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Green Mountain Coffee Roasters (GMCR)
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GMCR » Topics » Our failure to successfully integrate Keurig into our business may cause us to fail to realize the expected synergies and other benefits of the acquisition, which could adversely affect our future results.

This excerpt taken from the GMCR 10-K filed Dec 13, 2007.

Our failure to successfully integrate Keurig into our business may cause us to fail to realize the expected synergies and other benefits of the acquisition, which could adversely affect our future results.

The integration of Keurig into our business presents significant challenges and risks to our business, including:

 

  •  

Distraction of management from regular business concerns;

 

  •  

Assimilation and retention of employees and customers of Keurig;

 

  •  

Integration of technologies, services and products; and

 

  •  

Achievement of appropriate internal control over financial reporting.

We may fail to successfully complete the integration of Keurig into our business and, as a result, may fail to realize the synergies, cost savings and other benefits expected from the acquisition.

This excerpt taken from the GMCR 10-K filed Dec 14, 2006.

Our failure to successfully integrate Keurig into our business may cause us to fail to realize the expected synergies and other benefits of the acquisition, which could adversely affect our future results.

The integration of Keurig into our business presents significant challenges and risks to our business, including:

 

  •   distraction of management from regular business concerns;

 

  •   assimilation and retention of employees and customers of Keurig;

 

  •   integration of technologies, services and products; and

 

  •   achievement of appropriate internal control over financial reporting.

We may fail to successfully complete the integration of Keurig into our business and, as a result, may fail to realize the synergies, cost savings and other benefits expected from the acquisition. We may fail to grow and build profits in Keurig’s business line or achieve sufficient cost savings through the integration of customers or administrative and other operational activities. Furthermore, we must achieve these objectives without adversely affecting our revenues. If we are not able to successfully achieve these objectives, the anticipated benefits of the acquisition may not be realized fully or at all, or it may take longer to realize them than expected, and our results of operations could be materially adversely affected.

Keurig has a history of operating losses, and our ability to achieve and maintain profitability of its business lines will depend on our ability to manage and control operating expenses and to generate and sustain increased levels of revenue. Our expectations to increase its profitability may not be realized, and Keurig’s losses may continue as we integrate its operations into our business. If Keurig’s revenue grows more slowly than we anticipate, or if its operating expenses are higher than we expect, we may not be able to achieve, sustain or increase its profitability, in which case our financial condition will suffer and our stock price could decline.

We financed the cash consideration paid in the acquisition with Keurig through our new $125 million credit facility, and such debt could adversely affect our business and limit our ability to plan for or respond to changes in our business. This substantial indebtedness and the fact that a significant portion of our cash flow from operations must be used to make principal and interest payments on this indebtedness could have important consequences. For example, our debt obligations could:

 

  •   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;

 

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  •   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.

EXCERPTS ON THIS PAGE:

10-K
Dec 13, 2007
10-K
Dec 14, 2006

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