PEET Peets Coffee & Tea, Inc. (MM)

EMERYVILLE, Calif., Feb. 12 /PRNewswire-FirstCall/ -- Peet's Coffee & Tea, Inc. (NASDAQ:PEET) today announced results for its fourth quarter and fiscal year 2008. (Logo: http://www.newscom.com/cgi-bin/prnh/20070606/AQW139LOGO) In this release, the Company: - Reports net revenue of $79.1 million for the fourth quarter, an increase of 12% versus last year, - Reports fourth quarter diluted earnings per share of $0.29, an increase of 26% versus last year, - Reports fiscal year diluted earnings per share of $0.80, an increase of 36% versus last year, and - Reaffirms guidance for 2009 of diluted earnings per share of $0.94 to $1.00. For the fourth quarter of 2008, consisting of the 13 weeks ended December 28, 2008, net revenue increased 12% to $79.1 million from $70.9 million for the corresponding period of fiscal 2007. For the 52 weeks ended December 28, 2008, net revenue increased 14% to $284.8 million from $249.4 million in fiscal 2007. Net income for the quarter was $4.0 million or $0.29 per diluted share, compared to $3.3 million or $0.23 per diluted share for the corresponding period last year. For the fiscal year 2008, net income was $11.2 million or $0.80 per diluted share, compared to $8.4 million or $0.59 per diluted share last year. Fiscal 2007 results include approximately $0.9 million or $0.06 per diluted share related to stock option review professional fees. "We are pleased with our results for the quarter and full year," said Patrick O'Dea, president and chief executive officer of Peet's Coffee & Tea. "Real productivity improvements resulting from past investments we've made are improving our margins as we move forward. It's a real tribute to the team we have in place at Peet's that we were able to achieve our earnings forecast for 2008 and be in a position to continue to significantly improve our earnings performance in 2009, despite the challenging environment." 2008 Fourth Quarter Financial Summary Retail net revenue increased 8% to $50.9 million for the quarter from $47.0 million for the corresponding quarter last year. The increase was primarily attributed to new retail stores opened in the last 12 months. The Company opened seven new retail locations during the quarter. Specialty net revenue increased 18% to $28.3 million for the quarter from $24.0 million for the corresponding quarter last year. Within the specialty business, grocery grew 23%, foodservice and office sales were up 33%, and the home delivery business declined 7% compared to the corresponding period last year. Cost of sales and related occupancy costs decreased to 46.8% of total net revenue for the quarter compared to 47.5% for the corresponding period last year. The decrease from last year was due to procurement savings, increased prices in retail and grocery, and leverage of costs related to the roasting facility that opened last year, partially offset by higher green coffee costs. Operating expenses as a percent of net revenue increased to 32.7% of total net revenue for the quarter compared to 32.5% for the corresponding period last year. The increase was due to higher costs associated with expanding the grocery business, higher incentive compensation and store impairment expense, partially offset by favorable workers' compensation insurance expense. General and administrative expenses decreased to $6.3 million for the quarter from $6.5 million for the corresponding period last year primarily due to lower marketing spending in the retail segment, partially offset by professional fees and compensation costs to support our growth. Depreciation and amortization expenses increased to $3.5 million for the quarter from $3.0 million for the corresponding quarter last year. The increase was primarily due to the opening of 23 new retail stores during the year. The Company ended the quarter with cash and cash equivalents plus short- term marketable securities of $13.3 million. Fiscal 2009 Outlook Looking ahead, Peet's provided the following guidance for fiscal 2009, which includes 53 weeks: -- Total net revenue is expected to grow 10 to 13%, -- Diluted earnings per share is expected to be in the $0.94 to $1.00 range, and -- The Company is planning to open about 10 new retail locations and 30 to 40 new licensed locations. "Clearly, 2009 will be a challenging year for all businesses," said O'Dea. "I believe, however, we are better positioned than most to continue delivering strong earnings growth. We expect our margins to continue to improve as we leverage the past investments we've made in our people, the plant and infrastructure. In addition, we have a strong balance sheet with $13 million of cash and no debt. Most importantly, our commitment to truly distinctive quality coffees and teas has garnered us a highly loyal customer following, which is a real asset in times like these." Peet's Coffee & Tea, Inc. Q4 2008 Conference Call The Company will report its fourth quarter and 2008 year-end results on Thursday, February 12, 2009. The teleconference call will begin at 2:00 p.m. PT/5:00 p.m. ET. The teleconference can be accessed by calling 1-877-545-1489. The call will be simultaneously webcast on Peet's Web site at http://www.peets.com/. A replay of the teleconference will be available from 5:00 p.m. PT/8:00 p.m. ET through 8:59 p.m. PT/11:59 p.m. ET on Thursday, February 19, 2009, at 1-888-203-1112 or 1-719-457-0820, using access code 5341574. It will also be archived at http://investor.peets.com/medialist.cfm through February 12, 2010, at 8:59 p.m. PT/11:59 ET. ABOUT PEET'S COFFEE & TEA, INC. Peet's Coffee & Tea, Inc., (PEET), is the premier specialty coffee and tea company in the United States. Peet's buys the highest quality beans in the world, artisan roasts every bean by hand to order, and delivers all of its coffee quickly for superior freshness no matter where it is sold. Founded in 1966 in Berkeley, California by Alfred Peet, who is widely recognized as the grandfather of specialty coffee in the U.S., Peet's has a rapidly growing, passionate customer following that seeks out Peet's coffees wherever they go. Peet's is committed to strategically growing its business through many channels without compromising the extraordinary quality of its coffee. For more information about Peet's Coffee & Tea, Inc. visit http://www.peets.com/. This press release contains statements that are not based on historical fact and are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements include statements relating to 2009 forecasted net revenue growth, earnings per diluted share and expected retail and license location growth for 2009. Forward-looking statements are based on management's beliefs as well as assumptions made by and information currently available to management, including financial and operational information, the Company's stock price volatility, and current competitive conditions. As a result, these statements are subject to various risks and uncertainties. The Company's actual results could differ materially from those set forth in forward-looking statements depending on a variety of factors including, but not limited to, general economic conditions, including the current recession and its ongoing negative impact on consumer spending, the Company's ability to implement its business strategy, attract and retain customers, and obtain and expand its market presence in new geographic regions; the impact of the Company's stock price volatility on the valuation of stock-based compensation under SFAS 123(R); the availability and cost of high quality Arabica coffee beans; consumers' tastes and preferences; and competition in its market as well as other risk factors as described more fully in the Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 30, 2007. These factors may not be exhaustive. The Company operates in a continually changing business environment, and new risks emerge from time to time. Any forward-looking statements speak only as of the date of this press release. PEET'S COFFEE & TEA, INC. CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands, except share amounts) December 28, December 30, 2008 2007 ASSETS Current assets Cash and cash equivalents $4,719 $15,312 Short-term marketable securities 8,600 7,932 Accounts receivable, net 11,924 8,287 Inventories 26,124 24,483 Deferred income taxes - current 2,922 2,950 Prepaid expenses and other 7,193 4,285 Total current assets 61,482 63,249 Long-term marketable securities - 7,831 Property, plant and equipment, net 107,914 99,231 Deferred income taxes - non current 3,059 3,353 Other assets, net 3,897 3,883 Total assets $176,352 $177,547 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable and other accrued liabilities $9,858 $10,104 Accrued compensation and benefits 8,852 8,909 Deferred revenue 6,350 5,856 Total current liabilities 25,060 24,869 Deferred lease credits and other long-term liabilities 7,385 5,425 Total liabilities 32,445 30,294 Shareholders' equity Common stock, no par value; authorized 50,000,000 shares; issued and outstanding: 13,174,000 and 13,932,000 shares 90,123 104,616 Accumulated other comprehensive income 34 52 Retained earnings 53,750 42,585 Total shareholders' equity 143,907 147,253 Total liabilities and shareholders' equity $176,352 $177,547 PEET'S COFFEE & TEA, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited, in thousands, except per share amounts) Thirteen weeks ended Fifty-two weeks ended December 28, December 30, December 28, December 30, 2008 2007 2008 2007 Retail stores $50,890 $46,956 $187,719 $168,392 Specialty sales 28,256 23,957 97,103 80,997 Net revenue 79,146 70,913 284,822 249,389 Cost of sales and related occupancy expenses 37,059 33,683 133,537 118,389 Operating expenses 25,910 23,028 98,844 85,800 General and administrative expenses 6,286 6,454 22,519 22,682 Depreciation and amortization expenses 3,526 2,977 12,921 10,912 Total costs and expenses from operations 72,781 66,142 267,821 237,783 Income from operations 6,365 4,771 17,001 11,606 Interest income 90 274 726 1,446 Income before income taxes 6,455 5,045 17,727 13,052 Income tax provision 2,435 1,722 6,562 4,675 Net income $4,020 $3,323 $11,165 $8,377 Net income per share: Basic $0.30 $0.24 $0.81 $0.61 Diluted $0.29 $0.23 $0.80 $0.59 Shares used in calculation of net income per share: Basic 13,417 13,904 13,723 13,724 Diluted 13,655 14,310 13,997 14,120 PEET'S COFFEE & TEA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands) Fifty-two weeks ended 2008 2007 2006 Cash flows from operating activities: Net income $11,165 $8,377 $7,816 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 15,113 12,861 10,244 Amortization of interest purchased 193 242 415 Stock-based compensation 2,711 2,814 4,022 Excess tax benefit from exercise of stock options (462) (1,350) (724) Tax benefit from exercise of stock options 285 1,234 708 Loss on disposition of assets and asset impairment 900 494 288 Deferred income taxes 322 (3,100) (3,495) Changes in other assets and liabilities: Accounts receivable, net (3,637) (1,449) (1,686) Inventories (1,641) (4,950) (2,532) Prepaid expenses and other current assets (2,908) (433) (480) Other assets (21) (45) (244) Accounts payable, accrued liabilities and deferred revenue 1,464 3,519 2,473 Deferred lease credits and other long-term liabilities 1,960 1,919 969 Net cash provided by operating activities 25,444 20,133 17,774 Cash flows from investing activities: Purchases of property, plant and equipment (25,930) (30,824) (44,443) Proceeds from sales of property, plant and equipment 67 23 28 Changes in restricted investments (87) - 1,500 Proceeds from sales and maturities of marketable securities 7,857 31,304 49,888 Purchases of marketable securities (917) (21,688) (26,356) Net cash used in investing activities (19,010) (21,185) (19,383) Cash flows from financing activities: Net proceeds from issuance of common stock 3,138 7,322 3,888 Purchase of common stock (20,627) - (15,934) Excess tax benefit from exercise of stock options 462 1,350 724 Net cash (used in)/ provided by financing activities (17,027) 8,672 (11,322) (Decrease)/increase in cash and cash equivalents (10,593) 7,620 (12,931) Cash and cash equivalents, beginning of period 15,312 7,692 20,623 Cash and cash equivalents, end of period $4,719 $15,312 $7,692 Non-cash investing activities: Capital expenditures incurred, but not yet paid $734 $1,995 $2,751 Other cash flow information: Cash paid for income taxes 8,293 6,761 7,890 SEGMENT REPORTING (Unaudited, dollars in thousands) Retail Specialty Unallocated Total Percent Percent Percent of Net of Net of Net Amount Revenue Amount Revenue Amount Revenue For the thirteen weeks ended December 28, 2008 Net revenue $50,890 100.0% $28,256 100.0% $79,146 100.0% Cost of sales and occupancy 23,152 45.5% 13,907 49.2% 37,059 46.8% Operating expenses 20,796 40.9% 5,114 18.1% 25,910 32.7% Depreciation and amortization 2,726 5.4% 382 1.4% $418 3,526 4.5% Segment operating income 4,216 8.3% 8,853 31.3% (6,704) 6,365 8.0% For the thirteen weeks ended December 30, 2007 Net revenue $46,956 100.0% $23,957 100.0% $70,913 100.0% Cost of sales and occupancy 21,728 46.3% 11,955 49.9% 33,683 47.5% Operating expenses 19,196 40.9% 3,832 16.0% 23,028 32.5% Depreciation and amortization 2,298 4.9% 391 1.6% $288 2,977 4.2% Segment operating income 3,734 8.0% 7,779 32.5% (6,742) 4,771 6.7% For the fifty-two weeks ended December 28, 2008 Net revenue $187,719 100.0% $97,103 100.0% $284,822 100.0% Cost of sales and occupancy 85,343 45.5% 48,194 49.6% 133,537 46.9% Operating expenses 79,587 42.4% 19,257 19.8% 98,844 34.7% Depreciation and amortization 9,970 5.3% 1,411 1.5% $1,540 12,921 4.5% Segment operating income 12,819 6.8% 28,241 29.1% (24,059) 17,001 6.0% For the fifty-two weeks ended December 30, 2007 Net revenue $168,392 100.0% $80,997 100.0% $249,389 100.0% Cost of sales and occupancy 78,412 46.6% 39,977 49.4% 118,389 47.5% Operating expenses 71,714 42.6% 14,086 17.4% 85,800 34.4% Depreciation and amortization 8,516 5.1% 1,376 1.7% $1,020 10,912 4.4% Segment operating income 9,750 5.8% 25,558 31.6% (23,702) 11,606 4.7% http://www.newscom.com/cgi-bin/prnh/20070606/AQW139LOGO http://photoarchive.ap.org/ DATASOURCE: Peet's Coffee & Tea, Inc. CONTACT: Media, Melanie Vuynovich of Double Forte, +1-415-848-8122, , for Peet's Coffee & Tea, Inc.; or Investors, Seanna Allen of Peet's Coffee & Tea, Inc., +1-510-594-2196, Web site: http://www.peets.com/

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