Glacier Water Announces Third Quarter 2010 Results

Brian McInerney, Chief Executive Officer of Glacier Water, said, aOur year-to-date October 3, 2010 revenues decreased slightly versus last year. Revenues were impacted in the third quarter by below-average temperatures throughout the west and southwestern U.S., combined with the volume-per-store reduction from replacing some mature stores with new ramping locations. However, same-store revenue increased 3.1% for the first nine months and the total fleet of machines in operation increased by approximately 700 compared to a year ago. At the end of the third quarter, Glacier had more than 18,700 machines located at retailers across the U.S. and Canada providing high quality, great tasting drinking water.a

Revenues for the third quarter ended October 3, 2010 decreased 5.1% to $28,265,000 compared to $29,780,000 for the same quarter a year ago. For the nine-month period ended October 3, 2010, revenues decreased 1.9% to $76,750,000 compared to $78,246,000 for the same period one year ago.

The Companya�s income from operations for the third quarter ended October 3, 2010 was $3,793,000 compared to $4,236,000 for the same period last year. For the nine-month period ended October 3, 2010, income from operations was $6,363,000 compared to $7,034,000 for the same period last year. Income from operations was affected by increased operating costs to support the growth in machines, and in particular labor and benefits, replacement parts, and fuel costs, offset by reduced depreciation and amortization costs. Income from operations for the first nine months of 2010 and 2009 included non-cash compensation expense of $267,000.

The Companya�s net income applicable to common stockholders for the quarter ended October 3, 2010 was $1,776,000, or $0.65 per basic share and $0.63 per diluted share, compared to a net income of $2,190,000, or $0.81 per basic share and $0.78 per diluted share, for the same period last year. For the nine-month period ended October 3, 2010, the net income applicable to common stockholders was $55,000, or $0.02 per basic and diluted share, compared to net income of $843,000, or $0.31 per basic share and $0.30 per diluted share, for the same period last year.

With more than 18,700 machines located in 42 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 Companya�s audited financial statements for the year ended January 3, 2010 are available on the Companya�s website, [ www.glacierwater.com ], or can be obtained by contacting Steve Stringer at (760) 560-1111.



FINANCIAL RESULTS				GLACIER WATER SERVICES, INC.

Summary Financial Information

GLACIER WATER SERVICES, INC.
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)

		Three Months Ended			Nine Months Ended
		October 3,		September 27,	October 3,		September 27,
		2010		2009	2010		2009
Revenues	$	28,265		29,780	76,750		78,246
Operating costs and expenses:
Operating expenses		17,977		18,178	50,108		48,958
Depreciation and amortization		3,004		3,781	9,508		11,524
Cost of goods sold		20,981		21,959	59,616		60,482
Selling, general, and administrative expenses		3,491		3,585	10,771		10,730
Total operating costs and expenses		24,472		25,544	70,387		71,212
Income from operations		3,793		4,236	6,363		7,034
Interest expense		2,160		2,046	6,384		6,191
Net Income (loss) before income taxes		1,633		2,190	(21	)	843
Income taxes expense (benefit)		(143	)	-	(76	)	-
Net income applicable to common stockholders	$	1,776		2,190	55		843
Basic income per share:
Net income per share applicable to common stockholders	$	0.65		0.81	0.02		0.31
Weighted average shares used in calculation		2,718,548		2,711,732	2,716,210		2,711,669

Diluted income per share:
Net income per share applicable to common stockholders	$	0.63		0.78	0.02		0.30
Weighted average shares used in calculation		2,807,070		2,813,412	2,809,919		2,827,695



FINANCIAL RESULTS	GLACIER WATER SERVICES, INC.

GLACIER WATER SERVICES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
		October 3,		January 3,
Assets		2010		2010
		(Unaudited)
Current assets:
Cash and cash equivalents	$	4,195		3,710
Accounts receivable, net of allowance for doubtful accounts of $64 and $63 as of October 3, 2010 and January 3, 2010, respectively		1,926		1,583
Repair parts		2,898		3,084
Prepaid expenses and other		1,814		1,381
Total current assets		10,833		9,758

Property and equipment, net		42,466		43,108
Goodwill		7,080		7,080
Intangible assets, net of accumulated amortization of $1,250 and $1,234 as of October 3, 2010 and January 3, 2010, respectively		18		32
Investment in Glacier Water Trust I Common Securities		2,629		2,629
Investment in Glacier Water Trust I Preferred Securities		3,648		3,648
Deferred financing costs, net		4,404		4,481
Other assets		748		762
Total assets	$	71,826		71,498

Liabilities and Stockholdersa� Deficit
Current liabilities:
Accounts payable	$	1,864		1,443
Accrued commissions		4,310		3,823
Accrued liabilities		3,111		3,576
Bank overdraft		1,170		1,331
Current portion of deferred rent		7		4
Total current liabilities		10,462		10,177

Long-term debt		87,629		87,629
Long-term line of credit and notes payable		27,729		28,173
Long-term portion of deferred rent		59		17
Total liabilities		125,879		125,996

Commitments and contingencies

Stockholdersa� deficit:
Preferred Stock, $0.01 par value; liquidation preference $100 per share; 8% cumulative redeemable convertible; Authorized, 100,000 shares; issued and outstanding, 0 shares at October 3, 2010 and January 3, 2010		-		-
Common stock, $0.01 par value. Authorized 10,000,000 shares, issued and outstanding 2,718,548, and 2,714,873 shares at October 3, 2010 and January 3, 2010, respectively		44		44
Additional paid-in capital		12,839		12,530
Retained deficit		(34,744	)	(34,799	)
Treasury stock, at cost, 1,587,606 shares at October 3, 2010 and January 3, 2010		(32,562	)	(32,562	)
Accumulated other comprehensive income		370		289
Total stockholdersa� deficit		(54,053	)	(54,498	)
Total liabilities and stockholdersa� deficit	$	71,826		71,498

N@N

Glacier Water Announces Third Quarter 2010 Results