Glacier Water Announces First Quarter 2008 Results

Glacier Water Services, Inc. (Pink Sheets:GWSV) announced results for the quarter ended March 30, 2008.

Brian McInerney, Chief Executive Officer of Glacier Water, said, “Glacier achieved first quarter revenues of $20,880,000, up 1.2% over the same period last year. The rate of growth was moderated by a couple of factors including soft sales in the Midwest driven by cold and wet weather and the impact of replacing some mature locations with newer developing locations. On a same store basis, sales increased by 5.3% as compared to last year. Loss from operations for the first quarter was $245,000 and was driven by higher operating costs to support new location growth and increased fuel costs. At the end of the first quarter of 2008, Glacier had more than 16,300 machines at retailers across the U.S. and Canada providing high quality, great tasting drinking water.”

Revenues for the quarter ended March 30, 2008 increased to $20,880,000 from $20,638,000, representing a 1.2% increase versus last year. The increase in revenue was primarily the result of higher volume per machine and more machine locations year-over-year. The net increase in machines in operation at March 30, 2008 as compared to April 1, 2007 was approximately 400.

The Company’s loss from operations for the quarter ended March 30, 2008 was $245,000 compared to income from operations of $127,000 for the same period last year. The loss from operations for the first quarter 2008 includes non-cash compensation expense of $80,000 as compared to $62,000 for the first quarter 2007. Additionally, the Company incurred higher operating costs in the form of labor, machine maintenance, and fuel costs. Fuel costs in particular increased $83,000 as compared to last year.

The Company’s net loss applicable to common stockholders for the first quarter ended March 30, 2008, was $2,440,000, or $0.91 per basic and diluted share, compared to a loss of $2,171,000, or $0.84 per basic and diluted share for the same period last year.

With approximately 16,300 machines located in 43 States throughout the United States and Canada, Glacier is the leading provider of high quality, low-priced drinking water dispensed to consumers through self-service bottled water machines located at supermarkets and other retail locations.

Statements in this announcement that are not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. A copy of the Company’s audited financial statements for the year ended December 30, 2007 are available on the Company’s website, www.glacierwater.com, or can be obtained by contacting Steve Stringer at (760) 560-1111.

Summary Financial Information

Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)

				Three Months Ended
					March 30,			April 1,
					2008			2007
Revenues				$	20,880		$	20,638
Operating costs and expenses:
	Operating expenses				13,686			13,191
	Depreciation and amortization				3,937			3,920
		Cost of goods sold			17,623			17,111
	Selling, general, and administrative expenses				3,502			3,400
			Total operating costs and expenses		21,125			20,511
			Income from operations		(245	)		127
Interest expense					2,195			2,298
			Loss before income taxes		(2,440	)		(2,171	)
Income tax benefit					-			-
			Net loss applicable to common stockholders	$	(2,440	)	$	(2,171	)
Basic and diluted loss per share:
	Net loss applicable to common stockholders			$	(0.91	)	$	(0.84	)
	Weighted average shares used in calculation				2,690,613			2,599,539

Cash dividend per common share				$	0.50		$	0.40


Consolidated Balance Sheets
(In thousands, except share data)

		March 30,			December 30,
Assets			2008			2007
			(unaudited)
Current assets:
	Cash and cash equivalents	$	2,774		$	3,120
	Accounts receivable, net of allowance for doubtful accounts of $62 and $61 as of March 30, 2008 and December 30, 2007, respectively
			1,691			1,617
	Repair parts		2,655			2,561
	Prepaid expenses and other		1,352			1,161
	Total current assets		8,472			8,459

Property and equipment, net			46,042			47,698
Goodwill			7,080			7,080
Intangible assets, net of accumulated amortization of $1,283 and $1,279 as of March 30, 2008 and December 30, 2007, respectively
			76			88
Investment in Glacier Water Trust I Common Securities			2,629			2,629
Investment in Glacier Water Trust I Preferred Securities			3,357			3,357
Deferred financing costs, net			4,639			4,661
Other assets			644			465
	Total assets	$	72,939		$	74,437

Liabilities and Stockholders’ Deficit
Current liabilities:
	Accounts payable	$	1,486		$	1,148
	Accrued commissions		2,716			2,580
	Accrued liabilities		3,137			4,386
	Bank overdraft		1,582			2,068
	Current portion of long-term notes payable		4			57
	Current portion of deferred rent		50			50
	Total current liabilities		8,975			10,289

Long-term debt			87,629			87,629
Long-term line of credit and notes payable			22,817			19,197
Long-term portion of deferred rent			56			67
	Total liabilities		119,477			117,182

Commitments and contingencies

Stockholders’ deficit:
	Common stock, $0.01 par value. Authorized 10,000,000 shares; issued and outstanding 2,690,693, and 2,690,568 shares at March 30, 2008 and December 30, 2007, respectively		44			44
	Additional paid-in capital		17,974			19,244
	Retained deficit		(32,317	)		(29,877	)
	Treasury stock, at cost, 1,587,606 shares at March 30, 2008 and December 30, 2007		(32,562	)		(32,562	)
	Accumulated other comprehensive income		323			406
	Total stockholders’ deficit		(46,538	)		(42,745	)
	Total liabilities and stockholders’ deficit	$	72,939		$	74,437