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Peet’s Coffee & Tea, Inc. Reports Second Quarter 2012 Results

General and administrative expenses increased as a percent of net revenue to 7.8%, compared to 6.6% for the corresponding period last year. General and administrative expenses increased to $7.4 million from $6.0 million for the corresponding period last year, primarily due to higher payroll and marketing costs.

Depreciation and amortization expenses decreased as a percent of net revenue to 4.1%, compared to 4.3% for the corresponding period last year. Depreciation and amortization expenses were $3.9 million for the quarter, consistent with the corresponding period last year.

Cash and cash equivalents plus short-term and long-term marketable securities were $38.9 million at the end of the quarter, compared to $35.4 million at the end of fiscal 2011.

About Peet’s Coffee & Tea, Inc.

Peet’s Coffee & Tea, Inc. (NASDAQ: PEET) is the premier specialty coffee and tea company in the United States. The company was founded in 1966 in Berkeley, Calif. by Alfred Peet. Peet was an early tea authority who later became widely recognized as the grandfather of specialty coffee in the U.S. Today, Peet’s Coffee & Tea offers superior quality coffees and teas in multiple forms, by sourcing the best quality coffee beans and tea leaves in the world, adhering to strict high-quality and taste standards, and controlling product quality through its unique direct store delivery selling and merchandising system. Peet’s is committed to strategically growing its business through many channels while maintaining the extraordinary quality of its coffees and teas. For more information about Peet’s Coffee & Tea, Inc., visit www.peets.com.

   
 
PEET’S COFFEE & TEA, INC.
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except share amounts)
 
July 1, January 1,

2012

2012

ASSETS
 
Current assets
Cash and cash equivalents $ 32,428 $ 30,755
Short-term marketable securities 5,791 3,800
Accounts receivable, net 19,595 20,522
Inventories 68,417 54,265
Deferred income taxes - current 5,041 5,041
Prepaid expenses and other   10,240   9,368
Total current assets 141,512 123,751
 
Long-term marketable securities 634 888
Property, plant and equipment, net 85,458 89,304
Other assets, net   2,261   1,328
 
Total assets $ 229,865 $ 215,271
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
Current liabilities
Accounts payable and other accrued liabilities $ 13,348 $ 11,547
Accrued compensation and benefits 9,132 10,283
Deferred revenue   7,524   7,382
Total current liabilities 30,004 29,212
 
Deferred income taxes - non current 372 367
Deferred lease credits 6,463 6,668
Other long-term liabilities   2,396   1,068
Total liabilities 39,235 37,315
 
Shareholders' equity
 

Common stock, no par value; authorized 50,000,000 shares; issued and outstanding: 13,245,000 and 13,136,000 shares

74,940 69,664
Accumulated other comprehensive income 3 2
Retained earnings   115,687   108,290
 
Total shareholders' equity   190,630   177,956
 
Total liabilities and shareholders' equity $ 229,865 $ 215,271
       
 
PEET’S COFFEE & TEA, INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except per share amounts)
 
Thirteen weeks ended Twenty-six weeks ended
July 1, July 3, July 1, July 3,

2012

2011

2012

2011

 
Retail stores $ 55,424 $ 53,351 $ 109,539 $ 105,440
Specialty sales   39,968   37,265   80,627   73,648
Net revenue 95,392 90,616 190,166 179,088
 
Cost of sales and related occupancy expenses 48,064 44,558 96,420 85,778
Operating expenses 29,734 28,146 59,560 56,030
Litigation related expenses - 38 - 79
General and administrative expenses 7,428 6,011 14,810 12,779
Depreciation and amortization expenses   3,930   3,881   7,872   7,800
Total costs and expenses from operations   89,156   82,634   178,662   162,466
 
Income from operations 6,236 7,982 11,504 16,622
 
Interest income, net   16   7   22   18
 
Income before income taxes 6,252 7,989 11,526 16,640
 
Income tax provision   2,239   2,878   4,129   6,016
 
Net income $ 4,013 $ 5,111 $ 7,397 $ 10,624
 
Net income per share:
Basic $ 0.30 $ 0.40 $ 0.56 $ 0.82
Diluted $ 0.30 $ 0.38 $ 0.55 $ 0.79
 
Shares used in calculation of net income per share:
Basic 13,260 12,892 13,215 13,000
Diluted 13,547 13,309 13,515 13,414
 
 
PEET’S COFFEE & TEA, INC.
   
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 
Twenty-six weeks ended
July 1, July 3,

2012

2011

 
Cash flows from operating activities:
Net income $ 7,397 $ 10,624
 

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 8,932 8,956
Amortization of interest purchased 150 197
Stock-based compensation 2,303 2,035
Excess tax benefit from exercise of stock options (1,696 ) (5,763 )
Tax benefit from exercise of stock options 1,612 5,224
Loss on disposition of assets and asset impairment 140 325
Deferred income taxes 5 67
Changes in other assets and liabilities:
Accounts receivable, net 927 (197 )
Inventories (14,152 ) (13,946 )
Prepaid expenses and other current assets (872 ) (1,147 )
Other assets (1,238 ) (2 )
Accounts payable, accrued liabilities and deferred revenue 593 (3,021 )
Deferred lease credits and other long-term liabilities   1,123     (379 )
Net cash provided by operating activities   5,224     2,973  
 
Cash flows from investing activities:
Purchases of property, plant and equipment (5,021 ) (4,851 )
Proceeds from sales of property, plant and equipment
Changes in restricted investments 299 798
Proceeds from sales and maturities of marketable securities 4,056 3,013
Purchases of marketable securities   (5,942 )   (8,384 )
Net cash used in investing activities   (6,608 )   (9,424 )
 
Cash flows from financing activities:
Net proceeds from issuance of common stock 4,060 15,023
Purchase of common stock (2,699 ) (39,529 )
Excess tax benefit from exercise of stock options   1,696     5,763  
Net cash provided by/(used in) financing activities   3,057     (18,743 )
 
Increase/(decrease) in cash and cash equivalents 1,673 (25,194 )
Cash and cash equivalents, beginning of period   30,755     44,629  
 
Cash and cash equivalents, end of period $ 32,428   $ 19,435  
 
Non-cash investing activities:
Capital expenditures incurred, but not yet paid $ 444 $ 449
Other cash flow information:
Cash paid for income taxes 2,807 2,896
 
 
PEET’S COFFEE & TEA, INC.
             
SEGMENT REPORTING
(Unaudited, in thousands)
 

Retail

Specialty

Unallocated

Total

Percent Percent Percent
of Net of Net of Net

Amount

Revenue

Amount

Revenue

Amount

Revenue

 
For the thirteen weeks ended July 1, 2012
Net revenue $ 55,424 100.0 % $ 39,968 100.0 % $ 95,392 100.0 %
Cost of sales and occupancy 24,807 44.8 % 23,257 58.2 % 48,064 50.4 %
Operating expenses 21,663 39.1 % 8,071 20.2 % 29,734 31.2 %
Depreciation and amortization 2,782 5.0 % 354 0.9 % $ 794 3,930 4.1 %
Segment operating income 6,172 11.1 % 8,286 20.7 % (8,222 ) 6,236 6.5 %
 
For the thirteen weeks ended July 3, 2011
Net revenue $ 53,351 100.0 % $ 37,265 100.0 % $ 90,616 100.0 %
Cost of sales and occupancy 23,692 44.4 % 20,866 56.0 % 44,558 49.2 %
Operating expenses 20,387 38.2 % 7,759 20.8 % 28,146 31.1 %
Litigation related expenses 38 0.1 % - 38 0.0 %
Depreciation and amortization 2,731 5.1 % 433 1.2 % $ 717 3,881 4.3 %
Segment operating income 6,503 12.2 % 8,207 22.0 % (6,728 ) 7,982 8.8 %
 
For the twenty-six weeks ended July 1, 2012
Net revenue $ 109,539 100.0 % $ 80,627 100.0 % $ 190,166 100.0 %
Cost of sales and occupancy 49,323 45.0 % 47,097 58.4 % 96,420 50.7 %
Operating expenses 42,728 39.0 % 16,832 20.9 % 59,560 31.3 %
Depreciation and amortization 5,571 5.1 % 721 0.9 % $ 1,580 7,872 4.1 %
Segment operating income 11,917 10.9 % 15,977 19.8 % (16,390 ) 11,504 6.0 %
 
For the twenty-six weeks ended July 3, 2011
Net revenue $ 105,440 100.0 % $ 73,648 100.0 % $ 179,088 100.0 %
Cost of sales and occupancy 45,936 43.6 % 39,842 54.1 % 85,778 47.9 %
Operating expenses 40,866 38.8 % 15,164 20.6 % 56,030 31.3 %
Litigation related expenses 79 0.1 % - 0.0 % 79 0.0 %
Depreciation and amortization 5,468 5.2 % 877 1.2 % $ 1,455 7,800 4.4 %
Segment operating income 13,091 12.4 % 17,765 24.1 % (14,234 ) 16,622 9.3 %




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