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8-K/A - FORM 8-K/A - KEURIG GREEN MOUNTAIN, INC.d8ka.htm
EX-99.2 - CONSOILDATED BALANCE SHEETS OF DIEDRICH COFFEE - KEURIG GREEN MOUNTAIN, INC.dex992.htm
EX-99.3 - UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS OF DIEDRICH COFFEE - KEURIG GREEN MOUNTAIN, INC.dex993.htm
EX-23.1 - CONSENT OF BDO USA, LLP - KEURIG GREEN MOUNTAIN, INC.dex231.htm

Exhibit 99.4

Green Mountain Coffee Roasters, Inc.

Index to Pro Forma Condensed Combined Financial Information (Unaudited)

 

     Pages

Pro Forma Condensed Combined Financial Statements:

  

Introduction to Pro Forma Condensed Combined Financial Statements (Unaudited)

   1

Pro Forma Condensed Combined Balance Sheet as of March 27, 2010 (Unaudited)

   3

Pro Forma Condensed Combined Statement of Operations (Unaudited)
For the Twenty-Six Weeks ended March 27, 2010

   4

Pro Forma Condensed Combined Statement of Operations (Unaudited)
For the Fifty-Two Weeks ended September 26, 2009

   5

Notes to Pro Forma Condensed Combined Financial Statements (Unaudited)

   6-9


Green Mountain Coffee Roasters, Inc.

Introduction to Pro Forma Condensed Combined Financial Information (Unaudited)

On May 11, 2010, Green Mountain Coffee Roasters, Inc. (“GMCR”) acquired Diedrich Coffee, Inc. (“Diedrich”) for $35 per share of common stock in cash, pursuant to a cash tender offer, for a total purchase price of approximately $313,143,000. The transaction was financed using existing cash and GMCR’s existing credit facility, as increased by an amendment on the acquisition date. Diedrich will be maintained as a wholly-owned subsidiary, with operations integrated into GMCR’s Specialty Coffee Business Unit segment. In addition, on November 13, 2009, GMCR entered into a Share Purchase Agreement to acquire all of Timothy’s Coffees of the World Inc. (“Timothy’s”) issued and outstanding stock for a purchase price of $156,274,000. The accompanying unaudited pro forma condensed combined financial information is based on the historical financial statements of GMCR, Diedrich and Timothy’s. The information attempts to illustrate the effect that GMCR’s acquisition of Diedrich and Timothy’s would have had on GMCR’s financial statements if the transaction had been consummated at earlier dates as described below. This information is hypothetical and does not necessarily reflect the financial performance that would have actually resulted if the acquisition of Diedrich and Timothy’s had been completed on the dates assumed.

The Unaudited Pro Forma Condensed Combined Balance Sheet presents the historical financial position of GMCR as though the Diedrich acquisition was consummated on March 27, 2010, the end of GMCR’s second fiscal quarter. Because the Timothy’s acquisition occurred prior to the balance sheet date there are no pro forma adjustments for this acquisition. The Unaudited Pro Forma Condensed Combined Statements of Operations present the historical results of operations of GMCR for the twenty-six weeks ended March 27, 2010 and the fifty-two weeks ended September 26, 2009. The accompanying Unaudited Pro Forma Condensed Combined Statements of Operations reflect pro forma adjustments for both Diedrich and Timothy’s as though the acquisitions were consummated on September 28, 2008, the beginning of GMCR’s 2009 fiscal year.

GMCR’s historical results as of and for the twenty–six weeks ended March 27, 2010 are derived from GMCR’s unaudited consolidated financial statements included in its Quarterly Report on Form 10-Q for the quarter ended March 27, 2010. GMCR’s historical results for the fifty-two weeks ended September 26, 2009 are derived from GMCR’s audited consolidated financial statements included in its Annual Report on Form 10-K for the fifty-two weeks ended September 26, 2009. The Unaudited Pro Forma Condensed Combined Balance Sheet was prepared using Diedrich’s historical balance sheet as of March 3, 2010. The Unaudited Pro Forma Condensed Combined Statement of Operations for the twenty-six weeks ended March 27, 2010 was prepared using Diedrich’s historical results of operations for the twenty-four weeks ended March 3, 2010 and Timothy’s historical results of operations for the six weeks ended November 12, 2009, the period prior to the acquisition. For the period of November 12, 2009 through March 27, 2010, Timothy’s results of operations are included in GMCR’s historical results. The Unaudited Pro Forma Condensed Combined Statement of Operations for the fifty-two weeks ending September 26, 2009 was prepared using Diedrich historical results of operations for the fifty-two weeks ending September 16, 2009 and Timothy’s historical results of operations for the fifty-two weeks ending July 26, 2009.

The unaudited pro forma condensed combined financial statements have been prepared using the acquisition method of accounting. The allocation of the purchase price to the fair values of the identified tangible and intangible assets acquired and liabilities assumed was based upon an independent valuation and management estimates. The historical financial information has been adjusted to give effect to matters that are (1) directly attributable to the acquisition, (2) factually supportable, and (3) with respect to the statement of operations, expected to have a continuing impact on the operating results of the combined company.

 

1


The accompanying unaudited pro forma condensed combined financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto included on GMCR’s 2009 Annual Report on Form 10-K, Quarterly Report on Form 10-Q for the twenty-six weeks ended March 27, 2010, Current Report on Form 8-K for the Timothy’s acquisition filed on November 13, 2009, as amended and; Diedrich’s 2009 Annual Report on Form 10-K, Quarterly Report on Form 10-Q for the twelve-weeks ended December 9, 2009 and Quarterly Report on Form 10-Q for the twelve weeks ended March 3, 2010. GMCR’s management believes that the assumptions used in preparing these unaudited pro forma condensed combined financial statements provide a reasonable basis for presenting all of the significant effects of the acquisitions. These unaudited pro forma condensed combined financial statements presented are for informational purposes only and do not purport to be indicative of the results that would have actually occurred if the acquisitions had been consummated on the dates indicated or of those results that may be achieved in the future. In addition, the allocation of the Diedrich purchase price is preliminary and, accordingly, the purchase accounting adjustments made in the preparation of the unaudited pro forma condensed combined financial statements may be subject to adjustment which could have a material impact on the accompanying unaudited pro forma condensed combined financial statements.

 

2


GREEN MOUNTAIN COFFEE ROASTERS, INC.

Pro Forma Condensed Combined Balance Sheet

(Dollars in thousands)

(Unaudited)

 

     March 27, 2010  
     GMCR
Historical
    (B)
Diedrich
Historical
    Pro Forma
Adjustments
          Pro Forma  

Assets

          

Current assets:

          

Cash and cash equivalents

   $ 144,135      $ 5,438      $ (143,643   (C   $ 5,930   

Restricted cash and cash equivalents

     70        623        —            693   

Short-term investments

     —          —          —            —     

Receivables, less uncollectible accounts and return allowances of $8,555

     128,198        13,820        (8,265   (D     133,753   

Income tax receivable

     6,243        —          —            6,243   

Inventories

     109,929        4,115        379      (E     114,423   

Other current assets

     23,779        932        —            24,711   

Deferred income taxes, net

     11,932        —          1,733      (F     13,665   
                                  

Total current assets

     424,286        24,928        (149,796       299,418   

Fixed assets, net

     180,043        6,435        4,515      (G     190,993   

Intangibles, net

     129,575        —          100,200      (H     229,775   

Goodwill

     168,897        —          219,470      (I     388,367   

Other long-term assets

     8,999        812        —            9,811   
                                  

Total assets

   $ 911,800      $ 32,175      $ 174,389        $ 1,118,364   
                                  

Liabilities and Stockholders' Equity

          

Current liabilities:

          

Current portion of long-term debt

   $ 5,062      $ 2,000      $ 8,500      (J   $ 15,562   

Accounts payable

     89,532        9,148        (8,265   (D     90,415   

Accrued compensation costs

     16,245        1,610        2,504      (K     20,359   

Accrued expenses

     32,568        1,321        1,147      (L     35,036   

Other short-term liabilities

     2,525        —          —            2,525   
                                  

Total current liabilities

     145,932        14,079        3,886          163,897   

Long-term debt

     67,642        1,501        157,499      (J     226,642   

Deferred income taxes, net

     53,376        33        30,361      (F     83,770   

Other long-term liabilities

     5,123        352        —            5,475   

Commitments and contingencies

          

Stockholders' equity:

          

Preferred stock, $0.10 par value: Authorized—1,000,000 shares;
No shares issued or outstanding

     —          —          —            —     

Common stock, $0.10 par value: Authorized—200,000,000 shares;
Issued—43,846,000 shares

     4,384        57        (57   (M     4,384   

Additional paid-in capital

     462,565        65,964        (65,964   (M     462,565   

Retained earnings (Accumulated deficit)

     174,358        (49,811     48,664      (M     173,211   

Accumulated other comprehensive loss

     (1,506     —          —            (1,506

ESOP unallocated shares, at cost—12,687 shares

     (74     —          —            (74
                                  

Total stockholders' equity

     639,727        16,210        (17,357       638,580   
                                  

Total liabilities and stockholders' equity

   $ 911,800      $ 32,175      $ 174,389        $ 1,118,364   
                                  

 

3


GREEN MOUNTAIN COFFEE ROASTERS, INC.

Pro Forma Condensed Combined Statement of Operations

(Dollars in thousands except per share data)

(Unaudited)

 

     Twenty-six weeks ended March 27, 2010  
     GMCR
Historical
          (A)
Timothy's
Historical
    (B)
Diedrich
Historical
    Pro Forma
Adjustments
          Pro Forma  

Net sales

   $ 674,278        $ 13,004      $ 50,535      $ (43,353   (N   $ 694,464   

Cost of sales

     463,801          9,576        37,071        (43,460   (O     466,988   
                                            

Gross profit

     210,477          3,428        13,464        107          227,476   

Selling and operating expenses

     98,558          234        2,871        —            101,663   

General and administrative expenses

     47,636          1,260        6,953        (4,570   (P     51,279   
                                            

Operating income

     64,283          1,934        3,640        4,677          74,534   

Other income (expense)

     (244       —          113        —            (131

Interest expense

     (1,881       (395     (260     (1,296   (R     (3,832

Merger related expenses

     —            —          (4,137     4,137      (S     —     

Income (loss) before income taxes

     62,158          1,539        (644     7,518          70,571   

Income tax benefit (expense)

     (24,962       (477     (166     (2,985   (T     (28,590

Net income (loss)

   $ 37,196        $ 1,062      $ (810   $ 4,533        $ 41,981   
                                            

Basic income per share:

              

Weighted average shares outstanding

     43,705,417      (U             43,705,417   

Net income

   $ 0.85                $ 0.96   

Diluted income per share:

              

Weighted average shares outstanding

     45,876,132      (U             45,876,132   

Net income

   $ 0.81                $ 0.92   

 

4


GREEN MOUNTAIN COFFEE ROASTERS, INC.

Pro Forma Condensed Combined Statement of Operations

(Dollars in thousands except per share data)

(Unaudited)

 

     Fifty-two weeks ended September 26, 2009  
     GMCR
Historical
          (A)
Timothy's
Historical
    (B)
Diedrich
Historical
    Pro Forma
Adjustments
          Pro Forma  

Net sales

   $ 803,045        $ 59,819      $ 71,032      $ (73,161   (N   $ 860,735   

Cost of sales

     553,281          44,178        52,925        (73,546   (O     576,838   
                                            

Gross profit

     249,764          15,641        18,107        385          283,897   

Selling and operating expenses

     123,948          2,425        6,246        —            132,619   

General and administrative expenses

     47,103          5,462        9,140        15,941      (P     77,646   

Patent Litigation (settlement) expense

     (17,000       —          —          —            (17,000
                                            

Operating income (loss)

     95,713          7,754        2,721        (15,556       90,632   

Other income (expense)

     (662       83        215        (634   (Q     (998

Interest expense

     (4,693       (3,368     (1,295     602      (R     (8,754
                                            

Income (loss) before income taxes

     90,358          4,469        1,641        (15,588       80,880   

Income tax benefit (expense)

     (34,476       (1,459     33        6,188      (T     (29,714

Net income (loss)

   $ 55,882        $ 3,010      $ 1,674      $ (9,400     $ 51,166   
                                            

Basic income per share:

              

Weighted average shares outstanding

     37,993,196      (U             37,993,196   

Net income

   $ 1.47                $ 1.35   

Diluted income per share:

              

Weighted average shares outstanding

     40,123,533      (U             40,123,533   

Net income

   $ 1.39                $ 1.28   

 

5


Green Mountain Coffee Roasters, Inc.

Notes to Pro Forma Condensed Combined Financial Information (Unaudited)

(A) “Timothy’s” represents the operations of Timothy’s World Coffee brand and wholesale business acquired on November 13, 2009. The Unaudited Pro Forma Condensed Combined Balance Sheet as of March 27, 2010 includes Timothy’s balances within GMCR’s consolidated historical results. The Unaudited Pro Forma Condensed Combined Statement of Operations for the twenty-six weeks ended March 27, 2010 includes six weeks of Timothy’s operations prior to the acquisition on November 13, 2009. Subsequent to the acquisition date, Timothy’s operations are included in GMCR’s historical consolidated statement of operations. The Unaudited Pro Forma Condensed Combined Statement of Operations for the fifty-two weeks ended September 26, 2009 includes Timothy’s operations for the fifty-two weeks ended July 26, 2009.

(B) “Diedrich” represents the balance sheet and operations of Diedrich Coffee, Inc. acquired on May 11, 2010. The Unaudited Pro Forma Condensed Combined Balance Sheet and Statement of Operations as of and for the twenty-six weeks ending March 27, 2010 were prepared using Diedrich’s historical balance sheet and statement of operations as of and for the twenty-four weeks ending March 3, 2010. The Unaudited Pro Forma Condensed Combined Statement of Operations for the fifty-two weeks ending September 26, 2009 was prepared using Diedrich historical statements of operations for the fifty-two weeks ending September 16, 2009.

(C) The total purchase price associated with the Diedrich acquisition was $313,143,000 of which approximately $143,643,000 was financed with cash on hand, $29,500,000 from the existing credit facility and $140,000,000 from the Amendment to the Credit Agreement in the form of a term loan.

(D) Represents the elimination of trade accounts receivable and accounts payable for the sale of coffee, brewers and related royalties between GMCR and Diedrich.

(E) Represents the estimated fair value adjustment to Diedrich’s acquired inventory. The Unaudited Pro Forma Condensed Combined Statements of Operations exclude any adjustment to cost of sales for the estimated fair value adjustment due to the non-recurring nature of the adjustment.

(F) Represents a current net tax asset of $1,733,000 and a long-term net tax liability of $30,361,000 calculated as of the date of the Diedrich acquisition. The current net tax asset is primarily related to accrued compensation expenses. The net long-term tax liability is related to the amortization on the intangible assets, which are deductible for book purposes but not for tax, offset by a long-term tax benefit for net operating loss carryforwards.

(G) Represents the estimated fair value adjustment to Diedrich’s acquired fixed assets for a decrease of approximately $1,994,000. In addition, this adjustment reflects the acquisition of certain leased equipment as required by the Agreement and Plan of Merger for approximately $6,509,000.

 

6


(H) Reflects estimated fair value of identified intangible assets based upon an independent valuation and management’s estimates as of the date of acquisition, as follows:

 

     Amortization
Period
   Estimated Fair
Value

Customer relationships

   10 years    $ 83,300,000

Product family names

   10 years      16,900,000
         

Total

      $ 100,200,000
         

(I) Reflects residual of the acquisition price for Diedrich of $313,143,000 over the fair value of the assets acquired and liabilities assumed as of March 27, 2010 as follows:

 

Purchase Price

   $ 313,143,000   

Less Fair Value of:

  

Tangible Assets Acquired

     (38,802,000

Intangible Assets

     (100,200,000

Plus Fair Value of:

  

Liabilities Assumed

     45,329,000   
        

Goodwill

   $ 219,470,000   
        

The final allocation will be based on the fair value of assets acquired and liabilities assumed as of the acquisition date of May 11, 2010.

(J) Reflects the additional borrowing GMCR incurred to finance the acquisition. GMCR incurred $29,500,000 from its existing credit facility and $140,000,000 from the Amendment to the Credit Agreement in the form of a term loan. In addition, this adjustment reflects the elimination of Diedrich’s debt of $3,501,000 that was not assumed in the acquisition.

(K) Reflects the adjustment for acquisition-related liabilities accounted for as part of the business combination.

(L) Reflects accrual for expenses, net of income taxes, related to the Diedrich acquisition.

(M) Reflects the elimination of Diedrich’s stockholders’ equity accounted for in the allocation of the purchase price and the accrual for expenses related to the Diedrich acquisition as noted in (L) above.

(N) Represents the elimination of coffee and brewer sales amongst GMCR, Diedrich and Timothy’s, as well as the elimination of royalties earned by GMCR from Diedrich and Timothy’s, as follows:

 

     Twenty-six
weeks ended
March 27,
2010
   Fifty-two
weeks ended
September 26,
2009

GMCR Sales

   $ 13,636,000    $ 26,755,000

Diedrich Sales

     24,942,000      28,741,000

Timothy’s Sales

     4,775,000      17,665,000
             

Total Sales

   $ 43,353,000    $ 73,161,000
             

 

7


(O) Reflects the elimination of coffee and brewer cost of sales amongst GMCR, Diedrich and Timothy’s, as well as the elimination of royalties paid to GMCR from Diedrich and Timothy’s, as follows:

 

     Twenty-six
weeks ended
March 27,
2010
   Fifty-two
weeks ended
September 26,
2009

GMCR COS

   $ 29,717,000    $ 46,406,000

Diedrich COS

     10,721,000      13,528,000

Timothy’s COS

     2,915,000      13,227,000
             

Total COS

   $ 43,353,000    $ 73,161,000
             

In addition, reflects an adjustment to reduce depreciation related to the valuation of fixed assets used in production of $107,000 for the twenty-six weeks ended March 27, 2010 and $385,000 for the fifty-two weeks ended September 26, 2009.

(P) Reflects the elimination of expenses related to the Diedrich and Timothy’s acquisitions incurred by all parties and the adjustment for depreciation and amortization expense related to valuation of fixed assets and intangibles as follows:

 

Twenty-six weeks ended March 27, 2010   
     Diedrich     Timothy’s     Total  

Acquisition related expenses

   $ (7,971,000   $ (1,898,000   $ (9,869,000

Depreciation

     (21,000     (4,000     (25,000

Amortization

     5,010,000        314,000        5,324,000   
                        

Total

   $ (2,982,000   $ (1,588,000   $ 4,570,000   
                        

 

Fifty-two weeks ended September 26, 2009   
     Diedrich     Timothy’s     Total  

Acquisition related expenses

   $ —        $ (426,000   $ (426,000

Depreciation

     (56,000     (32,000     (88,000

Amortization

     10,020,000        6,435,000        16,455,000   
                        

Total

   $ 9,964,000      $ 5,977,000      $ 15,941,000   
                        

(Q) Conforms Timothy’s presentation of coffee derivatives to GMCR’s accounting policy. GMCR determined these coffee derivatives to be consistent with accounting for ordinary purchase commitments.

 

8


(R) Reflects the interest that would have been incurred on debt used to finance the acquisition using the rate in effect at the time of acquisition. The rate on the existing credit facility was 1.09% (one-month LIBOR plus 75 basis points) and the rate on the term loan was 2.84% (one-month LIBOR plus 250 basis points). In addition, this adjustment reflects the elimination of interest expense on Diedrich and Timothy’s long-term debt that was not assumed in the acquisitions.

 

     Twenty-six
weeks ended
March 27,
2010
    Fifty-two
weeks ended
September 26,
2009
 

GMCR

   $ (1,951,000   $ (4,061,000

Diedrich

     260,000        1,295,000   

Timothy’s

     395,000        3,368,000   
                

Total

   $ (1,296,000   $ 602,000   
                

Debt incurred to finance the acquisition that was subject to variable interest rates was $159,000,000 for the twenty-six weeks ended March 27, 2010 and $169,500,000 for the fifty-two weeks ended September 26, 2009. Had interest rates increased by 125 basis points, the effect on net income would have been additional interest expense of $994,000 during the twenty-six weeks ended March 27, 2010 and $2,119,000 during the fifty-two weeks ended September 26, 2009.

(S) Reflects elimination of acquisition related expenses incurred by Diedrich.

(T) Reflects the benefit from (provision for) income taxes associated with the pro forma adjustments computed based upon an estimated combined federal and state statutory rate of 39.7%.

(U) Unrelated to the acquisitions, on April 28, 2010, the Company announced a three-for-one stock split in the form of a stock dividend of two additional shares of the Company’s common stock for every one issued share. The stock dividend was distributed on May 17, 2010 to holders of record as of May 10, 2010.

The following reflects historical and pro forma earnings per share on a post-split basis:

 

     Twenty-six weeks ended
March 27, 2010
   Fifty-two weeks ended
September 26, 2009
     GMCR
Historical
   Pro Forma    GMCR
Historical
   Pro Forma

Net income (in thousands)

   $ 37,196    $ 41,981    $ 55,882    $ 51,166

Basic income per share:

           

Weighted average shares outstanding

     131,116,251      131,116,251      113,979,588      113,979,558

Net income

   $ 0.28    $ 0.32    $ 0.49    $ 0.45

Diluted income per share:

           

Weighted average shares outstanding

     137,628,396      137,628,396      120,370,599      120,370,599

Net income

   $ 0.27    $ 0.31    $ 0.46    $ 0.43

 

9