Caribou Coffee Reports Second Quarter 2009 Results

MINNEAPOLIS // GLOBE NEWSWIRE // -- Caribou Coffee Company, Inc. (Nasdaq:CBOU), the second largest company-owned gourmet coffeehouse operator in the United States based on the number of coffeehouses, today reported financial results for the second quarter of 2009 (thirteen weeks ended June 28, 2009).

HIGHLIGHTS FOR THE SECOND QUARTER OF 2009 INCLUDE:

  • Earnings per share of $0.06 for the second quarter ended June 28, 2009
  • 28% increase in commercial sales for the quarter
  • Opened eight franchise units during the quarter

Speaking on behalf of the Company, Michael Tattersfield, the Company's President and CEO commented, "We are pleased with the progress we are making as we continue along our strategic path of moving from a premium coffeehouse operator to a premium branded coffee company. We believe our financial results for the second quarter, which is our third quarter of positive earnings, reflect the traction we are gaining in our short-term initiatives. Long-term, we will seek to grow shareholder value by growing each of our three business channels, while continuing to enhance the Caribou experience through uncompromising execution and new and exciting product innovation."

SECOND QUARTER 2009 RESULTS

Total net sales decreased $0.2 million, or 0.4%, to $63.0 million for the quarter ended June 28, 2009, from $63.2 million for the quarter ended June 29, 2008.

  • Coffeehouse sales were $55.3 million in the second quarter 2009, as compared with $57.3 million in the second quarter of 2008, a decrease of 3.4%. The decrease primarily reflects a 3.3% decline in comparable coffeehouse sales and 62 fewer operating coffeehouse weeks in the second quarter of 2009 as compared to the same period in fiscal 2008.
  • Commercial sales were $5.7 million in the second quarter of 2009 as compared with $4.5 million in the second quarter of 2008, an increase of 28%. The increase was due to higher sales to existing and new customers as the Company now sells through over 4,800 doors.
  • Franchise sales were $1.9 million in the second quarter of 2009, as compared with $1.4 million in the second quarter of 2008, an increase of 34%. The increase was due to higher sales from franchise fees, royalties and product sales from 33 franchise coffeehouses opened during the last 12 months, including eight coffeehouse openings during the second quarter of 2009.

Cost of sales and related occupancy costs in the second quarter of 2009 were $27.3 million, which is a 1.2% increase over the second quarter of 2008. Although total revenue declined year-over-year, this increase in cost of sales is due to an overall mix change with a higher percentage of sales coming from our commercial and franchise segments.

Operating expenses in the second quarter of 2009 were $23.9 million compared to $25.8 million in the same period of the prior year. This decrease was the result of improved operating performance within the retail segment as well as having fewer coffeehouse operating weeks. As a percentage of revenue, operating costs were 37.9%, down from 40.9% in the same period of the prior year.

General and administrative expenses increased $0.2 million, or 2.6%, to $6.8 million during the second quarter of 2009, from $6.6 million during the second quarter of 2008 as the Company reinvests in initiatives to drive future growth.

EBITDA was $5.4 million during the second quarter of 2009, compared to EBITDA of $2.9 million during the same period in 2008. The year-over-year EBITDA increase was primarily due to improved performance within our retail coffeehouses and continued growth in the commercial and franchise segments. (EBITDA is a non-GAAP measure. See EBITDA reconciliation at the end of this release).

Depreciation and amortization decreased $1.0 million, or 23.1%, to $3.6 million during the second quarter of 2009, from $4.6 million during the same period in the prior year. The lower depreciation and amortization in the quarter was due to the Company's lower depreciable asset based from impairments taken in 2008 and reduced capital spending in the current year.

The Company's net income for the second quarter of 2009 was $1.2 million or $0.06 per share compared to a net loss of $2.4 million or ($0.13) per share for the same period in 2008.

CONFERENCE CALL

Caribou Coffee will host a conference call on August 4, 2009, at 4:30 p.m. (Eastern Time) to discuss these results. Hosting the call will be Mike Tattersfield, Chief Executive Officer, and Tim Hennessy, Chief Financial Officer. The call will be webcast and can be accessed from the Company's website at www.cariboucoffee.com. The webcast link is in the Investor Relations section. The dial in number is 1-888-788-8903 or 1-913-312-1520 for international calls. Confirmation number is 9458558. If you are unable to join the call, a replay will be available beginning at 7:30 p.m. (Eastern Time) on August 4, 2009 through 11:59 p.m. on August 11, 2009 and can be accessed by dialing 1-888-203-1112 or international callers 1-719-457-0820 and enter pin number 9458558. In addition, the webcast will be archived on the Company's website.

ABOUT THE COMPANY

Caribou Coffee Company, Inc., founded in 1992 and headquartered in Minneapolis, Minnesota, is the second largest company-owned gourmet coffeehouse operator in the United States based on the number of coffeehouses. As of June 28, 2009, Caribou Coffee had 522 coffeehouses, which includes 108 franchised and licensed locations. Caribou Coffee offers its customers high-quality gourmet coffee and espresso-based beverages, as well as specialty teas, baked goods, whole bean coffee, branded merchandise and related products. In addition, Caribou Coffee sells products to club stores, grocery stores, mass merchandisers, office coffee providers, airlines, hotels, sports and entertainment venues, college campuses and online customers. Caribou Coffee focuses on creating a unique experience for customers through a combination of high-quality products, a comfortable and welcoming coffeehouse environment and a unique style of customer service.

FORWARD-LOOKING STATEMENTS

Certain statements in this release, and other written or oral statements made by or on behalf of Caribou Coffee are "forward-looking statements" within the meaning of the federal securities laws. Statements regarding future events and developments and our future performance, as well as management's current expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. These forward-looking statements are subject to a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: fluctuations in quarterly and annual results, incurrence of net losses, adverse effects of management focusing on implementation of a growth strategy, failure to develop and maintain the Caribou Coffee brand and other factors disclosed in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.


CARIBOU COFFEE COMPANY, INC. AND AFFILIATES
(A Majority Owned Subsidiary of Caribou Holding Company Limited)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Thirteen Weeks Twenty-Six Weeks
Ended Ended
------------------ ------------------
June 28, June 29, June 28, June 29,
2009 2008 2009 2008
-------- -------- -------- --------
(In thousands, except for per share
amounts)
(Unaudited)
Coffeehouse sales $ 55,294 $ 57,267 $108,158 $113,887
Commercial and franchise sales 7,660 5,916 15,176 11,053
-------- -------- -------- --------
Total net sales 62,954 63,183 123,334 124,940
Cost of sales and related
occupancy costs 27,317 27,004 53,589 53,217
Operating expenses 23,866 25,815 47,188 51,210
Opening expenses 4 51 14 135
Depreciation and amortization 3,570 4,645 7,311 10,566
General and administrative
expenses 6,789 6,618 13,395 14,067
Closing expense and disposal
of assets 3 1,332 56 3,879
-------- -------- -------- --------
Operating income (loss) 1,405 (2,282) 1,781 (8,134)
Other income (expense):
Interest income 7 3 7 20
Interest expense (63) (122) (121) (634)
-------- -------- -------- --------
Income (loss) before provision
for income taxes 1,349 (2,401) 1,667 (8,748)
Provision for (benefit from)
income taxes 59 44 (42) 50
-------- -------- -------- --------
Net income (loss) 1,290 (2,445) 1,709 (8,798)
Less: Net income attributable
to noncontrolling interest 122 (13) 195 40
-------- -------- -------- --------
Net Income (loss) attributable
to Caribou Coffee Company,
Inc. $ 1,168 $ (2,432) $ 1,514 $ (8,838)
======== ======== ======== ========
Basic net income (loss)
attributable to Caribou Coffee
Company, Inc. common
shareholders per share $ 0.06 $ (0.13) $ 0.08 $ (0.46)
======== ======== ======== ========
Diluted net income (loss)
attributable to Caribou Coffee
Company, Inc. common
shareholders per share $ 0.06 $ (0.13) $ 0.08 $ (0.46)
======== ======== ======== ========
Basic weighted average number
of shares outstanding 19,371 19,371 19,371 19,371
======== ======== ======== ========
Diluted weighted average number
of shares outstanding 20,118 19,371 19,865 19,371
======== ======== ======== ========


CARIBOU COFFEE COMPANY, INC. AND AFFILIATES
(A Majority Owned Subsidiary of Caribou Holding Company Limited)
CONDENSED CONSOLIDATED BALANCE SHEETS

June 28, December 28,
2009 2008
------------ ------------
In thousands, except per
share amounts
(Unaudited)

ASSETS
Current assets:
Cash and cash equivalents $ 17,951 $ 11,060
Accounts receivable (net of allowance for
doubtful accounts of $60 and $72 at
June 28, 2009 and December 28, 2008,
respectively) 3,759 5,311
Other receivables (net of allowance for
doubtful accounts of $127 and $76 at
June 28, 2009 and December 28, 2008,
respectively) 1,308 916
Income tax receivable -- 60
Inventories 10,658 10,218
Prepaid expenses and other current assets 754 881
------------ ------------
Total current assets 34,430 28,446
Property and equipment, net of accumulated
depreciation and amortization 52,341 60,312
Notes receivable 8 16
Restricted cash 327 327
Other assets 385 471
------------ ------------
Total assets $ 87,491 $ 89,572
============ ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9,242 $ 8,229
Accrued compensation 6,859 6,241
Accrued expenses 6,564 8,317
Deferred revenue 6,291 9,473
------------ ------------
Total current liabilities 28,956 32,260

Asset retirement liability 1,078 1,035
Deferred rent liability 8,855 9,245
Deferred revenue 2,343 2,538
Income tax liability 356 486
------------ ------------
Total long term liabilities 12,632 13,304

Equity:
Caribou Coffee Company, Inc. Shareholders'
equity:
Preferred stock, par value $.01, 20,000
shares authorized; no shares issued and
outstanding -- --
Common stock, par value $.01, 200,000
shares authorized; 19,371 shares issued
and outstanding at June 28, 2009 and
December 28, 2008 194 194
Additional paid-in capital 125,593 125,222
Accumulated comprehensive loss (92) --
Accumulated deficit (79,965) (81,479)
------------ ------------
Total Caribou Coffee Company, Inc.
shareholders' equity 45,730 43,937
Noncontrolling interest 173 71
------------ ------------
Total equity 45,903 44,008
------------ ------------
Total liabilities and equity $ 87,491 $ 89,572
============ ============


Coffeehouse Openings and Closings

13 Weeks Ended 26 Weeks Ended
June 28, June 29, June 28, June 29,
2009 2008 2009 2008
--------------------------------------

Comparable Coffeehouse Sales
(Company-Owned) (3.3%) (1.7%) (4.2%) (2.0%)

COFFEEHOUSE COUNT
Company-Owned:
Coffeehouses open at beginning
of period 414 421 414 432
Coffeehouses opened during the
period 0 0 0 5
Coffeehouses closed during the
period 0 6 0 22
--------------------------------------
Total Company-Owned at period
end 414 415 414 415

Franchised:
Coffeehouses open at beginning
of period 101 63 97 52
Coffeehouses opened during the
period 8 12 14 23
Coffeehouses closed during the
period 1 0 3 0
--------------------------------------
Total Franchised at period
end 108 75 108 75
--------------------------------------
TOTAL COFFEEHOUSES AT PERIOD
END 522 490 522 490
--------------------------------------

---------------------------------------------------------------------

(1) Percentage change in comparable coffeehouse net sales compares
the net sales of coffeehouses during a fiscal period to the net
sales from the same coffeehouses for the equivalent period in the
prior year. A coffeehouse is included in this calculation
beginning in its thirteenth full fiscal month of operations. A
closed coffeehouse is included in the calculation for each full
month that the coffeehouse was open in both fiscal periods.
Franchised coffeehouses are not included in the comparable
coffeehouse net sales calculations.


EBITDA RECONCILIATION

The following is a reconciliation of the Company's net loss to EBITDA.

Thirteen Weeks Twenty-Six Weeks
Ended Ended
June 28, June 29, June 28, June 29,
2009 2008 2009 2008
-------- -------- -------- --------
(In thousands)
--------------------------------------
Net income (loss) $ 1,168 $ (2,432) $ 1,514 $ (8,838)
Interest expense 63 122 121 634
Interest income (7) (3) (7) (20)
Depreciation and
amortization(1) 4,102 5,207 8,396 11,627
Provision (benefit) for income
taxes 59 44 (42) 50
-------- -------- -------- --------
EBITDA $ 5,385 $ 2,938 $ 9,982 $ 3,453
======== ======== ======== ========

(1) Includes depreciation and amortization associated with the
headquarters and roasting facility that are categorized as
general and administrative expenses and cost of sales and related
occupancy costs on the statement of operations.
EBITDA is equal to net income (loss) excluding: (a) interest expense; (b) interest income; (c) depreciation and amortization; and (d) income taxes.
Management believes EBITDA is useful to investors in evaluating the Company's operating performance for the following reason:


* Coffeehouse leases are generally short-term (5-10 years) and
Caribou must depreciate all of the cost associated with those
leases on a straight-line basis over the initial lease term
excluding renewal options (unless such renewal periods are
reasonably assured at the inception of the lease). The Company
opened a net 211 company-operated coffeehouses from the beginning
of fiscal 2003 through the end of the second thirteen weeks of
fiscal 2009. As a result, management believes depreciation expense
is disproportionately large when compared to the sales from a
significant percentage of the coffeehouses that are in their
initial years of operations. Also, many of the assets being
depreciated have actual useful lives that exceed the initial lease
term excluding renewal options. Consequently, management believes
that adjusting for depreciation and amortization is useful for
evaluating the operating performance of the coffeehouses.
Management uses EBITDA:


* As a measurement of operating performance because it assists
management in comparing its operating performance on a consistent
basis as it removes the impact of items not directly resulting from
coffeehouse operations;

* For planning purposes, including the preparation of our internal
annual operating budget;

* To establish targets for certain management compensation matters;
and

* To evaluate the Company's capacity to incur and service debt, fund
capital expenditures and expand the business.
EBITDA as calculated by Caribou Coffee is not necessarily comparable to similarly titled measures used by other companies. In addition, EBITDA: (a) does not represent net income or cash flows from operating activities as defined by GAAP; (b) is not necessarily indicative of cash available to fund cash flow needs; and (c) should not be considered an alternative to net income, operating income, cash flows from operating activities or Caribou Coffee's other financial information as determined under GAAP.


###

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