The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information, the instructions to Form 10-Q, and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements.

In the opinion of management, all adjustments considered necessary for a fair statement of the interim financial data have been included. Results from operations for the twelve week and twenty-eight week periods ended April 13, 2002 are not necessarily indicative of the results that may be expected for the fiscal year ending September 28, 2002.

For further information, refer to the consolidated financial statements and the footnotes included in the Annual Report on Form 10-K for Green Mountain Coffee, Inc. for the fiscal year ended September 29, 2001.

The Company delivered its strongest growth for the quarter in the supermarket and convenience store channels, where coffee pounds shipped increased 21.8% and 9.9%, respectively. In the supermarket channel, growth was led by expansion of sales to two customers: Price Chopper Supermarkets, with an increase of 73 store locations during the quarter, and Kings Super Markets, which added the Company's complete bulk, pre-bag and cup coffee program to its 30 locations this past fall. Growth in the convenience store channel continued to be led by sales to ExxonMobil stores. There was a year-over-year slow down in the growth of shipments to ExxonMobil's distributor, McLane Company, Inc. ("McLane"), compared to previous quarters that will also be evident in the Company's third fiscal quarter. This is due to an initial ramp of sales to McLane to load their warehouses in the second and third quarters of fiscal 2001 for distribution to ExxonMobil convenience stores that had formerly been delivered directly by Green Mountain Coffee.

Management now anticipates full-year fiscal 2002 growth in coffee pounds shipped to be in the range of 11% to 13%, and dollar sales growth in the range of 6% to 8%. Management also anticipates third quarter fiscal 2002 growth in coffee pounds shipped to be in the range of 10% to 13%, and dollar sales growth in the range of 8% to 10%.

Gross profit increased by $372,000, or 3.9%, from $9,567,000 for the 2001 period to $9,939,000 for the 2002 period. As a percentage of net sales, gross profit increased 1.1 percentage points from 42.1% for the 2001 period to 43.2% for the 2002 period. The increase in gross profit as a percentage of sales was due primarily to a higher percentage of the Company's total sales being coffee compared to allied products such as cups and lids, and from a shift to higher margin coffee products. Unlike previous quarters, Green Mountain did not benefit from a year-over-year decrease in green coffee prices in the 2002 period. Management presently expects quarter-to-quarter and year-over-year green coffee costs to increase in the third fiscal quarter. It is anticipated that third quarter gross profit margins will be in the range of 42% to 43%. Total year margins are expected to be in the range of 43% to 44%.

Selling and operating expenses increased by $189,000, or 3.4%, from $5,631,000 for the 2001 period to $5,820,000 for the 2002 period. As a percentage of sales, selling and operating expenses increased 0.5 percentage points from 24.8% for the 2001 period to 25.3% for the 2002 period. The increase in selling and operating expense was primarily due to increases in wholesale sales force compensation costs related to being fully staffed in the current period, and was offset, in part, by a decrease in bad debt expense.

General and administrative expenses increased by $115,000, or 6.7%, from $1,721,000 for the 2001 period to $1,836,000 for the 2002 period. As a percentage of sales, general and administrative expenses increased 0.4 percentage points from 7.6% for the 2001 period to 8.0% for the 2002 period. The increase in general and administrative expenses was primarily due to higher compensation and training costs.

Interest expense decreased by $128,000, or 87.7%, from $146,000 for the 2001 period to $18,000 for the 2002 period primarily due to lower year-over-year average debt balances outstanding and lower interest rates during the 2002 period. In the 2002 period, the Company capitalized $49,000 of interest expense associated with investments in production equipment currently classified as construction in progress (primarily the installation of the bowl roasters and related conveyance and storage equipment). It is anticipated that interest expense in the third and fourth fiscal 2002 quarters will be in the range of $140,000 to $160,000.

Income tax expense increased $85,000, or 9.9%, from $858,000 for the 2001 period to $943,000 for the 2002 period. The effective tax rate for the 2002 period was 41.6%. It is now expected that the Company's effective tax rate will approximate 41% for the full fiscal 2002 year. This estimate is dependent on the level of book and tax permanent differences and possible changes in the valuation allowance against the deferred tax asset arising from its Vermont manufacturer's investment tax credit during the remainder of fiscal 2002. The ultimate amount of this credit that the Company will be able to use is dependent on many factors, including the amount of taxable income being generated; the percentage of income that is allocable to the State of Vermont; and, the number of disqualifying dispositions of stock options.

Net income increased by $113,000, or 9.3%, from $1,213,000 for the 2001 period to $1,326,000 in the 2002 period. Excluding the future impact of the equity method of accounting for our Keurig investment, full-year earnings per share is expected to be in the range of $0.94 to $0.97. Third quarter earnings per share are expected to be in the range of $0.19 to $0.21. The Company currently estimates that the equity method accounting of its Keurig investment will have a negative impact on earnings per share in the range of $0.04 to $0.06 for the full fiscal year.

Net sales increased by $1,724,000, or 3.2%, from $53,646,000 for the twenty-eight weeks ended April 14, 2001 (the "2001 YTD period") to $55,370,000 for the twenty-eight weeks ended April 13, 2002 (the "2002 YTD period"). Coffee pounds shipped increased by approximately 724,000 pounds, or 10.8%, from approximately 6,697,000 pounds in the 2001 YTD period to approximately 7,421,000 pounds in the 2002 YTD period. The difference between coffee pounds growth and dollar sales growth was due primarily to changes in sales mix, driven by the continued successful expansion of the Company's business with Exxon Mobil Corporation convenience stores (ExxonMobil). The Company's sales agreement with ExxonMobil, effective since February 2001, provides for lower coffee sales prices and a reduction in its direct purchases of accessories such as cups and lids, offset by lower delivery and ordering costs for Green Mountain Coffee.

Coffee pounds shipped increases were strongest in the supermarket and convenience store channels with year-over-year pound increases of 300,000 and 268,000, respectively. Wholesale coffee pounds shipped increases were strongest in the Mid-Atlantic region (New York, New Jersey and Pennsylvania) due primarily to increases in sales to Kings Super Markets and Price Chopper Supermarkets and in the South Central region due primarily to sales to McLane for ExxonMobil convenience stores.

Selling and operating expenses increased by $1,283,000, or 10.0%, from $12,877,000 for the 2001 period to $14,160,000 for the 2002 period. As a percentage of sales, selling and operating expenses increased 1.6 percentage points from 24.0% for the 2001 period to 25.6% for the 2002 period. The increase in selling and operating expense was primarily due to increases in wholesale sales force compensation costs and higher consumer direct promotional expenses, offset, in part, by lower bad debt expense.

General and administrative expenses increased by $328,000, or 9.1%, from $3,608,000 for the 2001 period to $3,936,000 for the 2002 period. As a percentage of sales, general and administrative expenses increased 0.4 percentage points from 6.7% for the 2001 period to 7.1% for the 2002 period. The increase in general and administrative expenses was primarily due to higher compensation, recruiting and relocation costs, and training costs.

Interest expense decreased by $249,000, or 72.4%, from $344,000 for the 2001 YTD period to $95,000 for the 2002 YTD period primarily due to lower year-over-year average debt balances outstanding and lower interest rates during the 2002 YTD period.

Income tax expense increased $380,000, or 18.2%, from $2,091,000 for the 2001 YTD period to $2,471,000 for the 2002 YTD period. The effective tax rate for the 2002 YTD period was 40.9%. It is now expected that the Company's effective tax rate will approximate 41% for the full fiscal 2002 year. This estimate is dependent on the level of book and tax permanent differences and possible changes in the valuation allowance against the deferred tax asset arising from its Vermont manufacturer's investment tax credit during the remainder of fiscal 2002 as noted above.

Net income increased $539,000, or 17.8%, from $3,033,000 in the 2001 YTD period to $3,572,000 in the 2002 YTD period.

In order to finance the Keurig investment, the Company extended its existing $15,000,000 line of credit with Fleet Bank (Fleet) by one year to March 31, 2004 and entered into a new $5,000,000 term loan agreement with Fleet. The term loan is to be paid back in quarterly installments of $625,000, beginning on June 30, 2002 and ending in March 31, 2004. The interest rate is 175 basis points above LIBOR rates. At April 13, 2002, the outstanding balance on the Fleet line of credit was $12,820,000 and the amount remaining available was $2,180,000. The Fleet credit facility is subject to certain quarterly covenants, and the Company was in compliance with these covenants at April 13, 2002.

During the 2002 YTD period, besides the investment in Keurig, Green Mountain had capital expenditures of $5,194,000, including $3,268,000 for production and distribution equipment, $510,000 for leasehold improvements, $739,000 for equipment on loan to wholesale customers, $405,000 for computer equipment and software, and $272,000 in fixtures. These capital expenditures include installation costs of $1,119,000 for two roasters purchased at auction in fiscal 2001. Once the installation of these two new roasters is completed, the Company's annual roasting capacity in Waterbury, Vermont, is expected to increase from approximately 15 million pounds to 40 to 50 million pounds of roasted coffee. The installation of the roasters and related equipment is expected to be completed in September 2002.

During the 2001 YTD period, Green Mountain had capital expenditures of $2,553,000, including $1,125,000 for equipment on loan to wholesale customers, $566,000 for production and distribution equipment, $484,000 for computer equipment and software, and $255,000 in leasehold improvements. Cash used to fund the capital expenditures in the 2002 and 2001 YTD periods was obtained from net cash provided by operating activities.

The Company currently plans to make net capital expenditures in fiscal 2002 of approximately $9,500,000 to $10,000,000, including the purchase of Keurig K-Cup™ production equipment, which is currently owned by Keurig. The cost of that equipment will be in the range of $1,500,000 to $2,500,000 and the Company has committed to purchase the equipment no later than December 31, 2003. The purchase price decreases the further out in time that the purchase occurs. The Company will pay reduced royalties to Keurig on K-Cup production after this equipment is purchased. Management continuously reviews capital expenditure needs and actual amounts expended may differ from these estimates.

A summary of the Company's cash requirements related to its outstanding long-term debt (excluding the Company's line of credit which terminates on March 31, 2004), future minimum lease payments and green coffee purchase commitments is as follows:

Management believes that cash flow from operating activities, existing cash, the currently available credit facility and additional borrowings will provide sufficient liquidity to pay all liabilities in the normal course of business, fund capital expenditures and service debt requirements in fiscal 2002. However, a decrease in operating cash flows, due to a decline in earnings or other factors, may impact the Company's ability to self-fund capital expenditures and other investments, or service debt requirements, and may lead the Company to rely on additional borrowings or an equity offering as sources of funding. Management is presently considering expanding its credit facility in order to position the company for small strategic opportunities similar to last year's Frontier acquisition.

The Company had net deferred tax assets of $505,000 at April 13, 2002. These assets are reported net of a deferred tax asset valuation allowance at that date of $1,791,000 (including $1,772,000 related to a Vermont investment tax credit). Presently, the Company believes that the deferred tax assets, net of deferred tax liabilities and the valuation allowance, are realizable and represent management's best estimate, based on the weight of available evidence as prescribed in SFAS 109, of the amount of deferred tax assets which most likely will be realized. However, management will continue to evaluate the amount of the valuation allowance based on near-term operating results and longer-term projections.

Historically, the Company has experienced variations in sales and earnings from quarter to quarter due to the holiday season and a variety of other factors, including, but not limited to, general economic trends, the cost of green coffee, competition, marketing programs, weather and special or unusual events. Because of the seasonality of the Company's business, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.

Green Mountain prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period (see Note 2 to the Company's Consolidated Financial Statements included in the Annual Report on Form 10-K). Actual results could differ from those estimates.

In December, the Securities and Exchange Commission ("SEC") requested that all registrants list their critical accounting policies in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of their Form 10-K. The SEC defined a critical accounting policy as one which is important to the portrayal of the company's financial condition and results of operations and requires management's subjective or complex judgments. In accordance with this request, the Company has described its critical accounting policies below.

Provision for Doubtful Accounts
Periodically, the Company reviews the adequacy of its provision for doubtful accounts based on historical bad debt expense results and current economic conditions using factors based on the aging of its accounts receivable. In addition, from time-to-time the Company estimates specific additional allowances based on indications that a specific customer may be experiencing financial difficulties. Actual bad debt results could differ materially from the Company's estimates.

Deferred Tax Valuation Allowance
Periodically, management reviews the adequacy of its deferred tax valuation allowance that is primarily related to a Vermont manufacturer's investment tax credit. This review entails estimating: the Company's future taxable income through fiscal 2004; how much of that taxable income will be allocable to Vermont; and, the levels of disqualifying dispositions of stock options, among other factors. A reduction in the valuation allowance can result in the Company reporting its income tax expense at a lower effective Federal and State tax rate. Conversely, an increase in the valuation allowance can result in the Company reporting its income tax at a higher rate. Since future results may differ materially from those estimated by the Company, the Company's estimate of the amount of deferred tax assets that will be ultimately realized could differ materially.

Impairment of Long-Lived Assets
When facts and circumstances indicate that the carrying values of long-lived assets, including fixed assets, investments in other companies and intangibles, may be impaired, an evaluation of recoverability is performed by comparing the carrying value of the assets to projected future cash flows in addition to other quantitative and qualitative analyses. Upon indication that the carrying value of such assets may not be recoverable, the Company recognizes an impairment loss as a charge against current operations. Long-lived assets to be disposed of are reported at the lower of the carrying amount or fair value, less estimated costs to sell. Judgments made by the Company related to the expected useful lives of long-lived assets and the ability of the Company to realize undiscounted cash flows in excess of the carrying amounts of such assets are affected by factors such as the ongoing maintenance and improvements of the assets, changes in economic conditions, and changes in operating performance. As the Company assesses the ongoing expected cash flows and carrying amounts of its long-lived assets, these factors could cause the Company to realize a material impairment charge.

There have been no material changes in information relating to commodity price risks since the Company's disclosure included in Item 7A of Form 10-K as filed with the Securities and Exchange Commission on December 24, 2001.

At April 13, 2002, the Company had $17,820,000 of debt subject to variable interest rates ( Fleet Bank's prime rate, LIBOR rates for maturities up to one year or Bankers' Acceptance rates). A hypothetical 100 basis point increase in the Bankers' Acceptance, LIBOR and prime rates would result in additional interest expense of $178,000 on an annualized basis.

(a) The Registrant held its 2002 Annual Meeting of Stockholders on April 4, 2002 at the Company's offices located at 81 Demeritt Place in Waterbury, Vermont. The Board of Directors of the Registrant solicited proxies for this meeting pursuant to a proxy statement filed under regulation 14A.

(b-c) At the Annual Meeting the stockholders voted as follows on the following matter:

VOTES

3,826,169          1,217,221         1,307               1,680,942

For                    Against              Abstain              Not voted

3,927,451          1,071,503         45,743               1,680,942

3,645,703          1,350,032        48,962               1,680,942

3,613,859          1,381,110         49,728               1,680,942