-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KbzeL3twpi55sPQ3snkwItSLMPAqG0Na81TbxzUK+n3D79QkN2rqLB/Cum5b52MU c6IP0l8xI3HEpFiMAGE56w== 0000051207-95-000013.txt : 19951010 0000051207-95-000013.hdr.sgml : 19951010 ACCESSION NUMBER: 0000051207-95-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950825 FILED AS OF DATE: 19951006 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL DAIRY QUEEN INC CENTRAL INDEX KEY: 0000051207 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-GROCERIES & RELATED PRODUCTS [5140] IRS NUMBER: 410852869 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-06116 FILM NUMBER: 95579217 BUSINESS ADDRESS: STREET 1: 7505 METRO BLVD CITY: MINNEAPOLIS STATE: MN ZIP: 55439-0286 BUSINESS PHONE: 6128300200 MAIL ADDRESS: STREET 1: PO BOX 39286 CITY: MINNEAPOLIS STATE: MN ZIP: 55439-0286 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [ x ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended August 25, 1995 --------------- 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 0-6116 ------ INTERNATIONAL DAIRY QUEEN INC. - ------------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 41-0852869 - ---------------------------------------- ------------------------------- (State of Incorporation) (I.R.S. Employer Identification Number) 7505 Metro Boulevard, Minneapolis, Minnesota 55439 - --------------------------------------------- --------------------------- (Address of principal executive offices) (Zip Code) Registrant's Telephone Number 612/830-0200 - --------------------------------------------- ---------------------------- Neither name, address nor fiscal year has been changed since the last report. - ------------------------------------------------------------------------------ (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) 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 ----- ----- Number of registrant's Class A Common Shares outstanding at September 29, 1995: 14,333,986 Number of registrant's Class B Common Shares outstanding at September 29, 1995: 8,475,957 INTERNATIONAL DAIRY QUEEN, INC. Securities and Exchange Commission Form 10-Q for the Third Quarter Ended August 25, 1995 I N D E X Page Number ------ PART I: FINANCIAL INFORMATION: Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheet August 25, 1995 and November 30, 1994 3 Condensed Consolidated Statement of Income Three months and nine months ended August 25, 1995 and August 26, 1994 4 Condensed Consolidated Statement of Cash Flows Nine months ended August 25, 1995 and August 26, 1994 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 7-9 PART II. OTHER INFORMATION: Items 1 through 6 have been omitted since such items are inapplicable or the answers are negative. SIGNATURES 9 PART I INTERNATIONAL DAIRY QUEEN, INC. CONSOLIDATED BALANCE SHEET (Condensed and in Thousands) (Unaudited) August 25, November 30, ASSETS 1995 1994 ---------- ------------ Current Assets: Cash and cash equivalents and marketable securities $ 40,520 $ 38,722 Receivables--net 47,412 32,408 Inventories 5,300 5,404 Other current assets 3,670 3,718 -------- -------- Total current assets 96,902 80,252 Notes receivable and other--net 18,957 15,789 Other revenue producing assets--net: Franchise rights and service contracts 88,855 87,754 Rental properties 2,723 2,895 Miscellaneous 11 23 ------- -------- Total other revenue producing assets 91,589 90,672 Property, plant and equipment--net 10,970 9,783 -------- -------- $218,418 $196,496 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Drafts and accounts payable $ 24,039 $ 17,127 Accrued liabilities 12,867 7,758 Committed advertising (911) 1,108 Current maturities of long-term debt 388 367 Total current liabilities 36,383 26,360 Deferred income taxes 14,995 14,995 Long-term debt 25,013 23,344 Other non-current liabilities 221 436 Common stock and other stockholders' equity 141,806 131,361 -------- -------- $218,418 $196,496 ======== ========
See accompanying notes. INTERNATIONAL DAIRY QUEEN, INC. CONSOLIDATED STATEMENT OF INCOME (Condensed and in Thousands, Except Per Share Amounts) (Unaudited) Nine Months Ended Third Quarter Ended --------------------- ----------------------- August 25, August 26, August 25, August 26, 1995 1994 1995 1994 ---------- ---------- ---------- ---------- Operating Revenues: Net Sales $231,602 $209,705 $ 92,477 $ 85,715 Service Fees 44,345 42,063 18,178 17,142 Franchise sales and other fees 6,694 6,540 2,630 2,623 Real estate finance and rental income 5,654 6,197 1,800 1,943 Other 746 811 276 38 -------- -------- -------- -------- 289,041 265,316 115,361 107,461 Operating Expenses: Cost of Sales 208,025 189,028 83,010 77,139 Expenses applicable to real estate finance and rental income 5,274 5,817 1,656 1,802 Selling, general and administrative 33,393 30,164 11,762 10,454 -------- -------- -------- -------- 246,692 225,009 96,428 89,395 -------- -------- -------- -------- 42,349 40,307 18,933 18,066 Net interest income 1,466 1,081 484 388 -------- -------- -------- -------- Income before income taxes 43,815 41,388 19,417 18,454 Provision for income taxes 17,310 16,350 7,670 7,290 -------- -------- -------- -------- Net income $ 26,505 $ 25,038 $ 11,747 $ 11,164 -------- -------- -------- -------- Earnings per common and common equivalent share $ 1.14 $ 1.03 $ .51 $ .46 ======== ======== ======== ======== Average common and common equivalent shares outstanding 23,280 24,395 23,001 24,189 ======== ======== ======== ========
See accompanying notes. INTERNATIONAL DAIRY QUEEN, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (Condensed and in Thousands) (Unaudited)
Nine Months Ended ------------------------- August 25, August 26, 1995 1994 ---------- ---------- Net cash provided by operating activities $23,797 $23,639 Cash flows from investing activities: Marketable securities, net (investments)/maturities (24) 5,833 Net advances to operators for store renovations and equipment (1,890) (2,205) Capital expenditures (2,323) (1,691) Purchase of franchise rights and service contracts (1,170) (1,107) Other 90 24 ------- ------- Cash flows (used in)/provided by investing activities (5,317) 854 Cash flows from financing activities: Purchase and retirement of common shares (16,924) (12,577) Principal payments on long-term debt (355) (2,020) Other 541 306 ------- ------- Cash flows used in financing activities (16,738) (14,291) Effect of exchange rate changes on cash 32 (29) -------- ------- Net increase in cash and cash equivalents 1,774 10,173 Cash and cash equivalents at beginning of year 31,766 21,188 ------- ------- Cash and cash equivalents at end of period $33,540 $31,361 ======= =======
See accompanying notes. INTERNATIONAL DAIRY QUEEN, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) The interim financial statements included herein have been prepared by the Company without audit, but include all adjustments which are of a normal recurring nature and which the Company believes are necessary for a fair presentation of its financial position at August 25, 1995, and August 26, 1994, and results of operations and cash flows for the three-month and nine-month periods then ended. The condensed financial statements do not include all disclosures required under generally accepted accounting principles since certain footnote information has been omitted. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report and Form 10-K for the year ended November 30, 1994. The Company calculates its income tax provision for interim periods by estimating its annual effective tax rate and applying this rate to the income of the interim period. The effective tax rate applied was 39.5 percent for the three-month and nine-month periods ended August 25, 1995, and August 26, 1994. Earnings per common share amounts are based on the weighted average number of common and common equivalent shares outstanding during each period. The Company's business is seasonal in nature, and the results of operations for the nine months ended August 25, 1995, may not be indicative of the results for the full year. INTERNATIONAL DAIRY QUEEN, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General: The Company's revenues are derived primarily from service and franchise fees received from franchisees and the sale of perishable and nonperishable supplies and equipment for use by franchised stores. Although the Company does not allocate interest or selling, general and administrative expenses by products sold or services rendered, it believes that a major portion of its operating income results from franchise service fees. The following table sets forth certain information as to the number of stores in the "Dairy Queen," "Orange Julius," "Karmelkorn," and "Golden Skillet" systems.
Total Ownership Total 11/30/94 Opened Closed Converted Changes 8/25/95 -------- ------ ------ --------- --------- ------- DAIRY QUEEN SYSTEM United States Franchised by the Company: "Dairy Queen" stores 3,195 61 (48) 25 3,233 "Treat Center" units 104 8 2 114 Franchised by territorial operators 1,614 52 (24) (25) 1,617 Company operated stores 1 (1) 0 ----- --- ---- --- --- ----- 4,914 121 (73) 2 0 4,964 Canada Franchised by the Company: "Dairy Queen" stores 432 15 (1) 446 "Treat Center" units 20 1 21 ----- --- ---- --- --- ----- 452 16 (1) 467 ----- --- ---- --- --- ----- Other foreign 176 17 30) 163 ----- --- ---- --- --- ----- Total "Dairy Queen" stores 5,542 154 (104) 2 5,594 ----- --- ---- --- --- ----- "Orange Julius" stores 454 10 (33) (1) 430 "Karmelkorn" shoppes 82 1 (12) (1) 70 "Golden Skillet" restaurants 21 21 ----- --- ---- --- --- ----- TOTAL 6,099 165 (149) 0 0 6,115 ===== === ==== === === =====
Results of Operations: - ---------------------- The improvement in the Company's results of operations for the third quarter and first nine months of 1995, compared to the third quarter and first nine months of 1994, reflects an increase in net sales, increased service fees received from stores franchised by the Company and an increase in net interest income. These increases were partially offset by an increase in selling, general and administrative expenses. The reason for the changes in the third quarter periods were generally similar to the reasons, discussed below, for the changes in the nine-month periods. The following table indicates as a percentage of revenue, line items from the income statement, and the percentage increase/decrease of such items when comparing the first nine months of 1995 with the first nine months of 1994.
Percentage of Revenue Nine Months Ended ---------------------- Percentage August 25, August 26, Increase 1995 1994 (Decrease) ---------- ---------- ---------- Operating Revenues: Net Sales 80.1 79.0 10.4 Service Fees 15.3 15.9 5.4 Franchise sales & other fees 2.3 2.5 2.4 Real estate finance & rental income 2.0 2.3 (8.8) Other .3 .3 (8.0) ----- ----- Total Revenues 100.0 100.0 8.9 Operating Expenses: Cost of Sales 71.9 71.2 10.1 Expense applicable to real estate finance & rental income 1.8 2.2 (9.3) Selling, general & administrative 11.6 11.4 10.7 ----- ----- Total Operating Expenses 85.3 84.8 9.6 Net interest income .5 .4 35.6 Income before income taxes 15.2 15.6 5.9 Provision for income taxes 6.0 6.2 5.9 ----- ----- Net income 9.2 9.4 5.9 ===== =====
The increase of $21,897,777 in net sales resulted primarily from an increase of $18,663,130 in unit sales of frozen and non-frozen foods, meat products (primarily chicken) and paper and plastics to authorized warehouses (who in turn sell to franchisees), an increase of $1,487,900 in sales of promotional items sold to "Dairy Queen" stores, and an increase of $2,527,015 in fees by Firstaff, Inc. These increases were partially offset by a reduction in equipment sales to franchisees of $1,504,343 when comparing the first nine months of 1995 with the comparable period of 1994. This decrease resulted from the introduction of newly-designed menu boards which were offered to stores at discounted prices during the 1994 introductory period and which resulted in net sales of $5,654,879 in the first nine months of 1994. Selling, general and administrative expenses increased $3,229,465 due to additional personnel and support costs, increased marketing and research costs, legal costs, and other costs required to support and develop a higher overall level of operations. The increase in net income per share when comparing the 1995 period with the 1994 period was due to an increase in the Company's net income and to a decrease in the average number of common and common equivalent shares outstanding. Liquidity and Capital Resources: - -------------------------------- Available liquid resources at August 25, 1995, include $40.5 million in cash, cash equivalents and marketable securities. The Company's business is highly seasonal with its working capital requirements generally being the greatest during the first nine months of its fiscal year. The Company believes it has sufficient capital to meet existing and presently anticipated needs. PART II ------- All items required under Part II have been omitted since they are inapplicable or the answers are negative. 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. International Dairy Queen, Inc. ------------------------------------- (Registrant) October 6, 1995 /s/ CHARLES W. MOOTY - ------------------------- ------------------------------------- Date Charles W. Mooty Chief Financial Officer, Vice President and Treasurer October 6, 1995 /s/ DAVID M. BOND - ------------------------- ------------------------------------- Date David M. Bond Secretary/Assistant Treasurer and Controller EX-27 2 ARTICLE 5 FDS
5 1,000 9-MOS NOV-30-1995 DEC-01-1994 AUG-25-1995 33,539 6,980 48,004 592 5,300 96,902 21,069 10,099 218,418 36,875 25,013 237 0 0 141,569 218,418 231,602 289,041 208,025 213,299 33,393 62 1,613 43,815 17,310 26,505 0 0 0 26,505 1.14 1.14
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