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Green Mountain Coffee Roasters (GMCR)
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GMCR » Topics » Our credit facility allows us to increase our outstanding indebtedness, which could restrict our ability to operate our business.

These excerpts taken from the GMCR 10-K filed Dec 11, 2008.

Our credit facility allows us to increase our outstanding indebtedness, which could restrict our ability to operate our business.

The Company has a $225 million revolving credit facility which we have the ability to increase from time to time by up to an additional $50 million, subject to receipt of lender commitments and other conditions precedent. As of September 29, 2008 approximately $123.5 million was outstanding under this credit facility. We intend to fund the $40.3 million purchase price for the Tully’s acquisition from our revolving credit facility. The incurrence of debt under our credit facility could adversely affect our business and limit our ability to plan for or respond to changes in our business. Our debt obligations could also:

 

  – Increase our vulnerability to general adverse economic and industry conditions;

 

  – Require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow for other purposes;

 

  – Limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate thereby placing us at a competitive disadvantage compared to our competitors that may have less debt;

 

  – Limit, by the financial and other restrictive covenants in our debt agreements, our ability to borrow additional funds; and have a material adverse effect on us if we fail to comply with the covenants in our debt agreements because such failure could result in an event of default which, if not cured or waived, could result in a substantial amount of our indebtedness becoming immediately due and payable.

Our credit facility allows us to increase our
outstanding indebtedness, which could restrict our ability to operate our business.

The Company has a $225 million revolving credit facility which we
have the ability to increase from time to time by up to an additional $50 million, subject to receipt of lender commitments and other conditions precedent. As of September 29, 2008 approximately $123.5 million was outstanding under this credit
facility. We intend to fund the $40.3 million purchase price for the Tully’s acquisition from our revolving credit facility. The incurrence of debt under our credit facility could adversely affect our business and limit our ability to plan for
or respond to changes in our business. Our debt obligations could also:

 






 –Increase our vulnerability to general adverse economic and industry conditions;

 






 –Require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow for other purposes;

 






 –Limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate thereby placing us at a competitive disadvantage compared to our
competitors that may have less debt;

 






 –Limit, by the financial and other restrictive covenants in our debt agreements, our ability to borrow additional funds; and have a material adverse effect on us if we fail to comply
with the covenants in our debt agreements because such failure could result in an event of default which, if not cured or waived, could result in a substantial amount of our indebtedness becoming immediately due and payable.
This excerpt taken from the GMCR 10-K filed Dec 13, 2007.

Our credit facility allows us to increase our outstanding indebtedness, which could restrict our ability to operate our business.

The Company has a $225 million revolving credit facility which we have the ability to increase from time to time by up to an additional $50 million, subject to receipt of lender commitments and other conditions precedent. As of September 29, 2007 approximately $90 million was outstanding under this credit facility. The incurrence of the full amount of such debt could adversely affect our business and limit our ability to plan for or respond to changes in our business. Our debt obligations could also:

 

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Increase our vulnerability to general adverse economic and industry conditions;

 

  •  

Require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow for other purposes;

 

  •  

Limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate thereby placing us at a competitive disadvantage compared to our competitors that may have less debt;

 

  •  

Limit, by the financial and other restrictive covenants in our debt agreements, our ability to borrow additional funds; and have a material adverse effect on us if we fail to comply with the covenants in our debt agreements because such failure could result in an event of default which, if not cured or waived, could result in a substantial amount of our indebtedness becoming immediately due and payable.

Because a substantial portion of our business is based in New England, a worsening of the regional New England economy, a decrease in consumer spending or a change in the competitive conditions in this market could substantially decrease the Company’s revenue and could adversely impact our ability to implement our business strategy.

New England has been historically the Company’s strongest market and we expect that our New England operations will continue to generate a substantial portion of our revenue. In addition, our market share and visibility in New England provides us with a means for increasing brand awareness, building customer loyalty and strengthening our premium specialty coffee brand. As a result, an economic downturn or other decrease in consumer spending in New England may not only lead to a substantial decrease in revenue, but may also adversely impact our ability to market our brand, build customer loyalty, or otherwise implement our business strategy and further diversify the geographical concentration of our operations.

 

Item 1B. Unresolved Staff Comments

EXCERPTS ON THIS PAGE:

10-K (2 sections)
Dec 11, 2008
10-K
Dec 13, 2007

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