PEET Peets Coffee & Tea, Inc. (MM)

In the news release, Peet's Coffee & Tea, Inc. Reports Fourth Quarter and 2009 Year-End Results, issued 17-Feb-2010 by Peet's Coffee & Tea, Inc. over PR Newswire, the Segment Reporting table and Non-GAAP Financial Information tables have been reformatted rather than the previously transmitted release by PR Newswire. The complete, corrected release follows: EMERYVILLE, Calif., Feb. 17 /PRNewswire-FirstCall/ -- Peet's Coffee & Tea, Inc. (NASDAQ:PEET) today announced its fourth quarter and annual results for the fiscal year ended January 3, 2010, which included 14 weeks and 53 weeks, respectively. The fiscal fourth quarter and fiscal year ended December 28, 2008, included 13 weeks and 52 weeks, respectively. (Logo: http://www.newscom.com/cgi-bin/prnh/20070606/AQW139LOGO) In this release, the company: -- Reports net revenue growth for the quarter and the year of 16% and 9%, respectively -- Achieves full year diluted earnings per share of $1.44 -- Reports non-GAAP full year diluted earnings per share of $1.09, up 36% versus 2008, and above the company's prior guidance of $1.04 to $1.06 per share -- Confirms 2010 non-GAAP diluted earnings per share guidance of $1.24 to $1.30, excluding legal and related expenses the company expects to incur to comply with a subpoena it recently received from the Federal Trade Commission in connection with its anti-trust review of the proposed Green Mountain Coffee Roasters acquisition of Diedrich Coffee. Financial Highlights Fourth Quarter % Fiscal Year % 2009 2008 Change 2009 2008 Change ---- ---- ------ ---- ---- ------ Net revenue, as reported $91,695 $79,146 16% $311,270 $284,822 9% Non-GAAP net revenue, excluding 53rd week 86,103 79,146 9% 305,678 284,822 7% Net income per diluted share, as reported $0.76 $0.29 162% $1.44 $0.80 80% Non-GAAP diluted net income per share, excluding unusual items $0.41 $0.29 41% $1.09 $0.80 36% Non-GAAP diluted net income per share, excluding unusual items and 53rd week $0.36 $0.29 24% $1.04 $0.80 30% For the 14 weeks ended January 3, 2010, net revenue increased 16% to $91.7 million from $79.1 million for the corresponding period of fiscal 2008. For the 53-week fiscal year ended January 3, 2010, net revenue increased 9% to $311.3 million from $284.8 million for fiscal 2008. The company recognized $5.6 million in net revenue during the 53rd week of the 2009 fiscal year. Excluding the impact of this week, the company would have reported sales growth of 9% and 7% for the quarter and the full year on a comparable 13-week and 52-week basis, respectively. Net income for the 14 weeks ended January 3, 2010, increased to $10.3 million from $4.0 million for the corresponding 13-week period of fiscal 2008. Diluted earnings per share were $0.76 for the 14-week period of fiscal 2009 compared to $0.29 per share for the corresponding 13-week period of fiscal 2008. Net income for the quarter includes a pre-tax benefit of $7.7 million ($4.8 million after tax or $0.35 per diluted share) comprised of unusual items including: the net gain received from the company's attempted acquisition of Diedrich Coffee ("Diedrich") ($7.2 million after tax), the anticipated settlement and legal costs of a class action lawsuit ($1.7 million after tax), and the costs related to closing 4 stores during the quarter ($0.7 million after tax). Excluding these unusual items, non-GAAP diluted earnings per share would have been $0.41.Net income for 2009 increased to $19.3 million from $11.2 million for 2008. Diluted earnings per share were $1.44 for 2009, compared to $0.80 per diluted share for fiscal 2008. Excluding the unusual items listed above, non-GAAP diluted earnings per share for 2009 would have been $1.09, up 36% versus 2008. The company estimates that the additional week in 2009 contributed $0.7 million in net income for the year, or $0.05 per diluted share. Excluding this extra week, non-GAAP diluted earnings per share would have been $1.04 versus $0.80 per diluted share for fiscal 2008, which represents 30% growth on a comparable basis. "We finished the year strongly," said Patrick O'Dea, president and chief executive officer of Peet's Coffee & Tea, Inc. "Our grocery business growth is accelerating and our stores are operating at a high performance level. We're entering 2010 with good momentum, a healthy plate of growth initiatives and a very strong balance sheet. All in all, we're well positioned to drive strong earnings growth again this year." Consolidated Financial and Operating Summary Retail net revenue increased 11% to $56.5 million for the 14 weeks ended January 3, 2010, from $50.9 million for the corresponding period of fiscal 2008. Excluding the impact of the extra week in 2009, retail net revenue increased 4% to $52.8 million. The increase was primarily attributable to the opening of 8 new retail stores in the last 12 months. Specialty net revenue increased 25% to $35.2 million for the 14 weeks ended January 3, 2010 compared to $28.3 million for the corresponding period of fiscal 2008. Excluding the impact of the extra week in 2009, total specialty net revenue increased 18% to $33.3 million. Within specialty sales, the grocery business continues to grow the most rapidly, up 39% over last year (30% on a comparable 13-week basis); foodservice and office business grew 16% (10% on a comparable 13-week basis); and home delivery sales were equal to last year (down 4% on a comparable 13-week basis). Cost of sales and related occupancy expenses were 46.9% of total net revenue for the 14 weeks ended January 3, 2010, compared to 46.8% for the corresponding 13-week period of fiscal 2008. The slight increase resulted from a slightly lower average selling price per pound compared to the prior year partially offset by lower commodity costs. Operating expenses as a percentage of net revenue decreased to 32.6% for the 14 weeks ended January 3, 2010 from 32.7% for the corresponding period of fiscal 2008, primarily due to leverage of retail overhead costs, offset by a reduction in our workers compensation reserve in the prior year. Transaction income includes the $8.5 million break-up fee received for the termination of a definitive agreement for Peet's to acquire Diedrich, net of $4.2 million of costs incurred related to the transaction. Litigation related expenses of $2.8 million includes all costs incurred related to the pending settlement of a wage and hour class action lawsuit that was filed in July 2008 against the company. General and administrative expenses increased to $7.0 million for the 14 weeks ended January 3, 2010, compared to $6.3 million for the corresponding period of fiscal 2008 primarily due to higher payroll related costs and the costs of the 53rd week of operations. Depreciation and amortization expenses increased to $4.0 million for the 14 weeks ended January 3, 2010, compared to $3.5 million for the corresponding period of fiscal 2008. The increase was primarily due to depreciation from our new Enterprise Resource Planning (ERP) system and the opening of 8 new retail stores in the last 12 months. The company recorded a $7.3 million pre-tax gain in the quarter for the sale of stock that it had acquired in Diedrich within the last year. The effective income tax rate for the 14 weeks ended January 3, 2010 was 38.3% compared to 37.7% for the corresponding period of 2008. The 2009 full year effective rate was 37.5%, compared to 37.0% for the full year 2008. The company ended 2009 with cash and cash equivalents plus investments of $47.9 million, compared to $13.3 million at year end 2008. Fiscal 2010 Targets Looking ahead, the company provided additional detail on current fiscal 2010 targets: -- The company is targeting total net revenue growth of approximately 8% to 12%, excluding the impact of the 53rd week in fiscal 2009, resulting in 2010 net revenue of approximately $330 to $340 million -- The company is targeting non-GAAP diluted earnings per share of $1.24 to $1.30 for fiscal 2010, which represents diluted earnings per share growth of 19% to 25% off of non-GAAP comparable 52-week earnings per share of $1.04 in 2009. This earnings forecast excludes legal and related expenses the company will incur to comply with a subpoena it recently received from the Federal Trade Commission in connection with its anti-trust review of the proposed Green Mountain Coffee Roasters acquisition of Diedrich. Peet's Coffee & Tea, Inc. Q4 and 2009 Year-End Conference Call Peet's will report its fourth quarter and 2009 year-end earnings via conference call on Wednesday, February 17, 2010. The teleconference call will begin at 2:00 p.m. PT/5 p.m. ET and can be accessed by calling 1-866-748-8653. The call will be simultaneously webcast on Peet's website at http://investor.peets.com/events.cfm. 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 Wednesday, February 24, 2010, at 1-800-642-1687 or 1-706-645-9291, using access code 5661489. It will also be archived at http://investor.peets.com/medialist.cfm through February 17, 2011, at 8:59 p.m. PT/11:59 ET. The company has also posted on its website at http://investor.peets.com/events.cfm a detailed reconciliation of all non-GAAP reporting for the year and quarter, including non-GAAP segment reporting. ABOUT PEET'S COFFEE & TEA, INC. Peet's Coffee & Tea, Inc., (PEET), is the premier specialty coffee and tea company in the United States. The company was founded in 1966 in Berkeley, California by Alfred Peet. Peet was an early tea authority who later became widely recognized as the grandfather of specialty coffee in the U.S. Today, Peet's Coffee & Tea offers superior quality coffees and teas in multiple forms, by sourcing the best quality coffee beans and tea leaves in the world, adhering to strict high quality and taste standards, and controlling product quality though its unique direct store delivery selling and merchandising system. Peet's is committed to strategically growing its business through many channels while maintaining the extraordinary quality of its coffees and teas. 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 2010 forecasted net revenue and earnings per diluted share. 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 manage its expense relating to the inquiry by the Federal Trade Commission into the proposed acquisition of Diedrich by Green Mountain Coffee Roasters; 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 availability and cost of high quality Arabica coffee beans; consumers' tastes and preferences; complaints or claims by current, former or prospective employees or government agencies or other litigation; 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 28, 2008. 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 (In thousands, except share amounts) January 3, December 28, 2010 2008 ---- ---- ASSETS Current assets Cash and cash equivalents $47,934 $4,719 Short-term marketable securities - 8,600 Accounts receivable, net 15,209 11,924 Inventories 25,936 26,124 Deferred income taxes - current 3,592 2,922 Prepaid expenses and other 5,863 7,193 ----- ----- Total current assets 98,534 61,482 Property, plant and equipment, net 103,494 107,914 Deferred income taxes - non current - 3,059 Other assets, net 2,775 3,897 ----- ----- Total assets $204,803 $176,352 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable and other accrued liabilities $13,669 $9,858 Accrued compensation and benefits 10,832 8,852 Deferred revenue 6,845 6,350 ----- ----- Total current liabilities 31,346 25,060 Deferred income taxes - non current 321 - Deferred lease credits 7,059 6,645 Other long-term liabilities 1,021 740 ----- --- Total liabilities 39,747 32,445 Shareholders' equity Common stock, no par value; authorized 50,000,000 shares; issued and outstanding: 13,104,000 and 13,174,000 shares 92,054 90,123 Accumulated other comprehensive income - 34 Retained earnings 73,002 53,750 ------ ------ Total shareholders' equity 165,056 143,907 ------- ------- Total liabilities and shareholders' equity $204,803 $176,352 ======== ======== PEET'S COFFEE & TEA, INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) Fourteen Thirteen Fifty-three Fifty-two weeks weeks weeks weeks ended ended ended ended January December January December 3, 28, 3, 28, 2010 2008 2010 2008 ---- ---- ---- ---- Retail stores $56,453 $50,890 $201,139 $187,719 Specialty sales 35,242 28,256 110,131 97,103 ------ ------ ------- ------ Net revenue 91,695 79,146 311,270 284,822 Cost of sales and related occupancy expenses 42,964 37,059 142,776 133,537 Operating expenses 29,848 25,910 106,652 98,844 Transaction income, net (4,311) - (4,183) - Litigation related expenses 2,811 - 2,957 - General and administrative expenses 7,000 6,286 24,508 22,519 Depreciation and amortization expenses 3,967 3,526 15,167 12,921 ----- ----- ------ ------ Total costs and expenses from operations 82,279 72,781 287,877 267,821 ------ ------ ------- ------- Income from operations 9,416 6,365 23,393 17,001 Gain on sale of securities 7,305 - 7,305 - Interest income, net 1 90 112 726 -- -- --- --- Income before income taxes 16,722 6,455 30,810 17,727 Income tax provision 6,400 2,435 11,558 6,562 ----- ----- ------ ----- Net income $10,322 $4,020 $19,252 $11,165 ======= ====== ======= ======= Net income per share: Basic $0.79 $0.30 $1.48 $0.81 Diluted $0.76 $0.29 $1.44 $0.80 Shares used in calculation of net income per share: Basic 13,055 13,417 12,997 13,723 Diluted 13,591 13,655 13,349 13,997 PEET'S COFFEE & TEA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Fifty-three Fifty-two weeks ended weeks ended January 3, December 28, 2010 2008 ---- ---- Cash flows from operating activities: Net income $19,252 $11,165 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 17,279 15,113 Amortization of interest purchased 36 193 Stock-based compensation 3,018 2,711 Excess tax benefit from exercise of stock options (892) (462) Tax benefit from exercise of stock options 695 285 Gain on sale of securities (7,305) - Loss on disposition of assets and asset impairment 1,141 900 Deferred income taxes 2,710 322 Changes in other assets and liabilities: Accounts receivable, net (3,285) (3,637) Inventories 188 (1,641) Prepaid expenses and other current assets 1,330 (2,908) Other assets 161 (21) Accounts payable, accrued liabilities and deferred revenue 6,887 1,464 Deferred lease credits and other long-term liabilities 695 1,960 --- ----- Net cash provided by operating activities 41,910 25,444 ------ ------ Cash flows from investing activities: Purchases of property, plant and equipment (14,505) (25,930) Proceeds from sales of property, plant and equipment 11 67 Changes in restricted investments 877 (87) Proceeds from sales and maturities of marketable securities 16,183 7,857 Purchases of marketable securities (371) (917) ---- ---- Net cash provided by (used in) investing activities 2,195 (19,010) ----- ------- Cash flows from financing activities: Net proceeds from issuance of common stock 4,782 3,138 Purchase of common stock (6,564) (20,627) Excess tax benefit from exercise of stock options 892 462 --- --- Net cash (used in) provided by financing activities (890) (17,027) ---- ------- Increase (decrease) in cash and cash equivalents 43,215 (10,593) Cash and cash equivalents, beginning of year 4,719 15,312 ----- ------ Cash and cash equivalents, end of year $47,934 $4,719 ======= ====== Non-cash investing activities: Capital expenditures incurred, but not yet paid $156 $734 Other cash flow information: Cash paid for income taxes 7,213 8,293 SEGMENT REPORTING (Dollars in thousands) Retail Specialty Unallocated Total Percent Percent Percent of Net of Net of Net Amount Revenue Amount Revenue Amount Revenue For the fourteen weeks ended January 3, 2010 Net revenue $56,453 100.0% $35,242 100.0% $91,695 100.0% Cost of sales and occup- ancy 24,913 44.1% 18,051 51.2% 42,964 46.9% Operating expenses 23,198 41.1% 6,650 18.9% 29,848 32.6% Depreciation and amorti- zation 2,817 5.0% 433 1.2% $717 3,967 4.3% Segment operating income 2,714 4.8% 10,108 28.7% (3,406) 9,416 10.3% 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 occup- ancy 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 amorti- zation 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 fifty-three weeks ended Janaury 3, 2010 Net revenue $201,139 100.0% $110,131 100.0% $311,270 100.0% Cost of sales and occup- ancy 87,843 43.7% 54,933 49.9% 142,776 45.9% Operating expenses 83,616 41.6% 23,036 20.9% 106,652 34.3% Depreciation and amorti- zation 11,267 5.6% 1,758 1.6% $2,142 15,167 4.9% Segment operating income 15,456 7.7% 30,404 27.6% (22,467) 23,393 7.5% 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 occup- ancy 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 amorti- zation 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% NON-GAAP FINANCIAL INFORMATION The following reconciliation and non-GAAP financial information are provided to assist the reader with understanding the financial impact of the previously discussed unusual items and the extra week during the year. Management believes this information is relevant because the nature and magnitude of the charges do not reflect our on-going operating performance. Reconciliation of Non-GAAP Financial Information to Net Revenue and Net Income (Unaudited, in thousands, except per share data) Fourteen Thirteen Fifty-three Fifty-two weeks weeks weeks weeks ended ended ended ended January December January December 3, 28, 3, 28, 2010 2008 2010 2008 ---- ---- ---- ---- Net Revenue ----------- Net revenue, as reported $91,695 $79,146 $311,270 $284,822 53rd week sales (5,592) (5,592) ------ ------- ------ -------- Non-GAAP net revenue, excluding 53rd week $86,103 $79,146 $305,678 $284,822 ======= ======= ======== ======== Net revenue growth, as reported 15.9% 9.3% Net revenue growth, excluding 53rd week 8.8% 7.3% Net Income ---------- Net income, as reported $10,322 $4,020 $19,252 $11,165 Transaction income, net, net of tax (7,170) (7,178) Litigation related expenses, net of tax 1,735 1,848 Store closures, net of tax 664 672 --- ----- --- ------ Non-GAAP net income 5,551 4,020 14,594 11,165 Non-GAAP 53rd week net income (677) (686) ---- ------ ---- ------- Non-GAAP net income, excluding 53rd week $4,874 $4,020 $13,908 $11,165 ====== ====== ======= ======= Diluted Net Income Per Share ---------------------------- Net income per diluted share, as reported $0.76 $0.29 $1.44 $0.80 Transaction income, net (0.53) (0.54) Litigation related expenses 0.13 0.14 Store closures 0.05 0.05 ---- ----- ---- ----- Non-GAAP diluted net income per share $0.41 $0.29 $1.09 $0.80 Non-GAAP 53rd week (0.05) (0.05) ----- ----- ----- ----- Non-GAAP, excluding 53rd week $0.36 $0.29 $1.04 $0.80 ===== ===== ===== ===== Quarter ended January 3, 2010 Non-GAAP Non-GAAP Transaction Litigation With 53rd Excluding As Income, Related Store 53rd Week 53rd Reported net Expenses Closures Week Impact Week -------- --- -------- -------- ----- ------ ----- Retail stores $56,453 $56,453 $(3,675) $52,778 Specialty sales 35,242 35,242 (1,917) 33,325 Net revenue 91,695 91,695 (5,592) 86,103 Cost of sales and related occupancy expenses 42,964 $(167) 42,797 (2,414) 40,383 Operating expenses 29,848 (909) 28,939 (1,887) 27,052 Transaction income, net (4,311) $4,311 - - Litigation related expenses 2,811 $(2,811) - - General and admini- strative 7,000 7,000 (194) 6,806 Depreciation and amorti- zation 3,967 3,967 3,967 Total costs and expenses 82,279 4,311 (2,811) (1,076) 82,703 (4,495) 78,208 Income from operations 9,416 (4,311) 2,811 1,076 8,992 (1,097) 7,895 Gain on sale of securities 7,305 (7,305) - - Interest income, net 1 1 1 Income before income taxes 16,722 (11,616) 2,811 1,076 8,993 (1,097) 7,896 Income tax provision 6,400 (4,446) 1,076 412 3,442 (420) 3,022 Net income $10,322 $(7,170) $1,735 $664 $5,551 $(677) $4,874 Net income per diluted share $0.76 $(0.53) $0.13 $0.05 $0.41 $(0.05) $0.36 Year ended January 3, 2010 Non-GAAP Non-GAAP Transaction Litigation With 53rd Excluding As Income, Related Store 53rd Week 53rd Reported net Expenses Closures Week Impact Week -------- --- -------- -------- ----- ------ ----- Retail stores $201,139 $201,139 $(3,675)$197,464 Specialty sales 110,131 110,131 (1,917) 108,214 Net revenue 311,270 311,270 (5,592) 305,678 Cost of sales and related occupancy expenses 142,776 $(167) 142,609 (2,414) 140,195 Operating expenses 106,652 (909) 105,743 (1,887) 103,856 Transaction income, net (4,183) $4,183 - - Litigation related expenses 2,957 $(2,957) - - General and admini- strative 24,508 24,508 (194) 24,314 Depreciation and amorti- zation 15,167 15,167 15,167 Total costs and expenses 287,877 4,183 (2,957) (1,076) 288,027 (4,495) 283,532 Income from operations 23,393 (4,183) 2,957 1,076 23,243 (1,097) 22,146 Gain on sale of securities 7,305 (7,305) - - Interest income, net 112 112 112 Income before income taxes 30,810 (11,488) 2,957 1,076 23,355 (1,097) 22,258 Income tax provision 11,558 (4,310) 1,109 404 8,761 (411) 8,350 Net income $19,252 $(7,178) $1,848 $672 $14,594 $(686) $13,908 Net income per diluted share $1.44 $(0.54) $0.14 $0.05 $1.09 $(0.05) $1.04 http://www.newscom.com/cgi-bin/prnh/20070606/AQW139LOGO http://photoarchive.ap.org/ DATASOURCE: Peet's Coffee & Tea, Inc. CONTACT: Media, Nicole Arena of Double Forte, +1-415-848-8103, , 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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