GMCR announces fourth quarter results

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GMCR announces fourth quarter results

Wed, 11/10/2004 - 8:00pm -- tim

Green Mountain Coffee Roasters Reports
Fiscal 2004 Fourth Quarter and Fiscal Year 2004 Results

WATERBURY, Vt.--(BUSINESS WIRE)--Nov. 11, 2004--
-- Q4 Net Income Growth of 43.6% on Net Sales Growth of 15.4%

-- FY'04 Net Income Growth of 24.9% on Net Sales Growth of
17.7%
Green Mountain Coffee Roasters, Inc., (NASDAQ: GMCR) has announced results for the Company's fourth quarter and fiscal year
ended September 25, 2004.

Net sales for the fourth quarter ended September 25, 2004
increased 15.4% to $31.8 million, up from $27.5 million in the fourth
quarter of 2003. Total coffee pounds shipped increased 11.8% to 4.2
million pounds. Net income for the fourth quarter increased 43.6% to $2.0
million, or $0.27 per diluted share, compared to $1.4 million, or $0.19
per diluted share for the fourth quarter of 2003.

For the fiscal year, Green Mountain Coffee grew sales 17.7% to
$137.4 million. Total coffee pounds shipped were up 13.9% to 17.7
million pounds for the year. Net income for the year increased $1.6
million or 24.9% to $7.8 million. The Company reported diluted
earnings per share of $1.06, compared to $0.86 in fiscal 2003.

Robert P. Stiller, Chairman, President and Chief Executive
Officer, said "Green Mountain Coffee's fourth quarter provided a
strong finish to a strong year. We delivered healthy sales growth and even
better earnings growth this past fiscal year. Our entrepreneurial approach
to expanding new venues for a superior coffee experience, with the
Keurig(R) Single-Cup Brewer, contributed meaningfully to our success this
past year. The expansion of our certified Fair Trade and Organic lines of
coffee also were important, further confirming our belief that our
commitment to corporate social responsibility is a clear advantage in a
very competitive market, and that it enhances our financial performance. I
want to take this opportunity to thank our many loyal and enthusiastic
employees, customers, partners, the millions of Green Mountain Coffee
consumers, and everyone else who has shared our passion for 'doing well by
doing good,' making our success possible."
Fourth Quarter Financial Review
Channel and Other Sales Growth Highlights:
-- The Company's dollar sales growth in the fourth quarter was
led by the office coffee service (OCS), supermarket, consumer
direct and convenience store channels. The OCS channel contributed
approximately 41% of the increase in net sales due to strong
K-Cup(R) sales driven by increased penetration of the Keurig (R)
B-100 brewers in small offices and by continued success of teas in
K-Cups.
-- The supermarket channel grew 11.2% in coffee pounds shipped
due primarily to distribution to Publix Supermarkets which
began in the first quarter of fiscal 2004.
-- In the convenience store and food service channels, coffee
pounds shipped increased 6.3% and 5.8%, respectively.
-- The consumer direct channel grew 50% in dollar sales and 32.7%
in coffee pounds shipped with the majority of growth related
to the sales of Keurig Single-Cup Brewers for the home and the
associated K-Cups.
-- Fair Trade and Organic certified coffee pound sales grew by
35% versus Q4 '03. In the fourth quarter of 2004, Fair Trade
and Organic coffees represented approximately 16% of total
company pounds shipped, as compared to approximately 11% in
the year-ago quarter.
Margins, Expenses, and Analysis of After-Tax Income:
-- Green Mountain Coffee's gross profit margin was 38.4% of sales
compared to 39.7% in the year-ago quarter. The decrease was
attributable to higher delivery and fuel costs, variations in
sales mix, and a slight increase in green coffee costs.
-- Selling, general and administrative expenses decreased to
26.3% of sales from 27.8%. This improvement was the result of
leveraging selling and organizational resources on a higher sales
base.
-- The Company's tax rate in the fourth quarter of fiscal 2004
decreased to 38.2% from 41.5% in the prior year period due to the
favorable impact of recently awarded state tax incentives under
the Vermont Economic Advancement Tax Incentive Program.
-- The Company's fourth quarter after-tax income before the
recognition of a non-cash loss related to the Company's equity
investment in Keurig Incorporated ("Keurig") increased 27.1% to
$2,330,000. The Company's net income was $2,005,000 after
recognition of the Keurig-related non-cash loss of $325,000 (or
$0.04 per share), an increase of 43.6%.
Fiscal 2004 Results:
-- For the fiscal year ended September 25, 2004, the Company
delivered a 17.7% increase in net sales to $137,444,000 from
$116,727,000 and a 13.9% increase in coffee pounds shipped
compared to the same period last year.
-- Net income for the fifty-two weeks ended September 25, 2004
was up 24.9% to $7,825,000 after recognition of a non-cash
loss of $1,076,000 from its minority investment in Keurig as
compared to $6,266,000 in 2003 including recognition of a
non-cash loss of $1,127,000 from the investment in Keurig.
-- Diluted earnings per share for fiscal year 2004 increased to
$1.06 from $0.86 as compared to fiscal year 2003.
-- EBITDA for fiscal year 2004 increased to $19.6 million from
$18.0 million in fiscal year 2003.
Valuation of Keurig Investment:
-- The Company recognizes its equity portion of Keurig's losses
net of related tax benefits. This accounting treatment assumes
that the deferred tax asset from the Keurig losses will ultimately
be realizable. Upon the advice of its independent accountants, the
Company plans to retain an investment banking firm to provide a
valuation of its Keurig investment to support the carrying value
of the deferred tax asset. The Company anticipates the valuation
report will be completed prior to the filing of its Form 10-K on
December 9, 2004.
Business Outlook and Other Forward-Looking Information
Fiscal Year 2005:
-- The Company anticipates net sales and coffee pounds growth of
13% to 18% for its fiscal year 2005.
-- The Company anticipates its gross margin will be in the range
of 38.0% to 39.0% and that its operating margin will be in the
range of 10.2 % to 11.0%.
-- The Company expects interest expense to increase to
approximately $800,000 to $900,000 from $282,000 in fiscal
2004 due to the recent completion of the new distribution
center and the cessation of capitalization of the related
interest expenses.
-- The Company's tax rate for fiscal 2005 is anticipated to
increase to 41.25% from 39.2% in fiscal 2004 due to lower
capital expenditures in fiscal 2005 and the associated
decrease of the favorable impact of the awarded state tax
incentives under the Vermont Economic Advancement Tax
Incentive Program.
-- The Company expects that the recognition of its share of
Keurig's loss for fiscal year 2005 will reduce diluted
earnings per share by $0.03 to $0.10.
-- Based on all of these factors, the Company anticipates its
fully diluted earnings per share for fiscal year 2005 will be in
the range of $1.21 to $1.28 per share.
Fiscal First Quarter 2005:
-- The Company expects net sales growth of 11% to 15% and coffee
pounds growth of 10% to 14% in its first quarter of fiscal
2005.
-- The Company expects that its gross margin will be in the range
of 37.5% to 38.5% and that its operating margin will be in the
range of 9.5% to 10.5%.
-- The Company expects that the recognition of its share of
Keurig's loss for the first quarter in fiscal 2005 will reduce
diluted earnings per share by $0.02 to $0.04.
-- The Company anticipates its fully diluted earnings per share
for the first quarter of fiscal 2005 to be in the range of
$0.32 to $0.37 per share.
Balance Sheet and Cash Flow:
-- The Company forecasts its capital expenditures for fiscal 2005
to be in the range of $7 to $8 million and depreciation
expenses to be between $5.5 and $6.0 million.
-- The Company has completed building a new distribution and
warehousing facility attached to its existing plant that will
incorporate material-handling automation to improve distribution
efficiencies. The Company anticipates it will result in lower
overall distribution costs relative to sales over the long-term,
as well as allow for increased packaging capacity in the current
plant. The installation and implementation of the
material-handling automation is underway and will continue
throughout the first quarter of fiscal 2005.
-- The Company expects its EBITDA in 2005, excluding the
recognition of Keurig's loss, to be approximately $21 to $23
million.
There will be further discussion of the financial results released
today and these future expectations on Company's webcast conference call
later this morning.

Green Mountain Coffee Roasters, Inc. is a leader in the specialty
coffee industry and offers over 100 coffee selections including estate,
certified organic, Fair Trade, signature blends, and flavored coffees that
it sells under the Green Mountain Coffee Roasters(R) and Newman's Own(R)
Organics brands. While the majority of Green Mountain Coffee's revenue is
derived from its wholesale operations, the Company also operates a direct
mail business and an e-commerce website (www.GreenMountainCoffee.com) from
its Waterbury, Vermont headquarters. Each year the Company contributes at
least five percent of its pre-tax profits to support socially responsible
initiatives. Based on its performance, Green Mountain Coffee Roasters has
been recognized for the past five years as one of Forbes Magazine's "200
Best Small Companies," for the past two years in the top ten on Business
Ethics magazine's list of "100 Best Corporate Citizens," and in 2004 as
one of the Society of Human Resource Management's "Best Medium Sized
Companies to Work for in America."

Keurig, Incorporated ("Keurig") manufactures brewing equipment
that allows users to brew high-quality specialty coffee one cup at a
time. Green Mountain Coffee has 42% equity ownership of Keurig. In
addition, Green Mountain Coffee is the largest of four roasters
licensed to distribute the K-Cups(R) that are used with Keurig(R)
Single-Cup Brewers. The Company sells K-Cups to businesses through its OCS
channel, and to home users through its consumer direct channel.

Certain statements contained herein are not based on historical
fact and are "forward-looking statements" within the meaning of the
applicable securities laws and regulations. Owing to the uncertainties
inherent in forward-looking statements, actual results could differ
materially. Factors that could cause actual results to differ materially
from those in the forward-looking statements include, but are not limited
to, fluctuations in availability and cost of high-quality green coffee,
competition, business conditions in the coffee industry and food industry
in general, the impact of the loss of one or more major customers or
reduction in the volume of purchases by one or more major customers,
delays in the timing of adding new locations with existing customers,
Green Mountain Coffee's level of success in continuing to attract new
customers, variances from sales mix and growth rate, weather and special
or unusual events, delays in installing the material handling equipment in
the recently-completed distribution and warehouse facility, as well as
other risks as described more fully in the Company's filings with the
Securities and Exchange Commission. In addition, the Company has an equity
investment in Keurig, Incorporated, a small private company. Keurig,
Incorporated can have significant quarterly operating income fluctuations
and its results can differ materially from expectations set forth in
forward-looking statements, which could also effect its valuation. Keurig
is currently operating at a loss. Further, there is uncertainty around
Keurig's marketing expenditures for the launch of the Keurig Single-Cup
Brewer for the home and results could vary materially depending on Keurig,
Incorporated's success in entering the home brewer market and its ability
to secure adequate financing to support this launch. Forward-looking
statements reflect management's analysis as of the date of this press
release. The Company does not undertake to revise these statements to
reflect subsequent developments, other than in its regular, quarterly
earnings releases.

Green Mountain Coffee Roasters will be discussing these financial
results and future prospects with analysts and investors in a conference
call available via the Internet. The call will take place today, November
11, 2004, at 10:30 a.m. ET and will be available via live webcast on the
Company's website at www.GreenMountainCoffee.com and on Street Events at
www.StreetEvents.com, as well as AOL, Yahoo and other major portals.

The Company archives the latest conference call on the Investor
Services section of its website for a period of time. A replay of the
conference call also will be available by telephone at (719) 457-0820,
confirmation number 878985, from 1:30 p.m. ET on November 11th through
midnight on Monday, November 15, 2004.