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2006 Board: The following Executive Officers were re-elected: Dennis B. Sprung, President and Chief Executive Officer; John Lyons, Chief Operating Officer; James P. Crowley, Executive Secretary and James T. Stevens, Chief Financial Officer.  Chairman of the Board is Ronald Menaker.

DELEGATES QUARTERLY MEETING SEPTEMBER 2006 – partial page 5 & 6

Mr. Sprung: Thank you, Ron. The Chair calls on Jim Stevens, Chief Financial Officer, for the financial report.

Mr. Stevens: Good morning. Overall, our financial results to date so far this year have looked pretty good. Here’s an overview of what our current numbers from operations look like for the first eight months of this year compared to the same period last year.
     Total revenues were slightly above last year, while total expenses were up a modest two and a half percent compared to 2005. This produced an operating profit of $3.2 million, versus $3.9 million last year. Therefore, on an operating basis, we are 17 percent behind last year’s results. The fact that this number is declining is something we’d like to improve upon. Please recognize that these numbers exclude the impact of our investments. This picture changes considerably when we include our investments. Our portfolio has produced unrealized gains of almost two and a half million dollars for the first eight months of this year. This was 36 percent better than the previous year. Consequently, our bottom line reflects a net surplus of $5.7 million, which is just marginally below last year.
     Before we get into the details of our financial results, we are pleased to report that more registrations continue to be completed online. The percentage of litters which are being registered online has now increased to 50 percent as of the end of last month. This compares to 41 percent at the same time last year.

     Online dog registrations have also increased significantly. Recently they reached an all-time high of 20 percent, and this number is 50 percent greater than the highest level of usage last year. We are certainly very pleased with these developments.
     However, the trend with registration revenues continues to be disappointing. The number of litter registrations for the first eight months of this year is down one percent compared to the previous year. As many of you may recall from the June Delegates meeting, we reviewed with you how dog registrations have been in a downward spiral since 1992. Unfortunately, this trend still persists in 2006. Dog registrations for the first eight months of this year have declined by almost six percent from 2005, which is not good.
     You might ask the question, what is AKC doing about this? The answer is that there is no quick fix or silver bullet to solve this problem. This is something which AKC’s management team and Board have struggled with since 1992. What we can tell you today is that the strategic business plan which was approved by the Board last year has identified various registration initiatives.
     We do not expect that any of these initiatives will have an immediate impact. In fact, it will probably take up to five years for the combination of all these initiatives to produce meaningful results.
     One of the principle strategies of the plan is to increase registrations by addressing the needs of all customer groups. We are creating programs which will reach all dog owners, breeders and fanciers. We recognize that in order to be successful, we must reach all of these groups.
     Here are some of the registration initiatives which are currently underway.
Earlier today, Keith Frazier talked about our outreach to veterinarians. This is one of the key audiences we need to reach in order to positively impact AKC registrations. Programs like Vet Net allow us to reach vets, but also offer tangible benefits to dog owners and breeders.
     During the past few months we have introduced other incentives, including a simplified full litter registration process for breeders and various discount coupons for litter registrations.
     Dog owners are receiving incentives such as the previously described Vet Net program and dog.com coupons.
     We also are working on some additional initiatives. Fully communicating the benefits of AKC registration is best done before the buyer takes their new pet home. Therefore, AKC is embarking on a strategic relationship with Petland that involves educating their employees about the benefits of AKC registration and providing their customers with materials about registering with us. As you know, AKC registered dogs have always been sold in pet stores. This program we are designing will encourage the store to differentiate AKC registration from the myriad of other for-profit registries. What sets our registry apart from others is our comprehensive inspection and quality control programs.
     Working with pet stores will widen the pool of AKC registered dogs and provide the opportunity to improve the lives of dogs, educate owners, and enhance their pet ownership experience via AKC programs and services.
     Another aspect of our strategic plan involves placing ads in publications which reach a broad range of people in the pet industry. These ads drive home a message specifically designed for this group, that AKC registration is unique and preferred by pet owners. These ads are intended to distinguish AKC from the other registries and highlight our longevity, high standards and overall value.
     We will keep you updated on these new initiatives as we continue to work on these in the future, so that we reach dog owners in ways we never have before.
     As a result, many dog owners will be introduced to the benefits which our organization has to offer. We are confident that the impact of these efforts will assist in reversing the downward trend in registrations. As you know, registration revenues are critical in providing the necessary funding for most of AKC’s programs.
     Shifting gears back to our financial results, here’s an overview of the composition of our year-to-date operating expenses for this year versus the previous two years. As you see illustrated in this graph, I’m sure you will agree that management has been very effective in controlling expenses over the past three years. Year-to-date operating expenses for the year are $41.4 million, and this was only two and a half percent higher than 2005. Payroll and benefits expense, which appears as gold on this graph, continue to represent half of our total expenses. This expense is 4.7 percent higher than last year, primarily due to increased headcount. The total of all other expenses are essentially in line with last year.
     At the last Delegates meeting, we also reported to you some financial data concerning events. We noted that this area lost approximately ten million dollars in 2005. This year there have been 8,500 events to date, which was up 12 and a half percent from 2005.
     The total number of entries in events so far this year has been 1.8 million, which is two and a half percent above last year. Based on how the current year is shaping up, we would anticipate that this year’s loss from events will be comparable to last year. This leaves a great deal to be desired, given the continued erosion in our registration revenues.
     One good piece of news is that as previously noted, our investments continue to turbo charge our bottom line. Again, these investments generate a gain of two and a half million dollars for the first eight months of the year. We have been very fortunate that this amount has continued to increase each year, as illustrated here. Our year-to-date return on investments through the end of last month was 4.8 percent, which frankly was a pretty decent return considering the roller coaster ride in the stock market over the last few months.
     Nevertheless, despite these favorable returns, we should never take this for granted. The turbulence in the stock market over the past few months clearly demonstrates this. As you may recall, at our last meeting David Merriam talked about the fact that there was a need to establish an endowment fund reserve. The Board deemed this to be fiscally prudent in order to solidify AKC’s financial future. We are pleased to report that the current balance in this reserve as of the end of last month was seven million dollars.
     In conclusion, I’d like to remind you again that the strategic planning initiatives regarding registrations don’t offer a quick fix. We are only in the first few months of what is anticipated to be a five-year plan. While we are pleased with our overall 2006 financial results to date, we recognize that there is always room for improvement. Thank you. (Applause)

Mr. Sprung: Thank you, Jim.

DELEGATES QUARTERLY MEETING SEPTEMBER 2006 – partial page 19 – 31

Mr. Sprung: Earlier in the meeting, Jim Stevens mentioned our Petland registration initiative. The Chair calls on John Lyons, our Chief Operating Officer, to provide you with some more information on this project.

Mr. Lyons: This is some more background information for you on this initiative to hopefully clear up some of the misunderstandings. During strategic planning, the Board looked at registration trends in depth. The Board considered all facets of registration. The registration portion of the Board’s strategic plan outlines three main strategies.

The first strategy: Increase the return rate of individual dog applications by increasing the value of registration.

The second strategy: Increase litter registration by improving AKC’s relationship with breeders.

And the third strategy: Develop constructive dialogues with pet shops and distributors.

Registration tactics focus on increasing registration by addressing the needs of all customer groups. Dog owners, the fancy, breeders and the commercial channel. This focus stems from a belief that purebred dogs are best served by AKC, and breeding programs are better when AKC is involved than when we are not. An article in the June Perspectives submitted by Jim Crowley provided details on many of the registration related tactics we have implemented to stop the decline and reverse the trend in dog and litter registrations. The article specifically highlighted tactics related to the commercial sector, including:

Continued dialogue with distributors and pet retailers to consider ways to encourage high standards and promote AKC registration.
 

During the strategic planning process, the Board considered and prioritized these tactics. The Board receives regular communication as tactics are implemented in addition to quarterly updates on the overall strategic plan timeline.

The Board considered the tactic of working with pet shops and distributors to promote AKC registration at each strategic planning workshop from April through the final approval of the strategic plan in October of 2005. They then prioritized this as a high priority tactic, and instructed staff to begin discussions. The Board reviewed the details of a potential agreement with Petland at the April and July, 2006 meetings. At the Board’s direction, staff moved forward to develop an agreement with Petland.

So what does this agreement mean, and what is the purpose behind it? The agreement establishes a means to promote AKC registration. The purpose is simply to encourage the AKC registration of AKC registrable dogs, that is, puppies that have come out of AKC registered litters. Today, many of these AKC registrable dogs are registered with other registries or not at all. Educating Petland associates about the value and importance of AKC registration will highlight the differences between AKC and the for-profit listing services. As Petland associates prepare to send a puppy home with a new owner, they will highlight the value and importance of registration. If the new owner decides to register, Petland will facilitate the process by providing data necessary for registration to the AKC: Litter registration number, color, sex, marking, microchip number and the name and address of the new owner. In addition, the new owner will pay for AKC registration in the store. The new owner will complete the registration process by submitting the name of their new puppy on line or via paper. Just to clarify, as a result of this project, AKC is not providing discounted registrations to pet retailers.

From this agreement, AKC benefits by being able to reach more new dog owners. Petland sees a real value in the programs and services AKC has to offer to dog owners: Event participation, and programs like canine good citizen, the Canine Health Foundation, companion animal recovery and pet insurance. These programs are a real value to new puppy owners.

This agreement is one tactic in a suite of initiatives aimed at increasing registrations. For breeders, we have distributed litter registration coupons; issued litter coupons to bred-by medallion winners; implemented the full litter registration, a process that includes an average 28 percent discount on the litter registration and a 20 percent discount on the dog registration, as well as discounts on packages.

For dog owners, we have introduced dog.com certificates and veterinary network certificates. As you know, much of 2005 was spent on developing the strategic plan. As part of the development process, the Delegate body received regular briefings. In January, 2005, briefings in Tampa outlined some of the major trends in registrations, including the growing number of for-profit listing services.  A presentation and subsequent mailing in June 2005 detailed the goals and strategies, including dialogue with distributors and pet retailers. The Chairman’s final report on the strategic plan, mailed in the fall of 2005, again summarized the goals and strategies of the plan.

We are less than a year into our five year strategic plan, but have already accomplished much. As we have begun implementing the plan, we have continued to provide briefings to the Delegate body. Jim Crowley’s article in the June Perspectives gave you a midyear update on our progress. We will provide a year-end update at the December Delegates meeting.

In addition, as new initiatives are launched, you will receive announcements. Thank you.

Ms. Laurans: Mr. President?
Mr. Sprung: Yes.
Ms. Laurans: Do you wish to have questions and comments regarding this presentation now or later?
Mr. Sprung: Under new business.
Ms. Laurans: You want to wait after that? Thank you.
M r. Sprung: We will wait for new business.
Ms. Laurans: We’ll be glad to deal with it now, while John can give some answers, or you can -
Mr. Sprung: We’ll do it under new business.
Ms. Laurans: Okay. Thank you.

Ms. Laurans: Before I blast off, I’d like to say thank you for acknowledging
25 years of service for all of us. And John, I’m glad you are walking to the podium and you are a brave man. The indication was given that we were going to help Petland with communication and education. The original question as to whether we had an agreement with Petland was asked by someone in the audience at the Parent Club Committee. Unfortunately, John was not present. We were told that we would be given a presentation and I am appreciative of the presentation. One of the questions that I asked was: Is Petland going to be registering the AKC dogs that they sell there? And John, I believe you told me no.

Mr. Lyons: That’s true. There is going to be an exchange of data that will allow us to issue the registration.

Ms. Laurans: And how will that data be exchanged? In the same way online registrations are done?

Mr. Lyons: Basically, yes.

Ms. Laurans: Yes, okay. So that’s semantics. I would like to call attention to every single Parent clubs’ that I know of code of ethics that says we will not sell to pet stores. I would like to call attention to the fact that, from my humble belief, we are selling our birthright for a few shekels. I would like to call attention that this is a club of clubs and that we are your constituency. We are the groups that are asked to help out with medallions, to work at shows, to educate the public, to make our clubs and our events more friendly so we can help increase registration on a volunteer basis. I would like to make note of the fact, and pardon me, I feel we are prostituting some of our values, I feel we are going against what I believe most of the members and member clubs would want to see happen, and I feel that we should have at least had some sort of way to give you our thoughts before contracts were signed, sealed and delivered. You said, and I supported the fact, that we don’t want to let the enemy in. I question the fact right now if the enemy is already here. Thank you.

Ms. Laurans: Can we get back to have comments on what I was just talking about and that was getting distracted, so we can keep things in context?
And if people have other things that they would like to talk about, would you back off and let us talk about this Petland agreement first.

Mr. Lyons: I just want to respond. I appreciate how you feel. My thought on that is that these puppies are going to be sold through pet shops anyway. We are not stopping that. The only difference now is they are not registered with us and we don’t have — by not being inclusive with them, we don’t have an opportunity to positively influence their behavior regarding conditions and so forth.

Ms. Laurans: John, education, communication materials, that’s wonderful.
The day that we start seeing them being registered online from the pet shop, where the AKC banners are up in the pet shops, to me that is the Good Housekeeping’s Seal of Approval in a pet shop, and that goes against everything
I have ever known or been taught by the American Kennel Club.

Mr. Gladstone: With all respect, Pat, we have been taking their money for 75 years and cashing their checks.

Mr. Sprung: One person at a time will be recognized.

The Chair recognized Judy Hart, Delegate from Pembroke Welsh Corgi Club of America, who spoke as follows: The good news is when I’m angry, I tend not to become articulate like Pat does but think in sound bites; so that might lead you to think I will be a very short with this. The bad news is, my flight doesn’t leave until seven p.m. I have spent over 35 years involved with purebred dogs and this Sport - 100 percent with the American Kennel Club. And don’t think that I’m upset and my voice is shaking because I’m sad or not used to public speaking or something. I am truly angry. Today I have stopped being a lifelong, dyed-in-the-wool, nobody-else supporter of the American Kennel Club, and when I get home and start getting calls from the constituents in my club, I am going to become an apologist for the American Kennel Club. And that upsets me very, very badly. I am not so naive that I think that Petland is a charitable organization. I may be wrong, but I don’t believe they’re a charitable organization. I would like to know in this contract that apparently we have already signed — we have been told what’s in it for the AKC; what’s in it for Petland? The AKC stamp of approval on puppies sold through pet shops? Could we have a little expansion on what was in the contract that makes this so desirable to Petland that they will train all of their employees and do all of this accepting of registration and do all of these wonderful things for these AKC puppies? What’s in it for Petland?

Mr. Sprung: David Merriam is going to address that question.

Mr. Merriam: I will respond to both your comments and Pat’s comments.
In 1981, 96 percent of the income of AKC was registration money. That money did not come only from the Fanciers or the Sport. That money came from all the dogs registered with AKC, which means it was the backyard breeders, and it was the commercial breeders.  In 1981, when we were living off of that money to fund our Sport, we did not feel we were prostitutes to the commercial breeders. If we want to live in the real world, and we have learned it since the institution of the FUS and the departure of large parts of the commercial breeders; if we want to live in that world, then we have to understand that if we want AKC dogs registered, we have to address that segment.

Now, I’m with you in terms of saying I don’t particularly like the commercial breeding of dogs. It’s not the way I raised dogs. It’s not the way I sold my dogs. If I were to apply my own personal standards to the American Kennel Club, as to what dogs we would register, we would probably reduce our registry to three or four-hundred thousand dogs at most. We would then radically change the way AKC operates. We can reduce the services. We can reduce all of the things that AKC does in an expansive way for what we believe is in the best interests of the Sport of purebred dogs, and we can place upon the participants of our Sport the entire costs of our Sport. That would be an alternative. We would retract in size and in influence. We would truly be elitist. But we’d be elitists who were supporting ourselves. But let me tell you that the cost of that would be very substantial. And if we had an up-down vote on that and if you wanted to say we are willing to pay $75 entry fees, we’re willing to assess $5,000 or $10,000 a year membership dues on member clubs, we could do that, and we could do it all within ourselves. But I suggest to you that that is not the direction that most of the Delegates wish to go and most of our clubs wish to go.

As to the question as to what’s in the contract? I’m not privy to the contract.
I’m not.

Ms. Laurans: May we hear from someone who is?

Mr. Merriam: I will only tell you that just as the contract with Eukanuba for the production of the show was confidential, this contract is confidential. I know many of you would like to have the entire inner workings of the business operations of AKC laid out to this group. In the business world of today that’s not possible. All we can tell you is that from AKC’s standpoint, they are given no breaks. These people, the pet shops, the commercial breeders of 20 years ago, could do exactly the same thing that Petland is doing today. They can sell AKC puppies, they can advertise that these are AKC puppies, and they can assist, in any way they wish for the sale and registration of AKC puppies. And they used to do that. What has changed is that we have competitors, and these competitors now are in the pet stores. They’re in the commercial channels. And they say, “Okay, it costs $15 to register a puppy, XYZ Registry will do it for $12, and we’ll kickback three dollars to the pet shop.” That’s the competition we’re in. And don’t believe that it hasn’t had an effect on our registration. Every meeting, Jim Stevens relates the decline of our registration. If we are going to address this in a serious, honest and a realistic way, we have got to address that segment of the registration. That is the commercial. And that’s simply the answer. If you want to tell the Board and your fellow clubs that we are willing to go inward, support ourselves, pay the price, then that’s a direction you can go, but I think if we go that direction, the American Kennel Club will not exist 100 years from today.

Mr. Sprung: Thank you, David.

The Chair recognized Ruth Ann Naun, Delegate for the Border Terrier Club of America, who spoke as follows: The longer I stand here, the more I think I’ll probably add too many things in and get the whole issue confused. I don’t want to do that.

First of all, I have to say that when I started 25 years ago, it was Dr. Ruth Ann Naun, and it is still Dr. Ruth Ann Naun; but it’s got nothing to do with dogs, so I don’t use that and I’m not a physician, so I can’t help you in the room. But truthfully I was at the Parent Club Committee meeting yesterday. I try to read most of the things that are mailed to us. And what I thought we were going to hear about Petland was that there was going to be a product endorsement exchange between the products that the American Kennel Club now wishes to market with labeling and the AKC. And in John Lyon’s response to us here today, I felt largely that we were being told — very nicely, John — that we knew about this, that we have been updated about this. And truthfully I don’t think so. But I also feel that we’re, as Delegates and as members of a club of clubs, we had today a Nominating Committee named who are accepting open nominations to the AKC Board until the end of October. And I think probably just as the Field Trial Board’s recommendations, when they recommend something, come through this group, with almost unanimous acceptance all the time — granted we don’t know, most of us, a lot about field trials, but we also, most of us, have a lot of confidence in the Field Trial Advisory Board that what they’re doing for the Sport of field trials; and that they have the best interests of that Sport in their mind when they are doing it.

Now, I know that the AKC is an organization with a bottom line, and issues that have to be considered in terms of the bottom line. I do not accept, although, Lord, I’m not a person to be on the AKC Board, so what am I doing here standing here spouting off? It’s a lot of work, it takes a lot of skill. And you have to have a choice of decision about where you want the AKC to go if you are going to be on the Board. I think the Board must know that there are an awful lot of member clubs that do not see this direction as what we would wish us to explore as ways in which we can go forward in this century to maintain a place for purebred dogs where you don’t have to be apologetic about the product that you are helping families to have in their homes. And there’s got to be a better way than marketing through places that take dogs that come from what we now call high volume breeders. Thank you for your time.

Mr. Gladstone: In 1993 the AKC adopted care and condition policies for those high volume breeders, what we called puppy mills then. When we did that, we demanded that those high volume breeders meet our standards for the care and conditions that they gave to the dogs in their kennels. Last year we had 4500 inspections of those breeders. What we have got to understand is that there is a different marketplace today than there was in 1993. When we accept those AKC breeders’ dollars for their registrations, and when they have complied with our care and condition requirements, they are indeed putting into the marketplace an AKC dog, that is a different dog than a dog being put into the marketplace by someone who has either refused to meet our standards or has abandoned the AKC to a competitor. No one suggests that the members or the Parent clubs should change their code of ethics or argue that they should be selling dogs differently. The American Kennel Club, however, has survived and subsidized our activities on the income from commercially bred dogs since the 1950s. To suggest that those breeders who meet our standards, who suffered through our
inspections or tolerate our inspections or are pleased for our inspections, they
are delivering a better product, that dog, that puppy, than those breeders who have failed our inspections, abandoned our registry, and refused to deal with us.

It’s not a message that I want to deliver to you. I know it’s not a message that you want to hear. But the fact is if you call high volume breeders that meet AKC standards “high volume breeders,” and you call every other commercial breeder who refuses or can’t meet AKC standards “puppy mills,” we have got to accept the fact, we are taking their money; and, yes, Judy, we are endorsing them with our papers. We are telling the world these people meet AKC standards. Now, you may not like that, but the fact is that we have lived off of that for the last 60 years.

Ms. Laurans: Steve —

Mr. Sprung: Excuse me. Delegate, please wait. You have spoken on this. Let him finish and then I have to call on the others who haven’t spoken on this topic.

Ms. Laurans: Okay. Then I want to go back and ask Steve about the number of inspections -

Mr. Sprung: You can. You will able to.

Mr. Gladstone: I will let Tom Sharp give you the actual numbers of inspections. My understanding is approximately 4,500.

Ms. Laurans: Of every dog –

Mr. Gladstone: We don’t inspect every dog any more than the IRS audits every return.

Mr. Sprung: Thank you, Delegate. Please be courteous to each speaker.

The Chair recognized Howard Falberg, Delegate for the Golden Retriever Club of America, who spoke as follows: I understand why this approach is being explored. I have a question and then a comment. First off: I live in areas where there’s Petco, where there is Pet Smart, and the emphasis there is on food and, assorted products. I don’t live where they have, what do they call it? Petland? Is that primarily a smaller operation that is filled with puppies that they sell? So that’s my first question.

Mr. Sprung: Let’s answer that question first.

Mr. Lyons: Howard, basically they sell everything that you will see in Pet Smart, but in addition they sell puppies. There are 120 of them nationwide.

Mr. Falberg: Okay. I have some major concerns with this approach. First of all, I was very impressed with Robin Stansell’s presentation, because it consisted of positive things that we are trying to do to improve participation in our Sport. And I don’t think anybody here argued with and certainly approved of what Robin and his group are trying to do. This is a horse or a dog of a different color. Because what we are really dealing with here is: We are getting away from the approach that this organization has had for over 100 years, where we support the breeding of purebred dogs by responsible breeders. I mean the day and age of kennels where people had literally a hundred or more dogs, it’s over with. It’s a private practice. I was very interested in our treasurer’s report because it was not a bad report. And combined with what Robin was talking about, hopefully it’s going to improve, you know, the kind of registrations that we get. I am scared stiff that that what we are doing now with this proposal reminds me of the Biblical phrase about selling your birthright for a bowl full of rotten porridge. And I don’t think that we should be doing that. And that being the case, I would make a motion that the Delegate body requests that the AKC rescind all possibilities of a contract involving the registration of dogs through the Petland organization.

A Delegate: I’ll second the motion.

Mr. Sprung: The motion is under the authority of the Board. Therefore, what you suggest should be a recommendation to the Board of Directors.

A Delegate: Will you consider a straw vote on that recommendation?

Mr. Holder: What I think he meant was to make a motion to recommend to the Board to rescind the contract with Petland. Is that correct?

Mr. Falberg: Yes.

Mr. Sprung: We will open a discussion on a non-binding standing straw ballot. Is there discussion on it?

A Delegate: I Call the question.

Mr. Sprung: Is there a second on that?

A Delegate: Yes.

Mr. Sprung: Any discussion? We are going to vote on calling the question. Jim, could you read back so everybody is clear.

Mr. Crowley: Yes, there was a motion that the Delegate body to make a recommendation to the Board that the Petland contract be rescinded. The question was called. Now the vote is whether or not to call the question and vote on the main motion.

Mr. Sprung: This requires a two thirds majority. All those in favor please raise your hand. Hands down, thank you. All those opposed, please raise your hand. Thank you. The discussion is over. We are now going to vote on the question.

Mr. Crowley: The vote is on a Delegate recommendation to the Board that they consider rescinding the Petland contract. So we are voting on that motion, which is a recommendation to the Board.

Mrs. Daniels: Point of order. Question, please. I believe the motion was not to consider rescinding. The motion was to rescind. The Board could consider rescinding and say we considered it with no action.

Mr. Sprung: Let’s repeat the wording so everybody is clear.

Mr. Crowley: It is a recommendation to the Board that they rescind the Petland contract, which is a non-binding recommendation to the Board.

Mr. Sprung: All those in favor, please raise your hand. Hands down, thank you.
All those opposed, please raise your hand. Hands down, thank you. The motion passes.

The Chair recognized Karen Arends, Delegate for the Portuguese Water Dog Club of America, who spoke as follows: There have been some nice attempts to kind of sidetrack this, but people don’t seem to be sidetracked. In Texas, we are very lucky to have very few pet stores that sell dogs and cats. Petland is one of the few. And I’ve been to their openings and saw very, very docile animals that it’s not possible they are like this normally with everybody that’s there poking them. And these dogs, I don’t know how many they lose. I heard 20 percent before they get there. And then people that don’t know how to care for them and then go to quite often any home, quite often inappropriate. And so we have lost a lot of the dogs. How many of them that you have all seen in pet stores would you swear are purebred dogs? You know this is kind of iffy. And these came from breeders who obviously don’t care where they’re placed. They don’t have to follow up. Why do they care if they’re purebred dogs? They are getting the same money by saying they are. And if they aren’t interested enough to back them up, what makes us think they’re interested enough to be honest with us? These same dogs are then taken care of by people that know nothing about the breeds, individual placements. Then we have all seen them with health problems in our rescue programs, and then you have the nice family that came to buy a fish, that when they get tired of it they salute and flush. These same people may see this darling puppy and buy it that day. What are the chances of that dog having a happy long life with this family? And so these other people said they are planning to be apologetic. I think that AKC should be ashamed. This is beyond awful. And most of the things, as others have said, I’ve been able to back, but I can’t even pretend with this one. And I think the Board should look really hard and strong and maybe if this isn’t the way the real world is, we should go in another direction. Thank you. Also, are these dogs all placed on limited registrations or are they put out on full registrations?

The Chair recognized Sylvia Meisels, Delegate for the Lakeland Winter Haven Kennel Club, who spoke as follows: Yes, I would like to address the subject of the agreement with Petland again, please. Frankly, I find it offensive personally, as I’m sure many of you do, who are breeders and have been registering dogs all your life with the AKC. I always thought of this as a — sorry, if you don’t like the elitist idea; but an elitist registry, something to be especially proud of. And now having puppies coming out of pet shops in this manner, what do I have left to convince me AKC registration means anything more to me than any other registry? Why shouldn’t I go over to another registry?

Mr. Sprung: You say “now,” we have been doing it for many, many years?

Mrs. Meisels: But you haven’t been doing this through pet shops like this, having them send the registrations in.

Mr. Sprung: Correct, the blue slips were given to the customer.

Mrs. Meisels: I have spent 25 years of my life having purebred dogs registered with the AKC. I have special dogs that have come from the bred-by class very successfully. I think I have done the utmost I can to prove that I have good dogs, AKC dogs, that I thought meant something. Now I would like to ask something: Is it possible that you could consider your contract with them requiring them to have limited registrations only on those puppies that are sold that way?

Mr. Sprung: It’s certainly possible to bring that topic up.

Mrs. Meisels: Could you consider that, please?

Mr. Sprung: We will consider all suggestions seriously. Absolutely.

Mrs. Meisels: I would like to make the recommendation to the Board that they please consider putting limited registration on all those puppies sold that way.

A Delegate: Is that a motion?

Ms. Meisels: That is a motion.

Mr. Sprung: We can’t answer for all other people. In other words, the pet buying public will make that final decision.

Ms. Meisels: But the breeder makes that decision when their papers go out.

Mr. Sprung: That’s not what I meant. What I said is the person who is going to purchase a puppy, whether it’s from a breeder or from a pet store, or anywhere else, that’s the person who makes the final decision.

Mrs. Meisels: No.

Mr. Sprung: That’s the person who makes the final decision whether or not they will purchase that puppy.

Mrs. Meisels: Whether they purchase that puppy or not is not the issue. The issue is: Can they get a full registration on a puppy in that manner?

Mr. Sprung: That’s the choice of the breeder.

Mr. Merriam: It’s not the store.

Mrs. Meisels: In this case, there is no breeder. It is Petland that is transferring the dog.

Mr. Sprung: No, that’s not the case. There is a breeder of every litter. Petland is not a breeder of puppies.

Mrs. Meisels: Is it not true that when the dog transfers hands, the ownership goes over to the person whose hands it comes to? Petland owns those dogs at the time it sold to the public.

Mr. Sprung: It is only the breeder who can choose whether a registration is limited or not. And it is only the breeder that can lift that requirement.

Mrs. Meisels: Well, perhaps that rule should be changed, sir?

Mr. Sprung: Perhaps. That’s up to the Delegate body. But then what you are suggesting is: Every owner of a dog, once it is transferred, could place a dog on limited or lift a limited registration?

Mrs. Meisels: Exactly.

Mr. Sprung: So when I sell a special to somebody because I’m no longer going to exhibit it, that dog could become limited. Is that what you are suggesting?

Mrs. Meisels: Yes, sir, I’m suggesting that Petland sell only limited dogs.

Mr. Sprung: To be clear, you are suggesting we take the right of placing limited away from the breeder, and give it to anybody who owns a dog and is transferring a dog?

Mrs. Meisels: I’m suggesting, since you won’t show us the contract and agreement with these people in the first place —

Mr. Sprung: That’s true.

Mrs. Meisels: And in the second place, you have demeaned the dogs that we sell by selling them this way through the pet shop and registering with AKC, all of them are going to be registered so that they could be bred and placed in more puppy mills and in more pet shops. What is to happen to the purebred dog?

Mr. Sprung: These dogs — let’s take it one step back, if we may. These dogs are AKC registrable.

Mrs. Meisels: Absolutely.

Mr. Sprung: So the question is: Should there be a mechanism for them to be registered as AKC puppies, or would we prefer that those AKC puppies are registered elsewhere?

Mrs. Meisels: That was not my question.

Mr. Sprung: But those are the facts of the matter. They will either not be registered with anybody, or registered elsewhere and possibly bred. AKC will not register a litter with AKC limited registration. However, all 23 of our competitors will register those litters. We do not have the ability to stop the registering of litters from limited dogs and bitches, except in our own domain.

Mrs. Meisels: Yes. But I suggest that perhaps then if you can’t have the Petland put limited registration on them, have Petland acquire the puppies from people who only sell them to them as limited registration.

Mr. Sprung: That’s a possibility as well.

Mrs. Meisles: I mean, obviously this is large commercial breeders they are buying them from, and if they require that the large commercial breeders send only limited puppies to them, then that’s all they can sell.

Mr. Sprung: That would be correct.

Mrs. Meisels: There is a way around it.

Mr. Sprung: That’s a possibility.

Mrs. Meisels: Anyway, can we get a motion to the effect that I’d like the Board to consider this, please?

Mr. Sprung: Absolutely.

Mrs. Meisels: I make such a motion, please, that the Board consider having Petland buy only from breeders who will put limited registration on their puppies.

Mr. Sprung: Is there a second? There is no second.

Mrs. Meisels: Thank you for your time.

Mr. Sprung: Thank you.

Mrs. Daniels: Thank you, Mr. President. Perception is reality. How many times have we all heard that? And there have been times when decisions have been made sometimes in the Delegate body, sometimes by staff, sometimes by Board, where we come away thinking we have got some egg on our face. I think right now we all feel like we have just been hit with a 12 - egg omelet. And what I would like to say is a very brief analogy, if you will, to what has happened today. Before lunch, we passed a Bylaws amendment that allow us protection from legal lawsuits when we keep the enemy out of the body. And I can agree with that reason for that Bylaws amendment. Then after dessert, we find out with a spokesperson from the podium that because we have competitors and because we need more money, and believe me, I understand the need for ancillary lines of income — we were researching them tremendously when I was on staff and we started one of the big ones then. But now because we need the money, we have been told we are going to go to bed with the pet shops, with the enemies, and to me that is indeed prostituting our ethic.

Mr. Sprung: Thank you.

The chair recognized Betty Jo Patrick, Delegate for the Schipperke Club of America, who spoke as follows: Earlier today we reviewed and voted on, actually discussed the Article VI, Section 5, of the AKC Bylaws on Delegate Eligibility. And I’m going to read quickly. It says, “No person is eligible to become or remain a Delegate if he or she, Section B, is engaged in trade or traffic in dogs which is engaged in — which includes commercial breeders or brokers of dogs for resale.”
Now, I have a real problem with one rule for us and another rule for you. And I don’t mean to be rude, but I do the rescue for the State of Arizona. And I am the one that gets the dogs and I am the one that tries to find the homes and I am the one that pays for the MPS 3B tests at 80 bucks apiece. And I’m going to say: Petland is not going to take them back when they don’t work out. They come to me. And they’re a mess. And I am angry; very, very, very angry.

The Chair recognized Kathrynanne Sarvinas, Delegate from the Dog Owner’s Training Club of Maryland, who spoke as follows: I can understand your reasoning behind getting these puppies registered. However, as someone has been thrown out of Doctor’s Pet Shops more times than I care to count for questioning the Parentage of a Boxer puppy that I happen to see there that looks more like a Beagle, is there any way that we can ensure that the dogs that they are registering are, in fact, what they are supposed to be?

Mr. Sprung: They are part of the inspection process. The inspectors are there. They do DNA tests, they check the papers, etc., as they do in the kennels that these puppies came from.

Ms. Goldberg: I’m sure I speak for much of the Delegate body in that we sympathize and recognize that the AKC has to find alternate sources of revenue. What you are hearing here is that this is obviously not the one we would choose. I’m throwing this out without previous thought. It occurred to me when Howard Falberg was talking about the Pet Smarts and the Petcos across the nation, those pets supply facilities that do not sell puppies; could the staff not develop some sort of a program, similar to ILP, with paperwork that could be handed out to every person buying a bag of dog food, inviting them to register their dog is some ILP-like registry that’s part of AKC, and telling them what fun it would be to compete in the various events that we offer and giving them a reduced fee and some sort of incentive that would be inclusive. Perhaps it would inspire them to make their next dog a purebred dog. It would not be supporting the puppy mills or high volume breeders, call them what you will; but it would be including more people, showing them the advantages of registration, show them the joys of being part of this fancy, and perhaps encouraging them to buy from a reputable breeder next time around?

Mr. Sprung: Thank you for your suggestion, I will advise you that such research is already underway.

The Chair recognized Margarette Wampold, Delegate for the South Windsor Kennel Club, who spoke as follows: My kennel club does public education, big events almost every month. Wherever we go, we take signs that say “Buy a purebred dog from a reputable breeder.” We had an incident a few weeks ago when we did Dog Days in the Park in South Windsor. This lovely lady came by with her dog, and she wanted one just like it, to breed to. And she informed me it was a Siberian Husky. I thought it was a Malamute; and she told me no, she bought it at a pet store and she had AKC papers. We happened to have a licensed judge that judges the whole working group, and I said “Ed, come over and tell me what this is?” And he looked at me like I was an idiot, not recognizing a Malamute and he said, “Peggy, that’s a Malamute.” Well, that woman has AKC papers saying she has a Siberian Husky. So they are not supervising what they’re buying and she believes she has a Siberian Husky with AKC papers. So I’m opposed to anything where AKC is giving papers to dogs in puppy stores or whatever you want to call it, commercial breeders, because we have worked through the years trying to promote buying a purebred dog from a reputable breeder, and if they have an AKC dog, then they know what they’ve got. Thank you.

Mr. Sprung: Thank you.

The Chair recognized John McNabney, Delegate for the Scottish Terrier Club of America, who spoke as follows: As some of you know, I have a habit of speaking before I think, so I found myself in a situation on an e-mail list defending breeders and defending the AKC against some people who were very active in rescue and were blaming the AKC and breeders for all their problems. And the subject turned to puppy mills and whether or not puppy mills were approved to sell AKC puppies. And I brought up the fact that there was a Care and Standards Commission that the AKC enforced on all commercial breeding operations. And they came back and said yes, that may be; but there are many breeding operations out there that are selling AKC puppies that don’t come anywhere near meeting any kind of reasonable care and conditions standards. I said, if you would tell me the names and the addresses of these locations, I would refer them to the AKC and see to it that the issue is addressed.

Mr. Sprung: Please give it to us.

Mr. McNabney: I need to know who to send those to.

Mr. Sprung: Send it to Tom Sharp. He will talk to you right after the meeting.
Please send it to us.

Mr. McNabney: Very good. Thank you very much.

Mr. Sprung: Thank you.

Mr. Brisbin: I guess I am resigned that my breed and other breed gene pools have taken a hit here, and there is not much I can do about it at this point; that the dogs that we are breeding and putting out there are going to be diluted in a population sense by now more genes from high volume breeders, and apparently there is not much we can do about that. What I would like to know is: Is there a chance, and I think some of the people who put this contract in may now be wishing that there was a way to minimize this. And let me suggest, and I don’t think it would bother Petland, that every puppy that gets registered through this program with Petland get sent an invitation to spay and neuter and to maybe even rebate something to them if they will spay and neuter so that their dogs won’t be out there competing with ours. And the final issue in my mind is: Can you at least tell us how long this contract is valid for? Is there an expiration date on it?

Mr. Sprung: Yes, there’s an expiration date. Every contract has a termination clause, so our attorneys have us prepared for any eventuality.

Mr. Brisbin: But you can’t tell us now how long the contract is?

Mr. Sprung: I don’t have the contract in front of me.

Mr. Brisbin: Thank you.

Mr. Sprung: All AKC contracts, as I said, have a termination clause.

The Chair recognized Gretchen Bernardi, Delegate for the Mississippi Valley Kennel Club, who spoke as follows: I regret that we voted to suggest to rescind a contract that we knew nothing about. But our passions were so high and our feelings were so high we did that, and now we still don’t know anything about this contract. And I still hope that some time in the future we can learn exactly what Petland is getting out of this deal. Because there are a lot of concerns for it, and I worry about: We do require chain of ownership, a paper trail that follows our dogs. And, you know, at one point we quickly got rid of the idea of allowing Doctor Pet stores to print our supplementary transfers, and I fear that we’re going back in that same direction, and I hope that’s not the case. But I wanted to speak to you about something else.

Mr. Sprung: First of all, if I may interrupt. The passion is appreciated.

Ms. Bernardi: Good. Earlier in the day in the financial statement we talked about the ten million dollar deficit in event expenses. And I feel like we breeders and exhibitors and judges have taken a hit, because it’s as though we drain the American Kennel Club, instead of contributing to it. And I’d like to remind you that a few weeks ago, six, seven weeks ago a French bulldog was sold at auction, where else, in Missouri, for $12,500, a male French Bulldog. Now, you have to know that no — I think it went to a commercial breeder in Oklahoma or Kansas, I’m not positive. But the point I’d like to make is: We never saw — I know a little bit about the commercial breeding in Missouri, and we never saw French Bulldogs in the commercial establishments until they started to win groups. So we contribute every day when we go to a dog show and take our good dogs and exhibit them and win with them on television. We contribute to the profit of those dogs. And so I don’t think we should always feel like we’re the drain on the American Kennel Club.

Mr. Sprung: Gretchen, we’re not trying to make the point that that ten million dollar loss or cost or however one wishes to define it — is negative, from a fault point of view. We are simply trying to inform the Delegate body that this is the financial story addressing events across the board. Not saying: This is the financial story, the cost of doing business is minus ten million dollars and it’s someone’s fault. That is not the intention. The intention is strictly to make sure the Delegate body is aware of the cost of holding those events. And certainly not to say we shouldn’t be holding those events or there is anything wrong with holding them. That’s part of our core constituency, and that matters. But we feel an obligation to give you the entire financial picture.

Ms. Bernardi: I appreciate that.

Ms. Laurans: Okay. I’ve been accused of stirring things up. But I think we need to remember: We are all still part of something we love. And what we love is the American Kennel Club. I’ve had people come up to me and say, can we do a no confidence vote, can we do this. I still have confidence in this Board of Directors. What I have concern with is maybe they don’t really understand where we are coming from. There may be, whether it be the Internal Consulting Group or the people that put the strategic plan together, what our bottom line, gut level is with, as the little old lady who is eating the hamburger said, “I’m sick and tired of this and I don’t want to take it any more.” But it doesn’t mean that we don’t still need to work together for an organization and a Sport that we care about. But I think we have expressed a bottom line here, and I hope that there will be some interest to listen to it. And I know you may not be able to rescind it now, or you may. I don’t know. But this is just a gut level thing of something that happened that is untenable for some of us that we didn’t know was coming down, and probably you didn’t know how intensely or passionately we felt about it. So I think it’s time for us to work together to get that point. Whether it means that there is some people who feel that way, who have input to internal consulting, or to you, or that you come to us a bit more, I think it needs to happen. And I would also like to see more money, if we are going to be doing this, given to our Inspections Department and that it targeted to the pet stores.

Mr. Lyons: Pat, I really appreciate your comments. But I do take exception to one thing, as I have in our personal discussions. The ICG, the Internal Consulting Group and the staff and the management of this organization work at the direction of the Board. They do not work independently.

Ms. Laurans: John, we understand that totally; and that was why when the question came up at the Parent Club meeting, the individual from the audience asked that the question be asked at the Board. We do understand totally that the staff works very hard, that we have a wonderful caring and committed staff. They work at the behest of the Board and I think the Board tries to do what they feel is in the best interests of us and our Sport. But we have gotten a little off track.

Mr. Sprung: Thank you.

Ms. Parker: Several of our members have come from the UKC through the miscellaneous class, the Nova Scotia Duck Tolling Retriever, the Toy Fox Terrier. They were very concerned about the ability of judges to cross judge, and they would respectfully request that you reconsider that position and allow judges to participate in both UKC and AKC events. They feel it will enhance both and not detract from either. The thing that I will be very concerned about bringing back to my membership: I’m going to have to take a big gulp when I tell them that their AKC registration for their dogs, that they breed in their homes and try so hard to sell to people as quality puppies is going to have no more meaning now than what they get at Pet Smart.

Mr. Menaker: You know, I’m emotional, too. And I know Pat’s emotional as is Judi. We hear you and we will address the issues you raise and come back with a solution. Your Board does have responsibilities and one of those is fiduciary responsibilities, but let’s not walk out of here tonight suggesting that this staff or anybody else has come up with something that we haven’t been doing for the past 122 years. Indeed we have been registering AKC eligible puppies from Petland, and every other company selling AKC registrable puppies. We have been registering those puppies and we have collected millions of dollars.

This is not a new phenomenon. What is happening is: As the registrations are going down, and many of you are screaming about why this is, our registrations have been pirated by other organizations. That means, and I’ve explained this to Gretchen this morning, that these pet shops take an AKC registrable puppy and convert it to another registry. We need to decide whether we are going to stop registering puppies that come from these puppy brokers or Pet Shops and the like. I say “stop,” because, yes, Gretchen, we have been registering puppies from pet shops. That’s not new. While I certainly don’t endorse brokers or pet shops selling puppies, it is a fact of life and the numbers continue to grow. What I’m saying is there are several options. One is to make a conscious decision to no longer register “all” AKC puppies. By the way, some of them make their way to pet shops from all types of Breeders. That’s one alternative. To tell you the truth, Judi, I would almost prefer to raise the registrations and the event fees and be able to say, “Effective next month, we are no longer going to register those puppies.” However, not only would we lose those registrations, but we would lose a large number of potential constituents and that would impact our ability to influence legislation and over time, our numbers might simply make us just one of 23 registries. So that’s Option Number 1.

Option number 2 is we continue to register any AKC puppy — as we have been doing in the past. And please don’t make it sound like we haven’t, because the data shows we have been doing so on a large scale. However, in this option, we make no attempt to stop the pirating of those AKC registrable puppies and we allow our registry and registration dollars to simply decline.

The third option was the option that the staff was trying to present — and blame the Board; don’t blame the staff. I understand you can un-elect us. But believe me; we put our heart and soul into this sport as much as I believe you all do.

Our intention was not to support or to endorse Pet Shops, but rather to stop the conversion of our AKC puppies. The fact of the matter is that pet shop AKC puppies were being registered when Judi Daniels was a director and when she was president, right, Judi? We have always been registering those puppies. Now they are getting pirated and they are ending up in other registries and they are no longer part of our AKC. The people who own them may never have an opportunity to be part of the AKC family. If bred, they are no longer part of our care and conditions. What we have learned is that competing registries are paying bounties to convert AKC registration papers to ACA papers or the like. And all we simply did, with this recommendation from the staff, and which the Board approved 12 to 1, was to attempt to prevent this trend from continuing. You have communicated to this Board today that you do not want us to pursue this route. Indeed, we will come up with other ways to pursue revenue shortfalls. One way is to raise fees in order that we make up for the shortfall that occurs when registrations decline. There’s no simplistic answer. We are all emotional. But the fact of the matter is there are many components to this whole issue, and there needs to be a way of dealing with it. One lady asks if they are all limited registrations? Well, the question you have to ask yourself is, did the breeders make them limited registrations? As far as I’m concerned, they ought to all be limited registrations. So the real question is: As the registrations continue to decline and as AKC puppies are converted to other registries, we have to make a decision as to whether or not we want to try to go after them, or whether or not we want to try to turn away from them and look for other sources of revenue. That’s what it boils down to. This initiative was not to endorse or support those people or the conditions that most of us are opposed to. It was never done for that purpose. It was taken because in the past we were registering those puppies, and they accounted for a large number of our registration numbers. In any event, I can assure you the Board has received your message. We will reconvene on that subject and you will hear back from us. I assure you, it was not a decision taken lightly, nor was there any intent to do harm to the ethics and values that most of us believe in. Thank you.

The Chair recognized Carl Holder, Delegate for the Beaumont Kennel Club, who spoke as follows: Do we still have a quorum present?

Mr. Sprung: I would say we do. Barely.

Mr. Holder: I move to adjourn.

Mr. Sprung: Is there a second?

A Delegate: Second.

Mr. Sprung: This is a majority vote. We are going to ask you to please stand. All those wishing to adjourn, please stand. Thank you. All those opposed? The ayes have it. The meeting is adjourned.

The opinions expressed by the speakers may not necessarily reflect those of the American Kennel Club.