<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 SEPTEMBER 30, 1997.
-------------------
__ 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
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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 October 31, 1997
- - ------------------------------ -------------------------------
Common stock, $.10 par value 6,775,427
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
-------
Condensed Consolidated Balance Sheets
as of September 30, 1997 (unaudited)
and December 31, 1996.............................................3
Consolidated Statements of Income for
the Three Months Ended September 30, 1997
and 1996 (unaudited)..............................................4
Consolidated Statements of Income for
the Nine Months Ended September 30, 1997
and 1996 (unaudited)..............................................5
Condensed Consolidated Statements of
Cash Flows for the Nine Months Ended
September 30, 1997 and 1996 (unaudited)...........................6
Notes to Condensed Consolidated Financial
Statements.................................................. 7 - 8
Item 2. Management's Discussion and Analysis of Financial
-------
Condition and Results of Operations........................ 8 - 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings...........................................10 - 11
-------
Item 2. Changes in Securities...................................... 10 - 11
-------
Item 3. Defaults Upon Senior Securities.............................10 - 11
-------
Item 4. Submission of Matters to a Vote of Security Holders.........10 - 11
-------
Item 5. Other Information...........................................10 - 11
-------
Item 6. Exhibits and Reports on Form 8-K............................10 - 11
-------
2
<PAGE>
THE DWYER GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------ -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................. $ 954,376 $ 1,820,167
Short-term investments, held-to-maturity.............................. 1,166,373 1,084,061
Marketable securities, available-for-sale............................. 1,153,011 709,246
Trade accounts receivable, net of allowance for doubtful
accounts of $369,509 and $429,647, respectively....................... 653,323 616,959
Accounts receivable from related parties.............................. 414,229 317,053
Accrued interest receivable........................................... 223,602 183,272
Trade notes receivable, current portion............................... 1,060,171 686,117
Inventories........................................................... 232,953 143,794
Prepaid expenses...................................................... 479,846 260,947
Federal income tax receivable......................................... 545,039 935,443
Notes receivable from related parties, current portion................ 139,893 130,453
Total current assets.................................................. 7,022,816 6,887,512
Property and equipment, net............................................. 1,112,637 1,259,863
Notes and accounts receivable from related parties...................... 1,287,174 1,413,862
Assets held for sale.................................................... 456,927 452,428
Trade notes receivable, net of allowance for doubtful notes of
$1,123,341 and $1,633,092, respectively............................... 3,970,932 4,521,896
Purchased franchise rights, net......................................... 1,081,505 1,177,929
Investment, equity method............................................... 424,863 389,241
Net deferred tax asset.................................................. 277,700 342,046
Other assets............................................................ 632,325 787,301
------------ ------------
TOTAL ASSETS............................................................ $16,266,879 $17,232,078
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade............................................... $ 763,506 $ 1,007,146
Accounts payable to related parties................................... 101,151 61,490
Accrued liabilities................................................... 943,311 1,172,417
Current portion of notes payable and capital lease obligations........ 177,025 280,689
Total current liabilities............................................. 1,984,993 2,521,742
Long-term debt, less current portion.................................... 514,451 612,381
Deferred franchise sales revenue........................................ 1,762,132 2,250,299
Franchise funds held for advertising.................................... - 459,586
Commitments and contingencies
Stockholders' equity:
Preferred stock....................................................... - -
Common stock.......................................................... 723,556 723,556
Additional paid-in capital............................................ 8,941,029 8,941,029
Retained earnings..................................................... 2,289,471 1,796,836
Unrealized gain on available-for-sale securities...................... 147,368 22,770
Treasury stock, at cost............................................... (96,121) (96,121)
Total stockholders' equity............................................ 12,005,303 11,388,070
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.............................. $16,266,879 $17,232,078
============ ============
</TABLE>
See notes to condensed consolidated financial statements (unaudited).
3
<PAGE>
THE DWYER GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996
------------- -------------
<S> <C> <C>
REVENUES:
Royalties $ 2,007,156 $ 1,778,561
Franchise fees 1,061,084 824,256
Tax services 117,982 121,273
Product sales 157,907 156,816
Interest 156,070 138,483
Other 421,011 413,427
------------- -------------
Total revenues 3,921,210 3,432,816
COSTS AND EXPENSES:
Costs of product and other sales 253,612 77,093
Cost of tax services 187,299 183,151
General, administrative and selling 2,948,881 3,123,902
Depreciation and amortization 135,414 130,750
Interest 13,886 42,252
------------- -------------
Total costs and expenses 3,539,092 3,557,148
Income (loss) before income taxes 382,118 (124,332)
Income tax expense (benefit) 129,909 (33,672)
------------- -------------
Net income (loss) $ 252,209 $ (90,660)
============= =============
Per share data:
Income (loss) before income taxes $ .06 $ (.02)
Income tax expense (benefit) .02 (.01)
------------- -------------
Net income (loss) $ .04 $ (.01)
============= =============
Weighted average common and dilutive common
equivalent shares outstanding:
Primary 6,880,558 7,331,964
============= =============
Fully dilutive 6,880,558 7,331,964
============= =============
</TABLE>
See notes to condensed consolidated financial statements (unaudited).
4
<PAGE>
THE DWYER GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30, September 30,
1997 1996
------------------ ------------------
<S> <C> <C>
REVENUES:
Royalties............................... $ 5,789,146 $ 5,338,842
Franchise fees.......................... 2,469,751 3,004,973
Tax services............................ 682,974 649,461
Product sales........................... 483,811 604,817
Interest................................ 507,910 404,058
Other................................... 1,063,273 767,114
----------- -----------
Total revenues....................... 10,996,865 10,769,265
COSTS AND EXPENSES:
Costs of product and other sales........ 454,971 324,925
Cost of tax services.................... 709,406 704,833
General, administrative and selling..... 8,640,965 8,604,015
Depreciation and amortization........... 403,708 385,117
Interest................................ 36,998 53,978
----------- -----------
Total costs and expenses............. 10,246,048 10,072,868
Income before income taxes................... 750,817 696,397
Income tax expense........................... 258,182 250,327
----------- -----------
Net income................................... $ 492,635 $ 446,070
=========== ===========
Per share data:
Income before income taxes.............. $.11 $.09
Income tax expense...................... .04 .03
----------- -----------
Net income.............................. $.07 $.06
=========== ===========
Weighted average common and dilutive common
equivalent shares outstanding:
Primary................................. 6,920,870 7,333,765
=========== ===========
Fully dilutive.......................... 6,920,870 7,347,910
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements (unaudited).
5
<PAGE>
THE DWYER GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996
------------- -------------
<S> <C> <C>
Operating activities:
Net income for the period $ 492,635 $ 446,070
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization 403,708 384,028
Change in reserves and allowances (106,619) 158,135
Write-off of notes receivable - 254,697
Notes receivable issued for franchise sales (525,358) (1,287,184)
Net change in deferred franchise sales (488,167) (215,322)
Change in deferred tax asset 64,346 140,797
Net gain on sale of assets - (46,978)
Other adjustments (10,440) 38,630
Changes in assets and liabilities:
Accounts and interest receivable (76,694) 9,742
Accounts receivable / payable, related parties 57,515 (172,429)
Inventories (89,159) (23,712)
Prepaid expenses and other current assets (218,899) (625,960)
Income tax payable / receivable 390,404 (157,863)
Accounts payable and accrued liabilities (472,746) (390,212)
Franchise funds held for advertising (459,586) (112,061)
Other assets 151,687 (82,322)
----------- ------------
Net cash used in operating activities (887,373) (1,681,944)
----------- ------------
Investing activities:
Collections on notes receivable 492,466 689,603
Purchases of property and equipment (190,206) (275,517)
Purchase of marketable securities (332,312) (770,243)
Net purchases of intangible assets (20,112) (87,136)
Net change in receivables from related parties 31,025 (336,634)
Proceeds from sale of assets 3,000 318,035
Unrealized gain on marketable securities 124,598 -
Collections on notes receivable from related parties 86,223 -
----------- ------------
Net cash provided by (used in) investing activities 194,682 (461,892)
----------- ------------
Financing activities:
Proceeds from debt issued - 379,209
Payments on borrowings (173,100) (343,877)
----------- ------------
Net cash provided by (used in) financing activities (173,100) 35,332
----------- ------------
Net (decrease) increase in cash and cash equivalents (865,791) (2,108,504)
Cash and cash equivalents, beginning of period 1,820,167 3,446,166
----------- ------------
Cash and cash equivalents, end of period $ 954,376 $ 1,337,662
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements (unaudited).
6
<PAGE>
THE DWYER GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. ORGANIZATION
The Dwyer Group, Inc. 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") which include the following:
. Rainbow International Carpet Dyeing and Cleaning Co. ("Rainbow") is a
franchisor of carpet cleaning, dyeing, air duct cleaning and
restoration services.
. Mr. Rooter Corporation ("Mr. Rooter") is a franchisor of plumbing
repair and drain cleaning services under the service mark "Mr.
Rooter"(R).
. General Business Services, Inc. ("GBS") is a franchisor of business
management service to small businesses. Such business management
services include, among others, business counseling, tax counseling,
accounting services and products, financial counseling and personnel
services.
. Edwin K. Williams & Co. ("EKW") is a franchisor of information systems
and financial management services, specifically designed to meet the
special needs of small businesses. Its financial management services
include, among others, accounting and bookkeeping services and
systems, financial management analysis, payroll processing, and tax
preparation and planning services.
. Aire Serv Heating & Air Conditioning, Inc. ("Aire Serv") is a
franchisor of heating, ventilating and air conditioning service
businesses.
. Mr. Electric Corp. ("Mr. Electric") is a franchisor of electrical
repair and service businesses under the service
mark "Mr. Electric"(R).
. Mr. Appliance Corp. ("Mr. Appliance") is a franchisor of major
household appliance service and repair businesses.
. The Dwyer Group National Accounts, Inc. ("National Accounts") solicits
national account customers who can call a toll free phone number for
their general repair and 24 hour emergency service needs. The order is
filled through the Company's network of franchisees or qualified
subcontractors.
NOTE 2. BASIS OF PRESENTATION
A. 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.
B. INTERIM DISCLOSURES
-------------------
The information as of September 30, 1997 and for the nine months ended September
30, 1997 and 1996 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 condensed 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, 1996.
7
<PAGE>
The results of operations for the nine months ended September 30, 1997 and the
three months ended September 30, 1997 are not necessarily indicative of the
results to be expected for the fiscal year ending December 31, 1997.
C. RECLASSIFICATIONS
-----------------
Certain reclassifications have been made to the 1996 consolidated financial
statements to conform to the presentation used in the 1997 consolidated
financial statements. These reclassifications had no effect on stockholders'
equity or net income.
NOTE 3. 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.
Statement of Financial Accounting Standards No. 128 "Earnings per Share" is
required to be implemented for financial statements for interim and annual
periods ending after December 15, 1997. The Financial Accounting Standards
Board does not permit early application. Accordingly, the Company will
implement this pronouncement for the fiscal year ending December 31, 1997.
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 September 30,
1997 as compared to 2.7 to 1 at December 31, 1996. In addition, the Company had
working capital of approximately $5 million at September 30, 1997 as compared to
approximately $4.4 million at December 31, 1996. For the remainder of fiscal
1997 management expects to fund working capital requirements primarily through
operating cash flow. At September 30, 1997 and December 31, 1996, the Company
had cash and cash equivalents of approximately $1.0 million and $1.8 million,
respectively, and short term investments and marketable securities of
approximately $2.3 million and $1.8 million, respectively.
Cash flow used in operating activities decreased from $1,682,000 for the first
nine months of 1996 to $887,000 for the same period in 1997, primarily due to a
decrease in the amount of notes issued for franchise sales. For the first nine
months of 1997, cash provided by investing activities totaled $195,000 as
compared to $462,000 used in investing activities for the same period last year.
The increase is due primarily to decreases in purchases of property and
equipment and marketable securities partially offset by a decrease in
collections on notes receivable. Cash used in financing activities for the
first nine months of 1997 totaled $173,000 due to payments on borrowings.
The Company is not aware of any trend or event which would potentially affect
its liquidity. In the event such a trend would develop, management believes
that the Company has sufficient funds available to satisfy the working capital
needs of the business.
RESULTS OF OPERATIONS
- - ---------------------
For the nine months ended September 30, 1997, compared to the nine months ended
- - -------------------------------------------------------------------------------
September 30, 1996.
- - -------------------
Total revenues increased $228,000 (2.1%) to $10,997,000 for the nine months
ended September 30, 1997, from $10,769,000 for the same period last year. The
increase in revenues is due primarily to an increase in royalties of $450,000
(8.4%) and an increase in other income of $296,000 (38.6%), partially offset by
a decrease in franchise fees of $535,000 (17.8%).
Mr. Rooter and Mr. Electric contributed the most significant growth in royalty
revenue of $409,000 (22.0%) and $98,000 (130.5%), respectively. These increases
were partially offset by decreases in Aire Serve and E.K. Williams of
approximately $76,000 (38.3%), and $46,000 (6.4%), respectively.
8
<PAGE>
For the nine months ended September 30, 1997, revenues from franchise fees for
GBS, Mr. Rooter, Rainbow, and Aire Serv decreased $765,000 (58.3%), $192,000
(25.7%), $121,000 (31.1%), and $99,000 (52.1%), respectively, when compared to
1996. These franchise fee decreases were partially offset by increases in Mr.
Electric franchise fees of approximately $124,000 (33.8%), E.K. Williams
franchise fees of $131,000 and Mr. Appliance franchise sales of $390,000. E.K.
Williams began a renewed franchising effort in January 1997 and Mr. Appliance
began franchising in late 1996.
E.K.Williams and GBS produced approximately $484,000 in product sales for the
nine months ended September 30, 1997 compared to $605,000 for the first nine
months of 1996, a $121,000 (20.0%) decrease. EKW and GBS sell products such as
manual record keeping systems and forms to its franchisees and outside
customers.
Interest income increased approximately $104,000 primarily due to increased
interest income from related parties' notes receivable. Other income increased
approximately $296,000 primarily due to increased administrative and management
service fees to related parties and the addition of revenues from the National
Accounts program, which the Company began in late 1996.
Costs and expenses increased $173,000 (1.7%) to $10,246,000 for the nine months
ended September 30, 1997, from $10,073,000 for the first nine months of 1996.
The major contributors to these increased expenses are: costs and expenses
associated with Mr. Appliance Corp. and the Company's National Accounts program,
both of which began operating in late 1996; increased audit and legal fees; and
increased regional director commissions associated with increased royalty
income. These increased expenses were partially offset by a decrease in the
provision for bad debts and the write down of assets held for resale in 1996.
For the nine months ended September 30, 1997, the Company reported net income of
$493,000 or 7 cents per share as compared to $446,000 or 6 cents per share for
the nine months ended September 30, 1996.
For the three months ended September 30, 1997, compared to the three months
- - ---------------------------------------------------------------------------
ended September 30, 1996.
- - -------------------------
Revenues increased approximately $488,000 (14.2%) for the quarter ended
September 30, 1997, when compared to the third quarter of 1996. The increase is
primarily attributable to an increase in royalties of $229,000 (12.9%) and an
increase in franchise fees of $237,000 (28.7%).
The primary contributors to the increase in royalty revenues were Mr. Rooter,
Mr. Electric and Rainbow, which produced increases of $127,000 (19.6%), $41,000
(111.6%), and $32,000 (5.4%) respectively.
The increase in franchise fees is due primarily to the sale of $254,000 of Mr.
Appliance franchises. Mr. Appliance began franchising in late 1996.
Costs and expenses decreased approximately $18,000 (.5%) in the third quarter of
1997 compared to the third quarter of 1996. This decrease is primarily a result
of a write down of assets held for resale in 1996, which resulted in a decrease
in 1997 which was offset by: increased costs and expenses associated with Mr.
Appliance Corp. and the Company's National Accounts program, both of which began
operating in late 1996; increased audit and legal fees and increased regional
director commissions associated with increased royalty revenues.
Net income was approximately $252,000 for the quarter ended September 30, 1997
as compared to a loss of $91,000 for the same period in 1996.
IMPACT OF INFLATION
- - -------------------
Inflation has not had a material impact on the operations of the Company.
FOREIGN OPERATIONS
- - ------------------
The Company and its subsidiaries operate in 17 foreign countries. Typically,
foreign franchises are sold and managed by a master licensee in that country.
Royalty revenues from master licenses are recorded as received due to the
difficulty sometimes experienced in foreign countries when attempting to
transfer such funds to the United States. The Company does not depend on
foreign operations, and such operations do not have a material impact on its
cash flow. During the remainder of 1997, the Company
9
<PAGE>
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.
FORWARD-LOOKING STATEMENTS
- - --------------------------
The Company cautions readers that various factors could cause the actual results
of the Company to differ materially from those indicated by forward-looking
statements made from time to time in news releases, reports, proxy statements,
registration statements and other written communications (including the
preceding sections of this Management's Discussion and Analysis), as well as
oral statements made from time to time by representatives of the Company.
Except for historical information, matters discussed in such oral and written
communications are forward-looking statements that involve risks and
uncertainties, including but not limited to general business conditions, the
impact of competition, taxes, inflation, and governmental regulations.
PART II
OTHER INFORMATION
THE DWYER GROUP, INC. AND SUBSIDIARIES
ITEM 1 - LEGAL PROCEEDINGS
NONE
ITEM 2 - CHANGES IN SECURITIES
(a) NONE
(b) Not applicable.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The 1996 annual meeting of the stockholders of the Company was held on
July 31, 1997.
The following directors were elected at the meeting: Theresa Dwyer,
Donald J. Dwyer, Jr., Dina Dwyer-Owens, John P. Hayes, Donald E. Latin,
James L. Sirbasku, and Robert Tunmire. The election of directors by the
stockholders is for a term of one year, or until the next annual
meeting of the stockholders.
A proposal to amend the Company's 1986 Stock Option Plan by increasing
the number of shares issuable under the plan from 500,000 to 700,000
was approved at the meeting.
A proposal to ratify the appointment of BDO Seidman, LLP as independent
accountants for the Company and its wholly owned subsidiaries for the
year ended December 31, 1997 was also approved at the meeting.
Of the 5,460,923 shares present at the meeting, or through proxy, the
following summarizes the results of the voting:
10
<PAGE>
<TABLE>
<CAPTION>
Election of Directors:
Director Name Votes For Against Abstentions
- - ------------- --------- ----------- -----------
<S> <C> <C> <C>
Theresa Dwyer 5,410,969 0 49,954
Donald J. Dwyer, Jr. 5,409,995 0 50,928
John P. Hayes 5,409,895 0 51,028
James Sirbasku 5,410,995 0 49,928
Dina Dwyer-Owens 5,409,469 0 51,454
Robert Tunmire 5,409,999 0 50,924
Donald E. Latin 5,392,995 0 67,928
Amend Stock Option Plan:
For Against Abstentions
--- ------- -----------
5,361,979 69,769 29,175
Ratify Appointment of BDO Seidman, LLP:
For Against Abstentions
--- ------- -----------
5,419,770 11,378 29,775
</TABLE>
ITEM 5 - OTHER INFORMATION
NONE
EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.48 July 31, 1997 Amendment to The Dwyer Group, Inc. 1986 Stock
Option Plan
(b) Reports on Form 8-K:
Filed July 31, 1997 - Reported agreement which provides for the
cancellation of 340,300 shares of the Company's common stock.
11
<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: November 3, 1997 /s/ Robert Tunmire
---------------- -------------------------------------------
Robert Tunmire, President and
Chief Executive Officer
(Principal Executive Officer)
Date: November 3, 1997 /s/ Thomas J. Buckley
---------------- -------------------------------------------
Thomas J. Buckley, Treasurer and
Chief Financial Officer
(Principal Financial and Accounting Officer)
12
<PAGE>
AMENDMENT TO 1986 STOCK OPTION PLAN
THE DWYER GROUP, INC.
WHEREAS, on May 8, 1986, the Board of Directors of the Company authorized the
establishment of an Employee Stock Option Plan (the "Plan") whereby incentive
and non-incentive options would be granted to employees, officers and directors
of the Company; and
WHEREAS, the Plan was adopted by the shareholders of the Company; and
WHEREAS, on February 27, 1997, the Board of Directors unanimously approved,
subject to shareholder approval, an amendment to the Plan that would increase
the number of shares available under the Plan from 500,000 to 700,000 and
recommended that the amendment be submitted to the shareholders of the Company
for approval; and
WHEREAS, at the Company's Annual Meeting of Shareholders on July 31, 1997, the
shareholders voted in favor of the proposed amendment.
NOW, THEREFORE, BE IT RESOLVED that the Plan is hereby amended to increase the
number of shares available under the Plan from 500,000 to 700,000.
I hereby certify that the above described amendment was voted on and approved by
the Company's shareholders at the Company's Annual Meeting of Shareholders held
July 31, 1997.
8/6/97 /s/ THOMAS J. BUCKLEY
- - ------------------- ---------------------
Date Thomas J. Buckley
Chief Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEP 30, 1997
FORM QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> $954,376
<SECURITIES> 2,319,384
<RECEIVABLES> 2,351,325
<ALLOWANCES> 369,509
<INVENTORY> 232,953
<CURRENT-ASSETS> 7,022,816
<PP&E> 1,112,637
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,266,879
<CURRENT-LIABILITIES> 1,984,993
<BONDS> 0
0
0
<COMMON> 723,556
<OTHER-SE> 11,230,500
<TOTAL-LIABILITY-AND-EQUITY> 16,266,879
<SALES> 8,258,897
<TOTAL-REVENUES> 10,996,865
<CGS> 454,971
<TOTAL-COSTS> 10,246,048
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 36,998
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