Inventories



March 31, 2012	Processed		Unprocessed		Total
(In thousands)	(Unaudited)
Coffee	$	26,400	$	6,263	$	32,663
Tea and culinary products	28,886		4,656		33,542
Coffee brewing equipment	4,386		5,171		9,557
	$	59,672	$	16,090	$	75,762



June 30, 2011	Processed		Unprocessed		Total
(In thousands)
Coffee	$	22,464	$	17,220	$	39,684
Tea and culinary products	25,469		4,100		29,569
Coffee brewing equipment	3,930		6,576		10,506
	$	51,863	$	27,896	$	79,759

Inventories are valued at the lower of cost or market. Costs of coffee, tea and culinary products are accounted for 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. The Company anticipates that certain inventory quantities will be reduced as of June 30, 2012 and expects the reduction to result in a liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years as compared to the estimated current year cost in fiscal 2012. The expected beneficial effect of this liquidation for fiscal 2012 is $10.4 million of which the Company recorded $2.2 million and $7.8 million, respectively, in cost of goods sold for the three and nine months ended March 31, 2012. An actual valuation of inventory under the LIFO method is made only at the end of each fiscal 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 fiscal year-end inventory levels and costs. Because these estimates are subject to many forces beyond management’s control, interim results are subject to the final fiscal year-end LIFO inventory valuation.

The Company routinely enters into specialized hedging transactions to purchase future coffee contracts to enable it to lock in green coffee prices within a pre-established range, and holds a mix of futures contracts and options to help hedge against volatility in green coffee prices. Gains and losses on these derivative instruments are realized immediately in “Other, net.”

For the three and nine months ended March 31, 2012, the Company recorded $(1.8) million and $(4.9) million, respectively, in coffee-related net realized derivative losses. In each of the three and nine month periods ended March 31, 2011, the Company recorded $0.8 million in coffee-related net realized derivative gains.

For the three and nine months ended March 31, 2012, the Company recorded $(1.5) million and $(2.6) million, respectively, in coffee-related net unrealized derivative losses. For the three and nine months ended March 31, 2011, the Company recorded $(0.9) million in coffee-related net unrealized derivative losses and $0.2 million in coffee-related net unrealized gains, respectively.