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)