Jamba, Inc. Reports US$89 Million Loss In Q2 2008 Results

Emeryville, Calif., 28 Aug - Jamba, Inc.today reported unaudited financial results for the fiscal second quarter ended July 15, 2008. The Company's financial statements include the results of its wholly owned subsidiary, Jamba Juice Company.

Fiscal second quarter 2008 (2Q08), 12-week period ended July 15, 2008, compared to fiscal second quarter 2007 (2Q07), 12-week period ended July 24, 2007:

* Total revenue of $98.6 million, an increase of 10.0% from $89.6 million in 2Q07.

* Income from operations would have been $3.2 million as compared to $2.8 million in 2Q07, excluding the impact of non-cash activities of $82.6 million for trademark impairment and $5.5 million of store impairment, lease termination and store closure costs. The Company’s loss from operations for 2Q07 was $84.9 million as compared to $2.6 million in 2Q07. Non-cash activity in 2Q07 for store impairment and store closure costs was $0.1 million. There was no trademark impairment in 2Q07.

* Net loss for 2Q08 would have been $36.5 million, excluding $49.7 million for trademark impairment, net of tax, and $5.5 million of store impairment, lease termination and store closure costs and $2.5 million in gain from derivative liabilities. Net income, excluding non cash activities of $0.1 million for store impairment and closure cost and $0.3 million in gain from derivative liabilities for 2Q07, would have been $2.1 million. Net loss for 2Q08, including non-cash activities was $89.2 million, compared to net income of $2.3 million in 2Q07.

* The Company recorded a valuation allowance against differed tax assets in the amount of $32.2 million in 2Q08.
Diluted loss per share of $(1.69) in 2Q08, compared to diluted earnings per share of $0.04 in 2Q07.
Company-owned comparable store sales(1) of (7.3%), compared to (3.5%) in 2Q07.

* 14 new company-owned stores were opened, compared to 27 new company-owned stores in 2Q07. This brings the total number of company-owned stores to 518 and the total number of system-wide stores (company-owned and franchise-operated stores) to 736.

* Store-level EBITDA(*) increased to $19.9 million for the second quarter of fiscal 2008 compared to $19.3 million for the second quarter of fiscal 2007. For a reconciliation of Store-level EBITDA, a non-GAAP financial measure, to net income/loss, a GAAP financial measure (Net income (loss) was ($89.2 million) for the second quarter of fiscal 2008 compared to $2.3 million for the second quarter of fiscal 2007). Please see the table at the end of this release.

“In my first three weeks here, our leadership team has reviewed Jamba’s business plan and all of our assumptions in an effort to re-focus on the best strategic opportunities to leverage our brand and improve our store performance as we navigate the current challenging environment. We are working diligently to improve operating performance and long-term shareholder value by taking some key initial steps to alter our operating strategy,” said Steven R. Berrard, the Chief Executive Officer and President.

Mr. Berrard continued, “Our plan going forward assumes that the head winds will remain through the middle of 2009, if not longer. As such, our strategy is focused on changes in our business model shifting our focus from corporate store growth to franchising and in some cases re-franchising. We are seeking to maximize revenue streams from the Jamba brand based on our initial results from our relationship with Nestle. We are also focused on improving store performance through various initiatives while we continue to work to reduce general and administrative expenses and ensure our resources are effectively and efficiently being used.”

Outlook for 2009

The economy's negative impact on consumers' discretionary spending is expected to present a challenge to sales growth through the remainder of 2008. Accordingly, in the coming months, management will focus on areas they believe they can control, such as targeting a reduction in cost of sales as a percentage of Company Store revenue to at or below 26% and targeting a reduction in labor costs as a percentage of Company Store revenue to at or below 32%. In addition, management plans to implement the strategies described above, and more fully in the Company’s filings with the Securities and Exchange Commission, in order to manage and enhance liquidity and demonstrate a path back to profitability and sustained and long-term profitable growth.

Subsequent Events

As previously disclosed, a new management team has been put in place in order to aggressively pursue all avenues to create shareholder value from both an operational and financial perspective. These management changes and other subsequent events are outlined below.

Steven R. Berrard, the Company’s Chairman of the Board, assumed the role of interim Chief Executive Officer and President, replacing Paul E. Clayton. Karen L. Luey, Vice President, Controller, and Principal Accounting Officer of the Company, assumed the role of interim Chief Financial Officer, replacing Donald D. Breen, and has subsequently been appointed as the Company’s Senior Vice President, Chief Financial Officer. Earlier in the second quarter, Steve Adkins, Senior Vice President of Store Operations, and Glenn Lord, Vice President of Franchise Operation, assumed the responsibilities of Karen A. Kelley upon her departure.
On August 28, 2008, the Company entered into a commitment letter for a two-year senior term note credit facility in the aggregate principal amount of $15 million, with an option by the Company, during the initial 120-day period following the closing, to increase the principal amount by up to an additional $10 million subject to certain conditions under the Commitment Letter.
On August 27, 2008, the Company reduced its workforce by an additional 16 employees to reduce operating costs and increase operational efficiency and identified an additional 20 stores we intend to close.

JAMBA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share amounts)		July 15, 2008				January 1, 2008
ASSETS
Current assets:
Cash and cash equivalents		$	9,460			$	23,016
Restricted cash			914				1,916
Receivables, net of allowances of $595 and $133			3,597				6,402
Inventories			4,133				3,582
Deferred income taxes			-				6,928
Prepaid and refundable income taxes			5,546				5,814
Prepaid rent			1,838				3,261
Prepaid expenses and other current assets			1,205				1,607
Total current assets			26,693				52,526
Property, fixtures and equipment, net			127,036				128,861
Trademarks and other intangible assets, net			4,074				87,599
Restricted cash			3,434				2,950
Deferred income taxes			344				-
Other long-term assets			3,685				3,066
Total assets		$	165,266			$	275,002
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	9,946			$	14,487
Accrued compensation and benefits			9,073				6,490
Workers' compensation and health self-insurance reserves			1,776				1,796
Accrued jambacard liability			24,394				28,576
Current portion of capital lease obligations			241				-
Other accrued expenses			10,858				8,277
Derivative liabilities			1,160				9,290
Total current liabilities			57,448				68,916
Long-term workers' compensation and health insurance reserves			3,434				2,950
Capital lease obligations			405				-
Deferred income tax			-				7,269
Deferred rent and other long-term liabilities			14,353				12,359
Commitments and contingencies			-				-
Stockholders' equity:
Common stock, $0.001 par value, authorized 150,000,000 shares: 52,638,228 and 52,637,131 issued and outstanding at July 15, 2008 and January 1, 2008, respectively			53				53
Additional paid-in-capital			353,928				352,184
Accumulated deficit			(264,355	)			(168,729	)
Total stockholders' equity			89,626				183,508
Total liabilities and stockholders' equity		$	165,266			$	275,002

JAMBA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
		Twelve Week Period Ended								Twenty-eight Week Period Ended
(In thousands, except share and per share amounts)		July 15, 2008				July 24, 2007				July 15, 2008				July 24, 2007
Revenue:
Company stores		$	96,311			$	86,213			$	194,943			$	172,374
Franchise and other revenue			2,287				3,396				5,208				6,621
Total revenue			98,598				89,609				200,151				178,995
Operating expenses:
Cost of sales			25,334				23,659				51,713				47,211
Labor costs			31,420				26,477				69,419				55,342
Occupancy costs			10,556				8,592				23,935				19,543
Store operating			10,760				10,871				24,584				21,923
Depreciation and amortization			5,682				4,013				13,495				9,264
General and administrative			9,850				10,491				25,146				25,494
Store pre-opening			549				1,462				1,700				2,625
Store impairment			3,260				98				7,297				198
Store lease termination and closure costs			2,235				33				2,548				41
Trademark impairment			82,600				-				82,600				-
Other			1,219				1,272				2,136				2,760
Total operating expenses			183,465				86,968				304,573				184,401
Income (loss) from operations			(84,867	)			2,641				(104,422	)			(5,406	)
Other income (expense):
Gain from derivative liabilities			2,488				329				8,130				15,480
Interest income			59				921				246				2,316
Interest expense			(106	)			(24	)			(218	)			(135	)
Total other income			2,441				1,226				8,158				17,661
Income (loss) before income tax			(82,426	)			3,867				(96,264	)			12,255
Income tax (expense) benefit			(6,769	)			(1,539	)			638				2,023
Net income (loss)		$	(89,195	)		$	2,328			$	(95,626	)		$	14,278
Weighted-average shares used in computation of earnings (loss) per share:
Basic			52,637,209				52,391,434				52,637,165				52,100,109
Diluted			52,637,209				58,903,104				52,637,165				58,703,021
Earnings (loss) per share:
Basic		$	(1.69	)		$	0.04			$	(1.82	)		$	0.27
Diluted		$	(1.69	)		$	0.04			$	(1.82	)		$	0.24

JAMBA, INC.
Reconciliation of GAAP Income (Loss) from Operations to Store Level EBITDA
(Unaudited)
(In thousands)		Twelve Week Period Ended
		July 15, 2008				July 24, 2007
Company store revenue		$	96,311			$	86,213
Franchise revenue (excluding franchisee reimbursement)			1,654				2,683
Cost of sales			(25,334	)			(23,659	)
Labor costs			(31,420	)			(26,477	)
Occupancy costs			(10,556	)			(8,592	)
Store operating			(10,760	)			(10,871	)
Store Level EBITDA		$	19,895			$	19,297
Store Level EBITDA		$	19,895			$	19,297
Add: Franchisee reimbursement			633				713
Less: Depreciation and amortization			(5,682	)			(4,013	)
Less: General and administrative			(9,850	)			(10,491	)
Less: Store pre-opening			(549	)			(1,462	)
Less: Trademark impairment			(82,600	)			-
Less: Store lease termination and closure costs			(2,235	)			(33	)
Less: Other			(4,479	)			(1,370	)
Add: Other income			2,441				1,226
Less: Income tax expense			(6,769	)			(1,539	)
Net income (loss)		$	(89,195	)		$	2,328