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