Green Mountain Coffee Roasters reports Q2 2013 financial results

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Green Mountain Coffee Roasters reports Q2 2013 financial results

Wed, 05/08/2013 - 11:12am -- tim

Green Mountain Coffee Roasters, Inc, (NASDAQ: GMCR), based in Waterbury, Vermont Wednesday after markets closed announced its second quarter fiscal year 2013 results for the 13 weeks and 26 weeks ended March 30, 2013. GMCR also announced a major new partnership with rival Starbucks SEE STORY. GMCR's stock price at the end of Wednesday's trading was $59.48, up $0.92 (1.57%). GMCR's 52-week range is $17.11 - $59.62. By 5 pm, in after hours trading, the stock was at $65.60 up $6.12 (10.29%). It opened Thursday at $67.89 and quickly exceeded $70.
Highlights of the report, which was released after the market closed Wednesday, included: 

Revenue Increases 14% Over the Prior Year Period
Free Cash Flow of $202 Million in the Quarter, $456 Million for the First Half of Fiscal Year 2013
Management Updates Outlook for Fiscal Year 2013:

Raises Fiscal Year 2013 Non-GAAP EPS Estimates to $3.05 to $3.15 -- A Growth Rate of 27% to 31%, or 31% to 35% Excluding the 53rd Week of Fiscal Year 2012
Increases Estimated Free Cash Flow to a Range of $300 Million to $400 Million
Targets Fiscal Year 2013 Net Sales Growth of 11% to 14% Over Fiscal Year 2012, or 14% to 17% Excluding the 53rd Week of Fiscal Year 2012

"Our fiscal second quarter results demonstrate the leverage inherent in our business model," said Brian P. Kelley, GMCR's President and CEO. "Specifically, strong sales of our single serve packs drove 14% revenue growth and 45% non-GAAP earnings per share growth in the quarter."
"Our industry-leading single serve business made up of single serve packs, Keurig® brewers and accessories grew a healthy 16% in our second fiscal quarter contributing to strong earnings growth and significant free cash flow generation," continued Kelley. "We expect the Keurig® brewer installed base in U.S. households to grow between 25% to 30% in fiscal 2013 with volume of our single serve packs growing proportionately with the anticipated brewer installed base."

 

Second Quarter 2013 Performance Highlights

 

 

 
Thirteen weeks ended
 
Twenty-six weeks ended

($ in millions except earnings per share)

 
March 30,
 
March 24,
 
%
 
March 30,
 
March 24,
 
%

 
 
 
2013
 
 
2012
 
Increase
 
 
2013
 
 
2012
 
Increase

Net sales
 
$
1,004.8
 
$
885.1
 
14
%
 
$
2,343.9
 
$
2,043.3
 
15
%

Operating income:
 
 
 
 
 
 
 
 
 
 
 
 

GAAP
 
$
212.1
 
$
149.6
 
42
%
 
$
394.5
 
$
295.4
 
34
%

Non-GAAP
 
$
224.6
 
$
162.3
 
38
%
 
$
419.2
 
$
320.3
 
31
%

Net income:
 
 
 
 
 
 
 
 
 
 
 
 

GAAP
 
$
132.4
 
$
93.0
 
42
%
 
$
240.0
 
$
197.4
 
22
%

Non-GAAP
 
$
140.9
 
$
101.7
 
39
%
 
$
256.9
 
$
197.7
 
30
%

Diluted income per share:
 
 
 
 
 
 
 
 
 
 
 
 

GAAP
 
$
0.87
 
$
0.58
 
50
%
 
$
1.57
 
$
1.24
 
27
%

Non-GAAP
 
$
0.93
 
$
0.64
 
45
%
 
$
1.68
 
$
1.24
 
35
%

 
 
 
 
 
 
 
 
 
 
 
 
 

Note: Complete GAAP to Non-GAAP reconciliation tables provided with this release.

 

 

Second Quarter 2013 Financial Review

 
 
 
 
 
 
 
 
 

Net Sales

 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 

Net Sales by Product
 
 
 
 
 
 
 
 

($ in millions)
 
Thirteen weeks ended
 
 
 
 

 
 

March 30,
2013

 

March 24,
2012

 

$ Increase
(Decrease)

 

% Increase
(Decrease)

Single serve packs
 
$
794.0
 
$
655.0
 
$
139.0
 
 
21
%

Brewers and accessories
 
 
126.8
 
 
140.2
 
 
(13.4
)
 
(10
)%

Subtotal
 
 
920.8
 
 
795.2
 
 
125.6
 
 
16
%

Other products and royalties
 
 
84.0
 
 
89.9
 
 
(5.9
)
 
(7
)%

Total net sales
 
$
1,004.8
 
$
885.1
 
$
119.7
 
 
14
%

 
 
 
 
 
 
 
 
 
 
 
 
 
 

As shown in the table above, approximately 92% of consolidated second 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, fractional packs and the Canadian office coffee services business.

Single Serve Packs

The 21% increase in single serve pack net sales over the prior year period was driven by a 26% increase in sales volume offset by a 5% decrease due to single serve pack product mix.

Brewers and Accessories

For the quarter, 1.36 million Keurig® system brewers were sold, a 9% decrease in shipments over the prior year period.

Of the total, GMCR sold 1.23 million Keurig® Single Cup Brewers. This number does not account for consumer returns.
GMCR's licensed brewer partners reported 131,500 brewers sold during the period.

According to Company estimates, which include NPD data and retail customer reported information, U.S. consumer purchases of Keurig® system brewers in the second fiscal quarter increased by 13% over the prior year period.

Other Products and Royalties

Sales of other products and royalties declined 7% year-over-year primarily due to the continuing demand shift from traditional coffee package formats to single serve packs.

Operating Metrics

In the second quarter of fiscal year 2013, gross margin improved 590 basis points to 41.3% from 35.4% in the prior year period.

The higher gross margin versus the prior year period was due to favorable green coffee costs, lower obsolescence expense of finished goods and raw materials, lower labor and overhead manufacturing costs, a favorable product mix shift and a decrease in warranty expense for Keurig® Single Cup Brewers.
These positive impacts were partially offset by a $10.4 million before-tax charge related to a loss on a non-coffee purchase commitment.
The following table quantifies the changes in gross margin period to period:

 
 
 

 
 

Change from
Q2 2012 to
Q2 2013

Favorable green coffee costs
 
+290 bps

Lower obsolescence expense of finished goods and raw materials
 
+150 bps

Lower labor and overhead manufacturing costs
 
+140 bps

Shift in sales mix between Keurig® Single Cup Brewers and single serve packs
 
+90 bps

Lower warranty expense
 
+80 bps

Charge related to a non-coffee purchase commitment
 
-100 bps

Other Items
 
-60 bps

 
 
 

GAAP operating income of 21.1% of net sales in the second quarter of fiscal year 2013 increased from 16.9% in the prior year period.
Primarily due to the exclusion of the amortization of identifiable intangibles in both periods, non-GAAP operating income was 22.3% of net sales in the second quarter of fiscal year 2013 compared to 18.3% in the prior year period.
The Company's effective income tax rate was 35.6% for the second quarter of fiscal 2013 as compared to 36.0% for the prior year period. GMCR expects its fiscal 2013 annual effective tax rate to be approximately 37%.
Diluted weighted average shares outstanding as of the end of the second quarter of fiscal year 2013 decreased to 152.3 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 608,116 shares in the second quarter of fiscal 2013 at an average price of $44.65 and a cost of $27.2 million, bringing its total repurchases since the fourth quarter of fiscal 2012 to 7,985,293 shares at an average price of $25.32 and a total cost of $202.2 million.

Balance Sheet & Cash Flow Highlights
"For the second consecutive quarter, cash management and overall business improvements contributed to free cash flow generation, which year-to-date through the second quarter totaled $456 million," said Frances G. Rathke, GMCR's Chief Financial Officer. "While we continue to expect to invest in brewer inventory in the back half of the year to meet anticipated holiday demand, we are pleased to be revising our free cash flow estimate for the year upward to a range of $300 million to $400 million from a prior range of $100 million to $150 million."

 
 
 
 
 
 
 

Balance Sheet & Cash Flow Highlights ($ in millions)
 
March 30, 2013
 
March 24, 2012
 
% Change

Cash and cash equivalents, including restricted cash
 
$
221.7
 
$
155.2
 
43
%

Accounts receivables, net
 
$
312.9
 
$
300.7
 
4
%

Inventories
 
$
587.3
 
$
602.1
 
(2
)%

Raw materials & supplies
 
$
176.8
 
$
244.4
 
(28
)%

Coffee
 
$
105.0
 
$
150.5
 
(30
)%

Packaging & other raw materials
 
$
71.8
 
$
93.9
 
(24
)%

Finished goods
 
$
410.5
 
$
357.7
 
15
%

Brewers & accessories
 
$
233.9
 
$
191.1
 
22
%

Single serve packs
 
$
146.0
 
$
138.3
 
6
%

Other
 
$
30.6
 
$
28.3
 
8
%

Debt outstanding and capital lease and financing obligations
 
$
350.8
 
$
441.2
 
(20
)%

Twenty-six weeks net cash provided by operating activities
 
$
604.7
 
$
370.2
 
63
%

Twenty-six weeks free cash flow (1)
 
$
456.3
 
$
165.6
 
176
%

(1) 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
"With only 13% estimated U.S. household penetration of our Keurig® system, we believe there is considerable opportunity for strong continued growth," said Kelley. "Already, Keurig® is the brand synonymous with single serve coffee in the hearts and minds of North American consumers. We continue to build awareness of our Keurig® beverage system where it matters most: in the home, in the office, on the counter, one cup at a time."
"We are also pursuing new channels, new brands, new beverages, new geographies and new brewer technologies to drive incremental growth," said Kelley. "When combined with continued improvements in our operations, we believe these efforts will enable us to generate sustainable sales and earnings growth over the long term."
Company Estimates for Third Quarter and Fiscal Year 2013
The Company provided its outlook for its third quarter of fiscal year 2013 as follows:

Net sales growth in the range of 11% to 15% over the third quarter of fiscal year 2012.
Non-GAAP earnings per diluted share in a range of $0.71 to $0.78, an increase of 37% to 50% over the prior year period (excluding the amortization of identifiable intangibles related to the Company's acquisitions; 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 non-GAAP earnings per diluted share estimate includes the impact of shares repurchased prior to March 30, 2013 as part of its previously announced share repurchase program, but excludes any impact from potential future Company share repurchases.

The Company revised its outlook for its fiscal year 2013 as follows:

Net sales growth in the range of 11% to 14% over fiscal year 2012.

On a comparable basis, excluding the 53rd week of fiscal year 2012 which contributed $90 million in net sales in the Company's fourth quarter fiscal 2012, the Company's net sales growth outlook equates to growth in a range of 14% to 17%.
On a comparable basis, the Company's expected fiscal 2013 revenue growth rate is being driven by a 20% increase in the Company's core single serve business, offset by a 5% decline in its traditional coffee business, comprised of bagged coffee, fractional packs and office coffee services. As the entire coffee category's shift to Keurig® single serve continues, the Company's traditional coffee business will likewise continue to be adversely impacted.

The Company continues to be comfortable with its longer-term outlook of annual net sales growth of 15% to 20%.
Non-GAAP earnings per diluted share of $3.05 to $3.15, representing a growth rate of 27% to 31% over the $2.40 earnings per diluted share in fiscal 2012 (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).

On a comparable basis, excluding the 53rd week of fiscal year 2012 which contributed $0.07 in non-GAAP earnings per diluted share in the Company's fourth quarter of fiscal 2012, the Company's non-GAAP earnings per diluted share guidance equates to growth in a range of 31% to 35%.

The Company's fiscal year 2013 non-GAAP earnings per diluted share estimate includes the impact of shares repurchased prior to March 30, 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 $300 million to $400 million up from $76 million in fiscal year 2012.
Capital investment in the range of $275 million to $325 million versus $401 million in fiscal year 2012.

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, 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, May 8, 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) 457-2644, passcode 2268855 from 9:00 p.m. ET on May 8, 2013 through 9:00 p.m. ET on Sunday, May 13, 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 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, organizational efficiencies, 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 acquisition and integration of new businesses, fluctuations in the cost and availability of raw and packaging materials, successful execution of internal changes to the organizational and leadership structures, 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 SEC.
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, except per share data)

 
 
 
 
 

 
 

March 30, 2013

 

September 29, 2012

Assets
 
 
 
 

Current assets:
 
 
 
 

Cash and cash equivalents
 
$
221,170
 
 
$
58,289

Restricted cash and cash equivalents
 
 
553
 
 
 
12,884

Receivables, less uncollectible accounts and return allowances of $47,976 and $34,517 at March 30, 2013 and September 29, 2012, respectively
 
 
312,880
 
 
 
363,771

Inventories
 
 
587,281
 
 
 
768,437

Income taxes receivable
 
 
6,496
 
 
 
32,943

Other current assets
 
 
42,072
 
 
 
35,019

Deferred income taxes, net
 
 
51,104
 
 
 
51,613

Total current assets
 
 
1,221,556
 
 
 
1,322,956

 
 
 
 
 

Fixed assets, net
 
 
977,298
 
 
 
944,296

Intangibles, net
 
 
462,241
 
 
 
498,352

Goodwill
 
 
793,405
 
 
 
808,076

Deferred income taxes, net
 
 

 
 
 

Other long-term assets
 
 
35,710
 
 
 
42,109

 
 
 
 
 

Total assets
 
$
3,490,210
 
 
$
3,615,789

 
 
 
 
 

Liabilities and Stockholders' Equity
 
 
 
 

Current liabilities:
 
 
 
 

Current portion of long-term debt
 
$
9,796
 
 
$
6,691

Current portion of capital lease and financing obligations
 
 
3,274
 
 
 
3,057

Accounts payable
 
 
213,946
 
 
 
279,577

Accrued compensation costs
 
 
58,836
 
 
 
38,458

Accrued expenses
 
 
143,493
 
 
 
132,992

Income tax payable
 
 
12,372
 
 
 
29,322

Deferred income taxes, net
 
 
236
 
 
 
245

Other current liabilities
 
 
16,357
 
 
 
29,645

Total current liabilities
 
 
458,310
 
 
 
519,987

 
 
 
 
 

Long-term debt, less current portion
 
 
272,885
 
 
 
466,984

Capital lease and financing obligations, less current portion
 
 
64,798
 
 
 
54,794

Deferred income taxes, net
 
 
269,382
 
 
 
270,348

Other long-term liabilities
 
 
25,687
 
 
 
32,544

 
 
 
 
 

Commitments and contingencies
 
 
 
 

 
 
 
 
 

Redeemable noncontrolling interests
 
 
10,684
 
 
 
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 - 148,917,424 and 152,680,855 shares at March 30, 2013 and September 29, 2012, respectively
 
 
14,892
 
 
 
15,268

Additional paid-in capital
 
 
1,373,366
 
 
 
1,464,560

Retained earnings
 
 
1,009,985
 
 
 
771,200

Accumulated other comprehensive (loss) income
 
 
(9,779
)
 
 
10,200

Total stockholders' equity
 
 
2,388,464
 
 
 
2,261,228

 
 
 
 
 

Total liabilities and stockholders' equity
 
$
3,490,210
 
 
$
3,615,789

 
 
 
 
 
 
 
 

 

 

GREEN MOUNTAIN COFFEE ROASTERS, INC.

Unaudited Consolidated Statements of Operations

(Dollars in thousands except per share data)

 
 
 
 
 
 
 
 
 
 

 
 

Thirteen weeks ended

 
 

Twenty-six weeks ended

 
 

March 30, 2013

 

March 24, 2012

 
 

March 30, 2013

 

March 24, 2012

Net sales
 
$
1,004,792
 
 
$
885,052
 
 
 
$
2,343,851
 
 
$
2,043,268
 

Cost of sales
 
 
589,646
 
 
 
572,014
 
 
 
 
1,509,542
 
 
 
1,393,626
 

Gross profit
 
 
415,146
 
 
 
313,038
 
 
 
 
834,309
 
 
 
649,642
 

 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 

Selling and operating expenses
 
 
124,781
 
 
 
111,105
 
 
 
 
296,626
 
 
 
252,463
 

General and administrative expenses
 
 
78,261
 
 
 
52,340
 
 
 
 
143,138
 
 
 
101,748
 

Operating income
 
 
212,104
 
 
 
149,593
 
 
 
 
394,545
 
 
 
295,431
 

 
 
 
 
 
 
 
 
 
 

Other income, net
 
 
227
 
 
 
669
 
 
 
 
415
 
 
 
1,360
 

Gain (loss) on financial instruments, net
 
 
3,471
 
 
 
(2,112
)
 
 
 
4,575
 
 
 
(3,246
)

(Loss) gain on foreign currency, net
 
 
(6,115
)
 
 
3,613
 
 
 
 
(8,794
)
 
 
6,299
 

Gain on sale of subsidiary
 
 

 
 
 

 
 
 
 

 
 
 
26,311
 

Interest expense
 
 
(3,814
)
 
 
(6,042
)
 
 
 
(9,544
)
 
 
(12,505
)

Income before income taxes
 
 
205,873
 
 
 
145,721
 
 
 
 
381,197
 
 
 
313,650
 

 
 
 
 
 
 
 
 
 
 

Income tax expense
 
 
(73,302
)
 
 
(52,458
)
 
 
 
(140,681
)
 
 
(115,705
)

Net income
 
 
132,571
 
 
 
93,263
 
 
 
$
240,516
 
 
$
197,945
 

 
 
 
 
 
 
 
 
 
 

Net income attributable to noncontrolling interests
 
 
150
 
 
 
232
 
 
 
 
512
 
 
 
500
 

 
 
 
 
 
 
 
 
 
 

Net income attributable to GMCR
 
$
132,421
 
 
$
93,031
 
 
 
$
240,004
 
 
$
197,445
 

 
 
 
 
 
 
 
 
 
 

Basic income per share:
 
 
 
 
 
 
 
 
 

Basic weighted average shares outstanding
 
 
148,774,443
 
 
 
155,049,294
 
 
 
 
149,044,980
 
 
 
154,876,465
 

Net income per common share - basic
 
$
0.89
 
 
$
0.60
 
 
 
$
1.61
 
 
$
1.27
 

 
 
 
 
 
 
 
 
 
 

Diluted income per share:
 
 
 
 
 
 
 
 
 

Diluted weighted average shares outstanding
 
 
152,310,053
 
 
 
159,374,545
 
 
 
 
152,550,160
 
 
 
159,368,142
 

Net income per common share - diluted
 
$
0.87
 
 
$
0.58
 
 
 
$
1.57
 
 
$
1.24
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 

GREEN MOUNTAIN COFFEE ROASTERS, INC.

Unaudited Consolidated Statements of Cash Flows

(Dollars in thousands)

 
 
 
 
 

 
 
Twenty-six
 
Twenty-six

 
 
weeks ended
 
weeks ended

 
 
March 30, 2013
 
March 24, 2012

Cash flows from operating activities:
 
 
 
 

Net income
 
$
240,516
 
 
$
197,945
 

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

Depreciation
 
 
87,820
 
 
 
55,822
 

Amortization of intangibles
 
 
22,939
 
 
 
23,021
 

Amortization of deferred financing fees
 
 
3,025
 
 
 
3,025
 

Unrealized loss (gain) on foreign currency, net
 
 
7,178
 
 
 
(4,547
)

Loss on disposal of fixed assets
 
 
241
 
 
 
1,265
 

Gain on sale of subsidiary, excluding transaction costs
 
 

 
 
 
(28,914
)

Provision for doubtful accounts
 
 
(15
)
 
 
1,656
 

Provision for sales returns
 
 
58,812
 
 
 
67,402
 

(Gain) loss on derivatives, net
 
 
(3,847
)
 
 
3,580
 

Excess tax benefits from equity-based compensation plans
 
 
(9,563
)
 
 
(11,172
)

Deferred income taxes
 
 
2,901
 
 
 
8,325
 

Deferred compensation and stock compensation
 
 
15,214
 
 
 
9,336
 

Other
 
 
449
 
 
 
5
 

Changes in assets and liabilities:
 
 
 
 

Receivables
 
 
(9,827
)
 
 
(55,546
)

Inventories
 
 
177,665
 
 
 
72,671
 

Income tax receivable/payable, net
 
 
19,237
 
 
 
65,050
 

Other current assets
 
 
(7,861
)
 
 
(17,871
)

Other long-term assets, net
 
 
3,371
 
 
 
(436
)

Accounts payable, accrued expenses and accrued compensation costs
 
 
3,721
 
 
 
(17,474
)

Other current liabilities
 
 
(137
)
 
 
(2,878
)

Other long-term liabilities
 
 
(7,154
)
 
 
(109
)

Net cash provided by operating activities
 
 
604,685
 
 
 
370,156
 

 
 
 
 
 

Cash flows from investing activities:
 
 
 
 

Change in restricted cash
 
 
3,013
 
 
 
665
 

Proceeds from sale of subsidiary, net of cash transferred
 
 

 
 
 
137,733
 

Capital expenditures for fixed assets
 
 
(148,349
)
 
 
(204,556
)

Other investing activities
 
 
231
 
 
 
444
 

Net cash used in investing activities
 
 
(145,105
)
 
 
(65,714
)

 
 
 
 
 

Cash flows from financing activities:
 
 
 
 

Net change in revolving line of credit
 
 
(184,949
)
 
 
(182,814
)

Proceeds from issuance of common stock under compensation plans
 
 
9,334
 
 
 
2,228
 

Repurchase of common stock
 
 
(125,681
)
 
 

 

Excess tax benefits from equity-based compensation plans
 
 
9,563
 
 
 
11,172
 

Payments on capital lease and financing obligations
 
 
(1,547
)
 
 
(3,148
)

Repayment of long-term debt
 
 
(3,391
)
 
 
(4,552
)

Other financing activities
 
 
(549
)
 
 
(149
)

Net cash used in financing activities
 
 
(297,220
)
 
 
(177,263
)

 
 
 
 
 

Change in cash balances included in current assets held for sale
 
 

 
 
 
5,160
 

 
 
 
 
 

Effect of exchange rate changes on cash and cash equivalents
 
 
521
 
 
 
675
 

 
 
 
 
 

Net increase in cash and cash equivalents
 
 
162,881
 
 
 
133,014
 

Cash and cash equivalents at beginning of period
 
 
58,289
 
 
 
12,989
 

Cash and cash equivalents at end of period
 
$
221,170
 
 
$
146,003
 

 
 
 
 
 

Supplemental disclosures of cash flow information:
 
 
 
 

Fixed asset purchases included in accounts payable and not disbursed at the end of each period
 
$
21,437
 
 
$
44,672
 

Noncash investing and financing activities:
 
 
 
 

Fixed assets acquired under capital lease and financing obligations
 
$
11,769
 
 
$
44,174
 

Settlement of acquisition related liabilities through release of restricted cash
 
$
9,227
 
 
$
18,788
 

 
 
 
 
 
 
 
 
 

 

 

GREEN MOUNTAIN COFFEE ROASTERS, INC.

GAAP to Non-GAAP Reconciliation

(Dollars in thousands, except per share data)

 
 
 
 
 
 
 
 
 

 
 
 
 
Thirteen weeks ended
 

 
 
 
 
March 30, 2013
 
 
March 24, 2012
 

 
 
Operating income
 
$
212,104
 
 
$
149,593
 
 

 
 
Expenses related to SEC inquiry (1)
 
 
1,043
 
 
 
1,146
 
 

 
 
Amortization of identifiable intangibles (2)
 
 
11,404
 
 
 
11,568
 
 

 
 
Non-GAAP operating income
 
$
224,551
 
 
$
162,307
 
 

 
 
 
 
 
 
 
 
 

 
 
 
 
Thirteen weeks ended
 

 
 
 
 
March 30, 2013
 
 
March 24, 2012
 

 
 
Net income attributable to GMCR
 
$
132,421
 
 
$
93,031
 
 

 
 
After tax:
 
 
 
 
 
 

 
 
Expenses related to SEC inquiry (1)
 
 
672
 
 
 
713
 
 

 
 
Amortization of identifiable intangibles (2)
 
 
7,826
 
 
 
7,933
 
 

 
 
Non-GAAP net income attributable to GMCR
 
$
140,919
 
 
$
101,677
 
 

 
 
 
 
 
 
 
 
 

 
 
 
 
Thirteen weeks ended
 

 
 
 
 
March 30, 2013
 
 
March 24, 2012
 

 
 
Diluted income per share
 
$
0.87
 
 
$
0.58
 
 

 
 
After tax:
 
 
 
 
 
 

 
 
Expenses related to SEC inquiry (1)
 
 
0.00
 
 
 
0.00
 
 

 
 
Amortization of identifiable intangibles (2)
 
 
0.05
 
 
 
0.05
 
 

 
 
Non-GAAP net income per share
 
$
0.93
*
 
$
0.64
 
*

 
 
 
 
 
 
 
 
 

 
 
* 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.

 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 

 
 
 
 
Twenty-six weeks ended
 

 
 
 
 
March 30, 2013
 
 
March 24, 2012
 

 
 
Operating income
 
$
394,545
 
 
$
295,431
 
 

 
 
Expenses related to SEC inquiry (1)
 
 
1,763
 
 
 
1,815
 
 

 
 
Amortization of identifiable intangibles (2)
 
 
22,939
 
 
 
23,021
 
 

 
 
Non-GAAP operating income
 
$
419,247
 
 
$
320,267
 
 

 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 

 
 
 
 
Twenty-six weeks ended
 

 
 
 
 
March 30, 2013
 
 
March 24, 2012
 

 
 
Net income attributable to GMCR
 
$
240,004
 
 
$
197,445
 
 

 
 
After tax:
 
 
 
 
 
 

 
 
Expenses related to SEC inquiry (1)
 
 
1,116
 
 
 
1,130
 
 

 
 
Amortization of identifiable intangibles (2)
 
 
15,777
 
 
 
15,782
 
 

 
 
Gain on sale of subsidiary (3)
 
 

 
 
 
(16,685
)
 

 
 
Non-GAAP net income attributable to GMCR
 
$
256,897
 
 
$
197,672
 
 

 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 

 
 
 
 
Twenty-six weeks ended
 

 
 
 
 
March 30, 2013
 
 
March 24, 2012
 

 
 
Diluted income per share
 
$
1.57
 
 
$
1.24
 
 

 
 
After tax:
 
 
 
 
 
 

 
 
Expenses related to SEC inquiry (1)
 
 
0.01
 
 
 
0.01
 
 

 
 
Amortization of identifiable intangibles (2)
 
 
0.10
 
 
 
0.10
 
 

 
 
Gain on sale of subsidiary (3)
 
 

 
 
 
(0.10
)
 

 
 
Non-GAAP net income per share
 
$
1.68
 
 
$
1.24
 
*

 
 
 
 
 
 
 
 
 

 
 
* 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.

 

Green Mountain Coffee Roasters, Inc.