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 2008 (thirteen weeks ended June 29, 2008). HIGHLIGHTS FOR
THE SECOND QUARTER OF 2008 INCLUDE: �Other Sales� increased 68%
compared to the second quarter of 2007 Comparable Coffeehouse Net
Sales decreased 1.7% Opened 12 franchise units Speaking on behalf
of the Company, Rosalyn (Roz) Mallet commented, "The actions that
we have taken over the past year are beginning to show positive
results and we are making progress to improve the overall health of
the company.� Added Ms. Mallet, �Our commercial and franchise
business are both delivering healthy growth, indicative of the
strength of the Caribou Coffee brand.� SECOND QUARTER 2008 RESULTS
Total net sales increased $0.4 million, or 0.5%, to $63.2 million
for the quarter ended June 29, 2008, from $62.8 million for the
quarter ended July 1, 2007. This increase was attributable to a 68%
increase in Other Sales. Coffeehouse sales were $57.3 million in
fiscal second quarter 2008, a decrease of 3.5% from the same period
in the prior year. The decrease primarily reflects a 1.7% decline
in comparable coffeehouse sales and 318 fewer operating coffeehouse
weeks in the second thirteen weeks of fiscal 2008 as compared to
the same period in fiscal 2007. Other net sales were $5.9 million
in fiscal second quarter 2008, an increase of 68% over fiscal
second quarter 2007. The increase was due to higher sales from new
and existing commercial customers, royalties and product sales from
36 franchise coffeehouses opened during last 12 months. General and
administrative expenses decreased $0.6 million, or 7.5%, to $6.6
million during the thirteen weeks ended June 29, 2008, from $7.2
million during the thirteen weeks ended July 1, 2007. The decrease
in general and administrative expenses was largely due to lower
labor costs. Store closing expense and disposal of assets increased
$1.2 million to $1.3 million during second quarter 2008, from $0.1
million during second 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 6
underperforming company-owned coffeehouses during the thirteen
weeks ended June 29, 2008. Reported EBITDA was $2.9 million during
the thirteen weeks ended June 29, 2008, compared to EBITDA of $2.4
million during the thirteen weeks ended July 1, 2007. The year over
year EBITDA increase was impacted by a $1.2 million increase in
closing expense and disposal of assets. (EBITDA is a non-GAAP
measure. See EBITDA reconciliation at the end of this release).
Depreciation and amortization decreased $1.4 million, or 22.4%, to
$4.6 million during the thirteen weeks ended June 29, 2008, from
$6.0 million during the same period in the prior year. This
decrease was due to fewer coffeehouse operating weeks in the second
quarter of 2008 and the impairment of 38 company-operated
coffeehouses during the last three quarters of fiscal 2007.
Coffeehouse depreciation and amortization includes $0.2 million in
accelerated depreciation associated with coffeehouse asset
impairments during the second quarter of fiscal 2008 as compared to
$0.5 million during the same period in the prior year. The
Company�s net loss for the second quarter of 2008, was $2.5 million
or ($0.13) per share compared to a net loss of $3.9 million or
($0.20) per share for the same period in 2007. CONFERENCE CALL
Caribou Coffee will host a conference call on August 5, 2008, at
4:30 p.m. (Eastern Time) to discuss these results. Hosting the call
will be Rosalyn (Roz) Mallet and Kaye O�Leary. 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 1-888-211-0353 or
1-913-312-0860 for international calls. Confirmation number is
2347705. If you are unable to join the call, a replay will be
available beginning at 7:30 p.m. (Eastern Time) on August 5, 2008
through 11:59 p.m. on August 12, 2008 and can be accessed by
dialing 1-888-203-1112 or international callers 1-719-457-0820 and
enter pin number 2347705. 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
29, 2008, Caribou Coffee had 490 coffeehouses, which includes 75
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
Twenty-Six Weeks Ended � June 29, 2008 � July 1, 2007 June 29, 2008
� July 1, 2007 (Unaudited) Coffeehouse sales $ 57,267,099 $
59,331,262 $ 113,887,162 $ 117,407,226 Other sales � 5,916,290 � �
3,516,123 � � 11,052,948 � � 7,292,789 � Total net sales 63,183,389
62,847,385 124,940,110 124,700,015 Cost of sales and related
occupancy costs 27,004,012 26,519,499 53,216,720 52,033,765
Operating expenses 25,815,112 27,021,720 51,209,974 53,009,181
Opening expenses 50,425 66,018 135,452 175,809 Depreciation and
amortization 4,645,264 5,985,216 10,566,323 12,002,800 General and
administrative expenses 6,617,706 7,153,341 14,067,245 13,757,563
Closing expense and disposal of assets � 1,332,414 � � 133,886 � �
3,878,743 � � 860,864 � Operating loss (2,281,544 ) (4,032,295 )
(8,134,347 ) (7,139,967 ) Other income (expense): Interest income
2,752 45,899 20,291 79,136 Interest expense � (121,863 ) � (165,579
) � (633,459 ) � (295,298 ) Loss before provision (benefit) for
income taxes and minority interest (2,400,655 ) (4,151,975 )
(8,747,515 ) (7,356,129 ) Provision (benefit) for income taxes �
43,861 � � (315,932 ) � 49,846 � � (296,097 ) Loss before minority
interest (2,444,516 ) (3,836,043 ) (8,797,361 ) (7,060,032 )
Minority interest � (12,956 ) � 54,473 � � 40,182 � � 81,534 � Net
loss $ (2,431,560 ) $ (3,890,516 ) $ (8,837,543 ) $ (7,141,566 )
Basic and diluted net loss per share $ (0.13 ) $ (0.20 ) $ (0.46 )
$ (0.37 ) Basic and diluted weighted average number of shares
outstanding � 19,370,590 � � 19,320,055 � � 19,370,590 � �
19,304,035 � CARIBOU COFFEE COMPANY, INC. AND AFFILIATES (A
Majority Owned Subsidiary of Caribou Holding Company Limited)
CONDENSED CONSOLIDATED BALANCE SHEETS � � June 29, 2008
December�30, 2007 (Unaudited) ASSETS Current assets: Cash and cash
equivalents $ 6,749,930 $ 9,886,427 Accounts receivable (net of
allowance for doubtful accounts of $50,669 and $7,989 at June 29,
2008 and December 30, 2007, respectively) 3,090,036 3,116,864 Other
receivables (net of allowance for doubtful accounts of $60,828 and
$9,399 at June 29, 2008 and December 30, 2007, respectively)
1,280,274 1,544,281 Income tax receivable 92,645 149,304
Inventories 10,260,257 10,228,527 Prepaid expenses and other
current assets � 841,412 � � 1,690,668 � Total current assets
22,314,554 26,616,071 Property and equipment, net of accumulated
depreciation and amortization 74,403,518 83,798,120 Notes
receivable 24,237 32,296 Restricted cash 12,229 410,831 Other
assets � 532,300 � � 982,334 � Total assets $ 97,286,838 � $
111,839,652 � � LIABILITIES AND SHAREHOLDERS� EQUITY Current
liabilities: Accounts payable $ 7,764,996 $ 9,650,326 Accrued
compensation 7,464,583 7,863,445 Accrued expenses 7,032,004
9,318,442 Deferred revenue � 6,530,320 � � 9,987,724 � Total
current liabilities 28,791,903 36,819,937 � Revolving credit
facility 3,000,000 � Asset retirement liability 1,009,709 989,490
Deferred rent liability 10,307,717 11,271,186 Deferred revenue
2,742,000 2,853,500 Income tax liability 477,710 473,064 Minority
interests in affiliates � 73,575 � � 144,176 � Total long term
liabilities 17,610,711 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 June 29, 2008 andDecember 30, 2007 193,706 193,706
Additional paid-in capital 124,665,330 124,231,862 Accumulated
deficit � (73,974,812 ) � (65,137,269 ) Total shareholders� equity
� 50,884,224 � � 59,288,299 � Total liabilities and shareholders�
equity $ 97,286,838 � $ 111,839,652 � Coffeehouse Openings and
Closings � � 13 Weeks Ended 26 Weeks Ended June 29, 2008 � July 1,
2007 � June 29, 2008 � July 1, 2007 � � Comparable Coffeehouse
Sales(Company-Owned) (1.7%) 1% (2.0%) 0% � COFFEEHOUSE COUNT
Company-Owned: Coffeehouses open at beginning of period 421 442 432
440 Coffeehouses opened during the period 0 5 5 9 Coffeehouses
closed during the period 6 6 22 8 Total Company-Owned at period end
415 441 415 441 � Franchised: Coffeehouses open at beginning of
period 63 33 52 24 Coffeehouses opened during the period 12 6 23 15
Coffeehouses closed during the period 0 0 0 0 Total Franchised at
period end 75 39 75 39 TOTAL COFFEEHOUSES AT PERIOD END 490 480 490
480 � � � � � � � � � (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 Twenty-Six Weeks Ended June 29, 2008 � July
1, 2007 June 29, 2008 � July 1, 2007 (In thousands) Net loss $
(2,432 ) $ (3,890 ) $ (8,838 ) $ (7,142 ) Interest expense 122 166
634 295 Interest income (3 ) (46 ) (20 ) (79 ) Depreciation and
amortization(1) 5,207 6,526 11,627 13,110 Provision (benefit) for
income taxes � 44 � � (316 ) � 50 � � (296 ) EBITDA $ 2,938 � $
2,440 � $ 3,453 � $ 5,888 � (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 212 company-operated coffeehouses
from the beginning of fiscal 2003 through the end of the second
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.
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