UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended December 31, 1993
Commission file Number 0-1375
FARMER BROS. CO.
a California Corporation 95-0725980
20333 South Normandie Avenue, Torrance CA U.S.A. 90502
Registrant's telephone number, including area code: (310) 787-5241
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 $1.00 Par Value Common Stock outstanding as of
December 31, 1993: 1,926,414 shares.
FARMER BROS. CO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Amounts in thousands, except per share data)
For the three months For the six months
ended December 31, ended December 31,
1993 1992 1993 1992
------ ------ ------ ------
Net Sales $49564 $49717 $96562 $97505
Cost of goods sold 21943 20958 42930 39379
------ ------ ------ ------
Gross Profit 27621 28759 53632 58126
Selling expenses 18979 18187 37220 35904
General and adminis-
trative expenses 2753 2873 5278 5494
------ ------ ------ ------
21732 21060 42498 41398
Income from operations 5889 7699 11134 16728
Other income:
Dividend income 306 312 616 610
Interest income 947 1172 1822 2295
Other 203 418 728 618
------ ------ ------ ------
1456 1902 3166 3523
Income before taxes
and cumulative effect of
accounting changes 7345 9601 14300 20251
Provision for
income taxes 3149 3714 5739 7834
------ ------ ------ ------
Income before cumulative
effect of accounting
changes 4196 5887 8561 12417
Cumulative effect of
accounting changes 5294
------ ------ ------ ------
Net income 4196 5887 8561 7123
====== ====== ====== ======
Income per share:
Before accounting changes $ 2.18 $3.06 $4.44 $6.45
Cumulative effect of
accounting changes (2.75)
Net income per share
outstanding $ 2.18 $3.06 $4.44 $3.70
====== ===== ===== =====
The accompanying notes are an integral part of these financial statements.
/TABLE
FARMER BROS. CO.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Amounts in thousands)
December 31,1993 June 30, 1993
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $ 9474 $ 64742
Short term investments 66902 40046
Accounts and notes receivable, net 16152 13813
Inventories 35182 32333
Deferred income taxes 3356 3356
Prepaid expenses 1012 858
------- -------
Total current assets 132078 155148
Property, plant and equipment, net 28036 27701
Notes receivable 1385 1050
Long term investments, net 45691 20222
Other assets 12269 11179
Deferred income taxes 966 966
------- -------
Total assets $ 220425 $ 216266
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 4092 $ 6560
Accrued payroll expenses 4053 4815
Other 4156 3894
------ -----
Total current liabilities 12301 15269
Other long term liabilities 9517 9025
Shareholders' equity
Common stock, $1.00 par value,
authorized 3,000,000 shares;
issued and outstanding
1,926,414 shares 1926 1926
Additional paid-in capital 569 569
Retained earnings 196112 189477
------- -------
Total shareholders' equity $198607 $191972
Total liabilities and
shareholders' equity $220425 $216266
======= =======
The accompanying notes are an integral part of these financial statements.
/TABLE
FARMER BROS. CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Amounts in thousands)
For the six months
ended December 31,
1993 1992
Cash flows from operating activities:
Net income $ 8561 $ 7123
------ ------
Adjustments to reconcile net
income to net cash provided
by operating activities:
Cumulative effect of
accounting changes 5294
Depreciation 2444 2589
Other 13 (54)
Net gain (loss) on investments (485) (360)
Change in assets and liabilities:
Short term investments (26855) (11009)
Accounts & notes receivable (2302) (1062)
Inventories (2849) 652
Prepaid expenses and other
assets (1245) (483)
Accounts payable (2468) (2359)
Accrued payroll expenses
and other liabilities (500) (1800)
Other long term liabilitie s 492 447
------ ------
Total adjustments (33755) (8145)
------ ------
Net cash provided by operating
activities (25194) (1022)
------ ------
Cash flows from investing activities:
Purchases of property,
plant & equipment (2940) (2301)
Proceeds from sales of property,
plant & equipment 147 150
Purchases of investments (37921) (9942)
Proceeds from sales of
investments 12938 9635
Notes issued (833) (14)
Notes repaid 461 183
------ ------
Net cash provided by (used in)
investing activities 28148 (2289)
Cash flows from financing activities:
Dividends paid (1926) (1637)
------ ------
Net cash used by financing activities (1926) (1637)
Net increase (decrease) in cash
and cash equivalents $(55268) $(4948)
Cash and cash equivalents at
beginning of year $ 64742 $26352
------ ------
Cash and cash equivalents at
end of quarter $ 9474 $21404
====== ======
Supplemental disclosure of
cash flow information:
Income tax payments $ 5502 $ 8784
The accompanying notes are an integral part of these financial statements.
/TABLE
FARMER BROS. CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), December 31, 1993
A. Unaudited Financial Statements
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-Q and do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. It is management's
opinion that all adjustments necessary for a fair statement of the
results of operations for the interim periods have been made.
B. Inventories
(amounts in thousands)
Processed Unprocessed Total
December 31, 1993
Coffee $ 3224 $12369 $15593
Allied products 8850 3455 12305
Coffee brewing equipment 703 6581 7284
------ ------ ------
$12777 $22405 $35182
June 30, 1993
Coffee $ 3430 $ 8544 $11974
Allied products 10079 3468 13547
Coffee brewing equipment 1523 5290 6813
------ ------ ------
$15032 $17302 $32334
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Net sales for the second quarter of fiscal 1994 reached $49,564,000 as
compared to $49,717,000 in the same quarter of the prior fiscal year. Net
sales for the first half of fiscal 1994 were $96,562,000, a decrease of 1%
from those in the same period of fiscal 1993. Economic conditions in
Registrant's marketing area remain stagnant, with some improvement
noted outside of California.
Gross profit in the second quarter decreased 4% to $27,621,000 as compared
to $28,759,000 in the second quarter of the prior fiscal year and gross
profit for the first half of fiscal 1994 decreased 8% to $53,632,000
from $58,126,000 in the same period of the prior fiscal year. This is
primarily the result of higher green coffee costs in the current fiscal
year. The continued efforts of the Association of Coffee Producing
Countries (ACPC) to establish a voluntary retention program have
helped sustain higher prices of green coffee. Registrant is unable to
forecast future costs of green coffee, and cautions against using past
results to predict future earnings.
Operating expenses have increased 3% to $42,498,000 in the first six months
of 1994 from $41,398,000 in the same period of fiscal 1993. Increased costs
of coffee brewing equipment, medical expenses, payroll and workers' compen-
sation expenses more than offset decreases in insurance and legal costs.
Second quarter net income decreased 31% to $4,196,000 or $2.18 per share,
from $5,887,000 or $3.06 per share, in the same period of the prior fiscal
year. Income before cumulative effect of accounting changes for the first
six months of fiscal 1994 decreased 31% to $8,561,000 or $4.44 per share,
as compared to $12,417,000 or $6.45 per share, in the same quarter of fiscal
1993. The cumulative effect of adopting SFAS 106 and 109 resulted in a cost,
net of tax, of $2.75 per share in the first quarter of fiscal 1993. Net
income for the first six months of fiscal 1994 increased 20% to $8,561,000
or $4.44 per share, as compared to $7,123,000 or $3.70 per share, in the
same period of the prior fiscal year.
FARMER BROS. CO.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
Quarterly Summary
12/31/92 3/31/93 6/30/93 9/30/93 12/31/93
(amounts in thousands)
Net sales $49717 $46667 $46507 $46998 $49564
Gross profit 28759 28399 27732 26010 27621
Operating income 7698 7015 6187 5244 5889
Net income 5886 5187 6640 4365 4196
per share:
Net sales $25.81 $24.22 $24.14 $24.40 $25.73
Gross profit 14.93 14.74 14.40 13.50 14.34
Operating income 4.00 3.64 3.21 2.72 3.06
Net income 3.06 2.69 3.45 2.27 2.18
common sized:
Net sales 100.0% 100.0% 100.0% 100.0% 100.0%
Gross profit 57.8 60.9 59.6 55.3 55.7
Operating income 15.5 15.0 13.3 11.1 11.9
Net income 11.8 11.1 14.2 9.3 8.5
FARMER BROS. CO.
PART II - Other Information
Item 4. Submission of matters to a vote of security holders.
The annual meeting of shareholders of Farmer Bros. Co. was held on November 29,
1993. Holders of the Company's common stock were entitled to one vote per
share of common stock held.
The proposal to amend the Company's Bylaws to increase the number of
authorized directors from 5 to 6 was adopted, with 1,646,623 shares in
favor, 2,868 shares against the proposal and 320 shares abstaining.
Six directors were elected at the meeting, each to serve for the
coming year and until any successors are elected and qualify. The following
persons were elected as directors: Roy F. Farmer, Lewis A. Coffman, Guenter
W. Berger, Catherine E. Crowe, John M. Anglin and Roy E. Farmer. There
were 1,645,686 shares for the election of directors, 363 shares against
and 456 shares abstaining.
The proposal to appoint Coopers & Lybrand as the independent accountants for
the Company for the year ending June 30, 1994 was approved, with 1,649,742
shares in favor of the resolution, 3 shares against and 40 shares abstaining.
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits
None
b. Reports on Form 8-K
No reports have been filed on Form 8-K during this
quarter.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly cause this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FARMER BROS. CO.
Registrant
Date: February 11, 1994
John E. Simmons
John E. Simmons
Treasurer and Chief Financial Officer
