Green Mountain Coffee Roasters, Inc.’s First Quarter Fiscal 2013 Revenue Grows 16% Over Prior Year with Free Cash Flow of $254

  Green Mountain Coffee Roasters, Inc.’s First Quarter Fiscal 2013 Revenue
  Grows 16% Over Prior Year with Free Cash Flow of $254 Million

     4.6 Million Keurig Single Cup Brewers Sold by GMCR; Sales of Single
        Serve-Related Products Increase 19% Over the Prior Year Period

Business Wire

WATERBURY, Vt. -- February 6, 2013

Green Mountain Coffee Roasters, Inc., (GMCR) (NASDAQ: GMCR), a leader in
specialty coffee and coffee makers, today announced its first quarter fiscal
year 2013 results for the 13 weeks ended December 29, 2012.

“Our strong first quarter performance underscores the connection consumers
have to their Keurig^® brewers; the soundness of our business model; and, the
value inherent in our brand portfolio,” said Brian P. Kelley, GMCR’s President
and CEO. “While the GAAP earnings comparison was affected by a non-recurring
gain on the sale of Filterfresh in the first quarter of fiscal 2012, our
non-GAAP earnings per share of $0.76 grew 27%.”

“The Keurig^® Single Cup brewing system is a powerful breakthrough for the
beverage business, with significant untapped potential in the U.S. and
globally. We are in the early days of a marked evolution in how consumers
purchase, prepare and customize hot beverages in their homes,” said Kelley.
“With a robust innovation pipeline and a growing awareness and commitment to
the Keurig^® brand, GMCR is well positioned to continue to lead this
disruptive shift in consumer behavior.”


First Quarter 2013 Performance Highlights
                              Thirteen       Thirteen          
($ in millions except           weeks ended     weeks ended
earnings per share)
                                December 29,    December 24,      % Increase
                                2012            2011
Net sales                       $    1,339.1    $   1,158.2         16    %
Operating income:
GAAP                            $    182.4      $   145.8           25    %
Non-GAAP                        $    194.7      $   158.0           23    %
Net income:
GAAP                            $    107.6      $   104.4    ^(1)   3     %
Non-GAAP                        $    116.0      $   96.0            21    %
Diluted income per share:
GAAP                            $    0.70       $   0.66     ^(1)   6     %
Non-GAAP                        $    0.76       $   0.60            27    %
EBITDA-LTM^(2)                  $    804.7      $   647.0           24    %
                                                                    
Note: Complete GAAP to Non-GAAP reconciliation tables provided with this
release.

^(1) GAAP net income and diluted income per share includes $16.7 million in
net income and $0.10 per fully diluted share due to the gain on the sale of
Filterfresh in the first quarter of fiscal 2012.
^(2) “EBITDA” is earnings before interest, taxes, depreciation, and
amortization. “LTM” is last twelve months. The “LTM” period ended December 29,
2012 includes 53 weeks. The “LTM” period ended December 24, 2011 includes 52
weeks.


First Quarter 2013 Financial Review

Net Sales

Net Sales by Product
($ in millions)      Thirteen weeks ended                      
                      December 29,  December 24,   $ Increase    % Increase
                      2012           2011           (Decrease)     (Decrease)
Single Serve Packs    $   863.7     $   715.7      $  148.0       21     %
Brewers and               377.3          330.4         46.9        14     %
Accessories
Other Products and       98.1         112.1        (14.0  )    (12    )%
Royalties
Total Net Sales       $   1,339.1    $   1,158.2    $  180.9      16     %
                                                                   

  *As shown in the table above, approximately 93% of consolidated first
    quarter fiscal year 2013 net sales were sales of Keurig^® Single Cup
    Brewers, single serve packs, and Keurig^®-related accessories, with the
    remainder of net sales consisting primarily of bagged coffee and the
    traditional Canadian office coffee services business.
  *Net sales of Keurig^® Single Cup Brewers, single serve packs, and
    Keurig^®-related accessories increased 19% over the prior year period.

Single Serve Packs

  *The increase in single serve pack net sales was driven by a 26 percentage
    point increase in sales volume offset by a 4 percentage point decrease due
    to single serve pack product mix and a 1 percentage point decrease due to
    the net price realization of single serve packs.

Brewers and Accessories

  *There were a total of 4.95 million Keurig^® branded brewers sold during
    the period, an 18% increase over the prior year period.

       *Of the total, GMCR sold 4.6 million Keurig^® Single Cup Brewers
         during the first quarter. This number does not account for consumer
         returns.
       *GMCR’s licensed brewer partners reported 350,000 brewers sold with
         Keurig^® Single Cup Brewing technology during GMCR’s first quarter.

Other Products and Royalties

  *Other products and royalties declined 12% year-over-year primarily due to
    the demand shift from traditional coffee package formats to single serve
    packs.

Operating Metrics

  *In the first quarter of fiscal year 2013, gross margin improved to 31.3%
    from 29.1% in the prior year period.

       *The higher gross margin in the first quarter of fiscal 2013 compared
         to the first quarter of fiscal 2012 primarily was due to a decrease
         in green coffee costs, and a decrease in warranty expense and lower
         sales returns, both primarily related to Keurig^® Single Cup Brewers.
       *These positive impacts were partially offset by the launch of the
         Keurig^® Vue^® Brewing system that has a lower gross margin than the
         Keurig^® K-Cup^® Brewing system; lower gross margin on the K-Cup^®
         Brewing system primarily due to a brewer rebate program; higher labor
         and overhead manufacturing costs associated with the ramp-up in the
         K-Cup^® pack manufacturing base; and, single serve pack net price
         realization.
       *The following table quantifies the changes in gross margin period to
         period:


                                                                   Change from
                                                                  Q1 2012 to
                                                                   Q1 2013
Favorable green coffee costs                                       +250 bps
Lower warranty expense                                             +130 bps
Lower sales returns                                                +100 bps
Vue^®-related impact                                               -90 bps
Lower gross margins on K-Cup^® Brewers                             -70 bps
Higher manufacturing costs primarily associated with the ramp-up   -40 bps
in K-Cup^® pack production
Net price realization - single serve packs                         -30 bps
Other items                                                        -30 bps


  *GAAP operating income of 13.6% of net sales in the first quarter of fiscal
    year 2013 increased from 12.6% in the prior year period.
  *Primarily due to the exclusion of the amortization of identifiable
    intangibles in both periods, non-GAAP operating income was 14.5% of net
    sales in the first quarter of fiscal year 2013 compared to 13.6% in the
    prior year period.
  *The Company’s effective income tax rate was 38.4% for the first quarter of
    fiscal 2013 as compared to 37.7% for the prior year period. The lower
    effective tax rate in the prior year period was primarily attributable to
    the release of an $8.8 million capital loss valuation allowance as a
    result of the gain realized on the sale of Filterfresh, partially offset
    by a $5.2 million difference between the book and tax basis gains related
    to the sale.
  *Diluted weighted average shares outstanding as of the end of the first
    quarter of fiscal year 2013 decreased to 152.7 million from 159.4 million
    in the prior year period in part as a result of shares repurchased under
    the Company’s previously announced share repurchase program.
  *Under its Board-authorized two-year $500 million share repurchase program,
    the Company repurchased 4.3 million shares in the first quarter of fiscal
    2013 and 3.1 million shares in the fourth quarter of fiscal 2012 for a
    total of 7.4 million shares at a cost of $175 million to date.

Balance Sheet & Cash Flow Highlights

“Due to a combination of positive factors the business generated $254 million
in free cash flow in the quarter,” said Frances G. Rathke, GMCR’s Chief
Financial Officer. “We expect to continue to generate cash in our fiscal
second quarter. However, we also expect to build brewer inventory in the back
half of the year to meet anticipated seasonal demand and to continue to invest
capital to fuel the growth of the business. As a result, we are reiterating
our estimate for free cash flow in fiscal 2013 in the range of $100 million to
$150 million.”


Balance Sheet & Cash Flow Highlights ($ in        December 29,  December 24,
millions)                                          2012           2011
Cash and cash equivalents, including restricted    $    98.5      $    93.2
cash
Accounts receivables, net                          $    432.7     $    412.5
Inventories                                        $    587.3     $    606.7
Raw materials & supplies                           $    198.6     $    241.1
Coffee                                             $    124.6     $    155.8
Packaging & other raw materials                    $    74.0      $    85.3
Finished goods                                     $    388.7     $    365.6
Brewers & accessories                              $    239.2     $    166.8
Single serve packs                                 $    120.1     $    171.2
Other                                              $    29.4      $    27.6
Debt outstanding and capital lease and financing   $    414.3     $    479.7
obligations
Thirteen weeks net cash provided by operating      $    337.1     $    132.1
activities
Thirteen weeks free cash flow ^(*)                 $    253.7     $    30.2

^(*) 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

“For the remainder of the year, we expect to see continued year-over-year
gross margin improvement due to lower green coffee costs and ongoing brewer
quality improvements,” said Kelley. “While we expect growth will continue to
moderate in the overall total coffee and espresso maker category, we also
expect our share of the category to continue to increase driving further
expansion of our installed Keurig^® brewer base. Consistent with our previous
outlook, we estimate total fiscal year 2013 net sales growth in the range of
15% to 20% over fiscal year 2012.”

Company Estimates for Second Quarter and Fiscal Year 2013

The Company provided its outlook for its second quarter of fiscal year 2013 as
follows:

  *Total second quarter fiscal year 2013 net sales growth in the range of 14%
    to 18% over the second quarter of fiscal year 2012.
  *Second quarter fiscal year 2013 non-GAAP earnings per diluted share in a
    range of $0.70 to $0.75 per diluted share, excluding the amortization of
    identifiable intangibles related to the Company’s acquisitions; any
    acquisition-related transaction expenses; and, legal and accounting
    expenses related to the SEC inquiry and the Company’s pending securities
    and stockholder derivative class action litigation.
  *The Company’s second quarter of fiscal year 2013 non-GAAP earnings per
    diluted share estimate includes the impact of shares repurchased prior to
    January 31, 2013 as part of its previously announced share repurchase
    program, but excludes any impact from potential future Company share
    repurchases.

The Company reiterated its net sales growth and free cash flow estimates and
refined its non-GAAP earnings per share and capital expenditure outlook for
its fiscal year 2013 as follows:

  *Total fiscal year 2013 net sales growth in the range of 15% to 20% over
    fiscal year 2012.
  *Fiscal year 2013 non-GAAP earnings per diluted share in a range of $2.72
    to $2.82 per diluted share, revised from prior estimates of $2.64 to
    $2.74, and excluding the amortization of identifiable intangibles related
    to the Company’s acquisitions; any acquisition-related transaction
    expenses; and legal and accounting expenses related to the SEC inquiry and
    the Company’s pending  securities and stockholder derivative class action
    litigation.
  *The Company’s fiscal year 2013 non-GAAP earnings per diluted share
    estimate includes the impact of shares repurchased prior to January 31,
    2013 as part of its previously announced share repurchase program, but
    excludes any impact from potential future Company share repurchases.
  *Free cash flow in the range of $100 million to $150 million.
  *Capital investment in the range of $350 million to $400 million, revised
    from prior estimates of $380 million to $430 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 any gain from sale of the Filterfresh U.S.-based coffee
services business; legal and accounting expenses related to the SEC inquiry
and pending securities and stockholder derivative class action litigation; and
non-cash acquisition-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” table that
accompanies 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 at 5:00 p.m. ET today, February 6, 2013. 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 at
http://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 8967146 from 9:00
p.m. ET on February 6, 2013 through 9:00 p.m. ET on Sunday, February 10, 2013.

About Green 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, innovative Keurig^® 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 the SEC. The Company encourages
investors to consult this section of its website regularly for important
information and news. Additionally, by subscribing to the Company’s automatic
email news release delivery, individuals can receive news directly from GMCR
as it is released.

Forward-Looking Statements

Certain information contained in this filing, including statements concerning
expected performance such as those relating to net sales, earnings, cost
savings, acquisitions and brand marketing support, are “forward-looking
statements”. 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 the SEC and 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 our filings with the
Securities and Exchange Commission.

Actual results could differ materially from those projected in the
forward-looking statements. We undertake 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)
                                                              
                                                  December 29,   September 29,
                                                  2012           2012
Assets
Current assets:
Cash and cash equivalents                         $  98,525      $  58,289
Restricted cash and cash equivalents                 5              12,884
Receivables, less uncollectible accounts and
return allowances of $59,225 and $34,517 at          432,692        363,771
December 29, 2012 and September 29, 2012,
respectively
Inventories                                          587,321        768,437
Income taxes receivable                              11,916         32,943
Other current assets                                 44,534         35,019
Deferred income taxes, net                          51,417        51,613
Total current assets                                 1,226,410      1,322,956
                                                                 
Fixed assets, net                                    969,297        944,296
Intangibles, net                                     481,600        498,352
Goodwill                                             802,337        808,076
Deferred income taxes, net                           35             —
Other long-term assets                              39,361        42,109
                                                                 
Total assets                                      $  3,519,040   $  3,615,789
                                                                 
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt                 $  8,247       $  6,691
Current portion of capital lease and financing       3,167          3,057
obligations
Accounts payable                                     282,342        279,577
Accrued compensation costs                           38,893         38,458
Accrued expenses                                     161,414        132,992
Income tax payable                                   16,438         29,322
Deferred income taxes, net                           241            245
Other current liabilities                           24,123        29,645
Total current liabilities                            534,865        519,987
                                                                 
Long-term debt, less current portion                 342,385        466,984
Capital lease and financing obligations, less        60,536         54,794
current portion
Deferred income taxes, net                           271,775        270,348
Other long-term liabilities                          26,987         32,544
                                                                 
Commitments and contingencies
                                                                 
Redeemable noncontrolling interests                  9,855          9,904
                                                                 
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 -         14,867         15,268
148,675,810 and 152,680,855 shares at December
29, 2012 and September 29, 2012, respectively
Additional paid-in capital                           1,376,699      1,464,560
Retained earnings                                    878,703        771,200
Accumulated other comprehensive income              2,368         10,200
Total stockholders’ equity                          2,272,637     2,261,228
                                                                 
Total liabilities and stockholders’ equity        $  3,519,040   $  3,615,789
                                                                    


GREEN MOUNTAIN COFFEE ROASTERS, INC.
Unaudited Consolidated Statements of Operations
(Dollars in thousands except per share data)
                                                            
                                             Thirteen          Thirteen
                                             weeks ended       weeks ended
                                             December 29,      December 24,
                                             2012              2011
Net sales                                    $ 1,339,059       $ 1,158,216
Cost of sales                                 919,896         821,612     
Gross profit                                   419,163           336,604
                                                               
                                                               
Selling and operating expenses                 171,845           141,358
General and administrative expenses           64,877          49,408      
Operating income                               182,441           145,838
                                                               
Other income, net                              188               691
Gain (loss) on financial instruments, net      1,104             (1,134      )
(Loss) gain on foreign currency, net           (2,679      )     2,686
Gain on sale of subsidiary                     —                 26,311
Interest expense                              (5,730      )    (6,463      )
Income before income taxes                     175,324           167,929
                                                               
Income tax expense                            (67,379     )    (63,247     )
Net income                                     107,945           104,682
                                                               
Net income attributable to noncontrolling     362             268         
interests
                                                               
Net income attributable to GMCR              $ 107,583        $ 104,414     
                                                               
Basic income per share:
Basic weighted average shares outstanding      149,317,597       154,704,471
Net income per common share - basic          $ 0.72            $ 0.67
                                                               
Diluted income per share:
Diluted weighted average shares                152,708,807       159,367,829
outstanding
Net income per common share - diluted        $ 0.70            $ 0.66
                                                                             


GREEN MOUNTAIN COFFEE ROASTERS, INC.
Unaudited Consolidated Statements of Cash Flows
(Dollars in thousands)
                                                          
                                         Thirteen            Thirteen
                                         weeks ended         weeks ended
                                         December 29, 2012   December 24, 2011
Cash flows from operating activities:
Net income                               $   107,945         $   104,682
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation                                 43,810              25,611
Amortization of intangibles                  11,535              11,453
Amortization of deferred financing           1,513               1,513
fees
Unrealized loss (gain) on foreign            2,640               (2,050     )
currency, net
Loss on disposal of fixed assets             16                  232
Gain on sale of subsidiary, excluding        —                   (28,914    )
transaction costs
Provision for doubtful accounts              668                 1,422
Provision for sales returns                  44,809              54,630
(Gain) loss on derivatives, net              (755       )        1,383
Excess tax benefits from equity-based        (2,975     )        (3,908     )
compensation plans
Deferred income taxes                        2,934               5,636
Deferred compensation and stock              6,165               3,606
compensation
Other                                        363                 —
Changes in assets and liabilities:
Receivables                                  (115,282   )        (155,553   )
Inventories                                  179,767             67,048
Income tax receivable/payable, net           11,475              49,953
Other current assets                         (9,635     )        (5,952     )
Other long-term assets, net                  1,205               (365       )
Accounts payable, accrued expenses and       53,389              2,038
accrued compensation costs
Other current liabilities                    3,514               (144       )
Other long-term liabilities                 (5,959     )       (225       )
Net cash provided by operating               337,142             132,096
activities
                                                             
Cash flows from investing activities:
Change in restricted cash                    3,561               581
Proceeds from sale of subsidiary, net        —                   145,169
of cash transferred
Capital expenditures for fixed assets        (83,458    )        (101,848   )
Other investing activities                  100               368        
Net cash (used in) provided by               (79,797    )        44,270
investing activities
                                                             
Cash flows from financing activities:
Net change in revolving line of credit       (120,000   )        (113,074   )
Proceeds from issuance of common stock       1,127               811
under compensation plans
Repurchase of common stock                   (98,530    )        —
Excess tax benefits from equity-based        2,975               3,908
compensation plans
Payments on capital lease and                (755       )        (622       )
financing obligations
Repayment of long-term debt                  (1,584     )        (1,616     )
Other financing activities                  (244       )       (49        )
Net cash used in financing activities        (217,011   )        (110,642   )
                                                             
Change in cash balances included in          —                   5,160
current assets held for sale
                                                             
Effect of exchange rate changes on           (98        )        238
cash and cash equivalents
                                                             
Net increase in cash and cash                40,236              71,122
equivalents
Cash and cash equivalents at beginning      58,289            12,989     
of period
Cash and cash equivalents at end of      $   98,525         $   84,111     
period
                                                             
Supplemental disclosures of cash flow
information:
Fixed asset purchases included in
accounts payable and not disbursed at    $   36,770          $   33,463
the end of each period
Noncash investing and financing
activities:
Fixed assets acquired under capital      $   6,607           $   10,974
lease and financing obligations
Settlement of acquisition related
liabilities through release of           $   9,227           $   18,788
restricted cash
                                                                            


GREEN MOUNTAIN COFFEE ROASTERS, INC.
GAAP to Non-GAAP Reconciliation
(Dollars in thousands, except per share data)
                                                        
                                     Thirteen weeks ended
                                     December 29, 2012     December 24, 2011
Operating income                     $     182,441         $   145,838
Expenses related to SEC inquiry            720                 669
(1)
Amortization of identifiable              11,535             11,453    
intangibles (2)
Non-GAAP operating income            $     194,696         $   157,960   
                                                                             
                                                                             
                                                                             
                                     Thirteen weeks ended
                                     December 29, 2012     December 24, 2011
Net income attributable to GMCR      $     107,583         $   104,414
After tax:
Expenses related to SEC inquiry            444                 417
(1)
Amortization of identifiable               7,951               7,849
intangibles (2)
Gain on sale of subsidiary (3)            —                  (16,685   )
Non-GAAP net income                  $     115,978         $   95,995    
                                                                             
                                                                             
                                                                             
                                     Thirteen weeks ended
                                     December 29, 2012     December 24, 2011
Diluted income per share             $     0.70            $   0.66
After tax:
Expenses related to SEC inquiry            0.00                0.00
(1)
Amortization of identifiable               0.05                0.05
intangibles (2)
Gain on sale of subsidiary (3)            —                  (0.10     )
Non-GAAP net income per share        $     0.76        *   $   0.60         *

* Does not sum due to rounding.

(1) Represents legal and accounting expenses related to the SEC inquiry and
pending securities and stockholder derivative class action 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 gain on the sale of Filterfresh, net of income taxes of
$9.6 million.

Contact:

Green Mountain Coffee Roasters, Inc.
Suzanne DuLong, 802-488-2600
VP IR & Corporate Comm
Investor.Services@GMCR.com
or
Katie Gilroy, 781-205-7345
Corporate Comm Manager
Investor.Services@GMCR.com
 
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