SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1994
Commission file number 0-1375
FARMER BROS. CO.
California 95-0725980
State of Incorporation Federal ID Number
20333 S. Normandie Avenue, Torrance, California 90502
Registrant's Address Zip
(310) 787-5200
Registrant's telephone number
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Number of shares of Common Stock outstanding: 1,926,414 as of September 30,
1994.
PAGE 1 OF 9
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Dollars in thousands, except per share data)
FARMER BROS. CO.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the three months
ended September 30,
1994 1993
Net sales $ 54,182 $ 46,998
Cost of goods sold 28,274 20,988
25,908 26,010
Selling expense 18,422 18,241
General and administrative expenses 2,972 2,525
21,394 20,766
Income from operations 4,514 5,244
Other income (expense):
Dividend income 553 311
Interest income 958 875
Other (369) 524
1,142 1,710
Income before taxes and
cumulative effect of
accounting change 5,657 6,954
Provision for income taxes 2,269 2,589
Income before cumulative
effect of accounting change 3,388 4,365
Cumulative effect of
accounting change,
net of income taxes (593) -
Net income $ 2,795 $ 4,365
Income per share:
Before accounting change $ 1.76 $ 2.27
Cumulative effect of
accounting change (.31) -
Net income per share $ 1.45 $ 2.27
The accompanying notes are an integral part of these financial statements.
FARMER BROS. CO.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, June 30,
1994 1994
ASSETS
Current assets:
Cash and cash equivalents $ 7,244 $ 8,681
Short term investments 84,005 34,839
Accounts and notes receivable, net 18,231 15,975
Tax refund receivable - 5,357
Inventories 35,717 34,910
Deferred income taxes 3,567 2,905
Prepaid expenses and other 1,001 708
Total current assets 149,765 103,375
Property, plant and equipment, net 30,004 28,943
Notes receivable 1,216 1,257
Investments 28,980 71,960
Other assets 14,430 13,649
Deferred taxes and other assets 1,092 719
Total assets $225,487 $219,903
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,220 $ 3,372
Accrued payroll expenses 4,243 4,573
Other 4,905 4,543
Total current liabilities 15,368 12,488
Other long term liabilities 10,400 10,010
Commitments and contingencies
Shareholders' equity:
Common stock, $1.00 par value,
authorized 3,000,000 shares; issued
and outstanding 1,926,414 shares 1,926 1,926
Additional paid-in capital 568 568
Retained earnings 197,786 195,955
Net unrealized change in
investment securities (561) (1,044)
Total shareholders' equity 199,719 197,405
Total liabilities and
shareholders' equity $225,487 $219,903
The accompanying notes are an integral part of these financial statements.
FARMER BROS. CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the three months
ended September 30,
1994 1993
Cash flows from operating
activities:
Net Income $ 2,795 $ 4,365
Adjustments to reconcile net
income to net cash provided
by operating activities:
Cumulative effect of
accounting change 593 -
Depreciation 1,323 1,228
Deferred income taxes (256) -
Other 9 (44)
Net (gain) loss on
investments 502 (385)
Change in assets and
liabilities:
Short term investments (7,888) (14,658)
Accounts and notes
receivable (2,277) (609)
Inventories (807) 561
Tax refund receivable 5,357 -
Prepaid expenses and other
assets (1,107) (741)
Accounts payable 2,848 (1,648)
Accrued payroll expenses
and other liabilities 32 2,109
Other long term liabilities 390 246
Total adjustments (1,281) (13,941)
Net cash provided by operating
activities $ 1,514 ($ 9,576)
The accompanying notes are an integral part of these financial statements.
FARMER BROS. CO
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(Unaudited)
For the three months
ended September 30,
1994 1993
Net cash provided by operating
activities: $ 1,514 ($ 9,576)
Cash flows from investing
activities
Purchases of property, plant
and equipment (2,380) (905)
Proceeds from sales of property,
plant and equipment 20 72
Purchases of investments (9,790)
Proceeds from sales of
investments 311 7,114
Notes issued (833)
Notes repaid 61 443
Net cash provided by
(used in) investing
activities (1,988) (3,899)
Cash flows from financing
activities:
Dividends paid (963) (963)
Net cash used in financing
activities (963) (963)
Net (decrease) in cash
and cash equivalents (1,437) (14,439)
Cash and cash equivalents at
beginning of year 8,681 64,742
Cash and cash equivalents at
end of quarter $ 7,244 $ 50,303
Supplemental disclosure of
cash flow information:
Income tax payments $ 2 $ 187
The accompanying notes are an integral part of these financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. Unaudited Financial Statements
The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-Q and do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. It is management's opinion that all adjustments necessary
for a fair statement of the results of operations for the interim periods have
been made.
B. Inventories
Processed Unprocessed Total
(In thousands)
September 30, 1994
Coffee $ 2,721 $11,198 $13,919
Allied products 10,094 3,893 13,985
Coffee brewing equipment 1,807 6,006 7,813
$14,622 $21,097 $35,717
June 30, 1994
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
C. Accounting Policy Change
The Company adopted the provisions of the Statement of Financial Accounting
Standards No. 115 ("SFAS 115"), "Accounting for Certain Investments in Debt &
Equity Securities" for such securities held as of or acquired after July 1,
1994. In accordance with SFAS 115, prior period financial statements have not
been restated. Currently, a portion of the Company's investments have been
classified as trading securities and are carried at fair value with unrealized
gains and losses reported in earnings. The balance of the Company's investments
are currently classified as available for sale and are carried at fair value
with unrealized gains or losses excluded from earnings and reported as a
separate component of shareholders' equity. The cost of investments sold is
determined on the specific identification method. Investments are reported
at fair value. Investments designated trading securities are carried as
current assets. Available-for-sale investments are carried as current or
non-current assets as appropriate. The Company has not identified any
held-to-maturity investments at this time. Dividend and interest income
are accrued as earned.
Registrant has reported the cumulative effect of the change in accounting
principle relating to trading securities as an expense of $593,000, net of
taxes. During the quarter ended September 30, 1994, the market value of the
Company's trading securities declined $615,000 and is included in Other income
(expense). The Company has reported the cumulative effect of the change in
accounting principle relating to available for sale securities as a reduction in
shareholders' equity of $546,000, net of taxes. During the quarter ended
September 30, 1994, the fair value of the Company's available for sale
securities declined resulting in an additional reduction in shareholders' equity
of $15,000.
C. Accounting Changes (CONTINUED)
Unrealized gains and losses on available for sale investment securities included
in shareholders' equity at September 30, 1994 were fixed income government
securities maturing after 1 through 5 years with a cost of $28,215,000,
a fair value of $27,419,000, resulting in a net unrealized loss of
$(796,000) and fixed income government backed securities with a maturity
after 5 through 10 years with a cost of $1,699,000, a fair value
of $1,560,000, resulting in a net unrealized loss of $(139,000). Deferred
income taxes on the unrealized loss is $374,000.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The volatile green coffee market continues to affect Registrant's results of
operations. The Company continues its efforts to pass on higher green coffee
costs that more than doubled this past summer. Net sales for the quarter ended
September 30, 1994 increased to $54,182,000 as compared to $48,671,000 in the
quarter ended June 30, 1994 and $46,998,000 in the quarter ended September 30,
1993. Gross profit for the quarter was $25,908,000 as compared to $13,853,000
in the quarter ended June 30, 1994 and $26,010,000 in the quarter ended
September 30, 1993. Operating expenses, composed of selling and general &
administrative expenses reached $21,394,000 in the current quarter as compared
to $20,178,000 and $20,766,000 in the fiscal quarters ended June 30, 1994 and
September 30, 1993, respectively.
Operating income for the three months ended September 30, 1994, reached
$4,514,000, or $2.34 per share, as compared to an operating loss of $(6,324,000)
or $(3.28) per share and operating income of $5,244,000 or $2.72 per share in
the fiscal quarters ended June 30, 1994 and September 30, 1993, respectively.
Registrant adopted the provisions of SFAS 115 in the first quarter of fiscal
1995. The cumulative effect of its adoption, net of tax, was $(593,000)
or $(0.31) per share. Net income for the quarter ended September 30, 1994
was $2,795,000 or $1.45 per share as compared to a net loss of $(2,163,000)
or $(1.12) per share and net income of $4,365,000 or $2.27 per share in
the fiscal quarters ended June 30, 1994 and September 30, 1993, respectively.
Net Gross Operating Net
Sales Profit Income Income
(In thousands, except per share data)
09/30/93 $46,998 $26,010 $ 5,244 $ 4,365
100.00% 55.34% 11.16% 9.29%
12/31/93 $49,564 $27,621 $ 5,889 $ 4,196
100.00% 55.73% 11.88% 8.47%
03/31/94 $48,628 $26,811 $ 4,679 $ 3,932
100.00% 55.13% 9.62% 8.09%
06/30/94 $48,671 $13,853 ($ 6,324) $( 2,163)
100.00% 28.46% (12.99)% (4.44)%
09/30/94 $54,182 $25,908 $ 4,514 $ 2,795
100.00% 47.82% 8.33% 5.16%
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (CONTINUED)
Income Per Share
09/30/93 $2.27
12/31/93 $2.18
03/31/94 $2.04
06/30/94 ($1.13)
09/30/94 $1.45
Part II Other Information
Item 1. Legal proceedings. not applicable.
Item 2. Changes in securities. none.
Item 3. Defaults upon senior securities. none.
Item 4. Submission of matters to a vote of
security holders. none.
Item 5. Other information. none.
Item 6. Exhibits and reports on Form 8-K.
(a) Exhibits.
(2) Plan of acquisition, reorganization,
arrangement, liquidation or succession. not applicable.
(4) Instruments defining the rights of
security holders, including indentures. not applicable.
(11) Statement re computation of per
share earnings. not applicable.
(15) Letter re unaudited interim financial
information. not applicable.
(18) Letter re change in accounting principles. not applicable.
(19) Report furnished to security holders. not applicable.
(22) Published report regarding matters
submitted to vote of security holders. not applicable.
Part II Other Information (CONTINUED)
(23) Consents of experts and counsel. not applicable.
(24) Power of attorney. not applicable.
(27) Financial Data Schedule see attached Form EX-27.
(99) Additional exhibits. not applicable.
(b) Reports on Form 8-K none.
SIGNATURES
Pursuant to the requirements 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.
Date: November 13, 1994 FARMER BROS. CO.
(Registrant)
John E. Simmons
John E. Simmons
Treasurer and
Chief Financial Officer
5
1000
QTR-1
JUN-30-1995
SEP-30-1994
7244
84005
18676
445
35717
149765
30004
48993
225487
15368
0
1926
0
0
0
225487
54182
54182
28274
21394
0
0
0
5657
2269
0
0
0
(593)
2795
1.45
1.45
