UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
_X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1995
_______________
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to _______________
Commission file number 1-10046
_______
TCBY ENTERPRISES, INC.
________________________________________________________________
(Exact name or registrant as specified in its charter)
Delaware 71-0552115
________________________________________________________________
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
425 West Capitol Avenue Little Rock, Arkansas 72201
________________________________________________________________
(Address of principal executive offices) (Zip Code)
(501) 688-8229
________________________________________________________________
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of the Securities Exchange Act of 1934
during the preceding 12 months, (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
Yes _X_ No ___
On September 30, 1995 there were 25,675,276 shares of the registrant's
common stock outstanding.
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<TABLE>
TABLE OF CONTENTS
<CAPTION>
PART I. FINANCIAL INFORMATION Page
<S> <C> <C>
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets
August 31, 1995 and November 30, 1994 3
Consolidated Statements of Income
Quarter ended and nine months ended
August 31, 1995 and 1994 5
Consolidated Statements of Cash Flows
Nine months ended August 31, 1995 and 1994 6
Notes to Consolidated Financial Statements
August 31, 1995 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURES 18
</TABLE>
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PART 1
FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS (UNAUDITED)
TCBY ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
August 31, November 30,
1995 1994
________________________________
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 5,410,865 $ 4,938,118
Short-term investments 4,449,393 15,213,179
Receivables:
Trade accounts 16,329,904 15,805,358
Notes 3,003,888 2,120,932
Allowance for doubtful accounts
and notes (394,724) (383,515)
----------- -----------
18,939,068 17,542,775
Refundable income taxes - 1,501,663
Inventories 14,845,495 13,621,790
Distribution allowances 1,873,777 4,098,965
Prepaid expenses and other assets 3,277,296 2,051,808
_____________ _____________
TOTAL CURRENT ASSETS 48,795,894 58,968,298
PROPERTY, PLANT, AND EQUIPMENT:
Land 4,063,868 4,225,248
Buildings 24,611,035 23,583,374
Furniture, vehicles, and equipment 64,747,542 55,172,254
Leasehold improvements 11,237,262 10,986,674
Construction in progress - 3,089,350
Allowances for depreciation
and amortization (44,994,227) (40,213,323)
_____________ _____________
59,665,480 56,843,577
OTHER ASSETS:
Notes receivable, less current portion
(less allowance for doubtful notes of
$921,025 in 1995 and $894,869 in 1994) 16,198,292 8,358,703
Intangibles (less amortization of
$3,783,517 in 1995 and $3,317,663 in
1994) 5,577,491 5,795,445
Distribution allowances, less current
portion 1,384,115 7,105,649
Other 5,690,485 5,208,415
_____________ _____________
28,850,383 26,468,212
_____________ _____________
TOTAL ASSETS $137,311,757 $142,280,087
============= =============
</TABLE>
See notes to consolidated financial statements.
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TCBY ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
August 31, November 30,
1995 1994
________________________________
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 3,002,481 $ 2,890,869
Accrued expenses 4,361,000 5,742,510
Income taxes payable 525,544 -
Deferred income taxes payable 751,859 751,859
Current portion of long-term debt 3,158,539 3,072,756
_____________ _____________
TOTAL CURRENT LIABILITIES 11,799,423 12,457,994
LONG-TERM DEBT, less current portion 13,400,591 15,909,857
DEFERRED INCOME TAXES 5,638,287 5,638,287
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 -
1995 - 27,031,777; 1994 - 26,911,333 2,703,178 2,691,133
Additional paid-in capital 25,379,080 24,840,431
Retained earnings 88,127,085 90,153,584
_____________ _____________
116,209,343 117,685,148
Less treasury stock, at cost
(1,387,069 shares in 1995
and 1,317,069 in 1994) (9,735,887) (9,411,199)
_____________ _____________
TOTAL STOCKHOLDERS' EQUITY 106,473,456 108,273,949
_____________ _____________
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $137,311,757 $142,280,087
============= =============
</TABLE>
See notes to consolidated financial statements.
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TCBY ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
August 31, August 31,
1995 1994 1995 1994
________________________________________________________________ <S> <C>
<S> <C> <C> <C> <C>
Sales $35,176,849 $46,691,476 $ 90,771,037 $108,878,526
Cost of sales 20,640,143 27,105,672 52,666,985 63,990,315
____________ ____________ _____________ _____________
GROSS PROFIT 14,536,706 19,585,804 38,104,052 44,888,211
Franchising revenues:
Initial franchise and
license fees 611,610 284,128 1,226,510 1,017,828
Royalty income 3,450,351 3,699,076 7,971,798 8,379,169
____________ ____________ _____________ _____________
Total franchising
revenues 4,061,961 3,983,204 9,198,308 9,396,997
____________ ____________ _____________ _____________
18,598,667 23,569,008 47,302,360 54,285,208
Selling, general and
administrative expenses 15,187,678 16,825,023 46,915,170 43,160,108
____________ ____________ _____________ _____________
3,410,989 6,743,985 387,190 11,125,100
Other income (expense):
Interest expense (310,563) (173,287) (834,554) (482,411)
Interest income 194,188 208,137 697,572 726,049
Other income (expense) 46,740 41,643 2,511,974 (38,099)
____________ ____________ _____________ _____________
(69,635) 76,493 2,374,992 205,539
____________ ____________ _____________ _____________
INCOME BEFORE INCOME
TAXES 3,341,354 6,820,478 2,762,182 11,330,639
Income tax expense 1,152,770 2,340,886 952,954 3,909,070
____________ ____________ _____________ _____________
NET INCOME $ 2,188,584 $ 4,479,592 $ 1,809,228 $ 7,421,569
============ ============ ============= =============
Net income per share $ 0.09 $ 0.18 $ 0.07 $ 0.29
============ ============ ============= =============
Average shares
outstanding 25,585,110 25,518,767 25,579,007 25,501,297
============ ============ ============= =============
Cash dividends paid
per share $ 0.05 $ 0.05 $ 0.15 $ 0.15
============ ============ ============= =============
</TABLE>
See notes to consolidated financial statements.
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TCBY ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
August 31,
1995 1994
________________________________
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,809,228 $ 7,421,569
Adjustments to reconcile net income to
net cash provided by (used in) operating
activities:
Depreciation and amortization 8,452,357 6,308,485
Amortization of intangibles 465,854 468,848
Provision for doubtful accounts and notes 1,074,716 901,708
(Gain) loss on sales of property
and equipment (4,350) 315,465
Gain on sale of product line (2,370,046) -
Changes in operating assets and liabilities:
Receivables (2,931,692) (11,697,651)
Inventories (1,475,389) (2,299,108)
Prepaid expenses (1,225,488) (989,397)
Distribution allowances (639,055) (2,826,650)
Intangibles and other assets (861,867) (2,130,688)
Accounts payable and accrued expenses (2,461,423) 1,168,747
Income taxes 2,027,207 3,147,716
_____________ _____________
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 1,860,052 (210,956)
INVESTING ACTIVITIES
Purchases of property, plant, and equipment (9,190,366) (8,260,222)
Proceeds from sales of property and equipment 527,593 596,517
Origination of notes receivable (359,944) (1,297,530)
Principal collected on notes receivable 1,704,830 3,726,766
Purchases of short-term investments (3,123,436) (4,384,779)
Proceeds from maturity of short-term
investments 13,887,222 10,541,855
Proceeds from sale of product line 1,200,000 -
_____________ _____________
NET CASH PROVIDED BY INVESTING ACTIVITIES 4,645,899 922,607
FINANCING ACTIVITIES
Proceeds from sale of common stock 550,694 228,707
Dividends paid (3,835,727) (3,824,708)
Purchases of treasury stock (324,688) -
Principal payments of long-term debt (2,423,483) (1,572,879)
_____________ _____________
NET CASH USED IN FINANCING ACTIVITIES (6,033,204) (5,168,880)
_____________ _____________
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 472,747 (4,457,229)
Cash and cash equivalents at beginning
of period 4,938,118 10,167,074
_____________ _____________
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 5,410,865 $ 5,709,845
============= =============
</TABLE>
See notes to consolidated financial statements.
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TCBY ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
AUGUST 31, 1995
NOTE A -- FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three- and nine-month periods ended August 31, 1995 are not
necessarily indicative of the results that may be expected for the year
ended November 30, 1995. For further information, refer to the
consolidated financial statements and footnotes t hereto included in the
Company's annual report on Form 10-K for the year ended November 30, 1994.
NOTE B -- INVENTORIES
<TABLE>
<CAPTION>
August 31, November 30,
1995 1994
____________ ____________
<S> <C> <C>
Manufacturing materials and
supplies $ 5,590,097 $ 4,417,832
Finished yogurt and other
food products 4,771,082 4,162,242
Equipment and other products 4,484,316 5,041,716
____________ ____________
$14,845,495 $13,621,790
============ ============
</TABLE>
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NOTE C -- ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
August 31, November 30,
1995 1994
___________ ____________
<S> <C> <C>
Rent $ 623,410 $ 799,979
Compensation 1,822,085 2,411,903
Other 1,915,505 2,530,628
___________ ____________
Total accrued expenses $ 4,361,000 $ 5,742,510
=========== ===========
</TABLE>
NOTE D -- CONTINGENCIES
A purported investor in a former franchisee has claimed approximately $26
million in trebled damages plus costs and prejudgment interest from the
former franchisee for alleged fraudulent acts. The compensatory damages
requested are $8.7 million. The Company has also been named in this suit
as a defendant. 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 up on 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.
NOTE E -- DISPOSITION
In April 1995, the Company sold the rights for the exclusive manufacturing
and distribution of the "TCBY"(Registered) refrigerated yogurt product line
throughout the United States to Mid-America Dairymen, Inc., who co-packed
the products for the Company. The product line currently consists of low
fat and nonfat/no sugar added varieties of refrigerated yogurt, and
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the "TCBY"(Registered) Twosome product - refrigerated yogurt and topping,
side-by-side. TCBY sales of these products were approximately $23.0
million and $5.3 million for fiscal 1994 and the first quarter of fiscal
1995, respectively.
Under the terms of the 15 year agreement, Mid-America Dairymen plans to
expand the distribution of these products, as well as develop additional
refrigerated dairy items under the "TCBY"(Registered) brand. Mid-America
Dairymen currently manufactures and distributes over 2,000 products
nationwide. TCBY has continued to manufacture and distribute
"TCBY"(Registered) brand hardpack frozen yogurt products through the retail
grocery trade.
The sale of the product line resulted in net income of approximately $1.6
million, or $.06 per share, for TCBY in the second quarter of fiscal 1995.
Under the terms of the agreement, inventories and distribution allowances
related to the "TCBY"(Registered) refrigerated yogurt product line were
transferred to Mid-America Dairymen. The Company received cash proceeds of
$1.2 million upon closing and a note receivable of $10.6 million as
consideration in the transaction.
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ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company's total sales for the third quarter of fiscal 1995 decreased
24.7 percent from sales for the third quarter of fiscal 1994. Total sales
for the first nine months of fiscal 1995 decreased 16.6 percent from sales
for the first nine months of fiscal 1994.
The Company's operations are 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>
Quarter Ended August 31 Nine Months Ended August 31
1995 1994 1995 1994
Sales % Sales % Sales % Sales %
_______ ____ _______ ____ _______ ____ _______ ____
<S> <C> <C> <C> <C> <C> <C> <C> <
Food Products: c>
Yogurt sales to
ProSource
Distribution
Services and
other foodservice
distributors $17,868 51% $18,132 39% $41,734 46% $42,533 39%
Yogurt sales to the
retail grocery
trade 7,228 20% 16,191 35% 21,882 24% 34,570 32%
Retail sales by
Company-owned
stores 6,030 17% 6,950 15% 14,865 16% 17,223 16%
_______ ____ _______ ____ _______ ____ _______ ____
31,126 88% 41,273 89% 78,481 86% 94,326 87%
Equipment:
Sales by the
Company's equip-
ment distributor 2,919 8% 4,123 9% 8,439 9% 11,115 10%
Sales of manufac-
tured specialty
vehicles 897 3% 1,063 2% 3,113 4% 2,783 2%
_______ ____ _______ ____ _______ ____ _______ ____
3,816 11% 5,186 11% 11,552 13% 13,898 12%
Other 235 1% 232 0% 738 1% 655 1%
_______ ____ _______ ____ _______ ____ _______ ____
Total Sales $35,177 100% $46,691 100% $90,771 100% $108,879 100%
======= ==== ======= ==== ======= ==== ======= ====
</TABLE>
Sales from the Company's food products segment include (i) wholesale sales
of frozen yogurt products to ProSource Distribution Services (which
acquired a portion of the distribution business of The Martin-Brower
Company) and to other foodservice distributors, which distribute yogurt and
other products to TCBY stores and non-traditional locations and sales to
international master franchisees of frozen yogurt products and proprietary
ingredients for the manufacture of
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frozen yogurt products in the countries that produce locally, (ii) sales
of hardpack frozen 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. Third quarter sales in the food products
segment decreased from $41.3 million in fiscal 1994 to $31.1 million in
fiscal 1995. For the first nine months, sales in the food products segment
decreased from $94.3 million in fiscal 1994 to $78.5 million in fiscal
1995.
For the third quarter and first nine months of fiscal 1995, wholesale sales
of frozen yogurt to distributors decreased 1 percent and 2 percent,
respectively. This is attributed to a reduction in the number of domestic
traditional "TCBY"(Registered) stores (Company-owned and franchised stores)
in operation during fiscal 1995 compared to the same periods in fiscal
1994. In addition, sales to international master franchisees were down
slightly due to large purchases of proprietary ingredients for the initial
start-up of production of frozen yogurt in China during 1994. These
reductions were partially offset by increased purchases of frozen yogurt
products by non-traditional locations during fiscal 1995 compared to the
same periods in fiscal 1994.
The table below sets forth location activity for the third quarter and first
nine months of fiscal 1995 and 1994.
<TABLE>
<CAPTION>
NON-
FRANCHISED COMPANY INTERNATIONAL TRADITIONAL TOTAL
STORES STORES LOCATIONS LOCATIONS LOCATIONS
1995 1994 1995 1994 1995 1994 1995 1994 1995 1994
____________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
For the third quarter:
Locations open at
beginning of period 1,231 1,268 87 114 166 73 1,281 1,117 2,765 2,572
Opened 14 18 0 1 18 36 63 170 95 225
Closed (14) (22) (2) (15) 0 (2) (71) (26) (87) (65)
Net locations purchased
(sold) between fran-
chisees and Company 0 1 (0) (1) 0 0 0 0 0 0
____________________________________________________________________
Locations open at
August 31 1,231 1,265 85 99 184 107 1,273 1,261 2,773 2,732
====================================================================
</TABLE>
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<TABLE>
<CAPTION>
NON-
FRANCHISED COMPANY INTERNATIONAL TRADITIONAL TOTAL
STORES STORES LOCATIONS LOCATIONS LOCATIONS
1995 1994 1995 1994 1995 1994 1995 1994 1995 1994
____________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
For the first nine months:
Locations open at
beginning of period 1,245 1,298 96 121 141 66 1,319 989 2,801 2,474
Opened 31 31 0 1 43 43 181 389 255 464
Closed (46) (69) (10) (18) 0 (2) (227) (117) (283) (206)
Net locations purchased
(sold) between fran-
chisees and Company 1 5 (1) (5) 0 0 0 0 0 0
____________________________________________________________________
Locations open at
August 31 1,231 1,265 85 99 184 107 1,273 1,261 2,773 2,732
====================================================================
</TABLE>
Included in locations open are 119 and 122 "TCBY"(Registered) stores closed
for relocation or for the season at August 31, 1995 and August 31, 1994,
respectively. During the first nine months of 1995 the Company closed 227
non-traditional locations. These locations generally purchased low volumes
of yogurt from the Company. The Company expects that there may be
additional closings of low volume non-traditional accounts. In addition,
the Company's joint venture partners were not successful in retaining all
TCBY locations at the Dallas/Ft. Worth and Atlanta airports where the
foodservice contracts were up for bid, thus, closings in these airports
will occur in late 1995 and during 1996. The amount of the expected
decline in frozen yogurt sales in these airports is not known at this time
due to uncertain closing dates and relocation of existing units at these
sites, however, these airports have historically experienced higher yogurt
sales compared to other non-traditional locations.
Sales of yogurt to the retail grocery trade decreased 55 percent during the
third quarter and 37 percent during the first nine months of fiscal 1995
as compared to the same periods in fiscal 1994. These decreases are
primarily a result of the sale of the refrigerated yogurt product line. In
April 1995, the Company sold the rights for the exclusive manufacturing and
distribution of the "TCBY"(Registered) refrigerated yogurt products
throughout the United States to Mid-America Dairymen, Inc., who co-packed
these products for the Company. The sale resulted in net income of
approximately $1.6 million in the second quarter. The sale of this product
line will result in lower sales to the retail grocery trade for the
remainder of 1995 and the first quarter of 1996 as sales for fiscal 1994
were $23.0 million and $5.3 million the first quarter of 1995. The Company
has continued the distribution of hardpack frozen yogurt products in the
retail grocery trade primarily in existing markets.
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Sales by Company-owned stores declined 13 percent and 14 percent during the
third quarter and first nine months of fiscal 1995, respectively, as
compared to the same periods in fiscal 1994. These declines result from a
reduction in the number of Company-owned stores operated during the periods
and a decline in same store sales for Company-owned stores. At August 31,
1995, the Company operated 85 units. Subsequent to the end of the quarter,
16 company-owned stores, which had total sales of $3.4 million for the
first nine months of fiscal 1995, were either sold or transferred under
operating agreements to franchisee groups. The Company will continue to
evaluate opportunities to refranchise stores or close stores when
necessary.
Combined same store sales (the comparison of fiscal 1995 individual
traditional "TCBY"(Registered) store sales with sales by the same stores
operating during the same period of fiscal 1994) were flat in the third
quarter and first nine months of fiscal 1995. The restaurant industry
continues to be highly competitive. The Company is continuing its efforts
to improve same store sales through national television advertising
campaigns, menu extensions, local media advertising, store decor upgrades
and relocations. The efforts to improve same store sales include the
Company's new "TCBY"(Registered) Treats concept. The "TCBY"(Registered)
Treats concept features "TCBY"(Registered) soft serve frozen yogurt, but
adds "TCBY"(Registered) hand-dipped frozen yogurt, hand-dipped premium ice
cream, Paradise Ice(Trademark) shaved ice, frozen custard, and the
"TCBY"(Registered) bakery items. As of August 31, 1995, 358 stores had
converted and 125 were in the process of converting to the new concept.
Even with the successful implementation of these programs, same store sales
may decline and store closings may continue.
Sales in the equipment segment decreased 26 percent during the third
quarter of fiscal 1995 from $5.2 million in fiscal 1994 to $3.8 million in
fiscal 1995 and 17 percent for the first nine months in fiscal 1995 from
$13.9 million in fiscal 1994 to $11.6 million in fiscal 1995. The
decreases are primarily the result of fewer sales of equipment packages by
the Company's equipment distributor to domestic and international
franchisees. The decrease for the nine month period was offset slightly
due to increased sales by the Company's equipment manufacturer who
experienced increased orders for specialty vehicles during the first
quarter of fiscal 1995. During the third quarter of fiscal 1995, the
Company began exploring options for improving the operations of the
equipment segment, including the possible divestiture of its equipment
manufacturer.
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The ratio of cost of sales to sales was 58.7 percent for the third quarter
of fiscal 1995 as compared to 58.1 percent for the third quarter of fiscal
1994. The ratio of cost of sales to sales for the food products segment
and equipment segment in the third quarter of fiscal 1995 was 55.8 percent
and 85.7 percent, respectively, compared to 55.5 percent and 80.9 percent,
respectively, in the third quarter of fiscal 1994.
The increase in the overall cost of sales to sales ratio for the third
quarter is attributed to higher overhead cost per unit by the Company's
frozen yogurt products manufacturing facility in Dallas due to lower than
anticipated volumes. In addition, the Company's equipment manufacturer has
experienced increases in cost of sales during fiscal 1995 compared to
fiscal 1994. The increase in the cost of sales to sales ratio was
partially offset by a change in sales mix within the food products segment
from the prior year. Wholesale sales to the retail grocery trade and
private label customers, which have a higher cost of sales to sales ratio,
were a smaller percentage of total food products sales in fiscal 1995
compared to the prior year due primarily to the sale of the refrigerated
yogurt product line. Although milk prices (which represent a major
component of the Company's cost of sales) remained relatively constant
compared to the prior period, the Company has experienced increases in
other components of cost of sales, such as product packaging costs. As a
result of these increased product packaging costs, the Company instituted a
price increase of approximately one percent in the second quarter of fiscal
1995.
The ratio of cost of sales to sales was 58.0 percent for the first nine
months of fiscal 1995 as compared to 58.8 percent for the first nine months
of fiscal 1994. The ratio of cost of sales to sales for the food products
segment and equipment segment in the first nine months of fiscal 1995 was
55.1 percent and 81.5 percent, respectively, compared to 56.1 percent and
79.5 percent, respectively, in the first nine months of fiscal 1994. The
decrease in the overall cost of sales to sales ratio for the first nine
months of fiscal 1995 is attributed to a change in sales mix within the
food products segment from the prior year. Wholesale sales to the retail
grocery trade and private label customers, which have a higher cost of
sales to sales ratio, were a smaller percentage of total food products
sales in fiscal 1995 compared to the prior year due primarily to the sale
of the refrigerated product line. The decrease within the equipment
segment is due to lower margins realized by the Company's equipment
manufacturer.
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Franchising revenues consist of initial franchise and license fees and
royalty income. In the third quarter of fiscal 1995, initial franchise and
license fees increased 115 percent and royalty income decreased 7 percent
from fiscal 1994. In the first nine months of fiscal 1995, initial
franchise and license fees increased 21 percent and royalty income
decreased 5 percent from fiscal 1994. The increase in franchise and
license fees results primarily from increased initial international
franchise fees. The decrease in royalty income results from decreased
international royalties as a result of large purchases of proprietary
ingredients in fiscal 1994 related to the start-up of a production facility
in China and a decrease in domestic royalties as a result of the decrease
in domestic traditional "TCBY"(Registered) stores as previously noted
above.
Selling, general and administrative (SG&A) expenses decreased 10 percent in
the third quarter of fiscal 1995 compared to the third quarter of fiscal
1994. This decrease is due primarily to a decrease in selling costs, such
as consumer marketing expenses and trade allowances, associated with the
sale of yogurt products within the retail grocery trade and a reduction in
the number of corporate stores in operation during the period. The
decrease in selling costs are due to the sale of the "TCBY"(Registered)
refrigerated yogurt product line in April 1995. As a percentage of
combined sales and franchising revenues, SG&A expenses were 39 percent and
33 percent for the third quarter of fiscal 1995 and 1994, respectively.
The Company continues to invest significantly in selling and marketing
expenses associated with the sale of hardpack frozen yogurt products in the
retail grocery trade. These marketing expenses are a significant factor in
the decreased earnings in fiscal 1995 compared to fiscal 1994.
SG&A expenses increased 9 percent in the first nine months of fiscal 1995
compared to the first nine months of fiscal 1994. As a percentage of
combined sales and franchising revenues, SG&A expenses were 47 percent and
37 percent for the first nine months of fiscal 1995 and 1994, respectively.
The increase for the first nine months is primarily attributed to increased
selling costs associated with the sale of yogurt products (frozen and
refrigerated) within the retail grocery trade during the first nine months
of fiscal 1995 compared to the same period in fiscal 1994. As the retail
grocery trade continues to be very competitive, annual SG&A expenses as a
percentage of combined sales and franchising revenues may remain at the
current level.
Interest expense increased approximately $137,000 and $352,000 in the third
quarter and first nine months of fiscal 1995, respectively, compared to the
same periods of fiscal 1994. These increases are due to an additional $7.5
million borrowing in November 1994, related to the expansion of the
Company's
Sequential Page No. 15
<PAGE>
yogurt manufacturing facility, and a slight increase in the average
interest rate paid. The increase in interest expense is offset by
capitalized interest cost of $177,000 for the first nine months of fiscal
1995 in association with expansion of the Company's manufacturing facility.
Income taxes as a percentage of income before income taxes was 34.5 percent
in the third quarter and for the first nine months of fiscal 1995. This
compares to an effective rate of 33.3 percent for the fiscal year ended
November 30, 1994. The change in the effective tax rate is due to a higher
expected effective tax rate for fiscal 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically generated cash from operations sufficient to
meet its normal operating requirements. The Company's cash and short-term
investments decreased approximately $10.3 million in the first nine months
of fiscal 1995. This decrease resulted primarily from (i) lower earnings
for the first nine months of fiscal 1995 compared to the same period in
fiscal 1994, (ii) purchases of property, plant, and equipment primarily
related to the expansion of the Company's yogurt manufacturing facility,
and (iii) cash dividends paid. The Company's foreseeable cash needs for
operations and capital expenditures are expected to be met through cash
flows from operations; however, the Company has available a $5 million
unsecured credit line to meet seasonal cash needs.
On August 31, 1995, working capital was $37.0 million compared to $46.5
million on November 30, 1994. The current ratio was 4.1 to 1.0 on August
31, 1995 and 4.7 to 1.0 on November 30, 1994. The long-term debt to equity
ratio was .13 to 1.0 at August 31, 1995 and .15 to 1.0 at November 30,
1994.
On September 14, 1995, the Company's Board of Directors declared a five
cents per share dividend payable on October 13, 1995 to stockholders of
record on September 29, 1995. The Company will consider adjustments to the
dividend rate after giving consideration to return to stockholders,
profitability expectations and financing needs.
Sequential Page No. 16
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There were no changes from previously reported litigation.
ITEM 5: OTHER INFORMATION
The Company announced in June that it had engaged the investment banking
firm of Stephens Inc. to explore strategic alternatives for the Company
with the intent of maximizing shareholder value. This project remains in
process and no assurances can be given that this initiative will result in
any material corporate development.
<TABLE>
<CAPTION>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
<S> <C>
4(ii)(a) First Amendment to Second Amended and
Restated Loan Agreement and Amendment
to Loan Documents.
27 - Article 5, Financial Data Schedule for
the Third Quarter Fiscal 1995 10-Q.
99(a) - Press release, dated July 13, 1995,
"TCBY" Announces Signing of 30th
Country - Development Rights Awarded
for India."
99(b) - Press release, dated August 29, 1995,
"TCBY" International Licenses
Development in Brazil."
99(c) - Press release, dated September 21,
1995, "TCBY Reports Third Quarter
Results - Board Declares Dividend."
</TABLE>
b) The Company did not file any reports on Form 8-K
during the three months ended August 31, 1995.
Sequential Page No. 17
<PAGE>
SIGNATURES
__________
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TCBY ENTERPRISES, INC.
Date: 10/05/95 /s/ Frank D. Hickingbotham
__________________________
Frank D. Hickingbotham,
Chairman of the Board and
Chief Executive Officer
Date: 10/05/95 /s/ Gale Law
__________________________
Gale Law,
Senior Vice President,
Chief Financial Officer
Sequential Page No. 18
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AGREEMENT AND AMENDMENT TO LOAN DOCUMENTS
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AGREEMENT AND
AMENDMENT TO LOAN DOCUMENTS (the "Amendment") is made and entered into to
be effective as of the 7th day of April, 1995 by and among TCBY
ENTERPRISES, INC. (herein referred to with its successors and assigns as
the "Borrower"), AMERICANA FOODS LIMITED PARTNERSHIP (herein referred to
with its successors and assigns as the "Guarantor") and Bank One, Texas,
N.A., a national banking association (herein referred to with its
successors and assigns as the "Lender").
RECITALS:
A. Borrower and Lender executed that certain Second Amended and Restated
Loan Agreement, dated as of April 7, 1995 (the "Loan Agreement") pursuant
to which the Lender has made and may hereafter make loans to the Borrower,
as evidenced by that certain Term Note executed by Borrower and dated June
11, 1993, payable to the order of Lender in the original principal amount
of $14,609,776.64 ("Term Note #1"), that certain Term Note executed by
Borrower and dated November 28, 1994, payable to the order of Lender in the
original principal amount of $7,500,000.00 (Term Note #2") and by that
certain Re volving Credit Note dated April 7, 1995 executed by Borrower and
payable to the order of the Lender in the maximum principal amount of
$5,000,000.00 (the "Revolving Credit Note"). Except as otherwise expressly
provided herein, all capitalized terms used herein shall have the same
meanings assigned to such terms in the Loan Agreement.
B. The Borrower has asked the Lender to replace the profitability covenant
set forth in Section 5.8 of the Loan Agreement and to increase the Fixed
Charge Coverage ratio from 1.0 to 1.0 to 1.5 to 1.0. The Lender is willing
to agree to the Borrower's requests upon the terms and conditions outlined
herein and subject to the Borrower's and the Guarantor's agreements with
the terms and provisions hereof and of each and every other instrument and
agreement executed in connection herewith.
AGREEMENTS
In consideration of the premises, which are made a part hereof, and the
mutual covenants and agreements contained herein and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby amend the Loan Agreement and Loan
Documents as follows:
SECTION I
AMENDMENTS TO THE LOAN AGREEMENT
The Loan Agreement is hereby amended in the following respects:
<PAGE>
1.1 Amendment to Section 5.8. The Loan Agreement shall be and is hereby
amended to delete Section 5.8 in its entirety and to substitute the
following Section 5.8 in lieu thereof:
"5.8. Profitability Covenant. On a consolidated basis with the
Subsidiaries, Borrower will at all times maintain Net Income greater than
$0.00."
1.2 Amendment to Section 5.9. The Loan Agreement shall be and is hereby
amended to increase the required Fixed Charge Coverage ratio from "1.0 to
1.0" to "1.5 to 1.0."
SECTION II
AMENDMENT TO LOAN DOCUMENTS
2.1 Reference to the Loan Agreement. Each of the Loan Documents is hereby
amended so that any reference in any Loan Document to the Loan Agreement or
to any other Loan Document shall mean a reference to the Loan Agreement or
such other Loan Document as amended hereby.
SECTION III
MISCELLANEOUS
3.1 Authority. The Borrower and Guarantor hereby represent and warrant
that the execution, delivery and performance of this Amendment, all
instruments, agreements and other documents executed in connection herewith
and all other instruments, agreements and documents executed in connection
with the Loan Agreement have been duly authorized by all necessary action
of each of the Borrower and Guarantor and do not and will not: (a) violate
any provisions or any agreement, law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award presently in effect to
which Borrower or Guarantor is a party or to which it or any of its assets
may be subject; (b) result in, or require the creation or imposition of any
Lien (other than a Permitted Lien) upon or with respect to any asset now
owned by Borrower or Guarantor or any collateral; or (c) result in a breach
of or constitute a default by Borrower or Guarantor (and neither the
Borrower nor the Guarantor is in default) under any indenture, loan or
credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its assets are bound or affected. Borrower
and Guarantor further warrant and represent that no approval,
authorization, order, license, permit, franchise or consent of or
registration, declaration, qualification or filing with any governmental
authority is required in connection with the execution, delivery or
performance by Borrower or Guarantor of this Amendment or any other Loan
Document. Such instruments and agreements constitute the legal, valid and
binding
obligations of the Borrower and Guarantor, enforceable against Borrower and
Guarantor in accordance with their respective terms, subject only to the
applicable debtor relief laws.
3.2 Ratification. Borrower and Guarantor hereby ratify and confirm the
Loan Agreement and Loan Documents, as amended hereby, in all respects, and
acknowledge and agree that all of the terms, provisions and covenants
thereof, as amended hereby
<PAGE>
do and shall remain and continue in full force and effect, enforceable
against the Borrower and Guarantor and their assets in accordance with
their terms.
3.3 Further Assurances. The Borrower and Guarantor covenant and agree
from time to time to promptly execute, assign, endorse, and deliver to
Lender all documents, instruments, notices, agreements, assignments,
pledges, statements, and writings, and to do all other acts and things as
the Lender may reasonably request in order to more fully evidence and/or to
carry out more fully the intent and purpose of the Loan Agreement and other
Loan Documents.
3.4 Multiple Counterparts. Multiple counterparts of this Amendment may be
signed by the parties, each of which shall be an original but all of which
together shall constitute one and the same instrument.
3.5 Representations and Warranties. The Borrower and Guarantor hereby
represent and warrant that all representations and warranties contained in
the Loan Agreement and other Loan Documents are and continue to be true and
correct in all material respects, as if made on the date hereof, and
nothing is omitted therefrom that would cause the same to be misleading in
any material respect.
3.6 Applicable Laws. THIS AMENDMENT SHALL BE CONSTRUED, INTERPRETED AND
ENFORCEABLE UNDER AND PURSUANT TO THE LAWS OF THE STATE OF TEXAS AND
APPLICABLE LAWS OF THE UNITED STATES.
3.7 No Oral Agreements. THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
IN WITNESS WHEREOF, the Borrowers and the Lender have caused this Amendment
to be executed effective as of the date specified above.
BORROWER:
TCBY ENTERPRISES, INC.
By: /s/ Gale Law
Printed Name: Gale Law
Title: Senior Vice President,
CFO, Treasurer
GUARANTOR
AMERICANA FOODS LIMITED
PARTNERSHIP
By: Americana Foods General
Partner, Inc.,
its general partner
<PAGE>
By: /s/ Terry A. Elliott
Printed Name: Terry A. Elliott
Title: Executive Vice President
LENDER:
BANK ONE, TEXAS, N.A.
By: /s/ Gina A. Norris
Printed Name: Gina A. Norris
Title: Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF AUGUST 31, 1995 AND THE CONSOLIDATED
STATEMENT OF INCOME FOR THE QUARTER ENDED AUGUST 31, 1995 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> AUG-31-1995
<CASH> 5,410,865
<SECURITIES> 4,449,393
<RECEIVABLES> 19,333,792
<ALLOWANCES> 394,724
<INVENTORY> 14,845,495
<CURRENT-ASSETS> 48,795,894
<PP&E> 104,659,707
<DEPRECIATION> 44,994,227
<TOTAL-ASSETS> 137,311,757
<CURRENT-LIABILITIES> 11,799,423
<BONDS> 13,400,591
<COMMON> 2,703,178
0
0
<OTHER-SE> 103,770,278
<TOTAL-LIABILITY-AND-EQUITY> 137,311,757
<SALES> 35,176,849
<TOTAL-REVENUES> 39,238,810
<CGS> 20,640,143
<TOTAL-COSTS> 20,640,143
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 465,194
<INTEREST-EXPENSE> 310,563
<INCOME-PRETAX> 3,341,354
<INCOME-TAX> 1,152,770
<INCOME-CONTINUING> 2,188,584
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,188,584
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
Exhibit 99(a)
PRESS RELEASE
FOR IMMEDIATE RELEASE
THURSDAY
JULY 13, 1995
CONTACT PERSON: STACY DUCKETT
VICE PRESIDENT, CORPORATE COMMUNICATIONS
(501)688-8229
TCBY ANNOUNCES SIGNING OF 30TH COUNTRY
DEVELOPMENT RIGHTS AWARDED FOR INDIA
LITTLE ROCK, AR - July 13, 1995 - TCBY ENTERPRISES, INC. (NYSE:TBY) today
announced India will become the thirtieth country to which TCBY
Enterprises, Inc., sells and distributes its frozen yogurt products,
according to Chairman and Chief Executive Office Frank D. Hickingbotham.
The TCBY Master Franchisee in India, Top Green International, has entered
into a joint venture agreement with Indiana Dairy Products, based in
India, to open "TCBY"(Registered) frozen yogurt stores and to develop the
"TCBY"(Registered) frozen yogurt brand throughout India. The initial
agreement with Top Green calls for a minimum of twenty-five
"TCBY"(Registered) stores to be opened within the next five years. It is
projected that the first "TCBY"(Registered) stores will be opened in
Bangalore, India. In addition, Top Green will implement the wholesale
distribution of the hardpack frozen yogurt products throughout the
country.
"India is roughly one-third the size of the United States, yet has the
world's second largest population with eight hundred, eighty six million
people," Hickingbotham said. "Now that the Indian economy has opened up,
we believe India offers us a marvelous growth opportunity."
Many believe that India has the largest middle class population in the
world. Top Green International is the Master Franchisee for China, Hong
Kong and Macao. "Because of their successful development of the TCBY
concept in these markets, we are pleased to grant them this new
territory," said Hartsell Wingfield, President of TCBY International.
The actual development of the "TCBY"(Registered) brand, opening of the
stores and introduction of the product line in India will be done by
Indiana Dairy under license with TCBY through their current
<PAGE>
distribution system. "They are a producer and distributor of various
dairy products including ice cream, fresh milk and yogurt," Wingfield
said.
30TH COUNTRY SIGNED -2- July 13, 1995
Neil Friedman and Sterry Chong are the owners of Top Green International.
"We have had tremendous success with the "TCBY"(Registered) brand in
China and Hong Kong. That's why we were so enthusiastic about
duplicating that success in India," Friedman said. Top Green currently
has 16 stores open in China and five stores open in Hong Kong. In
addition, Top Green has enjoyed success in distributing its frozen
products through non-traditional channels.
TCBY's first international agreement was with Canada in 1986. The
Bahamas were next in 1987, followed in 1990 by Japan and Thailand. Today
TCBY has nine stores in Canada, three in the Bahamas, 37 in Japan and 27
in Thailand.
"Our growth in international markets has been steady," Wingfield said.
"The "TCBY"R brand is well-known worldwide and we continue to enjoy
strong demand for our products. There is a great deal of similarity to
the newness and popularity of "TCBY"(Registered) products internationally
to its initial response here in the United States," Wingfield added.
TCBY has developed a presence in the Far East, the Middle East and
neighboring Canada and Mexico. "We are reviewing interesting proposals
from Europe and South America now," Wingfield said.
TCBY has 166 international stores as of May 31, 1995, compared with 73
stores this time last year. But stores are just a part of the
international business. All Master Franchisees are licensed to
distribute "TCBY"(Registered) produc ts to the non-traditional areas such
as airports, restaurants and grocery stores in each individual country.
"We are extremely pleased with the growth and scope of our International
subsidiary," Hickingbotham said. "Our thirtieth country is a major
milestone for the Company."
TCBY Enterprises, Inc., through subsidiary companies, manufactures and
sells soft serve frozen yogurt, hardpack frozen yogurt, novelty products,
and custom foodservice vehicles, and markets foodservice equipment. The
Company is the largest franchisor, licensor and operator of frozen yogurt
stores in the world.
-30-
EXHIBIT 99(b)
PRESS RELEASE
FOR IMMEDIATE RELEASE
TUESDAY
AUGUST 29, 1995
CONTACT PERSON: STACY DUCKETT, VICE PRESIDENT
CORPORATE COMMUNICATIONS
(501) 688-8229
TCBY INTERNATIONAL LICENSES DEVELOPMENT IN BRAZIL
LITTLE ROCK, AR - TUESDAY (AUGUST 29, 1995) - TCBY ENTERPRISES, INC.,
(NYSE:TBY) today announced that TCBY International has awarded local
development rights for "TCBY"(Registered) stores and products in Brazil
to Mr. Jose R. Peixoto.
Mr. Peixoto's licensing agreement calls for the opening of 40
"TCBY"(Registered) frozen yogurt stores in Brazil during the next five
years. In addition, he will implement wholesale distribution of TCBY
hard-pack and novelty frozen yogurt product lines in supermarkets and
other foodservice outlets. The first TCBY stores and kiosks will be
opened in the city of Sao Paulo in time for the Brazilian summer.
Ini tial growth is planned throughout the state of Sao Paulo, followed by
the state of Rio de Janeiro and then southern Brazil.
Mr. Peixoto began his career with IBM and then started one of Brazil's
first cable television companies. In addition to TCBY, he is the master
franchisor for Subway in Brazil.
"The Brazilian economy has been expanding rapidly since the major
economic reform in July 1994," said Hartsell Wingfield, President of TCBY
International. "With this growth in the economy, franchising in Brazil
has been expanding dramatically and TCBY is excited about introducing its
products with our successful partner," he said.
Brazil is the fifth largest country in the world and the sixth most
populous. It is larger than the continental United States and makes up
half the land area of South America. The 158 million population is
concentrated primarily in the country's southern area.
TCBY Enterprises, Inc., through subsidiary companies, manufactures and
sells soft serve frozen yogurt, hardpack frozen yogurt, novelty products
and custom foodservice vehicles, and markets foodservice equipment. The
Company is the largest franchisor, licensor and operator of frozen yogurt
stores in the world.
-30-
EXHIBIT 99(c)
PRESS RELEASE
FOR IMMEDIATE RELEASE
THURSDAY
SEPTEMBER 21, 1995
CONTACT PERSON: STACY DUCKETT
VICE PRESIDENT, CORPORATE COMMUNICATIONS
(501) 688-8229
TCBY REPORTS THIRD QUARTER RESULTS
BOARD DECLARES DIVIDEND
LITTLE ROCK, AR - SEPTEMBER 21, 1995 - TCBY ENTERPRISES, INC. (NYSE:TBY)
today announced sales and franchising revenues for the third quarter
ended August 31, 1995 and 1994 were $39,238,810 and $50,674,680,
respectively. Sales and franchising revenues in the first nine months of
fiscal 1995 and 1994 were $99,969,345 and $118,275,523, respectively.
The majority of the decrease in sales and franchising revenues for both
periods is attributable to the April 1, 1995 sale of the
"TCBY"(Registered) refrigerated yogurt product line to Mid-America
Dairymen which resulted in a decrease in the Company's sales to the
retail grocery trade. Additional factors were a reduction in the number
of Company-owned stores and a decrease in equipment sales domestically
and internationally.
Net income for the third quarter ended August 31, 1995 was $2,188,584, or
$.09 per share, compared to $4,479,592, or $.18 per share, for the third
quarter ended August 31, 1994. Net income for the nine-month period
ended August 31, 1995 was $1,809,228, or $.07 per share, compared to net
income of $7,421,569, or $.29 per share, for the first nine months of
fiscal 1994. For the third quarter, selling, general and administrative
expenses decreased compared to the same quarter in 1994 and compared to
the first and second quarters of 1995 as a result of the sale of the
"TCBY"(Registered) refrigerated yogurt line, and a reduction in the
number of Company-owned stores. The Company continued in the third
quarter and year-to-date to incur significant selling and marketing
expenses associated with its hardpack frozen yogurt product <PAGE>
lines in what is currently a highly competitive environment. This was
the primary reason for the decrease in earnings this quarter versus third
quarter 1994.
TCBY had 2,773 total locations at the conclusion of the third quarter of
fiscal 1995, compared to 2,732 at August 31, 1994. These locations
consisted of 85 Company-owned stores, 184 international locations, 1,273
non-traditional locations and 1,231 franchised stores. During the
quarter, the Company closed 71 generally low-volume non-traditional
locations. The Company continues to pursue the development of
non-traditional locations with a special focus on national petroleum
company convenience stores, including Exxon, Texaco, Chevron, Mobil and
others. As of August 31, 1995, the Company had over 100 locations open
or under agreement for development as a part of this program. Many of
these locations share space with other national food companies such as
McDonald's, Taco Bell, Blimpie's and Subway.
The Company's new "TCBY"(Registered) Treats concept has been
well-received by franchisees and consumers. To date, 358 stores have
converted to this concept and 125 are in the process of converting, for a
total of 483 stores, representing approximately 40% of operating domestic
stores. Comparable sales results for these locations which have
implemented the Treats program surpass those for non-Treats locations.
For the third quarter and year-to-date, same store sales are unchanged as
compared to the same periods in fiscal 1994. Sales from non-traditional
locations are not included in same store sales comparisons.
Frank D. Hickingbotham, Chairman of the Board and Chief Executive Officer
said, "We continue to pursue the various development opportunities
available to the Company. The "TCBY "(Registered) Treats concept is
expanding throughout the system and non-traditional development is
proceeding as a major focus of the Company. The Company expanded
distribution of our new nonfat pint product line and it has been
favorably received by consumers. Internationally, a master franchisee has
been licensed to develop the "TCBY"(Registered) brand in Brazil, bringing
the total number of countries under agreement to thirty-one. We expect
to have other international signings to announce this fiscal year. We
are pleased that the expansion at Americana Foods is virtually completed
and we expect to see improved efficiencies in production and inventory
management as a result."
The Board of Directors of the Company declared a $.05 per share cash
dividend. This divid
"We are extremely pleased with the growth and scope of our International
subsidiary," Hickingbotham said. "Our thirtieth country is a major
milestone for the Company."
TCBY Enterprises, Inc., through subsidiary companies, manufactures and
h the intent of maximizing shareholder value. This project remains in
process and no assurances can be given that this initiative will result
in any material corporate development.
TCBY Enterprises, Inc., through subsidiary companies, manufactures and
sells soft serve frozen yogurt, hardpack frozen yogurt, novelty products
and custom foodservice vehicles, and markets foodservice equipment. The
Company is the largest franchisor, licensor and operator of frozen yogurt
stores in the world.
TCBY Enterprises, Inc.
Selected Financial Highlights
(000, Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
August 31, August 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Operating Results
Sales & Franchising Revenue $ 39,239 $ 50,675 $ 99,969 $118,276
Net Income $ 2,189 $ 4,480 $ 1,809 $ 7,422
Net Income Per Share $ .09 $ .18 $ .07 $ .29
Average Shares Outstanding 25,585 25,519 25,579 25,501
Dividends Paid Per Share $ .05 $ .05 $ .15 $ .15
August 31, November 30,
1995 1994
Financial Position
Current Assets $ 48,796 $ 58,968
Current Liabilities $ 11,799 $ 12,458
Property, Plant & Equipment, Net $ 59,665 $ 56,844
Total Assets $137,312 $142,280
Long-term Debt, less current portion $ 13,401 $ 15,910
Stockholders' Equity $106,473 $108,274
</TABLE>
-30-
