Tully's reports profit for year with sale of Japanese operations

The sale of its Japan operation and expanding wholesale operation pushed Tully's Coffee of Seattle into the black for its fiscal year 2006.

The Seattle company that sells coffee and operates a chain of cafes benefited from opening 14 stores in the last year and an extra week in the fiscal year that ended April 2. Product sales increased 3.5 percent to $51.4 million.

Tully's wholesale division sales rose $3.7 million to $13.2 million, a 38.6 percent increase from last year. Tully's retail division sales were $38.2 million, reflecting a 2.1 percent decline in comparable store sales. Tully's specialty division now has franchised stores in Arizona, California, Idaho, Oregon and Washington.

During fiscal 2006, Tully's sold its Japanese trademarks and other Japanese intellectual properties to its licensee for Japan and terminated its license and supply agreements with that licensee. Tully's recognized a one-time gain of $17.4 million on the sale. The company said it used the money to repay most of its debt and spruce up its stores.

Including the gain from the Japan Rights sale, Tully's had net income of $15.4 million compared with a net loss of $4.6 million last year. Earnings before interest, taxes, depreciation, and amortization (EBITDA) for fiscal 2006 was $19.7 million, compared with $2,000 last year.