ITEM 1.BUSINESS
GENERAL
The Company develops and services a system of more than 5,710 DAIRY QUEEN stores in the United States, Canada and other foreign countries featuring hamburgers, hot dogs, various dairy desserts and beverages, 34 of which are wholly or jointly owned and operated by the Company; more than 420 ORANGE JULIUS stores in the United States, Canada and other foreign countries featuring blended drinks made from orange juice, fruits and fruit flavors, along with various snack items; and more than 60 KARMELKORN stores featuring popcorn and other treat items. The Company also owns 60% of Firstaff, Inc., specialists in the placement and training of permanent and temporary office support personnel.
To support and promote the businesses of its franchisees, the Company undertakes product develop ment and market testing, creates and coordinates adver tising programs, provides training and advisory services for store operators and enforces quality control standards.
A major portion of the Company's operating income is derived from franchise fees paid by franchised stores and stores licensed by territorial operators.
The Company also sells equipment to stores and sells other products used in store operations to a system of independently-owned warehouses, which also purchase approved products from other suppliers. These warehouses in turn sell products to retail stores in their geographical areas.
Except for providing financing for the sale of specialized equipment to its franchisees, offering limited financing services for the remodeling of existing fran chised stores and for providing certain leasing services for stores located in shopping malls, the Company has not generally provided financial assistance or guarantees for the construction or operation of franchised stores.
FRANCHISING SYSTEM
DAIRY QUEEN. Stores are located in all states, except Rhode Island, as well as Canada, Japan and several other countries. Most stores are located in smaller towns and suburbs of larger cities. Some franchised stores offer only soft serve dairy products, while others also offer some or all of the food items in the BRAZIER line. The Company endeavors to have its DAIRY QUEEN franchisees offer a more complete line of authorized products.
The first DAIRY QUEEN store was opened in Illinois in 1940. In 1945, two predecessor companies began to develop the DAIRY QUEEN system on a national basis by granting territorial franchise rights for specific geographical areas. In 1962, certain territorial operators formed International Dairy Queen, Inc., by contributing their territorial franchise rights and acquiring ownership of the DAIRY QUEEN trademarks and other franchise rights.
DAIRY QUEEN/BRAZIER stores offer a menu of fast food items, including hamburgers, various dairy desserts (including soft serve and frozen yogurt) and beverages which are marketed under the DAIRY QUEEN and BRAZIER trademarks. Retail prices are determined by the store operators.
The DAIRY QUEEN dairy dessert product line includes cones of various sizes, BLIZZARD Flavor Treats, as well as shakes, malts and sundaes, and specialty frozen confections. These products are prepared in the store from the Company's specially formulated mixes by means of distinctive freezing and dispensing units.
The BRAZIER product line, adopted nationally in 1968, consists of a food menu featuring hamburgers, hot dogs, chicken strips, barbecue and chicken sandwiches, french fried potatoes and onion rings.
The Company franchises DAIRY QUEEN stores either directly through agreements with individual retail store operators or indirectly through agreements with territorial operators who are authorized to grant franchise rights to store operators within a specified territory.
The terms of direct store franchise agreements used by the Company have been modified from time to time as experience and changing circumstances have required. The present DAIRY QUEEN/BRAZIER franchise agreement provides that the store franchisee shall pay to the Company an initial service and set-up fee of $30,000 ($15,000 for a Limited BRAZIER), and a continuing franchise service fee of 4% of gross retail sales. The Company may permit certain qualified existing franchisees to open additional stores by paying a reduced service and set-up fee. Other forms of store agreements currently in force, most of which were entered into prior to 1968, provide for varying levels of service fees computed on different bases, such as the amount of total DAIRY QUEEN mix or products dispensed. All direct franchisees pay some fees to the Company, and at November 30, 1996, 2,861 of the 3,903 stores franchised by the Company in the United States and Canada were paying a continuing franchise service fee of 4% or more.
At November 30, 1996, there were 137 DAIRY QUEEN territorial operators in the United States who are licensed by the Company to grant franchise rights in specific geographical areas. Most of the existing territorial operator agreements were granted prior to 1950 during the early stages of development of the predecessor companies. Since 1973, the Company has acquired the rights of a number of territorial operators and has sought to convert subfranchisees to a direct franchise basis. The Company expects to continue to acquire the rights of territorial operators when it has the opportunity to do so on terms acceptable to the Company.
While the business terms of individual territorial operator agreements may differ in certain respects, they generally provide for substantial uniformity in terms of operation and product quality. The territory covered by territorial operator agreements vary, although most are for limited geographical areas as is evidenced by the fact that most have five or fewer stores. Many of the Company's territorial franchises provide for continuing payments to the Company generally computed on the basis of a percentage of the franchise service fees collected by the territorial operator. However, at November 30, 1996, 124 stores were subfranchised or operated by territorial operators who do not have any obligation to pay the Company any franchise service fees. As to most of these stores, the Company's right to control and supervise quality standards and methods of operation is limited to that activity normally required of the holder of a trademark or service mark under the laws related to trademark protection to control the nature and quality of goods sold under its trademark or service mark.
TREAT CENTER. With the acquisition of KARMELKORN in 1986 and ORANGE JULIUS in 1987, the TREAT CENTER concept has emerged. This franchising concept combines DAIRY QUEEN treat items together with either or both ORANGE JULIUS and KARMELKORN menu items under one storefront within a shopping mall. By combining the products of these franchising systems, the Company seeks to substantially increase store sales volumes in order to support the signing of leases that would be too expensive for a one product-line store. The present TREAT CENTER franchise agreement provides that the store franchisee shall pay to the Company an initial service and set-up fee of $15,000, and a continuing franchise service fee of 6% of gross retail sales. The Company permits certain existing franchisees to open additional stores without paying an initial service and set-up fee. At November 30, 1996, there were 171 TREAT CENTER units, of which 150 were in the United States and 21 in Canada, all of which were franchised by the Company.
COMPANY-OPERATED RESTAURANTS. 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. Three additional stores have subsequently been acquired.
ORANGE JULIUS. In August 1987, the Company acquired ORANGE JULIUS of America and ORANGE JULIUS Canada Limited, franchisors of retail stores which feature blended drinks made from orange juice, fruits and fruit flavors. Most of the stores are located in shopping malls. At November 30, 1996, there were 421 ORANGE JULIUS stores, of which 289 were in the United States, 104 were in Canada, and 28 in other foreign countries, all of which were franchised by the Company.
The present ORANGE JULIUS franchise agreement provides that the store franchisee shall pay to the Company an initial service and set-up fee of $15,000 ($5,000 for certain existing franchises), and a continuing franchise service fee of 6% of gross retail sales.
KARMELKORN. In March 1986, the Company acquired Karmelkorn Shoppes, Inc., a franchisor of retail stores which sells popcorn, candy and other treat items. Most of the stores are located in shopping malls. At November 30, 1996, there were 61 KARMELKORN stores, of which 56 were in the United States and 5 were in foreign countries, all of which were franchised by the Company.
GOLDEN SKILLET. In December 1981, the Company acquired the United States and international (exclusive of Canada) franchise rights and other selected assets of the GOLDEN SKILLET system. GOLDEN SKILLET stores feature fried chicken and side dishes. In October 1992, the Company assigned the franchises, trademarks and related assets for GOLDEN SKILLET in the contiguous 48 United States and the District of Columbia to a non-affiliated company. The Company continues to hold the GOLDEN SKILLET franchises and rights for the rest of the world. At November 30, 1996, there were 21 GOLDEN SKILLET stores in foreign countries, all of which were franchised by the Company.
NEW STORES
The Company is continuously seeking to open new stores. The ability of the Company to open new stores is most dependent upon recruiting qualified operators with suitable sites. New stores franchised by the Company are constructed in accordance with the Company's specifications and standards. Substantially all stores have a standardized appearance as well as uniform product lines and operating methods.
The Company also has a program whereby existing franchisees in good standing with the Company may be awarded an additional store franchise at reduced cost.
FOREIGN OPERATIONS
Foreign operations, excluding Canada, did not have a significant effect on consolidated operations for the year ended November 30, 1996. The Company's operations in Canada are substantially similar to its U.S. operations. Of the 839 foreign stores, at November 30, 1996, 583 were located in Canada, 86 in Japan and 170 in 23 other foreign countries.
COMPANY SERVICES
PRODUCT DEVELOPMENT AND TEST MARKETING. The Company continually attempts to develop new products. New product concepts are obtained from vendors, franchisees and Company personnel who work with the Company's Research and Development personnel to develop a product concept into a finished product suitable for the system.
ADVERTISING AND SALES PROMOTION. The Company develops and conducts national and area sales promotion and advertising programs principally through television, radio and newspapers. For each of the four food systems, the Company is assisted by an advisory council, the majority of whose members are elected by members of the system. Substantially all amounts expended for advertising and promotion are pro vided by franchisees who contribute to advertising funds.
(a) The ORANGE JULIUS stores which closed in 1996 reflect the continued high concentration of lease expirations during the 1988 through the 1996 period. The Company's policy is not to renew its lease obligations with respect to stores which have not achieved satisfactory operating results.
The present franchise agreements provide that franchisees shall pay an amount equal to 3% to 6% of gross sales to the advertising and sales promotion funds administered by the Company. Funds administered by the Company for advertising and sales promotion during 1996, 1995 and 1994 aggregated approximately $57,500,000, $57,100,000 and $51,000,000, respectively.
In addition to the funds administered by the Company, many stores expend funds for local and regional advertising. Unexpended advertising funds were $1,963,141 and $844,714 at November 30, 1996 and 1995, respectively.
MANUFACTURING AND DISTRIBUTION. The Company is one of over 70 approved manufacturers of DAIRY QUEEN mix. In addition to DAIRY QUEEN mix and concentrates, the Company sells equipment which is manufactured by independent manufacturers. The Company also purchases approved perishable and nonperishable supplies and resells them to independently-owned authorized warehouses described below. Substantially all of the Company's sales of products consist of products purchased for resale from manufacturers and suppliers unrelated to the Company. Neither the retail stores nor the authorized warehouses are required to purchase any products from the Company.
In order to provide stores with a convenient source of approved merchandise, the Company has arranged for a system of over 70 authorized warehouses which purchase, inventory and sell approved food and miscellaneous supplies to stores. In addition to the authorized warehouses, there are a number of warehouses which are not under contract with the Company which purchase products directly from approved manufacturers for resale to stores.
TRAINING AND ADVISORY SERVICES. The Company provides a wide range of training and advisory services to its franchisees. New store operators attend an intensive training course at the Company's training center in Minneapolis, Minnesota. The at ten dees are given classroom and practical instruction in procedures for product preparation, business and financial management, marketing and promotion and related operational matters. Periodic refresher training and instruction are available to all franchisees at the Company's training center and at state, regional and national conferences and seminars. The Company also makes available training aids and materials for the franchisees' use in instructing store employees.
QUALITY CONTROL. The Company conducts a periodic evaluation program designed to insure a high standard of operation, quality and product uniformity. Through 126 field consultants and 15 regional managers, the Company furnishes franchisees with information, advice and recommendations relating to facility image, menu/product preparation, financial management, personnel management and marketing.
In order to maintain quality control, stores are generally required to use approved products. The Company maintains a system of approved manufacturers which are authorized to manufacture and sell products such as mix, meat, containers, paper goods, equipment and sales promotion materials.
REGULATION OF FRANCHISE BUSINESS
The Company and its franchisees are subject to various federal, state and local laws affecting their businesses. The Company and its franchisees are subject to a variety of regulatory provisions relating to wholesomeness of food, sanitation, health and safety.
The Company is also subject to a substantial number of state laws regulating the offer and sale of franchises. Such laws impose registration and disclosure requirements on franchisors in the offer and sale of franchises and may also regulate termination, renewal fees and other substantive aspects of the relationship between franchisor and franchisee. The Company is also subject to Federal Trade Commission regulations governing disclosure requirements in the sale of franchises. The Company believes it is in compliance with applicable laws and regulations governing its operations.
COMPETITION
All areas of the fast food service business are highly competitive, and the Company has many competitors, some of whom are large companies selling a more diversified line of products and having greater financial resources than the Company. The Dairy Queen/BRAZIER, ORANGE JULIUS, KARMELKORN and Golden Skillet stores compete with a large number of national chains as well as locally-owned restaurants, drive-ins, take-home outlets and similar establishments, offering food at low and medium prices. Extensive and active competition also exists in the acquisition of commercial locations suitable for stores.
A key competitive factor is the reputation and image of the system. The Company believes that public recognition of DAIRY QUEEN/BRAZIER, ORANGE JULIUS and KARMELKORN names contributes significantly to sales by stores.
The Company owns the DAIRY QUEEN and BRAZIER trademarks registered in the United States Patent Office and in each of the fifty states and in the Canadian Trademarks Office. The Company also owns a number of United States and foreign registrations of other trademarks, including ORANGE JULIUS, KARMELKORN and GOLDEN SKILLET, and service marks used in the conduct of its business. The Company believes that the success of its business depends to a large extent on its trademark and service mark protection and, where and when necessary, intends to continue to protect its trademarks by appropriate legal action.
EMPLOYEES
At November 30, 1996, the Company employed 643 persons (including 96 persons employed by Firstaff, Inc.) primarily in sales, supervisory, clerical and managerial activities and employed 1,337 persons in its Company-operated restaurants. The Company maintains a 401(k) Retirement Savings Plan which is available to all full-time employees with one year or more of service. The Company also maintains a Section 125 Plan which is available to full-time employees after 30 days of service. The Company has never experienced a work stoppage due to labor difficulty and considers its employee relations to be satisfactory.
ITEM 2.
ITEM 2. PROPERTIES
The Company owns an office building aggregating approximately 114,000 square feet, of which 84,000 square feet is utilized by the Company for its principal administrative offices and training center. Of the remaining 30,000 square feet, approximately 27,000 is leased to third parties under leases expiring from 1998 to 2001.
The Company also owns a mix manufacturing plant in Decatur, Georgia, a Canadian office building/warehouse and the store facilities described below. Warehouse space aggregating 35,023 square feet is under lease expiring in 2001 and eleven regional offices comprising 15,918 square feet are under leases expiring from 1997 to 2005. Firstaff, Inc. has six offices in Minnesota, aggregating 20,512 square feet, which are under leases expiring from 1997 to 2001. The aggregate rental charges for the Company's administrative, FIRSTAFF and operating facilities, excluding stores, were approximately $775,000 and $750,000 for fiscal 1996 and fiscal 1995, respectively.
At November 30, 1996, the Company owned real property relating to eight stores, all of which were leased to franchisees, with an aggregate net book value of approximately $1,690,000. The Company leases all of the real property relating to the 34 DAIRY QUEEN/BRAZIER stores operated by it, under leases expiring from 1997 to 2016. See Notes 4 and 5 of Notes to Consolidated Financial Statements for additional information regarding the Company's properties.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
From time to time, and at present, the Company is subject to various claims and lawsuits in the ordinary course of business, some of which include allegations by franchisees and subfranchisees that the Company has violated antitrust and other laws. Such claims sometimes arise in connection with actions by the Company to collect amounts owed by franchisees or to enforce or terminate franchise agreements.
HUGH COLLINS, ET AL. V. INTERNATIONAL DAIRY QUEEN, INC. AND AMERICAN DAIRY QUEEN CORPORATION ("ADQ"), (United States District Court, Middle District of Georgia, Macon Division, No. 94-95-4-MAC (WDO), commenced April 5, 1994). This matter, previously reported, is an action by six franchisees in the State of Georgia for declaratory judgement, injunctive relief, actual damages in an unspecified amount, treble damages under the federal antitrust law, costs, and attorneys' fees. Plaintiffs' claims are that (1) ADQ and the Company have tied the purchase of the franchise to purchase of products sold in the DAIRY QUEEN system and in violation of Section I of the Sherman Antitrust Act (15 U.S.C. ss. 1), and (2) ADQ and the Company have monopolized and attempted to monopolize a "market" supposedly consisting of products sold in the DAIRY QUEEN system in violation of Section 2 of the Sherman Antitrust Act (15 U.S.C. ss. 2). Plaintiffs also allege that ADQ and the Company have breached contractual obligations to them related to the approval of alternative manufacturers and allege contract claims and claims for breach of fiduciary duty related to advertising funds. On August 30, 1996, the Court granted plaintiffs' motion to certify the case as a class action and established two classes and three subclasses. On the basis of motions filed by the Company and ADQ, the Court later modified the classes to exclude certain franchises with arbitration clauses. The Court currently is considering the Company's and ADQ's summary judgment motions on the cup and lid claims and the monopolization and attempted monopolization claims. The Company and ADQ are vigorously defending against plaintiffs' claims. No trial date has been set. See Note 8 of Notes to Consolidated Financial Statements.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Both Class A common stock and Class B common stock are listed on the Nasdaq National Market and trade under the symbols INDQA and INDQB, respectively.
The following table sets forth for the periods indicated the high and low prices for the Class A common stock and Class B common stock as reported by Nasdaq. The prices shown below do not include retail markups, markdowns or commissions.
- -------------------------------------------------- Class A Class B Common Stock Common Stock - -------------------------------------------------- Low High Low High - -------------------------------------------------- Fiscal Year Ended NOVEMBER 30, 1995 First Quarter $15.75 $18.00 $16.00 $19.00 Second Quarter $17.25 $19.75 $17.50 $20.00 Third Quarter $18.25 $22.00 $18.50 $22.37 Fourth Quarter $20.75 $23.25 $20.50 $22.00
Fiscal Year Ended NOVEMBER 30, 1996 First Quarter $20.25 $24.75 $20.00 $25.50 Second Quarter $20.00 $22.75 $19.75 $22.75 Third Quarter $19.00 $22.25 $19.00 $21.50 Fourth Quarter $18.75 $21.00 $18.75 $20.50
As of January 31, 1997, the approximate number of record holders of the Company's Class A common stock was 888 and the approximate number of record holders of the Company's Class B common stock was 432.
The Company has not paid cash dividends on its common stock. Future dividends will be determined by the Company's Board of Directors whose decision will be made in light of the earnings, financial position and cash requirements of the Company and other relevant factors existing at the time. The Company's credit agreements contain provisions limiting the payment of dividends. See Notes 3 and 7 of Notes to Consolidated Financial Statements.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The information set forth under the caption "Selected Financial Data" on page 9 of the Registrant's 1996 Annual Report to Stockholders is incorporated herein by reference.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, items from the Company's statement of income expressed as percentages of revenues, and the percentage changes in the dollar amounts of such items from the prior period.
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 service fees.
1996 COMPARED TO 1995. The increase of $10,418,314 in net sales resulted primarily from an increase of $10,275,987 in unit sales of frozen and non-frozen foods, paper, plastics and manufactured novelties to authorized warehouses (who in turn sell to franchisees) and an increase of $1,188,198 in permanent and temporary placement and training fees by Firstaff, Inc. These increases were partially offset by a reduction in equipment sales to franchisees of $1,467,518.
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. Three additional stores have subsequently been acquired. Net sales for these 34 stores through November 30, 1996 were $27,883,069 and related cost of sales was $25,035,301. Net sales for the fourth quarter were $7,998,602 and related cost of sales was $7,605,192.
Service fee income was flat primarily due to the elimination of $1,115,323 in 1996 of service fees due from Company-operated restaurants acquired in 1996.
The increase of $985,946 in 1996 in selling, general and administrative expenses was primarily from an increase in personnel and legal support costs.
The increase in net interest income of $278,974 in 1996 is primarily the result of an increase in 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 of 9(cent) when comparing the 1996 period with the 1995 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.
1995 COMPARED TO 1994. The increase of $28,918,848 in net sales resulted primarily from an increase of $22,921,941 in unit sales of frozen and non-frozen foods, meat products (primarily chicken) and paper and plastics to authorized warehouses, an increase of $2,324,517 in sales of promotional items sold to DAIRY QUEEN stores, and an increase of $3,202,205 in training and temporary placement fees by Firstaff, Inc.
These increases were partially offset by a reduction in equipment sales to franchisees of $1,671,845 when comparing 1995 with 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 $7,303,574 in 1994.
The decreases in real estate, finance and rental income and related expenses in fiscal 1995 reflect a continued number of lease expirations. It is the Company's policy not to renew the Company's obligations with respect to store leases, except in certain limited situations.
Selling, general and administrative expenses increased $3,987,301 due to additional personnel and support costs, increased marketing and research cost, legal costs, and other costs relating to the Company's higher overall level of operations in 1995.
The increase in net interest income in fiscal 1995 is the result of an increase in the funds available for short-term investments and increased interest rates.
The 13 cent 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.
SEASONALITY OF BUSINESS
The Company's business is highly seasonal. DAIRY QUEEN sales generally have been higher during the spring and summer months, while ORANGE JULIUS and KARMELKORN sales tend to be higher during the September to December back-to-school and holiday shopping periods. Historically, the Company has earned a substantial portion of its operating profit during the second and third quarters (spring and summer months). The following table shows the Company's net income by quarter for each of the past five fiscal years:
- -------------------------------------------------- First Second Third Fourth Quarter Quarter Quarter Quarter Total - -------------------------------------------------- Net income (IN THOUSANDS) 1992 $4,406 $8,674 $10,536 $5,479 $29,095 1993 4,548 8,727 10,677 5,936 29,888 1994 4,614 9,260 11,164 6,383 31,421 1995 4,910 9,848 11,747 6,712 33,217 1996 5,089 10,206 12,387 6,763 34,445
LIQUIDITY AND CAPITAL RESOURCES
Funds for working capital, acquisitions of territorial rights, acquisitions of the Company's common stock and capital expenditures during the last three years have been provided by internally-generated funds (net income plus amortization and depreciation). Available liquid resources at November 30, 1996 included $38,384,589 in cash and cash equivalents. The Company does not have any material commitments for capital expenditures during fiscal year 1996 and be lieves that its existing credit arrangements, along with working capital generated by operations, will be sufficient to meet existing and presently anticipated needs.
IMPACT OF INFLATION
The Company does not believe its business is affected by inflation to a greater extent than the general economy. Generally, the Company has been able to offset the inflationary impact of costs and wages through a combination of productivity gains and price increases.
PROSPECTIVE INFORMATION
The statements which are not historical facts contained in this report are forward-looking statements that involve certain risk and uncertainties including, but not limited to, risk associated with the uncertainty of future financial results, the impact of competitive products or pricing, the effect of economic conditions and other uncertainties detailed in the Company's filings with the Securities and Exchange Commission.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
An index to the consolidated financial statements and financial statement schedules is found on page 35 of this report.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to Directors, appearing under "Election of Directors" in the Company's Definitive Proxy Statement for the Annual Meeting of Stockholders to be held on March 18, 1997, is incorporated herein by reference. The names, ages, and positions of all of the officers of the Company are listed below along with their business experience during the past five years. Officers are normally elected annually by the Board of Directors at its annual meeting. Charles W. Mooty is the son of John W. Mooty. There are no other family relationships among these officers nor any arrangement between any officer and any person pursuant to which the officer was selected.
(1) Unless indicated to the contrary, each of such person's primary occupation for at least the past five years has been as an officer of the Company or a subsidiary of the Company. John W. Mooty is a member of the Minneapolis law firm of Gray, Plant, Mooty, Mooty & Bennett, P.A., with which firm he has been associated for more than five years.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to directors and officers, appearing under "Information Concerning Directors and Officers" in the Company's Definitive Proxy Statement for the Annual Meeting of Stockholders to be held on March 18, 1997, is incorporated herein by reference.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information with respect to security ownership of certain beneficial owners and management, appearing under "Outstanding Stock" in the Company's Definitive Proxy Statement for the Annual Meeting of Stockholders to be held on March 18, 1997, is incorporated herein by reference.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to certain relationships and related transactions, appearing under "Information Concerning Directors and Officers" in the Company's Definitive Proxy Statement for the Annual Meeting of Stockholders to be held on March 18, 1997, is incorporated herein by reference.
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Pursuant to the requirements of Section 13 or 15(d) 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.
By /s/ Michael P. Sullivan ------------------------------------- Michael P. Sullivan President and Chief Executive Officer
Date: February 21, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS INTERNATIONAL DAIRY QUEEN, INC.
Additions Balance at Charged to Balance at Beginning Costs and End of DESCRIPTION Of Year Expenses Deductions Year - ----------- ------- -------- ---------- ----
Reserves deducted from related assets:
Doubtful accounts and notes: Years ended November 30 1996 $572,000 $177,636 $274,909(1) $474,727 1995 610,738 257,047 295,785(1) 572,000 1994 845,071 347,771 582,104(1) 610,738
(1) Write-offs of oncollectible accounts and notes, net of recoveries.