Jamba, Inc. Delivers Against 2010 Blend Plan Initiatives and Announces Fourth Quarter and Fiscal Year 2010 Financial Results

Jamba, Inc. today reported financial results for the fiscal year and fourth quarter ended December 28, 2010. The Company showed solid progress on key strategic priorities, including the expansion of food, successful commercialization of consumer products and global franchise expansion. The Company said that positive Company-owned comparable store sales during the fourth quarter–the first since 2007–signals a planned return to positive Company-owned comparable store sales for 2011.

GAAP Financial Results for the 12 week fiscal fourth quarter of 2010 compared to the 12 week fiscal fourth quarter of 2009.⁽¹⁾

• Net loss for Q410 was $(12.2) million, compared to net loss of $(11.4) million for Q409. Included in the Q410 loss were charges of $2.3 million related to impairment of long lived assets and store lease termination and closure costs compared to $1.9 million for the same costs in Q409.
• Total revenue for Q410 decreased to $42.1 million from $50.6 million for Q409, a decrease of $8.5 million, due to the decrease in Company-owned stores primarily attributable to the refranchising initiative.
• Diluted loss per share was $(0.21) per share for Q410 compared to diluted loss per share of $(0.23) for Q409.
• Company-owned comparable store sales⁽²⁾ for Q410 improved to 0.2% from (5.3%) for Q409, reflecting a 550 basis point improvement over this same period last year.
• 11 franchise stores were opened during Q410.

GAAP Financial Results for the 52 week fiscal year 2010 compared to the 52 week fiscal year 2009.⁽¹⁾

• Net loss for fiscal 2010 was $(16.7) million compared to net loss of $(23.9) million for fiscal 2009. Included in the fiscal 2010 loss were charges of $7.0 million related to impairment of long lived assets and store lease termination and closure costs compared to $13.9 million for the same costs in fiscal 2009.
• Total revenue for fiscal 2010 decreased 12.9% to $262.7 million from $301.6 million for fiscal 2009, a decrease of $38.9 million, due to the decrease in Company-owned stores primarily attributable to the refranchising initiative.
• Diluted loss per share was $(0.35) per share for fiscal 2010 compared to diluted loss per share of $(0.48) for fiscal 2009.
• Company-owned comparable store sales⁽²⁾ for fiscal 2010 reflected sequential improvement in six of the last seven quarters, improving 800 basis points to (2.3%) from (10.3%) for fiscal 2009.
• 30 new franchise stores and one new Company-owned store were opened during fiscal 2010, bringing total store count to 743 stores system-wide, of which 392 are franchise stores and 351 are Company-owned stores.

Refranchising Initiative

In May 2009 the Company announced its refranchising initiative under which it stated its intent to sell existing Company Stores to new or existing franchisees, many of whom entered into area development agreements. The refranchising initiative has helped to accelerate growth and shift its business to an asset light model.

Under the refranchising initiative, the Company initially planned to complete the refranchising of up to 150 Company Stores. During fiscal 2010, it completed the sale of 105 Company Stores in fifteen separate refranchising transactions, bringing the refranchising program total to 132 Company Stores sold. The Company expects to conclude its refranchising program with the sale of 41 Company Stores in the Chicago and Minneapolis markets in early 2011.

The completion of the Company’s refranchising initiative unlocks the Company’s growth potential and significantly de-risks the business model.

For fiscal year 2010, Jamba significantly delivered on the BLEND plan priorities:

Deliver improved comparable Company-owned store sales⁽²⁾

• Fiscal 2010 showed four quarters of sequential improvement in comparable Company-owned store sales versus fiscal 2009, including the return to positive comparable Company-owned store sales of 0.2% in the fourth quarter of 2010. Results reflect sequential improvement in comparable Company-owned store sales in six of seven quarters and the first positive quarter of Company-owned comparable stores sales since 2007.

Build/expand our menu across all dayparts

• Major programs that strengthened the Company’s business model included the expansion of its beverage and food menu offerings across all dayparts, specifically the introduction of seasonally relevant limited time offerings, such as its new Superfruit and Probiotic Fruit and Yogurt smoothies; a hot beverage platform, featuring hot coffee, tea latte’s, hot chocolate and organic artisan teas from Mighty Leaf™, all or a portion of which are now available in more than 384 locations; the expansion of food offerings, including testing of new snack items and baked goods to more than 300 locations; the expansion of its renowned oatmeal platform to over 650 locations; the launch of a new breakfast daypart platform in select California markets; and the launch of a new specialty frozen yogurt platform called Whirl’ns™ Frozen Yogurt for the evening daypart.

Accelerate the development of franchise and non-traditional stores

• The Company made significant progress in the transition to a more franchise-oriented organization, expanding the Jamba brand into 23 states total with the opening of a new store in Louisiana and with the refranchising of 105 Company-owned stores as part of our refranchising initiative. The Company signed agreements to open franchise stores in three new markets including New Orleans, Boston, and Indiana and expects to expand into Connecticut in early April 2011. The Company also signed its first major international development agreement with SPC Group in South Korea. SPC Group opened their first franchise store on January 31, 2011 in the Incheon International Airport.

Build a licensing growth platform

• At the end of fiscal 2010, the Company had entered into nine licensing agreements and licensees had commercialized four consumer packaged goods product lines. In particular, Jamba-branded frozen novelties, manufactured under license by Oregon Ice Cream, and the At-Home Smoothie Kits, manufactured under license by Inventure Foods, were collectively in over 10,000 points of distribution by the close of fiscal 2010. In February 2011, Nestlé USA launched its all-natural, fruit-based, energy drinks in the Northeast and the Company expects the remaining four product lines to be in retail distribution by end of the second quarter 2011, including product lines developed through agreements with One Natural Experience (O.N.E.) for coconut water fruit juice beverages, with Zola for functional daily Brazilian Superfruit shots, with Johnvince Foods for all-natural, boosted trail mixes and with Sundia Corporation for functionally boosted fruit cups.

“At the start of 2010, we said that the transformation of our Company to a healthy, active lifestyle brand would be our mission. With the continued implementation of disciplined cost controls, the expansion of our business model into new platforms like hot beverages, breakfast, frozen yogurt and with the commercialization of four consumer product lines, we are gaining momentum in our transformation,” stated James D. White, Jamba’s chairman, president and CEO. “Despite the competitive activity in the smoothie category during 2010, we continued to maintain our status as one of the most recognized leaders in the smoothie category and to grow our awareness as a health and wellness brand.”

“Even though we faced a challenging operating environment during 2010, we made significant progress on our long-term BLEND plan. Jamba’s performance in 2010 makes us confident about the outlook for 2011. As we enter 2011, early indications leave us with the expectation that Jamba will return to positive comparable store sales,” concluded Mr. White.

Outlook for 2011

The Company expects to achieve the following in 2011:

• Deliver positive comparable store sales⁽²⁾ of 2-4%;
• Deliver Operating Profit⁽⁴⁾ margin of 18-20%;
• Develop 50-70 locations in traditional, non-traditional, and express formats;
• General and administrative expenses, in dollars, (excluding litigation charges and other one-time expenses) consistent with 2010 levels.

Liquidity

On December 28, 2010, the Company held $30.8 million in cash, cash equivalents, and restricted cash. The restricted cash balance was $1.8 million.

Footnotes

(1) Fiscal Q410 and Fiscal Year 2010 are the 12 week period ended and 52 week period ended December 28, 2010, respectively. Fiscal Q409 and Fiscal Year 2009 are the 12 week period ended and 52 week period ended December 29, 2009, respectively.

(2) 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.

(3) The Company uses the non-GAAP financial measure of Store-level EBITDA (adjusted) in its statements made in this release, which is helpful when used: as an indicator of the Company’s 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 Company-owned store operations; for planning purposes, including the preparation of our internal operating budget; and as a measure in assessing the performance of existing store operating income and comparative operating performance. Store-level EBITDA (adjusted) is equal to net loss, less: (a) gain from derivative liabilities; (b) interest income; (c) interest expense; (d) income taxes; (e) depreciation and amortization; (f) impairment of long-lived assets (g) other operating, net; (h) franchise and other revenue; and (i) general and administrative expenses.

(4) Operating Profit margin is equal to net loss, less: (a) gain from derivative liabilities; (b) interest income; (c) interest expense; (d) income taxes; (e) depreciation and amortization; (f) impairment of long-lived assets; (g) other operating, net; and (h) general and administrative expenses, divided by total revenue.

About Jamba, Inc.

Jamba, Inc. (NASDAQ:JMBA) is a holding company and through its wholly-owned subsidiary, Jamba Juice Company, owns and franchises JAMBA JUICE® stores. Founded in 1990, Jamba Juice is a leading restaurant retailer of better-for-you food and beverage offerings, including great tasting fruit smoothies, juices, and teas, hot oatmeal made with organic steel cut oats, wraps, salads, sandwiches, and California Flatbreads™, and a variety of baked goods and snacks. As of December 28, 2010, Jamba Juice had 743 locations consisting of 351 Company-owned and operated stores and 392 franchise stores. For the nearest location or a complete menu, visit the Jamba Juice website at www.jambajuice.com or call 1-866-4R-FRUIT (473-7848).