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Green Mountain Coffee Roasters, Inc., announced its fiscal 2010 third quarter results for the thirteen weeks ended June 26, 2010. Net sales for the third quarter of fiscal 2010 increased 64 percent to $311.5 million as compared to $190.5 million reported in the third quarter of fiscal 2009. According to Generally Accepted Accounting Principles ("GAAP"), net income for the third quarter of fiscal 2010 totaled $18.6 million, or $0.13 per fully diluted share.

Excluding transaction-related expenses incurred in the quarter, and the resulting tax effect of reversing the tax benefit associated with previously incurred acquisition-related expenses, the company's non-GAAP net income for the third quarter of fiscal 2010 was $25.8 million, or $0.19 per diluted share, representing an increase of 82 percent from $14.1 million, or $0.12 per diluted share, in the third quarter of fiscal 2009.1

The company completed its acquisition of Diedrich Coffee Inc. on May 11, 2010 for $35 per share of common stock in a transaction with a total value of approximately $300 million. The recent Financial Accounting Standards Board ("FASB") pronouncement on business combinations, effective in fiscal 2010 for the company, requires acquisition-related costs be expensed rather than capitalized. The company's fiscal third quarter GAAP net income is inclusive of approximately $4.0 million of non-deductible expenses associated with the Diedrich acquisition incurred during the fiscal third quarter. In accordance with the FASB pronouncement, because the Diedrich acquisition closed during the fiscal third quarter, this quarter's GAAP net income also reflects the tax effect of reversing the tax benefit of $3.2 million associated with the $8.1 million of acquisition-related costs for the Diedrich acquisition recorded during the first and second quarters of fiscal 2010.

During fiscal 2010's third quarter, 683 million K-Cup® portion packs were shipped system-wide by all Keurig licensed roasters, representing an increase of 72 percent over the year-ago quarter. Supporting continued growth in K-Cup demand, there were 846,000 system brewers with Keurig®-branded brewing technology shipped during the third quarter of fiscal 2010 compared to 444,000 shipped during the third quarter of fiscal 2009.

The company completed a three-for-one stock split during the third quarter, effected in the form of a stock dividend. Shareholders of record at the close of business on May 10, 2010 received two additional shares of common stock for every one share of common stock held on that date.

Lawrence J. Blanford, GMCR's president and CEO, said in a prepared statement, "In our fiscal third quarter, through the strong efforts of all our employees, we delivered excellent results on our key financial performance metrics including revenue, gross margin, operating margin and net income. We have now achieved 11 consecutive quarters of better than 40 percent net sales growth. For the first nine months of fiscal 2010 we have produced net sales growth of 70 percent and non-GAAP earnings per share growth of 89 percent over the same period for fiscal year 2009."

"Continued execution of our strategic business initiatives, including most recently, our acquisition of Diedrich, is driving GMCR's growth and enabling us to advance adoption and awareness of our growing portfolio of compelling brands," said Blanford. "We believe the inherent strength of our business model, combined with our passionate employees, the strong support of our business partners and our fervent belief that we can transform the way the world views business are key drivers behind our growth and success.

Blanford concluded, "The coming holiday buying season is shaping up to be another exciting opportunity for us to help more consumers discover and enjoy outstanding beverages with the convenience and choice of the Keurig Single-Cup brewing system. We are looking for a strong kickoff to our fiscal year 2011 and are providing our initial fiscal year 2011 estimate for sales growth in a range of between 44 percent to 50 percent and earnings per share of $1.15 to $1.20."

Fiscal 2010 Third Quarter Financial Review Key Business Drivers & Metrics

• The two primary drivers of the $121.0 million, or 64 percent, increase in the company's net sales were increases in total K-Cup portion pack net sales and Keurig brewer and accessory sales.
• Approximately 86 percent of consolidated net sales in the third quarter was from the Keurig brewing system and its recurring K-Cup portion pack revenue.
• Net sales from K-Cup portion packs totaled $197 million in the quarter, up 90 percent, or $93.1 million, over 2009.
• Net sales from Keurig brewers and accessories totaled $64 million in the quarter, up 69 percent, or 26.2 million, from the prior year period.
• For the Keurig business unit, net sales for the third quarter of fiscal 2010, after the elimination of inter-company sales, were $157.2 million, up 74 percent from net sales of $90.1 million in the third quarter of fiscal 2009.
• For the Specialty Coffee business unit (SCBU), net sales for the third quarter of fiscal 2010, after the elimination of inter-company sales, were $154.3 million, up 54 percent from net sales of $100.4 million in the third quarter of fiscal 2009.