##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended June 29, 2008.
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from             to            .
 Commission File Number: 000-51535
 
 CARIBOU COFFEE COMPANY, INC.
 (Exact Name of Registrant as Specified in Its Charter)
 Minnesota
    
    41-1731219(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 3900 Lakebreeze Avenue North
    
    55429Brooklyn Center, Minnesota
    
    (Zip Code)(Address of principal executive offices)
 (763) 592-2200
 Not Applicable
 þ o
  Large
accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller Reporting Company
þ
 o þ
  Title
    
    Shares Outstanding as of July 24, 2008Common Stock, par value $0.01 per share
    
    19,370,590




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##### 



CARIBOU COFFEE COMPANY, INC.
 FORM 10-Q
 For the Thirteen Week Period Ended June 29, 2008
  
 Table of Contents
 PART I. FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Condensed Consolidated Statements of Operations
    
    
    3Condensed Consolidated Balance Sheets
    
    
    4Condensed Consolidated Statements of Cash Flows
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    29Item 4T. Controls and Procedures
    
    
    29PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    30Item 1A. Risk Factors
    
    
    31Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    31Item 3. Defaults Upon Senior Securities
    
    
    31Item 4. Submission of Matters to a Vote of Security Holders
    
    
    31Item 5. Other Information
    
    
    31Item 6. Exhibits
    
    
    32Signature
    
    
    33CertificationCertificationSection 1350 CertificationSection 1350 Certification
  2




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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 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 EndedJune 29,
    
    
    July 1,
    
    
    June 29,
    
    
    July 1,2008
    
    
    2007
    
    
    2008
    
    
    2007(Unaudited)Coffeehouse sales
    
    $
    57,267,099
    
    
    $
    59,331,262
    
    
    $
    113,887,162
    
    
    $
    117,407,226Other sales
    
    
    5,916,290
    
    
    
    3,516,123
    
    
    
    11,052,948
    
    
    
    7,292,789Total net sales
    
    
    63,183,389
    
    
    
    62,847,385
    
    
    
    124,940,110
    
    
    
    124,700,015Cost of sales and related occupancy costs
    
    
    27,004,012
    
    
    
    26,519,499
    
    
    
    53,216,720
    
    
    
    52,033,765Operating expenses
    
    
    25,815,112
    
    
    
    27,021,720
    
    
    
    51,209,974
    
    
    
    53,009,181Opening expenses
    
    
    50,425
    
    
    
    66,018
    
    
    
    135,452
    
    
    
    175,809Depreciation and amortization
    
    
    4,645,264
    
    
    
    5,985,216
    
    
    
    10,566,323
    
    
    
    12,002,800General and administrative expenses
    
    
    6,617,706
    
    
    
    7,153,341
    
    
    
    14,067,245
    
    
    
    13,757,563Closing expense and disposal of assets
    
    
    1,332,414
    
    
    
    133,886
    
    
    
    3,878,743
    
    
    
    860,864Operating loss
    
    
    (2,281,544
    )
    
    
    (4,032,295
    )
    
    
    (8,134,347
    )
    
    
    (7,139,967
    )Other income (expense):Interest income
    
    
    2,752
    
    
    
    45,899
    
    
    
    20,291
    
    
    
    79,136Interest 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
    
    
    
    81,534Net 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
  3




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##### Table of Contents



CARIBOU COFFEE COMPANY, INC. AND AFFILIATES
(A Majority Owned Subsidiary of Caribou Holding Company Limited)
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 June 29,
    
    
    December 30,2008
    
    
    2007(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    6,749,930
    
    
    $
    9,886,427Accounts
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
    
    
    
    3,116,864Other 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
    
    
    
    1,544,281Income tax receivable
    
    
    92,645
    
    
    
    149,304Inventories
    
    
    10,260,257
    
    
    
    10,228,527Prepaid expenses and other current assets
    
    
    841,412
    
    
    
    1,690,668Total current assets
    
    
    22,314,554
    
    
    
    26,616,071Property and equipment, net of accumulated depreciation and amortization
    
    
    74,403,518
    
    
    
    83,798,120Notes receivable
    
    
    24,237
    
    
    
    32,296Restricted cash
    
    
    12,229
    
    
    
    410,831Other assets
    
    
    532,300
    
    
    
    982,334Total assets
    
    $
    97,286,838
    
    
    $
    111,839,652LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    7,764,996
    
    
    $
    9,650,326Accrued compensation
    
    
    7,464,583
    
    
    
    7,863,445Accrued expenses
    
    
    7,032,004
    
    
    
    9,318,442Deferred revenue
    
    
    6,530,320
    
    
    
    9,987,724Total current liabilities
    
    
    28,791,903
    
    
    
    36,819,937Revolving credit facility
    
    
    3,000,000
    
    
    
    Asset retirement liability
    
    
    1,009,709
    
    
    
    989,490Deferred rent liability
    
    
    10,307,717
    
    
    
    11,271,186Deferred revenue
    
    
    2,742,000
    
    
    
    2,853,500Income tax liability
    
    
    477,710
    
    
    
    473,064Minority interests in affiliates
    
    
    73,575
    
    
    
    144,176Total long term liabilities
    
    
    17,610,711
    
    
    
    15,731,416Shareholders 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 and
December 30, 2007
    
    
    193,706
    
    
    
    193,706Additional paid-in capital
    
    
    124,665,330
    
    
    
    124,231,862Accumulated deficit
    
    
    (73,974,812
    )
    
    
    (65,137,269
    )Total shareholders equity
    
    
    50,884,224
    
    
    
    59,288,299Total liabilities and shareholders equity
    
    $
    97,286,838
    
    
    $
    111,839,652
  4




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CARIBOU COFFEE COMPANY, INC. AND AFFILIATES
(A Majority Owned Subsidiary of Caribou Holding Company Limited)
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Twenty-Six Weeks EndedJune 29,
    
    
    July 1,2008
    
    
    2007(Unaudited)Operating activitiesNet loss
    
    $
    (8,837,543
    )
    
    $
    (7,141,566
    )Adjustments to reconcile net loss to net cash (used) provided
by operating activities:Depreciation and amortization
    
    
    11,627,437
    
    
    
    13,109,014Amortization of deferred financing fees
    
    
    401,905
    
    
    
    172,196Minority interests in affiliates
    
    
    40,182
    
    
    
    81,534Provision for closing expense and asset disposals
    
    
    1,142,699
    
    
    
    369,255Share-based compensation
    
    
    302,794
    
    
    
    278,666Non cash accretion expense
    
    
    20,219
    
    
    
    54,404Shareholder contribution
    
    
    130,674
    
    
    
    Changes in operating assets and liabilities:Restricted cash
    
    
    398,602
    
    
    
    Accounts receivable and other receivables
    
    
    298,894
    
    
    
    (387,370
    )Income tax receivable
    
    
    56,659
    
    
    
    (151,569
    )Inventories
    
    
    (31,730
    )
    
    
    1,000,647Prepaid expenses and other assets
    
    
    897,385
    
    
    
    293,082Accounts payable
    
    
    (1,885,330
    )
    
    
    (3,183,108
    )Accrued compensation
    
    
    (398,862
    )
    
    
    580,457Accrued expenses and income tax liability
    
    
    (2,585,353
    )
    
    
    (848,598
    )Deferred revenue
    
    
    (3,568,904
    )
    
    
    (2,435,680
    )Net cash (used) provided by operating activities
    
    
    (1,990,272
    )
    
    
    1,791,364Investing activitiesPayments for property and equipment
    
    
    (4,035,442
    )
    
    
    (8,309,760
    )Net cash used in investing activities
    
    
    (4,035,442
    )
    
    
    (8,309,760
    )Financing activitiesBorrowings under revolving credit facility
    
    
    3,000,000
    
    
    
    Distribution of minority interests earnings
    
    
    (110,783
    )
    
    
    (91,942
    )Issuance of common stock
    
    
    
    
    
    
    223,837Net cash provided by financing activities
    
    
    2,889,217
    
    
    
    131,895Decrease in cash and cash equivalents
    
    
    (3,136,497
    )
    
    
    (6,386,501
    )Cash and cash equivalents at beginning of period
    
    
    9,886,427
    
    
    
    14,752,269Cash and cash equivalents at end of period
    
    $
    6,749,930
    
    
    $
    8,365,768Supplemental disclosure of cash flow informationNoncash financing and investing transactions:Accrual for leasehold improvements, furniture, and equipment
    
    $
    
    
    
    $
    446,606
  5




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CARIBOU COFFEE COMPANY, INC. AND AFFILIATES
 (A Majority Owned Subsidiary of Caribou Holding Company Limited)
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 1. Basis of Presentation
   Principles of Consolidation
  Use of Estimates
  Fiscal Year End
 
  6




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2. Summary of Significant Accounting Policies
 Revenue Recognition
     Operating Leases and Rent Expense
 Accounting for Leases, Accounting for Operating Leases With Scheduled Rent
Increases.
 3. Recent Accounting Pronouncements
 Fair Value Measurement
 The Fair Value Option for Financial Assets and
Financial Liabilities-Including an Amendment of FASB Statement No. 115
 7




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Noncontrolling Interests in Consolidated Financial
Statements
 4. Impairments, Coffeehouse Closings, Asset Disposals and Severance
    Thirteen Weeks Ended
    
    
    Twenty-Six Weeks EndedJune 29,
    
    
    July 1,
    
    
    June 29,
    
    
    July 1,2008
    
    
    2007
    
    
    2008
    
    
    2007Coffeehouse closures
    
    
    6
    
    
    
    6
    
    
    
    22
    
    
    
    8Amount charged to
operations for
closed
coffeehouses:Amount charged to
operations for
closed coffeehouses
lease reserve
non-cash
    
    $
    99,929
    
    
    $
    99,735
    
    
    $
    585,275
    
    
    $
    83,195Amount charged to
operations for
costs to
consolidate
facilities
    
    
    
    
    
    
    40,037
    
    
    
    
    
    
    
    80,073Amount charged to
operations for
lease costs
associated with
lease
termination-cash
    
    
    1,070,259
    
    
    
    (43,225
    )
    
    
    2,736,044
    
    
    
    491,609Total exit costs
    
    
    1,170,188
    
    
    
    96,547
    
    
    
    3,321,319
    
    
    
    654,877Net book value of
closed coffeehouse
property and
equipment
    
    
    162,226
    
    
    
    956
    
    
    
    557,424
    
    
    
    164,569Amount charged to
operations for
other property and
equipment
write-offs
    
    
    
    
    
    
    36,383
    
    
    
    
    
    
    
    41,418Coffeehouse closing
expense and
disposal of assets
    
    $
    1,332,414
    
    
    $
    133,886
    
    
    $
    3,878,743
    
    
    $
    860,864
  Balance at
    
    
    Additions
    
    
    DeductionsBeginning of
    
    
    Charged to
    
    
    from
    
    
    Balance atTwenty-Six Weeks Ended:
    
    Year
    
    
    Expense
    
    
    reserves
    
    
    End of QuarterJune 29, 2008Exit costs
    
    $
    466,768
    
    
    $
    3,352,193
    
    
    $
    2,749,552
    
    
    $
    1,069,409Severance
    
    
    1,353,000
    
    
    
    754,895
    
    
    
    180,387
    
    
    
    1,927,508Total
    
    $
    1,819,768
    
    
    $
    4,107,088
    
    
    $
    2,929,939
    
    
    $
    2,996,917
 8




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Balance at
    
    Additions
    
    DeductionsBeginning of
    
    Charged to
    
    from
    
    Balance atTwenty-Six Weeks Ended:
    
    Year
    
    Expense
    
    reserves
    
    End of QuarterJuly 1, 2007Exit costs
    
    $
    511,641
    
    
    $
    654,877
    
    
    $
    634,957
    
    
    $
    531,561
   5. Inventories
  June 29,
    
    
    December 30,2008
    
    
    2007(Unaudited)Coffee
    
    $
    4,025,051
    
    
    $
    3,485,133Other merchandise held for sale
    
    
    3,099,165
    
    
    
    4,345,584Supplies
    
    
    3,136,041
    
    
    
    2,397,810$
    10,260,257
    
    
    $
    10,228,527
  6. Equity and Share-Based Compensation
   Weighted
    
    
    WeightedAverage
    
    
    Average
    
    
    AggregateNumber of
    
    
    Exercise
    
    
    Contract
    
    
    IntrinsicShares
    
    
    Price
    
    
    Life
    
    
    ValueOutstanding, December 30, 2007
    
    
    2,570,746
    
    
    $
    7.46
    
    
    6.47 YrsGranted
    
    
    55,000
    
    
    $
    2.78Exercised
    
    
    
    
    
    $
    Forfeited
    
    
    (14,331
    )
    
    $
    8.11Outstanding, March 30, 2008
    
    
    2,611,415
    
    
    $
    7.35
    
    
    6.28 Yrs
    
    $
    
 9




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Weighted
    
    
    WeightedAverage
    
    
    Average
    
    
    AggregateNumber of
    
    
    Exercise
    
    
    Contract
    
    
    IntrinsicShares
    
    
    Price
    
    
    Life
    
    
    ValueGranted
    
    
    160,271
    
    
    $
    2.54Exercised
    
    
    
    
    
    $
    Forfeited
    
    
    (1,217,651
    )
    
    $
    7.04Outstanding, June 29, 2008
    
    
    1,554,035
    
    
    $
    7.10
    
    
    7.26 Yrs
    
    $
    Options vested at June 29, 2008
    
    
    761,089
    
    
    $
    7.53
    
    
    5.86 Yrs
    
    $
    
 7. Income Taxes
  8. Net Loss Per Share
  Thirteen Weeks Ended
    
    
    Twenty-Six Weeks EndedJune 29,
    
    
    July 1,
    
    
    June 29
    
    
    July 1,2008
    
    
    2007
    
    
    2008
    
    
    2007Net loss
    
    $
    (2,431,560
    )
    
    $
    (3,890,516
    )
    
    $
    (8,837,543
    )
    
    $
    (7,141,566
    )Weighted average common shares
outstanding (for basic and diluted
calculation)
    
    
    19,370,590
    
    
    
    19,320,055
    
    
    
    19,370,590
    
    
    
    19,304,035Basic and diluted net loss per share
    
    $
    (0.13
    )
    
    $
    (0.20
    )
    
    $
    (0.46
    )
    
    $
    (0.37
    )
  9.  Master Franchise Agreement
     10




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10. Note Payable and Revolving Credit Facility
  11. Commitments and Contingencies
     11




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12. Segment Reporting
  Retail
  Commercial
  Franchise
   12




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##### Table of Contents



Thirteen weeks ended June 29, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unallocated(in thousands)
    
    Retail
    
    
    Commercial
    
    
    Franchise
    
    
    Corporate
    
    
    TotalTotal net sales
    
    $
    57,267
    
    
    $
    4,484
    
    
    $
    1,432
    
    
    $
    
    
    
    $
    63,183Costs of sales and related occupancy costs
    
    
    23,419
    
    
    
    2,882
    
    
    
    703
    
    
    
    
    
    
    
    27,004Operating expenses
    
    
    24,935
    
    
    
    480
    
    
    
    400
    
    
    
    
    
    
    
    25,815Opening expenses
    
    
    25
    
    
    
    
    
    
    
    26
    
    
    
    
    
    
    
    51Depreciation and amortization
    
    
    4,637
    
    
    
    7
    
    
    
    1
    
    
    
    
    
    
    
    4,645General and administrative expenses
    
    
    2,272
    
    
    
    
    
    
    
    
    
    
    
    4,346
    
    
    
    6,618Closing expense and disposal of assets
    
    
    1,229
    
    
    
    
    
    
    
    
    
    
    
    103
    
    
    
    1,332Operating income (loss)
    
    $
    750
    
    
    $
    1,115
    
    
    $
    302
    
    
    $
    (4,449
    )
    
    $
    (2,282
    )Identifiable assets
    
    $
    64,669
    
    
    $
    75
    
    
    $
    15
    
    
    $
    9,645
    
    
    $
    74,404Net impairment
    
    $
    238
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    238
 Thirteen weeks ended July 1, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unallocated(in thousands)
    
    Retail
    
    
    Commercial
    
    
    Franchise
    
    
    Corporate
    
    
    TotalTotal net sales
    
    $
    59,330
    
    
    $
    2,681
    
    
    $
    836
    
    
    $
    
    
    
    $
    62,847Costs of sales and related occupancy costs
    
    
    24,268
    
    
    
    1,843
    
    
    
    408
    
    
    
    
    
    
    
    26,519Operating expenses
    
    
    26,251
    
    
    
    486
    
    
    
    285
    
    
    
    
    
    
    
    27,022Opening expenses
    
    
    74
    
    
    
    
    
    
    
    (8
    )
    
    
    
    
    
    
    66Depreciation and amortization
    
    
    5,977
    
    
    
    6
    
    
    
    2
    
    
    
    
    
    
    
    5,985General and administrative expenses
    
    
    2,537
    
    
    
    
    
    
    
    
    
    
    
    4,616
    
    
    
    7,153Closing expense and disposal of assets
    
    
    134
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    134Operating income (loss)
    
    $
    89
    
    
    $
    346
    
    
    $
    149
    
    
    $
    (4,616
    )
    
    $
    (4,032
    )Identifiable assets
    
    $
    88,019
    
    
    $
    76
    
    
    $
    22
    
    
    $
    10,403
    
    
    $
    98,520Net impairment
    
    $
    510
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    510


13



---



##### Table of Contents



Twenty-six weeks ended June 29, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unallocated(in thousands)
    
    Retail
    
    
    Commercial
    
    
    Franchise
    
    
    Corporate
    
    
    TotalTotal net sales
    
    $
    113,887
    
    
    $
    8,034
    
    
    $
    3,019
    
    
    $
    
    
    
    $
    124,940Costs of sales and related occupancy costs
    
    
    46,719
    
    
    
    4,913
    
    
    
    1,585
    
    
    
    
    
    
    
    53,217Operating expenses
    
    
    49,423
    
    
    
    979
    
    
    
    808
    
    
    
    
    
    
    
    51,210Opening expenses
    
    
    110
    
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    135Depreciation and amortization
    
    
    10,550
    
    
    
    13
    
    
    
    3
    
    
    
    
    
    
    
    10,566General and administrative expenses
    
    
    4,780
    
    
    
    
    
    
    
    
    
    
    
    9,287
    
    
    
    14,067Closing expense and disposal of assets
    
    
    3,767
    
    
    
    
    
    
    
    
    
    
    
    112
    
    
    
    3,879Operating (loss) income
    
    $
    (1,462
    )
    
    $
    2,129
    
    
    $
    598
    
    
    $
    (9,399
    )
    
    $
    (8,134
    )Identifiable assets
    
    $
    64,669
    
    
    $
    75
    
    
    $
    15
    
    
    $
    9,645
    
    
    $
    74,404Net impairment
    
    $
    1,717
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,717
 Twenty-six weeks ended July 1, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unallocated(in thousands)
    
    Retail
    
    
    Commercial
    
    
    Franchise
    
    
    Corporate
    
    
    TotalTotal net sales
    
    $
    117,407
    
    
    $
    5,182
    
    
    $
    2,111
    
    
    $
    
    
    
    $
    124,700Costs of sales and related occupancy costs
    
    
    47,588
    
    
    
    3,337
    
    
    
    1,109
    
    
    
    
    
    
    
    52,034Operating expenses
    
    
    51,398
    
    
    
    992
    
    
    
    619
    
    
    
    
    
    
    
    53,009Opening expenses
    
    
    166
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    176Depreciation and amortization
    
    
    11,986
    
    
    
    12
    
    
    
    5
    
    
    
    
    
    
    
    12,003General and administrative expenses
    
    
    4,912
    
    
    
    
    
    
    
    
    
    
    
    8,845
    
    
    
    13,757Closing expense and disposal of assets
    
    
    861
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    861Operating income (loss)
    
    $
    496
    
    
    $
    841
    
    
    $
    368
    
    
    $
    (8,845
    )
    
    $
    (7,140
    )Identifiable assets
    
    $
    88,019
    
    
    $
    76
    
    
    $
    22
    
    
    $
    10,403
    
    
    $
    98,520Net impairment
    
    $
    923
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    923
  14




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  FORWARD-LOOKING STATEMENTS
  Overview
    Critical Accounting Policies
  15




---



##### Table of Contents



Fiscal Periods
   Thirteen Weeks Ended June 29, 2008 vs. Thirteen Weeks Ended July 1, 2007
 Results of Operations
 :
 Thirteen Weeks Ended
    
    
    
    
    
    
    Thirteen Weeks EndedJune 29,
    
    
    July 1,
    
    
    %
    
    
    June 29,
    
    
    July 1,2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007(In thousands)
    
    
    
    
    
    
    As a % of total net salesStatement of Operations Data:Net sales:Coffeehouse
    
    $
    57,267
    
    
    $
    59,331
    
    
    
    (3.5
    )%
    
    
    90.6
    %
    
    
    94.4
    %Other
    
    
    5,916
    
    
    
    3,516
    
    
    
    68.3
    %
    
    
    9.4
    %
    
    
    5.6
    %Total net sales
    
    
    63,183
    
    
    
    62,847
    
    
    
    0.5
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales and related occupancy costs
    
    
    27,004
    
    
    
    26,519
    
    
    
    1.8
    %
    
    
    42.7
    %
    
    
    42.2
    %Operating expenses
    
    
    25,815
    
    
    
    27,022
    
    
    
    (4.5
    )%
    
    
    40.8
    %
    
    
    43.0
    %Opening expenses
    
    
    51
    
    
    
    66
    
    
    
    (22.7
    )%
    
    
    0.1
    %
    
    
    0.1
    %Depreciation and amortization
    
    
    4,645
    
    
    
    5,985
    
    
    
    (22.4
    )%
    
    
    7.4
    %
    
    
    9.5
    %General and administrative expenses
    
    
    6,618
    
    
    
    7,153
    
    
    
    (7.5
    )%
    
    
    10.5
    %
    
    
    11.4
    %Closing expense and disposal of assets
    
    
    1,332
    
    
    
    134
    
    
    
    894.0
    %
    
    
    2.1
    %
    
    
    0.2
    %Operating loss
    
    
    (2,282
    )
    
    
    (4,032
    )
    
    
    43.4
    %
    
    
    (3.6
    )%
    
    
    (6.4
    )%Other income (expense):Interest income
    
    
    3
    
    
    
    46
    
    
    
    (93.5
    )%
    
    
    
    %
    
    
    0.1
    %Interest expense
    
    
    (122
    )
    
    
    (166
    )
    
    
    (26.5
    )%
    
    
    (0.2
    )%
    
    
    (0.3
    )%Loss before provision for income taxes
and minority interest
    
    
    (2,401
    )
    
    
    (4,152
    )
    
    
    42.2
    %
    
    
    (3.8
    )%
    
    
    (6.6
    )%Provision (benefit) for income taxes
    
    
    44
    
    
    
    (316
    )
    
    
    (113.9
    )%
    
    
    0.0
    %
    
    
    (0.5
    )%Loss before minority interest
    
    
    (2,445
    )
    
    
    (3,836
    )
    
    
    36.3
    %
    
    
    (3.8
    )%
    
    
    (6.1
    )%Minority interest
    
    
    (13
    )
    
    
    54
    
    
    
    124.1
    %
    
    
    0.0
    %
    
    
    0.1
    %Net loss
    
    $
    (2,432
    )
    
    $
    (3,890
    )
    
    
    37.5
    %
    
    
    (3.8
    )%
    
    
    (6.2
    )%
 Net Sales
  16




---



##### Table of Contents



Costs and Expenses
 Cost of sales and related occupancy costs.
 Operating expenses.
 Opening expenses.
 Depreciation and amortization.
 General and administrative expenses.
 Closing expenses and disposal of assets.
 Interest income.
 Interest expense.
 17




---



##### Table of Contents



Operating Segments
  Retail
 13 Weeks Ended
    
    
    13 Weeks EndedJune 29,
    
    
    July 1,
    
    
    %
    
    
    June 29,
    
    
    July 1,2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007(In thousands)
    
    
    
    
    
    
    As a % of coffeehouse salesCoffeehouse sales
    
    $
    57,267
    
    
    $
    59,330
    
    
    
    (3.5
    )%
    
    
    100.0
    %
    
    
    100.0
    %Costs of sales and related occupancy costs
    
    
    23,419
    
    
    
    24,268
    
    
    
    (3.5
    )%
    
    
    40.9
    %
    
    
    40.9
    %Operating expenses
    
    
    24,935
    
    
    
    26,251
    
    
    
    (5.0
    )%
    
    
    43.5
    %
    
    
    44.2
    %Opening expenses
    
    
    25
    
    
    
    74
    
    
    
    (66.2
    )%
    
    
    0.1
    %
    
    
    0.1
    %Depreciation and amortization
    
    
    4,637
    
    
    
    5,977
    
    
    
    (22.4
    )%
    
    
    8.1
    %
    
    
    10.1
    %General and administrative expenses
    
    
    2,272
    
    
    
    2,537
    
    
    
    (10.4
    )%
    
    
    4.0
    %
    
    
    4.3
    %Closing expense and disposal of assets
    
    
    1,229
    
    
    
    134
    
    
    
    817.2
    %
    
    
    2.1
    %
    
    
    0.2
    %Operating income
    
    $
    750
    
    
    $
    89
    
    
    
    742.7
    %
    
    
    1.3
    %
    
    
    0.2
    %
  Coffeehouse sales
  Costs and Expenses
 Cost of sales and related occupancy costs.
 Operating expenses.
 Depreciation and amortization.
 18




---



##### Table of Contents



General and administrative expenses.
 Closing expense and disposal of assets.
  Commercial
 13 Weeks Ended
    
    
    13 Weeks EndedJune 29,
    
    
    July 1,
    
    
    %
    
    
    June 29,
    
    
    July 1,2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007(In thousands)
    
    
    
    
    
    
    As a % of commercial salesSales
    
    $
    4,484
    
    
    $
    2,681
    
    
    
    67.3
    %
    
    
    100.0
    %
    
    
    100.0
    %Costs of sales and related occupancy costs
    
    
    2,882
    
    
    
    1,843
    
    
    
    56.4
    %
    
    
    64.3
    %
    
    
    68.7
    %Operating expenses
    
    
    480
    
    
    
    486
    
    
    
    (1.2
    )%
    
    
    10.7
    %
    
    
    18.2
    %Depreciation and amortization
    
    
    7
    
    
    
    6
    
    
    
    16.7
    %
    
    
    0.1
    %
    
    
    0.2
    %Operating income
    
    $
    1,115
    
    
    $
    346
    
    
    
    222.3
    %
    
    
    24.9
    %
    
    
    12.9
    %
  Sales
  Costs and Expenses
 Cost of sales and related occupancy costs.
 Operating expenses.
 19




---



##### Table of Contents



Franchise
 13 Weeks Ended
    
    
    13 Weeks EndedJune 29,
    
    
    July 1,
    
    
    %
    
    
    June 29,
    
    
    July 1,2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007(In thousands)
    
    
    
    
    
    
    As a % of franchise salesSales
    
    $
    1,432
    
    
    $
    836
    
    
    
    71.3
    %
    
    
    100.0
    %
    
    
    100.0
    %Costs of sales and related occupancy costs
    
    
    703
    
    
    
    408
    
    
    
    72.3
    %
    
    
    49.1
    %
    
    
    48.8
    %Operating expenses
    
    
    400
    
    
    
    285
    
    
    
    40.4
    %
    
    
    27.9
    %
    
    
    34.1
    %Opening expenses
    
    
    26
    
    
    
    (8
    )
    
    
    (425.0
    )%
    
    
    1.8
    %
    
    
    (1.0
    )%Depreciation and amortization
    
    
    1
    
    
    
    2
    
    
    
    (50.0
    )%
    
    
    0.1
    %
    
    
    0.3
    %Operating income
    
    $
    302
    
    
    $
    149
    
    
    
    102.7
    %
    
    
    21.1
    %
    
    
    17.8
    %
  Sales
  Costs and Expenses
 Cost of sales and related occupancy costs.
 Operating expenses.
 Opening expenses.
 20




---



##### Table of Contents



Unallocated Corporate
 13 Weeks Ended
    
    
    13 Weeks EndedJune 29,
    
    
    July 1,
    
    
    %
    
    
    June 29,
    
    
    July 1,2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007(In thousands)
    
    
    
    
    
    
    As a % of total net salesGeneral and administrative expenses
    
    $
    4,346
    
    
    $
    4,616
    
    
    
    (5.8
    )%
    
    
    6.9
    %
    
    
    7.3
    %Closing expense and disposal of assets
    
    
    103
    
    
    
    
    
    
    
    n/a
    
    
    
    0.1
    %
    
    
    
    %Operating (loss)
    
    $
    (4,449
    )
    
    $
    (4,616
    )
    
    
    3.6
    %
    
    
    (7.0
    )%
    
    
    (7.3
    )%
 General and administrative expenses.
 Twenty-Six Weeks Ended June 29, 2008 vs. Twenty-Six Weeks Ended July 1, 2007
 Results of Operations
 :
 Twenty-Six Weeks Ended
    
    
    
    
    
    
    Twenty-Six Weeks EndedJune 29,
    
    
    July 1,
    
    
    %
    
    
    June 29,
    
    
    July 1,2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007(In thousands)
    
    
    
    
    
    
    As a % of total net salesStatement of Operations Data:Net sales:Coffeehouse
    
    $
    113,887
    
    
    $
    117,407
    
    
    
    (3.0
    )%
    
    
    91.2
    %
    
    
    94.2
    %Other
    
    
    11,053
    
    
    
    7,293
    
    
    
    51.6
    %
    
    
    8.8
    %
    
    
    5.8
    %Total net sales
    
    
    124,940
    
    
    
    124,700
    
    
    
    0.2
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales and related occupancy costs
    
    
    53,217
    
    
    
    52,034
    
    
    
    2.3
    %
    
    
    42.6
    %
    
    
    41.7
    %Operating expenses
    
    
    51,210
    
    
    
    53,009
    
    
    
    (3.4
    )%
    
    
    41.0
    %
    
    
    42.5
    %Opening expenses
    
    
    135
    
    
    
    176
    
    
    
    (23.3
    )%
    
    
    0.1
    %
    
    
    0.1
    %Depreciation and amortization
    
    
    10,566
    
    
    
    12,003
    
    
    
    (12.0
    )%
    
    
    8.4
    %
    
    
    9.7
    %General and administrative expenses
    
    
    14,067
    
    
    
    13,757
    
    
    
    2.3
    %
    
    
    11.3
    %
    
    
    11.0
    %Closing expense and disposal of assets
    
    
    3,879
    
    
    
    861
    
    
    
    350.5
    %
    
    
    3.1
    %
    
    
    0.7
    %Operating loss
    
    
    (8,134
    )
    
    
    (7,140
    )
    
    
    13.9
    %
    
    
    (6.5
    )%
    
    
    (5.7
    )%Other income (expense):Interest income
    
    
    20
    
    
    
    79
    
    
    
    (74.7
    )%
    
    
    
    %
    
    
    0.0
    %Interest expense
    
    
    (634
    )
    
    
    (295
    )
    
    
    114.9
    %
    
    
    (0.5
    )%
    
    
    (0.2
    )%Loss before provision for income taxes
and minority interest
    
    
    (8,748
    )
    
    
    (7,356
    )
    
    
    18.9
    %
    
    
    (7.0
    )%
    
    
    (5.9
    )%Provision (benefit) for income taxes
    
    
    50
    
    
    
    (296
    )
    
    
    (116.9
    )%
    
    
    0.0
    %
    
    
    (0.2
    )%Loss before minority interest
    
    
    (8,798
    )
    
    
    (7,060
    )
    
    
    24.6
    %
    
    
    (7.0
    )%
    
    
    (5.7
    )%Minority interest
    
    
    40
    
    
    
    82
    
    
    
    (51.2
    )%
    
    
    0.0
    %
    
    
    0.0
    %Net loss
    
    $
    (8,838
    )
    
    $
    (7,142
    )
    
    
    23.7
    %
    
    
    (7.0
    )%
    
    
    (5.7
    )%
 Net Sales
  21




---



##### Table of Contents



Costs and Expenses
 Cost of sales and related occupancy costs.
 Operating expenses.
 Opening expenses.
 Depreciation and amortization.
 General and administrative expenses.
 Closing expenses and disposal of assets.
 22




---



##### Table of Contents



Interest income.
 Interest expense.
 Operating Segments
  Retail
 26 Weeks Ended
    
    
    26 Weeks EndedJune 29,
    
    
    July 1,
    
    
    %
    
    
    June 29,
    
    
    July 1,2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007(In thousands)
    
    
    
    
    
    
    As a % of coffeehouse salesCoffeehouse sales
    
    $
    113,887
    
    
    $
    117,407
    
    
    
    (3.0
    )%
    
    
    100.0
    %
    
    
    100.0
    %Costs of sales and related occupancy costs
    
    
    46,719
    
    
    
    47,588
    
    
    
    (1.8
    )%
    
    
    41.0
    %
    
    
    40.5
    %Operating expenses
    
    
    49,423
    
    
    
    51,398
    
    
    
    (3.8
    )%
    
    
    43.4
    %
    
    
    43.8
    %Opening expenses
    
    
    110
    
    
    
    166
    
    
    
    (33.7
    )%
    
    
    0.1
    %
    
    
    0.2
    %Depreciation and amortization
    
    
    10,550
    
    
    
    11,986
    
    
    
    (12.0
    )%
    
    
    9.3
    %
    
    
    10.2
    %General and administrative expenses
    
    
    4,780
    
    
    
    4,912
    
    
    
    (2.7
    )%
    
    
    4.2
    %
    
    
    4.2
    %Closing expense and disposal of assets
    
    
    3,767
    
    
    
    861
    
    
    
    337.4
    %
    
    
    3.3
    %
    
    
    0.7
    %Operating (loss) income
    
    $
    (1,462
    )
    
    $
    496
    
    
    
    (394.8
    )%
    
    
    (1.3
    )%
    
    
    0.4
    %
  Coffeehouse sales
  Costs and Expenses
 Cost of sales and related occupancy costs.
 23




---



##### Table of Contents



Operating expenses.
 Depreciation and amortization.
 General and administrative expenses.
 Closing expense and disposal of assets.
 Commercial
 26 Weeks Ended
    
    
    26 Weeks EndedJune 29,
    
    
    July 1,
    
    
    %
    
    
    June 29,
    
    
    July 1,2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007(In thousands)
    
    
    
    
    
    
    As a % of commercial salesSales
    
    $
    8,034
    
    
    $
    5,182
    
    
    
    55.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Costs of sales and related occupancy costs
    
    
    4,913
    
    
    
    3,337
    
    
    
    47.3
    %
    
    
    61.1
    %
    
    
    64.4
    %Operating expenses
    
    
    979
    
    
    
    992
    
    
    
    (1.3
    )%
    
    
    12.2
    %
    
    
    19.2
    %Depreciation and amortization
    
    
    13
    
    
    
    12
    
    
    
    8.3
    %
    
    
    0.2
    %
    
    
    0.2
    %Operating income
    
    $
    2,129
    
    
    $
    841
    
    
    
    153.2
    %
    
    
    26.5
    %
    
    
    16.2
    %
  Sales
  24




---



##### Table of Contents



Costs and Expenses
 Cost of sales and related occupancy costs.
 Franchise
 26 Weeks Ended
    
    
    26 Weeks EndedJune 29,
    
    
    July 1,
    
    
    %
    
    
    June 29,
    
    
    July 1,2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007(In thousands)
    
    
    
    
    
    
    As a % of franchise salesSales
    
    $
    3,019
    
    
    $
    2,111
    
    
    
    43.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Costs of sales and related occupancy costs
    
    
    1,585
    
    
    
    1,109
    
    
    
    42.9
    %
    
    
    52.5
    %
    
    
    52.6
    %Operating expenses
    
    
    808
    
    
    
    619
    
    
    
    30.5
    %
    
    
    26.8
    %
    
    
    29.3
    %Opening expenses
    
    
    25
    
    
    
    10
    
    
    
    150.0
    %
    
    
    0.8
    %
    
    
    0.5
    %Depreciation and amortization
    
    
    3
    
    
    
    5
    
    
    
    (40.0
    )%
    
    
    0.1
    %
    
    
    0.2
    %Operating income
    
    $
    598
    
    
    $
    368
    
    
    
    62.5
    %
    
    
    19.8
    %
    
    
    17.4
    %
  Sales
  Costs and Expenses
 Cost of sales and related occupancy costs.
 Operating expenses.
 25




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Unallocated Corporate
 26 Weeks Ended
    
    
    26 Weeks EndedJune 29,
    
    
    July 1,
    
    
    %
    
    
    June 29,
    
    
    July 1,2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007(In thousands)
    
    
    
    
    
    
    As a % of total net salesGeneral and administrative expenses
    
    $
    9,287
    
    
    $
    8,845
    
    
    
    5.0
    %
    
    
    7.4
    %
    
    
    7.1
    %Closing expense and disposal of assets
    
    
    112
    
    
    
    
    
    
    
    n/a
    
    
    
    0.1
    %
    
    
    
    %Operating (loss)
    
    $
    (9,399
    )
    
    $
    (8,845
    )
    
    
    (6.3
    )%
    
    
    (7.5
    )%
    
    
    (7.1
    )%
 General and administrative expenses.
 Liquidity and Capital Resources
  Twenty-Six Weeks EndedJune 29,
    
    
    July 1,
    
    
    Increase /2008
    
    
    2007
    
    
    (Decrease)(In thousands)Net cash (used) provided by operating activities
    
    $
    (1,990
    )
    
    $
    1,791
    
    
    $
    (3,781
    )Net cash used in investing activities
    
    
    (4,035
    )
    
    
    (8,310
    )
    
    
    4,275Net cash provided by financing activities
    
    
    2,889
    
    
    
    132
    
    
    
    2,757Net change in cash and cash equivalents
    
    $
    (3,136
    )
    
    $
    (6,387
    )
    
    $
    3,251
   26




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##### Table of Contents



Off-Balance Sheet Arrangements
  Recent Accounting Pronouncements
 Fair Value Measurement
 The Fair Value Option for Financial Assets and
Financial Liabilities-Including an Amendment of FASB Statement No. 115
 27




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##### Table of Contents



Noncontrolling Interests in Consolidated Financial
Statements
 Key Financial Metrics
   Thirteen Weeks Ended
    
    
    Twenty-Six Weeks EndedJune 29, 2008
    
    
    July 1, 2007
    
    
    June 29, 2008
    
    
    July 1, 2007(In thousands, except operating data)Non-GAAP Metrics:EBITDA(1)
    
    $
    2,938
    
    
    $
    2,440
    
    
    $
    3,453
    
    
    $
    5,888Operating Data:Percentage change in comparable
coffeehouse net sales(2)
    
    
    (1.7
    %)
    
    
    1
    %
    
    
    (2.0
    %)
    
    
    0
    %Company-Owned:Coffeehouses open at beginning of period
    
    
    421
    
    
    
    442
    
    
    
    432
    
    
    
    440Coffeehouses opened during the period
    
    
    0
    
    
    
    5
    
    
    
    5
    
    
    
    9Coffeehouses closed during the period
    
    
    6
    
    
    
    6
    
    
    
    22
    
    
    
    8Coffeehouses open at end of period:Total Company-Owned
    
    
    415
    
    
    
    441
    
    
    
    415
    
    
    
    441Franchised:Coffeehouses open at beginning of period
    
    
    63
    
    
    
    33
    
    
    
    52
    
    
    
    24Coffeehouses opened during the period
    
    
    12
    
    
    
    6
    
    
    
    23
    
    
    
    15Coffeehouses closed during the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Coffeehouses open at end of period:Total Franchised
    
    
    75
    
    
    
    39
    
    
    
    75
    
    
    
    39Total coffeehouses open at end of period
    
    
    490
    
    
    
    480
    
    
    
    490
    
    
    
    480
 
 (1)
    
    See reconciliation and discussion of non-GAAP measures which follow at the end of this
section.(2)
    
    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.  28




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##### Table of Contents




    
    Our coffeehouse leases are generally short-term (5-10 years), and we 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). We opened a net 212 company-owned coffeehouses from the
beginning of fiscal 2003 through the end of the first twenty-six weeks of fiscal 2008. As a
result, we believe depreciation expense is disproportionately large when compared to the
sales from a significant percentage of our 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, we believe that adjusting
for depreciation and amortization is useful for evaluating the operating performance of our
coffeehouses.
  
    
    As a measurement of operating performance because it assists us in comparing our
operating performance on a consistent basis, as it removes the impact of items not directly
resulting from our 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 our capacity to incur and service debt, fund capital expenditures and
expand our business.
  Thirteen Weeks Ended
    
    
    Twenty-Six Weeks EndedJune 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
    
    
    
    295Interest income
    
    
    (3
    )
    
    
    (46
    )
    
    
    (20
    )
    
    
    (79
    )Depreciation and
amortization(1)
    
    
    5,207
    
    
    
    6,526
    
    
    
    11,627
    
    
    
    13,110Provision (benefit)
for income taxes
    
    
    44
    
    
    
    (316
    )
    
    
    50
    
    
    
    (296
    )EBITDA
    
    $
    2,938
    
    
    $
    2,440
    
    
    $
    3,453
    
    
    $
    5,888
 
 (1)
    
    Includes depreciation and amortization associated with our headquarters and roasting facility
that are categorized as general and administrative expenses and cost of sales and related
occupancy costs on our statement of operations. 
 Item 3. Quantitative and Qualitative Disclosures about Market Risks.
  
 Item 4T. Controls and Procedures.
  29




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
      30




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##### Table of Contents



Item 1A. Risk Factors.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
 Unregistered Sales of Equity Securities
  Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information.
  31




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##### Table of Contents



Item 6. Exhibits.
 3.1*
    
    Form of Amended and Restated Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to the Companys
Registration Statement of Form S-1/A filed August 25, 2005).3.2*
    
    Form of Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.2 to the Companys Registration Statement of
Form S-1/A filed August 25, 2005).4.1*
    
    Form of Registrants Common Stock Certificate (incorporated by
reference to Exhibit 4.1 to the Companys Registration Statement of
Form S-1/A filed September 6, 2005).31.1
    
    Certification Pursuant to Rule 13a  14(a), as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification Pursuant to Rule 13a  14(a), as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification Pursuant to 18 U.S. C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification Pursuant to 18 U.S. C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
  32




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##### Table of Contents



SIGNATURE
  CARIBOU COFFEE COMPANY, INC.By:
    /s/ Michael TattersfieldMichael TattersfieldChief Executive Officer and President  33