Attached files

file filename
8-K/A - FORM 8-K/A - KEURIG GREEN MOUNTAIN, INC.d8ka.htm
EX-99.2 - CONSOLIDATED BALANCE SHEETS OF LJVH HOLDINGS INC. - KEURIG GREEN MOUNTAIN, INC.dex992.htm
EX-99.3 - UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS OF LJVH HOLDINGS INC. - KEURIG GREEN MOUNTAIN, INC.dex993.htm
EX-23.1 - CONSENT OF KPMG 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 Statement of Operations (Unaudited) For the Thirteen Weeks ended December 25, 2010

     3   

Pro Forma Condensed Combined Statement of Operations (Unaudited) For the Fifty-Two Weeks ended September 25, 2010

     4   

Notes to Pro Forma Condensed Combined Financial Statements (Unaudited)

     5-9   


Green Mountain Coffee Roasters, Inc.

Introduction to Pro Forma Condensed Combined Financial Information (Unaudited)

On December 17, 2010, Green Mountain Coffee Roasters, Inc. (“GMCR”) acquired all of the outstanding capital stock of LJVH Holdings Inc. (“LJVH” and together with its subsidiaries, “Van Houtte”) for approximately $947.6 million ($907.9 million, net of $39.7 million cash acquired). The transaction was financed with cash on hand and borrowings under a $1.45 billion credit facility. Van Houtte will be maintained as a wholly-owned subsidiary, with operations managed in the Canadian Business Unit segment of GMCR. In addition, on May 11, 2010, GMCR acquired all of the outstanding common stock of Diedrich Coffee, Inc. (“Diedrich”) for a total purchase price of approximately $313.5 million ($305.3 million, net of $8.2 cash acquired) and on November 13, 2009, GMCR entered into a Share Purchase Agreement pursuant to which it acquired all of Timothy’s Coffees of the World Inc. (“Timothy’s”) issued and outstanding stock for a purchase price of $155.7 million. The accompanying unaudited pro forma condensed combined financial information is based on the historical financial statements of GMCR, Van Houtte, Diedrich and Timothy’s. The information attempts to illustrate the effect that GMCR’s acquisitions of Van Houtte, Diedrich and Timothy’s would have had on GMCR’s financial statements if the transactions 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 acquisitions of Van Houtte, Diedrich and Timothy’s had been completed on the dates assumed.

The Van Houtte acquisition is included in GMCR’s historical results since December 17, 2010, as reflected in GMCR’s Quarterly Report on Form 10-Q for the quarter ended December 25, 2010. As a result, an Unaudited Pro Forma Condensed Combined Balance Sheet has not been presented. The Unaudited Pro Forma Condensed Combined Statements of Operations present the historical results of operations of GMCR for the thirteen weeks ended December 25, 2010 and the fifty-two weeks ended September 25, 2010 and reflect pro forma adjustments for Van Houtte, Diedrich and Timothy’s as though the acquisitions were consummated on September 27, 2009, the beginning of GMCR’s 2010 fiscal year.

GMCR’s historical results for the thirteen weeks ended December 25, 2010 are derived from GMCR’s unaudited consolidated financial statements included in its Quarterly Report on Form 10-Q for the thirteen weeks ended December 25, 2010. GMCR’s historical results for the fifty-two weeks ended September 25, 2010 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 25, 2010. The Unaudited Pro Forma Condensed Combined Statement of Operations for the thirteen weeks ended December 25, 2010 was prepared using Van Houtte’s historical results of operations for the twelve weeks ended December 16, 2010, the period prior to the acquisition. For the thirteen weeks ended December 25, 2010, Diedrich’s and 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 25, 2010 was prepared using Van Houtte’s historical results of operations for the fifty-three weeks ending October 16, 2010; Diedrich’s historical results of operations for the thirty-two weeks ended May 11, 2010; and Timothy’s historical results of operations for the six weeks ended November 12, 2009, the periods prior to the acquisitions. Van Houtte’s, Diedrich’s and Timothy’s results of operations for the periods from the dates of the respective acquisitions through September 25, 2010 and December 25, 2010, respectively, are included in GMCR’s historical results.

In conjunction with the acquisition of Van Houtte, GMCR is conducting a strategic review of the Van Houtte U.S. Coffee Service business (“Filterfresh”) in contemplation of a potential divestiture of Filterfresh. As a result, GMCR has also presented in the accompanying unaudited pro forma information consolidated results of operations excluding Filterfresh as reflected in a separate pro forma adjustment column. The Unaudited Pro Forma Condensed Combined Statement of Operations, excluding Filterfresh, for the thirteen weeks ended December 25, 2010 and for the fifty two weeks ended September 25, 2010 was prepared using Filterfresh historical results of operations for the thirteen weeks ended December 25, 2010 and for the fifty-three weeks ended October 16, 2010, respectively.

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 a valuation and management estimates. The historical financial

 

1


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.

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 2010 Annual Report on Form 10-K, Quarterly Report on Form 10-Q for the thirteen weeks ended December 25, 2010, Current Reports on Form 8-K for the Diedrich’s and Timothy’s acquisitions filed on July 13, 2010 and January 12, 2010, as amended, respectively and; Diedrich’s 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 Van Houtte 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 Statement of Operations

(Dollars in thousands except per share data)

(Unaudited)

 

     Thirteen weeks ended December 25, 2010  
     GMCR
Historical
   

(C)

Van Houtte
Historical

    Pro Forma
Adjustments
         Pro Forma
(Including
Filterfresh)
    (M)
Filterfresh
    Pro Forma
(Excluding
Filterfresh)
 

Net sales

   $ 575,027      $ 115,306      $ (17,355   (D)    $ 672,978      $ 29,514      $ 643,464   

Cost of sales

     430,613        58,944        (16,226   (E)      473,331        14,629        458,702   
                                                   

Gross profit

     144,414        56,362        (1,129        199,647        14,885        184,762   

Selling and operating expenses

     78,448        27,592        (2,269   (F)      103,771        6,584        97,187   

General and administrative expenses

     42,887        13,205        (3,260   (G)      52,832        5,349        47,483   
                                                   

Operating income

     23,079        15,565        4,400           43,044        2,952        40,092   

Other income (expense)

     137        —          —             137        —          137   

Gain (loss) on financial instruments, net

     (6,377     (631     6,290      (H)      (718     —          (718

Gain (loss) on foreign currency, net

     1,605        5,336        (5,336   (I)      1,605        —          1,605   

Interest expense

     (6,023     (19,816     12,981      (J)      (12,858     (5     (12,853
                                                   

Income before income taxes

     12,421        454        18,335           31,210        2,947        28,263   

Income tax (expense) benefit

     (10,167     2,441        (579   (L)      (8,305     717        (9,022
                                                   

Net income

     2,254        2,895        17,756           22,905        3,664        19,241   

Less: Net income attributable to noncontrolling interest

     25        690        —             715        279        436   
                                                   

Net income

   $ 2,229      $ 2,205      $ 17,756         $ 22,190      $ 3,385      $ 18,805   
                                                   

Basic income per share:

               

Weighted average shares outstanding

     141,374,327                   141,374,327   

Net income

   $ 0.02                 $ 0.13   

Diluted income per share:

               

Weighted average shares outstanding

     147,036,072                   147,036,072   

Net income

   $ 0.02                 $ 0.13   

 

3


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 25, 2010  
    GMCR
Historical
    (A)
Timothy’s
Historical
    (B)
Diedrich
Historical
    (C)
Van Houtte
Historical
    Pro Forma
Adjustments
        Pro Forma
(Including
Filterfresh)
    (M)
Filterfresh
    Pro Forma
(Excluding
Filterfresh)
 

Net sales

  $ 1,356,775      $ 13,004      $ 73,348      $ 416,557      $ (94,316   (D)   $ 1,765,368      $ 113,097      $ 1,652,271   

Cost of sales

    931,017        9,576        54,540        211,678        (88,701   (E)     1,118,110        55,297        1,062,813   
                                                                 

Gross profit

    425,758        3,428        18,808        204,879        (5,615       647,258        57,800        589,458   

Selling and operating expenses

    186,418        234        4,136        113,192        (6,975   (F)     297,005        28,367        268,638   

General and administrative expenses

    100,568        1,260        11,192        50,465        9,958      (G)     173,443        22,929        150,514   
                                                                 

Operating income

    138,772        1,934        3,480        41,222        (8,598       176,810        6,504        170,306   

Other income (expense)

    185        —          —          —          —            185        —          185   

Gain (loss) on financial instruments, net

    (454     —          —          (6,678     8,289      (H)     1,157        —          1,157   

Gain (loss) on foreign currency, net

    —          —          —          11,890        (11,890   (I)     —          —          —     

Interest expense

    (5,294     (395     (647     (35,097     (13,923   (J)     (55,356     (6     (55,350

Merger related expenses

    —          —          (9,751     —          9,751      (K)     —          —          —     
                                                                 

Income before income taxes

    133,209        1,539        (6,918     11,337        (16,371       122,796        6,498        116,298   
                  `     

Income tax (expense) benefit

    (53,703     (477     4,401        2,602        10,840      (L)     (36,337     (2,006     (34,331
                                                                 

Net income (loss)

    79,506        1,062        (2,517     13,939        (5,531       86,459        4,492        81,967   

Less: Net income attributable to noncontrolling interest

    —          —          —          1,619        —            1,619        1,113        506   
                                                                 

Net income (loss)

  $ 79,506      $ 1,062      $ (2,517   $ 12,320      $ (5,531     $ 84,840      $ 3,379      $ 81,461   
                                                                 

Basic income per share:

                 

Weighted average shares outstanding

    131,529,412                      131,529,412   

Net income

  $ 0.60                    $ 0.62   

Diluted income per share:

                 

Weighted average shares outstanding

    137,834,123                      137,834,123   

Net income

  $ 0.58                    $ 0.59   

 

4


Green Mountain Coffee Roasters, Inc.

Notes to Pro Forma Condensed Combined Financial Information (Unaudited)

(A) “Timothy’s Historical” represents the operations of Timothy’s World Coffee brand and wholesale business acquired on November 13, 2009. The Unaudited Pro Forma Condensed Combined Statement of Operations for the fifty-two weeks ended September 25, 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.

(B) “Diedrich Historical” represents the operations of Diedrich Coffee, Inc. acquired on May 11, 2010. The Unaudited Pro Forma Condensed Combined Statement of Operations for the fifty-two weeks ending September 25, 2010 was prepared using Diedrich historical statements of operations for the thirty-two weeks ended May 11, 2010. Subsequent to the acquisition date, Diedrich’s operations are included in GMCR’s historical consolidated statement of operations.

(C) “Van Houtte Historical” represents the operations of LJVH Holdings Inc., acquired on December 17, 2010. The Unaudited Pro Forma Condensed Combined Statement of Operations for the thirteen weeks ended December 25, 2010 includes the results of LJVH Holdings Inc. from September 26, 2010 to December 16, 2010. The Unaudited Pro Forma Condensed Combined Statement of Operations for the fifty-two weeks ended September 25, 2010 was prepared using Van Houtte historical statements of operations for the fifty-three weeks ended October 16, 2010. Subsequent to the acquisition date, Van Houtte’s operations are included in GMCR’s historical consolidated statement of operations. Van Houtte historical results for the three weeks ended October 16, 2010 are included in both the statements of operations for the thirteen weeks ended December 25, 2010 and for the fifty-two weeks ended September 25, 2010.

The total preliminary purchase price was $947.6 million ($907.9 million, net of $39.7 million cash acquired). The total preliminary estimated purchase price was allocated to Van Houtte’s net tangible assets and identifiable intangible assets based on their estimated fair values as of December 17, 2010. The purchase price is subject to working capital, net indebtedness and closing tax adjustments based upon a balance sheet audit prepared as of December 17, 2010. GMCR does not anticipate material changes to the purchase price or the preliminary fair values assigned to the net assets acquired. The table below represents the preliminary allocation of the preliminary purchase price to the acquired net assets of Van Houtte (in thousands):

 

Fair value of:

  

Tangible assets acquired

   $ 287,298   

Intangible assets

     381,220   

Goodwill

     418,585   

Less Fair Value of:

  

Liabilities assumed

     (134,248

Non-controlling interests

     (5,206
        

Total purchase price

   $ 947,649   
        

 

5


(D) Represents the elimination of coffee and brewer sales amongst GMCR, Van Houtte, Diedrich and Timothy’s, as well as the elimination of royalties earned by GMCR from Van Houtte, Diedrich and Timothy’s on sales of K-Cup portion packs to third-party customers, as follows (in thousands):

 

     Thirteen
weeks ended
December 25, 2010
     Fifty-two
weeks ended
September 25, 2010
 

GMCR Sales

   $ 6,408       $ 28,253   

Van Houtte Sales

     10,834         26,265   

Diedrich Sales

     —           34,380   

Timothy’s Sales

     113         5,418   
                 

Total Sales

   $ 17,355       $ 94,316   
                 

(E) Represents cost of sales adjustments that consist of:

 

  1) The elimination of coffee and brewer cost of sales amongst GMCR, Van Houtte, Diedrich and Timothy’s, as well as the elimination of royalties paid to GMCR from Van Houtte, Diedrich and Timothy’s on sales of K-Cup portion packs to third-party customers, as follows (in thousands):

 

     Thirteen
weeks ended
December 25, 2010
     Fifty-two
weeks ended
September 25, 2010
 

GMCR COS

   $ 10,833       $ 65,420   

Van Houtte COS

     5,489         19,075   

Diedrich COS

     —           8,489   

Timothy’s COS

     —           2,123   
                 

Total COS

   $ 16,322       $ 95,107   
                 

 

  2) An adjustment for the reduction in (additional) depreciation related to the valuation of fixed assets used in production, as follows (in thousands):

 

     Thirteen
weeks ended
December 25, 2010
    Fifty-two
weeks ended
September 25, 2010
 

Timothy’s

   $ —        $ 18   

Diedrich

     —          127   

Van Houtte

     (2,114     (8,114
                

Total

   $ (2,114   $ (7,969
                

The weighted-average depreciable life for Van Houtte fixed assets related to cost of sales is 5.2 years.

 

6


  3) The add-back of the amortization resulting from the one-time inventory mark-up to fair value.

 

     Thirteen
weeks ended
December 25, 2010
     Fifty-two
weeks ended
September 25, 2010
 

Timothy’s

   $ —         $ 658   

Diedrich

     —           905   

Van Houtte

     2,018         —     
                 

Total

   $ 2,018       $ 1,563   
                 

Total Cost of Sales Adjustment

   $ 16,226       $ 88,701   
                 

(F) Represents the reversal of historical amortization incurred by Van Houtte on intangibles of $2.6 million and $8.3 million for the thirteen weeks ended December 25, 2010 and fifty-two weeks ended September 25, 2010, respectively. In addition, represents additional depreciation of $0.3 million and $1.3 million related to the date of acquisition fair valuation for Van Houtte fixed assets, including Filterfresh, for the thirteen weeks ended December 25, 2010 and the fifty-two weeks ended September 25, 2010, respectively.

The weighted-average depreciable life for Van Houtte fixed assets related to selling and operating activities is 5.1 years.

(G) Represents the elimination of expenses related to the Van Houtte, Diedrich and Timothy’s acquisitions incurred by all parties including GMCR, for stock-related compensation as well as an adjustment for depreciation and amortization expense (including Filterfresh) related to date of acquisition fair valuation of fixed assets and intangibles as follows (in thousands):

 

     Thirteen weeks ended December 25, 2010  
     Van Houtte     Diedrich     Timothy’s     Total  

Acquisition-related expenses

   $ (10,049   $ —        $ —        $ (10,049

Amortization

     6,482        —          —          6,482   

Depreciation

     307        —          —          307   
                                

Total

   $ (3,260   $ —        $ —        $ (3,260
                                
     Fifty-two weeks ended September 25, 2010  
     Van Houtte     Diedrich     Timothy’s     Total  

Acquisition-related expenses

   $ (5,341   $ (11,693   $ (2,325   $ (19,359

Amortization

     27,580        6,263        314        34,157   

Depreciation

     1,191        (30     (4     1,157   

Stock compensation

     —          (5,997     —          (5,997
                                

Total

   $ 23,430      $ (11,457   $ (2,015   $ 9,958   
                                

 

7


The weighted-average depreciable life for Van Houtte fixed assets related to general and administrative activities is 16.7 years. The weighted-average amortizable life for Van Houtte intangible assets is 10.6 years.

(H) Represents the elimination of gains and losses incurred by GMCR on derivatives not designated as hedging instruments for accounting purposes used to hedge the Canadian dollar purchase price of the Timothy’s and Van Houtte acquisitions and Van Houtte incurred gains and losses on derivatives related to the Van Houtte debt that was not assumed as part of the acquisition (in thousands):

 

     Thirteen
weeks ended
December 25, 2010
    Fifty-two
weeks ended
September 25, 2010
 

GMCR

   $ 6,846      $ 100   

Timothy’s

     —          354   

Van Houtte

     (556     7,835   
                

Total

   $ 6,290      $ 8,289   
                

(I) Represents the elimination of the gain resulting from the remeasurement of foreign currency denominated debt that was not assumed as part of the Van Houtte acquisition.

(J) Represents an adjustment for additional interest and amortization of deferred financing fees that would have been incurred on the new $1.45 billion credit facility used to finance the Van Houtte acquisition and to re-pay GMCR’s indebtedness outstanding under its previous credit facility, using the rates that would have been in effect during the applicable periods The adjustment also represents the elimination of interest expense incurred for Van Houtte, Diedrich and Timothy’s long-term debt that was not assumed in the acquisitions and an adjustment to eliminate the amortization of deferred financing fees incurred by GMCR and Van Houtte under terminated credit facilities and the amortization of deferred financing fees incurred under the new $1.45 billion credit facility.

 

     Thirteen weeks ended December 25, 2010  
     GMCR     Van Houtte      Diedrich      Timothy’s      Total  

Deferred financing

   $ (1,973   $ 5,896       $ —         $ —         $ 3,923   

Interest expense

     (5,191     14,249         —           —           9,058   
                                           

Total

   $ (7,164   $ 20,145       $ —         $ —         $ 12,981   
                                           
     Fifty-two weeks ended September 25, 2010  
     GMCR     Van Houtte      Diedrich      Timothy’s      Total  

Deferred financing

   $ (7,891   $ 1,477       $ —         $ —         $ (6,414

Interest expense

     (41,748     33,197         647         395         (7,509
                                           

Total

   $ (49,639   $ 34,674       $ 647       $ 395       $ (13,923
                                           

Debt incurred to finance the acquisition that was subject to variable interest rates was $671.5 million for the thirteen weeks ended December 25, 2010 and $1.0 billion for the fifty-two weeks ended September 25, 2010. Had interest rates increased by 125 basis points, the effect

 

8


on net income would have been additional interest expense of $1.1 million during the thirteen weeks ended December 25, 2010 and $4.7 million during the fifty-two weeks ended September 25, 2010.

(K) Represents elimination of acquisition-related expenses incurred by Diedrich.

(L) Represents the benefit from (provision for) income taxes associated with the pro forma adjustments computed based upon an estimated combined federal and state statutory rates as follows:

 

     Thirteen
weeks ended
December 25, 2010
    Fifty-two
weeks ended
September 25, 2010
 

United States

     40.35     40.35

Canada, Quebec

     28.40     29.90

Canada, Ontario

     28.50     30.00

The pro forma adjustments include the add-back of acquisition-related expenses, some of which are not tax deductible. The pro forma adjustment for the income tax expense (benefit) excludes the effect of the add-back of the non-deductible acquisition-related expenses. For tax purposes, these non-deductible expenses were recognized in the historical quarters in which the acquisitions occurred and therefore do not require adjustment for pro forma presentation.

(M) GMCR is conducting a strategic review of the Van Houtte U.S. Coffee Service business (“Filterfresh”) in contemplation of a potential divestiture of Filterfresh. As a result, all the assets and liabilities relating to the Filterfresh business were recorded at estimated fair value less costs to sell and reported as held-for-sale as of the date of the acquisition in GMCR’s Quarterly Form 10-Q for the quarter ended December 25, 2010.

The column entitled, Pro Forma, including Filterfresh, represents consolidated pro forma results of operations which include the Filterfresh operations. GMCR has eliminated the results of operations for Filterfresh as reflected in the column titled Filterfresh, which include pro forma adjustment related to Filterfresh included in the column titled Pro Forma Adjustments. GMCR’s sales to Filterfresh have been eliminated and are not reflected in the consolidated pro forma results column excluding Filterfresh. Although GMCR expects to continue to sell to Filterfresh after the potential divestiture, there is no assurance such sales will occur and if they do occur, if the sales will be for the same amounts. For the thirteen weeks ended December 25, 2010, GMCR sales to Filterfresh were approximately $6.6 million and cost of sales were approximately $4.7 million. For the fifty-two weeks ended September 25, 2010, GMCR sales to Filterfresh were approximately $25.9 million and cost of sales were approximately $18.0 million.

 

9