UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(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, 1996
________________
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, 1996 there were 24,774,876 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
August 31, 1996 and November 30, 1995 3
Consolidated Statements of Operations
Quarter ended and nine months ended
August 31, 1996 and 1995 5
Consolidated Statements of Cash Flows
Nine months ended August 31, 1996 and 1995 6
Notes to Consolidated Financial Statements
August 31, 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 16
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURES 17
</TABLE>
Sequential Page No. 2
PART 1
FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS (UNAUDITED)
TCBY ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
August 31, November 30,
1996 1995
_________________________________
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 12,993,540 $ 5,565,654
Short-term investments 4,172,309 8,824,163
Receivables:
Trade accounts 11,904,259 10,114,935
Notes 2,744,026 2,918,762
Allowance for doubtful accounts
and impaired notes (1,498,405) (1,592,607)
______________ ______________
13,149,880 11,441,090
Refundable income taxes - 4,418,936
Deferred income taxes 2,790,639 2,463,089
Inventories 11,851,603 12,920,468
Prepaid expenses and other assets 1,745,666 2,098,366
Assets held for sale 972,806 3,625,375
______________ ______________
TOTAL CURRENT ASSETS 47,676,443 51,357,141
PROPERTY, PLANT, AND EQUIPMENT:
Land 2,866,820 2,866,820
Buildings 23,451,368 23,402,389
Furniture, vehicles, and equipment 48,019,736 47,325,993
Leasehold improvements 3,481,730 3,214,117
Construction in progress 1,052,953 31,483
Allowances for depreciation
and amortization (34,469,662) (31,130,608)
______________ ______________
44,402,945 45,710,194
OTHER ASSETS:
Notes receivable, less current portion
(less allowance for doubtful and impaired
notes of $9,184,847 in 1996 and
$9,585,410 in 1995) 6,385,250 7,035,259
Intangibles (less amortization of
$1,669,281 in 1996 and $1,514,068 in
1995) 3,663,227 3,517,942
Other 5,066,801 4,004,707
______________ ______________
15,115,278 14,557,908
______________ ______________
TOTAL ASSETS $ 107,194,666 $111,625,243
============== ==============
</TABLE>
See notes to consolidated financial statements.
Sequential Page No. 3
TCBY ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
August 31, November 30,
1996 1995
________________________________
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 2,833,669 $ 2,455,127
Accrued expenses 5,817,700 9,041,380
Income taxes payable 1,210,602 -
Current portion of long-term debt 3,171,448 3,171,448
_____________ _____________
TOTAL CURRENT LIABILITIES 13,033,419 14,667,955
LONG-TERM DEBT, less current portion 10,262,318 12,640,904
DEFERRED INCOME TAXES 3,516,336 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 shares in 1996 and 1995 2,706,235 2,706,235
Additional paid-in capital 25,547,184 25,547,184
Retained earnings 65,559,180 63,661,235
_____________ _____________
93,812,599 91,914,654
Less treasury stock, at cost (2,242,469
shares in 1996 and 1,387,069 in 1995) (13,430,006) (9,735,887)
_____________ _____________
TOTAL STOCKHOLDERS' EQUITY 80,382,593 82,178,767
_____________ _____________
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $107,194,666 $111,625,243
============= =============
</TABLE>
See notes to consolidated financial statements.
Sequential Page No. 4
TCBY ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
August 31, August 31,
1996 1995 1996 1995
____________________________________________________________
<C> <C> <C> <C>
Sales $26,075,002 $35,176,849 $ 65,706,599 $ 90,771,
Cost of sales 16,727,654 20,640,143 41,925,391 52,666,9
____________ ____________ _____________ _________
GROSS PROFIT 9,347,348 14,536,706 23,781,208 38,104,0
Franchising revenues:
Initial franchise and
license fees 590,750 611,610 1,740,375 1,226,
Royalty income 3,555,427 3,450,351 7,996,898 7,971,
____________ ____________ _____________ _________
4,146,177 4,061,961 9,737,273 9,198,
____________ ____________ _____________ _________
13,493,525 18,598,667 33,518,481 47,302,3
Operating expenses:
Selling, general, and
administrative expenses 7,787,936 14,722,484 24,897,683 45,840,
Provision for doubtful
accounts and impaired
notes 21,797 465,194 66,155 3,541,
____________ ____________ _____________ _________
7,809,733 15,187,678 24,963,838 49,382,
INCOME (LOSS) FROM
OPERATIONS 5,683,792 3,410,989 8,554,643 (2,079,7
Other income (expense):
Interest expense (237,901) (310,563) (740,685) (834,
Interest income 299,085 194,188 820,876 697,
Other income 32,544 46,740 140,444 2,511,97
____________ ____________ _____________ _________
93,728 (69,635) 220,635 2,374,992
____________ ____________ _____________ _________
INCOME BEFORE
INCOME TAXES 5,777,520 3,341,354 8,775,278 295,26
Income tax expense 2,022,133 1,152,770 3,071,347 101,
____________ ____________ _____________ _________
NET INCOME $ 3,755,387 $ 2,188,584 $ 5,703,931 $ 193,3
============ ============ ============= =========
Net income
per share $ 0.15 $ 0.09 $ 0.23 $ 0.
============ ============ ============= =========
Average shares
outstanding 25,036,405 25,585,110 25,293,284 25,579,
============ ============ ============= =========
Cash dividends paid
per share $ 0.05 $ 0.05 $ 0.15 $ 0
============ ============ ============= =========<PAGE>
</TABLE>
See notes to consolidated financial statements.
Sequential Page No. 5
TCBY ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
August 31,
1996 1995
________________________________
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 5,703,931 $ 193,392
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 3,880,564 8,452,357
Amortization of intangibles 155,213 465,854
Provision for doubtful accounts and
impaired notes 66,155 3,541,638
Deferred income taxes 1,051,169 -
Gain on sales of property
and equipment (40,631) (4,350)
Gain on sale of product line - (2,370,046)
Changes in operating assets and liabilities:
Receivables (2,171,382) (2,931,692)
Inventories 1,068,865 (1,475,389)
Prepaid expenses 352,700 (1,225,488)
Distribution allowances - (639,055)
Assets held for disposal 2,298,521 -
Intangibles and other assets (1,564,935) (861,867)
Accounts payable and accrued expenses (2,845,138) (2,461,423)
Income taxes 5,629,538 1,176,121
_____________ _____________
NET CASH PROVIDED BY OPERATING ACTIVITIES 13,584,570 1,860,052
INVESTING ACTIVITIES
Purchases of property, plant, and equipment (2,331,386) (9,190,366)
Proceeds from sales of property and equipment 318,508 527,593
Origination of notes receivable (223,284) (359,944)
Principal collected on notes receivable 1,306,315 1,704,830
Purchases of short-term investments (23,496,592) (3,123,436)
Proceeds from maturity of short-term
investments 28,148,446 13,887,222
Proceeds from sale of product line - 1,200,000
_____________ _____________
NET CASH PROVIDED BY INVESTING ACTIVITIES 3,722,007 4,645,899
FINANCING ACTIVITIES
Proceeds from sale of common stock - 550,694
Dividends paid (3,805,986) (3,835,727)
Purchases of treasury stock (3,694,119) (324,688)
Principal payments of long-term debt (2,378,586) (2,423,483)
_____________ _____________
NET CASH USED IN FINANCING ACTIVITIES (9,878,691) (6,033,204)
_____________ _____________<PAGE>
INCREASE IN CASH AND CASH EQUIVALENTS 7,427,886 472,747
Cash and cash equivalents at beginning
of period 5,565,654 4,938,118
_____________ _____________
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 12,993,540 $ 5,410,865
============= =============
</TABLE>
See notes to consolidated financial statements.
Sequential Page No. 6
TCBY ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
August 31, 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 and nine-month periods ended August 31, 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 income per share as originally reported differs from the
amount set forth in the Consolidated Statement of Operations
for the first nine months of 1995 due to the adoption of
Financial Accounting Standards Board Statement No. 114,
"Accounting by Creditors for Impairment of a Loan" in
November 1995. The effect of the adoption of this statement
decreased net income by $1,615,836 or $.06 per share for the
first nine months of 1995.
NOTE C -- INVENTORIES
<TABLE>
<CAPTION>
August 31, November 30,
1996 1995
____________ ____________
<S> <C> <C>
Manufacturing materials and
supplies $ 4,886,268 $ 4,449,940
Finished yogurt products and
other food products 3,010,353 4,203,058
Equipment and other products 3,954,982 4,267,470
____________ ____________
$11,851,603 $12,920,468
============ ============
</TABLE>
Sequential Page No. 7
NOTE D -- ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
August 31, November 30,
1996 1995
____________ ____________
<S> <C> <C>
Rent $ 1,058,654 $ 1,547,372
Compensation 2,832,603 3,355,348
Other 1,926,443 4,138,660
____________ ____________
$ 5,817,700 $ 9,041,380
=========== ============
</TABLE>
NOTE E -- CONTINGENCIES
A purported investor in a former franchisee has claimed
approximately $26 million in trebled damages plus costs and
prejudgment interest from the former franchisee for alleged
fraudulent acts. The compensatory damages requested are
$8.7 million. The Company has also been named in this suit
as a defendant and has cross-claimed the former franchisee.
The Company believes the plaintiff's claims against the
Company to be without merit, and t he Company is vigorously
contesting the suit to the extent the pace of the litigation
allows.
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<PAGE>
The Company's total sales during the third quarter and first
nine months of 1996 decreased 26 and 28 percent,
respectively, from sales in the same periods of 1995. As
described below, the decrease in sales are primarily related
to the franchising or closing of most Company-owned stores,
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 Company's
decision to focus on geographic regions where hardpack
products can be delivered and marketed in a more efficient
manner. 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>
Quarter Ended August 31, Nine Months Ended Au
1996 1995 1996
Sales % Sales % Sales % Sales %
________ ____ ________ ____ ________ ____ _____
<S> <C> <C> <C> <C> <C> <C> <C>
Food Products:
Frozen product sales
to ProSource
Distribution
Services and
other foodservice
distributors $16,899 65% $17,868 51% $39,704 60% $41,7
Yogurt sales to the
retail grocery
trade 4,523 17% 7,228 20% 11,167 17% 21,8
Retail sales by
Company-owned
stores 217 1% 6,030 17% 2,426 4% 14,8
________ ____ ________ ____ ________ ____ _____
21,639 83% 31,126 88% 53,297 81% 78,4
Equipment:
Sales by the
Company's equip-
ment distributor 3,341 13% 2,919 8% 9,325 14% 8,4
Sales of manufac-
tured specialty
vehicles 833 3% 897 3% 2,307 4% 3,1
________ ____ ________ ____ ________ ____ _____
4,174 16% 3,816 11% 11,632 18% 11,5
Other 266 1% 235 1% 778 1% 7
________ ____ ________ ____ ________ ____ _____
Total Sales $26,075 100% $35,177 100% $65,707 100% $90,7
======= ==== ======= ==== ======= ==== =====
</TABLE>
Sequential Page No. 9
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 (through April 1995), and frozen novelties for
distribution to the retail grocery trade, and (iii) retail
sales of yogurt and related food items by Company-owned
stores.
Wholesale sales of frozen products decreased five percent
during the third quarter and first nine months of 1996,
compared to the same periods in 1995. These decreases are
attributed primarily to a reduction in the number of
domestic traditional "TCBY"(Registered) stores (franchised and
company-owned) in operation and a decline in yogurt purchased
by operating stores during 1996 compared to 1995.
The following table sets forth location activity for the
third quarter and first nine months of 1996 and 1995.
<TABLE>
<CAPTION>
NON-
FRANCHISED COMPANY INTERNATIONAL TRADITIONAL
STORES STORES LOCATIONS LOCATIONS LO
1996 1995 1996 1995 1996 1995 1996 1995 199
_________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
For the third quarter:
Locations open at
beginning of period 1,228 1,231 8 87 194 166 1,311 1,281 2
Opened 15 14 - - 42 18 96 63
Closed (18) (14) - (2) (27) - (68) (71)
Locations transferred 6 - (7) - - - 1 -
_________________________________________________________
Locations open at
end of period 1,231 1,231 1 85 209 184 1,340 1,273 2
=========================================================
</TABLE>
<TABLE>
<CAPTION>
NON-
FRANCHISED COMPANY INTERNATIONAL TRADITIONAL
STORES STORES LOCATIONS LOCATIONS LO
1996 1995 1996 1995 1996 1995 1996 1995 199
_________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
For the first nine months:
Locations open at
beginning of period 1,218 1,245 42 96 187 141 1,273 1,319 2
Opened 29 31 - - 64 43 262 181
Closed (46) (46) (1) (10) (42) - (205) (227)
Locations transferred 30 1 (40) (1) - - 10 -
_________________________________________________________
Locations open at
end of period 1,231 1,231 1 85 209 184 1,340 1,273 2
=========================================================
</TABLE>
Sequential Page No. 10
Included in the franchised store information are 127 and 119
"TCBY"(Registered) stores closed for relocation or for the
season on August 31, 1996 and 1995, respectively. The
non-traditional locations include sites at airports, travel
plazas, colleges, hospitals, theme parks, and stadiums.
During the past year, additional opportunities have
developed in locations where "TCBY"(Registered) products are
utilized with other brands such as in petroleum stores or
with other food concepts. Locations developed in cojunction
with petroleum stores are a majority of the 262 non-
traditional openings in 1996. The Company's initial
experience is that the volume of these locations may
exceed that of some other types of non-
traditional locations with the exception of airports.
During the first nine months of 1996, 205 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. These closings are not expected
to have a material impact on yogurt sales, but will allow
the Company's support services to be more effective and
efficient. In addition, the Company's joint venture
partners were not successful in retaining all of the
"TCBY"(Registered) locations at the Dallas/Ft. Worth (DFW),
Atlanta, and Los Angeles airports where the foodservice
contracts were up for bid in 1995. The transition in
Atlanta and Los Angeles is complete and declines in the
frozen yogurt sales at these airports are not material to
the Company. The transition at the DFW Airport has begun
and the Company does not expect to have locations in this
airport at some point during fiscal 1997 unless new
opportunities develop. The Company anticipates the decline
in frozen product sales from the changes at DFW will be
offset by continued growth in new co-branded locations
described above.
Sales of yogurt to the retail grocery trade decreased 37
percent and 49 percent during the third quarter and first
nine months of 1996, respectively, compared to the same
periods in 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 sale resulted
in a pre-tax gain of $2.4 million included in other income
for the first nine months of 1995 on the Consolidated
Statements of Operations. The Company's sales of
refrigerated yogurt products totaled approximately $5.3
million in 1995. 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 yogurt
products to the retail grocery trade in 1996.
Sequential Page No. 11
Retail Sales by Company-owned stores declined 96 percent and
84 percent during the third quarter and first nine months of
1996, respectively, compared to the same periods in 1995.
These declines result primarily from a reduction of
Company-owned stores operated during 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 August 31, 1996 and
1995, the Company operated 1 store and 85 stores,
respectively.
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 business and
government entities. Sales in the equipment segment
increased nine percent and one percent during the third
quarter and first nine months of 1996, respectively, over
the same periods in the prior year.
The increase in sales during the third quarter is
attributable to increased sales at the Company's equipment
distributor due to the opening of non-traditional locations,
some of which are purchasing a portion of their original
equipment packages from the Company. The increase in sales
for the nine month period is due to the same reason
described above except the increase in sales for the
equipment distributor was partially offset by decreased
orders for specialty vehicles at the Company's equipment
manufacturer. The Company has continued the process to
possibly divest its equipment manufacturer located in
Fresno, California as this subsidiary is no longer a part of
the Company's core business.
<TABLE>
<CAPTION>
Third Quarter First Nine Months
_______________ ___________________
1996 1995 1996 1995
______ ______ ______ ______
<S> <C> <C> <C> <C>
Company 64% 59% 64% 58%
Food Products Segment 63% 56% 62% 55%
Equipment Segment 74% 86% 76% 82%
</TABLE>
Sequential Page 12
The increase in the overall cost of sales to sales ratio for
1996 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 had a lower
cost of sales to sales ratio than the overall ratio for the
food products segment. Therefore, as such stores were 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 1996
compared to 1995. Milk prices have risen as a result of
lower milk production primarily due to extremely high feed
prices and strong consumer demand for dairy products. Milk
prices are expected to remain higher in the fourth 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 1995
expansion of the manufacturing facility.
Franchising revenues consist of initial franchise and
license fees and royalty income. In the third quarter of
1996, initial franchise and license fees decreased three
percent over the same period in 1995 while royalty income
increased three percent compared to the same period in 1995.
The decrease in franchise and license fees results primarily
from decreased initial international fees which fluctuate
from period to period as new countries are developed. The
decrease in initial international fees was partially offset
by increased domestic franchise fees, resulting primarily
from the expansion into convenience stores operated in
association with national petroleum companies. The increase
in royalty income relates to the growth in the number of
franchises operated by petroleum companies and their dealers
or distributors, international development, and from the
franchising of stores that were previously operated by the
Company.
In the first nine months of 1996, initial franchise and
license fees increased 42 percent over the same period in
1995 while royalty income was virtually unchanged compared
to the same period in 1995. The increase in franchise and
license fees results primarily from increased domestic
franchise fees as discussed above.
Selling, general, and administrative expenses decreased 47
percent and 46 percent in the third quarter and first nine
months of 1996, respectively, compared to the same periods
in 1995. These decreases are attributable to several
factors including: (i) a reduction in depreciation and
amortization due to the reduction in the basis of various
assets associated with the adoption during 1995 of Financial
Accounting Standards
Sequential Page No. 13
Board Statement No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed
Of"; (ii) a reduction in selling and marketing costs
associated with the refrigerated yogurt line sold 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; (iii) a reduction
in expenses related to operation of corporate stores due to
the franchising or closing of all but one of these stores as
discussed above, and; (iv) a restructuring of the Company's
organization in the fourth quarter of 1995. As a percentage
of combined sales and franchising revenues, selling,
general, and administrative expenses were 26 percent and 38
percent for the third quarter of 1996 and 1995,
respectively, and were 33 percent and 46 percent for the
first nine months of 1996 and 1995, respectively.
The provision for doubtful accounts and impaired notes
decreased 95 percent and 98 percent for the third quarter
and first nine months of 1996, respectively, compared to the
same periods in 1995. The decreases in 1996 are
attributable to significant provisions made in 1995 relating
to the adoption of Financial Accounting Standards Board
Statement No. 114 "Accounting by Creditors for Impairment of
a Loan".
Sequential Page No. 14
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 increased
approximately $2.8 million in the first nine months of 1996.
This increase resulted primarily from (i) the net income for
the first nine months of 1996, (ii) cash from the disposal
of assets held for sale; and (iii) receipt of federal tax
refunds from 1995 tax benefits. These increases were
partially offset by purchases of treasury stock totalling
$3.7 million and cash dividends of 15 cents per share or
$3.8 million paid in 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 September 11, 1996, the Company purchased the assets of
two Phoenix, Arizona-based companies which together
constitute a two-unit juice bar concept known as Juice
Works(Registered) for $1 million.
On August 31, 1996, working capital was $34.6 million
compared to $36.7 million on November 30, 1995. The current
ratio was 3.7 to 1.0 on August 31, 1996 and 3.5 to 1.0 on
November 30, 1995. The long-term debt to equity ratio was
.13 to 1.0 at August 31, 1996 and .15 to 1.0 at November 30,
1995. The Company has tangible net worth of $76.7 million
at August 31, 1996.
On September 20, 1996, the Company's Board of Directors
declared a five cents per share dividend payable on October
14, 1996 to the stockholders of record on October 4, 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. 15
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>
27 Article 5, Financial Data Schedule for the Third
Quarter Fiscal 1996 Form 10-Q
99(a) Press release, dated August 30, 1996, "TCBY
Announces Jerry Butterbaugh New Vice President,
National Accounts."
99(b) Press release, dated September 18, 1996, "TCBY
Announces New International Development."
99(c) Press release, dated September 20, 1996, "TCBY
Reports Third Quarter Earnings Increase 72
Percent."
99(d) Press release, dated September 24, 1996, "TCBY
Announces Acquisition of Juice Works(Registered)
Concept."
</TABLE>
b)The Company did not file any reports on Form 8-K
during the three months ended August 31, 1996.
Sequential Page No. 16
SIGNATURES
__________
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
TCBY ENTERPRISES, INC.
Date: 10/11/96 /s/ Frank D. Hickingbotham
__________________________
Frank D. Hickingbotham,
Chairman of the Board and
Chief Executive Officer
Date: 10/11/96 /s/ Gene Whisenhunt
__________________________
Gene Whisenhunt,
Executive Vice President
Chief Financial Officer
Sequential Page No. 17
EXHIBIT 27
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF AUGUST
31, 1996 AND THE CONSOLIDATED STATEMENT OF INCOME FOR THE
QUARTER ENDED AUGUST 31, 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> AUG-31-1996
<CASH> 12,993,540
<SECURITIES> 4,172,309
<RECEIVABLES> 14,648,285
<ALLOWANCES> 1,498,405
<INVENTORY> 11,851,603
<CURRENT-ASSETS> 47,676,443
<PP&E> 78,872,607
<DEPRECIATION> 34,469,662
<TOTAL-ASSETS> 107,194,666
<CURRENT-LIABILITIES> 13,033,419
<BONDS> 10,262,318
<COMMON> 2,706,235
0
0
<OTHER-SE> 77,676,358
<TOTAL-LIABILITY-AND-EQUITY> 107,194,666
<SALES> 26,075,002
<TOTAL-REVENUES> 30,221,179
<CGS> 16,727,654
<TOTAL-COSTS> 16,727,654
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 21,797
<INTEREST-EXPENSE> 237,901
<INCOME-PRETAX> 5,777,520
<INCOME-TAX> 2,022,133
<INCOME-CONTINUING> 3,755,387
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,755,387
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
Exhibit 99(a)
PRESS RELEASE
FOR IMMEDIATE RELEASE
FRIDAY
AUGUST 30, 1996
CONTACT PERSON: STACY DUCKETT, VICE PRESIDENT
CORPORATE COMMUNICATIONS
(501) 688-8229
TCBY ANNOUNCES JERRY BUTTERBAUGH
NEW VICE PRESIDENT, NATIONAL ACCOUNTS
LITTLE ROCK, AR - FRIDAY, AUGUST 30, 1996 - TCBY
ENTERPRISES, INC. (NYSE:TBY) today announced that Jerry
Butterbaugh has joined the Company as Vice President,
National Accounts. Mr. Butterbaugh will be responsible for
pursuing strategic partnerships with foodservice and major
petroleum companies for the development of co-branded
locations.
Butterbaugh has over 20 years of experience in the
restaurant and convenience store industries. He began his
career in the convenience store industry and led the
Development and Marketing departments at Kwik Shop, Inc. and
Stop-N-Go Foods, Inc. He then moved to the foodservice
industry, directing the development of Hardee's in the
midwest and upper plains. Prior to coming to TCBY, Mr.
Butterbaugh was National Director of Alternative Development
for America's Favorite Chicken Company.
TCBY Enterprises, Inc., through subsidiary companies,
manufactures and sells soft serve frozen yogurt, hardpack
frozen yogurt, hardpack ice cream, and frozen novelty
products, and markets foodservice equipment. The Company is
the world's largest manufacturer - franchisor of frozen
yogurt.
-30-
Exhibit 99(b)
PRESS RELEASE
FOR IMMEDIATE RELEASE
WEDNESDAY
SEPTEMBER 18, 1996
CONTACT PERSON: STACY DUCKETT, VICE PRESIDENT
CORPORATE COMMUNICATIONS
(501) 688-8229
TCBY ANNOUNCES NEW INTERNATIONAL DEVELOPMENT
LITTLE ROCK, AR - Wednesday (September 18)-TCBY ENTERPRISES,
INC.
(NYSE:TBY) today announced it has executed a development
agreement for Australia, New Zealand, Malaysia, Singapore
and Vietnam. TCBY now has development agreements in 38
foreign countries.
Mr. Peter J. Burns and Mr. Tajuddin J. H. Tan, will be the
master franchisees and will develop the "TCBY"(Registered)
brand throughout these five countries through franchising
and retail distribution. Mr. Burns is an entrepreneur who
has developed and sold several successful businesses in
manufacturing, retail and real estate development in Ireland
and Australia. Mr. Tan is a former owner of Pengkalen
Holdings Berhad, a $70 million food and juice production and
distribution company in the region.
During the first twelve months locations will be developed
in Australia, Malaysia and Vietnam with a minimum
development of 125 locations over five years, throughout all
the countries. The Company did not disclose the terms of
the agreement.
"We are very excited about developing the TCBY brand in
these additional countries," said Hartsell Wingfield,
President of TCBY International. "With this agreement, we
will now have distribution in virtually all of Asia and the
Pacific Rim."
International Development -2- September 18, 1996
TCBY now has development agreements for the following
countries in Asia/Pacific Rim: Australia, China, Hong Kong,
India, Indonesia, Japan, Macao, Malaysia, New Zealand, the
Philippines, Singapore, South Korea, Thailand and Vietnam.
In addition, regional manufacturing operations have been
established by master franchisees for "TCBY"(Registered)
frozen yogurt products in China and South Korea, a second
plant is under development in China, and one is under
construction in Thailand.
The five new countries have a combined population of over
110 million people. American food concepts are very popular
in the area and there is a growing consumer trend toward
lighter foods. All of these countries are experiencing
expanding economies.
TCBY Enterprises, Inc., through subsidiary companies,
manufactures and sells soft serve frozen yogurt, hardpack
frozen yogurt, hardpack ice cream, and frozen novelty
products, and markets foodservice equipment. The Company is
the world's largest manufacturer-franchisor of frozen
yogurt.
-30-
Exhibit 99(c)
PRESS RELEASE
FOR IMMEDIATE RELEASE
FRIDAY
SEPTEMBER 20, 1996
CONTACT PERSON: STACY DUCKETT, VICE PRESIDENT
CORPORATE COMMUNICATIONS
(501) 688-8229
TCBY REPORTS THIRD QUARTER EARNINGS
INCREASE 72 PERCENT
LITTLE ROCK, AR - Friday (September 20) - TCBY
ENTERPRISES, INC. (NYSE:TBY) today announced net income for
the third quarter of 1996 improved 72 percent to $3,755,387
or $.15 per share, from $2,188,584, or $.09 per share, for
the same period of 1995. Net income for the first nine
months of 1996 improved to $5,703,931 or $.23 per share,
from $193,392, or $.01 per share, for the same period in
1995. The improvements were primarily achieved through
growth in non-traditional franchise development, and the
Company's restructuring announced in November, 1995,
including the franchising of Company-owned stores resulting
in reduced overhead, and a focus on geographic regions where
the Company's hardpack frozen products can be delivered and
marketed in a more efficient manner.
Sales and franchising revenues for the third quarter ended
August 31, 1996 and 1995 were $30,221,179 and $39,238,810,
respectively. Sales and franchising revenues for the first
nine months of 1996 and 1995 were $75,443,872 and
$99,969,345, respectively. The declines in sales and
franchising revenues primarily result from the execution of
the Company's strategic decisions to franchise its
Company-owned stores; to sell the marketing and distribution
rights to its refrigerated yogurt line; and to refocus the
geographic regions where the Company's hardpack frozen
products are marketed.
TCBY had 2,781 total locations at the conclusion of the
third quarter of 1996. These locations consisted of 1
company-owned store, 209 international locations, 1,340
non-traditional locations and 1,231 franchised stores. The
Company continues
3rd Quarter Earnings -2- September 20, 1996<PAGE>
to pursue the development of franchised non-traditional
locations with an emphasis on convenience stores operated in
association with national petroleum companies. As of August
31, 1996, the Company had opened 184 of these petroleum
locations and had an additional 80 locations under agreement
for development in 1996. Agreements have been signed for
multi-location developments with many major petroleum
companies including Texaco, Citgo, and Exxon. These
locations offer dual-branding opportunities with other
national food companies.
Following the close of the third quarter, the Company
announced it had executed a franchise development agreement
for Australia, New Zealand, Singapore, Malaysia, and
Vietnam. In addition, an agreement for the development of
Ecuador was signed late in the third quarter. The Company
now has development agreements in 38 countries.
"We are very pleased with our third quarter results and the
significant improvements we are experiencing," said Herren
Hickingbotham, President and Chief Operating Officer. "We
are excited about our development opportunities through
non-traditional and co-branded locations, through
conversions and expansion of the TCBY Treats program in our
traditional franchise stores and through international
growth. The reductions in selling, general and
administrative expenses have been maintained throughout the
year, and we continue to focus on improving sales and
profitability."
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. During this fiscal
year, the Company has purchased over 900,000 shares.
Purchases have been made utilizing the Company's cash from
operations.
The Board of Directors of the Company declared a $.05 per
share cash dividend payable on October 14, 1996 to
shareholders of record as of October 4, 1996.
TCBY Enterprises, Inc., through subsidiary companies,
manufactures and sells soft serve frozen yogurt, hardpack
frozen yogurt, hardpack ice cream, and frozen novelty
products, and markets foodservice equipment. The Company is
the largest manufacturer-franchisor of frozen yogurt in the
world.
3rd Quarter Earnings -3- September 20, 1996
TCBY Enterprises, Inc.
Selected Financial Highlights
($000, Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
August 31, August 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Operating Results
Sales & Franchising Revenue $30,221 $39,239 $75,444 $99,969
Net Income $ 3,755 2,189 5,704 193
Net Income Per Share $ .15 .09 .23 .01
Average Shares Outstanding 25,036 25,585 25,293 25,579
Dividends Paid Per Share $ .05 .05 .15 .15
</TABLE>
<TABLE>
<CAPTION>
August 31, November 30,
1996 1995
<S> <C> <C>
Financial Position
Current Assets $ 47,676 $ 51,357
Current Liabilities $ 13,033 $ 14,668
Property, Plant & Equipment, Net $ 44,403 $ 45,710
Total Assets $107,195 $111,625
Long-term Debt, less current portion $ 10,262 $ 12,641
Stockholders' Equity $ 80,383 $ 82,179
</TABLE>
-30-
Exhibit 99(d)
PRESS RELEASE
FOR IMMEDIATE RELEASE
TUESDAY
SEPTEMBER 24, 1996
CONTACT PERSON: STACY DUCKETT, VICE PRESIDENT
CORPORATE COMMUNICATIONS
(501) 688-8229
TCBY ANNOUNCES ACQUISITION
OF JUICE WORKS(Registered) CONCEPT
LITTLE ROCK, AR - Tuesday (September 24) - TCBY ENTERPRISES,
INC.
(NYSE:TBY) today announced the acquisition of substantially
all of the assets of two companies which owned and
franchised Juice Works(Registered), a Phoenix-based juice
and smoothie bar operation. The Company intends to
franchise the Juice Works(Registered) concept domestically
and internationally.
The Juice Works(Registered) concept was operated by Robert
and Shelley Sikora, who will remain with the new TCBY
subsidiary, Juice Works Development, Inc., to assist in the
development of the concept. There are currently 2 locations
open in the Phoenix area and 4 more under development. The
Company plans to expand into other major markets in the
immediate future, including Dallas, Tempe and Tucson, and
has received inquiries from around the U.S., Europe, and
Australia. The Juice Works(Registered) concept will be
developed through franchising of both traditional and
non-traditional locations. Co-branding with
"TCBY"(Registered) locations and other foodservice concepts
will also be available.
Forbes magazine, in April, noted juice bars as one of the
hottest concepts in the food business. A Juice
Works(Registered) store offers a menu of fruit and vegetable
juices, fresh-made fruit smoothies made with frozen yogurt,
nutritional supplements to add to juices and smoothies, and
lowfat/nonfat baked goods. The juice drinks and fruit
smoothies are appealing not only to the health-conscious,
but are a delicious, nutritional alternative as a meal
substitute.
Juice Works -2- September 24, 1996
"Juice Works is an exciting acquisition for the Company,"
said Herren Hickingbotham, President and Chief Operating
Officer, TCBY Enterprises, Inc. "Juice Works is one of the
better positioned concepts in this exciting, emerging
category in the franchise industry. It is a health-oriented
concept, and fits well with the TCBY image of offering
quality, healthy products to consumers. From a co-branding
standpoint with TCBY, the Juice Works menu is an excellent
complement to our frozen treats dayparts. We look forward
to developing the Juice Works concept into a national and
international operation."
"Juice Works will benefit greatly from TCBY's experience,"
said Shelley Sikora, now Vice President of Development for
Juice Works Development, Inc. "They have the expertise and
systems in place to develop, support, supply and equip a
major franchise system. TCBY developed the #1 brand of
frozen yogurt in the world and we look forward to applying
that expertise in building the Juice Works brand rapidly. "
Closing date for the acquisition was September 11. The
Company did not disclose the details of the purchase.
TCBY Enterprises, Inc., through subsidiary companies,
manufactures and sells soft serve frozen yogurt, hardpack
frozen yogurt, hardpack ice cream, and frozen novelty
products, and markets foodservice equipment. The Company is
the world's largest manufacturer-franchisor of frozen
yogurt.
-30-
