-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Qj57WS04o3pkQCQ9QM0aOqMlos7cE1hkUMCTd8WU8uc21hWQ/0wbLnNc3S56/eGd N+0E1xqfTITYQz6gUEyCuw== 0000950117-06-000207.txt : 20060118 0000950117-06-000207.hdr.sgml : 20060118 20060118124953 ACCESSION NUMBER: 0000950117-06-000207 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20060112 FILED AS OF DATE: 20060118 DATE AS OF CHANGE: 20060118 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COOLBRANDS INTERNATIONAL INC CENTRAL INDEX KEY: 0001005531 STANDARD INDUSTRIAL CLASSIFICATION: ICE CREAM & FROZEN DESSERTS [2024] IRS NUMBER: 000000000 STATE OF INCORPORATION: A5 FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-27476 FILM NUMBER: 06535024 BUSINESS ADDRESS: STREET 1: 8300 WOODBINE AVE 5TH FL STREET 2: MARKHAM ONTARIO CITY: CANADA L3R 9Y7 STATE: A6 BUSINESS PHONE: 5167379700 MAIL ADDRESS: STREET 1: 8300 WOODBINE AVENUE STREET 2: MARKHAM ONTARIO CITY: CANADA L3R 9Y7 STATE: A6 ZIP: L3R 9Y7 FORMER COMPANY: FORMER CONFORMED NAME: YOGEN FRUZ WORLD WIDE INC DATE OF NAME CHANGE: 19960103 6-K 1 a41185.txt COOLBRANDS INTERNATIONAL FORM 6-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 For the month of January, 2006 Commission File No. 000-27476 CoolBrands International Inc. (Translation of registrant's name into English) 8300 Woodbine Avenue, Markham, Ontario Canada L3R 9Y7 (Address of principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F [X] Form 40-F [ ] Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1)________ Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7)________ Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes [ ] No [X] If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82-_________ SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. COOLBRANDS INTERNATIONAL INC. Date: January 17, 2006 By: /s/ Gary P. Stevens ------------------------------ Name: Gary P. Stevens Title: Chief Financial Officer INDEX TO EXHIBITS 99.1 Registrant's Press Release regarding its financial results for the first quarter of fiscal 2006 and commitment letters with JP Morgan Chase for secured credit facilities. 99.2 Registrant's unaudited interim financial statements for the period ended November 30, 2005. 99.3 Registrant's discussion and analysis of financial condition and results of operations. 99.4 Registrant's form 52-109F2 - Certification of Interim Filings by CEO. 99.5 Registrant's form 52-109F2 - Certification of Interim Filings by CFO. EX-99 2 ex99-1.txt EXHIBIT 99.1 COOLBRANDS INTERNATIONAL INC. REPORTS FINANCIAL RESULTS; ENTERS INTO COMMITMENT LETTERS WITH JPMORGAN CHASE Toronto, Canada, January 12, 2006 - CoolBrands International Inc. ("CoolBrands") (TSX: COB.SV.A) today announced financial results for the first quarter of fiscal 2006 and also announced that it has entered into commitment letters with JPMorgan Chase for new senior secured credit facilities. Financial Results Revenues for the first quarter of fiscal 2006 increased to $91,528,000 from $89,292,000 for the same quarter last year. Net loss for the quarter was $(4,404,000) (($0.08) basic and diluted loss per share) as compared with net earnings of $4,333,000 ($0.08 basic and diluted earnings per share) for the same quarter last year. Commenting on the results, David J. Stein, President and Chief Executive Officer of CoolBrands International Inc. stated, "As we expected, our revenues and net earnings in this first quarter continued to reflect the trends that impacted our results during fiscal 2005, in particular the lower sales in our prepackaged frozen dessert business. Our strategy to respond - described several weeks ago - is well underway: we are implementing an aggressive program of new brand introductions and product innovation in the frozen dessert segment under the Godiva, Yoplait and Disney brands and, with the Breyers Yogurt brand, expanding the categories in which we compete and enhancing the Company's positioning as a marketer of dairy based snack foods." Commitment Letters CoolBrands has signed binding commitment letters with J.P. Morgan Securities Inc. and JPMorgan Chase Bank, N.A. in respect of new credit facilities. The facilities will be structured as follows: (a) a US$48 million senior secured revolving credit facility for CoolBrands and its subsidiaries (other than Americana Foods Limited Partnership), (b) a US$8 million senior secured revolving credit facility in respect of which Americana Foods Limited Partnership will be the borrower, and (c) a US$15 million term loan in respect of which Americana Foods Limited Partnership will be the borrower. The facilities are for a term of three years and provide for interest at LIBOR plus 2% for revolving debt and LIBOR plus 2.5% for term debt. J.P. Morgan Securities Inc. has agreed to use its commercially reasonable efforts to syndicate the new credit facilities to a group of lenders including JPMorgan Chase Bank, N.A., which has committed to provide up to half of the new credit facilities. The CoolBrands credit facility will be secured by all of the assets of CoolBrands and its subsidiaries other than Americana Foods Limited Partnership. The Americana Foods Limited Partnership credit facilities will be secured by all of the assets of Americana Foods Limited Partnership. All of the credit facilities will be unconditionally guaranteed by CoolBrands and certain of its subsidiaries. The Company's existing credit facility with JPMorgan Chase Bank, N.A. expires on April 3, 2006. The Company further announced today that the term of the existing credit facility of Americana Foods Limited Partnership with Regions Bank has been extended to March 10, 2006. CoolBrands currently has approximately US$35.6 million of short term debt owing to JPMorgan Chase Bank, N.A. and CoolBrands' 50.1% owned subsidiary, Americana Foods Limited Partnership, has approximately US$10.1 million of short term debt owing to Regions Bank. These liabilities will be repaid upon the closing of the new facilities. Closing of the new facilities is conditional upon syndication, the completion of due diligence by JP Morgan Securities Inc. and JPMorgan Chase Bank, N.A., the absence of any material adverse change and other customary conditions. Conference Call and Webcast The Company will hold a conference call to discuss its first quarter 2006 results on January 18, 2006 at 5:00 PM Eastern time. Persons wishing to participate in the call should telephone 1-866-898-9626 in North America; International participants should call (416) 340-2216. The call will also be webcast live on the following Internet site at: http://events.startcast.com/events/188/B0002 and subsequently archived at: www.coolbrandsinc.com and http://events.startcast.com/events/188/B0002 About CoolBrands International: CoolBrands International is a leading marketer of dairy based snacks in the refrigerated and frozen snack foods categories. In the frozen snack foods category, CoolBrands manufactures and distributes such well known brands as Godiva Ice Cream, Whole Fruit Sorbet, Eskimo Pie frozen snacks, Tropicana Fruit Bars, Chipwich Ice Cream Cookie Sandwiches and many others. In the refrigerated dairy category, CoolBrands manufactures and distributes Breyer's Yogurt and Creme Savers Yogurt. CoolBrands operates a "direct store delivery" (DSD) ice cream distribution system in selected markets in the U.S., serving CoolBrands products and a growing family of Partner Brands to supermarkets, convenience stores and other retail customers. CoolBrands' 50.1% owned subsidiary, Americana Foods, is a leading U.S. manufacturer and supplier of soft serve mixes, packaged ice cream, frozen yogurt and sorbet products, frozen snacks and other food products to well known national retailers, food companies and restaurant chains. CoolBrands' Foodservice Division manufactures and sells premium soft serve ice cream and frozen yogurt to the foodservice industry. CoolBrands' Dairy Components Division 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. For more information about CoolBrands, visit www.coolbrandsinc.com. Forward Looking Statements: 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. - 30 - For more information, please contact: David J. Stein Co-Chairman, President and Chief Executive Officer (631) 737-9700 CoolBrands International Inc. Consolidated Balance Sheets as at November 30, and August 31, 2005
- --------------------------------------------------------------------------------------------------------------------------- (Unaudited) (Amounts expressed in thousands of dollars) November 30, August 31, 2005 2005 (Unaudited) Assets Current assets: Cash $ 20,745 $ 24,062 Investments 7,500 Restricted cash 10,000 10,000 Receivables, net 39,196 54,526 Receivables - affiliates 1,745 1,840 Inventories 45,683 49,955 Income taxes recoverable 9,279 9,767 Prepaid expenses 1,693 2,413 Deferred income taxes 6,475 5,148 -------------------------------------------------- Total current assets 134,816 165,211 Deferred income taxes, net of valuation allowance 14,839 14,799 Property, plant and equipment 46,852 47,639 Intangible and other assets 22,578 22,369 Goodwill 47,827 47,827 -------------------------------------------------- $266,912 $297,845 ================================================== Liabilities and shareholders' equity Current liabilities: Accounts payable $ 33,665 $ 53,300 Payables - affiliates 555 620 Accrued liabilities 26,500 30,015 Deferred income taxes 93 93 Short term borrowings 34,553 34,553 Current maturities of long-term debt 16,621 18,161 -------------------------------------------------- Total current liabilities 111,987 136,742 Long-term debt 8,111 8,248 Other liabilities 2,687 2,881 Deferred income taxes 6,244 6,180 -------------------------------------------------- Total liabilities 129,029 154,051 -------------------------------------------------- Minority interest 3,618 5,388 -------------------------------------------------- Commitments and contingencies Shareholders' equity: Capital stock 97,727 97,578 Additional paid-in-capital 46,582 46,376 Accumulated other comprehensive earnings (1,788) (1,696) Retained earnings (8,256) (3,852) -------------------------------------------------- Total shareholders' equity 134,265 138,406 -------------------------------------------------- $266,912 $297,845 ==================================================
CoolBrands International Inc. Consolidated Statements of Operations for the three months ended November 30, 2005 and 2004
- ----------------------------------------------------------------------------------------------------------------------- (Unaudited) (Amounts expressed thousands of dollars, except for per share data) For the three months ended November 30, 2005 November 30, 2004 Net revenues: Net sales $89,103 $85,128 Royalties, licensing, and consumer products license revenue 1,208 1,699 Drayage and other income 1,217 2,465 ------------------------------------------------- Total net revenues 91,528 89,292 ------------------------------------------------- Cost of goods sold 85,294 75,824 Selling, general and administrative expenses 13,722 8,226 Stock-based compensation expense 263 80 Interest expense 1,297 355 ------------------------------------------------- (Loss) earnings before income taxes and minority interest (9,048) 4,807 Minority interest (1,770) (642) ------------------------------------------------- (Loss) earnings before income taxes (7,278) 5,449 (Recovery of) provision for income taxes (2,874) 1,116 ------------------------------------------------- Net (loss) earnings $(4,404) $ 4,333 ================================================= Per share data: (Loss) earnings per share: Basic and diluted $ (0.08) $ 0.08 ================================================= Weighted average shares outstanding: Shares used in per share calculation - basic 56,012 55,893 Shares used in per share calculation - diluted 56,012 56,109
CoolBrands International Inc. Consolidated Statements of Operations for the three months ended November 30, 2005 and 2004
- -------------------------------------------------------------------------------------------------------------------------- (Unaudited) (Amounts expressed thousands of dollars, except for per share data) For the three months ended November 30, November 30, 2005 2004 Cash and short term investments provided by (used in): Operating activities: Net (loss) earnings $ (4,404) $ 4,333 Adjustments to reconcile net earnings to net cash flows from operating activities Depreciation and amortization 1,617 1,194 Stock-based compensation expense 263 80 Excess tax benefits from stock-based compensation (104) Deferred income taxes (1,303) (143) Minority interest (1,770) (642) Cash effect of changes Receivables 15,432 711 Receivables - affiliates 96 949 Allowance for doubtful accounts (160) 25 Inventories 4,271 (1,414) Income taxes recoverable 488 Prepaid expenses 720 (1,306) Accounts payable (19,632) 4,768 Payables - affiliates (65) (451) Accrued liabilities (3,514) 3,768 Income taxes payable (2,284) Other assets (338) (146) Other liabilities (194) 42 ------------------------------------------------------- Cash (used in) provided by operating activities (8,597) 9,484 ------------------------------------------------------- Investing activities: Purchase of property, plant and equipment (705) (2,152) Purchase of license agreements (14) Redemption of investments 7,500 Increase in notes receivable (8) Collection of notes receivable 66 4 ------------------------------------------------------- Cash provided by (used in) investing activities 6,853 (2,162) ------------------------------------------------------- Financing activities: Proceeds from issuance of Class A and B shares 92 Change in revolving line of credit, secured (770) 2,223 Repayment of long-term debt (907) (969) Excess tax benefits from stock-based compensation 104 ------------------------------------------------------- Cash (used in) provided by financing activities (1,481) 1,254 ------------------------------------------------------- (Decrease) in cash flow due to changes in foreign exchange (92) (2,100) rates ------------------------------------------------------- (Decrease) increase in cash and cash equivalents (3,317) 6,476 Cash and cash equivalents - beginning of period 24,062 36,277 ------------------------------------------------------- Cash and cash equivalents -end of period $ 20,745 $ 42,753 =======================================================
CoolBrands International Inc. Summary Financial Data
- ---------------------------------------------------------------------------------------------------------------------- (in thousands of dollars, except share data): For the three months ended November 30, November 30, 2005 2004 $ $ - ------------------------------------------------------------- ---------------------------- --------------------------- Net revenues 91,528 89,292 (Loss) earnings before income taxes (7,278) 5,449 (Recovery of) provision for income taxes: (2,874) 1,116 Net (loss) earnings (4,404) 4,333 Basic (loss) earnings per share: Basic and diluted: $ (0.08) $ 0.08 Depreciation and amortization 1,617 1,194 Interest expense 1,297 355 Weighted average number of shares outstanding: Shares used in per share calculation - basic 56,012 55,893 Shares used in per share calculation - diluted 56,012 56,109
About CoolBrands International Inc.: CoolBrands International Inc. markets a broad range of ice creams and frozen snacks under a family of brands, including Eskimo Pie, Godiva Ice Cream, Whole Fruit Sorbet, Snapple On Ice Pops, Tropicana Fruit Bars, No Pudge! Frozen Snacks, Crayola Color Pops, Yoplait Frozen Yogurt and many other well recognized brand names. CoolBrands also manufactures, markets and sells fresh yogurt products, including Breyers Fruit on the Bottom, Light and Creme Savers cup yogurt varieties. CoolBrands' operates a "direct store door" (DSD) frozen distribution system in selected markets in the U.S. to deliver CoolBrands products and Partner Brands to supermarkets, convenience stores and other retail customers. CoolBrands' subsidiary, Americana Foods, manufactures soft serve mixes, packaged ice cream, frozen snacks and other food products for CoolBrands and for well known national retailers, food companies and restaurant chains. CoolBrands' Foodservice Division manufactures and sells premium soft serve ice cream and frozen yogurt to the foodservice industry. For more information about CoolBrands, visit www.coolbrandsinc.com. 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. For further information, contact: David J. Stein, President and Chief Executive Officer Telephone: (631) 737-9700 (ext. 216) EX-99 3 ex99-2.txt EXHIBIT 99.2 CoolBrands International Inc. UNAUDITED INTERIM FINANCIAL STATEMENTS In accordance with National Instrument 51-102 released by the Canadian Securities Administrators, the Company discloses that its auditors have not reviewed the unaudited financial statements for the period ended November 30, 2005. CoolBrands International Inc. Consolidated Balance Sheets as at November 30, and August 31, 2005 - --------------------------------------------------------------------------------
(Unaudited) (Amounts expressed in thousands of dollars) November 30, August 31, 2005 2005 (Unaudited) Assets Current assets: Cash $ 20,745 $ 24,062 Investments 7,500 Restricted cash 10,000 10,000 Receivables, net 39,196 54,526 Receivables - affiliates 1,745 1,840 Inventories 45,683 49,955 Income taxes recoverable 9,279 9,767 Prepaid expenses 1,693 2,413 Deferred income taxes 6,475 5,148 -------------------------------------- Total current assets 134,816 165,211 Deferred income taxes, net of valuation allowance 14,839 14,799 Property, plant and equipment 46,852 47,639 Intangible and other assets 22,578 22,369 Goodwill 47,827 47,827 -------------------------------------- $266,912 $297,845 ====================================== Liabilities and shareholders' equity Current liabilities: Accounts payable $ 33,665 $ 53,300 Payables - affiliates 555 620 Accrued liabilities 26,500 30,015 Deferred income taxes 93 93 Short term borrowings 34,553 34,553 Current maturities of long-term debt 16,621 18,161 -------------------------------------- Total current liabilities 111,987 136,742 Long-term debt 8,111 8,248 Other liabilities 2,687 2,881 Deferred income taxes 6,244 6,180 -------------------------------------- Total liabilities 129,029 154,051 -------------------------------------- Minority interest 3,618 5,388 -------------------------------------- Commitments and contingencies Shareholders' equity: Capital stock 97,727 97,578 Additional paid-in-capital 46,582 46,376 Accumulated other comprehensive earnings (1,788) (1,696) Retained earnings (8,256) (3,852) -------------------------------------- Total shareholders' equity 134,265 138,406 -------------------------------------- $266,912 $297,845 ======================================
CoolBrands International Inc. Consolidated Statements of Operations for the three months ended November 30, 2005 and 2004 - --------------------------------------------------------------------------------
(Unaudited) (Amounts expressed thousands of dollars, except for per share data) For the three months ended November 30, November 30, 2005 2004 Net revenues: Net sales $ 89,103 $ 85,128 Royalties, licensing, and consumer products license revenue 1,208 1,699 Drayage and other income 1,217 2,465 ----------------------------------------- Total net revenues 91,528 89,292 ----------------------------------------- Cost of goods sold 85,294 75,824 Selling, general and administrative expenses 13,722 8,226 Stock-based compensation expense 263 80 Interest expense 1,297 355 ----------------------------------------- (Loss) earnings before income taxes and minority interest (9,048) 4,807 Minority interest (1,770) (642) ----------------------------------------- (Loss) earnings before income taxes (7,278) 5,449 (Recovery of) provision for income taxes (2,874) 1,116 ---------------------------------------- Net (loss) earnings $ (4,404) $ 4,333 ========================================= Per share data: (Loss) earnings per share: Basic and diluted $ (0.08) $ 0.08 ========================================= Weighted average shares outstanding: Shares used in per share calculation - basic 56,012 55,893 Shares used in per share calculation - diluted 56,012 56,109
CoolBrands International Inc. Consolidated Statements of Shareholders' Equity For the three months ended November 30, 2005 - --------------------------------------------------------------------------------
(Unaudited) (Amounts expressed in thousands of dollars) Accumulated other Total Capital Additional comprehensive Retained stockholder stock paid-in-capital earnings earnings equity ------------------------------------------------------------------------------------------ Balance at August 31, 2005 $97,578 $46,376 $(1,696) $(3,852) $138,406 Comprehensive loss: Net loss (4,404) (4,404) Other comprehensive earnings (loss), net of income taxes: Stock-based compensation expense 263 263 Currency translation adjustment (92) (92) --------- Total other comprehensive earnings 171 --------- Total comprehensive loss (4,233) Issuance of shares for stock options exercised 149 (57) 92 ------------------------------------------------------------------------------------------ Balance at November 30, 2005 $97,727 $46,582 $(1,788) $(8,256) $134,265 ==========================================================================================
CoolBrands International Inc. Consolidated Statements of Cash Flows for the three months ended November 30, 2005 and 2004 - --------------------------------------------------------------------------------
(Unaudited) (Amounts expressed thousands of dollars) For the three months ended November 30, November 30, 2005 2004 Cash and short term investments provided by (used in): Operating activities: Net (loss) earnings $ (4,404) $ 4,333 Adjustments to reconcile net earnings to net cash flows from operating activities Depreciation and amortization 1,617 1,194 Stock-based compensation expense 263 80 Excess tax benefits from stock-based compensation (104) Deferred income taxes (1,303) (143) Minority interest (1,770) (642) Cash effect of changes Receivables 15,432 711 Receivables - affiliates 96 949 Allowance for doubtful accounts (160) 25 Inventories 4,271 (1,414) Income taxes recoverable 488 Prepaid expenses 720 (1,306) Accounts payable (19,632) 4,768 Payables - affiliates (65) (451) Accrued liabilities (3,514) 3,768 Income taxes payable (2,284) Other assets (338) (146) Other liabilities (194) 42 -------------------------- Cash (used in) provided by operating activities (8,597) 9,484 -------------------------- Investing activities: Purchase of property, plant and equipment (705) (2,152) Purchase of license agreements (14) Redemption of investments 7,500 Increase in notes receivable (8) Collection of notes receivable 66 4 -------------------------- Cash provided by (used in) investing activities 6,853 (2,162) -------------------------- Financing activities: Proceeds from issuance of Class A and B shares 92 Change in revolving line of credit, secured (770) 2,223 Repayment of long-term debt (907) (969) Excess tax benefits from stock-based compensation 104 -------------------------- Cash (used in) provided by financing activities (1,481) 1,254 -------------------------- (Decrease) in cash flow due to changes in foreign exchange rates (92) (2,100) -------------------------- (Decrease) increase in cash and cash equivalents (3,317) 6,476 Cash and cash equivalents - beginning of period 24,062 36,277 -------------------------- Cash and cash equivalents - end of period $ 20,745 $ 42,753 ==========================
CoolBrands International Inc. Consolidated Notes to Interim Financial Statements (Unaudited) November 30, 2005 and 2004 - -------------------------------------------------------------------------------- (Amounts are expressed in thousands of dollars) 1. Significant accounting policies The financial statements of the Company have been prepared by management in accordance with generally accepted accounting principles in the United States of America 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, 2005. The significant accounting policies follow those disclosed in the most recently reported annual financial statements. Certain amounts have been reclassified in the November 30, 2004 financial statements to conform to the presentation used at November 30, 2005. 2. Accounting estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimated. 3. Changes in accounting policy and restated financial statements Adoption of U.S. GAAP During the fourth quarter of 2005, the Company adopted, on a retroactive basis, accounting principles generally accepted in the United States of America. Previously the Company prepared its annual and interim consolidated financial statements in accordance with generally accepted accounting principals in Canada ("Cnd GAAP"). As a result, the following adjustments have been made to previously issued Consolidated Financial Statements. The Company promotes its products with advertising, consumer incentive and trade promotions. Such programs include, but are not limited to, cooperative advertising, promotional discounts, coupons, rebates, in-store display incentives, volume based incentives and product introductory payments (i.e. slotting fees). Such consumer and trade promotion activities have been historically accounted for as selling, general and administrative expenses. In accordance with EITF No. 01-09 "Accounting for Consideration Given by a Vendor to a Customer or Reseller of the Vendors Products" certain payments made to customers by the Company, including promotional sales allowances, cooperative advertising and product introductory expenditures must be deducted from revenue. CoolBrands International Inc. Consolidated Notes to Interim Financial Statements (Unaudited) November 30, 2005 and 2004 - -------------------------------------------------------------------------------- (Amounts are expressed in thousands of dollars) Changes in accounting policy and restated financial statements (cont'd) Accordingly, our Consolidated Statements of Operations for the three months ended November 30, 2004 have been restated to reflect a reduction in revenues and selling, general and administrative expenses of $11,192. Our Consolidated Statements of Operations for the three months ended November 30, 2005 reflects a decrease in revenue and selling, general administrative expenses of $13,549. The following summarizes the impact of restatement for the change from Cnd to U.S. GAAP for consumer trade promotion expenditures in our Consolidated Statements of Operations:
For the three months ended November 30, November 30, 2005 2004 Total net revenues in accordance with Canadian GAAP $ 105,077 $ 100,484 Less consumer and trade promotion expenditures (13,549) (11,192) ---------------------------------------------- Total net revenues in accordance with U.S. GAAP $ 91,528 $ 89,292 ============================================== For the three months ended November 30, November 30, 2005 2004 Total selling, general and administrative expenses in accordance with Canadian GAAP $ 27,271 $ 19,418 Less consumer and trade promotion expenditures (13,549) (11,192) ---------------------------------------------- Total selling, general and administrative expenses in accordance with U.S. GAAP $ 13,722 $ 8,226 ==============================================
Product introduction expenditures (i.e. slotting fees) incurred by the Company have been historically recognized as expense by amortizing the slotting fees over the twelve months subsequent to the actual acceptance of product introduction offers by our customers. Under U.S. GAAP, such expenditures are recognized as expenses at the time product introduction offers are accepted by our customers, which for measurement purposes is at the time of the first shipment of the product to each customer. As a result of this change, our previously reported net earnings for the three months ended November 30, 2004 have been decreased by $923 when compared with the net income that would have been reported using our historical accounting principles. Our reported net loss for the three months ended November 30, 2005 has been decreased by $1,725. CoolBrands International Inc. Consolidated Notes to Interim Financial Statements (Unaudited) November 30, 2005 and 2004 - -------------------------------------------------------------------------------- (Amounts are expressed in thousands of dollars) Changes in accounting policy and restated financial statements (cont'd) The following summarizes the impact of restatement for the change from Cnd to US GAAP for new product introduction expenditures (slotting fees) in our Consolidated Statement of Operations:
For the three months ended November 30, November 30, 2005 2004 Net (loss) earnings in accordance with Canadian GAAP $ (6,129) $ 5,256 Adjustment for new product introduction expenditures 1,725 (923) ------------------------------------------- Net (loss) earnings in accordance with U.S. GAAP $ (4,404) $ 4,333 ===========================================
Stock-based compensation On September 1, 2004, the Company adopted, on a retroactive basis without restatement, the recommendation of CICA Handbook Section 3870, "Stock-based compensation and other stock-based payments", which required companies to adopt the fair value based method for all stock-based awards granted on or after September 1, 2002. Previously, the Company was required to disclose only the pro-forma effect of stock options issued to employees and employee directors in the notes to the financial statements. As a result of adopting U.S. GAAP during the fourth quarter of 2005, as previously discussed, the Company adopted, on a modified prospective basis, the recommendations of Financial Accounting Standards Board ("FASB") issued SFAS No. 123 "Accounting for Stock Based Compensation." This statement superseded Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees," and amends FASB Statement No. 95, "Statement of Cash Flows". The adoption of this accounting policy had no effect on the Consolidated Statement of Operations for the three months ended November 30, 2004. On September 1, 2005 the Company adopted ("SFAS 123R"), Share-Based Payment, using the modified prospective application transition method. Because the fair value recognition provisions of SFAS No. 123, Stock-Based Compensation, and SFAS No. 123(R) were materially consistent under our equity plans, the adoption of SFAS No. 123(R) did not have a significant impact on our financial position or our results of operations. Prior to our adoption of SFAS No. 123(R), benefits of tax deductions in excess of recognized compensation costs were reported as operating cash flows. SFAS No. 123(R) requires excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid. Our net income for the three months ended November 30, 2005 includes $263 of compensation costs and $104 of income tax benefits related to stock-based compensation arrangements. Our net income for the three months ended November 30, 2004 included $80 of compensation costs and $16 of income tax benefits related to our stock-based compensation arrangements. CoolBrands International Inc. Consolidated Notes to Interim Financial Statements (Unaudited) November 30, 2005 and 2004 - -------------------------------------------------------------------------------- (Amounts are expressed in thousands of dollars) 4. Segment information
Frozen Dairy Franchising dessert Yogurt Foodservice components and licensing Corporate Consolidated For the three months Ended November 30, 2005 Net revenues $53,254 $25,850 $4,209 $5,383 $ 2,814 $ 18 $91,528 Inter-segment revenues 6,674 58 549 39 7,320 Segment (loss) earnings before income taxes (8,326) 1,631 (230) 798 87 (1,238) (7,278) For the three months ended November 30, 2004 Net revenues $76,406 $4,611 $5,065 $ 3,166 $ 44 $89,292 Inter-segment revenues 11,794 115 597 44 12,550 Segment (loss) earnings before income taxes 4,134 386 818 226 (115) 5,449
5. Capital stock The Company had the following equity securities and stock options outstanding as of January 6, 2006:
Class A Subordinate Class B Multiple Voting Shares Voting Shares Stock Options - ------------------------ --------------------- ----------------------- 50,005 6,028 4,034 ======================== ===================== =======================
6. Subsequent events Effective December 23, 2005 the Company sold substantially all of its franchising and licensing segment to International Franchise Corp. for cash consideration of U.S. $8 million. International Franchise Corp. is a company controlled by Mr. Aaron Serruya, a director of CoolBrands and the senior executive who was responsible for the franchising division at CoolBrands. Mr. Serruya resigned as executive vice president of CoolBrands as a result of this transaction, but continues as a director. The sale transaction was reviewed and unanimously recommended to the board of directors of CoolBrands by a committee of independent directors of CoolBrands, and was unanimously approved by the board of directors of CoolBrands. CoolBrands International Inc. Consolidated Notes to Interim Financial Statements (Unaudited) November 30, 2005 and 2004 - -------------------------------------------------------------------------------- Subsequent events (cont'd) As a part of their review of the transaction, the independent committee and the board of directors received a fairness opinion from Duff & Phelps, LLC who acted as exclusive financial advisor to CoolBrands and who assisted CoolBrands in marketing the division to potential buyers. In connection with the sale of the franchising and licensing segment, the Company was required to pay down $3,612 of its short term borrowings and long-term debt from the cash consideration received. Effective December 31, 2005 the Company obtained an extension of its existing credit facilities with JP Morgan Chase Bank. The maturity date of the existing facilities has been extended from January 3, 2006 to April 3, 2006. All other terms and conditions of the existing facilities remain the same. EX-99 4 ex99-3.txt EXHIBIT 99.3 Management's Discussion and Analysis of Financial Condition and Results of Operations (Tabular amounts expressed in thousands of dollars, except per share data) This management's discussion and analysis ("MD&A") addresses the results of operations and financial position of CoolBrands International Inc. ("CoolBrands" or the "Company") for the three months ended November 30, 2005 compared to the three months ended November 30, 2004. This MD&A is dated January 11, 2006 and has been approved by the Board of Directors of CoolBrands on the recommendation of the Audit Committee. This MD&A should be read in conjunction with the Company's audited consolidated financial statements and the related notes, which may be accessed on the Internet at www.sedar.com. Additional information relating to the Company, including the Company's Annual Information Form, can also be accessed on the SEDAR website. Unless otherwise indicated, all financial information herein is prepared in accordance with United States general accepted accounting principles and all dollar amounts referred to herein are in thousands of United States dollars, except per share data. The information in this document contains certain forward-looking statements with respect to CoolBrands International Inc., its subsidiaries and affiliates. These statements are often, but not always made through the use of words or phrases such as "expect", "should continue", "continue", "believe", "anticipate", "estimate", "contemplate", "target", "plan", "budget" "may", "will", "schedule" and "intend" or similar formulations. By their nature, these forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant, known and unknown, business, economic, competitive and other risks, uncertainties and other factors affecting CoolBrands specifically or its industry generally that could cause actual performance, achievements and financial results to differ materially from those contemplated by the forward-looking statements. These risks and uncertainties include the tastes and preferences of the global retail consumer of CoolBrands' products; the ability of CoolBrands to be competitive in the highly competitive U.S. market for frozen desserts fluctuations in consumption of CoolBrands' products and services as a result the seasonal nature of the frozen dessert industry; the ability of CoolBrands to retain or acquire shelf space for its products in supermarkets, club stores and convenience stores; the ability of CoolBrands to effectively manage the risks inherent with mergers and acquisitions; the effect on foreign operation of political, economic and regulatory risks; currency risk exposure; the ability to recruit and retain qualified employees; changes in prices for raw materials; the ability of CoolBrands to pass on cost increases resulting from inflation and other risks described from time to time in publicly filed disclosure documents of CoolBrands and its subsidiaries and affiliates. In view of these uncertainties we caution readers not to place undue reliance on these forward-looking statements. CoolBrands disclaims any intention or obligation to update or revise any statements made herein, whether as a result of new information, future events or otherwise. About CoolBrands International Inc. CoolBrands is substantially unchanged from the description contained in the fiscal year 2005 MD&A, except for the disposition of our franchising and licensing segment, as discussed in the subsequent events section in this MD&A. CoolBrands' Business Strategy CoolBrands' business strategy is unchanged from the disclosure in the fiscal 2005 MD&A. Management's Discussion and Analysis of Financial Condition and Results of Operations Comparison of Quarters ended November 30, 2005 and 2004 We manage our business based on five industry segments: Frozen dessert, yogurt, foodservice, dairy components, and franchising and licensing. Sales Sales for each segment are summarized in the following table:
Percentage of sales ------------------- Quarter ended November 30, 2005 2004 2005 2004 Frozen dessert $51,378 $73,635 57.7 86.5 Yogurt 25,850 29.0 Foodservice 4,209 3,860 4.7 4.5 Dairy components 5,383 5,065 6.0 6.0 Franchising and licensing 2,283 2,568 2.6 3.0 ------- ------- ----- ----- Total $89,103 $85,128 100.0 100.0 ======= ======= ===== =====
Sales in the first quarter of fiscal 2006 increased by $3,975 or 4.7% to $89,103 as compared with $85,128 in the first quarter of fiscal 2005. The increase in sales came from the addition of the yogurt segment acquired March 27, 2005. However, this increase was substantially offset by the continuing frozen dessert segment's sales decline, partially offset by the sales from new frozen dessert products introduced during the second half of 2005. Drayage and other income Drayage and other income declined by $1,248 or 50.6% to $1,217 in the first quarter of fiscal 2006 as compared with $2,465 recognized in the first quarter of fiscal 2005. This decline was due to the decline in fees paid to CoolBrands by Dreyer's for the delivery of products to Dreyer's scanned based trading customers, primarily in California, Oregon and Washington where the Company refocused its DSD operations to reduce supermarket distribution operations in favor of increased focus on the impulse channel. Management's Discussion and Analysis of Financial Condition and Results of Operations Gross profit margin The following table presents the gross profit margin dollars and gross profit percentage for our segments:
Percentage of sales --------------------- Quarter ended November 30, 2005 2004 2005 2004 Frozen dessert $(3,227) $6,614 (6.3) 9.0 Yogurt 4,942 19.1 Foodservice 313 795 7.4 20.6 Dairy components 1,231 1,242 22.9 24.5 Franchising and licensing 550 653 24.1 25.4 ------- ------ ---- ---- Total $ 3,809 $9,304 4.3 10.9 ======= ====== ==== ====
Gross profit dollars declined to $3,809 for the first quarter of fiscal 2006 from $9,304 for the same quarter last year, a 59.1% decline. CoolBrands overall gross profit percentage for first quarter of fiscal 2006 declined to 4.3% as compared with 10.9% for the first quarter of fiscal 2005. The overall percentage decline was due primarily to the decline in the frozen dessert segment gross profit percentage which was adversely impacted by increased trade promotions and the sales of products with lower gross profit margins in fiscal 2006 as compared with fiscal 2005. Selling, general and administrative expenses Selling, general and administrative expenses are summarized by industry segment in the following table:
Percentage of sales -------------------- Quarter ended November 30, 2005 2004 2005 2004 Frozen dessert $7,947 $6,176 15.5 8.4 Yogurt 2,413 9.3 Foodservice 543 409 12.9 10.6 Dairy components 433 425 8.0 8.4 Franchising and licensing 1,132 1,041 49.6 40.5 Corporate 1,254 175 n/a n/a ------- ------ Total $13,722 $8,226 ======= ======
Selling, general and administrative expenses increased by $5,496 or 66.8% from $8,226 in the first quarter of fiscal 2005 to $13,722 in the first quarter of fiscal 2006 due primarily to the acquisition of CoolBrands Dairy Inc., increased spending on information services and consulting fees. Selling, general and administrative expenses increased as a percentage of revenues to 15.0% for the first quarter of fiscal 2006 from 9.2% for the first quarter of fiscal 2005. Management's Discussion and Analysis of Financial Condition and Results of Operations Stock-based compensation expense In accordance with U.S. GAAP, the Company recognized $263 in stock-based compensation expense representing the estimated fair value of stock options earned in the first quarter of fiscal 2006. The stock-based compensation expense for the comparable period in the 2005 fiscal year was $80. Interest expense Interest expense was $1,297 in the first quarter of fiscal 2006 as compared with $355 for the same period of the prior year. The increase in interest expense was primarily due to the increase in short term borrowing related to the acquisition of Breyers yogurt business in March 2005 and Americana Foods, 50.1% owned by CoolBrands, offset by repayments of short term borrowings and long-term debt of $1,677 during the three months ended November 30, 2005. (Recovery of) provision for income taxes The effective (benefit) tax rate was (39.5%) in the first quarter of fiscal 2006 and 20.5% for the first quarter of fiscal 2005. The effective tax rate differs from the Canadian Federal/Principal Statutory Rate primarily due to our operations in foreign countries with lower effective tax rates. Future effective tax rates could be adversely affected by earnings being lower than anticipated in countries that have lower statutory rates or changes in the valuation of our deferred income tax assets or liabilities. Net (loss) earnings A net (loss) of $(4,404) was incurred in the first quarter of fiscal 2006 versus net earnings of $4,333 in the first quarter of fiscal 2005. The decline in net earnings is due primarily to the lower sales in our frozen dessert segment and the resulting decline gross profit dollar combined with increased in selling, general and administrative expenses and interest expense. Management's Discussion and Analysis of Financial Condition and Results of Operations Summary of quarterly results The following table presents a summary of our results for the last eight quarters:
Quarter ended November 30, August 31, May 31, February 28, 2005 2005 2005 2005 $ $ $ $ - ----------------------------------------------------------------------------------------------------------------------- Total revenues 91,528 124,055 97,890 73,833 Net (loss) (4,404) (64,093) (6,233) (8,077) (Loss) per share: Basic (0.08) (1.15) (0.11) (0.14) Diluted (0.08) (1.15) (0.11) (0.14)
Quarter ended November 30, August 31, May 31, February 29, 2004 2004 2004 2004 $ $ $ $ - ----------------------------------------------------------------------------------------------------------------------- Total revenues 89,292 129,052 128,140 99,946 Net (loss) 4,333 12,484 (625) 8,465 (Loss) per share: Basic 0.08 0.22 (0.01) 0.15 Diluted 0.08 0.22 (0.01) 0.15
The ice cream and frozen yogurt industry generally experiences its highest volume during the spring and summer months and its lowest volume in the winter months. Liquidity The following sets forth certain measures of our liquidity:
November 30, August 31, 2005 2005 Cash, investments and restricted cash $ 30,745 $ 41,562 Working capital $ 22,829 $ 28,469 Current ratio 1.2 to 1 1.2 to 1
The decrease in working capital to $22,829 at November 30, 2005 from $28,469 at August 31, 2005 was primarily due to the utilization of cash on hand and investments for operations. CoolBrands is currently negotiating the refinance of its long-term debt and short-term borrowings. The maturity date of the Company's existing facilities has been extended to April 3, 2006. Management's Discussion and Analysis of Financial Condition and Results of Operations Cash flows from operating activities The Company used cash of $8,597 for operating activities in the three months ended November 30, 2005 as compared with generating $9,484 of cash in the three months ended November 30, 2004. The unfavorable period to period comparison of $18,081 was primarily due to the net loss in the fiscal 2006 period as compared with the net earnings in the fiscal 2005 period, an adverse change of $8,737 and the change in working capital. Cash flows from investing activities For the three months ended November 30, 2005 net cash provided by investing activities increased by $9,015 to $6,853 in 2005 from cash used of $2,162 in 2004. The cash generated in 2005 was mainly from the redemption of investments. The spending in 2004 was primarily to expand production capacity at Americana Foods. Cash flows from financing activities For the three months ended November 30, 2005 $1,481 was primarily used by financing activities to reduce our revolving line of credit and long-term debt. In 2004, the cash provided by financing activities resulted from an increase in the secured revolving line of credit at Americana Foods of $2,223, offset by the repayment of long-term debt of $969. Contractual Obligations CoolBrands' requirements are substantially unchanged from the annual MD&A for Fiscal 2005. Capital resources CoolBrands' requirements are substantially unchanged from the annual MD&A for Fiscal 2005. Payment requirements Payment requirements are substantially unchanged from those disclosed in the annual MD&A for Fiscal 2005. Subsequent event Effective December 23, 2005 the Company sold substantially all of its franchising and licensing segment for cash consideration of U.S. $8 million. In connection with the sale of the franchising and licensing segment, the Company was required to pay down $3,612 of its short term borrowings and long-term debt from the cash consideration received. Effective December 31, 2005 the Company obtained an extension of its existing credit facilities with JP Morgan Chase Bank. The maturity date of the existing facilities has been extended from January 3, 2006 to April 3, 2006. All other terms and conditions of the existing facilities remain the same. Management's Discussion and Analysis of Financial Condition and Results of Operations Risk factors and uncertainties Risk factors and uncertainties are unchanged from those disclosed in the annual MD&A for Fiscal 2005. Transactions with related parties The nature of transactions with related parties is unchanged from those disclosed in the annual MD&A for Fiscal 2005. Critical accounting policies The accounting policies discussed in this section are those that we consider to be particularly critical to an understanding of our financial statements because their application places the most significant demands on our ability to judge the effect of inherently uncertain matters on our financial results. For all of these policies, we caution that future events rarely develop exactly as forecast, and our management's best estimates may require adjustment. Management believes that the critical accounting policies are substantially unchanged from those disclosed in the fiscal 2005 MD&A. Legal matters CoolBrands is subject to various legal proceedings and claims, either asserted or unasserted, that arise in the ordinary course of business. CoolBrands evaluates among other things, the degree of probability of an unfavorable outcome and reasonably estimates the amount of the loss. Significant judgment is required in both the determination of the probability and as to whether an exposure can be reasonably estimated. When CoolBrands determines that it is probable that a loss has been incurred, the effect is recorded in the Consolidated Financial Statements. Although the legal outcome of these claims cannot be predicted with certainty, CoolBrands does not believe that any of the existing legal matters will have a material adverse affect on its financial condition or results of operations. However, significant changes in legal proceedings and claims or the factors considered in the evaluation of those matters could have a material adverse affect on CoolBrands business, financial condition and results of operation. Changes in accounting policy and restated financial statements Adoption of U.S. GAAP During the fourth quarter of 2005, the Company adopted, on a retroactive basis, accounting principles generally accepted in the United States of America ("U.S. GAAP"). Previously the Company prepared its annual and interim consolidated financial statements in accordance with generally accepted accounting principals in Canada ("Cnd GAAP"). As a result, the following adjustments have been made to previously issued Consolidated Financial Statements. The Company promotes its products with advertising, consumer incentive and trade promotions. Such programs include, but are not limited to, cooperative advertising, promotional discounts, coupons, rebates, in-store display incentives, volume based incentives and product introductory payments (i.e. slotting fees). Such consumer and trade promotion activities have been historically accounted for as Management's Discussion and Analysis of Financial Condition and Results of Operations Changes in accounting policy and restated financial statements (cont'd) selling, general and administrative expenses. In accordance with EITF No. 01-09 "Accounting for Consideration Given by a Vendor to a Customer or Reseller of the Vendors Products" certain payments made to customers by the Company, including promotional sales allowances, cooperative advertising and product introductory expenditures must be deducted from revenue. Accordingly, our Consolidated Statements of Operations for the three months ended November 30, 2004 have been restated to reflect a reduction in revenues and selling, general and administrative expenses of $11,192. Our Consolidated Statements of Operations for the three months ended November 30, 2005 reflects a decrease in revenue and selling, general administrative expenses of $13,549. The following summarizes the impact of restatement for the change from Cnd GAAP to U.S. GAAP for consumer trade promotion expenditures in our Consolidated Statements of Operations:
For the three months ended November 30, 2005 November 30, 2004 Total net revenues in accordance with Cnd GAAP $105,077 $100,484 Less consumer and trade promotion expenditures (13,549) (11,192) -------------------------------------------- Total net revenues in accordance with U.S. GAAP $ 91,528 $ 89,292 ============================================
For the three months ended November 30, 2005 November 30, 2004 Total selling, general and administrative expenses in accordance with Canadian GAAP $ 27,271 $ 19,418 Less consumer and trade promotion expenditures (13,549) (11,192) ---------------------------------------------- Total selling, general and administrative expenses in accordance $ 13,722 $ 8,226 with U.S. GAAP ======================= ======================
Product introduction expenditures (i.e. slotting fees) incurred by the Company have been historically recognized as expense by amortizing the slotting fees over the twelve months subsequent to the actual acceptance of product introduction offers by our customers. Under U.S. GAAP, such expenditures are recognized as expenses at the time product introduction offers are accepted by our customers, which for measurement purposes is at the time of the first shipment of the product to each customer. As a result of this change, our previously reported net earnings for the three months ended November 30, 2004 have been decreased by $923 when compared with the net income that would have been reported using our historical accounting principles. Our reported net loss for the three months ended November 30, 2005 has been decreased by $1,725. Management's Discussion and Analysis of Financial Condition and Results of Operations The following summarizes the impact of restatement for the change from Cnd GAAP to U.S. GAAP for new product introduction expenditures (slotting fees) in our Consolidated Statement of Operations: Changes in accounting policy and restated financial statements (cont'd)
For the three months ended November 30, 2005 November 30, 2004 Net (loss) earnings in accordance with Cnd GAAP $(6,129) $5,256 Adjustment for new product introduction expenditures 1,725 (923) --------------------- --------------------- Net (loss) earnings in accordance with U.S. GAAP $(4,404) $4,333 ===================== =====================
Stock-based compensation On September 1, 2004, the Company adopted, on a retroactive basis without restatement, the recommendation of CICA Handbook Section 3870, "Stock-based compensation and other stock-based payments", which required companies to adopt the fair value based method for all stock-based awards granted on or after September 1, 2002. Previously, the Company was required to disclose only the pro-forma effect of stock options issued to employees and employee directors in the notes to the financial statements. As a result of adopting U.S. GAAP during the fourth quarter of 2005, as previously discussed, the Company adopted, on a modified prospective basis, the recommendations of Financial Accounting Standards Board ("FASB") issued SFAS No. 123 "Accounting for Stock Based Compensation." This statement superseded Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees," and amends FASB Statement No. 95, "Statement of Cash Flows". The adoption of this accounting policy had no effect on the Consolidated Statement of Operations for the three months ended November 30, 2004. Annual Information Form Additional information relating to CoolBrands including CoolBrands' Annual Information Form is available on SEDAR at www.sedar.com. Outstanding share data As of January 6, 2006, the Company had 50,005 subordinate voting shares, 6,028 multiple voting shares and 4,034 stock options outstanding. Outlook The outlook for fiscal 2006 is substantially unchanged from that disclosed in the fiscal 2005 MD&A. EX-99 5 ex99-4.txt EXHIBIT 99.4 FORM 52-109F2 Certification of Interim Filings I, David J. Stein, President and Chief Executive Officer, certify that: 1. I have reviewed the interim filings (as this term is defined in Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings) of CoolBrands International Inc., (the "Issuer") for the interim period ending November 30, 2005; 2. Based on my knowledge, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings; 3. Based on my knowledge, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the Issuer, as of the date and for the periods presented in the interim filings; 4. The Issuer's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures for the Issuer, and we have designed such disclosure controls and procedures, or caused them to be designed under our supervision, to provide reasonable assurance that material information relating to the Issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the interim filings are being prepared. January 11, 2006 /s/ David Stein - ----------------------------------------------- David J. Stein President and Chief Executive Officer EX-99 6 ex99-5.txt EXHIBIT 99.5 FORM 52-109F2 Certification of Interim Filings I, Gary Stevens, Chief Financial Officer, certify that: 1. I have reviewed the interim filings (as this term is defined in Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings) of CoolBrands International Inc., (the "Issuer") for the interim period ending November 30, 2005; 2. Based on my knowledge, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings; 3. Based on my knowledge, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the Issuer, as of the date and for the periods presented in the interim filings; 4. The Issuer's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures for the Issuer, and we have designed such disclosure controls and procedures, or caused them to be designed under our supervision, to provide reasonable assurance that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the interim filings are being prepared. January 11, 2006 /s/ Gary Stevens - ----------------------------------------------- Gary Stevens Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----