Just after the stock market closed Wednesday, Green Mountain Coffee Roasters, Inc, (GMCR) (NASDAQ: GMCR) announced its third quarter fiscal year 2012 results for the thirteen and thirty-nine weeks endedJune 23, 2012. It also announced that its board had authorized a $500 million share repurchase.Against the third quarter of 2011, Q3 2012 sales were $869.2 million, or 21 percentgreater and net income per share was 46 cents, an increase of 25 percent from last year. The stock is near its 52-week low ($17.11/$115.98) as it finished the day at $17.91, down 35 cents or $1.92 percent. Shares were up by early Thursday to $22.74, a gain of $4.82 from Wednesday's close (+26.93%). GMCR also announced thatNorman H Wesley, former CEO and Chairman of Fortune Brands, Inc, has joined its Board of Directors.
Third Quarter Fiscal Year 2012 Performance Highlights
($ in millions except earnings per share)
June 23, 2012
June 25, 2011
% Increase
(Decrease)
Net Sales
$
869.2
$
717.2
21%
Operating Income:
GAAP
$
129.7
$
119.3
9%
Non-GAAP
$
144.2
$
131.9
9%
Net Income:
GAAP
$
73.3
$
56.3
30%
Non-GAAP
$
82.9
$
75.7
9%
Diluted Income Per Share:
GAAP
$
0.46
$
0.37
25%
Non-GAAP
$
0.52
$
0.49
6%
EBITDA - LTM(*)
$
714.9
$
390.8
83%
Note: Complete GAAP to Non-GAAP reconciliation tables provided with this release.
(*) EBITDA is earnings before interest, taxes, depreciation, and amortization. LTM is last twelve months.
"Our third quarter results demonstrate continued business strength and solid fundamentals, particularly in light of the robust comparable quarter we reported in the year ago period," said Lawrence J Blanford, GMCR's President and CEO. "Our Keurig®Single Cup Brewing system continues to revolutionize the way North Americans prepare and consume their single-serve beverages and our proven ability to grow consumer awareness and demand for the system has enabled us to deliver extraordinary results over the past five years."
"As we become larger, however, our sales growth trajectory will understandably moderate from hyper-growth to a level more in-line with other successful growth businesses," continued Blanford. "Based upon our current analysis of business fundamentals and the single-serve opportunity, we believe we will deliver annual sales growth in the range of 15% to 20% with annual earnings growth in the mid-teens over the longer term."
Board Authorized Share Repurchase
GMCR's Board of Directors has authorized the Company to repurchase up to$500.0 millionof its common shares over the next two years, at such times and prices as determined appropriate by the Company's management in collaboration with the Board of Directors. The shares will be purchased with cash on hand, cash from operations, and funds available through our existing credit facility.
"Based on expectations for future growth and the Company's ability to generate meaningful free cash flow in 2013 and 2014, the Board of Directors has decided to strategically deploy its capital by authorizing the repurchase of common shares from time to time depending on market conditions," said
Michael J. Mardy
, Interim Chairman of GMCR's Board of Directors.
Third Quarter Fiscal Year 2012 Financial Review
Net Sales
Net Sales by Product
Thirteen weeks ended
($ in millions)
June 23,
June 25,
$ Increase
% Increase
2012
2011
(Decrease)
(Decrease)
Single-Serve Packs
$
638.0
$
485.4
$
152.6
31%
Brewers and Accessories
139.1
105.4
33.7
32%
Other Products and Royalties
92.1
126.4
(34.3
)
(27)%
Total Net Sales
$
869.2
$
717.2
$
152.0
21%
Approximately 89% of consolidated third quarter fiscal year 2012 net sales were from sales ofKeurig®Single Cup Brewers, single-serve packs, andKeurig®-related accessories, with the remainder of net sales consisting primarily of sales of bagged coffee and sales from the office coffee services business.
The increase in single-serve pack sales was driven by a 28 percentage point increase in sales volume and a 3 percentage point increase in K-Cup®pack net price realization due primarily to price increases implemented during fiscal 2011 to offset higher green coffee and other input costs.
GMCR sold 1.4 millionKeurig®Single Cup Brewers during the third quarter of fiscal year 2012. This brewer shipment number does not account for consumer returns.
The Company estimates that the combination of brewer shipments from GMCR and its licensed partners resulted in shipments of 1.5 millionKeurig®Single Cup Brewers in the third quarter of fiscal year 2012.
The third fiscal quarter's net sales included$20.0 millionof sales of new Vue®brewers and Vue®packs. According to data fromThe NPD Group, Vue®brewer sales were more than two times that of other coffee and espresso makers in its price category in the quarter endingJune 2012.
Other products and royalties declined year-over-year primarily as a result of the sale of the Filterfresh onOctober 3, 2011.
Operating Metrics
In the third quarter of fiscal 2012, gross margin declined to 34.9% from 36.8% in the prior year period.
The decline compared to the prior year period was due in part to under-utilization of the Company's manufacturing base as a result of lower than expected manufacturing through-put primarily due to lower K-Cup® pack demand and lower-than-planned production levels. An increase in single-serve pack obsolescence also adversely impacted gross margin in the quarter.
These adverse impacts were partially offset by the single-serve pack net price realization from price increases taken in fiscal 2011 to offset higher green coffee and other input costs experienced in fiscal 2011 and the first half of fiscal 2012, as well as by a decrease in green coffee costs in the third quarter of fiscal 2012 compared to the prior year period.
The following table quantifies the changes in gross margin period to period:
Change Q3
2011 to Q3
2012
Manufacturing base under-utilization
-320 bps
Net price realization
+250 bps
Increase in obsolescence
-120 bps
Favorable green coffee costs
+110 bps
Vue®-related impact
-110 bps
Lower warranty expense
+60 bps
Other
- 60 bps
GAAP operating margin of 14.9% of net sales in the third quarter of fiscal year 2012 decreased from 16.6% in the prior year period as a result of the lower gross margin.
Non-GAAP operating margin, which excludes$3.0 millionin expenses associated with theSECinquiry and pending litigation in the quarter, as well as$11.5 millionin amortization of identifiable intangibles related to the Company's acquisitions, was 16.6% of net sales in the third quarter of fiscal year 2012 compared to 18.4% in the prior year period.
The Company's effective income tax rate was 39.6% for the third quarter of fiscal year 2012 as compared to a 35.8% effective tax rate for the prior year period. The increase is attributable to the extension of the 2011 Federal R&D credit in the third quarter of the prior year and lower stock option activity in the current quarter.
Diluted weighted average shares outstanding as of the end of the third quarter of fiscal year 2012 increased to 159.3 million from 153.3 million from the prior year period.
Balance Sheet & Cash Flow Highlights
"We are pleased with the strength of our balance sheet including our low debt ratio," said
Frances G. Rathke
, GMCR's Chief Financial Officer. "As part of our ongoing efforts to drive efficiencies in our single-serve pack inventory management and distribution, we have reduced our forward-weeks coverage on hand from our fiscal second quarter."
"Our higher overall inventory dollar balance in the third quarter of fiscal 2012 compared to the same period in fiscal 2011 is largely driven by increases inKeurig®brewer finished goods resulting from expected first quarter fiscal 2013 holiday demand," continued Rathke. "In order to ensure brewer availability on retail shelves for the holiday season, all of our anticipated holiday brewer units must be on hand inNorth Americaby early October, leading to brewer and accessories inventory build beginning in our fiscal third quarter and continuing into our fiscal fourth quarter."
Balance Sheet & Cash Flow Highlights
($ in millions)
June 23,
June 25,
$ Increase
% Increase
2012
2011
(Decrease)
(Decrease)
Cash and cash equivalents
$
149.1
$
106.8
$
42.3
40%
Accounts receivable, net
$
265.9
$
229.4
$
36.5
16%
Inventories
$
667.0
$
417.5
$
249.5
60%
Raw materials & supplies
$
243.0
$
116.9
$
126.1
108%
Coffee
$
153.0
$
70.8
$
82.2
116%
Packaging & other raw materials
$
90.0
$
46.1
$
43.9
95%
Finished goods
$
424.0
$
300.6
$
123.4
41%
Brewers & accessories
$
301.5
$
174.2
$
127.3
73%
Single-serve packs
$
95.6
$
103.0
$
(7.4
)
(7)%
Other
$
26.9
$
23.4
$
3.5
15%
Debt outstanding and capital lease obligations
$
409.1
$
421.9
$
(12.8
)
(3)%
Thirty-nine weeks cash provided by operating activities
$
488.2
$
174.7
$
313.5
179%
Thirty-nine weeks free cash flow (*)
$
182.7
$
(0.8
)
$
183.5
N/A
(*)Free cash flow is calculated by subtracting capital expenditures for fixed assets from net cash provided by operating activities as reported in the unaudited statement of cash flows.
Business Outlook and Other Forward-Looking Information
Company Estimates for Fourth Quarter and Fiscal Year 2012
In its guidance for its fourth quarter (which contains 14 weeks), the Company refined estimates for its fiscal year 2012.
For the fourth quarter of fiscal year 2012, the Company anticipates:
Total net sales in the range of$889.9 million to $925.5 million, or net growth of 25% to 30%, from$711.9 millionin the fourth quarter of fiscal year 2011.
Fourth quarter 2012 non-GAAP earnings per diluted share in a range of$0.45 to $0.50per diluted share, excluding any acquisition-related transaction expenses; legal and accounting expenses related to theSECinquiry and the Company's pending litigation; amortization of identifiable intangibles related to the Company's acquisitions; and any impact from anticipated Company share repurchases.
We anticipate the fiscal 2012 fourth quarter tax rate to be similar to the 37.7% year to date tax rate. Last year's fourth quarter tax rate was 23.7% primarily attributable to the release of valuation allowances related to a$17.7 millioncapital loss carryforward and a$5.4 millionnet operating loss carryforward in the fourth quarter of fiscal 2011.
For its fiscal year 2012, the Company anticipates:
Total net sales in the range of$3.79 billion to $3.84 billion, or net growth of 43% to 45%, from$2.65 billionin fiscal year 2011.
Fiscal year 2012 non-GAAP earnings per diluted share in a range of$2.21 to $2.26per diluted share, excluding approximately$0.20per share due to the amortization of identifiable intangibles related to the Company's acquisitions; any acquisition-related transaction expenses; legal and accounting expenses related to theSECinquiry and the Company's pending litigation; any gain from the sale of the Filterfresh business; and any impact from anticipated Company share repurchases.
Capital expenditures in the range of$475 to $525 million, down from prior estimates of$525 to $575 million.
Slightly negative free cash flow for fiscal 2012.
Company Outlook for Fiscal Year 2013
The Company provided its outlook for its fiscal year 2013:
Total net sales growth in the range of 15% to 20% over fiscal 2012.
Fiscal year 2013 non-GAAP earnings per diluted share in a range of$2.55 to $2.65per diluted share, excluding approximately$0.18per share due to the amortization of identifiable intangibles related to the Company's acquisitions; any acquisition-related transaction expenses; legal and accounting expenses related to theSECinquiry and the Company's pending litigation; and, any impact from anticipated Company share repurchases.
Capital expenditures in the range of$380 million to $430 million.
Free cash flow in the range of$100 million to $150 million.
Use of Non-GAAP Financial Measures
In addition to reporting financial results in accordance with generally accepted accounting principles (GAAP), the Company provides non-GAAP operating results that exclude certain charges or credits such as transaction expenses related to the Company's acquisitions including the foreign exchange impact of hedging the risk associated with the Canadian dollar purchase price of the Van Houtte acquisition; any gain from sale of the Filterfresh U.S.-based coffee services business; legal and accounting expenses related to theSECinquiry and pending litigation; and non-cash related items such as amortization of identifiable intangibles and losses incurred on the extinguishment of debt, each of which include adjustments to show the tax impact of excluding these items. These amounts are not in accordance with, or an alternative to, GAAP. The Company's management believes that these measures provide investors with transparency by helping illustrate the underlying financial and business trends relating to the Company's results of operations and financial condition and comparability between current and prior periods. Management uses the measures to establish and monitor budgets and operational goals and to evaluate the performance of the Company. Please see the "GAAP to Non-GAAP Reconciliation of Unaudited Consolidated Statements of Operations" tables that accompany this document for a full reconciliation the Company's GAAP to non-GAAP results.
Conference Call and Webcast
Green Mountain Coffee Roasters, Inc.will be discussing these financial results with analysts and investors in a conference call and live webcast available via the Internet at5:00 p.m. ETtoday,August 1, 2012. Management's prepared remarks on its quarterly results will be provided via a Current Report on Form 8-K and also posted under the events link in the Investor Relations section of the Company's website atwww.GMCR.com. As a result, the conference call will include only brief remarks by management followed by a question and answer session. The call along with accompanying slides is accessible via live webcast from the events link in the Investor Relations portion of the Company's website athttp://investor.gmcr.com/events.cfm. The Company archives the latest conference call for a period of time. A replay of the conference call also will be available by telephone at (719) 457-0820, Passcode 5540931 from9:00 p.m. ETonAugust 1, 2012through9:00 p.m. ETonSunday, August 5, 2012.
AboutGreen Mountain Coffee Roasters, Inc.
As a leader in specialty coffee and coffee makers,Green Mountain Coffee Roasters, Inc.(GMCR) (NASDAQ: GMCR), is recognized for its award-winning coffees, innovativeKeurig®Single Cup brewing technology, and socially responsible business practices. GMCR supports local and global communities by offsetting 100% of its direct greenhouse gas emissions, investing in sustainably-grown coffee, and donating a portion of its pre-tax profits to social and environmental projects.
GMCR routinely posts information that may be of importance to investors in the Investor Relations section of its website, including news releases and its complete financial statements, as filed with theSEC.The Companyencourages investors to consult this section of its website regularly for important information and news. Additionally, by subscribing to the Company'sautomatic email news release delivery,individuals can receive news directly from GMCR as it is released.
Forward-Looking Statements
Certain information contained in this release, including statements concerning expected performance such as those relating to net sales, earnings, cost savings, acquisitions and brand marketing support, are "forward-looking statements" within the meaning of Section21E of the Securities Exchange Act of 1934. Generally, these statements may be identified by the use of words such as "may," "will," "would," "expect," "should," "anticipate," "estimate," "believe," "forecast," "intend," "plan" and similar expressions intended to identify forward-looking statements. These statements may relate to: the expected impact of raw material costs and our pricing actions on our results of operations and gross margins, expected trends in net sales and earnings performance and other financial measures, the expected productivity and working capital improvements, the ability to maximize or successfully assert our intellectual property rights, the success of introducing and producing new product offerings, ability to attract and retain senior management, the impact of foreign exchange fluctuations, the adequacy of internally generated funds and existing sources of liquidity, such as the availability of bank financing, the expected results of operations of businesses acquired by us, our ability to issue debt or additional equity securities, our expectations regarding purchasing shares of our common stock under the existing authorizations, and the impact of the inquiry initiated by theSECand any related litigation or additional governmental inquiry or enforcement proceedings.
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 theSecurities 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 Statements of Operations
(Dollars in thousands except per share data)
Thirteen
Thirteen
weeks ended
weeks ended
June 23,
June 25,
2012
2011
Net sales
$
869,194
$
717,210
Cost of sales
565,883
453,130
Gross profit
303,311
264,080
Selling and operating expenses
117,982
95,512
General and administrative expenses
55,601
49,258
Operating income
129,728
119,310
Other income (expense), net
229
(233
)
Loss on financial instruments, net
3,032
482
Gain on foreign currency, net
(5,068
)
(981
)
Interest expense
(6,157
)
(29,830
)
Income before income taxes
121,764
88,748
Income tax expense
(48,244
)
(31,778
)
Net Income
$
73,520
$
56,970
Net income attributable to noncontrolling interests
224
622
Net income attributable to GMCR
$
73,296
$
56,348
Basic income per share:
Basic weighted average shares outstanding
155,459,690
147,663,350
Net income per common share - basic
$
0.47
$
0.38
Diluted income per share:
Diluted weighted average shares outstanding
159,299,578
153,344,389
Net income per common share - diluted
$
0.46
$
0.37
GREEN MOUNTAIN COFFEE ROASTERS, INC.
Unaudited Consolidated Statements of Operations
(Dollars in thousands except per share data)
Thirty-nine
Thirty-nine
weeks ended
weeks ended
June 23,
June 25,
2012
2011
Net sales
$
2,912,462
$
1,939,016
Cost of sales
1,959,509
1,288,481
Gross profit
952,953
650,535
Selling and operating expenses
370,445
253,546
General and administrative expenses
157,349
134,788
Operating income
425,159
262,201
Other income (expense), net
1,589
933
Loss on financial instruments, net
(214
)
(11,819
)
Gain on foreign currency, net
1,231
4,643
Gain on sale of subsidiary
26,311
-
Interest expense
(18,662
)
(52,560
)
Income before income taxes
435,414
203,398
Income tax expense
(163,949
)
(78,171
)
Net Income
$
271,465
$
125,227
Net income attributable to noncontrolling interests
724
1,095
Net income attributable to GMCR
$
270,741
$
124,132
Basic income per share:
Basic weighted average shares outstanding
155,071,117
143,606,691
Net income per common share - basic
$
1.75
$
0.86
Diluted income per share:
Diluted weighted average shares outstanding
159,364,440
149,357,480
Net income per common share - diluted
$
1.70
$
0.83
GREEN MOUNTAIN COFFEE ROASTERS, INC.
Unaudited Consolidated Balance Sheets
(Dollars in thousands)
June 23,
September 24,
2012
2011
Assets
Current assets:
Cash and cash equivalents
$
138,988
$
12,989
Restricted cash and cash equivalents
10,096
27,523
Receivables, less uncollectible accounts and return allowances of$39,389and$21,407atJune 23, 2012andSeptember 24, 2011, respectively
265,862
310,321
Inventories
667,005
672,248
Income taxes receivable
7,810
18,258
Other current assets
23,812
28,072
Deferred income taxes, net
45,598
36,231
Current assets held for sale
-
25,885
Total current assets
1,159,171
1,131,527
Fixed assets, net
846,323
579,219
Intangibles, net
496,793
529,494
Goodwill
791,197
789,305
Other long-term assets
43,646
47,759
Long-term assets held for sale
-
120,583
Total assets
$
3,337,130
$
3,197,887
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt and capital lease obligations
$
9,271
$
6,669
Accounts payable
215,153
265,511
Accrued compensation costs
37,913
43,260
Accrued expenses
108,085
92,120
Income tax payable
77,626
9,617
Deferred income taxes, net
-
243
Other current liabilities
23,827
34,613
Current liabilities related to assets held for sale
-
19,341
Total current liabilities
471,875
471,374
Long-term debt and capital lease obligations
399,841
575,969
Deferred income taxes, net
212,101
189,637
Other long-term liabilities
28,603
27,184
Long-term liabilities related to assets held for sale
-
474
Commitments and contingencies
Redeemable noncontrolling interests
9,828
21,034
Stockholders' equity:
Preferred stock,$0.10par value: Authorized - 1,000,000 shares; No shares issued or outstanding
-
-
Common stock,$0.10par value: Authorized - 500,000,000 shares; Issued and outstanding - 155,526,602 and 154,466,463 shares atJune 23, 2012andSeptember 24, 2011, respectively
15,553
15,447
Additional paid-in capital
1,534,166
1,499,616
Retained earnings
678,891
411,727
Accumulated other comprehensive income (loss)
(13,728
)
(14,575
)
Total stockholders' equity
2,214,882
1,912,215
Total liabilities and stockholders' equity
$
3,337,130
$
3,197,887
GREEN MOUNTAIN COFFEE ROASTERS, INC.
Unaudited Consolidated Statements of Cash Flows
(Dollars in thousands)
Thirty-nine
Thirty-nine
weeks ended
weeks ended
June 23,
June 25,
2012
2011
Cash flows from operating activities:
Net income
$
271,465
$
125,227
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
89,221
50,176
Amortization of intangibles
34,496
29,587
Amortization deferred financing fees
4,538
4,643
Loss on extinguishment of debt
-
19,732
Unrealized gain of foreign currency
(535
)
(4,956
)
Loss on disposal of fixed assets
2,103
421
Gain on sale of subsidiary, excluding transaction costs
(28,914
)
-
Provision for doubtful accounts
2,084
2,315
Provision for sales returns
83,170
48,755
Unrealized loss on financial instruments, net
112
7,671
Tax benefit from exercise of non-qualified options and disqualified dispositions of incentive stock options
4
38
Excess tax benefits from equity-based compensation plans
(12,449
)
(29,175
)
Deferred income taxes
13,198
3,343
Deferred compensation and stock compensation
13,811
7,686
Changes in assets and liabilities, net of effects of acquisition:
Receivables
(37,895
)
(58,229
)
Inventories
6,464
(118,113
)
Income tax receivable/payable, net
91,032
25,533
Other current assets
4,014
2,371
Other long-term assets, net
(608
)
(11,552
)
Accounts payable
(59,130
)
49,134
Accrued compensation costs
(5,024
)
(1,106
)
Accrued expenses
15,341
12,054
Other current liabilities
(3,909
)
(2,388
)
Other long-term liabilities
5,593
11,541
Net cash provided by operating activities
488,182
174,708
Cash flows from investing activities:
Change in restricted cash
(461
)
98
Proceeds from notes receivable
240
449
Acquisition ofLJVH 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
(305,532
)
(175,474
)
Proceeds from disposal of fixed assets
340
850
Other investing activities
-
(158
)
Net cash used in investing activities
(167,680
)
(1,082,070
)
Cash flows from financing activities:
Net change in revolving line of credit
(208,678
)
165,835
Proceeds from issuance of common stock under compensation plans
8,392
9,577
Proceeds from issuance of common stock for private placement
-
291,096
Cash distributions to redeemable noncontrolling interests shareholders
(513
)
(702
)
Proceeds from issuance of common stock in public equity offering
-
673,048
Financing costs in connection with public equity offering
-
(25,685
)
Excess tax benefits from equity-based compensation plans
12,449
29,175
Principal payments under capital lease obligations
(4,255
)
(7
)
Proceeds from borrowings of long-term debt
-
796,375
Deferred financing fees
-
(45,821
)
Repayment of long-term debt
(6,231
)
(906,708
)
Net cash (used in) provided by financing activities
(198,836
)
986,183
Change in cash balances included in current assets held for sale
5,160
(8,248
)
Effect of exchange rate changes on cash and cash equivalents
(827
)
1,164
Net increase in cash and cash equivalents
125,999
71,737
Cash and cash equivalents at beginning of period
12,989
4,401
Cash and cash equivalents at end of period
$
138,988
$
76,138
Supplemental disclosures of cash flow information:
Fixed asset purchases included in accounts payable and not disbursed at the end of each period
$
34,293
$
26,970
Non cash financing and investing activities:
Fixed Assets acquired under capital lease obligations/vendor notes
$
44,174
$
-
GREEN MOUNTAIN COFFEE ROASTERS, INC.
GAAP to Non-GAAP Reconciliation
(Dollars in thousands, except per share data)
Thirteen
weeks ended
June 23, 2012
Thirteen
weeks ended
June 25, 2011
Operating income
$
129,728
$
119,310
Expenses related toSECinquiry (1)
2,996
799
Amortization of identifiable intangibles (2)
11,475
11,794
Non-GAAP operating income
$
144,199
$
131,903
Thirteen
weeks ended
June 23, 2012
Thirteen
weeks ended
June 25, 2011
Net income attributable to GMCR
$
73,296
$
56,348
After tax:
Expenses related toSECinquiry (1)
1,759
513
Amortization of identifiable intangibles (2)
7,876
7,859
Loss on extinguishment of debt (3)
-
11,027
Non-GAAP net income
$
82,931
$
75,747
Thirteen
weeks ended
June 23, 2012
Thirteen
weeks ended
June 25, 2011
Diluted income per share
$
0.46
$
0.37
After tax:
Expenses related toSECinquiry (1)
0.01
0.00
Amortization of identifiable intangibles (2)
0.05
0.05
Loss on extinguishment of debt (3)
-
0.07
Non-GAAP net income per share
$
0.52
$
0.49
(1)
Represents legal and accounting expenses related to theSECinquiry 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 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.
GREEN MOUNTAIN COFFEE ROASTERS, INC.
GAAP to Non-GAAP Reconciliation
(Dollars in thousands, except per share data)
Thirty-nine
weeks ended
June 23, 2012
Thirty-nine
weeks ended
June 25, 2011
Operating income
$
425,159
$
262,201
Acquisition-related expenses (1)
-
10,573
Expenses related toSECinquiry (2)
4,811
7,193
Amortization of identifiable intangibles (3)
34,496
29,587
Non-GAAP operating income
$
464,466
$
309,554
Thirty-nine
weeks ended
June 23, 2012
Thirty-nine
weeks ended
June 25, 2011
Net income attributable to GMCR
$
270,741
$
124,132
After tax:
Acquisition-related expenses (1)
-
14,524
Expenses related toSECinquiry (2)
2,889
4,442
Amortization of identifiable intangibles (3)
23,658
19,514
Loss on extinguishment of debt (4)
-
11,027
Gain on sale of subsidiary (5)
(16,685
)
-
Non-GAAP net income
$
280,603
$
173,639
Thirty-nine
weeks ended
June 23, 2012
Thirty-nine
weeks ended
June 25, 2011
Diluted income per share
$
1.70
$
0.83
After tax:
Acquisition-related expenses (1)
-
0.10
Expenses related toSECinquiry (2)
0.02
0.03
Amortization of identifiable intangibles (3)
0.15
0.13
Loss on extinguishment of debt (4)
-
0.07
Gain on sale of subsidiary (5)
(0.10
)
-
Non-GAAP net income per share
$
1.76
*
$
1.16
* Does not sum due to rounding.
(1)
Represents direct acquisition-related expenses of$10.6 million($9.8 millionafter-tax); the write-off of deferred financing expenses as part of new debt financing of$2.6 million($1.6 millionafter-tax); 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 millionafter-tax). In addition, the Company recognized a$2.1 milliontax expense related to the reversal of nondeductible acquisition-related expenses incurred during the Company's fourth quarter of fiscal 2010 and a$3.0 milliontax benefit related to the reversal of certain nondeductible acquisition-related expenses incurred during the Company's fourth quarter of fiscal 2010 and the first quarter of fiscal 2011 that were deemed deductible in accordance with tax regulations enacted in the second quarter of fiscal 2011. This combined tax affect was reversed for purposes of this non-GAAP table.
(2)
Represents legal and accounting expenses related to theSECinquiry 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 gain recognized on the sale of Filterfresh, net of income taxes of$9.6 million.
Source: Green Mountain Coffee Roasters, Inc. WATERBURY, Vt.--(BUSINESS WIRE) 8.1.2012