EX-99 2 ex99-1.txt EXHIBIT 99.1 Exhibit 99.1 NEWS FROM: COOLBRANDS INTERNATIONAL, INC. 8300 Woodbine Avenue, 5th Floor Contact: Michael Serruya Markham, Ontario, Canada, L3R 9Y7 Telephone: (905) 479-8762 FOR IMMEDIATE RELEASE: November 30, 2004 COOLBRANDS INTERNATIONAL INC. REPORTS FINANCIAL RESULTS FOR FOURTH QUARTER OF FISCAL 2004 CoolBrands International Inc. (TSX: COB.SV.A) announced its operating results for the fourth quarter, and the fiscal year, ended August 31, 2004. Operating results For fiscal 2004, revenues increased to $642,820,000 as compared with $357,273,000 for fiscal 2003, an 80% increase. Net earnings for fiscal 2004 increased to $48,843,000 ($0.88 basic and $0.87 diluted earnings per share) as compared with net earnings of $31,704,000 ($0.61 basic and $0.59 diluted earnings per share) for fiscal 2003, a 54% increase. Revenues for the forth quarter of fiscal 2004 increased to $178,693,000 from $154,014,000 for the same quarter last year, a 16% increase. Net earnings for the quarter were $14,704,000 ($0.26 basic and diluted earnings per share) as compared with net earnings of $14,836,000 ($0.29 basic and $0.27 diluted earnings per share) for the same quarter last year. CoolBrands' revenues consist mainly of sales made in U.S. dollars but reported in Canadian dollars. Thus, the exchange rates in effect from one reporting date to the same reporting date of the following fiscal year affect the variances between results actually reported. For purposes of comparison, assuming the same average exchange rate for the year ended August 31, 2004 as was in effect for the year ended August 31, 2003, CoolBrands would have reported revenues of $715,682,000 for fiscal 2004, or approximately 11% greater than actually reported and net earnings of $54,379,000 The growth in revenues for fiscal 2004 reflected increased revenues, primarily from the prepackaged consumer product segment attributable to Americana Foods LP (50.1% owned), Eskimo Pie Frozen Distribution and our Super Premium Dreamery, Godiva and Whole Fruit pints. In fiscal 2004, sales increased by 75% to $584,951,000 as compared with $335,034,000 for fiscal 2003. In fiscal 2004, drayage and other income increased by 213% to $53,083,000 as compared with $16,978,000 for fiscal 2003. In fiscal 2004, revenues from Americana Foods, Eskimo Pie Frozen Distribution and Super Premium pints represent a full year's activity as compared with approximately two months in fiscal 2003. The growth in revenues for the fourth quarter of fiscal 2004 reflected increased revenues, primarily from the prepackaged consumer product segment attributable to Americana Foods, Eskimo Pie Frozen Distribution and our Super Premium Dreamery, Godiva and Whole Fruit pints, offset by a marginal decline in sales from our base prepackaged consumer products. In the fourth quarter of fiscal 2004, sales increased by 20% to $164,597,000 from $137,678,000 for fiscal 2003. In the fourth quarter of fiscal 2004, drayage and other income declined by 17% to $12,383,000 as compared with $14,991,000 for fiscal 2003. In the fourth quarter of fiscal 2004, revenues from Americana Foods, Eskimo Pie Frozen Distribution and our Super Premium pints represent a full quarter's activity as compared with approximately two months in fiscal 2003. Drayage income represents the fees paid to CoolBrands by Dreyer's/Nestle to deliver products invoiced to customers by Dreyer's/Nestle. If products for which CoolBrands received a drayage fee were accounted for at the equivalent wholesale sales value, CoolBrands' revenues would have been approximately $188,742,000 for the fourth quarter and $717,735,000 for fiscal 2004. Gross profit percentage for fiscal 2004 declined to 25% as compared to 38% for fiscal 2003 and the gross profit percentage for the fourth quarter of fiscal 2004 declined to 24% as compared to 34% for the fourth quarter of fiscal 2003. Both percentage declines were due to the impact of normally lower margins generated by Americana Foods' manufacturing operations and Eskimo Pie Frozen Distribution's distribution operations. The fourth quarter and full year results of 2004 were additionally impacted by the pre-tax operating losses at Americana Foods LP (50.1% owned) of approximately $2,089,000 and $1,180,000, respectively. These losses were primarily due to plant production losses incurred during the installation of new production lines and the related start-up expenses which occurred in the fourth quarter of fiscal 2004. Selling, general and administrative expenses for fiscal 2004 declined as a percentage of revenues to 18% as compared to 27% for fiscal 2003. Selling, general and administrative expenses for the fourth quarter of fiscal 2004 declined as a percentage of revenues to 18% from 24% for the fourth quarter of fiscal 2003. The fourth quarter and full year results of 2004 were adversely impacted by $3,684,000 for the pre-tax write-off of the Weight Watchers' intangible license asset. This write-off was required when the Company was notified by Weight Watchers International on July 28,2004 that the license agreement would not be extended. The 2004 fiscal year results were adversely impacted by a non-cash pre-tax compensation charge of $8,938,000 which represents the fair value of stock options granted to the Company's Co-CEO and Co-Chairman during the year. Consistent with recent changes in Canadian GAAP, beginning in fiscal 2005 the Company will expense the fair value of all stock options granted. Cash and working capital Cash and short-term investments increased to $84,700,000 at August 31, 2004 from $30,140,000 at August 31, 2003. Working capital improved to $159,355,000 at August 31, 2004 from $85,734,000. Coolbrands's current ratio improved to 2.6 to 1 at August 31, 2004 from 2.1 at August 31, 2003. Comparability of results The Company's financial statements reflect the July 1, 2003 acquisition of the general partner interest and majority the total partnership interest in Americana Foods LP (50.1% owned) and the July 6, 2003 acquisition of Dreamery ice cream and Whole Fruit sorbet brands from Dreyer's Grand Ice Cream, Inc, as well as the right to the license for the Godiva ice cream brand, which was assigned to the Company and substantially all of the Haagen-Dazs frozen dessert distribution assets from Nestle Ice Cream Company, LLC. These acquisitions were accounted for under the purchase method of accounting and the Consolidate Statements of Earnings include the results of these acquisitions from the date of acquisition. The first quarter of fiscal 2005 ending November 30, 2004 will be the first quarter following these acquisitions in which the Consolidated Statement of Earnings for the quarter can be directly compared to the prior year period. CoolBrands International Inc. Consolidated Balance Sheets as at August 31, 2004 and August 31, 2003
-------------------------------------------------------------------------------- (in thousands of dollars) August 31, August 31, 2004 2003 $ $ -------------------------------------------------------------------------------- Assets Current assets: Cash and short term investments 84,700 30,140 Receivables 88,419 60,807 Receivables - affiliates 5,113 3,185 Inventories 64,618 55,604 Prepaid expenses 7,818 9,722 Future income taxes 6,461 1,930 ------------------------------------ 257,129 161,388 Total current assets Future income taxes 4,255 2,977 Property, plant and equipment 37,829 28,349 License agreements 7,567 12,357 Intangible and other assets 8,471 9,084 Goodwill 96,562 99,695 ------------------------------------ 411,813 313,850 ==================================== Liabilities and Shareholders' Equity Current liabilities: Accounts payable 49,384 27,339 Payables - affiliates 1,119 754 Accrued liabilities 27,156 33,530 Income taxes payable 6,499 5,204 Future income taxes 2,434 3,144 Revolving loan - secured 5,903 Current maturities of long-term debt 5,279 5,683 ------------------------------------ Total current liabilities 97,774 75,654 25,362 38,671 Long-term debt Other liabilities 3,631 3,984 Future income taxes 4,790 4,722 ------------------------------------ Total liabilities 131,557 123,031 ------------------------------------ Minority interest 10,649 2,968 ------------------------------------ Shareholders' Equity: 139,012 122,406 Capital stock Contributed surplus 24,904 Cumulative translation adjustment (17,501) (8,904) Retained earnings 123,192 74,349 ------------------------------------ 269,607 187,851 Total shareholders' equity ------------------------------------ 411,813 313,850 ====================================
CoolBrands International Inc. Consolidated Statements of Earnings
--------------------------------------------------------------------------------------------------------- (Unaudited) (in thousands of dollars, except share data) For the year ended For the three months ended August 31, August 31, August 31, August 31, 2004 2003 2004 2003 $ $ $ $ --------------------------------------------------------------------------------------------------------- Revenues: Sales 584,951 335,034 164,597 137,678 Franchising and licensing revenues: Royalty income 2,756 2,716 840 682 Franchise and license fees 1,549 1,804 742 358 Consumer products license fee 481 741 131 305 Drayage and other income 53,083 16,978 12,383 14,991 ------------------------------------------------------------- Total revenues 642,820 357,273 178,693 154,014 ------------------------------------------------------------- Operating expenses: Cost of goods sold 438,458 207,870 124,666 90,854 Selling, general and administrative expenses 115,131 95,088 32,835 37,245 Stock-based compensation 8,938 Interest expense 1,994 1,990 356 539 ------------------------------------------------------------- Total operating expenses 564,521 304,948 157,857 128,638 ------------------------------------------------------------- Minority interest (1,275) 541 (2,040) 541 ------------------------------------------------------------- Earnings before income taxes 79,574 51,784 22,876 24,835 Provision for income taxes 30,731 20,080 8,172 9,999 ------------------------------------------------------------- Net earnings 48,843 31,704 14,704 14,836 Retained earnings - beginning of period 74,349 42,645 108,488 59,513 ------------------------------------------------------------- Retained earnings - end of period 123,192 74,349 123,192 74,349 ============================================================= Earnings per share: Basic 0.88 0.61 0.26 0.29 ============================================================= Diluted 0.87 0.59 0.26 0.27 ============================================================= Weighted average shares outstanding: Shares used in per share calculation - basic 55,441 51,746 55,890 51,763 Shares used in per share calculation - diluted 56,329 53,992 56,332 54,775
CoolBrands International Inc. Consolidated Statements of Cash Flows
--------------------------------------------------------------------------------------------------------- (Unaudited) (in thousands of dollars) For the year ended For the three months ended August 31, August 31, August 31, August 31, 2004 2003 2004 2003 $ $ $ $ --------------------------------------------------------------------------------------------------------- Cash and short term investments provided by (used in): Operating activities: Net earnings 48,843 31,704 14,704 14,836 Items not affecting cash: Depreciation and amortization 9,738 4,801 5,346 1,075 Stock-based compensation expense 8,938 Future income taxes (4,898) 2,544 364 1,202 Loss of asset held for sale 390 (13) Minority interest (1,275) 541 (2,040) 541 Changes in current assets and liabilities: Receivables (28,118) (5,172) (630) (7,726) Receivables - affiliates (1,949) 844 (403) 2,999 Allowance for doubtful accounts 168 (1,087) (346) (376) Inventories (9,113) (9,065) 9,426 774 Prepaid expenses 1,924 (2,900) 625 (3,299) Accounts payable 22,286 (7,476) (17,273) (10,566) Payables - affiliates 369 (240) 73 (1,698) Accrued liabilities (6,447) (2,293) (5,367) 1,163 Income taxes payable 17,273 (2,292) (449) 4,789 Other assets 71 364 (57) (295) Other liabilities (357) (1,023) (147) (94) ---------------------------------------------------- Cash provided by operating activities 57,453 9,640 3,826 3,312 ---------------------------------------------------- Investing activities: Purchase of leasehold improvements and equipment (17,791) (5,736) (6,845) (1,883) Purchase of intangible assets (102) (113) (32) (113) Purchase of license agreements (399) (1,482) (6) (1,482) Acquisitions, net of cash acquired (13,409) (13,409) Proceeds from the sale of asset held for sale 3,283 (113) Repayment of notes receivable 31 340 1 36 ---------------------------------------------------- Cash used in investing activities (18,261) (17,117) (6,882) (16,964) ---------------------------------------------------- Financing activities: Change in revolving line of credit, - secured 2,016 2,770 (4,328) 28 Capital contributions from Partnership's minority partner 11,554 Return of capital contribution from Partnership's minority partner (2,663) Proceeds from issuance of Class A and B shares 16,607 172 130 108 Repayment of long-term debt (7,697) (9,495) (1,045) (1,952) Expenses for special warrants (144) ---------------------------------------------------- Cash provided by (used in) financing activities 19,817 (6,697) (5,243) (1,816) ---------------------------------------------------- (Decrease) increase in cash flow due to changes in foreign exchange rates (4,449) (2,772) (4,487) 7,646 ---------------------------------------------------- Increase (decrease) in cash and short-term investments 54,560 (16,946) (12,786) (7,822) Cash and short-term investments - beginning of period 30,140 47,086 97,486 37,962 ---------------------------------------------------- Cash and short-term investments - end of period 84,700 30,140 84,700 30,140 ====================================================
CoolBrands International Inc. Summary Financial Data
--------------------------------------------------------------------------------------------------------- (in thousands of dollars, except share data): For the year ended For the three months ended August 31, August 31, August 31, August 31, 2004 2003 2004 2003 $ $ $ $ --------------------------------------------------------------------------------------------------------- Revenues 642,820 357,273 178,693 154,014 Earnings before income taxes 79,574 51,784 22,876 24,835 Provision for income taxes 30,731 20,080 8,172 9,999 ---------------------------------------------------- Net earnings 48,843 31,704 14,704 14,836 ==================================================== Basic earnings per share: .88 .61 .26 .29 Diluted earnings per share: .87 .59 .26 .27 Depreciation and amortization 9,738 4,801 5,346 1,075 Interest expense 1,994 1,990 356 539 Weighted average number of shares outstanding: Shares used in per share calculation - basic 55,441 51,746 55,890 51,763 Shares used in per share calculation - diluted 56,329 53,992 56,332 54,775
About CoolBrands International: CoolBrands International is a leader in the consumer products and franchising segments of the frozen dessert industry, marketing a diverse range of frozen dessert products under nationally and internationally recognized brand names. CoolBrands is the pre-eminent company in the fast-growing "better-for-you" ice cream category with offerings such as fat free, non-dairy Whole Fruit'TM' Sorbet and new Atkins'r' Endulge'TM' controlled carbohydrate super premium ice cream. CoolBrands also competes in the super premium ice cream category with the Dreamery'r' Ice Cream and Godiva'r' Ice Cream brands. In addition, CoolBrands markets a wide variety of "all family" premium ice creams, frozen novelties and frozen desserts under the Eskimo Pie'r', Chipwich'r', Tropicana'r', Welch's'r', Yoplait'r', Betty Crocker'r' and Trix'r' brand names. CoolBrands' subsidiary, Eskimo Pie Frozen Distribution, operates the second largest "direct store delivery" (DSD) ice cream distribution system in the U.S., serving these CoolBrands products and a growing family of Partner Brands to supermarkets, convenience stores and other retail customers. CoolBrands' subsidiary, Americana Foods, is a leading U.S. manufacturer and supplier of soft serve mixes, packaged ice cream, frozen yogurt and sorbet products and frozen novelties to well known national retailers, food companies and restaurant chains. Americana Foods also manufactures and sells products for the foodservice channel, which are extensively used to standardize quality and reduce labor costs in on-site food preparation. CoolBrands' Foodservice Division manufactures and sells premium soft serve ice cream and frozen yogurt to the foodservice industry. CoolBrands also manufactures and sells a full line of quality flavours, chocolate coatings, fudge sauces, powders for chocolate milk, egg nog bases and other ingredients and flexible packaging products for use in private label dairy products in addition to the Company's brands. CoolBrands also franchises and licenses frozen dessert outlets operated under a Family of Brands including Tropicana'r' Smoothies, Juices & More, Swensen's'r' Ice Cream, I Can't Believe It's Yogurt'r', Yogen Fruz'r', Bresler's'r' Premium Ice Cream, Golden Swirl'r' and Ice Cream Churn'r', with company owned, franchised and non-traditional partnership locations around the world. This press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding, among other things, statements relating to goals, plans and projections regarding the Company's financial position and business strategy. These statements may be identified by the fact that they use such words as "anticipate," "estimate," "expect," "intend," "plan," "believe," and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes and results to differ materially from current expectations. These factors include, among other things, market factors, competitive product development and promotional activity, the level of consumer interest in the Company's products, product costing, the weather, the performance of management, including management's ability to implement its plans as contemplated, the Company's relationship with its customers, franchisees, licensees and licensors, governmental regulations and legislation and litigation. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.