Green Mountain Coffee Roasters (GMCR)

Income before taxes

Company income before taxes increased to $21.4 million in the second quarter of fiscal 2009, up from $10.0 million in the prior year period, and, as a percentage of net sales, 11.1% and 8.3%, respectively.

Excluding the non-cash amortization expenses related to the identifiable intangibles of $1.2 million in each period and $1.0 million of patent litigation expense in the prior year period, the Company’s non-GAAP income before taxes was $22.6 million, or 11.7% of net sales as compared to $12.2 million, or 10.1% of net sales in the prior year period.

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The SCBU segment contributed $12.8 million in income before taxes in the second quarter of fiscal 2009, up from $7.2 million in the prior year period.

The Keurig segment contributed $14.7 million in income before taxes in the second quarter of fiscal 2009, up from $10.1 million in the prior year period.

The Corporate segment accounted for a reduction of $(6.0) million from income before taxes in the second quarter of fiscal 2009, as compared to a reduction of ($6.2) million in the prior year period.

Income before taxes

Company income before taxes increased to $44.9 million in the 2009 YTD period, up from $14.9 million in the prior YTD period, and, as a percentage of net sales, 11.5% and 6.0%, respectively. This increase is mainly attributable to the $17.0 million (pretax) patent litigation settlement as described above.

Excluding the non-cash intangibles amortization expense of $2.4 million in each period, the patent litigation income of $17.0 million in the 2009 YTD period, and the patent litigation expense of $1.5 million in the prior YTD period, non-GAAP income before taxes increased to $30.3 million in the 2009 YTD period from $18.8 million in the prior YTD period.

The SCBU segment contributed $22.4 million in income before taxes in the 2009 YTD period, up from $13.3 million in the prior YTD period.

The Keurig segment contributed $17.4 million in income before taxes in the 2009 YTD period, up from $13.8 million in the prior YTD period.

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The Corporate segment contributed $6.2 million in income before taxes in the 2009 YTD period, as compared to a reduction of $(11.1) million in the prior YTD period. This increase is mainly attributable to the $17.0 million (pretax) patent litigation settlement as described above.

Income before taxes

Company income before taxes increased to $23.5 million in the first quarter of fiscal 2009, up from $4.9 million in the prior year period, and, as a percentage of net sales, 11.9% and 3.9%, respectively. This increase is mainly attributable to the $17.0 million (pretax) patent litigation settlement as described above. Excluding the patent litigation income, income before taxes increased to $6.5 million in the first quarter of fiscal 2009, up from $5.3 million in the prior year period.

Excluding the non-cash amortization expenses related to the identifiable intangibles of $1.2 million in each period and patent litigation settlement receipt and expense, the Company’s income before taxes was $7.7 million, or 3.9% of net sales as compared to $6.5 million, or 5.2% of net sales in the prior year period.

The GMC segment contributed $9.6 million in income before taxes in the first quarter of fiscal 2009, up from $6.2 million in the prior year period.

The Keurig segment contributed $2.7 million in income before taxes in the first quarter of fiscal 2009, down from $3.7 million in the prior year period.

The Corporate segment contributed $12.1 million in income before taxes in the first quarter of fiscal 2009, as compared to ($4.9) million in the prior year period, due to the settlement of the patent litigation in the first quarter of fiscal 2009.

Income before taxes

Company income before taxes was $36.5 million in fiscal 2008, $21.6 million in fiscal 2007 and $16.1 million in fiscal 2006, and, as a percentage of net sales, 7%, 6% and 7%, respectively. Excluding the non-cash amortization expenses related to the identifiable intangibles acquired in prior years, the Company’s income before taxes was 8% of net sales in fiscal 2008, which is consistent with fiscal 2007.

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Table of Contents

The GMC segment contributed $27.8 million in income before taxes in fiscal 2008, up from $22.5 million in fiscal 2007 and $18.7 million in fiscal 2006.

The Keurig segment contributed $32.6 million in income before taxes in fiscal 2008, up from $16.8 million in fiscal 2007. Income before taxes in fiscal 2006 was $1.1 million for the 15 weeks ended September 30, 2006.

Income before taxes

FACE="Times New Roman" SIZE="2">Company income before taxes was $36.5 million in fiscal 2008, $21.6 million in fiscal 2007 and $16.1 million in fiscal 2006, and, as a percentage of net sales, 7%, 6% and 7%, respectively. Excluding the non-cash
amortization expenses related to the identifiable intangibles acquired in prior years, the Company’s income before taxes was 8% of net sales in fiscal 2008, which is consistent with fiscal 2007.

Income before taxes

Company income before taxes increased to $24.8 million in the 2008 YTD period, up from $15.5 million in the prior YTD period, and, as a percentage of net sales, 6.8% and 6.2%, respectively due to increased sales and leveraging selling and organizational resources on a higher sales base.

The GMC segment contributed $18.9 million in income before taxes in the 2008 YTD period, up from $17.0 million in the prior YTD period.

The Keurig segment contributed $23.0 million in income before taxes in the 2008 YTD period, up from $11.3 million in the prior YTD period.

Corporate expenses and inter-company eliminations accounted for a reduction of $17.1 million in income before taxes in the third quarter of fiscal 2008, as compared to a reduction of $12.8 million in the prior YTD period.

Income before taxes

Company income before taxes increased to $14.9 million in the 2008 YTD period, up from $9.5 million in the prior YTD period, and, as a percentage of net sales, 6.0% and 5.7%, respectively due to increased sales and leveraging selling and organizational resources on a higher sales base.

The GMC segment contributed $13.3 million in income before taxes in the 2008 YTD period, up from $12.0 million in the prior YTD period.

The Keurig segment contributed $13.8 million in income before taxes in the 2008 YTD period, up from $5.8 million in the prior YTD period.

Corporate expenses and inter-company eliminations accounted for a reduction of $12.2 million in income before taxes in the second quarter of fiscal 2008, as compared to a reduction of $8.3 million in the prior YTD period.

Income before taxes

Company income before taxes was $4.9 million in the first quarter of fiscal 2008, up from $4.1 million in the prior year period, and, as a percentage of net sales, 3.9% and 4.8%, respectively.

The GMC segment contributed $6.2 million in income before taxes in the first quarter of fiscal 2008, down from $6.9 million in the prior year period due primarily to the lower gross margin.

The Keurig segment contributed $3.7 million in income before taxes in the first quarter of fiscal 2008, up from $1.6 million in the prior year period.

Corporate expenses and inter-company eliminations accounted for a reduction of $5.0 million in income before taxes in the first quarter of fiscal 2008, as compared to a reduction of $4.4 million in the prior year period.

Income before taxes

Company income before taxes was $21.6 million in fiscal 2007, $16.1 million in fiscal 2006 and $15.6 million in fiscal 2005, and, as a percentage of net sales, 6.3%, 7.1% and 9.6%, respectively. Excluding the non-cash amortization expenses related to the identifiable intangibles acquired in fiscal 2006, the Company’s income before taxes was 7.7% in fiscal 2007, unchanged from fiscal 2006 levels.

The GMC segment contributed $16.6 million in income before taxes in fiscal 2007, down from $18.7 million in fiscal 2006 and $15.6 million in fiscal 2005.

The Keurig segment contributed $16.3 million in fiscal 2007 and $1.1 million for the 15 weeks ended September 30, 2006 to income before taxes (prior to inter-company eliminations).

Income Before Taxes and Taxes

The GMCR segment income before taxes for the 2007 YTD period was $12.9 million as compared to $13.9 million reported in 2006 YTD period.

Keurig’s income before taxes for the 2007 YTD period was $11.1 million (prior to $3.6 million of amortization of intangibles and $4.9 million of interest expense in the 2007 YTD period), as compared to $10,000 reported in the 2006 YTD period.

The effective income tax rate for the Company was 40.2% in the 2007 YTD period, down from 41.6% in the 2006 YTD period.

Income before income taxes

Company income before income taxes for the fiscal first quarter of 2007 was $4.1 million, compared to the reported sixteen week fiscal first quarter of 2006 of $5.1 million. Excluding the extra three weeks in the fiscal first quarter of 2006 income before income taxes was $5.0 million. Excluding the impact of the non-cash items described below, non-GAAP net income grew approximately 19.4% in the first quarter of fiscal 2007 totaling $3.7 million, or $0.46 per share, compared to non-GAAP net income of $3.1 million or $0.39 per share, for the comparable 2006 period. The non-cash items excluded were: (i) Pre-tax non-cash stock-based compensation charges of $744,000 or approximately $0.06 per diluted share in the fiscal first quarter of 2007 as compared to $339,000 or approximately $0.02 per diluted share in the adjusted thirteen-week first quarter of fiscal 2006; (ii) As part of the purchase price accounting for the acquisition of Keurig, the fiscal first quarter 2007 results include pre-tax non-cash amortization expense related to the identifiable intangibles and pre-tax non-cash inventory step-up adjustments of approximately $1.3 million or $0.10 per diluted share; and (iii) The Company’s net income in the first quarter of fiscal 2006 includes recognition of after-tax non-cash income of $2,000 or $0.00 per share as a result of its equity investment in Keurig, Inc.