New World Coffee reports results for the third quarter and nine months ended September 29, 1996

Business Wire, Nov 6, 1996

NEW YORK--(BUSINESS WIRE)--November 6, 1996--New World Coffee Inc. (NASDAQ:NWCI), which operates 36 espresso bars in the Northeast, today announced results for the third quarter and nine months ended September 29, 1996 compared to the equivalent period last year, ended October 1, 1995.

Results for the quarter and nine months are released both actual and pro forma for the Willoughby's acquisition announced October 28th, and store closings reported in the second quarter. Pro forma revenues for the quarter were $3,192,856. Actual revenues for the quarter were $2,851,038 compared with $2,555,669 for the equivalent 1995 quarter. The number of stores open at the end of each period was 30 and 27, respectively.

Pro forma store operating income was $511,591, or 16.0% of sales. Actual store operating income for the quarter was $293,363, or 10.3% of sales, as compared with $149,323, or 5.8% of sales, last year. The improvement in pro forma store level margins reflects a 4.8% improvement in cost of goods sold, through vertical integration as well as improved vendor pricing; a 4.0% improvement in occupancy expense due to the addition of seven day stores, and stores outside of New York City, both of which carry lower rent expense; and a 1.4% improvement in store operating expense. The company expects the improvements in its store operating income to continue. Specifically, the company expects continued dramatic improvement in occupancy expense as it takes advantage of lower rent structures beyond New York City, and continued improvement in cost of goods as it benefits from improved pricing due to critical mass.

The pro forma loss from operations was $635,432, or $0.13 per share. The actual loss from operations for the 1996 quarter was $830,127, or $0.17 per share, as compared with a loss of $453,316, or $0.31 per share, in the 1995 quarter. Pro forma net loss was $689,070 or $0.16 per share. Actual net loss for the quarter was $856,765 or $0.19 per share, compared to a loss of $552,358, or $0.38 per share, for the equivalent period last year.

Ramin Kamfar, president and CEO of New World Coffee commented, "This has been a pivotal period for New World: completing the Ridgefield acquisition, initiating the Willoughby's acquisition which we completed in the fourth quarter, and achieving the strong improvements in store operating performance. Last quarter we projected 17% store operating margins by year end, we are now at pro forma 16% and expect to exceed that objective. This quarter our milestone to attain is positive cash flow as we continue to improve our store margins, grow our revenue base with the planned opening of five new stores, and corporate general and administrative expenses level off. Our store operating income is now in line with our comparables: Diedrich's Coffee, Coffee People and Starbucks which are trading at three to five times our valuation. We expect our valuation should come in line as the market becomes aware of our strong underlying value."

For the nine months, pro forma revenues were $9,518,238. The company's nine months actual revenues were $7,758,199, compared to $7,024,698 last year. Pro forma store operating income was $1,505,891, or 15.8% of sales. Actual store operating income was $609,032, or 7.9% of sales, versus $45,920, or 0.7% of sales, for the first nine months of 1995.

Pro forma loss from operations for the nine months of 1996 was $1,513,024, or $0.35 per share. The actual loss from operations for the nine months was $2,341,029, or $0.54 per share, compared to a loss of $1,885,605, or $1.29 per share last year. Pro forma net loss was $2,977,262 or $0.70 per share. The actual net loss for the period was $5,198,167, or $1.21 per share, compared to a loss of $2,069,202, or $1.42 per share, last year. The per share net loss figures include a $75,000 charge for Preferred Stock dividends in the current quarter. The nine months results for 1996 includes one-time, non-cash charges for pre-IPO bridge financing of $1,000,000, and a provision for store closings of $1,500,000.

New World Coffee Inc., the largest coffee bar retailer based in the Northeastern United States, currently owns and operates 36 espresso bars in the New York City, New Jersey, Pennsylvania and Connecticut areas and has eight leases for upcoming locations.

Certain statements in this release constitute "forward looking statements." Actual results could differ materially from such forward looking statements due to a number of important factors. Those factors, including terms of sites for store development, weather conditions and availability and terms of capital, are more fully discussed in the company's most recent Form 10-QSB for the third quarter of 1996, a copy of which is available without charge from the company. -0-

                       NEW WORLD COFFEE, INC.
                       FINANCIAL HIGHLIGHTS

                    (In thousands, except per share data)

                                     Quarter Ended       Proforma
                                  9/29/96    10/1/95      9/29/96

Revenues                        $  2,851    $ 2,556      $ 3,193
Store Operating Income               293        149          512
Loss from Operations                (830)      (453)        (635)
Net Loss                            (857)      (552)        (689)

Per Share Information:
 Loss from Operations              (0.17)     (0.31)       (0.13)
 Net loss (a)                   $  (0.19)   $ (0.38)     $ (0.16)
Weighted Average Number of
 Common Shares Outstanding     4,784,564  1,460,642    4,784,564


                                  Nine Months Ended      Proforma
                                  9/29/96    10/1/95      9/29/96

Revenues                        $  7,758    $ 7,025      $ 9,518
Store Operating Income               609         46        1,506
Loss from Operations (b)          (2,341)    (1,886)      (1,513)
Net Loss (c)                      (5,198)    (2,069)      (2,977)

Per Share Information:
 Loss from Operations (b)          (0.54)     (1.29)       (0.35)
 Net loss (a)(c)                $  (1.21)   $ (1.42)     $ (0.70)
Weighted Average Number of
 Common Shares Outstanding     4,353,009  1,460,642    4,353,009
-0-
(a)  Includes $75,000 charge for preferred stock dividend.

(b)  Excludes store closings and other non-recurring charges.

(c)  Includes one-time non-cash charges of $1,500,000 for store
     closings in the second quarter, and $1,000,000 related to
     pre-IPO bridge financing in the first quarter.