Green Mountain Coffee to restate financial results

by Jeff Gelski
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WATERBURY, VT. — Green Mountain Coffee Roasters, Inc. will restate its previously issued financial statements for the fiscal years 2007, 2008, and 2009 and the first three quarters of fiscal year 2010 because of errors identified in the statements. The estimated impact is a reduction in cumulative net income by about $6.1 million to $6.5 million and in cumulative diluted income per share by about 4c to 5c.

Management discovered the errors while preparing for yearend financial statements and audit, as well as during an internal investigation initiated by the audit committee of the company’s board of directors in light of a previously disclosed inquiry by the staff of the Securities and Exchange Commission’s division of enforcement.

The internal investigation is nearly complete while Green Mountain Coffee Roasters continues to cooperate with the S.E.C., the company said.

The company has discovered the following errors:

●a $7.6 million overstatement of pre-tax income due to the K-Cup inventory adjustment error previously reported in the company’s form 8-K filed on Sept. 28, 2010;
●a $1.4 million overstatement of pre-tax income due to the under-accrual of certain marketing and customer incentive program expenses;
●a $1 million overstatement of pre-tax income due to changes in the timing and classification of the company’s historical revenue recognition of royalties from third party licensed roasters;
●an $800,000 overstatement of pre-tax income due to applying an incorrect standard cost to intercompany brewery inventory balances in consolidation; and
●a $700,000 understatement of pre-tax income for the specialty coffee business unit.

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