SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended
March 31, 1994
Commission file number 0-1375
FARMER BROS. CO.
A California Corporation 95-0725980
20333 S. Normandie Avenue, Torrance, California 90502
Registrant's telephone number: (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 March 31,
1994: 1,926,414 shares.
PAGE 1 OF 8
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
FARMER BROS. CO.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Amounts in thousands, except per share data)
For the three months For the nine months
ended March 31, ended March 31,
1994 1993 1994 1993
Net sales $ 48,628 $ 46,667 $145,191 $144,171
Cost of goods sold 21,817 18,267 64,747 57,646
26,811 28,400 80,444 86,525
Selling expense 18,605 18,459 55,825 54,363
General and adminis-
trative expense 3,527 2,925 8,804 8,419
22,132 21,384 64,629 62,782
Income from operations 4,679 7,016 15,815 23,743
Other income:
Dividend income 305 303 921 913
Interest income 879 1,106 2,700 3,401
Other 655 35 1,383 654
1,839 1,444 5,004 4,968
Income before taxes and
cumulative effect of
accounting changes 6,518 8,460 20,819 28,711
Provision for
income taxes 2,586 3,273 8,326 11,107
Income before cumulative
effect of accounting
changes 3,932 5,187 12,493 17,604
Cumulative effect of
accounting changes,
net of income taxes 5,294
Net income $ 3,932 $ 5,187 $ 12,493 $ 12,310
Income per share:
Before accounting
changes $2.04 $2.69 $6.49 $9.14
Cumulative effect of
accounting changes (2.75)
Net income per share
outstanding $2.04 $2.69 $6.49 $6.39
The accompanying notes are an integral part of these financial statements.
FARMER BROS. CO.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in thousands)
March 31, June 30,
1994 1993
ASSETS
Current assets:
Cash and cash equivalents $ 13,819 $ 64,742
Short term investments 47,759 40,046
Accounts and notes receivable, net 15,824 13,813
Inventories 34,268 32,333
Deferred income taxes 3,356 3,356
Prepaid expenses 1,689 858
Total current assets 116,715 155,148
Property, plant and equipment, net 28,357 27,701
Notes receivable 968 1,050
Long term investments, net 65,746 20,222
Other assets 12,815 11,179
Deferred income taxes 966 966
Total assets $225,567 $216,266
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,497 $ 6,560
Accrued payroll expenses 4,516 4,815
Other 4,215 3,894
Total current liabilities 14,228 15,269
Other long term liabilities 9,763 9,025
Commitments and contingencies:
Shareholders' equity:
Common stock, $1.00 par value,
authorized 3,000,000 shares; issued
and outstanding 1,926,414 shares 1,926 1,926
Additional paid-in capital 569 569
Retained earnings 199,081 189,477
Total shareholders' equity 201,576 191,972
Total liabilities and
shareholders' equity $225,567 $216,266
The accompanying notes are an integral part of these financial statements.
FARMER BROS. CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
For the nine months
ended March 31,
1994 1993
Cash flows from operating
activities:
Net Income $ 12,493 $ 12,310
Adjustments to reconcile net
income to net cash provided
by operating activities:
Cumulative effect of
accounting changes 5,294
Depreciation 3,717 3,855
Other (22) (62)
Net (gain) loss on
investments (1,007) (325)
Changes in Assets and
Liabilities:
Short term investments (7,712) (2,080)
Accounts and notes receivable (2,120) 242
Inventories (1,935) 134
Prepaid expenses and other
assets (2,467) (1,374)
Accounts payable (1,062) (1,008)
Accrued payroll expenses
and other liabilities 22 (1,227)
Other long term liabilities 738 671
Total adjustments (11,848) 4,120
Net cash provided by operating
activities $ 645 $ 16,430
The accompanying notes are an integral part of these financial statements.
FARMER BROS. CO
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(Unaudited)
(Amounts in thousands)
For the nine months
ended March 31,
1994 1993
Net cash provided by operating
activities: $ 645 $ 16,430
Cash flows from investing
activities:
Purchases of property, plant
and equipment (4,553) (2,995)
Proceeds from sales of property,
plant and equipment 201 202
Purchases of investments (64,695) (16,162)
Proceeds from sales of
investments 20,178 19,200
Notes issued (833) (14)
Notes repaid 1,025 226
Net cash provided by
(used in) investing activities (48,677) 457
Cash flows from financing
activities:
Dividends paid (2,890) (2,504)
Net cash used by financing
activities (2,890) (2,504)
Net increase (decrease) in cash
and cash equivalents (50,922) 14,383
Cash and cash equivalents at
beginning of year 64,742 26,352
Cash and cash equivalents at
end of quarter $ 13,820 $ 40,735
Supplemental disclosure of
cash flow information:
Income tax payments $ 8,363 $ 12,344
The accompanying notes are an integral part of these financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. Unaudited Financial Statements
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-Q and do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. It is management's opinion that all
adjustments necessary for a fair statement of the results of operations for
the interim periods have been made.
B. Inventories (Amounts in thousands)
Processed Unprocessed Total
March 31, 1994
Coffee $ 3,505 $11,125 $14,630
Allied products 8,562 3,533 12,095
Coffee brewing equipment 854 6,689 7,543
$12,921 $21,347 $34,268
June 30, 1993
Coffee $ 3,430 $ 8,544 $11,974
Allied products 10,079 3,468 13,547
Coffee brewing equipment 1,523 5,290 6,813
$15,032 $17,302 $32,334
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
A modest sales increase combined with smaller gross profit on green coffee
and flat operating expenses resulted in lower earnings per share for the
quarter. Net sales for the quarter ending March 31, 1994 increased 4% to
$48,628,000 as compared to $46,667,000 in the same quarter of the prior
fiscal year. Year to date earnings are even with those of the prior fiscal
year. Revenue for the first 9 months of fiscal 1994 increased to $145,191,000
as compared to $144,172,000 in 1993.
Continued increases in the cost of green coffee, Registrant's major product,
have eroded profit margins. Gross profit decreased 6% to $26,811,000 as
compared to $28,399,000 for the three months ended March 31, 1994 and 1993
respectively. Year to date gross profit decreased 7% to $80,443,000 as
compared to $86,525,000 in the first three quarters of fiscal 1994 and 1993,
respectively.
Operating expenses, composed of selling and general & administrative
expenses, increased 5% to $22,132,000 from $21,384,000 in the three months
ending March 31, 1994 and 1993, respectively, and for the year to date
increased 1% to $64,629,000 from $62,782,000 for the 9 months ending March
31, 1994 and 1993, respectively.
Net profit for the most recent quarter decreased 24% to $3,932,000, or $2.04
per share, as compared to $5,187,000, or $2.69 per share in the same quarter
of the prior fiscal year. Net profit for the 9 months ended March 31, 1994
reached $12,493,000, or $6.49 per share, a 2% increase over the $12,310,000,
or $6.39 per share, earned in the same nine month period of fiscal 1993.
The market for green coffee can be volatile, and its fluctuations can have a
significant impact on Registrant's operations. Management cautions against
projecting future results based upon present earnings.
03/31/93 06/30/93 09/30/93 12/30/93 03/30/94
Net sales $46,667 $46,507 $46,998 $49,564 $48,628
Gross profit 28,400 27,732 26,010 27,621 26,811
Operating income 7,016 6,187 5,244 5,889 4,679
Net income 5,187 6,640 4,365 4,196 3,932
Per share:
Net sales $24.22 $24.14 $24.40 $25.73 $25.24
Gross Profit 14.74 14.40 13.50 14.34 13.92
Operating income 3.64 3.21 2.72 3.06 2.43
Net income 2.69 3.45 2.27 2.18 2.04
Common sized:
Net sales 100.0% 100.0% 100.0% 100.0% 100.0%
Gross profit 60.9 59.6 55.3 55.7 55.1
Operating income 15.0 13.3 11.1 11.9 9.6
Net income 11.1 14.2 9.3 8.5 8.0
Part II Other Information
Item 6. Exhibits and reports on Form 8-K none.
(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 caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 13, 1994 FARMER BROS. CO.
(Registrant)
John E. Simmons
John E. Simmons
Treasurer and
Chief Financial Officer
