Peet's Coffee & Tea, Inc. Concludes Voluntary Stock Option Review
23 February 2007 - 12:45AM
PR Newswire (US)
EMERYVILLE, Calif., Feb. 22 /PRNewswire-FirstCall/ -- Peet's Coffee
and Tea, Inc. (NASDAQ:PEET) today announced that the Option Review
Committee of its Board of Directors has completed its voluntary
review of the Company's historical stock option granting practices.
As previously announced, the review was conducted with the
assistance of independent legal counsel, Shartsis Friese LLP, which
was retained by the Committee in October 2006. Shartsis Friese also
retained KPMG LLP as a consultant, and KPMG has conducted its own
investigation and review of information relevant to the Company's
stock option granting practices. The Committee's findings and
recommendations have been discussed with the Company's independent
registered public accounting firm, Deloitte & Touche LLP. The
Committee's review covered the period from the Company's 2001
initial public offering to August 2006. The Committee reported that
its independent counsel received full cooperation from Company
management, was given complete access to all potentially necessary
and relevant electronic and other documents, and interviewed all
key persons who were and are primarily involved in the stock option
granting process at the Company, as well as the Company's outside
counsel and accountants. The Committee's final report indicates
that neither Shartsis Friese nor KPMG have found evidence that
there was any deliberate attempt to manipulate the price at which
any stock option was granted nor the date of the grant in order to
benefit the grant recipient or the Company. The Committee also
reported that they have not discovered any evidence of intentional
wrongdoing by any Peet's employee or Board member. In its final
report, the Committee did conclude the Company had a lack of
documentation and internal controls in connection with the stock
administration system, particularly in the 2001 to 2003 period.
Based upon the Committee's findings, the Company has concluded that
it incorrectly applied the measurement date, as defined in
Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," with respect to certain stock option grants
made from 2001 to 2006. Additionally, the Company found other
isolated instances of inaccurate accounting for stock option grants
during this period. In order to correct the accounting errors that
resulted from the misapplication of the measurement date and other
stock option-related corrections, the Company expects to restate
its previously issued consolidated financial statements to record
non-cash, pre-tax compensation expense totaling approximately $1.7
million. Of the total adjustment, all but approximately $95,000
relates to grants made prior to June 2002. The amounts of the
restatement and related expenses are subject to adjustment pending
finalization by the Company. No current executive officer of the
Company received any option that will be included in the
restatement. In addition to the restatement charge, the Company
expects to recognize $2.4 million of pre-tax expense related to
conducting the investigation, with $1.8 million being incurred in
its 2006 fiscal fourth quarter and approximately $0.6 million
incurred in the first quarter of 2007. As recently announced,
certain of the Company's current and former directors and officers
have been named as defendants in stockholder derivative lawsuits
relating to the Company's past option grant practices. The costs
and any potential liabilities that the Company may incur in
connection with such lawsuits have not been included in the charges
and costs referred to above. The Company expects to file its Form
10-K for the fiscal year ended December 31, 2006 reflecting the
restatement, as well as amended Forms 10-Q for the first two
quarters of 2006 and its delayed Form 10-Q for the third quarter of
2006, by April 2, 2007. About Peet's Coffee & Tea, Inc. Founded
in Berkeley, Calif., in 1966, Peet's Coffee & Tea, Inc. is a
specialty coffee roaster and marketer of fresh, deep-roasted whole
bean coffee for home and office enjoyment. Peet's fresh-roasted
coffee, hand-selected tea and related items are sold in several
distribution channels including specialty grocery and gourmet food
stores, online and mail order, office and restaurant accounts and
company-owned stores throughout the United States. For information
about Peet's Coffee & Tea, Inc., visit http://www.peets.com/ or
call 1- 800-999-2132. Peet's Coffee & Tea, Inc. shares are
traded under the symbol PEET. Safe Harbor Statement This press
release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These
forward- looking statements include statements relating to the
amount of the anticipated restatement, the estimated expenses
associated with the stock option investigation and the Company's
expectations as to when it will file its Form 10-K for the fiscal
year ended December 31, 2006, its amended Forms 10-Q for the first
two quarters of 2006 and its delayed Form 10-Q for the third
quarter of 2006. Forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause the
actual results, performance or achievements of the Company to be
materially different from any future results, performance or
achievements expressed or implied by forward- looking statements.
Investors are cautioned that forward-looking statements are not
guarantees of future performance and that undue reliance should not
be placed on such statements. Certain of the Company's current and
former directors and officers are defendants in stockholder
derivative actions relating to the Company's past option grant
practices. These actions are in the preliminary stages, and the
Company cannot provide assurance that their ultimate outcome will
not have a material, adverse affect on the Company's business,
financial condition or results of operations. The Company
undertakes no obligation to publicly update or revise any
forward-looking statements or to make any other forward-looking
statements, whether as a result of new information, future events
or otherwise unless required to do so by securities laws. Investors
are referred to the full discussion of risks and uncertainties
associated with forward-looking statements and the discussion of
risk factors contained in the Company's filings with the Securities
and Exchange Commission including its Annual Report on Form 10-K
for the fiscal year ended January 1, 2006. DATASOURCE: Peet's
Coffee and Tea, Inc. CONTACT: Media Contact: Jennifer Strasburg,
Weber Shandwick, +1-415-449- 0125, ; or Investor Contact: Susie
Phillips, Peet's Coffee & Tea, Inc., +1-510-594-2196, Web site:
http://www.peets.com/
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