PEET Peets Coffee & Tea, Inc. (MM)

EMERYVILLE, Calif., Oct. 28 /PRNewswire-FirstCall/ -- Peet's Coffee & Tea, Inc. (NASDAQ:PEET) today announced results for its third quarter 2008 ended September 28, 2008. In this release, the Company: -- Reports net revenue of $68.5 million, an increase of 12.5% versus last year, -- Reports diluted earnings per share of $0.15, an increase of 15% versus last year, -- Reaffirms diluted earnings per share expectations for the full year of $0.77 to $0.82, and -- Gives guidance for 2009 of diluted earnings per share growth of 20 to 25%. For the 13 weeks ended September 28, 2008, net revenue increased 12.5% to $68.5 million from $60.9 million for the corresponding period of fiscal 2007. For the 39 weeks ended September 28, 2008, net revenue increased 15.2% to $205.7 million from $178.5 million for the corresponding period of fiscal 2007. Net income for the quarter was $2.0 million or $0.15 per diluted share, compared to $1.8 million or $0.13 per diluted share last year. Year-to-date, net income was $7.1 million or $0.51 per diluted share, compared to $5.1 million or $0.36 per diluted share last year. "We are on track to deliver within our earnings per share guidance for the year and well positioned for 20 to 25% earnings per share growth next year," said Patrick O'Dea, president and chief executive officer of Peet's Coffee & Tea. "While our grocery growth rate in the quarter was below our year-to-date trend, this was largely due to a shift in timing of new distribution and promotion activity from September into October. Overall, I'm encouraged by the strength of our business despite the economic environment. It's a tribute to the Peet's brand and people." Financial and Operating Summary Retail net revenue increased 11% to $45.9 million for the quarter from $41.5 million for the corresponding quarter last year. The increase was primarily attributable to new retail stores opened in the last 12 months and growth in existing stores. The Company opened three new retail locations during the quarter. Specialty net revenue increased 16% to $22.6 million for the quarter from $19.4 million for the corresponding quarter last year. Within the specialty business, grocery grew 15%, foodservice and office sales were up 34%, and the home delivery business declined 2.5% compared to the same period last year. Cost of sales and related occupancy costs decreased to 47.1% of total net revenue for the quarter compared to 47.9% for the corresponding quarter last year. The decrease from last year was due to procurement savings, increased prices in retail and grocery, and leverage of costs related to the roasting facility that opened last year, partially offset by higher green coffee costs. Operating expenses as a percent of net revenue increased to 36.1% of total net revenue for the quarter compared to 35.5% for the corresponding quarter last year. The increase was due primarily to higher costs associated with expanding the grocery business. General and administrative expenses increased to $5.2 million for the quarter from $4.9 million for the corresponding quarter last year primarily due to additional headcount and other investments to support the Company's growth. Depreciation and amortization expenses increased to $3.2 million for the quarter from $2.6 million for the corresponding quarter last year. The increase was primarily due to the opening of 23 new retail stores in the last 12 months. The Company ended the quarter with cash and cash equivalents plus marketable securities of $14.8 million. Fiscal 2009 Outlook Looking ahead, Peet's provided the following fiscal 2009 guidance: -- Total net revenue is expected to grow 12 to 15%, -- Diluted earnings per share is expected to grow 20 to 25% and be in the $0.94 to $1.00 range, and -- The Company is planning to open about 10 new retail locations and 30 to 40 new licensed locations. Peet's Coffee & Tea, Inc. Q3 2008 Conference Call The Company will report its third quarter 2008 earnings results via conference call on Tuesday, October 28, 2008. The teleconference call will begin at 2:00 p.m. PT/5:00 p.m. ET. The teleconference can be accessed by calling 1-877-604-9667. The call will be simultaneously webcast on Peet's Web site at http://www.peets.com/. A replay of the teleconference will be available through 5:00 p.m. PT/8:00 p.m. ET through 8:59 p.m. PT/11:59 p.m. ET on Tuesday, November 4, 2008, at 1-888- 203-1112 or 1-719-457-0820, using access code 9429411. It will also be archived at http://investor.peets.com/medialist.cfmthrough October 28, 2009. ABOUT PEET'S COFFEE & TEA, INC. Peet's Coffee & Tea, Inc., (PEET), is the premier specialty coffee and tea company in the United States. Peet's buys the highest quality beans in the world, artisan roasts every bean by hand to order, and delivers all of its coffee quickly for superior freshness no matter where it is sold. Founded in 1966 in Berkeley, Calif. by Alfred Peet, who is widely recognized as the grandfather of specialty coffee in the U.S., Peet's has a rapidly growing, passionate customer following that seeks out Peet's coffees wherever they go. Peet's is committed to strategically growing its business through many channels without compromising the extraordinary quality of its coffee. For more information about Peet's Coffee & Tea, Inc. visit http://www.peets.com/. This press release contains statements that are not based on historical fact and are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements include statements relating to 2008 forecasted earnings per diluted share and 2009 forecasted net revenue growth, earnings per diluted share and expected retail and license location growth for 2009. Forward-looking statements are based on management's beliefs as well as assumptions made by and information currently available to management, including financial and operational information, the Company's stock price volatility, and current competitive conditions. As a result, these statements are subject to various risks and uncertainties. The Company's actual results could differ materially from those set forth in forward-looking statements depending on a variety of factors including, but not limited to, general economic conditions, including the current credit crisis and its impact on the economy and consumer spending, the Company's ability to implement its business strategy, attract and retain customers, and obtain and expand its market presence in new geographic regions; the impact of the Company's stock price volatility on the valuation of stock-based compensation under SFAS 123(R); the availability and cost of high quality Arabica coffee beans; consumers' tastes and preferences; and competition in its market 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 December 30, 2007. These factors may not be exhaustive. The Company operates in a continually changing business environment, and new risks emerge from time to time. Any forward-looking statements speak only as of the date of this press release. PEET'S COFFEE & TEA, INC. CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands, except share amounts) September 28, December 30, 2008 2007 ASSETS Current assets Cash and cash equivalents $3,889 $15,312 Short-term marketable securities 10,893 7,932 Accounts receivable, net 9,642 8,287 Inventories 29,698 24,483 Deferred income taxes - current 2,937 2,950 Prepaid expenses and other 9,806 4,285 Total current assets 66,865 63,249 Long-term marketable securities - 7,831 Property, plant and equipment, net 107,564 99,231 Deferred income taxes - non current 3,000 3,353 Other assets, net 3,893 3,883 Total assets $181,322 $177,547 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable and other accrued liabilities $9,934 $10,104 Accrued compensation and benefits 10,470 8,909 Deferred revenue 4,477 5,856 Total current liabilities 24,881 24,869 Deferred lease credits and other long-term liabilities 7,030 5,425 Total liabilities 31,911 30,294 Shareholders' equity Common stock, no par value; authorized 50,000,000 shares; issued and outstanding:13,653,000 and 13,932,000 shares 99,662 104,616 Accumulated other comprehensive income 19 52 Retained earnings 49,730 42,585 Total shareholders' equity 149,411 147,253 Total liabilities and shareholders' equity $181,322 $177,547 PEET'S COFFEE & TEA, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited, in thousands, except per share amounts) Thirty-nine Thirteen weeks ended weeks ended September September September September 28, 2008 30, 2007 28, 2008 30, 2007 Retail stores $45,911 $41,450 $136,829 $121,436 Specialty sales 22,575 19,410 68,847 57,040 Net revenue 68,486 60,860 205,676 178,476 Cost of sales and related occupancy expenses 32,249 29,142 96,478 84,706 Operating expenses 24,715 21,593 72,934 62,772 General and administrative expenses 5,237 4,928 16,233 16,228 Depreciation and amortization expenses 3,150 2,619 9,395 7,935 Total costs and expenses from operations 65,351 58,282 195,040 171,641 Income from operations 3,135 2,578 10,636 6,835 Interest income 130 284 636 1,172 Income before income taxes 3,265 2,862 11,272 8,007 Income tax provision 1,247 1,026 4,127 2,953 Net income $2,018 $1,836 $7,145 $5,054 Net income per share: Basic $0.15 $0.13 $0.52 $0.37 Diluted $0.15 $0.13 $0.51 $0.36 Shares used in calculation of net income per share: Basic 13,603 13,816 13,825 13,664 Diluted 13,899 14,168 14,111 14,057 SEGMENT REPORTING (Unaudited, dollars 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 September 28, 2008 Net revenue $45,911 100.0% $22,575 100.0% $68,486 100.0% Cost of sales and occupancy 21,130 46.0% 11,119 49.3% 32,249 47.1% Operating expenses 19,940 43.4% 4,775 21.2% 24,715 36.1% Depreciation and amortization 2,357 5.1% 372 1.6% $421 3,150 4.6% Segment operating income 2,484 5.4% 6,309 27.9% (5,658) 3,135 4.6% For the thirteen weeks ended September 30, 2007 Net revenue $41,450 100.0% $19,410 100.0% $60,860 100.0% Cost of sales and occupancy 19,510 47.1% 9,632 49.6% 29,142 47.9% Operating expenses 18,109 43.7% 3,484 17.9% 21,593 35.5% Depreciation and amortization 2,075 5.0% 314 1.6% $230 2,619 4.3% Segment operating income 1,756 4.2% 5,980 30.8% (5,158) 2,578 4.2% For the thirty-nine weeks ended September 28, 2008 Net revenue $136,829 100.0% $68,847 100.0% $205,676 100.0% Cost of sales and occupancy 62,191 45.5% 34,287 49.8% 96,478 46.9% Operating expenses 58,791 43.0% 14,143 20.5% 72,934 35.5% Depreciation and amortization 7,244 5.3% 1,029 1.5% $1,122 9,395 4.6% Segment operating income 8,603 6.3% 19,388 28.2% (17,355) 10,636 5.2% For the thirty-nine weeks ended September 30, 2007 Net revenue $121,436 100.0% $57,040 100.0% $178,476 100.0% Cost of sales and occupancy 56,684 46.7% 28,022 49.1% 84,706 47.5% Operating expenses 52,517 43.2% 10,255 18.0% 62,772 35.2% Depreciation and amortization 6,218 5.1% 985 1.7% $732 7,935 4.4% Segment operating income 6,017 5.0% 17,778 31.2% (16,960) 6,835 3.8% Thirteen weeks ended Thirty-nine weeks ended September September September September 28, 2008 30, 2007 28, 2008 30, 2007 (unaudited, in thousands, (unaudited, in thousands, except per share amounts) except per share amounts) Net income, as reported $2,018 $1,836 $7,145 $5,054 Stock option review professional fees - 188 16 1,228 Income tax benefit - (67) (6) (453) Net income, excluding fees $2,018 $1,957 $7,155 $5,829 After tax impact of review professional fees $- $121 $10 $775 Diluted net income per share: Net income, as reported $0.15 $0.13 $0.51 $0.36 Stock option review professional fees - 0.01 - 0.09 Income tax benefit - - - (0.03) Diluted net income, excluding fees* $0.15 $0.14 $0.51 $0.41 After tax impact of review professional fees* $- $0.01 $- $0.06 * per share data may not sum due to rounding (Logo: http://www.newscom.com/cgi-bin/prnh/20070606/AQW139LOGO) http://www.newscom.com/cgi-bin/prnh/20070606/AQW139LOGO http://photoarchive.ap.org/ DATASOURCE: Peet's Coffee & Tea, Inc. CONTACT: media, Patsy Barich of Double Forte, +1-415-848-8104, , for Peet's Coffee & Tea, Inc.; or investors, Seanna Allen of Peet's Coffee & Tea, Inc., +1-510-594-2196, Web site: http://www.peets.com/

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