-----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, LWiK6Iy7Oh6xsGEAbsYA1iSTm8a5vb9njuXUpC+dGKkYhAK0GiiJf2avzQQMZuK5 6lg/FmdTRfQsloNSFLb1Tg== 0000909954-97-000014.txt : 19970820 0000909954-97-000014.hdr.sgml : 19970820 ACCESSION NUMBER: 0000909954-97-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19970705 FILED AS OF DATE: 19970819 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: 97666126 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 twelve weeks ended July 5, 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 Identification No.) incorporation or organization) 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 August 14, 1997, 3,479,106 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)
July 5, September 28, 1997 1996 ------------- ------------- (unaudited) ASSETS Current assets: Cash and cash equivalents ..................... $ 360 $ 551 Receivables, less allowances of $90 at July 5, 1997 and $80 at September 28, 1996 ........ 3,409 2,778 Inventories ................................... 4,641 3,276 Other current assets .......................... 627 627 Deferred income taxes, net .................... 886 516 -------- -------- Total current assets......................... 9,923 7,748 Fixed assets, net ............................... 10,551 8,715 Other long-term assets, net...................... 492 394 Deferred income taxes, net ...................... 481 386 -------- -------- Total assets .................................... $ 21,447 $ 17,243 ======== ======== LIABILTIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt ............. $ 957 $ 947 Current portion of obligation under capital lease........................ 129 114 Accounts payable .............................. 3,538 3,002 Accrued payroll ............................... 510 480 Accrued expenses .............................. 471 264 -------- -------- Total current liabilities ................... 5,605 4,807 -------- -------- Long-term debt .................................. 2,133 2,911 -------- -------- Obligation under capital lease .................. 35 144 -------- -------- Long-term line of credit ........................ 3,436 508 -------- -------- Commitments Stockholders' equity: Common stock, $0.10 par value: Authorized - 10,000,000 shares; issued and outstanding - 3,442,306 shares at July 5, 1997 and 3,417,306 at Sept. 28, 1996......... 344 342 Additional paid-in capital..................... 12,569 12,508 Accumulated deficit............................ (2,675) (3,977) -------- -------- Total stockholders' equity....................... 10,238 8,873 -------- -------- Total liabilities and stockholders' equity ...... $ 21,447 $ 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)
Twelve weeks ended --------------------------- July 5, July 6, 1997 1996 ----------- ----------- (unaudited) Net sales ..................................... $ 10,817 $ 8,617 Cost of sales ................................. 6,779 5,121 ----------- ----------- Gross profit .............................. 4,038 3,496 Selling & operating expenses .................. 3,184 2,503 General and administrative expenses ........... 749 735 ----------- ----------- Income from operations .................... 105 258 Other income .................................. 15 6 Interest expense .............................. (119) (89) ----------- ----------- Income before income taxes ................ 1 175 Income tax benefit (expense) .................. - (26) ----------- ----------- Net income ................................ $ 1 $ 149 =========== =========== Net income per share ........................ $ 0.00 $ 0.04 =========== =========== Weighted average shares ..................... 3,456,948 3,427,682 =========== =========== 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)
Forty weeks ended -------------------------- July 5, July 6, 1997 1996 ------------ ----------- (unaudited) Net sales ........................................... $ 35,292 $ 28,880 Cost of sales ....................................... 21,305 17,229 ----------- ----------- Gross profit .................................... 13,987 11,651 Selling & operating expenses ........................ 10,030 7,888 General and administrative expenses ................. 2,487 2,334 Loss on abandonment of fixed assets ................. 218 - ----------- ----------- Income from operations .......................... 1,252 1,429 Other income (expense) .............................. 13 (5) Interest expense .................................... (370) (335) ----------- ----------- Income before income taxes ...................... 895 1,089 Income tax benefit (expense) ........................ 407 (163) ----------- ----------- Net income ...................................... $ 1,302 $ 926 =========== =========== Net income per share .............................. $ 0.38 $ 0.27 =========== =========== Weighted average shares ........................... 3,449,171 3,427,592 =========== =========== 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)
Forty weeks ended --------------------- July 5, July 6, 1997 1996 --------- --------- (unaudited) Cash flows from operating activities: Net income ............................................ $ 1,302 $ 926 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ..................... 1,879 1,517 Loss on disposal of fixed assets................... 237 28 Provision for doubtful accounts ................... 112 106 Deferred income taxes ............................. (465) 163 Changes in assets and liabilities: Receivables ................................. (744) 295 Inventories ................................. (1,365) 93 Other current assets ........................ (18) (57) Other long-term assets, net.................. (98) (138) Accounts payable ............................ 536 (311) Accrued payroll ............................. 30 183 Accrued expenses ............................ 207 75 -------- -------- Net cash provided by operating activities.... 1,613 2,880 -------- -------- Cash flows from investing activities: Expenditures for fixed assets .......................... (3,999) (1,730) Proceeds from disposals of fixed assets................. 65 52 -------- -------- Net cash used for investing activities....... (3,934) (1,678) -------- -------- Cash flows from financing activities: Proceeds from issuance of common stock ................. 64 - Proceeds from issuance of long-term debt................ - 1,009 Repayment of long-term debt ............................ (768) (566) Principal payments under capital lease obligation ...... (94) (64) Net change in revolving line of credit ................. 2,928 (1,395) -------- -------- Net cash used for financing activities....... 2,130 (1,016) -------- -------- Net increase (decrease) in cash and cash equivalents ...... (191) 186 Cash and cash equivalents at beginning of period........... 551 310 -------- -------- Cash and cash equivalents at end of period ............... $ 360 $ 496 ======== ======== 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 considered necessary for a fair statement of the interim financial data have been included. Results from operations for the forty week period ended July 5, 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: July 5, September 28, 1997 1996 --------------- --------------- Raw materials and supplies $ 2,091,000 $ 1,291,000 Finished goods 2,550,000 1,985,000 =============== =============== $ 4,641,000 $ 3,276,000 =============== ===============
3. Abandonment of Equipment The Company recently embarked on an expansion of its central production and distribution facility in order to increase capacity and streamline operations. In connection with this program, certain equipment with a net book value of $218,000 was abandoned for no proceeds in the twelve week period ended April 12, 1997. 4. Income Taxes A deferred tax asset and related valuation allowance was established at $4,405,000 and $3,503,000, respectively, at September 28, 1996 based upon estimates of future taxable income through fiscal 1997. The valuation allowance has been reduced by $1,133,000 during the first three quarters of fiscal 1997 to $2,370,000 at July 5, 1997 based upon estimates of future taxable income beyond fiscal 1997, year-to-date fiscal 1997 taxable income, and certain reductions in the gross deferred tax asset. 5. Line of Credit 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." Additionally, on June 9, 1997, another amendment increased the line of credit limit to $6,000,000. Interest on this revolving line of credit is variable. 6. Earnings Per Share In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128 (SFAS 128), "Earnings per Share." SFAS 128 establishes new standards for computing and presenting earnings per share and will be effective for the Company's interim and annual periods ending after December 15, 1997. Early adoption of the Statement is not permitted. SFAS 128 requires restatement of all previously reported earnings per share data that are presented. SFAS 128 replaces primary and fully diluted earnings per share with basic and diluted earnings per share, and results in no material difference in earnings per share information currently presented. 7. Segments of an Enterprise In June 1997, the Financial Accounting Standard Board issued Statement of Financial Accounting Standard No. 131, "Disclosures about Segments of an Enterprise and Related Information" (SFAS No. 131). SFAS No. 131 specifies new guidelines for determining a company's operating segments and related requirements for disclosure. The Company is in the process of evaluating the impact of the new standard on the presentation of the financial statements and the disclosures therein. The Statement will become effective in the Company"s fiscal year ending September 26, 1998. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations The following table sets forth, for the periods indicated, certain financial data as a percentage of total revenue: Twelve weeks ended Forty weeks ended ------------------- ----------------- July 5, July 6, July 5, July 6, 1997 1996 1997 1996 ------- ------- ------- ------- Net sales ............................ 100.0% 100.0% 100.0% 100.0% Cost of sales ........................ 62.7% 59.4% 60.4% 59.7% ------- ------- ------- ------- Gross profit ...................... 37.3% 40.6% 39.6% 40.3% Selling and operating expenses ....... 29.4% 29.1% 28.4% 27.3% General and administrative expenses .. 6.9% 8.5% 7.1% 8.1% Loss on abandonment of fixed assets .. - - 0.6% - ------- ------- ------- ------ Income from operations ............ 1.0% 3.0% 3.5% 4.9% Other income (expense) ............... 0.1% 0.0% 0.0% 0.0% Interest expense ..................... (1.1)% (1.0)% (1.0)% (1.1)% ------- ------- ------- ------ Income before taxes ............... 0.0% 2.0% 2.5% 3.8% Income tax benefit (expense) ......... 0.0% (0.3)% 1.2% (0.6)% ------- ------- -------- ------ Net income ........................ 0.0% 1.7% 3.7% 3.2% ======== ======= ======== ======
General Green Mountain Coffee, Inc., a leader in the specialty coffee industry, roasts over 25 high quality arabica coffees to produce over 70 varieties of coffee that it sells under the Green Mountain Coffee Roasters[R]and Green Mountain Coffee[R] brands. For the forty weeks ended July 5, 1997, Green Mountain Coffee, Inc. (the "Company" or "Green Mountain") derived approximately 82.4% 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. Green Mountain also operates twelve company-owned retail stores in the Northeast and metropolitan Chicago, and has a direct mail operation serving customers nationwide from its Waterbury, Vermont headquarters, which accounted for approximately 11.0% and 6.6% 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 the last Saturday of the 16th week, 28th week and 40th week, respectively, of the fiscal year. 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. Forward-looking statements which are based on various assumptions (some of which are beyond Green Mountain's control), may be identified by reference to a future period, or periods, or by the use of forward-looking terminology such as "may", "will", "believe", "expect", "estimate", "plan", "anticipate", "continue", or similar terms or variations on those terms, or the negative of those terms. 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, economic conditions, prevailing interest rates, competition, variances from budgeted sales mix and growth rate, the impact of the United Parcel Service strike on the Company's shipping costs and ability to ship a portion of its customers orders, consumers acceptance of the Company's new pre-bagged package design and sizes, weather and special or unusual events, as well as other risk factors described in the Company's Annual Report on Form 10-KSB for the year ended September 28, 1996 and other factors described from time to time in the Company's filings with the Securities and Exchange Commission. Twelve weeks ended July 5, 1997 versus twelve weeks ended July 6, 1996 Net sales increased by $2,200,000 or 25.5% from $8,617,000 for the twelve weeks ended July 6, 1996 (the "1996 period") to $10,817,000 for the twelve weeks ended July 5, 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 208,000 pounds, or 17.1%, from approximately 1,215,000 pounds in the 1996 period to approximately 1,423,000 pounds in the 1997 period. The net sales increase is attributable to the wholesale area in which net sales increased by $2,017,000 or 31.5% from $6,407,000 for the 1996 period to $8,424,000 for the 1997 period. This increase was primarily caused by the growth in the number of wholesale customer accounts. In response to the dramatic increase in the cost of green coffee since the beginning of 1997, the Company raised sales prices to wholesale customers by $0.45 per pound effective March 10, 1997, and by an additional $.65 per pound effective June 16, 1997. The cumulative impact on sales dollars is expected to be greater in the fourth quarter of fiscal 1997 than in the third quarter of fiscal 1997, as the second price increase was only in effect during the last three weeks of the third quarter. Wholesale sales are expected to continue to lead sales growth, in part as a consequence of the Company's significant investments in that portion of the business in the past year. For example, in the 1997 period, these expansion efforts have resulted in sales contracts with Staples Office Products Superstore and Midway Airlines, as well as a five-year contract with Mobil Oil to supply coffee to their planned 1,200 "On the Run" convenience stores. However, sales to customers who resell the Company's whole bean coffee by the pound, mostly in the supermarket category, appear to have softened in the 1997 period. Possible causes include the price-elasticity of demand and the conversion of one pound packaging to 12 oz. packaging in the second fiscal quarter of 1997. There can be no assurance that this slow-down is temporary or that the Company will be able to pass increases in the cost of green coffee to its customers. Gross profit increased by $542,000, or 15.5 % from $3,496,000 for the 1996 period to $4,038,000 for the 1997 period. As a percentage of net sales, gross profit decreased 3.3 percentage points from 40.6% for the 1996 period to 37.3% for the 1997 period. The decrease in gross profit as a percentage of sales was due primarily to the increase in green coffee costs. Selling and operating expenses increased by $681,000, or 27.2%, from $2,503,000 for the 1996 period to $3,184,000 for the 1997 period. Selling and operating expenses increased 0.3 percentage points as a percentage of sales from 29.1% for the 1996 period to 29.4% for the 1997 period. The increase as a percentage of sales was primarily due to increases in selling, sales support, and marketing expenses associated with the Company's increased expansion efforts which commenced in fiscal 1996. Approximately half of the incremental expenses are directly related to the hiring of a national supermarket sales manager, a national office coffee service and food service sales manager, and the addition of nine people to the Company's direct sales force in the Rhode Island, Connecticut, Arizona, New York and greater Philadelphia markets. In conjunction with these new hires, the Company also stepped up its marketing and sales support expenditures. General and administrative expenses increased by $14,000, or 1.9%, from $735,000 for the 1996 period to $749,000 for the 1997 period, representing a decrease of 1.6 percentage points as a percentage of sales from 8.5% for the 1996 period to 6.9% for the 1997 period. Income from operations decreased by $153,000, or 59.3%, from $258,000 for the 1996 period to $105,000 for the 1997 period. The decrease is primarily due to higher green coffee costs and sales and operating expenses. The income tax expenses recognized under SFAS 109 was $26,000 and $0 in the 1996 and 1997 periods, respectively. As a result of the decrease in income from operations, net income decreased by $148,000, or 99.3%, from $149,000, or $0.04 per share, for the 1996 period to $1,000, or $0.00 per share, in the 1997 period. Forty weeks ended July 5, 1997 versus forty weeks ended July 6, 1996 Net sales increased by $6,412,000, or 22.2%, from $28,880,000 for the forty weeks ended July 6, 1996 (the "1996 YTD period") to $35,292,000 for the forty weeks ended July 5, 1997 (the "1997 YTD period"). Coffee pounds sold, excluding coffee pounds sold as beverages through the Company's 12 company-owned retail stores, increased by approximately 900,000 pounds, or 23.0%, from approximately 3,921,000 pounds in the 1996 YTD period to approximately 4,821,000 pounds in the 1997 YTD period. The net sales increase is attributable to the wholesale area in which net sales increased by $6,517,000, or 28.9%, from $22,574,000 for the 1996 YTD period to $29,091,000 for the 1997 YTD period. The main factor for the wholesale net sales increase was the growth in the number of wholesale accounts. Gross profit increased by $2,336,000, or 20.0%, from $11,651,000 for the 1996 YTD period to $13,987,000 for the 1997 YTD period. As a percentage of net sales, gross profit decreased 0.7 percentage points from 40.3% for the 1996 YTD period to 39.6% for the 1997 YTD period. The decline is primarily due to the increased cost of green coffee. Selling and operating expenses increased by $2,142,000, or 27.2%, from $7,888,000 for the 1996 YTD period to $10,030,000 for the 1997 YTD period. Selling and operating expenses increased 1.1 percentage points as a percentage of sales from 27.3% for the 1996 YTD period to 28.4% for the 1997 YTD period. Approximately half of the increase is due to the doubling of the wholesale sales force since March 1996. The remainder is primarily due to increases in sales support and marketing expenditures. General and administrative expenses increased by $153,000 or 6.6% from $2,334,000 for the 1996 YTD period to $2,487,000 for the 1997 YTD period, representing a decrease of 1.0 percentage points as a percentage of sales from 8.1% for the 1996 YTD period to 7.1% for the 1997 YTD period. During the second quarter of fiscal 1997, Green Mountain commenced the expansion of its central production and distribution facility located in Waterbury in preparation for expected future growth and after the approval of a Federal Community Development Block Grant to the Town of Waterbury, Vermont which is expected to indirectly benefit the Company through reduced occupancy costs. The 45,000 square-foot addition to its central facility is expected to be completed by the current fiscal year end and will first be used for expanded warehousing and distribution space with roasting and packaging machinery being added in future fiscal years as needed. The increase in occupancy costs related to the expansion is not expected to have a material impact on the Company in fiscal 1997. Due to the demolition of an old, adjacent office building occupied by the Company, and the immediate redesign of the production flow to be used in the expanded facility, the Company recorded a loss on abandonment of equipment of $218,000 during the second quarter of fiscal 1997. Income from operations decreased by $177,000 or 12.4% from $1,429,000 for the 1996 YTD period to $1,252,000 for the 1997 YTD period. However, had the Company not recorded the $218,000 loss on abandonment of equipment discussed above, income from operations would have increased by $41,000 or 2.9% from $1,429,000 for the 1996 YTD period to $1,470,000 for the 1997 YTD period. The income tax expense recognized under SFAS 109 was $163,000 in the 1996 YTD period compared to an income tax benefit of $407,000 in the 1997 YTD period. The Company has been profitable for eight consecutive fiscal quarters and, based on the weight of available evidence, as prescribed in SFAS 109, of the amount of deferred tax assets which more likely than not will be realized, significantly reduced its deferred tax assets valuation allowance during the second quarter of fiscal 1997. Net income increased by $376,000, or 40.6%, from $926,000, or $0.27 per share for the 1996 YTD period to $1,302,000, or $0.38 per share, for the 1997 YTD period. The increase was primarily due to the effect of the reduction in the deferred tax asset valuation allowance. Liquidity and Capital Resources Working capital increased $1,377,000 to $4,318,000 at July 5, 1997 from $2,941,000 at September 28, 1996. The increase is primarily the result of higher inventories, due to increases in the price of green coffee and due to inventories built up for shipments to new customers in the fourth quarter of fiscal 1997. Cash used for capital expenditures aggregated $3,999,000 during the 1997 YTD period, and included $670,000 for equipment loaned to wholesale customers, $627,000 for production and distribution equipment and $2,130,000 for computer hardware and software. During the 1996 YTD period, Green Mountain had capital expenditures of $1,730,000 (net of $180,000 financed directly by a capital lease and long-term debt), including $612,000 for equipment on loan to wholesale customers, $438,000 for production equipment, and $376,000 for computer hardware and software. Cash used to fund the capital expenditures in the 1997 YTD period was obtained primarily from the $1,613,000 of net cash provided by operating activities and the increase in the revolving line of credit of $2,928,000. The Company currently plans to make capital expenditures in fiscal 1997 of approximately $5,500,000. Overall capital expenditures for fiscal 1998 are presently expected to be below fiscal 1997's expected level. However, capital expenditure needs are constantly reviewed and actual amounts expended may differ from these estimates. Green Mountain is presently implementing an enterprise information system which it expects to use to facilitate growth and improve operations and customer service. This new enterprise information system also is expected to address all "Year 2000" issues in a complete and timely manner. Management believes that the substantial investment in fiscal 1997 in computer hardware and software and the expansion of its central production and distribution center for fiscal 1998 occupancy is necessary for the Company to efficiently and effectively grow. However, there can be no assurance that future sales increases will be adequate to cover the additional depreciation, software maintenance, and facility expenses, and earnings in future periods may be negatively impacted. 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 to February 28, 1999. On June 9, 1997, Green Mountain again amended its credit facility with Fleet Bank - NH to increase its revolving line of credit limit by another $1,000,000 to $6,000,000. The amount available under the revolving line of credit is now fully available as the previous working capital borrowing base formula was eliminated. Therefore, the amount available under the revolving line of credit at July 5, 1997 was $2,564,000. The interest paid on this line of credit, as well as other Fleet Bank borrowings, varies with the prime and LIBOR interest rates, the fluctuations of which may impact future earnings. Management believes that cash flow from operations, existing cash and available borrowings under its credit facility and other sources will provide sufficient liquidity to fund currently planned growth, pay all liabilities incurred in the normal course of business, fund capital expenditures and service debt requirements for the next twelve months. Twenty-year lows in reported domestic coffee supplies combined with forecasts of smaller crops in Central America, labor actions in certain countries and the fear of frost in Brazil, among other factors, have caused a dramatic increase since December 1996 in the "c" price of coffee (the price per pound quoted by the Coffee, Sugar and Cocoa Exchange). 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 and into fiscal 1998. There can be no assurance that the Company will be successful in passing these fluctuations on to the customers without losses in sales volume or gross margin, as may have occurred with customers who resell the Company's whole bean coffee by the pound in the 1997 period. 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. However, a worldwide supply shortage of the high-quality arabica coffees the Company purchases could have an adverse impact on the Company. Deferred Income Taxes The Company had net deferred tax assets of $1,367,000 at July 5, 1997. These assets are reported net of a deferred tax asset valuation allowance at that date of $2,370,000 (related primarily to a Vermont investment tax credit). The Company had income before taxes of $895,000 and $1,484,000 in the 1997 YTD period and for all of fiscal 1996, respectively, and has been profitable in its last eight 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. 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. Approximately 32% of the Company's total net sales were shipped via United Parcel Service ("UPS"), Federal Express ("FedEx") and the United States Post Office ("USPS") prior to the UPS strike in August 1997. The Company has been successful to the date of this filing in shifting its shipments to FedEx and USPS. However, there can be no assurance that it will be able to do so in the future should the UPS strike continue for a prolonged period. Furthermore, the impact of such a change on shipping costs, customer service levels, and ultimately sales, is uncertain. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: 3.1 Certificate of Incorporation1 3.2 Bylaws1 10.2(ee) Ninth Amendment to Commercial Loan Agreement, Fleet Bank, dated June 9, 1997 among Green Mountain Coffee Roasters, Inc. as borrower, and Fleet Bank - NH, as lender 10.2(ff) Replacement Revolving Line of Credit Promissory Note, dated June 9, 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 forty weeks ended July 5, 1997 ______________________ 1Incorporated 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: 8/19/97 By: /s/ Robert P. Stiller -------- -------------------------------------------- Robert P. Stiller, President and Chief Executive Officer Date: 8/19/97 By: /s/ Robert D. Britt -------- -------------------------------------------- Robert D. Britt, Chief Financial Officer, Treasurer and Secretary Excludes Exhibits Filed With This Form 10-Q To obtain copies of exhibits, please contact: Green Mountain Coffee, Inc. Investor Relations Department 33 Coffee Lane Waterbury, VT 05676 (802) 244-5621 EX-10.2(EE) 2 NINTH AMENDMENT TO COMMERCIAL LOAN AGREEMENT NINTH AMENDMENT TO FLEET BANK - NH COMMERCIAL LOAN AGREEMENT AND LOAN DOCUMENTS THIS NINTH AMENDMENT TO COMMERCIAL LOAN AGREEMENT AND LOAN DOCUMENTS (the "Amendment") is made effective June ___, 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, as amended by Eighth Amendment to Fleet Bank - NH Commercial Loan Agreement and Loan Documents dated February 19, 1997 (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 Five Million Dollars ($5,000,000.00) (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 Five Million Dollars ($5,000,000.00) to Six Million Dollars ($6,000,000.00), 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 and Elimination of Borrowing Base. The maximum principal amount available 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 Five Million Dollars ($5,000,000.00) to Six Million Dollars ($6,000,000.00), subject to the terms and conditions of the Loan Agreement and Revolving Line of Credit Loan promissory note. The provisions limiting availability under the Revolving Line of Credit Loan under clause (2) of Section I. A. of the Loan Agreement shall be and hereby are deleted. 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 under the Revolving Line of Credit Loan. B. Change of Interest Rate Provisions. Section I. D. of the Loan Agreement shall be and hereby is amended by deleting the same and inserting in place thereof the following new Section I. D.: D. Interest Rate. (i) Except as provided below, the principal balance outstanding from time to time under the Revolving Line of Credit Loan, net of amounts subject to a LIBOR based rate of interest as provided below, shall bear interest at a variable annual rate equal to the BANK's Base Rate plus the Applicable Base Rate Margin (as hereinafter defined) per annum. 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 receives notice thereof. 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. Each time the Base Rate changes the interest rate under the Revolving Line of Credit Loan shall change contemporaneously with such change in the Base Rate. Interest shall be calculated and charged daily on the basis of actual days elapsed over a three hundred sixty (360) day banking year. (ii) BORROWER may elect from time to time to have amounts outstanding under the Revolving Line of Credit Loan bear interest for one or more periods of thirty (30) days to up to three hundred sixty (360) days each (each such period to be in increments of thirty (30) days) but in no event beyond the next Review Date) at a rate (the "Revolving LIBOR-based Rate") equal to the LIBOR rate (as hereinafter defined) plus the Applicable LIBOR Margin (as hereinafter defined) per annum. BORROWER may only elect the Revolving LIBOR-based Rate with respect to an outstanding principal amount under the Revolving Line of Credit Loan of not less than Five Hundred Thousand Dollars ($500,000.00). BORROWER shall notify BANK in writing at least two (2) banking Days (as hereinafter defined) in advance of the date upon which the BORROWER desires an election to the Revolving LIBOR-based Rate to be effective. BORROWER's notice to BANK as aforesaid shall specify the outstanding amount under the Revolving Line of Credit Loan that BORROWER desires to bear interest at the Revolving LIBOR-based Rate, the period selected (i.e., 30, 60, 90, 120, 150, 180, 210, 240, 270, 300, 330, or 360 days), and the date such election is to be effective (which must be a Banking Day). Any amounts outstanding under the Revolving Line of Credit Loan as to which BORROWER has elected the Revolving LIBOR-based Rate shall hereinafter be referred to as a "LIBOR Advance". All amounts outstanding under the Revolving Line of Credit Loan which are not subject to the Revolving LIBOR-based Rate shall bear interest at a variable annual rate equal to the BANK's Base Rate plus Applicable Base Rate Margin as provided above. The term "LIBOR rate" shall mean the rate as determined by the BANK on the basis of the offered rates for deposits in U.S. dollars for the period selected by the BORROWER which appear on the Telerate page 3750 or Reuter's LIBO page as of 11:00 a.m. London time on the date that is two (2) Banking Days preceding the effective date of BORROWER's election of the Revolving LIBOR-based Rate in respect of a LIBOR Advance. If such rate does not appear on the Telerate page 3750 or Reuter's LIBO page, the rate for that date will be determined on the basis of the offered rates for deposits in U.S. dollars which are offered by four major banks in the London interbank market at approximately 11:00 a.m. London time on the date that is two (2) Banking Days preceding the effective date of BORROWER's election of the Revolving LIBOR-based Rate in respect of a LIBOR Advance. The principal London office of each of the four major BANKS in the London interbank market will be requested to provide a quotation of its U.S. dollar deposit offered rate. If at least two such quotations are provided, the rate for that date will be the arithmetic mean of all such quotations. If fewer than two quotations are provided as requested, the rate for that date will be determined on the basis of the rates quoted for loans in U.S. dollars to leading European banks for the period selected offered by major banks in New York City at approximately 11:00 a.m., New York City time, on the date that is two (2) Banking Days preceding the effective date of BORROWER's election of the Revolving LIBOR-based Rate in respect of a LIBOR Advance. In the event that the BANK is unable to obtain any such quotation as provided above, it will be deemed that the LIBOR rate cannot be determined and that the BORROWER's election for the applicable LIBOR Advance shall be void. In the event that the Board of Governors of the Federal Reserve System shall impose a Reserve Percentage on the BANK with respect to LIBOR deposits of the BANK, then for any period during which such Reserve Percentage shall apply, the LIBOR rate shall be equal to the amount determined above divided by an amount equal to 1 minus the Reserve Percentage actually maintained by the BANK. For purposes hereof, "Reserve Percentage" means the rate (expressed as a decimal) at which the BANK is required to maintain reserves under Regulation D of the Board of Governors of the Federal Reserve System against Eurodollar liabilities outstanding. Notwithstanding the foregoing, if as a result of any change in any foreign or United States law or regulation (or change in the interpretation thereof) it is determined by BANK that it is unlawful to maintain a LIBOR Advance, or if any central bank or governmental authority (foreign or domestic) shall assert that it is unlawful to maintain a LIBOR Advance, then such LIBOR Advance shall terminate and the BORROWER shall have no further right hereunder to elect the Revolving LIBOR-based Rate. If for any reason a LIBOR Advance is terminated or prepaid prior to the end of the applicable period for which the Revolving Libor-based Rate is to be in effect, the BORROWER shall, upon demand by BANK, pay to BANK any amounts required to compensate BANK for any losses, costs, or expenses which it may reasonably incur as a result of such termination or prepayment, including, without limitation, any losses, costs, or expenses incurred by reason of the liquidation or redeployment of deposits or other funds acquired by the BANK to fund or maintain such LIBOR Advance. For purposes hereof, a "Banking Day" means a day upon which BANKS are open for business to the general public in Manchester, New Hampshire, and upon which dealings are carried on and banks are open for business in the London interbank market. (iii) For purposes hereof, the terms "Applicable Base Rate Margin" and "Applicable LIBOR Margin" shall mean the margins determined by BANK on a quarterly basis as provided below. The margins shall be determined by reference to the ratio of BORROWER's Funded Debt to Cash Flow (each as described and defined in Schedule B attached hereto) as reported on BORROWER's quarterly financial covenant compliance certificate (as described on Schedule B attached hereto) delivered to the BANK and as evidenced by BORROWER's Financial Statements (as defined and described on Schedule B attached hereto) delivered to the BANK. The Applicable Base Rate Margin and Applicable LIBOR Margin are as follows: If ratio of Funded Debt Then the Applicable Then the Applicable to Cash Flow is: Base Rate Margin is: LIBOR Margin is: Greater or equal to 1.8:1 0.25% 2.75% Greater or equal to 1.5:1 but less than 1.8:1 0% 2.50% Greater or equal to 1.25:1 but less than 1.5:1 0% 2.25% Greater or equal to 1.0:1 but less than 1.25:1 0% 2.00% Less than 1.0:1 0% 1.80%
Within forty-five (45) days of the end of each of its fiscal quarters, BORROWER shall (a) deliver to BANK its quarterly Financial Statements (other than with respect to the fourth fiscal quarter for which BORROWER shall deliver management prepared financial statements for purposes hereof), (b) deliver to BANK the quarterly financial covenant compliance certificate of BORROWER, and (c) certify to BANK the then ratio of BORROWER's Funded Debt to Cash Flow and the BORROWER's determination of the Applicable Base Rate Margin and Applicable LIBOR Margin therefrom on such form as the BANK may from time to time specify. BORROWER shall also provide to the BANK such other reasonable information as BANK may request of BORROWER to verify its determination of the Applicable Base Rate Margin and Applicable LIBOR Margin. As of the tenth (10th) Banking Day after the BORROWER's certification to the BANK of BORROWER's delivery of all of the above-referenced items to the BANK, the BANK shall notify BORROWER of its determination of the Applicable Base Rate Margin and Applicable LIBOR Margin. The Applicable Base Rate Margin and Applicable LIBOR Margin as so determined by the BANK shall be effective as to all outstanding advances under the Revolving Line of Credit Loan as of the tenth (10th) Banking Day after the date of the BORROWER's delivery to the BANK of the above-referenced items through the next date upon which the determination of a new Applicable Margin becomes effective in accordance with the above provisions." C. Amendment of Fees. The Annual Revolving Line of Credit Facility Fee set forth in Section I of Schedule B of the Loan Agreement shall be and hereby is replaced with the following: "Annual Revolving Line of Credit Facility Fee: $3,500.00 per annum, payable in quarterly installments of $875.00 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 on a consolidated basis shall have a ratio of Funded Debt (as hereinafter defined) to Cash Flow (as hereinafter defined) as of the end of each fiscal quarter which does not exceed 2.0:1. "Funded Debt" means all indebtedness of the BORROWER and the Subsidiary other than ordinary trade accounts payable and accrued liabilities, all as determined at the end of each fiscal quarter from BORROWER's and the Subsidiary' financial statements delivered to the BANK in accordance with the covenants of the BORROWER herein above (the "Financial Statements"). "Cash Flow" means the BORROWER's and Subsidiary's earnings for the relevant period, before reduction for interest, depreciation, and amortization expense, and after reduction or increase for non-cash items, all as determined in accordance with generally accepted accounting principles from the Financial Statements. The relevant periods for purposes of the determination of Cash Flow as of the end of each of BORROWER's fiscal quarters shall be the prior four (4) fiscal quarters (including the quarter then ending). B. The BORROWER and the Subsidiary on a consolidated basis shall have a minimum "Debt Service Coverage" (as hereinafter defined) of 2.4:1 as at the end of each fiscal quarter. For purposes hereof, "Debt Service Coverage" shall mean the ratio of Cash Flow for the relevant period to the aggregate amount of interest and current maturities on Funded Debt payable by BORROWER and the Subsidiary for such period, all as determined in accordance with generally accepted accounting principles from the Financial Statements. The relevant periods for purposes of the determination of Debt Service Coverage as of the end of each of BORROWER's fiscal quarters shall be the prior four (4) fiscal quarters (including the quarter then ending). C. BORROWER and the Subsidiary on a consolidated basis shall have a ratio of Adjusted Senior Debt (as hereinafter defined) to Tangible Capital Base (as hereinafter defined) of not greater than 1.4:1 as of end of each fiscal quarter. "Adjusted Senior Debt" means Senior Debt (as hereinafter defined) less Excess Cash (as hereinafter defined), all as determined as of the end of the fiscal quarter from the Financial Statements. "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. "Excess Cash" means the sum of BORROWER's and the Subsidiary's cash balances in investment and depository accounts which exceed Four Hundred Thousand Dollars ($400,000.00). "Tangible Capital Base" means total shareholders' equity, plus Permitted Subordinated Debt, plus deferred tax liabilities, and less intangible assets (unamortized product development costs, goodwill, and unamortized debt issuance costs), all as determined from the Financial Statements. Deferred tax assets are considered tangible assets for purposes of this calculation. D. BORROWER and the Subsidiary shall have on a consolidated basis Net Profits (as hereinafter defined) as of the end of each fiscal quarter for the relevant period of at least One Millions Dollars ($1,000,000.00). "Net Profits" means net profits as determined in accordance with generally accepted accounting principles from the Financial Statements. The relevant period for purposes of the determination of Net Profits as of the end of each fiscal quarter shall be the prior four (4) fiscal quarters (including the quarter then ending). E. BORROWER shall not make expenditures for capital assets or capital improvements (as determined in accordance with generally accepted accounting principals) in its 1997 fiscal year in excess of Five Million Seven Hundred Thousand Dollars ($5,700,000.00) and in any fiscal year thereafter 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 firs above written. FLEET BANK-NH /s/ Catherine Consentino By: /s/ Andre P. Pelletier - ------------------------ ------------------------------ Witness Andre P. Pelletier, Vice President GREEN MOUNTAIN COFFEE ROASTERS, INC. /s/ Kimberly S. Cameron By: /s/ Robert D. Britt - ------------------------ ----------------------------- Witness Robert D. Britt, Chief Financial Officer GREEN MOUNTAIN COFFEE ROASTERS FRANCHISING CORPORATION /s/ Kimberly S. Cameron By: /s/ Robert D. Britt - ----------------------- --------------------------------- Robert D. Britt, Chief Financial Officer STATE OF New Hampshire -------------- COUNTY OF Hillsborough -------------- On this, the 16 day of June, 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 9th day of June, 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 9th day of June, 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 NINTH AMENDMENT TO FLEET BANK - NH COMMERCIAL LOAN AGREEMENT AND LOAN DOCUMENTS Schedule I None NINTH AMENDMENT TO FLEET BANK - NH COMMERCIAL LOAN AGREEMENT AND LOAN DOCUMENTS Schedule II None NINTH AMENDMENT TO FLEET BANK - NH COMMERCIAL LOAN AGREEMENT AND LOAN DOCUMENTS Schedule III None EX-10.2(FF) 3 REPL. REVOLVING LINE OF CREDIT PROMISSORY NOTE REPLACEMENT REVOLVING LINE OF CREDIT PROMISSORY NOTE $6,000,000.00 Manchester, NH June 9, 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 an address of Mail Stop NHNA E02A, 1155 Elm Street, Manchester, New Hampshire 03101 (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 SIX MILLION DOLLARS ($6,000,000.00), 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 dated February 19, 1997, and by Ninth 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, plus the Applicable Base Rate Margin as determined under the Loan Agreement from time to time. 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. 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 occurrence 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 Replacement Revolving Line of Credit Promissory Note of the undersigned payable to the order of the Bank in the principal amount of Five Million Dollars ($5,000,000.00) dated February 19, 1997 (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 9th day of June, 1997. GREEN MOUNTAIN COFFEE ROASTERS, INC. /s/ Kimberley S. Cameron By: /s/ Robert D. Britt - ------------------------ ------------------- Witness Robert D. Britt, Chief Financial Officer STATE OF Vermont -------------- COUNTY OF Washington --------------- On this the 9th day of June, 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 GREEN MOUNTAIN COFFEE, INC. Exhibit 11 Computation of Net Income Per Share (unaudited) Twelve weeks ended Forty weeks ended July 5, July 6, July 5, July 6, 1997 1996 1997 1996 --------- --------- --------- --------- Net income ..................... $ 1,000 $ 149,000 $1,302,000 $ 926,000 ========= ========= ========== ========= Primary weighted common shares outstanding: Common stock ................ 3,424,282 3,399,795 3,419,356 3,399,795 Dilutive effect of outstanding common stock options ........ 32,666 27,887 29,815 27,797 --------- --------- --------- --------- Weighted average common and common equivalent shares .... 3,456,948 3,427,682 3,449,171 3,427,592 ========= ========= ========= ========= Net income per share .......... $ 0.00 $ 0.04 $ 0.38 $ 0.27 ========= ========= ========= ========= 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 7/5/97 and the Statement of Operations for the forty weeks ended 7/5/97 and is qualified in its entirety by reference to such financial statements. 1,000 OTHER SEP-27-1997 SEP-29-1996 JUL-5-1997 360 0 3,499 90 4,641 9,923 18,866 8,315 21,447 5,605 5,604 0 0 344 9,894 21,447 10,817 10,817 6,779 6,779 3,184 0 119 1 0 1 0 0 0 1 0.00 0.00
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