PAGE 1
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 February 29, 1996
__________________
OR
___TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE <PAGE>
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to
______________
Commission file number 1-10046
_______
TCBY ENTERPRISES, INC.
___________________________________________________________
____
(Exact name of registrant as specified in its charter)
Delaware 71-0552115
___________________________________________________________
(State 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 March 31, 1996 there were 25,314,876 shares of the
registrant's common stock outstanding.
Sequential Page No. 1
<TABLE>
TABLE OF CONTENTS
<CAPTION>
PART I. FINANCIAL INFORMATION Page
<S> <C> <C>
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets
February 29, 1996 and November 30, 1995 3
Consolidated Statements of Operations
Three Months Ended February 29, 1996
and February 28, 1995 5
Consolidated Statements of Cash Flows
Three Months Ended February 29, 1996
and February 28, 1995 6
Notes to Consolidated Financial Statements
February 29, 1996 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
</TABLE>
Sequential Page
No. 2
PART 1
FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS (UNAUDITED)
TCBY ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
February 29, November 30,
1996 1995
________________________________
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 500,558 $ 5,565,654
Short-term investments 11,275,252 8,824,163
Receivables:
Trade accounts 9,883,909 10,114,935
Notes 2,907,644 2,918,762
Allowance for doubtful accounts
and impaired notes (1,589,587) (1,592,607)
_____________ _____________
11,201,966 11,441,090
Refundable income taxes 4,697,990 4,418,936
Deferred income taxes 2,463,089 2,463,089
Inventories 12,444,173 12,920,468
Prepaid expenses and other assets 2,266,520 2,098,366
Assets held for sale 2,847,756 3,625,375
_____________ _____________
TOTAL CURRENT ASSETS 47,697,304 51,357,141
PROPERTY, PLANT, AND EQUIPMENT:
Land 2,866,820 2,866,820
Buildings 23,410,187 23,402,389
Furniture, vehicles, and equipment 47,417,615 47,325,993
Leasehold improvements 3,319,745 3,214,117
Construction in progress 218,892 31,483
Allowances for depreciation
and amortization (32,210,728) (31,130,608)
_____________ _____________
45,022,531 45,710,194
OTHER ASSETS:
Notes receivable, less current portion
(less allowance for doubtful and impaired
notes of $9,484,673 in 1996 and
$9,585,410 in 1995) 7,001,935 7,035,259
Intangibles (less amortization of
$1,561,773 in 1996 and $1,514,068 in 1995) 3,579,581 3,517,942
Other 3,349,377 4,004,707
_____________ _____________
13,930,893 14,557,908
_____________ _____________
TOTAL ASSETS $106,650,728 $111,625,243
============= =============<PAGE>
</TABLE>
See notes to consolidated financial statements.
Sequential Page No. 3
TCBY ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
February 29, November 30,
1996 1995
_________________________________
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 3,115,777 $ 2,455,127
Accrued expenses 7,061,569 9,041,380
Current portion of long-term debt 3,171,448 3,171,448
_____________ _____________
TOTAL CURRENT LIABILITIES 13,348,794 14,667,955
LONG-TERM DEBT, less current portion 12,112,330 12,640,904
DEFERRED INCOME TAXES 2,137,617 2,137,617
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 -
27,062,345 in 1996 and 1995 2,706,235 2,706,235
Additional paid-in capital 25,547,184 25,547,184
Retained earnings 61,874,839 63,661,235
_____________ _____________
90,128,258 91,914,654
Less treasury stock, at cost (1,705,869
shares in 1996 and 1,387,069 in 1995) (11,076,271) (9,735,887)
_____________ _____________
TOTAL STOCKHOLDERS' EQUITY 79,051,987 82,178,767
_____________ _____________
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $106,650,728 $111,625,243
============= =============
</TABLE>
See notes to consolidated financial statements.
Sequential Page No. 4
TCBY ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
February 29, February 28,
1996 1995
_________________________________
<S> <C> <C>
Sales $ 15,052,899 $ 25,231,842
Cost of sales 9,451,986 15,067,896
_____________ _____________
GROSS PROFIT 5,600,913 10,163,946
Franchising revenues:
Initial franchise and license fees 532,750 195,900
Royalty income 1,692,004 1,766,579
_____________ _____________
2,224,754 1,962,479
_____________ _____________
7,825,667 12,126,425
OPERATING EXPENSES:
Selling, general, and administrative
expenses 8,637,058 16,255,400
Provision for doubtful accounts
and impaired notes 22,055 2,677,001
_____________ _____________
8,659,113 18,932,401
_____________ _____________
LOSS FROM OPERATIONS (833,446) (6,805,976)
Other income (expense):
Interest expense (262,754) (298,451)
Interest income 275,778 274,440
Other income 43,996 25,444
_____________ _____________
57,020 1,433
_____________ _____________
LOSS BEFORE INCOME TAXES (776,426) (6,804,543)
Income tax benefit (271,749) (2,369,253)
_____________ _____________
NET LOSS $ (504,677) $ (4,435,290)
============= =============
Net loss per share $ (0.02) $ (0.17)
============= =============
Average shares outstanding 25,563,836 25,595,638
============= =============
Cash dividends paid per share $ 0.05 $ 0.05
============= =============
</TABLE>
See notes to consolidated financial statements.
Sequential Page No. 5
TCBY ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
February 29, February 28,
1996 1995
________________________________
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (504,677) $ (4,435,290)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,295,965 2,981,444
Amortization of intangibles 47,705 155,042
Provision for doubtful accounts and
impaired notes 22,055 2,677,001
Gain on disposal of property and equipment (2,864) (1,354)
Changes in operating assets and liabilities:
Receivables 29,444 (2,294,022)
Inventories 476,295 (3,644,413)
Prepaid expenses (168,154) (316,461)
Distribution allowances - (175,860)
Assets held for disposal 777,619 -
Intangibles and other assets 480,785 218,243
Accounts payable and accrued expenses (1,319,161) 307,491
Income taxes (279,054) (1,661,388)
_____________ _____________
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES 855,958 (6,189,567)
INVESTING ACTIVITIES
Purchases of property, plant, and equipment (597,575) (3,877,561)
Proceeds from sales of property and equipment 37,600 89,089
Origination of notes receivable (48,364) (92,539)<PAGE>
Principal collected on notes receivable 289,051 631,690
Purchases of short-term investments (5,012,019) (92,112)
Proceeds from sale of short-term investments 2,560,930 6,777,222
_____________ _____________
NET CASH (USED IN) PROVIDED BY
INVESTING ACTIVITIES (2,770,377) 3,435,789
FINANCING ACTIVITIES
Proceeds from sale of Common Stock - 2,188
Dividends paid (1,281,719) (1,279,713)
Purchases of treasury stock (1,340,384) -
Principal payments of long-term debt (528,574) (612,547)
_____________ _____________
NET CASH USED IN FINANCING ACTIVITIES (3,150,677) (1,890,072)
_____________ _____________
DECREASE IN CASH AND CASH EQUIVALENTS (5,065,096) (4,643,850)
Cash and cash equivalents at beginning
of period 5,565,654 4,938,118
_____________ _____________
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 500,558 $ 294,268
============== =============<PAGE>
</TABLE>
See notes to consolidated financial statements.
Sequential
Page No. 6
TCBY ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FEBRUARY 29, 1996
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-month period ended February 29, 1996 are not
necessarily indicative of the results that may be expected
for the year ended November 30, 1996. For further
information, refer to the consolidated financial statements
and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended November 30, 1995.
NOTE B -- RECLASSIFICATIONS AND RESTATEMENT
Certain amounts in the 1995 consolidated financial
statements have been reclassified to conform to the 1996
presentation.
Net loss per share as originally reported differ from the
amount set forth in the Consolidated Statement of Operations
for the first quarter of 1995 due to the adoption of Finanical
Accounting Standards Board Statement No. 114, "Accounting by
Creditors for Impairment of a Loan" in 1995. The effect of
the adoption of this statement increased the net loss by
$1,615,836 or $.06 per share.
NOTE C -- INVENTORIES
<TABLE>
<CAPTION>
February 29, November 30,
1996 1995
____________ ____________
<S> <C> <C>
Manufacturing materials and
supplies $ 5,224,719 $ 4,449,940
Finished yogurt products and
other food products 3,214,904 4,203,058
Equipment and other products 4,004,550 4,267,470
____________ ____________
$12,444,173 $12,920,468
============ ============
</TABLE>
NOTE D -- ACCRUED EXPENSES
<TABLE>
<CAPTION>
Accrued expenses consist of the following:
February 29, November 30,
1996 1995
____________ ____________
<S> <C> <C>
Rent $ 1,310,024 $ 1,547,372
Compensation 2,155,631 3,355,348
Other 3,595,914 4,138,660
____________ ____________
$ 7,061,569 $ 9,041,380
============ ============
</TABLE>
Sequential Page No. 7
NOTE E -- CONTINGENCIES
A purported investor in a former franchisee has claimed
approximately $26 million in trebled damages plus costs and
prejudgment interest from the former franchisee for alleged
fraudulent acts. The compensatory damages requested are
$8.7 million. The Company has also been named in this suit
as a defendant and has cross-claimed the former franchisee.
The Company believes the plaintiff's claims against the
Company to be without merit, and the Company is vigorously
contesting the suit.
Other than as set forth above, there is no material
litigation pending against the Company. Various legal and
administrative proceedings are pending against the Company
which are incidental to the business of the Company. The
ultimate legal and financial liability of the Company in
connection with such proceedings and that discussed above
cannot be estimated with certainty, but the Company
believes, based upon its examination of these matters, its
experience to date, and its discussions with legal counsel,
that resolution of these proceedings will have no material
adverse effect upon the Company's financial condition,
either individually or in the aggregate; of course, any
substantial loss pursuant to any litigation might have a
material adverse impact upon results of operations in the
fiscal quarter or year in which it were to be incurred, but
the Company cannot estimate the range of any reasonably
possible loss.
Sequential Page No.
8
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company's total sales for the first quarter of 1996
decreased 40 percent from sales in the first quarter of
1995. As described below, this decrease in sales is
primarily related to the sale of the rights for
manufacturing and distribution of "TCBY"(Registered)
refrigerated yogurt products to Mid-America Dairymen, Inc.
in April 1995, and the franchising or closing of most
Company-owned stores. The Company operates 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>
1st Quarter 1st Quarter
1996 1995
____________________ ____________________
Sales % Sales %
________ _____ ________ _____
<S> <C> <C> <C> <C>
Food Products:
______________
Yogurt sales to ProSource
and other food service
distributors $ 8,246 55% $ 8,901 35%
Yogurt sales to the retail
grocery trade 2,177 14% 8,713 35%
Retail sales by Company-
owned stores 1,326 9% 3,640 14%
________ _____ ________ _____
11,749 78% 21,254 84%
Equipment:
__________
Sales by the Company's
equipment distributor 2,265 15% 2,556 10%
Sales of manufactured
specialty vehicles 784 5% 1,186 5%
________ _____ ________ _____
3,049 20% 3,742 15%
Other 255 2% 236 1%
________ _____ ________ _____
Total Sales $ 15,053 100% $ 25,232 100%
======== ===== ======== =====<PAGE>
</TABLE>
Sales from the Company's food products segment include (i)
wholesale sales of frozen yogurt and ice cream products to
ProSource Distribution Services and to other foodservice
distributors, which distribute yogurt and other products to
"TCBY"(Registered) stores and non-traditional locations, and
sales to international master franchisees of frozen yogurt
products and proprietary ingredients for the manufacture of
frozen yogurt products in the countries that produce
locally, (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 decreased from $21.3 million in the first
quarter of 1995 to $11.7 million during the first quarter of
1996.
Sequential Page No.
9
Wholesale sales of frozen yogurt decreased 7 percent during
the first quarter of 1996 as compared to the first quarter
of 1995. This is attributed primarily to a reduction in the
number of domestic traditional "TCBY"(Registered) stores in
operation and a decline in yogurt purchased by operating
stores during the first quarter of 1996 compared to the same
period in 1995. The purchases of yogurt by operating stores
is generally greater during warm weather conditions and
diminishes during periods of inclement weather. As weather
conditions throughout the USA during the first quarter of
1996 were generally more severe than the prior year,
purchases of yogurt by operating stores were adversely
impacted.
The following table sets forth location activity for the
first quarter of 1996 and 1995.
<TABLE>
<CAPTION>
NON-
FRANCHISED COMPANY INTERNATIONAL TRADITIONAL
STORES STORES LOCATIONS LOCATIONS L
1996 1995 1996 1995 1996 1995 1996 1995 1
_________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <
For the first quarter:
Locations open at
beginning of period 1,218 1,245 42 96 187 141 1,273 1,319 2
Opened 2 10 - - 16 10 47 46
Closed (18) (16) (1) (8) (11) - (62) (35)
Locations transferred 6 - (15) - - - 9 -
_________________________________________________________
Locations open at
end of period 1,208 1,239 26 88 192 151 1,267 1,330 2
=========================================================<PAGE>
</TABLE>
Included in the franchised and Company store information are
146 and 163 "TCBY"(Registered) stores closed for relocation
or for the season on February 29, 1996 and February 28,
1995, respectively. During the first quarter of 1996, 62
non-traditional locations were closed. 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 locations. In addition, the
Company's joint venture partners were not successful in
retaining all of the "TCBY"(Registered) locations at the
Dallas/Ft. Worth, Atlanta, and Los Angeles airports where
the foodservice contracts were up for bid in 1995, thus,
closings in these airports will occur 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 than other non-traditional locations.
Sequential Page No.
10
Sales of yogurt to the retail grocery trade decreased 75
percent during the first quarter of 1996 as compared to the
first quarter of 1995. In April 1995, the Company sold the
rights for exclusive manufacturing and distribution of the
"TCBY"(Registered) refrigerated yogurt products throughout
the United States to Mid-America Dairymen, Inc., who
co-packed the products for the Company. The Company's sales
of refrigerated yogurt products totaled approximately $5.3
million in the first quarter of 1995. In addition, during
the fourth quarter of 1995, the Company began to focus on
geographic regions where the hardpack products can be
delivered and marketed in a more efficient manner. This
action has improved operating results but has resulted in
lower sales of hardpack frozen yogurt products in 1996.
Sales by Company-owned stores declined 64 percent during the
first quarter of 1996 as compared to the first quarter of
1995. This decline results primarily from a reduction of
Company-owned stores operated during the first quarter of
1996. During the fourth quarter of 1995, the Company
decided to franchise or close most of the Company-owned
stores. The Company believes the stores can operate more
effectively with local ownership. The divestiture of the
stores will lower future sales in the food products segment.
At February 29, 1996, the Company operated 26 stores most of
which the Company expects to franchise during the remainder
of 1996.
Sales in 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 decreased 19
percent during the first quarter of 1996 over the same
period in the prior year. The decrease in sales is
primarily due to decreased orders for specialty vehicles at
the Company's equipment manufacturer. The Company has taken
steps to divest its equipment manufacturer located in
Fresno, California as this subsidiary is no longer a part of
the Company's core business.
The ratio of cost of sales to sales was 63 percent for the
first quarter of 1996 as compared to 60 percent for the
first quarter of 1995. The ratio of cost of sales to sales
for the food products segment and equipment segment in the
first quarter of 1996 was 60 percent and 80 percent,
respectively, compared to 57 percent and 77 percent,
respectively, in the first quarter of 1995.
Sequential Page No.
11
The increase in the overall cost of sales to sales ratio is
attributed to a number of factors including the Company's
decision to franchise or close most of its Company-owned
stores. The Company-owned stores have a lower cost of sales
to sales ratio than the overall ratio for the food products
segment. Therefore, as such stores are sold or closed, the
cost of sales to sales ratio is increased. In addition,
milk prices which represent a major component of the
Company's cost of sales increased during the first quarter
of 1996 compared to the first quarter of 1995. Milk prices
are expected to remain higher in the second quarter of 1996
compared to the same period in 1995. Lastly, the overhead
cost per unit at the Company's manufacturing facility in
Dallas has increased during 1996 as a result of lower
volumes produced compared to the previous year and higher
total overhead costs primarily related to the expansion of
the manufacturing facility. The increase in the cost of
sales to sales ratio was partially offset by reduced sales
to the retail grocery trade. 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 the first quarter
of 1996 compared to the prior year primarily because of the
sale of the refrigerated yogurt product line.
Franchising revenues consist of initial franchise and
license fees and royalty income. In the first quarter of
1996, initial franchise and license fees increased 172
percent while royalty income decreased four percent from the
same period in 1995. This increase in franchise and license
fees results primarily from increased initial international
and domestic franchise fees. The decrease in royalty income
is due primarily to a decrease in domestic royalties as a
result of the decrease in domestic traditional
"TCBY"(Registered) stores and a decline in store sales noted
above.
Operating expenses decreased 54 percent in the first quarter
of 1996 compared to the same period in 1995. The decrease
is attributable to several factors including: (i) a
decrease in the provision for doubtful accounts and impaired
notes as 1995 includes charges related to the adoption of
Financial Accounting Standards Board Statement No. 114
"Accounting by Creditors for Impairment of a Loan"; (ii) a
reduction in depreciation and amortization due to the
reduction in the basis of various assets associated with the
adoption of Financial Accounting Standards Board Statement
No. 121 "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of" during 1995;
(iii) a reduction in selling and marketing costs due to the
sale of the refrigerated yogurt line in April 1995 and the
Company's decision to focus distribution of its hardpack
frozen yogurt products to the retail grocery trade in
geographic regions where the products can be delivered and
marketed in a more efficient manner; (iv) a reduction in
selling, general, and administrative expenses related to
corporate stores due to the franchising or closing of most
corporate stores as discussed above, and; (v) a
restructuring of the Company's organization in the fourth
quarter of 1995. As a percentage of combined sales and
franchising revenues, operating expenses were 50 percent and
70 percent for the first quarter of 1996 and 1995,
respectively.
Sequential Page No.
12
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically generated cash from operations
sufficient to meet its normal operating requirements.
However, the Company normally experiences a decrease in cash
and cash equivalents in the first quarter as a result of the
seasonality of its business. The Company's cash and
short-term investments decreased approximately $2.6 million
in the first quarter of 1996. This decrease resulted
primarily from (i) the net loss for the first quarter of
1996, (ii) purchases of treasury stock, and (iii) a cash
dividend of five cents per share or $1.3 million paid in
January 1996. 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 February 29, 1996, working capital was $34.3 million
compared to $36.7 million on November 30, 1995. The current
ratio was 3.6 to 1.0 on February 29, 1996 and 3.5 to 1.0 on
November 30, 1995. The long-term debt to equity ratio was
.15 to 1.0 at February 29, 1996 and November 30, 1995. The
Company has tangible net worth of $75.5 million at February
29, 1996.
On March 15, 1996, the Company's Board of Directors declared
a five cents per share dividend payable on April 12, 1996 to
the stockholders of record on March 29, 1996. The Company
will consider adjustments to the dividend rate after giving
consideration to return to stockholders, profitability
expectations and financing needs.
Sequential Page No.
13
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There were no changes from previously reported litigation.
<TABLE>
<CAPTION>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
<S> <C>
4(a) Second Amendment to Second Amended and
Restated Loan Agreement and Amendment to
Loan Documents.
27 Article 5, Financial Data Schedule for the
First Quarter Fiscal 1996 Form 10-Q
99(a) Press release, dated February 12, 1996, "TCBY
Enterprises, Inc. Announces Promotion of Gene
Whisenhunt to Executive Vice President and
Chief Financial Officer"
99(b) Press release, dated March 13, 1996, "TCBY
Licenses Development in Israel"
99(c) Press release, dated March 15, 1996, "TCBY
Reports Improved Operating Results for First
Quarter"
99(d) Press release, dated March 26, 1996, "TCBY
Names Tony Passarello Senior Vice President of
Marketing"
</TABLE>
b) The Company filed a Current Report on Form
8-K, dated December 1, 1995 in relation to stock
repurchase, franchising of Company-owned
stores, and other developments.
Sequential Page No.
14
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: 04/11/96 /s/ Frank D. Hickingbotham
___________________________
Frank D. Hickingbotham,
Chairman of the Board and
Chief Executive Officer<PAGE>
Date: 04/11/96 /s/ Gene Whisenhunt
___________________________
Gene Whisenhunt,
Executive Vice President
Chief Financial Officer
Sequential Page No.
15
SECOND AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AGREEMENT AND AMENDMENT TO LOAN DOCUMENTS
THIS SECOND 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 1st day of December, 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 Revolving 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 meaning assigned to such terms in the Loan
Agreement.
B. The Borrower has asked the Lender to declassify
Ca rlin Manufacturing, Inc. as a "Material Subsidiary," to
redefine "Net Income," and to decrease the required Fixed
Charge Coverage ratio from 1.5 to 1.0 to 1.25 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 the 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:
1.1 Amendments to Section 1.1 Section 1.1 of the
Loan Agreement shall be and is hereby amended to declassify
Carlin Manufacturing, Inc., an Arkansas corporation, as a
"Material Subsidiary" and to delete the name of such
corporation from the definition of "Material Subsidiary."
1.2 Amendment to Section 6.6. The Loan Agreement
shall be and is hereby amended to add the following as an
additional subsection to Section 6.6:
"2.6.3
Waiver Fee. Subject to Section 2.5, the Borrower
agrees to pay to the Lender a fee in the amount
$15,000.00 in consideration for the one time,
limited waiver made by Lender as evidenced by its
letter to Borrower dated January 11, 1996. Such
fee shall be paid in twelve (12) monthly payments of
$1,250.00 each beginning on January 15, 1996 and
continuing on the 15th day of each month
thereafter until paid in full. The Lender shall have the
right, at its option, to debit the amount of any
installment of the waiver fee that is not made on
the date the same is due and payable against any
deposit account maintained by the Borrower with
the Lender including, but not limited to, demand
deposit account #1889860316.
1.3 Amendment to Section 5.9. Section 5.9 of the
Loan Agreement shall be and is hereby amended to decrease
the required Fixed Charge Coverage ratio from "1.5 to 1.0"
to "1.25 to 1.0." Section 5.9 is further amended to
provide, solely for purposes of calculating the Fixed Charge
Coverage ratio, that nonrecurring or extraordinary gains or
losses which are excluded from the calculation of Net Income
shall mean nonrecurring and extraordinary gains and losses
which are determined on a pre-tax basis.
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, d elivery 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 of 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 s 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, 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 reasonable request in order to more
fully evidence and/or to carry out more fully the intent and
purposes 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/ Gene H. Whisenhunt
_____________________________
Printed Name: Gene H. Whisenhunt
__________________
Title: Executive Vice President
and CFO
_________________________
GUARANTOR:
AMERICANA FOODS LIMITED
PARTNERSHIP
By: /s/ Jim H. Fink
_____________________________
Printed Name: Jim H. Fink
___________________
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 FEBRUARY
29, 1996 AND THE CONSOLIDATED STATEMENT OF INCOME FOR THE
QUARTER ENDED FEBRUARY 29, 1996 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-30-1996
<PERIOD-END> FEB-29-1996
<CASH> 500,558
<SECURITIES> 11,275,252
<RECEIVABLES> 12,791,553
<ALLOWANCES> 1,589,587
<INVENTORY> 12,444,173
<CURRENT-ASSETS> 47,697,304
<PP&E> 77,233,259
<DEPRECIATION> 32,210,728
<TOTAL-ASSETS> 106,650,728
<CURRENT-LIABILITIES> 13,348,794
<BONDS> 12,112,330
<COMMON> 2,706,235
0
0
<OTHER-SE> 76,345,752
<TOTAL-LIABILITY-AND-EQUITY> 106,650,728
<SALES> 15,052,899
<TOTAL-REVENUES> 17,277,653
<CGS> 9,451,986
<TOTAL-COSTS> 9,451,986
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 22,055
<INTEREST-EXPENSE> 262,754
<INCOME-PRETAX> (776,426)
<INCOME-TAX> (271,749)
<INCOME-CONTINUING> (504,677)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (504,677)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
EXHIBIT 99(a)
PRESS RELEASE
FOR IMMEDIATE RELEASE
MONDAY
FEBRUARY 12, 1996
CONTACT PERSON: STACY DUCKETT, VICE PRESIDENT
CORPORATE COMMUNICATIONS
(501) 688-8229
TCBY ENTERPRISES, INC. ANNOUNCES PROMOTION OF
GENE WHISENHUNT TO EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
LITTLE ROCK, AR - FEBRUARY 12, 1996 - TCBY ENTERPRISES, INC.
(NYSE:TBY) has announced that Gene Whisenhunt has been
promoted to Executive Vice President and Chief Financial
Officer of TCBY Enterprises, Inc. He will be responsible
for the financial 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-
EXHIBIT 99(b)
PRESS RELEASE
FOR IMMEDIATE RELEASE
WEDNESDAY
MARCH 13, 1996
CONTACT PERSON: STACY DUCKETT, VICE PRESIDENT
CORPORATE COMMUNICATIONS
TCBY ENTERPRISES, INC.
501-688-8229
TCBY LICENSES DEVELOPMENT IN ISRAEL
LITTLE ROCK, AR - WEDNESDAY (MARCH 13, 1996) - TCBY
ENTERPRISES, INC., (NYSE:TBY) today announced that TCBY's
International Division has awarded local development rights
for "TCBY"(Registered) stores and products in Israel, which
will be operated by JSH Enterprises, a New Jersey-based
corporation.
The franchise agreement calls for
the opening of 10 "TCBY"(Registered) frozen yogurt stores
in Israel during the next five years. The franchisee
intends to open the first "TCBY"(Registered) locations in
the Tel Aviv area. Plans also call for the distribution of
hardpack and novelty frozen yogurt products through
supermarkets and other channels.
"The Israeli market presents many opportunities for
development. Israel has the highest per capita consumption
of ice cream in the Middle East and consumers are already
familiar with frozen yogurt as an alternative to ice cream,"
said Hartsell Wingfield, President of TCBY International.
"We are excited about introducing "TCBY"(Registered)
products in this market with our new partners," he said.
Gidon Wallis, spokesman for JSH's operations in Israel,
added "We are excited about our association with the leading
and tastiest frozen yogurt product in the world. With the
growing health consciousness in Israel, we are confident the
local consumer will soon discover you do not have to
sacrifice taste to sacrifice calories."
TCBY Enterprises, Inc., through subsidiary companies,
manufactures and sells soft serve frozen yogurt, hardpack
frozen yogurt, novelty products, and markets foodservice
equipment. The Company is the largest
manufacturer-franchisor of frozen yogurt in the world.
-30-
EXHIBIT 99(c)
PRESS RELEASE
FOR IMMEDIATE RELEASE
FRIDAY
MARCH 15, 1996
CONTACT PERSON: STACY DUCKETT, VICE PRESIDENT
CORPORATE COMMUNICATIONS
(501) 688-8229
TCBY REPORTS IMPROVED OPERATING RESULTS
FOR FIRST QUARTER
LITTLE ROCK, AR - FRIDAY (MARCH 15, 1996) - TCBY
Enterprises, Inc., (NYSE:TBY) announced its results improved
from a net loss of $4,435,290, or $.17 per share, in the
first quarter of fiscal 1995 to a net loss of $504,677, or
$.02 per share, in the first quarter of fiscal 1996. First
quarter 1995 results include a loss of $.06 per share due to
the adoption of a new accounting standard. The improvement
in results reflects
a reduction in selling, general and administrative costs
primarily achieved through the Company's restructuring, the
sale of Company-owned stores, and a focus on geographic
regions where the Company's hardpack products can be
delivered and marketed in a more efficient manner. Sales
and franchising revenues for the first quarter of 1996 were
$17,277,653 compared to $27,952,759 in the first quarter of
1995. The decline in sales and franchising revenues is
primarily attributable to a decrease in sales to the retail
grocery trade as a result of the sale of the Company's
refrigerated yogurt line during the second quarter of fiscal
1995, and the execution of the Company's decision to
franchise or close the 88 Company-owned stores in operation
as of first quarter 1995.
As of February 29, 1996, there were 2,693 "TCBY"(Registered)
locations worldwide. These locations are comprised of 1,208
traditional domestic stores, 1,267 non-traditional domestic
locations, 192 international locations, and 26 Company-owned
stores. The Company continues to franchise its
Company-owned stores as announced in December, 1995 and
expects to complete this process in fiscal 1996.
Also in December, 1995, the Company announced the
authorization by its Board of Directors to purchase up to
three million shares of its outstanding common stock and has
purchased over 325,000 shares since that time. Purchases
have been made utilizing the Company's available cash
resources.
"We are encouraged by our first quarter results in light of
the harsh winter experienced across the country," said
Herren Hickingbotham, President and Chief Operating Officer.
"Many changes were announced in December, and we are seeing
immediate improvements as a result of the implementation of
these plans. We are also excited about our development
opportunities in 1996 through new international and
non-traditional locations, as well as through continued
conversions and expansion of the TCBY Treats program in our
traditional stores."
Subsequent to the close of the first quarter, the Company
announced its international division had finalized a
franchise agreement for Israel. In addition, it was
announced that a national development agreement had been
reached with Citgo Petroleum Corporation to pursue
co-branding opportunities in Citgo locations across the
country.
The Board of Directors of the Company declared a $.05 per
share cash dividend payable on April 12, 1996 to
stockholders of record as of March 29, 1996.
TCBY Enterprises, Inc., through subsidiary companies,
manufactures and sells soft serve frozen yogurt, hardpack
frozen yogurt and ice cream, novelty products, and markets
foodservice equipment. The Company is the largest
manufacturer-franchisor of frozen yogurt in the world.
TCBY Enterprises, Inc.
Selected Financial Highlights
(In Thousands, Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
February 29 February 28
1996 1995
<S> <C> <C>
Operating Results
Sales & Franchising Revenues $ 17,278 $ 27,953
Net Loss $ (505) $ (4,435)
Net Loss Per Share $ (.02) $ (.17)
Average Shares Outstanding 25,564 25,596
Dividends Paid Per Share $ .05 $ .05
February 29 November 30
1996 1995
Financial Position
Current Assets $ 47,697 $ 51,357
Current Liabilities $ 13,349 $ 14,668
Property, Plant & Equipment, Net $ 45,023 $ 45,710
Total Assets $ 106,651 $ 111,625
Long-term Debt $ 12,112 $ 12,641
Stockholders' Equity $ 79,052 $ 82,179
</TABLE>
-30-
EXHIBIT 99(d)
PRESS RELEASE
FOR IMMEDIATE RELEASE
TUESDAY
MARCH 26, 1996
CONTACT PERSON: STACY DUCKETT, VICE PRESIDENT
CORPORATE COMMUNICATIONS
(501) 688-8229
TCBY NAMES TONY PASSARELLO
SENIOR VICE PRESIDENT OF MARKETING
LITTLE ROCK, AR - MARCH 26, 1996 - TCBY ENTERPRISES, INC.
(NYSE:TBY) announced that Tony Passarello has been named
Senior Vice President of Marketing for TCBY Systems. He was
previously Vice President of Marketing for Popeye's Chicken
and Biscuits.
Passarello will be responsible for both the marketing and
research and development functions for Systems. His
experience includes marketing management positions with
Pizza Hut and A&W Restaurants. For over ten years,
Passarello owned a consulting firm specializing in target
market strategies for clients including McDonald's,
Friendly's and Bakers Square.
TCBY Systems is responsible for domestic traditional and
non-traditional "TCBY"(Registered) locations.
TCBY Enterprises, Inc., through subsidiary companies,
manufactures and sells soft serve frozen yogurt, hardpack
frozen yogurt, novelty products, and markets foodservice
equipment. The Company is the largest
manufacturer-franchisor of frozen yogurt in the world.
-30-
