EXHIBIT 99.1
FOR IMMEDIATE RELEASE
[CARIBOU COFFEE LOGO]
Caribou Coffee Company, Inc.
3900 Lakebreeze Avenue, North
Minneapolis, MN 55429
(763) 592-2200
INVESTOR RELATIONS CONTACT: MEDIA CONTACT:
Kathleen Heaney (203) 803-3585 Jami Smith
ir@cariboucoffee.com (763) 592-2214
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CARIBOU COFFEE COMPANY, INC. REPORTS THIRD QUARTER 2005 RESULTS
MINNEAPOLIS, MINNESOTA, NOVEMBER 2, 2005. 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 third quarter 2005 (thirteen weeks ended October 2, 2005.)
On October 4, 2005, Caribou Coffee Company, Inc. closed its initial public
offering of 5,358,000 shares of its common stock with net proceeds to the
Company of $67.7 million.
HIGHLIGHTS FOR THE THIRD QUARTER OF 2005 COMPARED TO THE THIRD QUARTER OF 2004
INCLUDE:
- Total net sales grew 26% to $48.8 million
- Comparable coffeehouse net sales increased 3.7 percent
- Opened 19 company operated coffeehouses and one licensed
coffeehouse
- Other Sales advanced 153% in the quarter
- Adjusted EBITDA was $3.2 million
- Net loss of $1.2 million, or ($0.08) per share versus a net
loss of $0.8 million, or ($0.06) per share.
- Balance sheet strengthened with proceeds from IPO
"We are pleased with our third quarter results as we continue to build momentum
in the business by accelerating coffeehouse unit expansion, driving comparable
coffeehouse sales growth through innovative offerings such as 'Bou Gourmet, and
maximizing commercial and licensing opportunities. The proceeds from the IPO
will enable us to continue new coffeehouse development and further establish our
brand. We are excited about the growth prospects for Caribou Coffee and look
forward to the opportunity of maximizing long-term
value for all shareholders," stated Michael Coles, Chairman, Chief Executive
Officer and President.
THIRD QUARTER 2005 RESULTS
Net proceeds from the IPO were $67.7 million, shown on the quarter-end balance
sheet as Stock Subscription Receivable Due from Broker. Subsequent to quarter's
end, the Company used $29.9 million of the net proceeds from the IPO to repay
the entire outstanding principal balance under its revolving credit facility.
Cash available is approximately $40 million. The cash position and $60 million
available under the existing credit facility provide the necessary resources to
support future growth initiatives into 2008.
Caribou Coffee opened 20 coffeehouses in the third quarter of 2005 including its
first coffeehouse in Colorado and one licensed coffeehouse in the Detroit
Airport. The Company continues to opportunistically identify strong partners for
future license development both domestically and in select international
locations.
Total net sales increased 26 percent to $48.8 million in the third quarter of
2005 compared to $38.7 million in the third quarter of 2004. Both coffeehouse
net sales and other sales performed well and were driven by the increase in new
coffeehouses and commercial customers. Comparable coffeehouse net sales grew 3.7
percent in the third quarter of 2005 compared to 7.3 percent in the third
quarter of 2004, which was on the higher end of the previously stated comparable
growth expectations of 2.0 to 4.0 percent.
Cost of sales and related occupancy costs in the third quarter, were $19.6
million compared to $15.7 million the prior year. This increase was primarily
due to the 64 company-owned coffeehouses opened since the third quarter of 2004.
Cost of sales and related occupancy costs as a percentage of total net sales
were 40.2 percent during third quarter 2005 down from 40.4 percent in third
quarter 2004 primarily due to price increases on some of our beverage items. It
is the Company's practice to enter into fixed price purchase contracts for
coffee beans in order to secure an adequate supply and fix the cost of coffee
beans for up to one year supply.
Operating expenses increased $4.0 million, or 25 percent, to $20.1 million as a
result of new coffeehouse openings during the past year and one-time expenses
associated with the roll-out of 'Bou Gourmet. Depreciation and amortization
expenses increased to $4.1 million in the third quarter of 2005 compared to $3.2
million in the third quarter 2004. The increase was primarily due to coffeehouse
openings in the past year.
General and administrative expenses increased to $5.6 million in the third
quarter of 2005 compared to $3.8 million in the third quarter of 2004. The
increase was primarily due to an increase in management and administrative
personnel to support the growth of the company. Additionally, the Company
incurred incremental expenses associated with its annual store managers meeting
which was held in the third quarter of this year but held during the fourth
quarter of 2004.
In connection with the Company's initial public offering it granted the
underwriters an option to purchase 803,700 shares of the Company's common stock
at $14 per share on September 28, 2005. Because this option extended beyond the
closing of the initial public offering, such feature represents a call option
that meets the definition of a derivative under SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities. Accordingly, the call option has
been separately accounted for at fair value with the change in fair value
between the grant date and October 2, 2005 of $0.6 million recorded as
derivative income.
EBITDA in the quarter was $3.8 million compared to $3.2 million in the same
period of the prior year. Adjusted EBITDA, which excludes the aforementioned one
time derivative income, was $3.2 million in third quarter 2005 compared with
$3.2 million in third quarter 2004. (EBITDA and Adjusted EBITDA are non-GAAP
measures. See EBITDA reconciliation at the end of this release.)
The net loss for the Company was $1.2 million, or ($0.08) per share, in the
third quarter of 2005 compared to a net loss of $0.8 million, or ($0.06) per
share, for the third quarter of 2004.
Michael Coles added, "We were able to generate solid comparable coffeehouse net
sales. The fourth quarter has historically been one of our strongest quarters
and coupled with the successful launch of our 'Bou Gourmet food products, we are
on track to deliver full year comparable coffeehouse net sales in the 6 to 7
percent range."
NINE MONTH 2005 RESULTS
Through September 2005, total revenue increased 27 percent to $142.1 million,
driven by a 7.2 percent increase in comparable coffeehouse net sales and a 23
percent increase in new coffeehouses. Other Sales, which primarily includes
sales to commercial customers, almost doubled in the period to $4.2 million and
accounted for 3 percent of total company revenue versus 2 percent in the prior
year.
The significant increase in both cost of goods sold and store operating expenses
in the nine month period largely reflects the aforementioned 23 percent increase
in new coffeehouse openings. Cost of sales and related occupancy as a percent of
total net sales declined 1.0 percentage point to 40.1 percent and operating
expenses as a percent of total net sales declined 0.7 percentage points during
the thirty-nine week period ended October 2, 2005 as compared to the same period
in the prior year. These declines are attributable to the Company's ability to
leverage its fixed costs with the comparable coffeehouse increases and other
sales increases.
The increase in interest expense during the nine month period reflects an
increase in borrowings under the Company's revolving credit facility to fund new
coffeehouse openings over the past twelve months. Subsequent to quarter end, the
Company used a portion of the net proceeds from its IPO to repay the entire
$29.9 million outstanding under its revolving credit facility.
The net loss per share through October 2, 2005 was $0.31 versus a net loss per
share of $0.21 in the same period in the prior year.
OUTLOOK
FOURTH QUARTER AND FULL YEAR 2005
For the fourth quarter (thirteen weeks ending January 1, 2006), the Company
expects comparable coffeehouse net sales to increase between 3 to 7 percent. The
Company anticipates opening 38 to 43 new company-owned coffeehouses in the
quarter. Adjusted EBITDA is projected to be $5.5 to $5.9 million. Earnings per
share are projected to be breakeven to positive $0.02.
For the full fiscal year 2005, the Company expects a comparable coffeehouse
sales increase of 6 to 7 percent. The Company also expects 80 to 85 new
coffeehouse openings for fiscal 2005. Adjusted EBITDA for the full year which
excludes the one-time items related to an amendment of an employee agreement and
derivative income is estimated to be in the range $16.7 million to $17.1
million. Earnings per share for the full year are estimated at ($0.29) to
($0.31).
2006 OUTLOOK
For 2006, as previously disclosed, the Company plans to open 105 to 115
coffeehouses and is targeting a comparable coffeehouse net sales increase in the
range of 3 to 7 percent. It is our intention to release quarterly comparable
coffeehouse sales shortly after the quarter ends with the first such release
expected in January 2006. At that time we will also introduce additional 2006
guidance, such as EBITDA and EPS.
CONFERENCE CALL
Caribou Coffee will host a conference call today, Wednesday, November 2, 2005 at
4:30pm Eastern Time to discuss these results. Hosting the call will be Michael
Coles, Chairman of the Board, Chief Executive Officer and President, 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. If you are unable to join the call, a
replay will be available beginning at 7:30pm Eastern time and can be accessed by
dialing 1-888-203-1112, passcode 1558234.
ABOUT THE COMPANY
Caribou Coffee, 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 October 2, 2005, Caribou
Coffee had 348 coffeehouses, including four licensed locations and four joint
venture locations. Caribou Coffee's coffeehouses are located in 14 states and
the District of Columbia. 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 grocery stores and mass merchandisers, office
coffee
providers, airlines, hotels, sports and entertainment venues, college campuses
and other commercial 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 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.
# # #
SELECT OPERATING DATA
(UNAUDITED)
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Thirteen Weeks Ended Thirty-Nine Weeks
--------------------------- ------------------------
September 26, October 2, September October 2,
2004 2005 26, 2004 2005
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Comparable Coffeehouse Sales (company-owned) 7.3% 3.7% 8.3% 7.2%
Change in Comparable Coffeehouse Average Check 3.7% 5.0% 1.6% 7.3%
Change in Comparable Coffeehouse Transaction Count 3.6% -1.3% 6.7% -0.1%
Coffeehouses Open at Beginning of Period 263 325 251 304
Coffeehouses Opened in Period 17 19 31 42
Coffeehouses Closed in Period 0 0 -2 -2
Coffeehouses at Period End:
Company Owned 280 344 280 344
Licensed 2 4 2 4
TOTAL COFFEEHOUSES 282 348 282 348
CARIBOU COFFEE COMPANY, INC. AND AFFILIATES
(A Majority Owned Subsidiary of Caribou Holding Company Limited)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<Table>
<Caption>
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
--------------------------- ---------------------------
SEPTEMBER 26, OCTOBER 2, SEPTEMBER 26, OCTOBER 2,
2004 2005 2004 2005
--------------------------- ---------------------------
(Unaudited)
Coffeehouse sales $ 37,901,565 $ 46,682,924 $ 109,505,494 $137,872,690
Other sales 833,452 2,110,436 2,162,996 4,241,137
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Total net sales 38,735,017 48,793,360 111,668,490 142,113,827
Cost of sales and related occupancy costs 15,650,630 19,606,907 45,934,186 57,023,608
Operating expenses 16,138,502 20,142,047 46,382,590 57,918,649
Opening expenses 364,116 398,649 815,242 1,176,470
Depreciation and amortization 3,188,716 4,116,304 9,078,191 11,463,016
General and administrative expenses 3,781,367 5,573,713 10,810,522 17,189,663
Closing expense and disposal of assets 2,532 189,725 560,700 310,393
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Operating loss (390,846) (1,233,985) (1,912,941) (2,967,972)
Other income (expense):
Interest income 1,335 1,400 4,246 28,378
Interest expense (264,127) (512,222) (626,934) (1,424,559)
Derivative income -- 623,109 -- 623,109
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Loss before provision for income taxes and minority (653,638) (1,121,698) (2,535,629) (3,741,044)
interest
Provision for income taxes 136,500 (46,323) 137,830 255,000
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Loss before minority interest (790,138) (1,075,375) (2,673,459) (3,996,044)
Minority interest 31,444 123,005 177,190 308,071
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Net loss $ (821,582) (1,198,380) $ (2,850,649) $(4,304,115)
=========================== ===========================
Basic and diluted net loss per share $ (0.06) $ (0.08) $ (0.21) $ (0.31)
=========================== ===========================
Basic and diluted weighted average number of shares
outstanding 13,801,436 14,142,047 13,797,317 13,916,940
=========================== ===========================
</Table>
CARIBOU COFFEE COMPANY, INC. AND AFFILIATES
(A Majority Owned Subsidiary of Caribou Holding Company Limited)
CONDENSED CONSOLIDATED BALANCE SHEETS
<Table>
<Caption>
JANUARY 2, OCTOBER 2,
2005 2005
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(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 7,618,470 $ 3,871,091
Accounts receivable (net of allowance for doubtful
accounts of approximately $34,900 and $19,092 at
January 2, 2005 and October 2, 2005) 857,692 849,398
Stock subscription receivable due from broker -- 69,761,160
Other receivables 1,093,675 1,385,761
Income tax receivable 451,168 9,731
Inventories 5,704,440 10,532,729
Prepaid expenses and other current assets 441,014 1,245,589
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Total current assets 16,166,459 87,655,459
Property and equipment, net of accumulated depreciation and amortization 67,639,732 78,637,075
Notes receivable 80,649 68,561
Restricted cash 539,983 321,030
Other assets 1,780,105 1,747,818
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TOTAL ASSETS $86,206,928 $168,429,943
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,311,686 $ 11,875,335
Accrued compensation 4,707,242 4,121,949
Accrued expenses 5,469,931 6,973,825
Deferred revenue 5,308,713 5,150,952
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Total current liabilities 20,797,572 28,122,061
Revolving credit facility 19,923,930 29,923,930
Deferred rent liability 8,420,509 9,518,134
Deferred revenue 3,055,000 3,055,000
Minority interests in affiliates 217,206 250,291
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Total long term liabilities 31,616,645 42,747,355
Commitments and contingencies
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;
13,801,436 and 19,265,533 shares issued and outstanding
at January 2, 2005 and October 2, 2005, respectively 138,014 192,664
Treasury stock -- (12,390)
Additional paid-in capital 53,634,009 121,663,678
Accumulated deficit (19,979,312) (24,283,426)
----------- -----------
Total shareholders' equity 33,792,711 97,560,527
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $86,206,928 $168,429,943
=========== ============
</Table>
EBITDA RECONCILIATION
(UNAUDITED)
<Table>
<Caption>
Thirteen Weeks Ended Thirty-Nine Weeks
---------------------------- --------------------------
September 26, October 2, September 26, October 2,
2004 2005 2004 2005
---------------------------- --------------------------
(thousands)
Net loss $ (822) $(1,198) $(2,851) $(4,304)
Interest expense 264 512 627 1,425
Interest income (1) (1) (4) (28)
Depreciation and amortization (1) 3,602 4,573 10,088 12,769
Provision for income taxes 137 (46) 138 255
------ ------- ------- -------
EBITDA 3,180 3,840 7,998 10,117
Derivative income -- (623) -- (623)
Amendment of employment agreement -- -- -- 1,738
------ ------- ------- -------
Adjusted EBITDA $3,180 $ 3,217 $ 7,998 $11,232
------ ------- ------- -------
</Table>
(1) Includes depreciation and amortization associated with its 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.
Caribou Coffee uses EBITDA and Adjusted EBITDA:
- As measurements of operating performance because they assist
management in comparing the operating performance on a
consistent basis as they remove the impact of items not
directly resulting from the coffeehouse operations;
- For planning purposes, including the preparation of its
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 and Adjusted EBITDA as calculated by the Company are not necessarily
comparable to similarly titled measures used by other companies. In addition,
EBITDA and Adjusted EBITDA: (a) do not represent net income or cash flows from
operating activities as defined by GAAP; (b) are not necessarily indicative of
cash available to fund the Company's cash flow needs; and (c) should not be
considered as alternatives to net income, operating income, cash flows from
operating activities or the Company's other financial information as determined
under GAAP.
The Company prepares Adjusted EBITDA by adjusting EBITDA to eliminate the impact
of a number of items that it does not consider indicative of its core operating
performance. You are encouraged to evaluate each adjustment and the reasons the
Company considers them appropriate for supplemental analysis. As an analytical
tool, Adjusted EBITDA is subject to all of the limitations applicable to EBITDA.
In addition, in evaluating Adjusted EBITDA, you should be aware that in the
future the Company may incur expenses similar to the adjustments in this
presentation. Caribou Coffee's presentation of Adjusted EBITDA should not be
construed as an implication that its future results will be unaffected by
unusual or non-recurring items.
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