
3.1.7. Opinions of Counsel. The Borrower and each other Loan
Party shall have each furnished to the Lender the favorable written opinion
of counsel to the Borrower or such other Loan Party, dated as of the date
of this Agreement and in the form satisfactory to the Lender.
3.1.8. UCC Lien Search. The Lender shall have received UCC
record and copy searches, disclosing no notice of any liens or encumbrances
filed against any of the assets of the Borrower or any Subsidiary in any
relevant jurisdiction other than as relate to Permitted Liens or which are
to be wholly released in connection with the closing of the transactions
contemplated by this Agreement.
3.1.9. Approval of Lender Counsel. All actions, proceedings,
instruments and documents required to carry out the transactions
contemplated by this Agreement or any other Loan Document or incidental
thereto and all other related legal matters shall have been satisfactory to
and approved by legal counsel for the Lender, and said counsel shall have
been furnished with such certified copies of actions and proceedings and
such other instruments and documents as they shall have requested.
3.1.10. Other Information and Documentation. The Lender shall
have received such other information, certificates and executed documents
as it shall have reasonably requested in connection with this transaction.
SECTION 4. WARRANTIES AND REPRESENTATIONS.
The Borrower represents and warrants to the Lender that:
4.1. Corporate Existence and Power. (a) The Borrower and each Loan
Party is an existing legal entity as specified in the definitions of the
terms "Borrower" and "Loan Party" contained in Section 1.1 of this
Agreement duly organized, validly existing and in good standing under the
laws of its State of formation, as specified in such definition, (b) each
of the Subsidiaries is an existing legal entity as specified in the
definition of such term contained in Section 1.1 of this Agreement, duly
organized, validly existing and in good standing under the law of its State
of formation, as therein specified, (c) the Borrower, each Loan Party which
is not an individual and each of the Subsidiaries have the power and
authority to own their respective properties and assets and to carry out
their respective businesses as now being conducted and are qualified to do
business and in good standing in every jurisdiction wherein such
qualification is necessary and (d) the Borrower and each Loan Party each
has the capacity, power and authority to execute, deliver and perform each
of the Loan Documents to which it is a party (including, with respect to
the Borrower, this Agreement), to borrow money in accordance with its terms
and to do any and all other things required of it hereunder or under any
other Loan Document.
4.2. Authorization and Approvals. The execution, delivery and
performance of this Agreement, the borrowing hereunder and the execution
and delivery of the other Loan Documents (a) have been duly authorized by
all requisite action, (b) do not require registration with or consent or
approval of, or other action by, any federal, state or other governmental
authority or regulatory body, or, if such registration, consent or approval
is required, the same has been obtained and disclosed in writing to the
Lender, (c) will not violate any provision of law, any order of any court
or other agency of government, the articles of incorporation or bylaws (or
comparable documents) of the Borrower or any other Loan Party, any
provision of any indenture, agreement or other instrument to which the
Borrower or any other Loan Party is a party, or by which it or any of its
properties or assets are bound, (d) will not be in conflict with, result in
a breach of or constitute (with or without notice or passage of time) a
default under any such indenture, agreement or other instrument, and (e)
will not result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the properties or assets
of the Borrower or any other Loan Party other than in favor of the Lender.
4.3. Valid and Binding Agreement. This Agreement and the other Loan
Documents are (or will be, when executed and delivered) valid and binding
obligations of the Borrower and each other Loan Party to the extent they
are a party thereto, in each case enforceable in accordance with their
respective terms except as such enforcement may be limited by bankruptcy,
reorganization, insolvency and similar laws and equitable principles
affecting the enforcement of creditors' rights generally.
4.4. Actions, Suits or Proceedings. Except as disclosed on Schedule
4.4, there are no actions, suits or proceedings, at law or in equity, and
no proceedings before any arbitrator or by or before any governmental
commission, board, bureau or other administrative agency, pending, or, to
the best knowledge of the Borrower, threatened against or affecting the
Borrower, any Loan Party or any of the Material Subsidiaries, or any
properties or rights of the Borrower, any Loan Party or any of the Material
Subsidiaries which, if adversely determined, could materially impair the
right of the Borrower, any Loan Party or any of the Material Subsidiaries
to carry on their respective businesses substantially as now conducted or
could have a material adverse effect upon the financial condition of the
Borrower, any Loan Party or any of the Subsidiaries.
4.5. Subsidiaries. The Subsidiaries specifically named in the
definition of such term that is contained in Section 1.1 hereof are the
only wholly or partially owned Subsidiaries of the Borrower and the
ownership (both legal and beneficial) of each Subsidiary is completely and
correctly described on Schedule 4.5.
4.6. No Liens, Pledges, Mortgages or Security Interests. Except for
Permitted Liens, none of the Borrower's or the Subsidiaries' assets and
properties is subject to any Lien of any kind or character.
4.7. Accounting Principles. The Financial Statements have been
prepared in accordance with GAAP and fully and fairly present the financial
condition of the Borrower and the Subsidiaries and each other Loan Party
who has furnished Financial Statements, as of the dates (and the results of
their operations for the periods) for which the same are furnished to the
Lender. Neither the Borrower, any Subsidiary nor any other Loan Party who
furnished Financial Statements has material contingent obligations,
liabilities for taxes, long-term leases or unusual forward or long-term
commitments not disclosed by, or reserved against in, the Financial
Statements.
4.8. No Adverse Changes. There has been no material adverse change in
the business, properties or condition (financial or otherwise) of the
Borrower, any Material Subsidiary or any Loan Party who has furnished
Financial Statements since the date of the latest Financial Statement.
4.9. Conditions Precedent. As of the date of this Agreement, all
appropriate conditions precedent referred to in Section 3 hereof shall have
been satisfied (or waived in writing by the Lender).
4.10. Taxes. The Borrower and the Material Subsidiaries and each
other Loan Party have filed by the due date therefor all federal, state and
local tax returns and other reports they are required by law to file and
which are material to the conduct of their respective businesses, have paid
or caused to be paid all taxes, assessments and other governmental charges
that are shown to be due and payable under such returns, and have made
adequate provision for the payment of such taxes, assessments or other
governmental charges which have accrued but are not yet payable. The
Borrower has no knowledge of any deficiency or assessment in a material
amount in connection with any taxes, assessments or other governmental
charges not adequately disclosed in the Financial Statements.
4.11. Compliance with Laws. Except as disclosed on Schedule 4.11,
the Borrower and the Material Subsidiaries and each other Loan Party have
complied with all applicable laws, to the extent that failure to comply
would materially affect any of their assets or interfere with the conduct
of the business of the Borrower or any of the Material Subsidiaries.
4.12. Indebtedness. The Borrower and the Subsidiaries have no
Debt, whether contingent or otherwise, that was incurred in connection with
any loan, credit or other financial transaction (including liabilities
arising in connection with letters of credit, commercial paper, banker's
acceptances and similar financial transactions) except for the
Indebtedness, the Debt disclosed on Schedule 4.12 and, to the extent
Borrower makes or is deemed to make this representation and warranty at any
time in the future, the Debt permitted under Section 6.2 of this Agreement.
4.13. Material Agreements. Except as disclosed on Schedule 4.13,
the Borrower and the Subsidiaries have no leases, contracts, or patent or
trademark licenses which, if breached, terminated, lost or otherwise
adversely affected, could materially and adversely affect the financial
condition or business of the Borrower or any Material Subsidiary; to the
best knowledge of Borrower following diligent inquiry, all parties to such
agreements (including the Borrower and the Subsidiaries) have complied with
the provisions of such agreements; and to the best knowledge of Borrower,
following diligent inquiry, no party to such agreements (including the
Borrower and the Subsidiaries) is in default thereunder, and no event has
occurred which with notice or the passage of time, or both, would
constitute such a default.
4.14. Margin Stock. Neither the Borrower nor any of the
Subsidiaries nor any Loan Party is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose
of purchasing or carrying any "margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System, and
no part of the proceeds of the Term Loan will be used, directly or
indirectly, to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin stock or for
any other purpose that might violate the provisions of Regulation G, T, U
or X of the said Board of Governors. Neither the Borrower, any Subsidiary
nor any other Loan Party owns any margin stock.
4.15. Misrepresentation. No warranty or representation by the
Borrower or any Loan Party contained herein or in any certificate or other
document furnished by the Borrower or any Loan Party pursuant hereto or in
connection herewith contains any untrue statement of material fact or omits
to state a material fact necessary to make such warranty or representation
not misleading in light of the circumstances under which it was made.
4.16. Forfeiture. Except as disclosed on Schedule 4.4, neither
the Borrower, any Subsidiary nor any other Loan Party is or has been
charged with or, to its knowledge, is under investigation for possible
violations of the Racketeering, Influence and Corrupt Organizations Act
("RICO"), the Continuing Criminal Enterprises Act ("CCE"), the Contraband
Substance Act of 1978, the Money Laundering Act of 1986, the Drug Abuse Act
of 1986, or any similar law providing for the possible forfeiture of any of
its assets or properties.
SECTION 5. AFFIRMATIVE COVENANTS.
From the date hereof until the Indebtedness is paid and performed in
full, the Borrower covenants and agrees:
5.1. Financial and Other Information.
5.1.1. Annual Financial Reports. Borrower will furnish or
cause to be furnished to the Lender in form satisfactory to the Lender not
later than one hundred twenty (120) days after the close of each fiscal
year of the Borrower and the Subsidiaries consolidated balance sheets,
income statements and statements of cash flow and consolidating balance
sheets and income statements for the Borrower and the Subsidiaries as of
the close of each such fiscal year, and such other comments and financial
details as are usually included in similar reports. Such reports shall be
prepared in accordance with GAAP and shall be audited by independent
certified public accountants of recognized standing selected by the
Borrower and shall contain unqualified opinions as to the fairness of the
statements therein contained.
5.1.2. Interim Financial Statements. Borrower will furnish or
cause to be furnished to the Lender, not later than sixty (60) days after
the close of each quarter of each fiscal year of the Borrower and the
Subsidiaries, financial statements containing consolidated balance sheets,
income statements and statements of cash flow and consolidating balance
sheets and income statements as of the end of each such period. These
statements shall be prepared on substantially the same accounting basis as
the statements required in Section 5.1.1 of this Agreement, and the
accuracy of the statements shall be certified by the chief executive or
financial officer of the Borrower.
5.1.3. Compliance Certificate. Together with each delivery of
the financial statements required by Sections 5.1.1 and 5.1.2 of this
Agreement, Borrower will furnish to the Lender a Compliance Certificate of
its chief executive or financial officer stating, among the other
requirements thereof, that no Event of Default or Default has occurred, or
if any such Event of Default or Default exists, stating the nature thereof,
the period of existence thereof and what action the Borrower proposes to
take with respect thereto.
5.1.4. Adverse Events. Borrower will promptly inform the
Lender of the occurrence of any Event of Default or Default, or of any
occurrence which has or could be expected to have a materially adverse
effect upon any of the business, properties, financial condition or ability
of the Borrower or any other Loan Party to comply with its obligations
under any Loan Document.
5.1.5. Reports. Borrower will promptly furnish to the Lender,
upon becoming available, a copy of all financial statements, reports,
notices, proxy statements and other communications sent by the Borrower to
the owners or holders of Borrower's Stock and all regular and periodic
reports filed by the Borrower with the Securities and Exchange Commission
and all Offering Franchise Circulars filed with any state (or agency
thereof) within the United States of America.
5.1.6. Other Information as Requested. Borrower will promptly
furnish or cause to be furnished to the Lender such other information
regarding the operations, properties, business affairs and financial
condition of the Borrower and the Subsidiaries as the Lender may reasonably
request from time to time, and if Lender believes in good faith that good
cause for inspection may exist (which cause shall be communicated to
Borrower), Borrower shall permit (or cause to be permitted) the Lender, its
employees, attorneys and agents, to inspect all of the books, records and
properties of the Borrower and the Subsidiaries at any reasonable time.
5.2. Insurance. Borrower will keep and will cause to be kept all of
its insurable properties and the insurable properties of the Subsidiaries
adequately insured and will maintain and cause the Subsidiaries to maintain
(a) insurance against fire and other risks customarily insured against by
companies engaged in the same or a similar business to that of the Borrower
or the Subsidiaries, (b) worker's compensation insurance, to the extent
required by applicable law, (c) public liability and product liability
insurance in amounts and against risks customarily insured against by
companies engaged in the same or a similar business, (d) business
interruption insurance, and (e) such other insurance as may be required by
law. The Borrower will deliver to the Lender, at the Lender's reasonable
request, evidence satisfactory to the Lender that such insurance has been
so procured and, with respect to liability insurance, such insurance shall
name the Lender as an additional insured.
5.3. Taxes. Borrower will pay or will cause to be paid promptly and
within the time that they can be paid without interest or penalty all
taxes, assessments and similar imposts and charges of every kind and nature
lawfully levied, assessed or imposed upon the Borrower or the Subsidiaries
or any of their respective properties, except to the extent being contested
in good faith and, if reasonably requested by the Lender, bonded in a
manner satisfactory to the Lender. If the Borrower shall fail to pay or
cause to be paid such taxes and assessments by their due date, the Lender
shall have the option to do so, and the Borrower agrees to repay the
Lender, with interest at Default Rate, all amounts so expended by the
Lender.
5.4. Maintain Corporation and Business. Borrower will do or cause to
be done all things necessary to preserve and keep in full force and effect
the Borrower's and the Material Subsidiaries' existence, rights and
franchises and to comply and to cause each Subsidiary to comply with all
applicable laws; Borrower will and will cause each Material Subsidiary to
continue to conduct and operate their respective businesses substantially
as conducted and operated at the present time; Borrower will and will cause
each Material Subsidiary to at all times maintain, preserve and protect all
franchises, trademarks and trade names and preserve all of their respective
properties used or useful in the conduct of their respective businesses and
to keep the same in good repair, working order and condition; and Borrower
will and will cause each Material Subsidiary to from time to time make, or
cause to be made, all needed and proper repairs, renewals, replacements,
betterments and improvements thereto so that the business carried on in
connection therewith may be properly and advantageously conducted at all
times. 5.5. Use of Loan Proceeds. Borrower will use the proceeds
of the Term Loan for the Loan Purposes set forth in the definition of such
term that is contained in Section 1.1 of this Agreement.
5.6. Leverage Ratio. On a consolidated basis with the Subsidiaries,
Borrower will at all times maintain a ratio of Debt to Tangible Net Worth
of the Borrower and Subsidiaries that is less than 0.75 to 1.0.
5.7. Current Ratio. On a consolidated basis with the Subsidiaries,
Borrower will at all times maintain a ratio of Current Assets to Current
Liabilities of the Borrower and Subsidiaries that is greater than 2.0 to
1.0.
5.8. Profitability Ratio. On a consolidated basis with the
Subsidiaries, Borrower will at all times maintain a Profitability Ratio
greater than 1.5 to 1.0. As used in this Section 5.8, "Profitability
Ratio" shall mean, as of any applicable date of determination, the ratio of
Net Income for the immediately preceding period of twelve calendar months
to Current Maturities of Long Term Debt of the Borrower and Subsidiaries.
5.9. Fixed Charge Coverage. On a consolidated basis with the
Subsidiaries, Borrower will at all times maintain a Fixed Charge Coverage
ratio greater than 1.0 to 1.0. As used in this Section 5.9, "Fixed Charge
Coverage" shall mean, as of any applicable date of determination, the ratio
of Net Income of the Borrower and Subsidiaries for the immediately
preceding period of twelve calendar months plus Noncash Charges of the
Borrower and Subsidiaries for the same period to Current Maturities of Long
Term Debt of the Borrower and Subsidiaries plus cash dividends paid by TCBY
to the shareholders of TCBY for the preceding period of twelve calendar
months plus Replacement CapEx of the Borrower and Subsidiaries for the
preceding period of twelve calendar months (Replacement CapEx incurred by
the Borrower and Subsidiaries during the 12 months preceding the date of
this Agreement may be based upon the best estimate of such expenditures as
made by Borrower's chief financial officer and controller).
SECTION 6. NEGATIVE COVENANTS.
From the date hereof until the Indebtedness is paid and performed in
full, the Borrower covenants and agrees that it will not and it will not
permit any Subsidiary to:
6.1. Liens and Encumbrances. Create, incur, assume or suffer to exist
any Lien, encumbrance, or charge of any kind (including any lease required
to be capitalized under GAAP) upon any of its properties and/or assets
other than Permitted Liens. Notwithstanding the foregoing, should Lender
consent to the Borrower and/or any of the Subsidiaries voluntarily
creating, incurring, assuming or suffering to exist any such Lien,
encumbrance or charge of any kind (including any lease required to be
capitalized under GAAP) upon any of its properties and/or assets, such
consent shall be conditioned upon the immediate granting of, and Americana
shall immediately grant to the Lender, a first priority Lien and security
interest against, in and to all of the assets and properties of Americana.
6.2. Subsidiary Indebtedness. As to the Subsidiaries only, incur,
create, assume or permit to exist any Debt, except for (a) the
Indebtedness, (b) existing Debt described on Schedule 4.12, (c) trade
indebtedness and liability upon negotiable instruments resulting from the
endorsement of such instruments for collection or deposit to the extent the
same are incurred in good faith in the ordinary course of business, and (d)
purchase money obligations incurred in good faith in the ordinary course of
business and secured by Permitted Liens.
6.3. Extension of Credit and Investments. (a) Make any loan, advance
or extension of credit to any Person, or (b) acquire or hold beneficially
any Stock of any Person or make any investment or acquire any interest
whatsoever in any Person (unless the Borrower and/or its wholly-owned
Subsidiaries own, legally and beneficially, 50% or more of all Stock and/or
other interests in such Person or the Borrower holds the requisite power
and ownership interests to solely direct and manage such Person's business
and affairs pursuant to its charter, articles, bylaws and/or other
governing documents) if, as a result of any action described in clause (a)
or (b) above, the aggregate amount of all such loans, advances and
extensions of credit plus the value of all such Stock and other investments
made by the Borrower and the Subsidiaries, on an aggregate basis, would
exceed twenty-five percent (25%) of the consolidated Tangible Net Worth of
the Borrower and the Subsidiaries; provided, however, that (i) sales made
or services provided on open account and other trade receivables, provided
the same arise in the ordinary course of business, and (ii) loans, advances
and extensions of credit between or among the Borrower and wholly-owned
Subsidiaries, and (iii) "slotting" allowances funded in connection with the
acquisition of store space for retail yogurt sales activities, and (iv)
equipment placement contracts entered into in connection with yogurt retail
sales activities (provided that the Borrower or Subsidiary, as applicable,
retains ownership of the equipment) shall not be taken into consideration
for purposes of determining compliance with this provision.
6.4. Guarantee Obligations. As to the Subsidiaries only, directly or
indirectly, in any way be or become responsible for Guarantee Obligations.
6.5. Subordinate Indebtedness. Subordinate any indebtedness due to it
from a Person (or any Lien securing such indebtedness) to indebtedness of
other creditors of such Person (or any Lien securing such indebtedness).
6.6. Property Transfer, Merger or Lease-Back. (a) Sell, lease,
transfer or otherwise dispose of any assets, except the sale of yogurt
stores in the ordinary course of business, the sale of Subsidiaries in the
ordinary course of business (other than Material Subsidiaries), the sale of
Carlin Manufacturing, Inc., the sale of inventory in the ordinary course of
business and disposition of obsolete or worn-out equipment upon the
replacement thereof, (b) change its name, consolidate with or merge into
any other Person, permit another Person to merge into it, enter into any
reorganization or recapitalization or reclassify its Stock, or (c) enter
into any sale-leaseback transaction; provided, however, that a Subsidiary
which is wholly owned by the Borrower may be merged into, or consolidated
with, another Subsidiary which is wholly owned by the Borrower, and such
Subsidiary may sell, lease or transfer all or a substantial part of its
assets to another Subsidiary wholly owned by the Borrower, and such
Subsidiary may acquire all or substantially all of the properties and
assets of the Subsidiary so to be merged into (or consolidated with) it or
so to be sold, leased or transferred to it.
6.7. Investments. Make any investment including, without limitation,
the acquisition or holding of any Stock of, or any investment in or
acquisition of any interest whatsoever in any other Person except for: (a)
the Stock of the Subsidiaries owned by the Borrower and/or any Subsidiary
on the date of this Agreement and/or JBY Co.,Inc., a Japanese corporation
(20% of which is owned by TCBY International, Inc.); (b) Stock, investments
and other interests acquired by the Borrower and Subsidiaries in other
Persons, to the extent permitted by Section 6.3, above; (c) Stock in wholly
owned Subsidiaries of the Borrower; (d) certificates of deposit with
maturities of one (1) year or less; (e) direct obligations of the United
States Government or its agencies or mutual funds holding solely such
obligations; (f) commercial paper, maturing not more than two hundred
seventy (270) days after the date of issue, issued by corporations with a
minimal rating of "P-1" (or its equivalent) according to Moody's Investor
Service, "A-1+" (or its equivalent) according to Standard & Poors
Corporation, or "F-1" (or its equivalent) according to Fitch's Investors
Service, Inc.; (g) banker's acceptances issued by banks organized under the
laws of the United States or any state thereof which mature no later than
and have ratings equal to or greater than those stated for commercial paper
in subpart (f) above; (h) money market accounts; and (i) investment grade
bonds rated "AA" or"AAA" (or the equivalent) by Standard & Poors
Corporation.
6.8. Misrepresentation. Furnish the Lender with any certificate or
other document that contains any untrue statement of a material fact or
omits to state a material fact necessary to make such certificate or
document not misleading in light of the circumstances under which it was
furnished. 6.9. Margin Stock. Apply any of the proceeds of the
Term Loan, or any portion thereof, to the purchase or carrying of any
"margin stock" within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System, or any regulations, interpretations or
rulings thereunder.
6.10. Compliance with Environmental Laws. Use (or permit any
tenant to use) any of its assets for the handling, processing, storage,
transportation, or disposal of any Hazardous Substance unless the same is
handled in all respects in compliance with all Environmental Laws, or
generate any Hazardous Substance unless the same is generated in all
respects in compliance with Environmental Laws, or conduct any activity
which is likely to cause a release of any Hazardous Substance, or otherwise
conduct any activity or use any of its assets in any manner that is likely
to violate any Environmental Law.
6.11. Principal Place of Business. Move Americana's principal
place of business from the address for Americana specified in Section 1.1
of this Agreement under the term "Guarantor."
6.12. Repurchase of Stock. With respect to the Borrower,
repurchase the Stock of TCBY using, directly or indirectly, the proceeds of
any loan.
SECTION 7. EVENTS OF DEFAULT - ENFORCEMENT - APPLICATION OF PROCEEDS.
7.1. Acceleration of Indebtedness. Upon the occurrence of any Event
of Default, all Indebtedness shall be due and payable in full forthwith at
the option of the Lender without presentation, demand, protest, notice of
dishonor, notice of intention to accelerate, or other notice of any kind,
all of which are hereby expressly waived. Unless all of the Indebtedness is
then fully paid, the Lender shall have and may exercise any one or more of
the rights and remedies which shall be available to Lender under this
Agreement or any other Loan Document or otherwise at law or in equity
including, without limitation, the right to set-off against the
Indebtedness any amount owing by the Lender to the Borrower.
7.2. Cumulative Remedies. The rights and remedies provided for herein
or in any other Loan Document are cumulative to one another and to the
rights and remedies for collection and enforcement of the Indebtedness as
provided by law or in equity. Nothing herein contained is intended, and it
should not be construed, to preclude the Lender from pursuing any other
right or remedy for the recovery of any other sum to which the Lender may
be or become entitled for the breach of this Agreement or any other Loan
Document.
SECTION 8. MISCELLANEOUS.
8.1. Independent Rights. No single or partial exercise of any right,
power, privilege or remedy hereunder or under any other Loan Document, or
any delay in the exercise thereof, shall preclude other or further exercise
thereof.
8.2. Covenant Independence. Each covenant in this Agreement and in
each Loan Document shall be deemed to be independent of any other covenant,
and an exception in one covenant shall not create an exception in another
covenant.
8.3. Waivers and Amendments. No forbearance on the part of the Lender
in enforcing any of its rights under this Agreement or any other Loan
Document and no renewal, extension or rearrangement of any payment or
covenant to be made or performed hereunder or thereunder, shall constitute
a waiver of any of the terms of this Agreement or any other Loan Document
or of any such right. No Default or Event of Default shall be waived by
the Lender except in writing signed and delivered by an officer of the
Lender, and no waiver of any Default or Event of Default shall operate as a
waiver of any other Default or Event of Default or of the same Default or
Event of Default on a future occasion. No other amendment, modification or
waiver of, or consent with respect to, any provision of this Agreement or
any other Loan Document shall be effective unless the same shall be in
writing and signed and delivered by an officer of the Lender.
8.4. GOVERNING LAW. THIS AGREEMENT, AND EACH AND EVERY TERM AND
PROVISION HEREOF, SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS. IF ANY PROVISION OF THIS AGREEMENT SHALL FOR ANY REASON BE
HELD INVALID OR UNENFORCEABLE, SUCH INVALIDITY OR UNENFORCEABILITY SHALL
NOT AFFECT ANY OTHER PROVISION HEREOF, BUT THIS AGREEMENT SHALL BE
CONSTRUED AS IF SUCH INVALID OR UNENFORCEABLE PROVISION HAD NEVER BEEN
CONTAINED HEREIN.
8.5. Survival of Warranties, Etc. All of the Borrower's and the
Subsidiaries' and each other Loan Party's covenants, agreements,
representations and warranties made in connection with this Agreement and
any document contemplated hereby shall survive the making of the Term Loan
and the delivery of the Note and other Loan Documents and shall be deemed
to have been relied upon by the Lender notwithstanding any investigation
heretofore or hereafter made by the Lender. All statements contained in
any certificate or other document delivered to the Lender at any time by or
on behalf of the Borrower or any Subsidiary or any other Loan Party
pursuant hereto or in connection with the transactions contemplated hereby
shall constitute representations and warranties by the Borrower in
connection with this Agreement.
8.6. Attorneys' Fees. The Borrower agrees that it will pay all
reasonable costs and expenses of the Lender in connection with the
enforcement of the Lender's rights and remedies under this Agreement or
under any other Loan Document and in connection with the preparation or
making of any amendments, modifications, waivers or consents with respect
to this Agreement or any other Loan Document. If Borrower shall prevail in
any litigation brought to enforce Lender's obligations under this Agreement
or any other Loan Document, Borrower shall be entitled to recover
reasonable attorney's fees and court costs incurred by Borrower in the
course of such litigation.
8.7. Payments on Non-Business Days. Whenever any payment to be made
hereunder or under any other Loan Document shall be stated to be due on a
day which is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension, if any, shall be included in
computing interest.
8.8. Binding Effect. This Agreement shall inure to the benefit of and
shall be binding upon the parties hereto and their respective successors
and assigns; provided, however, the Borrower may not assign, transfer or
delegate its rights or obligations hereunder without the prior written
consent of the Lender.
8.9. Notices. All notices and communications provided for herein or
in any other Loan Document or required by law to be given shall be in
writing (including bank wire, telecopy or similar writing) and shall be
given to such party at its address or telecopy number (if any) set forth
below: (a) if to the Borrower, to the Borrower's Address or telecopy
number specified for such purpose in the definition of such term contained
in Section 1.1 of this Agreement; and (b) if to the Lender, to the address
or telecopy number specified for such purpose in the definition of the term
"Lender's Address " contained in Section 1.1 of this Agreement; or (c) to
such other address in the United States of America or telecopy number in
the United States of America as a party shall have designated to the other
in writing delivered in accordance herewith. Each such notice or other
communication shall be effective if given by telecopier, when such telecopy
is transmitted to the telecopy number (if any) specified above and the
appropriate confirmation is received or, if given by mail, 72 hours after
such communication is deposited in the United States mail with first-class
postage prepaid, addressed as aforesaid, provided that such mailing is by
registered or certified mail, return receipt requested, or if given by any
other means, when delivered at the address heretofore specified. The
giving of at least 5 days' notice before the Lender shall take any action
described in any notice shall conclusively be deemed reasonable for all
purposes, including for purposes of determining if the notice or action
described in the notice is commercially reasonable.
8.10. Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures were upon the same
instrument.
8.11. Headings. Article and section headings in this Agreement
are included for the convenience of reference only and shall not constitute
a part of this Agreement for any purpose.
8.12. Capital Adequacy. If, as a result of any regulatory change
directly or indirectly affecting the Lender or any of the Lender's
affiliates, there shall be imposed, modified or deemed applicable any tax,
reserve, special deposit, minimum capital, capital ratio, or similar
requirement against or with respect to or measured by reference to the Term
Loan made hereunder or participations therein, and the result shall be to
increase the cost to the Lender or any of the Lender's affiliates of making
or maintaining of the Term Loan hereunder or to any other party maintaining
any participation therein, or reduce any amount receivable in respect of
the Term Loan (which increase in cost, or reduction in amount receivable,
shall be the result of the Lender's or the Lender's affiliated company's
reasonable allocation among all affected customers of the aggregate of such
increases or reductions resulting from such event) then, within 10 days
after receipt by the Borrower of notice from the Lender containing the
information described below in this Section which shall be delivered to the
Borrower, the Borrower agrees from time to time to pay the Lender such
additional amounts (provided that Lender shall not be entitled to double
compensation hereunder for amounts previously paid by Borrower pursuant to
Section 2.13) as shall, from time to time, be sufficient to compensate the
Lender or any of the Lender's affiliates (for as long as such increased
costs or reductions in amount receivable exist) for such increased costs or
reductions in amount receivable which the Lender determines in the Lender's
sole discretion are material. The notice to be delivered pursuant to this
Section shall identify the regulatory change which has occurred, the
requirements which have been imposed, modified or deemed applicable, the
amount of such additional cost or reduction in amount receivable and the
manner in which such amount has been calculated. All provisions hereof are
subject to Section 2.4 of this Agreement.
8.13. Indemnification and Reimbursement by the Borrower. Subject
to Section 2.4 of this Agreement, the Borrower hereby covenants and agrees
to indemnify, reimburse, defend and hold harmless the Lender and its
officers, directors, employees and agents from and against any and all
claims, damages, liabilities, costs and expenses (including without
limitation, the fees and out-of-pocket expenses of counsel) which may be
incurred by or asserted against the Lender or any such other individual or
entity in connection with:
(a) Any investigation, action or proceeding arising out of or in
any way relating to this Agreement or any other Loan Document or any act or
omission relating to any of the foregoing (excluding, however, examinations
of Lender by regulatory authorities unless such examination is made
specifically as to the Loan and not as to the Lender's assets generally);
or
(b) The correctness, validity or genuineness of any instruments
or documents that may be released or endorsed to Borrower or any other Loan
Party by the Lender (which shall, in any event, automatically be deemed to
be without any representation or warranty from the Lender, express or
implied, and without recourse to the Lender), or the existence, character,
quantity, quality, condition, value or delivery of any goods purporting to
be represented by any such instruments or documents.
Notwithstanding the foregoing, the Borrower shall have no
obligation to indemnify, reimburse, defend or hold harmless the Lender or
any of its officers, directors, employees or agents from any claim, damage,
liability, cost or expense which is incurred by or asserted against the
Lender or such other Person as a result of the Lender's or such Person's
own gross negligence or willful misconduct.
8.14. Gender. Throughout this Agreement, the masculine shall
include the feminine and vice versa and the singular shall include the
plural and vice versa, unless the context of this Agreement indicates
otherwise.
8.15. Joint Borrowers. If more than one party executes this
Agreement as Borrower, then for the purpose of this Agreement the term
Borrower shall mean each such party and each such party shall be jointly
and severally liable as Borrower for the Indebtedness without regard to
which party receives the proceeds of any portion of the Term Loan. Each
such party hereby acknowledges that it expects to derive economic advantage
from the Term Loan.
8.16. Severability of Provisions. Any provision of this
Agreement, the Note or any other Loan Document that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement or such other Loan
Document or affecting the validity or enforceability of such provision in
any other jurisdiction.
8.17. Assignment. The Lender shall have the absolute and
unrestricted right to sell, assign, transfer, or grant participation in,
all or any portion of the Term Loan without the consent of Borrower or any
other Loan Party; provided, however, no such action on the part of the
Lender shall have the effect of changing any of the Borrower's obligations
hereunder without the written consent of the Borrower.
8.18 Amendment and Restatement. This Agreement amends and restates
that certain Loan Agreement dated as of June 11, 1993 entered into by Bank
One, Texas, N.A. and TCBY Enterprises, Inc. but shall not extinguish or
constitute a novation of the indebtedness or obligations evidenced by said
Loan Agreement or any of the Loan Documents described therein, and all such
Loan Documents are hereby amended so that any reference contained therein
to the Loan Agreement dated June 11, 1993 shall be deemed to mean and refer
to this Agreement. The Borrower hereby expressly acknowledges that all
such indebtedness and obligations continue in full force and effect and the
same are, hereby, ratified and confirmed by the Borrower.
8.19. NO ORAL AGREEMENTS. THIS AGREEMENT TOGETHER WITH THE OTHER
LOAN DOCUMENTS, AS WRITTEN, REPRESENT THE FINAL AGREEMENTS BETWEEN THE
LENDER AND THE BORROWER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE LENDER AND THE BORROWER.
IN WITNESS WHEREOF, the Borrower and the Lender have caused this
Agreement to be executed by their duly authorized officers as of the day
and year first written above.
BORROWER:
TCBY ENTERPRISES, INC.
By:
Printed Name:
Title:
LENDER:
BANK ONE, TEXAS, N.A.
By:
Printed Name:
Title:EXHIBIT A
COMPLIANCE CERTIFICATE OF TCBY ENTERPRISES, INC. FOR THE _________
(QUARTER/YEAR) ENDED ___________, 199_
TO: Bank One, Texas, N.A.
1717 Main Street, 3rd Floor
Dallas, Texas 75201
Attention: Lisa Peterson
FOR: Amended and Restated Loan Agreement dated as of November 28, 1994,
entered into by and among Bank One, Texas, N.A., and TCBY Enterprises, Inc.
This Certificate is delivered to you pursuant to Section 5.1.3 of the
Amended and Restated Loan Agreement (the "Agreement") dated as of November
28, 1994 by and between Bank One, Texas, N.A. and TCBY Enterprises, Inc.
(the "Borrower"). Unless otherwise defined herein, capitalized terms used
in this Certificate have the meanings given to them in the Agreement.
I hereby certify to you:
1. I am the Chief Executive Officer, Chief Financial Officer, Chief
Accounting Officer or Corporate Controller (as stipulated below my
signature below) of TCBY Enterprises, Inc.
2. As required by Section 5.1.1 or 5.1.2 of the Agreement, as
applicable, financial statements of the Borrower and its Subsidiaries for
the _________________ (year/quarter) ended __________________, 19___ (the
"Financial Statements"), prepared in accordance with generally accepted
accounting principles consistently applied, accompany this Certificate.
The Financial Statements present fairly the financial condition of the
Borrower and Subsidiaries as of the date thereof and the results of
operations of the Borrower and Subsidiaries for the period covered thereby.
3. A review of the activities of the Borrower and the Subsidiaries
during the Subject Period has been made under my supervision with a view to
determining whether, during the Subject Period, the Borrower and the
Subsidiaries have observed and performed all of the obligations under the
Loan Documents. During the Subject Period, the Borrower and the
Subsidiaries observed and performed each and every covenant and condition
of the Loan Documents (except as described on Schedule 2 attached hereto).
4. The status of compliance by the Borrower with the provisions of
Sections 5.6, 5.7, 5.8, 5.9, 6.2, 6.3, 6.4, 6.5 and 6.8 of the Agreement as
of the end of the Subject Period is stated on Schedule 1 attached hereto
and made a part hereof for all purposes. The language set forth on
Schedule 1 is intended only to paraphrase or summarize certain provisions
of the Loan Agreement and shall not constitute a modification of such
provisions. The language of the Agreement shall control in all events.
5. The representations and warranties contained in the Agreement and
all of the other Loan Documents and all facts stated therein are true and
correct as of the date hereof. No material adverse change has occurred in
the Borrower's or any Material Subsidiary's business, properties, or
financial condition or in the ability of the Borrower or any Subsidiaries
to comply with the obligations under any Loan Document.
WITNESS my hand this ________ day of ________________, 19___.
TCBY ENTERPRISES, INC.
By:
Printed Name:
Title: SCHEDULE 1
FINANCIAL COVENANTS
LEVERAGE RATIO (SECTION 5.6) REQUIRED: less than
.075 TO 1.00 ACTUAL: (i) Debt (all items of indebtedness,
obligations and liabilities of the Borrower and Subsidiaries, on a
consolidated basis, whether matured or unmatured, liquidated or
unliquidated, direct or indirect, absolute or contingent, joint or several,
that should be classified as liabilities in accordance with GAAP plus
Guarantee Obligations of such Persons plus, without duplication of the
foregoing, all liabilities of such Persons arising with respect to letters
of credit, commercial paper, banker's acceptances and similar financial
transactions) $________ (ii) Tangible Net Worth:
(a) The book value of all assets of the Borrower on a consolidated basis
with the Subsidiaries (other than patents, patent rights, trademarks, trade
names, franchises, copyrights, licenses, goodwill, research and development
expenses, unless prepaid, and similar intangible assets) after appropriate
deductions, all determined in accordance with GAAP $________
(b) All items of indebtedness, obligations and liabilities of the Borrower
and Subsidiaries, on a consolidated basis, whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent,
joint or several, that should be classified as liabilities in accordance
with GAAP $________
(c) Guarantee Obligations $________
(d) Contingent liabilities with respect to letters of credit and similar
financial transactions $________
(e) Tangible Net Worth: (a) minus (b) minus (c) minus (d)
$________ (iii) Leverage Ratio: line (i) divided by line (ii)(e)
_____ to _____ CURRENT RATIO (SECTION 5.7) REQUIRED: greater
than 2.00 to 1.00 ACTUAL: (i) Current Assets for
the Borrower on a consolidated basis with the Subsidiaries:
(a) All cash $________
(b) All nonaffiliated customer receivables $________
(c) All Investments allowed per Section 6.7 of the Loan Agreement that
should be classified as current in accordance with GAAP
$________
(d) All inventories $________
(e) All other assets that should be classified as current in accordance
with GAAP $________
(f) Current Assets: sum of (a) through (e) $________ (ii)
Current Liabilities for the Borrower on a consolidated basis with the
Subsidiaries (liabilities classified as current in accordance with GAAP)
$________ (iii) Current Ratio: line (i)(f) divided by line (ii)
_____ to _____ PROFITABILITY RATIO (SECTION 5.8)
REQUIRED: greater than 1.50 to 1.00 ACTUAL:
(i) Net income, after deduction of income taxes, for the Borrower on
a consolidated basis with the Subsidiaries for the immediately preceding
period of twelve calendar months determined in accordance with GAAP
(including, within the calculation thereof, nonrecurring or extraordinary
items) $________ (ii) Nonrecurring or extraordinary gains for
the immediately preceding period of 12 calendar months, determined in
accordance with GAAP $________ (iii) Nonrecurring or
extraordinary losses for the immediately preceding period of 12 calendar
months, determined in accordance with GAAP $________ (iv)
Net Income: (i) minus (ii) plus (iii) $________ (v) Current
Maturities of Long Term Debt (the principal portion of current maturities
of long term indebtedness and current obligations on long term capital
leases, as determined according to GAAP) for the Borrower on a consolidated
basis with the Subsidiaries for the next succeeding period of twelve
calendar months $________ (vi) Profitability Ratio: line
(iv) divided by line (v) _____ to _____ FIXED CHARGE COVERAGE
(SECTION 5.9) REQUIRED: greater than 1.00 to 1.00
ACTUAL: (i) Net income for the Borrower after deduction of
income taxes on a consolidated basis with the Subsidiaries for the
immediately preceding period of twelve calendar months determined in
accordance with GAAP (including, within the calculation thereof,
nonrecurring or extraordinary items) $________ (ii)
Nonrecurring or extraordinary gains for the immediately preceding period of
12 calendar months, determined in accordance with GAAP
$________ (iii) Nonrecurring or extraordinary losses for the
immediately preceding period of 12 calendar months, determined in
accordance with GAAP $________ (iv) Net Income: (i) minus
(ii) plus (iii) $________ (v) Noncash Charges for the Borrower on
a consolidated basis with the Subsidiaries for the immediately preceding
period of twelve calendar months:
(a) All amortization $________
(b) All depreciation $________
(c) All deferred income taxes $________
(d) All non-cash additions to reserves (insurance, taxes, bad debt, or
otherwise) $________
(e) Noncash Charges: sum of (a), (b), (c) and (d) $________ (vi)
Net Income plus Noncash Charges: total of line (iv) and line (v)(e)
$________ (vii) Current Maturities of Long Term Debt (the
principal portion of current maturities of long-term indebtedness and
current obligations on long-term capital leases, as determined in
accordance with GAAP) for the next succeeding period of 12 calendar months
$________ (viii) All cash dividends paid by TCBY Enterprises,
Inc., to shareholders of TCBY Enterprises, Inc. for the preceding period of
twelve calendar months $________ (ix) Replacement CapEx for the
Borrower on a consolidated basis with the Subsidiaries for the preceding
period of twelve calendar months (estimated for the 12 months preceding
6/11/93):
(a) Total capital expenditures for the immediately preceding period of
twelve calendar months (estimated for the 12 months preceding 6/11/93)
$________
(b) Total non-replacement capital expenditures for the immediately
preceding period of twelve calendar months (estimated for the 12 months
preceding 6/11/93) $________
(c) Replacement CapEx: (a) minus (b) $________ (x) Subtotal of
lines (vii) and (viii) and (ix)(c) $________ (xi)
Fixed Charge Coverage: line (vi) divided by line (x) _____ to _____
MAXIMUM PERMITTED LIENS TO SECURE PURCHASE MONEY OBLIGATIONS (SECTION 1.1
AND SECTION 6.1) PERMITTED:
For the Borrower and the Subsidiaries on a consolidated basis:
$5,000,000.00 ACTUAL:
For the Borrower and the Subsidiaries on a consolidated basis:
(a) Total Liens encumbering the properties and/or assets of the Borrower
and/or the Subsidiaries, which secure purchase money obligations incurred
by the Borrower and/or the Subsidiaries in good faith in the ordinary
course of business and not yet due and payable
$________ SUBSIDIARY INDEBTEDNESS (SECTION 6.2) (i)
Total Subsidiary Debt $_______ (ii) Subsidiary liability for
payment of the Indebtedness $_______ (iii) Debt described on
Schedule 4.12 of the Agreement $_______ (iv) Total of (i)
Subsidiary liability for trade indebtedness and liability on negotiable
instruments resulting from the endorsement of such instruments for
collection or deposit to the extent the same are incurred in good faith in
the ordinary course of business plus (ii) purchase money obligations
incurred by the Subsidiaries in good faith in the ordinary course of
business and secured by Permitted Liens $_______ (v)
Total Subsidiary Debt: line (i) above minus the sum of (ii) through (iv)
$-0- EXTENSION OF CREDIT AND INVESTMENTS (SECTION 6.3)
PERMITTED:
For the Borrower and the Subsidiaries, on a consolidated basis, the
aggregate amount of credit extended to Persons (other than (a) open
accounts from sales and services and other trade receivables in the
ordinary course of business, (b) credit between and among the Borrower and
wholly owned Subsidiaries, (c) "slotting" allowances funded in connection
with the acquisition of store space for retail yogurt sales activities, and
(d) equipment placement contracts entered into in connection with yogurt
retail sales activities if the Borrower or Subsidiaries retain ownership of
the equipment) plus the value of Stock and other investments in any Person
(unless the Borrower and/or its wholly-owned Subsidiaries own, legally and
beneficially, 50% or more of all Stock and/or other interests in such
Person or the Borrower holds the requisite power and ownership interests to
solely direct and manage such Person's business and affairs pursuant to its
charter, articles, bylaws and/or other governing documents), outstanding at
any time may not exceed, on an aggregate basis, an amount equal to
twenty-five percent of the Tangible Net Worth of the Borrower and the
Subsidiaries, on a consolidated basis ACTUAL:
(i) Tangible Net Worth of the Borrower on a consolidated basis with the
Subsidiaries:
(a) The book value of all assets of the Borrower on a consolidated basis
with the Subsidiaries (other than patents, patent rights, trademarks, trade
names, franchises, copyrights, licenses, goodwill, research and development
expenses, unless prepaid, and similar intangible assets) after appropriate
deductions, all determined in accordance with GAAP $________
(b) All Debt of the Borrower on a consolidated basis with the Subsidiaries
(all items of indebtedness, obligations and liabilities of the Borrower and
the Subsidiaries on a consolidated basis, whether mature or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent,
joint or several, that should be classified as liabilities in accordance
with GAAP $________
(c) Guarantee Obligations $________
(d) Contingent liabilities with respect to letters of credit
$________
(e) Tangible Net Worth: (a) minus (b) minus (c) minus (d)
$________
(f) 25% of Tangible Net Worth (line (e) x .25) $________ (ii)
The aggregate amount of credit extended by the Borrower and the
Subsidiaries, on a consolidated basis to Persons (other than (a) open
accounts from sales and services in the ordinary course of business, (b)
credit between or among the Borrower and wholly owned Subsidiaries, (c)
"slotting" allowances funded in connection with the acquisition of store
space for retail yogurt sales activities, and (d) equipment placement
contracts entered into in connection with yogurt retail sales activities if
the Borrower or Subsidiaries retain ownership of the equipment) plus the
value of Stock and other investments in any Person (unless the Borrower
and/or its wholly-owned Subsidiaries own, legally and beneficially, 50% or
more of all Stock and/or other interests in such Person or the Borrower
holds the requisite power and ownership interests to solely direct and
manage such Person's business and affairs pursuant to its charter,
articles, bylaws and/or other governing documents)
$________ GUARANTEE OBLIGATIONS OF SUBSIDIARIES (SECTION 6.4)
(i) Total obligations of other Persons which the Subsidiaries
guarantee or for which the Subsidiaries are otherwise, directly or
indirectly, responsible (whether by agreement to purchase the indebtedness
of another Person, agreement to furnish funds to another Person through the
furnishing of goods, supplies or services, by way of Stock purchase,
capital contribution, advance or loan for the purpose of paying or
discharging, or causing the payment or discharge, of the indebtedness of
any other Person (excluding, however, the total amounts that result from
the endorsement of negotiable instruments by the Subsidiaries in the
ordinary course of business for deposit or collection and the continuing
liability of any Subsidiary, as lessee, pursuant to an operating lease that
is assigned to and assumed by a franchisee in connection with such
franchisee's acquisition of a yogurt store from such Subsidiary)
$________
SCHEDULE 2EXHIBIT B
Bank One Texas, N.A. 1717 Main Street 3rd Floor Dallas, Texas 75201
Re: Amended and Restated Loan Agreement Dated as of November 28, 1994
by and between Bank One, Texas, N.A. and TCBY Enterprises, Inc. (the
"Agreement")
Gentlemen:
Pursuant to Section 2.8 of the Agreement the undersigned hereby
confirms its request made on ________________, 19___ for a Stated Rate
Loan and/or one or more or Eurodollar Loans to be made on _____________,
19__ in the following amounts and for the following Interest Periods (30,
60, 90 or 180 days):
Loan Amount Interest Period
Stated Rate Loan $ N/A
Eurodollar Loan #1 $ days
Eurodollar Loan #2 $ days
Eurodollar Loan #1 represents a _______________
(continuation/conversion) of the _______________________ (Stated Rate or
Eurodollar Loan) made on ________________ in the amount of $_____________.
Eurodollar Loan #2 represents a _______________
(continuation/conversion) of the _______________________ (Stated Rate or
Eurodollar Loan) made on ________________ in the amount of $_____________.
The representations and warranties contained or referred to in Section
4 of the Agreement are true and accurate on and as of the effective date of
the conversion made the basis hereof as though made at and as of such date,
and no Default or Event of Default has occurred and is continuing or will
result from the conversion made the basis hereof.
TCBY ENTERPRISES, INC.
By:
Printed Name:
Title:
Date: EXHIBIT C
Bank One Texas, N.A. 1717 Main Street 3rd Floor Dallas, Texas 75201
Re: Amended and Restated Loan Agreement Dated as of November 28, 1994
by and between Bank One, Texas, N.A. and TCBY Enterprises, Inc. (the
"Agreement")
Gentlemen:
Pursuant to Section 2.9 of the Agreement the undersigned hereby
confirms its request made on ________________, 19___ for a Fixed Rate Loan
in the amount of $________________ on ________________, 19___.
The representations and warranties contained or referred to in Section
4 of the Agreement are true and accurate on and as of the effective date of
the conversion made the basis hereof as though made at and as of such date;
and no Event of Default has occurred and is continuing or will result from
the conversion made the basis hereof.
TCBY ENTERPRISES, INC.
By:
Printed Name:
Title:
Date:
Exhibit 4(ii)(c)
TERM NOTE
Dallas, Texas
$7,500,000.00 November 28, 1994
FOR VALUE RECEIVED, TCBY Enterprises, Inc., a Delaware corporation (herein
referred to with each of its successors and assigns as the "Maker"),
promises to pay to the order of Bank One, Texas, N.A., a national banking
association (herein collectively referred to with its successors and
assigns as the "Lender") at 1717 Main Street, 3rd Floor, Dallas, Texas
75201, the principal sum of SEVEN MILLION FIVE HUNDRED THOUSAND AND NO/100
DOLLARS ($7,500,000.00) or, if less, the total advanced and remaining
outstanding, in legal and lawful money of the United States of America and
in immediately available funds, together with interest on the principal
outstanding from time to time prior to maturity at the Term Loan Contract
Rate, as that term is defined in the Loan Agreement described below.
Unless sooner called or accelerated, the unpaid principal balance
hereof shall be repaid in equal monthly installments, which shall be in the
amount of $90,361.45 each, commencing on the 1st day of January, 1995, and
continuing regularly and monthly on the 1st day of each calendar month
thereafter through December 31, 2001 when the entire amount of this Note,
principal and interest then remaining unpaid, shall be due and payable in
full. Notwithstanding the foregoing, however, if the date for payment is
not a business day, then the payment required to be made hereunder shall be
due and payable on the next succeeding business day. The date on which the
entire unpaid principal balance hereof becomes due and payable is herein
referred to as the "Maturity Date".
Interest shall be payable, to the extent accrued, on the 1st day of
each calendar month, beginning December 1, 1994, that occurs prior to the
Maturity Date; provided, however, if any such payment date does not occur
on a business day, then the payment date shall be the next succeeding
business day.
Subject to the provisions hereof limiting interest to the Maximum
Amount (defined below), past due amounts of principal payable hereunder
and, to the extent permitted by applicable law, past due amounts of
interest payable hereunder shall bear interest from and after the dates the
same became due and payable hereunder until paid at the Default Rate, as
that term is defined in the Loan Agreement described below, and Maker
promises to pay such interest to the order of Lender in legal and lawful
money of the United States of America and in immediately available funds at
the place for payment specified above upon DEMAND.
This Note is executed and delivered pursuant to the terms of that
certain Amended and Restated Loan Agreement dated as of November 28, 1994,
entered into by and between Maker and Lender (as the same may be renewed,
extended, amended, restated, increased, supplemented or otherwise modified
from time to time, the "Loan Agreement"), and the holder of this Note shall
be entitled to the benefits provided in the Loan Agreement and to all of
the liens, benefits, rights and privileges set forth in or otherwise
arising under any and all agreements, instruments, certificates and other
documents executed or delivered or contemplated to be executed or delivered
in connection with the Loan Agreement or the transactions that are the
subject matter thereof, as any of the same may be renewed, extended,
restated, supplemented, increased, amended or otherwise modified from time
to time. Unless otherwise expressly defined herein, terms that are used in
this Note which begin with an initial capital letter (including, without
limitation, the term "Loan Documents") shall have the meanings ascribed to
such terms in the Loan Agreement. Reference is made to the Loan Agreement
for a statement of certain of the rights of the holder of this Note and for
other purposes provided herein. Reference is also made to the Loan
Agreement for a statement of certain terms and provisions relevant to this
Note but not contained herein including, without limitation, Defaults and
Events of Default. Neither the reference to the Loan Agreement nor the
reference to any term or provision thereof shall, however, affect or impair
the absolute and unconditional obligation of the Maker to pay the principal
of and interest on this Note when due and payable.
If a Default or an Event of Default occurs hereunder or under any Loan
Document that is not cured within the time, if any, provided for by the
Loan Document, the Lender may exercise any one or more of the rights and
remedies (including the right to accelerate this Note and any other
indebtedness or obligations owed to it pursuant to any Loan Document) which
shall be available to Lender under any Loan Document or otherwise at law or
in equity including, without limitation, the right to take possession and
to sell, lease or otherwise dispose of any or all collateral and to set off
against the indebtedness and obligations owed hereunder or under any other
Loan Document any amount owing by the Lender to the Maker (including,
without limitation, any amount in any deposit account of the Maker with the
Lender and any property of the Maker which is in the possession of the
Lender).
No delay on the part of the holder of this Note or the exercise of any
power or right or remedy under or with respect to this Note or any other
Loan Document shall operate as a waiver thereof, and no single or partial
exercise of any power or right shall preclude any other or further exercise
thereof or the exercise of any other power or right. Enforcement by the
holder of this Note of any security for the payment hereof shall not
constitute an election by it of any remedy so as to preclude the exercise
of any other right or remedy available to it.
No agreements, conditions, provision or stipulations contained in this
Note or in any other Loan Document, or the occurrence of a default or an
event of default, or the exercise by the Lender of the right to accelerate
the payment of the maturity of principal or interest, or to exercise any
option whatsoever contained in this Note or any other Loan Document, or the
arising of any contingency whatsoever, shall entitle the Lender to collect,
in any event, interest exceeding the maximum amount allowed from time to
time by applicable state or federal laws, as now or hereafter in effect
(the "Maximum Amount"), and in no event shall the Maker be obligated to pay
interest exceeding such Maximum Amount, and all agreements, conditions or
stipulations, if any, which may in any event or contingency whatsoever
operate to bind, obligate or compel the Maker to pay interest exceeding the
Maximum Amount shall be without binding force or effect, at law or in
equity, to the extent only of the excess of interest over such Maximum
Amount. In the event any interest is charged or collected in excess of the
Maximum Amount (the "Excess"), the Maker acknowledges, agrees and
stipulates that any such amount shall be the result of an accidental and
bona fide error, and any such charge shall be canceled and any such Excess
that is collected shall, first, be applied to reduce the principal of any
obligations due and, second, returned to the Maker or to such other person
who may be entitled thereto by law, it being the intention of the parties
hereto not to enter at any time into an usurious or otherwise illegal
relationship. The parties hereto recognize that with fluctuations in the
Term Loan Contract Rate from time to time unintentional results could
inadvertently occur. By the execution of this Note, the Maker covenants
that (a) the cancellation, credit or return of any Excess shall constitute
the acceptance by the Maker of such Excess, and (b) the Maker shall not
seek or pursue any other remedy, legal or equitable, against the Lender
based, in whole or in part, upon the charging or receiving of any interest
in excess of the Maximum Amount. For the purpose of determining whether or
not any Excess has been contracted for, charged or received by the Lender,
all interest at any time contracted for, charged or received by the Lender
in connection with the Maker's obligations shall be amortized, prorated,
allocated and spread in equal parts during the entire term of this Note.
Unless preempted by federal law or other state laws now or hereafter in
effect and applicable hereto, the applicable interest rate ceiling shall be
the "indicated rate ceiling" from time to time in effect under the Texas
Revised Civil Statues Annotated, Article 5069-1.04, as amended.
The provisions of this Note governing interest, as set forth in the
preceding paragraph, shall be deemed to be incorporated into every Loan
Document or communication relating to the indebtedness evidenced hereby,
whether or not any provision of this Note is referred to therein. All such
documents and communications and all figures set forth therein shall, for
the sole purpose of computing the extent of the obligations asserted by the
Lender thereunder, be automatically recomputed by the Maker or any other
obligor, and by any court considering the same, to give effect to the
adjustments or credits required by the preceding paragraph.
If the applicable state or federal law is amended in the future to
allow a greater rate of interest to be charged under this Note than is
presently allowed by applicable state or federal law, then the limitations
on interest hereunder shall be increased to the maximum allowed by
applicable state or federal law, as amended, which increase shall be
effective hereunder on the effective date of such amendment, and all
interest charges owing to the Lender by reason thereof shall be payable
upon DEMAND.
The Maker and all guarantors, signers, sureties and endorsers (a)
waive presentment, demand, protest, notice of protest and of dishonor,
notice of intent to demand, notice of intent to accelerate, and diligence
in collecting, (b) agree that no extension, partial payment or indulgence
to the Maker or release or nonenforcement of any security, whether with or
without notice, before or after maturity shall affect the obligations of
any guarantor, signer, surety or endorser, and (c) agree to reimburse the
holder of this Note for any and all costs and expenses (including, but not
limited to, reasonable attorney fees) incurred in collecting or attempting
to collect any and all principal of and interest on this Note.
Should this Note be signed by more than one party, all of the
obligations herein contained shall be the joint and several obligations of
each signatory hereto.
THE PROCEEDS OF THIS NOTE ARE TO BE USED FOR BUSINESS, COMMERCIAL,
INVESTMENT OR OTHER SIMILAR PURPOSE AND NO PORTION THEREOF WILL BE USED FOR
PERSONAL, FAMILY OR HOUSEHOLD USE.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS AND THE LAWS OF THE UNITED STATES APPLICABLE TO TRANSACTIONS IN
TEXAS.
THIS NOTE TOGETHER WITH THE OTHER LOAN DOCUMENTS, AS WRITTEN,
REPRESENT THE FINAL AGREEMENTS BETWEEN THE LENDER AND THE MAKER AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE LENDER AND THE MAKER.
IN WITNESS WHEREOF, the Maker has executed this Note as of November 28,
1994.
TCBY ENTERPRISES, INC.
By:
Printed Name:
Title:
Sequential Page Number 24
Results of Operations
Fiscal 1994 Compared to Fiscal 1993
The Company's total sales for fiscal 1994 increased 28 percent from sales
in fiscal 1993. The Company's operations were primarily in two segments:
food products and equipment. The following table sets forth sales by
category within the Company's primary segments of operation (dollars in
thousands):
<TABLE>
<CAPTION>
% of % of % of
1994 Sales 1993 Sales 1992 Sales
____ _____ ____ _____ ____ _____
<S> <C> <C> <C> <C> <C> <C>
Food Products:
Yogurt sales to Martin-
Brower and other food
service distributors $ 54,243 39% $ 52,320 48% $ 56,114 52%
Yogurt sales to the retail
grocery trade 46,377 33% 13,161 12% 5,683 6%
Retail sales by Company-
owned stores 21,734 15% 26,873 24% 30,271 28%
________ ____ ________ ____ ________ ____
122,354 87% 92,354 84% 92,068 86%
Equipment:
Sales by the Company's
equipment distributor 13,262 9% 8,640 8% 4,753 4%
Sales of manufactured
specialty vehicles 3,936 3% 7,489 7% 9,617 9%
________ ____ ________ ____ ________ ____
17,198 12% 16,129 15% 14,370 13%
Other 893 1% 1,042 1% 1,195 1%
________ ____ ________ ____ ________ ____
Total Sales $140,445 100% $109,525 100% $107,633 100%
======== ==== ======== ==== ======== ====
</TABLE>
Sales from the Company's food products segment include (i) wholesale sales
of frozen yogurt products to the Martin-Brower Company, which distributes
yogurt and other products primarily to "TCBY" stores, and to other
foodservice distributors, which distribute to non-traditional locations
such as airports, on-premises business cafeterias, hospitals, sporting
arenas, toll road plazas, etc., (ii) sales of hardpack frozen yogurt,
refrigerated yogurt, and frozen novelties for distribution to the retail
grocery trade, and (iii) retail sales of yogurt and related food items by
Company-owned stores. Sales in the food products segment increased from
$92.4 million in fiscal 1993 to
<PAGE>
$122.4 million during fiscal 1994. The food products segment represented
87 percent of the Company's total sales during fiscal 1994 as compared to
84 percent in fiscal 1993.
Within the food products segment, wholesale sales of frozen yogurt
increased 4 percent during fiscal 1994 as compared to fiscal 1993. This
increase is due to a greater number of non-traditional locations operating
during fiscal 1994 compared to the same period in fiscal 1993 and was
partially offset by a reduction in the number of domestic 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 fiscal 1995.
The following table sets forth location activity for fiscal 1994 and 1993:
<TABLE>
<CAPTION>
Non-
Franchise Company International Traditional Total
Stores Stores Locations Locations Locations
_________ _______ _____________ ___________ _________
<S> <C> <C> <C> <C> <C>
Locations Open at
November 30, 1992 1,330 147 71 292 1,840
Opened 28 1 23 752 804
Closed (75) (12) (28) (55) (170)
Net Stores Purchased
(Sold) Between Fran-
chisees & Company 15 (15) -- -- --
_________ _______ _____________ ___________ _________
Locations Open at
November 30, 1993 1,298 121 66 989 2,474
Opened 31 2 77 506 616
Closed (89) (22) (2) (176) (289)
Net Stores Purchased
(Sold) Between Fran-
chisees & Company 5 (5) -- -- --
_________ _______ _____________ ___________ _________
Locations Open at
November 30, 1994 1,245 96 141 1,319 2,801
========= ======= ============= =========== =========
</TABLE>
Included in the franchised and Company store information are 152 and 166
"TCBY" stores closed for relocation or for the season on November 30, 1994
and 1993, respectively.
Sales of yogurt to the retail grocery trade increased 252 percent during
fiscal 1994 as compared to fiscal 1993. This increase is a result of
expanded geographic distribution of both hardpack frozen yogurt and
refrigerated yogurt products. The Company plans to continue to expand the
distribution of yogurt products in the retail grocery trade during fiscal
1995, however, not necessarily at the same rate experienced in fiscal 1994.
<PAGE>
Sales by Company-owned stores declined 19 percent during fiscal 1994 as
compared to fiscal 1993. This decline results primarily from a reduction
of Company-owned stores operated during fiscal 1994. The Company expects
the number of Company-owned stores to stabilize at approximately 90 stores
during fiscal 1995. However, the Company will continue to evaluate
opportunities to refranchise stores.
Sales from the Company's equipment segment include (i) sales from the
distribution of equipment to the foodservice industry and (ii) sales of
manufactured mobile kitchens and other specialty vehicles primarily to
businesses and governments. Sales in the equipment segment increased 7
percent during fiscal 1994 from $16.1 million in fiscal 1993 to $17.2
million during fiscal 1994. Sales by the equipment segment represented 12
percent of the Company's total sales during fiscal 1994 as compared to 15
percent in fiscal 1993. The increase in sales by the Company's equipment
distributor is primarily due to sales of equipment packages to
international franchisees and a full year of sales for AIMCO Equipment
Company, which was acquired in April 1993. This increase was partially
offset by the completion by the equipment manufacturer 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.
Average store sales (the average of sales by domestic traditional stores
open the entire fiscal year) for Company-owned and franchised "TCBY" stores
increased 5 percent from $202,000 in fiscal 1993 to $212,000 in fiscal
1994. Same store sales (the comparison of fiscal 1994 individual domestic
traditional "TCBY" store sales with sales by the same stores operating
during the same period of fiscal 1993) increased 3.6 percent in fiscal 1994
from fiscal 1993. The increase in average store sales is due primarily to
improved same store sales and the closing of stores with sales less than
the average store sales reported for fiscal 1994. The overall improvement
in same store sales for the year reflects the Company's continuing efforts
to increase sales through national and local media advertising, menu
extensions, store decor upgrades, and relocations. The restaurant industry
continues to be highly competitive. Even with the continuation of these
programs and implementation of similar programs, same store sales may
decline and store closings may continue.
<PAGE>
The ratio of cost of sales to sales was 59 percent for fiscal 1994 as
compared to 53 percent for fiscal 1993. The ratio of cost of sales to
sales for the food products segment and equipment segment in fiscal 1994
was 56 percent and 79 percent, respectively, compared to 44 percent and 78
percent, respectively, in 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
retail grocery trade and private label customers increased (private label
and refrigerated yogurt have a higher cost of sales to sales ratio). A
major component of the Company's cost of sales of food products is milk.
Milk pricing is regulated by the USDA which sets pricing on a monthly
basis. Milk prices in fiscal 1994 were approximately 6 percent higher than
prices in fiscal 1993. The Company in the past has not adjusted its
selling prices to reflect fluctuations in milk pricing. Average milk
prices are expected to stabilize in fiscal 1995. In addition, the Company
has experienced increases in other components of cost of sales, such as
product packaging costs, and additional increases are expected in product
packaging costs in fiscal 1995. The Company will monitor all costs and
evaluate its selling prices accordingly. The cost of sales to sales ratio
for the equipment segment increased due to an increase in sales of
equipment with lower gross profit margins.
Franchising revenues consist of initial franchise and license fees and
royalty income. In fiscal 1994, initial franchise and license fees
increased 24 percent while royalty income increased 8 percent from fiscal
1993. The increase in franchise and license fees results pr imarily from
domestic and international franchising activity. Five percent of food
products sales and franchising revenues were generated from international
activity in fiscal 1994 compared to 3 percent in fiscal 1993. 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 11 percent in
fiscal 1994 compared to 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, distribution allowances, and brokerage fees)
associated with the sales growth and increased distribution of yogurt
products within the retail grocery trade and the continued development of
non-traditional locations. Increases in SG&A expenses were partially
offset by a reduction in the number of Company-owned stores operating
during fiscal 1994 (see location activity schedule above) which results in
a decrease in the amount of total operating expenses within Company-owned
<PAGE>
stores. As a percentage of combined sales and franchising revenues, SG&A
expenses were 39 percent and 44 percent for 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 planned expansion in a highly competitive environment,
combined with the amortization of distribution allowances, selling costs
will increase in fiscal 1995.
Interest expense decreased 24 percent in fiscal 1994 over fiscal 1993.
This decrease is due to a reduction in the average principal balances of
outstanding long-term debt during 1994. In future periods, interest costs
will increase as $7.5 million was borrowed in November 1994 to finance the
expansion of the Company's yogurt manufacturing facility, which is
discussed in greater detail below, and due to anticipated increases in
interest rates in fiscal 1995.
Interest income decreased 18 percent in fiscal 1994 from fiscal 1993. This
decrease is due to reductions in the outstanding balances of interest
earning assets. The Company's practice is not to accrue interest income on
franchise notes receivable when collection becomes uncertain.
Litigation settlement and costs in fiscal 1994 and 1993 are costs
associated with legal and administrative proceedings which are incidental
to the business of the Company.
Income taxes as a percentage of pre-tax income decreased to 33.3 percent in
fiscal 1994 from 34.3 percent in fiscal 1993. The decrease relates
primarily to a reduction in tax allowances established in prior years.
Assuming no significant change in federal and state tax laws, the Company
expects its future tax rate to approximate that of fiscal 1993. Deferred
tax assets of $2.2 million will be realized through the offset of existing
taxable temporary differences.
Fiscal 1993 Compared to Fiscal 1992
Total sales for fiscal 1993 increased 2 percent from sales for fiscal 1992.
See table above setting forth sales by category within the Company's
primary segments of operations.
Sales in the food products segment increased from $92.1 million in fiscal
1992 to $92.4 million during fiscal 1993. The food products segment
represented 84 percent of the Company's total sales during fiscal 1993 as
compared to 86 percent in fiscal 1992. Within the food products segment,
wholesale sales of frozen yogurt declined 7 percent during fiscal 1993 from
wholesale sales during fiscal 1992. This was attributed to a reduction in
the number of traditional "TCBY" stores open during
<PAGE>
fiscal 1993 along with a slight reduction in the average amount of yogurt
purchased by those stores. This reduction was partially offset by a
greater number of non-traditional locations open during fiscal 1993. See
table above setting forth location activity for fiscal 1993.
Included in store openings were 16 stores for fiscal 1993 and 13 stores for
fiscal 1992 previously reported closed that reopened during the year.
Included in stores open were 166 and 137 "TCBY" stores closed for
relocation or for the season on November 30, 1993 and 1992, respectively.
Sales by Company-owned stores declined 11 percent during fiscal 1993 as
compared to fiscal 1992. This decline resulted primarily from a reduction
of Company-owned stores operated during the period.
Sales of yogurt to the retail grocery trade increased 132 percent during
fiscal 1993 as compared to fiscal 1992. This increase was a result of
expanded geographic distribution of both hardpack frozen yogurt and
refrigerated yogurt products.
Sales in the equipment segment increased 12 percent during fiscal 1993 from
$14.4 million during fiscal 1992 to $16.1 million. Sales by the equipment
segment represented 15 percent of the Company's total sales during fiscal
1993 as compared to 13 percent during fiscal 1992. This increase in sales
resulted primarily from the acquisition of AIMCO Equipment Company in April
1993. AIMCO, located in Little Rock, is a regional distributor of
equipment to the foodservice industry and serves customers primarily
outside of the "TCBY" franchise system. Sales of manufactured equipment
decreased in fiscal 1993 from fiscal 1992 as a result of the completion in
the second quarter 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.
Average store sales (the average of sales by domestic traditional stores
open the entire fiscal year) for Company-owned and franchise "TCBY" stores
increased 2 percent from $198,000 in fiscal 1992 to $202,000 in fiscal
1993. Same store sales (the comparison of fiscal 1993 individual domestic
traditional "TCBYR" store sales to sales by the same stores operating
during the same period of fiscal 1992) decreased 1.7 percent in fiscal 1993
from fiscal 1992. The increase in average store sales was due primarily to
the closing of 115 stores with average sales less than the average store
sales reported for fiscal 1992. The decline in same store sales that began
in 1990, had an adverse impact on the financial condition of franchised and
Company-owned stores, and contributed to store closings.
<PAGE>
The ratio of cost of sales to sales was 53 percent for fiscal 1993 as
compared to 51 percent for fiscal 1992. The increase in the cost of sales
to sales ratio was attributed primarily to a change in sales mix. Overall,
equipment sales, which have a higher cost ratio, increased as a percentage
of total sales. In addition, the sales mix within the food products
segment changed with retail sales through Company-owned stores declining
whil e wholesale sales to the retail grocery trade, which are made at a
higher cost of sales to sales ratio, increased. The Company did experience
an improvement in the cost of sales to sales ratio for Company-owned stores
of 3 percent as a percentage of sales in fiscal 1993 compared to fiscal
1992 due to improved cost controls. The ratio of cost of sales to sales
for the food products segment and equipment segment in fiscal 1993 was 44
percent and 78 percent, respectively, compared to 43 percent and 78
percent, respectively, in fiscal 1992. A major component of the Company's
cost of sales of food products is milk. Milk pricing is regulated by the
USDA which sets pricing on a monthly basis. Milk prices in fiscal 1993
were fairly consistent with prices in fiscal 1992. The Company in the past
has not adjusted its selling prices to reflect fluctuations in milk
pricing.
Franchising revenues consist of initial franchise and license fees and
royalty income. In fiscal 1993, initial franchise and license fees
increased 74 percent while royalty income declined 6 percent from fiscal
1992. The increase in franchise and license fees resulted primarily from
an increase in development of international license agreements. Three
percent of food products sales and franchising revenues were generated from
international activity in fiscal 1993 compared to 2 percent in fiscal 1992.
The decline in royalty income resulted from a decline in the sale of yogurt
to "TCBY" stores as noted above.
Selling, general and administrative (SG&A) expenses decreased 4 percent in
fiscal 1993. This decrease was due primarily to a decrease in the
provision for doubtful accounts and notes and a reduction in the number of
Company-owned stores operating during fiscal 1993 (see location activity
schedule above) which resulted in a decrease in the total number of
associates employed. Included in SG&A for fiscal 1993 was a provision of
$1.1 million for doubtful accounts and notes compared to $2.3 million in
fiscal 1992. The decrease in the provision for fiscal 1993 was due to a
reduction in the number of franchised stores closed during the year and a
reduction in lending activity during fiscal 1993 and 1992. In addition,
net expenses relating to the sale or closure of Company-owned stores
decreased from approximately $1 million in fiscal 1992 to approximately
$50,000 in fiscal 1993. The improvements referred to above were partially
offset by (i) an increase in costs incurred by the Company in an effort to
develop non-traditional locations and sales to the retail grocery trade and
(ii) an
<PAGE>
increase in costs related to the operation of AIMCO. As a percentage of
combined sales and franchising revenues, SG&A expenses were 44 percent and
46 percent for fiscal 1993 and 1992, respectively.
Interest expense decreased 30 percent in fiscal 1993 as compared to fiscal
1992. This decrease was due to a reduction in the average interest rate
paid during fiscal 1993 and a reduction in the principal balances of
outstanding long-term debt.
Interest income decreased 25 percent in fiscal 1993 as compared to fiscal
1992. This decrease was due to reductions in the outstanding balances and
yields on interest earning assets. The Company's practice is not to accrue
interest income on franchise notes receivable when collection becomes
uncertain.
Litigation settlement and costs decreased in fiscal 1993 compared to fiscal
1992. The fiscal 1992 expenses relate to the settlement of claims with
respect to a stockholder class action lawsuit against the Company and other
defendants.
Other income increased to $365,883 for fiscal 1993 from $13,635 for fiscal
1992. Other income during fiscal 1993 primarily related to equipment
rental income generated by the equipment segment, and gains realized from
the sales of miscellaneous property and equipment.
Income taxes as a percentage of pre-tax income increased to 34.3 percent in
fiscal 1993 from 30.4 percent in fiscal 1992. The lower tax rate in fiscal
1992 resulted from the cumulative effect ($301,000) of adopting FASB
Statement No. 109. The Company's income tax asset resulted primarily from
temporary differences in the recognition of bad debt expense. T he Company
realizes the actual tax benefit of the items upon write-off of the related
receivables. The Revenue Reconciliation Act of 1993 did not have a
significant impact on the Company's effective tax rate.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically generated cash from operations sufficient to
meet its normal operating requirements. Cash provided by operating
activities amounted to $4.5 million in fiscal 1994 compared to $12.4
million in fiscal 1993 and $16.1 million in fiscal 1992. This decrease in
fiscal 1994 resulted primarily from increases in distribution allowances
and trade accounts receivable to expand distribution into the retail
grocery trade. The use of funds for distribution allowances in fiscal 1994
was partially offset by a current year income tax benefit of $3.8 million
recognized in the fourth quarter due to
<PAGE>
the tax treatment of these items for federal income tax purposes. Deferred
tax payments for these items will occur in future years. The decrease in
fiscal 1993 is due to the Company's development of non-traditional
locations and increases in international accounts receivable.
On November 30, 1994, working capital was $46.5 million compared to $44.4
million on November 30, 1993. The current ratio was 4.7 to 1 on November
30, 1994, and 6.0 to 1 on November 30, 1993.
Cash and cash equivalents decreased from $10.2 million as of November 30,
1993 to $4.9 million as of November 30, 1994, while short-term investments
increased from $14.8 million as of November 30, 1993 to $15.2 million as of
November 30, 1994. The net decrease of cash and cash equivalents and
short- term investments in fiscal 1994 is due primarily to the increase in
accounts receivable and distribution allowances related to the expansion
into the retail grocery trade as discussed above, which was partially
offset by $7.5 million in loan proceeds to finance the expansion of the
Company's frozen yogurt manufacturing facility in Dallas, Texas. The $7.5
million was borrowed in November 1994 under an unsecured note payable to a
bank. This note matures in equal monthly installments over a seven year
period and bears interest at a match-funding rate of the adjusted
Eurodollar rate plus 1.0% (7.75% at November 30, 1994) or at the bank's
base rate less 0.75%.
Long-term debt proceeds exceeded long-term debt repayments by $5.4 million
in fiscal 1994. Long-term debt repayments exceeded long-term debt proceeds
by $3.8 million and $2.7 million in fiscal 1993 and 1992, respectively.
Cash generated from operations has been used to finance all capital
expenditures, with the exception of the plant expansion. Purchases of
property, plant, and equipment amounted to $11.4 million, $6.0 million, and
$7.1 million in fiscal 1994, 1993, and 1992, respectively. Commitments for
capital expenditures related to the expansion of the manufacturing facility
in Dallas, Texas, totaled approximately $6.5 million at November 30, 1994.
The Company has budgeted approximately $4.5 million for capital
expenditures in fiscal 1995 in addition to the commitment noted above.
Except for the plant expansion project, it is expected that operating cash
flows will be used to finance these capital expenditures, although certain
equipment may be acquired through capital leases. In addition, from time
to time, the Company may evaluate and make acquisitions. Any acquisition
may require the use of operating cash flows, long-term or short-term
financing, or issuance of equity or other financing services in order to
consummate such acquisition or to fund operating and capital expenditures
of any acquired business.
<PAGE>
Cash provided by operating activities has also been used by the Company to
provide financing to franchisees for the purpose of acquiring equipment and
other fixed assets for the development or purchase of "TCBY" stores. The
principal collected on notes receivable primarily from franchisees exceeded
origination of notes receivable by $848,000, $965,000, and $3.8 million in
fiscal 1994, 1993, and 1992, respectively.
The Company's foreseeable cash needs for operations and capital
expenditures will continue to be met through cash flows from operations and
borrowings from credit facilities which the Company believes are available.
Cash dividends of 20 cents per share were paid to stockholders during
fiscal 1994, 1993, and 1992. The Company will consider adjustments to the
dividend rate after giving consideration to return to stockholders,
profitability expectations, financing and cash needs of the Company, and
other factors.
<PAGE>
Consolidated Financial Statements
TCBY Enterprises, Inc.
Years ended November 30, 1994, 1993, and
1992 with Report of Independent Auditors
<PAGE>
TCBY Enterprises, Inc.
Consolidated Financial Statements
Years ended November 30, 1994, 1993, and 1992
<TABLE>
<CAPTION>
Contents
<S> <C>
Report of Independent Auditors...............................................1
Audited Consolidated Financial Statements
Consolidated Balance Sheets..................................................2
Consolidated Statements of Income............................................4
Consolidated Statements of Stockholders' Equity..............................5
Consolidated Statements of Cash Flows........................................6
Notes to Consolidated Financial Statements...................................7
</TABLE>
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
The Board of Directors and Stockholders
TCBY Enterprises, Inc.
We have audited the accompanying consolidated balance sheets of TCBY
Enterprises, Inc. and subsidiaries as of November 30, 1994 and 1993, and
the related consolidat ed statements of income, stockholders' equity, and
cash flows for each of the three years in the period ended November 30,
1994. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of TCBY
Enterprises, Inc. and subsidiaries at November 30, 1994 and 1993, and the
consolidated results of their operations and their cash flows for each of
the three years in the period ended November 30, 1994, in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
__________________________
Ernst & Young LLP
January 9, 1995
Little Rock, Arkansas
1
<PAGE>
TCBY Enterprises, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
November 30
1994 1993
__________________________
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 4,938,118 $ 10,167,074
Short-term investments 15,213,179 14,826,289
Receivables:
Trade accounts 15,805,358 10,859,638
Notes 2,120,932 2,577,182
Allowance for doubtful accounts and notes (383,515) (650,547)
__________________________
17,542,775 12,786,273
Refundable income taxes 1,501,663 487,394
Deferred income taxes - 611,914
Inventories 13,621,790 11,476,837
Distribution allowances 4,098,965 304,324
Prepaid expenses and other assets 2,051,808 2,539,461
__________________________
Total current assets 58,968,298 53,199,566
Property, plant, and equipment:
Land 4,225,248 3,879,175
Buildings 23,583,374 22,519,574
Furniture, vehicles, and equipment 55,172,254 49,932,263
Leasehold improvements 10,986,674 11,020,257
Construction in progress 3,089,350 743,493
Allowances for depreciation and amortization (40,213,323) (34,179,906)
__________________________
56,843,577 53,914,856
Other assets:
Notes receivable, less current portion (less
allowance for doubtful notes of $894,869 in
1994 and $1,517,943 in 1993) 8,358,703 10,146,885
Intangibles (less amortization of $3,317,663 in 1994
and $2,705,816 in 1993) 5,795,445 6,122,354
Distribution allowances, less current portion 7,105,649 617,871
Other 5,208,415 4,689,604
__________________________
26,468,212 21,576,714
__________________________
Total assets $142,280,087 $128,691,136
==========================
</TABLE>
See accompanying notes. 2
<PAGE>
<TABLE>
<CAPTION>
November 30
1994 1993
_________________________
<S> <C> <C>
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 2,890,869 $ 1,199,737
Accrued expenses 5,742,510 5,541,904
Deferred income taxes 751,859 -
Current portion of long-term debt 3,072,756 2,092,761
__________________________
Total current liabilities 12,457,994 8,834,402
Long-term debt, less current portion 15,909,857 11,486,736
Deferred income taxes 5,638,287 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 26,911,333 shares in 1994
and 26,804,385 shares in 1993 2,691,133 2,680,439
Additional paid-in capital 24,840,431 24,255,981
Retained earnings 90,153,584 87,705,993
__________________________
117,685,148 114,642,413
Less treasury stock, at cost (1,317,069 shares) (9,411,199) (9,411,199)
__________________________
Total stockholders' equity 108,273,949 105,231,214
__________________________
Total liabilities and stockholders' equity $142,280,087 $128,691,136
==========================
</TABLE>
See accompanying notes.
3
<PAGE>
TCBY Enterprises, Inc.
Consolidated Statements of Income
<TABLE>
<CAPTION>
Year ended November 30
1994 1993 1992
_______________________________________
<S> <C> <C> <C>
Sales $140,444,739 $109,525,036 $107,633,301
Cost of sales 82,546,965 58,309,928 55,308,367
_______________________________________
Gross profit 57,897,774 51,215,108 52,324,934
Franchising revenues:
Initial franchise and license fees 1,342,311 1,079,000 618,700
Royalty income 10,684,055 9,873,042 10,444,128
_______________________________________
Total franchising revenues 12,026,366 10,952,042 11,062,828
_______________________________________
69,924,140 62,167,150 63,387,762
Selling, general, and administrative
expenses 58,839,572 52,901,925 55,002,207
_______________________________________
11,084,568 9,265,225 8,385,555
Other income (expense):
Interest expense (618,121) (810,216) (1,155,004)
Interest income 1,070,029 1,311,958 1,751,266
Litigation settlement and costs (349,000) (385,419) (1,708,860)
Other income 131,668 365,883 13,635
_______________________________________
234,576 482,206 (1,098,963)
_______________________________________
Income before income taxes 11,319,144 9,747,431 7,286,592
Income tax expense (benefit):
Current (96,144) 3,122,246 2,917,838
Deferred 3,863,276 216,374 (704,170)
_______________________________________
3,767,132 3,338,620 2,213,668
_______________________________________
Net income $ 7,552,012 $ 6,408,811 $ 5,072,924
=======================================
Net income per share $.30 $.25 $.20
=======================================
Average shares outstanding 25,523,436 25,605,753 25,788,100
=======================================
</TABLE>
See accompanying notes.
4
<PAGE>
TCBY Enterprises, Inc.
Consolidated Statements of
Stockholders' Equity
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Retained Treasury
Shares Par Value Capital Earnings Stock Total
________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Balance at December 1,
1991 26,777,934 $2,677,793 $24,143,443 $86,509,234 $(6,967,738) $106,362,732
Exercise of stock
options 3,165 317 11,806 - - 12,123
Cash dividends--$.20 per
share - - - (5,169,292) - (5,169,292)
Purchase of treasury stock--330,300
shares - - - - (1,470,862) (1,470,862)
Net income - - - 5,072,924 - 5,072,924
_______________________________________________________________________
Balance at November 30,
1992 26,781,099 2,678,110 24,155,249 86,412,866 (8,438,600) 104,807,625
Exercise of stock
options 23,286 2,329 107,874 - - 110,203
Cash dividends--$.20 per
share - - - (5,115,684) - (5,115,684)
Purchase of treasury stock--172,838
shares - - - - (1,012,899) (1,012,899)
Sale of treasury stock--4,081
shares - - (7,142) - 40,300 33,158
Net income - - - 6,408,811 - 6,408,811
________________________________________________________________________
Balance at November 30,
1993 26,804,385 2,680,439 24,255,981 87,705,993 (9,411,199) 105,231,214
Exercise of stock options,
including tax benefit of
$47,575 106,948 10,694 584,450 - - 595,144
Cash dividends--$.20 per
share - - - (5,104,421) - (5,104,421)
Net income - - - 7,552,012 - 7,552,012
________________________________________________________________________
Balance at November 30,
1994 26,911,333 $2,691,133 $24,840,431 $90,153,584 $(9,411,199) $108,273,949
========================================================================
</TABLE>
See accompanying notes.
5
<PAGE>
TCBY Enterprises, Inc.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended November 30
1994 1993 1992
_______________________________________
<S> <C> <C> <C>
Operating activities
Net income $ 7,552,012 $ 6,408,811 $ 5,072,924
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 8,862,307 7,691,565 7,394,149
Amortization of intangibles 611,847 554,761 390,614
Provision for doubtful accounts and notes 1,469,630 1,079,630 2,317,512
Deferred income taxes 3,863,276 216,374 (704,170)
Loss (gain) on sales of property and
equipment 266,128 (90,140) 769,966
Changes in operating assets and liabilities:
Receivables (4,945,720) (1,859,088) (686,429)
Inventories (2,144,953) 618,941 (702,699)
Prepaid expenses 487,653 (1,178,751) 1,748,648
Distribution allowances (11,640,511) (922,195) -
Intangibles and other assets (803,749) 370,779 (1,610,073)
Accounts payable and accrued expenses 1,891,738 64,181 1,262,664
Income taxes (1,014,269) (588,393) 807,320
_______________________________________
Net cash provided by operating activities 4,455,389 12,366,475 16,060,426
Investing activities
Purchases of property, plant, and
equipment (11,391,402) (6,021,878) (7,059,322)
Purchase of business, net of cash
acquired - (2,244,262) -
Proceeds from sales of property and
equipment 352,338 1,903,415 1,531,131
Origination of notes receivable (1,309,698) (2,036,213) (1,274,276)
Principal collected on notes receivable 2,157,468 3,001,231 5,066,170
Purchases of short-term investments (12,111,419) (25,874,278) (23,840,718)
Proceeds from maturity of short-term
investments 11,724,529 21,775,892 20,290,346
_______________________________________
Net cash used in investing activities (10,578,184) (9,496,093) (5,286,669)
Financing activities
Proceeds from long-term borrowings 7,500,000 14,622,357 -
Proceeds from sale of Common Stock 595,144 110,203 12,123
Dividends paid (5,104,421) (5,115,684) (5,169,292)
Net treasury stock transactions - (979,741) (1,470,862)
Principal payments of long-term debt (2,096,884) (18,395,731) (2,697,218)
_______________________________________
Net cash provided by (used in) financing
activities 893,839 (9,758,596) (9,325,249)
_______________________________________
Increase (decrease) in cash and cash
equivalents (5,228,956) (6,888,214) 1,448,508
Cash and cash equivalents at beginning
of year 10,167,074 17,055,288 15,606,780
_______________________________________
Cash and cash equivalents at end of year $ 4,938,118 $ 10,167,074 $ 17,055,288
=======================================
</TABLE>
See accompanying notes.
6
<PAGE>
TCBY Enterprises, Inc.
Notes to Consolidated Financial Statements
November 30, 1994
1. Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated in consolidation.
Description of Business
The Company manufactures and sells soft serve frozen yogurt, hardpack
frozen yogurt, and novelty food products through Company-owned and
franchised retail stores ("TCBY stores"), non-traditional locations (e.g.,
airports, schools, hospitals, and travel plazas), and the retail grocery
trade (e.g., grocery stores and wholesale clubs). In addition, the Company
markets refrigerated yogurt through the retail grocery trade and
manufacturers and sells equipment related to the food service industry.
The following summarizes TCBY locations:
<TABLE>
<CAPTION>
November 30
1994 1993 1992
____________________
<S> <C> <C> <C>
Franchised or licensed 1,386 1,364 1,401
Company-owned 96 121 147
Non-traditional 1,319 989 292
</TABLE>
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
Short-term Investments
Short-term investments consist of certificates of deposit and other income
producing nonequity securities with an original maturity of greater than
three months and less than one year. These investments are recorded at
cost which approximates market value and are intended to be held to
maturity.
7
<PAGE>
TCBY ENTERPRISES, Inc.
Notes to Consolidated Financial Statements (continued)
1. Accounting Policies (continued)
Inventories
Inventories are carried at the lower of cost or market. The cost of food
products is generally based on the latest invoice cost, while other
inventory cost is determined on a first-in, first-out basis.
Receivables
A majority of the Company's trade accounts receivable are due from
customers operating in the food products segment. In addition, the Company
extends credit in the form of notes receivable to franchisees. During 1994
and 1993, the Company extended credit of approximately $290,000 and
$873,000, respectively, to finance the sale of certain corporate stores.
Notes receivable are primarily collateralized by equipment located in TCBY
stores. Most of these notes receivable are intended to be paid over five
years and bear interest at market rates. Notes receivable are placed on a
nonaccrual basis when the collectibility of principal or interest becomes
uncertain.
In May 1993, Statement of Financial Accounting Standards No. 114,
"Accounting by Creditors for Impairment of a Loan," was issued and amended
in October 1994, by Statement of Financial Accounting Standards No. 118,
"Accounting by Creditors for Impairment of a Loan-Income Recognition and
Disclosures". The Company will be required to adopt the provisions of
these Statements in fiscal 1996 and does not expect the adoption to have a
material effect on its financial position or results of operations.
Property, Plant, and Equipment
Property, plant, and equipment is recorded at cost and is depreciated by
the straight-line method for financial reporting purposes over the
estimated useful lives of the individual assets. For tax reporting
purposes, accelerated cost recovery depreciation methods are used.
8
<PAGE>
TCBY Enterprises, Inc.
Notes to Consolidated Financial Statements (continued)
1. Accounting Policies (continued)
Intangibles
Intangibles include the cost in excess of net assets of businesses
acquired, trademarks, noncompete agreements, and franchise rights. These
intangibles are being amortized over the estimated future periods
benefited, ranging from 5 to 40 years. Goodwill of approximately $900,000
was recorded in 1993 in connection with the acquisition of an equipment
company.
The carrying value of intangibles is reviewed if the facts and
circumstances suggest that they may be impaired. If this review indicates
that intangibles have diminished in fair value based on the undiscounted
cash flows produced by the intangibles over the remaining amortization
period, the Company's carrying value would be reduced accordingly.
Distribution Allowances
Distribution allowances are paid to customers to obtain retail or wholesale
shelf space. These costs are capitalized and amortized on a straight-line
basis over a three-year period. If a customer is lost, the unamortized
allowances are written off.
Franchising Revenues
Franchising revenues consist of initial franchise and license fees and
royalty income. Initial franchise and license fees are recognized as
revenue when the Company has substantially completed its obligations under
the franchise or license agreement. Royalty income is earned on sales by
franchisees and is recognized as revenue when the related sales are made.
Income Taxes
The liability method is used in accounting for income taxes. Under this
method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will
be in effect when the differences are expected to reverse.
Net Income Per Share
Net income per share is based on the average number of common shares
outstanding during each year. The dilutive effect of stock options is
insignificant.
9
<PAGE>
TCBY Enterprises, Inc.
Notes to Consolidated Financial Statements (continued)
1. Accounting Policies (continued)
Reclassification
Certain amounts in the 1993 and 1992 consolidated financial statements have
been reclassified to conform to the 1994 presentation.
2. Inventories
Inventories consisted of the following:
<TABLE>
<CAPTION>
November 30
1994 1993
__________________________
<S> <C> <C>
Manufacturing materials and supplies $ 4,417,832 $ 3,775,732
Finished yogurt and other food products 4,162,242 3,281,552
Equipment and other products 5,041,716 4,419,553
__________________________
$ 13,621,790 $ 11,476,837
==========================
</TABLE>
3. Long-Term Debt
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
November 30
1994 1993
__________________________
<S> <C> <C>
Unsecured notes payable $ 18,979,110 $ 13,566,221
Capitalized lease obligations 3,503 13,276
__________________________
18,982,613 13,579,497
Less current portion 3,072,756 2,029,761
__________________________
$ 15,909,857 $ 11,486,736
==========================
</TABLE>
Effective June 11, 1993, the Company entered into a loan agreement with a
bank. The proceeds of the note issued under this loan agreement were used
to retire existing indebtedness. In November 1994, the loan agreement was
revised to allow the Company to borrow an additional $7.5 million. These
proceeds are
10
<PAGE>
TCBY Enterprises, Inc.
Notes to Consolidated Financial Statements (continued)
3. Long-Term Debt (continued)
being used to finance various projects designed to expand the Company's
food
products production capabilities. Commitments related to the plant
expansion were approximately $6.5 million at November 30, 1994. The notes
are unsecured and bear interest at the bank's base rate less 0.75% or at a
match-funding rate of the adjusted Eurodollar rate plus 1.0%. The interest
rate at November 30, 1994 was 6.0625% for the original note and 7.75% for
the additional borrowings. The notes are due in monthly installments of
approximately $265,000 plus interest. The original note matures on June 1,
2000 with the additional $7.5 million borrowing maturing December 31, 2001.
The loan agreement requires, among other things, a fixed charge coverage
ratio of greater than 1.0 to 1.0 be maintained. This ratio is defined as
the sum of net income and noncash charges divided by the sum of the current
portion of long term debt, cash dividends paid, and capital expenditures
incurred to maintain or replace existing property, plant, and equipment.
The Company believes it was in compliance with all covenants of the
unsecured debt agreement at November 30, 1994.
Annual maturities of long-term debt total $3,072,756, $3,158,540,
$3,158,540, $3,158,540, and $3,158,540 for fiscal 1995 through 1999,
respectively.
During fiscal 1994, 1993, and 1992, the Company paid interest of
approximately $631,000, $810,000, and $1,161,000, respectively.
4. Income Taxes
Effective December 1, 1991, the Company changed its method of accounting
for income taxes from the deferred method to the liability method. The
cumulative effect as of December 1, 1991 of this change in accounting
method increased net income by $301,308 or $.01 per share in fiscal 1992.
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 deferred tax liabilities and assets
are as follows:
<TABLE>
<CAPTION>
November 30
1994 1993
__________________________
<S> <C> <C>
Deferred tax liabilities:
Distribution allowances $ 3,865,592 $ 304,853
Tax over book depreciation 2,398,335 2,479,743
Other 2,293,399 2,352,483
__________________________
Total deferred tax liabilities 8,557,326 5,137,079
Deferred tax assets:
Allowance for doubtful accounts 339,800 762,433
Accrued rent 270,748 348,426
Other 1,556,632 1,499,350
__________________________
Total deferred tax assets 2,167,180 2,610,209
__________________________
Net deferred tax liabilities $ 6,390,146 $ 2,526,870
==========================
</TABLE>
11
<PAGE>
TCBY Enterprises, Inc.
Notes to Consolidated Financial Statements (continued)
4. Income Taxes (continued)
Significant components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
Year ended November 30
1994 1993 1992
_______________________________________
<S> <C> <C> <C>
Current:
Federal $ (81,245) $ 3,081,333 $ 2,880,306
State (14,899) 40,913 37,532
_______________________________________
Total current (96,144) 3,122,246 2,917,838
Deferred 3,863,276 216,374 (704,170)
_______________________________________
$ 3,767,132 $ 3,338,620 $ 2,213,668
=======================================
</TABLE>
The reconciliation of income taxes computed at the United States federal
statutory tax rates to income tax expense is:
<TABLE>
<CAPTION>
Year ended November 30
1994 1993 1992
_______________________________________
<S> <C> <C> <C>
Income tax at the statutory federal rate $ 3,861,700 $ 3,314,127 $ 2,477,441
State income taxes, net of federal benefit (9,833) 27,003 24,771
Cumulative effect of adjustments to
deferred tax liabilities due to change
in accounting method - - (301,308)
Other, net (84,735) (2,510) 12,764
_______________________________________
Total income taxes $ 3,767,132 $ 3,338,620 $ 2,213,668
=======================================
</TABLE>
The Company made income tax payments of approximately $871,000, $3,711,000,
and $2,111,000 in fiscal 1994, 1993, and 1992, respectively.
12
<PAGE>
TCBY Enterprises, Inc.
Notes to Consolidated Financial Statements (continued)
5. Accrued Expenses
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
November 30
1994 1993
__________________________
<S> <C> <C>
Rent $ 799,979 $ 1,031,718
Compensation 2,411,903 1,714,336
Other 2,530,628 2,795,850
__________________________
Total accrued expenses $ 5,742,510 $ 5,541,904
==========================
</TABLE>
6. Lease Commitments
In fiscal 1994, 1993, and 1992, rent expense totaled approximately
$5,083,000, $4,951,000, and $6,106,000, respectively. The future minimum
rental commitments as of November 30, 1994, for all noncancelable operating
leases with initial or remaining terms in excess of one year are as
follows:
<TABLE>
<CAPTION>
Offices and
Total Stores (1) Other (2)
_______________________________________
<S> <C> <C> <C>
1995 $ 3,677,836 $ 2,071,838 $ 1,605,998
1996 2,935,121 1,329,123 1,605,998
1997 2,545,896 939,898 1,605,998
1998 1,319,661 784,330 535,331
1999 487,567 487,567 -
Thereafter 1,456,494 1,456,494 -
_______________________________________
$12,422,575 $ 7,069,250 $ 5,353,325
=======================================
</TABLE>
(1) Certain of the leases are renewable for substantially the same rentals
or at increased rentals of up to approximately 20% for up to 20 additional
years.
(2) Includes a 10-year lease for the corporate headquarters. Rent expense
is being recognized ratably over the initial 10-year term. Renewal
options exist for four 5-year terms at increased rentals of up to approximately
16%.
Aggregate future minimum rentals to be received under noncancelable
subleases are approximately $418,000 at November 30, 1994.
13
<PAGE>
TCBY Enterprises, Inc.
Notes to Consolidated Financial Statements (continued)
7. Contingencies
A purported investor in a former franchisee has claimed approximately $26
million in trebled damages plus costs and prejudgement 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.
In May 1992, the Company entered into a settlement agreement with a group
of stockholders certified as a class i n relation to various lawsuits
brought against the Company and certain of its officers and directors that
alleged, among other things, violations of federal securities laws. Under
the agreement, the Company and its liability insurer, while denying any
wrongdoing, agreed to pay up to $2.8 million in full settlement of all
claims by the stockholder class against the Company and other defendants.
The Company recognized settlement expense of $1,708,860 related to these
claims during fiscal 1992.
8. Employee Benefit Plans
The Company's 1984, 1989, and 1992 Stock Option Plans, as amended, along
with the 1992 Nonemployee Director Stock Option Plan made available options
for the purchase of up to 3,869,960 shares of the Company's Common Stock to
certain officers and employees. The option prices are to be no less than
the fair market value of the Common Stock on the date of grant. The
options are exercisable in four equal installments, beginning one year
after the date of grant. Outstanding option prices range from $3.83 to
$15.62 per share and the options expire on various dates from September
1995 to September 2004.
14
<PAGE>
TCBY Enterprises, Inc.
Notes to Consolidated Financial Statements (continued)
8. Employee Benefit Plans (continued)
The following summarizes the option transactions under the plans for fiscal
1994 and 1993:
<TABLE>
<CAPTION>
Shares Under Option Aggregate Option Price
________________________________________________
1994 1993 1994 1993
________________________________________________
<S> <C> <C> <C> <C>
Outstanding at beginning of
year 1,154,153 1,008,376 $ 7,246,957 $ 6,883,662
Granted 755,750 334,200 5,267,136 1,587,450
Exercised (106,948) (23,286) (547,569) (110,203)
Terminated (159,057) (165,137) (1,036,588) (1,113,952)
________________________________________________
Outstanding at end of year 1,643,898 1,154,153 $10,929,936 $ 7,246,957
================================================
Reserved for future grant 822,318 1,419,011
======================
Exercisable at end of year 512,428 438,413
======================
</TABLE>
The Company maintains a pre-tax savings plan in accordance with the
provisions of Section 401(k) of the Internal Revenue Code (the "Plan").
Employees who have completed one year of service with the Company, are over
the age of 21, and fulfill the statutory minimum hours of service (1,000)
during the plan year are eligible to participate in the Plan. Under the
Plan, employees are eligible to contribute up to 10% of compensation to the
statutory limit, with the Company matching 50% of the first 5% of
compensation contributed by the employee. The Company's matching portion
of employee contributions resulted in expense of approximately $210,000 in
1994, $184,000 and 1993, and $136,000 in 1992.
9. Certain Transactions
In fiscal 1994, 1993, and 1992, the Company paid gross billings totaling
approximately $205,000, $191,000 and $186,000, respectively, to an
advertising, public relations and marketing firm whose chief executive
officer is a director of the Company.
In fiscal 1994 and 1993, the Company recorded sales totaling approximately
$447,000 and $329,000, respectively, to a food services distributor whose
chief executive officer is a director of the Company. No sales were made
to the distributor in fiscal 1992.
15
<PAGE>
TCBY Enterprises, Inc.
Notes to Consolidated Financial Statements (continued)
10. Operations by Industry Segment
Financial information for each of the Company's segments described in Note
1 is set forth below.
<TABLE>
<CAPTION>
Food
1994 Products Equipment Other Total
_____________________________________________________
<S> <C> <C> <C> <C>
Net sales and franchising
revenues $134,379,486 $ 17,198,176 $ 893,443 $152,471,105
Profit (loss) from
operations 18,695,987 154,897 (7,766,316) 11,084,568
Identifiable assets 96,219,172 18,953,812 27,107,103 142,280,087
Capital expenditures 9,452,681 1,538,922 399,799 11,391,402
Depreciation and
amortization 7,291,780 444,398 1,126,129 8,862,307
1993
Net sales and franchising
revenues $103,306,766 $ 16,128,588 $ 1,041,724 $120,477,078
Profit (loss) from
operations 16,770,719 469,052 (7,974,546) 9,265,225
Identifiable assets 80,544,294 15,140,042 32,006,800 128,691,136
Capital expenditures 4,995,399 640,046 386,433 6,021,878
Depreciation and
amortization 5,959,263 396,840 1,335,462 7,691,565
1992
Net sales and franchising
revenues $103,130,176 $ 14,370,590 $ 1,195,363 $118,696,129
Profit (loss) from
operations 15,500,180 521,680 (7,636,305) 8,385,555
Identifiable assets 81,404,177 14,388,233 36,132,732 131,925,142
Capital Expenditures 6,403,256 424,958 231,108 7,059,322
Depreciation and
amortization 5,641,836 276,025 1,476,288 7,394,149
</TABLE>
(a) Inter-segment sales and transfers are insignificant
(b) The Company's business segments are described and discussed in
Management's Discussion and Analysis of Financial Condition and
Results of Operations.
(c) The "Other" segment is composed of unallocated corporate expenditures
and other sundry operations.
16
<PAGE>
TCBY Enterprises, Inc.
Notes to Consolidated Financial Statements (continued)
10. Operations by Industry Segment (continued)
Substantially all frozen yogurt products are sold to TCBY stores
exclusively by Martin-Brower Company ("Martin-Brower"), an international
food service distributor. Sales by the Company's manufacturing subsidiary
to Martin-Brower totaled approximately $49.0 million, $49.7 million, and
$54.4 million in fiscal 1994, 1993, and 1992, respectively. Approximately
$3.9 million and $2.7 million were receivable from Martin-Brower as of
November 30, 1994 and 1993, respectively.
11. Quarterly Results of Operations (Unaudited)
Financial results by quarter for fiscal 1994 and 1993 are summarized below:
<TABLE>
<CAPTION>
Quarters
_____________________________________________________
First Second Third Fourth
_____________________________________________________
1994
___________________________
<S> <C> <C> <C> <C>
Sales $ 22,587,248 $ 39,599,802 $ 46,691,476 $31,566,213
Gross profit 9,250,983 16,051,424 19,585,803 13,009,564
Franchising revenues 1,671,335 3,742,458 3,983,204 2,629,369
Net income (loss) (621,367) 3,563,344 4,479,591 130,444
Net income (loss) per share $(.02) $.14 $.18 $.01
Average shares outstanding 25,489,439 25,495,360 25,518,767 25,589,561
1993
___________________________
Sales $ 20,987,494 $ 31,110,937 $ 33,824,848 $23,601,757
Gross profit 9,541,796 14,751,597 16,283,741 10,637,974
Franchising revenues 1,816,799 3,129,995 3,401,250 2,603,998
Net income (loss) (788,560) 2,737,153 4,002,404 457,814
Net income (loss) per share $(.03) $.11 $.16 $.02
Average shares outstanding 25,632,787 25,645,955 25,625,837 25,516,348
</TABLE>
<TABLE>
<CAPTION>
The subsidiaries of TCBY Enterprises, Inc. and their respective states of
incorporation are as follows:
<S> <C>
American Best Care, Inc. Arkansas
Americana Foods General Partner, Inc. Arkansas
Americana Foods Limited Partnership Texas
Carlin Manufacturing, Inc. Arkansas
FSL, Inc. Nevada
Riverport Equipment and
Distribution Company Arkansas
TCBY International, Inc. Arkansas
TCBY International Foreign Sales
Corporation Virgin Islands
TCBY of Georgia, Inc. Georgia
TCBY of Texas, Inc. Texas
TCBY Systems, Inc. Arkansas
TCBY of Aruba, Inc. Arkansas
TCBY of Mexico, Inc. Arkansas
TCBY of Saudi Arabia, Inc Arkansas
TCBY of Qatar, Inc. Arkansas
TCBY United Kingdom, Inc. Arkansas
TCBY of the Philippines, Inc. Arkansas
</TABLE>
Each of these subsidiaries does business under its respective corporate
name. All of the outstanding capital stock of each subsidiary is owned by
TCBY Enterprises, Inc. except Americana Foods Limited Partnership which is
99% owned by FSL, Inc. and 1% owned by Americana Foods General Partner,
Inc.; FSL, Inc. is wholly owned by Americana Foods General Partner, Inc.
TCBY of Texas, Inc. is also wholly owned by Americana Foods General
Partner, Inc.
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form
10-K) of TCBY Enterprises, Inc. of our report dated January 9, 1995,
included in the 1994 Annual Report to Shareholders of TCBY Enterprises,
Inc.
Our audits also included the financial statement schedule of TCBY
Enterprises, Inc. listed in Item 14(a). This schedule is the
responsibility of the Company's management. Our responsibility is to
express an opinion based on our audits. In our opinion, the financial
statement schedule referred to above, when considered in relation to the
basic financial statements taken as a whole, present fairly in all material
respects the information set forth therein.
We also consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-37484) pertaining to the 1989 Stock Option Plan
of TCBY Enterprises, Inc. of our report dated January 9, 1995, with respect
to the consolidated financial statements incorporated herein by reference,
and our report included in the preceding paragraph with respect to the
financial statement schedule included in this Annual Report (Form 10-K) of
TCBY Enterprises, Inc.
/s/ Ernst & Young LLP
_____________________
Ernst & Young LLP
Little Rock, Arkansas
February 22, 1995
POWER OF ATTORNEY
_________________
The undersigned, being a director of TCBY ENTERPRISES, INC., a
Delaware corporation (the "Corporation"), does hereby constitute and
appoint FRANK D. HICKINGBOTHAM, HERREN C. HICKINGBOTHAM and GALE LAW, with
full power to each of them to act alone, as the true and lawful attorneys
and agents of the undersigned, with full power of substitution and
resubstitution to each of said attorneys, to execute, file, electronically
transmit, or deliver any and all instruments and to do any and all acts and
things which said attorneys and agents, or any of them, deem advisable to
enable the Corporation to comply with the Securities Exchange Act of 1934,
as amended, and any requirements of the Securities and Exchange Commission
in respect thereto, relating to annual reports on Form 10-K, including
specifically, but without limitation of the general authority hereby
granted, the power and authority to sign such person's name in the name and
on behalf of the Corporation to annual reports on Form 10-K or any
amendments or filings supplemental thereto; and the undersigned does hereby
fully ratify and confirm all that said attorneys and agents, or any of
them, or the substitute of any of them, shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of
attorney on April 14, 1994.
/s/ Frank D. Hickingbotham
__________________________________
Frank D. Hickingbotham
/s/ Herren C. Hickingbotham
__________________________________
Herren C. Hickingbotham
/s/ Marvin D. Loyd
__________________________________
Marvin D. Loyd
/s/ Gale Law
__________________________________
Gale Law
<PAGE>
/s/ William H. Bowen
__________________________________
William H. Bowen
/s/ Don O'Neal Kirkpatrick
__________________________________
Don O'Neal Kirkpatrick
/s/ Daniel R. Grant
__________________________________
Daniel R. Grant
/s/ Hugh H. Pollard
__________________________________
Hugh H. Pollard
/s/ F. Todd Hickingbotham
__________________________________
F. Todd Hickingbotham
/s/ Jim H. Fink
__________________________________
Jim H. Fink
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF NOVEMBER 30, 1994 AND THE CONSOLIDATED
STATEMENT OF INCOME FOR THE YEAR ENDED NOVEMBER 30, 1994 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> NOV-30-1994
<CASH> 4,938,118
<SECURITIES> 15,213,179
<RECEIVABLES> 17,926,290
<ALLOWANCES> 383,515
<INVENTORY> 13,621,790
<CURRENT-ASSETS> 58,968,298
<PP&E> 97,056,900
<DEPRECIATION> 40,213,323
<TOTAL-ASSETS> 142,280,087
<CURRENT-LIABILITIES> 12,457,994
<BONDS> 15,909,857
<COMMON> 2,691,133
0
0
<OTHER-SE> 105,582,816
<TOTAL-LIABILITY-AND-EQUITY> 142,280,087
<SALES> 140,444,739
<TOTAL-REVENUES> 152,471,105
<CGS> 82,546,965
<TOTAL-COSTS> 82,546,965
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 618,121
<INCOME-PRETAX> 11,319,144
<INCOME-TAX> 3,767,132
<INCOME-CONTINUING> 7,552,012
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,552,012
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
</TABLE>
PRESS RELEASE
Exhibit 99 (a)
FOR IMMEDIATE RELEASE
TUESDAY
OCTOBER 18, 1994
CONTACT PERSON: STACY DUCKETT
DIRECTOR, CORPORATE COMMUNICATIONS
(501) 688-8229
TOP GREEN INTERNATIONAL INTRODUCES CHINA TO TCBY
LITTLE ROCK, AR - OCTOBER 18, 1994 - Top Green International, TCBY's master
franchisee in China, has opened its first frozen yogurt stores in Shanghai,
Hangshou, and Tienjin. To date the Tienjin location is selling
approximately 1,500 "TCBY" Yog-A-Bar Treats per day.
"We plan to make TCBY synonymous with frozen yogurt and ice cream for
China's masses," says Neil Friedman, Top Green's New York-based partner,
who along with Hong Kong partner Sterry Chong secured the China franchise
for the frozen-yogurt chain.
Top Green and TCBY have been a presence in China since early 1994 when, in
a joint venture with Huzhou Zhen Yuan Tong Food Stuff Manufacturer, they
opened a $3 million, state-of-the-art frozen yogurt and ice cream
manufacturing facility in the city of Huzhou, located in the Zhejang
province. The plant, which employs 450 people, produces a variety of
"TCBY" frozen yogurt, ice cream and novelty products and is expected to
produce approximately 97 million "TCBY" Yog-A-Bars per year.
The initial "TCBY" product line is being distributed throughout the
Shanghai region in "TCBY" stores, department stores, push carts and retail
food stores. According to Top Green, it plans to open an additional 40
locations by the end of the year, with its first Hong Kong location
expected to open in late 1994 or early 1995.
This venture into the frozen dessert industry is a first for Friedman and
Chong, who both share backgrounds in the textile industry. Top Green
signed a master f ranchise agreement for China in September 1993 with TCBY
International, a subsidiary of Little Rock, Arkansas-based TCBY
Enterprises, Inc., and has since invested about $8 million in expansion
efforts. Top Green is also the master franchisee for Hong Kong and Macao.
TCBY Enterprises, Inc., through subsidiary companies, manufactures and
sells soft serve frozen yogurt, hardpack frozen yogurt, novelty products,
and custom foodservice vehicles, and markets traditional style cup yogurt
and foodservice equipment. The Company is the largest franchisor,
licensor, and operator of frozen yogurt locations in the world.
<PAGE> PRESS RELEASE
Exhibit 99 (b)
FOR IMMEDIATE RELEASE
THURSDAY
NOVEMBER 3, 1994
CONTACT PERSON: STACY DUCKETT, DIRECTOR
CORPORATE COMMUNICATIONS
(501) 688-8229
TCBY CHOSEN FOR INCLUSION IN
STANDARD & POOR'S SMALLCAP STOCK PRICE INDEX
LITTLE ROCK, AR - November 3, 1994 - TCBY Enterprises, Inc., has been
chosen for inclusion in the S&P SmallCap 600, a new index designed by
Standard & Poor's to track the stock performance of small-capitalization
companies with market value ranging from $80 million to $600 million.
TCBY is one of 600 domestic companies included in the S&P SmallCap 66, with
a combined market capitalization of $181 billion as of September 30, 1994.
The median market capitalization of stocks in the Index is approximately
$267 million.
TCBY was chosen for inclusion by Standard & Poor's after a careful
evaluation of its size, liquidity and industry representation.
According to Standard & Poor's, inclusion in the S&P SmallCap 600 could
provide TCBY with increased visibility, wider coverage by securities
analysts and increased trading in its stock, as institutional investors
create investment portfolios which mirror the index.
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 locations in the world.
-30-
<PAGE>
PRESS RELEASE
Exhibit 99 (c)
FOR IMMEDIATE RELEASE
MONDAY
NOVEMBER 14, 1994
CONTACT PERSON: STACY DUCKETT, DIRECTOR
CORPORATE COMMUNICATIONS
(501) 688-8229
TCBY TO EXPAND TO HONG KONG AND MACAO
LITTLE ROCK, AR - November 14, 1994 - Top Green International, the master
franchisee for TCBY in China, has been awarded franchise development rights
for "TCBY" products in Hong Kong and Macao.
Three locations were recently opened in China by Top Green International.
The Hong Kong and Macao developments will consist of 6 stores over a 5-year
period.
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.
-30-
<PAGE>
PRESS RELEASE
Exhibit 99 (d)
FOR IMMEDIATE RELEASE
TUESDAY
DECEMBER 13, 1994
CONTACT PERSON: STACY DUCKETT
CORPORATE COMMUNICATIONS
501-688-8229
TCBY CONTINUES FAR EAST EXPANSION
LITTLE ROCK, AR - December 13, 1994 - TCBY ENTERPRISES, INC. (NYSE:TBY) -
Top Green International, the master franchisee for "TCBY" frozen yogurt in
China, has been awarded franchise development rights for "TCBY" products in
Hong Kong and Macao by TCBY International.
According to Neil Friedman, Top Green's New York partner, the first "TCBY"
store will be opened in Hong Kong in April 1995. The 1,000+ square foot
store will be located in Causeway Bay with a seating capacity of 40 people.
"Top Green has established a training facility, Yogurt U, in Hong Kong with
the idea of preparing up to 20 franchisees in the area," Friedman said.
In the Far East, Top Green has opened its third location in China. In
addition, TCBY has 107 stores open in Japan, Thailand and Korea.
TCBY Enterprises, Inc., through subsidiary companies, manufactures and
sells soft serve frozen yogurt, hardpack frozen yogurt, novelty products,
and 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.
-30-
<PAGE>
PRESS RELEASE
Exhibit 99 (e)
FOR IMMEDIATE RELEASE
FRIDAY
DECEMBER 30, 1994
CONTACT PERSON: STACY DUCKETT
CORPORATE COMMUNICATIONS
501-688-8229
TCBY ENTERPRISES, INC. ANNOUNCES
PROMOTION OF JIM FINK TO EXECUTIVE VICE PRESIDENT
LITTLE ROCK, AR - December 30, 1994 - TCBY ENTERPRISES, INC. (NYSE:TBY) has
announced that Jim Fink has been promoted to Executive Vice President of
the Company.
Mr. Fink joined the Company in 1987 as Vice President of Accounting. He
received his undergraduate degree in Business Administration from Rhodes
College in Memphis in 1979. He was with Ernst & Young before coming to
TCBY. Mr. Fink holds a CPA certification.
-30-
<PAGE>
PRESS RELEASE
Exhibit 99 (f)
FOR IMMEDIATE RELEASE
FRIDAY
DECEMBER 30, 1994
CONTACT PERSON: STACY DUCKETT
CORPORATE COMMUNICATIONS
501-688-8229
TERRY ELLIOTT PROMOTED TO EXECUTIVE VICE PRESIDENT
OF TCBY ENTERPRISES
LITTLE ROCK, AR - December 30, 1994 - TCBY Enterprises, Inc. (NYSE:TBY) has
announced that Terry Elliott has been promoted to Executive Vice President
of TCBY Enterprises, Inc.
Mr. Elliott joined the Company in September of this year. He previously
served as Senior Partner and Office Managing Partner with Ernst & Young's
Little Rock Office.
-30-
<PAGE>
PRESS RELEASE
Exhibit 99 (g)
FOR IMMEDIATE RELEASE
FRIDAY
DECEMBER 30, 1994
CONTACT PERSON: STACY DUCKETT
CORPORATE COMMUNICATIONS
501-688-8229
TCBY ENTERPRISES, INC. ANNOUNCES PROMOTION OF
GENE WHISENHUNT TO SENIOR VICE PRESIDENT AND
CHIEF ACCOUNTING OFFICER
LITTLE ROCK, AR - December 30, 1994 - TCBY ENTERPRISES, INC. (NYSE:TBY) has
announced that Gene Whisenhunt has been promoted to Senior Vice President
and Chief Accounting Officer of TCBY Enterprises, Inc. He will be
responsible for the accounting functions of the Company.
Mr. Whisenhunt has been with the Company since 1989. He obtained his
undergraduate degree in Accounting from Ouachita Baptist University, and a
Master's Degree in Business Administration from Louisiana Tech University.
He holds a CPA certification.
-30-
<PAGE>
PRESS RELEASE
Exhibit 99 (h)
FOR IMMEDIATE RELEASE
FRIDAY
DECEMBER 30, 1994
CONTACT PERSON: STACY DUCKETT
CORPORATE COMMUNICATIONS
501-688-8229
TCBY ENTERPRISES, INC. ANNOUNCES PROMOTION OF
JOHN ROGERS TO SENIOR VICE PRESIDENT,
CHIEF INFORMATION OFFICER AND ASSISTANT TREASURER
LITTLE ROCK, AR - December 30, 1994 - TCBY ENTERPRISES, INC. (NYSE:TBY) has
announced that John Rogers has been promoted to Senior Vice President,
Chief Information Officer and Assistant Treasurer for the Company. Mr.
Rogers' primary responsibilities will involve Management Information
Systems and budgeting.
Mr. Rogers has been with Company since 1986. He received his undergraduate
degree in Accounting and Data Processing from the University of Southern
Mississippi. He holds a CPA certification.
-30-
<PAGE>
PRESS RELEASE
Exhibit 99 (i)
FOR IMMEDIATE RELEASE
WEDNESDAY
JANUARY 11, 1995
CONTACT PERSON: STACY DUCKETT
CORPORATE COMMUNICATIONS
501-688-8229
TCBY REPORTS RECORD TOTAL SALES AND FRANCHISING REVENUES
FOR 1994
TCBY Enterprises, Inc., (NYSE:TBY) today announced record total sales and
franchising revenues for the year ended November 30, 1994. Total sales and
franchising revenues increased 27 percent to $152,471,000 in fiscal 1994
from $120,477,000 in the prior year. Net income was $7,552,000, or $.30
per share in fiscal 1994, up from $6,409,000, or $.25 per share, for fiscal
1993, an increase of 20 percent in earnings per share.
Same store sales for Company-owned and franchised stores combined increased
3.6 percent in fiscal 1994, compared to a decrease of 1.7 percent in fiscal
1993. As of November 30, 1994, there were 2,801 locations, which included
1,245 domestic franchised or licensed stores, 141 international franchised
or licensed stores, 96 Company-owned stores, and 1,319 non-traditional
locations. This represents a net increase of 327 locations for the year.
Average store sales for fiscal 1994 increased to $212,000, up from $202,000
in fiscal 1993. Store sales comparisons do not include sales from
non-traditional locations such as airports, educational facilities and
hospitals.
Total sales and franchising revenues for the fourth quarter of fiscal 1994
were $34,196,000 as compared to $26,206,000 for the fourth quarter of
fiscal 1993. Net income for the fourth quarter of fiscal 1994 was
$130,000, or $.01 per share, compared to $458,000, or $.02 per share, in
the prior year. In the fourth quarter of fiscal 1994, same store sales for
Company-owned and franchised stores combined increased 3.4 percent, as
compared to a decrease of 1.6 percent in fiscal 1993. The substantial
increase in total sales and franchising revenues is primarily attributable
to yogurt sales to the retail grocery trade. This change in the sales mix
resulted in an increase in the cost of sales ratio and higher selling,
general and administrative expenses in the fourth quarter.
"TCBY" hardpack frozen yogurt and "TCBY" Traditional Style Yogurt products
are now in nationwide distribution to the retail grocery trade. Total
sales to the retail grocery trade represented 33 percent of the Company's
sales (excluding franchising revenues) in fiscal 1994, compared to 12
percent in fiscal 1993.
As of November 30, 1994 "TCBY" produ cts were licensed for sale and
distribution in 25 foreign countries. To support its international growth
and development, the Company now has licensed production of its frozen
yogurt products in manufacturing facilities in Canada, Japan, China, Korea and
Costa Rica.
<PAGE>
"TCBY Enterprises continues to grow. 1994 was a record year for total
sales and franchising revenues for the Company, and the 20 percent increase
in earnings per share is very encouraging. The improvements in both
average and same store sales are a significant accomplishment for the
system. During the year, the Company launched its first national
television campaign in several years, introduced many new products to
consumers and continued to expand the availability of "TCBY" products
through non-traditional and retail grocery outlets. As a result, "TCBY"
brand awareness has returned to record levels. We are pleased with the
results of 1994, and look forward to continuing this progress in 1995 and
beyond," said Frank D. Hickingbotham, Chairman of the Board and CEO.
TCBY Enterprises, Inc., through subsidiary companies, manufactures and
sells soft serve frozen yogurt, hardpack frozen yogurt, novelty products
and custom foodservice vehicles, and markets refrigerated 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
(In Thousands, Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
November 30 November 30
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Operating Results
Sales & Franchising Revenue $ 34,196 $ 26,206 $152,471 $120,477
Net Income $ 130 $ 458 $ 7,552 $ 6,409
Net Income Per Share $ .01 $ .02 $ .30 $ .25
Average Shares Outstanding 25,590 25,516 25,523 25,606
Dividends Paid Per Share $ .05 $ .05 $ .20 $ .20
</TABLE>
<TABLE>
<CAPTION>
November 30 November 30
1994 1993
<S> <C> <C>
Financial Position
Current Assets $ 58,968 $ 53,200
Current Liabilities $ 12,458 $ 8,834
Property, Plant & Equipment (Net) $ 56,844 $ 53,915
Total Assets $142,280 $128,691
Long-term Debt $ 15,910 $ 11,487
Stockholders' Equity $108,274 $105,231
</TABLE>
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<PAGE>
PRESS RELEASE
Exhibit 99 (j)
FOR IMMEDIATE RELEASE
MONDAY
JANUARY 23, 1995
CONTACT PERSON: STACY DUCKETT
CORPORATE COMMUNICATIONS
501-688-8229
TCBY TO ROLL OUT TREATS CONCEPT NATIONWIDE
LITTLE ROCK, AR - MONDAY, JANUARY 23, 1995 - TCBY ENTERPRISES, INC.,
(NYSE:TBY) today announced following a successful test program with
Company-owned and franchised stores, TCBY Systems, Inc. will roll out its
new "TCBY" Treats concept nationwide.
The new "TCBY" Treats stores will feature sixteen flavors of hand-dipped
frozen yogurt and premium ice cream products daily, in addition to Paradise
Ice shaved ice and its traditional soft serve frozen yogurt products. The
stores will also undergo an external and internal make-over, giving them a
fresh new look.
The test program was initiated in April 1994 in two franchised markets.
This limited test was then expanded into Dallas Company-owned stores in
June. The "TCBY" Treats stores in the Dallas market experienced an 8.3%
improvement in the same store sales during the test period. Based upon
positive results, the decision was made to roll the program out nationwide.
"The introduction of the "TCBY" Treats concept has helped bring in a
broader range of customers and has helped us increase traffic," said Gary
Albertazzie, franchisee in Morgantown, West Virginia.
"Response to the quality and wide variety of flavors in our "TCBY" Treats
stores has been terrific," Jim Sahene, President, TCBY Systems, Inc., said.
"We're finding that many families now buy their frozen yogurt and their
premium ice cream from us, instead of dividing these purchases with ice
cream shops."
Approximately twenty percent of the eleven hundred plus stores in the
system have already responded positively, Sahene added. Ninety-seven
Treats stores are already opened and another 161 stores are under
development. "And, we've just announced the national program," Sahene
said.
Terry Schmidt, franchisee from Omaha, Nebraska, reacted to test results at
his store by commenting, "I see the introduction of ice cream as an
important step in our becoming a full-fledged treat shop."
The new decor for packaging, dress and interior design is burgundy and the
traditional "TCBY" green. In addition to a sixteen-bin dipping cabinet,
brass lighting has been installed along with new menu boards and exterior
signage now featuring the "TCBY" Treats logo.
<PAGE>
Consumer feedback has been extremely favorable in the test areas, according
to Sahene. "Reception to the quality of the hand-dipped frozen yogurt and
premium ice cream has been especially positive."
According to franchisee James Wheatley of Harrisonburg, Virginia, "We are
seeing new customers come into the store. They really love our expanded
variety of products and flavors."
This rollout comes at a time when TCBY continues to have positive sales
increases. In 1994, TCBY Systems had a 3.6% same store sales increase.
"The "TCBY" Treats program is part of the strong momentum that the Company
has going into 1995," Sahene said.
The best-selling hand-dipped frozen yogurt flavors to date are Peanut
Butter Fudge, Mint Chocolate Chip and Cookies 'n Cream. The best-selling
hand-dipped ice cream flavors are Rainbow Cream, Cookies and Cream and
Pralines & Cream.
TCBY Enterprises, Inc., through subsidiary companies, manufactures and
sells soft serve frozen yogurt, hardpack frozen yogurt, novelty products
and custom foodservice vehicles, and markets refrigerated yogurt and
foodservice equipment. The Company is the largest franchisor, licensor and
operator of frozen yogurt stores in the world.
Gary Albertazzie (304) 598-8229
Terry Schmidt (402) 496-0170
James Wheatley (703) 434-6177
-30-
