USA: Green Mountain Coffee, Inc. Reports Strong Third Quarter Sales and Earnings Growth

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Green Mountain Coffee, Inc. (NASDAQ: GMCR) today announced continued strong sales growth, and even stronger earnings growth, for its third fiscal quarter, the twelve weeks ended July 1, 2000.

Net sales were up 31.4% to $19,668,000 for the twelve weeks ended July 1, 2000, and total coffee pounds sold increased 20.5% year-over-year to 2,532,000 pounds. Sales to office coffee service distributors led year-over-year growth for the quarter, with a 57.6% increase in coffee pounds sold, due in large part to Keurig Premium Coffee System(TM) coffee sales. The convenience store channel also contributed to higher coffee pound sales with a 19.8% increase over this same period. The difference in percentage growth between the year-over-year increase in net sales and the increase in coffee pounds sold was primarily due to the impact of sales of the single-cup Keurig line of coffees, whose sales price per coffee pound sold is greater than the Company's traditional product line, and sales of non-coffee products such as the new Monte Verde(TM) line of powdered hot cappuccino and frozen granita products.

For the third fiscal quarter, Green Mountain Coffee's gross profit margin was 39.4% of sales compared to 41.1% of sales in the year ago period. The 1.7 percentage point gross margin decline was caused primarily by the impact of sales of the Keurig line of coffees, which operates under a slightly different business model with lower gross margins and correspondingly lower operating expenses. As the Company continued to successfully focus on achieving increased operating efficiencies, overall selling, operating, general and administrative expenses were down 1.8 percentage points, improving to 32.1% of sales in the quarter ended July 1, 2000, compared to 33.9% in the year-ago quarter. Operating margins improved 60 basis points to 7.3% of sales, compared to 6.7% of sales in the year-ago quarter. As a result of these factors, Green Mountain Coffee achieved a very strong 55.7% increase in net income to $802,000 for the twelve weeks ended July 1, 2000 compared to $515,000 for the comparable year ago period. On a per share basis, earnings increased to $0.23 for the twelve weeks ended July 1, 2000 compared to $0.14 for the comparable year ago period.

For the forty weeks ended July 1, 2000, Green Mountain Coffee realized a 26.6% year-over-year increase in net sales to $62,669,000, compared to net sales of $49,493,000 for the 40 weeks ended July 3, 1999. Year-over-year coffee pounds sold for the period were up 18.1% to 8,156,000 pounds, compared to 6,904,000 pounds for the prior year period. Income from continuing operations increased 92.1% to $2,717,000, or $0.77 per share, for the current period, compared to $1,414,000, or $0.40 per share, for the forty weeks ended July 3, 1999.

Robert P. Stiller, Chairman, President, and Chief Executive Officer of Green Mountain Coffee said, "Our continuing strong performance this quarter demonstrates, better than words, the path along which we are moving as we continue to focus on improving the effectiveness of internal processes at Green Mountain Coffee. When you have a great product, like our coffee, and you develop and empower employees to work as a team to not only provide superior customer service, but also to be aggressively creative and innovative, the potential is exciting. From our award-winning coffees to our highly ranked website, we are being recognized for the level of excellence that defines and motivates this organization. I am extremely proud of the employees at Green Mountain Coffee and our achievements, as we work together to both responsibly and profitably grow the business."

Talking more about the Company's strong third quarter financial performance, Robert D. Britt, Chief Financial Officer, said, "Once again, this quarter we not only experienced healthy top line growth, but also grew earnings faster than sales, continuing to gain leverage over expenses. This leverage has been actively managed throughout the organization, as part of our focus on superior business execution. Looking forward, we will continue to work hard to continue building stockholder value in this manner."

Green Mountain Coffee, Inc. is a leader in the specialty coffee industry. The Company roasts high-quality arabica coffees and offers over 60 varieties including single-origin, estate, certified organic, Fair Trade, proprietary blends, and flavored coffees that it sells under the Green Mountain Coffee Roasters® brand. The majority of Green Mountain Coffee's revenue is derived from its wholesale operation which services restaurant, supermarket, specialty food store, convenience store, food service, in-room hotel hospitality, university, airline, train, and office coffee service customers. Green Mountain Coffee also operates a direct mail operation and e-commerce website ( with secure on-line ordering for customers from its Waterbury, Vermont headquarters.

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. 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, fluctuations in availability and cost of green coffee, competition and other business conditions in the coffee industry and more generally in the food and beverage industry, the impact of the loss of one or more major customers, the Company's level of success in continuing to attract new customers, economic conditions, variances from budgeted sales mix and growth rate, customer acceptance of the Company's new products, the impact of a tighter job market, weather and special or unusual events, as well as other risk factors as described more fully in the Company's filings with the Securities and Exchange Commission.

Consolidated Statement of Operations
(Dollars in thousands except per share data)

Twelve Weeks Ended Forty Weeks Ended
July 1, July 3, July 1, July 3,
2000 1999 2000 1999
(unaudited) (unaudited)
Net sales:
Wholesale $ 18,898 $ 14,254 $ 59,406 $ 46,718
Direct mail 770 719 3,263 2,775
Net sales 19,668 14,973 62,669 49,493

Cost of sales 11,909 8,821 37,595 30,253

Gross profit 7,759 6,152 25,074 19,240

Selling and
operating expenses 4,912 3,914 15,603 12,568
General and
administrative expenses 1,403 1,164 4,459 3,666
Loss on abandonment
of fixed assets -- 75 135 100

Operating income 1,444 999 4,877 2,906

Other income (expense) 30 (5) 40 6
Interest (expense) (141) (164) (389) (639)

Income from continuing
operations before
income taxes 1,333 830 4,528 2,273

Income tax expense (531) (315) (1,811) (859)

Income from continuing
operations 802 515 2,717 1,414

Discontinued operations (a):

Income from discontinued
retail stores operations,
net of income tax expense -- -- -- 186

Net income $ 802 $ 515 $ 2,717 $ 1,600

Basic income per share:
Weighted average
shares outstanding 3,226,415 3,494,399 3,361,789 3,499,299
Income from
continuing operations $ 0.25 $ 0.15 $ 0.81 $ 0.40
Income from
discontinued operations -- -- -- 0.06
Net income $ 0.25 $ 0.15 $ 0.81 $ 0.46

Diluted income per share:
Weighted average
shares outstanding 3,511,282 3,552,574 3,534,517 3,532,541
Income from
continuing operations $ 0.23 $ 0.14 $ 0.77 $ 0.40
Income from discontinued
operations -- -- -- 0.05
Net income $ 0.23 $ 0.14 $ 0.77 $ 0.45

(a) The Company discontinued its company-owned retail store
operation in the third quarter of fiscal 1998. In the twelve weeks
ended April 10, 1999, the Company recorded a partial reversal of its
original estimated loss on disposal of $186,000 (net of income tax of
$114,000), due to larger than expected proceeds from the sale of
assets and lower lease termination costs.

Consolidated Balance Sheet
(Dollars in thousands)

July 1, September 25,
2000 1999
Current assets:
Cash and cash equivalents $ 574 $ 415

Receivables, less allowances of
$235 at July 1, 2000 and $190 at
September 25, 199 8,138 6,223
Inventories 5,768 5,409
Income tax receivable -- 233
Other current assets 461 264
Loans to officers -- 250
Deferred income taxes, net 179 490

Total current assets 15,120 13,284

Fixed assets, net 10,564 10,183
Other long-term assets 248 250
Deferred income taxes, net 239 161

Total assets $ 26,171 $ 23,878

Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $ 161 $ 1,127
Accounts payable 4,814 4,551
Accrued payroll 1,484 1,005
Accrued expenses 1,221 357
Income tax payable 173 --
Accrued losses and other costs of
discontinued operations, net 179 192

Total current liabilities 8,032 7,232

Long-term debt 308 1,908

Long-term line of credit 9,400 3,056

Commitments and contingencies
Stockholders' equity:
Common stock, $0.10 par value:
authorized - 10,000,000 shares;
issued- 3,649,454 shares at
July 1, 2000 and 3,615,404 shares at
September 25, 1999 365 362
Additional paid-in capital 13,651 13,409
Retained earnings
(accumulated deficit) 1,282 (1,435)
Treasury shares, at cost:
558,853 shares at July 1, 2000 and
100,609 shares at
September 25, 1999, respectively (6,867) (654)

Total stockholders' equity 8,431 11,682

Total liabilities and stockholders' equity $ 26,171 $ 23,878

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