GMCR: Green Mountain Coffee Roasters
Analysis and Audit Plan
University of Some State
Green Mountain Coffee Roasters has become a force to reckon with in the specialty coffee industry, with incredible growth in the last ten years, due in large part to its commitment to customers, employees, and social responsibility. This paper will concentrate on the financial records reviewed and will analyze (a) GMCR’s annual report and 10-K; (b) industry information, including key economic factors, life cycle, evaluation of factors for success, key business risks, accounting considerations, legal and regulatory concerns, and social concerns; (c) the company’s financial strength, including assessment and likelihood of change, sources and value of capital, response by capital markets, comparison with others in the industry, and quality of earnings, and present an audit plan including transactions and transaction cycles, risk areas, the potential for fraudulent reporting, reduction of assessed control risk, allocation of audit effort, and the suggested form of audit report.
GMCR: Green Mountain Coffee Roasters
Green Mountain Coffee Roasters’ history dates back to 1980, when its founder, Bob Stiller, purchased a cup of coffee from a coffee shop in Waitsfield, Vermont and decided to buy into the coffee shop. Between 1980 and 1992, GMCR introduced organic coffee to their coffee shops, composted coffee grounds, launched a mail order system, developed earth-friendly coffee filters, began building a 10,000 square foot manufacturing facility, and took the company employees on a company trip to their coffee growing community in Costa Rica. GMCR went public in 1993, began making a profit in 1995, and has grown from that first cup of coffee in 1980 into a large manufacturer of organic and fair trade coffees. Analysis of Annual Report and 10-K
Located in Waterbury, Vermont, Green Mountain Coffee Roasters (“GMCR”) is in the coffee industry. GMCR markets coffee, packaging materials, and brewing systems as its primary products and uses coffee beans, flavorings, and packaging materials as its raw materials. Through the assistance of its subsidiaries, GMCR is able to manufacture its patented one cup brewing system without the assistance of third party manufacturing facilities (Annual Report, 2009). GMCR has been very successful in the industry, and is expanding rapidly. The company shows a long-standing commitment to social and environmental responsibility, an entrepreneurial spirit, and a highly-engaged workforce, all of which contribute to its competitive advantage. (Annual Report, 2009). GMCR’s annual report clearly highlights its corporate social responsibility initiatives, its outstanding financial results in 2009, and its growing family of brands and products. The annual report also draws attention to the company’s multi-channel, multi-brand approach, its commitment to a better world, and awards and recognition the company has received. (Annual Report, 2009). In 2009 GMCR had over $800 million in net sales and over $800 million in total assets, and employed 1,499 people on a full-time basis and 18 people on a part-time basis. (Annual Report, 2009). Its subsidiaries include Keurig, Tully’s Coffee, and Timothy’s World Coffee. GMCR retails its Keurig K-cup products at Bed Bath & Beyond, Macy’s, Target, Kohl’s, and Wal-mart. It also sources, roasts, and packages organic coffee blends for Newman’s Own Organics. These products are then sold in stores such as Costco, BJ’s, and Sam’s Club, or served in restaurants such as McDonald’s. The company also has licensing or other types of agreements with such companies as Celestial Seasonings, Caribou Coffee, Emeril’s, and Kahlua. (Annual Report, 2009). The company’s 10-K is not as graphic and pleasing to the eye as the annual report. However, it is much more detailed, and approaches the data from...