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 March 1, 1998
______________
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to
_____________
Commission file number 1-10046
_________
TCBY ENTERPRISES, INC.
__________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 71-0552115
_________________________________________________________
(State 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, 1998 there were 23,334,940 shares of the
registrant's common stock outstanding.
Sequential Page No. 1
<TABLE>
TABLE OF CONTENTS
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements (Unaudited) Page
Consolidated Balance Sheets
March 1, 1998 and November 30, 1997 3
Consolidated Statements of Operations
Quarter Ended March 1, 1998 and
March 2, 1997 5
Consolidated Statements of Cash Flows
Quarter Ended March 1, 1998 and
March 2, 1997 6
Notes to Consolidated Financial Statements
March 1, 1998 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
</TABLE>
Sequential Page No. 2
PART 1
FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS (UNAUDITED)
TCBY ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
March 1, November 30,
1998 1997
________________________________
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 14,964,883 $ 19,693,693
Short-term investments 2,374,254 2,406,045
Receivables:
Trade accounts 10,775,710 8,750,207
Notes 2,131,884 2,127,328
Allowance for doubtful accounts
and impaired notes (823,990) (833,447)
_____________ _____________
12,083,604 10,044,088
Refundable income taxes - 12,472
Deferred income taxes 1,086,406 1,086,406
Inventories 12,214,810 10,679,231
Prepaid expenses and other assets 1,804,987 1,549,643
Assets held for sale 754,652 754,652
____________ _____________
TOTAL CURRENT ASSETS 45,283,596 46,226,230
PROPERTY, PLANT, AND EQUIPMENT:
Land 2,866,820 2,866,820
Buildings 24,062,521 23,753,155
Furniture, vehicles, and equipment 50,181,571 49,987,506
Leasehold improvements 3,629,885 3,625,054
Allowances for depreciation (40,927,604) (39,891,253)
_____________ _____________
39,813,193 40,341,282
OTHER ASSETS:
Notes receivable, less current portion
(less allowance for doubtful and
impaired notes of $7,719,116 in 1998
and $7,741,180 in 1997) 4,994,837 5,495,337
Intangibles (less amortization of
$2,029,597 in 1998 and $1,964,433 in 1997) 4,279,288 4,326,193
Other 2,542,978 2,875,354
_____________ _____________
11,817,103 12,696,884
_____________ _____________
TOTAL ASSETS $ 96,913,892 $ 99,264,396
============= =============
</TABLE>
See notes to consolidated financial statements.
Sequential Page No. 3
TCBY ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
March 1, November 30,
1998 1997
________________________________
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 3,059,544 $ 1,910,414
Accrued expenses 5,253,358 6,612,146
Income taxes payable 66,927 -
Current portion of long-term debt 3,171,448 3,171,448
_____________ _____________
TOTAL CURRENT LIABILITIES 11,551,277 11,694,008
LONG-TERM DEBT, less current portion 5,595,507 6,298,008
DEFERRED INCOME TAXES 3,846,858 3,846,858
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 -
1998 - 27,197,117; 1997 - 27,095,620 2,719,712 2,709,562
Additional paid-in capital 26,318,860 25,761,424
Retained earnings 68,788,706 69,216,099
_____________ _____________
97,827,278 97,687,085
Less treasury stock, at cost (3,750,169
shares in 1998 and 3,515,269 in 1997) (21,907,028) (20,261,563)
_____________ _____________
TOTAL STOCKHOLDERS' EQUITY 75,920,250 77,425,522
_____________ _____________
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 96,913,892 $ 99,264,396
============= =============
</TABLE>
See notes to consolidated financial statements.
Sequential Page No. 4
TCBY ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended
March 1, March 2,
1998 1997
________________________________
<S> <C> <C>
Sales $ 16,728,701 $ 15,884,887
Cost of sales 11,292,515 10,682,965
_____________ _____________
GROSS PROFIT 5,436,186 5,201,922
Franchising revenues:
Initial franchise and license fees 684,980 761,375
Royalty income 1,794,844 1,825,437
_____________ _____________
2,479,824 2,586,812
_____________ _____________
7,916,010 7,788,734
Selling, general, and administrative
expenses 7,003,801 7,527,396
_____________ _____________
INCOME FROM OPERATIONS 912,209 261,338
Other income (expense):
Interest expense (163,616) (202,970)
Interest income 354,534 303,085
Other income 37,779 25,701
_____________ _____________
228,697 125,816
_____________ _____________
INCOME BEFORE INCOME TAXES 1,140,906 387,154
Income tax expense 399,318 135,503
_____________ _____________
NET INCOME $ 741,588 $ 251,651
============= =============
Earnings per share:
Basic $ 0.03 $ 0.01
============= =============
Diluted $ 0.03 $ 0.01
============= =============
Weighted Average Shares Outstanding
Basic 23,468,430 24,471,597
============= =============
Diluted 24,164,665 24,491,551
============= =============
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>
Quarter Ended
March 1, March 2,
1998 1997
________________________________
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 741,588 $ 251,651
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation 1,056,560 1,314,020
Amortization of intangibles 65,163 54,254
Provision for doubtful accounts and
impaired notes 15,699 17,699
Gain on disposal of property and equipment (101) -
Changes in operating assets and liabilities:
Receivables (2,012,868) (2,613,635)
Inventories (1,535,579) (2,094,661)
Prepaid expenses (255,344) (192,607)
Intangibles and other assets 294,897 386,539
Accounts payable and accrued expenses (209,658) 1,201,276
Income taxes 79,399 121,946
_____________ ______________
NET CASH USED IN OPERATING ACTIVITIES (1,760,244) (1,553,518)
INVESTING ACTIVITIES
Purchases of property, plant, and equipment (516,376) (361,661)
Proceeds from sales of property and equipment 7,227 -
Origination of notes receivable (97,909) (53,921)
Principal collected on notes receivable 556,062 278,081
Purchases of short-term investments - (720,000)
Proceeds from maturity of short-term
investments 31,791 807,302
_____________ ______________
NET CASH USED IN INVESTING ACTIVITIES (19,205) (50,199)
FINANCING ACTIVITIES
Proceeds from sale of Common Stock 567,586 4,000
Dividends paid (1,168,981) (1,225,979)
Purchases of treasury stock (1,645,465) (1,096,115)
Principal payments of long-term debt (702,501) (792,862)
_____________ ______________
NET CASH USED IN FINANCING ACTIVITIES (2,949,361) (3,110,956)
_____________ ______________
DECREASE IN CASH AND CASH EQUIVALENTS (4,728,810) (4,714,673)
Cash and cash equivalents at beginning
of period 19,693,693 14,919,008
_____________ ______________
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 14,964,883 $ 10,204,335
============= =============
</TABLE>
See notes to consolidated financial statements.
Sequential Page No. 6
TCBY ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 1, 1998
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
quarter ended March 1, 1998 are not necessarily indicative
of the results that may be expected for the year ended
November 29, 1998. 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, 1997.
NOTE B -- EARNINGS PER SHARE
The following table sets forth the computation of basic and
diluted earnings per share:
<TABLE>
<CAPTION>
1998 1997
________ ________
<S> <C> <C>
Numerator:
Net Income $741,588 $251,651
========== ==========
Denominator:
Denominator for basic earnings
per share -- weighted-average
shares 23,468,430 24,471,597
Potential dilutive effect of
employee stock options 696,235 19,954
__________ __________
Denominator for diluted earnings
per share -- weighted-average
shares and assumed conversions 24,164,665 24,491,551
========== ==========
Basic earnings per share $0.03 $0.01
========== ==========
Diluted earnings per share $0.03 $0.01
========== ==========
</TABLE>
Sequential Page No. 7
During 1998 and 1997, there were outstanding options to
purchase 60,461 and 2,098,688 shares of common stock,
respectively, that were not included in the computation of
diluted earnings per share because the options' exercise
prices were greater than the average market price of the
common shares, therefore, the effect would be antidilutive.
NOTE C -- INVENTORIES
<TABLE>
<CAPTION>
March 1, November 30,
1998 1997
___________________________
<S> <C> <C>
Manufacturing materials and
supplies $ 4,510,470 $ 4,307,719
Finished yogurt products and
other food products 4,421,045 2,929,034
Equipment and other products 3,283,295 3,442,478
___________ ___________
$12,214,810 $10,679,231
=========== ===========
</TABLE>
NOTE D -- ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
March 1, November 30,
1998 1997
____________________________
<S> <C> <C>
Rent $ 662,224 $ 662,224
Compensation 1,240,683 2,534,394
Other 3,350,451 3,415,528
___________ ___________
$ 5,253,358 $ 6,612,146
=========== ===========
</TABLE>
NOTE E -- CONTINGENCIES
A purported investor in a former franchisee claimed
approximately $26 million in trebled damages plus costs and
prejudgment interest from the former franchisee for alleged
fraudulent acts. The compensatory damages requested were
$8.7 million. The Company was also named in this suit as a
defendant. In April, 1997, summary judgment was granted by
the trial court in favor of the Company on the basis that as
a matter of law the Company could not be liable to the
purported investor; the plaintiff has appealed the summary
judgment order, and in response the Company will vigorously
argue that the order should be upheld.
A customer for whom Americana Foods produces private label
products has asserted a claim alleging damages due to
production defects. Immediate and voluntary recalls of
limited quantities of product were undertaken in 1997. The
Company believes sufficient insurance coverage is in place
to cover any potential damages over the uninsured portion
which was accrued in fiscal 1997.
Sequential Page No. 8
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
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. 9
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company's total sales for the first quarter of 1998
increased five percent from sales in the first quarter of
1997. This increase is primarily attributed to improved
sales in the specialty products and equipment distribution
categories as described below. The sales increases were
partially offset due to the divestiture of Carlin
Manufacturing, Inc. ("Carlin") in July, 1997. The Company's
total sales excluding Carlin increased 11 percent in 1998
compared to 1997. The following table sets forth sales by
category within the Company's primary segments (food
products and equipment) of operation:
<TABLE>
<CAPTION>
(dollars in thousands)
1st Quarter 1st Quarter
1998 1997
____________________ ____________________
Sales % Sales %
________ _____ ________ _____
<S> <C> <C> <C> <C>
Food Products:
"TCBY"(registered) frozen
product sales for distribution
to "TCBY"(registerd)locations $ 8,387 50% $ 8,631 54%
Sales of specialty products 4,549 27% 3,024 19%
________ ____ ________ ____
12,936 77% 11,655 73%
Equipment:
Sales by the Company's
equipment distributor 3,408 20% 3,000 19%
Sales of manufactured
specialty vehicles 0 0% 794 5%
________ ____ ________ ____
3,408 20% 3,794 24%
Other 385 3% 436 3%
________ ____ ________ ____
Total Sales $ 16,729 100% $ 15,885 100%
======== ==== ======== ====
</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 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 products
and proprietary ingredients for the manufacture of frozen
products in the countries that produce locally, and (ii)
sales of "TCBY"(registered) frozen packaged products and
other specialty dairy food products to customers including
supermarkets, convenience stores, dairies, foodservice
distributors, club stores, and private label suppliers.
Sequential Page No. 10
Wholesale sales of frozen yogurt and ice cream products
decreased three percent during the first quarter of 1998 as
compared to the first quarter of 1997. The decrease is
attributed primarily to a reduction in the number of
domestic traditional "TCBY"(registered) stores in operation
and decreased sales to international franchisees due to the
economic challenges in Asia which are expected to continue
throughout 1998. The economic challenges in Asia will have
a short-term impact on the Company's international
operations, but are not expected to have a material impact
on the overall earnings for 1998. These decreases were
partially offset by increased purchases by
"TCBY"(registered) non-traditional locations. The Company
continues to develop additional "TCBY"(registered)
non-traditional locations with over 300 "TCBY"(registered)
locations under agreement for development as of March 1,
1998. Most of the "TCBY"(registered) locations under
development will be co-branded locations with petroleum or
other food operations.
The following table sets forth location activity for the
first quarter of 1998 and 1997 for "TCBY"(registered) and
Juice Works(registered) locations:
<TABLE>
<CAPTION>
NON-
FRANCHISED COMPANY INTERNATIONAL TRADITIONAL TOTAL
STORES STORES LOCATIONS LOCATIONS LOCATIONS
1998 1997 1998 1997 1998 1997 1998 1997 1998 1997
____________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
For the first quarter:
Locations open at
beginning of period 1,110 1,198 2 2 229 201 1,467 1,297 2,808 2,698
Opened 5 13 - - 4 11 78 70 87 94
Closed (20) (18) - - (3) (2) (17) (47) (40) (67)
Locations transferred - - - - - - - - - -
____________________________________________________________________
Locations open at
end of period 1,095 1,193 2 2 230 210 1,528 1,320 2,855 2,725
====================================================================
</TABLE>
During the first quarter of 1998, significantly more
"TCBY"(registered) non-traditional locations than
traditional locations opened. While the Company has placed
and continues to place emphasis upon both traditional and
non-traditional locations, the Company has experienced more
non-traditional development in the last few years. The
Company believes this trend will continue during the
remainder of 1998. While different in size and character,
each "TCBY"(registered) location is treated the same in the
site evaluation process, and the Company intends to avoid
approving the placement of a new "TCBY"(registered)
location, be it traditional or non-traditional, so close to
any existing "TCBY"(registered) location that sales of the
two locations would be materially impacted. The
non-traditional locations include sites at airports, travel
plazas, colleges, hospitals, theme parks, stadiums, and
locations in conjunction with petroleum stores and other
food concepts (co-branded locations). The majority of the
78 non-traditional openings in the first quarter of 1998
were "TCBY"(registered) co-branded locations. During the
first quarter of 1998, 17 non-traditional locations were
closed. These locations generally purchased low volumes of
product from the Company. The Company expects that there
may be additional closings of low volume non-traditional
locations as they are not efficient for the Company to
service or the customer to operate. During the first
quarter of 1998, a total of 20 TCBY franchised stores were
closed by franchisees. Each TCBY store closed is the result
Sequential Page No. 11
of the franchisee's evaluation of its financial condition,
cash flow, lease expiration, profitability, and store
operations, among other things. Of the 20 locations closed,
18 operated for a portion of the first quarter of 1998, with
the remainder having originally closed for relocation in
prior years. Included in the franchised and Company-owned
store information are 117 and 157 "TCBY"(registered) stores
closed for relocation or for the season at March 1, 1998 and
March 2, 1997, respectively.
Sales of specialty products increased 50 percent during the
first quarter of 1998 as compared to the first quarter of
1997. This increase is attributed primarily to increased
sales of private label products. The Company has pursued
private label opportunities to utilize the available
capacity at its manufacturing facility in Dallas. Sales
improvements have also occurred due to the introduction of
new "TCBY"(registered) novelty products primarily through
club stores during the second quarter of 1997.
Sales in the Company's equipment segment include (i) sales
from the distribution of equipment to the foodservice
industry and (ii) 1997 sales of manufactured mobile kitchens
and other specialty vehicles primarily to businesses and
governments. Sales in the equipment segment decreased ten
percent during the first quarter of 1998 over the same
period in the prior year due to the sale of the Company's
equipment manufacturer in July, 1997. The decrease was
partially offset by increased sales at the Company's
equipment distributor due to the opening of non-traditional
"TCBY"(registered) locations, some of which purchased a
portion of their original equipment packages from the
Company.
As a percent of sales, cost of sales for the first quarter
of 1998 and 1997 for the Company and its two primary
segments are presented below:
<TABLE>
<CAPTION>
1998 1997
______________________________________________________
<S> <C> <C>
Food Products Segment 66% 65%
Equipment Segment 79% 79%
Company Total 68% 67%
</TABLE>
The increase in the food products segment cost of sales
percentage is due to a number of factors including sales of
specialty products, which generally have a higher cost of
sales percentage than the other food segment categories,
were a larger component of the food products segment sales
in the first quarter of 1998 compared to the prior year.
(See earlier discussion related to sales increases.) In
addition, dairy prices, which are a major component of the
Company's cost of sales, increased during the first quarter
of 1998 compared to 1997. The cost of dairy components is
currently tied to the federal milk orders system. This
market fluctuates based on supply and demand with prices
being variable from month to month. The Company's cost for
dairy components is expected to be slightly higher in the
second quarter of 1998 than during the same period in 1997.
However, current expectations are that the dairy prices may
come down during the later part of 1998.
Sequential Page No. 12
Franchising revenues consist of initial franchise and
license fees and royalty income. In the first quarter of
1998, initial franchise and license fees decreased ten
percent while royalty income decreased two percent from the
same period in 1997. This decrease in franchise and license
fees results primarily from decreased initial international
franchise fees, which was partially offset by increased
development of "TCBY"(registered) non-traditional locations.
The decrease in royalty income is primarily attributable to
fewer traditional "TCBY"(registered) stores and decreased
purchases by international franchisees. These decreases
were partially offset by an increase in the number of
non-traditional locations.
Operating expenses decreased seven percent in the first
quarter of 1998 compared to the same period in 1997. The
decrease is due to the sale of Carlin Manufacturing, Inc. in
July, 1997, and a reduction in other corporate operating
costs. As a percentage of combined sales and franchising
revenues, operating expenses were 36 percent and 41 percent
for the first quarter of 1998 and 1997, respectively.
A key objective of the Company continues to be the
enhancement of shareholder value. As such, the Company's
executive management team will only receive their full
incentive bonus if the Company attains basic earnings per
share of $.46 in 1998, which approximates a 24 percent
increase over 1997. The Company expects revenues from food
products and equipment distribution to increase over 1997
due to continued expansion of co-branded locations and other
manufacturing opportunities.
These forward-looking statements, particularly expectations
regarding dairy costs, the impact of economic challenges in
Asia, and senior management incentive bonuses based on
estimated basic earnings per share of $.46, are based on
certain assumptions regarding the economy, competition,
costs of raw materials, unit openings and closings, sales
volumes per unit, other manufacturing opportunities, no
changes in governmental regulation of the food industry, and
no material event which would impact the reputation of the
Company's manufacturing facility or the Company's ability to
utilize that facility. Should the Company's performance
differ materially from the assumptions regarding these
areas, actual results could vary significantly from the
performance noted in the forward-looking statements. Thus,
the Company cautions readers not to place undue reliance on
any forward-looking statements, which speak only as of the
date made.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically generated cash from operations
sufficient to meet its normal operating requirements.
However, the Company generally 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 $4.8 million
during the first quarter of 1998. This decrease resulted
primarily from (i) purchases of treasury stock, (ii) an
increase in trade accounts receivable and inventory due to
Sequential Page No. 13
normal seasonal increases along with expansion in the
private label products, and (iii) a cash dividend of five
cents per share or $1.2 million paid in January 1998. 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.
In December 1995, the Company was authorized to repurchase
up to three million shares of its outstanding common stock.
Subsequently, repurchases have totaled 2,363,100 shares with
234,900 shares purchased in the first quarter of 1998. The
repurchases were funded with cash flows from operations. In
December, 1997, the Company was authorized to repurchase an
additional two million shares of its outstanding common
stock. Future repurchases will be funded with cash flows
from operations or long-term financing.
The following summarizes statistics related to the Company's
financial position:
<TABLE>
<CAPTION>
March 1, November 30,
1998 1997
___________________________________________________________
<S> <C> <C>
Current Ratio 3.9 to 1.0 4.0 to 1.0
Working Capital (in millions) $33.7 $34.5
Long-Term Debt to Equity Ratio .07 to 1.0 .08 to 1.0
Tangible Net Worth (in millions) $71.6 $73.1
</TABLE>
On March 20, 1998, the Company's Board of Directors declared
a five cents per share dividend payable on April 21, 1998 to
the stockholders of record on April 6, 1998. The Company
will consider adjustments to the dividend rate after giving
consideration to return to stockholders, profitability
expectations and financing needs.
Sequential Page No. 14
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no changes from previously reported litigation.
<TABLE>
<CAPTION>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
<S> <C>
27(a) Article 5, Financial Data Schedule for the
First Quarter 1998 Form 10-Q
27(b) Article 5, Financial Data Schedule for the
First Quarter 1997 Form 10-Q restated for adoption
of Financial Accounting Standards Board Statement
Number 128, Earnings Per Share
99(a) Press release, dated February 9, 1998, "TCBY
Signs Development Agreement With Phillips
Petroleum Company"
99(b) Press release, dated February 18, 1998, "TCBY
Announces New International Development In
Europe"
99(c) Press release, dated March 10, 1998, "TCBY
Reports Improved Operating Results For First
Quarter"
99(d) Press release, dated March 20, 1998, "TCBY
Declares Cash Dividend"
</TABLE>
b) The Company did not file any Reports on Form 8-K
during the quarter ended March 1, 1998.
Sequential Page 15
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: 04/13/98 /s/ Frank D. Hickingbotham
__________________________
Frank D. Hickingbotham,
Chairman of the Board and
Chief Executive Officer
Date: 04/13/98 /s/ Gene Whisenhunt
__________________________
Gene Whisenhunt,
Executive Vice President
Chief Financial Officer
Sequential Page 16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF MARCH 1,
1998 AND THE CONSOLIDATED STATEMENT OF INCOME FOR THE
QUARTER ENDED MARCH 1, 1998 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-29-1998
<PERIOD-END> MAR-01-1998
<CASH> 14,964,883
<SECURITIES> 2,374,254
<RECEIVABLES> 12,907,594
<ALLOWANCES> 823,990
<INVENTORY> 12,214,810
<CURRENT-ASSETS> 45,283,596
<PP&E> 80,740,797
<DEPRECIATION> 40,927,604
<TOTAL-ASSETS> 96,913,892
<CURRENT-LIABILITIES> 11,551,277
<BONDS> 5,595,507
<COMMON> 2,719,712
0
0
<OTHER-SE> 73,200,538
<TOTAL-LIABILITY-AND-EQUITY> 96,913,892
<SALES> 16,728,701
<TOTAL-REVENUES> 19,208,525
<CGS> 11,292,515
<TOTAL-COSTS> 11,292,515
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 15,699
<INTEREST-EXPENSE> 163,616
<INCOME-PRETAX> 1,140,906
<INCOME-TAX> 399,318
<INCOME-CONTINUING> 741,588
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 741,588
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS RESTATED SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF MARCH 2,
1997 AND THE CONSOLIDATED STATEMENT OF INCOME FOR THE
QUARTER ENDED MARCH 2, 1997 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-30-1997
<PERIOD-END> MAR-02-1997
<CASH> 10,204,335
<SECURITIES> 4,165,250
<RECEIVABLES> 13,584,116
<ALLOWANCES> 1,209,645
<INVENTORY> 13,431,313
<CURRENT-ASSETS> 44,554,574
<PP&E> 79,281,788
<DEPRECIATION> 36,799,258
<TOTAL-ASSETS> 100,810,418
<CURRENT-LIABILITIES> 11,978,673
<BONDS> 8,676,594
<COMMON> 2,706,335
0
0
<OTHER-SE> 74,447,715
<TOTAL-LIABILITY-AND-EQUITY> 100,810,418
<SALES> 15,884,887
<TOTAL-REVENUES> 18,471,699
<CGS> 10,682,965
<TOTAL-COSTS> 10,682,965
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 17,699
<INTEREST-EXPENSE> 202,970
<INCOME-PRETAX> 387,154
<INCOME-TAX> 135,503
<INCOME-CONTINUING> 251,651
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 251,651
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
Exhibit 99(a)
PRESS RELEASE
FOR IMMEDIATE RELEASE
MONDAY
FEBRUARY 9, 1998
CONTACT PERSON: STACY DUCKETT, VICE PRESIDENT
CORPORATE COMMUNICATIONS
TCBY ENTERPRISES, INC.
(501) 688-8229
TIM CARLIN, FOODSERVICE DIRECTOR
PHILLIPS PETROLEUM COMPANY
(918) 661-4862
TCBY SIGNS DEVELOPMENT AGREEMENT
WITH PHILLIPS PETROLEUM COMPANY
LITTLE ROCK, AR - Monday (February 9) - TCBY ENTERPRISES,
INC. (NYSE:TBY) today announced it has signed a development
agreement with Phillips Petroleum Company (NYSE:P). Under
terms of the agreement, "TCBY" Treats(registered) locations
may be located in Phillips 66 retail outlets. There are
currently over 10 locations open or under development around
the country. There are approximately 6,900 Phillips 66
locations across the United States.
"TCBY is proud to be working with Phillips Petroleum," said
Herren C. Hickingbotham, President of TCBY Enterprises, Inc.
"Convenience store development remains a strong growth area
for our company. Phillips Petroleum will make a positive
contribution to that growth."
"We are very pleased to be working with TCBY," said Tim
Carlin, Foodservice Director for Phillips. "Phillips
Petroleum realizes the benefits of developing locations with
branded concepts. A TCBY Treats location would be a good
complement to our operations."
Phillips is an integrated petroleum company with 17,000
employees worldwide. Founded in Bartlesville, Oklahoma in
1917, the Company has assets of $14 billion and annual
revenues of $16 billion.
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. The Company, through subsidiaries, develops
locations and products under the "TCBY"(registered) and
Juice Works(registered) brands.
-30-
Exhibit 99(b)
PRESS RELEASE
FOR IMMEDIATE RELEASE
WEDNESDAY
FEBRUARY 18, 1998
CONTACT PERSON: STACY DUCKETT, VICE PRESIDENT
CORPORATE COMMUNICATIONS
(501) 688-8229
TCBY ANNOUNCES NEW INTERNATIONAL DEVELOPMENT
IN EUROPE
LITTLE ROCK, AR - Wednesday (February 18, 1998) - TCBY
ENTERPRISES, INC. (NYSE:TBY) today announced it has executed
a development agreement for the United Kingdom and Ireland.
TCBY now has development agreements in over 70 foreign
countries.
In excess of 60 stores are planned to be developed over the
next five years within the U.K. and Ireland. Initial
development will be in Ireland with the first location
expected to open by this summer. The Company did not
disclose the specific terms of the agreement.
The United Kingdom and Ireland are top dairy consuming
nations. The U.K. is rated number two in per capita
consumption of frozen dairy products in the European
Community. Ireland is rated number three.
"We are very excited about developing the TCBY brand in
Ireland and the U.K.," said Hartsell Wingfield, President of
TCBY International. "With this agreement, we will now have
distribution in over half of Europe."
TCBY Enterprises, Inc., through subsidiary companies,
manufactures and sells soft serve frozen yogurt and sorbet,
hardpack frozen yogurt and ice cream, and frozen novelty
products, and markets foodservice equipment. The Company is
the world's largest manufacturer-franchisor of frozen
yogurt. The Company, through subsidiaries, develops
locations and products under the "TCBY"(registered) and
Juice Works(registered) brands.
-30-
Exhibit 99(c)
PRESS RELEASE
FOR IMMEDIATE RELEASE
TUESDAY
MARCH 10, 1998
CONTACT PERSON: STACY DUCKETT, VICE PRESIDENT
CORPORATE COMMUNICATIONS
(501) 688-8229
TCBY REPORTS IMPROVED OPERATING
RESULTS FOR FIRST QUARTER
LITTLE ROCK, AR - Tuesday (March 10, 1998) - TCBY
ENTERPRISES, INC. (NYSE:TBY) today announced improved
operating results for the first quarter of 1998. Net income
increased to $741,588, or $.03 per share (basic and
diluted), from $251,651, or $.01 per share (basic and
diluted) in 1997. These results represent the best first
quarter earnings performance experienced by the Company
since 1990.
Sales and franchising revenues were $19,208,525 as compared
to $18,471,699 for the same period last year. The sales and
franchising revenues for 1997 includes approximately
$800,000 from Carlin Manufacturing, Inc. which was sold in
July, 1997. The increase in sales and franchising revenues
is primarily attributable to continued growth in co-branded
locations and increased private label sales. Franchising
revenues were adversely impacted by the economic challenges
in Asia, which are expected to continue throughout 1998.
As of March 1, 1998, there were 2,855 "TCBY"(registered) or
Juice Works(registered) locations open, as well as several
thousand retail points-of-sale for "TCBY"(registered)
products worldwide. In addition, there were over 300
"TCBY"(registered) locations under agreement for
development. Most of the "TCBY"(registered) locations under
development will be co-branded locations with other food or
petroleum operations. Juice Works(registered) locations
continue to be opened in travel plazas, airports, and mall
food courts by Host Marriott, generally in conjunction with
"TCBY"(registered) locations.
The Company's expansion worldwide continued during the first
quarter. New development agreements were completed for
Bolivia, Paraguay, Ireland and the United Kingdom. The
economic challenges in Asia will have a short-term impact on
the Company's international operations, but are not expected
to have a material impact on the overall earnings for 1998.
"We are extremely pleased with our first quarter results,"
said Frank D. Hickingbotham, Chairman and Chief Executive
Officer. "We have experienced nine consecutive quarters of
income improvements over the comparable prior periods. The
Company is pleased with our continuing franchising growth as
domestic franchise fees increased 47% in the first quarter
of 1998 compared to the first quarter of 1997."
The Company announced it will conduct 10 regional meetings
with franchisees throughout the country during the second
quarter to introduce marketing programs and new products for
1998. Jim Sahene, President, TCBY Systems, stated, "We have
worked closely with our franchise community to develop these
exciting programs and believe they should provide benefit to
our stores in 1998."
A key objective of the Company continues to be the
enhancement of shareholder value. As such, the Company
announced in January that its executive management team will
only receive their full incentive bonus if the Company
attains basic earnings per share of $.46 in 1998, which
approximates a 24 percent increase over 1997. The Company
expects revenues from food products and equipment sales to
increase over 1997 due to continued expansion of co-branded
locations and other manufacturing opportunities.
These forward-looking statements are based on certain
assumptions regarding the economy, competition, costs of raw
materials, unit openings and closings, sales volumes per
unit, other manufacturing opportunities, no changes in
governmental regulation of the food industry, and no
material event which would impact the reputation of the
Company's manufacturing facility or the Company's ability to
utilize that facility. Should the Company's performance
differ materially from the assumptions regarding these
areas, actual results could vary significantly from the
performance noted in the forward-looking statements. Thus,
the Company cautions readers not to place undue reliance on
any forward-looking statements, which speak only as of the
date made.
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. To date, the
Company has purchased approximately 2.4 million shares under
this authorization. In December, 1997, the Board of
Directors authorized the purchase of an additional two
million shares of the Company's stock. To date, purchases
have been made utilizing the Company's cash from operations.
TCBY Enterprises, Inc., through subsidiary companies,
manufactures and sells soft serve frozen yogurt, hardpack
frozen and ice cream, and frozen novelty products, and
markets foodservice equipment. The Company is the world's
largest manufacturer-franchisor of frozen yogurt. The
Company, through subsidiaries, develops locations and
products under the "TCBY"(registered) and Juice
Works(registered) brands.
TCBY Enterprises, Inc.
Selected Financial Highlights
(In Thousands, Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
March 1, March 2,
1998 1997
<S> <C> <C>
Operating Results
Sales & Franchising Revenues $19,209 $18,472
Net Income $ 742 $ 252
Basic Earnings Per Share $ .03 $ .01
Average Shares Outstanding 23,468 24,472
Diluted Earnings Per Share $ .03 $ .01
Diluted Shares 24,165 24,492
Dividends Paid Per Share $ .05 $ .05
</TABLE>
<TABLE>
<CAPTION>
March 1, November 30,
1998 1997
<S> <C> <C>
Financial Position
Current Assets $45,284 $46,226
Current Liabilities 11,551 11,694
Property, Plant & Equipment, Net 39,813 40,341
Total Assets 96,914 99,264
Long-term Debt, less current portion 5,596 6,298
Stockholders' Equity 97,827 97,687
Less Treasury Stock (21,907) (20,262)
Total Stockholders' Equity 75,920 77,426<PAGE>
</TABLE>
Exhibit 99(d)
PRESS RELEASE
FOR IMMEDIATE RELEASE
FRIDAY
MARCH 20, 1998
CONTACT PERSON: STACY DUCKETT, VICE PRESIDENT
CORPORATE COMMUNICATIONS
(501) 688-8229
TCBY DECLARES CASH DIVIDEND
LITTLE ROCK, AR - Friday, March 20, 1998 - TCBY ENTERPRISES,
INC. (NYSE:TBY) today announced the Board of Directors of
the Company declared a $.05 per share cash dividend. This
dividend is payable on April 21, 1998 to shareholders of
record as of April 6, 1998.
TCBY Enterprises, Inc., through subsidiary companies,
manufactures and sells soft serve frozen yogurt, hardpack
frozen yogurt and ice cream, and frozen novelty products,
and markets foodservice equipment. The Company is the
world's largest manufacturer-franchisor of frozen yogurt.
The Company, through subsidiaries, develops locations and
products under the "TCBY"(registered) and Juice
Works(registered) brands.
-30-
