SEATTLE-- Jones Soda Co. (the Company) , a leader in the premium soda category and known for its unique branding and innovative marketing, today announced results for the fourth quarter and year ended December 31, 2009. The Company reported a net loss of $4.5 million, or ($0.17) per share, for the quarter ended December 31, 2009, an increase of 33% over the fourth quarter 2008 net loss of $3.4 million, or ($0.13) per share, with the current quarter including $2.0 million in non-cash charges for excess inventory and fixed asset write-downs. The Company reported a net loss of $10.5 million, or ($0.40) per share, for 2009, an improvement of 31% over the 2008 net loss of $15.2 million, or ($0.58) per share.
“We have strived over the last 12 months to streamline our business by reducing costs and focusing on our core glass bottle business. We have achieved improved year-over-year bottom-line results on lower case volumes, and we believe in the strength of the Jones Soda brand. However, adverse economic conditions have continued to negatively impact our liquidity and financial condition and caused us to explore strategic alternatives in an effort to enhance shareholder value. While the Board continues to conduct this process, we will continue to focus on executing our strategy, on delivering improved operating results in our core business – Jones Soda glass bottles, including our new Zilch™ zero calorie offering – and on regaining traction in our retail marketplace,” commented Joth Ricci, President & Chief Executive Officer.
Fourth Quarter Review – Comparison of Quarters ended December 31, 2009 and December 31, 2008
- Revenue decreased 30% to $4.3 million for the quarter ended December 31, 2009, compared to $6.1 million in the fourth quarter of 2008.
- Gross profit decreased to a negative $1.1 million for the quarter ended December 31, 2009, compared to a positive $1.5 million in the corresponding period a year ago. This decrease was primarily the result of a $2.0 million charge, consisting of a $1.6 million write-down of excess GABA inventory and a $422,000 impairment of equipment located at a co-packer relating to our CSD channel. For the quarter ended December 31, 2009, gross profit as a percentage of revenue decreased to (26%), comprised of 21% relating to our gross profit on case sales offset by (47%) relating to the $2.0 million in inventory write-down and impairment charges, compared to 24% for the quarter ended December 31, 2008.
- Operating expenses decreased 37% to $3.3 million, compared to the corresponding period a year ago and were benefited by cost containment measures including the reductions in workforce enacted during the fourth quarter of 2008 and in 2009.
- Cash used in operations during the quarter decreased significantly to $1.1 million, versus cash used in operations of $3.0 million during the prior year period.
Full Year Review – Comparison of Year ended December 31, 2009 and December 31, 2008
- Revenue decreased 28% to $26.0 million for the year ended December 31, 2009, compared to $35.9 million in 2008.
- Gross profit decreased 47% to $3.9 million for the quarter ended December 31, 2009, compared to $7.4 million, a year ago. This decrease was primarily as a result of a $2.2 million charge, of which $2.0 million was recorded in the fourth quarter, consisting of a $1.8 million write-down of excess GABA inventory and a $422,000 impairment of equipment located at a co-packer relating to our CSD channel. For the year ended December 31, 2009, gross profit as a percentage of revenue decreased to 15%, comprised of 24% relating to our gross profit on case sales offset by (9%) relating to the $2.2 million in inventory write-down and impairment charges, compared to 21% for the year ended December 31, 2008.
- Operating expenses decreased 37% to $14.4 million, compared to the corresponding period a year ago and were benefited by cost containment measures undertaken over the last year, including reductions in workforce.
- Cash used in operations during the year decreased to $7.3 million, versus cash used in operations of $14.5 million during prior year.
Balance Sheet
As of December 31, 2009, the Company had cash and cash-equivalents of approximately $5.0 million and working capital of $8.5 million. Cash used in operations during the year ended December 31, 2009 totaled $7.3 million, of which $1.1 million was used in the quarter ended December 31, 2009. As of December 31, 2009, inventories were $3.7 million compared to $5.7 million as of December 31, 2008. The $1.8 million of our GABA inventory, of which $1.6 million related to raw materials purchased in conjunction with the Company’s Pharma GABA supply agreement previously classified in other assets, was written-down to lower of cost or market as of December 31, 2009 as management determined that this amount is in excess of forecasted demand.
The challenges and uncertainties we face in our business, including our liquidity position, our inability to implement further meaningful cost containment measures beyond those we have already undertaken and the extremely difficult environment in which to obtain additional equity or debt financing, continue to raise substantial doubt about our ability to continue as a going concern. In light of this, we have evaluated a broad range of strategic alternatives over the last months. On March 9, 2010, we announced that we had entered into a Letter of Intent (LOI) with Reed's, Inc. (Reed’s), maker of sodas sold in natural food stores nationwide, regarding a potential merger transaction in which Reed's would acquire Jones Soda for a combination of cash and Reed's common stock. On March 22, 2010, we announced that we had terminated the exclusivity provisions of the LOI in order to explore an unsolicited, nonbinding transaction proposal submitted by another third party. We intend to continue to explore strategic transactions that may be in the best interest of the Company and our shareholders, which may include, without limitation, mergers or other business combinations, public or private offerings of debt or equity financings, joint ventures with one or more strategic partners and other strategic alternatives. However, there can be no assurance that we will enter into a definitive agreement with respect to a transaction, or that any transaction we may enter into will ultimately be consummated.
About Jones Soda Co.
Headquartered in Seattle, Washington, Jones Soda Co.® markets and distributes premium beverages under the Jones Soda, Jones Pure Cane Soda™, Jones 24C™, Jones GABA®, and Whoopass Energy Drink® brands and sells through its distribution network in markets primarily across North America. A leader in the premium soda category, Jones is known for its variety of flavors and innovative labeling technique that incorporates always-changing photos sent in from its consumers. Jones Soda is sold through traditional beverage retailers. For more information visit www.jonessoda.com, www.myjones.com, and www.jonesGABA.com.