Exhibit 99.1
COOLBRANDS INTERNATIONAL INC.
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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 athttp://events.startcast.com/events/188/B0004 and subsequently archived at:www.coolbrandsinc.com andhttp://events. startcast.com/events/188/B0004
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CoolBrands International Inc. |
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(Unaudited) |
| May 31, 2006 |
| August 31, 2005 |
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Assets |
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Current assets: |
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Cash |
| $ | 997 |
| $ | 24,062 |
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Investments |
|
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| 7,500 |
|
Restricted cash |
|
|
|
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| 10,000 |
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Receivables, net |
|
| 45,125 |
|
| 51,575 |
|
Receivables – affiliates |
|
| 1,953 |
|
| 1,919 |
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Inventories |
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| 39,074 |
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| 49,472 |
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Franchising net assets held for sale |
|
|
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| 7,203 |
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Income taxes recoverable |
|
| 17,588 |
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| 9,813 |
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Prepaid expenses |
|
| 2,056 |
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| 2,347 |
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Deferred income taxes |
|
| 5,148 |
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| 5,148 |
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Total current assets |
|
| 111,941 |
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| 169,039 |
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Deferred income taxes, net of valuation allowance |
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| 4,861 |
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| 14,799 |
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Property, plant and equipment |
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| 44,482 |
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| 46,567 |
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Intangible and other assets |
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| 23,674 |
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| 21,204 |
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Goodwill |
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| 41,881 |
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| 43,382 |
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| $ | 226,839 |
| $ | 294,991 |
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Liabilities and shareholders’ equity |
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Current liabilities: |
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Accounts payable |
| $ | 38,872 |
| $ | 51,518 |
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Payables – affiliates |
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| 332 |
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| 620 |
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Accrued liabilities |
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| 29,415 |
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| 29,417 |
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Deferred income taxes |
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| 93 |
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| 93 |
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Short term borrowings |
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| 34,553 |
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Notes payable to bank |
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| 20,504 |
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Current maturities of long-term debt |
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| 3,152 |
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| 18,161 |
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Total current liabilities |
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| 92,368 |
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| 134,362 |
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Long-term debt |
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| 17,852 |
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| 8,248 |
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Other liabilities |
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| 2,988 |
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| 2,442 |
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Deferred income taxes |
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| 6,180 |
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| 6,145 |
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Total liabilities |
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| 119,388 |
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| 151,197 |
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Minority interest |
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| 5,388 |
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Commitments and contingencies |
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Shareholders’ equity: |
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Capital stock |
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| 97,804 |
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| 97,578 |
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Additional paid-in-capital |
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| 39,119 |
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| 46,376 |
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Accumulated other comprehensive earnings |
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| (1,450 | ) |
| (1,696 | ) |
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Retained earnings |
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| (28,022 | ) |
| (3,852 | ) |
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Total shareholders’ equity |
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| 107,451 |
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| 138,406 |
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| $ | 226,839 |
| $ | 294,991 |
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CoolBrands International Inc. |
Consolidated Statements of Operations |
for the nine and three months ended May 31, 2006 and 2005 |
(Unaudited) |
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| For the nine months ended |
| For the three months ended |
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| May 31, 2006 |
| May 31, 2005 |
| May 31, 2006 |
| May 31, 2005 |
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Net revenues: |
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Net sales |
| $ | 258,116 |
| $ | 235,726 |
| $ | 93,987 |
| $ | 89,325 |
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Drayage and other income |
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| 5,348 |
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| 11,932 |
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| 1,567 |
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| 2,781 |
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Total net revenues |
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| 263,464 |
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| 247,658 |
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| 95,554 |
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| 92,106 |
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Cost of goods sold |
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| 258,153 |
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| 238,100 |
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| 93,776 |
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| 90,442 |
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Selling, general and administrative expenses |
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| 38,938 |
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| 29,138 |
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| 13,527 |
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| 13,362 |
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Interest expense |
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| 3,515 |
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| 1,465 |
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| 1,051 |
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| 774 |
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Asset impairment |
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| 1,401 |
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Loss from continuing operations before income tax and minority interest |
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| (37,142 | ) |
| (22,446 | ) |
| (12,800 | ) |
| (12,472 | ) |
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Minority interest |
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| (5,185 | ) |
| (2,247 | ) |
| (1,525 | ) |
| (790 | ) |
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Loss from continuing operations before income taxes |
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| (31,957 | ) |
| (20,199 | ) |
| (11,275 | ) |
| (11,682 | ) |
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Recovery of income taxes |
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| (7,573 | ) |
| (7,846 | ) |
| 495 |
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| (4,229 | ) |
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Loss from continuing operations |
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| (24,384 | ) |
| (12,353 | ) |
| (11,770 | ) |
| (7,453 | ) |
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Discontinued operations: |
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(Loss) gain from operations of Franchising segment |
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| (192 | ) |
| 2,376 |
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| (44 | ) |
| 1,220 |
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Gain on sale of Franchising segment |
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| 406 |
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Net loss |
| $ | (24,170 | ) | $ | (9,977 | ) | $ | (11,814 | ) | $ | (6,233 | ) |
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(Loss) earnings per share, basic and diluted: |
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Continuing operations |
| $ | (0.43 | ) | $ | (0.22 | ) | $ | (0.21 | ) | $ | (0.13 | ) |
Discontinued operations |
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| 0.00 |
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| 0.04 |
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| 0.00 |
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| 0.02 |
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Net loss |
| $ | (0.43 | ) | $ | (0.18 | ) | $ | (0.21 | ) | $ | (0.11 | ) |
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Weighted average shares outstanding: |
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Shares used in per share calculation – basic and diluted |
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| 56,038 |
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| 55,916 |
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| 56,068 |
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| 55,935 |
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CoolBrands International Inc. |
Consolidated Statements of Cash Flows |
for the nine and three months ended May 31, 2006 and 2005 |
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(Unaudited) |
| For the nine months ended |
| For the three months ended |
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(Amounts expressed in thousands of dollars) |
| May 31, |
| May 31, |
| May 31, |
| May 31, |
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Cash and short term investments provided by (used in): |
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Operating activities: |
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Net loss |
| $ | (24,170 | ) | $ | (9,977 | ) | $ | (11,814 | ) | $ | (6,233 | ) |
Adjustments to reconcile net loss to net cash flows from operating activities |
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Depreciation and amortization |
|
| 7,822 |
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| 3,021 |
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| 4,747 |
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| 1,456 |
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Stock-based compensation expense |
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| 750 |
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| 243 |
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| 130 |
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| 82 |
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Asset impairment |
|
|
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| 1,401 |
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|
|
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Deferred income taxes |
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| 2,053 |
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| (3,363 | ) |
| 4,091 |
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| (1,215 | ) |
Minority interest |
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| (5,185 | ) |
| (2,247 | ) |
| (1,525 | ) |
| (790 | ) |
Allowance for doubtful accounts |
|
| 850 |
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| 260 |
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| 405 |
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| (58 | ) |
Net loss (gain) from discontinued operations |
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| 192 |
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| (2,376 | ) |
| 44 |
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| (1,220 | ) |
Gain on sale of discontinued operations |
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| (406 | ) |
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Cash effect of changes |
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Receivables |
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| 5,822 |
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| 5,129 |
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| (7,145 | ) |
| (11,500 | ) |
Receivables - affiliates |
|
| (34 | ) |
| (57 | ) |
| 1,193 |
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| (617 | ) |
Inventories |
|
| 10,398 |
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| (4,578 | ) |
| 1,806 |
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| (5,705 | ) |
Prepaid expenses |
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| (110 | ) |
| (2,614 | ) |
| (846 | ) |
| (466 | ) |
Other assets |
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| (2,708 | ) |
| 153 |
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| (2,159 | ) |
| 227 |
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Income taxes recoverable |
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| (7,755 | ) |
| (9,968 | ) |
| (3,581 | ) |
| (4,879 | ) |
Accounts payable |
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| (12,646 | ) |
| 11,547 |
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| 12,774 |
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| 22,913 |
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Payables - affiliates |
|
| (288 | ) |
| (600 | ) |
| (258 | ) |
| 60 |
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Accrued liabilities |
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| 1,293 |
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| 12,620 |
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| (4,894 | ) |
| 1,471 |
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Other liabilities |
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| (800 | ) |
| (93 | ) |
| (1,326 | ) |
| (26 | ) |
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Cash used in operating activities |
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| (24,942 | ) |
| (1,499 | ) |
| (8,358 | ) |
| (6,500 | ) |
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Investing activities: |
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Acquisition, net of cash acquired |
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| (59,609 | ) |
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| (59,609 | ) |
Purchase of property, plant, and equipment |
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| (3,971 | ) |
| (8,925 | ) |
| (2,216 | ) |
| (5,738 | ) |
Purchase of license agreements and other intangibles |
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| (26 | ) |
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|
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| (9 | ) |
Purchase of investments |
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| (2,500 | ) |
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|
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| (2,500 | ) |
Redemption of investments |
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| 7,500 |
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| 18,050 |
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| 18,050 |
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Redemption of restricted cash |
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| 10,000 |
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| 10,000 |
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Issuance of notes receivable |
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| (251 | ) |
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Collection of notes receivable |
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| 44 |
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| 4 |
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| 24 |
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| (9 | ) |
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Cash provided by (used in) investing activities |
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| 13,322 |
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| (53,006 | ) |
| 7,808 |
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| (49,815 | ) |
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Financing activities: |
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Proceeds from issuance of Class A and B shares |
|
| 140 |
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| 57 |
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| 48 |
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| 27 |
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Proceeds from bank loan |
|
| 57,198 |
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| 44,553 |
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| 57,198 |
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| 44,553 |
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Proceeds from issuance of capital leases |
|
| 172 |
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Change in revolving line of credit, secured |
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| 1,223 |
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| 1,623 |
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Repayment of short-term borrowings |
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| (15,690 | ) |
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| (15,690 | ) |
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Repayment of long-term debt |
|
| (61,134 | ) |
| (2,908 | ) |
| (53,604 | ) |
| (1,119 | ) |
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Cash (used in) provided by financing activities |
|
| (19,314 | ) |
| 42,925 |
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| (12,048 | ) |
| 45,084 |
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Decrease in cash flow due to changes in foreign exchange rates |
|
| (247 | ) |
| (4,168 | ) |
| (205 | ) |
| (3,084 | ) |
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Cash flows from discontinued operations: |
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Net (loss) gain from Franchising operations |
|
| (192 | ) |
| 2,376 |
|
| (44 | ) |
| 1,220 |
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Operating |
|
| 275 |
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| 2,160 |
|
| 193 |
|
| (36 | ) |
Investing |
|
| 8,033 |
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Financing |
|
|
|
|
| (222 | ) |
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| ||||||||||||
Cash provided by discontinued operations |
|
| 8,116 |
|
| 4,314 |
|
| 149 |
|
| 1,184 |
|
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| ||||||||||||
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 |
|
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| ||||||||||||
Cash and cash equivalents – end of period |
| $ | 997 |
| $ | 24,843 |
| $ | 997 |
| $ | 24,843 |
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CoolBrands International Inc.
Summary Financial Data
|
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(in thousands of dollars, except share data): |
|
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| ||||||||
|
| For the nine months ended |
| For the three months ended |
| ||||||||
|
| May 31, |
| May 31, |
| May 31, |
| May 31, |
| ||||
|
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
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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, visitwww.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.