Item 1. Business
General: Farmer Bros. Co. (the Company or Registrant) was incorporated in California in 1923, and is engaged in the production and sale of coffee, spices and a variety of allied products to the institutional food service industry.
Raw Materials and Supplies: Coffee is the largest product in the line and is responsible for approximately 56% of corporate revenues. Purchasing, roasting and packaging coffee takes place at Registrant's Torrance plant, which is also the distribution hub for its branches.
Green coffee is purchased through commodity brokers representing foreign suppliers. Agricultural commodities are subject to fluctuations of both price and supply. Registrant has not been confronted by shortages in the supply of green coffee, but has been faced with price fluctuations.
Trademarks & Patents: Registrant owns approximately 23 registered U.S. trademarks which are integral to customer identification of its products. It is not possible to assess the impact of the loss of such identification.
Seasonality: Registrant experiences some seasonal influences. The winter months are the best sales months. Registrant's product line and geographic diversity provides some sales stability during the summertime decline in coffee consumption during the warmer months.
Distribution: Registrant's products are distributed by its selling divisions from 98 branches located in most urban centers in the western states. The diversity of the product line (over 300 products) and size of the area served requires each branch to stock a sizable inventory. Registrant maintains its own trucking fleet to better control the supply of these warehouses.
Customers: No single customer represents a large enough portion of sales to have a material effect on Registrant. The customer contact and service quality which is integral to Registrant's sales effort is often secondary to product pricing for customers with their own distribution systems.
Competition: Registrant faces competition from many sources, including multi- national firms like Procter and Gamble, Nestle and Philip Morris, grocery distributors like Sysco and Rykoff-Sexton and regional roasters like Boyd Coffee Co., Lingle Bros. and Royal Cup.
Registrant has some competitive advantages due to its longevity, strong regional roots and sales and service force. Registrant's customer base is price sensitive and the Company is often faced with price competition.
Item 1. Business, Continued
Working Capital: Registrant makes every effort to finance operations internally. Management believes that working capital from internal sources will be adequate for the coming year. Registrant maintains a $50,000,000 line of credit with First Interstate Bank of California. There is no commitment fee or compensating balance requirement and the line was not used in fiscal 1994.
Foreign Operations: Registrant has no material revenues that result from foreign operations. Coffee brewing equipment is sold through distributors in Canada and Japan and manufactured in Europe under license.
Other: On June 30, 1994, Registrant employed 1,177 employees, 486 are subject to collective bargaining agreements.
No material amounts have been expended on research and development for existing or new products during the past three years.
There have been no material effects of compliance with government provisions regulating discharge of materials into the environment.
The nature of Registrant's business does not provide for maintenance of or reliance upon a sales backlog.
Item 2.
Item 2. Properties
Registrant's largest facility is the 474,000 sq. ft. roasting plant, warehouses and administrative offices in Torrance, California. Registrant believes the existing plant will continue to provide adequate production capacity for the foreseeable future.
Item 3.
Item 3. Legal Proceedings
Registrant is a defendant in various legal proceedings incidental to its business which are ordinary and routine. It is management's opinion that the resolution of these lawsuits will have no material financial impact on the Company.
Registrant incorporates by reference the information contained in Item 3 of Form 10-K for the fiscal years ended June 30, 1992 and 1993. The appeal of the individual action reported therein has resolved unfavorably to Registrant. The costs associated with this action are not material to Registrant's financial position and results of operations. A reserve was established in the year ended June 30, 1992 for these costs.
Item 4.
Item 4. Submission of Matters to A Vote of Security Holders
Reference is made to the information to be set forth in the section entitled "Amendment of Bylaws" in the Proxy Statement, which is incorporated herein by reference.
PART II
Item 5.
Item 5. Market for Registrant's Common Equity and Related Shareholder Matters
Registrant has one class of common stock which is traded in the over the counter market. The bid prices indicated below are as reported by NASDAQ and represent prices between dealers, without including retail mark up, mark down or commission, and do not necessarily represent actual trades.
1994 1993 High Low Dividend High Low Dividend
1st Quarter $156.00 $145.00 $0.50 $123.00 $113.00 $0.45 2nd Quarter 156.00 134.00 0.50 122.00 108.00 0.45 3rd Quarter 151.00 126.00 0.50 144.00 117.00 0.45 4th Quarter 148.00 123.00 0.50 156.00 143.00 0.45
There were 688 holders of record on June 30, 1994.
Item 6.
Item 6. Selected Financial Data (Dollars in thousands, except per share data)
1994 1993 1992
Net sales $193,861 $190,679 $197,312 Income from operations 9,488 29,929 27,494 Net income 10,330 18,950(a) 20,226 Net income per share $5.36 $9.84(a) $10.50 Total assets $219,903 $216,266 $190,714 Dividends declared per share $2.00 $1.80 $1.60
1991 1990
Net sales $196,232 $197,773 Income from operations 28,016 26,277 Net income 21,394 19,812 Net income per share $11.11 $10.28 Total assets $171,361 $153,080 Dividends declared per share $1.40 $1.25
(a) Includes the cumulative impact of adopting Statement of Financial Accounting Standards Nos. 109 ("SFAS 109"), "Accounting for Income Taxes" and 106 ("SFAS 106"), "Employers' Accounting for Postretirement Benefits Other Than Pensions" as of July 1, 1992, which reduced net income for the year ended June 30, 1993 by approximately $5,294,000 or $2.75 per share. (See Notes F and G to Consolidated Financial Statements)
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Liquidity and Capital Resources
Registrant continues to maintain a strong working capital position and management believes cash requirements for the coming year will be met by internal sources. Registrant has no major commitments for capital expenditures at this time, but has developed plans for construction of a new laboratory building in its Torrance compound at an estimated cost of $2.5 million. Construction is expected to start soon. The Company maintains a $50 million line of credit with First Interstate Bank of California. There was no bank debt incurred during fiscal 1994.
1994 1993 1992 (Dollars in thousands)
Current assets $103,375 $155,148 $ 95,245 Current liabilities 12,488 15,269 13,453
Working capital $ 90,887 $139,879 $ 81,792
Quick ratio 4.76:1 7.77:1 4.65:1
Capital Expenditures $ 6,658 $ 5,388 $ 6,967
Results of Operations
Net sales increased 1.7% to $193,861,000 in 1994 as compared to $190,679,000 in 1993, but remained below 1992 sales of $197,312,000. Although some segments of the national economy are improving, Registrant notes little improvement in the restaurant and hospitality business in its service area. The California economy, in particular, has shown little sign of improvement during fiscal 1994.
Gross profit decreased 17.5% to $94,295,000 in 1994 as compared to $114,258,000 in 1993 and $112,394,000 in 1992. The volatile world market for green coffee had a negative impact on Registrant's operations in fiscal 1994. Speculation about a perceived world shortage of coffee, followed by two Brazilian frosts in June and July pushed green coffee prices to eight year highs. The cost of green coffee more than doubled by year end, and Registrant was unable to raise prices fast enough to accommodate the increased costs. The rapid erosion of margins has a direct impact on net profit, resulting in a net loss for the quarter ended June 30, 1994 of ($2,163,000) or ($1.13) per share, as compared to a net profit of $6,640,000 or $3.45 per share in the same quarter of fiscal 1993 and a net profit of $3,325,000 or $1.73 per share in the fourth quarter of fiscal 1992. Net income for 1994 decreased 45.5% to $10,330,000 or $5.36 per share from $18,950,000 or $9.84 per share in 1993 and $20,226,000 or $10.50 per share in 1992. The green coffee market is too volatile to reliably forecast future coffee costs, and Registrant cautions against using past results to predict future earnings. Operating expenses were even with prior years, reaching $84,807,000 or $.44 per share in 1994 as compared to $84,329,000 or $.44 per share in 1993 and $84,900,000 or $.44 per share in 1992.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued
Increased compensation, medical and coffee brewing equipment costs were offset by reduced legal fees and insurance costs.
1994 1993(1) 1992
Income per share: Before accounting changes $ 5.36 $12.59 $10.50 Cumulative effect of accounting changes - (2.75) - Net income per share $ 5.36 $ 9.84 $10.50
Percentage change: 1994 to 1993 1993 to 1992
Net sales 1.7% (3.4)% Cost of goods sold 30.3% (10.0)% Gross profit (17.5)% 1.7% Operating expenses 0.6% (0.7)% Income from operations (68.3)% 8.9% Provision for income taxes (58.4)% 14.9% Income before accounting changes (57.4)% 19.9% Net income (45.5)% (6.3%)
Change in Earnings Per Share A summary of the change in earnings per share, which highlights factors discussed earlier, is as follows:
Per Share Earnings Per Share Earnings 1994 to 1993 1993 to 1992
Coffee: Prices $1.66 $(2.29) Volume (2.02) (1.78) Cost (11.10) 4.76 Gross profit (11.46) 0.69
Allied products: Gross profit 1.10 0.28 Operating expenses (0.25) 0.30 Other income (1.25) 1.85 Provision for income taxes 4.63 (1.03) Income before accounting changes (7.23) 2.09 Cumulative effect of accounting changes(1) 2.75 (2.75) Net income $(4.48) $(0.66)
(1) The Company adopted both SFAS 106 and SFAS 109 in 1993.
Inflation The Company's operations are significantly impacted by the world market for green coffee. Coffee is an agricultural product and its price fluctuates as the result of many factors beyond Registrant's control, including the actions of our own and foreign governments, the weather in coffee producing nations and the operation of the commodity futures markets. Management cautions against using past results to predict future earnings.
SFAS No. 115 Registrant has not adopted the provisions of Statement of Financial Accounting Standards No. 115 ("SFAS 115"), "Accounting for Certain Investments in Debt and Equity Securities." SFAS 115 requires certain changes in accounting for investments in equity and debt securities. The Company is required to adopt this standard for the fiscal year beginning July 1, 1994. Registrant does not believe the adoption of SFAS 115 will have a material impact on its financial position.
Item 8.
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Farmer Bros. Co. and Subsidiary
We have audited the consolidated financial statements and the financial statement schedule of Farmer Bros. Co. and Subsidiary ("the Company") as listed in Item 14(a) of this Form 10-K. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 1994 and 1993, and the consolidated results of its operations and its cash flows for each of the three years in the period ended June 30, 1994 in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein.
As discussed in Notes F and G to the consolidated financial statements, the Company changed its methods of accounting for postretirement benefits other than pensions and income taxes in 1993.
Coopers & Lybrand L.L.P.
Los Angeles, California September 23, 1994
[FN] The accompanying notes are an integral part of these financial statements.
Notes to Consolidated Financial Statements
A. Summary of Significant Accounting Policies
Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary FBC Finance Company. All significant intercompany balances and transactions have been eliminated.
Cash Equivalents The Company considers all highly liquid investments with a maturity of 30 days or less when purchased to be cash equivalents, which approximate market.
Investments Marketable equity securities are carried at the lower of cost or market. A valuation allowance is included in shareholders' equity that represents any net unrealized loss from non current investments. Other investments are carried at amortized cost which approximates market. The cost of investments sold is determined on the specific identification method. Fair value of investments are based on quoted market prices. Dividend and interest income are accrued as earned.
Inventories Inventories are valued at the lower of cost or market. Costs of coffee and allied products are determined on the Last In, First Out (LIF0) basis. Costs of coffee brewing equipment manufactured are accounted for on the First In, First Out (FIFO) basis.
Property, Plant and Equipment Property, plant and equipment is carried at cost, less accumulated deprecia tion. Depreciation of buildings and facilities is computed using the straight-line method. Other assets are depreciated using primarily the sum- of-the-years' digits method. The following useful lives are used:
Buildings and facilities 10 to 30 years Machinery and equipment 3 to 5 years Office furniture and equipment 5 years
When assets are sold or retired the asset and related depreciation allowance is eliminated from the records and any gain or loss on disposal is included in operations. Maintenance and repairs are charged to expense, betterments are capitalized.
Income Taxes In 1994 and 1993, deferred income taxes are determined based on the difference between the financial reporting and tax basis of assets and liabilities, using enacted tax rates in effect for the year in which differences are expected to reverse. In 1992, the provision for deferred income taxes represents the tax effect of differences in the timing of income and expense recognition for financial reporting and tax purposes.
B. Investments 1994 1993 Cost Market Cost Market (In thousands) Short term: Commercial Paper $ - $ - $25,266 $25,252 U.S. Government obligations 34,839 34,924 14,780 15,320 $34,839* $34,924 $40,046* $40,572 Long term: U.S. Government obligations $39,599* $38,621 $ 1,604 $ 1,810 Preferred stocks 28,939 27,895* 16,340 17,625 Corporate bonds 1,799* 1,796 1,999 2,149 Liquid asset fund 2,667* 2,667 279 279 $73,004 $70,979 $20,222* $21,863
* Represents carrying value.
A valuation allowance for preferred stocks of approximately $1,044,000 was recorded at June 30, 1994.
Net realized gains (losses) on the sale of investments were $1,758,000, $3,552,000, and $(422,000) in 1994, 1993, and 1992, respectively.
The Company has not adopted the provisions of Statement of Financial Accounting Standards No. 115 ("SFAS 115"), "Accounting for Certain Investments in Debt and Equity Securities." SFAS 115 requires certain changes in accounting for investments in equity and debt securities. The Company is required to adopt this standard for the fiscal year beginning July 1, 1994. The Company does not believe the adoption of SFAS 115 will have a material impact on its financial position.
C. Allowance for Doubtful Accounts and Notes Receivable
Balance At Additions Deductions of Balance At Beginning Charged to Uncollectible End of of Year Costs and Accounts Written Year Expenses Off July 1st June 30th (In thousands)
1994 $ 530 184 269 $ 445 1993 $ 614 339 423 $ 530 1992 $ 583 586 555 $ 614
D. Inventories
June 30, 1994 Processed Unprocessed Total (In thousands)
Coffee $ 3,182 $10,829 $14,011 Allied products 10,395 3,022 13,417 Coffee brewing equipment 1,712 5,770 7,482 $15,289 $19,621 $34,910
June 30, 1993 Processed Unprocessed Total (In thousands)
Coffee $ 3,430 $ 8,544 $11,974 Allied products 10,079 3,468 13,547 Coffee brewing equipment 1,523 5,289 6,812 $15,032 $17,301 $32,333
Current cost of coffee and allied products inventories exceeds the LIFO cost by approximately $6,700,000 and $2,500,000 as of June 30, 1994 and 1993, respectively.
E. Property, Plant and Equipment 1994 1993 (In thousands)
Buildings and facilities $23,760 $23,244 Machinery and equipment 46,237 42,152 Office furniture and equipment 2,217 2,431 72,214 67,827 Accumulated depreciation (47,997) (44,852) Land 4,726 4,726 $28,943 $27,701
Maintenance and repairs charged to expense for the years ended June 30, 1994, 1993 and 1992 were $9,137,000, $9,056,000 and $9,338,000, respectively.
F. Retirement Plans
The Company has a contributory defined benefit pension plan for all employees not covered under a collective bargaining agreement (Farmer Bros. Co.) and a non contributory defined benefit pension plan for certain hourly employees covered under a collective bargaining agreement (Brewmatic Co.). The Company's funding policy is to contribute annually at a rate that is intended to fund benefits as a level percentage of salary (Farmer Bros. Co.) and as a level dollar cost per participant (Brewmatic Co.) over the working lifetime of the plan participants. Benefit payments are determined under a final pay formula (Farmer Bros. Co.) and flat benefit formula (Brewmatic Co.).
F. Retirement Plans, Continued
The net periodic pension benefit for 1994, 1993 and 1992 are comprised of the following: Farmer Bros. Co. Brewmatic Co. (In thousands)
Service cost $ 594 $ 14 Interest cost 1,869 116 Actual return on assets (94) 6 Net amortization and deferral (3,651) (216) Net periodic pension benefit $ (1,282) $ (80)
Service cost $ 588 $ 16 Interest cost 1,629 110 Actual return on assets (5,870) (260) Net amortization and deferral 2,719 76 Net periodic pension benefit $ (934) $ (58)
Service cost $ 655 $ 17 Interest cost 1,786 100 Actual return on assets (4,846) (256) Net amortization and deferral 2,032 77 Net periodic pension benefit $ (373) $ (62)
The funded status of the plans at June 30, 1994 was as follows:
Farmer Bros. Co. Brewmatic Co. (In thousands) Actuarial present value of benefit obligations: Vested $ 22,710 $ 1,590 Non-vested 110 - Accumulated benefit obligations 22,820 1,590 Effect of projected salary increases 3,724 - Projected benefit obligations 26,544 1,590 Plan assets at fair value (39,111) (2,295) Plan assets at fair value in excess of projected benefit obligations (12,567) (705) Unrecognized net asset at June 30, 1994 5,585 329 Unrecognized prior service cost (304) (117) Unrecognized net loss (1,045) (167) Prepaid pension cost $ (8,331) $ (660)
Assumptions for 1994: Discount rate for plan obligations 7.75% 7.75% Assumed long term return on assets 8.00% 8.00% Projected compensation increases for pay related plans 3.10% -
F. Retirement Plans, Continued
The funded status of the plans at June 30, 1993 was as follows:
Farmer Bros. Co. Brewmatic Co. (In thousands) Actuarial present value of benefit obligations: Vested $ 20,428 $ 1,475 Non-vested 121 3 Accumulated benefit obligations 20,549 1,478 Effect of projected salary increases 3,296 - Projected benefit obligations 23,845 1,478 Plan assets at fair value (39,920) (2,377) Plan assets at fair value in excess of projected benefit obligations (16,075) (899) Unrecognized net asset at June 30, 1993 6,206 365 Unrecognized prior service cost (335) (130) Unrecognized net gain 3,155 97 Prepaid pension cost $ (7,049) $ (567)
Assumptions for 1993: Discount rate for plan obligations 8.00% 8.00% Assumed long term return on assets 8.00% 8.00% Projected compensation increases for pay related plans 3.10% -
The assets of each plan are primarily invested in publicly traded stocks and bonds, U.S. government securities and money market funds. The Farmer Bros. Co. Retirement Plan owned 21,765 shares of the Company's common stock at June 30, 1994 and 1993 with a fair value of approximately $2,677,000 and $3,287,000, respectively.
The Company contributes to two-multi-employer defined benefit plans for certain union employees. The contributions to these multi employer pension plans were approximately $1,615,000, $1,610,000, and $1,448,000 for 1994, 1993 and 1992, respectively. The Company also has a defined contribution plan for eligible non-union employees. No Company contributions have been made nor required to be made to this plan.
The Company incurred health care and life insurance costs, for both active employees and retirees, of approximately $4,114,000, $3,665,000 and $4,305,000 for the years ended June 30, 1994, 1993 and 1992, respectively. In 1993, the Company adopted Statement of Financial Accounting Standards No. 106 ("SFAS 106"), "Employers' Accounting for Postretirement Benefits Other Than Pensions." SFAS 106 requires the accrual method of accounting for these benefits rather than the Company's previous policy of recording these benefits when paid. The Company recognized the Accumulated Postretirement Benefit Obligation as of July 1, 1992 of $8,130,000. On an after-tax basis, the cumulative effect of this charge was $4,901,000 or $2.55 per share.
F. Retirement Plans, Continued
Net periodic postretirement benefit cost charged to operations for the years ended June 30, 1994 and 1993 includes the following components:
1994 1993 (In thousands) Service cost benefits earned during the year $ 496 $ 457 Interest cost on accumulated postretirement benefit obligation 756 681 Total expense $1,252 $1,138
At June 30, 1994 and 1993, the recorded liability for these postretirement benefits was as follows:
Accumulated postretirement benefit obligation: 1994 1993 (In thousands)
Retirees and dependents $ 5,276 $ 4,046 Fully eligible active participants 3,300 2,913 Other active participants 2,030 2,066 Accumulated postretirement benefit obligation 10,606 9,025 Unrecognized net loss (596) - Accrued postretirement benefit cost $10,010 $ 9,025
The discount rate used in determining the accumulated postretirement benefit obligation at June 30, 1994 and 1993 was 8% and 8.5%, respectively. The health care cost trend rate was assumed to be 10% in 1994 and 1993 grading to 5.5% in ten years for medical and 6% for all years for dental.
An increase in the health care cost trend rate of 1% in each year would increase the accumulated postretirement benefit obligation as of June 30, 1994 by 8.3% and increase the aggregate of service and interest cost for 1994 by 8.7%.
G. Income Taxes
Effective July 1, 1992, the Company adopted Statement of Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes." The cumulative effect of adopting SFAS 109 resulted in a charge of $393,000 or $.20 per share.
G. Income Taxes, Continued
The primary components of temporary differences which give rise to the Company's net deferred tax asset at June 30, 1994 and June 30, 1993 are as follows: June 30, June 30, 1994 1993 (In thousands) Deferred tax assets: Postretirement benefits $ 4,068 $ 3,629 Accrued liabilities 2,014 2,088 State taxes 287 681 Other 922 997 7,291 7,395 Deferred tax liabilities: Pension assets 3,653 3,063 Other 14 10 3,667 3,073 Net deferred tax asset $ 3,624 $ 4,322
Deferred tax assets are expected to be realized against future taxable income and have not been reduced by a valuation allowance.
The current and deferred components of the provision for income taxes consist of the following: 1994 1993 1992 (In thousands)
Current: Federal $ 4,385 $11,991 $10,706 State 1,276 2,837 2,871 5,661 14,828 13,577
Deferred: Federal 642 372 (230) State 56 94 (35) 698 466 (265) $ 6,359 $15,294 $13,312
A reconciliation of the provision for income taxes to the statutory federal income tax expense is as follows:
1994 1993 1992 (In thousands)
Statutory tax rate 35% 34.5% 34% Income tax expense at statutory rate $ 5,841 $13,641 $11,403 State income tax (net of federal tax benefit) 865 1,856 1,873 Dividend income exclusion (324) (302) (304) Other (net) (23) 99 340 $ 6,359 $15,294 $13,312 Income taxes paid $10,993 $15,636 $14,155
H. Other Current Liabilities 1994 1993 (In thousands) Accrued workers' compensation liabilities $ 3,112 $ 2,708 Dividends payable 963 867 Other 468 319 $ 4,543 $ 3,894
I. Line of Credit
The Company has a credit line of $50,000,000. The line has no fee or compensating balance requirement.
J. Commitments and Contingencies
The Company incurred rent expense of approximately $666,000, $686,000 and $694,000, for the years ended June 30, 1994, 1993 and 1992, respectively, and is obligated under leases for branch warehouses with terms not exceeding five years. Certain leases contain renewal options.
Future minimum lease payments are as follows:
June 30, (In thousands) 1995 $435 1996 230 1997 150 1998 114 1999 44 $973
The Company is a party to various pending legal and administrative pro ceedings. It is management's opinion that the outcome of such proceedings will have no material financial impact on the Company.
Concentration of Credit Risk: At June 30, 1994, financial instruments which potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents in financial institutions (which periodically exceed federally insured limits) and investments in the preferred stocks of other companies. Other investments are in U.S. government securities. Investment in the preferred stocks of other companies are limited to high quality issuers and are not concentrated by geographic area or issuer.
K. Quarterly Financial Data (Unaudited)
Quarter Ended 09/30/93 12/31/93 03/31/94 06/30/94 (In thousands, except per share data)
Net sales $46,998 $49,564 $48,628 $48,671 Gross profit 26,010 27,621 26,811 13,853 Income (loss) from operations 5,244 5,889 4,679 (6,324) Net income (loss) 4,365 4,196 3,932 (2,163) Net income (loss) per share $2.27 $2.18 $2.04 $(1.13)
Results were negatively impacted by the sudden increase in green coffee prices which occurred in the fourth quarter of 1994.
Quarter Ended 09/30/92 12/31/92 03/31/93 06/30/93 (In thousands, except per share data)
Net sales $47,788 $49,717 $46,667 $46,507 Gross profit 29,368 28,759 28,399 27,732 Income from operations 9,029 7,698 7,015 6,187 Income before cumulative effect of accounting changes 6,531 5,886 5,187 6,640 Net income 1,237 5,886 5,187 6,640 Income per share: Before cumulative effect of accounting changes $3.39 $3.06 $2.69 $3.45 Net income per share $0.64 $3.06 $2.69 $3.45
Results for the first three quarters of 1993 have been restated to reflect the adoption of SFAS 106 and SFAS 109 retroactively to July 1, 1992. The cumulative effect of adopting these accounting changes, net of tax, was approximately $5,294,000 (or $2.75 per share) during the first quarter.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
Reference is made to the information to be set forth in the section entitled "Election of Directors" in the definitive proxy statement involving the election of directors in connection with the Annual Meeting of Shareholders to be held on November 28, 1994 (the "Proxy Statement") which section is incorporated herein by reference. The Proxy Statement will be filed with the Securities and Exchange Commission no later than 120 days after June 30, 1994, pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended.
Name Age Position
Roy F. Farmer 78 Chairman of Board of Directors since 1951.
Roy E. Farmer 42 President and Director since 1993; various positions since 1976, son of Chairman of the Board, R.F. Farmer.
Guenter W. Berger 57 Vice President of Production, Director since 1980; various positions since 1960.
Kenneth R. Carson 54 Vice President of Sales since 1990; Sales Management since 1968.
David W. Uhley 53 Secretary since 1985; various positions since 1968.
John E. Simmons 43 Treasurer since 1985; various positions since 1980.
All officers are elected annually by the Board of Directors and serve at the pleasure of the Board.
Item 11.
Item 11. Executive Compensation
Reference is made to the information to be set forth in the section entitled "Management Remuneration" in the Proxy Statement, which is incorporated herein by reference.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Reference is made to the information to be set forth in the sections entitled "Principal Shareholders" and "Election of Directors" in the Proxy Statement, which is incorporated herein by reference.
Item 13.
Item 13. Certain Relationships and Related Transactions
Reference is made to the information to be set forth in the sections entitled "Principal Shareholders" and "Election of Directors" in the Proxy Statement, which is incorporated herein by reference.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) List of Financial Statements and Financial Statement Schedule 1. Financial Statements included in Item 8: Consolidated Balance Sheets as of June 30, 1994 and 1993. Consolidated Statements of Income For the Years Ended June 30, 1994, 1993 and 1992. Consolidated Statements of Cash Flows For the Years Ended June 30, 1994, 1993 and 1992. Consolidated Statements of Shareholders' Equity For the Years Ended June 30, 1994, 1993 and 1992. Notes to Consolidated Financial Statements
2. Financial Statement Schedule: Schedule I - Marketable Securities-Other Investments- June 30, 1994. Other schedules are omitted as they are not applicable, not material or the required information is given in the financial statements or notes thereto.
3. Exhibits required by Item 601 of Regulation S-K. See item (c) below.
(b) Reports on Form 8-K. Registrant did not file any reports on Form 8-K during the quarter ended June 30, 1994.
(c) Exhibits required by Item 601 of Regulation S-K.
Exhibits 3. Articles of incorporation and by-laws. Filed with the Form 10-K for the fiscal year ended June 30, 1986. 4. Instruments defining the rights of security holders, including indentures. Not applicable. 9. Voting trust agreement. Not applicable. 10. Material contracts Not applicable. 11. Statement re computation of per share earnings. Not applicable. 12. Statements re computation of ratios. Not applicable. 13. Annual report to security holders, Form 10-Q or quarterly report to security holders. Not applicable. 18. Letter re change in accounting principles. Not applicable. 19. Previously unfiled documents. Not applicable.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8K, Continued
22. Subsidiaries of the Registrant. Not applicable. 23. Published report regarding matters submitted to vote of security holders. Not applicable. 24. Consents of experts and counsel. Not applicable. 25. Power of attorney. Not applicable. 28. Additional exhibits. Not applicable. 29. Information from reports furnished to state insurance regulatory authorities. Not applicable.
(d) Financial statements required by Regulation S-X but excluded from the annual report to shareholders by Rule 14a - 3(b). None.
FARMER BROS. CO. SCHEDULE I - MARKETABLE SECURITIES - OTHER INVESTMENTS JUNE 30, 1994
Column A Column B Column C Column D Column E Number of Amount at Description shares & Cost Market which carried principal value in the amount balance sheet
(In thousands)
Short term:
U.S. Government obligations 35,000 $34,839 $34,924 $34,839
Long term:
U.S. Government obligations 41,000 39,599 38,621 39,599
Various preferred stocks* - 28,939 27,895 27,895
Corporate bonds* 1,800 1,799 1,796 1,799
Liquid asset fund - 2,667 2,667 2,667
* Securities of any one issuer do not exceed 2% of total assets.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Farmer Bros. Co.
By: Roy F. Farmer (Roy F. Farmer, Chief Executive Officer and Chairman of the Board of Directors) Date: September 28, 1994
By: John E. Simmons (John E. Simmons, Treasurer and Chief Financial and Accounting Officer) Date: September 28, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Lewis A. Coffman Lewis A. Coffman, Director Date: September 28, 1994
Guenter W. Berger Guenter W. Berger, Vice President and Director Date: September 28, 1994
Roy E. Farmer Roy E. Farmer, President and Director Date: September 28, 1994
John M. Anglin, Director Date
Catherine E. Crowe, Director Date