CoolBrands International Inc. reports operating results in U.S. Dollars for first quarter of fiscal 2005
Friday January 14, 6:47 pm ET
TORONTO, Jan. 14 /CNW/ - CoolBrands International Inc. (TSX: COB.SV.A - News) announced today that revenues for the first quarter of fiscal 2005 declined to $100,484,000 by 3.3% from $103,902,000 for the same quarter last year. Net earnings for the quarter declined to $2,605,000 ($0.05 basic and diluted earnings per share) as compared with net earnings of $5,005,000 ($0.09 basic and diluted earnings per share) for the same quarter last year, a decline of 48.5%. CoolBrands adopted the U.S. dollar as its functional and reporting currency effective September 1, 2004, the commencement of fiscal 2005. CoolBrands adopted the U.S. dollar for its financial reporting since the majority of its business is conducted in the United States which will make comparisons between current and prior periods more meaningful to investors. For comparative purposes, historical financial statements have been restated into U.S. dollars in accordance with generally accepted accounting principles.
The decline in revenues for the first quarter of 2005 reflected an increase in sales from the prepackaged consumer products segment, offset by a larger decline in drayage income. As a result of a change in the business arrangement with Dreyer's Grand Ice Cream Inc. ("Dreyer's"), CoolBrands began accounting for the distribution of Dreyer's products as an independent distributor, changing from the previously used drayage basis, except for Dreyer's scanned based trading customers which are still delivered on a drayage basis. As a result of this change, CoolBrands began purchasing products from Dreyer's and selling those products to customers at wholesale, except for Dreyer's scanned based trading customers which are still delivered on a drayage basis. Sales for the first quarter increased to $96,320,000 as compared with $91,648,000 for the first quarter of 2004, a 5% improvement. However, drayage and other income declined by $9,066,000 to $2,465,000 in the first quarter of fiscal 2005 as compared with $11,531,000 recognized in the first quarter of fiscal 2004 due to the change in the business arrangement with Dreyer's. Drayage income in 2005 represents the fees paid to CoolBrands by Dreyer's for the delivery of products invoiced by Dreyer's to its scanned based trading customers.
Gross profit dollars declined to $20,496,000 for the first quarter of fiscal 2005 from $22,821,000 for the same quarter last year, a 10.1% decline. Gross profit percentage for first quarter of fiscal 2005 declined to 21.3% as compared to 24.9% for the first quarter of fiscal 2004. This decline was due to the impact of lower margins generated by Americana Foods' manufacturing operations and Eskimo Pie Frozen Distribution's distribution operations. Selling, general and administrative expenses for first quarter of fiscal 2005 declined as a percentage of revenues to 20.4% as compared to 24.1% for first quarter of fiscal 2004.
Cash and short term investments increased to $70,803,000 at November 30, 2004 from $64,327,000 at August 31, 2004. Working capital declined to $112,111,000 at November 30, 2004 from $121,026,000 at August 31, 2004. CoolBrands' current ratio declined to 2.2 to 1 at November 30, 2004 from 2.6 to 1 at August 31, 2004. The declines in working capital and the current ratio were due primarily to the classification of certain bank debt which is due November 1, 2005 as a current liability at November 30, 2004 as compared with the classification as a long-term liability at August 31, 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 now requires 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. The effect of this change in accounting policy reduced retained earnings at September 1, 2004 by $15,436,000 with a corresponding increase to reported contributed surplus.
Commenting on the results, David J. Stein, President and Co-Chief Executive Officer of CoolBrands International Inc. stated, "As we expected, increased competition impacted our revenues and net earnings in this first quarter. In particular, results were driven by lower sales in our base prepackaged consumer products 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 and increased promotional support for our brands. We are also expanding the categories in which we compete, reflected in our recently announced agreement to acquire the Breyer's and Crème Savers yogurt business from Kraft."
Conference Call
A conference call to discuss the Company's first quarter results for fiscal 2005 is scheduled for Tuesday, January 18 at 5:00 PM Eastern time. Individuals desiring to be in on the call are to contact Carla Aedo at carlaa(at)yogenfruz.com for the call in number and the required confirmation number prior to 3:00 PM Eastern time on Tuesday January 18, 2005.
Webcast
A webcast with CoolBrands management to review the results is scheduled for 5:00 PM on Tuesday, January 18, 2005. To join us for the live webcast please visit the following website: viavid.net sign)000021A3 |
