Peet’s Coffee & Tea (NYSE: PEET)1 Mandy Gray Katherine Jonas Jennifer Tao December 7, 2007 business overview Peet's is a specialty coffee roaster and marketer of fresh roasted whole bean coffee with a focus on artisan roasting practices and the freshness of the coffee's ingredients. Peet's markets its coffee through online sales and a mail order service. It also distributes its products through specialty food and grocery stores, as well as offices, restaurants, hotels and its own retail store locations. The driving force of Peet's Coffee & Tea is the desire to be the gold standard specialty coffee and tea brand available to the world, with one of the most dedicated and loyal customer followings of any brand. The company strives to enable and inspire customers to enjoy Peet's Coffees & Teas by providing a distinctive, superior product, superior coffee and tea knowledge and superior service to every customer, every day. Peet's largest presence is in California, but they have recently expanded to the northeastern United States. In 2003, they unsuccessfully attempted to expand in Japan by opening 4 retail locations, but all of them were closed within one year due to competition from Starbucks and other retailers in Japan. Peet's Coffee offers a wide selection of retail products consisting fresh roasted whole bean coffee, premium blends, sweets, and tea, in addition to providing freshly brewed coffee, tea, beverages, and baked goods. Essentially, it has two segments: retail stores and specialty sales, which consist of sales to home-delivery customers, grocery stores, offices, food service companies, and restaurants. The stores are designed to facilitate the sale of fresh whole bean coffee and encourage customers to purchase packages of blends to be home-brewed. The specialty sales have expanded from individual home delivery to a network of grocery stores. Within the coffee business, Peet's is well known for its commitment to providing high-end, premium coffee blends. The chain encourages customers to 1 Disclaimer: Smart Woman Securities ("SWS") reminds you that nothing contained in an Investment Report or on this website constitutes tax or investment advice. Neither the information, nor any opinion, contained in an Investment Report constitutes a solicitation or offer by SWS to buy or sell any securities, futures, options or other financial instruments. Decisions based on information contained in an Investment Report are your sole responsibility. The information in the Investment Reports is provided "AS IS" and without warranties of any kind, either expressed or implied. 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Thus, each store has a dedicated staff person at the bean counter to take orders, handscoop and grind beans to the customers' specifications, and assist them with questions on coffee origins. Since 2001, Peet's Coffee has been under the guidance of CEO Patrick O'Dea. A long time member of the Peet's management team, O'Dea plans to expand sale of Peet's coffee beans in grocery stores, introducing the brand at one thousand new locations this year. This October, Kay Bogeajis was appointed Vice-President of retail operations, where she will be responsible for Peet's 160 shops, as well as Peet's coffee sold through grocery stores nationwide. Bogeajis' is widely anticipated to bring growth and experience to the company, having previous experience managing retail operations for 1,400 of Taco Bell's restaurants, as well as experience with the Frito-Lay company and Burger King. Also in October or this year, Chris Lansing was promoted from Chief Marketing Officer to General Manager or consumer business and CMO. Lansing was largely credited with the successful introduction of Peet's Coffee to the New England market, and will now be responsible for grocery and direct channels of sales. He plans to expand upon Peet's direct-to-store delivery program. Peet's also welcomed Libby Sartain to Peet's board of directors this October. Sartain, currently Executive Vice-President at Yahoo, brings with her 30 years of experience in human resources. The founder of Peet's Coffee recently passed away. competition from Reuters Competitor Role Trends Diedrich's stock prices over the past 5 years have generally declined, alongside Peet's. Diedrich Coffee Company, a specialty coffee Although both companies roaster, wholesaler and retailer, was cater to wholesale buyers, incorporated in 1985. Like Peet's, Diedrich's Peet's focus on premium sells light food items, specialty beans and roasting techniques and high espresso blends. However, unlike Peet's, most quality set it apart from Diedrich Coffee of Diedrich's sales are wholesale to office Diedrich's. Since Diedrich's (DDRX) buildings and hotels. Most of Diedrich's supplies markets where the Coffee stores are located in Orange County, consumer has little choice California, although Gloria Jean's, a sub-brand over the brand of coffee they of Diedrich's Coffee, has retail outlets in 33 receive, Peet's can capitalize states. on the demand for high quality beans and beverages which dominates the coffee market. The Coffee Holding Company is a wholesale vendor of green coffee beans, private roasts, Coffee Holding Company has and branded roasts. The Coffee Holding maintained a steady stock Company was founded in 1971 by Sterling value which continues to Gordon, who has ceded leadership of the increase with news of the new company to his two sons, Andrew and David contract with Entenmann’s, Gordon, who are now president and vice- despite declining share prices president of the company, respectively. Green among other coffee roasters. Coffee Holding coffee beans are imported from Colombia, Since Coffee Holding Company (JVA) Mexico, Kenya, Uganda and Brazil, and Company imports green roasted at the companies facilities in Colorado. beans directly, it firmly This fall, the Coffee Holding Company controls its supply line, and is entered into a three-year contract with sheltered from much of the Entenmann’s Products, Inc., in which the competition between retail Coffee Holding Company will produce a companies such as Peet’s and specially-roasted line of beans for sale under Starbucks. the Entenmann’s brand. Founded in 1950 by Bill Rosenberg in Quincy, Dunkin’ Donuts is privately Massachusetts, Dunkin’ Donuts has one of the owned by private equity firms longest and most established histories in the Bain Capital LLC and Thomas New England region. With over 12,000 points H. Lee Partners, which of distribution worldwide, Dunkin’ Donuts is bought the company in 2005 one of the largest coffee retailers in existence. for $2.4 billion. By providing In addition, Dunkin’ Donuts has recently fast, consistent service at a begun selling roasted coffee beans through its plethora of convenient stores and online, and has secure relationships locations, Dunkin’ Donuts with airlines, hotels and restaurants that serve has established itself as a Dunkin’ Donuts brand coffee. favorite coffee supplier to customers in the New England region. New Dunkin' Donuts advertising campaigns (Private) featuring the slogan “America Runs on Dunkin’s” have allowed Dunkin’ Donuts to promote itself as the brand of choice for the average American consumer, giving it a broad base in the coffee market which Peet’s Coffee is unlikely to equal. Caribou Coffee Company, founded in Caribou Coffee occupies a Minneapolis, Minnesota in 1992, is both a market very similar to Peet’s wholesale seller of coffee beans – both Coffee, and poses direct through its retail locations and through competition to the brand. At grocery store displays – and coffee products. this time, Caribou’s location, Based on the number of coffeehouses, which is largely concentrated Caribou coffee is the second largest company- in the Midwest, does not owned gourmet coffeehouse operator in the overlap with Peet’s, so United States, with locations in eighteen states. although the retail locations The company offers espresso drinks, tea, do not compete directly, sale Caribou Coffee baked goods, whole bean coffee and branded of coffee beans on-line Company (CBOU) merchandise at its stores, with an emphasis on compete for the same market. quality goods, from roasting to brewing. Since Since the company went 2003, Caribou Coffee Company has been led public in September of 2005, by CEO by Michael J. Coles. stock prices have consistently fallen. This has led to many repurchasing initiatives by the board of directors, but these have been unsuccessful in rallying stock prices. Green Mountain Coffee Roasters sells more There is certainly overlap with than 100 high quality coffee selections, and Peet’s in terms of competing offers one of the largest selections of double- for customers (offices and certified Fair Trade organic coffees in the individuals) who wish to country. Although it provides similar products purchase coffee blends. On as Peet’s Coffee, Green Mountain is solely the other hand, Green based on wholesale and does not operate any Mountain Coffee Roasters has retail or café branches. It competes against a contract with McDonald’s Peet’s in the coffee bean wholesale industry, by selling Newman’s Own and is actually more East-coast based whereas Organic Blend coffee in more Green Mountain Peet’s is a West-coast company. A than 600 stores in the Coffee distinguishing feature of Green Mountain Northeast. In general, it seems (GMCR) Coffee Roasters is that it is very that Green Mountain caters environmentally friendly, contributing at least primarily to larger five percent of its pre-tax profit annually to organizations, whereas Peet’s support socially responsible initiatives. In July is more individual-based. 2006, Green Mountain Coffee Roasters Overall, it looks like the launched an all-natural paper hot beverage company has had a positive cup. trend in the last year, although in the recent three months it has hit peaks and dropped. Tully’s is a West-coast coffee chain competing There is definitely much in essentially the same region as Peet’s that overlap between Peets and sells coffee, blends, smoothies, ice cream, and Tully’s since both companies pastries in stores. It also high quality, hand- have strong presences on the roasted premium whole bean coffees not in an West Coast and offer similar automated process. With well over 100 stores products and services. Their across the western United States and a strong reputations and niches are presence in thousands of grocery chains, it is very similar, offering high moving into new regions and new retail quality, premium roasted enterprises daily. The wholesale division sells coffee and serving beverages Tully’s coffees to customers in the in upscale stores. The supermarket, food service, restaurant, office company philosophies are coffee service, and institutional channels; it is very similar, and their Tully’s Coffee also responsible for mail order and Internet commitments to offering high (TULY) sales activities. quality coffee to supermarkets, restaurants, and corporations overlap. The competitor has certainly taken business away from Peets. On June 27, 2007, shareholders decided on an amendment that effects a one-for-eight reverse stock split (the “reverse split”) of all issued and outstanding shares of their common stock. Trends and figures were not available. Opened its first store in 1971, currently has Starbucks stock has over 12,000 locations in the U.S, including dramatically outperformed 1600 locations in 41 countries outside of the Peet’s over the past 6 years U.S. Starbucks sells over 30 types of coffee, and the company itself has a handcrafted beverages such as hot and iced strong consumer loyalty that espresso, coffee and non-coffee blended Peet’s may have trouble beverages and Tazo teas. The company also competing with. Both Starbucks (SBUX) sells espresso machines, coffee brewers and companies have retail outlets grinders, premium chocolates, mugs and for selling coffee and food coffee accessories, baked pastries, sandwiches, items, and both companies salads, selection of music, books and film as sell brewing equipment and well as global consumer products such as their gift cards, but Starbucks’ has a line of bottled Starbucks Frappuccino drinks, wider variety of merchandise, Starbucks Discoveries coffee drinks (in Japan with their sales of music and and Taiwan), Starbucks DoubleShot espresso specialized beverages. While drinks, Starbucks Iced Coffee drinks and Peet’s has strong customer Starbucks Coffee Liqueuers and a line of loyalty in the western US, superpremium ice creams. They also sell Starbucks brand loyalty is Starbucks gift cards which surpassed the $2.5 nation-wide, and because billion in activations and reloads since its Starbucks has a much larger launch in 2001. number of retail outlets, it is likely the most challenging competition for Peet’s. financials income statement In Millions of USD 52 weeks 52 weeks 53 weeks 52 weeks 52 weeks Ending 52 weeks (except for per share Ending 2006- Ending 2006-01- Ending Ending 2003- 2002-12-29 Ending items) 12-31 01 2005-01-02 12-28 2001-12-30 Revenue 210.49 175.20 145.68 119.82 104.07 94.40 Other Revenue, Total - - - - - - Total Revenue 210.49 175.20 145.68 119.82 104.07 94.40 Cost of Revenue, Total 98.93 80.84 67.81 54.96 48.15 45.36 Gross Profit 111.56 94.36 77.88 64.86 55.93 49.04 Selling/General/Admin. 20.63 13.34 11.44 10.35 11.29 11.05 Expenses, Total Research & Development - - - - - - Depreciation/Amortization 8.61 7.29 5.79 4.89 4.57 5.04 Interest Expense(Income) - - - - - - - Net Operating Unusual Expense (Income) - - - 3.37 0.00 - Other Operating Expenses, 72.27 57.88 47.65 38.75 33.22 30.62 Total Total Operating Expense 200.44 159.35 132.68 112.32 97.22 92.07 Operating Income 10.05 15.85 13.01 7.50 6.85 2.33 Interest Income(Expense), 2.46 1.77 0.92 1.16 0.54 -0.43 Net Non-Operating Gain (Loss) on Sale of - - - - - - Assets Other, Net - - - - - - Income Before Tax 12.51 17.62 13.93 8.66 7.39 1.90 Income After Tax 7.82 10.78 8.71 5.18 4.66 1.16 Increased gross profit is clearly a positive aspect, indicating that a company is making more money over the cost of producing the good. As we can see, Peet’s gross profit has been consistently growing, but actually decreased from 2005 to 2006. This significant trend can be accounted for by the fact that when revenue increases and operating income decreases, then the operating margin decreases as well. In 2006, the decline can be attributed to a considerable increase in operating expenses, due to the opening of new stores, higher expenses in existing stores, and the impact of expensing stock options. In the retail segment, operating expenses as a percent of net revenue increased by 1.9% to 42.6% from 2005 to 2006. This is mainly because Peet’s has opened 45 new stores in the past two years, which generally have higher operating expenses due to low sales volume. Nonetheless, net revenue increased 19.8% compared to 2005 in the retail segment, propelled by an increase in beverage and pastry sales. In the past five years, Peet’s has more than doubled its gross profit. If a company’s operating margin increases, this means it is earning more per dollar of sales. The profit margin should also be high, which indicates the company has efficiently controlled costs that do not rise greater than the amount it earns from selling a product. balance sheet December 31, January 1, 2006 2006 (As Restated, See Note 2) ASSETS Current assets Cash and cash equivalents $ 7,692 $ 20,623 Short-term marketable securities 19,511 32,453 Accounts receivable, net 6,838 5,152 Inventories 19,533 17,001 Deferred income taxes—current 1,888 1,514 Prepaid expenses and other 3,852 3,372 Total current assets 59,314 80,115 Long-term marketable securities 5,989 16,890 Property and equipment, net 82,447 46,313 Deferred income taxes—non-current 1,315 — Other assets, net 3,940 5,434 Total assets $ 153,005 $ 148,752 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Accounts payable and other accrued liabilities $ 11,046 $ 8,553 Accrued compensation and benefits 6,389 5,563 Deferred revenue 4,625 3,415 Total current liabilities 22,060 17,531 Deferred income taxes—non-current — 1,806 Deferred lease credits and other long-term liabilities 3,506 2,537 Total liabilities 25,566 21,874 Shareholders’ equity Common stock, no par value; authorized 50,000,000 shares; issued and outstanding: 13,516,000 and 13,902,000 shares 93,246 100,562 Accumulated other comprehensive loss, net of tax (15) (76) Retained earnings 34,208 26,392 Total shareholders’ equity 127,439 126,878 Total liabilities and shareholders’ equity $ 153,005 $ 148,752 Between 2005 and 2006, Peet’s assets have increased, but their current assets have significantly decreased due to the large increase in PP&E, with cash and equivalents decreasing by 50%. Returns on assets are inching upward to 5%, and their significant investment in PP&E may boost this in the coming year, but in general their returns on both assets and equities have been low. However, their current ratio remained equal to 1. Both short-term and long-term debt increased slightly. The Debt-to-Equity Ratio has increased over the year but achieved a low mark of .027 indicating that Peet’s is not in serious debt. statement of cash flows September 30, October 1, 2007 2006 Cash flows from operating activities: Net income $ 5,054 $ 5,639 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 9,376 7,542 Amortization of interest purchased 177 334 Stock-based compensation 2,116 3,357 Excess tax benefit from exercise of stock options (1,279) (709) Tax benefit from exercise of stock options 1,166 756 Loss on disposition of assets and asset impairment 122 273 Deferred income taxes (186) (46) Changes in other assets and liabilities: Accounts receivable, net (650) (884) Inventories (8,823) (7,038) Prepaid expenses and other current assets (3,997) (3,036) Other assets 34 (312) Accounts payable, accrued liabilities and deferred revenue 4,027 2,622 Deferred lease credits and other long-term liabilities 1,394 534 Net cash provided by operating activities 8,531 9,032 Cash flows from investing activities: Purchases of property and equipment (25,804) (17,574) Proceeds from sales of property and equipment 22 28 Changes in restricted investments - (1,969) Proceeds from sales and maturities of marketable securities 26,144 36,553 Purchases of marketable securities (21,688) (26,356) Net cash used in investing activities (21,326) (9,318) Cash flows from financing activities: Net proceeds from issuance of common stock 5,885 3,345 Purchase of common stock - (15,934) Excess tax benefit from exercise of stock options 1,279 709 Net cash provided by (used in) financing activities 7,164 (11,880) Decrease in cash and cash equivalents (5,631) (12,166) ## Cash and cash equivalents, beginning of period 7,692 20,623 Cash and cash equivalents, end of period $ 2,061 $ 8,457 Peet’s total assets have been consistently increasing, a testament to the company’s vision of expansion being realized. Its cash flows from investing activities have increased, although its spending has also increased, an indication of growth in the future. From 2006 to 2007, its net income has decreased, with a trend in increasing net cash used in investing activities. Peet’s growth is once more reflected in the increase in purchasing property and equipment. The increased cash flow in investments is mainly due to purchasing of new equipment and property, since Peet’s has expanded its number of stores and continues to expand the specialty sales segment, which requires roasting equipment. In December 2006, the Company acquired approximately 460,000 sq ft of land and a 138,000 sq ft building as a roasting facility. The net cash provided by operating activities decreased (see income statement for explanation of operating expenses). Starbucks, a competitor, has significantly different levels of cash flows due to its much larger size, but one can see that its investment cash flow has greatly decreased from 2005 to 2006, contrary to Peet’s increase in investments. The cash flow statements were not available for Green Mountain Coffee Roasters. For Caribou coffee, the net income in cash flow has been increasing significantly from 2000 to 5000 to over 9000 in 2006, but all its investing activities are in capital expenditures whereas Peet’s has diversified. valuation In the course of the last year, the stock price of Peet's Coffee has not changed notably, starting the year at 26.01 and closing on November 17th at 26.65, and increase of only 2.4 percent. Stock price spiked in early August, rising from 23.36 to 28.01 when management commented that it expected sales growth to reach the 20% range. However, prices quickly dropped back to a price of 23.70 within the next week. The stock seems to have had difficulty maintaining price since July of 2005, when the prices peaked at 36 dollars a share. Since then, stock price has steadily fallen, despite growth in revenue remaining at about 20% per year. Company management authorized a buyback of equity in 2006, but has not yet acted upon this initiative. Given that the background of management is in food chains and delivery, it seems unlikely that a focus on bolstering stock prices is forthcoming. In addition, an evaluation, initiated by Peet’s management, to review of bonuses and payments in the form of stock-options has revealed inaccurate accounting, requiring Peet’s to reform its compensation policy. Litigation regarding these findings may further negatively affect stock price. The only analysts who currently advise to buy Peet’s Coffee stock are those who have firm trust in the management to capitalize on investments already made in expanding the chain, an investment that has not yet yielded returns. For these reasons, the average analyst of Peet’s Coffee stock advises a hold, on the basis of the stock being fairly valued, and unlikely to dramatically increase in price. Valuation Table Metric P/E EPS Prospective P/S P/B Profit Gross EPS Margin Margin Peet’s 51.36 .52 .44 -32.7 -60.7 3.0% 4.2% Starbucks 29.60 .75 .85 -51.6 -85.5 7.3% 10.2% Green Mountain 30.20 .99 1.08 8.5 -65.1 3.2% 7.9% Coffee Caribou Coffee -1.80 -.40 -.44 101.5 -0.6 -3.4% -3.6% Valuation Analysis Compared to the competition, Peet’s Coffee appears to be trading over its value. At 51.36, the price per earning ratio is larger than that of other companies in the same market, despite Peet’s having low earnings per share. The current campaign being made by Peet’s Coffee management to expand the chain into the Northeast makes the company’s relatively low gross margin acceptable, but lagging sales and a relatively high stock price are causing Peet’s to be overvalued, or in the best case scenario, at value. investment opportunities Expansion Patrick O’Dea, CEO of Peet’s, has made expansion of the Peet’s Coffee brand into New England a priority for the company. Currently, this initiative has been marked by the success, as many Peet’s Coffee coffee shops have been established in the region, despite competition from Starbuck s and Dunkin’ Donuts, which already had coffee shops established in the region. This shows that the market is not yet saturated, and that stable franchises can be established by the company in a region far removed from the West Coast, where the company is centered. The main focus of expansion lies in supermarket and home roasting bagged coffee sales. Selling bagged coffee is more profitable and requires less capital than opening and operating hundreds of retail stores, notes O’Dea. Peet’s bagged coffee is currently available in 5,200 grocery store locations, and an additional 3,000 locations will be added in the coming year. Thus, given its shifting focus on grocery sales of bagged coffee, O’Dea comments that Peet’s plans to slow down shop expansion next year, opening 30 stores (the same number it has planned for this year). With this move, Peet’s hopes to move away from the highly competitive coffee shops and position itself as an integrand of daily home coffee roasting, an advantageous and promising strategy. Brand Peet’s Coffee has a brand that is loyally ascribed to by those whom the company terms its “Peetnicks”, original customers who frequented the store at its first Berkeley location. The “Peetnick” identity is marketable in many areas, as it and Peet’s Coffee in general is associated with Berkeley, alternative culture, and liberalism, concepts which may become increasingly politically appealing to populations looking for an alternative to Peet’s competitors. Roasting Peet’s Coffee prides itself on artisan roasting techniques established and passed down by Alfred Peet, the company’s founder. These roasting techniques are still highly valued by the company, which sees high quality beans and roasting as the hallmark of the company. Discerning customers who value the grade of their bean and the way in which it is roasted may identify with the aims of Peet’s and preferentially patronize the company. Moreover, it is focused on carving out a niche for itself as the highest-quality coffee sold at U.S. supermarkets. Peet’s plans to expand from the 5,200 stores in which it currently retails to 8,200 next year. The company will operate in cities where it does not have any coffee shops. Industry Relationships Alfred Peet established strong relationships with the suppliers of his coffee beans at the very start of his career, and these relationships are maintained by current Peet’s leadership. According to the company, these relationships shield Peet’s from the hazards of increasing costs of raw materials. Third Quarter Report Peet's Coffee & Tea Inc. reported that sales jumped 20 percent to $60.9 million during the its third quarter of 2007, compared with $50.9 million during the same period last year. Earnings rose to 13 cents per share, a 24 percent increase compared with 11 cents per share during the third quarter in 2006. O'Dea comments that these results were boosted by a 23 percent growth in sales of whole beans in grocery stores and reducing commodity-related expenses. investment risks Competition Peet’s Coffee faces strong competition in the arena of specialty coffee roasting and brewing. Starbucks Coffee provides nearly all of the services that Peet’s does, and has a tremendously strong franchise presence, as does Dunkin’ Donuts. Moreover, the premium coffee market has expanded to include McDonald’s as a competitor, for example, notes Deutsche Bank analyst Marc Greenberg. The sheer number of alternatives may drive customers to choose other brands out of convenience. It is unclear whether the Peet’s Company brand is strong enough to draw customers to Peet’s coffee shops when so many alternatives are present. Starbucks shares have slid 35 percent in 2007, while Peet's shares have gained 6 percent in the same period. The Standard & Poor's Restaurants index, which both stocks are parts of, is up 4 percent this year. Industry Trends The coffee industry has stagnated ever since its peak in mid 2005, and neither Peet’s Coffee nor its competitors have achieved significant growth since then. This may be indicative of an oncoming downward spell for the industry, as Peet’s stock and that of its competitors have largely moved together in this motion. Peet’s current P/E ratio is around 52, compared to Green Mountain Coffee Roaster’s 62 and Starbuck’s 26. Thus, given wide industry P/E ratio ranges, Peet’s P/E ratio falls within those of competitors but is not pointing to a clear direction of buy/sell. Furthermore, its 2008 P/E ratio is projected to fall to 35. Failure of Partnerships A partnership between Peet’s Coffee and Larry’s Market – a specialty grocery chain in the Seattle area focusing on high-quality groceries – established Peet’s Coffee shops within each Larry’s store. Closure of Larry’s Market locations in 2006 led to the subsequent closure of the Peet’s coffee shops within, making a small but noticeable hit to the company’s revenue. Peet’s in-store boutiques, which provide Peet’s whole bean coffee within grocery stores, make the company similarly dependent on the success of their partners. investment recommendation For these reasons, we submit a position of HOLD at the current market price on Peet’s Coffee to the SWS Executive Board. investment project team Mandy Gray '09 is a junior History of Art and Architecture major with a focus in Italian Renaissance art, who lives in Lowell house, but is originally from Eddyville, Ky. At Harvard, she is studying art history and working toward a citation/secondary field in Italian, and also works for the Harvard University Art Museums as an administrative assistant to the Facilities Supervisor. She hopes to go into museum work after graduation. Mandy is interested in learning about investing because she wants to make her money work for her, and with the uncertainty of Social Security and pensions, etc, she feels that it is becoming very relevant. She has played the guitar for many years, enjoys soccer and most other sports and I grew up on a farm. This summer Mandy participated in a summer abroad study program in Abruzzo, Italy for language development, and worked for her father (who is a civil engineer/farmer). Katherine Grace Jonas, '08, is a senior biochemistry concentrator in Cabot House, originally from Seattle, Washington. At Harvard, she has studied the pre-medical curriculum while completing coursework for a public health policy minor. She also is active in women's issues on campus as co- director of the peer-counseling group Response, and as a member of the Women in Leadership program. She is also Co-chair of the Cabot House Committee, is head of the Cabot House intramural crew team, and maintains a cartoon in "The Crimson". Katherine in interested in learning more about investing because she believes that being able to earn invest money is as important as an ability to earn it, and wants her children to be able to make career choices independently of financial considerations. She loves music, wine, chocolate and coffee. Jennifer Tao '11 is a freshman living Grays Middle; her concentration is undecided but she is exploring Psychology, Econ, Statistics, and History of Art/Architecture. At Harvard, she is a HUWIB comper, a HAUSCR comper, an intern with Cambridge Student Partnerships, a marketing assistant and distributor at Harvard Student Agencies, and a member of the Harvard Art Society. Jennifer is learning more about investing because she wants to be able to make her own financial decisions and manage her money efficiently. She loves Finale desserts, Chinese painting, Leonardo da Vinci, snowboarding, Target giftcard designs, and jellyfish. Over the past summer, Jennifer traveled with her family on a phenomenal 6-week trip to Spain, Morocco, Portugal, France, the UK, Ireland, Greece, and Germany.