-----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, AJ8s9gG+w+C/c0xQ3hoX7xwY/NMoo3D+Ynq1lMDZap/K8eRa7d2iQsJXmZD8pSL4 t1xt7aHSdb7+IvjJ5tYdoA== 0000909954-99-000011.txt : 19990810 0000909954-99-000011.hdr.sgml : 19990810 ACCESSION NUMBER: 0000909954-99-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19990703 FILED AS OF DATE: 19990809 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: SEC FILE NUMBER: 001-12340 FILM NUMBER: 99681451 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 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 3, 1999 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 July 26, 1999, 3,519,635 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) July 3, September 26, 1999 1998 -------- ------------- (unaudited) Assets Current assets: Cash and cash equivalents.............................................. $ 958 $ 777 Receivables, less allowances of $180 at July 3, 1999 and $378 at September 26, 1998........................................ 5,450 4,789 Inventories............................................................ 5,342 5,636 Other current assets................................................... 536 489 Loans to officers...................................................... 523 185 Deferred income taxes, net............................................. 695 880 ---------- ------------- Total current assets............................................. 13,504 12,756 Fixed assets, net......................................................... 10,264 10,800 Other long-term assets.................................................... 254 270 Deferred income taxes, net................................................ 409 737 ---------- ------------- Total assets.............................................................. $ 24,431 $ 24,563 ========== ============= Liabilities and Stockholders' Equity Current liabilities: Current portion of long-term debt...................................... $ 233 $ 249 Current portion of obligation under capital lease...................... - 12 Accounts payable....................................................... 3,547 3,131 Accrued payroll........................................................ 878 827 Accrued expenses....................................................... 612 507 Accrued losses and other costs of discontinued operations, net......... 185 178 ---------- ------------- Total current liabilities......................................... 5,455 4,904 ---------- ------------- Long-term debt............................................................ 3,858 5,041 ---------- ------------- Long-term line of credit.................................................. 4,234 5,150 ---------- ------------- Commitments and contingencies Stockholders' equity: Common stock, $0.10 par value: Authorized - 10,000,000 shares; issued- 3,594,753 shares and 3,545,841 shares at July 3, 1999 and September 26, 1998, respectively... 359 355 Additional paid-in capital.............................................. 13,287 13,018 Accumulated deficit..................................................... (2,268) (3,868) Treasury shares, at cost: 80,118 shares and 7,350 shares at July 3, 1999 and September 26, 1998, respectively...................................................... (494) (37) ---------- ------------- Total stockholders' equity.............................................. 10,884 9,468 ---------- ------------- Total liabilities and stockholders' equity....................... $ 24,431 $ 24,563 ========== ============= 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 per share data) Twelve weeks ended ---------------------------- July 3, 1999 July 4, 1998 ------------ ------------ (unaudited) Net sales...................................................... $ 14,973 $ 12,675 Cost of sales.................................................. 8,821 8,090 ------------ ----------- Gross profit............................................... 6,152 4,585 Selling and operating expenses................................. 3,969 3,209 General and administrative expenses............................ 1,184 1,017 ------------ ----------- Operating income........................................... 999 359 Other income (expenses)........................................ (5) 13 Interest expense............................................... (164) (241) ------------ ----------- Income from continuing operations before income taxes...... 830 131 Income tax expense............................................. (315) (52) ------------ ----------- Income from continuing operations.......................... 515 79 Discontinued operations: Loss from discontinued retail stores operations, net of income tax benefit of $37 for 1998........................ - (56) Loss on disposal of retail stores operations, including a provision of $342 for operating losses during the phase-out period, net of income tax benefit of $834....... - (1,259) ------------ ----------- Net income (loss)......................................... $ 515 $ (1,236) ============ =========== Basic income (loss) per share: Weighted average shares outstanding....................... 3,494,399 3,530,818 Income from continuing operations......................... $ 0.15 $ 0.02 Loss from discontinued operations......................... - $ (0.37) ------------ ----------- Net income (loss)......................................... $ 0.15 $ (0.35) ============ =========== Diluted income (loss) per share: Weighted average shares outstanding....................... 3,552,574 3,534,228 Income from continuing operations......................... $ 0.14 $ 0.02 Loss from discontinued operations......................... - $ (0.37) ------------ ----------- Net income (loss)......................................... $ 0.14 $ (0.35) ============ =========== 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 per share data) Forty weeks ended ---------------------------- July 3, 1999 July 4, 1998 ------------ ------------ (unaudited) Net sales...................................................... $ 49,493 $ 42,479 Cost of sales.................................................. 30,253 28,255 ------------ ----------- Gross profit............................................... 19,240 14,224 Selling and operating expenses................................. 12,648 10,404 General and administrative expenses............................ 3,686 3,228 ------------ ----------- Operating income........................................... 2,906 592 Other income................................................... 6 53 Interest expense............................................... (639) (647) ------------ ----------- Income (loss) from continuing operations before income taxes...................................................... 2,273 (2) Income tax (expense) benefit................................... (859) 39 ------------ ----------- Income from continuing operations 1,414 37 Discontinued operations: Loss from discontinued retail stores operations, net of income tax benefit of $196 for 1998........................ - (297) Income (loss) on disposal of retail stores operations (including a provision of $342 for operating losses during the phase-out period), net of income tax expense of $114 and income tax benefit of $834 for 1999 and 1998, respectively............................................... 186 (1,259) ------------ ----------- Net income (loss).......................................... $ 1,600 $ (1,519) ============ =========== Basic income (loss) per share: Weighted average shares outstanding........................ 3,499,299 3,530,818 Income from continuing operations.......................... $ 0.40 $ 0.01 Income (loss) from discontinued operations................. $ 0.06 $ (0.44) ------------ ----------- Net income (loss).......................................... $ 0.46 $ (0.43) ============ =========== Diluted income (loss) per share: Weighted average shares outstanding........................ 3,532,541 3,541,966 Income from continuing operations.......................... $ 0.40 $ 0.01 Income (loss) from discontinued operations................. $ 0.05 $ (0.44) ============ =========== Net income (loss).......................................... $ 0.45 $ (0.43) ============ =========== 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 3, 1999 July 4, 1998 ------------ ------------ (unaudited) Cash flows from operating activities: Net income (loss)........................................... $ 1,600 $ (1,519) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Loss (income) from discontinued operations............. (186) 1,556 Depreciation and amortization.......................... 2,261 1,992 Loss (gain) on disposal of fixed assets................ 16 (42) Provision for doubtful accounts........................ 207 273 Stock options compensation expense..................... 3 - Deferred income taxes.................................. 513 (45) Changes in assets and liabilities: Receivables...................................... (868) (1,446) Inventories...................................... 294 (852) Other current assets............................. (411) (83) Other long-term assets, net...................... (34) 6 Accounts payable................................. 416 (987) Accrued payroll.................................. 51 100 Accrued expenses................................. 105 135 ------------ ----------- Net cash provided by (used for) continuing operations...................................... 3,967 (912) Net cash provided by (used for) discontinued operations...................................... 111 (440) ------------ ----------- Net cash provided by (used for) operating activities...................................... 4,078 (1,352) ------------ ----------- Cash flows from investing activities: Capital expenditures for fixed assets....................... (1,801) (2,902) Capital expenditures for discontinued operations............ - (208) Proceeds from disposals of fixed assets..................... 60 119 Proceeds from disposal of discontinued operations........... 158 20 ------------ ----------- Net cash used for investing activities........... (1,583) (2,971) ------------ ----------- Cash flows from financing activities: Purchase of treasury shares................................. (457) - Proceeds from issuance of common stock...................... 270 - Proceeds from issuance of long-term debt.................... - 4,500 Repayment of long-term debt................................. (1,199) (2,067) Principal payments under capital lease obligation........... (12) (97) Net change in revolving line of credit....................... (916) 1,515 ------------ ----------- Net cash provided by (used for) financing activities....................................... (2,314) 3,851 ------------ ----------- Net increase (decrease) in cash and cash equivalents........... 181 (472) Cash and cash equivalents at beginning of period............... 777 831 ------------ ----------- Cash and cash equivalents at end of period..................... $ 958 $ 359 ============ =========== 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 twelve week period ended July 3, 1999 are not necessarily indicative of the results that may be expected for the fiscal year ending September 25, 1999. For further information, refer to the consolidated financial statements and the footnotes included in the annual report on Form 10-K for Green Mountain Coffee, Inc. for the year ended September 26, 1998. 2. Inventories Inventories consist of the following: July 3, September 26, 1999 1998 ------------- ------------- Raw materials and supplies.......... $ 3,254,000 $ 2,832,000 Finished goods...................... 2,088,000 2,804,000 ------------- ------------- $ 5,342,000 $ 5,636,000 =============== ============= 3. Discontinued Company-Owned Retail Store Operations On May 29, 1998, the Company announced that it had adopted a plan to discontinue its company-owned retail store operations. The Company had closed all of its retail stores by the end of the second fiscal quarter of 1999. Accordingly, the retail stores are reported as discontinued operations for all periods presented. Under generally accepted accounting principles, the operating results of such operations are being segregated from the continuing operations and reported separately on the statement of operations. The estimated loss on disposal of the retail store operations of $1,259,000 (net of a tax benefit of $834,000) was included in the third quarter of fiscal 1998 results. The pre-tax loss on disposal of $2,093,000 consisted of an estimated loss on disposal of the business of $1,692,000 and a provision of $401,000 for anticipated losses from May 29, 1998 (the measurement date) until disposal. The loss on disposal includes provisions for estimated lease termination costs, write-off of leasehold improvements and other fixed assets, severance and employee benefits. During the second quarter of fiscal 1999, the Company revised its estimated pre-tax loss on disposal and reversed $300,000 ($186,000 net of tax) of the original estimate, primarily due to larger than expected proceeds from the sale of fixed assets and lower lease termination costs. Net sales from the retail store operations were $207,000 and $3,033,000 for the forty weeks ended July 3, 1999 and July 4, 1998, respectively. The loss from operations of the discontinued operations from May 29, 1998 through July 3, 1999 approximated the provision for anticipated losses recorded in fiscal 1998. Net proceeds from the sale of retail assets totaled $72,000 in the second quarter of fiscal 1999, $86,000 in the first quarter of fiscal 1999, and $118,000 in fiscal 1998. The assets and liabilities of the discontinued retail operations at July 3, 1999 are reflected as a net current liability in the accompanying consolidated balance sheet. The net liabilities of the discontinued operations in the July 3, 1999 accompanying consolidated balance sheet are summarized as follows: Current assets, net..................................... $ 25,000 Fixed assets, net....................................... 46,000 Deferred tax assets, net................................ 140,000 Estimated accrued losses and other costs on disposal of discontinued operations............................. (396,000) ---------- Net accrued losses and other costs of discontinued operations, net........................................ $ (185,000) ============ 4. Earnings per share The following table illustrates the reconciliation of the numerator and denominator of basic and diluted income per share from continuing operations computations as required by SFAS No. 128 (dollars in thousands, except share and per share data): Twelve weeks ended Forty weeks ended ----------------------------- ----------------------------- July 3, 1999 July 4, 1998 July 3, 1999 July 4, 1998 ------------ ------------ ------------ ------------ Numerator - basic and diluted earnings per share : Net income from continuing operations........... $ 515 $ 79 $ 1,414 $ 37 ============ ============= ============ ============ Denominator: Basic earnings per share - weighted average shares outstanding.............................. 3,494,399 3,530,818 3,499,299 3,530,818 Effect of dilutive securities - stock options... 58,175 3,410 33,242 11,148 ------------ ------------- ------------ ------------ Diluted earnings per share - weighted average shares outstanding.............................. 3,552,574 3,534,228 3,532,541 3,541,966 ============ ============== ============ ============ Basic earnings per share $ 0.15 $ 0.02 $ 0.40 $ 0.01 Diluted earnings per share $ 0.14 $ 0.02 $ 0.40 $ 0.01
For the twelve weeks ended July 3, 1999 and July 4, 1998, anti-dilutive shares of 262,326 and 400,912, and for the forty weeks ended July 3, 1999 and July 4, 1998, anti-dilutive shares of 299,519 and 359,840, respectively, have been excluded from the calculation of EPS. 5. Derivative instruments and hedging activities In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"). This pronouncement will require the Company to recognize derivatives on its balance sheet at fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. The Company expects that this new standard will not have a significant effect on its results of operations. SFAS 133 is effective for fiscal years beginning after June 15, 2000, which is fiscal year 2001 for the Company. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations OVERVIEW For the forty weeks ended July 3, 1999, Green Mountain Coffee, Inc. (the "Company" or "Green Mountain") derived approximately 94.0% 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 office coffee services. The Company's direct mail operation sells coffee to coffee club, catalog, e-commerce, small business and corporate gifting customers and accounted for approximately 6.0% of net sales during the same period. Cost of sales consists of the cost of raw materials including coffee beans, flavorings and packaging materials, a portion of the Company's rental expense, the salaries and related expenses of production and distribution personnel, depreciation on production equipment and freight and delivery expenses. Selling and operating expenses consist of expenses that directly support the sales of the Company's wholesale or direct mail channels, including media and advertising expenses, a portion of the Company's rental expense, and the salaries and related expenses of employees directly supporting sales. General and administrative expenses consist of expenses incurred for corporate support and administration, including a portion of the Company's rental expense and the salaries and related expenses of personnel not elsewhere categorized. The Company's fiscal year ends on the last Saturday in September. The Company's fiscal year normally consists of 13 four-week periods with the first, second and third "quarters" ending 16 weeks, 28 weeks and 40 weeks, respectively, into the fiscal year. COFFEE PRICES, AVAILABILITY AND GENERAL RISK FACTORS Green coffee commodity prices are subject to substantial price fluctuations, generally caused by multiple factors including weather, political and economic conditions in certain coffee-producing countries and other supply-related concerns. Since May 1997, when it reached historical highs, the "C" price of coffee (the price per pound quoted by the Coffee, Sugar and Cocoa Exchange) has generally been declining. In response to this decline, the Company decreased its selling prices in the first quarter of fiscal 1998, in the fourth quarter of fiscal 1998 and in the first quarter of fiscal 1999. Green coffee costs generally continued to decline in the three quarters of fiscal 1999. The Company believes that the "C" price of coffee will remain highly volatile in future periods. In addition to the "C" price, coffee of the quality sought by Green Mountain also tends to trade on a negotiated basis at a substantial premium or "differential" above the "C" price. These differentials are also subject to significant variations. There can be no assurance that the Company will be successful in passing any upward green coffee cost fluctuations on to the customers without losses in sales volume or gross profit. Similarly, rapid sharp decreases in the cost of green coffee could also force the Company to lower sales prices before realizing cost reductions in its green coffee inventory. Because Green Mountain roasts over 25 different types of green coffee beans to produce its more than 60 varieties of coffee, if one type of green coffee bean were to become unavailable or prohibitively expensive, management believes Green Mountain could substitute another type of coffee of equal or better quality, meeting a similar taste profile, in a blend or temporarily remove that particular coffee from its product line. However, frequent substitutions could lead to cost increases and fluctuations in gross profit margin. Furthermore, a worldwide supply shortage of the high-quality arabica coffees the Company purchases could have an adverse impact on the Company. The Company enters into fixed coffee purchase commitments in an attempt to secure an adequate supply of quality coffees. To further reduce its exposure to rising coffee costs, the Company, from time to time, enters into futures contracts and buys options to hedge price-to-be-established coffee purchase commitments. Certain statements contained herein are not based on historical fact and are "forward-looking statements" within the meaning of the applicable securities laws and regulations. In addition, the Company's representatives may from time to time make oral forward-looking statements. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statements that do not directly relate to any historical or current fact. Words such as "anticipates", "believes", "expects", "estimates", "intends", "plans", "projects", and similar expressions, may identify such forward-looking statements. Owing to the uncertainties inherent in forward-looking statements, actual results could differ materially from those set forth in forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, business conditions in the coffee industry and food industry in general, fluctuations in the availability and cost of green coffee, the impact of the loss of one or more major customers, economic conditions, prevailing interest rates, the management challenges of rapid growth, variances from budgeted sales mix and growth rate, consumer acceptance of the Company's new products, the impact of a tighter job market, Year 2000 issues, weather and special or unusual events, as well as other risk factors described in the Company's Annual Report on Form 10-K for the year ended September 26, 1998, and other factors described from time to time in the Company's other filings with the Securities and Exchange Commission. Forward-looking statements reflect management's analysis as of the date of this document. The Company does not undertake to revise these statements to reflect subsequent developments. RESULTS OF OPERATIONS Twelve weeks ended Forty weeks ended --------------------------- ---------------------------- July 3, 1999 July 4, 1998 July 3, 1999 July 4, 1998 ------------ ------------ ------------ ------------ Net sales.............................. 100.0 % 100.0 % 100.0 % 100.0 % Cost of sales.......................... 58.9 % 63.9 % 61.1 % 66.5 % ------------ ------------ ------------ ------------ Gross profit...................... 41.1 % 36.1 % 38.9 % 33.5 % Selling and operating expenses......... 26.5 % 25.3 % 25.6 % 24.5 % General and administrative expenses.... 7.9 % 8.0 % 7.4 % 7.6 % ------------ ------------ ------------ ------------ Operating income.................. 6.7 % 2.8% 5.9 % 1.4 % Other income........................... 0.0 % 0.1 % 0.0 % 0.1 % Interest expense....................... (1.2)% (1.9)% (1.3)% (1.5)% ------------ ------------ ------------ ------------ Income from continuing operations before taxes........... 5.5 % 1.0 % 4.6 % 0.0 % Income tax (expense) benefit........... (2.1)% (0.4)% (1.7)% 0.1 % ------------ ------------ ------------ ------------ Income from continuing operations........................ 3.4 % 0.6 % 2.9 % 0.1 % ------------ ------------ ------------ ------------ Income (loss) from discontinued operations, net of tax (expense) benefits......... - (0.5)% - (0.7)% Loss on disposal of retail operations.. - (9.9)% 0.3 % (3.0)% ------------ ------------ ------------ ------------ Net income (loss)................. 3.4 % (9.8)% 3.2 % (3.6)% ============= ============ ============ ============
TWELVE WEEKS ENDED JULY 3, 1999 VERSUS TWELVE WEEKS ENDED JULY 4, 1998 Net sales from continuing operations increased by $2,298,000, or 18.1%, from $12,675,000 for the twelve weeks ended July 4, 1998 (the "1998 period") to $14,973,000 for the twelve weeks ended July 3, 1999 (the "1999 period"). Coffee pounds sold from continuing operations increased by approximately 307,000 pounds, or 17.1%, from approximately 1,794,000 pounds in the 1998 period to approximately 2,101,000 pounds in the 1999 period. The difference between the percentage increase in net sales and the percentage increase in coffee pounds sold relates primarily to increased sales of convenience coffee products with higher sales prices per pound. The increase in net sales from continuing operations is attributable to the wholesale area in which net sales increased by $2,214,000, or 18.4%, from $12,040,000 for the 1998 period to $14,254,000 for the 1999 period. The wholesale net sales increase resulted primarily from the growth in certain accounts in the office coffee service and convenience store categories. Gross profit from continuing operations increased by $1,567,000, or 34.2%, from $4,585,000 for the 1998 period to $6,152 ,000 for the 1999 period. As a percentage of net sales, gross profit from continuing operations increased 5.0 percentage points from 36.1% for the 1998 period to 41.1% for the 1999 period. The increase in gross profit as a percentage of sales was due primarily to the lower green coffee costs. Selling and operating expenses from continuing operations increased by $760,000, or 23.7%, from $3,209,000 for the 1998 period to $3,969,000 for the 1999 period. Selling and operating expenses from continuing operations increased 1.2 percentage points as a percentage of sales from 25.3% in the 1998 period to 26.5% in the 1999 period. The increase in selling and operating expense as a percentage of sales was primarily due to increased marketing and promotional expenses. General and administrative expenses increased by $167,000, or 16.4%, from $1,017,000 for the 1998 period to $1,184,000 for the 1999 period, but decreased 0.1 percentage points as a percentage of sales from 8.0% for the 1998 period to 7.9% for the 1999 period. As a result of the foregoing, operating income from continuing operations increased by $640,000, or 178.3%, from $359,000 for the 1998 period to $999,000 for the 1999 period. Interest expense decreased by $77,000, or 32.0%, from $241,000 for the 1998 period to $164,000 for the 1999 period. The decrease is due to the reduction in long-term debt, which was made possible by positive cash flows from operations over the past four fiscal quarters. Income tax expense from continuing operations increased $263,000, or 505.8%, from $52,000 for the 1998 period to $315,000 for the 1999 period, as a result of the Company's increased income from continuing operations. It is expected that the Company's effective tax rate will approximate 38% for the remaining quarter of fiscal 1999, and then rise to 40% in fiscal 2000. Income from continuing operations increased by $436,000, or 551.9%, from $79,000 for the 1998 period to income of $515,000 in the 1999 period. During the 1998 period, the Company announced that it was discontinuing its unprofitable company-owned retail store operation and recorded an estimated charge on disposal of $1,259,000 (net of income tax benefits of $834,000). The loss from discontinued operations in the 1998 period was $56,000 (net of income tax benefits of $37,000). Net income increased $1,751,000, from a net loss of $1,236,000 in the 1998 period to net income of $515,000 in the 1999 period. FORTY WEEKS ENDED JULY 3, 1999 VERSUS FORTY WEEKS ENDED JULY 4, 1998 Net sales from continuing operations increased by $7,014,000, or 16.5%, from $42,479,000 for the forty weeks ended July 4, 1998 (the "1998 YTD period") to $49,493,000 for the forty weeks ended July 3, 1999 (the "1999 YTD period"). Coffee pounds sold from continuing operations increased by approximately 1,038,000 pounds, or 17.7%, from approximately 5,866,000 pounds in the 1998 YTD period to approximately 6,904,000 pounds in the 1999 YTD period. The difference between the percentage increase in net sales and the percentage increase in coffee pounds sold relates primarily to decreases in Green Mountain's selling prices for coffee during fiscal 1998 and the first quarter of fiscal 1999 as a result of lower green coffee costs. The increase in net sales from continuing operations is attributable to the wholesale area in which net sales increased by $6,699,000, or 16.7%, from $40,019,000 for the 1998 YTD period to $46,718,000 for the 1999 YTD period. The wholesale net sales increase resulted primarily from the growth in certain accounts in the office coffee service and, to a lesser extent, supermarket categories. Gross profit from continuing operations increased by $5,016,000, or 35.3%, from $14,224,000 for the 1998 YTD period to $19,240,000 for the 1999 YTD period. As a percentage of net sales, gross profit from continuing operations increased 5.4 percentage points from 33.5% for the 1998 YTD period to 38.9% for the 1999 YTD period. The increase in gross profit as a percentage of sales was due primarily to the lower green coffee costs. Selling and operating expenses from continuing operations increased by $2,244,000, or 21.6%, from $10,404,000 for the 1998 YTD period to $12,648,000 for the 1999 YTD period. Selling and operating expenses from continuing operations increased by 1.1 percentage points as a percentage of sales from 24.5% in the 1998 YTD period to 25.6% in the 1999 YTD period. The increase in selling and operating expense was primarily due to increased marketing and sales personnel expenses. General and administrative expenses increased by $458,000, or 14.2%, from $3,228,000 for the 1998 YTD period to $3,686,000 for the 1999 YTD period, but decreased 0.2 percentage points as a percentage of sales from 7.6% for the 1998 YTD period to 7.4% for the 1999 YTD period. As a result of the foregoing, operating income from continuing operations increased by $2,314,000, or 390.9%, from $592,000 for the 1998 YTD period to $2,906,000 for the 1999 YTD period. Income tax expense from continuing operations increased $898,000, from an income tax benefit of $39,000 for the 1998 YTD period to an income tax expense of $859,000 for the 1999 YTD period. Income from continuing operations increased by $1,377,000, from $37,000 for the 1998 YTD period to income of $1,414,000 in the 1999 YTD period. As noted above, the Company recorded a loss on disposal of $1,259,000 during the 1998 YTD period. During the 1999 YTD period, the Company recorded a partial reversal of its original estimated loss on disposal of $186,000 (net of income tax of $114,000), due to larger than expected proceeds from the sale of assets and lower lease termination costs. During the 1998 YTD period, the loss from discontinued operations was $297,000 (net of income tax benefits of $196,000). Net income increased $3,119,000, from a loss of $1,519,000 in the 1998 YTD period to income of $1,600,000 in the 1999 YTD period. LIQUIDITY AND CAPITAL RESOURCES Working capital increased $197,000 to $8,049,000 at July 3, 1999 from $7,852,000 at September 26, 1998. This increase is primarily attributable to higher accounts receivable, partially offset by lower inventories and higher accounts payable. During the 1999 YTD period, Green Mountain had capital expenditures of $1,801,000, including $1,196,000 for equipment on loan to wholesale customers, $291,000 for computer equipment and $219,000 for production equipment. Cash used for capital expenditures related to continuing operations aggregated $2,902,000 during the 1998 YTD period, and included $1,244,000 for equipment loaned to wholesale customers, $789,000 for leasehold improvements and fixtures, $318,000 for production equipment, and $425,000 for computer hardware and software. Cash used to fund the capital expenditures in the 1999 YTD period was obtained from net cash provided by operating activities. The Company currently plans to make capital expenditures in fiscal 1999 of approximately $2,500,000. Management continuously reviews capital expenditure needs and actual amounts expended may differ from these estimates. The Company maintains a $9,000,000 line of credit with Fleet Bank - NH, the availability of which is subject to the Company's accounts receivable and inventory levels. At July 3, 1999, the outstanding balance on the Fleet line of credit was $4,234,000 and the amount remaining available was $2,884,000. The Fleet credit facility also provides for $4,500,000 of revolving term debt, of which $3,500,000 was outstanding at July 3, 1999. The Fleet credit facility is subject to certain quarterly covenants, which the Company was in compliance with at July 3, 1999. Management believes that cash flow from operations, existing cash and available borrowings under its credit facility will provide sufficient liquidity to pay all liabilities in the normal course of business, fund capital expenditures and service debt requirements for the remainder of calendar 1999. YEAR 2000 The Year 2000 problem concerns the inability of information systems and systems with embedded chip technology to properly recognize and process date-sensitive information beyond December 31, 1999. The Company is in the continuing process of assessing its Year 2000 readiness and has identified its Year 2000 risk in three broad categories: internal business software; manufacturing, facilities and embedded chip technology; and external noncompliance by customers and suppliers. Company state of readiness -------------------------- Internal business software. In early fiscal 1997, the Company began a Company-wide business systems replacement project with an enterprise-system from PeopleSoft, Inc. ("PeopleSoft"). The new system, which is expected to make approximately 90% of the Company's business computer systems Year 2000 compliant, is over 90% complete and on schedule. Implementation is scheduled to be completed by the end of September 1999. The primary motivation to implement PeopleSoft was to reap the benefits of its enhanced functionality and features to improve operations and customer service as the Company grows. Besides the implementation of Peoplesoft, there were no other significant information technology projects (IT) planned. Therefore, the Year 2000 project has not caused significant delays in other IT projects. Besides the enterprise-wide information system, software upgrades which take place in the normal course of business are expected to tend to the majority of the Year 2000 problems related to internal business software. The Company migrated its direct mail operation to the PeopleSoft system on August 2nd, 1999. Manufacturing, facilities and embedded chip technology. The Company has completed the inventory of its computer hardware, manufacturing, security and communication systems which are vital to its daily operations and could present a Year 2000 risk. All PC hardware susceptible to fail after the Year 2000 was replaced in the normal course of business over the past three years. Based on the information received from major vendors of manufacturing equipment, security equipment, and communication systems, the Company assessed these vendors to be Year 2000 compliant or in the process of becoming compliant before the end of the calendar year. External noncompliance by customers and suppliers. The Company has contacted its critical suppliers and service providers to determine the extent to which the Company is vulnerable to those third parties' failure to remedy their own Year 2000 issues. As of July 1, 1999, all key suppliers had given the Company reasonable assurances that they were Year 2000 compliant or in the process of becoming compliant before the end of the calendar year. The Company currently does not expect to have to change vendors because of Year 2000 issues with its existing vendors. The Company has also contacted its key customers and is attempting to assess their Year 2000 readiness. Although it has received indications that major customers are working on Year 2000 compliance, the Company expects to receive fewer formal responses from its customers than its vendors and can give no assurance that a complete assessment of customers Year 2000 readiness will be possible. Actual and anticipated costs ---------------------------- The total cost associated with required modifications to become Year 2000 compliant is not expected to be material to the Company's financial position. The estimated total cost of the Year 2000 Project is approximately $200,000, excluding internal costs consisting primarily of payroll and benefits of employees working on Year 2000 issues. This estimate does not include the conversion to PeopleSoft, since those replacement costs were not due to, or accelerated by, the Year 2000 Project. Through July 3, 1999, the Company has not incurred expenses directly related to the Year 2000 Project. The estimated future costs of the Year 2000 Project is $200,000, of which approximately (1) $75,000 relates to the replacement costs of communication equipment; (2) $100,000 relates to the addition of emergency backup systems such as power generators; and (2) $25,000 relates to replacement costs of non-compliant computer hardware. Risks ----- The failure to correct a material Year 2000 problem could result in an interruption in, or a failure of, certain normal business activities or operations. Such failures could materially and adversely affect the Company's results of operations, liquidity and financial condition. Due to the general uncertainty inherent in the Year 2000 problem, resulting in part from the uncertainty of the Year 2000 readiness of third-party suppliers and customers, the Company is unable to determine at this time whether the consequences of Year 2000 failures will have a material impact on the Company's results of operations, liquidity or financial condition. The Company's efforts are expected to significantly reduce the Company's level of uncertainty about the Year 2000 problem. The Company believes that, with the completion of the implementation of PeopleSoft and the completion of the plan identified above, the possibility of significant interruptions of normal operations should be reduced. Contingency plans ----------------- As of August 1, 1999, the Company had developed a draft contingency plan related to Year 2000, which is currently being reviewed by management. DEFERRED INCOME TAXES The Company had net deferred tax assets of $1,244,000 at July 3, 1999. These assets are reported net of a deferred tax asset valuation allowance at that date of $2,355,000 (including $2,306,000 primarily related to a Vermont investment tax credit). Presently, the Company believes that the deferred tax assets, net of deferred tax liabilities and the valuation allowance, are realizable and represent management's best estimate, based on the weight of available evidence as prescribed in SFAS 109, of the amount of deferred tax assets which most likely will be realized. However, management will continue to evaluate the amount of the valuation allowance based on near-term operating results and longer-term projections. FACTORS AFFECTING QUARTERLY PERFORMANCE Historically, the Company has experienced significant variations in sales from quarter to quarter due to the holiday season and a variety of other factors, including, but not limited to, general economic trends, the cost of green coffee, competition, marketing programs, weather and special or unusual events. Because of the seasonality of the Company's business, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year. Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no material changes in information relating to market risk since the Company's disclosure included in Item 7A of Form 10-K as filed with the Securities and Exchange Commission on December 18, 1998. Part II. Other Information Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: 3.1 Certificate of Incorporation(1) 3.2 Bylaws1 10.91 Stock Option Agreement dated April 13, 1999 between the Company and David E. Moran 10.92 Stock Option Agreement dated April 13, 1999 between the Company and William D. Davis 10.93 Stock Option Agreement dated April 13, 1999 between the Company and Jules A. del Vecchio 10.94 Stock Option Agreement dated April 13, 1999 between the Company and Hinda Miller 27 Financial Data Schedule. (b) No reports on Form 8-K were filed during the twelve weeks ended July 3, 1999. - ---------- (1)Incorporated by reference to the corresponding exhibit number in the Registration Statement on Form SB-2 (Registration No. 33-66646) filed on July 28, 1993, and declared effective on September 21, 1993. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GREEN MOUNTAIN COFFEE, INC. Date: 8/9/99 By: /s/ Robert P. Stiller ------------ ------------------------------------------------ Robert P. Stiller, President and Chief Executive Officer Date: 8/9/99 By: /s/ Robert D. Britt ------------ ------------------------------------------------ Robert D. Britt, Chief Financial Officer, Treasurer and Secretary EX-10.91 2 STOCK OPTION AGREEMENT GREEN MOUNTAIN COFFEE, INC. STOCK OPTION AGREEMENT UNDER 1999 STOCK OPTION PLAN NON-QUALIFIED STOCK OPTION April 13, 1999 AGREEMENT entered into by and between Green Mountain Coffee, Inc., a Delaware corporation with its principal place of business in Waterbury, Vermont (together with its subsidiaries, the "Company"), and the undersigned consultant to the Company (the "Optionee"). The Company desires to grant the Optionee a non-qualified stock option under the Company's 1999 Stock Option Plan, as amended (the "Plan") to acquire shares of the Company's Common Stock, par value $.10 per share (the "Shares"). The Plan provides that each option is to be evidenced by an option agreement, setting forth the terms and conditions of the option. ACCORDINGLY, in consideration of the premises and of the mutual covenants and agreements contained herein, the Company and the Optionee hereby agree as follows: 1. Grant of Option. The Company hereby grants to the Optionee non-qualified stock options (collectively, the "Option") to purchase all or any part of the number of Shares shown at the end of this Agreement on the terms and conditions hereinafter set forth. This Option is not intended to be treated as an incentive stock option under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). 2. Purchase Price. The purchase price ("Purchase Price") for the Shares covered by the Option shall be the dollar amount per Share set forth at the end of this Agreement. 3. Time of Exercise of Option. This Option shall be first exercisable as to 5,000 Shares on the date of this Agreement, and 25% of the remaining Shares on each of the first four anniversary dates of this Agreement. To the extent the Option is not exercised by the Optionee when it becomes exercisable, it shall not expire, but shall be carried forward and shall be exercisable, on a cumulative basis, until the Expiration Date, as hereinafter defined. 4. Term of Options; Exercisability. (a) Term. (i) Each Option shall expire on the date shown at the end of this Agreement (the "Expiration Date"), as determined by the Board of Directors of the Company (the "Board"). (ii) In the event of the death of the Optionee, the Option granted to such Optionee shall terminate on the earlier of (i) one year after the date such optionee's consultancy to the Company is terminated; or (ii) the date on which the option expires by its terms. (b) Exercisability. In the event of the death of the Optionee, the Option granted to such Optionee may be exercised to the full number of Shares covered thereby, whether or not under the provisions of Section 3 hereof the Optionee was entitled to do so at the date of his or her death, by the executor, administrator or personal representative of such Optionee, or by any person or persons who acquired the right to exercise such Option by bequest or inheritance or by reason of the death of such Optionee. 5. Manner of Exercise of Option. (a) To the extent that the right to exercise the Option has accrued and is in effect, the option may be exercised in full or in part by giving written notice to the Company stating the number of Shares exercised and accompanied by payment in full for such Shares. No partial exercise may be made for less than one hundred (100) full shares of Common Stock. Payment may be either wholly in cash or in whole or in part in Shares already owned by the person exercising the Option, valued at fair market value as of the date of exercise; provided, however, that payment of the exercise price by delivery of Shares already owned by the person exercising the Option may be made only if such payment does not result in a charge to earnings for financial accounting purposes as determined by the Board. Upon such exercise, delivery of a certificate for paid-up, non-assessable Shares shall be made at the principal office of the Company to the person exercising the option, not less than thirty (30) and not more than ninety (90) days from the date of receipt of the notice by the Company. (b) The Company shall at all times during the term of the Option reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of the Option. 6. Non-Transferability. The right of the Optionee to exercise the option shall not be assignable or transferable by the Optionee otherwise than by will or the laws of descent and distribution, and the Option may be exercised during the lifetime of the Optionee only by him or her. The Option shall be null and void and without effect upon the bankruptcy of the Optionee or upon any attempted assignment or transfer, except as hereinabove provided, including without limitation any purported assignment, whether voluntary or by operation of law, pledge, hypothecation or other disposition contrary to the provisions hereof, or levy of execution, attachment, trustee process or similar process, whether legal or equitable, upon the Option. 7. Representation Letter and Investment Legend. (a) In the event that for any reason the Shares to be issued upon exercise of the Option shall not be effectively registered under the Securities Act of 1933, as amended (the "1933 Act"), upon any date on which the option is exercised in whole or in part, the person exercising the Option shall give a written representation to the Company in the form attached hereto as Exhibit 1 and the Company shall place an "investment legend", so-called, as described in Exhibit 1, upon any certificate for the Shares issued by reason of such exercise. (b) The Company shall be under no obligation to qualify Shares or to cause a registration statement or a post-effective amendment to any registration statement to be prepared for the purposes of covering the issue of Shares. 8. Adjustments on Changes in Capitalization. Adjustments on changes in capitalization and the like shall be made in accordance with the Plan, as in effect on the date of this Agreement. 9. No Special Consultancy or Employment Rights. Nothing contained in the Plan or this Agreement shall be construed or deemed by any person under any circumstances to bind the Company to continue the consulting relationship of, or to employ, the Optionee for the period within which this Option may be exercised. However, during the period of the Optionee's consultancy, the Optionee shall render diligently and faithfully the services which are assigned to the Optionee from time to time by the Board or by the executive officers of the Company and shall at no time take any action which directly or indirectly would be inconsistent with the best interests of the Company. 10. Rights as a Shareholder. The Optionee shall have no rights as a shareholder with respect to any Shares which may be purchased by exercise of this option unless and until a certificate or certificates representing such Shares are duly issued and delivered to the Optionee. Except as otherwise expressly provided in the Plan, no adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. 11. Withholding Taxes. Whenever Shares are to be issued upon exercise of this Option, the Company shall have the right to require the Optionee to remit to the Company an amount sufficient to satisfy all Federal, state and local withholding tax requirements prior to the delivery of any certificate or certificates for such Shares. The Company may agree to permit the Optionee to withhold Shares purchased upon exercise of this Option to satisfy the above-mentioned withholding requirement. IN WITNESS HEREOF, the Company has caused this Agreement to be executed, and the Optionee has hereunto set his or her hand and seal, all as of the day and year first above written. GREEN MOUNTAIN COFFEE, INC. OPTIONEE By: /s/ Robert P. Stiller /s/ David E. Moran --------------------- ------------------ Robert P. Stiller David E. Moran President 7,500 ---------------- Number of Shares $5.875 ------------------------ Purchase Price Per Share April 13, 2009 --------------- Expiration Date EX-10.92 3 STOCK OPTION AGREEMENT GREEN MOUNTAIN COFFEE, INC. STOCK OPTION AGREEMENT UNDER 1999 STOCK OPTION PLAN NON-QUALIFIED STOCK OPTION April 13, 1999 AGREEMENT entered into by and between Green Mountain Coffee, Inc., a Delaware corporation with its principal place of business in Waterbury, Vermont (together with its subsidiaries, the "Company"), and the undersigned consultant to the Company (the "Optionee"). The Company desires to grant the Optionee a non-qualified stock option under the Company's 1999 Stock Option Plan, as amended (the "Plan") to acquire shares of the Company's Common Stock, par value $.10 per share (the "Shares"). The Plan provides that each option is to be evidenced by an option agreement, setting forth the terms and conditions of the option. ACCORDINGLY, in consideration of the premises and of the mutual covenants and agreements contained herein, the Company and the Optionee hereby agree as follows: 1. Grant of Option. The Company hereby grants to the Optionee non-qualified stock options (collectively, the "Option") to purchase all or any part of the number of Shares shown at the end of this Agreement on the terms and conditions hereinafter set forth. This Option is not intended to be treated as an incentive stock option under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). 2. Purchase Price. The purchase price ("Purchase Price") for the Shares covered by the Option shall be the dollar amount per Share set forth at the end of this Agreement. 3. Time of Exercise of Option. This Option shall be first exercisable as to 5,000 Shares on the date of this Agreement, and 25% of the remaining Shares on each of the first four anniversary dates of this Agreement. To the extent the Option is not exercised by the Optionee when it becomes exercisable, it shall not expire, but shall be carried forward and shall be exercisable, on a cumulative basis, until the Expiration Date, as hereinafter defined. 4. Term of Options; Exercisability. (a) Term. (i) Each Option shall expire on the date shown at the end of this Agreement (the "Expiration Date"), as determined by the Board of Directors of the Company (the "Board"). (ii) In the event of the death of the Optionee, the Option granted to such Optionee shall terminate on the earlier of (i) one year after the date such optionee's consultancy to the Company is terminated; or (ii) the date on which the option expires by its terms. (b) Exercisability. In the event of the death of the Optionee, the Option granted to such Optionee may be exercised to the full number of Shares covered thereby, whether or not under the provisions of Section 3 hereof the Optionee was entitled to do so at the date of his or her death, by the executor, administrator or personal representative of such Optionee, or by any person or persons who acquired the right to exercise such Option by bequest or inheritance or by reason of the death of such Optionee. 5. Manner of Exercise of Option. (a) To the extent that the right to exercise the Option has accrued and is in effect, the option may be exercised in full or in part by giving written notice to the Company stating the number of Shares exercised and accompanied by payment in full for such Shares. No partial exercise may be made for less than one hundred (100) full shares of Common Stock. Payment may be either wholly in cash or in whole or in part in Shares already owned by the person exercising the Option, valued at fair market value as of the date of exercise; provided, however, that payment of the exercise price by delivery of Shares already owned by the person exercising the Option may be made only if such payment does not result in a charge to earnings for financial accounting purposes as determined by the Board. Upon such exercise, delivery of a certificate for paid-up, non-assessable Shares shall be made at the principal office of the Company to the person exercising the option, not less than thirty (30) and not more than ninety (90) days from the date of receipt of the notice by the Company. (b) The Company shall at all times during the term of the Option reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of the Option. 6. Non-Transferability. The right of the Optionee to exercise the option shall not be assignable or transferable by the Optionee otherwise than by will or the laws of descent and distribution, and the Option may be exercised during the lifetime of the Optionee only by him or her. The Option shall be null and void and without effect upon the bankruptcy of the Optionee or upon any attempted assignment or transfer, except as hereinabove provided, including without limitation any purported assignment, whether voluntary or by operation of law, pledge, hypothecation or other disposition contrary to the provisions hereof, or levy of execution, attachment, trustee process or similar process, whether legal or equitable, upon the Option. 7. Representation Letter and Investment Legend. (a) In the event that for any reason the Shares to be issued upon exercise of the Option shall not be effectively registered under the Securities Act of 1933, as amended (the "1933 Act"), upon any date on which the option is exercised in whole or in part, the person exercising the Option shall give a written representation to the Company in the form attached hereto as Exhibit 1 and the Company shall place an "investment legend", so-called, as described in Exhibit 1, upon any certificate for the Shares issued by reason of such exercise. (b) The Company shall be under no obligation to qualify Shares or to cause a registration statement or a post-effective amendment to any registration statement to be prepared for the purposes of covering the issue of Shares. 8. Adjustments on Changes in Capitalization. Adjustments on changes in capitalization and the like shall be made in accordance with the Plan, as in effect on the date of this Agreement. 9. No Special Consultancy or Employment Rights. Nothing contained in the Plan or this Agreement shall be construed or deemed by any person under any circumstances to bind the Company to continue the consulting relationship of, or to employ, the Optionee for the period within which this Option may be exercised. However, during the period of the Optionee's consultancy, the Optionee shall render diligently and faithfully the services which are assigned to the Optionee from time to time by the Board or by the executive officers of the Company and shall at no time take any action which directly or indirectly would be inconsistent with the best interests of the Company. 10. Rights as a Shareholder. The Optionee shall have no rights as a shareholder with respect to any Shares which may be purchased by exercise of this option unless and until a certificate or certificates representing such Shares are duly issued and delivered to the Optionee. Except as otherwise expressly provided in the Plan, no adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. 11. Withholding Taxes. Whenever Shares are to be issued upon exercise of this Option, the Company shall have the right to require the Optionee to remit to the Company an amount sufficient to satisfy all Federal, state and local withholding tax requirements prior to the delivery of any certificate or certificates for such Shares. The Company may agree to permit the Optionee to withhold Shares purchased upon exercise of this Option to satisfy the above-mentioned withholding requirement. IN WITNESS HEREOF, the Company has caused this Agreement to be executed, and the Optionee has hereunto set his or her hand and seal, all as of the day and year first above written. GREEN MOUNTAIN COFFEE, INC. OPTIONEE By: /s/ Robert P. Stiller /s/ William D. Davis --------------------- -------------------- Robert P. Stiller William D. Davis President 8,000 ---------------- Number of Shares $5.875 ------------------------ Purchase Price Per Share April 13, 2009 --------------- Expiration Date EX-10.93 4 STOCK OPTION AGREEMENT GREEN MOUNTAIN COFFEE, INC. STOCK OPTION AGREEMENT UNDER 1999 STOCK OPTION PLAN NON-QUALIFIED STOCK OPTION April 13, 1999 AGREEMENT entered into by and between Green Mountain Coffee, Inc., a Delaware corporation with its principal place of business in Waterbury, Vermont (together with its subsidiaries, the "Company"), and the undersigned consultant to the Company (the "Optionee"). The Company desires to grant the Optionee a non-qualified stock option under the Company's 1999 Stock Option Plan, as amended (the "Plan") to acquire shares of the Company's Common Stock, par value $.10 per share (the "Shares"). The Plan provides that each option is to be evidenced by an option agreement, setting forth the terms and conditions of the option. ACCORDINGLY, in consideration of the premises and of the mutual covenants and agreements contained herein, the Company and the Optionee hereby agree as follows: 1. Grant of Option. The Company hereby grants to the Optionee non-qualified stock options (collectively, the "Option") to purchase all or any part of the number of Shares shown at the end of this Agreement on the terms and conditions hereinafter set forth. This Option is not intended to be treated as an incentive stock option under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). 2. Purchase Price. The purchase price ("Purchase Price") for the Shares covered by the Option shall be the dollar amount per Share set forth at the end of this Agreement. 3. Time of Exercise of Option. This Option shall be first exercisable as to 5,000 Shares on the date of this Agreement, and 25% of the remaining Shares on each of the first four anniversary dates of this Agreement. To the extent the Option is not exercised by the Optionee when it becomes exercisable, it shall not expire, but shall be carried forward and shall be exercisable, on a cumulative basis, until the Expiration Date, as hereinafter defined. 4. Term of Options; Exercisability. (a) Term. (i) Each Option shall expire on the date shown at the end of this Agreement (the "Expiration Date"), as determined by the Board of Directors of the Company (the "Board"). (ii) In the event of the death of the Optionee, the Option granted to such Optionee shall terminate on the earlier of (i) one year after the date such optionee's consultancy to the Company is terminated; or (ii) the date on which the option expires by its terms. (b) Exercisability. In the event of the death of the Optionee, the Option granted to such Optionee may be exercised to the full number of Shares covered thereby, whether or not under the provisions of Section 3 hereof the Optionee was entitled to do so at the date of his or her death, by the executor, administrator or personal representative of such Optionee, or by any person or persons who acquired the right to exercise such Option by bequest or inheritance or by reason of the death of such Optionee. 5. Manner of Exercise of Option. (a) To the extent that the right to exercise the Option has accrued and is in effect, the option may be exercised in full or in part by giving written notice to the Company stating the number of Shares exercised and accompanied by payment in full for such Shares. No partial exercise may be made for less than one hundred (100) full shares of Common Stock. Payment may be either wholly in cash or in whole or in part in Shares already owned by the person exercising the Option, valued at fair market value as of the date of exercise; provided, however, that payment of the exercise price by delivery of Shares already owned by the person exercising the Option may be made only if such payment does not result in a charge to earnings for financial accounting purposes as determined by the Board. Upon such exercise, delivery of a certificate for paid-up, non-assessable Shares shall be made at the principal office of the Company to the person exercising the option, not less than thirty (30) and not more than ninety (90) days from the date of receipt of the notice by the Company. (b) The Company shall at all times during the term of the Option reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of the Option. 6. Non-Transferability. The right of the Optionee to exercise the option shall not be assignable or transferable by the Optionee otherwise than by will or the laws of descent and distribution, and the Option may be exercised during the lifetime of the Optionee only by him or her. The Option shall be null and void and without effect upon the bankruptcy of the Optionee or upon any attempted assignment or transfer, except as hereinabove provided, including without limitation any purported assignment, whether voluntary or by operation of law, pledge, hypothecation or other disposition contrary to the provisions hereof, or levy of execution, attachment, trustee process or similar process, whether legal or equitable, upon the Option. 7. Representation Letter and Investment Legend. (a) In the event that for any reason the Shares to be issued upon exercise of the Option shall not be effectively registered under the Securities Act of 1933, as amended (the "1933 Act"), upon any date on which the option is exercised in whole or in part, the person exercising the Option shall give a written representation to the Company in the form attached hereto as Exhibit 1 and the Company shall place an "investment legend", so-called, as described in Exhibit 1, upon any certificate for the Shares issued by reason of such exercise. (b) The Company shall be under no obligation to qualify Shares or to cause a registration statement or a post-effective amendment to any registration statement to be prepared for the purposes of covering the issue of Shares. 8. Adjustments on Changes in Capitalization. Adjustments on changes in capitalization and the like shall be made in accordance with the Plan, as in effect on the date of this Agreement. 9. No Special Consultancy or Employment Rights. Nothing contained in the Plan or this Agreement shall be construed or deemed by any person under any circumstances to bind the Company to continue the consulting relationship of, or to employ, the Optionee for the period within which this Option may be exercised. However, during the period of the Optionee's consultancy, the Optionee shall render diligently and faithfully the services which are assigned to the Optionee from time to time by the Board or by the executive officers of the Company and shall at no time take any action which directly or indirectly would be inconsistent with the best interests of the Company. 10. Rights as a Shareholder. The Optionee shall have no rights as a shareholder with respect to any Shares which may be purchased by exercise of this option unless and until a certificate or certificates representing such Shares are duly issued and delivered to the Optionee. Except as otherwise expressly provided in the Plan, no adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. 11. Withholding Taxes. Whenever Shares are to be issued upon exercise of this Option, the Company shall have the right to require the Optionee to remit to the Company an amount sufficient to satisfy all Federal, state and local withholding tax requirements prior to the delivery of any certificate or certificates for such Shares. The Company may agree to permit the Optionee to withhold Shares purchased upon exercise of this Option to satisfy the above-mentioned withholding requirement. IN WITNESS HEREOF, the Company has caused this Agreement to be executed, and the Optionee has hereunto set his or her hand and seal, all as of the day and year first above written. GREEN MOUNTAIN COFFEE, INC. OPTIONEE By: /s/ Robert P. Stiller /s/ Jules A. del Vecchio --------------------- ------------------------ Robert P. Stiller Jules A. del Vecchio President 8,000 ---------------- Number of Shares $5.875 ------------------------ Purchase Price Per Share April 13, 2009 --------------- Expiration Date EX-10.94 5 STOCK OPTION AGREEMENT GREEN MOUNTAIN COFFEE, INC. STOCK OPTION AGREEMENT UNDER 1999 STOCK OPTION PLAN NON-QUALIFIED STOCK OPTION April 13, 1999 AGREEMENT entered into by and between Green Mountain Coffee, Inc., a Delaware corporation with its principal place of business in Waterbury, Vermont (together with its subsidiaries, the "Company"), and the undersigned consultant to the Company (the "Optionee"). The Company desires to grant the Optionee a non-qualified stock option under the Company's 1999 Stock Option Plan, as amended (the "Plan") to acquire shares of the Company's Common Stock, par value $.10 per share (the "Shares"). The Plan provides that each option is to be evidenced by an option agreement, setting forth the terms and conditions of the option. ACCORDINGLY, in consideration of the premises and of the mutual covenants and agreements contained herein, the Company and the Optionee hereby agree as follows: 1. Grant of Option. The Company hereby grants to the Optionee non-qualified stock options (collectively, the "Option") to purchase all or any part of the number of Shares shown at the end of this Agreement on the terms and conditions hereinafter set forth. This Option is not intended to be treated as an incentive stock option under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). 2. Purchase Price. The purchase price ("Purchase Price") for the Shares covered by the Option shall be the dollar amount per Share set forth at the end of this Agreement. 3. Time of Exercise of Option. This Option shall be first exercisable as to 25% of the Shares on each of the first four anniversary dates of this Agreement. To the extent the Option is not exercised by the Optionee when it becomes exercisable, it shall not expire, but shall be carried forward and shall be exercisable, on a cumulative basis, until the Expiration Date, as hereinafter defined. 4. Term of Options; Exercisability. (a) Term. (i) Each Option shall expire on the date shown at the end of this Agreement (the "Expiration Date"), as determined by the Board of Directors of the Company (the "Board"). (ii) In the event of the death of the Optionee, the Option granted to such Optionee shall terminate on the earlier of (i) one year after the date such optionee's consultancy to the Company is terminated; or (ii) the date on which the option expires by its terms. (b) Exercisability. In the event of the death of the Optionee, the Option granted to such Optionee may be exercised to the full number of Shares covered thereby, whether or not under the provisions of Section 3 hereof the Optionee was entitled to do so at the date of his or her death, by the executor, administrator or personal representative of such Optionee, or by any person or persons who acquired the right to exercise such Option by bequest or inheritance or by reason of the death of such Optionee. 5. Manner of Exercise of Option. (a) To the extent that the right to exercise the Option has accrued and is in effect, the option may be exercised in full or in part by giving written notice to the Company stating the number of Shares exercised and accompanied by payment in full for such Shares. No partial exercise may be made for less than one hundred (100) full shares of Common Stock. Payment may be either wholly in cash or in whole or in part in Shares already owned by the person exercising the Option, valued at fair market value as of the date of exercise; provided, however, that payment of the exercise price by delivery of Shares already owned by the person exercising the Option may be made only if such payment does not result in a charge to earnings for financial accounting purposes as determined by the Board. Upon such exercise, delivery of a certificate for paid-up, non-assessable Shares shall be made at the principal office of the Company to the person exercising the option, not less than thirty (30) and not more than ninety (90) days from the date of receipt of the notice by the Company. (b) The Company shall at all times during the term of the Option reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of the Option. 6. Non-Transferability. The right of the Optionee to exercise the option shall not be assignable or transferable by the Optionee otherwise than by will or the laws of descent and distribution, and the Option may be exercised during the lifetime of the Optionee only by him or her. The Option shall be null and void and without effect upon the bankruptcy of the Optionee or upon any attempted assignment or transfer, except as hereinabove provided, including without limitation any purported assignment, whether voluntary or by operation of law, pledge, hypothecation or other disposition contrary to the provisions hereof, or levy of execution, attachment, trustee process or similar process, whether legal or equitable, upon the Option. 7. Representation Letter and Investment Legend. (a) In the event that for any reason the Shares to be issued upon exercise of the Option shall not be effectively registered under the Securities Act of 1933, as amended (the "1933 Act"), upon any date on which the option is exercised in whole or in part, the person exercising the Option shall give a written representation to the Company in the form attached hereto as Exhibit 1 and the Company shall place an "investment legend", so-called, as described in Exhibit 1, upon any certificate for the Shares issued by reason of such exercise. (b) The Company shall be under no obligation to qualify Shares or to cause a registration statement or a post-effective amendment to any registration statement to be prepared for the purposes of covering the issue of Shares. 8. Adjustments on Changes in Capitalization. Adjustments on changes in capitalization and the like shall be made in accordance with the Plan, as in effect on the date of this Agreement. 9. No Special Consultancy or Employment Rights. Nothing contained in the Plan or this Agreement shall be construed or deemed by any person under any circumstances to bind the Company to continue the consulting relationship of, or to employ, the Optionee for the period within which this Option may be exercised. However, during the period of the Optionee's consultancy, the Optionee shall render diligently and faithfully the services which are assigned to the Optionee from time to time by the Board or by the executive officers of the Company and shall at no time take any action which directly or indirectly would be inconsistent with the best interests of the Company. 10. Rights as a Shareholder. The Optionee shall have no rights as a shareholder with respect to any Shares which may be purchased by exercise of this option unless and until a certificate or certificates representing such Shares are duly issued and delivered to the Optionee. Except as otherwise expressly provided in the Plan, no adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. 11. Withholding Taxes. Whenever Shares are to be issued upon exercise of this Option, the Company shall have the right to require the Optionee to remit to the Company an amount sufficient to satisfy all Federal, state and local withholding tax requirements prior to the delivery of any certificate or certificates for such Shares. The Company may agree to permit the Optionee to withhold Shares purchased upon exercise of this Option to satisfy the above-mentioned withholding requirement. IN WITNESS HEREOF, the Company has caused this Agreement to be executed, and the Optionee has hereunto set his or her hand and seal, all as of the day and year first above written. GREEN MOUNTAIN COFFEE, INC. OPTIONEE By: /s/ Robert P. Stiller /s/ Hinda Miller --------------------- ---------------- Robert P. Stiller Hinda Miller President 5,000 ---------------- Number of Shares $5.875 ------------------------ Purchase Price Per Share April 13, 2009 --------------- Expiration Date EX-27 6 FDS --
5 This schedule contains summary financial information extracted from the Balance Sheet dated 7/3/99 and the Statement of Operations for the sixteen weeks ended 7/3/99 and is qualified in its entirety by reference to such financial statements. 0000909954 GREEN MOUNTAIN COFFEE, INC. 1,000 U.S. DOLLARS OTHER SEP-25-1999 APR-11-1999 JUL-03-1999 1.0000 958 0 5,630 180 5,342 13,504 20,388 10,124 24,431 5,455 8,092 0 0 359 10,525 24,431 14,973 14,973 8,821 8,821 3,969 0 164 830 315 515 0 0 0 515 0.15 0.14
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