Jamba Juice 2009 Annual Report Download

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Table of Contents
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  
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

Units, consisting of one share of Common Stock, par value
$0.001 per share, and one Common Stock Purchase Warrant The NASDAQ Stock Market LLC
Common Stock, par value $.001 per share The NASDAQ Stock Market LLC
Common Stock Purchase Warrants The NASDAQ Stock Market LLC


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing
requirements for the past 90 days. Yes x No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one):
Large accelerated filer ¨
Accelerated filer x
Non-accelerated filer ¨
(Do not check if a smaller reporting company)
Smaller reporting company ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x
The aggregate market value of the registrant’s common stock, $0.001 par value per share, held by non-affiliates as of the last day of the registrant’s
second fiscal quarter ended July 15, 2008 was $53,554,731 (based upon the closing sales price of registrant’s common stock on such date). For purposes of
this disclosure, shares of common stock held by persons who held more than 5% of the outstanding shares of common stock and shares held by officers and
directors of the registrant have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
The number of shares of common stock of Jamba, Inc. issued and outstanding as of March 6, 2009 was 54,690,728.

Portions of the Proxy Statement for the 2009 Annual Meeting of Stockholders (the “Proxy Statement”), to be filed within 120 days of the end of the fiscal
year ended December 30, 2008, are incorporated by reference in Part III hereof. Except with respect to information specifically incorporated by reference in this
Form 10-K, the Proxy Statement is not deemed to be filed as part hereof.

Table of contents

  • Page 1
    ... offices) Registrant's telephone number, including area code: (510) 596-0100 Securities registered pursuant to Section 12(b) of the Tct: Units, consisting of one share of Common Stock, par value $0.001 per share, and one Common Stock Purchase Warrant The NASDAQ Stock Market LLC Common Stock...

  • Page 2
    ...Item 8. Item 9. Item 9T. Item 9B. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES SELECTED FINANCIAL DATA MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT...

  • Page 3
    ... events. You should be aware that the occurrence of the events described in the "Risk Factors" portion of this annual report, the documents incorporated herein and our other SEC filings could have a material adverse effect on our business, prospects, financial condition or operating results. 3

  • Page 4
    ...unidentified operating business. On July 6, 2005, the Company consummated its initial public offering. On March 10, 2006, the Company entered into an Agreement and Plan of Merger with Jamba Juice Company, the category-defining retailer of premium healthy blended beverages that was originally founded...

  • Page 5
    ..., baked goods and snacks in our stores. Our menu items are designed to strengthen the relationship with our customers by offering products that are relevant to individuals striving for a healthy lifestyle. Product innovation is a high priority and our research and development team, composed of food...

  • Page 6
    ... lifestyle needs. Breakfast All Day: Yogurt and Fruit Blends: These refreshing blends of fruit, nonfat yogurt and soymilk offer healthy great taste to start the day right. Yogurt and Fruit Blends with Granola: Eat it with a spoon! A nutritionally balanced breakfast of blended fruit, low-fat yogurt...

  • Page 7
    ...Company is to build accessibility, meaning making it easier for customers to experience Jamba. One way to increase accessibility is to expand the number of Jamba Juice stores. The goal of building accessibility is increasing frequency and, as a result, comparable store sales and average unit volumes...

  • Page 8
    ... emphasis on non-traditional locations. We believe this franchise strategy will better position us for growth in market share, reduce capital outlays, provide better overall margins, allow us to open more stores faster, increase our brand presence, and increase customer frequency. As part of...

  • Page 9
    ...license agreements in which the franchisee develops and operates a specified number of stores within a specified period of time within a specified geographic area, which we call area development agreements. Our current traditional store franchise agreement provides for a 10-year term. The agreement...

  • Page 10
    ... entered into a worldwide license agreement for the manufacturing, marketing and distribution of Jamba ready-to-drink beverages. In May 2008, Nestlé launched a Jamba ready-to-drink product line including six SKUs: three Jamba Smoothies, named Strawberries Wild w/Energy Boost, Orange Dream Machine...

  • Page 11
    ...we must communicate the Jamba Juice story, the benefits of our products and our usage occasions. Emotional connections are developed as the messages are delivered consistently and with a freshness that appeals to consumers. In fiscal 2009, we also refocused our marketing strategy on a local basis on...

  • Page 12
    ... costs, and therefore reduce cost of goods sold, in non-California markets. Southwest Traders, Inc. is a distributor of proprietary products to our Company Stores and Franchise Stores. Southwest Traders distributed ingredients that made up approximately 81% of cost of sales for Jamba Juice Company...

  • Page 13
    ... Company could enter the market at any time and compete directly against Jamba Juice stores. We compete most directly with regional smoothie stores, most of which are franchises of other smoothie brands. Additionally, the rising popularity of convenient and healthy food items may result in increased...

  • Page 14
    ... information is provided to the Company. Franchisees set their own menu prices. Company Stores use the Company's licensed labor scheduling and food cost management software to record employee time clock information, schedule labor, improve inventory management and provide management reports. 14

  • Page 15
    ...joined Jamba Juice Company after having served as an independent consultant in Dallas, Texas, focusing on business development strategies in international markets from 2005 through 2007. Prior to consulting, he held several senior executive positions with Blockbuster, Inc. in Ft. Lauderdale, Florida...

  • Page 16
    ... at our corporate offices or part of our field support and operations. The remainder of the employees were store management and hourly store personnel. The Company also hires a significant number of seasonal employees during its peak selling season during the Spring and Summer. Our employees are not...

  • Page 17
    ... the Company for future growth and long-term stockholder value, including: building a customer first "operationally focused" service culture; building a retail food capability across all four day parts (breakfast, lunch, afternoon, and dinner); accelerating the development of franchise and...

  • Page 18
    ... in our revenue and operating margins. We compete with many well-established companies, food service and otherwise, on the basis of taste, quality and price of product offered, customer service, atmosphere, location and overall guest experience. We compete with other smoothie and juice bar retailers...

  • Page 19
    ... extent we have purchase commitments in excess of our needs. The Company actively works with its vendors under such contracts to mitigate any such "long" positions by authorizing the vendors to sell such products to other customers or by more actively promoting sales of offerings that contain such...

  • Page 20
    ... terms or at all, which could cause us to close stores in desirable locations. We may not achieve sales growth plans and other assumptions that support the carrying value of our assets and we may record lease termination costs. The carrying value of our assets is subject to impairment reviews as of...

  • Page 21
    ... We may not be able to increase the percentage of franchised stores at the annual rate we desire or achieve the ownership mix of franchise stores to Company Stores that we desire. Risks Related to Franchise Operations The opening and success of franchised stores depend on various factors, including...

  • Page 22
    ... popularity of the Jamba Juice experience. Newly opened franchise stores may not succeed, future markets and stores may not be successful and, even if we are successful, our average store revenue, and the royalty income generated therefrom, may not increase at historical rates. Termination or non...

  • Page 23
    ... purchase option under the franchise or area development agreement. Any acquisition that we undertake involves risks, including, our ability to successfully and profitably transition acquired franchise stores into Company Stores. Failure to do so effectively could strain our financial and management...

  • Page 24
    ... could adversely affect our profits. The Company pays a substantial part of the healthcare benefits for team members at the General Manager level and above and for those working at the Company's corporate office. Other team members can purchase more limited healthcare benefits. Legislation is being...

  • Page 25
    ...common stock held by them at a price of $1.50 per share. Any exercise of this put right could have an adverse effect on our liquidity. The $3.0 million that would be needed to repurchase these shares are classified in restricted cash on our balance sheet. Insufficient cash flows from operations may...

  • Page 26
    ... may enter into agreements with other companies for the retail distribution of other product categories involving the licensing of the Jamba Juice trademarks. Any execution failure by our business partner or failure to adhere to the brand experience and standards expected by our customers may damage...

  • Page 27
    ... close some stores. If we react to negative publicity by changing our menu or other key aspects of the Jamba Juice experience, we may lose customers who do not accept those changes, and may not be able to attract enough new customers to produce the revenue needed to make our stores profitable...

  • Page 28
    ...a put right. Our common stock is currently listed on the NASDAQ Global Market. A continual listing requirement of the NASDAQ is that the bid price of our common stock not close below the minimum of $1.00 per share for a 30-consecutive business day period. We are not currently in compliance with this...

  • Page 29
    ...and discretionary spending; the timing of new franchise store openings and related revenue; labor availability and wages of store management and team members; changes in comparable store revenue and customer visits, including as a result of the introduction of new menu items; variations in general...

  • Page 30
    ...'s corporate headquarters is located at 6475 Christie Avenue, Emeryville, California. This facility is occupied under a lease for approximately 36,000 square feet, at a cost of approximately $1.0 million per year and has a lease term that expires December 31, 2017. The Company currently operates all...

  • Page 31
    ... of Contents The Company currently serves its customers through a combination of Company Stores and Franchise Stores in 21 different states and the Bahamas. Store Count as of December 30, 2008 Franchise Company Stores Stores Total Arizona California Colorado Florida Illinois Indiana Minnesota...

  • Page 32
    ... closing price per share of Jamba, Inc. common stock, warrants and units as reported on the NASDAQ Global Market on March 6, 2009, was $0.40, $0.01 and $0.47, respectively. The following table sets forth, for the fiscal quarter indicated, the quarterly high and low closing sales prices of our units...

  • Page 33
    ... Global Market, (ii) the Russell 2000 Index and (iii) Russell MicroCap Index. The graph assumes that the value of the investment in our common stock and each index (including reinvestment of dividends) was $100 on July 28, 2005. The Company is using the Russell MicroCap Index for the first time...

  • Page 34
    ... Year Ended December 30, 2008 January 1, 2008 (1) $ January 9, 2007 (2) $ Period from January 1, 2006 to January 10, 2006 Period from January 6, 2005 (inception) to December 31, 2005 Revenue: Company stores Franchise and other revenue Total revenue Costs and operating expenses: Cost of sales...

  • Page 35
    Table of Contents Selected Balance Sheet Data (at period end) December 30, 2008 January 1, 2008 January 9, 2007 January 10, 2006 December 31, 2005 Cash and cash equivalents Cash held in trust Total assets Note payable Total liabilities, including $25,241 of common stock subject to possible ...

  • Page 36
    ... of Jamba Juice Company. (In thousands) Period From June 28, 2006 to November 28, 2006 Fiscal Years Ended (1) June 27, 2006 June 28, 2005 June 29, 2004 Statements of Operations Data: Revenue: Company stores Franchise and other revenue Total revenue Costs and operating expenses: Cost of sales...

  • Page 37
    ... retailer of premium quality blended-to-order fruit smoothies, squeezedto-order juices, blended beverages and healthy snacks. As of December 30, 2008, we had 729 Jamba Juice stores, of which 511 were Company Stores and 218 were Franchise Stores. We acquired Jamba Juice Company on November 29, 2006...

  • Page 38
    ... in selected markets. We also believe several operational factors contributed to our operating results in fiscal 2008. Our business model and growth strategy of heavy focus on Company Stores with less emphasis on Franchise Stores, and the associated cost structure of operating Company Stores caused...

  • Page 39
    ... marketing and brand officer, and senior vice president, development. On December 1, 2008, James D. White joined the Company as President and Chief Executive Officer. In addition, as a result of the above-referenced departures, we internally promoted other members of the executive team and increased...

  • Page 40
    ... that most significantly affect the fair value calculation are assumptions related to revenue growth, discount rate, public-market trading multiples and control premiums. The fair value of the reporting unit is reconciled to the Company's market capitalization plus an estimated control premium...

  • Page 41
    ... Jamba Juice Company has sold the jambacard since November of 2002. The jambacard works as a reloadable gift or debit card. At the time of the initial load, in an amount between $5 and $500, the Company records an obligation that is reflected as jambacard liability on the consolidated balance sheets...

  • Page 42
    ...Because of the Company's recent history of operating losses, management believes the recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a valuation allowance. A full valuation allowance has...

  • Page 43
    ... stock at an exercise price of $6.00 per share and expires on June 28, 2009. These Warrants are freely traded on the NASDAQ Global Market under the symbol "JMBAW." The Company sold to the representative of the underwriter, for $100, an option to purchase up to a total of 750,000 units (the "Units...

  • Page 44
    ... of the Company's common stock since its inception and historic, daily stock price observations of the Company's peers (companies in Jamba Juice Company's industry that are viewed as a "concept" and a leader in the premium, specialty growth segment) for a period prior to the balance sheet date that...

  • Page 45
    ...1, 2008 %(1) Revenue: Company stores Franchise and other revenue Total revenue Costs and operating expenses: Cost of sales Labor Occupancy Store operating Depreciation and amortization General and administrative Store pre-opening Impairment of long-lived assets Store lease termination and closure...

  • Page 46
    ... 2008 % of Year Ended Company Store Revenue January 1, 2008 Company Store Revenue Cost of sales $ 89,163 26.7% $ 84,226 27.5% Cost of sales is mostly comprised of fruit, dairy and other products used to make smoothies and juices, as well as paper products. Cost of sales increased 5.9% to...

  • Page 47
    ... % of Year Ended Company Store Revenue January 1, 2008 Company Store Revenue Labor $ 120,251 36.0% $ 102,661 33.5% Labor costs are comprised of store management salaries and bonuses, hourly team member payroll, training costs and other associated fringe benefits. Labor costs increased 17...

  • Page 48
    ... net number of Company Stores operating in fiscal 2008 as compared to the prior year. Total store operating expenses remained constant as a percentage of Company Store revenue for fiscal 2008 as compared to the prior year primarily due to decreases in national and local marketing expenses and cost...

  • Page 49
    ...of internal business and infrastructure projects, the reduction in the amount of corporate G&A expenses being capitalized versus expensed due to the decrease in the number of new stores opened in fiscal 2008 as compared to the prior year, project costs related to new product launches and an increase...

  • Page 50
    ... in Total G&A fees. The decrease in G&A expenses in fiscal 2008 was almost fully offset by one-time severance costs, employee-related special charges and other expenses, project costs associated with new product launches, costs associated with the hiring of our new Chief Executive Officer and costs...

  • Page 51
    ... Lease termination costs consist primarily of the costs of future obligations related to closed store locations. Discounted liabilities for future lease costs and the fair value of related subleases of closed locations are recorded when the stores are closed. All other costs related to closed units...

  • Page 52
    ... 2007 to fund new Company Stores openings and day to day operations. While cash on hand as of December 30, 2008 was $20.8 million as compared to $23.0 million at the end of fiscal 2007, the average cash balance during fiscal 2008 was significantly lower during the year, until funding was provided...

  • Page 53
    ...Revenue: Company stores Franchise and other revenue Total revenue Operating expenses: Cost of sales Labor costs Occupancy costs Store operating expense Depreciation and amortization General and administrative expense Store pre-opening expense Impairment of long-lived assets Store lease termination...

  • Page 54
    ... Tdjustments Tctivity Ts Reported Proforma Revenue: Company stores Franchise and other revenue Total revenue Operating expenses: Cost of sales Labor costs Occupancy costs Store operating expense Depreciation and amortization General and administrative expense Store pre-opening expense Impairment...

  • Page 55
    ... other products used to make smoothies and juices, as well as paper products. The increase of cost of sales as a percentage of Company Stores revenues is primarily associated with higher fresh orange, orange juice and dairy ingredient costs, increased freight costs and coupons issued in support of...

  • Page 56
    ... by menu price increases taken in fiscal 2007. On a reported basis, labor costs decreased as a percentage of Company Store revenue in fiscal 2007 as compared to fiscal 2006 as a result of prior year deleverage resulting from lower sales in the slower Winter months, which include the six week period...

  • Page 57
    ... and marketing. The increase of store operating expenses as a percentage of Company Stores revenue on a proforma basis is primarily associated with the increase in marketing expenses to support our fiscal 2007 product initiatives and increased credit card fees due to increasing jambacard sales...

  • Page 58
    ... marketing costs. The increase in store pre-opening costs as a percentage of total revenue on a proforma basis is primarily associated with 99 new Company Stores openings in fiscal 2007, decreased leverage due to lower California Company Store comparable store sales, partially offset by menu price...

  • Page 59
    ... Florida LLC, which owns 13 stores, and a Midwest franchisee whose stores we acquired in the fourth quarter of fiscal 2006. Franchise support expenses are offset by franchise support revenue, which is recorded in franchise and other revenue. Also contributing to other operating expenses were losses...

  • Page 60
    ...to make smoothies and juices, as well as paper products. As a percentage of Company Store revenue, these costs were 25.6% compared to 25.0% for JJC fiscal 2006. Labor costs consist of store management salaries and bonuses, hourly team member payroll and training costs and other payroll-related items...

  • Page 61
    ... are largely costs incurred for training new store personnel and pre-opening marketing. Jamba Juice Company opened 18 stores during the 22 Week Period. Store pre-opening costs for the 22 Week Period were $1.0 million. Other operating expenses consist primarily of franchise support expenses, losses...

  • Page 62
    ... period of operations. Revenue from franchised stores are not included in the comparable Company Store revenue. LIQUIDITY TND CTPITTL RESOURCES Cash Flows Summary The following table summarizes our cash flows for each of the past two full fiscal years since the acquisition of Jamba Juice Company...

  • Page 63
    ...we expect capital expenditures to be up to $13 million depending on liquidity. We expect to open less than ten new Company Stores as we focus our growth on franchise development. We anticipate investing in new equipment to support building our food capability and, on a discretionary basis, embark on...

  • Page 64
    ...2007 Net loss Gain from derivative liabilities Interest income Trademark, long-lived asset and store impairment Income tax benefit Interest expense Depreciation and amortization Store pre-opening Store lease termination and closure costs General and administrative expenses Other operating expenses...

  • Page 65
    ...if the average daily trading price for our common stock on the NASDAQ Global Market for 20 of 30 business days after the first anniversary of the closing date is greater than $1.50 per share, with average daily trading volume during such period of at least 250,000 shares, or the lenders' sale of the...

  • Page 66
    ... rent obligations, license, permits and real estate taxes for our fiscal year ended December 30, 2008 were $9.6 million. (2) We negotiate pricing and quality specifications for many of the products used in Company Stores and Franchise Stores. This allows for volume pricing and consistent quality...

  • Page 67
    ... position or results of operations. A one percent change of the interest rate would result in an annual change in the results of operations of $0.2 million. Commodities Prices We purchase significant amounts of fruits and dairy products to support the needs of our Company Stores. The price...

  • Page 68
    ... balance sheet of Jamba, Inc. and subsidiary as of December 30, 2008, and the related consolidated statements of operations, stockholders' equity, and cash flows for the fiscal year ended December 30, 2008. These consolidated financial statements are the responsibility of the Company's management...

  • Page 69
    ... REPORT OF INDEPENDENT REGISTERED PUBLIC TCCOUNTING FIRM To the Board of Directors and Stockholders of Jamba, Inc. Emeryville, California We have audited the accompanying consolidated balance sheet of Jamba, Inc. and subsidiary (the "Company") as of January 1, 2008 and the related consolidated...

  • Page 70
    ... BTLTNCE SHEETS (Dollars in thousands, except share and per share amounts) December 30, 2008 January 1, 2008 TSSETS Current assets: Cash and cash equivalents Restricted cash and investments Receivables, net of allowances of $416 and $133 Inventories Prepaid and refundable income taxes Prepaid...

  • Page 71
    ... 9, 2007 Revenue: Company stores Franchise and other revenue Total revenue Costs and operating expenses: Cost of sales Labor Occupancy Store operating Depreciation and amortization General and administrative Store pre-opening Impairment of long-lived assets Store lease termination and closure...

  • Page 72
    ...expense Assumption of Jamba Juice Company options and warrants at fair value Net loss Balance as of January 9, 2007 Exercise of warrants Exercise of stock options Share-based compensation expense Restricted shares vested in 2007 Net loss Balance as of January 1, 2008 Share-based compensation expense...

  • Page 73
    ... common stock Net put/call obligation Payment on capital lease obligations Cash from private placement and exercise of warrants Proceeds from exercise of stock options Cash provided by financing activities Net (decrease) increase in cash and equivalents Cash and equivalents at beginning of period...

  • Page 74
    ... stage. The Company offers a wide variety of fresh blended-to-order smoothies, fresh-squeezed juices, baked goods and snacks through retail stores. As of December 30, 2008, there were 729 locations consisting of 511 company owned and operated stores and 218 franchise stores operating in 21 states...

  • Page 75
    .... Inventories -Inventories include only the purchase cost and are stated at the lower of cost or market. Cost is determined using the first-in, first-out method (FIFO). Inventories consist of food, beverages and available-for-sale promotional products. Property, Fixtures and Equipment -Property...

  • Page 76
    ...revenue growth, discount rate, public market trading multiples and control premiums. The fair value of the reporting unit is reconciled to the Company's market capitalization plus an estimated control premium. Trademarks are not subject to amortization and are tested for impairment annually (at year...

  • Page 77
    ... coincides with the time when the landlord delivers the property for us to develop. All rent costs recognized during construction periods are classified as pre-opening expenses. In accordance with FASB Statement No. 141, Business Combinations, deferred rent recorded by Jamba Juice Company prior to...

  • Page 78
    ...Franchise revenue is generated from three sources: development fees, initial franchise fees and royalties. Development fees are paid to the Company as part of an agreement to open and operate a specific number of stores in a specified territory. The amount of the fee is based on the number of stores...

  • Page 79
    ... in tax rates is recognized in income in the period that includes the enactment date. In establishing deferred income tax assets and liabilities, management of the Company makes judgments and interpretations based on enacted tax laws and published tax guidance applicable to the Company's operations...

  • Page 80
    ... stock. The Company also grants restricted stock with a fair value determined based on the closing price of the Company's common stock on the date of grant (see Note 12). Stock options excluding performance-based stock option grants and restricted stock generally vest over a four-year period. Share...

  • Page 81
    ... circumstances, including if the average daily trading price for the Company's common stock on the NASDAQ Global Market for 20 of 30 business days after the first anniversary of the closing date is greater than $1.50 per share, with average daily trading volume during such period of at least 250,000...

  • Page 82
    ... stock at an exercise price of $6.00 per share and expires on June 28, 2009. These Warrants are freely traded on the NASDAQ Global Market under the symbol "JMBAW." The Company sold to the representative of the underwriter, for $100, an option to purchase up to a total of 750,000 units (the "Units...

  • Page 83
    ... TO CONSOLIDTTED FINTNCITL STTTEMENTS-(continued) daily stock price observations of the Company's peers (companies in Jamba Juice Company's industry that are viewed as a "concept" and a leader in the premium, specialty growth segment) for a period prior to the balance sheet date that is equal in...

  • Page 84
    ... a deficit balance (i.e., book value can go negative). The Company will present noncontrolling interests (currently shown as minority interest) as a component of equity on the consolidated balance sheets and minority interest expense will no longer be separately reported as a reduction to net income...

  • Page 85
    ... from JJC Florida. The agreement called for the purchase of all the assets, property, and business of JJC Florida related to the operation of its 13 stores. JJC Florida had entered into a joint venture with the Company to develop the Florida market. The right to develop additional stores expired on...

  • Page 86
    ... current assets Trademarks and other intangible assets, net Other long-term assets and deferred franchise revenue Other accrued expenses Deferred tax liabilities Other long-term liabilities Goodwill Total purchase price $ 4,377 398 1,095 71 (193) (86) (14) 19,008 $24,656 Acquisition of Jamba Juice...

  • Page 87
    ... of the Jamba Juice Company options and warrants immediately prior to the Merger. The fair value of options assumed and warrants exchanged was determined using a Black-Scholes valuation model with the following assumptions: average stock price of $11.53, expected lives of 0.5 to 5.0 years, risk-free...

  • Page 88
    ... Current liabilities Accrued jambacard liability Deferred income tax liabilities, net Other long-term liabilities Total purchase price 81,548 93,773 172,200 5,344 2,863 (45,239) (14,830) (58,171) (3,780) $251,751 Trademarks All of Jamba Juice Company's products are sold under the Jamba Juice name...

  • Page 89
    ... of the initial fee. As of December 30, 2008, there are 77 stores operating under the two current multi-unit license agreements. One of the two current multi-area developers have contractual commitments to open four new franchise stores. The Company generally executes franchise agreements for each...

  • Page 90
    ... Jamba Juice Company $110,000 in fiscal 2006 for managing and operating these stores, which is reported as franchise and other revenue. In June 2005, Jamba Juice Company entered into a Management Agreement with JJC Florida. Under this agreement, Jamba Juice Company managed and operated the stores...

  • Page 91
    ... Tmount Tccumulated Tmortization Net Tmortized Intangible Tssets Ts of January 1, 2008 Favorable leases Franchise agreements Employment agreements Reacquired franchise rights $ 3,893 1,141 730 Total Ts of December 30, 2008 Favorable leases Franchise agreements Reacquired franchise rights 875...

  • Page 92
    ... JJC Florida, LLC and JJC Hawaii, LLC as of January 1, 2008 and the fiscal year then ended (in thousands). Information for fiscal 2008 is not significant. January 1, 2008 Current assets Non-current assets Current liabilities Non-current liabilities and members' equity Revenue Gross profit Net loss...

  • Page 93
    ... Company Stores and sites under development and lease termination related costs and $2.2 million in severance charges. Lease termination costs consist primarily of the costs of future obligations related to closed store locations. Discounted liabilities for future lease costs and the fair value...

  • Page 94
    ... circumstances, including if the average daily trading price for the Company's common stock on the NASDAQ Global Market for 20 of 30 business days after the first anniversary of the closing date is greater than $1.50 per share, with average daily trading volume during such period of at least 250,000...

  • Page 95
    ... in default of the Financing Agreement. 10. LETSE COMMITMENTS The Company leases its office, retail stores, and some equipment under operating leases, with terms expiring through 2021. Most store leases have an initial term of 10 years, with renewal options of up to 10 years and provide for payment...

  • Page 96
    ... Deferred franchise revenue Total current deferred tax asset Net operating losses Deferred rent Tax credit attributes Basis difference in intangibles Share-based compensation Basis difference in fixed assets Basis difference in investments Reserves and accruals Other Total non-current deferred tax...

  • Page 97
    ...Because of the Company's recent history of operating losses, management believes the recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a valuation allowance. A full valuation allowance has...

  • Page 98
    ... its new President and Chief Executive Officer, resulting in an increase in the number of shares issued under stock option awards outstanding. This award was granted as an "inducement" grant outside of the Company's existing equity plans. The fair value of options granted was estimated at the date...

  • Page 99
    ... to actual values, except for annual adjustments to reflect actual forfeitures. Fiscal Year Ended December 30, 2008 Fiscal Year Ended Fiscal Year Ended January 1, 2008 January 9, 2007 Weighted-average risk-free interest rate Expected life of options (years) Expected stock volatility Expected...

  • Page 100
    ... an exercise price of $6.00 per share and an option to purchase up to a total of 750,000 units at an exercise price of $10.00 per share in connection with its initial public offering in July 2005. Each unit includes one share of common stock and a warrant to purchase one share of common stock at an...

  • Page 101
    ... the consolidated balance sheet. Included in derivative liabilities on the consolidated balance sheet. (2 ) 15. EMPLOYEE BENEFIT PLTN The Company maintains a voluntary defined contribution plan covering all eligible employees that it acquired from Jamba Juice Company. Eligible employees may elect...

  • Page 102
    ... ranging from one year to 15-year terms ending in 2024 for commitments to purchase a minimum level of fruit and other items used in the production of the Company's products totaling $64.4 million over the next 15 years. 17. RELTTED-PTRTY TRTNSTCTIONS The Company paid up to $7,500 a month in total...

  • Page 103
    ... Year 2007 Twelve Weeks Ended October 16, 2007 2007 2007 Ended January 1, 2008 Total revenue Gross profit Income (loss) from operations Gain on derivative liabilities Interest income Interest expense Other income (expense) Net income (loss) Basic earnings (loss) per share Diluted earnings (loss...

  • Page 104
    ... REPORT OF INDEPENDENT REGISTERED PUBLIC TCCOUNTING FIRM To the Board of Directors and Stockholders of Jamba Juice Company and Subsidiary: We have audited the accompanying consolidated balance sheet of Jamba Juice Company and subsidiary (the "Company") as of November 28, 2006, and the related...

  • Page 105
    ... Other accrued expenses Total current liabilities Deferred franchise revenue Deferred rent and other long-term liabilities Total liabilities Commitments and contingencies (Notes 7 and 14) Convertible redeemable preferred stock: No par value-30,000,000 shares authorized. Shares issued and outstanding...

  • Page 106
    ...JTMBT JUICE COMPTNY TND SUBSIDITRY CONSOLIDTTED STTTEMENTS OF INCOME For the Period June 28, 2006 to November 28, 2006 (22 weeks) (Dollars in thousands) Fiscal Year Ended June 27, 2006 (52 weeks) Revenue: Company stores Franchise and other revenue Total revenue Operating expenses: Cost of sales...

  • Page 107
    ... JUICE COMPTNY TND SUBSIDITRY CONSOLIDTTED STTTEMENTS OF COMMON STOCKHOLDERS' DEFICIT Total Common (Dollars in thousands) Common Stock Shares Tdditional Paid-In Capital Stockholders Tccumulated Deficit ' Deficit Balance as of June 28, 2005 Issuance of common stock Other Net income Balance...

  • Page 108
    ... Loss on asset impairment, store closures and disposals Gift certificate and jambacard breakage income Share-based compensation Deferred rent and other Deferred income taxes Changes in operating assets and liabilities: Receivables, net of allowance Inventories Prepaid expenses and other current...

  • Page 109
    ... Business-Jamba Juice Company is a leading retailer of premium quality blended-to-order fruit smoothies, squeezed-to-order juices, blended beverages, and healthy snacks. Jamba Juice Company offers a wide variety of fresh blended-to-order smoothies, fresh-squeezed juices, baked goods and snacks...

  • Page 110
    ... balance sheet as of November 28, 2006, was $3.0 million. Cash and Cash Equivalents -Jamba Juice Company considers all highly liquid instruments with maturities of three months or less when purchased to be cash equivalents. As of November 28, 2006, Jamba Juice Company did not have any investments...

  • Page 111
    ... assessing impairment. Jamba Juice Company identifies cash flows for retail net assets at the individual store level. Long-lived assets to be disposed of are reported at the lower of their carrying amount or fair value, less estimated costs to sell. Jamba Juice Company makes judgments related to the...

  • Page 112
    ... the number of stores to be opened. Any changes to the specific number of stores would be stated in a subsequent contractual agreement (see Note 2). Jamba Juice Company charges an initial franchise fee for providing operational materials, new store opening planning, and functional training courses...

  • Page 113
    ... than not that a deferred tax asset will be not realized. Employee Stock Options -Stock options for a fixed number of shares are granted to certain employees and directors with an exercise price equal to or greater than the fair market value of Jamba Juice Company's common stock at the date of grant...

  • Page 114
    ...Whole Foods Market in which employees of Whole Foods Market are operating the stores. As of November 28, 2006, three of the four current multi-area developers have contractual commitments to open, cumulatively, 24 new franchise stores. Jamba Juice Company generally executes franchise agreements for...

  • Page 115
    ... Jamba Juice Company $1,114,000 and $1,216,000 for the 22 Week Period and fiscal 2006, respectively, for managing and operating these stores, which is reported as franchise and other revenue. In connection with entering into the Management Agreement, JJC Florida's development rights were terminated...

  • Page 116
    .... Jamba Juice Company recorded losses related to store closures of $78,000 and $1,027,000 in the 22 Week Period and fiscal 2006, respectively. Of these charges, $59,000 and $856,000 were noncash. In the year of closure, revenue for the stores that have closed was $146,000 and $892,000 and net...

  • Page 117
    ... 28, 2006. During fiscal year 2004, Jamba Juice Company invested an additional $2 million in JJC Florida, LLC as part of an amendment to its original Franchise Agreement and License Agreement. Under the amendment, profits and losses are to be allocated to the members in proportion to their cash...

  • Page 118
    ...$35 million in any year. Jamba Juice Company has obtained a waiver from its financial institution in regards to its merger agreement with Services Acquisition Corp. International. The outstanding balance on the Line was $15.9 million as of November 28, 2006 with an interest rate of 9.25%. Additional...

  • Page 119
    ... Net operating losses Deferred franchise revenue Deferred rent Tax credit attributes Basis difference in fixed assets Basis difference in investments Total non-current deferred tax asset Total net deferred tax asset $ 4,692 702 270 5,664 10 35 2,788 619 6,498 (283) 9,667 $15,331 A valuation...

  • Page 120
    ...05%, ten year expected life, a dividend rate of 0%, and volatility of 67%. The warrant entitled the holder to purchase a one-third share of Jamba Juice Company's common stock at an exercise price of $0.75, or $2.25 for each full share (the "Warrant"). The Warrants are exercisable for a period of 10...

  • Page 121
    ... of Jamba Juice Company's capital stock or completion of an initial public offering, under certain conditions. The conversion price of Preferred Stock also will be adjusted upon the issuance of additional shares of common stock or warrants or rights to purchase common stock or securities...

  • Page 122
    ... rates appropriate for the expected term of the award. Expected dividends are zero based on history of not paying cash dividends on Jamba Juice Company's common stock. Expected volatility for the 22 Week Period is based on historic, daily stock price observations of Jamba Juice Company's peers...

  • Page 123
    ... approximately 523,000 options, at an average exercise price of $4.00 per share. Subsequent to the grant, certain employees were given the opportunity to exchange their options for new options with an exercise price equal to the fair value of Jamba Juice Company's common stock six months from the...

  • Page 124
    ... and California law, to current and former employees designated as "General Manager" and "Assistant General Manager." Jamba Juice Company agreed to pay $3.0 million plus payroll taxes to the class and its representatives ratably over a five-year period beginning in fiscal 2004. The net present value...

  • Page 125
    ... Week Period, Jamba Juice Company entered into a purchase obligation with a supplier for certain fruits for a 15 year term, ending in 2024 for commitments to purchase a minimum level of fruit, totaling $32.2 million. Jamba Juice Company did not make significant purchases under this agreement during...

  • Page 126
    ...of achieving the desired control objectives, as the Company's controls are designed to do, and management necessarily was required to apply its judgment in evaluating the risk related to controls and procedures. In connection with the preparation of this Annual Report on Form 10-K, as of December 30...

  • Page 127
    ... Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Jamba, Inc. and subsidiary as of December 30, 2008, and the related consolidated statements of operations, stockholders' equity, and cash flows for the fiscal year ended December 31, 2008, and our report...

  • Page 128
    ... from the Company's 2009 Proxy Statement to Stockholders to be filed pursuant to Regulation 14A under the Exchange Act no later than 120 days after the end of the Company's 2008 fiscal year. Information regarding the Executive Officers of the Company is contained in Part I of this Annual Report on...

  • Page 129
    ... Consolidated Financial Statements of Jamba Juice Company as of November 28, 2006 and for the period from June 28, 2006 to November 28, 2006 and the fiscal year ended June 27, 2006 Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of Income...

  • Page 130
    ... has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Emeryville, State of California, on the 16 th day of March, 2009. JAMBA, INC. By: /s/ JAMES D. WHITE James D. White Chief Executive Officer and President POWER OF TTTORNEY...

  • Page 131
    Table of Contents EXHIBIT INDEX Exhibit Filed Number Description Form File No. Exhibit Filing Date Herewith 2.1 Agreement and Plan of Merger by and among Services Acquisition Corp International, JJC Acquisition Company and Jamba Juice Company, dated as of March 6, 2006. 8-K 001-32552 10...

  • Page 132
    ... 8-K 10-K 10.19 10.20 10.9 10.10 Form of Non-Qualified Stock Option Agreement under the 2006 Plan.** Non-employee Director Compensation Policy.** Form of Registration Rights Agreement between Services Acquisition Corp. International and investors, as amended. 10.21 10.3 10.11 10.12 10.13 March...

  • Page 133
    ... Stock Option Agreement, Dated December 1, 2008, entered into between Jamba, Inc. and James White.** 10.22 14.1 Code of Business Conduct and Ethics. 8-K 001-32552 14.1 December 5, 2006 X X X X 21.1 23.1 23.2 23.3 List of Subsidiary. Consent of Independent Registered Public Accounting...

  • Page 134
    ... Exhibit Number Description Form File No. Exhibit Filing Date Herewith 24 Power of Attorney, included on signature page hereto. X X 31.1 Certification of Chief Executive Officer pursuant ...omitted and are marked by an asterisk. Management contract, or compensatory plan or arrangement. 134

  • Page 135
    ...") to euhcuase cehtain suahes of Common Stock of Jamba, Inc. (tue "Compapy" ) euhsuant to tue attacued Non-Qualified Stock Oetion Agheement (tue "Optiop Agreemept"), as follows: Optionee: James Wuite Date of Grant: Number of Option Shares: Exercise Price: Decembeh 1, 2008 1,500,000 $0.60 Tue...

  • Page 136
    ...stock, $ . 001 eah value eeh suahe (tue "Suahes"), undeh and foh tue euheoses set fohtu in tue emeloyment agheement between tue Comeany's wuolly-owned subsidiahy Jamba Juice... and uehein, undeh United States secuhities and tax laws. By signing ... tuis Agheement. 2. PURCHASE PRICE . Tue euhcuase ehice...

  • Page 137
    ...conditions of tuis Agheement. 4. TERM OF OPTION . Tuis Oetion suall tehminate ten yeahs...as defined in Pahaghaeu 1 of tue Plan) may exehcise tue Oetion wituin one yeah... immediately as of tue time tue Oetionee is notified uis...days acchued in tue cuhhent vesting eehiod ehioh to tue date of Disability. 3

  • Page 138
    ...ueon tue numbeh of days acchued in tue cuhhent...OF EXERCISING OPTION . Subject...9 of tue Plan. Tue Comeany ... hegisteh in tue name of tue Oetionee ... any time and fhom time to time wituin ...benefit of tue Oetionee's Immediate Family (including, wituout limitation, to a thust foh tue benefit... in whiting as ...

  • Page 139
    ... in tue name of tue ...stock subject to Oetions and tue helated ehovisions witu heseect to successohs to tue business...tax wituuolding obligation, tue Oetionee will heimbuhse tue Comeany on demand, in casu, foh tue amount undeh-wituueld. 11. PURCHASE FOR INVESTMENT . Unless tue offehing and sale...

  • Page 140
    ... heehesented by tuis cehtificate uave been taken foh investment and tuey may not be sold oh otuehwise thansfehhed by any eehson, including a...tue Oetion is a one-time benefit wuicu does not cheate any conthactual oh otueh higut to heceive futuhe ghants of oetions, oh benefits in lieu of oetions; ...

  • Page 141
    ... aghee tuat sucu litigation suall be conducted in tue couhts of San Fhancisco County, Califohnia oh tue fedehal couhts of tue United States foh tue Nohtuehn Disthict of Califohnia. 15. BENEFIT OF AGREEMENT . Tuis Agheement suall be foh tue benefit of and suall be binding ueon tue ueihs, executohs...

  • Page 142
    ...eah value, of Jamba, Inc. eeh suahe, euhsuant to and subject to tue tehms of tuat cehtain Ghant Notice and Non-Qualified Stock (tue "Comeany"), at tue exehcise ehice of $ , 2008. Oetion Agheement between tue undehsigned and tue Comeany dated I undehstand tue natuhe of tue investment I am making and...

  • Page 143
    IMPORTANT NOTICE: This form of Notice of Exercise may oply be used at such time as the Compapy has filed a Registratiop Statemept with the Securities apd Exchapge Commissiop upder which the issuapce of the Shares for which this exercise is beipg made is registered apd such Registratiop Statemept ...

  • Page 144
    EXHIBIT 21.1 LIST TF SUBSIDIARY Name of Company Jurisdiction of Incorporation Jamba Juice Company California

  • Page 145
    ... and cash flows for the fiscal year ended December 30, 2008, and the effectiveness of internal control over financial reporting as of December 30, 2008, which reports appear in the December 30, 2008 annual report on Form 10-K of Jamba, Inc. /s/ KPMG LLP San Francisco, California March 16, 2009

  • Page 146
    ... expresses an unqualified opinion and includes an explanatory paragraph relating to the adoption of a new accounting standard) appearing in this Annual Report on Form 10-K of Jamba, Inc. for the fiscal year ended December 30, 2008. /s/ Deloitte & Touche LLP han Francisco, California March 16, 2009

  • Page 147
    ... expresses an unqualified opinion and includes an explanatory paragraph relating to the adoption of a new accounting standard) appearing in this Annual Report on Form 10-K of Jamba, Inc. for the fiscal year ended December 30, 2008. /s/ Deloitte & Touche LLP han Francisco, California March 16, 2009

  • Page 148
    ..., summarize and report sinancial insormation; and (b) Any sraud, whether or not material, that involves management or other employees who have a signisicant role in the registrant's internal control over sinancial reporting. /s/ James D. White James D. White Chief Executive Officer and President...

  • Page 149
    ... the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who...

  • Page 150
    ...(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ James D. White James D. White Chief Executive Officer and President Date: March 16, 2009 A signed original of this written statement required...

  • Page 151
    ... The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Karen L. Luey Karen L. Luey Senior Vice President and Chief Financial Officer Date: March 16, 2009 P signed original of this written statement...