10-Q 1 mar10q0304a.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period from January 1, 2004 to March 31, 2004. Commission File Number: 0-1375 FARMER BROS. CO. (Exact name of registrant as specified in its charter) Delaware 95-0725980 (State of Incorporation) (IRS Employer Identification Number) 20333 S. Normandie Avenue, Torrance, California 90502 (Address of principal executive offices) (Zip Code) (310) 787-5200 (Registrant's telephone number) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes [ ] No [X] Number of shares of Common Stock outstanding: 16,075,080 as of May 11, 2004. PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Dollars in thousands, except per share data) FARMER BROS. CO. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) For the three months For the nine months ended March 31, ended March 31, 2004 2003 2004 2003 Net sales $49,069 $49,267 $146,245 $153,774 Cost of goods sold 18,488 17,229 53,459 55,050 Gross profit 30,581 32,038 92,786 98,724 Selling expense 22,735 22,696 68,019 66,256 General and administrative expenses 7,103 4,357 19,843 11,810 Operating expenses 29,838 27,053 87,862 78,066 Income from operations 743 4,985 4,924 20,658 Other income: Dividend income 844 811 2,527 2,440 Interest income 935 834 2,156 3,195 Other, net 4,980 3,677 6,149 2,725 Total other income 6,759 5,322 10,832 8,360 Income before taxes 7,502 10,307 15,756 29,018 Income taxes 1,899 3,968 5,077 11,172 Net income $ 5,603 $ 6,339 $10,679 $17,846 Net income per share $0.416 $0.352 $0.657 $ 0.978 Weighted average shares outstanding 13,457,300 18,009,140 16,266,410 18,248,020 Dividends declared per share $0.095 $0.090 $0.285 $0.270 The accompanying notes are an integral part of these financial statements. FARMER BROS. CO. CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, June 30, 2004 2003 ASSETS Current assets: Cash and cash equivalents $ 25,773 $ 18,986 Short term investments 166,652 274,444 Accounts and notes receivable, net 17,568 13,756 Inventories 33,980 34,702 Income tax receivable 900 2,878 Prepaid expenses 3,123 1,851 Total current assets 247,996 346,617 Property, plant and equipment, net 42,223 41,753 Notes receivable 193 193 Other assets 24,235 26,390 Deferred income taxes 1,462 1,462 Total assets $316,109 $416,415 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 5,599 $ 3,321 Accrued payroll expenses 11,193 7,362 Deferred income tax 976 976 Other expense 4,648 5,000 Total current liabilities 22,416 16,659 Accrued postretirement benefits 26,725 25,041 Other long term liabilities - 5,570 49,141 47,270 Commitments and contingencies - - Shareholders' equity: Common stock, $1.00 par value, authorized 3,000,000 shares; 1,607,508 shares issued and outstanding 1,608 1,926 Additional paid-in capital 46,351 18,798 Retained earnings 282,913 382,831 Unearned ESOP shares (62,858) (33,364) Less accumulated comprehensive loss (1,046) (1,046) Total shareholders' equity 266,968 369,145 Total liabilities and shareholders' equity $316,109 $416,415 The accompanying notes are an integral part of these financial statements. FARMER BROS. CO. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine months ended March 31, 2004 2003 Cash flows from operating activities: Net income $10,679 $17,846 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 5,302 4,316 (Gain) on sales of assets (52) (367) ESOP compensation expense 3,835 2,835 (Gain)on investments (631) (2,025) Change in assets and liabilities: Short term investments (2,738) 55,853 Accounts and notes receivable (3,846) 640 Inventories 722 1,029 Income tax receivable 1,978 2,553 Prepaid expenses and other assets 883 (2,066) Accounts payable 2,278 (186) Accrued payroll and expenses and other liabilities 3,479 733 Accrued postretirement benefits 1,684 1,446 Other long term liabilities (5,570) - Total adjustments 7.324 64,761 Net cash provided by operating activities $ 18,003 $82,607 Cash flows from investing activities: Purchases of property, plant and equipment (5,806) (6,445) Proceeds from sales of property, plant and equipment 86 497 Notes receivable repaid 34 42 Net cash used in investing activities (5,686) (5,906) Cash flows from financing activities: Dividends paid (4,354) (4,916) ESOP contributions (32,412) (22,496) Proceeds from sale of short term investments 111,161 - Purchase of capital stock (111,161) - Sale of capital stock 31,236 - Net cash used in financing activities (5,530) (27,412) Net increase in cash and cash equivalents 6,787 49,289 Cash and cash equivalents at beginning of year 18,986 7,047 Cash and cash equivalents at end of period $25,773 $56,336 Supplemental disclosure of cash flow information: Income tax payments 2,250 7,044 The accompanying notes are an integral part of these financial statements. Notes to Consolidated Financial Statements (Unaudited) Note 1. Unaudited Financial Statements The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the period ended March 31, 2004 are not necessarily indicative of the results that may be expected for the year ended June 30, 2004. The balance sheet at June 30, 2003 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Farmer Bros Co. annual report on Form 10-K/A for the year ended June 30, 2003. Reclassification: Certain 2003 balances have been reclassified to be consistent with the 2004 presentation. Note 2. Investments Investments are as follows (in thousands): March 31 June 30 2004 2003 U.S. Treasury Obligations $106,827 $220,057 Preferred Stock and Other 58,370 53,897 Futures, options and other derivative investments 1,455 490 Total short term investments $166,652 $274,444 Note 3. Inventories (In thousands) March 31, 2004 Processed Unprocessed Total Coffee $4,075 $9,110 $13,185 Allied products 10,918 3,872 14,790 Coffee brewing equipment 2,336 3,669 6,005 $17,329 $16,651 $33,980 June 30, 2003 Processed Unprocessed Total Coffee $3,853 $9,155 $13,008 Allied products 11,776 4,213 15,989 Coffee brewing equipment 2,372 3,333 5,705 $18,001 $16,701 $34,702 Interim LIFO Calculations An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations must necessarily be based on management's estimates of expected year-end inventory levels and costs. Because these are subject to many forces beyond management's control, interim results are subject to the final year-end LIFO inventory valuation. Note 4. Pension Plans The Company has a contributory defined benefit pension plan for all employees not covered under a collective bargaining agreement and a non-contributory defined benefit plan for certain hourly employees covered under a collective bargaining agreement. The net periodic pension costs for the defined benefit plans for the three months ended March 31 were as follows: Components of Net Periodic Benefit Cost (in thousands) Three months ended March 31, 2004 2003 Service cost 594 427 Interest cost 988 971 Expected return on plan assets (1,362) (1,491) Amortization of transition obligation ( 0 (164) Amortization of prior service cost 62 66 Amortization of net (gain) loss 336 4 Net periodic benefit cost 618 (187) Note 5. Stock Split On May 10, 2004 the Company affected a 10 for 1 stock split. The effect of this stock split has been retroactively reflected in the net income per share, dividends per share and weighted average shares reported in the accompanying condensed financial statements. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Liquidity As reported in the Form 10-Q/A dated February 18, 2004, on December 24, 2003, the Company purchased the 443,845 shares of its common stock held by the Crowe Family and related trusts for approximately $111 million or approximately $250 per share. The closing market price for Farmer Bros. Co. common stock on December 24, 2003 was $316/share. Concurrently with this purchase, the Company offered its Employee Stock Ownership Plan (ESOP) the opportunity to purchase 124,939 shares at the same price, fulfilling its previously announced intention to purchase 300,000 shares for the ESOP. This portion of the transaction was completed on January 11, 2004. The transactions can be summarized as follows: Cost of shares purchased $111,161,000 Cost of shares retired 79,926,000 Cost of shares transferred to ESOP 31,235,000 The ESOP, established in 2000 for all Farmer Bros. Co. employees, is a leveraged ESOP. Consistent with plan provisions, the ESOP buys Company stock with money loaned to the ESOP, in this case by the Company. Annually, the Company makes a federal income tax deductible contribution to the ESOP, and the ESOP uses that contribution to make its loan payment (principal and taxable interest) to the Company. When the loan payment is made, the shares that secured that payment amount are allocated to employees and held for them by a third party trust. When employees retire or leave the Company they receive the stock or cash. Cash amounts are based on the market price of its stock. At the inception of the ESOP, the Board authorized the purchase of 300,000 shares of Company stock. Our multi-year information systems project, is possibly the largest undertaking of its type the Company has ever attempted, has two major milestones left. The project began in the Fall of 2002, and the initial milestone was on July 1, 2003 when certain of the financial systems "went live." The manufacturing systems are expected to go live on September 1, 2004, and the sales system is expected to be phased into our branches beginning in February, 2005, to be complete by June 30, 2005. The additional cost of the information systems portion of the project, through fiscal 2005 is expected to exceed $7,000,000. Our working capital is composed of the following: (in thousands) March 30, June 30, 2004 2003 Current assets $247,096 $348,617 Current liabilities 22,505 $ 16,659 Working capital $224,591 $331,958 Total assets $315,209 $416,415 We expect all present and future liquidity needs will be met by internal sources. The Company tries not to rely on banks or other third parties for its working capital and other liquidity needs. There have been no changes in the needs or commitments described in the Company's Annual Report on Form 10- K/A. Results of Operations Most operating trends discussed in the Form 10-K/A for fiscal 2003 have continued throughout fiscal 2004. A slight improvement in the downward sales trend seen this year was experienced during the fiscal quarter ended March 31, 2004. Net sales decreased 0.4% in the third quarter of fiscal 2004 to $49,069,000 as compared to $49,267,000 in the fiscal quarter ended March 31, 2003. Year to date sales decreased 5% to $146,245,000 as compared to $153,774,000 in the first nine months of fiscal 2003. In addition to the previously mentioned trends, the Company had decreased coffee brewing equipment sales of $4,049,000 in the current fiscal year as compared to the same period of fiscal 2003. Gross profit for the quarter ended March 31, 2004 decreased 5% to $30,582,000 as compared to $32,038,000 in the same quarter of fiscal 2003. This decrease is primarily the result of higher green coffee costs. The average cost of green coffee during the fiscal quarter ended March 31, 2004 has increased 27% since the June 30, 2003 year end. The average cost of green coffee during the nine months of fiscal 2004 has been 9% higher than the average cost of green coffee over the same period of the prior fiscal year. Gross profit for the first nine months of fiscal 2004 decreased 6% to $92,786,000 as compared to $98,724,000 in the same period of the prior fiscal year. Operating expenses in the first nine months of fiscal 2004, consisting of selling and general and administrative expenses, increased 13% to $87,862,000 as compared to $78,066,000 in the same period of fiscal 2003. Operating expenses for the three months ended March 31, 2004 increased 10% to $29,839,000 as compared to $27,053,000 in the same period of fiscal year 2003. This increase is primarily attributed to costs associated with our multi year program to update our information systems, increased employee benefits and legal expenses, detailed as follows for the nine months ended March 31. 2004 2003 Information systems $ 4,148,000 $ 563,000 Employee benefits 17,617,000 13,598,000 Legal services 1,857,000 502,000 Total $23,622,000 $14,663,000 Other income in the third quarter of fiscal 2004 increased 27% to $6,759,000 from $5,322,000 in the same quarter of fiscal 2003. Other income for the first nine months of fiscal 2004 increased 29% to $10,832,000 from $8,360,000 in the same period of the prior fiscal year. The Company's Chairman, Roy F. Farmer, who guided the Company for more than 50 years, died on March 16, 2004 (as more fully described in a Form 8-K filed March 16, 2004). The Company received payment of a key man life insurance policy on Mr. Farmer that is not taxable. Additionally, the deferred compensation due Mr. Farmer has been reclassified as a current liability in the most recent quarter. The Company prevailed in a lawsuit against the State of California regarding state taxability of dividends, as a result we will receive a tax refund of approximately $811,000 and interest income in excess of $627,000. The Company received another court award, as a plaintiff in a class-action lawsuit regarding price-fixing by sellers of monosodium glutamate. The increase in other income in the third quarter is primarily the result of the these non-recurring transactions. Key man life insurance $4,088,000 Court award 1,061,000 Interest on state tax refunds 627,000 Total $5,776,000 As the result of the above mentioned factors, net income for the third quarter of fiscal 2004 decreased 12% to $5,603,000 or $0.416 per share, as compared to $6,339,000, or $0.352 per share, in the same quarter of fiscal 2003. Net income for the first nine months of fiscal 2004 decreased 40% to $10,679,000 or $0.657 per share, as compared to $17,846,000 or $0.978 per share in the same period of the prior fiscal year. Quarterly Summary of Results (in thousands of dollars): 03/31/03 06/30/03 09/30/03 12/31/03 3/31/04 Net sales $49,267 $47,784 $45,665 $51,511 $49,069 Gross profit $32,038 $32,172 $29,632 $32,573 30,582 Income from operations $4,985 $3,230 $1,057 $3,124 743 Net income $6,339 $5,783 $2,511 $2,565 $ 5,604 Net income per share $0.352 $0.323 $0.141 $0.146 $0.416 Forward Looking Statements Certain statements contained in this Quarterly Report on Form 10-Q regarding the risks, circumstances and financial trends that may affect our future operating results, financial position and cash flows may be forward-looking statements within the meaning of federal securities laws. These statements are based on management's current expectations, assumptions, estimates and observations about our business and are subject to risks and uncertainties. As a result, actual results could materially differ from the forward looking statements contained herein. These forward looking statements can be identified by the use of words like "expects," "plans," "believes," "intends," "will," "assumes" and other words of similar meanings. These and other similar words can be identified by the fact that they do not relate solely to historical or current facts. While we believe our assumptions are reasonable, we caution that it is impossible to predict the impact of such factors which could cause actual results to differ materially from predicted results. We intend these forward-looking statements to speak only at the time of this report and do not undertake to update or revise these projections as more information becomes available. For these statements, we claim the protection of the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Many but not all of these factors and assumptions are identified in the Company's Annual Report on Form 10-K for the year ended June 30, 2003. Item 3. Quantitative and Qualitative Disclosure About Market Risk. Financial Markets 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 is primarily invested in treasury securities. As of March 31, 2004 over 83% 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 70 days. A 100 basis point increase in the general level of interest rates would result in a change in the market value of the portfolio of approximately ($1,080,000). 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 March 31, 2004. 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 of March 31, 2004 Change in Market Preferred Futures & Total Value of Total Stock Options Portfolio Portfolio -150 basis points ("b.p.") $63,930 $- $63,930 $4,835 -100 b.p. 62,578 6 62,584 3,489 Unchanged 58,355 740 59,095 0 +100 b.p. 53,020 5,080 58,100 ( 995) +150 b.p. 50,424 7,717 58,141 ( 954) The number and type of future and option contracts entered into depends on, among other items, the specific maturity and issuer redemption provisions for each preferred stock 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 green coffee contracts. The following table demonstrates the impact of changes in the price of green coffee on inventory and green coffee contracts at March 31, 2004. It assumes an immediate change in the price of green coffee, and the valuations of coffee index futures and put options and relevant commodity purchase agreements at March 31, 2004. Commodity Risk Disclosure (In thousands) Market Value of Coffee Cost Coffee March 31, 2004 Change in Market Value Change Inventory Futures & Options Totals Derivatives Inventory -20% $11,900 $6,355 $18,255 $6,356 ($1,300) unchanged 13,200 ( 1,450) 11,750 - - 20% 14,500 ( 7,806) 6,694 ( 6,356) 1,300 At March 31, 2004 the derivatives consisted mainly of commodity futures with maturities shorter than four months. Item 4 Controls & Procedures As of the end of the period covered by this report, the Chief Executive Officer and Chief Financial Officer evaluated the Company's disclosure control and procedures pursuant to Exchange Act Rule 13a-14 and 15d-14. They have concluded that the Company's disclosure controls and procedures are effective in ensuring that all material information required to be filed in this quarterly report has been made known to them in a timely fashion. In addition, there have been no significant changes in the Company's internal controls or in other factors that could significantly affect the Company's internal control over financial reporting. PART II OTHER INFORMATION Item 1. Legal proceedings. On February 4, 2004, Leonard Rosenthal, unilaterally and without payment of settlement filed a Notice of Dismissal Without Prejudice with the United States District Court for the Central District of California with respect to the action against the Company, its present directors and a former director, previously reported in the Company's Form 10-Q for the period ended December 31, 2003. Item 2. Changes in securities, Use of Proceeds and Issuer Purchases of Equity Securities. (a) - (b) On February 17, 2004, the Company was reincorporated as a Delaware corporation by merger into a wholly-owned Delaware corporation. As a result of such reincorporation and the inclusion of certain provisions in the charter of the surviving Delaware corporation, changes in the rights of holders of the Company's common stock occurred. The changes are explained in the sections of the Company's proxy statement dated January 30, 2004 entitled: " Introduction to Proposals Three (A), Three (B), Three (C), Three (D) and Three (E);" "Proposal Three (A): Reincorporation of the Company in the State of Delaware;" "Comparison of the Charters and Bylaws of Farmer Bros. California and Farmer Bros. Delaware;" "Significant Differences Between the Corporation Laws of California and Delaware;" "Proposal Three (B): Elimination of the Right of Shareholders to Act by Written Consent;" " Proposal Three (C): Implementation of a Classified Board of Directors;" "Proposal Three (D): Elimination of Right to Call Special Meetings;" "and "Proposal Three (E): Elimination of Cumulative Voting for Directors." These sections appear at pp. 7 through 35 of the Company's printed Proxy Statement, and are incorporated hereat by this reference. A copy of the material incorporated by reference is filed as Exhibit 99 to this report. (c) As described in Part I, Item 2 - Management Discussion and Analysis of this report, supra, on December 24, 2003 the Company purchased the 443,845 shares of its common stock held by the Crowe Family and related trusts for approximately $111 million or approximately $250 per share. Concurrently with this purchase, the Company offered its Employee Stock Ownership Plan (ESOP) the opportunity to acquire 124,939 shares at the same price. This portion of the transaction was completed on January 11, 2004 when the Company transferred said shares to the ESOP. No underwriters were involved. The ESOP is a non-contributory mandatory employee benefit plan. Accordingly the transaction did not constitute a sale for purposes of the Securities Act of 1933, as amended. (d) Not applicable. (e) The following table summarizes the purchases of equity securities by the issuer and affiliated purchasers. Issuer Purchases of Equity Securities Period (a) Total (b) Average (c) Total Number (d) Maximum Number Number of Price Paid of Shares Purchased of Shares that Shares per Share as Part of Publicly May Be Purchased Purchased Announced Plans Under the Plans January 1 Through 50(1) $306 none NA January 31 February 1 Through none February 29 March 1 Through none March 31 (1) ESOP purchased shares from retired employee. Item 3. Defaults upon senior securities. none. Item 4. Submission of matters to a vote of security holders. The Company's annual meeting was held on February 23, 2004. At the meeting the following persons were elected to the terms indicated: Roy F. Farmer (Class I) 1 year Lewis A. Coffman (Class I) 1 year John Samore, Jr. (Class I) 1 year Guenter W. Berger (Class II) 2 years Thomas A. Maloof (Class II) 2 years John H. Merrell (Class III) 3 years Roy E. Farmer (Class III) 3 years Roy F. Farmer died on March 16,2004. The following "Report of Proxy Voting" was originally included in a Form 8-K dated February 23, 2004 and filed with the Commission on February 23, 2004. Report of Proxy Voting There were 1,607,508 shares of Common Stock entitled to vote at the meeting and a total of 1,229,762 shares (76.50%) were represented at the meeting. 1. Election of Directors FOR WITHOLD Roy F. Farmer (Class I) 1,039,648 190,114 Lewis A. Coffman (Class I) 1,038,784 190,978 John Samore, Jr. (Class I) 1,039,470 190,292 Guenter W. Berger (Class II) 1,037,319 192,443 Thomas A. Maloof (Class II) 1,039,480 190,282 John H. Merrell (Class III) 1,039,470 190,292 Roy E. Farmer (Class III) 1,038,964 190,798 2. Approval of Appointment of Ernst & Young LLP as the Company's independent public accountants for fiscal year 2004. FOR AGAINST ABSTAIN BROKER NON-VOTE 1,169,645 57,413 2,704 0 3. Approval of the reincorporation of the Company in the State of Delaware. FOR AGAINST ABSTAIN BROKER NON-VOTE 996,860 232,546 356 0 4. Approval of the elimination of the right of our shareholders to act by written consent. FOR AGAINST ABSTAIN BROKER NON-VOTE 992,798 236,290 674 0 5. Approval of the implementation of a classified Board of Directors. FOR AGAINST ABSTAIN BROKER NON-VOTE 985,281 244,205 276 0 6. Approval of the elimination of the right of shareholders holding ten percent (10%) or more of the voting shares to call a special meeting of shareholders. FOR AGAINST ABSTAIN BROKER NON-VOTE 991,318 237,669 775 0 7. Approval of the elimination of cumulative voting for our directors. FOR AGAINST ABSTAIN BROKER NON-VOTE 995,228 234,348 186 0 8. Approval of the increase in authorized shares of common stock of the Company from 3,000,000 shares to 25,000,000 shares, and authorization of 500,000 shares of preferred stock of the Company. FOR AGAINST ABSTAIN BROKER NON-VOTE 994,050 235,477 235 0 9. Shareholder proposal to amend the Company's bylaws to restore cumulative voting. FOR AGAINST ABSTAIN BROKER NON-VOTE 216,937 1,011,562 1,263 0 Item 5. Other information none. Item 6. Exhibits and reports on Form 8-K. (a) Exhibits. 3.1 Certificate of Incorporation 3.2 Bylaws 31.1 Certification of Chief Executive Officer (Section 302 of the Sarbannes- Oxley Act of 2002) 31.2 Certification of Chief Financial Officer (Section 302 of the Sarbannes- Oxley Act of 2002) 32.1 Certification of Chief Executive Officer (Section 906 of the Sarbannes- Oxley Act of 2002) 32.2 Certification Chief Financial Officer (Section 906 of the Sarbannes-Oxley Act of 2002) 99 Excerpts incorporated by reference from proxy statement dated January 30, 2004. (b) Reports on Form 8-K. A Form 8-K dated January 12, 2004 and filed with the Commission on January 12, 2004, reporting the purchase of 124,939 shares of stock by the ESOP, completing the Company's goal of acquiring 300,000 shares of Company stock. A Form 8-K dated February 23, 2004 and filed with the Commission on February 23, 2004, reporting that the Company had filed to reincorporate in Delaware following shareholder approval at the shareholder's meeting held February 23, 2004. The Form 8-K also reported the results of proxy voting, and a report from management on the state of the company. A Form 8-K dated March 4, 2004 and filed with the Commission on March 4, 2004 noting that the Board of Directors declared a 10 for one stock split in the form of a one time stock dividend. The stock dividend will entitle each pre- split shareholder to receive nine shares of stock for each share owned at the opening of business on May 10, 2004. A Form 8-K dated March 16, 2004 and filed with the Commission on March 16, 2004 to announce the death of Chairman, Roy F. Farmer. 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. FARMER BROS. CO. /s/ Roy E. Farmer Roy E. Farmer, President and Chief Executive Officer and Director (principal executive officer) Date: May 14, 2004 /s/ John E. Simmons John E. Simmons, Treasurer and Chief Financial Officer (principal financial and accounting officer) Date: May 14, 2004