CoolBrands loss tops $2.8 million, sales plunge 95%

by Eric Schroeder
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TORONTO — CoolBrands International, Inc. sustained a loss of $2,876,000 in the third quarter ended May 31, which compared with a loss of $11,814,000 for the same period last year. Year to date, CoolBrands posted a loss of $18,021,000, which compared with a loss of $24,170,000 in the first nine months of fiscal 2006.

Net sales for the quarter plummeted 95% to $964,000 from $20,057,000 in the third quarter of fiscal 2006. For the year to date, revenue from continuing operations decreased by $52,571,000 to $1,953,000, which compared with $54,254,000 in the prior year. The decreases were primarily attributable to the closing of the Americana Foods L.P. plant in October 2006.

In recent months, Coolbrands has divested or agreed to sell a number of businesses, including, most recently, its Whole Fruit Sorbet and Fruit-a-Freeze Frozen Fruit Bar brands. Earlier this year, the company sold its Eskimo Pie and Chipwich Brands and Real Fruit trademark, along with Eskimo Pie soft serve brands and related food service business segment to Dreyer’s.

"The company has undergone a significant downsizing and has disposed of or closed down a significant portion of its businesses," the company said in a July 13 filing with the Canadian Securities Administrators. "Because of the sales of the dairy component segment, the yogurt segment, the food service segment and the frozen dessert segment, and the bankruptcy and closing of Americana Foods, the company’s financial reporting will become less complicated and management is designing processes and procedures appropriate for the organization. However, because of, among other things, loss of staff, the company has not completed its assessment of internal controls and may not have implemented the necessary controls to correct any deficiencies that may be identified upon completion of its assessment and documentation of internal controls."

Looking ahead to the remainder of fiscal 2007, CoolBrands said it believes it has "sufficient working capital to operate for the foreseeable future."

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