-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, APrRvgCUQPOlAI2hs9g2TvcnHZUjGFSSyFDIO8xg1KqucjY1q77sj9VLcSc1o+HU UCKYhLhPADOIhyOOcrL6MQ== 0000909954-97-000007.txt : 19970303 0000909954-97-000007.hdr.sgml : 19970303 ACCESSION NUMBER: 0000909954-97-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19970118 FILED AS OF DATE: 19970228 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREEN MOUNTAIN COFFEE INC CENTRAL INDEX KEY: 0000909954 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FOOD PREPARATIONS & KINDRED PRODUCTS [2090] IRS NUMBER: 030339228 STATE OF INCORPORATION: DE FISCAL YEAR END: 0928 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12340 FILM NUMBER: 97547304 BUSINESS ADDRESS: STREET 1: 33 COFFEE LANE CITY: WATERBURY STATE: VT ZIP: 05676 BUSINESS PHONE: 8022445621 MAIL ADDRESS: STREET 1: 33 COFFEE LANE CITY: WATERBURY STATE: VT ZIP: 05676 10-Q 1 FORM 10-Q 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 18, 1997 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. ----------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 03-0339228 ------------------------------- ------------------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 33 Coffee Lane, Waterbury, Vermont 05676 --------------------------------------------------- Address of principal executive offices) (zip code) (802) 244-5621 --------------------------------------------------- (Registrant's telephone number, including area code) ---------------------------------------------------- (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 24, 1997, 3,417,306 shares of common stock of the registrant were outstanding. Part I. Financial Information Item I. Financial Statements GREEN MOUNTAIN COFFEE, INC. Consolidated Balance Sheet (Dollars in thousands except share data) January 18, September 28, 1997 1996 ----------- ------------ (unaudited) Assets Current assets: Cash and cash equivalents..................... $ 320 $ 551 Receivables, less allowances of $80 at January 18, 1997 and $80 at September 28, 1996...... 2,617 2,778 Inventories................................... 3,404 3,276 Other current assets.......................... 455 627 Deferred income taxes, net.................... 196 516 ---------- ---------- Total current assets........................ 6,992 7,748 Fixed assets, net............................... 9,258 8,715 Other long-term assets, net..................... 465 394 Deferred income taxes, net...................... 613 386 ---------- --------- Total assets.................................... $ 17,328 $ 17,243 ---------- --------- Liabilities and Stockholders' Equity Current liabilities: Current portion of long-term debt............. $ 951 $ 947 Current portion of obligation under capital lease 120 114 Accounts payable.............................. 2,514 3,002 Accrued payroll............................... 479 480 Accrued expenses.............................. 150 264 ---------- --------- Total current liabilities................... 4,214 4,807 ---------- --------- Long-term debt.................................. 2,592 2,911 ---------- --------- Obligation under capital lease.................. 102 144 ---------- --------- Long-term line of credit........................ 825 508 ---------- --------- Commitments Stockholders' equity: Common stock, $0.10 par value: Authorized - 10,000,000 shares; issued and outstanding -3,417,306 shares at January 18, 1997 and September 28, 1996....... 342 342 Additional paid-in capital.................... 12,508 12,508 Accumulated deficit........................... (3,255) (3,977) --------- --------- Total stockholders' equity...................... 9,595 8,873 --------- --------- Total liabilities and stockholders' equity...... $ 17,328 $ 17,243 --------- ---------
The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements. GREEN MOUNTAIN COFFEE, INC. Consolidated Statement of Operations (Dollars in thousands except share data) Sixteen weeks ended --------------------------- January 18, January 20, 1997 1996 ------------ ---------- (unaudited) Net sales........................................ $ 14,412 $ 12,144 Cost of sales.................................... 8,645 7,234 ---------- ---------- Gross profit.................................. 5,767 4,910 Selling & operating expenses..................... 3,783 3,044 General and administrative expenses.............. 973 926 ---------- ---------- Income from operations........................ 1,011 940 Other expense.................................... - (1) Interest expense................................. (144) (140) ---------- ---------- Income before taxes........................... 867 799 Income tax expense............................... (145) (120) ---------- ---------- Net income.................................... $ 722 $ 679 ---------- ---------- Net income per share............................. $ 0.21 $ 0.20 ---------- ---------- Weighted average shares.......................... 3,444,218 3,426,778 ---------- ----------
The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements. GREEN MOUNTAIN COFFEE, INC. Consolidated Statement of Cash Flows (Dollars in thousands) Sixteen weeks ended ------------------------- January 18, January 20, 1997 1996 (unaudited) ------------------------- Cash flows from operating activities: Net income ........................................$ 722 $ 679 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization.................. 729 584 Loss on disposal of fixed assets............... 15 15 Provision for doubtful accounts................ 30 37 Deferred income taxes.......................... 93 119 Changes in assets and liabilities: Receivables.................................. 131 387 Inventories.................................. (128) 98 Other current assets......................... 172 (33) Other long-term assets, net.................. (78) 4 Accounts payable............................. (488) (882) Accrued payroll.............................. (1) 133 Accrued expenses............................. (114) 19 --------- --------- Net cash used for operating activities....... 1,083 1,160 --------- --------- Cash flows from investing activities: Expenditures for fixed assets..................... (1,308) (551) Proceeds from disposals of fixed assets........... 28 21 --------- --------- Net cash used for investing activities....... (1,280) (530) --------- --------- Cash flows from financing activities: Proceeds from issuance of long-term debt.......... - 9 Repayment of long-term debt....................... (315) (210) Principal payments under capital lease obligation. (36) (15) Net change in revolving line of credit............ 317 (220) --------- --------- Net cash provided by financing activities.... (34) (436) --------- --------- Net increase (decrease) in cash and cash equivalents (231) 194 Cash and cash equivalents at beginning of period..... 551 310 --------- --------- Cash and cash equivalents at end of period...........$ 320 $ 504 --------- ---------
The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements. 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 (consisting solely of normal recurring 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 18, 1997 are not necessarily indicative of the results that may be expected for the fiscal year ending September 27, 1997. For further information, refer to the consolidated financial statements and the footnotes included in the annual report on Form 10-KSB for Green Mountain Coffee, Inc. for the year ended September 28, 1996. Net income per share is computed based upon the weighted average number of common and dilutive common equivalent shares outstanding during the period. 2. Inventories ----------- Inventories consist of the following: January 18, September 28, 1997 1996 ----------- ------------ C<> Raw materials and supplies.............. $ 1,375,000 $ 1,291,000 Finished goods.......................... 2,029,000 1,985,000 ----------- ----------- $ 3,404,000 $ 3,276,000 ----------- -----------
3. Income Taxes ------------ The Company recognized deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. The Company had net deferred tax assets of $809,000 and $902,000 at January 18, 1997 and September 28, 1996, respectively. These assets are reported net of a deferred tax asset valuation allowance of $3,111,000 (including $2,482,000 primarily related to a Vermont investment tax credit) and $3,503,000 (including $2,681,000 primarily related to a Vermont investment tax credit) at January 18, 1997 and September 28, 1996, respectively. 4. Reclassification ---------------- On February 19, 1997, the Company amended its credit facility with Fleet Bank - NH, thereby extending the term of its line of credit to February 28, 1999. Accordingly, the Company has reclassified and renamed its revolving line of credit on the face of the balance sheet as a long-term liability under the name "Long-term line of credit." Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations General - ------- For the sixteen weeks ended January 18, 1997, Green Mountain Coffee, Inc. (the "Company" or "Green Mountain") derived approximately 79.6% 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 also operated twelve retail stores and a direct mail operation, which accounted for approximately 12.6% and 7.8% of net sales, respectively, 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, retail 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, into the fiscal year. This document may include forward-looking statements about the Company's sales and earnings and future plans and objectives. Any such statements are subject to risks and uncertainties that could cause the actual results to vary materially. These risks 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, economic conditions, competition, variances from budgeted sales mix and growth rate, weather and special or unusual events. Sixteen weeks ended January 18, 1997 versus sixteen weeks ended January 20, 1996 - ------------------------------------------------------------------ Net sales increased by $2,268,000, or 18.7%, from $12,144,000 for the sixteen weeks ended January 20, 1996 (the "1996 period") to $14,412,000 for the sixteen weeks ended January 18, 1997 (the "1997 period"). Coffee pounds sold, excluding coffee pounds sold as beverages through the Company's 12 company-owned retail stores, increased by approximately 410,000 pounds, or 25.8%, from approximately 1,590,000 pounds in the 1996 period to approximately 2,000,000 pounds in the 1997 period. The net sales increase is attributable to the wholesale area in which net sales increased by $2,297,000, or 25.0%, from $9,170,000 for the 1996 period to $11,467,000 for the 1997 period. The wholesale net sales increase resulted primarily from growth in the number of wholesale accounts. Retail net sales increased $24,000 or 1.3% from $1,794,000 for the 1996 period to $1,818,000 for the 1997 period despite an average reduction in wholebean coffee sales prices of $1.00 per pound and the closing during the 1996 period of an espresso cart located in Albany, New York. Net sales in the direct mail area decreased $53,000 or 4.5% from $1,180,000 for the 1996 period to $1,127,000 for the 1997 period. The decrease in direct mail sales resulted primarily from an average reduction in coffee sales prices of $1.00 per pound. Gross profit increased by $857,000, or 17.5%, from $4,910,000 for the 1996 period to $5,767,000 for the 1997 period. As a percentage of net sales, gross profit decreased 0.4 percentage points from 40.4% for the 1996 period to 40.0% for the 1997 period. The decrease in gross profit as a percentage of sales was due primarily to an increase in delivery costs related to the expansion and start-up during the 1997 period of regional warehouses in Massachusetts and Connecticut and higher costs of delivery to customers outside the northeast United States. Selling and operating expenses increased by $739,000, or 24.3%, from $3,044,000 for the 1996 period to $3,783,000 for the 1997 period. Selling and operating expenses increased 1.1 percentage points as a percentage of sales from 25.1% for the 1996 period to 26.2% for the 1997 period. The increase in selling and operating expense includes approximately $360,000 in expenses related to the addition since the 1996 period of a national supermarket sales manager, a national office coffee service and food service sales manager, and 14 people to the Company's direct sales force in the greater Boston, Connecticut, Florida, New York and Greater Philadelphia markets. General and administrative expenses increased by $47,000 or 5.1% from $926,000 for the 1996 period to $973,000 for the 1997 period, and decreased 0.8 percentage points as a percentage of sales from 7.6% for the 1996 period to 6.8% for the 1997 period. As a result of the foregoing, income from operations increased by $71,000 or 7.6% from $940,000 for the 1996 period to $1,011,000 for the 1997 period. Net income increased by $43,000 or 6.3% from $679,000 for the 1996 period to $722,000 in the 1997 period. Liquidity and Capital Resources - ------------------------------- Working capital decreased $163,000 to $2,778,000 at January 18, 1997 from $2,941,000 at September 28, 1996. The working capital balance now reflects a decrease in current liabilities due to the reclassification of the Company's line of credit. Cash used for capital expenditures aggregated $1,308,000 during the 1997 period, and included $311,000 for equipment loaned to wholesale customers, $326,000 for production equipment and $399,000 for computer hardware and software. During the 1996 period, Green Mountain had capital expenditures of $551,000, including $243,000 for equipment on loan to wholesale customers, $55,000 for production equipment and $96,000 for computer hardware and software. Cash used to fund the capital expenditures in the 1997 period was obtained primarily from the $1,083,000 of net cash provided by operating activities. The Company currently plans to make capital expenditures in fiscal 1997 of approximately $4,500,000, primarily to fund the purchase of equipment for loan to wholesale customers (approximately $1,700,000) and computer hardware and software (approximately $1,700,000). Assuming a stable mix in packaging types and sizes, management believes that it will operate at approximately 60-70% of production capacity in fiscal 1997 and does not foresee significant production equipment expenditures during the year. Management is presently planning to add to production and distribution capacity in fiscal 1998, which will result in some temporary relocation expenses and write-offs of certain fixtures and leasehold improvements later in fiscal 1997. This planned increase in fiscal 1998 capital expenditures to increase production and distribution capacity is expected to be offset by reductions in fiscal 1998 in computer hardware and software capital expenditures. Management continuously reviews capital expenditure needs and actual amounts expended may differ from these estimates. On February 19, 1997, the Company amended its credit facility with Fleet Bank - NH. Under the revised facility, the Company increased the limit of the revolving line of credit from $3,000,000 to $5,000,000 and extended its term by one year to February 28, 1999. The outstanding balance on the line of credit at January 18, 1997 was $825,000, with a total availability of $3,254,000 under the borrowing base formula. Management believes that cash flow from operations, existing cash and available borrowings under its credit facility and other sources will provide sufficient liquidity to pay all liabilities in the normal course of business, fund capital expenditures and service debt requirements in fiscal 1997. The average cost of the high quality arabica coffees the Company purchases decreased slightly during the 1997 period as compared to the 1996 period. However, since December 1996, when the closing March "c" price (the price per pound quoted by the Coffee, Sugar and Cocoa Exchange) was as low as $1.036, the March "c" price has risen dramatically, closing on February 13, 1997 at $1.79, a 72.8% increase from the low. 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. Since December 1996, differentials have also been rising. The Company believes that the cost of green coffee will continue to be volatile in fiscal 1997. The Company believes that increases in the cost of green coffee can generally be passed on to customers or absorbed through more efficient operations, although there can be no assurance that the Company will be successful in doing so. 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 70 different 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. Deferred Income Taxes - --------------------- The Company had net deferred tax assets of $809,000 at January 18, 1997. These assets are reported net of a deferred tax asset valuation allowance at that date of $3,111,000 (including $2,482,000 primarily related to a Vermont investment tax credit). The Company had income before taxes of $867,000 and $1,484,000 in the 1997 period and for all of fiscal 1996, respectively, and has has been profitable in eight of its last ten fiscal quarters, including the last six consecutive fiscal quarters. 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. Seasonality - ----------- Historically, the Company has experienced lower net sales levels in its second fiscal quarter following high holiday-related levels in its first fiscal quarter, especially in its retail and direct mail operations, resulting in less favorable operating results during the second fiscal quarter. In addition, quarterly results may be affected by 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. 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) 10.2 (bb) Eighth Amendment to Commercial Loan Agreement, dated February 19, 1997, among Green Mountain Coffee Roasters, Inc., as borrower, and Fleet Bank - NH as lender. 10.2 (cc) Replacement Revolving Line of Credit Promissory Note, dated February 19, 1997, from Green Mountain Coffee Roasters, Inc., to Fleet Bank - NH. 11 Computation of net income per share of Common Stock 27 Financial Data Schedule (b) No reports on Form 8-K were filed during the sixteen weeks ended January 18, 1997. ---------------------------------------------------- (1) Incorporated by reference to the corresponding exhibit number on 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: 2/27/97 By: /s/ Robert P. Stiller ------------- ----------------------------- Robert P. Stiller President and Chief Executive Officer Date: 2/27/97 By: /s/ Robert D. Britt -------------- ----------------------------- Robert D. Britt, Chief Financial Officer, Treasurer and Secretary EX-10.2(BB) 2 EIGHTH AMENDMENT TO COMMERCIAL LOAN AGREEMENT, DATED FEBRUARY 19, 1997, AMONG GREEN MOUNTAIN COFFEE ROASTERS, INC. AS BORROWER, AND FLEET BANK - NH AS LENDER EIGHTH AMENDMENT TO FLEET BANK - NH COMMERCIAL LOAN AGREEMENT AND LOAN DOCUMENTS THIS EIGHTH AMENDMENT TO COMMERCIAL LOAN AGREEMENT AND LOAN DOCUMENTS (the "Amendment") is made effective February 19, 1997, by and among FLEET BANK - NH, a bank organized under the laws of the State of New Hampshire with an address of Mail Stop NHNA E02A, 1155 Elm Street, Manchester, New Hampshire 03101 (the "Bank"), GREEN MOUNTAIN COFFEE ROASTERS, INC. (f/k/a Green Mountain Coffee, Inc.), a Vermont corporation with a principal place of business at 33 Coffee Lane, Waterbury, Vermont 05676 (the "Borrower"), and GREEN MOUNTAIN COFFEE ROASTERS FRANCHISING CORPORATION, a Delaware corporation (the "Subsidiary". W I T N E S S E T H: WHEREAS, the Bank, the Borrower, and the Subsidiary are parties to a certain Fleet Bank - NH Seventh Amendment and First Restatement of Commercial Loan Agreement dated April 12, 1996 (the "Loan Agreement") and certain Loan Documents of various dates (as defined in the Loan Agreement and as amended through the date hereof), including, but not limited to a certain Guaranty Agreement dated October 22, 1992, as amended to date, of the Subsidiary (the "Guaranty"), and certain Security Agreements of the Borrower dated April 12, 1996 and of the Subsidiary dated October 22, 1992, as amended to date (collectively, the "Security Agreements"); WHEREAS, pursuant to the Loan Agreement, the Bank has extended to the Borrower certain credit facilities including a revolving line of credit loan up to the maximum principal amount of Three Million Dollars ($3,000,000.00) (the "Revolving Line of Credit Loan"); and WHEREAS, the Borrower has requested, and the Bank has agreed, to increase the maximum principal amount available under the Revolving Line of Credit Loan from Three Million Dollars ($3,000,000.00) to Five Million Dollars ($5,000,000.00), and, in connection therewith, to make certain amendments to the terms and conditions affecting all of the credit facilities provided under the Loan Agreement and the Loan Documents. All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement and/or the Loan Documents, as the case may be. NOW, THEREFORE, in consideration of the Bank increasing the Revolving Line of Credit Loan as described above and amending the Loan Agreement in other respects as provided below, the Bank, the Borrower, and the Subsidiary hereby agree to amend the Loan Agreement and the Loan Documents as follows: I. AMENDMENT OF LOAN AGREEMENT. A. Increase of Revolving Line of Credit. The maximum available amount to the Borrower under the Revolving Line of Credit Loan as set forth in Section I. A. of the Loan Agreement shall be and hereby is increased from Three Million Dollars ($3,000,000.00) to Five Million Dollars ($5,000,000.00), subject to and limited by the provisions regarding availability under clause (2) of Section I. A. of the Loan Agreement, and the terms and conditions of the Revolving Line of Credit Loan promissory note. The Borrower shall execute and deliver to Bank a replacement Revolving Line of Credit Loan promissory note in form and substance satisfactory to the Bank to reflect the increase of the maximum principal amount thereunder. B. Amendment of Review Date for Revolving Line of Credit Loan. The Review Date as set forth in Section C of Article I of the Loan Agreement with respect to the Revolving Line of Credit Loan shall be and hereby is changed to February 28, 1999. C. Amendment of Fees. The Unused Revolving Line of Credit Commitment Fee set forth in Section I of Schedule B of the Loan Agreement shall be and hereby are replaced with the following: "Annual Revolving Line of Credit Facility Fee: $3,000.00 per annum, payable in quarterly installments of $750.00 on January 1st, April 1, July 1st, and October 1st." D. Amendment of Financial Covenants. The Financial Covenants of the Borrower set forth in Section IV of Schedule B of the Loan Agreement shall be and hereby are replaced with the following: "IV. Description of Additional Financial and other Covenants: A. BORROWER and the Subsidiary shall have a Tangible Capital Base (as hereinafter defined) on a consolidated basis equal to at least Eight Million Five Hundred Thousand Dollars ($8,500,000.00) as of the last day of the first quarter of BORROWER's 1997 fiscal year and at all times thereafter. "Tangible Capital Base" means total shareholders' equity , plus Permitted Subordinated Debt (as hereinafter defined), plus deferred tax liabilities, and less intangible assets (unamortized product development costs, goodwill, and unamortized debt issuance costs), all as determined from BORROWER's and the Subsidiary' financial statements delivered to the BANK in accordance with the covenants of the BORROWER hereinabove (the "Financial Statements"). B. BORROWER and the Subsidiary on a consolidated basis shall have a ratio of Senior Debt (as hereinafter defined) to Tangible Capital Base of not greater than 1.15:1 as of the last day of the first quarter of BORROWER's 1997 fiscal year and at all times thereafter. "Senior Debt" means all indebtedness with the exception of indebtedness of the BORROWER or the Subsidiary that is subordinated to the BANK on terms of subordination acceptable to the BANK ("Permitted Subordinated Debt"), all as determined from the Financial Statements. C. BORROWER and the Subsidiary shall maintain on a consolidated basis Available Cash (as hereinafter defined) of at least One Million Dollars ($1,000,000.00) at all times. "Available Cash" means the sum of (a) cash balances in investment and depository accounts and (b) the amount equal to the then Borrowing Base as determined in accordance with Section I. A. of the Loan Agreement less the then outstanding principal balance of advanced funds under the Revolving Line of Credit Loan. In the event that the BORROWER and the Subsidiary at any time fail to maintain Available Cash in the amount required above, such failure shall not constitute an Event of Default under the Loan Agreement and the Loan Documents but the interest rate applicable to each of the Loans shall, at the option of the BANK, be immediately increased by one-quarter of one percent (0.25%) per annum. Such increased rates shall remain in effect until such time as the BORROWER certifies in writing to the BANK that it is in compliance with the financial covenant hereunder and under Paragraph D below. Upon BANK's receipt of such certification the interest rates under each of the Loans shall immediately and automatically be reduced to the rates stated in the Loan Documents for such Loans. D. BORROWER and the Subsidiary shall have on a consolidated basis Net Profit (as hereinafter defined) for each fiscal quarter, other than the second quarter of fiscal year 1997, of at least One Thousand Dollars ($1,000.00). "Net Profit" means net profits as determined in accordance with generally accepted accounting principles from BORROWER's Financial Statements. In the event that the BORROWER and the Subsidiary at any time fail to achieve Net Profits in the amount required above for any quarter, such failure shall not constitute an Event of Default under the Loan Agreement and the Loan Documents but the interest rate applicable to each of the Loans shall, at the BANK's option, be immediately increased by one quarter of one percent (0.25%) per annum. Such increased rates shall remain in effect until such time as the BORROWER certifies in writing to the BANK that it is in compliance with the financial covenants hereunder and under Paragraph C above. Upon BANK's receipt of such certification the interest rates under each of the Loans shall immediately and automatically be reduced to the rates stated in the Loan Documents for such Loans. E. BORROWER shall not make expenditures for capital assets or capital improvements (as determined in accordance with generally accepted accounting principals) in any fiscal year in excess of Five Million Dollars ($5,000,000.00). F. BORROWER shall report and certify to BANK its compliance with the financial covenants hereinabove within forty-five (45) days after each fiscal quarter end on such form or forms as may from time to time be specified by the BANK." E. Commitment Fee. For and in consideration of the Bank entering into this Amendment, the Borrower shall pay the Bank a commitment fee in the amount of $2,000.00 on the date of execution hereof. II. AMENDMENT OF SECURITY AGREEMENTS. The Revolving Line of Credit Loan, as increased hereby, is and shall be secured in accordance with the terms, conditions, and priorities under the Loan Agreement and Loan Documents for the Revolving Line of Credit Loan prior to increase hereunder. The Security Agreements of each of the Borrower and the Subsidiary included among the Loan Documents shall be and hereby are amended by including the Revolving Line of Credit Loan, as increased hereby, as Secured Obligations under each of the Security Agreements secured by the security interests in the Collateral granted to the Bank by the Borrower and the Subsidiary thereunder. III. AMENDMENT OF SUBSIDIARY'S GUARANTY AGREEMENT. The Guaranty shall be and hereby is amended such that the Revolving Line of Credit Loan, as increased hereby shall be included as a Guaranteed Obligations thereunder. IV. REPRESENTATIONS AND WARRANTIES. Except as set forth in Schedule I hereto, and except to the extent affected by the amendments hereunder or by previous amendments, or otherwise consented to or acknowledged by the Bank in writing, each of the Borrower and the Subsidiary, jointly and severally, confirm, reassert, and restate all of the representations and warranties under the Loan Agreement and the Loan Documents as of the date hereof. V. AFFIRMATIVE COVENANTS. Except as set forth in Schedule II hereto and except to the extent affected by the amendments hereunder or by previous amendments, or otherwise consented to or acknowledged by the Bank in writing, each of the Borrower and the Subsidiary, jointly and severally, hereby confirm, reassert, and restate their respective affirmative covenants as set forth in the Loan Agreement and Loan Documents as of the date hereof. VI. AFFIRMATION OF NEGATIVE COVENANTS. Except as set forth on Schedule III hereto and except to the extent affected by the amendments hereunder or by previous amendments, or otherwise consented to or acknowledged by the Bank in writing, each of the Borrower and the Subsidiary, jointly and severally, hereby confirm, reassert, and restate their respective negative covenants as set forth in the Loan Agreement and the Loan Documents as of the date hereof. VII. FURTHER REPRESENTATION AND WARRANTY. Each of the Borrower and the Subsidiary represent and warrant to the Bank that no consent, authorization or approval is required of any third party, including, but not limited to, the Vermont Economic Development Authority and the United States Small Business Administration, for any of the Borrower or the Subsidiary to enter into this Agreement and to consummate the transactions contemplated hereunder. VIII. NO FURTHER EFFECT. Except as specifically amended hereby, the terms and conditions of the Loan Agreement and the Loan Documents as set forth therein and as amended through the date hereof shall remain in full force and effect. IN WITNESS WHEREOF, the Bank, the Borrower and the Subsidiary have executed this agreement effective as of the date and year first above written. FLEET BANK-NH /s/ Catherine A. Consentino By: /s/ Andre P. Pelletier - --------------------------- --------------------------------- Witness Andre P. Pelletier, Vice President GREEN MOUNTAIN COFFEE ROASTERS, INC. /s/ Robert P. Stiller By: /s/ Robert D. Britt - ------------------------- ---------------------------------------- Witness Robert D. Britt, Chief Financial Officer GREEN MOUNTAIN COFFEE ROASTERS FRANCHISING CORPORATION /s/ Robert P. Stiller By: /s/ Robert D. Britt - ------------------------- ---------------------------------------- Witness Robert D. Britt, Chief Financial Officer STATE OF New Hampshire COUNTY OF Hillsborough On this, the 19th day of February, 1997, before me, the undersigned officer, personally appeared Andre P. Pelletier, who acknowledged himself to be a Vice President of Fleet Bank - NH, a bank and that he, as such Vice President, being authorized so to do, executed the foregoing instrument for the purposes therein contained on behalf of said bank. Before me, /s/ Catherine A. Consentino ---------------------------------- Justice of the Peace STATE OF Vermont COUNTY OF Washington On this, the 19th day of February, 1997, before me, the undersigned officer, personally appeared Robert D. Britt, who acknowledged himself to be the Chief Financial Officer of Green Mountain Coffee Roasters, Inc., a corporation and that he, as such officer, being authorized so to do, executed the foregoing instrument for the purposes therein contained on behalf of said corporation. Before me, /s/ Betty Omansky ---------------------------------- Notary Public STATE OF Vermont COUNTY OF Washington On this, the 19th day of February, 1997, before me, the undersigned officer, personally appeared Robert D. Britt, who acknowledged himself to be the Chief Financial Officer of Green Mountain Coffee Roasters Franchising Corporation, a corporation and that he, as such officer, being authorized so to do, executed the foregoing instrument for the purposes therein contained on behalf of said corporation. Before me, /s/ Betty Omansky ------------------------------- Notary Public EIGHTH AMENDMENT TO FLEET BANK - NH COMMERCIAL LOAN AGREEMENT AND LOAN DOCUMENTS Schedule I None EIGHTH AMENDMENT TO FLEET BANK - NH COMMERCIAL LOAN AGREEMENT AND LOAN DOCUMENTS Schedule II None EIGHTH AMENDMENT TO FLEET BANK - NH COMMERCIAL LOAN AGREEMENT AND LOAN DOCUMENTS Schedule III None EX-10.2(CC) 3 REPLACEMENT REVOLVING LINE OF CREDIT PROMISSORY NOTE, DATED FEBRUARY 19, 1997, FROM GREEN MOUNTAIN COFFEE ROASSTERS, INC. TO FLEET BANK - NH. REPLACEMENT REVOLVING LINE OF CREDIT PROMISSORY NOTE $5,000,000.00 Manchester, NH February 19, 1997 FOR VALUE RECEIVED, GREEN MOUNTAIN COFFEE ROASTERS, INC., a Vermont corporation with a principal place of business at 33 Coffee Lane, Waterbury, Vermont 05676 (the "Borrower"), promises to pay to the order of FLEET BANK - NH, a bank organized under the laws of the State of New Hampshire with a principal place of business at One Indian Head Plaza, Nashua, New Hampshire 03060 (the "Bank"), at such address, or such other place or places as the holder hereof may designate in writing from time to time hereafter, the maximum principal sum of FIVE MILLION DOLLARS ($5,000,000.00), or so much thereof as may be advanced or readvanced by the Bank to the Borrower from time to time hereafter (such amounts defined as the "Debit Balance" below), together with interest as provided for hereinbelow, in lawful money of the United States of America. The Borrower's "Debit Balance" shall mean the debit balance in an account on the books of the Bank, maintained in the form of a ledger card, computer records or otherwise in accordance with the Bank's customary practice and appropriate accounting procedures wherein there shall be recorded the principal amount of all advances made by the Bank to the Borrower, all principal payments made by the Borrower to the Bank hereunder, and all other appropriate debits and credits. Under the Revolving Line of Credit Loan evidenced by this Note (the "Line of Credit"), the Bank agrees to lend to the Borrower, and the Borrower may borrow, up to the lesser of (a) the maximum principal sum provided for in this Note or (b) the Borrower's Borrowing Base, all in accordance with and subject to the terms, conditions, and limitations of this Note and the Seventh Amendment and First Restatement of Commercial Loan Agreement dated April 12, 1996, as amended by Eighth Amendment to Commercial Loan Agreement and Loan Documents of even date herewith, entered into by and between the Borrower and the Bank, and as said agreement may be further amended from time to time (collectively, as amended, the "Loan Agreement"). The holder of this Note is entitled to all of the benefits and rights of the Bank under the Loan Agreement. However, neither this reference to the Loan Agreement nor any provision thereof shall impair the absolute and unconditional obligation of the Borrower to pay the principal and interest of this Note as herein provided. Terms not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement. The Borrower shall make requests for advances under this Note as provided in the Loan Agreement. The Borrower agrees that the Bank may make all advances under this Note by direct deposit to any demand account of the Borrower with the Bank or in such other manner as may be provided in the Loan Agreement, and that all such advances shall represent binding obligations of the Borrower. The Borrower acknowledges that this Note is to evidence the Borrower's obligation to pay its Debit Balance, plus interest and any other applicable charges as determined from time to time, and that it shall continue to do so despite the occurrence of intervals when no Debit Balance exists because the Borrower has paid the previously existing Debit Balance in full. Interest shall be calculated and charged daily, based on the actual days elapsed over a three hundred sixty (360) day banking year, on the unpaid principal balance outstanding from time to time. Except as provided hereinbelow, the unpaid principal balance outstanding hereunder from time to time shall bear interest at a variable annual rate equal to the Bank's Base Rate, so called. The Base Rate shall be the Base Rate of the Bank as established and changed by the Bank from time to time whether or not such rate shall be otherwise published or Borrower is provided with notice thereof. Each time the Base Rate changes, the interest rate hereunder shall change contemporaneously with such change in the Base Rate effective as of the opening of business on the date of change. The Borrower acknowledges that the Base Rate is used for reference purposes only as an index and is not necessarily the lowest interest rate charged by the Bank on commercial loans. Notwithstanding the foregoing, the Borrower may elect from time to time the Revolving LIBOR-based Rate to apply to some or all of the outstanding principal hereunder in accordance with, and subject to the limitations of, the Loan Agreement. The Borrower further acknowledges and agrees that the interest rate hereunder is subject to increase upon the occurrence of certain events as provided in the Loan Agreement. Pending an Event of Default as provided in the Loan Agreement and herein below, the Bank shall extend the Line of Credit through and until February 28, 1999 (the "Review Date"), and, if the Line of Credit is renewed and extended by the Bank pursuant to the Loan Agreement, through and until each anniversary of such date with respect to which the Line of Credit is renewed and extended. The Borrower shall (i) make payments of principal from time to time as provided in the Loan Agreement and (ii) make payments of interest monthly in arrears commencing thirty (30) days from the date hereof (or on any day within 30 days of the date hereof agreed to by the Borrower and the Bank to provide for a convenient payment date) and continuing on the same date of each month thereafter through and until the earlier of the acceleration of this Note upon an Event of Default as provided herein below or the Review Date or any anniversary thereof with respect to which the Line of Credit is not renewed by the Bank, whereupon all principal, accrued and unpaid interest, and any other charges provided for hereunder, shall be due and payable in full. In the event that the Line of Credit is renewed pursuant to the Loan Agreement as of the Review Date or any anniversary thereof, this Note shall thereafter continue to evidence amounts advanced and due under the Line of Credit as renewed. This Note is being executed and delivered in accordance with the terms of the Loan Agreement and the documents defined therein as the "Loan Documents". The payment and performance of the obligations contained in the Loan Documents are secured by the collateral granted to the Bank therein (the "Collateral") and the security granted to the Bank in the Loan Documents. At the option of the Bank, this Note shall become immediately due and payable in full, without further demand or notice, if any payment of interest or principal is not made when due hereunder or upon the occurrance and during the continuance of any other Event of Default under the terms hereof, under the Loan Agreement, or under any of the other Loan Document. The holder may impose upon the Borrower a delinquency charge of five percent (5%) of the amount of interest not paid on or before the tenth (10th) day after such installment is due. The entire principal balance hereof, together with accrued interest, shall after the occurrence and during the continuance of an Event of Default under the Loan Agreement or maturity, whether by demand, acceleration or otherwise, bear interest at the then contract rate of this Note plus an additional five percent (5%) per annum. The Borrower agrees that any other property upon or in which the Borrower has granted or hereafter grants the holder a mortgage or security interest, securing the payment and performance of any other liability of the Borrower to the holder, shall also constitute Collateral. As additional Collateral, the Borrower grants (1) a security interest in, or pledges, assigns and delivers to the holder, as appropriate, all deposits, credits and other property now or hereafter due from the holder to the Borrower; and (2) the right to set off and apply (and a security interest in said right), from time to time hereafter and without demand or notice of any nature, all, or any portion, of such deposits, credits and other property, against the indebtedness evidenced by this Note whether the other Collateral, if any, is deemed adequate or not. The Borrower, and every maker, endorser, or guarantor of this Note, jointly and severally, agree to pay on demand all reasonable out-of-pocket costs of collection hereof, including reasonable attorneys' fees, whether or not any foreclosure or other action is instituted by the holder in its discretion. No delay or omission on the part of the holder in exercising any right, privilege or remedy shall impair such right, privilege or remedy or be construed as a waiver thereof or of any other right, privilege or remedy. No waiver of any right, privilege or remedy or any amendment to this Note shall be effective unless made in writing and signed by the holder. Under no circumstances shall an effective waiver of any right, privilege or remedy on any one occasion constitute or be construed as a bar to the exercise of or a waiver of such right, privilege or remedy on any future occasion. The acceptance by the holder hereof of any payment after any default hereunder shall not operate to extend the time of payment of any amount then remaining unpaid hereunder or constitute a waiver of any rights of the holder hereof under this Note. All rights and remedies of the holder, whether granted herein or otherwise, shall be cumulative and may be exercised singularly or concurrently, and the holder shall have, in addition to all other rights and remedies, the rights and remedies of a secured party under the Uniform Commercial Code of New Hampshire. The holder shall have no duty as to the collection or protection of the Collateral or of any income thereon, or as to the preservation of any rights pertaining thereto beyond the safe custody thereof. Surrender of this Note, upon payment or otherwise, shall not affect the right of the holder to retain the Collateral as security for the payment and performance of any other liability of the Borrower to the holder in accordance with the provisions of the Loan Documents. The Borrower, and every maker, endorser, or guarantor of this Note, hereby jointly waive, to the fullest extent permitted by law, presentment, notice, protest and all other demands and notices and assents (1) to any extension of the time of payment or any other indulgence, (2) to any substitution, exchange or release of Collateral, and (3) to the release of any other person primarily or secondarily liable for the obligations evidenced hereby. This Note and the provisions hereof shall be binding upon the Borrower and the Borrower's heirs, administrators, executors, successors, legal representatives and assigns and shall inure to the benefit of the holder, the holder's heirs, administrators, executors, successors, legal representatives and assigns. The word "holder" as used herein shall mean the payee or endorsee of this Note who is in possession of it, or the bearer, if this Note is at the time payable to the bearer. This Note may not be amended, changed or modified in any respect except by a written document which has been executed by each party. This Note constitutes a New Hampshire contract to be governed by the laws of such state and to be paid and performed therein. The provisions of this Note are expressly subject to the condition that in no event shall the amount paid or agreed to be paid to the holder hereunder and deemed interest under applicable law exceed the maximum rate of interest on the unpaid principal balance hereunder allowed by applicable law, if any, (the "Maximum Allowable Rate"), which shall mean the law in effect on the date hereof, except that if there is a change in such law which results in a higher Maximum Allowable Rate being applicable to this Note, then this Note shall be governed by such amended law from and after its effective date. In the event that fulfillment of any provisions of this Note results in the interest rate hereunder being in excess of the Maximum Allowable Rate, the obligation to be fulfilled shall automatically be reduced to eliminate such excess. If notwithstanding the foregoing, the holder receives an amount which under applicable law would cause the interest rate hereunder to exceed the Maximum Allowable Rate, the portion thereof which would be excessive shall automatically be applied to and deemed a prepayment of the unpaid principal balance hereunder and not a payment of interest. This Note is executed and delivered in replacement of, but not in novation or discharge of, the Revolving Line of Credit Promissory Note of the undersigned payable to the order of the Bank in the principal amount of Three Million Dollars ($3,000,000.00) dated March 31, 1995 (the "Old Note"). All references to the Old Note in the Loan Agreement or any other Loan Document shall be deemed to refer to this Note. Executed and delivered this 19th day of February, 1997. GREEN MOUNTAIN COFFEE ROASTERS, INC. /s/ Robert P. Stiller By: /s/ Robert D. Britt - ---------------------- ----------------------------------------- Witness Robert D. Britt, Chief Financial Officer STATE OF Vermont COUNTY OF Washington On this the 19th day of February, 1997, before me, the undersigned notary or justice, personally appeared Robert D. Britt, who acknowledged himself to be the Chief Financial Officer of Green Mountain Coffee Roasters, Inc., a corporation, and that he, as such authorized officer, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by himself as such authorized officer. /s/ Betty Omansky ---------------------------------- Notary Public EX-11 4 COMPUTATION OF NET INCOME PER SHARE OF COMMON STOCK GREEN MOUNTAIN COFFEE, INC. Computation of Net Income Per Share Sixteen weeks ended ------------------------- January 18, January 20, 1997 1996 (unaudited) ---------- ----------- Net income................................... $ 722,000 $ 679,000 Primary weighted common shares outstanding: Common stock............................... 3,417,306 3,399,795 Stock options.............................. 26,912 26,983 Weighted average shares...................... 3,444,218 3,426,778 Net income per share......................... $ .21 $ .20 - ------------------------------------------------ This Exhibit should be read in conjunction with the accompanying unaudited interim consolidated financial statements and the notes thereto.
EX-27 5 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the balance sheet dated 1/18/97 and the Statement of Operations for the sixteen weeks ended 1/18/97 and is qualified in its entirety by reference to such financial statements. 1,000 OTHER SEP-27-1997 SEP-29-1996 JAN-18-1997 320 0 2,697 80 3,404 6,992 17,062 7,804 17,328 4,214 3,519 0 0 342 9,253 17,328 14,412 14,412 8,645 8,645 3,783 0 144 867 145 722 0 0 0 722 .21 .21
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