EX-99 2 ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

COOLBRANDS INTERNATIONAL INC.

 

 

 

          8300 Woodbine Avenue, 5th Floor

 

Contact: David J. Stein

          Markham, Ontario, Canada, L3R 9Y7

 

Telephone: (631) 737-9700(x216)

COOLBRANDS REPORTS FINANCIAL RESULTS
FOR THE THIRD QUARTER OF FISCAL 2006

Toronto, Canada, July 17, 2006 - CoolBrands International Inc. (TSX: COB.SV.A) today announced financial results for the third quarter of fiscal 2006.

Financial Results

Revenues for the third quarter of fiscal 2006 increased to $95,554,000 from $92,106,000 for the same quarter last year. Net loss for the quarter was $(11,814,000) (($0.21) basic and diluted loss per share) as compared with a net loss of $(6,233,000) (($0.11) basic and diluted earnings per share) for the same quarter last year.

Commenting on the results, David J. Stein, President, Chief Executive Officer and Co-Chairman of CoolBrands International Inc., stated, “Negative results were driven by continued declines in our frozen desserts business, underscoring our need to refocus our brand portfolio on more appealing and strongly differentiated brands and products. Our new product initiatives this year, which began showing up on store shelves in the third quarter, reflect that strategy. Meanwhile, our other three operating segments, including our Breyer’s® Yogurt business, showed stable revenues and profitability.

Restatement of financial statements for the period ended February 28, 2006

The Company has revised its financial statements for the three month period ended February 28, 2006 to reflect the cancellation of 2,141,000 stock options which occurred during the period. The cancellation of the stock options resulted in a reduction in additional paid-in-capital and long-term deferred income taxes of $7,920,000.

Conference Call and Webcast

The Company will hold a conference call to discuss its third quarter 2006 results on July 21, 2006 at 8:30 AM Eastern time. Persons wishing to participate in the call should telephone 1-866-898-9626 in North America; local 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/B0004 and subsequently archived at: www.coolbrandsinc.com and http://events. startcast.com/events/188/B0004

 

CoolBrands International Inc.
Consolidated Balance Sheets
as at May 31, 2006 and August 31, 2005

 

 

 

 

 

 

 

 

(Unaudited)
(Amounts expressed in thousands of dollars)

 

May 31, 2006
(Unaudited)

 

August 31, 2005

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash

 

$

997

 

$

24,062

 

Investments

 

 

 

 

 

7,500

 

Restricted cash

 

 

 

 

 

10,000

 

Receivables, net

 

 

45,125

 

 

51,575

 

Receivables – affiliates

 

 

1,953

 

 

1,919

 

Inventories

 

 

39,074

 

 

49,472

 

Franchising net assets held for sale

 

 

 

 

 

7,203

 

Income taxes recoverable

 

 

17,588

 

 

9,813

 

Prepaid expenses

 

 

2,056

 

 

2,347

 

Deferred income taxes

 

 

5,148

 

 

5,148

 

 

 

Total current assets

 

 

111,941

 

 

169,039

 

 

 

 

 

 

 

 

 

Deferred income taxes, net of valuation allowance

 

 

4,861

 

 

14,799

 

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

44,482

 

 

46,567

 

 

 

 

 

 

 

 

 

Intangible and other assets

 

 

23,674

 

 

21,204

 

 

 

 

 

 

 

 

 

Goodwill

 

 

41,881

 

 

43,382

 

 

 

 

 

$

226,839

 

$

294,991

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

38,872

 

$

51,518

 

Payables – affiliates

 

 

332

 

 

620

 

Accrued liabilities

 

 

29,415

 

 

29,417

 

Deferred income taxes

 

 

93

 

 

93

 

Short term borrowings

 

 

 

 

 

34,553

 

Notes payable to bank

 

 

20,504

 

 

 

 

Current maturities of long-term debt

 

 

3,152

 

 

18,161

 

 

 

Total current liabilities

 

 

92,368

 

 

134,362

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

17,852

 

 

8,248

 

 

 

 

 

 

 

 

 

Other liabilities

 

 

2,988

 

 

2,442

 

 

 

 

 

 

 

 

 

Deferred income taxes

 

 

6,180

 

 

6,145

 

 

 

Total liabilities

 

 

119,388

 

 

151,197

 

 

 

Minority interest

 

 

 

 

 

5,388

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital stock

 

 

97,804

 

 

97,578

 

 

 

 

 

 

 

 

 

Additional paid-in-capital

 

 

39,119

 

 

46,376

 

 

 

 

 

 

 

 

 

Accumulated other comprehensive earnings

 

 

(1,450

)

 

(1,696

)

 

 

 

 

 

 

 

 

Retained earnings

 

 

(28,022

)

 

(3,852

)

 

 

Total shareholders’ equity

 

 

107,451

 

 

138,406

 

 

 

 

 

$

226,839

 

$

294,991

 

 

 


 

CoolBrands International Inc.

Consolidated Statements of Operations

for the nine and three months ended May 31, 2006 and 2005

(Unaudited)
(Amounts expressed thousands of dollars, except for per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended

 

For the three months ended

 

 

 

May 31, 2006

 

May 31, 2005

 

May 31, 2006

 

May 31, 2005

 

Net revenues:

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

258,116

 

$

235,726

 

$

93,987

 

$

89,325

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Drayage and other income

 

 

5,348

 

 

11,932

 

 

1,567

 

 

2,781

 

 

 

 

Total net revenues

 

 

263,464

 

 

247,658

 

 

95,554

 

 

92,106

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

 

258,153

 

 

238,100

 

 

93,776

 

 

90,442

 

Selling, general and administrative expenses

 

 

38,938

 

 

29,138

 

 

13,527

 

 

13,362

 

Interest expense

 

 

3,515

 

 

1,465

 

 

1,051

 

 

774

 

Asset impairment

 

 

 

 

 

1,401

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations before income tax and minority interest

 

 

(37,142

)

 

(22,446

)

 

(12,800

)

 

(12,472

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Minority interest

 

 

(5,185

)

 

(2,247

)

 

(1,525

)

 

(790

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations before income taxes

 

 

(31,957

)

 

(20,199

)

 

(11,275

)

 

(11,682

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recovery of income taxes

 

 

(7,573

)

 

(7,846

)

 

495

 

 

(4,229

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations

 

 

(24,384

)

 

(12,353

)

 

(11,770

)

 

(7,453

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) gain from operations of Franchising segment

 

 

(192

)

 

2,376

 

 

(44

)

 

1,220

 

Gain on sale of Franchising segment

 

 

406

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(24,170

)

$

(9,977

)

$

(11,814

)

$

(6,233

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) earnings per share, basic and diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.43

)

$

(0.22

)

$

(0.21

)

$

(0.13

)

Discontinued operations

 

 

0.00

 

 

0.04

 

 

0.00

 

 

0.02

 

 

 

Net loss

 

$

(0.43

)

$

(0.18

)

$

(0.21

)

$

(0.11

)

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in per share calculation – basic and diluted

 

 

56,038

 

 

55,916

 

 

56,068

 

 

55,935

 


 

CoolBrands International Inc.

Consolidated Statements of Cash Flows

for the nine and three months ended May 31, 2006 and 2005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

For the nine months ended

 

For the three months ended

 

(Amounts expressed in thousands of dollars)

 

May 31,
2006

 

May 31,
2005

 

May 31,
2006

 

May 31,
2005

 

Cash and short term investments provided by (used in):

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(24,170

)

$

(9,977

)

$

(11,814

)

$

(6,233

)

Adjustments to reconcile net loss to net cash flows from operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

7,822

 

 

3,021

 

 

4,747

 

 

1,456

 

Stock-based compensation expense

 

 

750

 

 

243

 

 

130

 

 

82

 

Asset impairment

 

 

 

 

 

1,401

 

 

 

 

 

 

 

Deferred income taxes

 

 

2,053

 

 

(3,363

)

 

4,091

 

 

(1,215

)

Minority interest

 

 

(5,185

)

 

(2,247

)

 

(1,525

)

 

(790

)

Allowance for doubtful accounts

 

 

850

 

 

260

 

 

405

 

 

(58

)

Net loss (gain) from discontinued operations

 

 

192

 

 

(2,376

)

 

44

 

 

(1,220

)

Gain on sale of discontinued operations

 

 

(406

)

 

 

 

 

 

 

 

 

 

Cash effect of changes

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivables

 

 

5,822

 

 

5,129

 

 

(7,145

)

 

(11,500

)

Receivables - affiliates

 

 

(34

)

 

(57

)

 

1,193

 

 

(617

)

Inventories

 

 

10,398

 

 

(4,578

)

 

1,806

 

 

(5,705

)

Prepaid expenses

 

 

(110

)

 

(2,614

)

 

(846

)

 

(466

)

Other assets

 

 

(2,708

)

 

153

 

 

(2,159

)

 

227

 

Income taxes recoverable

 

 

(7,755

)

 

(9,968

)

 

(3,581

)

 

(4,879

)

Accounts payable

 

 

(12,646

)

 

11,547

 

 

12,774

 

 

22,913

 

Payables - affiliates

 

 

(288

)

 

(600

)

 

(258

)

 

60

 

Accrued liabilities

 

 

1,293

 

 

12,620

 

 

(4,894

)

 

1,471

 

Other liabilities

 

 

(800

)

 

(93

)

 

(1,326

)

 

(26

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash used in operating activities

 

 

(24,942

)

 

(1,499

)

 

(8,358

)

 

(6,500

)

 

 

Investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition, net of cash acquired

 

 

 

 

 

(59,609

)

 

 

 

 

(59,609

)

Purchase of property, plant, and equipment

 

 

(3,971

)

 

(8,925

)

 

(2,216

)

 

(5,738

)

Purchase of license agreements and other intangibles

 

 

 

 

 

(26

)

 

 

 

 

(9

)

Purchase of investments

 

 

 

 

 

(2,500

)

 

 

 

 

(2,500

)

Redemption of investments

 

 

7,500

 

 

18,050

 

 

 

 

 

18,050

 

Redemption of restricted cash

 

 

10,000

 

 

 

 

 

10,000

 

 

 

 

Issuance of notes receivable

 

 

(251

)

 

 

 

 

 

 

 

 

 

Collection of notes receivable

 

 

44

 

 

4

 

 

24

 

 

(9

)

 

 

Cash provided by (used in) investing activities

 

 

13,322

 

 

(53,006

)

 

7,808

 

 

(49,815

)

 

 

Financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of Class A and B shares

 

 

140

 

 

57

 

 

48

 

 

27

 

Proceeds from bank loan

 

 

57,198

 

 

44,553

 

 

57,198

 

 

44,553

 

Proceeds from issuance of capital leases

 

 

172

 

 

 

 

 

 

 

 

 

 

Change in revolving line of credit, secured

 

 

 

 

 

1,223

 

 

 

 

 

1,623

 

Repayment of short-term borrowings

 

 

(15,690

)

 

 

 

 

(15,690

)

 

 

 

Repayment of long-term debt

 

 

(61,134

)

 

(2,908

)

 

(53,604

)

 

(1,119

)

 

 

Cash (used in) provided by financing activities

 

 

(19,314

)

 

42,925

 

 

(12,048

)

 

45,084

 

 

 

Decrease in cash flow due to changes in foreign exchange rates

 

 

(247

)

 

(4,168

)

 

(205

)

 

(3,084

)

 

 

Cash flows from discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) gain from Franchising operations

 

 

(192

)

 

2,376

 

 

(44

)

 

1,220

 

Operating

 

 

275

 

 

2,160

 

 

193

 

 

(36

)

Investing

 

 

8,033

 

 

 

 

 

 

 

 

 

 

Financing

 

 

 

 

 

(222

)

 

 

 

 

 

 

 

 

Cash provided by discontinued operations

 

 

8,116

 

 

4,314

 

 

149

 

 

1,184

 

 

 

Decrease in cash and cash equivalents

 

 

(23,065

)

 

(11,434

)

 

(12,654

)

 

(13,131

)

Cash and short-term investments – beginning of period

 

 

24,062

 

 

36,277

 

 

13,651

 

 

37,974

 

 

 

Cash and cash equivalents – end of period

 

$

997

 

$

24,843

 

$

997

 

$

24,843

 

 

 

CoolBrands International Inc.
Summary Financial Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands of dollars, except share data):

 

 

 

 

 

 

 

For the nine months ended

 

For the three months ended

 

 

 

May 31,
2006

 

May 31,
2005

 

May 31,
2006

 

May 31,
2005

 

 

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

 

 

263,464

 

 

247,658

 

 

95,554

 

 

92,106

 

Loss from continuing operations before income taxes

 

 

(31,957

)

 

(20,199

)

 

(11,275

)

 

(11,682

)

Recovery of income taxes

 

 

(7,573

)

 

(7,846

)

 

495

 

 

(4,229

)

Loss from continuing operations

 

 

(24,384

)

 

(12,353

)

 

(11,770

)

 

(7,453

)

Discontinued operations

 

 

214

 

 

2,376

 

 

(44

)

 

1,220

 

Net loss

 

 

(24,170

)

 

(9,977

)

 

(11,814

)

 

(6,233

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) earnings per share, basic and diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.43

)

$

(0.22

)

$

(0.21

)

$

(0.13

)

Discontinued operations

 

 

0.00

 

 

0.04

 

 

0.00

 

 

0.02

 

 

 

Net loss

 

$

(0.43

)

$

(0.18

)

$

(0.21

)

$

(0.11

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

7,822

 

 

3,021

 

 

4,747

 

 

1,456

 

Interest expense

 

 

3,515

 

 

1,465

 

 

1,051

 

 

774

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in per share calculation – basic and diluted

 

 

56,038

 

 

55,916

 

 

56,068

 

 

55,935

 

About CoolBrands International: 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 markets fresh yogurt products, including Breyers® Fruit on the Bottom, Probiotics Plus 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. Eskimo Pie, Whole Fruit and No Pudge are trademarks of CoolBrands, all other are used under license.

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.