Address 28 Executive Park Suite 200 Irvine, CA 92614 United States - Map Phone: 949-260-1600 Fax: 949-260-1610 http://www.diedrich.com Exchange NASDAQ Index Membership None Sector Consumer Non-Durables Industry Grocery Stores Held by these Mutual Funds Utopia Core Utopia Growth Utopia Core Conservative Utopia Yield Income DFA U.S. Small Cap Value I DFA U.S. Micro Cap I DFA Tax-Managed U.S. Targeted Value DFA Tax-Managed U.S. Small Cap Vanguard Extended Market Idx DFA Tax-Managed U.S. Marketwide Value II Competitors Starbucks BAGL Carrols Restaurant Group Burger King Holdings Executives Mr. James Russell Phillips Chief Exec. Officer Pres Director and Chairman of Audit Committee Mr. Sean M. McCarthy Chief Financial Officer Chief Accounting Officer VP and Sec. Mr. James L. Harris VP of Sales Jeanne Ortiz Director of HR Dana A. King VP Information & Customer Services Financial Snapshot Revenue Net Income EPS EBITDA Long Term Debt 2008 $ 46.3 M $ -13.8 M $ -2.5 $ -6.9 M $ 0.0 2007 $ 36.6 M $ -1.8 M $ -0.3 $ -3.8 M $ 0.0 Description Diedrich Coffee, Inc. was incorporated in California in 1985. In August 1996, it reincorporated under Delaware law as Diedrich Coffee, Inc., and completed an initial public offering of its common stock in September 1996. Diedrich Coffee, Inc. is a specialty coffee roaster, wholesaler and retailer. It sells brewed, espresso-based and various blended beverages primarily made from its own fresh roasted premium coffee beans, as well as light food items, whole bean coffee and accessories, through its company operated and franchised retail locations. The Company also sells whole bean and ground coffee on a wholesale basis through a network of distributors in the Office Coffee Service market and to other wholesale customers, including restaurant chains and other retailers. As of June 28, 2006, the Company owned and operated 52 retail locations, of which up to 40 retail locations may be sold to Starbucks Corporation, and franchised 148 other retail locations under these brands, for a total of 200 retail coffee outlets. Although the specialty coffee industry is presently dominated by a single company, which operates over eight thousand domestic retail locations. Its retail units are located in 33 states. As of June 28, 2006, the Company also had over 800 wholesale accounts with OCS distributors, chain and independent restaurants, and others. In addition, the Company operates a large coffee roasting facility in central California that supplies freshly roasted coffee to its franchise and retail locations and wholesale accounts. Diedrich's Gloria Jean's coffee stores offer a variety of the finest quality flavored whole bean coffees, as well as an assortment of coffee related merchandise, accessories, porcelain novelties and gift items, in addition to coffee-based beverages. On September 14, 2006, the Company and Starbucks Corporation entered into an asset purchase agreement to which Starbucks has agreed to purchase its leasehold interests in most of the 47 locations where it operates retail stores under the Diedrich Coffee and Coffee People brands, along with certain related fixtures and equipment, improvements, prepaid items, and ground lease improvements, and to assume certain liabilities as set forth in the asset purchase agreement. The Company's primary marketing strategy is to develop the Gloria Jean's brand in the U.S. and Puerto Rico through penetration of new and existing markets via franchise growth. Its wholesale sales in the OCS market, to chain restaurants, and to other customers also operate to increase the visibility of its brands. Diedrich owns several trademarks and service marks that have been registered with the United States Patent and Trademark Office, including Diedrich Coffee(r), Gloria Jean's(r), Coffee People(r), Motor Moka(r), Aero Moka(r), Wiener Melange Blend(r), Harvest Peak(r), and Flor de Apanas(r), as well as other slogans, product names, design marks and logos. In addition to the laws and regulations relating to the food service industry, the Company is subject to Federal Trade Comm. regulation and state laws that regulate the offer and sale of franchises as well as the franchise relationshi