FORM 10-Q
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the sixteen weeks ended January 15, 2000
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from __________ to ____________
Commission file number 1-12340
GREEN MOUNTAIN COFFEE, INC.
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(Exact name of registrant as specified in its charter)
Delaware 03-0339228
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
33 Coffee Lane, Waterbury, Vermont 05676
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(Address of principal executive offices) (zip code)
(802) 244-5621
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant has (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES [ X ] NO [ ]
As of February 21, 2000, 3,349,141 shares of common stock of the registrant
were outstanding.
Part I. Financial Information
Item I. Financial Statements
GREEN MOUNTAIN COFFEE, INC.
Consolidated Balance Sheets
(Dollars in thousands)
January 15, September 25,
2000 1999
----------- -------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents........................................ $ 1,083 $ 415
Receivables, less allowances of $210 at January 15, 2000
and $190 at September 25, 1999.................................. 6,930 6,223
Inventories...................................................... 5,074 5,409
Income tax receivable............................................ - 233
Other current assets............................................. 164 264
Loans to officers................................................ 210 250
Deferred income taxes, net....................................... 290 490
----------- -------------
Total current assets....................................... 13,751 13,284
Fixed assets, net................................................... 10,332 10,183
Other long-term assets.............................................. 236 250
Deferred income taxes, net.......................................... 148 161
----------- -------------
Total assets........................................................ $ 8.827 $ 23,878
=========== =============
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt................................ $ 1,099 $ 1,127
Accounts payable................................................. 4,518 4,551
Accrued payroll.................................................. 1,131 1,005
Accrued expenses................................................. 727 357
Income tax payable............................................... 401 -
Accrued losses and other costs of discontinued operations, net... 178 192
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Total current liabilities................................... 8,054 7,232
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Long-term debt...................................................... 1,676 1,908
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Long-term line of credit............................................ 2,780 3,056
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Commitments and contingencies
Stockholders' equity:
Common stock, $0.10 par value: authorized - 10,000,000 shares;
issued- 3,616,003 shares at January 15, 2000 and 3,615,404 shares
at September 25, 1999............................................ 362 362
Additional paid-in capital....................................... 13,410 13,409
Accumulated deficit.............................................. (135) (1,435)
Treasury shares, at cost: 217,995 shares at January 15, 2000 and
100,609 shares at September 25, 1999, respectively............... (1,680) (654)
----------- -------------
Total stockholders' equity....................................... 11,957 11,682
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Total liabilities and stockholders' equity................. $ 24,467 $ 23,878
=========== =============
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.
</FN>
GREEN MOUNTAIN COFFEE, INC.
Consolidated Statements of Operations
(Dollars in thousands except per share data)
Sixteen weeks ended
--------------------------
January 15, January 16,
2000 1999
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(unaudited)
Net sales................................ $ 24,742 $ 20,068
Cost of sales............................ 14,696 12,540
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Gross profit......................... 10,046 7,528
Selling and operating expenses........... 6,049 4,968
General and administrative expenses...... 1,684 1,399
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Operating income..................... 2,313 1,161
Other income (expense)................... (4) 4
Interest expense......................... (141) (300)
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Income before income taxes........... 2,168 865
Income tax expense....................... (868) (324)
----------- -----------
Net income........................... $ 1,300 $ 541
=========== ===========
Basic income per share:
Weighted average shares outstanding 3,464,105 3,515,277
Net income $ 0.38 $ 0.15
Diluted income per share:
Weighted average shares outstanding 3,542,668 3,533,058
Net income $ 0.37 $ 0.15
<FN>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these financial statements.
</FN>
GREEN MOUNTAIN COFFEE, INC.
Consolidated Statements of Cash Flows
(Dollars in thousands)
Sixteen weeks ended
--------------------------
January 15, January 16,
2000 1999
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(unaudited)
Cash flows from operating activities:
Net income........................................................... $ 1,300 $ 541
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization................................... 926 925
Loss (gain) on disposal of fixed assets......................... 70 (2)
Provision for doubtful accounts................................. 68 108
Deferred income taxes........................................... 213 13
Changes in assets and liabilities:
Receivables............................................... (775) (346)
Inventories............................................... 335 491
Other current assets...................................... 373 (145)
Other long-term assets, net............................... 14 (4)
Accounts payable.......................................... (33) 360
Accrued payroll........................................... 126 (122)
Accrued expenses.......................................... 771 4
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Net cash provided by continuing operations................ 3,388 1,823
Net cash provided by (used for) discontinued operations... (14) 256
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Net cash provided by operating activities................. 3,374 2,079
Cash flows from investing activities:
Expenditures for fixed assets........................................ (1,170) (715)
Proceeds from disposal of discontinued operations.................... - 86
Proceeds from disposals of fixed assets.............................. 25 23
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Net cash used for investing activities................... (1,145) (606)
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Cash flows from financing activities:
Issuance of new debt................................................. 43 -
Stock option exercises .............................................. 1 -
Purchase of treasury shares.......................................... (1,026) (257)
Repayment of long-term debt.......................................... (303) (84)
Principal payments under capital lease obligation.................... - (12)
Net change in revolving line of credit............................... (276) (1,250)
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Net cash used for financing activities.................... (1,561) (1,603)
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Net increase (decrease) in cash and cash equivalents.................... 668 (130)
Cash and cash equivalents at beginning of period........................ 415 777
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Cash and cash equivalents at end of period.............................. $ 1,083 $ 647
=========== ===========
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.
</FN>
Green Mountain Coffee, Inc.
Notes to Consolidated Financial Statements
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information, the instructions to Form 10-Q, and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete consolidated financial statements.
In the opinion of management, all adjustments considered necessary for
a fair statement of the interim financial data have been included.
Results from operations for the sixteen week period ended January 15,
2000 are not necessarily indicative of the results that may be expected
for the fiscal year ending September 30, 2000.
For further information, refer to the consolidated financial statements
and the footnotes included in the annual report on Form 10-K for Green
Mountain Coffee, Inc. for the fiscal year ended September 25, 1999.
Certain reclassifications of prior year balances have been made to
conform to the current presentation.
2. Inventories
Inventories consist of the following:
January 15, September 25,
2000 1999
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Raw materials and supplies....... $ 2,336,000 $ 2,809,000
Finished goods................... 2,738,000 2,600,000
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$ 5,074,000 $ 5,409,000
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3. Earnings per share
The following table illustrates the reconciliation of the numerator and
denominator of basic and diluted income per share computations as
required by SFAS No. 128 (dollars in thousands, except per share data):
Sixteen weeks ended
---------------------------
January 15, January 16,
2000 1999
----------- -----------
Numerator - basic and diluted earnings per share :
Net income $ 1,300 $ 541
=========== ===========
Denominator:
Basic earnings per share - weighted average shares outstanding 3,464,105 3,515,277
Effect of dilutive securities - employee stock options 78,563 17,781
----------- -----------
Diluted earnings per share - weighted average shares
outstanding 3,542,668 3,533,058
=========== ===========
Basic earnings per share $ 0.38 $ 0.15
Diluted earnings per share $ 0.37 $ 0.15
For the sixteen weeks ended January 15, 2000, options to purchase
92,776 shares of common stock at exercise prices ranging from $8.50 to
$10.00 per share were outstanding but were not included in the
computation of diluted income per share because the options' exercise
price was greater than the market price of the shares of common stock.
For the sixteen weeks ended January 16, 1999, options to purchase
457,579 shares of common stock at exercise prices ranging from $5.63 to
$10.00 per share were outstanding but were not included in the
computation of diluted income per share because the options' exercise
price was greater than the market price of the shares of common stock.
4. Segment reporting
Business conducted by the Company can be segmented into two distinct
areas determined by the distribution channel. The direct mail segment
is comprised of all consumer-direct sales and sales to small businesses
which are solicited via catalogs and the Company's online store -
www.GreenMountainCoffee.com. The wholesale segment is comprised of all
sales to customers who resell Green Mountain coffee either as coffee
beans or brewed coffee by the cup, such as supermarkets, office coffee
distributors, convenience stores, restaurants, and others. Wholesale
sales are generated through the Company's direct sales force and a
limited number of distributors.
Both segments of the Company sell similar products, although the entire
Company product range is not fully available to both segments, and
direct mail customers do not have access to the same range of equipment
service, delivery and merchandising support as wholesale customers.
Selling and operating costs directly attributable to the direct mail
segment are charged accordingly while all remaining selling, operating,
general and administrative expenses (including depreciation and
amortization) are charged to the wholesale segment. The Company's
management does not review assets by segment.
The table below discloses segment net sales and pre-tax income for the
sixteen weeks ended January 15, 2000 and January 16, 1999 (in
thousands):
Sixteen weeks ended
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January 15, January 16,
2000 1999
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Net sales
Reportable segments:
Wholesale $ 23,027 $ 18,741
Direct mail 1,715 1,327
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Total net sales $ 24,742 $ 20,068
=========== ===========
Pre-tax income
Reportable segments:
Wholesale $ 2,158 $ 1,129
Direct mail 155 32
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Operating income 2,313 1,161
Reconciling items:
Other income (expense) (4) 4
Interest expense (141) (300)
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Pre-tax income $ 2,168 $ 865
=========== ===========
5. Interest rate swap agreement
During the first quarter of fiscal 2000, the Company received $34,000 from
Fleet National Bank for the termination of its interest rate swap agreement
with a $6,000,000 nominal amount. This payment was netted against interest
expense for the fiscal quarter. Due to the termination of this agreement,
at January 15, 2000, the Company had $5,125,000 of debt subject to variable
interest rates (the lower of Fleet bank's prime rate or LIBOR rates for
maturities up to one year).
6. Derivative instruments and hedging activities
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). This pronouncement will
require the Company to recognize derivatives on its balance sheet at fair
value. Derivatives that are not hedges must be adjusted to fair value
through income. If the derivative is a hedge, depending on the nature of
the hedge, changes in the fair value of derivatives will either be offset
against the change in fair value of the hedged assets, liabilities or firm
commitments through earnings or recognized in other comprehensive income
until the hedged item is recognized in earnings. The ineffective portion
of a derivative's change in fair value will be immediately recognized in
earnings. The Company expects that this new standard will not have a
significant effect on its results of operations. SFAS 137 deferred the
effective date of SFAS 133 to fiscal years beginning after June 15, 2000,
which is fiscal year 2001 for the Company.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
OVERVIEW
For the sixteen weeks ended January 15, 2000, Green Mountain Coffee,
Inc. (the "Company" or "Green Mountain") derived approximately 93.1% of
its net sales from its wholesale operation. Green Mountain's wholesale
operation sells coffee to retailers and food service concerns including
supermarkets, restaurants, convenience stores, specialty food stores,
hotels, universities and business offices. The Company's direct mail
operation accounted for approximately 6.9% of net sales during the same
period.
Cost of sales consists of the cost of raw materials including coffee
beans, flavorings and packaging materials, a portion of the Company's
rental expense, the salaries and related expenses of production and
distribution personnel, depreciation on production equipment and
freight and delivery expenses. Selling and operating expenses consist
of expenses that directly support the sales of the Company's wholesale
or direct mail channels, including media and advertising expenses, a
portion of the Company's rental expense, and the salaries and related
expenses of employees directly supporting sales. General and
administrative expenses consist of expenses incurred for corporate
support and administration, including a portion of the Company's rental
expense and the salaries and related expenses of personnel not
elsewhere categorized.
The Company's fiscal year ends on the last Saturday in September. The
Company's fiscal year normally consists of 13 four-week periods with
the first, second and third "quarters" ending 16 weeks, 28 weeks and 40
weeks, respectively, after the commencement of the fiscal year. Fiscal
2000, which began on September 26, 1999 and ends on September 30, 2000,
will consist of 53 weeks with the thirteenth fiscal period having 5
weeks.
COFFEE PRICES, AVAILABILITY AND GENERAL RISK FACTORS
Green coffee commodity prices are subject to substantial price
fluctuations, generally caused by multiple factors including weather,
political and economic conditions in certain coffee-producing countries
and other supply-related concerns. The Company believes that the "C"
price of coffee (the price per pound quoted by the Coffee, Sugar and
Cocoa Exchange) will remain highly volatile in Fiscal 2000 and beyond.
In addition to the "C" price, coffee of the quality sought by Green
Mountain also tends to trade on a negotiated basis at a substantial
premium or "differential" above the "C" price. These differentials are
also subject to significant variations. In the past, the Company has
generally been able to pass increases in green coffee costs to its
customers. However, there can be no assurance that the Company will be
successful in passing such fluctuations on to the customers without
losses in sales volume or gross margin in the future. Similarly, rapid
sharp decreases in the cost of green coffee could also force the
Company to lower sales prices before realizing cost reductions in its
green coffee inventory. Because Green Mountain roasts over 25 different
types of green coffee beans to produce its more than 60 varieties of
coffee, if one type of green coffee bean were to become unavailable or
prohibitively expensive, management believes Green Mountain could
substitute another type of coffee of equal or better quality, meeting a
similar taste profile, in a blend or temporarily remove that particular
coffee from its product line. However, frequent substitutions could
lead to cost increases and fluctuations in gross margins. Furthermore,
a worldwide supply shortage of the high-quality arabica coffees the
Company purchases could have an adverse impact on the Company. The
Company enters into fixed coffee purchase commitments in an attempt to
secure an adequate supply of quality coffees. To further reduce its
exposure to rising coffee costs, the Company, from time to time, enters
into futures contracts and buys options to hedge
price-to-be-established coffee purchase commitments.
The Company expects to face increasing competition in all its markets,
as competitors improve the quality of their coffees to make them more
comparable to Green Mountain's. In addition, specialty coffee is now
more widely available and a number of competitors benefit from
substantially larger promotional budgets following, among other
factors, the acquisition of specialty coffee companies by large,
consumer goods multinationals. The Company expects that the continued
high quality and wide availability of its coffee across a large array
of distribution channels and the added-value of its customer service
processes will enable Green Mountain to successfully compete in this
environment, although there can be no assurance that it will be able to
do so.
Certain statements contained herein are not based on historical fact
and are "forward-looking statements" within the meaning of the
applicable securities laws and regulations. In addition, the Company's
representatives may from time to time make oral forward-looking
statements. Forward-looking statements provide current expectations of
future events based on certain assumptions and include any statements
that do not directly relate to any historical or current fact. Words
such as "anticipates", "believes", "expects", "estimates", "intends",
"plans", "projects", "may", and similar expressions, may identify such
forward-looking statements. Owing to the uncertainties inherent in
forward-looking statements, actual results could differ materially from
those set forth in forward-looking statements. Factors that could cause
actual results to differ materially from those in the forward-looking
statements include, but are not limited to, business conditions in the
coffee industry and food industry in general, fluctuations in
availability and cost of green coffee, the impact of the loss of a
major customer, economic conditions, prevailing interest rates, the
management challenges of rapid growth, variances from budgeted sales
mix and growth rate, consumer acceptance of the Company's new products,
the impact of a tighter job market, Year 2000 issues, weather and
special or unusual events, as well as other risk factors described in
the Company's Annual Report on Form 10-K for the fiscal year ended
September 25, 1999 and other factors described from time to time in the
Company's filings with the Securities and Exchange Commission.
Forward-looking statements reflect management's analysis as of the
date of this document. The Company does not undertake to revise these
statements to reflect subsequent developments.
RESULTS OF OPERATIONS
Sixteen weeks ended
---------------------------
January 15, January 16,
2000 1999
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Net sales................................. 100.0 % 100.0 %
Cost of sales............................. 59.4 % 62.5 %
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Gross profit......................... 40.6 % 37.5 %
Selling and operating expenses............ 24.4 % 24.7 %
General and administrative expenses....... 6.8 % 7.0 %
----------- -----------
Operating income..................... 9.4 % 5.8 %
Other income.............................. 0.0 % 0.0 %
Interest expense.......................... (0.6)% (1.5)%
----------- -----------
Income before income taxes........... 8.8 % 4.3 %
Income tax expense........................ (3.5)% (1.6)%
----------- -----------
Net income........................... 5.3 % 2.7 %
=========== ===========
SIXTEEN WEEKS ENDED JANUARY 15, 2000 VERSUS SIXTEEN WEEKS ENDED JANUARY
16, 1999
Net sales increased by $4,674,000, or 23.3%, from $20,068,000 for the
sixteen weeks ended January 16, 1999 (the "1999 period") to $24,742,000
for the sixteen weeks ended January 15, 2000 (the "2000 period").
Coffee pounds sold increased by approximately 470,000 pounds, or 17.0%,
from approximately 2,772,000 pounds in the 1999 period to approximately
3,242,000 pounds in the 2000 period. The difference between the
percentage increase in net sales and the percentage increase in coffee
pounds sold is primarily due to the increased sales of single-cup
Keurig-Brewed TM line of coffees, whose sales price per coffee pound is
greater than the Company's traditional product line, and sales of
non-coffee products such as the Company's new Monte Verde TM powdered
hot cappuccino and frozen granita products.
The increase in net sales is primarily attributable to the wholesale
segment in which net sales increased by $4,286,000, or 22.9%, from
$18,741,000 for the 1999 period to $23,027,000 for the 2000 period. The
wholesale net sales increase resulted primarily from the growth in the
office coffee service channel.
Gross profit increased by $2,518,000, or 33.4%, from $7,528,000 for the
1999 period to $10,046,000 for the 2000 period. As a percentage of net
sales, gross profit increased 3.1 percentage points from 37.5% for the
1999 period to 40.6% for the 2000 period. The increase in gross profit
as a percentage of sales was due primarily to the lower green coffee
costs and certain efficiencies and economies of scale in distribution
costs.
Selling and operating expenses increased by $1,081,000, or 21.8%, from
$4,968,000 for the 1999 period to $6,049,000 for the 2000 period.
Selling and operating expenses decreased 0.3 percentage points as a
percentage of sales from 24.7% for the 1999 period to 24.4% for the
2000 period. The dollar increase in selling and operating expense was
primarily due to increased sales and sales support personnel expenses,
as well as increased marketing and promotional expenses.
General and administrative expenses increased by $285,000, or 20.4%,
from $1,399,000 for the 1999 period to $1,684,000 for the 2000 period,
but decreased 0.2 percentage points as a percentage of sales from 7.0%
for the 1999 period to 6.8% for the 2000 period. The dollar increase
in general and administrative expenses was primarily due to higher
employee education and consulting expenses.
As a result of the foregoing, operating income increased by $1,152,000,
or 99.2%, from $1,161,000 for the 1999 period to $2,313,000 for the
2000 period.
Interest expense decreased by $159,000, or 53.0%, from $300,000 for the
1999 period to $141,000 for the 2000 period. The decrease is due to the
reduction in the Company's long-term debt made possible by strong cash
flows from operations since the last quarter of fiscal 1998. Depending
on interest rate fluctuations and the amount of outstanding shares that
the Company may repurchase over the course of fiscal 2000, interest
expense may not continue to decrease year over year.
Income tax expense increased $544,000, or 67.9%, from $324,000 for the
1999 period to $868,000 for the 2000 period. It is expected that the
Company's effective tax rate will continue to approximate 40%
throughout fiscal 2000.
Net income increased by $759,000, or 140.3%, from $541,000 for the 1999
period to $1,300,000 in the 2000 period.
LIQUIDITY AND CAPITAL RESOURCES
Working capital decreased $355,000 to $5,697,000 at January 15, 2000
from $6,052,000 at September 25, 1999. This decrease is primarily due
to higher accrued expenses, including $401,000 income tax payable, and
was partially offset by higher cash and accounts receivable.
During the 2000 period, Green Mountain had capital expenditures of
$1,170,000, including $460,000 for equipment on loan to wholesale
customers, $306,000 for production equipment and $201,000 for computer
equipment. During the 1999 period, Green Mountain had capital
expenditures of $715,000, including $510,000 for equipment on loan to
wholesale customers, $84,000 for production equipment and $74,000 for
computer equipment. Cash used to fund the capital expenditures in the
2000 period was obtained from net cash provided by operating
activities.
The Company currently plans to make capital expenditures in fiscal 2000
of approximately $4,500,000. Management continuously reviews capital
expenditure needs and actual amounts expended may differ from these
estimates.
The Company maintains a $9,000,000 line of credit with Fleet Bank - NH,
the availability of which is subject to the Company's accounts
receivable and inventory levels. At January 15, 2000, the outstanding
balance on the Fleet line of credit was $2,780,000 and the amount
remaining available was $4,693,000. The facility also provides for a
term debt facility, of which $2,275,000 was outstanding at January 15,
2000. The Company presently makes monthly principal payments of $75,000
under the term debt. The Fleet credit facility is subject to certain
quarterly covenants, and the Company was in compliance with these
covenants at January 15, 2000.
In the 2000 period, the Company also used $1,026,000 of its cash flow
from operations to repurchase 117,386 of its outstanding shares. As
Management believes the market is still undervaluing the Company's
stock, Green Mountain may repurchase additional shares in fiscal 2000.
Management believes that cash flow from operating activities, existing
cash, the currently available credit facility and additional borrowings
will provide sufficient liquidity to pay all liabilities in the normal
course of business, fund capital expenditures and service debt
requirements in fiscal 2000.
.
DEFERRED INCOME TAXES
The Company had net deferred tax assets of $557,000 at January 15,
2000. These assets are reported net of a deferred tax asset valuation
allowance at that date of $2,355,000 (including $2,306,000 primarily
related to a Vermont investment tax credit). Presently, the Company
believes that the deferred tax assets, net of deferred tax liabilities
and the valuation allowance, are realizable and represent management's
best estimate, based on the weight of available evidence as prescribed
in SFAS 109, of the amount of deferred tax assets which most likely
will be realized. However, management will continue to evaluate the
amount of the valuation allowance based on near-term operating results
and longer-term projections.
YEAR 2000
In anticipation of the January 1, 2000 date change, Green Mountain
developed and implemented a Year 2000 plan to address possible Year
2000 disruptions. The Company had assessed its Year 2000 readiness and
identified its Year 2000 risk in three broad categories: internal
business software; manufacturing, facilities and embedded chip
technology; and external noncompliance by customers and suppliers.
During the December 31, 1999 to January 1, 2000 date change, Green
Mountain monitored its operations and computer systems and experienced
no apparent problems. Since January 1, 2000, the Company has also noted
no significant Year 2000 problems with its customers and suppliers.
Green Mountain will continue to monitor its internal operations and
computer systems, and to watch for Year 2000 problems with its
customers and suppliers, during the leap year date changes from
February 28, 2000 through March 1, 2000.
The total cost associated with required modifications to become Year
2000 compliant did not have a material effect on Green Mountain's
results of operations or financial condition. The Company spent
approximately $100,000 on a telephone switching and voice mail system
replacement project that was accelerated because of the Year 2000
project and approximately $250,000 on a co-generation project which was
partly motivated by Year 2000 concerns related to possible power supply
problems.
Although Green Mountain believes that its Year 2000 plan successfully
eliminated potential problems associated with the Year 2000 date
change, it cannot guarantee that the plans, work and funds expended
corrected all Year 2000 errors or that the information systems will not
generate Year 2000 errors in the future, particularly when operating
with third party computer systems or data. In addition, the Company
cannot reliably predict the effect future third party disruptions may
have on Green Mountain, its operations or financial condition.
FACTORS AFFECTING QUARTERLY PERFORMANCE
Historically, the Company has experienced significant variations in
sales from quarter to quarter due to the holiday season and a variety
of other factors, including, but not limited to, general economic
trends, the cost of green coffee, competition, marketing programs,
weather and special or unusual events. Because of the seasonality of
the Company's business, results for any quarter are not necessarily
indicative of the results that may be achieved for the full fiscal
year.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in information relating to
commodity price risks since the Company's disclosure included in Item
7A of Form 10-K as filed with the Securities and Exchange Commission on
December 22, 1999.
During the first quarter of fiscal 2000, the Company received $34,000
from Fleet National Bank for the termination of its interest rate swap
agreement with a $6,000,000 nominal amount. This payment was netted
against interest expense for the fiscal quarter. Due to the termination
of this agreement, at January 15, 2000, the Company had $5,125,000 of
debt subject to variable interest rates (the lower of Fleet bank's
prime rate or LIBOR rates for maturities up to one year). A
hypothetical 100 basis points increase in the LIBOR rate and prime rate
would result in additional interest expense of $51,000 on an annualized
basis.
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3.1 Certificate of Incorporation(1)
3.2 Bylaws(1)
10.100 Stock Option Agreement, dated as of December 21, 1999, by
and between Robert D. Britt and the Company
10.101 Stock Option Agreement, dated as of December 21, 1999, by
and between Agnes M. Cook and the Company
10.102 Stock Option Agreement, dated as of December 21, 1999, by
and between Jonathan C. Wettstein and the Company
10.103 Stock Option Agreement, dated as of December 21, 1999, by
and between James K. Prevo and the Company
10.104 Stock Option Agreement, dated as of December 21, 1999, by
and between Paul Comey and the Company
27 Financial Data Schedule.
(b) No reports on Form 8-K were filed during the sixteen weeks ended
January 15, 2000.
- ----------
(1) Incorporated by reference to the corresponding exhibit number in the
Registration Statement on Form SB-2 (Registration No. 33-66646) filed on July
28, 1993, and declared effective on September 21, 1993.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GREEN MOUNTAIN COFFEE, INC.
Date: 2/29/2000 By: /s/ Robert P. Stiller
- ----------------- ------------------------------------------------
Robert P. Stiller,
President and Chief Executive Officer
Date: 2/29/2000 By: /s/ Robert D. Britt
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Robert D. Britt,
Chief Financial Officer, Treasurer and Secretary