Exhibit 99.1

 

Media Contact: Nicole Arena Double Forte 415.848.8103 narena@double-forte.com

Investor Contact: Seanna Allen Peet’s Coffee & Tea, Inc. 510.594.2196 investorrelations@peets.com

 

 

PEET’S COFFEE & TEA, INC. REPORTS FOURTH QUARTER
AND 2011 YEAR-END RESULTS

 

EMERYVILLE, Calif. – February 14, 2012 – Peet’s Coffee & Tea, Inc. (NASDAQ: PEET) today announced its fourth quarter and full-year results for the period ended January 1, 2012.

 

In this release, the Company:

 

·

Reports diluted earnings per share of $0.42 for the fourth quarter and $1.33 for fiscal 2011

·

Reports non-GAAP diluted earnings per share of $1.49 for fiscal 2011, up 12% compared to fiscal 2010 non-GAAP diluted earnings per share

·

Reports net revenue growth of 11% for both the fourth quarter and the year

·

Confirms fiscal 2012 diluted earnings per share guidance of $1.70 to $1.80

 

Financial Highlights

 

PEET'S COFFEE & TEA, INC.
Financial Highlights
(Unaudited, in thousands, except per share data)

 

		Fourth Quarter								%				Fiscal Year								%
			2011				2010				Change				2011				2010				Change
Net revenue, as reported		$	101,623			$	91,628				11	%		$	371,919			$	333,808				11	%
Net income per diluted share, as reported		$	0.42			$	0.48				-13	%		$	1.33			$	1.28				4	%
Non-GAAP net income per diluted share		$	0.42			$	0.48				-13	%		$	1.49			$	1.33				12	%

___________

See “Non-GAAP Financial Information” at the end of this document, including the related reconciliation, for further detail.

 

For the 13 weeks and 52 weeks ended January 1, 2012, net revenue increased 11% versus the corresponding periods of fiscal 2010.

 

Diluted earnings per share was $1.33 for fiscal 2011, compared to $1.28 for fiscal 2010. Excluding the litigation- and transaction-related items outlined below, non-GAAP diluted earnings per share increased 12% to $1.49 for fiscal 2011, compared to $1.33 for fiscal 2010.

 

 

 

“Despite record high coffee costs since becoming a public company, we finished fiscal 2011 with diluted earnings per share toward the higher end of our stated range, consistent with previous guidance,” said Patrick O’Dea, president and CEO of Peet’s Coffee & Tea. “Our sales growth continues to be strong, led by our grocery business, which grew 29% in the quarter and 30% for the year. Our performance in 2011 is a testament to our brand’s premium-quality, premium-priced position in the market and the strength of our team. With pricing in place, visibility to our 2012 coffee costs, and already established growth strategies underway, we are well positioned to achieve our goals for this year. I believe this, in combination with the many new growth opportunities in our pipeline, bodes well for our long-term growth prospects.”

 

Non-GAAP Information

 

Net income and diluted earnings per share for fiscal 2011 include $3.3 million ($0.16 per diluted share) of expenses associated with a class action lawsuit, including anticipated settlement and legal costs. These costs are reflected in the consolidated statements of income as Litigation-related expenses.

 

Net income and diluted earnings per share for fiscal 2010 include $1.0 million ($0.05 per diluted share) of legal and related expenses incurred by the Company for its response to the subpoena it received from the Federal Trade Commission (FTC) in connection with the FTC’s anti-trust review of the acquisition of Diedrich Coffee by Green Mountain Coffee Roasters. These costs are reflected in the consolidated statements of income as Transaction-related expenses.

 

Fourth Quarter Consolidated Financial and Operating Summary

Retail net revenue increased 3% to $56.5 million for the 13 weeks ended January 1, 2012, from $54.7 million for the corresponding period last year. The increase was driven by a 6% rise in sales of beverages and pastries. The Company opened two stores in the quarter, ending the year with 196 stores versus 192 stores at the end of fiscal 2010.

Specialty net revenue increased 22% to $45.1 million for the 13 weeks ended January 1, 2012, compared to $36.9 million for the corresponding period last year. Within specialty, grocery sales were up 29% over last year, foodservice and office sales grew 20%, and home delivery sales were flat.

 

Cost of sales and related occupancy expenses increased as a percent of total net revenue to 52.7% for the quarter, compared to 45.7% for the corresponding period last year. The increase resulted primarily from higher coffee costs and, to a lesser extent, higher milk costs and a mix shift towards the specialty business, which has a higher cost of sales. Price increases across the channels and lower shipping expenses partially offset the impact of these higher costs.

Operating expenses decreased as a percentage of net revenue to 28.2%, compared to 30.9% for the corresponding period last year. The decrease was due to a favorable mix shift towards the specialty business, the impact of price increases across all channels, leveraging of overhead expenses, and cost efficiencies in both our retail stores and our direct store delivery system.

 

General and administrative expenses decreased as a percentage of net revenue to 6.7%, compared to 8.0% for the corresponding period last year. General and administrative expenses decreased to $6.8 million from $7.3 million for the corresponding period last year, primarily due to lower payroll costs and outside services.

Depreciation and amortization expenses decreased as a percentage of net revenue to 3.9%, compared to 4.3% for the corresponding period last year. Depreciation and amortization expenses were $3.9 million for the quarter, consistent with the corresponding period last year.

 

 

Cash and cash equivalents plus short-term and long-term marketable securities were $35 million at the end of fiscal 2011, compared to $49 million at the end of fiscal 2010.

Fiscal 2012 Outlook

 

Looking ahead, Peet’s confirmed the following fiscal 2012 guidance:

 

·

Total net revenue growth of around 10%

·

Diluted earnings per share in the range of $1.70 to $1.80

Peet’s Coffee & Tea, Inc. Q4 and 2011 Year-End Conference Call

 

Peet’s will discuss its fourth quarter and fiscal year 2011 results via conference call today, February 14, 2012. The teleconference call will begin at 2:00 p.m. PT/5:00 p.m. ET and can be accessed by calling 866-748-8653. The call will be simultaneously webcast on the Investor Relations portion of Peet’s website, under “Media Events”: 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 on February 14, 2012, until 8:59 p.m. PT/11:59 p.m. ET on February 21, 2012, at 404-537-3406 or 855-859-2056, using access code 43013095. The replay will also be archived at http://investor.peets.com/events.cfm through February 14, 2013, at 8:59 p.m. PT/11:59 p.m. ET.

 

The Company has posted on its website at http://investor.peets.com/events.cfm a detailed reconciliation of non-GAAP net income and non-GAAP net income per diluted share as well as non-GAAP operating income and margin on a total company and segment basis.

 

About Peet’s Coffee & Tea, Inc.

 

Peet’s Coffee & Tea, Inc. (NASDAQ: PEET) is the premier specialty coffee and tea company in the United States. The company was founded in 1966 in Berkeley, Calif. by Alfred Peet. Peet was an early tea authority who later became widely recognized as the grandfather of specialty coffee in the United States. 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 through 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 www.peets.com.

 

###

 

 

CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION

 

This press release and the related conference call contain statements that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “anticipates,” “expects,” “intends,” “plans,” “targets,” “projects,” “guidance” and similar expressions are intended to identify such forward-looking statements, which include statements relating to 2012 forecasted net revenue, 2012 forecasted diluted earnings per share, the Company’s ability to achieve its 2012 goals, opportunities for new growth, and long-term prospects. Forward-looking statements are based on management’s current beliefs, as well as current assumptions made by and information currently available to management, including financial and operational information, coffee and other commodity price expectations, the Company’s stock price volatility, and current competitive conditions. 

 

 

 

These forward-looking statements are not guarantees of future performance and are subject to inherent risks and uncertainties, including risks and uncertainties beyond the Company’s control or difficult to predict. Therefore, actual results and outcomes may differ materially from what is expressed or forecasted in such forward-looking statements. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company undertakes no obligation, other than as required by law, to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

 

Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: general economic conditions, including the recent recession and its ongoing negative impact on consumer spending; other factors impacting demand for specialty coffee, including consumers’ tastes and preferences; volatility of coffee and other commodity costs; the availability and cost of high-quality Arabica coffee beans; current and potential future claims and litigation involving the Company and the Company’s ability to manage its expenses related to such claims and litigation; the Company’s ability to implement its business strategy, attract and retain customers, obtain and expand its market presence in new geographic regions, and develop and maintain its brand; competition; and disruption of its roasting and distribution facility operations 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 January 2, 2011. These factors may not be exhaustive and other unpredictable or unknown factors could also have material adverse effects on forward-looking statements. Additionally, the Company operates in a continually changing business environment, and new risks and uncertainties emerge from time to time.

 

All forward-looking statements in this press release and the related conference call are qualified by these cautionary statements.

 

 

PEET’S COFFEE & TEA, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except share amounts)

 

		January 1,				January 2,
		2012				2011
ASSETS
Current assets
Cash and cash equivalents		$	30,755			$	44,629
Short-term marketable securities			3,800				4,183
Accounts receivable, net			20,522				14,852
Inventories			54,265				33,534
Deferred income taxes - current			5,041				4,420
Prepaid expenses and other			9,368				7,798
Total current assets			123,751				109,416
Long-term marketable securities			888				—
Property, plant and equipment, net			89,304				97,279
Other assets, net			1,328				2,137
Total assets		$	215,271			$	208,832
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and other accrued liabilities		$	11,547			$	9,138
Accrued compensation and benefits			10,283				11,555
Deferred revenue			7,382				7,102
Total current liabilities			29,212				27,795
Deferred income taxes - non current			367				46
Deferred lease credits			6,668				7,023
Other long-term liabilities			1,068				1,468
Total liabilities			37,315				36,332
Shareholders' equity
Common stock, no par value; authorized 50,000,000 shares;
issued and outstanding: 13,136,000 and 13,063,000 shares			69,664				81,995
Accumulated other comprehensive income			2				2
Retained earnings			108,290				90,503
Total shareholders' equity			177,956				172,500
Total liabilities and shareholders' equity		$	215,271			$	208,832

 

 

 

PEET’S COFFEE & TEA, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, in thousands, except per share amounts)

 

			Thirteen weeks ended								Fifty-two weeks ended
			January 1,				January 2,				January 1,				January 2,
			2012				2011				2012				2011
Retail stores		$	56,547			$	54,694			$	214,270			$	205,116
Specialty sales			45,076				36,934				157,649				128,692
Net revenue			101,623				91,628				371,919				333,808
Cost of sales and related occupancy expenses			53,534				41,838				186,374				154,892
Operating expenses			28,646				28,345				113,229				109,646
Transaction related expenses			—				—				—				970
Litigation related expenses			—				15				3,260				(34	)
General and administrative expenses			6,784				7,311				25,871				25,029
Depreciation and amortization expenses			3,913				3,923				15,578				15,767
Total costs and expenses from operations			92,877				81,432				344,312				306,270
Income from operations			8,746				10,196				27,607				27,538
Interest (expense) income, net			(1	)			2				8				8
Income before income taxes			8,745				10,198				27,615				27,546
Income tax provision			3,098				3,766				9,828				10,045
Net income		$	5,647			$	6,432			$	17,787			$	17,501
Net income per share:
Basic		$	0.43			$	0.50			$	1.37			$	1.34
Diluted		$	0.42			$	0.48			$	1.33			$	1.28
Shares used in calculation of net income per share:
Basic			13,034				12,871				12,982				13,038
Diluted			13,353				13,453				13,366				13,643

 

PEET’S COFFEE & TEA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)

 

		Fifty-two				Fifty-two
		weeks ended				weeks ended
		January 1,				January 2,
		2012				2011
Cash flows from operating activities:
Net income		$	17,787			$	17,501
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization			17,886				17,959
Amortization of interest purchased			346				16
Stock-based compensation			3,844				3,354
Excess tax benefit from exercise of stock options			(10,167	)			(5,501	)
Tax benefit from exercise of stock options			9,406				4,936
Loss on disposition of assets and asset impairment			765				129
Deferred income taxes			(300	)			(1,103	)
Changes in other assets and liabilities:
Accounts receivable, net			(5,670	)			357
Inventories			(20,731	)			(7,598	)
Prepaid expenses and other current assets			(1,570	)			(1,935	)
Other assets			(4	)			47
Accounts payable, accrued liabilities and deferred revenue			1,584				(3,809	)
Deferred lease credits and other long-term liabilities			(755	)			411
Net cash provided by operating activities			12,421				24,764
Cash flows from investing activities:
Purchases of property, plant and equipment			(10,833	)			(11,603	)
Proceeds from sales of property, plant and equipment			5				19
Changes in restricted investments			798				558
Proceeds from sales and maturities of marketable securities			9,765				—
Purchases of marketable securities			(10,616	)			(4,195	)
Net cash used in investing activities			(10,881	)			(15,221	)
Cash flows from financing activities:
Net proceeds from issuance of common stock			25,699				17,978
Purchase of common stock			(51,280	)			(36,327	)
Excess tax benefit from exercise of stock options			10,167				5,501
Net cash used in financing activities			(15,414	)			(12,848	)
Decrease in cash and cash equivalents			(13,874	)			(3,305	)
Cash and cash equivalents, beginning of period			44,629				47,934
Cash and cash equivalents, end of period		$	30,755			$	44,629
Non-cash investing activities:
Capital expenditures incurred, but not yet paid		$	245			$	412
Other cash flow information:
Cash paid for income taxes			3,044				7,227

 

 

PEET’S COFFEE & TEA, INC.
SEGMENT REPORTING
(Unaudited, 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 January 1, 2012
Net revenue		$	56,547				100.0	%		$	45,076				100.0	%						$	101,623				100.0	%
Cost of sales and occupancy			26,050				46.1	%			27,484				61.0	%							53,534				52.7	%
Operating expenses			20,652				36.5	%			7,994				17.7	%							28,646				28.2	%
Litigation related expenses			—								—												—
Depreciation and amortization			2,735				4.8	%			408				0.9	%		$	770				3,913				3.9	%
Segment operating income			7,110				12.6	%			9,190				20.4	%			(7,554	)			8,746				8.6	%
For the thirteen weeks ended January 2, 2011
Net revenue		$	54,694				100.0	%		$	36,934				100.0	%						$	91,628				100.0	%
Cost of sales and occupancy			22,922				41.9	%			18,916				51.2	%							41,838				45.7	%
Operating expenses			20,824				38.1	%			7,521				20.4	%							28,345				30.9	%
Litigation related expenses			15				0.0	%															15				0.0	%
Depreciation and amortization			2,775				5.1	%			432				1.2	%		$	716				3,923				4.3	%
Segment operating income			8,158				14.9	%			10,065				27.3	%			(8,027	)			10,196				11.1	%
For the fifty-two weeks ended January 1, 2012
Net revenue		$	214,270				100.0	%		$	157,649				100.0	%						$	371,919				100.0	%
Cost of sales and occupancy			96,193				44.9	%			90,181				57.2	%							186,374				50.1	%
Operating expenses			82,148				38.3	%			31,081				19.7	%							113,229				30.4	%
Litigation related expenses			3,260				1.5	%															3,260				0.9	%
Depreciation and amortization			10,917				5.1	%			1,698				1.1	%		$	2,963				15,578				4.2	%
Segment operating income			21,752				10.2	%			34,689				22.0	%			(28,834	)			27,607				7.4	%
For the fifty-two weeks ended January 2, 2011
Net revenue		$	205,116				100.0	%		$	128,692				100.0	%						$	333,808				100.0	%
Cost of sales and occupancy			88,622				43.2	%			66,270				51.5	%							154,892				46.4	%
Operating expenses			82,762				40.3	%			26,884				20.9	%							109,646				32.8	%
Litigation related expenses			(34	)			0.0	%															(34	)			0.0	%
Depreciation and amortization			11,216				5.5	%			1,746				1.4	%		$	2,805				15,767				4.7	%
Segment operating income			22,550				11.0	%			33,792				26.3	%			(28,804	)			27,538				8.2	%

 

 

NON-GAAP FINANCIAL INFORMATION

 

Peet’s Coffee & Tea, Inc. reports its financial results in accordance with generally accepted accounting principles in the United States (GAAP). In this press release, the Company is also providing non-GAAP financial measures―specifically, non-GAAP net income and non-GAAP net income per diluted share, which exclude certain litigation- and transaction-related expenses as detailed in the reconciliation below. Because of the nature and magnitude of these expenses, the Company uses the presented non-GAAP financial measures internally to compare its performance period to period and believes this information is also helpful to investors. The Company cautions investors that the non-GAAP financial measures presented are intended to supplement the Company’s GAAP results and are not a substitute for such results. Additionally, the non-GAAP financial measures used by Peet’s may differ from non-GAAP measures used by other companies.

 

PEET'S COFFEE & TEA, INC.
Reconciliation of Non-GAAP Financial Information
(Unaudited, in thousands, except per share data)

 

		Thirteen				Thirteen				Fifty-Two				Fifty-Two
		weeks ended				weeks ended				weeks ended				weeks ended
		January 1,				January 2,				January 1,				January 2,
		2012				2011				2012				2011
Net Income
Net income, as reported		$	5,647			$	6,432			$	17,787			$	17,501
Transaction related expenses, net of tax (1)			—				—				—				616
Litigation related expenses, net of tax (2)			—				10				2,100				(21	)
Non-GAAP net income		$	5,647			$	6,442			$	19,887			$	18,096
Net Income Per Diluted Share
Net income per diluted share, as reported		$	0.42			$	0.48			$	1.33			$	1.28
Transaction related expenses, net of tax (1)			—				—				—				0.05
Litigation related expenses, net of tax (2)			—				—				0.16				—
Non-GAAP net income per diluted share		$	0.42			$	0.48			$	1.49			$	1.33

___________ 

 

1)	Transaction-related expenses reflect legal and related expenses incurred in connection with a subpoena received from the Federal Trade Commission (FTC) relating to the FTC’s anti-trust review of the acquisition of Diedrich Coffee by Green Mountain Coffee Roasters.

 

2)

Litigation-related expenses reflect a) expenses incurred or accrued in connection with a class action lawsuit filed against the Company in the first quarter of 2010, including in connection with the pending settlement thereof and b) amounts recorded into income in 2010 in connection with a class action lawsuit filed against the Company in the third quarter of 2008, based on the difference between the previously recorded liability and the final settlement payment.