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 fourth quarter and fiscal 2008 (period ended December 28, 2008).

FOURTH QUARTER 2008 HIGHLIGHTS

• Net income of $1.3 million compared to a net loss of $15.1 million in the fourth quarter of 2007
• Commercial and franchise sales increased 37.6 percent compared to the fourth quarter of 2007
• Opened 17 franchise coffeehouses

“We are managing our business during unprecedented economic times. We are executing on our strategy and I am pleased to report that we are making progress in our multi-year turnaround plan,” says Michael Tattersfield, president and CEO. “As we continue to focus on improving the existing store base, we intend to limit company-owned coffeehouse expansion in 2009. However, given the success we are having with our commercial and franchise business, we are moving forward with an additional 35 to 40 franchise units in 2009 that will bolster our brand equity.”

Consolidated net sales were $68.0 million for the quarter, a 3.0 percent decrease from the same period in the prior year. Within the retail segment, coffeehouse sales were $60.5 million in the fourth quarter 2008, a decrease of 6.5 percent from the same period in the prior year. The decrease primarily reflects a 5.1 percent decline in comparable coffeehouse net sales and 230 fewer operating coffeehouse weeks in the fourth quarter 2008, as compared to the same period in the prior year. The Company had fewer coffeehouse weeks from closing 25 coffeehouses while opening 7 during the year. In the commercial and franchise segments, sales were $7.6 million in the fourth quarter 2008, an increase of 37.6 percent over the fourth quarter 2007. The increase was due to higher sales from new and existing commercial customers, as well as royalties and product sales from 45 new franchise coffeehouses opened during the last 12 months, including 17 coffeehouse openings during the fourth quarter 2008.

Cost of sales and related occupancy costs in the fourth quarter of 2008 was $29.4 million and remained relatively flat for the quarter compared to the same period of the prior year. The increased product sales in the commercial and franchise segments offset the lower comparable coffeehouse product sales.

Operating expenses in the fourth quarter of 2008 were $24.5 million as compared to $27.4 million in the same period of the prior year. As a percentage of revenue, operating costs were 36.0 percent, down from 39.1 percent in the same period of the prior year. This decrease was the result of improved operating performance within the retail segment as well as having fewer operating coffeehouse weeks.

General and administrative expenses decreased $3.8 million, or 32.0 percent, to $8.0 million during the fourth quarter 2008. The decrease in general and administrative expenses was largely due to costs incurred in the fourth quarter 2007 related to severance costs for the Company’s former CEO and litigation settlement costs. As a percentage of revenue, G&A was 11.7 percent in fourth quarter 2008, down from 16.7 percent in fourth quarter 2007 due to the above-mentioned 2007 costs.

Store closing expense and disposal of assets decreased $2.5 million to $0.6 million during the fourth quarter 2008, from $3.1 million during the fourth quarter 2007. One coffeehouse closed during the fourth quarter 2008 as compared to eleven in the same period of the prior year.

Reported EBITDA was $6.1 million during the fourth quarter 2008, compared to an EBITDA loss of $1.4 million during the fourth quarter 2007. The $7.5 million increase in EBITDA is largely due to improved performance within our retail coffeehouses, continued growth in the commercial and franchise segments, lower retail segment store closing expenses and certain non-recurring items in the fourth quarter of fiscal 2007. (EBITDA is a non-GAAP measure. See EBITDA reconciliation at the end of this release).

Depreciation and amortization decreased $8.8 million, or 68.1 percent, to $4.2 million during the fourth quarter 2008, from $13.0 million during the same period in the prior year. The decrease was due to the impairment of company-owned coffeehouses during the fourth quarter 2007 and lower depreciable assets during 2008 from impairments over the last twelve months. Depreciation and amortization in the fourth quarter 2007 included $7.9 million in accelerated deprecation associated with the coffeehouse impairments.

The Company’s net income for the fourth quarter 2008 was $1.3 million or $0.07 per share compared to a net loss of $15.1 million or ($0.78) per share for the same period in 2007.