Brick Brewing Third Quarter Report



    Brick Brewing reports Net Loss of $858 thousand as the Company incurred
    increased production taxes, one time costs related to Strategic Review
    and severance costs to streamline operations

    WATERLOO, ON, Dec. 11 /CNW/ - Brick Brewing Co. Limited (TSX:BRB) today
released its financial results for the third quarter and nine months ended
October 31, 2007.
    The results of the third quarter of fiscal 2008 for Brick Brewing
produced a loss of $858 thousand, compared with a profit of $40 thousand, in
the fiscal 2007 third quarter. The reduced profitability was largely due to
the continuing effect of increased production taxes of $528 thousand, and one
time costs associated with the recently completed strategic review of
$297 thousand and severance costs of $295 thousand, as the Company reduced
administrative and Formosa overheads.
    "We view these results as unfavourable but not unexpected," said Jim
Brickman, Founder and Chairman of Brick Brewing. "The strategic review took
longer than planned and proved to be both an expensive and distracting
exercise for the Company," he added. "However, we believe it was a necessary
exercise to explore alternative opportunities that could maximize shareholder
value. With the process now behind us, we can focus on streamlining operations
that recognize the current realities in the marketplace while implementing
strategies to grow our business."
    Gross revenues in the third quarter decreased by 7.2% to $16.9 million
compared with $18.2 million in the third quarter last year. On a net basis -
after deduction of distribution fees and production taxes - revenues were
$7.5 million, compared with $8.7 million last year. This decrease in net
revenue was largely attributable to a 9% decline in total beer volume. Volume
sold at The Beer Store (TBS), the industry's dominant Ontario distribution
channel, declined 15% while volumes sold to LCBO outlets increased 5% in the
quarter, compared with last year.
    In the third quarter the Company's marginal production tax rate increased
by 9% or $528 thousand in aggregate additional taxes, compared to the same
quarter last year. These increased per unit production taxes are due to the
Company no longer benefiting from the Ontario small brewer tax reduction in
fiscal 2008. The Ontario small brewer tax reduction reduced provincial taxes
payable by the Company by a total of $2.6 million in fiscal 2007.
    Cost of goods sold were $6.2 million down from $6.4 million last year. On
a per unit basis, these costs rose 6%, primarily reflecting higher material
and other input costs. Variable manufacturing costs were reduced from the same
quarter last year as a result of increased production volume in the Kitchener
facility. In the quarter the Company discontinued essentially all packaging
operations and minimized brewing operations in the Formosa facility. The
Company is seeking to further reduce manufacturing overheads and improve
packaging efficiencies by consolidating packaging activities in the Kitchener
facility.

    
                          Brick Brewing Co. Limited
                     Statements of Earnings and Deficit
                                 (unaudited)
                                  ($ 000's)

                              Three Months Ended        Nine Months Ended

    -------------------------------------------------------------------------
                           October 31,  October 31,  October 31,  October 31,
                                 2007         2006         2007         2006

    Gross Revenue          $   16,906   $   18,218   $   54,550   $   57,554
      Less: Production
       taxes & distribution
       fees                    (9,363)      (9,526)     (30,511)     (30,265)
    -------------------------------------------------------------------------
    Net Revenue                 7,542        8,692       24,039       27,289

    Cost of goods sold          6,241        6,409       19,204       18,300
    -------------------------------------------------------------------------
    Gross margin                1,302        2,283        4,835        8,989

    Expenses:
      Selling, marketing
       and administration       1,394        1,760        4,756        5,924
      Strategic review costs      297            -          297            -
      Severance costs             285            -          285            -
    -------------------------------------------------------------------------
                                1,976        1,760        5,338        5,924

    -------------------------------------------------------------------------
    Earnings before the
     undernoted                  (674)         524         (503)       3,065

    Other income/(expenses):
      Amortization               (429)        (385)      (1,322)      (1,105)
      Interest on
       long-term debt            (168)        (111)        (379)        (297)
      Other interest income         4           27           27           58
      Equity earnings/(loss)
       of long term investment      1            6           13          (13)
    -------------------------------------------------------------------------
                                 (592)        (463)      (1,661)      (1,357)

    -------------------------------------------------------------------------
    Earnings/(loss) before
     provision for income
     taxes                     (1,267)          61       (2,164)       1,709

    Future income tax
     expense/(recovery)          (409)          21         (691)         582
    -------------------------------------------------------------------------
    Net earnings/(loss)          (858)          40       (1,473)       1,127

    Deficit, beginning of
     the period                (4,876)      (3,198)      (4,158)      (4,285)

    Impact of change in
     accounting policy for
     deferred financing
     charges                        -            -         (103)
    -------------------------------------------------------------------------
    Deficit, end of period $   (5,734)  $   (3,158)  $   (5,734)  $   (3,158)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings/(loss)
     per share:
      Basic                $    (0.04)  $        -   $    (0.07)  $     0.03
      Diluted                   (0.04)           -   $    (0.06)        0.03
    -------------------------------------------------------------------------



                          Brick Brewing Co. Limited
                               Balance Sheets
                                 (unaudited)
                                  ($ 000's)

    -------------------------------------------------------------------------
                                                     October 31,  January 31,
                                                           2007         2007
    -------------------------------------------------------------------------

    Assets

    Current assets:
      Cash                                           $        -   $       54
      Accounts receivable                                 2,910        2,590
      Inventories                                         7,641        8,382
      Future income taxes                                    92           80
      Prepaid expenses                                      629          487
      -----------------------------------------------------------------------
      Total current assets                               11,271       11,593

    Property, plant and equipment                        17,304       17,687
    Long term investment                                     92           79
    Trademarks and listing fees                           5,430        5,407
    Deferred costs                                          409          638
    Other assets                                            220          243
    Future income taxes                                   2,432        1,705

    -------------------------------------------------------------------------
                                                     $   37,158   $   37,352
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
      Bank indebtedness                              $    1,839   $        -
      Trade accounts payable and accrued liabilities      4,356        3,912
      Current portion of long-term debt                     902          890
      Current portion of obligations under capital
       lease                                                157          204
      -----------------------------------------------------------------------
      Total current liabilities                           7,254        5,006

    Long-term debt                                        3,046        3,899
    Obligations under capital lease                         451          557

    Shareholders' equity:
      Share capital                                      31,526       31,504
      Contributed surplus                                   614          545
      Deficit                                            (5,734)      (4,158)
      -----------------------------------------------------------------------
      Total shareholders' equity                         26,407       27,890

    -------------------------------------------------------------------------
                                                     $   37,158   $   37,352
    -------------------------------------------------------------------------



                          Brick Brewing Co. Limited
                           Statements of Cash Flows
                                 (unaudited)
                                  ($ 000's)

                              Three Months Ended        Nine Months Ended
    -----------------------------------------------  ------------------------
                           October 31,  October 31,  October 31,  October 31,
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------

    Cash provided by
     (used in):

    Operations:
      Earnings/(loss) for
       the period          $     (858)  $       40   $   (1,473)  $    1,127
      Items not involving
       cash:
        Amortization              429          385        1,322        1,105
        Stock based
         compensation              23           50           70           50
        Equity (earnings)/
         loss of long term
         investment                (1)          (6)         (13)          13
        Future income
         taxes/(recovery)        (409)          21         (727)         582
      Change in non-cash
       operating working
       capital                    629       (2,414)         776       (2,852)
      -----------------------------------------------------------------------
                                 (186)      (1,924)         (45)          24

    Financing:
      Repayment of long
       term debt                 (399)        (422)        (841)        (657)
      Repayment of
       obligation under
       capital lease              (52)         (28)        (153)        (124)
      Issuance of long
       term debt                    -            -            -        2,000
      Proceeds from
       obligations under
       capital lease                -            -            -          750
      Issue of capital
       stock, net of costs          -        1,888           23        2,300
      -----------------------------------------------------------------------
                                 (452)       1,438         (971)       4,269

    Investments:
      Acquisition of
       property, plant and
       equipment and
       listing fees              (103)        (415)        (876)      (3,481)
      Pre-operating costs           -            -            -         (403)
      -----------------------------------------------------------------------
                                 (103)        (415)        (876)      (3,884)
                                                              -            -
    -------------------------------------------------------------------------
    Net increase in cash         (740)        (901)      (1,893)         410

    Cash, beginning of
     period                    (1,099)       1,818           54          507

    -------------------------------------------------------------------------
    Cash/(bank
     indebtedness), end
     of period             $   (1,839)  $      917   $   (1,839)  $      917
    -------------------------------------------------------------------------
    

    Additional Information
    ----------------------
    For further details the Company's MD&A and financial statements for the
quarter ended October 31, 2007 will be available on the investor section of
the Brick 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. These forward-looking statements include, among
others, the statements concerning plant, packaging and other capacity
improvements, product demand, marketing and sales opportunities, volume growth
and market share, distribution and customer service improvements, reduced
variable costs and improvements in earnings and margin. These forward-looking
statements are not guarantees and are based on management's expectations
concerning, among other things, improvements in product distribution and
customer service, that improved operating efficiencies will be realized and
that product demand will grow. Although the Company believes these
forward-looking statements are based on information and assumptions which are
reasonable there are a number of material factors and assumptions which could
cause actual results to vary materially from current expectations, including,
among other things, production delays, additional or duplicative costs,
operational or distribution issues, reduced marketing or sales opportunities
or reduced product demand. The forward-looking statements included in this
press release are made only at the date of this press release and the Company
does not undertake to publicly update these forward-looking statements to
reflect new information, future events or otherwise.

    %SEDAR: 00003334E




For further information:

For further information: Graydon Moore, Chief Financial Officer, Tel:
(519) 576-9100 Ext. 222, E-mail: finance@brickbeer.com; Jim Brickman,
Executive Chairman/Founder, Tel: (519) 576-9100 Ext. 232

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Brick Brewing Co. Limited

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