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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)
Farmer Brothers Co.
(Name of Issuer)
Common Stock, par value $1
(Title of Class of Securities)
307675108
(CUSIP Number)
David Winters
Franklin Mutual Advisers, LLC
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078
973.912.2177
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
June 27, 2002
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-l(b)(3) or (4), check the following box [X].
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Franklin Mutual Advisers, LLC
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)[ ]
(b)[X]
3. SEC USE ONLY
4. SOURCE OF FUNDS
See Item 3
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7. SOLE VOTING POWER
187,233 (See Item 5)
8. SHARED VOTING POWER
9. SOLE DISPOSITIVE POWER
187,233 (See Item 5)
10. SHARED DISPOSITIVE POWER
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
187,233 (See Item 5)
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES
CERTAIN SHARES [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
9.7% (See Item 5)
14. TYPE OF REPORTING PERSON IA
This Amendment No. 2 (this "Amendment") amends and supplements the Schedule 13D
filed on November 21, 2000 of the Reporting Persons, as amended by Amendment No.
1 thereto, filed on April 18, 2002, with respect to the common stock, par value
$1.00 per share (the Common Stock), of Farmer Brothers Co., a California
corporation (the "Issuer"). All capitalized terms used in this Amendment and not
otherwise defined herein have the meanings ascribed to such terms in the
Schedule 13D.
Items 4 and 5 of the Schedule 13D are hereby amended in their entirety as
follows:
The securities covered by this Statement were acquired by FMA's advisory clients
for the purpose of investment. Neither FMA nor any executive officer or director
of FMA has any present plans or intentions to acquire or dispose of any
securities of the Issuer other than on behalf of FMA's clients for the purpose
of investment.
FMA has, on behalf of its advisory clients, submitted a proposal to the Company
for inclusion in the Company's proxy statement for the next meeting of
stockholders. A copy of the proposal is attached as Exhibit C and is
incorporated herein.
According to its public filings, a steadily increasing amount of the Companys
assets have been accumulating over the years in an unused reserve fund reaching
$282 million or 69.5% of total corporate assets at March 31, 2002. The Company
appears to have become a de facto investment company, but without the benefits
of being registered as an investment company under the Investment Company Act of
1940 (the ICA) with the U.S. Securities and Exchange Commission. FMAs proposal
would require the Company to comply with the ICA in operating its investment
portfolio and should encourage a more focused attention to the Companys coffee
processing and food distribution by viewing these operations as a separately
managed entity with its own strategic directions.
FMA may decide to purchase on behalf of its advisory clients additional shares
of the Common Stock or other securities of the Issuer. In addition, FMA may
cause its advisory clients to dispose of any or all securities of the Issuer in
any manner permitted by applicable securities laws. FMA's advisory clients
reserve the right to exercise any and all of their respective rights as a
stockholder of the Issuer in a manner consistent with their equity interests.
Other than as described above, neither FMA nor any executive officer or director
of FMA, has any present plans or proposals which relate to or would result in:
(i) an extraordinary corporate transaction, such as a merger, reorganization
or liquidation, involving the Issuer or any of its subsidiaries;
(ii) the sale or transfer of a material amount of assets of the Issuer or any
of its subsidiaries;
(iii) any change in the present board of directors or management of the Issuer,
including any plans or proposals to change the number or term of directors or to
fill any existing vacancies on the board;
(iv) any material change in the present capitalization or dividend policy of
the Issuer;
(v) any other material change in the Issuer's business or corporate
structure;
(vi) changes in the Issuer's charter, bylaws or instruments corresponding
thereto or other actions which may impede the acquisition of control of the
Issuer by any person;
(vii) causing a class of securities of the Issuer to be delisted from a national
securities exchange or to cease to be authorized to be quoted in an inter-dealer
quotation system of a registered national securities association;
(viii) a class of equity security of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934; or
(ix) any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer
(a-b) One or more of FMA's advisory clients is the owner of 187,233 shares of
the Common Stock. Investment advisory contracts with FMAs advisory clients grant
to FMA sole voting and investment discretion over the securities owned by its
advisory clients. Therefore, FMA may be deemed to be, for purposes of Rule 13d-3
under the 1934 Act (the 1934 Act), the beneficial owner of 187,233 shares,
representing approximately 9.7% of the outstanding shares of Common Stock.
FMA is an indirect wholly owned subsidiary of Franklin Resources, Inc. (FRI).
Beneficial ownership by investment advisory subsidiaries and other affiliates of
FRI is being reported in conformity with the guidelines articulated by the SEC
staff in Release No. 34-39538 (January 12, 1998) relating to organizations, such
as FRI, where related entities exercise voting and investment powers over the
securities being reported independently from each other. The voting and
investment powers held by FMA are exercised independently from FRI, and from all
other investment advisor subsidiaries of FRI (FRI, its affiliates and investment
advisor subsidiaries other than FMA are collectively referred to herein as "FRI
affiliates"). Furthermore, FMA and FRI internal policies and procedures
establish informational barriers that prevent the flow between FMA and the FRI
affiliates of information that relates to the voting and investment powers over
the securities owned by their respective advisory clients. Consequently, FMA and
the FRI affiliates are each reporting the securities over which they hold
investment and voting power separately from each other.
Charles B. Johnson and Rupert H. Johnson, Jr. (the Principal Shareholders) each
own in excess of 10% of the outstanding Common Stock of FRI and are the
principal shareholders of FRI. However, FMA exercises voting and investment
powers on behalf of its advisory clients independently of FRI, the Principal
Shareholders, and their respective affiliates. Consequently, beneficial
ownership of the securities being reported by FMA is not attributed to FRI, the
Principal Shareholders, and their respective affiliates other than FMA. FMA
disclaims any economic interest or beneficial ownership in any of the securities
covered by this statement.
Furthermore, FRI, the Principal Shareholders, and their respective affiliates
including FMA, are of the view that they are not acting as a "group" for
purposes of Section 13(d) under the Act and that they are not otherwise required
to attribute to each other the "beneficial ownership" of securities held by any
of them or by any persons or entities advised by FRI subsidiaries.
(c) FMA engaged in the following transactions in the shares of the Common Stock
within the past sixty days: A sale of 200 shares at $331.00 per share on June 4,
2002, and a sale of 200 shares at $340.00 per share on June 11, 2002.
(d) No person other than respective advisory clients of FMA have the right to
receive or the power to direct the receipt of dividends from, or the proceeds of
the sale of the securities being reported herein.
(e) Not applicable.
Item 7. Materials to be Filed as Exhibits
Exhibit C: Shareholder Proposal
After reasonable inquiry, and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete, and correct.
June 27, 2002
Franklin Mutual Advisers, LLC
By: Franklin/Templeton Distributors, Inc.
Its Managing Member
/s/Leslie M. Kratter
LESLIE M. KRATTER
Secretary
EXHIBIT C
PROPOSAL: INVESTMENT COMPANY CONTROLS AND DISCLOSURES
It is proposed that the Companys Bylaws be amended by adding a new section to
Article VIII General Corporate Matters, to state the following:
Section 10: The corporation shall conduct its business as an investment company
subject to the Investment Company Act of 1940.
SUPPORTING STATEMENT
The purpose of this proposal is to require separate and more effective
management of what has become two distinct businesses: a food industry operation
which has stopped growing, and a securities portfolio which has continued
growing. With a steadily increasing amount of shareholder assets simply
accumulating over decades in an unused reserve fund -- reaching $282 million or
69.5% of total corporate assets at March 31, 2002 -- Farmer Bros. appears to
have become a de facto investment company, but without the benefits of being
registered as one.
Registering as an investment company and complying with the Investment Company
Act of 1940 ("ICA") will provide shareholders with significant benefits for
their fund portfolio, including the regulatory oversight of the U.S. Securities
and Exchange Commission and potentially more favorable tax treatment. Most
importantly, the ICA establishes:
? clearly defined fiduciary responsibilities of independent directors (who are
not "interested" as defined by the ICA) for safeguarding shareholder interests;
? independent director responsibility for retaining professionally competent
management of the Companys investment assets;
? detailed, thorough reporting of all investments, including performance; and,
? control and disclosure of expenses and relationships associated with the
management of investment assets.
Without ICA compliance, as the Company is now conducted, public shareholders do
not have sufficient information to know how well or badly their assets are being
managed. This is not acceptable.
Compliance with the ICA should also encourage a more focused attention to the
Companys coffee processing and food distribution enterprise. Viewing these
operations as a separately managed entity with its own strategic direction
should enhance the ability of the Companys managers to realize the full
potential of those businesses. It will also make these operations more visible
and understandable to the Companys public shareholders.
Finally, compliance with the ICA should be expected to encourage managements
consideration of strategic alternatives for restructuring the Companys separate
operations. This proposal is not intended to advocate a particular restructuring
objective, whether distributing cash, buying back stock, acquiring additional
businesses, spinning off either the investment fund or business operation, or
selling the Company. However, we believe that this proposal, if approved by
shareholders, would lead to an independent board giving rigorous consideration
of all relevant alternatives for enhancing shareholder value.