Peet's Coffee & Tea, Inc. Reports First Quarter 2009 Results

EMERYVILLE, Calif., April 28  /PRNewswire-FirstCall/ -- Peet's Coffee & Tea, Inc. (NASDAQ:PEET) today announced its first quarter 2009 results for the period ended March 29, 2009, which included 13 weeks.

  (Logo:  http://www.newscom.com/cgi-bin/prnh/20070606/AQW139LOGO)

  In this release, the Company:

  --  Reports first quarter diluted earnings per share of $0.23, an increase
      of 53% versus last year,
  --  Reports net revenue of $72.1 million, an increase of 7% versus last
      year, and

  --  Reaffirms guidance for 2009 of diluted earnings per share of $0.94 to
      $1.00.




For the 13 weeks ended March 29, 2009, net revenue increased 7% to $72.1 million from $67.1 million for the corresponding period last year.

Net income for the quarter was $3.1 million, or $0.23 per share, compared to $2.1 million, or $0.15 per diluted share, for the corresponding period last year.

"Our strong profit this quarter reflects the power of the Peet's brand and our ability to leverage the people, plant and systems infrastructure we've built to drive improved results," said Patrick O'Dea, president and CEO of Peet's Coffee & Tea. "The combination of focusing on our highly loyal customer base and executing with excellence across the Company is enabling us to grow quite profitably despite the challenging economic environment."

Financial and Operating Summary

Retail net revenue increased 8% to $48.0 million for the 13 weeks ended March 29, 2009 from $44.6 million for the corresponding period last year. The increase was primarily attributed to new retail stores opened in the last 12 months. The Company opened two new retail locations in the quarter.

Specialty net revenue increased 7% to $24.1 million, compared to $22.5 million for the corresponding period last year.  At the end of the quarter, approximately 8,400 grocery stores carried Peet's coffee. Within the specialty business, grocery sales grew 11%, foodservice and office was up 10%, and home delivery sales were down 8% compared to the same period last year.

Cost of sales and related occupancy costs increased to $32.6 million, compared to $32.0 million for the corresponding period last year, but decreased as a percentage of net revenue to 45.2%, compared to 47.6% for the corresponding period last year.  The decrease from last year was due to effective cost controls in the plant and retail stores, higher prices in retail and grocery, favorable product mix in foodservice and office, and lower milk and shipping costs, partially offset by higher green coffee costs.

Operating expenses increased to $25.2 million, compared to $23.5 million for the corresponding period last year, but decreased slightly as a percentage of net revenue to 34.9%, compared to 35.0%, for the corresponding period last year.  The decrease was primarily due to effective cost management in the retail business, including lower training, repairs and supplies spending, as well as leveraging of retail overhead costs.  This was mostly offset by higher costs in grocery to support the expansion of the direct store delivery sales system into the eastern U.S.

General and administrative expenses increased to $5.9 million compared to $5.6 million for the same period last year driven by higher payroll related costs, partially offset by lower administration costs.

Depreciation and amortization expenses increased to $3.6 million, compared to $3.1 million for the corresponding period last year. The increase was primarily due to the opening of 16 new retail stores in the last 12 months.

The Company ended the quarter with cash and cash equivalents plus investments of $16.6 million.

Peet's Coffee & Tea, Inc. Q1 2009 Conference Call

The Company will report its first quarter 2009 earnings results via conference call on Tuesday, April 28, 2009.  The teleconference will begin at 2:00 p.m. PT/5:00 p.m. ET.

The teleconference can be accessed by calling 1-877-545-1489. The call will be simultaneously webcast on Peet's web site at http://www.peets.com/. A replay of the teleconference will be available at 5:00 p.m. PT/ 8:00 p.m. ET through 8:59 p.m. PT/11:59 p.m. ET on, May 5, 2009 at 1-888-203-1112 or 1-719-457-0820, using access code 7479322.  It will also be archived at http://investor.peets.com/medialist.cfm through April 28, 2010, at 8:59p.m. PT/11:59 p.m. ET.

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, California 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 2009 forecasted earnings per diluted share. 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 recession and its ongoing negative impact on 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 28, 2008.  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)

                                             March 29,        December 28,
  ASSETS                                       2009               2008

  Current assets
    Cash and cash equivalents                 $12,003            $4,719
    Short-term marketable securities            4,558             8,600
    Accounts receivable, net                   10,115            11,924
    Inventories                                22,572            26,124
    Deferred income taxes - current             2,922             2,922
    Prepaid expenses and other                  5,499             7,193
      Total current assets                     57,669            61,482

  Property, plant and equipment, net          108,391           107,914
  Deferred income taxes - non current           3,068             3,059
  Other assets, net                             2,812             3,897

  Total assets                               $171,940          $176,352

  LIABILITIES AND SHAREHOLDERS' EQUITY

  Current liabilities
    Accounts payable and other accrued
     liabilities                               $9,366            $9,858
    Accrued compensation and benefits           8,294             8,852
    Deferred revenue                            4,979             6,350
      Total current liabilities                22,639            25,060

  Deferred lease credits                        7,030             6,645
  Other long-term liabilities                     808               740
  Total liabilities                            30,477            32,445

  Shareholders' equity
    Common stock, no par value; authorized
     50,000,000 shares; issued and
     outstanding: 12,880,000 and 13,174,000
     shares                                    84,669            90,123
    Accumulated other comprehensive
     income (loss)                                (9)                34
    Retained earnings                          56,803            53,750

       Total shareholders' equity             141,463           143,907

  Total liabilities and shareholders'
   equity                                    $171,940          $176,352


                        PEET'S COFFEE & TEA, INC.

                    CONSOLIDATED STATEMENTS OF INCOME
           (Unaudited, in thousands, except per share amounts)

                                    Thirteen weeks ended
                                     March 29, March 30,
                                        2009    2008

    Retail stores                     $47,982 $44,609
    Specialty sales                    24,122  22,526
                                       ------  ------
  Net revenue                          72,104  67,135

    Cost of sales and related
     occupancy expenses                32,568  31,989
    Operating expenses                 25,171  23,529
    General and administrative
     expenses                           5,938   5,562
    Depreciation and
     amortization expenses              3,607   3,070
                                        -----   -----
  Total costs and expenses
   from operations                     67,284  64,150
                                       ------  ------

  Income from operations                4,820   2,985

  Interest income                          78     304
                                           --     ---

  Income before income taxes            4,898   3,289

  Income tax provision                  1,845   1,198
                                        -----   -----

  Net income                           $3,053  $2,091
                                       ======  ======

  Net income per share:
      Basic                             $0.23   $0.15
      Diluted                           $0.23   $0.15

  Shares used in calculation of net
   income per share:
      Basic                            13,039  13,956
      Diluted                          13,241  14,236



                        PEET'S COFFEE & TEA, INC.

                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (Unaudited, in thousands)

                                                Thirteen weeks ended
                                              March 29,        March 30,
                                                2009              2008
   Cash flows from operating activities:
    Net income                                 $3,053           $ 2,091
    Adjustments to reconcile net income to
     net cash provided by operating activities:
      Depreciation and amortization             4,141             3,605
      Amortization of interest purchased           27                60
      Stock-based compensation                    643               668
      Excess tax benefit from exercise of
       stock options                              (28)              (30)
      Tax benefit from exercise of stock options   17                19
      Loss on disposition of assets and asset
       impairment                                   7                49
      Deferred income taxes                        (9)                -
    Changes in other assets and liabilities:
      Accounts receivable, net                  1,809               (44)
      Inventories                               3,552             2,010
      Prepaid expenses and other current
       assets                                   1,694              (178)
      Other assets                                177                 3
      Accounts payable, accrued liabilities
       and deferred revenue                    (3,235)            1,075
      Deferred lease credits and other
       long-term liabilities                      453               529
          Net cash provided by operating
           activities                          12,301             9,857

  Cash flows from investing activities:
    Purchases of property, plant and
     equipment                                 (3,787)           (8,828)
    Changes in restricted investments             884                 -
    Proceeds from sales and maturities of
     marketable securities                      3,972             1,765
    Purchases of marketable securities              -              (917)
          Net cash provided by/(used in)
           investing activities                 1,069            (7,980)

  Cash flows from financing activities:
    Net proceeds from issuance of common
     stock                                        450               544
    Purchase of common stock                   (6,564)                -
    Excess tax benefit from exercise of
     stock options                                 28                30
          Net cash provided by/(used in)
           financing activities                (6,086)              574

  Increase in cash and cash equivalents         7,284             2,451
  Cash and cash equivalents, beginning of
   period                                       4,719            15,312

  Cash and cash equivalents, end of period    $12,003           $17,763

  Non-cash investing activities:
            Capital expenditures incurred,
             but not yet paid                  $1,548           $ 2,772
  Other cash flow information:
            Cash paid for income taxes             21               119




                          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
   March 29, 2009
  Net revenue     $47,982   100.0%  $24,122  100.0%         $72,104   100.0%
  Cost of
   sales and
   occupancy       20,525    42.8%   12,043   49.9%          32,568    45.2%
  Operating
   expenses        19,756    41.2%    5,415   22.4%          25,171    34.9%
  Depreciation and
   amortization     2,762     5.8%      427    1.8%    $418   3,607     5.0%
  Segment
   operating
   income           4,939    10.3%    6,237    25.9% (6,356)  4,820     6.7%

  For the thirteen
   weeks ended
   March 30, 2008
  Net revenue     $44,609   100.0%  $22,526  100.0%         $67,135   100.0%
  Cost of sales
   and occupancy   20,356    45.6%   11,633   51.6%          31,989    47.6%
  Operating
   expenses        19,026    42.7%    4,503   20.0%          23,529    35.0%
  Depreciation and
   Amortization     2,378     5.3%      340    1.5%    $352   3,070     4.6%
  Segment
   Operating
   income           2,849     6.4%    6,050   26.9%  (5,914)  2,985     4.4%


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DATASOURCE: Peet's Coffee & Tea, Inc.



CONTACT:  Media, Melanie Vuynovich of Double Forte, [phone],

, for Peet's Coffee & Tea, Inc.; or Investors,

Seanna Allen of Peet's Coffee & Tea, Inc., [phone],





Web Site:  http://www.peets.com/ 

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