<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996.
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM________________
COMMISSION FILE NUMBER............................. 0-15227
THE DWYER GROUP, INC.
- -------------------------------------------------------------------------------
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
Delaware 73-0941783
- -------- ----------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
1010 N. University Parks Dr., Waco, TX 76707
-----------------------------------------------------
(ADDRESS AND ZIP CODE OF PRINCIPAL EXECUTIVE OFFICES)
(817) 745-2400
---------------
(ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)
- -------------------------------------------------------------------------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
Class Outstanding at July 31, 1996
- ------------------------------ ----------------------------
Common stock, $.10 par value 7,113,127
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE): Yes No X
--- ---
<PAGE>
THE DWYER GROUP, INC.
INDEX
PART I - FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements
------
Consolidated Balance Sheets as of June 30, 1996 (unaudited)
and December 31, 1995....................................... 3 - 4
Consolidated Statements of Income for the Three Months and
Six Months Ended June 30, 1996 and 1995 (unaudited)......... 5
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 1996 and 1995 (unaudited).................... 6 - 7
Notes to Consolidated Financial Statements.................. 8 - 9
Item 2. Management's Discussion and Analysis
------
of Financial Condition and Results of Operations............ 10 - 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings........................................... 13
------
Item 2. Changes in Securities....................................... 13
------
Item 3. Defaults Upon Senior Securities............................. 13
------
Item 4. Submission of Matters to a Vote of Security Holders......... 13
------
Item 5. Other Information........................................... 13
------
Item 6. Exhibits and Reports on Form 8-K............................ 13
------
2
<PAGE>
THE DWYER GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 30, DECEMBER 31,
1996 1995
----------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,118,189 $ 3,446,166
Short-term investments 1,000,000 1,000,000
Trade accounts receivable, net of allowance for
doubtful accounts of $566,874 and $491,613,
respectively 708,345 696,389
Accounts receivable from related parties 862,994 825,029
Accrued interest receivable 211,739 150,748
Trade notes receivable, current portion 916,873 826,418
Inventories 164,740 136,728
Prepaid expenses 308,978 148,854
Federal income tax receivable 107,064 646,641
----------- -----------
TOTAL CURRENT ASSETS 7,398,922 7,876,973
ACCOUNTS RECEIVABLE FROM
RELATED PARTIES, long term portion 95,416 97,916
PROPERTY AND EQUIPMENT, at cost less
accumulated depreciation 1,522,033 1,472,863
ASSETS HELD FOR SALE 1,118,252 1,187,101
TRADE NOTES RECEIVABLE, long-term portion,
net of allowance for doubtful notes of $919,271 and
$855,849, respectively 4,939,526 4,478,071
PURCHASED FRANCHISE RIGHTS, at cost less
accumulated amortization of $406,930 and $331,466,
respectively 1,262,054 1,337,518
PATENTS AND TRADEMARKS, at cost less
accumulated amortization of $28,914 and $24,150,
respectively 141,903 108,098
NOTES RECEIVABLE FROM RELATED PARTIES 649,412 653,403
INVESTMENT, equity method 391,599 428,423
OTHER ASSETS 253,991 199,778
----------- -----------
TOTAL ASSETS $17,773,108 $17,840,144
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
THE DWYER GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 30, DECEMBER 31,
1996 1995
------------ -------------
<S> <C> <C>
CURRENT LIABILITIES:
Trade accounts payable $ 821,424 $ 883,307
Accounts payable to related parties 46,300 222,227
Accrued liabilities 1,088,780 1,262,747
Other payables 47,523 67,759
Current portion of notes payable and capital
lease obligations 128,282 228,170
----------- -----------
TOTAL CURRENT LIABILITIES 2,132,309 2,664,210
NOTES PAYABLE, less current portion 261,478 246,458
DEFERRED FRANCHISE SALES REVENUE 2,533,701 2,652,057
FRANCHISE FUNDS HELD FOR ADVERTISING 259,550 318,447
DEFERRED TAX LIABILITY 58,147 58,147
----------- -----------
TOTAL LIABILITIES 5,245,185 5,939,319
STOCKHOLDERS' EQUITY:
Preferred stock, $1 par value - shares authorized,
500,000; outstanding, none - -
Common stock, authorized 15,000,000 shares of
$.10 par value; issued 7,235,552 shares at
June 30, 1996 and December 31, 1995, respectively 723,556 723,556
Additional paid-in capital 8,941,029 8,941,029
Retained earnings 3,378,355 2,751,257
Note receivable from shareholder (418,896) (418,896)
Treasury stock, at cost (122,425 shares at June 30, 1996
and December 31, 1995, respectively) (96,121) (96,121)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 12,527,923 11,900,825
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $17,773,108 $17,840,144
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
THE DWYER GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, THREE MONTHS ENDED JUNE 30,
1996 1995 1996 1995
----------------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
REVENUES:
Royalty income $3,545,455 3,130,097 $1,825,895 $1,693,989
Franchise sales 2,158,718 2,495,364 1,070,870 1,144,496
Tax services 528,188 502,230 194,602 200,658
Product sales 448,001 340,807 197,014 122,354
Interest and other, net 640,597 604,757 279,056 307,891
---------- ---------- ---------- ----------
7,320,959 7,073,255 $3,567,437 $3,469,388
COSTS AND EXPENSES:
Cost of product sales 247,832 128,903 117,771 59,134
Cost of tax services 521,682 713,649 241,928 347,320
General, administrative, selling 5,314,477 5,116,174 2,598,271 2,691,025
Depreciation and amortization 253,276 190,124 131,133 102,042
Interest 28,904 27,286 11,197 11,430
---------- ---------- ---------- ----------
6,366,171 6,176,136 3,100,300 3,210,951
Income before provision for federal income taxes 954,789 897,119 467,137 258,437
Provision for federal income taxes 327,690 269,136 156,936 58,233
---------- ---------- ---------- ----------
Net income $ 627,099 $ 627,983 $ 310,201 200,204
========== ========== ========== ==========
Income per common and dilutive share:
Income before federal income taxes $.13 .12 .06 $ .04
Provision for federal income taxes (.05) (.04) (.02) (.01)
---------- ---------- ---------- ----------
Net income per share $.08 $.08 $.04 $ .03
========== ========== ========== ==========
Weighted average common and dilutive common
equivalent shares outstanding:
Primary 7,334,666 7,366,340 7,334,951 7,371,983
========== ========== ========== ==========
Fully Dilutive 7,335,882 7,374,316 7,377,384 7,387,935
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
THE DWYER GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------
1996 1995
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 627,099 $ 627,984
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 253,276 190,124
Provision for doubtful accounts and notes
receivable 181,927 (110,783)
Notes receivable written off - 303,037
Income recognized from sales previously deferred (394,594) (46,812)
Sales of franchises for installment notes receivable (1,310,792) (1,343,889)
Payments received on notes receivable 661,954 706,678
Sales of franchises on which revenues were deferred 276,238 71,871
Equity in earnings of investment 36,824 29,456
Change in assets and liabilities:
Accounts receivable (11,956) 35,321
Accrued interest receivable (60,991) 31,238
Inventories (28,012) (17,183)
Prepaid expenses (160,124) (217,269)
Federal income tax receivable 539,577 -
Other assets (54,213) (205,523)
Deferred tax asset and liability - 61,618
Accounts payable and accrued liabilities (235,850) (221,538)
Accounts payable to related parties (175,927) -
Income tax payable - (333,915)
Other payables (20,236) (3,811)
Loss on disposal of assets held for sale 5,001 -
Franchisee funds held for advertising (58,897) 132,169
--------- ----------
Net cash provided by (used in) operating activities 70,304 (311,227)
--------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (210,097) (251,587)
Payments for patents and trademarks (38,569) (20,071)
Net change in notes and accounts receivable
from related parties (31,474) (262,618)
Acquisition of assets held for sale (76,173) (690,584)
Proceeds from disposal of assets held for sale 42,900 -
Franchise resale liabilities - 447,077
Purchase franchise rights - 19,651
--------- ----------
Net cash provided by (used in) investing activities (313,413) (758,132)
--------- ----------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
6
<PAGE>
THE DWYER GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------
1996 1995
---------- ----------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt issued 330,118 -
Principal payments of debt (414,986) (87,097)
Sale of treasury stock - 55,590
Sale of stock - 100
---------- ----------
Net cash provided by (used in) financing activities (84,868) (31,407)
---------- ----------
Net decrease in cash and cash equivalents (327,977) (1,100,766)
Cash and cash equivalents, at beginning of year 3,446,166 4,819,795
---------- ----------
Cash and cash equivalents, at June 30 $3,118,189 $3,719,029
========== ==========
Supplemental schedule of non cash investing activities:
Transfers from notes receivable to assets held for sale $ 74,522 -
Additions to notes receivable from sales of assets held $ 196,650 -
for sale
Transfers from accounts receivable to assets held for
sale $ 15,008 -
Additions to assets held for sale from liabilities
assumed $ 10,000 -
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
7
<PAGE>
THE DWYER GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
A. ORGANIZATION
------------
The Dwyer Group, Inc. (the "Parent") is a holding company for service-based
businesses providing specialty services internationally through franchising.
The consolidated financial statements include the accounts of The Dwyer Group,
Inc. and its wholly-owned Subsidiaries (the "Company"). All material
intercompany accounts and transactions have been eliminated in consolidation.
The Company was incorporated in 1970 in the State of Oklahoma under the name
Mr. Rooter Corporation of America, Inc. The Company's name was changed to Mr.
Rooter Corporation in 1972, and 1986 it was reincorporated as a Delaware
corporation. Until May 1, 1993, the Company operated in two segments:
franchising plumbing repair and sewer and drain cleaning services as well as
manufacturing and selling sewer and drain cleaning equipment and supplies. On
May 1, 1993, substantially all of the assets of the manufacturing operations
were sold.
On March 1, 1993, the Company, through Rooter's wholly-owned subsidiary Aire
Serv Heating and Air Conditioning, Inc. ("Aire Serv"), began to grant licenses
to operate air conditioning and heating repair services under the trade name
Aire Serv.
On June 1, 1993, the Company acquired all of the shares of common stock of
Rainbow International Carpet Dyeing & Cleaning Co. ("Rainbow"), and General
Business Services, Inc. ("GBS") from its majority stockholder for 8,070,000
shares (4,035,000 shares after reverse split) of common stock. With the
acquisition of GBS, the Company began operating in another segment, tax
services, through GBS's wholly-owned subsidiary, General Tax Services, Inc.
("GTS"). These acquisitions have been accounted for similar to a pooling of
interests because all companies were under common control.
Following the acquisition of Rainbow and GBS, the Board of Directors approved a
plan to convert the Company into a holding company and to form a new subsidiary
to operate the Mr. Rooter business. On July 30, 1993, this new subsidiary was
incorporated in Texas under the name Mr. Rooter Corporation and the Company was
renamed The Dwyer Group, Inc.
Effective May 1, 1994, the Company acquired Edwin K. Williams & Co. ("EKW"), a
wholly-owned subsidiary of Ekwill Acquisition Corporation ("Ekwill"), a
California corporation, for approximately $1,150,000 cash by purchasing all of
the outstanding capital stock of Ekwill from Ekwill's two shareholders. The
acquisition of Ekwill has been accounted for using the purchase method of
accounting; accordingly, assets acquired and liabilities assumed were recorded
at their estimated fair values.
Effective September 1, 1994, EKW purchased 33 1/3% of the capital stock of
Service Station Computer Systems, Inc. ("SSCS") for $500,000 cash. The
investment in SSCS has been accounted for under the equity method.
On September 6, 1994, the Company formed a new wholly-owned subsidiary. Mr.
Electric Corp. ("Electric"), is a Texas corporation engaged in franchising
electrical contracting service businesses.
B. PRINCIPLES OF CONSOLIDATION
---------------------------
The accompanying consolidated financial statements include The Dwyer Group,
Inc. and its subsidiaries (the "Company"). All significant intercompany
balances and transactions have been eliminated.
C. INTERIM DISCLOSURES
-------------------
The information as of June 30, 1996 and for the six months ended June 30, 1996
and 1995 is unaudited, but in the opinion of management, reflects all
adjustments, which are of a normal recurring nature, necessary for a fair
presentation of financial position and results of operations for the interim
periods. The accompanying consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
contained in the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1995.
8
<PAGE>
The results of operations for the six months ended June 30, 1996 are not
necessarily indicative of the results to be expected for the fiscal year ending
December 31, 1996.
D. RECLASSIFICATIONS
-----------------
Certain reclassifications have been made to the 1995 consolidated financial
statements to conform to the presentation used in the 1996 consolidated
financial statements. These reclassifications had no effect on stockholders'
equity or net income.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. EARNINGS PER COMMON SHARE
-------------------------
Earnings per share of common stock is computed by dividing net income by the
weighted average number of shares and common equivalent shares outstanding
during each of the periods. Earnings per share include the dilutive effect of
unexercised stock options and warrants.
NOTE 3. RECENT ACCOUNTING STANDARDS
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets to be Disposed Of" is
required to be implemented for fiscal years beginning after December 15, 1995.
Accordingly, the Company is implementing this pronouncement during the fiscal
year ending December 31, 1996. The effect of this pronouncement on the
Company's consolidated financial condition and results of operations is not
considered to be material.
THIS PORTION LEFT INTENTIONALLY BLANK.
9
<PAGE>
THE DWYER GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Company's working capital ratio was approximately 3.5 to 1 at June 30, 1996
as compared to 3.0 to 1 at December 31, 1995. In addition, the Company had
working capital of approximately $5,266,613 at June 30, 1996 as compared to
approximately $5,213,000 at December 31, 1995. For the remainder of fiscal
1996 management expects to fund working capital requirements primarily through
operating cash flow. At June 30, 1996 and December 31, 1995, the Company had
cash and cash equivalents of $3,118,000 and $3,446,000, respectively.
Net trade accounts receivable increased approximately $12,000 from December 31,
1995 to June 30, 1996. Allowance for doubtful accounts increased approximately
$75,000 from December 31,1995, to June 30, 1996.
Trade notes receivable increased approximately $682,000 (13.2%) coinciding with
approximately $2,200,000 in franchise sales for the first six months of 1996.
The Company will finance a portion of franchise sales if the buyer is
qualified.
Federal income tax receivable decreased $540,000 due to the receipt of
approximately $212,000 in federal income tax refunds from the Internal Revenue
Service and the federal income tax provision of approximately $328,000 for the
six months ended June 30, 1996.
Accounts receivable from related parties increased $35,000, whereas accounts
payable to related parties decreased $176,000. Related party receivables
relate to shared expenses and administrative fees billed to related parties by
the Company during the first six months of 1996.
RESULTS OF OPERATIONS
---------------------
For the six months ended June 30, 1996, compared to the six months ended June
-----------------------------------------------------------------------------
30, 1995.
---------
Total revenues increased $248,000 (3.5%) to $7,321,000 for the six months ended
June 30, 1996, from revenues of $7,073,000 for the six months ended June 30,
1995. The increase in revenues is mainly attributable to increases in royalty
income of $415,000 (13.3%) and product sales of $107,000 (31.5%). These
increases were partially offset by a decrease in franchise sales of $337,000
(13.5%) for the six months ended June 30, 1996, when compared to the first six
months of 1995.
Royalty income of Mr. Rooter accounted for $255,000 (27.2% increase) of the
total $415,000 increase in royalty income for the six months ended June 30,
1996, as compared to the first six months of 1995. Aire Serv, Mr. Electric,
Rainbow, and GBS/EKW continued to grow throughout the six months ended June 30,
1996, and contributed approximately $71,000 (91.4% increase), $35,000 (952.2%
increase), $26,000 (2.4% increase), and $30,000 (3.0% increase), respectively,
in increased royalty income when compared to the same period in 1995.
For the six months ended June 30, 1996, Mr. Rooter produced increased franchise
sales of $323,000 (89.3%) when compared to the same period in 1995. In
addition, Rainbow and Mr. Electric produced franchisee sales increases of
$61,000 (30.1%) and $33,000 (16.0%), respectively for the same time period.
These franchise sales increases were offset by franchise sales decreases in GBS
of $477,000 (36.2%) and Aire Serv of $277,000 (68.1%). The GBS decrease in
franchise sales is attributable to the strategic decision by the Company to
minimize the sale of GBS regional franchises during 1996. Whereas the decline
in Aire Serv franchise sales is
10
<PAGE>
THE DWYER GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
RESULTS OF OPERATIONS (CONTINUED)
---------------------------------
primarily attributable to the 1995 reorganization and restructure of the Aire
Serv franchise sales department which has yet to recognize the efficiencies of
the reorganization unlike Mr. Rooter and Mr. Electric, whose franchise sales
advances were detailed above.
GBS and E.K. Williams added approximately $448,000 in product sales for the six
months ended June 30, 1996, when compared to $341,000 in product sales for the
six months ended June 30, 1995. GBS and EKW sell products such as record
keeping systems and forms to their franchisees.
Costs and expenses increased $190,000 (3.1%) to $6,366,000 for the six months
ended June 30, 1996, from $6,176,000 for the first six months of 1995. The
major contributor to these increased expenses is the increased employee costs
as a result of the 1995 restructuring of the administrative, franchise sales,
and franchise management functions of the operating subsidiaries and the 1995
creation of several new corporate departments.
For the six months ended June 30, 1996, the Company achieved net income of
$627,000 or 8 cents per share as compared to $628,000 or 8 cents per share for
the six months ended June 30, 1995. Income before federal income taxes for the
first six months of 1996, increased to $955,000 or 13 cents per share from
$897,000 or 12 cents per share for the first six months of 1995, a 6.5%
increase.
For the three months ended June 30, 1996, compared to the three months ended
----------------------------------------------------------------------------
June 30, 1995.
--------------
Revenues increased approximately $98,000 (2.8%) for the quarter ended June 30,
1996, when compared to the second quarter of 1995. The increase in revenues is
mainly attributable to increases in royalty income of $132,000 (7.8%) and
product sales of $75,000 (61.0%). These revenue increases were partially
offset by decreased franchise sales of approximately $74,000 (6.4%) and
decreased interest and other income of approximately $29,000 (9.4%).
Rainbow, Mr. Rooter, Aire Serv, Mr. Electric and GBS/EKW produced royalty
income increases of $41,000 (6.9%), $35,000 (7.1%), $34,000 (91.4%), $20,000
(694.8%), and $19,000 (3.5%), respectively.
For the quarter ended June 30, 1996, when compared to the second quarter of
1995, Aire Serv, GBS and Mr. Electric reported franchise sales decreases of
$294,000 (92.4%), $204,000 (37.3%), and $40,000 (30,7%), respectively. These
franchise sales decreases were partially offset by franchise sales increases
from Mr. Rooter of $422,000 (530.1%) and from Rainbow of $41,000 (57.0%).
Costs and expenses decreased approximately $111,000 (3.5%) in the second
quarter of 1996 compared to the second quarter of 1995. This decrease is
primarily due to a downsizing of employees at General Tax Services, a wholly-
owned subsidiary of GBS, and the nonrecurring losses recognized during the
second quarter of 1995 relating the repurchase of several Aire Serv franchises.
These decreases were partially offset by increased employee costs as a result
of the 1995 creation of several corporate departments.
Income before provision for federal income taxes increased approximately
$209,000 (80.8%) for the quarter ended June 30, 1996 to 467,000 as compared to
$258,000 for the same period in 1995. Net income increased approximately
$110,000 (54.9%) or over 1 cent a share for the quarter ended June 30, 1996 as
compared to the same period in 1995.
IMPACT OF INFLATION
-------------------
Inflation has not had a material impact on the operations of the Company.
11
<PAGE>
THE DWYER GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
FOREIGN OPERATIONS
------------------
The Company and its subsidiaries operate in fourteen (14) countries. Income
from master licenses is recorded as received due to the difficulty sometimes
experienced in foreign countries when attempting to remove income generated
from royalties. The Company does not depend on foreign operations to have a
significant impact on its cash flow. Typically, foreign franchises are sold
and managed by a master licensee in that country. During the remainder of
1996, the Company may produce additional master license sales which could
result in each case in a one time, lump sum payment from the master licensee to
the company.
OTHER DISCLOSURES
-----------------
Weighted average common and dilutive common equivalent shares outstanding have
continued to increase as outstanding stock options held by management and
employees are exercised or become dilutive. This trend could continue when the
Company's stock price rises.
THIS PORTION IS INTENTIONALLY LEFT BLANK.
12
<PAGE>
PART II
OTHER INFORMATION
THE DWYER GROUP, INC. AND SUBSIDIARIES
LEGAL PROCEEDINGS
NONE
CHANGES IN SECURITIES
(a) NONE
(b) Not applicable.
DEFAULTS UPON SENIOR SECURITIES
NONE
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
OTHER INFORMATION
NONE
EXHIBITS AND REPORTS ON FORM 8-K
(a) NONE
(b) Reports on Form 8-K
NONE
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
The Dwyer Group, Inc.
By: \s\ Robert Tunmire
-------------------------------------
Robert Tunmire
President and Chief Executive Officer
Date: August 8, 1996 \s\ Robert Tunmire
-------------- ---------------------------------
Robert Tunmire, President and
Chief Executive Officer
(Principal Executive Officer)
Date: August 8, 1996 \s\ Stephen E. Beatty
-------------- ---------------------------------
Stephen E. Beatty, Treasurer and
Chief Financial Officer
(Principal Financial and Accounting Officer)
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATIONS EXTRACTED FROM JUNE 30,
1996 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 4,118,189
<SECURITIES> 0
<RECEIVABLES> 9,977,514
<ALLOWANCES> 1,486,145
<INVENTORY> 164,740
<CURRENT-ASSETS> 7,398,922
<PP&E> 2,369,741
<DEPRECIATION> 847,708
<TOTAL-ASSETS> 17,773,108
<CURRENT-LIABILITIES> 2,132,309
<BONDS> 389,760
0
0
<COMMON> 723,556
<OTHER-SE> 11,804,367
<TOTAL-LIABILITY-AND-EQUITY> 17,773,108
<SALES> 2,606,719
<TOTAL-REVENUES> 7,320,959
<CGS> 247,832
<TOTAL-COSTS> 6,366,171
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 181,927
<INTEREST-EXPENSE> 28,904
<INCOME-PRETAX> 954,789
<INCOME-TAX> 327,690
<INCOME-CONTINUING> 627,099
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 627,099
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
