Brick Brewing reports third quarter F2009 financial results and retirement of Executive Chairman and Founder, Jim Brickman

 
    WATERLOO, ON, Dec. 11 /CNW/ - Brick Brewing Co. Limited (the "Company")
today announced their third quarter F2009 financial results.
    Key operating and financial highlights for the Company's fiscal third
quarter ending October 31, 2008, compared to the fiscal third quarter ending
October 31, 2007, include the following:

    -   Brick Brewing gross revenues for the third quarter F2009 were $16.5
        million, a decrease of $0.4 million from the third quarter of fiscal
        F2008.
    -   Net revenues for the third quarter of fiscal F2009 were $7.3 million
        as compared to $7.5 million in the same quarter last year, a decrease
        of $0.2 million or 3.3%.
    -   The Company's overall beer volumes including co-packaged beer
        decreased by 6%, compared to a decrease of 9% in the third quarter
        last year.
    -   Brick Brewing's proprietary beer volumes showed considerable
        improvement compared to last year. Proprietary volumes declined by
        only 2.1% in the quarter compared to a decline of 12.7% in the third
        quarter of last year
        -  Laker family brands showed positive growth in September and
           October versus last year.
        -  Waterloo Dark experienced double-digit growth in the quarter.
    -   On September 20, 2008 the Ontario Government announced a new four-
        year Ontario Craft Brewers Opportunity Fund. Brick Brewing recognized
        a benefit of $565 thousand in the third quarter related to this Fund.
    -   On November 24, 2008 the minimum retail price of beer in Ontario
        increased from $26.40 to $28.00 on 5% alcohol 24-pack bottles.
    -   Efficiencies were realized at the Kitchener packaging facility and
        have contributed in per unit manufacturing costs being reduced in the
        third quarter compared to the same period in the previous year.
    -   All brewing production was consolidated to Waterloo in the quarter
        and Brick Brewing will continue to operate in this fashion going
        forward.

    "The financial results continue to be challenging, however Brick Brewing
is focused on improving efficiencies which will serve the Company well in the
future" said Croft, President and CEO of Brick.

    Special and Other One-Time Items

    -   The Company incurred $296 thousand in severance costs, for a total of
        $497 thousand for the nine months ending October 31, 2008. A layer of
        senior management has been eliminated, which will result in
        considerable savings on administration costs in F2010.
    -   The Company reduced the carrying value of certain bottles by $176
        thousand to reflect the realizable value of these bottles based on
        current production and sales estimates.
    -   The agreement with Direct Cellars Beverage Co. will end on January
        31, 2009. The Company determined that a $75 thousand reduction of the
        long-term investment was required at October 31, 2008.
    -   The Company completed a private placement financing for gross
        proceeds of $2.75 million on October 31, 2008.

    "Our focus for the balance of the year will continue to be directed at
reducing all non-strategic costs, enhancing operating efficiencies and
improving the performance of our brands in the marketplace" added Croft.
    The Company also announced today that Executive Chairman and Founder Jim
Brickman has provided his notice of retirement to the Company which the
Company has accepted effective immediately.
    The Company, founded by Jim Brickman in 1984, was the first craft brewery
to start up in Ontario, and is credited with pioneering the present day craft
brewing renaissance in Canada. Jim Brickman has been Executive Chairman of the
Company since May 2004, prior to which he was President and Chief Executive
Officer of the Company from February 1984 to May 2004.
    "The Company appreciates the significant contribution Jim Brickman has
made to Brick Brewing since founding it in 1984," said Croft. "His hard work
and dedication has helped build the foundation for the Company's future,"
added Croft. The Company's Board of Directors and management wish him well in
his future endeavours.

                          Brick Brewing Co. Limited
                       Statements of Loss and Deficit
                                 (unaudited)

                           Three Months Ended           Nine Months Ended

    -------------------------------------------------------------------------
                        October 31    October 31    October 31    October 31
                           2008          2007          2008          2007

    Gross Revenue     $ 16,501,409  $ 16,905,763  $ 51,543,872  $ 54,549,914
      Less: Production
       taxes &
       distribution
       fees             (9,206,408)   (9,363,352)  (28,238,614)  (30,511,084)
    -------------------------------------------------------------------------
    Net Revenue          7,295,001     7,542,411    23,305,258    24,038,830

    Cost of goods sold   6,533,437     6,240,536    19,223,148    19,203,993

    -------------------------------------------------------------------------
    Gross margin           761,564     1,301,875     4,082,110     4,834,837

    Expenses:
      Selling,
       marketing and
       administration      887,783     1,691,294     3,189,906     5,053,477
      Severance costs      296,475       284,734       497,278       284,734

    -------------------------------------------------------------------------
    Earnings before
     the undernoted       (422,694)     (674,153)      394,926      (503,374)

      Amortization        (426,856)     (429,437)   (1,277,359)   (1,321,714)
      Interest expense     (92,226)     (167,938)     (285,854)     (378,878)
      Other income          14,786         3,834        50,023        27,195
      Equity (loss)
       earnings of
       long term
       investment          (46,875)        1,100        17,339        12,767
    -------------------------------------------------------------------------
                          (551,171)     (592,441)   (1,495,851)   (1,660,630)

    -------------------------------------------------------------------------
    Loss before
     provision for
     income taxes         (973,865)   (1,266,594)   (1,100,925)   (2,164,004)

    Future income
     tax recovery         (297,679)     (408,689)     (318,614)     (691,329)

    -------------------------------------------------------------------------
    Net loss              (676,186)     (857,905)     (782,311)   (1,472,675)

    Deficit,
     beginning of
     the period         (6,958,365)   (4,876,384)   (6,852,240)   (4,158,438)

    Cumulative
     effect of
     adopting new
     accounting
     policies, net
     of tax                      -             -             -      (103,176)

    -------------------------------------------------------------------------
    Deficit, end
     of period         $(7,634,551)  $(5,734,289)  $(7,634,551)  $(5,734,289)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net loss per share:
      Basic            $     (0.03)  $     (0.04)  $     (0.04)  $     (0.07)
      Diluted                (0.03)        (0.04)        (0.04)        (0.07)
    -------------------------------------------------------------------------



                          Brick Brewing Co. Limited
                               Balance Sheets
                                 (unaudited)

    -------------------------------------------------------------------------
                                          October 31, 2008  January 31, 2008
    -------------------------------------------------------------------------

    Assets

    Current assets:
      Accounts receivable                    $   2,860,816     $   2,570,768
      Inventories                                6,400,097         6,489,553
      Future income taxes                           63,650            54,799
      Prepaid expenses                             570,657           509,995
      -----------------------------------------------------------------------
      Total current assets                       9,895,220         9,625,115

    Property, plant and equipment               16,972,347        17,776,735
    Long term investment                           122,921           105,582
    Trademarks and listing fees                  5,505,143         5,429,795
    Deferred costs                                 367,287           383,650
    Other assets                                   190,000           212,500
    Future income taxes                          2,372,373         2,062,610

    -------------------------------------------------------------------------
                                             $  35,425,291     $  35,595,987
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
      Bank indebtedness                      $     161,871     $   2,790,750
      Accounts payable and accrued
       liabilities                               4,215,187         3,038,317
      Current portion of long-term debt            919,500           906,600
      Current portion of obligations under
       capital lease                               131,991           137,854
      -----------------------------------------------------------------------
      Total current liabilities                  5,428,549         6,873,521

    Long-term debt                               2,126,250         2,991,900
    Obligations under capital lease                319,269           419,281

    Shareholders' equity:
      Share capital                             34,637,808        31,539,112
      Contributed surplus                          547,966           624,413
      Deficit                                   (7,634,551)       (6,852,240)
      -----------------------------------------------------------------------
      Total shareholders' equity                27,551,223        25,311,285

    -------------------------------------------------------------------------
                                             $  35,425,291     $  35,595,987
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                          Brick Brewing Co. Limited
                           Statements of Cash Flows
                                 (unaudited)

                           Three Months Ended           Nine Months Ended

    -------------------------------------------------------------------------
                        October 31,   October 31,   October 31,   October 31,
                           2008          2007          2008          2007
    -------------------------------------------------------------------------

    Cash provided by (used in):

    Operations:
      Loss for the
       period          $  (676,186)  $  (857,905)  $  (782,311)  $(1,472,675)
      Items not
       involving cash:
        Amortization of
         property, plant
         and equipment
         and deferred
         assets            424,807       421,937     1,261,536     1,306,714
        Amortization of
         other assets        7,500         7,500        22,500        15,000
        Stock based
         compensation       28,794        23,250        72,323        69,750
        Equity earnings
         (loss) on long
         term investment    46,875        (1,100)      (17,339)      (12,766)
        Future income
         tax recovery     (297,679)     (408,689)     (318,614)     (727,137)
      Change in non-cash
       operating working
       capital           1,003,560       629,035       915,616       775,782
      -----------------------------------------------------------------------
                           537,671      (185,972)    1,153,711       (45,332)

    Financing:
      Repayment of long
       term debt          (403,650)     (399,450)     (852,750)     (840,750)
      Repayment of
       obligation under
       capital lease       (31,321)      (52,105)     (105,875)     (153,174)
      Issue of capital
       stock, net of
       costs             2,637,096             -     2,949,926        22,829
      -----------------------------------------------------------------------
                         2,202,125      (451,555)    1,991,301      (971,095)

    Investments:
      Acquisition of
       property, plant
       and equipment
       and listing fees   (223,652)     (102,645)     (516,133)     (876,430)
      -----------------------------------------------------------------------
                          (223,652)     (102,645)     (516,133)     (876,430)

    -------------------------------------------------------------------------
    Net increase/
     (decrease) in
     cash                2,516,144      (740,172)    2,628,879    (1,892,857)

    Cash/(bank
     indebtedness),
     beginning of
     period             (2,678,015)   (1,098,833)   (2,790,750)       53,852

    -------------------------------------------------------------------------
    Cash/(bank
     indebtedness),
     end of period     $  (161,871)  $(1,839,005)  $  (161,871)  $(1,839,005)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    These statements should be read in conjunction with the audited annual
financial statements of the Company.

    Additional Information

    For further details the Company's management discussion and analysis
(MD&A) and financial statements for the quarter ended October 31, 2008 will be
available on the investor section of the Brick Brewing website at
www.brickbeer.com. Additional information relating to the Company, including
its Annual Information Form, is available there and on SEDAR at www.sedar.com.

    About Brick Brewing

    Brick Brewing Co. Limited is Ontario's largest Canadian-owned and
Canadian-based publicly held brewery. The Company is a regional brewer of
award winning premium quality and value beers. The Company, founded by Jim
Brickman in 1984, was the first craft brewery to start up in Ontario, and is
credited with pioneering the present day craft brewing renaissance in Canada.
Brick has complemented its J. R. Brickman Founder's Series and Waterloo Dark
premium craft beers with other popular brands such as Laker, Red Cap and
Formosa Springs Draft. Brick trades on the TSX under the symbol BRB. Visit us
at www.brickbeer.com

    Forward-Looking Statements

    All statements in this press release that do not directly and exclusively
relate to historical facts constitute forward-looking statements as of the
date of this press release. Forward-looking statements generally can be
identified by the use of forward-looking terminology such as "may", "will",
"expect", "intend", "anticipate", "seek", "plan", "believe" or "continue" or
the negatives of these terms or variations of them or similar terminology.
Although the Company believes that the expectations and assumptions reflected
in these forward-looking statements are reasonable, undue reliance should not
be placed on these forward-looking statements, which are not guarantees and
are subject to certain risks, uncertainties and assumptions, which may cause
actual performance and financial results to differ materially from such
forward-looking statements. The forward-looking statements, including the
statements regarding expected volumes, operating efficiencies and costs are
based on, among other things, the following material factors and assumptions:
volumes in the current fiscal year ending January 31, 2009 ("fiscal 2009")
will be reduced from last year, no material changes in consumer preferences,
operating efficiencies at the packaging and warehousing facility in Kitchener,
Ontario will continue to be realized, input costs for brewing and packaging
materials will continue to be higher than last year, competitive activity from
other brewers will continue, no material change to the regulatory environment
in which the Company operates and no material supply, cost or quality control
issues with vendors. Readers are urged to consider the foregoing factors and
assumptions when reading the forward-looking statements and, for more
information regarding the risks, uncertainties and assumptions that could
cause the Company's actual financial results to differ from the
forward-looking statements, to also refer to the Company's MD&A, annual
information form and various other public filings. The forward-looking
statements included in this press release are made only at the date of this
press release and, except as required by applicable securities laws, the
Company does not undertake to publicly update such forward-looking statements
to reflect new information, future events or otherwise.

    (*) EBITDA is a non-GAAP earnings measure, therefore it does not have any
standardized meaning prescribed by Canadian generally accepted accounting
principles and may not be similar to measures presented by other companies.
EBITDA represents earnings before interest, income taxes, depreciation and
amortization. Management uses this measurement to evaluate the operating
results of the Company. This measure is also important to management since it
is used by the Company's lenders to evaluate the ongoing cash generating
capability of the Company and therefore the amounts those lenders are willing
to lend to the Company. Investors find EBITDA to be useful information because
it provides a measure of the Company's operating performance.
For further information: George Croft, President and CEO, Tel: (519)
576-9519 Ext. 247, E-mail: info@brickbeer.com



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