-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, mnGKDbmjhDAakZqsVLH1h1EaJepZCUcw/bLzurRTL49Trw1foTNhBlI2Or+7riaa hOkrH71Moc/GMvxC7DPRqQ== 0000740693-94-000008.txt : 19941020 0000740693-94-000008.hdr.sgml : 19941020 ACCESSION NUMBER: 0000740693-94-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19940831 FILED AS OF DATE: 19941014 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TCBY ENTERPRISES INC CENTRAL INDEX KEY: 0000740693 STANDARD INDUSTRIAL CLASSIFICATION: 2024 IRS NUMBER: 710552115 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10046 FILM NUMBER: 94552780 BUSINESS ADDRESS: STREET 1: 425 W CAPITOL AVE STE 1100 CITY: LITTLE ROCK STATE: AR ZIP: 72201 BUSINESS PHONE: 5016888229 FORMER COMPANY: FORMER CONFORMED NAME: THIS CANT BE YOGURT INC DATE OF NAME CHANGE: 19850801 10-Q 1 10-Q PAGE 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10Q (Mark One) __X__ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 31, 1994 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 or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 425 West Capitol Avenue, Little Rock, AR 72201 (Address of principal executive offices) (Zip Code) (501) 688-8229 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 of the Securities Exchange Act of 1934 during the preceding 12 months, (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes _X_ No ___ On September 30, 1994 there were 25,594,264 shares of the registrant's common stock outstanding. Sequential Page No. 1 PAGE 2 TABLE OF CONTENTS
Part I. FINANCIAL INFORMATION Page Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets August 31, 1994 and November 30, 1993 3 Consolidated Statements of Income Quarter and Nine months ended August 31, 1994 and 1993 5 Consolidated Statements of Cash Flows Nine months ended August 31, 1994 and 1993 6 Notes to Consolidated Financial Statements August 31, 1994 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II. OTHER INFORMATION Item 1. Legal Proceedings 15 Item 6. Exhibits and Reports on Form 8-K 15 SIGNATURES 16
Sequential Page No. 2 PART 1 FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS (UNAUDITED) TCBY ENTERPRISES, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED)
August 31, November 30, 1994 1993 ____________ ____________ CURRENT ASSETS Cash and cash equivalents $ 5,709,845 $ 10,167,074 Short-term investments 8,669,213 14,826,289 Receivables: Trade accounts 20,821,696 10,859,638 Notes 2,229,671 2,577,182 Allowance for doubtful accounts and notes (400,381) (650,547) _____________ _____________ 22,650,986 12,786,273 Refundable income taxes - 487,394 Deferred income taxes 611,914 611,914 Inventories 13,775,945 11,476,837 Prepaid expenses and other assets 3,528,858 2,539,461 _____________ _____________ TOTAL CURRENT ASSETS 54,946,761 52,895,242 PROPERTY, PLANT AND EQUIPMENT Land 4,127,523 3,879,175 Buildings 23,208,174 22,519,574 Furniture, vehicles and equipment 51,817,157 49,932,263 Leasehold improvements 9,812,560 11,020,257 Construction in progress 5,161,490 743,493 Allowances for depreciation and amortization (38,484,049) (34,179,906) _____________ _____________ 55,642,855 53,914,856 OTHER ASSETS Notes receivable, less current portion (less allowance for doubtful notes 1994 - $934,224; 1993 - $1,517,943) 8,648,879 10,146,885 Intangibles (less amortization 1994 - $3,772,528; 1993 - $2,705,816) 5,926,313 6,122,354 Other 9,608,086 5,611,799 _____________ _____________ 24,183,278 21,881,038 _____________ _____________ TOTAL ASSETS $134,772,894 $128,691,136 ============= ============= See notes to consolidated financial statements.
Sequential Page No. 3 TCBY ENTERPRISES, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED)
August 31, November 30, 1994 1993 ____________ _____________ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 1,572,500 $ 1,199,737 Accrued expenses 5,970,904 5,276,677 Income taxes payable 2,660,322 - Deferred franchise fee income 366,984 265,227 Current portion of long-term debt 2,092,841 2,092,761 _____________ _____________ TOTAL CURRENT LIABILITIES 12,663,551 8,834,402 LONG-TERM DEBT, less current portion 9,913,777 11,486,736 DEFERRED INCOME TAXES 3,138,784 3,138,784 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- 1994 - 26,848,933; 1993 - 26,804,385 2,684,893 2,680,439 Additional paid-in capital 24,480,234 24,255,981 Retained earnings 91,302,854 87,705,993 _____________ _____________ 118,467,981 114,642,413 Less treasury stock, at cost (1,317,069 shares in 1994 and 1993) (9,411,199) (9,411,199) _____________ _____________ 109,056,782 105,231,214 _____________ _____________ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $134,772,894 $128,691,136 ============= ============= See notes to consolidated financial statements.
Sequential Page No. 4 TCBY ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Quarter Ended Nine Months Ended August 31, August 31, 1994 1993 1994 1993 ____________ ____________ _____________ _____________ Sales $46,691,476 $33,824,848 $108,878,526 $ 85,923,279 Cost of sales 27,105,673 17,541,107 63,990,315 45,346,145 ____________ ____________ _____________ _____________ GROSS PROFIT 19,585,803 16,283,741 44,888,211 40,577,134 Franchising revenues: Initial franchise and license fees 284,128 112,000 1,017,828 695,500 Royalty income 3,699,076 3,289,250 8,379,169 7,652,544 ____________ ____________ _____________ _____________ Total franchising revenues 3,983,204 3,401,250 9,396,997 8,348,044 ____________ ____________ _____________ _____________ 23,569,007 19,684,991 54,285,208 48,925,178 Selling, general and administrative expenses 16,825,023 13,925,011 43,160,108 40,269,627 ____________ ____________ _____________ _____________ 6,743,984 5,759,980 11,125,100 8,655,551 Interest expense (173,287) (192,631) (482,411) (655,331) Interest income 208,137 322,326 726,049 997,458 Other income (expense) 41,643 246,160 (38,099) 125,422 ____________ ____________ _____________ _____________ 76,493 375,855 205,539 467,549 ____________ ____________ _____________ _____________ INCOME BEFORE INCOME TAXES 6,820,477 6,135,835 11,330,639 9,123,100 Income taxes: Current 2,340,886 1,674,653 3,909,070 2,713,325 Deferred - 458,778 - 458,778 ____________ ____________ _____________ _____________ 2,340,886 2,133,431 3,909,070 3,172,103 ____________ ____________ _____________ _____________ NET INCOME $ 4,479,591 $ 4,002,404 $ 7,421,569 $ 5,950,997 ============= ============= ============= ============= NET INCOME PER SHARE $ 0.18 $ 0.16 $ 0.29 $ 0.23 ============= ============= ============= ============= Average shares outstanding 25,518,767 25,625,837 25,501,297 25,635,158 ============= ============= ============= ============= Cash dividends paid per share $ 0.05 $ 0.05 $ 0.15 $ 0.15 ============= ============= ============= ============= See notes to consolidated financial statements.
Sequential Page No. 5 TCBY ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended August 31, 1994 1993 _______________________________ OPERATING ACTIVITIES Net Income $ 7,421,569 $ 5,950,997 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization 6,308,485 5,827,401 Amortization of intangibles 468,848 400,232 Provision for doubtful accounts 901,708 831,537 Provision for deferred income taxes - 458,778 Loss on disposal of property and equipment 315,465 37,897 Changes in operating assets and liabilities: Accounts receivable (11,697,651) (6,439,281) Inventories (2,299,108) (151,408) Prepaid expenses (989,397) 136,377 Intangibles and other assets (4,957,338) (2,503,437) Accounts payable and accrued expenses 1,066,990 1,117,450 Deferred revenues 101,757 (184,036) Income taxes 3,147,716 1,627,052 _____________ _____________ NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (210,956) 7,109,559 INVESTING ACTIVITIES Purchases of property, plant and equipment (8,260,222) (5,377,577) Proceeds from sale of property and equipment 596,517 1,526,079 Origination of notes receivable (1,297,530) (1,217,583) Principal collected on notes receivable 3,726,766 2,557,089 Purchases of short-term investments (4,384,779) (17,144,501) Proceeds from sale of short-term investments 10,541,855 18,180,353 _____________ _____________ NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 922,607 (1,476,140) FINANCING ACTIVITIES Proceeds from long-term borrowings - 14,622,357 Proceeds from sales of common stock 228,707 99,289 Dividends paid (3,824,708) (3,838,575) Purchases of treasury stock - (708,643) Retirement of long-term debt (1,572,879) (17,327,344) _____________ _____________ NET CASH USED IN FINANCING ACTIVITIES (5,168,880) (7,152,916) _____________ _____________ Decrease in cash and cash equivalents (4,457,229) (1,519,497) Cash and cash equivalents at beginning of period 10,167,074 17,055,288 _____________ _____________ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,709,845 $ 15,535,791 ============= =============
See notes to consolidated financial statements. ments. Sequential Page No. 6 PAGE 7 TCBY ENTERPRISES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) August 31, 1994 NOTE A -- FINANCIAL STATEMENT PRESENTATION The notes to the consolidated financial statements do not include all notes which would be included in the annual report to stockholders and reference to the footnotes contained in the annual report to stockholders for the year ended November 30, 1993, will give additional information on such items as significant accounting policies, long-term debt, income taxes, lease commitments, contingencies and employee benefit plans. However, in the opinion of management, all footnotes have been included for disclosures required for compliance with the Securities and Exchange Commission rules, as contained in Accounting Series Release No. 177. Also in the opinion of management, all adjustments (consisting of normal recurring accruals) which are necessary for a fair statement of the results for the interim periods have been included. NOTE B -- RECLASSIFICATIONS Certain amounts in the 1993 consolidated financial statements have been reclassified to conform to the 1994 presentation. NOTE C -- INVENTORY
August 31, November 30, 1994 1993 ___________ ___________ Manufacturing materials and supplies $ 4,157,109 $ 3,775,732 Finished yogurt products and other food products 4,832,981 3,281,552 Equipment and other products 4,785,855 4,419,553 ___________ ___________ $13,775,945 $11,476,837 =========== ===========
Sequential Page No. 7 PAGE 8 NOTE D -- ACCRUED EXPENSES Accrued expenses consist of the following:
August 31, November 30, 1994 1993 ____________ ____________ Rent $ 859,218 $ 1,031,718 Compensation 1,755,680 1,714,336 Other 3,356,006 2,530,623 ___________ ___________ $ 5,970,904 $ 5,276,677 =========== ===========
NOTE E -- CONTINGENCIES A purported investor in a former franchisee has claimed approximately $26 million in trebled damages, plus costs and prejudgment interest, from the former franchisee for alleged fraudulent acts. The compensatory damages requested are $8.7 million. The Company has also been named in this suit as a defendant and has cross-claimed the former franchisee. The Company believes the plaintiff's claims against the Company to be without merit, and the Company is vigorously contesting the suit. Other than as set forth above, there is no material litigation pending against the Company. Various legal and administrative proceedings are pending against the Company which are incidental to the business of the Company. The ultimate legal and financial liability of the Company in connection with such proceedings and that discussed above cannot be estimated with certainty, but the Company believes, based upon its examination of these matters, its experience to date, and its discussions with legal counsel, that resolution of these proceedings will have no material adverse effect upon the Company's financial condition, either individually or in the aggregate; of course, any substantial loss pursuant to any litigation might have a material adverse impact upon results of operations in the fiscal quarter or year in which it were to be incurred, but the Company cannot estimate the range of any reasonably possible loss. Sequential Page No. 8 PAGE 9 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Total sales for the third quarter of fiscal 1994 increased 38 percent from sales for the third quarter of fiscal 1993. Total sales for the first nine months of fiscal 1994 increased 27 percent from sales for the first nine months of fiscal 1993. The following table sets forth sales by category within the Company's primary segments of operation:
Quarter Ended August 31 Nine Months Ended August 31 % of % of % of % of 1994 Sales 1993 Sales 1994 Sales 1993 Sales ______ _____ ______ _____ ______ _____ ______ _____ Food Products: Yogurt sales to Martin-Brower and other food service distributors $18,132 39% $16,989 50% $ 42,533 39% $42,027 49% Retail sales by Company-owned stores 6,950 15% 8,314 25% 17,223 16% 21,432 25% Yogurt sales to the retail grocery trade 16,191 35% 3,791 11% 34,570 32% 8,981 10% _______ _____ _______ _____ ________ _____ _______ _____ 41,273 89% 29,094 86% 94,326 87% 72,440 84% Equipment: Sales by the Company's equip- ment distributor 4,123 9% 2,564 7% 11,115 10% 6,809 8% Sales of manufac- tured specialty vehicles 1,063 2% 1,935 6% 2,783 2% 5,828 7% _______ _____ _______ _____ _______ _____ _______ _____ 5,186 11% 4,499 13% 13,898 12% 12,637 15% Other 232 0% 232 1% 655 1% 846 1% _______ _____ _______ _____ ________ _____ _______ _____ Total Sales $46,691 100% $33,825 100% $108,879 100% $85,923 100% ======= ==== ======= ==== ======== ===== ======= =====
($ rounded to nearest thousand) Sales from the Company's food produc ts segment include (i) wholesale sales of frozen yogurt products to The Martin-Brower Company, which distributes yogurt and other products to TCBY locations, and to other food service distributors, which distribute to non-traditional locations such as airports, on-premises business cafeterias, hospitals, sporting arenas, toll road plazas, etc., (ii) retail sales of yogurt and related Sequential Page No. 9 PAGE 10 food items by Company-owned stores, and (iii) sales of "hardpack" frozen yogurt and refrigerated "traditional style" yogurt for distribution to retail groceries. Third quarter sales in the food products segment increased from $29.1 million in fiscal 1993 to $41.3 million in fiscal 1994. The food products segment represented 89 percent of the Company's total sales in the third quarter of fiscal 1994 and 86 percent in the third quarter of fiscal 1993. For the first nine months, sales in the food products segment increased from $72.4 million in fiscal 1993 to $94.3 million in fiscal 1994. The food products segment represented 87 percent of the Company's total sales in the first nine months of fiscal 1994 and 84 percent in fiscal 1993. Within the food products segment, wholesale sales of soft serve frozen yogurt mix increased 7 pe rcent during the third quarter of fiscal 1994 and increased 1 percent during the first nine months of fiscal 1994 from the same periods in fiscal 1993. These increases are due to a greater number of non-traditional locations operating during the fiscal 1994 periods compared to the same periods in fiscal 1993 and, for the nine month period, was partially offset by a reduction in the number of traditional "TCBY" stores (Company-owned and franchised stores) in operation. The Company expects a continuation of growth in the number of non-traditional locations during the remainder of fiscal 1994. While the Company experienced a stabilization in the combined number of franchised and Company-owned stores operating in the third quarter, the Company may experience a decline in operating stores during the remainder of fiscal 1994. The table below sets forth location activity for the third quarter and first nine months of fiscal 1994 and 1993.
FRANCHISED COMPANY NON-TRADITIONAL STORES STORES LOCATIONS TOTAL 1994 1993 1994 1993 1994 1993 1994 1993 _____ _____ ____ ____ ______ ____ ______ ______ For the third quarter: Locations at beginning of period 1,341 1,383 114 137 1,117 631 2,572 2,151 Opened/Added 54 15 1 0 170 188 225 203 Closed (24) (22) (15) (2) (26) (11) (65) (35) Net locations purchased (sold) between fran- chisees and Company 1 3 (1) (3) 0 0 0 0 _____ _____ ____ ____ ______ ____ ______ ______ Locations at August 31 1,372 1,379 99 132 1,261 808 2,732 2,319 ====== ===== ==== ==== ====== ==== ====== ======
Sequential Page No. 10 PAGE 11
FRANCHISED COMPANY NON-TRADITIONAL STORES STORES LOCATIONS TOTAL 1994 1993 1994 1993 1994 1993 1994 1993 ______ ______ ____ ____ ______ ____ ______ ______ For the first nine months: Locations at beginning of period 1,364 1,401 121 147 989 292 2,474 1,840 Opened/Added 74 45 1 1 389 541 464 587 Closed (71) (80) (18) (3) (117) (25) (206) (108) Net locations purchased (sold) between fran- chisees and Company 5 13 (5) (13) 0 0 0 0 ______ ______ ____ ____ ______ ____ ______ ______ Locations at August 31 1,372 1,379 99 132 1,261 808 2,732 2,319 ================================================================
Included in total locations above are 122 and 115 "TCBY" stores closed for relocation or for the season at August 31, 1994 and August 31, 1993, respectively. Sales by Company-owned stores declined 16 percent during the third quarter of fiscal 1994 as compared to the same period in fiscal 1993. Sale s by Company-owned stores declined 20 percent during the first nine months of fiscal 1994 as compared to the same period in fiscal 1993. These declines result primarily from a reduction of Company-owned stores operated during the periods including the closing of 6 stores in Ohio, 4 stores in Georgia, and 5 stores in other markets. The Company expects the number of Company-owned stores to stabilize at approximately 90 stores by the end of fiscal 1994. However, the Company will continue to evaluate opportunities to refranchise stores. Sales of yogurt to the retail grocery trade increased 327 percent during the third quarter of fiscal 1994 as compared to the third quarter of fiscal 1993. Sales of yogurt to the retail grocery trade increased 285 percent during the first nine months of fiscal 1994 as compared to the first nine months of fiscal 1993. This increase is a result of expanded geographic distribution of both "hardpack" frozen and "traditional style" refrigerated yogurt products. The Company plans to continue to expand the distribution of yogurt products in the retail grocery trade during the remainder of fiscal 1994. Sales from the Company's equipment segment include (i) sales from the distribution of equipment to the food service industry and (ii) sales of manufactured mobile kitchens and other specialty vehicles primarily to businesses and governments. Sales in the equipment segment increased 15 percent during the third quarter of fiscal 1994 from $4.5 million in fiscal 1993 to $5.2 million in fiscal 1994. Sales by the equipment segment Sequential Page No. 11 PAGE 12 represented 11 percent and 13 percent of the Company's total sales during the third quarter of fiscal 1994 and fiscal 1993, respectively. This increase in sales results primarily from increased sales by the Company's equipment distributor due to sales of equipment packages to international franchisees. Sales in the equipment segment increased 10 percent for the first nine months in fiscal 1994 from $12.6 million in fiscal 1993 to $13.9 million in fiscal 1994. Sales by the equipment segment represented 12 percent of the Company's total sales during the first nine months of fiscal 1994 as compared to 15 percent during fiscal 1993. The increase in sales by the Company's equipment distributor is primarily due to sales of equipment packages to international franchisees and inclusion of a full nine months of sales for AIMCO Equipment Company, which was acquired in April 1993. The increase was partially offset by the completion in the second quarter of 1993 of an $11 million contract with a foreign government that was accounted for on a percentage-of-completion basis. The Company's equipment manufacturing subsidiary has not entered into any additional contracts of this magnitude. Combined same store sales (the comparison of fiscal 1994 individual traditional "TCBY" store sales with sales by the same stores operating during the same period of fiscal 1993) increased 6 percent in the third quarter of fiscal 1994. Same store sales for Company-owned stores increased 2 percent and franchised stores increased 7 percent in the third quarter of fiscal 1994. Combined same store sales increased 3 percent in the first nine months of fiscal 1994. Same store sales for Company-owned stores decreased 1 percent and franchised stores increased 4 percent in the first nine months of fiscal 1994. The overall improvement in same store sales in the quarter and for the nine month period reflects the Company's continuing efforts to increase sales through national media advertising (ended June 1994) and local media advertising, menu extensions, store decor upgrades and relocations. The restaurant industry continues to be highly competitive. Even with the implementation of these programs, same store sales may decline and store closings may occur. The ratio of cost of sales to sales was 58 percent for the third quarter of fiscal 1994 as compared to 52 percent for the third quarter of fiscal 1993. The ratio of cost of sales to sales for the food products segment and equipment segment in the third quarter of fiscal 1994 was 56 percent and 81 percent, respectively, compared to 49 percent and 74 percent, respectively, in the third quarter of fiscal 1993. The increase in the cost of sales to sales ratio is attributed primarily to a change in sales mix. Retail sales through Company-owned stores declined while wholesale sales to the grocery trade and private label customers (which are made at a higher cost of sales to sales ratio) increased. A major component of the Company's cost of sales of food products is milk. Average milk prices are expected to increase in the fourth quarter of fiscal 1994 over the same period in fiscal 1993. The cost of sales to sales ratio for the equipment segment increased due to an increase in sales for equipment with lower gross profit margins. The ratio of cost of sales to sales was 59 percent for the first nine months of fiscal 1994 as compared to 53 percent for the first nine months of fiscal 1993. The ratio of cost of sales to sales for the food products segment and equipment segment in the first nine months of fiscal 1994 was 56 percent and 80 percent, respectively, compared to 49 percent and 79 percent, respectively, in the first nine months of fiscal 1993. The changes in the cost of sales ratios for the nine month period are for the same reasons as noted above for the third quarter. Franchising revenues consist of initial franchise and license fees and royalty income. In the third quarter of fiscal 1994, initial franchise and license fees increased 154 percent and royalty income increased 12 percent from fiscal 1993. In the first nine months of fiscal 1994, initial franchise and license fees increased 46 percent and royalty income increased 9 percent from fiscal 1993. The increase in franchise and license fees results primarily from domestic and international franchising activity. The increase in royalty income results from international franchise activity and a higher number of non-traditional locations. Selling, general and administrative (SG&A) expenses increased 21 percent in the third quarter of fiscal 1994 compared to the third quarter of fiscal 1993. This increase is due primarily to an increase in expenses (e.g., hiring of additional salespersons and administrative staff and higher selling costs such as consumer marketing expenses, trade allowances, and brokerage fees due to the growth in sales volume achieved by the Company in an effort to expand the geographic distribution of the Company's yogurt products within the retail grocery trade) and the continued development of non-traditional locations. The increase referred to above was partially offset by a reduction in the number of Company-owned stores operating during the third quarter of fiscal 1994 (see location activity schedule above) which results in a decrease in the amount of total operating expenses within Company-owned stores. As a percentage of combined sales and franchising revenues, SG&A expenses were 33 percent and 37 percent for the third quarter of fiscal 1994 and 1993, respectively. The Company plans to continue the development of sales opportunities in non-traditional locations and the retail grocery trade. As a result of this plan and as a response to increased competitive activity, this will result in increased selling costs in the remainder of fiscal 1994. Selling, general and administrative expenses increased 7 percent in the first nine months of fiscal 1994 compared to the first nine months of fiscal 1993 for the same reasons as noted Sequential Page No. 13 PAGE 14 above for the third quarter. As a percentage of combined sales and franchising revenues, SG&A expenses were 36 percent and 43 percent for the first nine months of fiscal 1994 and 1993, respectively. Interest expense decreased approximately $19,000 in the third quarter of fiscal 1994 compared to the third quarter of fiscal 1993. Interest expense decreased approximately $173,000 in the first nine months of fiscal 1994 compared to the same period of fiscal 1993. These decreases are due to a reduction in the principal balances of outstanding long-term debt. In future periods, interest costs may increase as funds are borrowed to finance the expansion of the Company's yogurt manufacturing facility, which is discussed in greater detail below. Interest income decreased approximately $114,000 in the third quarter of fiscal 1994 compared to the same period of fiscal 1993. Interest income decreased approximately $271,000 in the first nine months of fiscal 1994 compared to the same period of fiscal 1993. These decreases are due to reductions in the outstanding balances of interest earning assets. Income taxes as a percentage of income before income taxes was 34 percent in the third quarter and first nine months of fiscal 1994. This approximates the effective rate recorded for the comparable periods in fiscal 1993. LIQUIDITY AND CAPITAL RESOURCES The Company has historically generated cash from operations sufficient to meet its normal operating requirements. The Company's cash and short-term investments decreased approximately $ 4.5 million from November 30, 1993 to August 31, 1994. This decrease resulted primarily from (i) an increase in trade accounts receivable and other assets (e.g., slotting fees paid), primarily attributed to the seasonal increase in these accounts along with expansion into the Private Label and Retail Grocery Trade markets, (ii) purchases of property, plant and equipment, including the purchase of the building previously being leased by AIMCO and various construction projects; the construction of modular Treatt EExxpress Units; reconfiguration of the vault refrigeration system and modifications to the novelty products equipment line at the production facility in Dallas, Texas; and the construction of new and relocated Company-owned stores, and (iii) cash dividends of fifteen cents per share or $3.8 million paid in fiscal 1994. The Board of Directors authorized the Executive Committee to spend up to $7.5 million on capital expenditures on various projects designed to expand the production capabilities of "hardpack" frozen yogurt products at the Company's manufacturing facility in Dallas, Texas. Long term bank financing is expected to be utilized to fund the various projects related to this expansion. Commitments or expenditures have been made for approximately $3 million related to this project. Sequential Page No. 14 PAGE 15 On August 31, 1994, working capital was $42.3 million compared to $44.1 million on November 30, 1993. The current ratio was 4.34 to 1.0 on August 31, 1994 and 5.99 to 1.0 on November 30, 1993. The long-term debt to equity ratio was .09 to 1.0 at August 31, 1994 and .11 to 1.0 at November 30, 1993. The Company has a tangible net worth of $103.1 million at August 31, 1994. On September 15, 1994, the Company's Board of Directors declared a five cents per share dividend payable on October 11, 1994 to the stockholders of record on September 26, 1994. The Company will consider adjustments to the dividend rate after giving consideration to return to stockholders, profitability expectations and financing needs. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS There were no changes from previously reported litigation. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits 27 - Article 5, Financial Data Schedule for the Third Quarter Fiscal 1994 10-Q 99(a) - Press release, dated September 15, 1994, "TCBY Reports Net Income and Revenues Up 25% Year-To-Date, Board Declares Dividend" 99(b) - Press release, dated September 16, 1994, "Terry Elliott Joins TCBY Enterprises As Senior VP of Corporate Development" 99(c) - Press release, dated September 20, 1994, "TCBY Enterprises, Inc. Announces $7.5 Million Expansion of Its Manufacturing Facility" 99(d) - Press release, dated September 28, 1994, "TCBY Enterprises, Inc. Announces Promotion of Gene Whisenhunt to Senior Vice President" 99(e) - Press Release, Dated September 28, 1994, "TCBY Enterprises, Inc. Announces Promotion of John Rogers to Senior Vice President" 99(f) - Press Release, Dated September 30, 1994, "Gary Talley Joins TCBY Retail Division as VP of Sales" b) The Company did not file any reports on Form 8-K during the three months ended August 31, 1994. Sequential Page No. 15 PAGE 16 SIGNATURES __________ Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TCBY ENTERPRISES, INC. Date: 10/12/94 /s/ Frank D. Hickingbotham __________________________ Frank D. Hickingbotham, Chairman of the Board and Chief Executive Officer Date: 10/12/94 /s/ Gale Law __________________________ Gale Law, Senior Vice President, Chief Financial Officer Sequential Page No. 16 EX-27 2 ART. 5 FDS FOR 3RD QUARTER 10
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF AUGUST 31, 1994 AND THE CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED AUGUST 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 9-MOS NOV-30-1994 AUG-31-1994 5,709,845 8,669,213 23,051,367 400,381 13,775,945 54,946,761 94,126,904 38,484,049 134,772,894 12,663,551 9,913,777 2,684,893 0 0 106,371,889 134,772,894 108,878,526 118,275,523 63,990,315 63,990,315 0 0 482,411 11,330,639 3,909,070 7,421,569 0 0 0 7,421,569 .29 .29
EX-99 3 EXHIBIT 99A Sequential Page No. 17 PRESS RELEASE EXHIBIT 99(a) FOR IMMEDIATE RELEASE THURSDAY SEPTEMBER 15, 1994 CONTACT PERSON: STACY DUCKETT DIRECTOR, CORPORATE COMMUNICATIONS (501) 688-8229 TCBY REPORTS NET INCOME AND REVENUES UP 25% YEAR-TO-DATE BOARD DECLARES DIVIDEND LITTLE ROCK, AR - SEPTEMBER 15, 1994 - TCBY ENTERPRISES, INC. (NYSE:TBY) today announced an increase in net income of 25% in the first nine months of fiscal 1994; net income was $7,421,569 or $.29 per share, as compared to $5,950,997 or $.23 per share for the first nine months of fiscal 1993. Sales and franchising revenues in the first nine months of fiscal 1994 and 1993 were $118,275,523 and $94,271,323, respectively, a 25% increase. Net income was $4,479,591 or $.18 per share as compared to $4,002,404 or $.16 per share for the third q uarter ended August 31, 1993, an increase of 12%. Sales and franchising revenues for the third quarter ended August 31, 1994 and 1993 were $50,674,680 and $37,226,098, respectively, a 36% increase. Same store sales for franchised and Company-owned stores combined increased 6% in the third quarter of fiscal 1994 as compared to the same period of the previous year. Franchised same store sales increased 7% while Company-owned same store sales increased 2% in the third quarter of fiscal 1994 as compared to the same period of the previous year. TCBY had 2,732 total locations at the end of the third quarter (consisting of 1,372 franchised stores, 99 Company-owned stores and 1,261 non-traditional locations) as compared to 2,319 at the end of the third quarter of fiscal 1993, a net increase of 413 locations. During the third quarter of fiscal 1994, the TCBY system opened 225 new locations worldwide, consisting of 55 traditional stores and 170 non-traditional locations. Frank D. Hickingbotham, Chairman of the Board and Chief Executive Officer said, "During the third quarter, the Company con- Sequential Page No. 18 tinued its national television campaign, and introduced several new products in the Company-own ed and franchised stores. The Company's expansion of its consumer packaged goods into the retail markets continued. During the third quarter of 1994, Consumer Packaged Goods sales increased 250% as compared to the same period of fiscal 1993 which we believe was a result of the Company's significant investment into the market development and promotion of its retail products. We are pleased with these positive results in the third quarter, and they represent the eighth consecutive quarter of earnings improvement over comparable quarters of the previous year." The Board of Directors of the Company declared a $.05 per share cash dividend. This dividend is payable on October 11, 1994 to shareholders of record as of September 26, 1994. TCBY Enterprises, Inc., through subsidiary companies, manufactures and sells soft serve frozen yogurt, hardpack frozen yogurt, novelty products, custom foodservice vehicles, and markets traditional style cup yogurt and foodservice equipment. The Company is the largest franchisor, licensor and operator of frozen yogurt stores in the world. TCBY Enterprises, Inc. Selected Financial Highlights (000, Except Per Share Amounts) (Unaudited) Three Months Ended Nine Months Ended August 31, August 31, 1994 1993 1994 1993 Operating Results Sales & Franchising Revenue $ 50,675 $ 37,226 $118,276 $ 94,271 Net Income $ 4,480 $ 4,002 $ 7,422 $ 5,951 Net Income Per Share $ .18 $ .16 $ .29 $ .23 Average Shares Outstanding 25,519 25,626 25,501 25,635 Dividends Paid Per Share $ .05 $ .05 $ .15 $ .15 August 31, November 30, 1994 1993 Financial Position Current Assets $ 54,947 $ 52,895 Current Liabilities $ 12,664 $ 8,834 Property, Plant & Equipment, Net $ 55,643 $ 53,915 Total Assets $134,773 $128,691 Long-term Debt, less current portion $ 9,914 $ 11,487 Stockholders' Equity $109,057 $105,231 -30- Sequential Page No. 19 EX-99 4 EXHIBIT 99B EXHIBIT 99(b) PRESS RELEASE FOR IMMEDIATE RELEASE FRIDAY SEPTEMBER 16, 1994 CONTACT PERSON: STACY DUCKETT DIRECTOR, CORPORATE COMMUNICATIONS (501) 688-8229 TERRY ELLIOTT JOINS TCBY ENTERPRISES AS SENIOR VP OF CORPORATE DEVELOPMENT LITTLE ROCK, AR - September 16, 1994 - TBCY Enterprises, Inc. (NYSE:TBY) has announced that Terry Elliott has joined the Company effective September 12 as its new Senior Vice President of Corporate Development. This is a newly created position. Mr. Elliott brings to the Company 26 years of financial and management experience with a focus on improving operations of companies. Mr. Elliott previously served as Senior Partner and Office Managing Partner with Ernst & Young's Little Rock office. "We are extremely pleased to have Mr. Elliott join our management team at TCBY. His guidance and insights will be instrumental in the development and execution of the Company's long-term plans," said Frank D. Hickingbotham, Chairman and CEO. -30- Sequential Page No. 20 EX-99 5 EXHIBIT 99C EXHIBIT 99(c) PRESS RELEASE FOR IMMEDIATE RELEASE TUESDAY - SEPTEMBER 20, 1994 CONTACT PERSON: STACY DUCKETT DIRECTOR CORPORATE COMMUNICATIONS TCBY ENTERPRISES, INC. ANNOUNCES $7.5 MILLION EXPANSION OF ITS MANUFACTURING FACILITY LITTLE ROCK, AR - SEPTEMBER 20, 1994 - TCBY ENTERPRISES, INC. (NYSE:TBY) announced a $7.5 million expansion of its manufacturing facility, Americana Foods in Dallas, Texas increasing the plant's overall capacity by more than fifty percent. Americana Foods manufactures the frozen yogurt and ice cream products for the Company - soft serve, hardpack and novelties. Since 1986, TCBY has invested over $35 million in this manufacturing facility. A four-phase expansion will add equipment and space to meet expanded production levels. A new freezing system will be added to improve efficiencies, while the trailer staging area will be enlarged to handle the number of trucks moving products. The current plant was built in June of 1986. In 1988, a new freezer and refrigeration plant was added. Two years later, after additional expansion, the manufacturing facility doubled the capacity of the original plant. "We are very excited about this expansion at Americana Foods," said Frank D. Hickingbotham, Chairman of the Board and Chief Executive Officer of TCBY Enterprises. "We will be able to better serve our existing and new customers both domestically and internationally." This year Americana Foods will export products to over twenty countries. Employment increased 26% in 1994, and should increase another 26% in 1995 after new construction is completed. TCBY Enterprises, Inc., through subsidiary companies, manufactures and sells soft serve frozen yogurt, hardpack frozen yogurt, novelty products, custom foodservice vehicles, and markets traditional style cup yogurt and foodservice equipment. The Company is the largest franchisor, licensor and operator of frozen yogurt stores in the world. Sequential Page No. 21 EX-99 6 EXHIBIT 99D EXHIBIT 99(d) PRESS RELEASE FOR IMMEDIATE RELEASE FRIDAY SEPTEMBER 28, 1994 CONTACT PERSON: STACY DUCKETT DIRECTOR, CORPORATE COMMUNICATIONS (501) 688-8229 TCBY ENTERPRISES, INC. ANNOUNCES PROMOTION OF GENE WHISENHUNT TO SENIOR VICE PRESIDENT LITTLE ROCK, AR - SEPTEMBER 23, 1994 - TCBY ENTERPRISES, INC. (NYSE:TBY) has announced that Gene Whisenhunt has been promoted to Senior Vice President of National Sales and Subsidiary Controller, for the Company. While retaining his responsibility for various financial functions of some of the Company's subsidiaries, he will now be responsible for operational and financial functions for the National Sales Division, the division which operates the Company's foodservice locations. Mr. Whisenhunt has been with the Company for five years. Prior to join ing TCBY, he was a manager at Ernst and Young accounting firm. He obtained his undergraduate degree in accounting from Ouachita Baptist University, and a master's degree in Business Administration from Louisiana Tech. He holds a CPA certification. -30- Sequential Page No. 22 EX-99 7 EXHIBIT 99E EXHIBIT 99(e) PRESS RELEASE FOR IMMEDIATE RELEASE FRIDAY SEPTEMBER 28, 1994 CONTACT PERSON: STACY DUCKETT DIRECTOR, CORPORATE COMMUNICATIONS (501) 688-8229 TCBY ENTERPRISES, INC. ANNOUNCES PROMOTION OF JOHN ROGERS TO SENIOR VICE PRESIDENT LITTLE ROCK, AR - SEPTEMBER 23, 1994 - TCBY ENTERPRISES, INC. (NYSE:TBY) has announced that John Rogers has been promoted to Senior Vice President, Information Systems and Corporate Controller, for the Company. Mr. Rogers' primary responsibilities will involve Management Information Systems, budgeting, SEC compliance and overall financial compliance of the Company. Mr. Rogers has been with the Company for eight years. Mr. Rogers received his undergraduate degree in accounting and data proces sing from the University of Southern Mississippi. He holds a CPA certification. -30- Sequential Page No. 23 EX-99 8 EXHIBIT 99F EXHIBIT 99(f) PRESS RELEASE FOR IMMEDIATE RELEASE FRIDAY SEPTEMBER 30, 1994 CONTACT PERSON: STACY DUCKETT DIRECTOR, CORPORATE COMMUNICATIONS (501) 688-8229 GARY TALLEY JOINS TCBY RETAIL DIVISION AS VP OF SALES LITTLE ROCK, AR - SEPTEMBER 23, 1994 - TCBY ENTERPRISES, INC. (NYSE:TBY) has announced that Gary Talley has joined the Company as Vice President of Sales for TCBY Specialty Products. This division of the Company is responsible for the sale and distribution of "TCBY" branded consumer packaged goods. Mr. Talley will manage the division's sales staff. Mr. Talley has over 20 years of experience in the consumer packaged goods field. Prior to joining TCBY Specialty Products, he was Director of Sales and Marketing for the Special Dairy Products Division of Mid-America Farms (Dairymen) Inc., the country's largest dairy co-operative. His sales experience also includes positions with Lever Brothers, Inc. and Colonial Baking Company. A Missouri native, Mr. Talley received his undergraduate degree from Southwest Missouri State University. TCBY Enterprises, Inc., through subsidiary companies, manufactures and sells soft serve frozen yogurt, hardpack frozen yogurt, novelty products, custom foodservice vehicles, and markets traditional style cup yogurt and foodservice equipment. The Company is the largest franchisor, licensor and operator of frozen yogurt stores in the world. -30- Sequential Page No. 24 -----END PRIVACY-ENHANCED MESSAGE-----