7.5.2004: Meldung: Green Mountain Coffee Roasters Inc.: Fiscal 2004 Second Quarter Results

WATERBURY, Vt.-- May 6, 2004--Green Mountain Coffee Roasters, Inc., (NASDAQ: GMCR) today announced its fiscal second quarter results for the twelve-week period ended April 10, 2004.

Net sales in the second quarter of fiscal 2004 increased 18.0% to $31,058,000, compared to $26,311,000 for the same period last year. Total coffee pounds shipped increased 13.1% to 3,940,000 pounds. The difference in growth rates between sales and coffee pounds shipped primarily reflects the increase in sales of coffee and tea K-Cups(R) as a percentage of sales, which sell at a higher price per pound than other Green Mountain Coffee products. Net income for the fiscal second quarter increased 9.8% to $1,315,000, or $0.18 per diluted share, compared to $1,198,000, or $0.17 per diluted share for the fiscal second quarter of 2003.

The Company"s year-over-year dollar sales growth in the second quarter was led by the office coffee service (OCS) and supermarket channels. The OCS channel contributed slightly over half the increase in net sales due to strong K-Cup sales driven by increased penetration of the Keurig(R) B-100 brewers in small offices and by continued success of teas in K-Cups. The supermarket channel grew 19.3% in coffee pounds shipped due primarily to distribution with Publix Supermarkets which began in the first quarter of fiscal 2004. In addition, the consumer direct channel grew 46.1% in dollar sales and 28.2% in coffee pounds shipped with the majority of growth related to the sales of Keurig Single-Cup Brewers for the home and the associated K-Cups.

Green Mountain Coffee"s gross profit margin was 38.5% of sales compared to 42.2% in the year ago quarter. The decrease was attributable to changes in sales mix, higher delivery and labor expenses while certain new production equipment is being installed, and higher green coffee costs. Selling, general and administrative expenses decreased to 30.4% of sales from 32.1%. This improvement was the result of leveraging selling and organizational resources on a higher sales base and the absence of prior year quarter severance expenses related to management changes.

Interest expenses decreased $88,000 due to a lower average debt balance. The Company"s tax rate in the second quarter of fiscal 2004 decreased to 37.4% from 41.5% in the prior year period due to the favorable impact of recently awarded state tax incentives under the Vermont Economic Advancement Tax Incentive Program. The Company"s second quarter after-tax income before the impact of Keurig increased 3.7% to $1,542,000. This income was partly offset by Green Mountain Coffee"s recognition of a non-cash loss of $227,000 (or $0.03 per share) as result of its equity investment in Keurig, Incorporated ("Keurig") in the second quarter of 2004.

For the twenty-eight weeks ended April 10, 2004, the Company experienced an 18.2% increase in net sales to $74,343,000 from $62,878,000 and a 13.5% increase in coffee pounds shipped compared to the same period last year. Net income for the first half of 2004 was $3,914,000 including a loss of $558,000 from its minority investment in Keurig as compared to $3,512,000 in 2003 including a loss of $373,000 from the investment in Keurig. Diluted earnings per share increased to $0.53 from $0.49 as compared to the same period last year. Diluted earnings per share excluding the net loss of Keurig were $0.60 per share as compared to $0.54 per share for the first twenty-eight weeks of fiscal 2003.

Robert P. Stiller, Chairman, President and Chief Executive Officer, said "Our strategic investment and focus on our Fair Trade and Organic product lines and on K-Cups and the Keurig Single-Cup Brewing system have continued to propel sales. We had strong growth throughout the United States through our multiple distribution channels, as our brand gains strength outside our traditional New England market."

Stiller continued, "While I am pleased with our sales growth, I expect our earnings growth also to be strong, and we did not achieve that goal this past quarter. With the completion of our expanded distribution facility later this year, we will have a more efficient operation that will not only better service our customers, but also enhance our profitability. What we should have anticipated is that over the short-term, it has created some disruption to our operations, resulting in an increased cost of goods sold. It is now our priority to eliminate these extra expenses as quickly as possible, and return the Company to a greater level of profitability."

Stiller concluded, "While there is this room for critical improvement, I am still proud of our many accomplishments this past quarter. It is great to see our line of Fair Trade certified organic coffees growing three times faster than our conventional lines. I believe that Fair Trade is improving the coffee quality and the quality of life in the communities that grow these coffees. More than that, Fair Trade puts a face on coffee that is changing the way we think about what is in our cup, and it is gratifying to be part of this trend towards more conscientious consumerism."

Forward Looking Information

The Company expects net sales growth of 13% to 17% and coffee pounds growth of 10% to 12% in its third quarter of fiscal 2004. The Company anticipates its gross margin will be in the range of 38.5% to 39.2% and that its operating margin will be in the range of 8.9% to 9.6%. The Company believes its tax rate for 2004 will be 39.0% with its third and fourth quarter rates at 37.4% attributable to anticipated additional tax incentives under the Vermont Economic Advancement Tax Incentive Program. The Company expects that the recognition of its share of Keurig"s loss for the third quarter of 2004 will reduce diluted earnings per share by $0.02 to $0.04. Based on all of these factors, the Company anticipates its fully diluted earnings per share for the third quarter will be in the range of $0.19 to $0.22 per share.

For the full fiscal year 2004, the Company anticipates net sales to increase 14% to 18% on coffee pounds growth of 10% to 13%. The Company expects that its gross margin will be in the range of 39.0% to 39.7% and that its operating margin will be in the range of 10.0% to 10.6%. The Company expects that the recognition of its share of Keurig"s loss for fiscal 2004 will reduce diluted earnings per share by $0.09 to $0.14. The Company anticipates its fully diluted earnings per share for fiscal 2004 to be in the range of $1.00 to $1.07 per share.

The Company forecasts its capital expenditures for fiscal 2004 to be in the range of $17 to $19 million and depreciation expenses to be between $4.5 and $5.0 million. The Company is building a new distribution and warehousing facility attached to its existing plant that will incorporate material-handling automation to improve distribution efficiencies. The Company anticipates it will result in lower overall distribution costs relative to sales over the long-term, as well as allow for increased packaging capacity in the current plant. The capital project is underway and is expected to cost approximately $9 million. The Company anticipates utilizing a combination of cash from operations, long-term debt and lease financing to fund the project. The Company expects its EBITDA in 2004 to be approximately $18 to $19 million.

Green Mountain Coffee Roasters, Inc., is a leader in the specialty coffee industry and has been recognized by Forbes magazine for the past four years as one of the "200 Best Small Companies in America." Green Mountain Coffee seeks to make the world a better place for present and future generations by operating in an environmentally and socially conscientious manner. The Company contributes at least five percent of its pre-tax profit annually to support socially and environmentally responsible initiatives, many of which it has supported for over 10 years. Earlier this week, Business Ethics magazine recognized these efforts by ranking Green Mountain Coffee Roasters 5th overall on its 2004 list of "100 Best Corporate Citizens."

The Company roasts high-quality arabica coffees and offers over 100 coffee selections including single-origins, estates, certified organics, Fair Trade, proprietary blends, and flavored coffees that it sells under the Green Mountain Coffee Roasters(R) and Newman"s Own(R) Organics brands. The majority of Green Mountain Coffee"s revenue is derived from its wholesale operation that serves supermarkets, convenience stores, offices, and other locations where fine coffees are sold. Green Mountain Coffee also operates a direct mail business and e-commerce website (www.GreenMountainCoffee.com) from its Waterbury, Vermont headquarters.

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

Green Mountain Coffee Roasters will be discussing these financial results and future prospects with analysts and investors in a conference call available via the Internet. The call will take place today, May 6, 2004, at 10:30 a.m. ET and will be available via live webcast on the Company"s website at www.GreenMountainCoffee.com and on Street Events at www.StreetEvents.com, as well as AOL, Yahoo and other major portals.

The Company archives the latest conference call on the Investor Services section of its website. A replay of the conference call also will be available by telephone at (719) 457-0820, confirmation number 752184, from 1:30 p.m. ET on May 6th, through midnight on Monday, May 10, 2004.

CONTACT: Green Mountain Coffee Roasters, Inc.
Frances G. Rathke, 802-244-5621 Ext. 1300
SOURCE: Green Mountain Coffee Roasters, Inc.
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