EX-99 2 ex99-1.txt EXHIBIT 99.1 CoolBrands International Inc. Consolidated Balance Sheets (Revised) as at November 30, and August 31, 2003 ------------------------------------------------------------------------------- (in thousands of dollars)
November 30, August 31, 2003 2003 (Unaudited) $ $ Assets Current assets: Cash and short term investments 49,468 30,140 Receivables 60,763 60,807 Receivables - affiliates 3,556 3,185 Inventories 53,298 55,604 Prepaid expenses 6,608 9,722 Future income taxes (note 6) 3,304 1,930 ---------------------------------------- Total current assets 176,997 161,388 Future income taxes 4,230 2,977 Property, plant and equipment 26,798 28,349 License agreements 11,381 12,357 Intangible and other assets 8,529 9,084 Goodwill 95,492 99,695 ---------------------------------------- 323,427 313,850 ======================================== Liabilities and shareholders' equity Current liabilities: Accounts payable 19,824 27,339 Payables - affiliates 622 754 Accrued liabilities 39,115 33,530 Income taxes payable 1,703 5,204 Future income taxes 1,880 3,144 Current maturities of long-term debt 5,267 5,683 ---------------------------------------- Total current liabilities 68,411 75,654 Long-term debt 31,407 38,671 Other liabilities 3,635 3,984 Future income taxes 4,535 4,722 ---------------------------------------- Total liabilities 107,988 123,031 ---------------------------------------- Minority interest 14,614 2,968 ---------------------------------------- Shareholders' Equity: Capital stock 138,103 122,406 Contributed surplus (note 4 and 6) 1,542 Cumulative translation adjustment (19,838) (8,904) Retained earnings (note 6) 81,018 74,349 ---------------------------------------- Total shareholders' equity (note 6) 200,825 187,851 ---------------------------------------- 323,427 313,850 ========================================
CoolBrands International Inc. Consolidated Statements of Earnings (Revised) for the three months ended November 30, 2003 and 2002 ------------------------------------------------------------------------------- (Unaudited) (in thousands of dollars, except share data)
2003 2002 $ $ Revenues: Sales 122,121 63,062 Franchising and licensing revenues: Royalty income 597 696 Franchise and license fees 284 346 Consumer products license fee 83 Drayage and other income 15,365 195 ---------------------------------------- Total revenues 138,450 64,299 ---------------------------------------- Operating expenses: Cost of goods sold 91,712 39,563 Selling, general and administrative expenses 33,385 19,796 Stock-based compensation expense (note 6) 1,542 Interest expense 577 548 ---------------------------------------- Total operating expenses 127,216 59,907 ---------------------------------------- Minority interest 288 ---------------------------------------- Earnings before income taxes (note 6) 10,946 4,392 Provision for income taxes (note 6) 4,277 1,669 ---------------------------------------- Net earnings (note 6) 6,669 2,723 ======================================== Earnings per share: Basic and diluted 0.12 0.05 ======================================== Weighted average shares outstanding: Shares used in per share calculation - basic 54,413 51,714 Shares used in per share calculation - diluted 55,891 53,300
CoolBrands International Inc. Consolidated Statements of Cash Flows (Revised) for the three months ended November 30, 2003 and 2002 ------------------------------------------------------------------------------- (Unaudited) (in thousands of dollars)
2003 2002 $ $ Cash and short term investments provided by (used in) : Operating activities: Net earnings 6,669 2,723 Items not affecting cash: Depreciation and amortization 1,460 1,282 Stock-based compensation expense (note 6) 1,542 Future income taxes (note 6) (2,506) (1,176) Minority interest 288 Changes in current assets and liabilities: Receivables (322) 9,028 Receivables - affiliates (381) 1,199 Allowance for doubtful accounts 349 91 Inventories 2,371 (4,323) Prepaid income taxes (215) Prepaid expenses 3,197 2,648 Accounts payable (7,723) 1,207 Payables - affiliates (136) (127) Accrued liabilities 5,880 (3,479) Income taxes payable (3,596) (7,392) Other assets (73) (1) Other liabilities (359) 113 ---------------------------------------- Cash provided by operating activities 6,660 1,578 ---------------------------------------- Investing activities: Increase in notes receivable (19) Repayment of notes receivable 3 108 Purchase of leasehold improvements and equipment (3,005) (1,297) ---------------------------------------- Cash used in investing activities (3,002) (1,208) ---------------------------------------- Financing activities: Expenses for special warrants (144) Proceeds from issuance of Class A and B shares 15,697 28 Capital contributions from Partnership's minority partner 11,554 Repayment of long-term debt (5,000) (1,578) ---------------------------------------- Cash provided by (used in) financing activities 22,251 (1,694) ---------------------------------------- (Decrease) increase in cash flow due to changes in foreign exchange rates (6,581) 189 ---------------------------------------- Increase (decrease) in cash and short term investments 19,328 (1,135) Cash and short-term investments - beginning of period 30,140 47,086 ---------------------------------------- Cash and short-term investments - end of period 49,468 45,951 ========================================
CoolBrands International Inc. Consolidated Notes to Interim Financial Statements (Revised) (Unaudited) November 30, 2003 and 2002 -------------------------------------------------------------------------------- (Tabular amounts are expressed in thousands) 1. Significant accounting policies The financial statements of the Company have been prepared by management in accordance with generally accepted accounting principles in Canada for interim financial statements. The financial statements have, in management's opinion, been properly prepared using judgment within reasonable limits of materiality. These interim financial statements do not include all the note disclosures required for annual financial statements and therefore they should be read in conjunction with the company's audited financial statements for the year ended August 31, 2003. The significant accounting policies follow those disclosed in the most recently reported annual financial statements. 2. Accounting estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimated. 3. Segment information
Prepackaged Foodservice Dairy Franchising Corporate Consoli- consumer components and dated products licensing $ $ $ $ $ $ --------------------------------------------------------------------------------------------------------------------------- For the three months ended November 30, 2003 Revenue, external 121,805 5,216 7,482 3,921 26 138,450 Intersegment revenue 19,012 182 1,584 55 20,833 Segment earnings before income taxes 9,384 464 1,243 127 (272) 10,946 For the three months ended November 30, 2002 Revenue, external 43,116 5,795 10,836 4,540 12 64,299 Intersegment revenue 2 232 617 52 903 Segment earnings before income taxes 3,009 389 1,247 341 (594) 4,392
CoolBrands International Inc. Consolidated Notes to Interim Financial Statements (Revised) (Unaudited) November 30, 2003 and 2002 ------------------------------------------------------------------------------- (Tabular amounts are expressed in thousands of dollars) 4. Contributed surplus Contributed surplus represents the fair value of stock options granted to the Company's Co-CEO and Co-Chairman as discussed in note 6. 5. Capital stock The Company had the following equity securities and stock options outstanding as of January 19, 2004:
Class A Class B Multiple Stock Options Subordinate Voting Shares Voting Shares ------------- ---------------- -------------- 49,610 6,033 1,936 ============= ================ ==============
6. Revised financial statements The Company has revised the financial statements to reflect stock-based compensation expense. CoolBrands' Co-CEO and Co-Chairman, who does not receive cash compensation directly from the Company, received stock option grants during the first quarter of fiscal 2004 for his service to the Company. The Company had believed that, for accounting purposes, these stock option grants could be characterized either as option grants to an employee or as option grants to a consultant, although the Company had believed that accounting for them as grants to an employee was the more appropriate accounting treatment. Under Generally Accepted Accounting Principles for that period, an option grant to an employee did not carry an immediate charge to earnings, while an option grant to a consultant carried an immediate charge against earnings Subsequently however the Company, in consultation with its independent auditors, has determined that it is appropriate to follow CICA 3870 Stock-Based Compensation and Other Stock-Based Payments and FASB Interpretation Number 44, Accounting for Certain Transactions Involving Stock Compensation, and APB Opinion Number 25, and for purposes of accounting for grants of stock options, to treat the Company's Co-CEO and Co-Chairman as a consultant. As a result the Company has recorded a non-cash pre tax compensation expense of $1,542,000 which reduced net earnings by $922,000 ($0.02 per share basic and diluted).