-----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, ErP5EgOACKgyzi2kJJxvsmlHHSEbzPFVdQ2KeInxr4QOJWtImp7nk3EiLUdh0zYP sRehWH5AcBodh/t6lYYbnw== 0000897101-97-000414.txt : 19970414 0000897101-97-000414.hdr.sgml : 19970414 ACCESSION NUMBER: 0000897101-97-000414 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970228 FILED AS OF DATE: 19970411 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: 97578632 BUSINESS ADDRESS: STREET 1: 7505 METRO BLVD CITY: MINNEAPOLIS STATE: MN ZIP: 55439 BUSINESS PHONE: 6128300200 MAIL ADDRESS: STREET 1: 7505 METRO BLVD CITY: MINNEAPOLIS STATE: MN ZIP: 55439 10-Q 1 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 February 28, 1997. 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 April 1, 1997: 13,875,774 Number of registrant's Class B Common Shares outstanding at April 1, 1997: 8,140,014 INTERNATIONAL DAIRY QUEEN, INC. Securities and Exchange Commission Form 10-Q for the First Quarter Ended February 28, 1997 I N D E X Page Number PART I: FINANCIAL INFORMATION: Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheet February 28, 1997 and November 30, 1996 3 Condensed Consolidated Statement of Income Three months ended February 28, 1997 and March 1, 1996 4 Condensed Consolidated Statement of Cash Flows Three months ended February 28, 1997 and March 1, 1996 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 (except Item 4) have been omitted since such 10 items are inapplicable or the answers are negative. SIGNATURES 10 PART I
INTERNATIONAL DAIRY QUEEN, INC. CONSOLIDATED BALANCE SHEET (Condensed and in Thousands) (Unaudited) ASSETS February 28, November 30, 1997 1996 ------------ -------- Current Assets: Cash and cash equivalents and marketable securities $ 35,332 $ 41,483 Receivables--net 49,802 36,512 Inventories 5,750 6,511 Other current assets 4,314 4,430 -------- -------- Total current assets 95,198 88,936 Notes receivable and other--net 29,034 23,340 Other revenue-producing assets--net: Franchise rights and goodwill 98,596 98,762 Rental properties 3,961 4,471 Miscellaneous 10 12 -------- -------- Total other revenue-producing assets 102,567 103,245 Property, plant and equipment--net 13,682 13,913 -------- -------- $240,481 $229,434 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 22,234 $ 16,000 Accrued liabilities 11,885 11,086 Committed advertising 1,455 1,963 Current maturities of long-term debt 10,819 10,849 -------- -------- Total current liabilities 46,393 39,898 Deferred income taxes 14,920 14,920 Long-term debt 3,240 3,543 Other non-current liabilities 2,371 2,241 Minority interest in subsidiaries 651 722 Common stock and other stockholders' equity 172,906 168,110 -------- -------- $240,481 $229,434 ======== ========
See accompanying notes.
INTERNATIONAL DAIRY QUEEN, INC. CONSOLIDATED STATEMENT OF INCOME (Condensed and in Thousands, Except Per Share Amounts) (Unaudited) First Quarter Ended ------------------------- February 28, March 1, 1997 1996 ------------ -------- Operating Revenues: Net Sales $ 65,804 $ 58,859 Sales by company-operated restaurants 7,239 2,168(*) Service Fees 10,722 10,686 Franchise sales and other fees 1,487 1,585 Real estate finance and rental income 2,102 2,004 Other 206 232 -------- -------- 87,560 75,534 Operating Expenses: Cost of Sales 59,049 53,201 Cost of Sales: company-operated restaurants 6,966 1,967(*) Expenses applicable to real estate finance and rental income 1,974 1,890 Selling, general and administrative 11,718 10,696 -------- -------- 79,707 67,754 -------- -------- Operating Income 7,853 7,780 Net Interest Income 912 726 Minority interest in earnings of consolidated subsidiaries and joint ventures (182) (117) -------- -------- Income before income taxes 8,583 8,389 Provision for income taxes 3,370 3,300 -------- -------- Net income $ 5,213 $ 5,089 ======== ======== Earnings per common and common equivalent shares $ .23 $ .22 ======== ======== Average common and common equivalent shares outstanding 22,273 23,084 ======== ========
(*) INCLUDES ONLY SALES AND COST OF SALES BY COMPANY-OPERATED RESTAURANTS FOR 24 DAYS FROM FEBRUARY 7, 1996.
INTERNATIONAL DAIRY QUEEN, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (Condensed and in Thousands) (Unaudited) First Quarter Ended ------------------------- February 28, March 1, 1997 1996 ------------ -------- Net cash (used in) provided by operating activities $ (5,664) $ 2,442 Investing Activities: Net (investments in) maturities of marketable securities (260) 561 Cost of acquisitions, net of cash acquired -- (4,713) Net advances to operators for store renovations and equipment (1,001) (1,322) Net capital expenditures (1,011) (943) Purchase of franchise rights and goodwill (697) (131) Other 41 7 -------- -------- Cash flows used in investing activities (2,928) (6,541) Financing Activities: Purchase and retirement of common shares (1,701) (1,130) Principal payments on long-term debt (332) (344) Other 1,480 356 -------- -------- Cash flows used in financing activities (553) (1,118) Effect of exchange rate changes on cash (16) (18) -------- -------- Net decrease in cash and cash equivalents (9,161) (5,235) Cash and cash equivalents at beginning of year 38,385 34,699 -------- -------- Cash and cash equivalents at end of period $ 29,224 $ 29,464 ======== ========
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 condensed consolidated balance sheet as of February 28, 1997 and March 1, 1996, and the related condensed consolidated statements of income for the three-month periods ended February 28, 1997 and March 1, 1996 and the condensed consolidated statements of cash flows for the three-month periods ended February 28, 1997 and March 1, 1996. 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, 1996. On February 7, 1996, the Company acquired 10 DAIRY QUEEN/BRAZIER stores and a majority interest in 21 other DAIRY QUEEN/BRAZIER stores located in Kentucky, Tennessee and Indiana. Net sales by Company-operated restaurants for these 31 stores from the date of acquisition to March 1, 1996 (24 days) were $2,167,564 and related cost of sales was $1,966,916. 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 39.3 percent for the three-month periods ended February 28, 1997 and March 1, 1996. 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 period ended February 28, 1997, 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(R), ORANGE JULIUS(R), KARMELKORN(R), and GOLDEN SKILLET(R) systems.
Total Ownership Total 11/30/96 Opened Closed Converted Changes 2/28/97 -------- ------ ------ --------- --------- ------- DAIRY QUEEN(R) SYSTEM United States Franchised by the Company: DAIRY QUEEN(R) stores 3,274 17 (23) 0 0 3,268 TREAT CENTER(R) units 150 5 0 0 0 155 Franchised by territorial operators 1,577 8 (4) 0 0 1,581 Company-operated stores 34 0 0 0 34 ------ ----- ----- ----- ----- ----- 5,035 30 (27) 0 0 5,038 ------ ----- ----- ----- ----- ----- Canada Franchised by the Company: DAIRY QUEEN(R) stores 458 4 0 0 0 462 TREAT CENTER(R) units 21 0 0 0 0 21 ------ ----- ----- ----- ----- ----- 479 4 0 0 0 483 ------ ----- ----- ----- ----- ----- Other Foreign 202 10 (1) 0 0 211 ------ ----- ----- ----- ----- ----- Total DAIRY QUEEN(R)stores 5,716 44 (28) 0 0 5,732 ORANGE JULIUS(R) Stores 421 5 (7) 0 0 419 KARMELKORN(R) Shoppes 61 0 (6) 0 0 55 GOLDEN SKILLET(R) Restaurants 21 1 0 0 0 22 ------ ----- ----- ----- ----- ----- TOTAL 6,219 50 (41) 0 0 6,228 ====== ===== ===== ===== ===== =====
Results of Operations: The improvement in the Company's results of operations for the first quarter of 1997 compared to the first quarter of 1996, reflects an increase in net sales and an increase in net interest income. These increases were partially offset by an increase in selling, general and administrative expenses. 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 three months of 1997 with the first three months of 1996.
Percentage of Revenue Three Months Ended ------------------------- Percentage February 28, March 1, Increase 1997 1996 (Decrease) ------------ -------- ---------- Operating Revenues: Net Sales 75.2 77.9 11.8 Sales by company-operated restaurants 8.3 2.9 * Service Fees 12.2 14.1 .3 Franchise Sales & other fees 1.7 2.1 (6.2) Real estate finance & rental income 2.4 2.7 4.9 Other .2 .3 (11.4) ----- ----- Total Revenues 100.0 100.0 15.9 ----- ----- Operating Expenses: Cost of Sales 67.4 70.4 11.0 Cost of Sales: company-operated restaurants 8.0 2.6 * Expense applicable to real estate finance & rental income 2.2 2.5 4.4 Selling, general & administrative 13.4 14.2 9.6 ----- ----- Total Operating Expenses 91.0 89.7 17.6 Operating Income 9.0 10.3 .9 Net interest income 1.0 1.0 25.6 Minority interest (.2) (.2) * ----- ----- Income before income taxes 9.8 11.1 2.3 Provision for income taxes 3.8 4.4 2.1 ----- ----- Net income 6.0 6.7 2.4 ===== =====
* Not meaningful since the prior year includes only 24 days of sales and cost of sales by Company-operated restaurants The increase during the first three months of 1997 when compared to the first three months of 1996 of $6,944,783 in net sales resulted primarily from an increase of $3,380,757 in unit sales of frozen, non-frozen foods, paper, plastics and manufactured novelties to authorized warehouses (who in turn sell to franchisees), an increase of $983,844 in sales of promotional items sold to DAIRY QUEEN stores, and an increase of $2,643,061 in equipment sales to franchisees. Permanent and temporary placement and training fees by Firstaff, Inc., increased by $149,988 during the first three months of 1997 when compared to the first three months of 1996. On March 31, 1997 (subsequent to the end of first quarter), the Company sold all of its interest in Firstaff, Inc. The impact of this transaction will not have a material effect on the Company's financial statements. Sales by company-operated restaurants increased by $5,071,144 when comparing the first three months of 1997 with the first three months of 1996 (December 1, 1995 to March 1, 1996) primarily due to the absence of company-operated restaurants' operations prior to February 7, 1996. Service fee income was flat primarily due to the elimination in 1997 of intercompany service fees of $202,845 in the first three months of 1997 due from company-operated restaurants acquired in February 1996. The increase of $1,022,941 in the first three months of 1997 in selling, general and administrative expenses was primarily from additional personnel and other costs required to support and develop a higher overall level of operations. The increase in net interest income of $186,156 in the first three months of 1997 is primarily the result of an increase in the funds available for investing in interest-generating activities. Minority interest represents the income from operations allocated to the minority ownership in 21 DAIRY QUEEN/BRAZIER stores and Firstaff, Inc. The increase in net income per share when comparing the 1997 period with the 1996 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 February 28, 1997, include $35.3 million in cash, cash equivalents and marketable securities. The Company believes it has sufficient capital to meet existing and presently anticipated needs. PART II Item 4. -- Submission of Matters to a Vote of Security Holders: The Company's Annual Meeting of Stockholders was held on Tuesday, March 18, 1997, and the following resolutions were approved. The following were elected to serve as directors of the Company until the next Annual Meeting of Stockholders:
VOTES VOTES ----------------------- ------------------------ CLASS A STOCKHOLDERS FOR WITHHELD CLASS B. STOCKHOLDERS FOR WITHHELD - ---------------------------------------------------- ------------------------------------------------- Michael P. Sullivan 12,473,222 128,896 John Mooty 7,712,650 3,050 Frank Heit 12,472,838 129,280 Ernest Dorn, Jr. 7,713,250 2,450 Richard Giertsen 7,713,250 2,450 C. David Luther 7,713,650 3,050 Jane Mooty 7,712,650 3,050 Thomas R. Stuart 7,713,250 2,450
The appointment of Ernst & Young LLP as the independent auditors of the Company for the fiscal year ending November 30, 1997, was approved. 7,715,700 shares voted for, none against, and none abstained. No additional items requiring a vote were presented. All other 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) April 11, 1997 /s/ CHARLES W. MOOTY - -------------------------- --------------------------------------------- Date Charles W. Mooty Chief Financial Officer, Vice President and Treasurer April 11, 1997 /s/ DAVID M. BOND - -------------------------- --------------------------------------------- Date David M. Bond Secretary/Assistant Treasurer and Controller EX-27 2 FINANCIAL DATA SCHEDULE
5 1000 3-MOS NOV-30-1997 DEC-01-1996 FEB-28-1997 29,224 6,109 50,322 521 5,750 95,198 25,776 12,094 240,481 46,393 3,241 0 0 222 172,684 240,481 73,043 87,560 66,015 67,989 11,718 101 290 8,583 3,370 5,213 0 0 0 5,213 .23 .23
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