<PAGE> 1
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, 2000.
[ ] 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)
<TABLE>
<S> <C>
Delaware 73-0941783
--------------------------------- -------------------
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
1010 N. University Parks Dr., Waco, TX 76707
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(ADDRESS AND ZIP CODE OF PRINCIPAL EXECUTIVE OFFICES)
(254) 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.
<TABLE>
<S> <C>
Class Outstanding at November 10, 2000
---------------------------- --------------------------------
Common stock, $.10 par value 6,997,931
</TABLE>
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE): Yes No X
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<PAGE> 2
THE DWYER GROUP, INC.
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE NO.
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 2000 (unaudited)
and December 31, 1999.............................................................................3
Consolidated Statements of Operations for the Three Months Ended
September 30, 2000 and 1999 (unaudited)...........................................................4
Consolidated Statements of Operations for the Nine Months Ended
September 30, 2000 and 1999 (Unaudited)...........................................................5
Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 2000 and 1999 (unaudited).....................................................6
Notes to Condensed Consolidated Financial Statements............................................7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................................................9-11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings................................................................................12
Item 2. Changes in Securities............................................................................12
Item 3. Defaults Upon Senior Securities..................................................................12
Item 4. Submission of Matters to a Vote of Security Holders..............................................12
Item 5. Other Information................................................................................12
Item 6. Exhibits and Reports on Form 8-K.................................................................12
</TABLE>
2
<PAGE> 3
THE DWYER GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
ASSETS 2000 1999
------------ -------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 389,623 $ 556,383
Marketable securities, available-for-sale 790,248 883,717
Trade accounts receivable, net of allowance for doubtful
accounts of $448,382 and $220,242, respectively 1,282,226 829,866
Accounts receivable from related parties 383,501 55,581
Accrued interest receivable, including amounts due from
related parties of $96,617 and $200,033, respectively 138,615 234,034
Trade notes receivable, current portion, net of allowance for
doubtful accounts of $56,225 and $56,053, respectively 1,349,267 1,345,267
Inventories 112,933 31,779
Prepaid expenses 373,252 184,579
Federal income tax receivable -- 301,579
Notes receivable from related parties, current portion 171,845 682,878
------------ ------------
Total current assets 4,991,510 5,105,663
Property and equipment, net 1,035,307 1,036,107
Notes and accounts receivable from related parties 1,749,972 1,290,998
Trade notes receivable, net of allowance for doubtful notes of
$891,304 and $872,467, respectively 4,521,117 3,601,029
Goodwill, net 5,266,353 5,408,617
Purchased franchise rights, net 3,938,376 2,298,851
Covenant not to compete, net 56,661 71,661
Net deferred tax asset 299,013 299,013
Other assets 248,761 304,988
------------ ------------
TOTAL ASSETS $ 22,107,070 $ 19,416,927
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade $ 967,436 $ 577,500
Accrued liabilities 1,088,531 1,399,378
Deferred franchise sales revenue 260,246 405,757
Litigation reserves 358,488 244,096
Current maturities of long-term debt 1,451,102 1,131,600
------------ ------------
Total current liabilities 4,125,803 3,758,331
Long-term debt, less current portion 2,788,941 1,481,707
Deferred franchise sales revenue 279,395 417,432
Commitments and contingencies
Stockholders' equity:
Preferred stock -- --
Common stock 764,519 764,519
Additional paid-in capital 10,193,855 10,183,855
Retained earnings 5,322,501 4,131,821
Accumulated other comprehensive income (157,792) (130,052)
Treasury stock, at cost (1,210,152) (1,190,686)
------------ ------------
Total stockholders' equity 14,912,931 13,759,457
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 22,107,070 $ 19,416,927
============ ============
</TABLE>
See notes to condensed consolidated financial statements (unaudited).
3
<PAGE> 4
THE DWYER GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
--------------------------
2000 1999
----------- -----------
<S> <C> <C>
REVENUES:
Royalties $ 2,857,686 $ 2,319,947
Franchise fees 1,052,159 957,654
Sales of products and services 514,283 362,513
Interest 169,655 134,895
Other 133,194 133,569
----------- -----------
TOTAL REVENUES 4,726,977 3,908,578
COSTS AND EXPENSES:
General, administrative and selling 3,308,166 2,720,845
Costs of product and service sales 468,527 312,644
Depreciation and amortization 336,913 208,727
Interest 71,307 21,906
----------- -----------
TOTAL COSTS AND EXPENSES 4,184,913 3,264,122
Income before income taxes 542,064 644,456
Income taxes (181,839) (222,917)
----------- -----------
NET INCOME $ 360,225 $ 421,539
=========== ===========
EARNINGS PER SHARE - BASIC $ 0.05 $ 0.06
=========== ===========
EARNINGS PER SHARE - DILUTED $ 0.05 $ 0.06
=========== ===========
WEIGHTED AVERAGE COMMON SHARES 6,997,980 6,940,494
=========== ===========
WEIGHTED AVERAGE COMMON SHARES AND POTENTIAL
DILUTIVE COMMON SHARES 7,111,058 7,238,614
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements (unaudited).
4
<PAGE> 5
THE DWYER GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------
2000 1999
------------ ------------
<S> <C> <C>
REVENUES:
Royalties $ 8,057,472 $ 6,765,185
Franchise fees 3,342,549 2,910,078
Sales of products and services 1,566,390 1,105,169
Interest 501,931 365,909
Other 430,788 398,013
------------ ------------
TOTAL REVENUES 13,899,130 11,544,354
COSTS AND EXPENSES:
General, administrative and selling 9,532,235 8,245,208
Costs of product and service sales 1,321,002 930,872
Depreciation and amortization 1,009,180 575,132
Interest 232,186 73,801
------------ ------------
TOTAL COSTS AND EXPENSES 12,094,603 9,825,013
Income before income taxes 1,804,527 1,719,341
Income taxes (613,847) (603,010)
------------ ------------
NET INCOME $ 1,190,680 $ 1,116,331
============ ============
EARNINGS PER SHARE - BASIC $ 0.17 $ 0.16
============ ============
EARNINGS PER SHARE - DILUTED $ 0.17 $ 0.16
============ ============
WEIGHTED AVERAGE COMMON SHARES 7,000,613 6,924,096
============ ============
WEIGHTED AVERAGE COMMON SHARES AND POTENTIAL
DILUTIVE COMMON SHARES 7,153,442 7,123,264
============ ============
</TABLE>
See notes to condensed consolidated financial statements (unaudited).
5
<PAGE> 6
THE DWYER GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
2000 1999
----------- -----------
<S> <C> <C>
Operating activities:
Net income for the period $ 1,190,680 $ 1,116,331
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
Depreciation and amortization 1,009,180 575,132
Provision for doubtful accounts 132,601 132,882
Notes received for franchise sales (2,265,799) (1,842,534)
Change in deferred tax asset -- 269,134
Loss on sale of securities 13,048 --
Changes in assets and liabilities:
Accounts and interest receivable (356,941) 33,701
Net change in receivables / payables to related parties (327,920) (317,964)
Inventories (81,154) 2,841
Prepaid expenses (188,673) (232,918)
Federal income tax receivable 301,579 --
Accounts payable and accrued liabilities 130,071 924,018
Litigation reserves 114,392 (664,535)
Deferred franchise sales revenue (135,745) 216,469
Other -- 6,650
----------- -----------
Net cash provided by (used in) operating activities (464,681) 219,207
----------- -----------
Investing activities:
Collections of notes receivable 1,149,655 476,477
Purchases of property and equipment (280,878) (242,945)
Purchases of franchise rights (450,000) (210,788)
Acquisition of other assets (36,771) (68,917)
Sale of other assets -- 141,575
Purchase of marketable securities (17,663) (113,723)
Sale of marketable securities 114,403 809,759
Increase (decrease) in unrealized gain on marketable securities -- (31,746)
Collections on notes receivable from related parties 52,059 108,819
----------- -----------
Net cash provided by investing activities 530,805 868,511
----------- -----------
Financing activities:
Purchases of treasury stock (19,466) (403,571)
Proceeds from exercise of stock options -- 561,824
Proceeds from borrowings 1,114,994 --
Payments on borrowings (1,328,412) (609,973)
----------- -----------
Net cash used in financing activities (232,884) (451,720)
----------- -----------
Net increase (decrease) in cash and cash equivalents (166,760) 635,998
Cash and cash equivalents, beginning of period 556,383 498,199
----------- -----------
Cash and cash equivalents, end of period $ 389,623 $ 1,134,197
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements (unaudited).
6
<PAGE> 7
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 condensed
consolidated financial statements include the accounts of The Dwyer Group, Inc.
and its wholly-owned subsidiaries (the "Company") which include the following:
o Rainbow International Carpet Dyeing and Cleaning Co.
("Rainbow") is a franchisor of carpet cleaning, dyeing, air
duct cleaning, and restoration services under the service mark
"Rainbow International"(R).
o Mr. Rooter Corporation ("Mr. Rooter") is a franchisor of
plumbing repair and drain cleaning services under the service
mark "Mr. Rooter"(R).
o Aire Serv Heating & Air Conditioning, Inc. ("Aire Serv") is a
franchisor of heating, ventilating and air conditioning
service businesses under the service mark "Aire Serv"(R).
o Mr. Electric Corp. ("Mr. Electric") is a franchisor of
electrical repair and service businesses under the service
mark "Mr. Electric"(R).
o Mr. Appliance Corp. ("Mr. Appliance") is a franchisor of major
household appliance service and repair businesses under the
service mark "Mr. Appliance"(R).
o Synergistic International, Inc., ("Glass Doctor"), is
franchisor of Glass Doctor(R), a service concept whose
business is the replacement of automobile, residential and
commercial glass.
o 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.
o The Dwyer Group Canada, Inc. ("TDG Canada") was incorporated
in January 1998 in order to market and service certain of the
Company's franchise concepts in Canada. Currently, those
concepts are Mr. Rooter, Mr. Electric, Rainbow and Aire Serv.
NOTE 2. BASIS OF PRESENTATION
A. PRINCIPLES OF CONSOLIDATION
The accompanying condensed 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, 2000 and for the three months and nine
months ended September 30, 2000 and September 30, 1999 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, 1999, and with other
filings with the U.S. Securities and Exchange Commission.
The results of operations for the three months and nine months ended September
30, 2000 are not necessarily indicative of the results to be expected for the
fiscal year ending December 31, 2000.
7
<PAGE> 8
C. RECLASSIFICATIONS
Certain reclassifications have been made to the 1999 condensed consolidated
financial statements to conform to the presentation used in the 2000 condensed
consolidated financial statements. These reclassifications had no effect on
stockholders' equity or net income.
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
EARNINGS PER COMMON SHARE
Basic earnings per share is computed based on the weighted average number of
shares outstanding during each of the periods. Diluted earnings per share
include the dilutive effect of unexercised stock options and warrants.
NOTE 4. COMMON STOCK
In September 1998, the Company authorized the repurchase of up to 100,000 of the
Company's common stock in the open market or in private transactions and
subsequently increased that amount to 550,000 shares. As of November 10, 2000,
the Company had repurchased 527,429 shares at an average purchase price of
$2.12. Of such shares, 7,983 have been purchased in 2000.
In early 1999, the Company issued 100,000 warrants to purchase the Company's
common stock to a nonaffiliated third party in connection with the purchase of
franchise rights. The warrants were issued at an exercise price of $3.00 per
share and expire in 2005.
NOTE 5. PURCHASE OF FRANCHISE RIGHTS
In February of 2000, the Company entered into an agreement to purchase franchise
rights from a nonaffiliated third party. The transaction also included the
purchase of notes receivable due from certain franchisees operating in the
purchased territory. The Company paid approximately $800,000 in cash and
executed a promissory note for $1,750,000 in connection with the transaction. In
order to fund a portion of the transaction, the Company negotiated a $500,000
term loan and a $500,000 line of credit with its bank and drew down $700,000.
In April of 2000, the Company purchased additional franchise rights from another
nonaffiliated third party for $50,000 in cash.
In October of 2000, the Company purchased additional franchise rights and notes
receivable from another nonaffiliated third party. The Company paid $32,000 in
cash and executed a promissory note for $442,000 in connection with the
transaction.
THIS SECTION LEFT INTENTIONALLY BLANK.
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Unless otherwise noted, all dollar amounts are rounded to the nearest thousand.
Percentages represent the change from the comparable amount from the previous
year. Note references refer to Notes to Condensed Consolidated Financial
Statements.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital ratio was approximately 1.2 to 1 at September 30,
2000 as compared to 1.4 to 1 at December 31, 1999. The Company had working
capital of approximately $866,000 at September 30, 2000 as compared to
approximately $1.3 million at December 31, 1999. For the remainder of fiscal
2000, management expects to fund working capital requirements primarily through
operating cash flow. At September 30, 2000, the Company had cash and cash
equivalents of approximately $390,000, and marketable securities of
approximately $790,000.
In the first quarter of 2000, the Company negotiated a $500,000 term loan and a
$500,000 line of credit with its bank. Of such total amount, $700,000 was drawn
at that time and was used to fund a portion of the purchase of franchise rights
as discussed in Note 5. In the third quarter, the remainder of the line of
credit was drawn and used for payments on long-term debt.
Cash in the amount of $465,000 was used in operating activities in the first
nine months of 2000, as compared to $219,000 of cash provided by such activities
for the same period in 1999. In 2000, cash was generated primarily by a net
profit of $1,191,000, depreciation and amortization of $1,009,000, a provision
for doubtful accounts of $133,000 and a decrease in a tax refund receivable of
$302,000. These amounts were more than offset by notes received from franchise
sales of $2,266,000, an increase in accounts receivables of $685,000 and an
increase of $189,000 in prepaid expenses.
In the first nine months of 2000, the Company generated $531,000 in cash from
investing activities, primarily from collections on notes receivable of
$1,202,000 and the sale of marketable securities for $114,000, partially offset
by the purchase of franchise rights for $450,000 and the purchase of property
and equipment for $281,000. For the same period in 1999, the Company generated
$869,000 in cash from investing activities, primarily from the sale of
marketable securities for $810,000, collections on notes receivable of $585,000
and the sale of other assets for $142,000, partially offset by the purchase of
property and equipment for $243,000 and the purchase of franchise rights for
$211,000.
The Company used $233,000 for financing activities in the first nine months of
2000. Payments on borrowings of $1,328,000 and the purchase of treasury stock
for $19,000 were partially offset by proceeds on borrowings of $1,115,000. In
the first nine months of 1999, the Company used $452,000 in cash for financing
activities for payments on borrowings of $610,000 and purchases of treasury
stock for $404,000, partially offset by proceeds from the exercise of stock
options of $562,000.
The Company is not aware of any trend or event, which would potentially
adversely 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, 2000, compared to the nine months ended
September 30, 1999.
Total revenues for the nine months increased by $2,355,000 (20%) to $13,899,000
in 2000 from $11,544,000 in 1999. This increase is due to increases in each of
the Company's revenue categories as follows: royalties - $1,292,000 (19%);
franchise fees - $432,000 (15%); sales of products and services - $461,000
(42%); interest - $136,000 (37%); and other - $33,000 (8%).
9
<PAGE> 10
Royalty revenues from each of the Company's franchise concepts increased as
follows:
<TABLE>
<S> <C> <C>
Mr. Rooter $ 639,000 23%
Mr. Electric $ 295,000 61%
Glass Doctor $ 141,000 14%
Aire Serv $ 79,000 22%
Mr. Appliance $ 62,000 76%
Rainbow $ 20,000 1%
</TABLE>
In addition to the above, royalties from the Company's Canadian operations
increased by $56,000 (24%).
Overall, these royalty revenue increases coincide with the increased business
revenues of existing franchisees as well as an increase in the number of
franchisees producing revenue. These increases are a direct result of the
Company's emphasis on providing strong franchise support services, and its
methods and programs created to assist franchisees in building successful
businesses, along with continued emphasis on the sale of new franchises. These
strategies are very important to the future of the Company, as royalties are the
foundation for the Company's long-term financial strength.
The increase in franchise fee revenues was due to increases from each of the
following concepts: Mr. Rooter - $110,000 (15%); Aire Serv - $37,000 (8%); Mr.
Appliance - $32,000 (29%); and Glass Doctor - $334,000 (50%). These increases
were partially offset by a decrease in franchise fees generated from: Mr.
Electric - $55,000 (9%); Rainbow - $15,000 (8%); and TDG Canada - $11,000 (16%).
Sales of products and services increased by $461,000 (42%), due to additional
sales made by National Accounts.
Interest income increased by $136,000 (37%) due to an increase in trade notes
receivable related to the sale of franchises.
General and administrative expenses increased by $1,287,000 (16%). This increase
was primarily a result of additional costs and personnel associated with the
increase in overall revenues, and additional franchise sales personnel hired
during the third quarter in an effort to increase franchise sales revenues in
future periods. In addition, the Company settled lawsuits for approximately
$130,000 in order to avoid future legal costs.
Due to the increase in product and service sales, costs associated with such
sales increased by $390,000 (42%).
Depreciation and amortization increased by $434,000 (75%) due primarily to
amortization of franchise rights purchased in late 1999 and early 2000.
Interest expense increased by $158,000 (215%) due to additional debt resulting
from the purchase of franchise rights.
The Company reported net income of $1,190,000 for the nine months ended
September 30, 2000 as compared to net income of $1,116,000 for the same period
in 1999.
For the three months ended September 30, 2000, compared to the three months
ended September 30, 1999.
Total revenues for the quarter increased by $818,000 (21%) to $4,727,000 in 2000
from $3,909,000 in 1999. This increase is due to an increase of $538,000 (23%)
in royalties, an increase of $95,000 (10%) in franchise fees, an increase of
$152,000 (42%) in sales of products and services and an increase of $35,000
(26%) in interest income.
Royalty revenues increased for the following franchise concepts:
<TABLE>
<S> <C> <C>
Mr. Rooter $291,000 33%
Mr Electric $117,000 61%
Glass Doctor $57,000 16%
Aire Serv $49,000 37%
Mr. Appliance $16,000 58%
</TABLE>
10
<PAGE> 11
In addition to the above, royalties from the Company's Canadian operations
increased by $19,000 (24%). These increases were partially offset by a decrease
in royalties of $12,000 (2%) from Rainbow.
Overall, these royalty revenue increases coincide with the increase business
revenues of existing franchisees as well as an increase in the number of
franchisees producing revenue. These increases are a direct result of the
Company's emphasis on providing strong franchise support services, and its
methods and programs created to assist franchisees in building successful
businesses, along with continued emphasis on the sale of new franchises. These
strategies are very important to the future of the Company, as royalties are the
foundation for the Company's long-term financial strength.
Franchise sales revenues increased by $95,000 (10%) from 1999 to 2000. Increases
from: Glass Doctor - $285,000 (291%); and Aire Serv - $75,000 (90%) were
partially offset by decreases from Mr. Rooter - $49,000 (13%); Mr. Electric -
$191,000 (64%); and Rainbow - $26,000 (61%). The increase from Glass Doctor was
due primarily to the sale of a number of larger territories in 2000. The
decrease from Mr. Electric was due primarily to the sale of a large territory in
1999.
Sales of products and services increased by $152,000 (42%) due to additional
sales made by National Accounts.
Interest income increased by $35,000 (26%) due to an increase in trade notes
receivable related to the sale of new franchises.
General and administrative expenses increased by $587,000 (22%). This increase
was primarily a result of additional costs and personnel associated with the
increase in overall revenues, and additional franchise sales personnel hired
during the quarter in an effort to increase franchise sales revenues in future
periods. In addition, the Company settled lawsuits for approximately $130,000 in
order to avoid future legal costs.
Depreciation and amortization increased by $128,000 (61%), due primarily to
amortization of franchise rights purchased in late 1999 and early 2000.
Interest expense increased by $49,000 (225%) due to additional debt resulting
from the purchase of franchise rights.
The Company reported net income of $360,000 for the quarter ended September 30,
2000 as compared to net income of $422,000 for the same period in 1999.
IMPACT OF INFLATION
Inflation has not had a material impact on the operations of the Company.
FOREIGN OPERATIONS
The Company operates in 19 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 2000, the Company may sell additional master licenses, which could result in
lump sum payments from the master licensees 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 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.
11
<PAGE> 12
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.
(c) NONE
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 5 - OTHER INFORMATION
NONE
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Financial Data Schedule
(b) Reports on 8-K
NONE
12
<PAGE> 13
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.
Date: November 10, 2000 The Dwyer Group, Inc.
By: /s/ Thomas Buckley
----------------------------
Thomas Buckley
Vice President and Chief Financial
Officer
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
27 Financial Data Schedule
</TABLE>
