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 first quarter 2008 (thirteen weeks ended March 30, 2008). HIGHLIGHTS FOR THE FIRST QUARTER OF 2008 INCLUDE: �Other Sales� increased 36% compared to the first quarter of 2007 Comparable Coffeehouse Net Sales decreased 2.3% Rosalyn (Roz) Mallet, the Company�s CEO commented, "Similar to other restaurant companies, Caribou Coffee was not immune to the pull-back in consumer spending and our comparable coffeehouse sales declined 2.3% in the quarter. Although we are operating in a difficult macro environment, we are making progress in improving the overall health of the Company. We are doing this by closing underperforming units and focusing on other initiatives, including labor management, to improve store level profitability�. Added Ms. Mallet, �Based on consumer feedback, we also have several initiatives underway, including product innovations, designed to strengthen the Caribou experience for our loyal customers.� FIRST QUARTER 2008 RESULTS Total net sales decreased $0.1 million, or 0.2%, to $61.8 million for the quarter ended March 30, 2008, from $61.9 million for the quarter ended April 1, 2007. This decrease is attributable to 146 fewer operating coffeehouse weeks and a 2.3% decrease in comparable coffeehouse sales in the first thirteen weeks of fiscal 2008 as compared to the same period in fiscal 2007. Coffeehouse sales were $56.6 million in fiscal first quarter 2008, a decrease of 2.5% from the same period in the prior year. The decrease primarily reflects a 2.3% decline in comparable coffeehouse sales. Other net sales were $5.1 million in fiscal first quarter 2008, an increase of 36% over fiscal first quarter 2007. The increase was due to higher sales from new and existing commercial customers, royalties and product sales from 30 franchise coffeehouses opened during last 12 months. General and administrative expenses increased $0.8 million, or 12.8%, to $7.4 million during the thirteen weeks ended March 30, 2008, from $6.6 million during the thirteen weeks ended April 1, 2007. The increase in general and administrative expenses was due to severance costs incurred during the first thirteen weeks of fiscal 2008. Store closing expense and disposal of assets increased $1.8 million to $2.5 million during first quarter 2008, from $0.7 million during first quarter 2007. The increase in closing expense and disposal of assets is primarily attributable to asset write-off and lease termination costs associated with the closing of 16 underperforming company-owned coffeehouses during the thirteen weeks ended March 30, 2008. Reported EBITDA income was $0.5 million during the thirteen weeks ended March 30, 2008, compared to EBITDA of $3.4 million during the thirteen weeks ended April 1, 2007. The year over year EBITDA decrease was impacted by $1.8 million increase in closing expense and disposal of assets and severance costs of $0.8 million. (EBITDA is a non-GAAP measure. See EBITDA reconciliation at the end of this release). Depreciation and amortization decreased $0.1 million, or 1.6%, to $5.9 million during the thirteen weeks ended March 30, 2008, from $6.0 million during the same period in the prior year. This decrease was due to fewer coffeehouse operating weeks in the first quarter of 2008 and the impairment of 35 company-operated coffeehouses during the last three quarters of fiscal 2007. Coffeehouse depreciation and amortization includes $1.5 million in accelerated depreciation associated with coffeehouse asset impairments during the first quarter of fiscal 2008 as compared to $0.4 million during the same period in the prior year. The Company�s net loss for the first quarter of 2008, was $6.4 million or ($0.33) per share compared to a net loss of $3.3 million or ($0.17) per share for the same period in 2007. The increase in the net loss is attributable to closing expense and disposal of assets costs associated with the closure of 16 coffeehouses and some one-time expenses associated with right-sizing the business. CONFERENCE CALL Caribou Coffee will host a conference call on May 7, 2008, at 4:30 p.m. (Eastern Time) to discuss these results. Hosting the call will be Rosalyn (Roz) Mallet, Chief Executive Officer, and Kaye O�Leary, 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 1-888-600-4871 or 1-913-312-1237 for international calls. Confirmation number is 4463553. If you are unable to join the call, a replay will be available beginning at 7:30 p.m. (Eastern Time) on May 7, 2008 through 11:59 p.m. on May 14, 2008 and can be accessed by dialing 1-888-203-1112 or international callers 1-719-457-0820 and enter pin number 4463553. 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 March 30, 2008, Caribou Coffee had 484 coffeehouses, including 63 franchised 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 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 � March 30, 2008 � April 1, 2007 (Unaudited) Coffeehouse sales $ 56,620,063 $ 58,075,964 Other sales � 5,136,658 � � 3,776,666 � Total net sales 61,756,721 61,852,630 Cost of sales and related occupancy costs 26,212,708 25,514,266 Operating expenses 25,394,862 25,987,461 Opening expenses 85,027 109,791 Depreciation and amortization 5,921,059 6,017,584 General and administrative expenses 7,449,539 6,604,222 Closing expense and disposal of assets � 2,546,329 � � 726,978 � Operating loss (5,852,803 ) (3,107,672 ) Other income (expense): Interest income 17,539 33,237 Interest expense � (511,596 ) � (129,719 ) Loss before provision for income taxes and minority interest (6,346,860 ) (3,204,154 ) Provision for income taxes � 5,985 � � 19,835 � Loss before minority interest (6,352,845 ) (3,223,989 ) Minority interest � 53,138 � � 27,061 � Net loss $ (6,405,983 ) $ (3,251,050 ) Basic and diluted net loss per share $ (0.33 ) $ (0.17 ) Basic and diluted weighted average number of shares outstanding � 19,370,590 � � 19,288,016 � CARIBOU COFFEE COMPANY, INC. AND AFFILIATES (A Majority Owned Subsidiary of Caribou Holding Company Limited) CONDENSED CONSOLIDATED BALANCE SHEETS � � March 30, 2008 December 30, 2007 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 4,083,326 $ 9,886,427 Accounts receivable (net of allowance for doubtful accounts of $20,860 and $7,989 at March 30, 2008 and December 30, 2007, respectively) 3,790,354 3,116,864 Other receivables 2,071,979 1,544,281 Income tax receivable 120,706 149,304 Inventories 9,409,089 10,228,527 Prepaid expenses and other current assets � 1,156,151 � � 1,690,668 � Total current assets 20,631,605 26,616,071 Property and equipment, net of accumulated depreciation and amortization 78,808,300 83,798,120 Notes receivable 28,266 32,296 Restricted cash 410,831 410,831 Other assets � 621,686 � � 982,334 � Total assets $ 100,500,688 � $ 111,839,652 � LIABILITIES AND SHAREHOLDERS� EQUITY � Current liabilities: Accounts payable $ 8,823,455 $ 9,650,326 Accrued compensation 5,968,885 7,863,445 Accrued expenses 10,064,419 9,318,442 Deferred revenue � 7,139,138 � � 9,987,724 � Total current liabilities 31,995,897 36,819,937 � Asset retirement liability 1,010,965 989,490 Deferred rent liability 10,858,343 11,271,186 Deferred revenue 2,842,500 2,853,500 Income tax liability 476,127 473,064 Minority interests in affiliates � 152,181 � � 144,176 � Total long term liabilities 15,340,116 15,731,416 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; 19,370,590 shares issued and outstanding at March 30, 2008 and December 30, 2007 193,706 193,706 Additional paid-in capital 124,514,221 124,231,862 Accumulated deficit � (71,543,252 ) � (65,137,269 ) Total shareholders� equity � 53,164,675 � � 59,288,299 � Total liabilities and shareholders� equity $ 100,500,688 � $ 111,839,652 � Coffeehouse Openings and Closings � Thirteen Weeks Ended March 30, 2008 � April 1, 2007 Operating Data: Percentage change in comparable coffeehouse net sales(1) (2.3 )% (1 )% COFFEEHOUSE DATA Company-Owned: Coffeehouses open at beginning of period 432 440 Coffeehouses opened during the period 5 4 Coffeehouses closed during the period 16 � 2 � Total Company-Owned Open at Period End 421 442 Franchised: Coffeehouses open at beginning of period 52 24 Coffeehouses opened during the period 11 9 Coffeehouses closed during the period � � � � Total Franchised Open at Period End 63 � 33 � Total coffeehouses open at end of period 484 � 475 � (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 Ended March 30, 2008 � April 1, 2007 (Thousands) Net loss $ (6,406 ) $ (3,251 ) Interest expense 512 130 Interest income (18 ) (33 ) Depreciation and amortization(1) 6,421 6,583 Provision for income taxes � 6 � � 20 � EBITDA $ 515 � $ 3,449 � (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 218 company-operated coffeehouses from the beginning of fiscal 2003 through the end of the first thirteen weeks of fiscal 2008. 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.