Green Mountain Coffee Roasters, Inc. Reports Fourth Quarter And Fiscal Year 2012 Results

These and other forward-looking statements are based on management’s current views and assumptions and involve risks and uncertainties that could significantly affect expected results. Results may be materially affected by external factors such as damage to our reputation or brand name, business interruptions due to natural disasters or similar unexpected events, actions of competitors, customer relationships and financial condition, the ability to achieve expected cost savings and margin improvements, the successful acquisition and integration of new businesses, fluctuations in the cost and availability of raw and packaging materials, changes in regulatory requirements, and global economic conditions generally which would include the availability of financing, interest, inflation rates and investment return on retirement plan assets, as well as foreign currency fluctuations, risks associated with our information technology systems, the threat of data breaches or cyber-attacks, and other risks described in the Company’s filings with the Securities and Exchange Commission.

Actual results could differ materially from those projected in the forward-looking statements. The Company undertakes no obligation to update or revise publicly, any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.

GMCR-C

GREEN MOUNTAIN COFFEE ROASTERS, INC.
Unaudited Consolidated Balance Sheets
(Dollars in thousands)
					September 29,				September 24,
					2012				2011
Assets
Current assets:
Cash and cash equivalents					$	58,289			$	12,989
Restricted cash and cash equivalents						12,884				27,523
Receivables, less uncollectible accounts and return allowances
of $34,517 and $21,407 at September 29, 2012 and
September 24, 2011, respectively						363,771				310,321
Inventories						768,437				672,248
Income taxes receivable						32,943				18,258
Other current assets						35,019				28,072
Deferred income taxes, net						51,613				36,231
Current assets held for sale						-				25,885
Total current assets						1,322,956				1,131,527
Fixed assets, net						944,296				579,219
Intangibles, net						498,352				529,494
Goodwill						808,076				789,305
Other long-term assets						42,109				47,759
Long-term assets held for sale						-				120,583
Total assets					$	3,615,789			$	3,197,887
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt					$	6,691			$	6,664
Current portion of capital lease and financing obligations						3,057				5
Accounts payable						279,577				265,511
Accrued compensation costs						38,458				43,260
Accrued expenses						132,992				92,120
Income tax payable						29,322				9,617
Deferred income taxes, net						245				243
Other current liabilities						29,645				34,613
Current liabilities related to assets held for sale						-				19,341
Total current liabilities						519,987				471,374
Long-term debt, less current portion						466,984				575,969
Capital lease and financing obligations, less current portion						54,794				-
Deferred income taxes, net						270,348				189,637
Other long-term liabilities						32,544				27,184
Long-term liabilities related to assets held for sale						-				474
Commitments and contingencies
Redeemable noncontrolling interests						9,904				21,034
Stockholders' equity:
Preferred stock, $0.10 par value: Authorized - 1,000,000 shares;
No shares issued or outstanding						-				-
Common stock, $0.10 par value: Authorized - 500,000,000 shares;
Issued and outstanding - 152,680,855 and 154,466,463 shares at September 29, 2012 and September 24, 2011, respectively						15,268				15,447
Additional paid-in capital						1,464,560				1,499,616
Retained earnings						771,200				411,727
Accumulated other comprehensive income (loss)						10,200				(14,575	)
Total stockholders' equity						2,261,228				1,912,215
Total liabilities and stockholders' equity					$	3,615,789			$	3,197,887

GREEN MOUNTAIN COFFEE ROASTERS, INC.
Unaudited Consolidated Statements of Operations
(Dollars in thousands except per share data)
					Fourteen				Thirteen				Fifty-three				Fifty-two
					weeks ended				weeks ended				weeks ended				weeks ended
					September 29,				September 24,				September 29,				September 24,
					2012				2011				2012				2011
Net sales					$	946,736			$	711,883			$	3,859,198			$	2,650,899
Cost of sales						630,290				457,793				2,589,799				1,746,274
Gross profit						316,446				254,090				1,269,399				904,625
Selling and operating expenses						111,048				95,150				481,493				348,696
General and administrative expenses						61,661				52,228				219,010				187,016
Operating income						143,737				106,712				568,896				368,913
Other income (expense), net						230				(285	)			1,819				648
Gain (loss) on financial instruments, net						(4,731	)			5,574				(4,945	)			(6,245	)
Gain (loss) on foreign currency, net						5,812				(7,555	)			7,043				(2,912	)
Gain on sale of subsidiary						-				-				26,311				-
Interest expense						(4,321	)			(5,097	)			(22,983	)			(57,657	)
Income before income taxes						140,727				99,349				576,141				302,747
Income tax expense						(48,692	)			(23,528	)			(212,641	)			(101,699	)
Net Income					$	92,035			$	75,821			$	363,500			$	201,048
Net income attributable to noncontrolling interests						148				452				872				1,547
Net income attributable to GMCR					$	91,887			$	75,369			$	362,628			$	199,501
Basic income per share:
Basic weighted average shares outstanding						154,557,765				153,837,445				154,933,948				146,214,860
Net income per common share - basic					$	0.59			$	0.49			$	2.34			$	1.36
Diluted income per share:
Diluted weighted average shares outstanding						158,094,806				159,207,852				159,075,646				152,142,434
Net income per common share - diluted					$	0.58			$	0.47			$	2.28			$	1.31

GREEN MOUNTAIN COFFEE ROASTERS, INC.
Unaudited Consolidated Statements of Cash Flows
(Dollars in thousands)
					Fifty-three					Fifty-two
					weeks ended					weeks ended
					September 29,					September 24,
					2012					2011
Cash flows from operating activities:
Net income					$	363,500				$	201,048
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation						135,656					72,297
Amortization of intangibles						45,991					41,339
Amortization deferred financing fees						6,050					6,158
Loss on extinguishment of debt						-					19,732
Unrealized (gain) loss of foreign currency						(6,557	)				1,041
Loss on disposal of fixed assets						2,517					884
Gain on sale of subsidiary, excluding transaction costs						(28,914	)				-
Provision for doubtful accounts						3,197					2,584
Provision for sales returns						107,436					64,457
Unrealized loss on financial instruments, net						6,310					3,292
Tax benefit from exercise of non-qualified options and disqualified dispositions of incentive stock options						(1,006	)				(6,142	)
Excess tax benefits from equity-based compensation plans						(12,070	)				(67,813	)
Deferred income taxes						60,856					(8,828	)
Deferred compensation and stock compensation						18,079					10,575
Other						334					-
Changes in assets and liabilities, net of effects of acquisition:
Receivables						(159,317	)				(157,329	)
Inventories						(92,862	)				(375,709	)
Income tax receivable/payable, net						16,457					63,487
Other current assets						(6,900	)				(715	)
Other long-term assets, net						(469	)				(11,454	)
Accounts payable						(17,668	)				106,202
Accrued compensation costs						(4,908	)				2,233
Accrued expenses						39,701					25,600
Other current liabilities						(2,718	)				(3,118	)
Other long-term liabilities						5,090					10,964
Net cash provided by operating activities						477,785					785
Cash flows from investing activities:
Change in restricted cash						(2,875	)				2,074
Acquisition of LJVH Holdings, Inc. (Van Houtte), net of cash acquired						-					(907,835	)
Proceeds from sale of subsidiary, net of cash transferred						137,733					-
Capital expenditures for fixed assets						(401,121	)				(283,444	)
Other investing activities						618					1,533
Net cash used in investing activities						(265,645	)				(1,187,672	)
Cash flows from financing activities:
Net change in revolving line of credit						(108,727	)				333,835
Proceeds from issuance of common stock under compensation plans						12,092					17,328
Proceeds from issuance of common stock for private placement						-					291,096
Proceeds from issuance of common stock in public equity offering						-					673,048
Financing costs in connection with public equity offering						-					(25,685	)
Repurchase of common stock						(76,470	)				-
Excess tax benefits from equity-based compensation plans						12,070					67,813
Payments on capital lease and financing obligations						(7,558	)				(8	)
Proceeds from borrowings of long-term debt						-					796,375
Deferred financing fees						-					(46,009	)
Repayment of long-term debt						(7,814	)				(906,885	)
Other financing activities						3,283					(1,063	)
Net cash (used in) provided by financing activities						(173,124	)				1,199,845
Change in cash balances included in current assets held for sale						5,160					(5,160	)
Effect of exchange rate changes on cash and cash equivalents						1,124					790
Net increase in cash and cash equivalents						45,300					8,588
Cash and cash equivalents at beginning of period						12,989					4,401
Cash and cash equivalents at end of period					$	58,289				$	12,989
Supplemental disclosures of cash flow information:
Cash paid for interest					$	20,783				$	33,452
Cash paid for income taxes					$	136,407				$	58,182
Fixed asset purchases included in accounts payable and not disbursed at the end of each period					$	56,127				$	25,737
Noncash financing and investing activities:
Fixed assets acquired under capital lease and financing obligations					$	66,531				$	-

GREEN MOUNTAIN COFFEE ROASTERS, INC.
GAAP to Non-GAAP Reconciliation
(Dollars in thousands, except per share data)
					Fourteen			Thirteen
					weeks ended			weeks ended
					September 29,			September 24,
					2012			2011
Operating income					$	143,737		$	106,712
Expenses related to SEC inquiry (1)						1,858			675
Amortization of identifiable intangibles (2)						11,495			11,752
Non-GAAP operating income					$	157,090		$	119,139
					Fourteen			Thirteen
					weeks ended			weeks ended
					September 29,			September 24,
					2012			2011
Net income attributable to GMCR					$	91,887		$	75,369
After tax:
Expenses related to SEC inquiry (1)						1,184			453
Amortization of identifiable intangibles (2)						7,897			7,829
Net operating and capital loss carryforwards (3)						-			(8,376	)
Non-GAAP net income					$	100,968		$	75,275
					Fourteen			Thirteen
					weeks ended			weeks ended
					September 29,			September 24,
					2012			2011
Diluted income per share					$	0.58		$	0.47
After tax:
Expenses related to SEC inquiry (1)						0.01			0.00
Amortization of identifiable intangibles (2)						0.05			0.05
Net operating and capital loss carryforwards (3)						-			(0.05	)
Non-GAAP net income per share					$	0.64		$	0.47

(1) Represents legal and accounting expenses related to the SEC inquiry and pending litigation classified as general and administrative expense.(2) Represents the amortization of intangibles related to the Company’s acquisitions classified as general and administrative expense.(3) Represents the release of the valuation allowance against federal capital loss carryforwards which represents the estimate of the tax benefit for the amount of capital losses that were utilized in the first quarter of fiscal 2012 on capital gains generated on the sale of Filterfresh and the utilization in fiscal 2011 of net operating loss carryforwards generated from the Filterfresh acquisition.

GREEN MOUNTAIN COFFEE ROASTERS, INC.
GAAP to Non-GAAP Reconciliation
(Dollars in thousands, except per share data)
		Fifty-three weeks ended September 29, 2012					Fifty-two weeks ended September 24, 2011
Operating income		$	568,896				$	368,913
Acquisition-related expenses (1)			-					10,573
Expenses related to SEC inquiry (2)			6,669					7,868
Amortization of identifiable intangibles (3)			45,991					41,339
Non-GAAP operating income		$	621,556				$	428,693
		Fifty-three weeks ended September 29, 2012					Fifty-two weeks ended September 24, 2011
Net income attributable to GMCR		$	362,628				$	199,501
After tax:
Acquisition-related expenses (7)			-					14,524
Expenses related to SEC inquiry (2)			4,073					4,895
Amortization of identifiable intangibles (3)			31,555					27,343
Loss on extinguishment of debt (4)			-					11,027
Net operating and capital loss carryforwards (5)								(8,376	)
Gain on sale of subsidiary (6)			(16,685	)				-
Non-GAAP net income		$	381,571				$	248,914
		Fifty-three weeks ended September 29, 2012					Fifty-two weeks ended September 24, 2011
Diluted income per share		$	2.28				$	1.31
After tax:
Acquisition-related expenses (7)			-					0.10
Expenses related to SEC inquiry (2)			0.03					0.03
Amortization of identifiable intangibles (3)			0.20					0.18
Loss on extinguishment of debt (4)			-					0.07
Net operating and capital loss carryforwards (5)			-					(0.06	)
Gain on sale of subsidiary (6)			(0.10	)				-
Non-GAAP net income per share		$	2.40		*		$	1.64		*
*Does not sum due to rounding.

(1) Represents direct acquisition-related expenses classified as general and administrative expense.(2) Represents legal and accounting expenses related to the SEC inquiry and pending litigation classified as general and administrative expense.(3) Represents the amortization of intangibles related to the Company’s acquisitions classified as general and administrative expense.(4) Represents the write-off of debt issuance costs and original issue discount, net of tax, primarily associated with the extinguishment of the Term B loan under the Credit Agreement.(5) Represents the release of the valuation allowance against federal capital loss carryforwards which represents the estimate of the tax benefit for the amount of capital losses that were utilized in the first quarter of fiscal 2012 on capital gains generated on the sale of Filterfresh and the utilization in fiscal 2011 of net operating loss carryforwards generated from the Filterfresh acquisition.(6) Represents the gain recognized on the sale of Filterfresh, net of income taxes of $9.6 million. The income taxes of $9.6 million include the tax benefit resulting from the release of the valuation allowance in fiscal 2011.(7) The 2011 fiscal year reflects direct acquisition-related expenses of $10.6 million ($8.9 million after-tax); the write-off of deferred financing expenses of $2.6 million ($1.6 million after-tax) on our Former Credit Facility in conjunction with the new financing secured for the Van Houtte acquisition; and the foreign exchange impact of hedging the risk associated with the Canadian dollar purchase price of the Van Houtte acquisition of $5.3 million ($4.0 million after-tax).

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