##### 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 April 4, 2010.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(State or other jurisdiction of 
incorporation or organization)
    
    41-1731219(I.R.S. Employer
Identification No.)3900 Lakebreeze Avenue North 
Brooklyn Center, Minnesota(Address of principal executive offices)
    
    55429(Zip Code)
 : (763) 592-2200
 þ o
 o o
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
    
    Smaller Reporting Company þ(Do not check if a smaller reporting company)
 o þ




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##### 



CARIBOU COFFEE COMPANY, INC.
 FORM 10-Q
 For the Thirteen Week Period Ended April 4, 2010
  
 Table of Contents
 PART I. FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Condensed Consolidated Statements of Operations
    
    
    3Condensed Consolidated Balance Sheets
    
    
    4Condensed Consolidated Statement of Changes in Equity
    
    
    5Condensed Consolidated Statements of Cash Flows
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    23Item 4T. Controls and Procedures
    
    
    23PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    24Item 1A. Risk Factors
    
    
    24Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    24Item 3. Defaults Upon Senior Securities
    
    
    24Item 4. Submission of Matters to a Vote of Security Holders
    
    
    24Item 5. Other Information
    
    
    24Item 6. Exhibits
    
    
    25Signature
    
    
    26EX-10.14EX-10.15EX-31.1EX-31.2EX-32.1EX-32.2
   2




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##### Table of Contents



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 EndedApril 4,
    
    
    March 29,2010
    
    
    2009(In thousands, except for per share amounts)(Unaudited)Coffeehouse sales
    
    $
    55,597
    
    
    $
    52,864Commercial and franchise sales
    
    
    11,454
    
    
    
    7,516Total net sales
    
    
    67,051
    
    
    
    60,380Cost of sales and related occupancy costs
    
    
    31,399
    
    
    
    26,252Operating expenses
    
    
    24,962
    
    
    
    23,405Depreciation and amortization
    
    
    3,145
    
    
    
    3,741General and administrative expenses
    
    
    6,509
    
    
    
    6,606Operating income
    
    
    1,036
    
    
    
    376Other income (expense):Interest income
    
    
    5
    
    
    
    Interest expense
    
    
    (106
    )
    
    
    (58
    )Income before benefit from income taxes
    
    
    935
    
    
    
    318Benefit from income taxes
    
    
    157
    
    
    
    101Net income
    
    
    1,092
    
    
    
    419Less: Net income attributable to noncontrolling interest
    
    
    54
    
    
    
    73Net Income attributable to Caribou Coffee Company, Inc
    
    $
    1,038
    
    
    $
    346Basic net income attributable to Caribou Coffee Company,
Inc. common shareholders per share
    
    $
    0.05
    
    
    $
    0.02Diluted net income (loss) attributable to Caribou Coffee
Company, Inc. common shareholders per share
    
    $
    0.05
    
    
    $
    0.02Basic weighted average number of shares outstanding
    
    
    19,509
    
    
    
    19,371Diluted weighted average number of shares outstanding
    
    
    20,313
    
    
    
    19,526
  3




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CARIBOU COFFEE COMPANY, INC. AND AFFILIATES
(A Majority Owned Subsidiary of Caribou Holding Company Limited)
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 April 4,
    
    
    January 3,2010
    
    
    2010In thousands, except per share amounts(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    17,728
    
    
    $
    23,578Accounts receivable (net of allowance for doubtful accounts of $20 and
$3 at April 4, 2010 and January 3, 2010, respectively)
    
    
    6,599
    
    
    
    5,887Other receivables (net of allowance for doubtful accounts of $134 and
$128 at April 4, 2010 and January 3, 2010, respectively)
    
    
    1,306
    
    
    
    1,268Income tax receivable
    
    
    204
    
    
    
    193Inventories
    
    
    18,900
    
    
    
    13,278Prepaid expenses and other current assets
    
    
    1,310
    
    
    
    1,546Total current assets
    
    
    46,047
    
    
    
    45,750Property and equipment, net of accumulated depreciation and amortization
    
    
    44,323
    
    
    
    47,135Restricted cash
    
    
    604
    
    
    
    605Other assets
    
    
    519
    
    
    
    237Total assets
    
    $
    91,493
    
    
    $
    93,727LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    10,328
    
    
    $
    9,042Accrued compensation
    
    
    5,104
    
    
    
    6,296Accrued expenses
    
    
    6,908
    
    
    
    7,563Deferred revenue
    
    
    6,558
    
    
    
    8,747Total current liabilities
    
    
    28,898
    
    
    
    31,648Asset retirement liability
    
    
    1,139
    
    
    
    1,120Deferred rent liability
    
    
    7,415
    
    
    
    7,955Deferred revenue
    
    
    2,072
    
    
    
    2,072Income tax liability
    
    
    10
    
    
    
    156Total long term liabilities
    
    
    10,636
    
    
    
    11,303Equity:Caribou Coffee Company, Inc. Shareholders equity:Preferred stock, par value $.01, 20,000 shares authorized; no shares
issued and outstanding
    
    
    
    
    
    
    Common stock, par value $.01, 200,000 shares authorized; 20,014 and
19,814 shares issued and outstanding at April 4, 2010 and January 3,
2010, respectively
    
    
    200
    
    
    
    198Additional paid-in capital
    
    
    126,974
    
    
    
    126,770Accumulated comprehensive loss
    
    
    (25
    )
    
    
    (7
    )Accumulated deficit
    
    
    (75,303
    )
    
    
    (76,341
    )Total Caribou Coffee Company, Inc. shareholders equity
    
    
    51,846
    
    
    
    50,620Noncontrolling interest
    
    
    113
    
    
    
    156Total equity
    
    
    51,959
    
    
    
    50,776Total liabilities and equity
    
    $
    91,493
    
    
    $
    93,727
  4




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CARIBOU COFFEE COMPANY, INC. AND AFFILIATES
(A Majority Owned Subsidiary of Caribou Holding Company Limited)
 
 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(unaudited)
(in thousands)
 Common Stock
    
    
    Additional
    
    
    
    
    
    
    AccumulatedNumber of
    
    
    
    
    
    
    Paid-In
    
    
    Noncontrolling
    
    
    Other
    
    
    AccumulatedShares
    
    
    Amount
    
    
    Capital
    
    
    Interest
    
    
    Comprehensive Loss
    
    
    Deficit
    
    
    EquityBalance, January 3, 2010
    
    
    19,814
    
    
    $
    198
    
    
    $
    126,770
    
    
    $
    156
    
    
    $
    (7
    )
    
    $
    (76,341
    )
    
    $
    50,776Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54
    
    
    
    
    
    
    
    1,038
    
    
    
    1,092Changes in fair value of
derivative financial
instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18
    )
    
    
    
    
    
    
    (18
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,074Share based compensation
    
    
    
    
    
    
    
    
    
    
    251
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    251Options exercised
    
    
    5
    
    
    
    
    
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28Restricted shares issued,
net of cancellations
    
    
    205
    
    
    
    2
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Distribution of
noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (97
    )
    
    
    
    
    
    
    
    
    
    
    (97
    )Stock repurchase
    
    
    (10
    )
    
    
    
    
    
    
    (73
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (73
    )Balance, April 4, 2010
    
    
    20,014
    
    
    $
    200
    
    
    $
    126,974
    
    
    $
    113
    
    
    $
    (25
    )
    
    $
    (75,303
    )
    
    $
    51,959
  5




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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
 Thirteen Weeks EndedApril 4, 2010
    
    
March 29, 2009(In thousands)(Unaudited)Operating activitiesNet income attributable to Caribou Coffee Company, Inc.
    
    $
    1,038
    
    
    $
    346Adjustments to reconcile net income to net cash used by operating activities:Depreciation and amortization
    
    
    3,628
    
    
    
    4,294Amortization of deferred financing fees
    
    
    71
    
    
    
    29Noncontrolling interest
    
    
    54
    
    
    
    73Stock-based compensation
    
    
    251
    
    
    
    265Other
    
    
    22
    
    
    
    (9
    )Changes in operating assets and liabilities:Accounts receivable and other receivables
    
    
    (761
    )
    
    
    521Inventories
    
    
    (5,622
    )
    
    
    386Prepaid expenses and other assets
    
    
    73
    
    
    
    27Accounts payable
    
    
    1,286
    
    
    
    375Accrued expenses and other liabilities
    
    
    (2,598
    )
    
    
    (3,619
    )Deferred revenue
    
    
    (2,189
    )
    
    
    (2,714
    )Net cash used by operating activities
    
    
    (4,747
    )
    
    
    (26
    )Investing activitiesPayments for property and equipment
    
    
    (772
    )
    
    
    (195
    )Proceeds from the disposal of property
    
    
    
    
    
    
    17Net cash used in investing activities
    
    
    (772
    )
    
    
    (178
    )Financing activitiesDistribution of noncontrolling interest
    
    
    (97
    )
    
    
    Purchase of noncontrolling interest
    
    
    
    
    
    
    (105
    )Issuance of common stock
    
    
    28
    
    
    
    Payment of debt financing fees
    
    
    (189
    )
    
    
    Stock repurchase
    
    
    (73
    )
    
    
    Net cash used by financing activities
    
    
    (331
    )
    
    
    (105
    )Decrease in cash and cash equivalents
    
    
    (5,850
    )
    
    
    (309
    )Cash and cash equivalents at beginning of period
    
    
    23,578
    
    
    
    11,060Cash and cash equivalents at end of period
    
    $
    17,728
    
    
    $
    10,751Supplemental disclosure of cash flow informationNoncash financing and investing transactions:Accrual for leasehold improvements, furniture and equipment
    
    $
    162
    
    
    $
    
  6




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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
   7




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2. Summary of Significant Accounting Policies
 Revenue Recognition
      Operating Leases and Rent Expense
  3. Recent Accounting Pronouncements
  8




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4. Derivative Financial Instruments
      5. Fair Value Measurements
  
    
    Level 1: Observable inputs that reflect unadjusted quoted prices for identical assets
or liabilities traded in active markets.
 
    
    Level 2: Inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly or indirectly.
 
    
    Level 3: Inputs that are generally unobservable. These inputs may be used with
internally developed methodologies that result in managements best estimate of fair
value.
  Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Assets:Cash and cash equivalents
    
    $
    17,728
    
    
    $
    17,728
    
    
    $
    
    
    
    $
    Liabilities:Derivatives
    
    $
    25
    
    
    $
    25
    
    
    $
    
    
    
    $
    
 9




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Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Assets:Cash and cash equivalents
    
    $
    23,578
    
    
    $
    23,578
    
    
    $
    
    
    
    $
    Liabilities:Derivatives
    
    $
    7
    
    
    $
    7
    
    
    $
    
    
    
    $
    
   6. Inventories
  April 4,
    
    
    January 3,2010
    
    
    2010Coffee
    
    $
    10,702
    
    
    $
    5,615Other merchandise held for sale
    
    
    3,913
    
    
    
    4,029Supplies
    
    
    4,285
    
    
    
    3,634$
    18,900
    
    
    $
    13,278
  7. Equity and Stock Based Compensation
   Weighted
    
    
    WeightedNumber of
    
    
    Average
    
    
    AverageShares
    
    
    Exercise Price
    
    
    Contract LifeOutstanding, January 3, 2010
    
    
    1,696
    
    
    $
    4.27
    
    
    7.54 YrsGranted
    
    
    
    
    
    $
    Exercised
    
    
    (5
    )
    
    $
    5.72Forfeited
    
    
    (26
    )
    
    $
    6.09Outstanding, April 4, 2010
    
    
    1,665
    
    
    $
    4.23
    
    
    7.31 YrsOptions vested at April 4, 2010
    
    
    795
    
    
    $
    6.10
    
    
    6.22 Yrs
 10




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##### Table of Contents



Weighted
    
    
    WeightedNumber of
    
    
    Average Grant Date
    
    
    AverageShares
    
    
    Fair Value
    
    
    Contract LifeOutstanding, January 3, 2010
    
    
    300
    
    
    $
    5.83Granted
    
    
    215
    
    
    $
    7.07Forfeited
    
    
    (9
    )
    
    $
    8.15Outstanding, April 4, 2010
    
    
    506
    
    
    $
    6.31
    
    
    3.31 Yrs
 8. Income Taxes
  9. Net Income (Loss) Per Share
  Thirteen Weeks EndedApril 4,
    
    
    March 29,2010
    
    
    2009Net income attributable to Caribou Coffee Company, Inc.
    
    $
    1,038
    
    
    $
    346Weighted average common shares outstanding  basic
    
    
    19,509
    
    
    
    19,371Dilutive impact of stock-based compensation
    
    
    804
    
    
    
    155Weighted average common shares outstanding  dilutive
    
    
    20,313
    
    
    
    19,526Basic net income per share
    
    $
    0.05
    
    
    $
    0.02Diluted net income per share
    
    $
    0.05
    
    
    $
    0.02
  10. Master Franchise Agreement
    11




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11. Revolving Credit Facility
      12. Commitments and Contingencies
  12




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13. Segment Reporting
  Retail Coffeehouses
  Commercial
  Franchise
  13




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Thirteen weeks ended April 4, 2010
 UnallocatedRetail Coffeehouses
    
    
    Commercial
    
    
    Franchise
    
    
    Corporate
    
    
    TotalTotal net sales
    
    $
    55,597
    
    
    $
    8,987
    
    
    $
    2,467
    
    
    $
    
    
    
    $
    67,051Costs of sales and related occupancy costs
    
    
    23,575
    
    
    
    6,294
    
    
    
    1,530
    
    
    
    
    
    
    
    31,399Operating expenses
    
    
    23,681
    
    
    
    979
    
    
    
    302
    
    
    
    
    
    
    
    24,962Depreciation and amortization
    
    
    3,129
    
    
    
    13
    
    
    
    3
    
    
    
    
    
    
    
    3,145General and administrative expenses
    
    
    1,847
    
    
    
    
    
    
    
    
    
    
    
    4,662
    
    
    
    6,509Operating income (loss)
    
    $
    3,365
    
    
    $
    1,701
    
    
    $
    632
    
    
    $
    (4,662
    )
    
    
    1,036Identifiable assets
    
    $
    35,962
    
    
    $
    184
    
    
    $
    61
    
    
    $
    8,116
    
    
    $
    44,323Net capital expenditures
    
    $
    576
    
    
    $
    
    
    
    $
    57
    
    
    $
    193
    
    
    $
    826
 Thirteen weeks ended March 29, 2009
 UnallocatedRetail Coffeehouses
    
    
    Commercial
    
    
    Franchise
    
    
    Corporate
    
    
    TotalTotal net sales
    
    $
    52,864
    
    
    $
    5,704
    
    
    $
    1,812
    
    
    $
    
    
    
    $
    60,380Costs of sales and related occupancy costs
    
    
    21,700
    
    
    
    3,513
    
    
    
    1,039
    
    
    
    
    
    
    
    26,252Operating expenses
    
    
    22,397
    
    
    
    700
    
    
    
    325
    
    
    
    (17
    )
    
    
    23,405Depreciation and amortization
    
    
    3,730
    
    
    
    10
    
    
    
    1
    
    
    
    
    
    
    
    3,741General and administrative expenses
    
    
    1,965
    
    
    
    
    
    
    
    
    
    
    
    4,641
    
    
    
    6,606Operating (loss) income
    
    $
    3,072
    
    
    $
    1,481
    
    
    $
    447
    
    
    $
    (4,624
    )
    
    $
    376Identifiable assets
    
    $
    47,158
    
    
    $
    120
    
    
    $
    11
    
    
    $
    8,914
    
    
    $
    56,203Net capital expenditures
    
    $
    67
    
    
    $
    
    
    
    $
    
    
    
    $
    124
    
    
    $
    191
  14




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




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Fiscal Periods
   Thirteen Weeks Ended April 4, 2010 vs. Thirteen Weeks Ended March 29, 2009
 Results of Operations
 :
 Thirteen Weeks Ended
    
    
    
    
    
    
    Thirteen Weeks EndedApril 4,
    
    
    March 29,
    
    
    
    
    
    
    April 4,
    
    
    March 29,2010
    
    
    2009
    
    
    %
    
    
    2010
    
    
    2009(In thousands)
    
    
    Change
    
    
    As a % of total net salesStatement of Operations Data:Net sales:Coffeehouse
    
    $
    55,597
    
    
    $
    52,864
    
    
    
    5.2
    %
    
    
    82.9
    %
    
    
    87.6
    %Commercial and franchise
    
    
    11,454
    
    
    
    7,516
    
    
    
    52.4
    %
    
    
    17.1
    %
    
    
    12.4
    %Total net sales
    
    
    67,051
    
    
    
    60,380
    
    
    
    11.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales and related occupancy costs
    
    
    31,399
    
    
    
    26,252
    
    
    
    19.6
    %
    
    
    46.8
    %
    
    
    43.5
    %Operating expenses
    
    
    24,962
    
    
    
    23,405
    
    
    
    6.7
    %
    
    
    37.2
    %
    
    
    38.8
    %Depreciation and amortization
    
    
    3,145
    
    
    
    3,741
    
    
    
    (15.9
    )%
    
    
    4.7
    %
    
    
    6.2
    %General and administrative expenses
    
    
    6,509
    
    
    
    6,606
    
    
    
    (1.5
    )%
    
    
    9.7
    %
    
    
    10.9
    %Operating income
    
    
    1,036
    
    
    
    376
    
    
    
    175.5
    %
    
    
    1.5
    %
    
    
    0.6
    %Other income (expense):Interest income
    
    
    5
    
    
    
    
    
    
    
    
    %
    
    
    
    %
    
    
    
    %Interest expense
    
    
    (106
    )
    
    
    (58
    )
    
    
    82.8
    %
    
    
    (0.1
    )%
    
    
    (0.1
    )%Income before benefit from income taxes
and noncontrolling interest
    
    
    935
    
    
    
    318
    
    
    
    194.0
    %
    
    
    1.4
    %
    
    
    0.5
    %Benefit from income taxes
    
    
    157
    
    
    
    101
    
    
    
    55.4
    %
    
    
    0.2
    %
    
    
    (0.2
    )%Net income
    
    
    1,092
    
    
    
    419
    
    
    
    160.6
    %
    
    
    1.6
    %
    
    
    0.7
    %Less: Net income attributable to
noncontrolling interest
    
    
    54
    
    
    
    73
    
    
    
    (26.0
    )%
    
    
    0.1
    %
    
    
    0.1
    %Net income attributable to Caribou
Coffee Company, Inc.
    
    $
    1,038
    
    
    $
    346
    
    
    
    200.0
    %
    
    
    1.5
    %
    
    
    0.6
    %
 Net Sales
  16




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##### Table of Contents



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




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##### Table of Contents



Retail Coffeehouses
 Thirteen Weeks Ended
    
    
    Thirteen Weeks EndedApril 4,
    
    
    March 29,
    
    
    
    

    
    
    April 4,
    
    
    March 29,2010
    
    
    2009
    
    
    
    
    
    
    2010
    
    
    2009(In thousands)
    
    
    % Change
    
    
    
    As a % of coffeehouse salesCoffeehouse sales
    
    $
    55,597
    
    
    $
    52,864
    
    
    
    5.2
    %
    
    
    100.0
    %
    
    
    100.0
    %Costs of sales and related occupancy costs
    
    
    23,575
    
    
    
    21,700
    
    
    
    8.6
    %
    
    
    42.4
    %
    
    
    41.1
    %Operating expenses
    
    
    23,681
    
    
    
    22,397
    
    
    
    5.7
    %
    
    
    42.6
    %
    
    
    42.4
    %Depreciation and amortization
    
    
    3,129
    
    
    
    3,730
    
    
    
    (16.1
    )%
    
    
    5.6
    %
    
    
    7.1
    %General and administrative expenses
    
    
    1,847
    
    
    
    1,965
    
    
    
    (6.0
    )%
    
    
    3.3
    %
    
    
    3.7
    %Operating income
    
    $
    3,365
    
    
    $
    3,072
    
    
    
    9.5
    %
    
    
    6.1
    %
    
    
    5.8
    %
  Coffeehouse sales
  Costs and Expenses
 Cost of sales and related occupancy costs.
 Operating expenses.
 Depreciation and amortization.
 General and administrative expenses.
 18




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##### Table of Contents



Commercial
 Thirteen Weeks Ended
    
    
    Thirteen Weeks EndedApril 4,
    
    
    March 29,
    
    
    
    

    
    
    April 4,
    
    
    March 29,2010
    
    
    2009
    
    
    
    
    
    
    2010
    
    
    2009(In thousands)
    
    

    % Change
    
    
    As a % of commercial salesSales
    
    $
    8,987
    
    
    $
    5,704
    
    
    
    57.6
    %
    
    
    100.0
    %
    
    
    100.0
    %Costs of sales and related occupancy costs
    
    
    6,294
    
    
    
    3,513
    
    
    
    79.2
    %
    
    
    70.0
    %
    
    
    61.6
    %Operating expenses
    
    
    979
    
    
    
    700
    
    
    
    39.9
    %
    
    
    10.9
    %
    
    
    12.3
    %Depreciation and amortization
    
    
    13
    
    
    
    10
    
    
    
    30.0
    %
    
    
    0.1
    %
    
    
    0.2
    %Operating income
    
    $
    1,701
    
    
    $
    1,481
    
    
    
    14.9
    %
    
    
    18.9
    %
    
    
    26.0
    %
  Sales
  Costs and Expenses
 Cost of sales and related occupancy costs.
 Operating expenses.
 19




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##### Table of Contents



Franchise
 Thirteen Weeks Ended
    
    
    Thirteen Weeks EndedApril 4,
    
    
    March 29,
    
    
    
    

    
    
    April 4,
    
    
    March 29,2010
    
    
    2009
    
    
    
    
    
    
    2010
    
    
    2009(In thousands)
    
    

    % Change
    
    
    As a % of franchise salesSales
    
    $
    2,467
    
    
    $
    1,812
    
    
    
    36.1
    %
    
    
    100.0
    %
    
    
    100.0
    %Costs of sales and related occupancy costs
    
    
    1,530
    
    
    
    1,039
    
    
    
    47.3
    %
    
    
    62.0
    %
    
    
    57.3
    %Operating expenses
    
    
    302
    
    
    
    325
    
    
    
    (7.1
    )%
    
    
    12.2
    %
    
    
    17.9
    %Depreciation and amortization
    
    
    3
    
    
    
    1
    
    
    
    200.0
    %
    
    
    0.1
    %
    
    
    0.1
    %Operating income
    
    $
    632
    
    
    $
    447
    
    
    
    41.4
    %
    
    
    25.6
    %
    
    
    24.7
    %
  Sales
  Costs and Expenses
 Cost of sales and related occupancy costs.
 Operating expenses.
 Unallocated Corporate
 Thirteen Weeks Ended
    
    
    Thirteen Weeks EndedApril 4,
    
    
    March 29,
    
    
    
    
    
    
    April 4,
    
    
    March 29,2010
    
    
    2009
    
    
    
    
    
    
    2010
    
    
    2009(In thousands)
    
    

    % Change
    
    
    As a % of total net salesOperating expenses
    
    $
    
    
    
    $
    (17
    )
    
    
    (100.0
    )%
    
    
    
    %
    
    
    
    %General and administrative expenses
    
    
    4,662
    
    
    
    4,641
    
    
    
    0.5
    %
    
    
    6.9
    %
    
    
    7.7
    %Operating loss
    
    $
    (4,662
    )
    
    $
    (4,624
    )
    
    
    0.8
    %
    
    
    6.9
    %
    
    
    7.7
    %
 General and administrative expenses.
 20




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##### Table of Contents



Liquidity and Capital Resources
  Thirteen Weeks EndedApril 4,
    
    
    March 29,
    
    
    Increase /2010
    
    
    2009
    
    
    (Decrease)(In thousands)Net cash used by operating activities
    
    $
    (4,747
    )
    
    $
    (26
    )
    
    $
    (4,721
    )Net cash used in investing activities
    
    
    (772
    )
    
    
    (178
    )
    
    
    (594
    )Net cash used by financing activities
    
    
    (331
    )
    
    
    (105
    )
    
    
    (226
    )Net change in cash and cash equivalents
    
    $
    (5,850
    )
    
    $
    (309
    )
    
    $
    (5,541
    )
      Off-Balance Sheet Arrangements
  21




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##### Table of Contents



Recent Accounting Pronouncements
  Key Financial Metrics
   Thirteen Weeks EndedApril 4, 2010
    
    
    March 29, 2009(In thousands, except operating data)Non-GAAP Metrics:EBITDA(1)
    
    $
    4,610
    
    
    $
    4,597Operating Data:Percentage change in comparable coffeehouse net sales(2)
    
    
    5.2
    %
    
    
    (5.0
    )%Company-Owned:Coffeehouses open at beginning of period
    
    
    413
    
    
    
    414Coffeehouses opened during the period
    
    
    
    
    
    
    Coffeehouses closed during the period
    
    
    
    
    
    
    Coffeehouses open at end of period:Total Company-Owned
    
    
    413
    
    
    
    414Franchised:Coffeehouses opened at beginning of period
    
    
    121
    
    
    
    97Coffeehouses opened during the period
    
    
    2
    
    
    
    6Coffeehouses closed during the period
    
    
    
    
    
    
    (2
    )Coffeehouses open at end of period:Total Franchised
    
    
    123
    
    
    
    101Total coffeehouses open at end of period
    
    
    536
    
    
    
    515
 
 (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.  22




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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 210 company-owned coffeehouses from the
beginning of fiscal 2003 through the end of the first thirteen weeks of 2010. 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 evaluate our capacity to incur and service debt, fund capital expenditures and
expand our business.
  Thirteen Weeks EndedApril 4, 2010
    
    
    March 29, 2009(Thousands)Net income attributable to Caribou Coffee Company, Inc.
    
    $
    1,038
    
    
    $
    346Interest expense
    
    
    106
    
    
    
    58Interest income
    
    
    (5
    )
    
    
    Depreciation and amortization(1)
    
    
    3,628
    
    
    
    4,294Benefit from income taxes
    
    
    (157
    )
    
    
    (101
    )EBITDA
    
    $
    4,610
    
    
    $
    4,597
 
 (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.
  23




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
    
 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. Reserved.
  
 Item 5. Other Information.
  24




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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).10.14
    
    Lease and License Financing and Purchase Option Agreement between
Caribou Coffee Company Inc. and Arabica Funding, Inc., dated
February 19, 2010.10.15
    
    Credit Agreement among Arabica Funding, Inc., as Borrower, and Wells
Fargo Bank, N.A., as Administrative Agent, dated as of February 19,
2010.31.1
    
    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.
  25




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##### Table of Contents



SIGNATURE
  CARIBOU COFFEE COMPANY, INC.By:
    /s/ Michael TattersfieldMichael TattersfieldChief Executive Officer and President  26