View:
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2001
Commission file number: 0-1375
FARMER BROS. CO.
California 95-0725980
State of Incorporation Federal ID Number
20333 South Normandie Avenue, Torrance, California
Registrant's address
(310) 787-5200
Registrant's telephone number
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class Name of each exchange on
which registered
Common stock, $1.00 par value OTC
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, $1.00 par value, outstanding as of August
2, 2001: 1,926,414 and the aggregate market value of the common shares
held by non-affiliates of the Registrant was approximately $202 million.
PART I
Item 1. Business
General: Farmer Bros. Co. was incorporated in California in 1923. We
manufacture and distribute a product line that includes roasted coffee,
coffee related products (coffee filters, stir sticks and creamers), teas,
cocoa, spices, and soup and beverage bases to restaurants and other
institutional establishments that prepare food, including restaurants,
hotels, hospitals, convenience stores and fast food outlets. The product
line presently includes over 300 items. Roasted coffee products make up
fifty four percent of total sales. No single product other than coffee
accounts for 10% or more of revenue. Our products are sold directly from
delivery trucks by sales representatives who solicit, sell, and otherwise
maintain our customer's accounts.
Raw Materials and Supplies: Our primary raw material is green coffee.
Coffee purchasing, roasting and packaging takes place at our Torrance,
California plant, which is also the distribution hub for our branches.
Green coffee is an agricultural commodity. We purchase all of our green
coffee through domestic commodity brokers. It is grown outside the United
States and can be subject to volatile price fluctuations resulting from
supply concerns related to crop availability and related conditions such as
weather, political events and social instability in coffee producing
nations. Government actions and trade restrictions between our own and
foreign governments can also influence prices.
Green coffee prices are affected by the actions of producer organizations.
The most prominent of these are the Colombian Coffee Federation (CCF), the
Association of Coffee Producing Countries (ACPC) and the International
Coffee Organization (ICO). These organizations seek to increase green
coffee prices largely by attempting to restrict supplies, thereby limiting
the availability of green coffee to the coffee consuming nations.
Other raw materials used in the manufacture of allied products include a
wide variety of spices, as well as tea, dry cocoa, dehydrated milk
products, salt and sugar. All of these agricultural products can be
subject to wide cost variation, but no combination of these raw materials
has had the material effect on our operating results as green coffee.
Trademarks & Patents: We own approximately 38 registered U.S. trademarks,
which are integral to customer identification of our products. It is not
possible to assess the impact of the loss of such identification.
Seasonality: We experience some seasonal influences. The winter months
are the best sales months. However, our product line and geographic
diversity provides some sales stability during the warmer months when
coffee consumption decreases. Additionally, the summer months usually
experience an increase in sales to seasonal businesses located in popular
vacation areas.
Distribution: Our products are distributed by our selling divisions from
103 branches located in most large cities throughout the 29 western United
States. We operate our own long haul trucking fleet to more effectively
control the supply of products to these warehouses and try to minimize our
inventory levels within each branch warehouse.
Customers: No customer represents a significant concentration of sales.
The loss of any one or more of our larger customer accounts would have no
material adverse effect on our operations. Customer contact and service
quality, which is integral to our sales effort, is often secondary to
product pricing for customers with their own distribution systems.
Competition: We face competition from many sources, including multi-
national manufacturers of retail products like Procter & Gamble and Sara
Lee Foods, grocery distributors like Sysco and U.S. Food Service and
regional coffee roasters like Boyd Coffee Co. and Lingle Bros. We may have
some competitive advantages due to our longevity, strong regional roots and
sales and service force. Our customer base is price sensitive and we are
often faced with price competition.
Working Capital: We finance our operations internally, and believe that
working capital from internal sources will be adequate for the coming year.
Foreign Operations: We have no material revenues that result from foreign
operations.
Other: On June 30, 2001, we employed 1,144 employees; 477 are subject to
collective bargaining agreements. The effects of compliance with
government provisions regulating discharge of materials into the
environment have not had a material effect on our financial condition or
results of operations. The nature of our business does not provide for
maintenance of or reliance upon a sales backlog.
Item 2. Properties
Our largest and most significant facility is the roasting plant, warehouses
and administrative offices in Torrance, California. This facility is our
primary manufacturing facility and the distribution hub for our fleet.
We stage product in more than 100 small branch warehouses throughout our
service area. These warehouses taken together represent a vital part of
our business, but no individual warehouse is material to the group as a
whole, and most warehouses vary in size from 2,500-12,000 sq. feet. We
believe both the existing plant and distribution warehouses will continue
to provide adequate capacity for the foreseeable future. A complete
list of facilities is found in Exhibit (99).
Item 3. Legal Proceedings
We are both defendant and plaintiff in various legal proceedings incidental
to our business which are ordinary and routine. It is our opinion that the
resolution of these lawsuits will not have a material impact on our
financial condition or results of operations.
Item 4 Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for Registrant's Common Equity and Related Shareholder
Matters
We have 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.
2001 2000
High Low Dividend High Low Dividend
1st Quarter $194.19 $165.00 $0.80 $208.00 $164.00 $0.75
2nd Quarter $211.00 $176.88 $0.80 $174.75 $158.00 $0.75
3rd Quarter $258.52 $188.00 $0.80 $179.00 $150.00 $0.75
4th Quarter $239.00 $205.00 $0.80 $191.13 $158.00 $0.75
There were 2,363 holders of record on August 2, 2001.
Item 6. Selected Financial Data
(In thousands, except per share data)
2001 2000 1999 1998 1997
Net sales $215,431 $218,688 $221,571 $240,092 $224,802
Income from operations $42,115 $48,965 $36,770 $40,955 $16,789
Net income $36,178 $37,576 $28,865 $33,400 $16,690
Net income per share $19.62 $20.22 $15.16 $17.34 $8.66
Proforma net income (a) $36,488 $35,445 $27,327 $33,702 $17,077
Proforma net income (a)
per share $19.79 $19.08 $14.36 $17.71 $8.86
Total assets $390,395 $353,467 $324,836 $307,012 $276,849
Dividends per share $3.20 $3.00 $2.80 $2.55 $2.40
(a) Upon adoption of SFAS No. 133 on July 1, 2000, the Company reclassified
its investments held as "available for sale" to the "trading" category
which resulted in an entry to recognize the accumulated unrealized loss of
$3,894,000. The "proforma" amounts above summarize the effect on earnings
and earnings per share on prior years' results as if the change had been in
effect for those periods presented.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
We have been able to maintain a strong working capital position, and
believe that both our short and long term cash requirements for the coming
year will be provided by internal sources. We have no major commitments
for capital expenditures at this time, but are prepared to loan additional
funds to the ESOP for purchase of up to 300,000 shares of Farmer Bros Co.
common stock at a cost not to exceed $50,000,000. At June 30, 2001 the
ESOP loan balance is $13,435,000.
(In thousands except ratio data)
2001 2000 1999
Current assets(a) $318,879 $188,560 $181,549
Current liabilities $17,655 $16,966 $15,918
Working capital $301,224 $171,594 $165,631
Quick ratio(a) 16:1 9:1 9:1
Capital Expenditures $5,912 $14,130 $6,167
(a) Upon adoption of SFAS No. 133 on July 1, 2000, the Company
reclassified its investments held as "available for sale" to the
"trading" category.
Results of Operations
Fiscal 2001 presented us with a less volatile green coffee market. World
green coffee supplies, bolstered by supply from Vietnam and Brazil have
pressured green coffee prices. Green coffee prices at June 30, 2001 are
down about 34% from the beginning of the year. The coffee crop in Brazil,
the world's largest coffee producer, appears to have weathered the frost
season (during our summer) and a good crop is expected. As depicted in the
"Change in Earnings per Share" analysis below, our 2001 sales declined
1.5%. Net sales decreased to $215,431,000 in 2001 as compared to
$218,688,000 in 2000, and $221,571,000 in 1999. The primary cause of our
sales decline has been reduced coffee usage by our customers who attribute
this decrease to a variety of causes which, although not quantifiable,
include the increasing number of competing beverages (both hot & cold) and
a decrease in consumer spending. Fiscal year 2000 operations did not vary
dramatically from the results of 1999.
Gross profit decreased to $141,400,000 in fiscal 2001, or 66% of sales,
compared to $141,719,000 in 2000, or 65% of sales. Gross profit for 1999
was $131,737,000, or 59% of sales. During fiscal 2001, green coffee prices
declined about 35% as compared to fiscal 2000 prices; however, as described
below gross profit was impacted by the change in accounting for coffee
contracts. During fiscal 2000, green coffee costs increased nearly 40% in
the first half of the year, decreasing to beginning of the year levels by
the first of June 2000. During the month of June 2000, green coffee costs
increased over 30% as the result of a weather threat to the Brazilian
coffee crop.
Operating expenses, composed of selling and general and administrative
expenses increased to $99,285,000 in 2001 from $92,754,000 in 2000 and
$94,967,000 in 1999. This increase in 2001 was primarily the result of an
increase of $2,181,000, or 32%, in the cost of providing coffee brewing
equipment to our customers and an increase of $2,678,000, or 4.2%, in
payroll & employee benefits expenses as compared to fiscal 2000. This
increase is primarily related to the cost of our employee stock ownership
plan. Operating expenses decreased in fiscal 2000 as compared to fiscal
1999. This is primarily the result of a larger deferred compensation
expenses in 1999.
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities", as amended by SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities-An Amendment of FASB Statement
133." The adoption of Statement Nos. 133 and 138 on July 1, 2001 resulted
in a cumulative effect of an accounting change of $515,000 ($310,000 net of
taxes) being recognized in the Statement of Net Income. Upon adoption of
SFAS 133, securities were reclassified from the "available for sale" to the
"trading" category. This resulted in an entry to recognize the accumulated
unrealized loss of $3,894,000 in other income. All investments, consisting
of marketable debt and equity securities, interest rate futures or options
and money market instruments, are now held for trading purposes and are
stated at fair value. Gains and losses, both realized and unrealized, are
now included in other income and expense. Other income increased to
$17,401,000 in 2001 as compared to $12,254,000 in 2000, and $11,745,000 in
1999 as the result of an increase in trading securities and coffee
contracts net of the reclassification adjustment described above.
Income before taxes was $59,516,000 or 28% of sales in 2001, as compared to
$61,219,000 or 28% of sales in 2000 and $48,515,000 or 22% of sales in
1999. Net income for fiscal year 2001 was $36,178,000, or $19.62 per
share, as compared to $37,576,000, or $20.22 per share, in 2000 and
$28,865,000, or $15.16 per share, in 1999.
We cannot forecast future trends, but note that fourth quarter operating
results reflect the national economic slowdown that has been much discussed
in the media. Fourth quarter sales in 2001 declined 7% or $4,007,000 as
compared to third quarter 2001 sales, and 4% or $2,156,000 as compared to
the same period of the prior fiscal year. Consumer spending has a direct
effect on our results: decreased business travel, reduced entertainment
expenses, reduced vacation travel, households that economize and eat out
less frequently, corporate layoffs and even employees who bring a sack
lunch instead of eating out all result in fewer restaurant sales dollars.
As a supplier to the restaurant and hospitality industry, fewer restaurant
sales means fewer sales of Farmer Bros.' products. Although profit margins
have been stable, the decline in sales resulted in a substantially reduced
fourth quarter profit. Operating income for the fourth quarter of fiscal
2001 declined 49% or $5,871,000 as compared to the third quarter of fiscal
2001 and 56% or $7,733,000 as compared to the same quarter of the prior
fiscal year. Earnings per share decreased 36% to $3.77 in the fourth
quarter of fiscal 2001 as compared to $5.85 per share in the same quarter
of the prior fiscal year.
2001 2000 1999
Net income per common share $19.62 $20.22 $15.16
Percentage change:
2001 to 2000 2000 to 1999
Net sales (1.5)% (1.3)%
Cost of goods sold (3.8)% (14.3)%
Gross profit (0.2)% 7.6 %
Operating expenses 7.0 % (2.3)%
Income from operations (14.0)% 33.2 %
Provisions for income taxes (2.6)% 20.3 %
Net income (3.7)% 30.2 %
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
2001 vs. 2000 2000 vs. 1999
Coffee: Prices $ 0.32 $(0.67)
Volume (3.20 (2.89)
Cost 2.09 6.86
Gross profit (0.79) 3.30
Allied products: Gross profit 0.62 2.12
Operating expenses (3.54) 1.19
Other income 2.79 0.27
Provision for income taxes 0.33 (2.15)
Accounting change (0.17) 0.00
Change in weighted average
shares outstanding 0.16 0.33
Net income $(0.60) $5.06
Price Risk
Our operations are significantly impacted by the world market for our
primary product: coffee. Coffee is an agricultural product that is
produced in many nations around the world. Although it is consumed in
those nations, the largest coffee consuming nation is the United States
followed by Western Europe. Green coffee is traded domestically on the
Coffee, Sugar & Cocoa Exchange (CSCE) in New York and is one of the largest
and most volatile commodity markets.
The most important aspect of our operation is to secure a consistent supply
of coffee. Some proportion of green coffee price fluctuations can be
passed through to our customers, even if lagging the market changes; but
maintaining a steady supply of green coffee is essential to keep inventory
levels low and sufficient stock to meet customer needs. We purchase our
coffee through established coffee brokers to help minimize the risk of
default on coffee deliveries. To help ensure future supplies we purchase
much of our coffee on forward contracts for delivery as long as six months
in the future. Sometimes these contracts are fixed price contracts, where
the price of the purchase is set regardless of the change in price of green
coffee between the contract and delivery dates. At other times these
contracts are variable price contracts that allow the delivered price of
contracted coffee to reflect the market price of coffee at the delivery
date.
Futures contracts not designated as hedges, and terminations of contracts
designed as hedges are marked to market and changes are recognized in
current earnings. There were no open contracts at June 30, 2000 and 1999.
Open contracts at June 30, 2001 are addressed in the following Item 7A.
In the event of non-performance by the counter parties, the Company could
be exposed to credit and supply risk. The Company monitors the financial
viability of the counter parties in an attempt to minimize this risk.
Item 7A. Qualitative and Quantitative Disclosures About Market Risk
We are exposed to market value risk arising from changes in interest rates
on our securities portfolio. Our portfolio of investment grade money
market instruments includes discount commercial paper, medium term notes,
federal agency issues and treasury securities. As of June 30, 2001 over
58% of these funds were invested in instruments with maturities shorter
than 90 days. This portfolio's interest rate risk is not hedged and its
average maturity is approximately 159 days. A 100 basis point move in the
general level of interest rates would result in a change in the market
value of the portfolio of approximately $2,100,000.
Our portfolio of preferred securities includes investments in derivatives
that provide a natural economic hedge of interest rate risk. We review the
interest rate sensitivity of these securities and (a) enter into "short
positions" in futures contracts on U.S. Treasury securities or (b) hold put
options on such futures contracts in order to reduce the impact of certain
interest rate changes on such preferred stocks. Specifically, we attempt
to manage the risk arising from changes in the general level of interest
rates. We do not transact in futures contracts or put options for
speculative purposes.
The following table demonstrates the impact of varying interest rate
changes based on the preferred stock holdings, futures and options
positions, and market yield and price relationships at June 30, 2001. This
table is predicated on an instantaneous change in the general level of
interest rates and assumes predictable relationships between the prices of
preferred securities holdings, the yields on U.S. Treasury securities and
related futures and options.
Interest Rate Changes
(In thousands)
Market Value at June 30, 2001 Change in Market
Preferred Futures and Total Value of Total
Securities Options Portfolio Portfolio
- -200 basis points "(b.p.")$53,194.1 $0.0 $53,194.1 $5,678.0
- -100 b.p. 50,034.2 15.2 50,049.4 2,533.3
Unchanged 46,254.0 1,262.1 47,516.1 0.0
+100 b.p. 42,340.9 5,025.2 47,366.1 (150.0)
+200 b.p. 38,758.0 8,297.3 47,055.3 (460.8)
The number and type of futures and options contracts entered into depends
on, among other items, the specific maturity and issuer redemption
provisions for each preferred security held, the slope of the Treasury
yield curve, the expected volatility of Treasury yields, and the costs of
using futures and/or options.
Commodity Price Changes
We are exposed to commodity price risk arising from changes in the market
price of green coffee. We price our inventory on the LIFO basis. In the
normal course of business we enter into commodity purchase agreements with
suppliers and we purchase exchange traded green coffee contracts. The
following table demonstrates the impact of changes in the price of green
coffee on inventory and green coffee contracts at June 30, 2001. It
assumes an immediate change in the price of green coffee, and the
valuations of coffee futures and relevant commodity purchase agreements at
June 30, 2001.
Commodity Risk Disclosure
(In thousands)
Market Value of
Coffee Cost Coffee June 30, 2001 Change in Market Value
Change Inventory Futures & Options Total Derivatives Inventory
- -10% $11,585 $72 $11,657 $63 ($1,287)
unchanged 12,872 9 12,881 -
+10% 14,159 (54) 14,105 (63) $1,287
At June 30, 2001 the derivatives consisted mainly of commodity futures with
maturities shorter than three months.
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders of Farmer Bros. Co. and
Subsidiary
We have audited the accompanying consolidated balance sheets of Farmer
Bros. Co. and Subsidiary (the "Company") as of June 30, 2001 and 2000, and
the related consolidated statements of income, cash flows, and
shareholders' equity for the three years ended June 30, 2001. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on the financial statements
based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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 Farmer
Bros. Co. and Subsidiary at June 30, 2001 and 2000, and the consolidated
results of their operations and their cash flows for each of the three
years in the period ended June 30, 2001, in conformity with accounting
principles generally accepted in the United States.
As discussed in Note 2 to the consolidated financial statements, the
Company changed its method of accounting for derivative financial
instruments in 2001.
/s/Ernst & Young LLP
Long Beach, California
September 7, 2001
FARMER BROS. CO.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
June 30, June 30,
2001 2000
ASSETS
Current assets:
Cash and cash equivalents $19,362 $15,504
Short term investments 243,818 114,346
Accounts and notes receivable, net 15,326 18,494
Inventories 35,780 36,770
Income tax receivable 2,991 1,340
Deferred income taxes 1,092 1,224
Prepaid expenses 510 882
Total current assets 318,879 188,560
Property, plant and equipment, net 39,094 38,741
Notes receivable 2,727 3,081
Long term investments 94,243
Other assets 26,432 23,975
Deferred income taxes 3,263 4,867
Total assets $390,395 $353,467
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $5,153 $5,921
Accrued payroll expenses 6,421 5,953
Other 6,081 5,092
Total current liabilities 17,655 16,966
Accrued postretirement benefits 20,800 19,198
Other long term liabilities 4,892 4,190
25,692 23,388
Commitments and contingencies -
Shareholders' equity:
Common stock, $1.00 par value,
authorized 3,000,000 shares; issued
and outstanding 1,926,414 1,926 1,926
Additional paid-in capital 16,629 16,359
Retained earnings 341,434 311,153
Unearned ESOP shares (12,941) (13,679)
Accumulated other comprehensive loss - (2,646)
Total shareholders' equity 347,048 313,113
Total liabilities and
shareholders' equity $390,395 $353,467
The accompanying notes are an integral part of these financial statements.
FARMER BROS. CO.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except share data)
Years ended June 30,
2001 2000 1999
Net sales $215,431 $218,688 $221,571
Cost of goods sold 74,031 76,969 89,834
141,400 141,719 131,737
Selling expense 84,524 82,858 81,321
General and administrative expense 14,761 9,896 13,646
99,285 92,754 94,967
Income from operations 42,115 48,965 36,770
Other income:
Dividend income 3,039 2,741 2,388
Interest income 12,308 10,080 8,870
Other, net 2,054 (567) 487
17,401 12,254 11,745
Income before taxes 59,516 61,219 48,515
Income taxes 23,028 23,643 19,650
Income before cumulative effect
of accounting change $36,488 $37,576 $28,865
Cumulative effect of accounting
change (net of income taxes
of $205,000) (310) - -
Net income $36,178 $37,576 $28,865
Income per common share:
Before cumulative effect of
accounting change $19.79 $20.22 $15.16
Cumulative effect of
accounting change ($0.17) - -
Net income per common share $19.62 $20.22 $15.16
Pro forma assuming accounting changes
were retroactively applied
Net income $36,488 $35,445 $27,327
Net income per common share $19.79 $19.08 $14.36
Weighted average shares
outstanding 1,843,392 1,858,034 1,903,420
The accompanying notes are an integral part of these financial statements.
FARMER BROS. CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Years ended June 30,
2001 2000 1999
Cash flows from operating activities:
Net income $36,178 $37,576 $28,865
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of accounting change 310 - -
Depreciation 5,527 5,628 5,202
Deferred income taxes 1,736 2,505 (993)
(Gain) loss on sales of assets (131) 686 (195)
ESOP compensation expense 1,398 489 -
Net (gain) loss on investments (1,614) 1,502 13
Net unrealized loss on investments
reclassified as trading 2,337 - -
Change in assets and liabilities:
Investments classified as trading (33,615) - -
Accounts and notes receivable 2,769 (335) (177)
Inventories 990 (3,095) 4,392
Income tax receivable (1,651) (1,091) 400
Prepaid expenses and other assets (2,130) (3,128) (1,841)
Accounts payable (768) 1,135 (819)
Accrued payroll and expenses and
other liabilities 1,457 (87) 578
Accrued postretirement benefits 1,602 1,491 1,766
Other long term liabilities 702 690 3,500
Total adjustments (21,081) 6,390 11,826
Net cash provided by operating activities $15,097 $43,966 $40,691
The accompanying notes are an integral part of these financial statements.
FARMER BROS. CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Years ended June 30,
2001 2000 1999
Net cash provided by operating activities $15,097 $43,966 $40,691
Cash flows from investing activities:
Purchases of property, plant and equipment (5,912) (14,130) (6,167)
Proceeds from sales of property,
plant and equipment 207 700 252
Purchases of available for sale investments - (278,083) (577,336)
Proceeds from sales of available for
sale investments - 268,337 554,603
Notes issued (78) - (54)
Notes repaid 831 843 142
Net cash used in investing activities ($4,952) ($22,333) ($28,560)
Cash flows from financing activities:
Dividends paid (5,897) (5,580) (5,344)
Common stock repurchased - (4,103) (11,817)
Common stock issued - 13,287 2,633
ESOP contributions (390) 14,136) -
Net cash used in financing activities (6,287) (10,532) (14,528)
Net increase (decrease) in cash
and cash equivalents 3,858 11,101 (2,397)
Cash and cash equivalents at beginning of year 15,504 4,403 6,800
Cash and cash equivalents at end of year $19,362 $15,504 $4,403
The accompanying notes are an integral part of these financial statements.
FARMER BROS. CO.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in thousands, except share data)
Accumulated
Additional Unearned Other
Stock Paid-in Retained ESOP Comprehensive
Shares Amount Capital EarningShares Income(Loss)Total
___________________________________________________________ _________________
Balance at June 30, 1998 1,926,41 $1,926 $568 $271,395 $ - $1,023 274,912
Comprehensive income 28,865 28,865
Net income
Other comprehensive income,
net of taxes ($1,024)
Change in unrealized gain on
available for sale securities -1,939 -1,939
Reclassification adjustment
for realized gain 401 401
-1,538 -1,538
Total comprehensive income 27,327
Dividends ($2.80 per share) -5,344 -5,344
Common stock repurchased -71,621 -71 -21 -11,725 -11,817
Common stock issued 15,961 16 2,617 2,633
Balance at June 30,1999 1,870,75 $1,871 $3,164 $283,191 $ - ($515)$287,711
Comprehensive income
Net income 37,576 37,576
Other comprehensive income,
net of taxes ($1,487)
Change in unrealized gain on
available for sale securities -2,512 -2,512
Reclassification adjustment
for realized gain 381 381
-2,131 -2,131
Total comprehensive income 35,445
Dividends ($3.00 per share) -5,580 -5,580
Common stock repurchased -25,715 -26 -43 -4,034 -4,103
Common stock issued
to ESOP 81,375 81 13,206 -13,287 -
ESOP contributions -849 -849
ESOP compensation expense 32 457 489
Balance at
June 30,2000 1,926,41 $1,926 $16,359 $311,153($13,679)($2,646)$313,113
Comprehensive income
Net income 36,178 36,178
Transition adjustment
for SFAS No. 133 2,646 2,646
Total comprehensive income 38,824
Dividends ($3.20 per share) -5,897 -5,897
ESOP contributions -390 -390
ESOP compensation expense 270 1,128 1,398
Balance at June 30, 2001 1,926,41 $1,926 $16,629 $341,434 ($12,941) $347,048
The accompanying notes are an integral part of these financial statements.
Notes to Consolidated Financial Statements
Note 1 Summary of Significant Accounting Policies
Organization
The Company, which operates in one business segment, is in the business of
roasting, packaging, and distributing coffee and allied products through direct
sales to restaurants, hotels, hospitals, convenience stores and fast food
outlets. The Company's products are distributed by its selling divisions from
branch warehouses located in most large cities throughout the western United
States.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary FBC Finance Company. All significant inter-company
balances and transactions have been eliminated.
Financial Statement Preparation
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management 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 revenue and expenses
during the reporting period. Actual results could differ from those estimates.
Cash Equivalents
The Company considers all highly liquid investments with a maturity of 30 days
or less when purchased to be cash equivalents.
Investments
The Company's investments, consisting of marketable debt and equity securities,
money market instruments and various derivative instruments, primarily exchange
traded treasury futures and options, green coffee forward contracts and
commodity purchase agreements. All such instruments not designated as
accounting hedges are marked to market and changes are recognized in current
earnings. At June 30, 2001 no derivative instruments are designated as
accounting hedges. The fair value of derivative instruments is based upon
broker quotes. The cost of investments sold is determined on the specific
identification method. Dividend and interest income is 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 (LIFO) 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
depreciation. Depreciation of buildings and facilities is computed using the
straight-line method. All other assets are depreciated using the sum-of-the
years' digits and straight-line methods. The following useful lives are used:
Building 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
are 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
Deferred income taxes are determined based on the temporary differences between
the financial reporting and tax bases of assets and liabilities, using enacted
tax rates in effect for the year in which differences are expected to reverse.
Revenue Recognition
Sales and the cost of products sold are recorded at the time of delivery to the
customer.
Net Income Per Common Share
Basic earnings per share is computed by dividing the net income attributable to
common stockholders by the weighted average number of common shares outstanding
during the period, excluding those unallocated shares held by the Company's
Employee Stock Ownership Plan (see Note 6). The Company has no dilutive shares
for any of the three fiscal years in the period ended June 30, 2001.
Accordingly, the consolidated financial statements present only basic net
income per share.
Long-Lived Assets
Long-lived assets held and used by the Company are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. For purposes of evaluating the
recoverability of long-lived assets, the Company evaluates the carrying value
of its property, plant and equipment on an ongoing basis and recognizes an
impairment when the estimated future undiscounted cash flows from operations
are less than the carrying value of the related long-lived assets.
Shipping and Handling Costs
The Company distributes its products directly to its customers and its shipping
and handling costs are considered Company selling expenses.
Collective Bargaining Agreements
The Company employs 1,144 employees, 477 are subject to collective bargaining
agreements. The duration of these agreements extend from 2001 to 2004.
Note 2 Investments and Derivative Instruments
In June 1998 the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", as amended by
Statements 137 and 138. The Statement requires the Company to recognize all
derivatives on the balance sheet at fair value. Derivatives that are not
hedges must be adjusted to fair value through income. If the derivative is a
hedge, depending on the nature of the hedge, changes in the fair value of
derivatives are either offset against the change in fair value of assets,
liabilities, or firm commitments through earnings or recognized in other
comprehensive income until the hedged item is recognized in earnings. The
ineffective portion of a derivative's change in fair value is immediately
recognized in earnings. The adoption of SFAS No. 133, as amended, on July 1,
2000, resulted in a cumulative effect of an accounting change of $515,000
($310,000 net of taxes) being recognized in the Statement of Net Income, and a
corresponding credit in other comprehensive income.
The Company purchases various derivative instruments as investments or to
create natural economic hedges of its interest rate risk and commodity price
risk. At June 30, 2001 derivative instruments are not designated as accounting
hedges as defined by SFAS No. 133. The fair value of derivative instruments is
based upon broker quotes. The Company records unrealized gains and losses on
trading securities and changes in the market value of certain coffee contracts
meeting the definition of derivatives in other income and expense.
Upon initial application of SFAS Nos. 133 and 138 on July 1, 2000, the Company
transferred all of its investments classified as "available for sale" at June
30, 2000 into the "trading" category. Investments, consisting of marketable
debt and equity securities and money market instruments, are held for trading
purposes and are stated at fair value. Gains and losses, both realized and
unrealized, are included in other income and expense. On July 1, 2000 the
company transferred all of its investments classified as "available for sale"
at June 30, 2000 into the "trading" category. Accordingly, the Company
recognized the accumulated unrealized loss of $3,894,000 in the consolidated
statement of net income.
Investments at June 30, 2001 are as follows:
(In thousands)
Net Gain Fair
June 30, 2001 Cost or(Loss) Value
Trading securities
Corporate debt $85,035 $80 $85,115
U.S. Treasury Obligations 71,030 188 71,218
U.S. Agency Obligations 31,852 106 31,958
Preferred Stock 46,256 (2) 46,254
Other fixed income 8,014 (3) 8,011
Futures, options & other derivatives 1,262 - 1,262
$243,449 $369 $243,818
Gross Gross
Unrealized Unrealized Fair
Cost Loss Gain Value
Available for sale securities:
Current Assets
Commercial Paper $22,674 ($7) $1 $22,668
U.S. Government Obligations 91,392 (1,402) 2 89,992
Municipal Debt 1,695 (9) - 1,686
$115,761 ($1,418) $3 $114,346
Non-Current Assets
U.S. Government Obligations $41,845 ($999) - $40,846
Corporate debt 8,000 (44) - 7,956
Preferred stocks 44,075 (2,310) 1,087 42,852
Corporate bonds 1,524 (214) - 1,310
Liquid asset fund and other 1,279 - - 1,279
$96,723 ($3,567) $1,087 $94,243
The contractual maturities of debt securities classified as current and non-
current available for sale are as follows:
Maturities
(In thousands)
June 30, 2000
Within one year $114,346
After 1 year through 5 years 48,802
$163,148
Gross realized gains and losses from available for sale securities $1,608,000
and ($3,110,000) respectively in 2000, and gross realized gains and losses from
available for sale securities were $2,278,000 and ($2,291,000) respectively in
1999.
Note 3 Allowance for Doubtful Accounts and Notes Receivable
June 30,
(In thousands) 2001 2000 1999
Balance at the beginning of $420 $470 $520
Additions 346 280 205
Deductions -371 -330 -255
Balance at end of year $395 $420 $470
Note 4 Inventories
June 30, 2001
(In thousands) Processed Unprocessed Total
Coffee $4,120 $8,752 $12,872
Allied products 13,847 3,980 17,827
Coffee brewing equipment 2,201 2,880 5,081
$20,168 $15,612 $35,780
June 30, 2000
(In thousands) Processed Unprocessed Total
Coffee $4,007 $9,239 $13,246
Allied products 11,922 5,210 17,132
Coffee brewing equipment 2,034 4,358 6,392
$17,963 $18,807 $36,770
Current cost of coffee and allied products inventories exceeds the LIFO cost by
approximately $1,553,000 and $7,863,000 as of June 2001 and 2000, respectively.
Decrease in the Company's green coffee and allied product inventories during
fiscal 2001, 2000 and 1999 resulted in LIFO decrements which had the effect of
increasing income before taxes those years by $1,283,000, $277,000 and
$564,000, respectively.
Note 5 Property, Plant and Equipment
(In thousands)
June 30,
2001 2000
Buildings and facilities $39,858 $37,994
Machinery and equipment 48,999 48,072
Office furniture and equipment 6,280 6,206
95,137 92,272
Accumulated depreciation (61,880) (59,368)
Land 5,837 5,837
$39,094 $38,741
Maintenance and repairs charged to expense for the years ended June 30, 2001,
2000 and 1999 were $10,514,000, $10,596,000, and $10,992,000, respectively.
Note 6 Employee Benefit Plans
The Company has a contributory defined benefit pension plan for all employees
not covered under a collective bargaining agreement (Farmer Bros. Co. Plan) and
a non-contributory defined benefit pension plan (Brewmatic Co. Plan) for
certain hourly employees covered under a collective bargaining agreement. The
Company's funding policy is to contribute annually at a rate that is intended
to fund benefits as a level percentage of salary (non-bargaining) and as a
level dollar cost per participant (bargaining) over the working lifetime of the
plan participants. Benefit payments are determined under a final payment
formula (non-bargaining) and flat benefit formula (bargaining).
The Company sponsors defined benefit postretirement medical and dental plans
that cover non-union employees and retirees, and certain union locals. The
plan is contributory and retirees contributions are fixed at a current level.
The plan is not funded.
(In thousands) Defined Accrued
Benefit Pensions Postretirement Benefits
June 30, June 30,
2001 2000 2001 2000
Changes in benefit obligation
Benefit obligation at
the beginning of the year $42,461 $45,744 $18,908 $18,953
Service cost 1,338 1,617 646 661
Interest cost 3,446 3,252 1,539 1,290
Plan participants' contributions 146 132 71 74
Actuarial loss (gain) 4,163 (5,836) 2,633 (1,318)
Benefits paid (2,645) (2,448) (846) (752)
Benefit obligation at
the end of the year $48,909 $42,461 $22,951 $18,908
Changes in plan assets
Fair value in plan assets at
the beginning of the year $77,337 $78,153 $ - $ -
Actual return on plan assets 4,401 1,483 - -
Company contributions 20 14 775 678
Plan participants' contributions 146 132 71 74
Benefits paid (2,645) (2,448) (846) (752)
Fair value in plan assets at
the end of the year $79,259 $77,337 $ - $ -
Funded status of the Plan $30,350 $34,876 ($22,951) $18,908)
Unrecognized net asset (1,314) (1,971) - -
Unrecognized net gain (11,062) (17,785) 2,784 3,070
Unrecognized prior service cost 1,016 1,255 (633) (3,360)
Prepaid benefit cost $18,990 $16,375 ($20,800) $19,198)
Weighted average assumptions as
of June 30:
Discount rate 7.70% 8.30% 7.70% 8.30%
Expected return on Plan assets 8.00% 8.00% - -
Rate of compensation increase 3.50% 4.00% - -
Initial medical rate trend 12.00% 9.00%
Ultimate medical trend rate 5.50% 5.00%
Number of years from initial to ultimate trend rate 7 8
Initial dental/vision trend rate 8.00% 8.00%
Ultimate dental/vision trend rate 5.50% 5.00%
Defined Accrued
Benefit Pensions Postretirement Benefits
June 30, June 30,
2001 2000 1999 2001 2000 1999
Components of net periodic
benefit costs
Service cost $1,338 $1,617 $1,662 $646 $661 $745
Interest cost 3,446 3,252 3,000 1,539 1,290 1,246
Expected return on
Plan assets (6,121) (6,191) (5,747) - - -
Actuarial gain - - - - (68) -
Unrecognized net
transition asset (657) (657) (658) - - -
Unrecognized net gain (840) (757) (514) (94) - -
Unrecognized prior
service cost 239 239 239 286 286 286
Benefit cost ($2,595) ($2,497) ($2,018) $2,377 $2,169 $2,277
The assumed health care cost trend rate has a significant effect on the amounts
reported. A one-percentage point change in the assumed health care cost trend
rate would have the following effects:
(In thousands) 7/1/00 - 6/30/01
1% Increase effect on:
Service and interest cost $ 131
Postretirement benefit obligation 752
1% Decrease effect on:
Service and interest cost $(140)
Postretirement benefit obligation (806)
The Farmer Bros. Co. Plan owned 39,940 shares of the Company's common stock at
June 30, 2001, with a fair value of approximately $9,306,000. The Brewmatic
Co. Plan owned 2,400 shares of the Company's common stock at June 30, 2001,
with a fair value of approximately $559,000. The Company paid dividends of
$127,808 and $7,680 for the year ended June 30, 2001 to the Farmer Bros. Co.
Plan and the Brewmatic Co. Plan, 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 $2,144,000, $2,005,000 and $2,196,000 for 2001, 2000 and 1999,
respectively. The Company also has a defined contribution plan for eligible
non-union employees. During the year ended June 30, 2000, the Company
established a defined contribution plan for eligible union employees. No
Company contributions have been made nor are required to be made to either
defined contribution plan.
"Other long term liabilities" represents deferred compensation payable to a
company officer. The deferred compensation plan provides for deferred
compensation awards to earn interest based upon the Company's average rate of
return on its investments. Total deferred compensation expense amounted to
$701,000, $690,000 and $3,500,000 for the years ended June 30, 2001, 2000 and
1999, respectively.
Employee Stock Ownership Plan
On January 1, 2000, the Company established the Farmer Bros. Co. Employee Stock
Ownership Plan (ESOP) to provide benefits to all employees. The Board of
Directors authorized a loan of up to $50,000,000 to the ESOP to purchase up to
300,000 shares of Farmer Bros. Co. common stock secured by the stock purchased.
The loan will be repaid from the Company's discretionary plan contributions
over a fifteen year term at a variable rate of interest, 6.25% at June 30,
2001.
For the year ended June 30, 2000 the Company loaned the ESOP $14,136,000, which
the ESOP used to purchase 86,575 shares of the Company's common stock. For the
year ended June 30, 2001 the Company loaned the ESOP an additional $389,880,
which the ESOP used to purchase 2,200 shares of the Company's common stock.
Shares purchased with loan proceeds are held by the plan trustee for allocation
among participants as the loan is repaid. The unencumbered shares are
allocated to participants using a compensation-based formula. Subject to
vesting requirements, allocated shares are owned by participants and shares are
held by the plan trustee until the participant retires.
The Company reports compensation expense equal to the fair market price of
shares committed to be released to employees in the period in which they are
committed. The cost of shares purchased by the ESOP which have not been
committed to be released or allocated to participants are shown as a contra-
equity account "Unearned ESOP Shares" and are excluded from earnings per share
calculations. During the fiscal years ended June 30, 2001 and June 30, 2000
the Company charged $1,136,000 and $489,000, respectively, to compensation
expense related to the ESOP. The difference between cost and fair market value
of committed to be released shares, which was $270,000 and $32,000 for the
years ended June 30, 2001 and June 30, 2000, respectively, is recorded as
additional paid in capital.
June 30, 2001 June 30, 2000
Allocated shares 6,673 -
Committed to be released shares 2,939 2,886
Unallocated shares 79,163 83,689
Total ESOP Shares 88,775 86,575
Fair value of unearned
ESOP shares $20,685,000 $15,151,000
Note 7 Income Taxes
The current and deferred components of the provision for income taxes consist
of the following:
June 30,
(In thousands) 2001 2000 1999
Current: Federal $17,607 $18,249 $16,937
State 3,685 2,889 3,706
21,292 21,138 20,643
Deferred: Federal 1,451 1,174 (1,032)
State 285 1,334 39
1,736 2,505 (993)
$23,028 $23,643 $19,650
A reconciliation of the provision for income taxes to the statutory federal
income tax expense is as follows:
June 30,
2001 2000 1999
Statutory tax rate 35.0% 35.0% 35.0%
Income tax expense at statutory rate $20,831 $21,427 $16,980
State income tax (net federal tax benefit) 2,552 2,809 2,434
Dividend income exclusion (731) (660) (595)
Other (net) 376 67 831
$23,028 $23,643 $19,650
Income taxes paid $24,879 $22,622 $20,850
The primary components of temporary differences which give rise to the
Company's net deferred tax assets are as follows:
(In thousands) June 30,
2001 2000
Deferred tax assets:
Postretirement benefits $8,239 $7,658
Accrued liabilities 4,364 3,531
State taxes 941 1,006
Other - 1,718
13,544 13,913
Deferred tax liabilities:
Pension assets (7,236) (6,206)
Other (1,953) (1,616)
(9,189) (7,822)
Net deferred tax assets $4,355 $6,091
Note 8 Other Current Liabilities
(In thousands)
Other current liabilities consist of the following:
June 30, June 30,
2001 2000
Accrued workers' compensation liabilities $3,316 $3,373
Dividends payable 1,541 1,445
Other 1,224 274
$6,081 $5,092
Note 9 Commitments and Contingencies
The Company incurred rent expense of approximately $698,000, $700,000 and
$691,000, for the fiscal years ended June 30, 2001, 2000 and 1999,
respectively, and is obligated under leases for branch warehouses. Certain
leases contain renewal options.
Future minimum lease payments are as follows:
June 30, (In thousands)
2002 $640
2003 572
2004 387
2005 159
2006 89
$1,847
The Company is a party to various pending legal and administrative proceedings.
It is management's opinion that the outcome of such proceedings will not have a
material impact on the Company's financial position, results of operations, or
cash flows.
Concentration of Credit Risk: At June 30, 2001, the financial instruments
which potentially expose the Company to concentrations of credit risk consist
of cash in financial institutions (which exceeds federally insured limits),
cash equivalents (principally commercial paper), short term investments,
investments in the preferred stocks of other companies and accounts receivable.
Cash equivalents and short term investments are not concentrated by issuer,
industry or geographic area. Maturities are generally shorter than 180 days.
Other investments are in U.S. government securities. Investments in the
preferred stocks of other companies are limited to high quality issuers and are
not concentrated by geographic area or issuer. Concentration of credit risk
with respect to trade receivable for the Company is limited due to the large
number of customers comprising the Company's customer base and their dispersion
across many different geographic areas. The trade receivables are short-term,
and all probable bad debt losses have been appropriately considered in
establishing the allowance for doubtful accounts.
Note 10 Quarterly Financial Data (Unaudited)
(In thousands except per share data)
September 30, December 31, March 31, June 30,
2000 2000 2001 2001
Net sales $52,015 $57,795 $54,814 $50,807
Gross profit 32,303 38,631 36,413 34,053
Income from operations 9,458 14,764 11,882 6,011
Income before cumulative
effect adjustment 7,911 11,807 9,793 6,977
Net income 7,601 11,807 9,793 6,977
Income per share before
cumulative effect
adjustment $4.30 $6.40 $5.32 $3.78
Net income per share $4.13 $6.40 $5.32 $3.78
September 30, December 31, March 31, June 30,
1999 1999 2000 2000
Net sales $53,068 $56,303 $56,354 $52,963
Gross profit 32,770 32,903 38,230 37,816
Income from operations 10,849 10,459 13,913 13,744
Net income 8,088 8,316 10,364 10,808
Net income per share $4.32 $4.45 $5.60 $5.85
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Directors
Name Age Served as a Director Principal Occupation
Continuously Since for the Last Five Years
Roy F. Farmer (1) 85 1951 Chairman and Chief Executive Officer
Roy E. Farmer (1) 49 1993 President and Chief Operating Officer
Guenter W. Berger 64 1980 Vice President - Production
Lewis A. Coffman 82 1983 Retired (formerly Vice President - Sales)
John M. Anglin(2) 54 1985 Partner in Law Firm of Walker, Wright, Tyler
& Ward, LLP, Los Angeles, California
John H. Merrell 57 2001 Partner in Accounting Firm of Hutchinson
and Bloodgood LLP, Glendale, California
(1) Roy F. Farmer is the father of Roy E. Farmer.
(2) Walker, Wright, Tyler & Ward, LLP provides legal services to the
Company.
Executive Officers
Name Age Position
Roy F. Farmer 85 Chairman of Board of Directors since 1951.
Roy E. Farmer 49 President since 1993; various positions since 1976,
son of Chairman of the Board, R. F. Farmer.
Guenter W. Berger 64 Vice President of Production, Director since 1980;
various positions since 1960.
Kenneth R. Carson 61 Vice President of Sales since 1990; Sales Management
since 1968.
John E. Simmons 50 Secretary-Treasurer since 2001; 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. Executive Compensation
Summary Compensation Table
Annual Other
Name and Principal Fiscal Compensation Annual All Other
Position Year Salary Bonus(2) Compensation Compensation(1)
ROY F. FARMER 2001 $1,000,000 $450,000 $ - $117,482 (3)
Chairman and CEO 2000 $1,000,000 $500,000 $ - $104,721 (3)
1999 $1,000,000 $3,500,000 $ - $ 88,154 (3)
ROY E. FARMER 2001 $309,000 $300,000 $ - $383
President and COO 2000 $302,933 $250,000 $ - $343
1999 $252,542 $250,000 $ 44,800 (4) $305
GUENTER W. BERGER 2001 $224,149 $100,000 $ - $570
Vice President, 2000 $221,561 $100,000 $ - $520
Production 1999 $215,951 $100,000 $ 4,340 (4) $470
KENNETH R. CARSON 2001 $197,080 $75,000 $ - $356
Vice President, Sales 2000 $194,805 $75,000 $ - $331
1999 $189,503 $75,000 $ 5,908 (4) $306
JOHN E. SIMMONS 2001 $178,849 $75,000 $ - $181
Treasurer 2000 $175,114 $75,000 $ - $166
1999 $169,447 $75,000 $ 5,600 (4) $153
(1) Except as stated in footnote (3) the amount shown represents the dollar
value of the benefit to the executive officer for the years shown under the
Company's executive life insurance plan.
(2) Awarded under the Company's Incentive Compensation Plan. The awards for
fiscal 2001 were based primarily upon the Company's earnings achieved that
year. Roy F. Farmer's award has been deferred until death or retirement.
The awards to the other officers were paid currently (See "Compensation
Committee Report," supra.).
(3) The amount shown for Roy F. Farmer represents P.S. 58 costs of the two
split-dollar life insurance policies purchased pursuant to the prior
employment agreement with Mr. Farmer which expired in 1998 plus the
dollar value of the benefit to him under the Company's executive life
insurance plan.
(4) Compensation element of purchase of shares from the Company at a price
below market on the date of purchase.
Pension Plan Table
Annualized Pension Compensation
for Highest 60 Consecutive Months Credited Years of Service
in Last Ten Years of Employment 20 25 30 35
$100,000 $30,000 $37,500 $45,000 $52,500
125,000 37,500 46,875 56,250 65,625
150,000 45,000 56,250 67,500 76,750
170,000 51,000 63,750 76,500 89,250
200,000 51,000 63,750 76,500 89,250
250,000 51,000 63,750 76,500 89,250
The above table shows estimated annual benefits payable under the
Company's retirement plan upon retirement at age 62 to persons at various
average compensation levels and years of credited service based on a straight
life annuity. The retirement plan is a contributory defined benefit plan
covering all non-union Company employees. The following figures assume that
employee contributions (2% of annual gross earnings) are made throughout the
employees' first five years of service and are not withdrawn. After five
years of participation in the plan, employees make no further contributions.
Benefits under a predecessor plan are included in the following figures.
Maximum annual combined benefits under both plans generally cannot exceed the
lesser of $135,000 or the average of the employee's highest three years of
compensation.
The earnings of executive officers by which benefits in part are
measured consist of the amounts reportable under "Annual Compensation" in the
Summary Compensation Table less certain allowance items (none in 2001).
Credited years of service through December 31, 2000 were as follows:
Guenter W. Berger - 36 years; Roy E. Farmer - 24 years; Kenneth R. Carson -
35 years; John E. Simmons - 19 years. After 37 years of credited service,
Roy F. Farmer began receiving maximum benefits during fiscal 1988.
The above straight life annuity amounts are not subject to deductions
for Social Security or other offsets. Other payment options, one of which is
integrated with Social Security benefits, are available.
Compensation of Directors
The Board met four times during fiscal 2001. Roy F. Farmer attended
two of the four meetings. No director receives fees or expense
reimbursements for his or her attendance at the meetings, except Mr. Anglin
who was paid an hourly fee of $285 for each Board and committee meeting
attended. Effective July 1, 2001 each director who is not a Company employee
will receive an annual retainer fee of $10,000 and the additional sum of
$1,000 for each board meeting and committee meeting (if not held in
conjunction with a board meeting). A director also will receive
reimbursement of travel expenses from outside the greater Los Angeles area to
attend a meeting.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee (the "Committee") is comprised of John M.
Anglin, a director, Lewis A. Coffman, a director and retired executive
officer of the Company, and John H. Merrell, a director.
Compensation Committee Report
The Compensation Committee, comprised of Messrs. Anglin, Coffman and
Merrell, met once in fiscal 2001. The Compensation Committee makes all
determinations with respect to executive compensation and administers the
Company's Incentive Compensation Plan.
Compensation Philosophy and Objectives
The Committee believes that once base salaries of executive officers
are established at competitive levels, increases should generally reflect
cost of living changes and that individual performance should be rewarded by
bonuses or other incentive compensation awards. The Committee believes that
most of the officers will be incentivized to a greater degree by such a
program.
Chief Executive Officer Compensation
In 1999 the Committee obtained a competitive compensation study
prepared by Ernst & Young LLP relating to Roy F. Farmer's compensation. The
study concluded that the total direct compensation paid to CEO's of companies
deemed comparable by Ernst & Young LLP was in the range of $669,700 to
$1,444,000. The term "total direct compensation", as used in the Ernst &
Young LLP study, does not include retirement benefits (including pension
plans, 401(k) plans, deferred compensation plans and supplemental retirement
plans or split-dollar life insurance programs) typically provided to CEO's of
successful companies. The Committee determined that the retirement benefits
provided to Mr. Farmer were well below those provided to CEO's of comparable
companies.
The Committee determined that Roy F. Farmer's salary for the fiscal
year ended June 30, 2001, excluding the award under the Company's Incentive
Compensation Plan (see below), be $1,000,000. This represents no change from
fiscal 2000.
Incentive Compensation Plan
The Company made awards under its Incentive Compensation Plan (the
"Plan") for fiscal 2001 to all executive officers. The Committee felt that
awards were justified in light of the Company's performance in 2001.
Under the provisions of the Plan, a percentage of the Company's annual
pre-tax income is made available for cash or deferred awards. The percentage
varies from three percent of pre-tax income over $14 million to six percent
of pre-tax income of $24 million or more. Amounts available for awards but
not awarded are carried forward. The pool available for awards for fiscal
2001 under the Incentive Compensation Plan was in excess of $14 million. Of
the available pool, the Committee awarded a total of $1 million of which
$450,000 was awarded to Roy F. Farmer, the Company's Chief Executive Officer,
and $550,000 in toto was awarded to the other executive officers.
The award to Roy F. Farmer is payable in five annual installments
commencing upon retirement. The unpaid balance of the award is payable upon
death. Under the terms of the Plan, the unpaid balance of deferred awards is
increased by a growth factor keyed to the Company's average return on
invested funds. Under Plan provisions, the unpaid portion of deferred awards
is forfeited in the event the recipient engages in activities competitive
with the Company or is guilty of malfeasance.
In making the award to Roy F. Farmer, the Committee was motivated
primarily by the earnings achieved by the Company in 2001 and Mr. Farmer's
substantial contribution to those earnings.
John M. Anglin
Lewis A. Coffman
John H. Merrell
Performance Graph
Comparison of Five-Year Cumulative Total Return*
Farmer Brothers Co., Russell 2000 Index And Value
Line Food Processing Index
(Performance Results Through 6/30/01)
1996 1997 1998 1999 2000 2001
Farmer Brothers Co. 100.00 93.58 179.46 154.10 135.48 177.27
Russell 2000 Index 100.00 116.33 135.09 136.26 153.99 150.64
Food Processing 100.00 148.25 200.06 191.81 199.12 242.51
Assumes $100 invested at the close of trading 6/30/96 in Farmer Brothers
Co. commons stock, Russell 2000 Index and Food Processing Index.
*Cumulative total return assumes reinvestment of dividends.
Source: Value Line, Inc.
Factual material is obtained from sources believed to be reliable, but the
publisher is not responsible for any errors or omissions contained herein.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Beneficial Ownership Reporting Compliance
The following are all persons known to management who beneficially own
more than 5% of the Company's common stock:
Amount and Nature Percent
Name and Address of of Beneficial of
Beneficial Owner Ownership (1) Class
Roy F. Farmer 835,035 shares (2) 43.35%
c/o Farmer Bros. Co.
20333 South Normandie Ave.
Torrance, California 90502
Catherine E. Crowe 203,430 shares (3) 10.56%
c/o Farmer Bros. Co.
20333 South Normandie Ave.
Torrance, California 90502
Franklin Mutual Advisers, LLC 187,488 shares (4) 9.73%
51 John F. Kennedy Parkway
Short Hills, NJ 07078
Attn: Bradley Takahashi
(1) Sole voting and investment power unless indicated otherwise in following
footnotes.
(2) Includes 171,041 shares owned outright by Mr. Farmer and his wife as
trustees of a revocable living trust, 662,121 shares held by various trusts
of which Mr. Farmer is sole trustee for the benefit of family members, 1,849
shares owned by his wife in which Mr. Farmer disclaims any beneficial
interest and 24 shares beneficially owned by Mr. Farmer through the Company's
Employee Stock Ownership Plan ("ESOP"), rounded to the nearest whole share.
(3) Excludes 9,900 shares held by trusts for Mrs. Crowe's benefit. Mr.
Farmer is sole trustee of said trusts and said shares are included in his
reported holdings.
(4) According to a Schedule 13G filed with the Securities and Exchange
Commission dated November 21, 2000 by Franklin Mutual Advisers, LLC
("Franklin"), Franklin on that date beneficially owned 187,488 shares
(9.73%). Franklin is reported to have sole voting and investment power over
these shares pursuant to certain Investment Advisory contracts with one or
more record shareholders, which advisory clients are the record owners of the
187,488 shares.
(b) The following sets forth the beneficial ownership of the common stock
of the Company by each director and nominee, each executive officer named in
the Summary Compensation Table, and all directors and executive officers as a
group:
Number of Shares and Nature
Name of Beneficial Ownership (1) Percent of Class
Roy F. Farmer (See "Item 12(a)," supra)
Guenter W. Berger 524(2) *
Lewis A. Coffman 15(3) *
Roy E. Farmer 38,235(4) 1.98%
John M. Anglin None -
Kenneth R. Carson 274(5) *
John E. Simmons 386(6) *
John H. Merrell None -
All directors and exec
officers as a group (8 persons) 874,469 45.39%
(1) Sole voting and investment power unless indicated otherwise in following
footnotes.
(2) Held in trust with voting and investment power shared by Mr. Berger and
his wife, includes 24 shares beneficially owned by Mr. Berger through the
Company's ESOP, rounded to the nearest whole share.
(3) Voting and investment power shared with spouse.
(4) Includes 4,000 shares owned outright by Mr. Farmer, 34,211 shares held
by various trusts of which Mr. Farmer is sole trustee and 24 shares
beneficially owned by Mr. Farmer through the Company's ESOP, rounded to the
nearest whole share. Excludes 21,218 shares held in a trust of which Roy F.
Farmer is sole trustee (reported under Roy F. Farmer's name in Item 12(a),
supra) and of which Roy E. Farmer is the beneficiary.
(5) Includes 24 shares beneficially owned by Mr. Carson through the
Company's ESOP, rounded to the nearest whole share.
(6) Voting and investment power shared with spouse, includes 24 shares
beneficially owned by Mr. Simmons through the Company's ESOP, rounded to the
nearest whole share.
* Less than 1%.
Item 13. Certain Relationships and Related Transactions
Reference is made to the information set forth in Items 10 and 11 of
this Form 10-K/A Annual Report.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 10-K.
(a) List of Financial Statements and Financial Statement Schedules:
1. Financial Statements included in Item 8:
Consolidated Balance Sheets as of June 30, 2001 and 2000.
Consolidated Statements of Income for the Years Ended
June 30, 2001, 2000 and 1999.
Consolidated Statements of Cash Flows for the Years Ended
June 30, 2001, 2000 and 1999.
Consolidated Statements of Shareholders' Equity For the Years
Ended June 30, 2001, 2000, and 1999.
Notes to Consolidated Financial Statements.
2. Financial Statement Schedules: Financial Statement Schedules
are omitted as they are not applicable, of the required informaion
is given in the consolidated financial statements of notes thereto.
(b) No reports on Form 8-K were filed during the last quarter of
the period covered by this report.
(c) Exhibits
3. Articles of incorporation and by-laws.
Attached.
(i) RESTATED ARTICLES OF INCORPORATION OF FARMER BROS. CO.
With all Amendments through November 28, 1988
KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, all of whom are citizens and residents of
the State of California, have this day voluntarily associated
ourselves together for the purpose of forming a corporation under the
laws of the State of California, and do hereby constitute ourselves a
body corporate in accordance with the laws of said State.
AND WE HEREBY CERTIFY:
FIRST: That the name of said corporation shall be Farmer Bros. Co.
SECOND: That the purposes for which said corporation is formed are as
follows:
1. To conduct a general mercantile business, buying, selling and
dealing in teas, coffees and spices and flavoring extract and
the manufacture, sale and leasing of metal coffee urns, and also
all apparatus and implements and things for use, either alone or
in connection with the products, or in the manufacture of which
they are a factor.
2. To acquire real property, by purchase, lease or otherwise,
either for the purpose of investment or for resale, and to
improve any lands held by the company by the erection thereon of
business structures, dwelling houses or improvements of any
character.
3. To acquire by purchase or otherwise, corporate shares, stocks
and bonds of municipal, public, quasi public and private
corporations, promissory notes and commercial paper of
descriptions, debentures, mortgages, trust certificates and
securities of all kinds.
4. To exchange shares of the capital stock or bonds of this
corporation for shares of the capital stock or bonds of other
corporations, or for real or personal property of any
description. To mortgage, pledge, hypothecate, convey or
transfer in trust, sell, lease, or otherwise dispose of any real
or personal property of this corporation.
5. To make application to the government of the United States or to
other government or to the government of any state for letters
patent, and to deal in patent rights; to manufacture patented
devices and articles and other inventions; to manufacture
machinery and other commodities, and to deal in any and all
classes of merchandise.
6. To transact any other business which to the Board of Directors
may seem proper, to all intents and purposes, and to the same
extent as an individual could do, in the furtherance of, or in
addition to, the objects and purposes aforesaid.
THIRD: The place where the principal office for the transaction of
the business of the corporation is in Los Angeles, California.
FOURTH: The Corporation shall have perpetual existence.
FIFTH: The number of directors of said corporation shall be five (5).
SIXTH: The total number of shares which the Corporation is authorized
to issue is Three Million (3,000,000), the aggregate par value of
which is Three Million Dollars ($3,000,000), all Three Million
(3,000,000) shares are to be Commons Stock of the par value of One
Dollar ($1.00) per share (hereinafter called the Common Stock).
SEVENTH: That the amount of Capital stock which has been actually
subscribed is three (3) shares, and that the subscribers to the said
capital stock, and their respective subscriptions to the capital
stock, are as follows, to-wit:
R.E. FARMER;
F.R. FARMER; AND
G.W. RILEY,
each of whom has subscribed for one (1) share of said capital
stock.
EIGHTH:
Section 1. The liability of the directors of the corporation
for monetary damages shall be eliminated to the fullest extent
permissible under California law.
Section 2. The corporation is authorized to provide
indemnification of agents (as defined in Section 317 of the California
Corporations Code) through bylaw provisions, agreements with the
agents, vote of the shareholders or disinterested directors, or
otherwise, in excess of the indemnification otherwise permitted by
Section 317 of the California Corporations Code, subject only to the
limits set forth in Section 204(a)(11) of the California Corporations
Code with respect to actions for breach of duty to the corporation or
its shareholders. The corporation is further authorized to provide
insurance for agents as set forth in Section 317 of the California
Corporations Code, provided that, in cases where the corporation owns
all or a portion of the shares of the company issuing the insurance
policy, the company and/or the policy must meet one of the two sets of
conditions set forth in Section 317, as amended.
Section 3. Any repeal or modification of the foregoing
provisions of this Article EIGHTH by the shareholders of this
corporation shall not adversely affect any right or protection of an
agent of this corporation existing at the time of such repeal or
modification."
(ii) BYLAWS OF FARMER BROS. CO. A California Corporation
With All Amendments Through November 27, 2000
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICES. The board of directors shall fix the
location of the principal executive office of the corporation at any
place within or outside the State of California. If the principal
executive office is located outside this state, and the corporation has
one or more business offices in this state, the board of directors
shall fix and designate a principal business office in the State
of California.
Section 2. OTHER OFFICES. The board of directors may at any time
establish branch or subordinate offices at any place or places where
the corporation is qualified to do business.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. PLACE OF MEETINGS. Meetings of shareholders shall be held
at any place within or outside the State of California designated by
the board of directors. In the absence of any such designation,
shareholders' meetings shall be held at the principal executive office
of the corporation.
Section 2. ANNUAL MEETING. The annual meeting of shareholders of the
corporation shall be held on such date, time and place as is fixed
annually by the board of directors, provided that a meeting shall be
held each year not later than fifteen (15) months after the holding of
the next previous annual meeting. If no such date and time and place is
fixed by the board of directors, the annual meeting of shareholders
shall be held on the third Wednesday of November at 10:00 A.M. at the
principal executive offices of the corporation. At the annual meeting
the directors shall be elected, and any other proper business shall be
transacted.
Section 3. SPECIAL MEETINGS. A special meeting of the shareholders
may be called at any time by the board of directors, or by the chairman
of the board, or by the president or any officer, or by one or more
shareholders holding shares in the aggregate entitled to cast not less
than 10% of the votes at that meeting.
If a special meeting is called by any person or persons other than
the board of directors, the request shall be in writing, specifying the
time of such meeting and the general nature of the business proposed to
be transacted, and shall be delivered personally or sent by registered
mail or by telegraphic or other facsimile transmission to the
president, any vice president, or the secretary of the corporation.
The officer receiving the request shall cause notice to be promptly
given to the shareholders entitled to vote, in accordance with the
provisions of Sections 4 and 5 of this Article II, that a meeting will
be held at the time requested by the person or persons calling the
meeting, not less than thirty-five (35) nor more than sixty (60) days
after the receipt of the request. If the notice is not given within
twenty (20) days after receipt of the request, the person or persons
requesting the meeting may give the notice. Nothing contained in this
paragraph of this Section 3 shall be construed as limiting, fixing or
affecting the time when a meeting of shareholders called by action of
the board of directors may be held.
Section 4. NOTICE OF SHAREHOLDERS' MEETINGS. All notices of
meetings of shareholders shall be sent or otherwise given in accordance
with Section 5 of this Article II not less than ten (10) nor more than
sixty (60) days before the date of the meeting. The notice shall
specify the place, date and hour of the meeting and (i) in the case of
a special meeting, the general nature of the business to be transacted,
or (ii) in the case of the annual meeting, those matters which the
board of directors, at the time of giving the notice, intends to
present for action by the shareholders. The notice of any meeting at
which directors are to be elected shall include the name of any nominee
or nominees whom, at the time of the notice, management intends to
present for election.
If action is proposed to be taken at any meeting for approval of (i)
a contract or transaction in which a director has a direct or indirect
financial interest, pursuant to Section 310 of the Corporations Code of
California, (ii) an amendment of the articles of incorporation,
pursuant to Section 902 of that Code, (iii) a reorganization of the
corporation, pursuant to Section 1201 of that Code, (iv) a voluntary
dissolution of the corporation, pursuant to Section 1900 of that Code,
or (v) a distribution in dissolution other than in accordance with the
rights of outstanding preferred shares, pursuant to Section 2007 of
that Code, the notice shall also state the general nature of that
proposal.
Section 5. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE. Notice of
any meeting of shareholders shall be given either personally or by
first-class mail or telegraphic or other written communication, charges
prepaid, addressed to the shareholder at the address of that
shareholder appearing on the books of the corporation or given by the
shareholder to the corporation for the purpose of notice. If no such
address appears on the corporation's books or is given, notice shall be
deemed to have been given if sent to that shareholder by first-class
mail or telegraphic or other written communication to the corporation's
principal executive office, or if published at least once in a
newspaper of general circulation in the county where that office is
located. Notice shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by telegram or
other means of written communication.
If any notice addressed to a shareholder at the address of that
shareholder appearing on the books of the corporation is returned to
the corporation by the United States Postal Service marked to indicate
that the United States Postal Service is unable to deliver the notice
to the shareholder at that address, all future notices or reports shall
be deemed to have been duly given without further mailing if these
shall be available to the shareholder on written demand of the
shareholder at the principal executive office of the corporation for a
period of one year from the date of the giving of the notice.
An affidavit of the mailing or other means of giving any notice of
any shareholders' meeting shall be executed by the secretary, assistant
secretary, or any transfer agent of the corporation giving the notice,
and shall be filed and maintained in the minute book of the
corporation.
Section 6. QUORUM. The presence in person or by proxy of the holders
of a majority of the shares entitled to vote at any meeting of
shareholders shall constitute a quorum for the transaction of business.
The shareholders present at a duly called or held meeting at which a
quorum is present may continue to do business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less
than a quorum, if any action taken (other than adjournment) is approved
by at least a majority of the shares required to constitute a quorum.
Section 7. ADJOURNED MEETING; NOTICE. Any shareholders' meeting,
annual or special, whether or not a quorum is present, may be adjourned
from time to time by the vote of the majority of the shares represented
at that meeting, either in person or by proxy, but in the absence of a
quorum, no other business may be transacted at that meeting, except as
provided in Section 6 of this Article II.
When any meeting of shareholders, either annual or special, is
adjourned to another time or place, notice need not be given of the
adjourned meeting if the time and place are announced at a meeting at
which the adjournment is taken, unless a new record date for the
adjourned meeting is fixed, or unless the adjournment is for more than
forty-five (45) days from the date set for the original meeting, in
which case the board of directors shall set a new record date. Notice
of any such adjourned meeting shall be given to each shareholder of
record entitled to vote at the adjourned meeting in accordance with the
provisions of Sections 4 and 5 of this Article II. At any adjourned
meeting the corporation may transact any business which might have been
transacted at the original meeting.
Section 8. VOTING. The shareholders entitled to vote at any meeting
of shareholders shall be determined in accordance with the provisions
of Section 11 of this Article II, subject to the provisions of Sections
702 and 704, inclusive, of the Corporations Code of California
(relating to voting shares held by a fiduciary, in the name of a
corporation, or in joint ownership). The shareholders' vote may be by
voice vote or by ballot; provided, however, that any election for
directors must be by ballot if demanded by any shareholder before the
voting has begun. On any matter other than elections of directors, any
shareholder may vote part of the shares in favor of the proposal and
refrain from voting the remaining shares or vote them against the
proposal, but, if the shareholder fails to specify the number of shares
which the shareholder is voting affirmatively, it will be conclusively
presumed that the shareholder's approving vote is with respect to all
shares that the shareholder is entitled to vote. If a quorum is
present, the affirmative vote of the majority of the shares represented
at the meeting and entitled to vote on any matter (other than the
election of directors) shall be the act of the shareholders, unless the
vote of a greater number or voting by classes is required by California
General Corporation Law or by the articles of incorporation.
In electing directors of this corporation, each share outstanding as
of the record date shall be entitled to one vote and such shares shall
not be cumulated. The candidates receiving the highest number of
votes, up to the number of directors to be elected, shall be elected.
Section 9. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS. The
transactions of any meeting of shareholders, either annual or special,
however called and noticed, and wherever held, shall be as valid as
though had at a meeting duly held after regular call and notice, if a
quorum be present either in person or by proxy, and if, either before
or after the meeting, each person entitled to vote, who was not present
in person or by proxy, signs a written waiver of notice or consent to a
holding of the meeting or an approval of the minutes. The waiver of
notice or consent need not specify either the business to be transacted
or the purpose of any annual or special meeting of shareholders, except
that if action is taken or proposed to be taken for approval of any of
those matters specified in the second paragraph of Section 4 of this
Article II, the waiver of notice or consent shall state the general
nature of the proposal. All such waivers, consents or approvals shall
be filed with the corporate records or made a part of the minutes of
the meeting.
Attendance by a person at a meeting shall also constitute a waiver
of notice of that meeting, except when the person objects, at the
beginning of the meeting, to the transaction of any business because
the meeting is not lawfully called or convened, and except that
attendance at a meeting is not a waiver of any right to object to the
consideration of matters not included in the notice of the meeting if
that objection is expressly made at the beginning.
Section 10. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
Any action which may be taken at any annual or special meeting of
shareholders may be taken without a meeting and without prior written
notice, if a consent in writing, setting forth the action so taken, is
signed by the holders of outstanding shares having not less than the
minimum number of votes that would be necessary to authorize or take
that action at a meeting at which all shares entitled to vote on that
action were present and voted. In the case of election of directors,
such a consent shall be effective only if signed by the holders of all
outstanding shares entitled to vote for the election of directors;
provided, however, that a director may be elected at any time to fill a
vacancy on the board of directors that has not been filled by the
directors, by the written consent of the holders of a majority of the
outstanding shares entitled to vote for the election of directors. All
such consents shall be filed with the secretary of the corporation and
shall be maintained in the corporate records. Any shareholder giving a
written consent, or the shareholder's proxy holders, or a transferee of
the shares or a personal representative of the shareholder or their
respective proxy holders, may revoke the consent by a writing received
by the secretary of the corporation before written consents of the
number of shares required to authorize the proposed action have been
filed with the secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing, and if the unanimous written consent of all such
shareholders shall not have been received, the secretary shall give
prompt notice of the corporate action approved by the shareholders
without a meeting. This notice shall be given in the manner specified
in Section 5 of this Article II. In the case of approval of (i)
contracts or transactions in which a director has a direct or indirect
financial interest, pursuant to Section 310 of the Corporations Code of
California, (ii) indemnification of agents of the corporation, pursuant
to Section 317 of that Code, (iii) a reorganization of the corporation,
pursuant to Section 1201 of that Code, and (iv) a distribution in
dissolution other than in accordance with the rights of outstanding
preferred shares, pursuant to Section 2007 of that Code, the notice
shall be given at least ten (10) days before the consummation of any
action authorized by that approval.
Section 11. RECORD DATE FOR SHAREHOLDER NOTICE, VOTING, AND GIVING
CONSENTS. For purposes of determining the shareholders entitled to
notice of any meeting or to vote or entitled to give consent to
corporate action without a meeting, the board of directors may fix, in
advance, a record date, which shall not be more than sixty (60) days
nor less than ten (l0) days before the date of any such meeting nor
more than sixty (60) days before any such action without a meeting, and
in this event only shareholders of record on the date so fixed are
entitled to notice and to vote or to give consents, as the case may be,
notwithstanding any transfer of any shares on the books of the
corporation after the record date, except as otherwise provided in the
California General Corporation Law.
If the board of directors does not so fix a record date:
(a) The record date for determining shareholders entitled to notice
of or to vote at a meeting of shareholders shall be at the close
of business on the business day next preceding the day on which
notice is given or, if notice is waived, at the close of
business on the business day next preceding the day on which the
meeting is held.
(b) The record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting, (i)
when no prior action by the board has been taken, shall be the
day on which the first written consent is given, or (ii) when
prior action of the board has been taken, and shall be at the
close of business on the day on which the board adopts the
resolution relating to that action, or the sixtieth (60th) day
before the date of such other action, whichever is later.
Section 12. PROXIES. Every person entitled to vote for directors or
on any other matter shall have the right to do so either in person or
by one or more agents authorized by a written proxy signed by the
person and filed with the secretary of the corporation. A proxy shall
be deemed signed if the shareholder's name is placed on the proxy
(whether by manual signature, typewriting, telegraphic transmission, or
otherwise) by the shareholder or the shareholder's attorney in fact. A
validly executed proxy which does not state that it is irrevocable
shall continue in full force and effect unless (i) revoked by the
person executing it, before the vote pursuant to that proxy, by a
writing delivered to the corporation stating that the proxy is revoked,
or by a subsequent proxy executed by, or attendance at the meeting and
voting in person by, the person executing the proxy; or (ii) written
notice of the death or incapacity of the maker of that proxy 1S
rece1ved by the corporation before the vote pursuant to that proxy is
counted; provided, however, that no proxy shall be valid after the
expiration of eleven (11) months from the date of the proxy, unless
otherwise provided in the proxy. The revocability of a proxy that
states on its face that it is irrevocable shall be governed by the
provisions of Sections 705(e) and 705(f) of the Corporations Code of
California. The form of proxy shall comply with the federal Securities
and Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder, if applicable.
Section 13. INSPECTORS OF ELECTION. Before any meeting of
shareholders, the board of directors may appoint any person other than
nominees for office to act as inspectors of election at the meeting or
its adjournment. If no inspectors of election are so appointed, the
chairman of the meeting may, and on the request of any shareholder or a
shareholder's proxy shall, appoint inspectors of election at the
meeting. The number of inspectors shall be either one (1) or three (3).
If inspectors are appointed at a meeting on the request of one or more
shareholders or proxies, the holders of a majority of shares or their
proxies present at the meeting shall determine whether one (1) or three
(3) inspectors are to be appointed. If any person appointed as
inspector fails to appear or fails or refuses to act, the chairman of
the meeting may, and upon the request of any shareholder or a
shareholder's proxy shall, appoint a person to fill that vacancy.
These inspectors shall:
(a) Determine the number of shares outstanding and the voting
power of each, the shares represented at the meeting, and the
effect of the proxies. In determining the number of shares
outstanding and entitled to vote, the inspectors may rely upon
the certificate of the corporation's transfer agent;
(b) Receive votes, ballots, or consents;
(c) Hear and determine all challenges and questions in any way
arising in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election
or vote with fairness to all shareholders.
Section 14. PROXY CONTESTS. If in connection with a meeting of
shareholders, any person or group solicits proxies from the
shareholders in opposition to the solicitation by the board of
directors, the corporation shall have the power to enter into an
agreement with the contesting faction(s) as to the manner of conducting
the shareholder meeting, presumptions regarding the validity of
proxies, and other related matters. The provisions of such agreement
shall govern any inconsistent provisions of these bylaws unless
contrary to the provisions of the Articles of Incorporation or
violative of applicable law. The inspectors of election may rely upon
and shall be governed by the provisions of such agreement.
ARTICLE III
DIRECTORS
Section 1. POWERS. Subject to the provisions of the California
General Corporation Law and any limitations in the articles of
incorporation and these bylaws relating to action required to be
approved by the shareholders or by the outstanding shares, the business
and affairs of the corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the board of
directors.
Section 2. NUMBER AND QUALIFICATION OF DIRECTORS. The number of
directors of the Corporation shall be not fewer than five (5) nor more
than nine (9). The board of directors or the shareholders shall fix
the exact number of directors within the limit specified above. The
board of directors can fix the exact number of directors by resolution
adopted at any duly held meeting of the board or by their unanimous
written consent. The shareholders can fix the exact number of
directors by the affirmative vote of a majority of the shares
represented and voting at a duly held meeting at which a quorum is
present (which shares voting affirmatively constitute at least a
majority of the required quorum) or by the written consent of the
holders of a majority of the then outstanding shares entitled to vote.
An amendment of this Section 2 reducing the minimum number of directors
to fewer than five (5) cannot be adopted if the votes cast against its
adoption at meeting of shareholders or the shares not consenting in
the case of action by written consent, equal or exceed sixteen and two-
thirds percent (13 2/3%) of the then outstanding shares entitled to
vote.
Section 3. ELECTION AND TERM OF OFFICE OF DIRECTORS. Directors shall
be elected at each annual meeting of the shareholders to hold office
until the next annual meeting. Each director, including a director
elected to fill a vacancy, shall hold office until the expiration of
the term for which elected and until a successor has been elected and
qualified.
Section 4. VACANCIES. Vacancies in the board of directors may be
filled by a majority of the remaining directors, though less than a
quorum, or by a sole remaining director, except that a vacancy created
by the removal of a director by the vote or written consent of the
shareholder or by court order may be filled only by the vote of a
majority of the shares entitled to vote represented at a duly held
meeting at which a quorum is present, or by the written consent of
holders of a majority of the outstanding shares entitled to vote. Each
director so elected shall hold office until the next annual meeting of
the shareholders and until a successor has been elected and qualified.
A vacancy or vacancies in the board of directors shall be deemed to
exist in the event of the death, resignation, or removal of any
director, or if the board of directors by resolution declares vacant
the office of a director who has been declared of unsound mind by an
order of court or convicted of a felony, or if the authorized number of
directors is increased, or if the shareholders fail, at any meeting of
shareholders at which any director or directors are elected, to elect
the number of directors to be voted for at that meeting.
The shareholders may elect a director or directors at any time to
fill any vacancy or vacancies not filled by the directors, but any such
election by written consent shall require the consent of a majority of
the outstanding shares entitled to vote.
Any director may resign effective on giving written notice to the
chairman of the board, the president, the secretary, or the board of
directors, unless the notice specifies a later time for that
resignation to become effective. If the resignation of a director is
effective at a future time, the board of directors may elect a
successor to take office when the resignation becomes effective.
No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office
expires.
Section 5. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE. Regular
meetings of the board of directors may be held at any place within or
outside the State of California that has been designated from time to
time by resolution of the board. In the absence of such a designation,
regular meetings shall be held at the principal executive office of the
corporation. Special meetings of the board shall be held at any place
within or outside the State of California that has been designated in
the notice of the meeting or, if not stated in the notice or there is
no notice, at the principal executive office of the corporation. Any
meeting, regular or special, may be held by conference telephone or
similar communication equipment, so long as all directors participating
in the meeting can hear one another, and all such directors shall be
deemed to be present in person at the meeting.
Section 6. ANNUAL MEETING. Immediately following each annual meeting
of shareholders, the board of directors shall hold a regular meeting
for the purpose of organization, any desired election of officers, and
the transaction of other business. Notice of this meeting shall not be
required.
Section 7. OTHER REGULAR MEETINGS. Other regular meetings of the
board of directors shall be held without call at such time as shall
from time to time be fixed by the board of directors. Such regular
meetings may be held without notice.
Section 8. SPECIAL MEETINGS. Special meetings of the board of
directors for any purpose or purposes may be called at any time by the
president or any vice president or the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail
or telegram, charges prepaid, addressed to each director at that
director's address as it is shown on the records of the corporation. In
case the notice is mailed, it shall be deposited in the United States
mail at least four (4) days before the time of the holding of the
meeting. In case the notice is delivered personally, or by telephone or
telegram, it shall be delivered personally or by telephone or to the
telegraph company at least forty eight (48) hours before the time of
the holding of the meeting. Any oral notice given personally or by
telephone may be communicated either to the director or to a person at
the office of the director who the person giving the notice has reason
to believe will promptly communicate it to the director. The notice
need not specify the purpose of the meeting nor the place if the
meeting is to be held at the principa1 executive office of the
corporation.
Section 9. QUORUM. A majority of the authorized number of directors
shall constitute a quorum for the transaction of business, except to
adjourn as provided in Section 11 of this Article III. Every act or
decision done or made by a majority of the directors present at a
meeting duly held at which a quorum is present shall be regarded as the
act of the board of directors, subject to the provisions of Section 310
of the Corporations Code of California (as to approval of contracts or
transactions in which a director has a direct or indirect material
financial interest), Section 311 of that Code (as to appointment of
committees), and Section 317(e) of that Code (as to indemnification of
directors). A meeting at which a quorum is initially present may
continue to transact business notwithstanding the withdrawal of
directors, if any action taken is approved by at least a majority of
the required quorum for that meeting.
Section 10. WAIVER OF NOTICE. The transactions of any meeting of the
board of directors, however called and noticed or wherever held, shall
be as valid as though had at a meeting duly held after regular call and
notice if a quorum is present and if, either before or after the
meeting, each of the directors not present signs a written waiver of
notice, a consent to holding the meeting or an approval of the minutes.
The waiver of notice or consent need not specify the purpose of the
meeting. All such waivers, consents, and approvals shall be filed with
the corporate records or made a part of the minutes of the meeting.
Notice of a meeting shall also be deemed given to any director who
attends the meeting without protesting before or at its commencement,
the lack of notice to that director.
Section 11. ADJOURNMENT. A majority of the directors present,
whether or not constituting a quorum, may adjourn any meeting to
another time and place.
Section 12. NOTICE OF ADJOURNMENT. Notice of the time and place of
holding an adjourned meeting need not be given, unless the meeting is
adjourned for more than twenty-four hours, in which case notice of the
time and place shall be given before the time of the adjourned meeting,
in the manner specified in Section 8 of this Article III, to the
directors who were not present at the time of the adjournment.
Section 13. ACTION WITHOUT MEETING. Any action required or permitted
to be taken by the board of directors may be taken without a meeting,
if all members of the board shall individually or collectively consent
in writing to that action. Such action by written consent shall have
the same force and effect as a unanimous vote of the board of
directors. Such written consent or consents shall be filed with the
minutes of the proceedings of the board.
Section 14. FEES AND COMPENSATION OF DIRECTORS. Directors and
members of committees may receive such compensation, if any, for their
services, and such reimbursement of expenses, as may be fixed or
determined by resolution of the board of directors. This Section 14
shall not be construed to preclude any director from serving the
corporation in any other capacity as an officer, agent, employee, or
otherwise, and receiving compensation for those services.
ARTICLE IV
COMMITTEES
Section 1. COMMITTEES OF DIRECTORS. The board of directors may, by
resolution adopted by a majority of the authorized number of directors,
designate one or more committees, each consisting of two or more
directors, to serve at the pleasure of the board. The board may
designate who may replace any absent member at any meeting of the
committee. Any committee, to the extent provided in the resolution of
the board, shall have all the authority of the board, except with
respect to:
(a) the approval of any action which, under the General
Corporation Law of California, also requires shareholders'
approval or approval of the outstanding shares;
(b) the filling of vacancies on the board of directors or in any
committee;
(c) the fixing of compensation of the directors for serving on the
board or on any committee;
(d) the amendment or repeal of bylaws or the adoption of new
bylaws;
(e) the amendment or repeal of any resolution of the board of
directors which by its express terms is not so amendable or
repealable;
(f) a distribution to the shareholders of the corporation, except
at a rate or in a periodic amount or within a price range
determined by the board of directors; or
(g) the appointment of any other committees of the board of
directors or the members of these committees.
Section 2. MEETINGS AND ACTION OF COMMITTEES. Meetings and action of
committees shall be governed by, and held and taken in accordance with,
the provisions of Article III of these bylaws, Sections 5 (place of
meetings), 7 (regular meetings), 8 (special meetings and notice), 9
(quorum), 10 (waiver and notice), 11 (adjournment), 12 (notice of
adjournment), and 13 (action without meeting), with such changes in the
context of those bylaws as are necessary to substitute the committee
and its members for the board of directors and its members, except that
the time of regular meetings of committees may be determined either by
resolution of the board of directors or by resolution of the committee;
special meetings of committees may also be called by resolution of the
board of directors; and notice of special meetings of committees shall
also be given to all alternate members, who shall have the right to
attend all meetings of the committee. The board of directors may adopt
rules for the government of any committee not inconsistent with the
provisions of these bylaws.
ARTICLE V
OFFICERS
Section 1. OFFICERS. The officers of the corporation shall be a
president, a secretary, and a treasurer. The corporation may also have,
at the discretion of the board of directors, a chairman of the board,
one or more vice presidents, one or more assistant secretaries, one or
more assistant treasurers, and such other officers as may be appointed
in accordance with the provisions of Section 3 of this Article V. Any
number of offices may be held by the same person.
Section 2. ELECTION OF OFFICERS. The officers of the corporation,
except such officers as may be appointed in accordance with the
provisions of Section 3 or Section 5 of this Article V, shall be chosen
by the board of directors, and each shall serve at the pleasure of the
board, subject to the rights, if any, of an officer under any contract
of employment.
Section 3. SUBORDINATE OFFICERS. The board of directors may appoint,
and may empower the president to appoint, such other officers as the
business of the corporation may require, each of whom shall hold office
for such period, have such authority and perform such duties as are
provided in the bylaws or as the board of directors may from time to
time determine.
Section 4. REMOVAL AND RESIGNATION OF OFFICERS. Subject to the
rights, if any, of an officer under any contract of employment, any
officer may be removed, either with or without cause, by the board of
directors, at any regular or special meeting of the board, or, except
in case of an officer chosen by the board of directors, by any officer
upon whom such power of removal may be conferred by the board of
directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the
receipt of that notice or at any later time specified in that notice;
and, unless otherwise specified in that notice, the acceptance of the
resignation shall not be necessary to make it effective. Any
resignation is without prejudice to the rights, if any, of the
corporation under any contract to which the officer is a party.
Section 5. VACANCIES IN OFFICES. A vacancy in any office because of
death, resignation, removal, disqualification or any other cause shall
be filled in the manner prescribed in these bylaws for regular
appointments to that office.
Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if such
an officer be elected, shall, if present, preside at meetings of the
board of directors. If the chairman of the board is designated as the
chief executive officer by the board of directors or if there is no
president, the chairman of the board shall in addition have the powers
and duties prescribed in Section 7(a) of the Article V. The chairman
of the board shall also have such other duties as may from time to time
be assigned to him by the board of directors or prescribed by the
bylaws.
Section 7. PRESIDENT.
(a) Unless the chairman of the board has been designated as the
chief executive officer, the president shall be the chief
executive officer of the corporation. The chief executive
officer shall, subject to the control of the board of
directors, have the general supervision, direction and control
of the business and the officers of the corporation. He shall
preside at all meetings of the shareholders. The chief
executive officer shall have the power to appoint any person to
preside at meeting of the shareholders if he is unable or
unwilling to do so. He shall have the general powers and
duties of management usually vested in the chief executive
officer of a corporation, and shall have such other powers and
duties as may be prescribed by the board of directors art the
bylaws. In the event of the absence or disability of the chief
executive officer, or if such position becomes vacant, the
duties of the chief executive officer shall be performed by the
president if the president is the chief operating officer or by
such person as the board of directors may appoint as acting
chief executive officer, subject to any restriction thereon
imposed by the board of directors.
(b) If the president is designated by the board of directors as the
chief operating officer of the corporation, he shall be the
chief administrative officer of the corporation and shall,
subject to the control of the board of directors and the
direction of the chief executive officer, conduct the day-to-
day activities of the corporation. The chief operating officer
also shall have such other powers and perform such other duties
as may from time to time by assigned to him by the chief
executive officer. In the absence of the chief executive
officer, the chief operating officer shall have the powers and
perform the duties of the chief executive officer. Unless
otherwise provided by resolution of the board of directors, the
chief operating officer shall have the power to bind the
corporation to obligations.
Section 8. VICE PRESIDENTS. The vice presidents shall have such
other powers and perform such other duties as from time to time may be
prescribed for them respectively by the board of directors, the bylaws,
the president, or the chairman of the board.
Section 9. SECRETARY. The secretary shall keep or cause to be kept,
at the principal executive office or such other place as the board of
directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors, and shareholders, with the time and
place of holding, whether regular or special, and, if special, how
authorized, the notice given, the names of those present at directors'
meetings or committee meetings, the number of shares present or
represented at shareholders' meetings, and the proceedings.
The secretary shall keep, or cause to be kept, at the principal
executive office or at the office of the corporation's transfer agent
or registrar, as determined by resolution of the board of directors, a
share register, or a duplicate share register, showing the names of all
shareholders and their addresses, the number and classes of shares held
by each, the number and date of certificates issued for the same, and
the number and date of cancellation of every certificate surrendered
for cancellation.
The secretary shall give, or cause to be given, notice of all
meetings of the shareholders and of the board of directors required by
the bylaws or by law to be given, and he shall keep the seal of the
corporation if one be adopted, in safe custody, and shall have such
other powers and perform such other duties as may be prescribed by the
board of directors or by the bylaws.
The assistant secretary, if any, shall have all powers of the
secretary. In the absence of the secretary and assistant secretary, any
vice president shall have the power to perform the duties of the
secretary.
Section 10. TREASURER. The treasurer shall be the chief financial
officer of the corporation. The treasurer shall keep and maintain, or
cause to be kept and maintained, adequate and correct books and records
of accounts of the properties and business transactions of the
corporation, including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, capital, retained earnings, and shares.
The books of account shall at all reasonable times be open to
inspection by any director.
The treasurer shall deposit all moneys and other valuables in the
name and to the credit of the corporation with such depositories as may
be designated by the board of directors. He shall disburse the funds
of the corporation as may be ordered by the board of directors, shall
render to the president and directors, whenever they request it, an
account of all of his transactions as chief financial officer and of
the financial condition of the corporation, and shall have other powers
and perform such other duties as may be prescribed by the board of
directors or the bylaws.
The assistant treasurer, if any, shall have all powers of the
treasurer.
ARTICLE VI
INDEMNIFICATION OF AGENTS
Section 1. CERTAIN DEFINITIONS. As used in this Article the following
terms shall have the meanings set forth in this section:
(a) Expenses: any expense, liability, or loss, including attorneys'
fees, judgments, fines, ERISA excise taxes and penalties, amounts paid
or to be paid in settlement, any interest, assessments, or other
charges imposed thereon, and any federal, state, local, or foreign
taxes imposed as a result of the actual or deemed receipt of any
payments under this Article, paid or incurred in connection with
investigating, defending, being a witness in, or participating in, or
preparing for any of the foregoing in, any Proceeding relating to any
Indemnifiable Event
(b) Indemnifiable Event: any event or occurrence that takes place
either prior to or after the date of adoption of this amended Article
VI, related to Indemnitee's service as a director or officer of the
Company or, at the request of the Company, as a director, officer,
employee, trustee, agent, or fiduciary of another foreign or domestic
corporation, partnership, joint venture, employee benefit plan, trust,
or other enterprise w)1ile also serving as a director or officer of the
Company.
(c) Indemnitee: every person who was or is a director or officer of
the Company.
(d) Proceeding: (i) any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative,
investigative or other, or (ii) any inquiry, hearing, or investigation,
whether conducted by the Company or any other party, that Indemnitee in
good faith believes might lead to the institution of any such action,
suit or proceeding.
Section 2. OBLIGATION TO INDEMNIFY.
(a) General Obligation. If Indemnitee becomes, or is threatened to
be made, a party to, or a witness or other participant in, any
Proceeding by reason of (or arising in part out of an Indemnifiable
Event, Indemnitee shall be indemnified and held harmless by the Company
from and against any and all Expenses actually and reasonably incurred
or suffered by Indemnitee in connection with such Proceeding, subject
to the provisions of this Article, including the exceptions stated in
section 2(b) below. Without limiting the generality of the foregoing,
the foregoing indemnity includes indemnification for amounts paid in
settlement of actions brought by or in the right of the corporation and
for expenses incurred therein, unless excluded under Subsection (b)
below, whether or not such settlement was approved by the court The
Company shall also cooperate fully with Indemnitee and render such
assistance as Indemnitee may reasonably require in the defense of any
Proceeding in which Indemnitee was or is a party or is threatened to be
made a party, and shall make available to Indemnitee and his counsel
all infonnation and documents reasonably available to it which relate
to the subject of any such Proceeding. The parties hereto intend that
this Article shall provide for indemnification in excess of that
expressly permitted by statute.
(b) Exceptions to Indemnity Obligations. Anything to the contrary in
Subsection (a) above, no Indemnitee shall be indemnified under
Subsection (a) above: (i) in connection with a proceeding initiated by
Indemnitee (other than pursuant to Section 4) unless such proceeding
was authorized by the Company; (ii) with respect to the settlement of
any Proceeding to which the Company has not consented in writing which
consent the Company agrees not to withhold unreasonably; (iii) on
account of any suit in which judgment is rendered against the
Indemnitee for an accounting of profits made in securities of the
Company in violation of Section 16(b) of the Securities Act of 1934, as
amended, the rules promulgated thereunder, or similar provisions of
federal or state statutory law; (iv) for acts or omissions that involve
intentional misconduct or a knowing and culpable violation of law; (v)
for acts or omissions that the Indemnitee believes to be contrary to
the best interests of the Company or its shareholders or that involve
the absence of good faith on the part of the Indemnitee; (vi) for any
transaction in which the Indemnitee derived an improper personal
benefit; (vii) for acts or omissions that show a reckless disregard for
the Indemnitee's duty to the Company or its shareholders in
circumstances in which the Indemnitee was aware, or should have been
aware, in the ordinary course of performing the Indemnitee's duties, of
a risk of serious injury to the Company or its shareholders; (viii) for
acts or omissions that constitute an unexcused pattern of inattention
that amounts to an abdication of duty to the Company or its
shareholders; (ix) from liability under Sections 310 or 316 of the
California General Corporation Law; or (x) if a court of competent
jurisdiction has finally determined in the instant case that
indemnification is unlawful under the circumstances. With respect to
the exceptions set forth in Subsections (b)(iv) through (b)(ix) above,
if after the date of adoption of this amended Article VI the California
General Corporation Law is amended or interpreted judicially so as to
make such provisions inapplicable to actions other than actions brought
by or in the right of a corporation or to otherwise permit broader
indemnification rights, such broader indemnification rights shall
automatically be made a part of this Article and an Indemnitee shall be
entitled thereto.
(c) Expense Advances. Expenses incurred by Indemnitee in defending
any Proceeding relating in whole or in part to an Indemnifiable Event
shall be advanced by the Company prior to the final disposition of any
such Proceeding upon receipt by the Company of an unsecured written
undertaking by or on behalf of Indemnitee to repay all amounts so
advanced without interest if it should be determined ultimately that
Indemnitee is not entitled to be indemnified under this Article or
otherwise.
(d) Mandatory Indemnfication. Notwithstanding any provision of this
Article VI to the contrary, to the extent that Indemnitee has been
successful on the merits in defense of any Proceeding relating in whole
or in part to an Indemnifiable Event or in defense of any issue or
matter therein, Indemnitee shall be indemnified against all Expenses
incurred in connection
therewith.
(e) Partial Indemnification. If Indemnitee is entitled under any
provision of this Article to indemnification by the Company for some or
a portion of Expenses, but not, however, for the total amount thereof,
the Company shall nevertheless indemnify Indemnitee for the portion
thereof to which Indemnitee is entitled
Section 3. NOTIFICATION AND DEFENSE OF PROCEEDING.
(a) Notice. Promptly after receipt by Indemnitee of notice of the
commencement of any Proceeding, Indemnitee shall, if a claim in respect
thereof is to be made against the Company under this article, notify
the Company of the commencement thereof, but the omission so to notify
the Company shall not relieve the Company from any liability that it
may have to Indemnitee unless such omission substantially prejudices
the Company.
(b) Defense. With respect to any Proceeding as to which Indemnitee
notifies the Company of the commencement thereof: (i) the Company shall
be entitled to participate in the Proceeding to the full extent
permitted by law and at its own expense, when, and only to the extent
that the Company, in its sole discretion, chooses to so participate;
and (ii) the Company shall be entitled to cause the Proceeding to be
defended on behalf of the Indemnitee by counsel chosen by the Company,
provided such counsel is reasonably satisfactory to Indemnitee and
provided, further, that representation by such counsel does not
constitute a conflict of interest So long as defense of the Proceeding
is being conducted by such counsel, Indemnitee shall not be entitled to
indemnity or advances for attorney's fees or expenses of other counsel
as may be separately employed by Indemnitee. The Indemnitee shall
cooperate fully with the Company's participation in any such Proceeding
and shall make available to the Company and its counsel all information
and documents reasonably available to Indemnitee which relate to the
subject of such Proceeding. The Company shall not be liable to
indemnify the Indemnitee under this Agreement with regard to any
judicial award if the Company was not given a reasonable and timely
opportunity, at its expense, to participate in the defense of such
action; the Company's liability hereunder shall not be excused if
participation in the proceeding by the Company was barred.
Section 4. REMEDY TO ENFORCE RIGHT TO INDEMNIFICATION. If a claim for
indemnity or an Expense advance under Section 2 of this Article is not
paid in full by the Company within sixty (60) days after a written
claim and any additional non-privileged information reasonably
requested by the Company concerning the claim has been received by the
Company, Indemnitee may at any time thereafter bring suit against the
Company to recover the unpaid amount of the claim, together with
interest thereon, aqd if successful in whole or in substantial part,
Indemnitee shall also be entitled to be paid the expenses of
prosecuting such claim, including reasonable attorney's fees incurred
in connection therewith. It shall be a defense to any such action
(other than an action brought to enforce a claim for Expenses incurred
in defending any Proceeding in advance of its final disposition where
the required undertaking has been tendered to the Company) that one or
more of the exceptions set forth in Section 2(b) bars indemnity, but
the burden of proving such a defense shall be on the Company. Neither
the failure of the Company (or of its full board of directors, its
directors who are not parties to the Proceeding with respect to which
indemnification is claimed, its shareholders, or independent legal
counsel) to have made a determination prior to the commencement of an
action pursuant to this Section 4 that indemnification of Indemnitee is
proper in the circumstances because Indemnitee has met any applicable
standard of conduct, nor an actual determination by any such person or
persons that Indemnitee has not met such applicable standard of
conduct, shall be a defense to such action or create a presumption that
Indemnitee has not met the applicable standard of conduct or is not
entitled to indemnity under this Article.
Section 5. BYLAW RIGHT NOT EXCLUSIVE; EXTENSION TO OTHER AGENTS. The
rights conferred by this Article shall not be exclusive of any other
right which Indemnitee may have or hereafter acquire under the General
Corporation Law of California or any oilier statute, or any provision
contained in the Company's Articles of Incorporation or Bylaws, or
under any agreement, or pursuant to a vote of shareholders or
disinterested directors, or otherwise. The board of directors shall
have the right, without further shareholder approval, to extend the
provisions of this Amended Article VI to non-officer employees and
other agents of the Company with respect to Indemnifiable Events as to
such employees and other agents.
Section 6. INSURANCE. The Company may purchase and maintain insurance
on behalf of its directors and officers against any liability asserted
against or incurred by any of them by reason of the fact that such
person is or was a director or officer of the Company whether or not
the Company would have the power to indemnify such persons against such
liability under the General Corporation Law of California.
Section 7. REPEAL OR MODIFICATION; APPLICABILITY TO PENDING ACTIONS.
No repeal or modification of this Article shall adversely affect any
right of an Indemnitee with respect to any proceeding or part thereof
based upon acts, omissions or occurrences antedating such repeal or
modification. This amended Bylaw shall not apply with respect to
Proceedings pending at the date of approval hereof by the shareholders
of the Company. In such cases, the predecessor Article VI shall, in
addition to all other rights which may exist, be applicable.
Section 8. NO WAIVER. No waiver of any of the provisions of this
Article shall operate as a waiver of any other provisions hereof
(whether or not similar), nor shall such waiver constitute a continuing
waiver. Except as specifically provided herein, no failure to exercise
or any delay in exercising any right or remedy hereunder shall
constitute a waiver thereof.
Section 9. NO DUPLICATION OF PAYMENTS. The Company shall not be liable
under this Article to make any payment in connection with any claim
made against Indemnitee to the extent Indemnitee has otherwise received
payment under any insurance policy, Bylaw, or otherwise of the amounts
otherwise indemnifiable hereunder.
Section 10. Binding Effect. This Article shall be a binding contract
between the Company and each Indemnitee made in partial consideration
of the Indemnitee's ongoing services to the Company and shall inure to
the benefit of, bind and be enforceable by the Company and each
Indemnitee and their respective successors (including any direct or
indirect successor by purchase, merger, consolidation, or otherwise to
all or substantially all of the business and/or assets of the Company),
spouses, heirs, and personal and legal representatives. The Company
shall require and cause any successor (whether direct or indirect by
purchase, merger, consolidation, or otherwise) to all, substantially
all, or a substantial part, of the business and/or assets of the
Company, by written agreement, expressly to assume and agree to perform
the provisions of this Article in the same manner and to the same
extent that the Company would be required to perform if no such
succession had taken place. The Indemnification provided under this
Article shall continue as to Indemnitee for any action taken or not
taken while serving in an indemnified capacity pertaining to an
Indemnifiable Event even though he may have ceased to serve in such
capacity at the time of any Proceeding.
Section 11. Severability. If any provision (or portion thereof) of
this Article shall be held by a court of competent jurisdiction to be
invalid, void, or otherwise unenforceable, the remaining provisions
shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this
Article (including, without limitation, each portion of this Article
containing any provision held to be invalid, void, or otherwise
unenforceable, that is not itself invalid, void, or unenforceable)
shall be construed so as to give effect to the intent manifested by the
provision held invalid, void, or unenforceable."
ARTICLE VII
RECORDS AND REPORTS
Section 1. MAINTENANCE AND INSPECTION OF SHARE REGISTER. The
corporation shall keep at its principal executive office, or at the
office of its transfer agent or registrar, if either be appointed and
as determined by resolution of the board of directors, a record of its
shareholders, giving the names and addresses of all shareholders and
the number and class of shares held by each shareholder.
A shareholder or shareholders of the corporation holding of record
at least five percent (5%) in the aggregate of the outstanding voting
shares of the corporation may (i) inspect and copy the records of
shareholders' names and addresses and shareholdings during usual
business hours on five days prior written demand on the corporation,
and (ii) obtain from the transfer agent of the corporation, on written
demand and on the tender of such transfer agent's usual charges for
such list, a list of the shareholders' names and addresses, who are
entitled to vote for the election of directors, and their
shareholdings, as of the most recent record date for which that list
has been compiled or as of a date specified by the shareholder after
the date of demand. This list shall be made available to any such
shareholder by the transfer agent on or before the later of five (5)
days after the demand is received or the date specified in the demand
as the date as of which the list is to be compiled. The record of
shareholders shall also be open to inspection on the written demand of
any shareholder or holder of a voting trust: certificate, at any time
during usual business hours, for a purpose reasonably related to the
holder's interests as a shareholder or as the holder of a voting trust
certificate. Any inspection and copying under this Section 1 may be
made in person or by an agent or attorney of the shareholder or holder
of a voting trust certificate making the demand.
Section 2. MAINTENANCE AND INSPECTION OF BYLAWS. The corporation
shall keep at its principal executive office, or if its principal
executive office is not in the State of California, at its principal
business office in this state, the original or a copy of the bylaws as
amended to date, which shall be open to inspection by the shareholders
at all reasonable times during office hours. If the principal executive
office of the corporation is outside the State of California and the
corporation has no principal business office in this state, the
Secretary shall, upon the written request of any shareholder, furnish
to that shareholder a copy of the bylaws as amended to date.
Section 3. MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS.
The accounting books and records and minutes of proceedings of the
shareholders and the board of directors and any committee or committees
of the board of directors shall be kept at such place or places
designated by the board of directors, or, in the absence of such
designation, at the principal executive office of the corporation or at
the offices of the corporation's accountants or attorneys. The minutes
shall be kept in written form and the accounting books and records
shall be kept either in written form or in any other form capable of
being converted into written form. The minutes and accounting books and
records shall be open to inspection upon the written demand of any
shareholder or holder of a voting trust certificate, at any reasonable
time during usual business hours, for a purpose reasonably related to
the holder's interests as a shareholder or as the holder of a voting
trust certificate. The inspection may be made in person or by an agent
or attorney, and shall include the right to copy and make extracts.
These rights of inspection shall extend to the records of each
subsidiary corporation of the corporation.
Section 4. INSPECTION BY DIRECTORS. Every director shall have the
absolute right at any reasonable time to inspect all books, records,
and documents of every kind and the physical properties of the
corporation and each of its subsidiary corporations. This inspection by
a director may be made in person or by an agent or attorney and the
right of inspection includes the right to copy and make extracts
of documents.
Section 5. ANNUAL REPORT TO SHAREHOLDERS. The corporation shall
cause an annual report to be sent to the shareholders within the time
required by California Corporation's Code Section 1501. The form and
content of said report shall comply with the requirements of said
section and with the requirements of the federal Securities and
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder if applicable.
Section 6. ANNUAL STATEMENT OF GENERAL INFORMATION. The corporation
shall each year file with the Secretary of State of the State of
California, on the prescribed form, a statement setting forth the
authorized number of directors, the names and complete business or
residence addresses of all incumbent directors, the names and complete
business or residence addresses of the chief executive officer,
secretary, and chief financial officer, the street address of its
principal executive office or principal business office in this State,
and the general type of business constituting the principal business
activity of the corporation, together with a designation of the agent
of the corporation for the purpose of service of process, all in
compliance with Section 1502 of the Corporations Code of California.
ARTICLE VIII
GENERAL CORPORATE MATTERS
Section 1. RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING.
For purposes of determining the shareholders entitled to receive
payment of any dividend or other distribution or allotment of any
rights or entitled to exercise any rights in respect of any other
lawful action (other than action by shareholders by written consent
without a meeting), the board of directors may fix, in advance, a
record date, which shall not be more than sixty (60) days before any
such action, and in that case only shareholders of record on the date
so fixed are entitled to receive the dividend, distribution, or
allotment or rights or to exercise the rights, as the case may be,
notwithstanding any transfer of any shares on the books of the
corporation after the record date so fixed, except as otherwise
provided in the California General Corporation Law.
If the board of directors does not so fix a record date, the record
date for determining shareholders for any such purpose shall be at the
close of business on the day on which the board adopts the applicable
resolution or the sixtieth (60th) day before the date of that action,
whichever is later.
Section 2. CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS. All checks,
drafts, or other orders for payment of money, notes, or other evidences
of indebtedness, shall be signed or endorsed by such person or persons
and in such manner as, from time to time, shall be determined by
resolution of the board of directors.
Section 3. CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED. The
board of directors, except as otherwise provided in these bylaws, may
authorize any officer or officers, agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation, and this authority may be general or confined to specific
instances; and, unless so authorized or ratified by the board of
directors or within the agency power of an officer, no officer, agent,
or employee shall have any power or authority to bind the corporation
by any contract or engagement or to pledge its credit or to render it
liable for any purpose or for any amount.
Section 4. CERTIFICATES FOR SHARES. A certificate or certificates
for shares of the capital stock of the corporation shall be issued to
each shareholder when any of these shares are fully paid, and the board
of directors may authorize the issuance of certificates or shares as
partly paid provided that these certificates shall state the amount of
the consideration to be paid for them and the amount paid. All
certificates shall be signed in the name of the corporation by the
chairman of the board or vice chairman of the board or the president or
vice president and by the chief financial officer or an assistant
treasurer or the secretary or any assistant secretary, certifying the
number of shares and the class or series of shares owned by the
shareholder. Any or all of the signatures on the certificate may be
facsimile. In case any officer, transfer agent, or registrar who has
signed or whose facsimile signature has been placed on a certificate
shall have ceased to be that officer, transfer agent, or registrar
before that certificate is issued, it may be issued by the corporation
with the same effect as if that person were an officer, transfer agent
or registrar at the date of issue.
Section 5. LOST CERTIFICATES. Except as provided in this Section 5,
no new certificates for shares shall be issued to replace an old
certificate unless the latter is surrendered to the corporation and
cancelled at the same time. The board of directors may, in case any
share certificate or certificate for any other security is lost,
stolen, or destroyed, authorize the issuance of a replacement
certificate on such terms and conditions as the board may require,
including provision for indemnification of the corporation secured by a
bond or other adequate security sufficient to protect the corporation
against any claim that may be made against it, including any expense or
liability, on account of the alleged loss, theft, or destruction of the
certificate or the issuance of the replacement certificate.
Section 6. REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The
chairman of the board, the president, or any vice president, or any
other person authorized by resolution of the board of directors or by
any of the foregoing designated officers, is authorized to vote on
behalf of the corporation any and all shares of any other corporation
or corporations, foreign or domestic, standing in the name of the
corporation. The authority granted to these officers to vote or
represent on behalf of the corporation any and all shares held by the
corporation in any other corporation or corporations may be exercised
by any of these officers in person or by any person authorized to do so
by a proxy duly executed by these officers.
Section 7. TRANSFER AND REGISTRY AGENTS. The corporation may, from
time to time, maintain one or more transfer offices or agencies and/or
registry offices at such place or places as may be determined from time
to time by the board of directors; and the board of directors may, from
time to time, define the duties of such transfer agents and registrars
and make such rules and regulations as it may deem expedient, not
inconsistent with these Bylaws, concerning the issue, transfer and
registration of certificates for stock of the corporation.
Section 8. CONSTRUCTION AND DEFINITIONS. Unless the context requires
otherw1se, the general prov1sions, rules of construction, and
definitions in the California General Corporation Law shall govern the
construction of these bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number
includes the singular, and the term "person" includes both a
corporation and a natural person.
Section 9. CONFLICT WITH LAW. In the event any provision of these
Bylaws conflicts with any applicable law of the Unites States or the
State of California, or with any order, rule, regulation, decree or
judgment of any governmental body or power or court having jurisdiction
over the corporation, or over the subject matter to which such bylaw
provision applies, or with any rules or order of a stock exchange or
such bylaw provision shall be deemed, amended only to the extent
necessary to resolve an unavoidable conflict and shall in all other
respects be in full force and effect.
ARTICLE IX
AMENDMENTS
Section 1. AMENDMENT BY SHAREHOLDERS. New bylaws may be adopted or
these bylaws may be amended or repealed by the vote or written consent
of holders of a majority of the outstanding shares entitled to vote;
provided, however, that if the articles of incorporation of the
corporation set forth the number of authorized directors of the
corporation, the authorized number of directors may be changed only by
an amendment of the articles of incorporation.
Section 2. AMENDMENT BY DIRECTORS. Subject to the rights of the
shareholders provided in Section 1 of this Article IX, bylaws, other
than a bylaw or an amendment of a bylaw changing the authorized number
of directors, may be adopted, amended, or repealed by the board of
directors.
(21) Subsidiaries of the Registrant.
FBC Finance Co., a California corporation.
(99) Additional Exhibits.
Offices Warehouses and PlantsOffices, Warehouses and Plants
The Corporation
Farmer Bros. Co., headquartered in Torrance, California, roasts
and packages coffee, processes spices and other restaurant
supplies at that location, and manufactures a complete line of
coffee-brewing equipment at its Brewmatic Division plant in Los
Angeles. The Corporation's primary business is conducted through
its internal divisions: Restaurant and Institutional Sales
Division, Brewmatic Division, Spice Products Division and Custom
Coffee Plan Division; and one subsidiary, FBC Finance Company.
Executive Offices:
Farmer Bros. Co.
20333 South Normandie Avenue, Torrance, California
Restaurant and Institutional Sales Division
20401 South Normandie Avenue, Torrance, California
Brewmatic Company Division
20333 South Normandie Avenue, Torrance, California
Spice Products Company Division
20333 South Normandie Avenue, Torrance, California
Custom Coffee Plan Division
20333 South Normandie Avenue, Torrance, California
FBC Finance Co.
20333 South Normandie Avenue, Torrance, California
RESTAURANT AND INSTITUTIONAL SALES BRANCHES
Arizona
FLAGSTAFF
2385 N. Walgreen
Street
Lake Havasu
1880 Commander
Dr., Suite C
PHOENIX
1060 W. Alameda
Dr.
Tempe
TUCSON
3818 South Evans
Blvd.
YUMA
3320 E. Gila Ridge
Rd.
Arkansas
FAYETTEVILLE
3901-D Kelly
Springdale
LITTLE ROCK
7630 Hardin Drive
North Little Rock
California
BAKERSFIELD
1135 W. Columbus
BARSTOW
408 N. Second
Street
BISHOP
324 E. Clarke
Street
Castroville
11460 Commercial
Parkway
CHICO
252 East Avenue,
Suite F
EUREKA
1825 3rd Street
FRESNO
4576 N. Bendel
LANCASTER
42138 7th Street
West
OAKLAND
9844 Kitty Lane
Emeryville
PALM SPRINGS
72205 Corporate
Way
Thousand Palms
REDDING
5601 Cedar Rd. - E
Resident Branch
RIVERSIDE
12101 Madera Way
SACRAMENTO
2450 Boatman Ave.
SAN DIEGO
7855 Ostrow St., B
SAN GABRIEL
859 Meridian St.
Duarte
SAN JOSE
1462 Seareel Pl.
SAN LUIS OBISPO
3415 Miguelito Ct.
SANTA Ana
3921 W. Segerstrom
Ave.
SANTA ROSA
470 E. Todd Rd.
STOCKTON
4243 Arch Road
TORRANCE
20401 S. Normandie
Ave.
VALLEY
9373 Remick Ave.
Arleta
VENTURA
1350 Stellar Dr.
Oxnard
Colorado
COLORADO SPRINGS
337 Manitou Ave.
Manitou Springs
DENVER
5595 Joliet Street
FORT COLLINS
4500 Innovation
Drive
GRAND JUNCTION
2848 Chipeta Ave.,
#B
Idaho
BOISE
1625 South Curtis
IDAHO FALLS
805 S. Saturn Ave.
TWIN FALLS
445 5th Ave. W
Resident Branch
Illinois
CHICAGO
31W280 Diehl Rd.,
Unit 103
Naperville
MOLINE
2950 38th Avenue
SPRINGFIELD
3430 C
Constitution Dr.
Indiana
EVANSVILLE
1905 N. Kentucky
Ave.
INDIANAPOLIS
1123 Country Club
Rd.
Iowa
DES MOINES
1662 N.E. 55th
Ave.
OMAHA
3217 Nebraska Ave.
Council Bluffs
Kansas
WICHITA
2355 S. Edwards,
Suite B
Louisiana
SHREVEPORT
4220 Pro St.
Minnesota
DULUTH
4314 Enterprise
Cr.
MINNEAPOLIS
3074 84th Lane N E
Blaine
Missouri
COLUMBIA
4881 B I-70 Drive
SW
KANSAS CITY
9 N.E. Skyline Dr.
Lee's Summit
SPRINGFIELD
450 M S. Union
ST. LOUIS
12832 Pennridge
Dr.
Montana
BILLINGS
2625 Enterprise
Ave.
GREAT FALLS
2600 16th St. N.E.
Black Eagle
MISSOULA
2751 Charlo St.
Nebraska
NORTH PLATTE
601 Sioux Meadow
Nevada
ELKO
460 S. A Street
LAS VEGAS
3417 Losee Rd.
CARSON CITY
3880 Technology
Way
New Mexico
ALBUQUERQUE
5911 Office Blvd.
FARMINGTON
1414 Schofield
Lane
Resident Branch
ROSWELL
710 East College
North Dakota
BISMARCK
3800 Commerce
Drive, Suite C
FARGO
710 38th St. N.W.
Unit C
Oklahoma
OKLAHOMA CITY
4611 S.W. 20th St.
TULSA
804 S. 8th St.
Broken Arrow
Oregon
BEND
20409 N. W. Cady
Way
Resident Branch
EUGENE
2545-F Prairie Rd.
MEDFORD
777 East Vilas Rd.
Central Point
PORTLAND
7515 N.E. 33rd Dr.
SALEM
3790-G Silverton
Rd. NE
South Dakota
RAPID CITY
2030 Creek Dr.
SIOUX FALLS
2405 W. 5th St.
Tennessee
MEMPHIS
5753 E. Shelby
Dr., Ste 1
NASHVILLE
1330 Foster Ave.
Texas
AMARILLO
1415 S. Johnson
St.
AUSTIN
2004 Lamar Dr.
Round Rock
CORPUS CHRISTI
3909 Wow Road
DALLAS/FT. WORTH
744 Avenue H East
Arlington
EL PASO
1325 Don Haskins
Dr.
HOUSTON
6638 Rupley Circle
LUBBOCK
1608 D No.
University
Resident Branch
McALLEN
1312 E. Laurel
ODESSA
2017 W. 7th
SAN ANTONIO
4930 Center Park
WICHITA FALLS
1404 Beverly Drive
Utah
SALT LAKE CITY
2230 So. 2000 West
Washington
SEATTLE
8660 Willows Rd.
Redmond
SPOKANE
E. 10915
Montgomery Dr.
TACOMA
9412 Front Street
Lakewood
YAKIMA
2301 S. 18th
Street
Union Gap
Wisconsin
GREEN BAY
1227 S. Maple Ave.
LA CROSSE
1232 Clinton St.
MADISON
1017 Jonathan Dr.
MILWAUKEE
W. 182 S8335-A
Racine Ave.
Muskego
Wyoming
CASPER
2170 N. Old Salt
Creek Hwy.
Custom Coffee Plan BRANCHES:
California
North Hollywood
7419 Bellaire Ave.
San Diego
7855-A Ostrow St.
San Leandro
3041 Teagarden
Torrance
20333 S. Normandie
Ave.
Colorado
Denver
5595 Joliet
Street, #B
Texas
Arlington
722 Avenue H East
Houston
11519 South
Petropark Drive
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, Chief Executive Officer and Chairman of the Board of Directors
Date: February 14, 2002
By:
John E. Simmons, Treasurer and Chief Financial and Accounting Officer
Date: February 14, 2002
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.
Roy E. Farmer, President and Director
Date: February 14, 2002
John M. Anglin, Director
Date: February 13, 2002
61