Jamba Sees Q2 Revenue Drop 15.1%

Emeryville, Calif., Aug. 20 - Jamba, Inc. today reported financial results for the fiscal second quarter ended July 14, 2009.

Financial and Operational Highlights

Highlights for the 12 weeks ended July 14, 2009, compared to the 12 weeks ended July 15, 2008:

• Consolidated EBITDA increased $0.3 million to $10.3 million from $10.0 million for 2Q08.*
• Store-level EBITDA decreased 6.9% to $18.5 million from $19.9 million for 2Q08.*
• Total revenue for 2Q09 decreased 15.1% to $83.2 million from $98.0 million for 2Q08.
• Net loss for 2Q09 of $(5.1) million showed significant improvement when compared to a net loss for 2Q08 of $(89.2) million. Included in the net loss for 2Q09 are a non-cash store impairment charge of $7.5 million, a write-off of $2.9 million for loan fees and discounts relating to the payoff of our senior term note, offset by a gain from derivative liabilities of $1.4 million associated with senior note holder’s exercise of its’ put option and the June expiration of the Company’s warrants. Included in the net loss for 2Q08 are a non-cash charge of $49.7 million for trademark impairment, net of tax, and $3.3 million for store impairment charges, offset by $2.5 million in gain from derivative liabilities.
• Diluted loss per share for 2Q09 of $(0.10) compared to a diluted loss per share for 2Q08 of $(1.69).
• Company-owned comparable store sales for 2Q09 decreased 13.7%⁽¹⁾ ,which contributed to the decrease in store-level EBITDA.
• Six new franchise stores and no new Company-owned stores were opened during the fiscal second quarter of 2009, compared to 14 new Company-owned stores in fiscal second quarter of 2008. The total number of stores, net of any closures occurring during the period, increased to 735, comprised of 490 Company-owned stores and 245 franchise stores.

“We continued to make strong progress against our strategic initiatives in the second quarter despite a challenging operating environment. We successfully completed the sale of $35 million in convertible, preferred stock. The sale proceeds, which were used to repay our senior term note and eliminate all of our long-term debt, have strengthened our balance sheet. We expanded food into almost 300 locations and made good progress in our brand licensing initiative. We grew our franchise base and are making progress in our refranchising program. We also continue to advance our cost management initiatives,” said James D. White, president and chief executive officer, Jamba, Inc. “In the face of an intensely difficult macro-economic climate we implemented our BLEND plan which is mitigating some of the headwinds we face.”

“We are pleased with the initial response to the grab-and-go food offerings launched in June. Based on our preliminary analysis, our stores in California, which were the first to offer grab-and-go food items, are showing an increase in customer visits and average check. The introduction of great tasting, high quality, value-priced, better-for-you food is a game-changing proposition for Jamba and we are fully committed to its success. These foods are a great fit with the Jamba brand and a perfect compliment to our beverages. We recently expanded our food offering to the East Coast with the launch of our California Flatbreads™ into the New York City marketplace in July and, as we announced today, the launch of a full menu of offerings into the Chicago marketplace.”

“We’ve made good progress on our franchise development initiative. We opened six new franchise locations and are on pace with our plans to open 40 to 45 new outlets, primarily franchised locations, by year end. In July, we announced the sale of nine Company stores in Oregon to an existing franchisee, which followed the earlier sale in the first quarter of 2009, of 10 Company locations to an existing franchisee in Arizona. We expect to close a number of additional deals this year.”

“Our brand licensing activities are also on target. We are actively working with Nestlé on our Ready-To-Drink beverage re-launch and our branded products with Think Wow Toys and Oregon Ice Cream should be in retail before year end. We also announced last week a license agreement for Jamba-branded smoothie kits with The Inventure Group and are exploring a number of other opportunities,” concluded Mr. White.

Outlook

The Company is tracking against targeted 2009 expense goals as follows:

• Cost of sales at or below 26% of company store revenue;
• Labor costs at or below 34% of company store revenue;
• Other controllable expenses included in store operating, at or below 3.5% of company store revenue and
• General and administrative costs at or below $35 million, before share-based compensation expense

Additionally, the Company has plans to open 40 to 45 new franchise stores in 2009.

Liquidity

On June 16, 2009, the Company entered into an agreement for the sale of $35.0 million in convertible preferred stock. The proceeds of the stock sale were used to repay the Company’s senior term note and to provide additional working capital.

On July 14, 2009, the Company held $31.6 million in cash, cash equivalents, and restricted cash. Our restricted cash balanced was $2.7 million.

Footnotes

⁽¹⁾ Comparable store sales are calculated using sales of stores open at least thirteen full fiscal periods. Management reviews the increase or decrease in comparable store sales compared with the same period in the prior year to assess business trends and make certain business decisions.

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