CBOU Caribou Coffee Company, Inc. (MM)

Caribou Coffee Company, Inc. (Nasdaq:CBOU), the second largest U.S.-based company-owned gourmet coffeehouse operator based on the number of coffeehouses, today reported financial results for second quarter 2007 (thirteen weeks ended July 1, 2007.) HIGHLIGHTS FOR THE SECOND QUARTER OF 2007 INCLUDE: Total net sales grew 11% to $62.8 million compared to the second quarter of 2006 Development Agreement for Northern New Jersey executed Opened 11 coffeehouses, 5 company-owned and 6 franchisee �Other Sales� increased 48% compared to the second quarter of 2006 Michael Coles, Chairman and CEO commented, "During the second quarter, we made considerable progress. Not only did we deliver positive comparable coffeehouse sales gains during the period, but we also grew Other Sales by an impressive 48%, in line with our previously stated goals for the year.� Added, Mr. Coles, �We are particularly pleased to have initiated our domestic franchising program in the U.S., which will enable us to accelerate coffeehouse growth in new markets. With a domestic development agreement in place with a local area developer, consumers in the Northern New Jersey market will soon be able to savor the Caribou Coffee experience. This agreement is an important step for Caribou in the advancement of our domestic franchise program.� SECOND QUARTER 2007 RESULTS Total net sales increased $6.2 million, or 11%, to $62.8 million for the thirteen weeks ended July 1, 2007, from $56.6 million for the thirteen weeks ended July 2, 2006. This increase is primarily attributable to the opening of 36 net new company-owned coffeehouses during the last twelve months. �Other Sales� increased by $1.1 million, or 48% to $3.5 million for the thirteen weeks ended July 1, 2007, from $2.4 million for the thirteen weeks ended July 2, 2006. This increase was primarily driven by sales to grocery, club stores and other commercial accounts as well as product sales to franchisees (franchise locations increased from 11 at July 2, 2006 to 39 at July 1, 2007). Comparable coffeehouse net sales increased 1% for the thirteen weeks ended July 1, 2007, compared with the same thirteen weeks in the prior year. Franchised coffeehouses are not included in the comparable coffeehouse net sales calculations. EBITDA was $2.4 million during the thirteen weeks ended July 1, 2007, compared to $3.6 million during the thirteen weeks ended July 2, 2006. (EBITDA is a non-GAAP measure. See EBITDA reconciliation at the end of this release.) The Company�s net loss for the thirteen weeks ended July 1, 2007 was $3.9 million or ($0.20) per share compared to a net loss of $2.4 million or ($0.12) per share for the thirteen weeks ended July 2, 2006. The increase in the net loss is attributable to higher coffeehouse labor, increased marketing expenditures as well as higher occupancy and depreciation expense related to new coffeehouses. CONFERENCE CALL Caribou Coffee will host a conference call today, Thursday August 2, 2007, at 4:30pm Eastern Time to discuss these results. Hosting the call will be Michael Coles, Chairman of the Board and Chief Executive Officer, and George Mileusnic, Chief Financial Officer. The call will be webcast live from the Company's website at www.cariboucoffee.com. The webcast link will be available under the investor relations section accessed thru the About Us section. If you are unable to join the call, a replay will be available beginning at 7:30pm Eastern Time on August 2, 2007 and can be accessed by dialing 1-888-203-1112 or international callers 1-719-457-0820 and enter pin number 7148647. 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 July 1, 2007, Caribou Coffee had 480 coffeehouses, including 39 licensed locations. Caribou Coffee's coffeehouses are located in 18 states and the District of Columbia, as well as in several venues outside the United States. 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 other commercial customers. In addition, Caribou Coffee licenses third parties to use the Caribou Coffee brand on quality food and merchandise items. 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. For more information, visit the Caribou Coffee web site at www.cariboucoffee.com. 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 Ended Twenty-Six Weeks Ended � July 1, 2007 July 2, 2006 July 1, 2007 July 2, 2006 (Unaudited) Coffeehouse sales $ 59,331,262 $ 54,210,429 $ 117,407,226 $ 107,494,251 Other sales � 3,516,123 � � 2,373,564 � � 7,292,789 � � 5,055,954 � Total net sales 62,847,385 56,583,993 124,700,015 112,550,205 Cost of sales and related occupancy costs 26,519,499 23,764,186 52,033,765 47,030,254 Operating expenses 27,021,720 23,107,034 53,009,181 46,207,890 Opening expenses 66,018 367,303 175,809 782,554 Depreciation and amortization 5,985,216 5,265,173 12,002,800 10,070,406 General and administrative expenses 7,153,341 6,239,910 13,757,563 12,341,088 Closing expense and disposal of assets � 133,886 � � 263,391 � � 860,864 � � 271,389 � Operating loss (4,032,295 ) (2,423,004 ) (7,139,967 ) (4,153,376 ) Other income (expense): Other income � 241,615 � 564,565 Interest income 45,899 133,389 79,136 320,392 Interest expense � (165,579 ) � (186,096 ) � (295,298 ) � (333,838 ) Loss before (benefit) provision for income taxes and minority interest (4,151,975 ) (2,234,096 ) (7,356,129 ) (3,602,257 ) (Benefit) provision for income taxes � (315,932 ) � 135,317 � � (296,097 ) � 282,356 � Loss before minority interest (3,836,043 ) (2,369,413 ) (7,060,032 ) (3,884,613 ) Minority interest � 54,473 � � 15,740 � � 81,534 � � 72,605 � Net loss $ (3,890,516 ) $ (2,385,153 ) $ (7,141,566 ) $ (3,957,218 ) Basic and diluted net loss per share $ (0.20 ) $ (0.12 ) $ (0.37 ) $ (0.21 ) Basic and diluted weighted average number of shares outstanding � 19,320,055 � � 19,280,806 � � 19,304,035 � � 19,277,454 � CARIBOU COFFEE COMPANY, INC. AND AFFILIATES (A Majority Owned Subsidiary of Caribou Holding Company Limited) � CONDENSED CONSOLIDATED BALANCE SHEETS � July 1, 2007 December 31, 2006 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 8,365,768 $ 14,752,269 Accounts receivable (net of allowance for doubtful accounts of $3,304 and $12,693 at July 1, 2007 and December 31, 2006) 2,419,726 1,663,139 Other receivables 1,408,098 1,769,256 Income tax receivables 151,569 � Inventories 9,293,846 10,294,493 Prepaid expenses and other current assets � 1,062,154 � � 1,339,596 � Total current assets 22,701,161 29,818,753 Property and equipment, net of accumulated depreciation and amortization 98,519,739 104,754,885 Notes receivable 40,354 48,413 Restricted cash 317,075 286,005 Other assets � 1,180,636 � � 1,399,542 � Total assets $ 122,758,965 � $ 136,307,598 � LIABILITIES AND SHAREHOLDERS� EQUITY � Current liabilities: Accounts payable $ 6,498,771 $ 9,681,879 Accrued compensation 6,256,906 5,676,449 Accrued expenses 6,593,959 7,518,379 Deferred revenue � 6,575,408 � � 9,002,588 � Total current liabilities 25,925,044 31,879,295 � Asset retirement liability 926,588 872,184 Deferred rent liability 11,080,991 11,733,473 Deferred revenue 2,910,500 2,919,000 Income tax liability 533,873 342,108 Minority interests in affiliates � 148,642 � � 159,050 � Total long term liabilities 15,600,594 16,025,815 Shareholders� equity: Preferred stock, par value $.01, 20,000,000 shares authorized; no shares issued and outstanding � � Common stock, par value $.01, 200,000,000 shares authorized; 19,319,858 and 19,286,425 shares issued and outstanding at July 1, 2007 and December 31, 2006, respectively 193,199 192,864 Additional paid-in capital 122,655,671 122,153,502 Accumulated deficit � (41,615,543 ) � (33,943,878 ) Total shareholders� equity � 81,233,327 � � 88,402,488 � Total liabilities and shareholders� equity $ 122,758,965 � $ 136,307,598 � EBITDA RECONCILIATION � The following is a reconciliation of the Company�s net loss to EBITDA. � Thirteen Weeks Ended Twenty-Six Weeks Ended July 1, July 2, July 1, July 2, 2007 2006 2007 2006 (Thousands) Net loss $ (3,891 ) $ (2,385 ) $ (7,142 ) $ (3,957 ) Interest expense 166 186 295 334 Interest income (46 ) (133 ) (79 ) (320 ) Depreciation and amortization(1) 6,526 5,766 13,110 11,048 Provision for income taxes � (316 ) � 135 � � (296 ) � 282 � EBITDA $ 2,439 � $ 3,569 � $ 5,888 � $ 7,387 � � (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 reasons: � Coffeehouse leases are generally short-term (5-10 years) and the Company 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). Caribou Coffee opened 283 coffeehouses from the beginning of fiscal 2002 through the first twenty-six weeks of 2007. As a result, management believes that the 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 Company. Management uses EBITDA: � As measurements of operating performance because it assists them in comparing the operating performance on a consistent basis as it removes the impact of items not directly resulting from the coffeehouse operations; � For planning purposes, including the preparation of an internal annual operating budget; � To establish targets for certain management compensation matters; and � To evaluate 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 the Company�s cash flow needs; and (c) should not be considered alternative to net income, operating income, cash flows from operating activities or other financial information as determined under GAAP.