10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2019

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                     

Commission file number: 001-34249

FARMER BROS. CO.

(Exact Name of Registrant as Specified in Its Charter)

Delaware		95-0725980
(State of Incorporation)		(I.R.S. Employer Identification No.)
1912 Farmer Brothers Drive, Northlake, Texas 76262
(Address of Principal Executive Offices; Zip Code)
888-998-2468
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $1.00 par value	FARM	NASDAQ Global Select Market
None
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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  ý    NO  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    YES  ý    NO  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

Large accelerated filer	¨	Accelerated filer	ý
Non-accelerated filer	¨	Smaller reporting company	¨
		Emerging growth company	¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act.	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    

YES ¨ NO  ý

As of January 31, 2020, the registrant had 17,231,473 shares outstanding of its common stock, par value $1.00 per share, which is the registrant’s only class of common stock.

TABLE OF CONTENTS

	Page
PART I – FINANCIAL INFORMATION (UNAUDITED)
Item 1. Financial Statements	1
Condensed Consolidated Balance Sheets at December 31, 2019 and June 30, 2019	1
Condensed Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2019 and 2018	2
Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended December 31, 2019 and 2018	3
Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended December 31, 2019 and 2018	4
Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2019 and 2018	6
Notes to Condensed Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3. Quantitative and Qualitative Disclosures About Market Risk	46
Item 4. Controls and Procedures	47
PART II – OTHER INFORMATION
Item 1. Legal Proceedings	48
Item 1A. Risk Factors	48
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 3. Defaults Upon Senior Securities	48
Item 4. Mine Safety Disclosures	48
Item 5. Other Information	48
Item 6. Exhibits	49
SIGNATURES	50

PART I - FINANCIAL INFORMATION (UNAUDITED)

Item 1. Financial Statements

FARMER BROS. CO.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share and per share data)

	December 31, 2019			June 30, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	9,130		$	6,983
Accounts receivable, net	60,404			55,155
Inventories	85,134			87,910
Income tax receivable	1,631			1,191
Short-term derivative assets	9,051			1,865
Prepaid expenses	5,820			6,804
Total current assets	171,170			159,908
Property, plant and equipment, net	171,983			189,458
Goodwill	36,224			36,224
Intangible assets, net	27,673			28,878
Other assets	9,520			9,468
Long-term derivatives assets	443			674
Right-of-use operating lease assets	19,696			—
Total assets	$	436,709		$	424,610
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	59,828			72,771
Accrued payroll expenses	16,021			14,518
Operating leases liabilities - current	5,571			—
Short-term derivative liabilities	368			1,474
Other current liabilities	7,982			7,309
Total current liabilities	89,770			96,072
Long-term borrowings under revolving credit facility	70,000			92,000
Accrued pension liabilities	45,717			47,216
Accrued postretirement benefits	22,597			23,024
Accrued workers’ compensation liabilities	5,000			4,747
Operating lease liabilities - noncurrent	14,318			—
Other long-term liabilities	3,147			4,057
Total liabilities	$	250,549		$	267,116
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $1.00 par value, 500,000 shares authorized; Series A Convertible Participating Cumulative Perpetual Preferred Stock, 21,000 shares authorized; 14,700 shares issued and outstanding as of December 31, 2019 and June 30, 2019; liquidation preference of $15,899 and $15,624 as of December 31, 2019 and June 30, 2019, respectively	15			15
Common stock, $1.00 par value, 25,000,000 shares authorized; 17,177,448 and 17,042,132 shares issued and outstanding as of December 31, 2019 and June 30, 2019, respectively	17,180			17,042
Additional paid-in capital	59,663			57,912
Retained earnings	158,310			146,177
Accumulated other comprehensive loss	(49,008		)	(63,652		)
Total stockholders’ equity	$	186,160		$	157,494
Total liabilities and stockholders’ equity	$	436,709		$	424,610

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1

FARMER BROS. CO.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except share and per share data)

	Three Months Ended December 31,						Six Months Ended December 31,
	2019			2018			2019			2018
Net sales	$	152,498		$	159,773		$	291,098		$	307,213
Cost of goods sold	108,513			106,529			206,472			205,734
Gross profit	43,985			53,244			84,626			101,479
Selling expenses	34,906			39,591			68,520			76,901
General and administrative expenses	11,266			12,140			24,006			20,757
Restructuring and other transition expenses	—			207			—			4,674
Net (gains) losses from sales of assets	(11,057		)	804			(23,662		)	723
Operating expenses	35,115			52,742			68,864			103,055
Income (loss) from operations	8,870			502			15,762			(1,576		)
Other (expense) income:
Interest expense	(2,859		)	(3,332		)	(5,407		)	(6,184		)
Pension settlement charge	—			(10,948		)	—			(10,948		)
Other, net	1,662			953			1,865			1,610
Total other expense	(1,197		)	(13,327		)	(3,542		)	(15,522		)
Income (loss) before taxes	7,673			(12,825		)	12,220			(17,098		)
Income tax benefit	(81		)	(2,725		)	(188		)	(4,012		)
Net income (loss)	7,754			(10,100		)	12,408			(13,086		)
Less: Cumulative preferred dividends, undeclared and unpaid	138			134			275			266
Net earnings (loss) available to common stockholders	$	7,616		$	(10,234	)	$	12,133		$	(13,352	)
Net earnings (loss) available to common stockholders per common share—basic	$	0.44		$	(0.60	)	$	0.71		$	(0.79	)
Net earnings (loss) available to common stockholders per common share—diluted	$	0.43		$	(0.60	)	$	0.69		$	(0.79	)
Weighted average common shares outstanding—basic	17,159,108			16,985,157			17,127,153			16,971,995
Weighted average common shares outstanding—diluted	17,583,335			16,985,157			17,550,144			16,971,995

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2

FARMER BROS. CO.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

(In thousands)

	Three Months Ended December 31,					Six Months Ended December 31,
	2019		2018			2019		2018
Net income (loss)	$	7,754	$	(10,100	)	$	12,408	$	(13,086	)
Other comprehensive (loss) income, net of tax:
Unrealized gains (losses) on derivative instruments designated as cash flow hedges, net of tax	11,284		748			7,395		(5,349		)
Losses on derivative instruments designated as cash flow hedges reclassified to cost of goods sold and interest expense, net of tax	4,661		1,650			7,249		3,110
Change in funded status of retiree benefit obligations, net of tax	—		(5,651		)	—		(5,651		)
Pension settlement charge, net of tax	—		8,147			—		8,147
Total comprehensive income (loss), net of tax	$	23,699	$	(5,206	)	$	27,052	$	(12,829	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

FARMER BROS. CO. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (In thousands, except share and per share data)
	Preferred Shares	Preferred Stock Amount		Common Shares	Common Stock Amount		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at June 30, 2019	14,700	$	15	17,042,132	$	17,042	$	57,912		$	146,177		$	(63,652	)	$	157,494
Net income	—	—		—	—		—			4,654			—			4,654
Net reclassification of unrealized losses on cash flow hedges, net of taxes	—	—		—	—		—			—			(1,301		)	(1,301		)
ESOP compensation expense, including reclassifications	—	—		52,534	53		807			—			—			860
Share-based compensation	—	—		—	—		(1		)	—			—			(1		)
Issuance of common stock and stock option exercises	—	—		532	—		—			—			—			—
Cumulative preferred dividends, undeclared and unpaid	—	—		—	—		—			(137		)	—			(137		)
Balance at September 30, 2019	14,700	$	15	17,095,198	$	17,095	$	58,718		$	150,694		$	(64,953	)	$	161,569
Net income	—	—		—	—		—			7,754			—			7,754
Net reclassification of unrealized losses on cash flow hedges, net of taxes	—	—		—	—		—			—			15,945			15,945
ESOP compensation expense, including reclassifications	—	—		55,623	56		525			—			—			581
Issuance of common stock and stock option exercises	—	—		—	—		319			—			—			319
Stock option exercises	—	—		26,627	29		101			—			—			130
Cumulative preferred dividends, undeclared and unpaid	—	—		—	—		—			(138		)	—			(138		)
Balance at December 31, 2019	14,700	$	15	17,177,448	$	17,180	$	59,663		$	158,310		$	(49,008	)	$	186,160

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

FARMER BROS. CO. CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (Continued) (In thousands, except share and per share data)
	Preferred Shares	Preferred Stock Amount		Common Shares	Common Stock Amount		Additional Paid-in Capital			Retained Earnings			Unearned ESOP Shares			Accumulated Other Comprehensive Income (Loss)			Total
Balance at June 30, 2018	14,700	$	15	16,951,659	$	16,952	$	55,965		$	220,307		$	(2,145	)	$	(62,039	)	$	229,055
Net loss	—	—		—	—		—			(2,986		)	—			—			(2,986		)
Net reclassification of unrealized losses on cash flow hedges, net of taxes	—	—		—	—		—			—			—			(4,637		)	(4,637		)
ESOP compensation expense, including reclassifications	—	—		—	—		529			—			—			—			529
Share-based compensation	—	—		—	—		433			—			—			—			433
Issuance of common stock and stock option exercises	—	—		26,042	26		300			—			—			—			326
Cumulative preferred dividends, undeclared and unpaid	—	—		—	—		—			(132		)	—			—			(132		)
Balance at September 30, 2018	14,700	15		16,977,701	16,978		57,227			217,189			(2,145		)	(66,676		)	222,588
Net loss	—	—		—	—		—			(10,100		)	—			—			(10,100		)
Net reclassification of unrealized gains on cash flow hedges, net of taxes	—	—		—	—		—			—			—			2,398			2,398
Pension settlement charge, net of taxes	—	—		—	—		—			—			—			8,147			8,147
Change in the funded status of retiree benefit obligations, net of taxes	—	—		—	—		—			—			—			(5,651		)	(5,651		)
ESOP compensation expense, including reclassifications	—	—		—	—		(1,740		)	—			2,145			—			405
Share-based compensation	—	—		16,266	16		474			—			—			—			490
Issuance of common stock and stock option exercises	—	—		8,562	9		173			—			—			—			182
Cumulative preferred dividends, undeclared and unpaid	—	—		—	—		—			(134		)	—			—			(134		)
Balance at December 31, 2018	14,700	$	15	17,002,529	$	17,003	$	56,134		$	206,955		$	—		$	(61,782	)	$	218,325

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

FARMER BROS. CO.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
	Six Months Ended December 31,
	2019			2018
Cash flows from operating activities:
Net income (loss)	$	12,408		$	(13,086	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	15,211			15,630
Restructuring and other transition expenses, net of payments	—			2,457
Deferred income taxes	—			(3,265		)
Pension settlement charge	—			10,948
Net (gains) losses from sales of assets	(23,662		)	723
Net losses on derivative instruments	4,075			6,205
Other adjustments	1,794			3,494
Change in operating assets and liabilities:
Accounts receivable	(5,285		)	(21,299		)
Inventories	1,804			(11,326		)
Derivative assets (liabilities), net	1,965			(9,234		)
Other assets	361			1,194
Accounts payable	(10,608		)	21,534
Accrued expenses and other liabilities	(258		)	(9,621		)
Net cash used in operating activities	$	(2,195	)	$	(5,646	)
Cash flows from investing activities:
Purchases of property, plant and equipment	(9,007		)	(23,120		)
Proceeds from sales of property, plant and equipment	35,247			105
Net cash provided (used) in investing activities	$	26,240		$	(23,015	)
Cash flows from financing activities:
Proceeds from revolving credit facility	$	38,000		$	40,642
Repayments on revolving credit facility	(60,000		)	(429		)
Payments of finance lease obligations	(27		)	(137		)
Payment of financing costs	—			(1,027		)
Proceeds from stock option exercises	129			507
Net cash (used) provided by financing activities	$	(21,898	)	$	39,556
Net increase in cash and cash equivalents	$	2,147		$	10,895
Cash and cash equivalents at beginning of period	6,983			2,438
Cash and cash equivalents at end of period	$	9,130		$	13,333

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

FARMER BROS. CO.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - (continued)
(In thousands)
	Six Months Ended December 31,
	2019		2018
Supplemental disclosure of non-cash investing and financing activities:
Net change in derivative assets and liabilities            included in other comprehensive loss, net of tax	$	14,644	$	(2,239	)
Non-cash additions to property, plant and equipment	$	284	$	2,928
Non-cash portion of earnout receivable recognized—spice assets sale	$	—	$	390
Non-cash portion of earnout payable recognized—West Coast Coffee acquisition	$	—	$	840
Non-cash issuance of 401-K common stock	$	109	$	—
Cumulative preferred dividends, undeclared and unpaid	$	275	$	266

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7

FARMER BROS. CO.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Introduction and Basis of Presentation

Farmer Bros. Co., a Delaware corporation (including its consolidated subsidiaries unless the context otherwise requires, the “Company”), is a national coffee roaster, wholesaler and distributor of coffee, tea, and culinary products.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 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 (“GAAP”) for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial data have been included. Operating results for the three and six months ended December 31, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2020. Events occurring subsequent to December 31, 2019 have been evaluated for potential recognition or disclosure in the unaudited condensed consolidated financial statements for the three and six months ended December 31, 2019.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019, filed with the Securities and Exchange Commission (the “SEC”) on September 11, 2019 (the “2019 Form 10-K”).

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its direct and indirect wholly owned subsidiaries FBC Finance Company, a California corporation, Coffee Bean Holding Co., Inc., a Delaware corporation, the parent company of Coffee Bean International, Inc., an Oregon corporation (“CBI”), CBI, China Mist Brands, Inc., a Delaware corporation, Boyd Assets Co., a Delaware corporation, and Coffee Bean International LLC, a Delaware limited liability company. All inter-company balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. The Company reviews its estimates on an ongoing basis using currently available information. Changes in facts and circumstances may result in revised estimates and actual results may differ from those estimates.

8

Farmer Bros. Co.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Note 2. Summary of Significant Accounting Policies

For a detailed discussion about the Company’s significant accounting policies, see Note 2, “Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements in the 2019 Form 10-K.

During the three and six months ended December 31, 2019, other than as set forth below and the adoption of Financial Accounting Standards Board Accounting (“FASB”) Standards Update (“ASU”) ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), there were no significant updates made to the Company’s significant accounting policies.

Concentration of Credit Risk

At December 31, 2019 and June 30, 2019, the financial instruments which potentially expose the Company to concentration of credit risk consist of cash in financial institutions (in excess of federally insured limits), derivative instruments and trade receivables.

The Company does not have any credit-risk related contingent features that would require it to post additional collateral in support of its net derivative liability positions. At December 31, 2019 and June 30, 2019, none of the cash in the Company’s coffee-related derivative margin accounts was restricted. Further changes in commodity prices and the number of coffee-related derivative instruments held, could have a significant impact on cash deposit requirements under certain of the Company's broker and counterparty agreements.

Approximately 34% and 28% of the Company’s trade accounts receivable balance was with five customers at December 31, 2019 and June 30, 2019, respectively. The Company estimates its maximum credit risk for accounts receivable at the amount recorded on the balance sheet. The trade accounts receivables are generally short-term and all probable bad debt losses have been appropriately considered in establishing the allowance for doubtful accounts.

Adoption of ASC 842 - Leases

Effective July 1, 2019, the Company adopted the FASB Topic 842 (“ASC 842”), Leases. The Company adopted ASC 842 under the modified retrospective approach using the practical expedient; therefore, the presentation of prior year periods has not been adjusted. No cumulative effect of initially adopting ASC 842 as an adjustment to the opening balance of components of equity as of July 1, 2019 was necessary. The adoption of ASC 842 resulted in the recording of Operating lease right-of-use assets and Operating lease liabilities of $16.3 million, as of July 1, 2019. The adoption of ASC 842 had no impact on retained earnings. See Note 3 for detail discussions on the adoption of ASC 842.

Right-of-use lease assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the company will exercise that option. Lease expense is primarily recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are combined for certain assets classes.

9

Farmer Bros. Co.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Recent Accounting Pronouncements

The Company considers the applicability and impact of all ASUs issued. ASUs not listed below were assessed and either determined to be not applicable or expected to have minimal impact on its condensed consolidated financial statements.

The following table provides a brief description of the applicable recent ASUs issued by the FASB:

Standard	Description	Effective Date	Effect on the Financial Statements or Other Significant Matters
In August 2018, the FASB issued ASU No. 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”).	ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.	Annual periods beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period.	Effective for the Company beginning July 1, 2020. The Company is currently evaluating the impact ASU 2018-15 will have on its consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-14, “Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans” (“ASU 2018-14”).	ASU 2018-14 modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing disclosures that no longer are considered cost beneficial, clarifying the specific requirements of disclosures and adding disclosure requirements identified as relevant.	Annual periods beginning after December 15, 2020.  Early adoption is permitted.	Effective for the Company beginning July 1, 2021. The Company is currently evaluating the impact ASU 2018-14 will have on its consolidated financial statements.
In February 2018, the FASB issued ASU No. 2018-02, “Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”).	ASU 2018-02 provides entities an option to reclassify certain stranded tax effects resulting from the tax reform from accumulated other comprehensive income to retained earnings.	The guidance in ASU 2018-02 is effective for annual periods beginning after December 15, 2018, and interim periods within those fiscal years, and should be applied either in the period of adoption or retrospectively.	The Company did not elect the option to reclassify certain stranded tax effects resulting from the tax reform from accumulated other comprehensive income to retained earnings.
In January 2017, the FASB issued ASU No. 2017-04, “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”).	The amendments in ASU 2017-04 address concerns regarding the cost and complexity of the two-step goodwill impairment test, and remove the second step of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 does not amend the optional qualitative assessment of goodwill impairment.	Annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019.	Effective for the Company beginning July 1, 2020. Adoption of ASU 2017-04 is not expected to have a material effect on the results of operations, financial position or cash flows of the Company.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Since that date, the FASB has issued additional ASUs clarifying certain aspects of ASU 2016-13.	The objective of the guidance in ASU 2016-13 is to allow entities to recognize estimated credit losses in the period that the change in valuation occurs. The amendments in ASU 2016-13 requires an entity to present financial assets measured on an amortized cost basis on the balance sheet net of an allowance for credit losses. The model requires an estimate of the credit losses expected over the life of an exposure or pool of exposures. The income statement will reflect the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period.	Annual reporting periods beginning after December 15, 2019 and interim periods within those reporting periods.	Effective for the Company beginning July 1, 2020. The Company is currently evaluating the impact of adoption on its financial statements and related disclosures, but does not anticipate a material impact to the consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases. Since that date, the FASB has issued additional ASUs clarifying certain aspects of ASU 2016-02.	ASU 2016-02 requires a lessee to recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term for both finance and operating leases. Subsequent guidance issued after February 2016 did not change the core principle of ASU 2016-02.	Annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early application is permitted.	The Company adopted the new guidance effective July 1, 2019, using the modified retrospective transition method, which did not require the Company to adjust comparative periods. See Note 3 for the applicable disclosure of ASU 2016-02 adoption. .

10

Farmer Bros. Co.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Note 3. Leases

The Company makes a determination if an arrangement constitutes a lease at inception, and categorizes the lease as either an operating or finance lease. Operating leases are included in right-of-use operating lease assets and operating lease liabilities in the Company's Condensed Consolidated Balance Sheets. Finance leases are included in property, plant and equipment, net and other long-term liabilities in the Condensed Consolidated Balance Sheets. Leases with an initial term of 12 months or less are not recorded on the Condensed Consolidated Balance Sheets.

The Company has entered into leases for building facilities, vehicles and other equipment. The Company’s leases have remaining contractual terms of up to 10 years, some of which have options to extend the lease for up to 20 years. For purposes of calculating operating lease liabilities, lease terms are deemed not to include options to extend the lease termination until it is reasonably certain that the Company will exercise that option. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Supplemental unaudited consolidated balance sheet information related to leases is as follows:

	Classification	December 31, 2019
(In thousands)
Operating lease assets	Right-of-use operating lease assets	$	19,696
Finance lease assets	Property, plant and equipment, net	34
Total lease assets		$	19,730
Operating lease liabilities - current	Operating lease liabilities - current	$	5,571
Operating lease liabilities - noncurrent	Operating lease liabilities - noncurrent	14,318
Finance lease liabilities	Other long-term liabilities	35
Total lease liabilities		$	19,924

The components of lease expense are as follows:

		Three Months Ended December 31,		Six Months Ended December 31,
	Classification	2019		2019
(In thousands)
Operating lease expense	General and administrative expenses and cost of goods sold	$	1,253	$	2,363
Finance lease expense:
Amortization of finance lease assets	General and administrative expenses	13		26
Interest on finance lease liabilities	Interest expense	—		1
Total lease expense		$	1,266	$	2,390

11

Farmer Bros. Co.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

	December 31, 2019
(In thousands)	Operating Leases			Finance Leases
Maturities of lease liabilities are as follows:
2020	$	2,826		$	27
2021	5,102			9
2022	3,631			—
2023	2,995			—
2024	2,699			—
Thereafter	5,375			—
Total lease payments	22,628			36
Less: interest	(2,739		)	(1		)
Total lease obligations	$	19,889		$	35

Lease term and discount rate:

	December 31, 2019
Weighted-average remaining lease terms (in years):
Operating lease	8.8
Finance lease	0.7
Weighted-average discount rate:
Operating lease	4.50	%
Finance lease	4.50	%

Other Information:

	Six Months Ended   December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,165
Operating cash flows from finance leases	$	1
Financing cash flows from finance leases	$	25
Leased assets obtained in exchange for new finance lease liabilities	$	—
Leased assets obtained in exchange for new operating lease liabilities	$	—

Disclosures related to periods prior to adoption of ASU 2016-02

Rent expense paid for the fiscal year ended June 30, 2019 was $6.4 million.

The minimum annual payments under operating and capital leases as of June 30, 2019 are as follows:

12

Farmer Bros. Co.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

(In thousands)	Operating  Lease Obligations		Capital  Lease Obligations
Year Ended June 30,
2020	$	4,434	$	36
2021	3,238		1
2022	2,472		—
2023	2,131		—
2024	2,025		—
Thereafter	4,389		—
Total minimum lease payments	$	18,689	37
Less: imputed interest (0.82% to 10.66%)			(2		)
Present value of future minimum lease payments			35
Less: current portion			(34		)
Long-term capital lease obligations			$	1

13

Farmer Bros. Co.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Note 4. Derivative Instruments

Derivative Instruments Held

Coffee-Related Derivative Instruments

The Company is exposed to commodity price risk associated with its price to fixed green coffee purchase contracts, which are described further in Note 2 to the consolidated financial statements in the 2019 Form 10-K. The Company utilizes forward and option contracts to manage exposure to the variability in expected future cash flows from forecasted purchases of green coffee attributable to commodity price risk. Certain of these coffee-related derivative instruments utilized for risk management purposes have been designated as cash flow hedges, while other coffee-related derivative instruments have not been designated as cash flow hedges or do not qualify for hedge accounting despite hedging the Company’s future cash flows on an economic basis.

The following table summarizes the notional volumes for the coffee-related derivative instruments held by the Company at December 31, 2019 and June 30, 2019:

(In thousands)	December 31, 2019	June 30, 2019
Derivative instruments designated as cash flow hedges:
Long coffee pounds	40,725	42,113
Derivative instruments not designated as cash flow hedges:
Long coffee pounds	1,238	6,070
Total	41,963	48,183

Coffee-related derivative instruments designated as cash flow hedges outstanding as of December 31, 2019 will expire within 17 months. At December 31, 2019 and June 30, 2019 approximately 97% and 87%, respectively, of the Company's outstanding coffee-related derivative instruments were designated as cash flow hedges.

Interest Rate Swap Derivative Instruments

Pursuant to an International Swap Dealers Association, Inc. Master Agreement (“ISDA”) which was effective March 20, 2019, the Company on March 27, 2019, entered into an interest rate swap transaction utilizing a notional amount of $80.0 million, with an effective date of April 11, 2019 and a maturity date of October 11, 2023 (the “Rate Swap”). In December 2019, the Company amended the notional amount to $65.0 million. The Rate Swap is intended to manage the Company’s interest rate risk on its floating-rate indebtedness under the Company’s revolving credit facility. Under the terms of the Rate Swap, the Company receives 1-month LIBOR, subject to a 0% floor, and makes payments based on a fixed rate of 2.1975%. The Company’s obligations under the ISDA are secured by the collateral which secures the loans under the revolving credit facility on a pari passu and pro rata basis with the principal of such loans. The Company has designated the Rate Swap derivative instruments as a cash flow hedge.

14

Farmer Bros. Co.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Effect of Derivative Instruments on the Financial Statements

Balance Sheets

Fair values of derivative instruments on the Company’s condensed consolidated balance sheets:

	Derivative Instruments Designated as Cash Flow Hedges				Derivative Instruments Not Designated as Accounting Hedges
	December 31, 2019		June 30, 2019		December 31, 2019		June 30, 2019
(In thousands)
Financial Statement Location:
Short-term derivative assets:
Coffee-related derivative instruments(1)	$	8,718	$	1,254	$	333	$	611
Long-term derivative assets:
Coffee-related derivative instruments (2)	$	443	$	671	$	—	$	3
Short-term derivative liabilities:
Coffee-related derivative instruments (3)	$	1	$	1,114	$	7	$	114
Interest rate swap derivative instruments (3)	$	360	$	246	$	—	$	—
Long-term derivative liabilities:
Coffee-related derivative instruments (4)	$	—	$	13	$	—	$	—
Interest rate swap derivative instruments (4)	$	1,069	$	1,599	$	—	$	—

________________

(1) Included in “Short-term derivative assets” on the Company’s condensed consolidated balance sheets.

(2) Included in “Long-term derivative assets” on the Company's condensed consolidated balance sheets.

(3) Included in “Short-term liabilities” on the Company's condensed consolidated balance sheets.

(4) Included in “Other long-term liabilities” on the Company's condensed consolidated balance sheets.

Statements of Operations

The following table presents pretax net gains and losses for the Company's derivative instruments designated as cash flow hedges, as recognized in “AOCI,” “Cost of goods sold” and “Other, net”.

	Three Months Ended December 31,						Six Months Ended December 31,						Financial Statement Classification
(In thousands)	2019			2018			2019			2018
Net gains (losses) recognized in AOCI - Interest rate swap	$	448		$	—		$	(48	)	$	—		AOCI
Net losses recognized from AOCI to earnings - Interest rate swap	$	(52	)	$	—		$	(32	)	$	—		Interest Expense
Net losses reclassified from AOCI to earnings for partial unwind of our interest swap - Interest rate swap (1)	$	(407	)	$	—		$	(407	)	$	—		Interest Expense
Net gains (losses) recognized in AOCI - Coffee-related	$	12,130		$	1,005		$	7,431		$	(7,188	)	AOCI
Net losses recognized in earnings - Coffee - related	$	(3,451	)	$	(2,217	)	$	(6,922	)	$	(4,179	)	Cost of goods sold

________________

(1) The $407 thousand of realized loss was due to partial unwinding of interest rate swap resulting from the amendment of the notional amount from $80 million to $65 million.

For the three and six months ended December 31, 2019 and 2018, there were no gains or losses recognized in earnings as a result of excluding amounts from the assessment of hedge effectiveness.

Net losses (gains) on derivative instruments in the Company’s condensed consolidated statements of cash flows also include net losses (gains) on coffee-related derivative instruments designated as cash flow hedges reclassified to cost of goods sold from AOCI in the three and six months ended December 31, 2019 and 2018. Gains and losses on derivative instruments not designated as accounting hedges are included in “Other, net” in the Company’s condensed consolidated statements of

15

Farmer Bros. Co.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

operations and in “Net losses (gains) on derivative instruments and investments” in the Company’s condensed consolidated statements of cash flows.

Net gains and losses recorded in “Other, net” are as follows:

	Three Months Ended December 31,						Six Months Ended December 31,
(In thousands)	2019			2018			2019			2018
Net losses on coffee-related derivative instruments(1)	$	419		$	(920	)	$	(624	)	$	(2,025	)
Non-operating pension and other postretirement benefit plans cost (2)	1,248			1,763			2,496			3,526
Other (losses) gains, net	(5		)	110			(7		)	109
Other, net	$	1,662		$	953		$	1,865		$	1,610

___________

(1) Excludes net gains and losses on coffee-related derivative instruments designated as cash flow hedges recorded in cost of goods sold in the three and six months ended December 31, 2019 and 2018.

(2) Presented in accordance with ASU 2017-07.

Offsetting of Derivative Assets and Liabilities

The Company has agreements in place that allow for the financial right of offset for derivative assets and liabilities at settlement or in the event of default under the agreements. Additionally, under certain coffee derivative agreements, the Company maintains accounts with its counterparties to facilitate financial derivative transactions in support of its risk management activities.

The following table presents the Company’s net exposure from its offsetting derivative asset and liability positions, as well as cash collateral on deposit with its counterparties as of the reporting dates indicated:

(In thousands)		Gross Amount Reported on Balance Sheet			Netting Adjustments			Cash Collateral Posted		Net Exposure
December 31, 2019	Derivative Assets	$	9,494		$	(8	)	$	—	$	9,486
	Derivative Liabilities	$	(1,437	)	$	(8	)	$	—	$	(1,445	)
June 30, 2019	Derivative Assets	$	2,539		$	(698	)	$	—	$	1,841
	Derivative Liabilities	$	3,086		$	(698	)	$	—	$	2,388

Cash Flow Hedges

Changes in the fair value of the Company’s coffee-related derivative instruments designated as cash flow hedges are deferred in AOCI and subsequently reclassified into cost of goods sold in the same period or periods in which the hedged forecasted purchases affect earnings, or when it is probable that the hedged forecasted transaction will not occur by the end of the originally specified time period. Based on recorded values at December 31, 2019, $5.2 million of net gains on coffee-related derivative instruments designated as a cash flow hedge are expected to be reclassified into cost of goods sold within the next twelve months. These recorded values are based on market prices of the commodities as of December 31, 2019.

Changes in the fair value of the Company's interest rate swap derivative instruments designated as a cash flow hedge are deferred in AOCI and subsequently reclassified into interest expense in the period or periods when the hedged transaction affects earnings or when it is probable that the hedged forecasted transaction will not occur by the end of the originally specified time period. As of December 31, 2019, $0.4 million of net losses on interest rate swap derivative instruments designated as a cash flow hedge are expected to be reclassified into interest expense within the next twelve months assuming no significant changes in the LIBOR rates. Due to LIBOR volatility, actual gains or losses realized within the next twelve months will likely differ from these values.

16

Farmer Bros. Co.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Note 5. Fair Value Measurements

Assets and liabilities measured and recorded at fair value on a recurring basis were as follows:

(In thousands)	Total		Level 1		Level 2		Level 3
December 31, 2019
Derivative instruments designated as cash flow hedges:
Coffee-related derivative assets (1)	$	9,161	$	—	$	9,161	$	—
Coffee-related derivative liabilities (1)	$	1	$	—	$	1	$	—
Interest rate swap derivative liabilities (2)	$	1,429	$	—	$	1,429	$	—
Derivative instruments not designated as accounting hedges:
Coffee-related derivative assets(1)	$	333	$	—	$	333	$	—
Coffee-related derivative liabilities(1)	$	7	$	—	$	7	$	—
(In thousands)	Total		Level 1		Level 2		Level 3
June 30, 2019
Derivative instruments designated as cash flow hedges:
Coffee-related derivative assets (1)	$	1,925	$	—	$	1,925	$	—
Coffee-related derivative liabilities (1)	$	1,127	$	—	$	1,127	$	—
Interest rate swap derivative liabilities (2)	$	1,845	$	—	$	1,845	$	—
Derivative instruments not designated as accounting hedges:
Coffee-related derivative assets (1)	$	614	$	—	$	614	$	—
Coffee-related derivative liabilities (1)	$	114	$	—	$	114	$	—

____________________ 

(1) The Company's coffee-related derivative instruments are traded over-the-counter and, therefore, classified as Level 2.

(2) The Company's interest rate swap derivative instrument are model-derived valuations with directly or indirectly observable significant inputs such as interest rate and, therefore, classified as Level 2.

Note 6. Accounts Receivable, Net

(In thousands)	December 31, 2019			June 30, 2019
Trade receivables	$	57,652		$	53,593
Other receivables(1)	3,293			2,886
Allowance for doubtful accounts	(541		)	(1,324		)
Accounts receivable, net	$	60,404		$	55,155

__________

(1) Includes vendor rebates and other non-trade receivables.

The $0.8 million decrease in the allowance for doubtful accounts during the six months ended December 31, 2019 was due to improvement of the Company’s accounts receivable aging balance.

17

Farmer Bros. Co.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Note 7. Inventories

(In thousands)	December 31, 2019		June 30, 2019
Coffee
Processed	$	27,492	$	25,769
Unprocessed	30,337		33,259
Total	$	57,829	$	59,028
Tea and culinary products
Processed	$	19,385	$	21,767
Unprocessed	94		74
Total	$	19,479	$	21,841
Coffee brewing equipment parts	$	7,826	$	7,041
Total inventories	$	85,134	$	87,910

In addition to product cost, inventory costs include expenditures such as direct labor and certain supply, freight, warehousing, overhead variances, purchase price variance (“PPVs”) and other expenses incurred in bringing the inventory to its existing condition and location. The “Unprocessed” inventory values as stated in the above table represent the value of raw materials and the “Processed” inventory values represent all other products consisting primarily of finished goods.

Note 8. Property, Plant and Equipment

(In thousands)	December 31, 2019			June 30, 2019
Buildings and facilities (1)	$	100,316		$	107,915
Machinery and equipment (1)	243,397			249,477
Capitalized software	28,770			27,666
Office furniture and equipment	13,858			14,035
	$	386,341		$	399,093
Accumulated depreciation	(227,671		)	(225,826		)
Land	13,313			16,191
Property, plant and equipment, net	$	171,983		$	189,458

__________

(1) Decrease as of December 31, 2019 is due to the sale of assets. See Note 21 for details.

Coffee Brewing Equipment (“CBE”) and Service

Capitalized CBE included in machinery and equipment above are:

(In thousands)	December 31, 2019			June 30, 2019
Coffee Brewing Equipment	$	103,520		$	106,593
Accumulated depreciation	(69,581		)	$	(70,202	)
Coffee Brewing Equipment, net	$	33,939		$	36,391

18

Farmer Bros. Co.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Depreciation expense related to capitalized CBE and other CBE related expenses (excluding CBE depreciation) provided to customers and reported in cost of goods sold were as follows:

	Three Months Ended December 31,				Six Months Ended December 31,
(In thousands)	2019		2018		2019		2018
Depreciation expense	$	2,327	$	2,201	$	4,666	$	4,396
Other CBE expenses	$	8,446	$	8,410	$	16,171	$	16,916

Other expenses related to CBE provided to customers, such as the cost of servicing that equipment (including service employees’ salaries, cost of transportation and the cost of supplies and parts), are considered directly attributable to the generation of revenues from the customers. Therefore, these costs are included in cost of goods sold.

Note 9. Goodwill and Intangible Assets

There were no changes to the carrying value of goodwill in the six months ended December 31, 2019. The carrying value of goodwill at December 31, 2019 and June 30, 2019 was $36.2 million.

The following is a summary of the Company’s amortized and unamortized intangible assets other than goodwill:

		December 31, 2019							June 30, 2019
(In thousands)	Weighted Average Amortization Period as of December 31, 2019	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Amortized intangible assets:
Customer relationships	7.3	$	33,003	$	(16,391	)	$	16,612	$	33,003	$	(15,291	)	$	17,712
Non-compete agreements	2.2	220		(142		)	78		220		(122		)	98
Recipes	3.8	930		(420		)	510		930		(354		)	576
Trade name/brand name	4.5	510		(365		)	145		510		(346		)	164
Total amortized intangible assets		$	34,663	$	(17,318	)	$	17,345	$	34,663	$	(16,113	)	$	18,550
Unamortized intangible assets:
Trademarks, trade names and brand name with indefinite lives		$	10,328	$	—		$	10,328	$	10,328	$	—		$	10,328
Total unamortized intangible assets		$	10,328	$	—		$	10,328	$	10,328	$	—		$	10,328
Total intangible assets		$	44,991	$	(17,318	)	$	27,673	$	44,991	$	(16,113	)	$	28,878

Aggregate amortization expense for the three months ended December 31, 2019 and 2018 was $0.6 million and $0.7 million, respectively. Aggregate amortization expense for the six months ended December 31, 2019 and 2018 was $1.2 million and $1.3 million, respectively.

The Company tests goodwill and intangible assets for impairment annually, as of January 31, or when events or changes in circumstances would indicate that the carrying amounts of the assets may not be recoverable. The Company is currently undergoing its annual testing. Events and circumstances have occurred, including those during the current fiscal year, such as declining operating results, that may have a negative impact on the fair value of these assets.

19

Farmer Bros. Co.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Note 10. Employee Benefit Plans

Single Employer Pension Plans

Effective June 30, 2011, the Company amended its defined benefit pension plans, freezing the benefit for all participants. As of the effective date, participants do not accrue any benefits under the plans, and new hires are not eligible to participate in the plans.

The net periodic benefit cost for the defined benefit pension plans is as follows:

	Three Months Ended December 31,						Six Months Ended December 31,
	2019			2018			2019			2018
(In thousands)
Service cost	$	—		$	—		$	—		$	—
Interest cost	1,059			1,426			2,118			2,852
Expected return on plan assets	(1,102		)	(1,485		)	(2,203		)	(2,970		)
Amortization of net loss(1)	370			370			740			740
Pension settlement charge	—			10,948			—			10,948
Net periodic benefit cost	$	327		$	11,259		$	655		$	11,570

___________

(1) These amounts represent the estimated portion of the net loss in AOCI that is expected to be recognized as a component of net periodic benefit cost over the current fiscal year. 

Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost

	December 31, 2019	June 30, 2019
Discount rate	3.45%	4.05%
Expected long-term return on plan assets	6.75%	6.75%

Multiemployer Pension Plans

The Company participates in two multiemployer defined benefit pension plans that are union sponsored and collectively bargained for the benefit of certain employees subject to collective bargaining agreements, of which the Western Conference of Teamsters Pension Plan ("WCTPP") is individually significant. The Company makes contributions to these plans generally based on the number of hours worked by the participants in accordance with the provisions of negotiated labor contracts.

Contributions made by the Company to the multiemployer pension plans were as follows:

	Three Months Ended December 31,				Six Months Ended December 31,
	2019		2018		2019		2018
(In thousands)
Contributions	$	452	$	283	$	880	$	778

Outstanding balance of settlement obligations of the Company to certain multiemployer pension plans are as follows:

(In thousands)	December 31, 2019		June 30, 2019
WCT Pension Trust (1)	$	344	$	1,487
Local 807 Pension Fund (2)	$	182	$	182

__________

(1) Initial liability amount of $3.4 million, including interest, commencing in September 10, 2018, payable in 17 monthly installments of $190,507 followed by a final monthly installment of $153,822 in February 2020.

(2) Lump sum cash settlement payment of $3.0 million plus two remaining installment payments of $91,000 due on or before October 1, 2034 and on or before January 1, 2035. As of December 31, 2019, the Company has paid the Local 807 Pension Fund $3.0 million and has accrued $0.2 million within “Accrued pension liabilities” on the Company’s condensed consolidated balance sheet.

20

Farmer Bros. Co.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Multiemployer Plans Other Than Pension Plans

The Company participates in nine multiemployer defined contribution plans other than pension plans that provide medical, vision, dental and disability benefits for active, union-represented employees subject to collective bargaining agreements. The plans are subject to the provisions of the Employee Retirement Income Security Act of 1974, and provide that participating employers make monthly contributions to the plans in an amount as specified in the collective bargaining agreements. Also, the plans provide that participants make self-payments to the plans, the amounts of which are negotiated through the collective bargaining process. The Company’s participation in these plans is governed by collective bargaining agreements which expire on or before June 30, 2022.

401(k) Plan

The Company’s 401(k) Plan is available to all eligible employees. Participants in the 401(k) Plan may choose to contribute a percentage of their annual pay subject to the maximum contribution allowed by the Internal Revenue Service. The Company recorded matching contributions of $0.6 million and $0.4 million in operating expenses in the three months ended December 31, 2019 and 2018. The Company recorded matching contributions of $1.3 million and $0.9 million in operating expenses in the six months ended December 31, 2019 and 2018.

Additionally, the Company makes an annual safe harbor non-elective contribution of shares of the Company’s common stock equal to 4% of each eligible participant’s annual plan compensation. During the three and six months December 31, 2019, the Company contributed a total of 54,025 and 109,649 shares of the Company’s common stock with a value of $0.6 millionand $1.4 million, respectively, to eligible participants’ annual plan compensation.

Postretirement Benefits

Retiree Medical Plan and Death Benefit

The following table shows the components of net periodic postretirement benefit cost for the Retiree Medical Plan and Death Benefit for the three and six months ended December 31, 2019 and 2018. Net periodic postretirement benefit cost was based on employee census information and asset information as of June 30, 2019.

	Three Months Ended December 31,						Six Months Ended December 31,
	2019			2018			2019			2018
(In thousands)
Components of Net Periodic Postretirement Benefit Cost (Credit):
Service cost	$	147		$	133		$	294		$	266
Interest cost	214			222			428			444
Amortization of net gain	(125		)	(209		)	(250		)	(418		)
Amortization of prior service credit	(392		)	(439		)	(784		)	(878		)
Net periodic postretirement benefit credit	$	(156	)	$	(293	)	$	(312	)	$	(586	)

Weighted-Average Assumptions Used to Determine Net Periodic Postretirement Benefit Cost 

	Fiscal
	2020	2019
Retiree Medical Plan discount rate	3.62%	4.25%
Death Benefit discount rate	3.64%	4.25%

21

Farmer Bros. Co.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Note 11. Debt Obligations

The following table summarizes the Company’s debt obligations:

				December 31, 2019				June 30, 2019
(In thousands)	Debt Origination Date	Maturity	Original Borrowing Amount	Carrying Value		Weighted Average Interest Rate		Carrying Value		Weighted Average Interest Rate
Credit Facility	Revolver	11/6/2023	N/A	$	70,000	4.05	%	$	92,000	3.98	%

On November 6, 2018, the Company entered into a new $150.0 million senior secured revolving credit facility (the “Revolving Facility”) with Bank of America, N.A, Citibank, N.A., JPMorgan Chase Bank, N.A., PNC Bank, National Association, Regions Bank, and SunTrust Bank, with a sublimit on letters of credit and swingline loans of $15.0 million each. The Revolving Facility includes an accordion feature whereby the Company may increase the revolving commitments or enter into one or more tranches of incremental term loans, up to an additional $75.0 million in aggregate of increased commitments and incremental term loans, subject to certain conditions. The commitment fee is based on a leverage grid and ranges from 0.20% to 0.40%. Borrowings under the New Revolving Facility bear interest based on a leverage grid with a range of PRIME + 0.25% to PRIME + 0.875% or Adjusted LIBO Rate + 1.25% to Adjusted LIBO Rate + 1.875%. Effective March 27, 2019, the Company entered into a rate swap agreement and in December 2019 amended the agreement. The impact of the amendment was $0.4 million of realized loss due to the partial unwinding of interest rate swap resulting from the amendment of the notional amount from $80.0 million to $65.0 million. See Note 4 for details.

Under the Revolving Facility, the Company is subject to a variety of affirmative and negative covenants of types customary in a senior secured lending facility, including financial covenants relating to leverage and interest expense coverage. The Company is allowed to pay dividends, provided, among other things, a total net leverage ratio is met, and no default exists or has occurred and is continuing as of the date of any such payment and after giving effect thereto.

At December 31, 2019, the Company was in compliance with all of the covenants under the Revolving Facility.

Note 12. Employee Stock Ownership Plan

The Company’s ESOP was established in 2000. As of December 31, 2018, the Company froze the ESOP such that (i) no employees of the Company may commence participation in the ESOP on or after December 31, 2018; (ii) no Company contributions will be made to the ESOP with respect to services performed or compensation received after December 31, 2018; and (iii) the ESOP accounts of all individuals who are actively employed by the Company and participating in the ESOP on December 31, 2018 will be fully vested as of such date. Additionally, the Administrative Committee, with the consent of the Board of Directors, designated certain employees who were terminated in connection with certain reductions-in-force in 2018 to be fully vested in their ESOP accounts as of their severance dates.

Shares are held by the plan trustee for allocation among participants using a compensation-based formula. Subject to vesting requirements, allocated shares are owned by participants and shares are held by the plan trustee until the participant retires.

	December 31, 2019		June 30, 2019
Allocated shares	1,393,530		1,393,530
Committed to be released shares	—		—
Unallocated shares	—		—
Total ESOP shares	1,393,530		1,393,530
(In thousands)
Fair value of ESOP shares	$	20,987	$	22,812

22

Farmer Bros. Co.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Note 13. Share-based Compensation

Farmer Bros. Co. 2017 Long-Term Incentive Plan

As of December 31, 2019, there were 565,112 shares available under the 2017 Plan including shares that were forfeited under the Prior Plans for future issuance.

Non-qualified stock options with time-based vesting (“NQOs”)

One-third of the total number of shares subject to each stock option vest ratably on each of the first three anniversaries of the grant date, contingent on continued employment, and subject to accelerated vesting in certain circumstances.

Following are the assumptions used in the Black-Scholes valuation model for NQOs granted during the six months endedDecember 31, 2019:

	Six Months Ended December 31, 2019
Weighted average fair value of NQOs	$	4.65
Risk-free interest rate	1.7		%
Dividend yield	—		%
Average expected term	4.6 years
Expected stock price volatility	35.4		%

The following table summarizes NQO activity for the six months endedDecember 31, 2019:

Outstanding NQOs:	Number of NQOs		Weighted Average Exercise Price ($)	Weighted Average Remaining Life (Years)	Aggregate Intrinsic Value ($ in thousands)
Outstanding at June 30, 2019	198,049		27.35	5.25	40
Granted	431,344		14.48	—	—
Exercised	(10,360	)	12.48	—	28
Forfeited	(104,288	)	27.28	—	—
Expired	(27,970	)	31.66	—	—
Outstanding at December 31, 2019	486,775		16.03	6.54	432
Exercisable at December 31, 2019	30,074		28.96	3.76	—

The weighted-average grant-date fair value of options granted during the six months endedDecember 31, 2019 was $4.65. The aggregate intrinsic values outstanding at the end of period in the table above represent the total pretax intrinsic values, based on the Company’s closing stock price of $15.06 at December 31, 2019 and $16.37 at June 28, 2019, representing the last trading day of the respective periods, which would have been received by NQO holders had all award holders exercised their NQOs that were in-the-money as of those dates. The aggregate intrinsic value of NQO exercises in the six months endedDecember 31, 2019 represents the difference between the exercise price and the value of the Company’s common stock at the time of exercise. NQOs outstanding that are expected to vest are net of estimated forfeitures.

The Company received $0.1 million and $0.3 million in proceeds from exercises of vested NQOs during the six months endedDecember 31, 2019 and 2018, respectively.

At December 31, 2019 and June 30, 2019, respectively, there were $2.1 million and $1.1 million of unrecognized NQO compensation cost. The unrecognized NQO compensation cost at December 31, 2019 is expected to be recognized over the weighted average period of 2.7 years. Total compensation expense for NQOs was $178.1 thousand and $185.0 thousand for the three months ended December 31, 2019 and 2018, respectively. Total compensation expense for NQOs was $277.2 thousand and $283.0 thousand for the six months ended December 31, 2019 and 2018, respectively.

23

Farmer Bros. Co.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Non-qualified stock options with performance-based and time-based vesting (“PNQs”)

The following table summarizes PNQ activity for the six months ended December 31, 2019:

Outstanding PNQs:	Number of PNQs		Weighted Average Exercise Price ($)	Weighted Average Remaining Life (Years)	Aggregate Intrinsic Value ($ in  thousands)
Outstanding at June 30, 2019	229,961		26.21	1.23	—
Granted	—		—	—	—
Exercised	—		—	—	—
Forfeited	(6,212	)	32.85	—	—
Expired	(202,753	)	25.67	—	—
Outstanding at December 31, 2019	20,996		29.39	1.92	—
Exercisable at December 31, 2019	12,730		27.95	1.78	—

The aggregate intrinsic values outstanding at the end of each fiscal period in the table above represent the total pretax intrinsic values, based on the Company’s closing stock price of $15.06 at December 31, 2019 and $16.37 at June 28, 2019, representing the last trading day of the respective fiscal periods, which would have been received by PNQ holders had all award holders exercised their PNQs that were in-the-money as of those dates. The aggregate intrinsic value of PNQ exercises in the six months ended December 31, 2019 represents the difference between the exercise price and the value of the Company’s common stock at the time of exercise. PNQs outstanding that are expected to vest are net of estimated forfeitures.

There were no options exercised during the six months endedDecember 31, 2019. The Company received $0.1 million in proceeds from exercises of vested PNQs during the six months ended December 31, 2018.

At December 31, 2019 and June 30, 2019, there were zero and $39.7 thousand, respectively, of unrecognized PNQ compensation cost. Total compensation expense related to PNQs in the three months ended December 31, 2019 and 2018 were $4.6 thousand and $146.4 thousand, respectively. Total compensation expense related to PNQs in the six months ended December 31, 2019 and 2018 were $18.3 thousand and $324.5 thousand, respectively.

Restricted Stock

The following table summarizes restricted stock activity for the six months ended December 31, 2019:

Outstanding and Nonvested Restricted Stock Awards:	Shares Awarded		Weighted Average Grant Date Fair Value ($)
Outstanding and nonvested at June 30, 2019	32,056		21.10
Granted	48,654		15.05
Vested/Released	(18,298	)	23.98
Cancelled/Forfeited	(1,704	)	31.70
Outstanding and nonvested at December 31, 2019	60,708		15.66

The total grant-date fair value of restricted stock granted during the six months ended December 31, 2019 was $0.7 million.

At December 31, 2019 and June 30, 2019, there were $0.7 million and $0.4 million, respectively, of unrecognized compensation cost related to restricted stock. The unrecognized compensation cost related to restricted stock at December 31, 2019 is expected to be recognized over the weighted average period of 0.8 years. Total compensation expense for restricted stock were $0.2 million and $0.1 million, respectively, in the three months ended December 31, 2019 and 2018. Total compensation expense for restricted stock in the six months ended December 31, 2019 and 2018 were $0.4 million and $0.2 million, respectively.

24

Farmer Bros. Co.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Performance-Based Restricted Stock Units (“PBRSUs”)

The following table summarizes PBRSU activity for the six months ended December 31, 2019:

Outstanding and Nonvested PBRSUs:	PBRSUs Awarded(1)		Weighted Average Grant Date Fair Value ($)
Outstanding and nonvested at June 30, 2019	51,237		27.69
Granted(1)	76,256		14.42
Vested/Released	—		—
Cancelled/Forfeited	(36,049	)	27.92
Outstanding and nonvested at December 31, 2019	91,444		16.54

_____________

(1) The target number of PBRSUs is presented in the table. Under the terms of the awards, the recipient may earn between 0% and 200% of the target number of PBRSUs depending on the extent to which the Company meets or exceeds the achievement of the applicable financial performance goals.

The total grant-date fair value of PBRSUs granted during the six months ended December 31, 2019 was $1.1 million.

At December 31, 2019 and June 30, 2019, there were $1.1 million and $0.3 million, respectively, of unrecognized PBRSU compensation cost. The unrecognized PBRSU compensation cost at December 31, 2019 is expected to be recognized over the weighted average period of 2.6 years. Total compensation expense for PBRSUs were $77.2 thousand and $117.0 thousand, respectively, for the three months ended December 31, 2019 and 2018. Total compensation expense for PBRSUs were $0.1 million and $0.2 million, respectively, for the six months ended December 31, 2019 and 2018.

Performance Cash Awards (“PCAs”)

In November 2019, the Company granted PCAs under the 2017 Plan to certain employees. The PCAs cliff vest on the third anniversary of the date of grant based on the Company’s achievement of certain financial performance goals for the performance period July 1, 2019 through June 30, 2022, subject to certain continued employment conditions and subject to acceleration provisions of the 2017 Plan. At the end of the three-year performance period, the amount of PCAs that actually vest will be 0% to 200% of the target amount, depending on the extent to which the Company meets or exceeds the achievement of those financial performance goals measured over the full three-year performance period.

The PCAs are measured initially based on a fixed amount of the awards at the date of grant and are required to be re-measured based on the probability of achieving the performance conditions at each reporting date until settlement. Compensation expense for PCAs is recognized over the applicable performance periods. The Company records a liability equal to the cost of PCAs for which achievement of the performance condition is deemed probable. As of December 31, 2019, the Company had recognized accrued liabilities of $16.9 thousand.

At December 31, 2019, there was $0.4 million of unrecognized PCA compensation cost. The unrecognized PCA compensation cost at December 31, 2019 is expected to be recognized over the weighted average period of 2.9 years. Total compensation expense for PCAs was $16.9 thousand for the three and six months ended December 31, 2019.

25

Farmer Bros. Co.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Note 14. Other Current Liabilities

Other current liabilities consist of the following:

(In thousands)	December 31, 2019		June 30, 2019
Accrued postretirement benefits	$	1,068	$	1,068
Accrued workers’ compensation liabilities	1,681		1,495
Cumulative preferred dividends, undeclared and unpaid (4)	1,198		305
Earnout payable (1)	—		1,000
Working capital dispute payable(2)	354		354
Other (3)	3,681		3,087
Other current liabilities	$	7,982	$	7,309

___________

(1) Represents estimated fair value of earnout payable in connection with the Company’s acquisition of substantially all of the assets of West Coast Coffee completed on February 7, 2017.

(2) Represents accrued expenses related to working capital disputes in connection with the Company's acquisition of Boyd Coffee on October 2, 2017.

(3) Includes accrued property taxes, sales and use taxes and insurance liabilities.

(4) Per the agreement, all the cumulative preferred dividends, undeclared and unpaid are now payable. Therefore, the previously accrued long-term portion has been reclassified to current liabilities.

Note 15. Other Long-Term Liabilities

Other long-term liabilities include the following:

(In thousands)	December 31, 2019		June 30, 2019
Finance lease liabilities	$	35	$	32
Derivative liabilities—noncurrent	1,068		1,612
Performance Cash Awards Liability	17		—
Cumulative preferred dividends, undeclared and unpaid—noncurrent	—		618
Deferred income taxes and other liabilities(1)	2,027		1,795
Other long-term liabilities	$	3,147	$	4,057

___________

(1) Includes deferred tax liabilities that have an indefinite reversal pattern.

Note 16. Income Taxes

The income tax expense (benefit) and the related effective tax rates are as follows (in thousands, except effective tax rate):

	Three Months Ended December 31,						Six Months Ended December 31,
	2019			2018			2019			2018
Income tax benefit	$	(81	)	$	(2,725	)	$	(188	)	$	(4,012	)
Effective tax rate	(1.1		)%	21.0		%	(1.5		)%	23.3		%

The lower effective tax rate is primarily due to the previously recorded valuation allowance and change in the Company’s estimated deferred tax liability. The Company’s interim tax provision is determined using an estimated annual effective tax rate and adjusted for discrete taxable events that may occur during the quarter. The Company recognizes the effects of tax legislation in the period in which the law is enacted. Deferred tax assets and liabilities are remeasured using enacted tax rates expected to apply to taxable income in the years the Company estimates the related temporary differences to reverse. The Company evaluates its deferred tax assets quarterly to determine if a valuation allowance is required. In making such assessment, significant weight is given to evidence that can be objectively verified, such as recent operating results, and less consideration is given to less objective indicators such as future income projections.

26

Farmer Bros. Co.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by U.S. federal, state and local tax authorities. With limited exceptions, as of December 31, 2019 and June 30, 2019, the Company is no longer subject to income tax audits by taxing authorities for any years prior to 2016. Although the outcome of tax audits is always uncertain, the Company does not believe the outcome of any future audit will have a material adverse effect on the Company’s condensed consolidated financial statements.

Note 17. Net Income (loss) Per Common Share

Basic net income (loss) per common share is calculated by dividing net income (loss) attributable to the Company by the weighted average number of common shares outstanding during the periods presented. Diluted net income (loss) per common share is calculated by dividing diluted net income (loss) attributable to the Company by the weighted average number of common shares outstanding adjusted to include the effect, if dilutive, of the exercise of in-the-money stock options, unvested performance-based restricted stock units, and shares of Series A Preferred Stock, as converted, during the periods presented. The calculation of dilutive shares outstanding excludes out-of-the-money stock options (i.e., such option’s exercise prices were greater than the average market price of our common shares for the period) and unvested performance-based restricted stock units because their inclusion would be have been anti-dilutive.

The following table presents the computation of basic and diluted earnings per common share:

	Three Months Ended December 31,					Six Months Ended December 31,
(In thousands, except share and per share amounts)	2019		2018			2019		2018
Undistributed net earnings (loss) available to common stockholders	$	7,595	$	(10,225	)	$	12,104	$	(13,341	)
Undistributed net earnings (loss) available to nonvested restricted stockholders and holders of convertible preferred stock	21		(9		)	29		(11		)
Net earnings (loss) available to common stockholders—basic	$	7,616	$	(10,234	)	$	12,133	$	(13,352	)
Weighted average common shares outstanding—basic	17,159,108		16,985,157			17,127,153		16,971,995
Effect of dilutive securities:
Shares issuable under stock options	1,236		—			1,819		—
Shares issuable under PBRSUs	8,091		—			6,272		—
Shares issuable under convertible preferred stock	414,900		—			414,900		—
Weighted average common shares outstanding—diluted	17,583,335		16,985,157			17,550,144		16,971,995
Net earnings (loss) per common share available to common stockholders—basic	$	0.44	$	(0.60	)	$	0.71	$	(0.79	)
Net earnings (loss) per common share available to common stockholders—diluted	$	0.43	$	(0.60	)	$	0.69	$	(0.79	)

The following table summarizes anti-dilutive securities excluded from the computation of diluted net income (loss) per common share for the periods indicated:

	Three Months Ended December 31,		Six Months Ended December 31,
	2019	2018	2019	2018
Shares issuable under stock options	190,117	201,543	121,113	165,013
Shares issuable under convertible preferred stock	—	400,691	—	400,691
Shares issuable under PBRSUs	16,195	64,991	8,097	52,890

27

Farmer Bros. Co.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Note 18. Preferred Stock

The Company is authorized to issue 500,000 shares of preferred stock at a par value of $1.00, including 21,000 authorized shares of Series A Preferred Stock.

On October 2, 2017, the Company issued 14,700 shares of Series A Preferred Stock in connection with the Boyd Coffee acquisition. At December 31, 2019, Series A Preferred Stock consisted of the following:

(In thousands, except share and per share amounts)
Shares Authorized	Shares Issued and Outstanding	Stated Value per Share		Carrying Value		Cumulative Preferred Dividends, Undeclared and Unpaid		Liquidation Preference
21,000	14,700	$	1,082	$	15,899	$	1,199	$	15,899

Note 19. Revenue Recognition

The Company’s primary source of revenue are sales of coffee, tea and culinary products. The Company recognizes revenue when control of the promised good or service is transferred to the customer and in amounts that the Company expects to collect. The timing of revenue recognition takes into consideration the various shipping terms applicable to the Company’s sales.

The Company delivers products to customers primarily through two methods, Direct-store-delivery (“DSD”) to the Company’s customers at their place of business and direct ship from the Company’s warehouse to the customer’s warehouse or facility. Each delivery or shipment made to a third party customer is to satisfy a performance obligation. Performance obligations generally occur at a point in time and are satisfied when control of the goods passes to the customer. The Company is entitled to collection of the sales price under normal credit terms in the regions in which it operates.

The Company disaggregates net sales from contracts with customers based on the characteristics of the products sold:

	Three Months Ended December 31,
	2019				2018
(In thousands)	$		% of total		$		% of total
Net Sales by Product Category:
Coffee (Roasted)	$	96,177	63.1	%	$	99,286	62.1	%
Coffee (Frozen Liquid)	8,556		5.6	%	9,318		5.8	%
Tea (Iced & Hot)	7,563		5.0	%	8,651		5.4	%
Culinary	15,158		10.0	%	16,795		10.5	%
Spice	6,126		4.0	%	6,002		3.8	%
Other beverages(1)	17,299		11.3	%	18,915		11.8	%
Other revenues(2)	946		0.6	%	—		—	%
Net sales by product category	151,825		99.6	%	158,967		99	%
Fuel surcharge	673		0.4	%	806		0.6	%
Net sales	$	152,498	100.0	%	$	159,773	100	%

____________

(1) Includes all beverages other than roasted coffee, frozen liquid coffee, and iced and hot tea, including cappuccino, cocoa, granitas, and concentrated and ready-to drink cold brew and iced coffee.

(2) Represents revenues for certain transition services related to the sale of the Company’s office coffee assets.

28

Farmer Bros. Co.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

	Six Months Ended December 31,
	2019				2018
(In thousands)	$		% of total		$		% of total
Net Sales by Product Category:
Coffee (Roasted)	$	183,547	63.1	%	$	194,640	63.4	%
Coffee (Frozen Liquid)	16,484		5.7	%	17,874		5.8	%
Tea (Iced & Hot)	15,268		5.2	%	17,555		5.7	%
Culinary	29,361		10.1	%	32,789		10.7	%
Spice	12,332		4.2	%	12,160		4.0	%
Other beverages(1)	30,032		10.3	%	30,541		9.9	%
Other revenues(2)	2,701		0.9	%	—		—	%
Net sales by product category	289,725		99.5	%	305,559		99.5	%
Fuel surcharge	1,373		0.5	%	1,654		0.5	%
Net sales	$	291,098	100.0	%	$	307,213	100.0	%

___________

(1) Includes all beverages other than roasted coffee, frozen liquid coffee, and iced and hot tea, including cappuccino, cocoa, granitas, and concentrated and ready-to drink cold brew and iced coffee.

(2) Represents revenues for certain transition services related to the sale of the Company’s office coffee assets.

The Company does not have any material contract assets and liabilities as of December 31, 2019. Receivables from contracts with customers are included in “Accounts receivable, net” on the Company’s condensed consolidated balance sheets. At December 31, 2019 and June 30, 2019, “Accounts receivable, net” included, $57.7 million and $53.6 million, respectively, in receivables from contracts with customers.

29

Farmer Bros. Co.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Note 20. Commitments and Contingencies

For a detailed discussion about the Company’s commitments and contingencies, see Note 22, “Commitments and Contingencies” in the Notes to Consolidated Financial Statements in the 2019 Form 10-K. During the six months ended December 31, 2019, other than the following, or as otherwise disclosed in these footnotes in the current Form 10-Q, there were no material changes in the Company’s commitments and contingencies.

Purchase Commitments

As of December 31, 2019, the Company had committed to purchase green coffee inventory totaling $60.7 million under fixed-price contracts, $6.2 million in other inventory under non-cancelable purchase orders and $5.4 million in other purchases under non-cancelable purchase orders.

Legal Proceedings

Council for Education and Research on Toxics (“CERT”) v. Brad Berry Company Ltd., et al., Superior Court of the State of California, County of Los Angeles

On August 31, 2012, CERT filed an amendment to a private enforcement action adding a number of companies as defendants, including the Company’s subsidiary, Coffee Bean International, Inc., which sell coffee in California under the State of California's Safe Drinking Water and Toxic Enforcement Act of 1986 (“Prop 65”). The suit alleges that the defendants have failed to issue clear and reasonable warnings in accordance with Prop 65 that the coffee they produce, distribute, and sell contains acrylamide. This lawsuit was filed in Los Angeles Superior Court (the “Court”). CERT alleges that the Company and the other defendants failed to provide warnings for their coffee products of exposure to the chemical acrylamide as required under Prop 65. Plaintiff seeks equitable relief, including providing warnings to consumers of coffee products, as well as civil penalties in the amount of the statutory maximum of $2,500.00 per day per violation of Prop 65. The Plaintiff asserts that every consumed cup of coffee, absent a compliant warning, is equivalent to a violation under Prop 65.

The Company, as part of a joint defense group (“JDG”) organized to defend against the lawsuit, disputes the claims of CERT. Acrylamide is not added to coffee but is present in all coffee in small amounts (parts per billion) as a byproduct of the coffee bean roasting process. Acrylamide is produced naturally in connection with the heating of many foods, especially starchy foods, and is believed to be caused by the Maillard reaction, though it has also been found in unheated foods such as olives. With respect to coffee, acrylamide is produced when coffee beans are heated during the roasting process-it is the roasting itself that produces the acrylamide. While there has been a significant amount of research concerning proposals for treatments and other processes aimed at reducing acrylamide content of different types of foods, to our knowledge there is currently no known strategy for reducing acrylamide in coffee without negatively impacting the sensorial properties of the product.

The Company has asserted multiple affirmative defenses. Trial of the first phase of the case commenced on September 8, 2014, and was limited to three affirmative defenses shared by all defendants. On September 1, 2015, the trial court issued a final ruling adverse to defendants on all Phase 1 defenses. Trial of the second phase of the case commenced in the fall of 2017. On May 7, 2018, the trial court issued a ruling adverse to defendants on the Phase 2 defense, the Company's last remaining defense to liability. On June 22, 2018, the California Office of Environmental Health Hazard Assessment (OEHHA) proposed a new regulation clarifying that cancer warnings are not required for coffee under Proposition 65. The case was set to proceed to a third phase trial on damages, remedies and attorneys' fees on October 15, 2018. However, on October 12, 2018, the California Court of Appeal granted the defendants request for a stay of the Phase 3 trial.

On June 3, 2019, the Office of Administrative Law (OAL) approved the coffee exemption regulation. The regulation became effective on October 1, 2019. On June 24, 2019, the Court of Appeal lifted the stay of the litigation. A status conference was held on July 11, 2019. The Court granted the JDG’s motion for leave to amend its answers to add the coffee exemption regulation as a defense. Concurrently, the Court denied CERT’s motion to add OEHHA as a party but granted CERT’s motions to complete the administrative record with respect to the exemption and to undertake certain third party discovery. A status conference was held November 12, 2019 to discuss discovery issues and dispositive motions. Plaintiff’s motion to compel OEHHA to add documents to the rulemaking file for the new coffee exemption regulation was denied. CERT continues to pursue third-party discovery with plans to file motions to compel appearances of proposed deponents. These motions, along with CERT’s eight summary judgment motions, were heard at a January 21, 2020 hearing where the Court denied several of CERT’s discovery requests. Further, the Court of Appeals scheduled a hearing on February 14, 2020 for additional discovery issues in the CERT vs OEHHA case. The JDG’s reply in support of its motion for summary judgment is currently due to the Court on March 16, 2020.

30

Farmer Bros. Co.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Subsequent to the hearing on January 21, 2020, Plaintiff issued broad discovery against each of the defendants in hopes of opening up a third round of discovery. The discovery focuses on “additives to and “flavorings” in coffee. Objections to discovery requests are due March 2, 2020.

At this time, the Company is not able to predict the probability of the outcome or estimate of loss, if any, related to this matter. 

The Company is a party to various other pending legal and administrative proceedings. It is management’s opinion that the outcome of such proceedings will not have a material impact on the Company’s financial position, results of operations, or cash flows.

Note 21. Sales of Assets

Sale of Office Coffee Assets

In order to focus on its core product offerings, in July 2019, the Company completed the sale of certain assets associated with its office coffee customers for $9.3 million in cash paid at the time of closing plus an earnout of up to an additional $2.3 million if revenue expectations are achieved during test periods scheduled to occur at various branches at various times and concluding by early third quarter of fiscal year 2020. The Company recognized an initial net gain on the asset sales of $7.2 million during the six months endedDecember 31, 2019. The sale of office coffee assets did not represent a strategic shift for the Company and did not have a material impact on the Company's results of operations because the Company has signed a supply agreement to provide certain coffee products to the assets purchaser.

Sale of Branch Properties

During the six months endedDecember 31, 2019, the Company completed the sale of five branch properties and entered into two operating lease agreements with the purchasers of two of the branch properties as detailed in the following table:

(In thousands)
Name of Branch Property	Date Sold	Sales Price		Net Proceed		Gain (loss)			Long-Term Leaseback	Lease Term	Monthly Base Rent
Seattle, Washington	8/28/2019	$	7,900	$	7,300	$	6,800		No	N/A	N/A
Indianapolis, Indiana	11/19/2019	$	250	$	186	$	(173	)	No	N/A	N/A
Hayward, California(1)	12/23/2019	$	7,050	$	6,569	$	2,016		Yes	5 years	$	28
Denver, Colorado(1)	12/31/2019	$	2,300	$	2,075	$	1,989		Yes	7 years	$	17
Casper, Wyoming	12/31/2019	$	385	$	355	$	304		No	N/A	N/A

___________

(1) Has an option to renew the lease for additional five years.

Sale leaseback of Houston Facility

In November 2019, the Company completed the sale of its Houston, Texas manufacturing facility and warehouse (the “Property”) for an aggregate purchase price, exclusive of closing costs, of $10.0 million. Cash proceeds from the sale of the Property were $9.0 million. The Company recognized a net gain on the Property sale of $7.3 million during the six months endedDecember 31, 2019. The Property did not meet the accounting guidance criteria to be classified as discontinued operations.

Following the close of the sale of the Property, the Company and the purchaser of the Property entered into a three-year leaseback agreement with respect to the Property for a base rent of $50,000 per month. The Company may terminate the leaseback no earlier than the first day of the eighteenth full calendar month of the term providing at least nine months’ notice. The purchaser of the Property does not have any material relationship with the Company or its subsidiaries.

31

Farmer Bros. Co.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Note 22. Subsequent Events

The Company evaluated all events or transactions that occurred after December 31, 2019 through the date the condensed consolidated financial statements were issued. During this period the Company had the following material subsequent events that require disclosure:

None.

32

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain statements contained in this Quarterly Report on Form 10-Q are not based on historical fact and are forward-looking statements within the meaning of federal securities laws and regulations. These statements are based on management’s current expectations, assumptions, estimates and observations of future events and include any statements that do not directly relate to any historical or current fact; actual results may differ materially due in part to the risk factors set forth in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 30, 2019 filed with the Securities and Exchange Commission (the “SEC”) on September 11, 2019 (the “2019 Form 10-K”) and Part II, Item 1A of this report. These forward-looking statements can be identified by the use of words like “anticipates,” “estimates,” “projects,” “expects,” “plans,” “believes,” “intends,” “will,” “could,” “assumes” and other words of similar meaning. Owing to the uncertainties inherent in forward-looking statements, actual results could differ materially from those set forth in forward-looking statements. We intend these forward-looking statements to speak only at the time of this report and do not undertake to update or revise these statements as more information becomes available except as required under federal securities laws and the rules and regulations of the SEC. Factors that could cause actual results to differ materially from those in forward-looking statements include, but are not limited to, the impact of capital improvement projects, the adequacy and availability of capital resources to fund the Company’s existing and planned business operations and the Company’s capital expenditure requirements, the relative effectiveness of compensation-based employee incentives in causing improvements in Company performance, the capacity to meet the demands of our large national account customers, the extent of execution of plans for the growth of Company business and achievement of financial metrics related to those plans, the success of the Company to retain and/or attract qualified employees, the success of the Company’s adaptation to technology and new commerce channels, the effect of the capital markets as well as other external factors on stockholder value, fluctuations in availability and cost of green coffee, competition, organizational changes, the effectiveness of our hedging strategies in reducing price and interest rate risk, changes in consumer preferences, our ability to provide sustainability in ways that do not materially impair profitability, changes in the strength of the economy, business conditions in the coffee industry and food industry in general, our continued success in attracting new customers, variances from budgeted sales mix and growth rates, weather and special or unusual events, as well as other risks described in this report and other factors described from time to time in our filings with the SEC. The results of operations for the three and six months ended December 31, 2019 are not necessarily indicative of the results that may be expected for any future period.

Our Business

We are a national coffee roaster, wholesaler and distributor of coffee, tea and culinary products manufactured under supply agreements, under our owned brands, as well as under private labels on behalf of certain customers. We were founded in 1912, incorporated in California in 1923, and reincorporated in Delaware in 2004. In fiscal 2017, we completed the relocation of our corporate headquarters from Torrance, California to Northlake, Texas. We operate in one business segment.

We serve a wide variety of customers, from small independent restaurants and foodservice operators to large institutional buyers like restaurants, department and convenience store chains, hotels, casinos, healthcare facilities, and gourmet coffee houses, as well as grocery chains with private brand and consumer-branded coffee and tea products, and foodservice distributors. Through our sustainability, stewardship, environmental efforts, and leadership we are not only committed to serving the finest products available, considering the cost needs of the customer, but also insist on their sustainable cultivation, manufacture and distribution whenever possible.

Our product categories consist of a robust line of roast and ground coffee, including organic, Direct Trade, Project D.I.R.E.C.T. and other sustainably-produced offerings; frozen liquid coffee; flavored and unflavored iced and hot teas; culinary products including gelatins and puddings, soup bases, dressings, gravy and sauce mixes, pancake and biscuit mixes, jellies and preserves, and coffee-related products such as coffee filters, sugar and creamers; spices; and other beverages including cappuccino, cocoa, granitas, and concentrated and ready-to-drink cold brew and iced coffee. We offer a comprehensive approach to our customers by providing not only a breadth of high-quality products, but also value added services such as market insight, beverage planning, and equipment placement and service.

We operate production facilities in Northlake, Texas; Houston, Texas; Portland, Oregon; and Hillsboro, Oregon. Distribution takes place out of the Northlake facility, Texas, the Portland and Hillsboro facilities, as well as separate distribution centers in Northlake, Illinois; and Moonachie, New Jersey. Our products reach our customers primarily in the following ways: through our nationwide DSD network of 365 delivery routes and 101 branch warehouses as of December 31, 2019, or direct-shipped via common carriers or third-party distributors. DSD sales are made “off-truck” to our customers at their places of business. We operate a large fleet of trucks and other vehicles to distribute and deliver our products, and we rely on third-party logistics service providers for our long-haul distribution.

33

Summary Overview of Three Months Ended December 31, 2019 Results of Operations

During the three months ended December 31, 2019, we experienced sales declines in our DSD sales channel while our direct ship sales channel were comparable to the prior year period.

Similar to what we experienced in fiscal 2019, our DSD network continued to be negatively impacted by higher customer attrition, partially offset by sales to new customers. In addition, our DSD sales network was impacted by the sale of our office coffee business in July 2019. While our direct ship channel sales grew in terms of coffee pounds, unfavorable customer mix shift and the impact of coffee prices for our cost plus customers caused revenues to be comparable to the prior period.

During the three months ended December 31, 2019, gross margins declined by 4.5% to 28.8% from 33.3% mostly due to unfavorable customer mix shift and higher write-down of slow moving inventories. These declines were partially offset by lower freight costs, the impact of coffee prices and the start of our key initiative to rebalance production across our plant network.

Operating expenses declined by $17.6 million over the prior year quarter driven mostly by gains realized from several key near-term strategic priorities. During the three months ended December 31, 2019, we completed the sale of our Houston, Texas manufacturing facility and warehouse and four branch properties for an aggregate sale price of $20.0 million. Net cash proceeds from these assets sales were $18.3 million. We recognized a net gain on these asset sales of $11.4 million during three months ended December 31, 2019. The proceeds from the sales gave us increased liquidity and flexibility. Operating expenses also benefited from several cost saving initiatives implemented during the current fiscal year. These savings were slightly offset by proxy contest expenses and one-time executive severance costs associated with a corporate reorganization during the period.

Our capital expenditures for the six months ended December 31, 2019 were $9.0 million, representing lower maintenance capital spend of $7.5 million, a 61.0% reduction compared to the prior year period. These spending reductions were driven by several key initiatives put in place, including a focus on improving our coffee brewing equipment (“CBE”) program to drive cost savings.

As of December 31, 2019, the outstanding debt on our revolver was $70.0 million, a decline of $15.0 million since September 30, 2019 and $22.0 million since June 30, 2019. Additionally, our cash increased to $9.1 million as of December 31, 2019, compared to $7.0 million as of June 30, 2019. These improvements in our liquidity provide additional financial and operational flexibility.

34

Results of Operations

Financial Data Highlights (in thousands, except per share data and percentages)

	Three Months Ended December 31,						Favorable (Unfavorable)					Six Months Ended December 31,						Favorable (Unfavorable)
	2019			2018			Change			% Change		2019			2018			Change			% Change
Income Statement Data:
Net sales	$	152,498		$	159,773		$	(7,275	)	(4.6	)%	$	291,098		$	307,213		$	(16,115	)	(5.2	)%
Gross margin	28.8		%	33.3		%	(4.5		)%	NM		29.1		%	33.0		%	(3.9		)%	NM
Operating expenses as a % of sales	23.0		%	33.0		%	10.0		%	NM		23.7		%	33.5		%	9.8		%	NM
Income (loss) from operations	$	8,870		$	502		$	8,368		NM		$	15,762		$	(1,576	)	$	17,338		NM
Net income (loss)	$	7,754		$	(10,100	)	$	17,854		NM		$	12,408		$	(13,086	)	$	25,494		194.8	%
Net earnings (loss) available to common stockholders per common share—basic	$	0.44		$	(0.60	)	$	1.04		NM		$	0.71		$	(0.79	)	$	1.50		NM
Net earnings (loss) available to common stockholders per common share—diluted	$	0.43		$	(0.60	)	$	1.03		NM		$	0.69		$	(0.79	)	$	1.48		NM
Operating Data:
Coffee pounds	29,360			27,398			1,962			7.2	%	55,318			52,845			2,473			4.7	%
EBITDA(1)	$	16,852		$	(3,188	)	$	20,040		NM		$	30,292		$	1,470		$	28,822		NM
EBITDA Margin(1)	11.1		%	(2.0		)%	13.1		%	NM		10.4		%	0.5		%	9.9		%	NM
Adjusted EBITDA(1)	$	7,448		$	12,443		$	(4,995	)	(40.1	)%	$	11,464		$	23,410		$	(11,946	)	(51.0	)%
Adjusted EBITDA Margin(1)	4.9		%	7.8		%	(2.9		)%	NM		3.9		%	7.6		%	(3.7		)%	NM
Percentage of Total Net Sales By Product Category
Coffee (Roasted)	63.1		%	62.1		%	1.0		%	1.6	%	63.1		%	63.4		%	(0.3		)%	(0.5	)%
Coffee (Frozen Liquid)	5.6		%	5.8		%	(0.2		)%	(3.4	)%	5.7		%	5.8		%	(0.1		)%	(1.7	)%
Tea (Iced & Hot)	5.0		%	5.4		%	(0.4		)%	(7.4	)%	5.2		%	5.7		%	(0.5		)%	(8.8	)%
Culinary	10.0		%	10.5		%	(0.5		)%	(4.8	)%	10.1		%	10.7		%	(0.6		)%	(5.6	)%
Spice	4.0		%	3.8		%	0.2		%	5.3	%	4.2		%	4.0		%	0.2		%	5.0	%
Other beverages(2)	11.3		%	11.8		%	(0.5		)%	(4.2	)%	10.3		%	9.9		%	0.4		%	4.0	%
Other revenues(3)	0.6		%	—		%	0.6		%	NM		0.9		%	—		%	0.9		%	NM
Net sales by product category	99.6		%	99.4		%	0.2		%	NM		99.5		%	99.5		%	(0.9		)%	NM
Fuel Surcharge	0.4		%	0.6		%	(0.2		)%	NM		0.5		%	0.5		%	—		%	NM
Total	100.0		%	100.0		%	—		%	NM		100.0		%	100.0		%	(0.9		)%	—	%
Other data:
Capital expenditures related to maintenance	$	3,107		$	7,105		$	(3,998	)	(56.3	)%	$	7,459		$	12,567		$	(5,108	)	(40.6	)%
Total capital expenditures	$	3,730		$	15,333		$	(11,603	)	(75.7	)%	$	9,007		$	23,120		$	(14,113	)	(61.0	)%
Depreciation and amortization expense	$	7,594		$	7,902		$	(308	)	(3.9	)%	$	15,211		$	15,630		$	(419	)	(2.7	)%

________________

NM - Not Meaningful

(1) EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures. See “Non-GAAP Financial Measures” below for a reconciliation of these non-GAAP measures to their corresponding GAAP measures.

(2) Includes all beverages other than roasted coffee, frozen liquid coffee, and iced and hot tea, including cappuccino, cocoa, granitas, and concentrated and ready-to-drink cold brew and iced coffee.

(3) Represents revenues for certain transition services related to the sale of our office coffee assets.

35

The following table sets forth information regarding our condensed consolidated results of operations for the three and six months ended December 31, 2019 and 2018 (in thousands, except percentages):

	Three Months Ended December 31,						Favorable (Unfavorable)					Six Months Ended December 31,						Favorable (Unfavorable)
	2019			2018			Change			% Change		2019			2018			Change			% Change
Net sales	$	152,498		$	159,773		$	(7,275	)	(4.6	)%	$	291,098		$	307,213		$	(16,115	)	(5.2	)%
Cost of goods sold	108,513			106,529			(1,984		)	(1.9	)%	206,472			205,734			(738		)	(.4	)%
Gross profit	43,985			53,244			(9,259		)	(17.4	)%	84,626			101,479			(16,853		)	(16.6	)%
Selling expenses	34,906			39,591			4,685			11.8	%	68,520			76,901			8,381			10.9	%
General and administrative expenses	11,266			12,140			874			7.2	%	24,006			20,757			(3,249		)	(15.7	)%
Restructuring and other transition expenses	—			207			207			100.0	%	—			4,674			4,674			100.0	%
Net (gains) losses from sales of assets	(11,057		)	804			11,861			NM		(23,662		)	723			24,385			NM
Operating expenses	35,115			52,742			17,627			33.4	%	68,864			103,055			34,191			33.2	%
Income (loss) from operations	8,870			502			8,368			NM		15,762			(1,576		)	17,338			NM
Other (expense) income:
Interest expense	(2,859		)	(3,332		)	473			14.2	%	(5,407		)	(6,184		)	777			12.6	%
Pension settlement charge	—			(10,948		)	10,948			(100.0	)%	—			(10,948		)	10,948			(100.0	)%
Other, net	1,662			953			709			74.4	%	1,865			1,610			255			15.8	%
Total other expense	(1,197		)	(13,327		)	12,130			91.0	%	(3,542		)	(15,522		)	11,980			(77.2	)%
Income (loss) before taxes	7,673			(12,825		)	20,498			159.8	%	12,220			(17,098		)	29,318			171.5	%
Income tax benefit	(81		)	(2,725		)	(2,644		)	(97.0	)%	(188		)	(4,012		)	(3,824		)	95.3	%
Net income (loss)	$	7,754		$	(10,100	)	17,854			176.8	%	$	12,408		$	(13,086	)	25,494			194.8	%
Less: Cumulative preferred dividends, undeclared and unpaid	138			134			(4		)	(3.0	)%	275			266			(9		)	(3.4	)%
Net earnings (loss) available to common stockholders	$	7,616		$	(10,234	)	17,850			174.4	%	$	12,133		$	(13,352	)	25,485			190.9	%

_____________

NM - Not Meaningful

36

Three and Six Months Ended December 31, 2019 Compared to Three and Six Months Ended December 31, 2018

Net Sales

The following table presents changes in units sold, unit price and net sales by product category in the three and six months ended December 31, 2019 compared to the same periods in the prior fiscal year (in thousands, except unit price and percentages):

	Three Months Ended December 31,				Favorable (Unfavorable)					Six Months Ended December 31,				Favorable (Unfavorable)
	2019		2018		Change			% Change		2019		2018		Change			% Change
Units sold
Coffee (Roasted)	23,488		21,918		1,570			7.2	%	44,254		42,276		1,978			4.7	%
Coffee (Frozen Liquid)	100		110		(10		)	(9.1	)%	198		235		(37		)	(15.7	)%
Tea (Iced & Hot)	723		723		—			—	%	1,348		1,358		(10		)	(0.7	)%
Culinary	1,934		2,112		(178		)	(8.4	)%	3,792		4,200		(408		)	(9.7	)%
Spice	171		175		(4		)	(2.3	)%	339		390		(51		)	(13.1	)%
Other beverages(1)	1,459		1,855		(396		)	(21.3	)%	2,397		2,908		(511		)	(17.6	)%
Total	27,875		26,893		982			3.7	%	52,328		51,367		961			1.9	%
Unit Price
Coffee (Roasted)	$	4.12	$	4.53	$	(0.41	)	(9.1	)%	$	4.18	$	4.60	$	(0.42	)	(9.1	)%
Coffee (Frozen Liquid)	$	85.65	$	84.47	$	1.18		1.4	%	$	83.21	$	75.98	$	7.23		9.5	%
Tea (Iced & Hot)	$	10.46	$	11.96	$	(1.50	)	(12.5	)%	$	11.33	$	12.93	$	(1.60	)	(12.4	)%
Culinary	$	7.98	$	7.95	$	0.03		.4	%	$	7.95	$	7.81	$	0.14		1.8	%
Spice	$	35.73	$	34.32	$	1.41		4.1	%	$	36.40	$	31.19	$	5.21		16.7	%
Other beverages(1)	$	11.95	$	10.20	$	1.75		17.2	%	$	12.68	$	10.50	$	2.18		20.8	%
Average unit price	$	5.47	$	5.94	$	(0.47	)	(7.9	)%	$	5.56	$	5.98	$	(0.42	)	(7.0	)%
Total Net Sales By Product Category(2)
Coffee (Roasted)	$	96,692	$	99,286	$	(2,594	)	(2.6	)%	$	185,067	$	194,640	$	(9,573	)	(4.9	)%
Coffee (Frozen Liquid)	8,556		9,318		(762		)	(8.2	)%	16,484		17,874		(1,390		)	(7.8	)%
Tea (Iced & Hot)	7,563		8,651		(1,088		)	(12.6	)%	15,268		17,555		(2,287		)	(13.0	)%
Culinary	15,435		16,795		(1,360		)	(8.1	)%	30,145		32,789		(2,644		)	(8.1	)%
Spice	6,126		6,002		124			2.1	%	12,332		12,160		172			1.4	%
Other beverages(1)	17,440		18,915		(1,475		)	(7.8	)%	30,391		30,541		(150		)	(.5	)%
Net sales by product category	$	151,812	$	158,967	$	(7,155	)	(4.5	)%	$	289,687	$	305,559	$	(15,872	)	(5.2	)%
Fuel Surcharge	686		806		(120		)	(14.9	)%	1,411		1,654		(243		)	(14.7	)%
Total	$	152,498	$	159,773	$	(7,275	)	(4.6	)%	$	291,098	$	307,213	$	(16,115	)	(5.2	)%

____________

(1) Includes all beverages other than roasted coffee, frozen liquid coffee, and iced and hot tea, including cappuccino, cocoa, granitas, and concentrated and ready-to-drink cold brew and iced coffee.

(2) Certain transition service revenues related to the sale of our office coffee assets are not separately presented. The amounts are included in each of the product categories.

37

Net sales in the three months ended December 31, 2019 decreased $7.3 million, or 4.6%, to $152.5 million from $159.8 million in the three months ended December 31, 2018. The decline in net sales was primarily due to a decline in volume of green coffee processed and sold through our DSD network, a decrease in net sales from tea and culinary products, and the impact of coffee prices for our cost plus customers. Sales through our DSD network were impacted by the sale of our office coffee business in July of 2019 and net customer attrition. Our direct ship sales were comparable to the prior year period because the increase in direct ship volume was offset by unfavorable customer mix shift and the impact of coffee prices for our cost plus customers. Net sales in the three months ended December 31, 2019 included $2.5 million in price decreases to customers utilizing commodity-based pricing arrangements, where the changes in the green coffee commodity costs are passed on to the customer, as compared to $1.0 million in price decreases to customers utilizing such arrangements in the three months ended December 31, 2018.

Net sales in the six months ended December 31, 2019 decreased $16.1 million, or 5.2%, to $291.1 million from $307.2 million in the six months ended December 31, 2018. The decline in net sales was primarily due to a decline in revenues and volume of green coffee processed and sold through our DSD network, a decrease in net sales from tea and culinary products, unfavorable customer mix within our direct sales, non-recurring sales of industrial soup based products associated with the Boyd’s acquisition which we stopped selling last year, and the impact of coffee prices for our cost plus customers. Sales through our DSD network were impacted by the sale of our office coffee business in July of 2019, higher customer attrition and lower inventory fill rates associated with downtime at our Houston plant during the earlier part of the current period. Net sales in the six months ended December 31, 2019 included $5.1 million in price decreases to customers utilizing commodity-based pricing arrangements, where the changes in the green coffee commodity costs are passed on to the customer, as compared to $3.0 million in price decreases to customers utilizing such arrangements in the six months ended December 31, 2018.

The following table presents the effect of changes in unit sales, unit pricing and product mix in the three and six months ended December 31, 2019 compared to the same periods in the prior fiscal year (in millions):

	Three Months Ended December 31, 2019 vs. 2018			% of Total Mix Change		Six Months Ended December 31, 2019 vs. 2018			% of Total Mix Change
Effect of change in unit sales	$	5.4		74.0	%	$	5.3		32.9	%
Effect of pricing and product mix changes	(12.7		)	(174.0	)%	(21.4		)	(132.9	)%
Total decrease in net sales	$	(7.3	)	(100.0	)%	$	(16.1	)	(100.0	)%

Unit sales increased 3.7% and average unit price decreased by 7.9% in the three months ended December 31, 2019 as compared to the same period in the prior fiscal year, resulting in a decrease in net sales of 4.6%. Unit sales increased 1.9% and average unit price decreased by 7.0% in the six months ended December 31, 2019 as compared to the same period in the prior fiscal year, resulting in a decrease in net sales of 5.2%. Average unit price decreased during three and six months ended December 31, 2019 due to a higher mix of product sold via direct ship versus DSD network, as direct ship has a lower average unit price. There were no new product category introductions in the three and six months ended December 31, 2019 or 2018, which had a material impact on our net sales.

Gross Profit

Gross profit in the three months ended December 31, 2019 decreased $9.3 million, or 17.4%, to $44.0 million from $53.2 million in the three months ended December 31, 2018. Gross margin decreased to 28.8% in the three months ended December 31, 2019 from 33.3% in the three months ended December 31, 2018. Gross profit in the six months ended December 31, 2019 decreased $16.9 million, or 16.6%, to $84.6 million from $101.5 million in the six months ended December 31, 2018. Gross margin decreased to 29.1% in the six months ended December 31, 2019 from 33.0% in the six ended December 31, 2018.

The decrease in gross profit in the three and six months ended December 31, 2019 was primarily driven by lower net sales of $7.3 million and $16.1 million, respectively, and higher costs of goods sold. Cost of goods sold in the three months ended December 31, 2019 was 71.2% of net sales as compared 66.7% of net sales, in the three months ended December 31, 2018. Cost of goods sold in the six months ended December 31, 2019 was 70.9% of net sales as compared 67.0% of net sales,

38

in the six months ended December 31, 2018. Margins were negatively impacted by unfavorable customer mix and higher write-down of slow moving inventories, partially offset by lower freight costs and the impact of coffee prices during the six months ended December 31, 2019.

Operating Expenses

In the three months ended December 31, 2019, operating expenses decreased $17.6 million, or 33.4%, to $35.1 million, or 23.0% of net sales, from $52.7 million, or 33.0% of net sales, in the three months ended December 31, 2018, primarily due to a $11.9 million increase in net gains from sales of assets, a $4.7 million decrease in selling expenses, $0.9 million decrease in general and administrative expenses and the absence of $0.2 million in restructuring and other transition expenses.

The decrease in selling expenses was primarily due to efficiencies realized from DSD route optimization. The decrease in general and administrative expenses was associated primarily with reductions in third party costs and the absence of Boyd Coffee integration costs, partially offset by higher employee incentive costs, proxy contest expenses and severance costs during the three months ended December 31, 2019. The three months ended December 31, 2018 includes a one–time credit for employees incentives costs.

Net gains from sales of assets in the three months ended December 31, 2019 were primarily associated with the sales of the Houston Property and four office branch properties for $7.3 million and $4.1 million, respectively.

In the six months ended December 31, 2019, operating expenses decreased $34.2 million, or 33.2%, to $68.9 million, or 23.7% of net sales, from $103.1 million, or 33.5% of net sales, in the six months ended December 31, 2018, primarily due to a $24.4 million increase in net gains from sales of assets, a $8.4 million decrease in selling expenses and the absence of $4.7 million in restructuring and other transition expenses, partially offset by a $3.2 million increase in general and administrative expenses.

The decrease in selling expenses was primarily due to headcount reductions, the conclusion of Boyd Coffee integration at the beginning of October 2018 and other efficiencies realized from DSD route optimization. The increase in general and administrative expenses was associated primarily with employee incentive and benefit costs, proxy contest expenses and executive severance costs incurred during the six months ended December 31, 2019. The six months ended December 31, 2018 includes a one–time credit for employees incentives costs.

Net gains from sales of assets in the six months ended December 31, 2019 were primarily associated with the sales of the Houston Property, the office coffee assets and five office branch properties for $7.3 million, $7.2 million and $10.9 million, respectively.

Total Other Expense

Total other expense in the three months ended December 31, 2019 was $1.2 million compared to $13.3 million in the three months ended December 31, 2018. Total other expense in the six months ended December 31, 2019 was $3.5 million compared to $15.5 million in the six months ended December 31, 2018. The change in total other expense in the three and six months ended December 31, 2019 was primarily a result of;

• the absence of pension settlement charge in the current period;

• reduced employee post retirement benefit gains;

• lower interest expense;

• higher net gains on coffee-related derivative instruments in the three months ended December 31, 2019; and

• lower net losses on coffee-related derivative instruments in the six months ended December 31, 2019.

The pension settlement charge incurred in the three and six months ended December 31, 2018 of $10.9 million was due to the termination of the Farmer Bros. Co. Pension Plan for Salaried Employees effective December 1, 2018.

Interest expense in the three months ended December 31, 2019 decreased $0.5 million to $2.9 million from $3.3 million in the prior year period. Interest expense in the six months ended December 31, 2019 decreased $0.8 million to $5.4 million from $6.2 million in the prior year period. The decrease in interest expense in the three and six months ended December 31, 2019 was principally due to lower pension interest expense and lower borrowings on our credit facility, partially offset by a$0.4 million of realized loss from the partial unwinding of our interest rate swap notional amount from $80.0 million to $65.0 million.

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Other, net in the three months ended December 31, 2019 increased by $0.7 million to $1.7 million compared to $1.0 million in the prior year period. Other, net in the six months ended December 31, 2019 increased by $0.3 million to $1.9 million compared to $1.6 million in the prior year period. The increase in Other, net was primarily a result of mark-to-market net gains on coffee-related derivative instruments not designated as accounting hedges in the three months ended December 31, 2019 compared same prior year period mark-to-market net losses. In the six months ended December 31, 2019, coffee-related derivative instruments not designated as accounting hedges was impacted by lower mark-to-market net losses compared same prior year period.

Income Taxes

In the three and six months ended December 31, 2019, we recorded income tax benefit of $0.1 million and $0.2 million, respectively, compared to $2.7 million and $4.0 million in the three and six months ended December 31, 2018, respectively. The lower tax benefit is primarily due to the previously recorded valuation allowance and change in our estimated deferred tax liability during the three and six months ended December 31, 2019 as compared to the prior year period. See Note 16, Income Taxes, of the Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.

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Non-GAAP Financial Measures

In addition to net (loss) income determined in accordance with U.S. generally accepted accounting principles (“GAAP”), we use the following non-GAAP financial measures in assessing our operating performance:

“EBITDA” is defined as net (loss) income excluding the impact of:

• income taxes;

• interest expense; and

• depreciation and amortization expense.

“EBITDA Margin” is defined as EBITDA expressed as a percentage of net sales.

“Adjusted EBITDA” is defined as net (loss) income excluding the impact of:

• income taxes;

• interest expense;

• (loss) income from short-term investments;

• depreciation and amortization expense;

• ESOP and share-based compensation expense;

• non-cash impairment losses;

• non-cash pension withdrawal expense;

• restructuring and other transition expenses;

• severance costs;

• proxy related expenses;

• net gains and losses from sales of assets;

• non-cash pension settlement charges; and

• acquisition and integration costs.

“Adjusted EBITDA Margin” is defined as Adjusted EBITDA expressed as a percentage of net sales.

Restructuring and other transition expenses are expenses that are directly attributable to (i) employee retention and separation benefits, pension withdrawal expense, facility-related costs and other related costs such as travel, legal, consulting and other professional services; and (ii) severance, prorated bonuses for bonus eligible employees, contractual termination payments and outplacement services, and other related costs, including legal, recruiting, consulting, other professional services, and travel.

For purposes of calculating EBITDA and EBITDA Margin and Adjusted EBITDA and Adjusted EBITDA Margin, we have excluded the impact of interest expense resulting from the adoption of ASU 2017-07, non-cash pretax pension settlement charge resulting from the amendment and termination of the Farmer Bros. Plan effective December 1, 2018 and severance because these items are not reflective of our ongoing operating results.

We believe these non-GAAP financial measures provide a useful measure of the Company’s operating results, a meaningful comparison with historical results and with the results of other companies, and insight into the Company’s ongoing operating performance. Further, management utilizes these measures, in addition to GAAP measures, when evaluating and comparing the Company’s operating performance against internal financial forecasts and budgets.

We believe that EBITDA facilitates operating performance comparisons from period to period by isolating the effects of certain items that vary from period to period without any correlation to core operating performance or that vary widely among similar companies. These potential differences may be caused by variations in capital structures (affecting interest expense), tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses) and the age and book depreciation of facilities and equipment (affecting relative depreciation expense). We also present EBITDA and EBITDA Margin because (i) we believe that these measures are frequently used by securities analysts, investors and other interested parties to evaluate companies in our industry, (ii) we believe that investors will find these measures useful in assessing our ability to service or incur indebtedness, and (iii) we use these measures internally as benchmarks to compare our performance to that of our competitors.

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EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin, as defined by us, may not be comparable to similarly titled measures reported by other companies. We do not intend for non-GAAP financial measures to be considered in isolation or as a substitute for other measures prepared in accordance with GAAP.

Set forth below is a reconciliation of reported net income (loss) to EBITDA (unaudited): 

	Three Months Ended December 31,						Six Months Ended December 31,
(In thousands)	2019			2018			2019			2018
Net income (loss), as reported	$	7,754		$	(10,100	)	$	12,408		$	(13,086	)
Income tax expense (benefit)	(81		)	(2,725		)	(188		)	(4,012		)
Interest expense (1)	1,585			1,735			2,861			2,938
Depreciation and amortization expense	7,594			7,902			15,211			15,630
EBITDA	$	16,852		$	(3,188	)	$	30,292		$	1,470
EBITDA Margin	11.1		%	(2.0		)%	10.4		%	0.5		%

____________

(1) Excludes interest expense related to pension plans and postretirement benefits.

Set forth below is a reconciliation of reported net income (loss) to Adjusted EBITDA (unaudited):

	Three Months Ended December 31,						Six Months Ended December 31,
(In thousands)	2019			2018			2019			2018
Net income (loss), as reported	$	7,754		$	(10,100	)	$	12,408		$	(13,086	)
Income tax expense (benefit)	(81		)	(2,725		)	(188		)	(4,012		)
Interest expense(1)	1,585			1,735			2,861			2,938
Depreciation and amortization expense	7,594			7,902			15,211			15,630
ESOP and share-based compensation expense	909			945			1,778			1,857
Restructuring and other transition expenses(2)	—			207			—			4,674
Net losses (gains) from sales of other assets	(11,057		)	804			(23,662		)	723
Proxy contest-related expenses	259			—			259			—
Acquisition and integration costs	—			2,727			—			3,738
Pension settlement charge	—			10,948			—			10,948
Severance	485			—			2,797			—
Adjusted EBITDA	$	7,448		$	12,443		$	11,464		$	23,410
Adjusted EBITDA Margin	4.9		%	7.8		%	3.9		%	7.6		%

____________

(1) Excludes interest expense related to pension plans and postretirement benefits.

(2) The six months ended December 31, 2018, includes $3.4 million, including interest, assessed by the WC Pension Trust representing the Company’s share of the Western Conference of Teamsters Pension Plan ("WCTPP") unfunded benefits due to the Company’s partial withdrawal from the WCTPP as a result of employment actions taken by the Company in 2016 in connection with the Corporate Relocation Plan.

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Liquidity, Capital Resources and Financial Condition

The following table summarizes our debt obligations:

				December 31, 2019				June 30, 2019
(In thousands)	Debt Origination Date	Maturity	Original Borrowing Amount	Carrying Value		Weighted Average Interest Rate		Carrying Value		Weighted Average Interest Rate
Credit Facility	Revolver	11/6/2023	N/A	$	70,000	4.05	%	$	92,000	3.98	%

Revolving Credit Facility

On November 6, 2018, we entered into a new $150.0 million senior secured revolving credit facility (the “Revolving Facility”) with Bank of America, N.A, Citibank, N.A., JPMorgan Chase Bank, N.A., PNC Bank, National Association, Regions Bank, and SunTrust Bank, with a sublimit on letters of credit and swingline loans of $15.0 million each. The Revolving Facility includes an accordion feature whereby we may increase the revolving commitments or enter into one or more tranches of incremental term loans, up to an additional $75.0 million in aggregate of increased commitments and incremental term loans, subject to certain conditions. The commitment fee is based on a leverage grid and ranges from 0.20% to 0.40%. Borrowings under the Revolving Facility bear interest based on a leverage grid with a range of PRIME + 0.25% to PRIME + 0.875% or Adjusted LIBO Rate + 1.25% to Adjusted LIBO Rate + 1.875%. Effective March 27, 2019, we entered into an interest rate swap to manage our interest rate risk on our floating-rate indebtedness. See Note 4 for details.

Under the Revolving Facility, we are subject to a variety of affirmative and negative covenants of types customary in a senior secured lending facility, including financial covenants relating to leverage and interest expense coverage. We are allowed to pay dividends, provided, among other things, a total net leverage ratio is met, and no default exists or has occurred and is continuing as of the date of any such payment and after giving effect thereto.

At December 31, 2019, we were in compliance with all of the covenants under the Revolving Facility.

At January 31, 2020, we had outstanding borrowings of $80.0 million and utilized $2.0 million of the letters of credit sublimit under the Revolving Facility. The amount available to borrow is subject to a leverage covenant ratio as defined under the Revolving Facility agreement.

Liquidity

We generally finance our operations through cash flows from operations and borrowings under our revolving credit facility described above. In fiscal 2018, we filed a shelf registration statement with the SEC which allows us to issue unspecified amounts of common stock, preferred stock, depository shares, warrants for the purchase of shares of common stock or preferred stock, purchase contracts for the purchase of equity securities, currencies or commodities, and units consisting of any combination of any of the foregoing securities, in one or more series, from time to time and in one or more offerings up to a total dollar amount of $250.0 million. We believe our Revolving Facility, to the extent available, in addition to our cash flows from operations, collectively, will be sufficient to fund our working capital and capital expenditure requirements for the next 12 months.

Our Revolving Facility includes financial covenants that are tested each fiscal quarter. The ratio of consolidated total indebtedness (net of unrestricted cash up to $7.5 million) to adjusted EBITDA (as defined in the Revolving Credit Facility) must not exceed 3.5 to 1.0. The ratio of adjusted EBITDA (as defined in the Revolving Credit Facility) to consolidated interest expense must not be less than 3.0 to 1.0. As of December 31, 2019, we were in compliance with both financial covenants.

At December 31, 2019, we had $9.1 million in cash and cash equivalents. At December 31, 2019, none of the cash in our coffee-related derivative margin accounts was restricted.

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Cash Flows

The significant captions and amounts from our condensed consolidated statements of cash flows are summarized below:

	Six Months Ended December 31,
	2019			2018
Condensed Consolidated Statements of cash flows data (in thousands)
Net cash used in operating activities	$	(2,195	)	$	(5,646	)
Net cash provided (used) in investing activities	26,240			(23,015		)
Net cash (used) provided by financing activities	(21,898		)	39,556
Net increase in cash and cash equivalents	$	2,147		$	10,895

Operating Activities

Net cash used in operating activities was $2.2 million in the six months ended December 31, 2019 compared to net cash used in operating activities of $5.6 million in the six months ended December 31, 2018. The $3.5 million decrease in cash used was primarily attributable to a lower use of cash for working capital during the current fiscal period. Working capital during the six months ended December 31, 2019 was impacted by, among other items, lower inventory levels and improvement in trade accounts receivable collections, partially offset by decline in outstanding accounts payable balance.

Investing Activities

Net cash provided by investing activities during the six months ended December 31, 2019 was $26.2 million as compared to net cash used of $23.0 million in the six months ended December 31, 2018. The $49.3 million increase in cash provided from investment activities was principally due to the sales of assets during the current period resulting in net cash proceeds of $35.2 million. In addition, cash used for purchases of property, plant and equipment decreased $14.1 million primarily due to prior period including purchase of machinery and equipment for the Northlake, Texas plant expansion, and lower coffee brewing equipment purchases in the current year period.

Financing Activities

Net cash used in financing activities in the six months ended December 31, 2019 was $21.9 million as compared to net cash provided of $39.6 million in the six months ended December 31, 2018, a decrease of $61.5 million. Net cash used in financing activities in the six months ended December 31, 2019 included $22.0 million in net payments under our Revolving Facility compared to $40.2 million in net borrowings in the six months ended December 31, 2018.

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Capital Expenditures

For the three and six months ended December 31, 2019 and 2018, our capital expenditures paid were as follows:

	Three Months Ended December 31,				Six Months Ended December 31,
(In thousands)	2019		2018		2019		2018
Maintenance:
Coffee brewing equipment	$	1,990	$	4,805	$	4,135	$	8,922
Building and facilities	58		15		133		15
Vehicles, machinery and equipment	349		1,153		1,036		1,723
IT, software, office furniture and equipment	710		1,132		2,155		1,907
Capital expenditures, maintenance	$	3,107	$	7,105	$	7,459	$	12,567
Expansion Project:
Machinery and equipment	$	623	$	8,228	$	1,548	$	10,553
Capital expenditures, Expansion Project	$	623	$	8,228	$	1,548	$	10,553
Total capital expenditures	$	3,730	$	15,333	$	9,007	$	23,120

In fiscal year 2020, we anticipate paying between $17.0 million to $20.0 million in maintenance capital expenditures. We expect to finance these expenditures through cash flows from operations and borrowings under our Revolving Facility.

Depreciation and amortization expenses were $7.6 million and $7.9 million in the three months ended December 31, 2019 and 2018, respectively. Depreciation and amortization expense were $15.2 million and $15.6 million in the six months ended December 31, 2019 and 2018, respectively. We anticipate our depreciation and amortization expense will be approximately $7.3 million to $7.6 million per quarter in the remainder of fiscal year 2020 based on our existing fixed asset commitments and the useful lives of our intangible assets.

Commitments and Contingencies

As of December 31, 2019, we had committed to purchase green coffee inventory totaling $60.7 million under fixed-price contracts, $6.2 million in other inventory under non-cancelable purchase orders and $5.4 million in other purchases under non-cancelable purchase orders.

Critical Accounting Policies and Estimates

We prepare our consolidated financial statements in accordance with GAAP. In applying many of these accounting principles, we need to make assumptions, estimates or judgments that affect the reported amounts of assets, liabilities, revenues and expenses in our consolidated financial statements. We base our estimates and judgments on historical experience and other assumptions that we believe are reasonable under the circumstances. These assumptions, estimates or judgments, however, are both subjective and subject to change, and actual results may differ from our assumptions and estimates. If actual amounts are ultimately different from our estimates, the revisions are included in our results of operations for the period in which the actual amounts become known. For a summary of our significant accounting policies, see Note 2, Summary of Significant Accounting Policies, of the Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this report and in our 2019 Form 10-K. For a summary of our critical accounting estimates, please see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates" in our 2019 Form 10-K.

Recent Accounting Pronouncements

See Note 2, Summary of Significant Accounting Policies, of the Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this report and in our 2019 Form 10-K. For a summary of our critical accounting estimates, please see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates" in our 2019 Form 10-K.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements. 

45

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

At December 31, 2019, we were eligible to borrow up to a total of $150.0 million, subject to a leverage covenant ratio as defined under the Revolving Facility agreement and had outstanding borrowings of $70.0 million and utilized $2.0 million of the letters of credit sublimit. As a result of the interest rate swap, only $5.0 million is now subject to interest rate variability. The weighted average interest rate on our outstanding borrowings subject to interest rate variability under the Revolving Facility at December 31, 2019 was 4.05%.

The following table demonstrates the impact of interest rate changes on our annual interest expense on outstanding borrowings subject to interest rate variability under the Revolving Facility based on the weighted average interest rate on the outstanding borrowings as of December 31, 2019:

(In thousands)	Principal	Interest Rate		Annual Interest Expense
–150 basis points	$5,000	2.55	%	$	128
–100 basis points	$5,000	3.05	%	$	153
Unchanged	$5,000	4.05	%	$	203
+100 basis points	$5,000	5.05	%	$	253
+150 basis points	$5,000	5.55	%	$	278

Commodity Price Risk

We are exposed to commodity price risk arising from changes in the market price of green coffee. We value green coffee inventory on the FIFO basis. In the normal course of business we hold a large green coffee inventory and enter into forward commodity purchase agreements with suppliers. We are subject to price risk resulting from the volatility of green coffee prices. Due to competition and market conditions, volatile price increases cannot always be passed on to our customers. See Note 4, Derivative Instruments, of the Notes to the Unaudited Condensed Consolidated Financial Statements for further discussions of our derivative instruments.

The following table summarizes the potential impact as of December 31, 2019 to net loss and AOCI from a hypothetical 10% change in coffee commodity prices. The information provided below relates only to the coffee-related derivative instruments and does not include, when applicable, the corresponding changes in the underlying hedged items:

	Increase (Decrease) to Net Loss					Increase (Decrease) to AOCI
	10% Increase in Underlying Rate		10% Decrease in Underlying Rate			10% Increase in Underlying Rate		10% Decrease in Underlying Rate
(In thousands)
Coffee-related derivative instruments(1)	$	161	$	(161	)	$	5,662	$	(5,662	)

__________

(1) The Company’s purchase contracts that qualify as normal purchases include green coffee purchase commitments for which the price has been locked in as of December 31, 2019. These contracts are not included in the sensitivity analysis above as the underlying price has been fixed.

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Item 4. Controls and Procedures

Disclosure Controls and Procedures

Disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information we are required to disclose in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosures.

As of December 31, 2019, our management, with the participation of our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial and accounting officer), carried out an evaluation of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(e) promulgated under the Exchange Act. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

Management has determined that there has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act) during our fiscal quarter ended December 31, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The information set forth in Note 20, Commitments and Contingencies, of the Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q is incorporated herein by reference.

Item 1A. Risk Factors

For a discussion of our other potential risks and uncertainties, see the information under “Item 1A. Risk Factors” in our Annual Report on Form 10‑K for the year ended June 30, 2019, which is accessible on the SEC’s website at www.sec.gov. During the six months ended December 31, 2019, there have been no material changes to the risk factors disclosed in our 2019 Form 10‑K.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3.  Defaults Upon Senior Securities

None

Item 4.  Mine Safety Disclosures

Not applicable

Item 5.  Other Information

None

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Item 6. Exhibits

Exhibit No.	Description
3.1	Amended and Restated Certificate of Incorporation of Farmer Bros. Co. (filed as Exhibit 3.1 to the Company’s Annual Report on Form 10-K filed with the SEC on September 11, 2019 and incorporated herein by reference).
3.2	Amended and Restated Bylaws, adopted as of October 14, 2018 (filed as Exhibit 3.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2018, filed with the SEC on February 11, 2019 and incorporated herein by reference).
10.58	Separation and Release Agreement by and between David Robson and Farmer Bros. Co. dated November 1, 2019 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on November 7, 2019 and incorporated herein by reference).
10.59	Form of Indemnification Agreement for Directors and Officers of the Company, as adopted on December 8, 2017 (with updated schedule of indemnitees attached)(filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on November 7, 2019 and incorporated herein by reference).
10.60	Form of Change in Control Severance Agreement for Executive Officers of the Company (with updated schedule of executive officers attached). (filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on November 7, 2019 and incorporated herein by reference).
10.61	Purchase and Sale Agreement, by and between Farmer Bros. Co., as Seller and Sage Interest, Inc., as Buyer (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on November 19, 2019 and incorporated herein by reference).
10.62*	Amendment No. 1 dated September 6, 2019 by and among Farmer Bros. Co., the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent, to that certain Amended and Restated Credit Agreement dated as of November 6, 2018.
31.1*	Principal Executive Officer Certification Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Principal Financial and Accounting Officer Certification Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Principal Executive Officer Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Principal Financial and Accounting Officer Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial statements from the Company’s Quarterly Report on Form 10-Q for the fiscal period ended December 31, 2019, formatted in eXtensible Business Reporting Language: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Loss, (iv) Condensed Consolidated Statements of Cash Flows, (v) Condensed Consolidated Statements of Stockholders’ Equity and (vi) Notes to Unaudited Condensed Consolidated Financial Statements (furnished herewith).

________________

*	Filed herewith
**	Furnished, not filed, herewith

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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.

FARMER BROS. CO.
By:	/s/ Deverl Maserang
	Deverl Maserang President and Chief Executive Officer (principal executive officer)
	February 6, 2020
By:	/s/ Scott Lyon
	Scott Lyon Corporate Controller (interim principal financial and accounting officer)
	February 6, 2020

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EX-10.62

EXECUTION COPY AMENDMENT NO. 1 Dated as of September 6, 2019 to AMENDED AND RESTATED CREDIT AGREEMENT Dated as of November 6, 2018 THIS AMENDMENT NO. 1 (this “Amendment”) is made as of September 6, 2019 by and among Farmer Bros. Co., a Delaware corporation (the “Borrower”), the financial institutions listed on the signature pages hereof and JPMorgan Chase Bank, N.A., as Administrative Agent (the “Administrative Agent’), under that certain Amended and Restated Credit Agreement dated as of November 6, 2018 by and among the Borrower, the other Loan Parties from time to time party thereto, the Lenders and the Administrative Agent (as further amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings given to them in the Credit Agreement. WHEREAS, the Borrower has requested that the requisite Lenders and the Administrative Agent agree to make certain amendments to the Credit Agreement; and WHEREAS, the Borrower, the Lenders party hereto and the Administrative Agent have so agreed on the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, the Lenders party hereto and the Administrative Agent hereby agree to enter into this Amendment. 1. Amendment to the Credit Agreement. Effective as of the date of satisfaction of the conditions precedent set forth in Section 2 below, the parties hereto agree that Section 6.06 of the Credit Agreement is hereby amended to add the double-underlined text (indicated in the same manner as the following example: double-underlined text) set forth below: SECTION 6.06. Sale and Leaseback Transactions. No Loan Party will, nor will it permit any Subsidiary to, enter into any arrangement, directly or indirectly, whereby it shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property sold or transferred (a “Sale and Leaseback Transaction”), except for any such sale of any fixed or capital assets by the Borrower or any Subsidiary that is made for cash consideration in an amount not less than the fair value of such fixed or capital asset and is consummated within 180 days after the Borrower or such Subsidiary acquires or completes the construction of such fixed or capital asset; provided that, notwithstanding the foregoing, nothing in this Section 6.06 shall prohibit any Disposition otherwise permitted under Section 6.05. ACTIVE 248191363v.1

2. Conditions of Effectiveness. The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent: (a) The Administrative Agent shall have received counterparts of this Amendment duly executed by the Borrower, the Required Lenders and the Administrative Agent. (b) The Administrative Agent shall have received payment of its reasonable and documented out-of-pocket expenses (including reasonable out-of-pocket fees and expenses of counsel for the Administrative Agent) in connection with this Amendment. 3. Representations and Warranties of the Borrower. The Borrower hereby represents and warrants as follows: (a) This Amendment and the Credit Agreement (as amended hereby) constitute legal, valid and binding obligations of the Borrower, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. (b) As of the date hereof and after giving effect to the terms of this Amendment, (i) no Default or Event of Default has occurred and is continuing and (ii) the representations and warranties of the Loan Parties set forth in the Loan Documents are true and correct in all material respects with the same effect as though made on and as of the date hereof (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date is true and correct in all material respects only as of such specified date, and that any representation or warranty which is subject to any materiality qualifier shall be required to be true and correct in all respects). 4. Reference to and Effect on the Credit Agreement. (a) Upon the effectiveness hereof, each reference to the Credit Agreement in the Credit Agreement or any other Loan Document shall mean and be a reference to the Credit Agreement as amended hereby. (b) The Credit Agreement and all other documents, instruments and agreements executed and/or delivered in connection therewith shall remain in full force and effect and are hereby ratified and confirmed. (c) The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Administrative Agent or the Lenders, nor constitute a waiver of any provision of the Credit Agreement or any other documents, instruments and agreements executed and/or delivered in connection therewith. (d) This Amendment is a Loan Document. 5. Governing Law. This Amendment shall be construed in accordance with and governed by the law of the State of New York. 6. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose. 2

7. Counterparts. This Amendment may be executed by one or more of the parties hereto on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Signatures delivered by facsimile or other electronic means shall have the same force and effect as manual signatures delivered in person. [Signature Pages Follow] 3

EX-31.1

EXHIBIT 31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Deverl Maserang certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Farmer Bros. Co.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 6, 2020

/S/ DEVERL MASERANG

Deverl Maserang

President and Chief Executive Officer

(principal executive officer)

EX-31.2

EXHIBIT 31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Scott Lyon, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Farmer Bros. Co.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 6, 2020

/S/ SCOTT LYON

Scott Lyon

Corporate Controller

(interim principal financial and accounting officer)

EX-32.1

EXHIBIT 32.1

Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Farmer Bros. Co. (the “Company”) on Form 10-Q for the quarterly period ended December 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Deverl Maserang, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 6, 2020

/S/  DEVERL MASERANG

Deverl Maserang

President and Chief Executive Officer

(principal executive officer)

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

Certification of Principal Financial and Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Farmer Bros. Co. (the “Company”) on Form 10-Q for the quarterly period ended December 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott Lyon, Interim Principal Financial and Accounting Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Dated: February 6, 2020

/S/ SCOTT LYON

Scott Lyon

Corporate Controller

(interim principal financial and accounting officer)

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Revenue Recognition Revenue Recognition

6 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

The Company’s primary source of revenue are sales of coffee, tea and culinary products. The Company recognizes revenue when control of the promised good or service is transferred to the customer and in amounts that the Company expects to collect. The timing of revenue recognition takes into consideration the various shipping terms applicable to the Company’s sales.

The Company delivers products to customers primarily through two methods, Direct-store-delivery (“DSD”) to the Company’s customers at their place of business and direct ship from the Company’s warehouse to the customer’s warehouse or facility. Each delivery or shipment made to a third party customer is to satisfy a performance obligation. Performance obligations generally occur at a point in time and are satisfied when control of the goods passes to the customer. The Company is entitled to collection of the sales price under normal credit terms in the regions in which it operates.

The Company disaggregates net sales from contracts with customers based on the characteristics of the products sold:

	Three Months Ended December 31,
	2019				2018
(In thousands)	$		% of total		$		% of total
Net Sales by Product Category:
Coffee (Roasted)	$	96,177	63.1	%	$	99,286	62.1	%
Coffee (Frozen Liquid)	8,556		5.6	%	9,318		5.8	%
Tea (Iced & Hot)	7,563		5.0	%	8,651		5.4	%
Culinary	15,158		10.0	%	16,795		10.5	%
Spice	6,126		4.0	%	6,002		3.8	%
Other beverages(1)	17,299		11.3	%	18,915		11.8	%
Other revenues(2)	946		0.6	%	—		—	%
Net sales by product category	151,825		99.6	%	158,967		99	%
Fuel surcharge	673		0.4	%	806		0.6	%
Net sales	$	152,498	100.0	%	$	159,773	100	%

____________

(1) Includes all beverages other than roasted coffee, frozen liquid coffee, and iced and hot tea, including cappuccino, cocoa, granitas, and concentrated and ready-to drink cold brew and iced coffee.

(2) Represents revenues for certain transition services related to the sale of the Company’s office coffee assets.

	Six Months Ended December 31,
	2019				2018
(In thousands)	$		% of total		$		% of total
Net Sales by Product Category:
Coffee (Roasted)	$	183,547	63.1	%	$	194,640	63.4	%
Coffee (Frozen Liquid)	16,484		5.7	%	17,874		5.8	%
Tea (Iced & Hot)	15,268		5.2	%	17,555		5.7	%
Culinary	29,361		10.1	%	32,789		10.7	%
Spice	12,332		4.2	%	12,160		4.0	%
Other beverages(1)	30,032		10.3	%	30,541		9.9	%
Other revenues(2)	2,701		0.9	%	—		—	%
Net sales by product category	289,725		99.5	%	305,559		99.5	%
Fuel surcharge	1,373		0.5	%	1,654		0.5	%
Net sales	$	291,098	100.0	%	$	307,213	100.0	%

___________

(1) Includes all beverages other than roasted coffee, frozen liquid coffee, and iced and hot tea, including cappuccino, cocoa, granitas, and concentrated and ready-to drink cold brew and iced coffee.

(2) Represents revenues for certain transition services related to the sale of the Company’s office coffee assets.

The Company does not have any material contract assets and liabilities as of December 31, 2019. Receivables from contracts with customers are included in “Accounts receivable, net” on the Company’s condensed consolidated balance sheets. At December 31, 2019 and June 30, 2019, “Accounts receivable, net” included, $57.7 million and $53.6 million, respectively, in receivables from contracts with customers.

XML

Other Long-Term Liabilities

6 Months Ended

Dec. 31, 2019

Other Liabilities Disclosure [Abstract]

Other Long-Term Liabilities

Other Long-Term Liabilities

Other long-term liabilities include the following:

(In thousands)	December 31, 2019		June 30, 2019
Finance lease liabilities	$	35	$	32
Derivative liabilities—noncurrent	1,068		1,612
Performance Cash Awards Liability	17		—
Cumulative preferred dividends, undeclared and unpaid—noncurrent	—		618
Deferred income taxes and other liabilities(1)	2,027		1,795
Other long-term liabilities	$	3,147	$	4,057

___________

(1) Includes deferred tax liabilities that have an indefinite reversal pattern.

XML

Accounts Receivable, net - Schedule of Accounts Receivable (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
Receivables [Abstract]
Trade receivables	$ 57,652	$ 53,593
Other Receivables	3,293	2,886
Allowance for doubtful accounts	(541)	(1,324)
Accounts receivable, net	$ 60,404	$ 55,155

XML

Derivative Instruments - Narrative (Details) - USD ($)	3 Months Ended	6 Months Ended
	Dec. 31, 2019	Dec. 31, 2019	Jun. 30, 2019	Mar. 27, 2019
Derivative [Line Items]
Derivative Instruments, Percentage Designated As Cash Flow Hedges	97.00%	97.00%	87.00%
Gain (loss) from components excluded from assessment of cash flow hedge effectiveness, net	$ 0
Cash flow hedge gain (loss) to be reclassified within twelve months		$ 5,200,000
Cash Flow Hedging
Derivative [Line Items]
Derivative, Term of Contract		17 months
Interest Rate Swap
Derivative [Line Items]
Derivative, Notional Amount	$ 65,000,000	$ 65,000,000		$ 80,000,000
Derivative, Floor Interest Rate	0.00%	0.00%
Derivative, Fixed Interest Rate	2.1975%	2.1975%
Cash flow hedge gain (loss) to be reclassified within twelve months		$ (400,000)

XML

Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Jun. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 36,224		$ 36,224		$ 36,224
Amortization expense	$ 600	$ 700	$ 1,200	$ 1,300

XML

Other Long-Term Liabilities (Tables)

6 Months Ended

Dec. 31, 2019

Other Liabilities Disclosure [Abstract]

Other Long-Term Liabilities

Other long-term liabilities include the following:

(In thousands)	December 31, 2019		June 30, 2019
Finance lease liabilities	$	35	$	32
Derivative liabilities—noncurrent	1,068		1,612
Performance Cash Awards Liability	17		—
Cumulative preferred dividends, undeclared and unpaid—noncurrent	—		618
Deferred income taxes and other liabilities(1)	2,027		1,795
Other long-term liabilities	$	3,147	$	4,057

___________

(1) Includes deferred tax liabilities that have an indefinite reversal pattern.

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Income Statement [Abstract]
Net sales	$ 152,498	$ 159,773	$ 291,098	$ 307,213
Cost of goods sold	108,513	106,529	206,472	205,734
Gross profit	43,985	53,244	84,626	101,479
Selling expenses	34,906	39,591	68,520	76,901
General and administrative expenses	11,266	12,140	24,006	20,757
Restructuring and other transition expenses	0	207	0	4,674
Net (gains) losses from sales of assets	(11,057)	804	(23,662)	723
Operating expenses	35,115	52,742	68,864	103,055
Income (loss) from operations	8,870	502	15,762	(1,576)
Other (expense) income:
Interest expense	(2,859)	(3,332)	(5,407)	(6,184)
Pension settlement charge	0	(10,948)	0	(10,948)
Other, net	1,662	953	1,865	1,610
Total other expense	(1,197)	(13,327)	(3,542)	(15,522)
Income (loss) before taxes	7,673	(12,825)	12,220	(17,098)
Income tax benefit	(81)	(2,725)	(188)	(4,012)
Net income (loss)	7,754	(10,100)	12,408	(13,086)
Less: Cumulative preferred dividends, undeclared and unpaid	138	134	275	266
Net earnings (loss) available to common stockholders	$ 7,616	$ (10,234)	$ 12,133	$ (13,352)
Net income (loss) per common share - basic (in US$ per share)	$ 0.44	$ (0.60)	$ 0.71	$ (0.79)
Net income (loss) per common share - diluted (in US$ per share)	$ 0.43	$ (0.60)	$ 0.69	$ (0.79)
Weighted average common shares outstanding - basic (in shares)	17,159,108	16,985,157	17,127,153	16,971,995
Weighted average common shares outstanding—diluted (in shares)	17,583,335	16,985,157	17,550,144	16,971,995

XML

Revenue Recognition (Tables)

6 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

he Company disaggregates net sales from contracts with customers based on the characteristics of the products sold:

	Three Months Ended December 31,
	2019				2018
(In thousands)	$		% of total		$		% of total
Net Sales by Product Category:
Coffee (Roasted)	$	96,177	63.1	%	$	99,286	62.1	%
Coffee (Frozen Liquid)	8,556		5.6	%	9,318		5.8	%
Tea (Iced & Hot)	7,563		5.0	%	8,651		5.4	%
Culinary	15,158		10.0	%	16,795		10.5	%
Spice	6,126		4.0	%	6,002		3.8	%
Other beverages(1)	17,299		11.3	%	18,915		11.8	%
Other revenues(2)	946		0.6	%	—		—	%
Net sales by product category	151,825		99.6	%	158,967		99	%
Fuel surcharge	673		0.4	%	806		0.6	%
Net sales	$	152,498	100.0	%	$	159,773	100	%

____________

(1) Includes all beverages other than roasted coffee, frozen liquid coffee, and iced and hot tea, including cappuccino, cocoa, granitas, and concentrated and ready-to drink cold brew and iced coffee.

(2) Represents revenues for certain transition services related to the sale of the Company’s office coffee assets.

	Six Months Ended December 31,
	2019				2018
(In thousands)	$		% of total		$		% of total
Net Sales by Product Category:
Coffee (Roasted)	$	183,547	63.1	%	$	194,640	63.4	%
Coffee (Frozen Liquid)	16,484		5.7	%	17,874		5.8	%
Tea (Iced & Hot)	15,268		5.2	%	17,555		5.7	%
Culinary	29,361		10.1	%	32,789		10.7	%
Spice	12,332		4.2	%	12,160		4.0	%
Other beverages(1)	30,032		10.3	%	30,541		9.9	%
Other revenues(2)	2,701		0.9	%	—		—	%
Net sales by product category	289,725		99.5	%	305,559		99.5	%
Fuel surcharge	1,373		0.5	%	1,654		0.5	%
Net sales	$	291,098	100.0	%	$	307,213	100.0	%

___________

(1) Includes all beverages other than roasted coffee, frozen liquid coffee, and iced and hot tea, including cappuccino, cocoa, granitas, and concentrated and ready-to drink cold brew and iced coffee.

(2) Represents revenues for certain transition services related to the sale of the Company’s office coffee assets.

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Cash flows from operating activities:
Net income (loss)	$ 12,408	$ (13,086)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	15,211	15,630
Restructuring and other transition expenses, net of payments	0	2,457
Deferred income taxes	0	(3,265)
Pension settlement charge	0	10,948
Net (gains) losses from sales of assets	(23,662)	723
Net losses on derivative instruments	4,075	6,205
Other adjustments	1,794	3,494
Change in operating assets and liabilities:
Accounts receivable	(5,285)	(21,299)
Inventories	1,804	(11,326)
Derivative assets (liabilities), net	1,965	(9,234)
Other assets	361	1,194
Accounts payable	(10,608)	21,534
Accrued expenses and other liabilities	(258)	(9,621)
Net cash used in operating activities	(2,195)	(5,646)
Cash flows from investing activities:
Purchases of property, plant and equipment	(9,007)	(23,120)
Proceeds from sales of property, plant and equipment	35,247	105
Net cash provided (used) in investing activities	26,240	(23,015)
Cash flows from financing activities:
Proceeds from revolving credit facility	38,000	40,642
Repayments on revolving credit facility	(60,000)	(429)
Payments of finance lease obligations	(27)	(137)
Payment of financing costs	0	(1,027)
Proceeds from stock option exercises	129	507
Net cash (used) provided by financing activities	(21,898)	39,556
Net increase in cash and cash equivalents	2,147	10,895
Cash and cash equivalents at beginning of period	6,983	2,438
Cash and cash equivalents at end of period	9,130	13,333
Supplemental disclosure of non-cash investing and financing activities:
Net change in derivative assets and liabilities included in other comprehensive loss, net of tax	14,644	(2,239)
Non-cash additions to property, plant and equipment	284	2,928
Non-cash portion of earnout receivable recognized—spice assets sale	0	390
Non-cash issuance of 401-K common stock	109	0
Cumulative preferred dividends, undeclared and unpaid	275	266
West Coast Coffee, Inc.
Supplemental disclosure of non-cash investing and financing activities:
Non-cash issuance of 401-K common stock	$ 0	$ 840

XML

Share-Based Compensation - Performance-Based RSUs (Details) - Performance-Based Restricted Stock Units (PBRSUs) - $ / shares	6 Months Ended
	Dec. 31, 2019	Jun. 30, 2019
Number of PBRSUs [Roll Forward]
Shares Awarded, Beginning balance (in shares)	51,237
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	76,256
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period	0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period	36,049
Shares Awarded, Ending balance (in shares)	91,444
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value	$ 16.54	$ 27.69
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value	14.42
Weighted Average Grant Date Fair Value, Exercised/Released (in US$ per share)	0.00
Weighted Average Grant Date Fair Value, Cancelled/Forfeited (in US$ per share)	$ 27.92

XML

Employee Benefit Plans - Narrative (Details) $ in Millions	3 Months Ended		6 Months Ended
	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2019 USD ($) plan shares	Dec. 31, 2018 USD ($) shares
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Defined Contribution Plan, Employer Matching Contribution, Amount	$ 0.6	$ 0.4	$ 1.3	$ 0.9
Other Postretirement Benefit Plan
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Multiemployer plans, number of plans | plan			9
Restated and Amended 401K Plan
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Defined contribution plan, employer matching contribution, percent of eligible income			4.00%
Defined Contribution Plan, Number of Shares Contributed | shares			54,025	109,648.7
Defined Contribution Plan, Employer Discretionary Contribution Amount			$ 0.6	$ 1.4

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Other Long-Term Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
Other Liabilities Disclosure [Abstract]
Other long-term liabilities-capital leases	$ 35	$ 32
Derivative liabilities—noncurrent	1,068	1,612
Multiemployer Plan Holdback Liability, Long-Term	17	0
Cumulative preferred dividends, undeclared and unpaid—noncurrent	0	618
Deferred income taxes	2,027	1,795
Other long-term liabilities	$ 3,147	$ 4,057

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Preferred Stock - Schedule of Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Dec. 31, 2019	Jun. 30, 2019
Auction Market Preferred Securities, Stock Series [Line Items]
Preferred Stock, Shares Authorized (in shares)	500,000	500,000
Preferred stock, par value (in US$ per share)	$ 1	$ 1
Preferred Stock, Value, Outstanding	$ 15	$ 15
Liquidation preference	$ 15,899	$ 15,624
Series A Preferred Stock
Auction Market Preferred Securities, Stock Series [Line Items]
Preferred Stock, Shares Authorized (in shares)	21,000,000
Preferred stock, issued (in shares)	14,700,000
Preferred stock, par value (in US$ per share)	$ 1,082
Preferred Stock, Value, Outstanding	$ 15,899
Cumulative Dividends	1,199
Liquidation preference	$ 15,899

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Share-Based Compensation - Narrative (Details) - USD ($)	3 Months Ended			6 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Jun. 30, 2019
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Proceeds from stock option exercises				$ 129,000	$ 507,000
Share-based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount	$ 2,100,000			2,100,000		$ 1,100,000
Restricted Stock
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Fair Value				700,000
Unrecognized compensation cost related to restricted stock	700,000			700,000		400,000
Restricted Stock | General and Administrative Expense
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Compensation expense recognized	200,000		$ 100,000	400,000	200,000
Performance-Based Restricted Stock Units (PBRSUs)
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Compensation expense recognized	77,200		117,000	100,000	200,000
Unrecognized compensation cost related to restricted stock	$ 1,100,000			$ 1,100,000		$ 300,000
2017 Plan
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Common Stock, Capital Shares Reserved for Future Issuance	565,112			565,112
NQOs
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Weighted average fair value (in US$ per share)				$ 4.65
Share price (in US$ per share)	$ 15.06			$ 15.06		$ 16.37
Proceeds from stock option exercises				$ 100,000	300,000
Compensation expense recognized	$ 178,100		185,000	277,200	283,000
NQOs | Farmer Bros. Co. Amended and Restated 2007 Long-term Incentive Plan
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Employee Service Share-based Compensation, Nonvested Awards, Weighted Average Remaining Amortization Period	2 years 6 months 79 days
PNQs
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Proceeds from stock option exercises					100,000
PNQs | Farmer Bros. Co. Amended and Restated 2007 Long-term Incentive Plan
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Share-based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount						$ 39,700
Compensation expense recognized	$ 4,600		$ 146,400	18,300	$ 324,500
Restricted Stock | Farmer Bros. Co. Amended and Restated 2007 Long-term Incentive Plan
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Employee Service Share-based Compensation, Nonvested Awards, Weighted Average Remaining Amortization Period	9 months 2 days
Performance-Based Restricted Stock Units (PBRSUs)
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Fair Value				1,100,000
Performance-Based Restricted Stock Units (PBRSUs) | 2017 Plan
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Employee Service Share-based Compensation, Nonvested Awards, Weighted Average Remaining Amortization Period	2 years 7 months 12 days
Performance Cash Awards
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Compensation expense recognized	$ 16,900
Unrecognized compensation cost related to restricted stock	400,000			400,000
Accrued Liabilities	$ 16,900			$ 16,900
Performance Cash Awards | 2017 Plan
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Employee Service Share-based Compensation, Nonvested Awards, Weighted Average Remaining Amortization Period		2 years 9 months 72 days

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Leases - Minimum Annual Payments (Details) $ in Thousands	Jun. 30, 2019 USD ($)
Operating Lease Obligations
Operating Leases, Future Minimum Payments Due, Next Twelve Months	$ 4,434
Operating Leases, Future Minimum Payments, Due in Two Years	3,238
Operating Leases, Future Minimum Payments, Due in Three Years	2,472
Operating Leases, Future Minimum Payments, Due in Four Years	2,131
Operating Leases, Future Minimum Payments, Due in Five Years	2,025
Operating Leases, Future Minimum Payments, Due Thereafter	4,389
Operating Leases, Future Minimum Payments Due	18,689
Capital Lease Obligations
Capital Leases, Future Minimum Payments Due, Next Twelve Months	36
Capital Leases, Future Minimum Payments Due in Two Years	1
Capital Leases, Future Minimum Payments Due in Three Years	0
Capital Leases, Future Minimum Payments Due in Four Years	0
Capital Leases, Future Minimum Payments Due in Five Years	0
Capital Leases, Future Minimum Payments Due Thereafter	0
Capital Leases, Future Minimum Payments Due	37
Less: imputed interest (0.82% to 10.66%)	(2)
Capital Lease Obligations	35
Capital Lease Obligations, Current	(34)
Capital Lease Obligations, Noncurrent	$ 1

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Leases - Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Dec. 31, 2019	Dec. 31, 2019
Leases [Abstract]
Operating Lease, Cost	$ 1,253	$ 2,363
Finance Lease, Right-of-Use Asset, Amortization	13	26
Finance Lease, Interest Expense	0	1
Lease, Cost	$ 1,266	$ 2,390

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Fair Value Measurements (Tables)

6 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Schedule of Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis

Assets and liabilities measured and recorded at fair value on a recurring basis were as follows:

(In thousands)	Total		Level 1		Level 2		Level 3
December 31, 2019
Derivative instruments designated as cash flow hedges:
Coffee-related derivative assets (1)	$	9,161	$	—	$	9,161	$	—
Coffee-related derivative liabilities (1)	$	1	$	—	$	1	$	—
Interest rate swap derivative liabilities (2)	$	1,429	$	—	$	1,429	$	—
Derivative instruments not designated as accounting hedges:
Coffee-related derivative assets(1)	$	333	$	—	$	333	$	—
Coffee-related derivative liabilities(1)	$	7	$	—	$	7	$	—
(In thousands)	Total		Level 1		Level 2		Level 3
June 30, 2019
Derivative instruments designated as cash flow hedges:
Coffee-related derivative assets (1)	$	1,925	$	—	$	1,925	$	—
Coffee-related derivative liabilities (1)	$	1,127	$	—	$	1,127	$	—
Interest rate swap derivative liabilities (2)	$	1,845	$	—	$	1,845	$	—
Derivative instruments not designated as accounting hedges:
Coffee-related derivative assets (1)	$	614	$	—	$	614	$	—
Coffee-related derivative liabilities (1)	$	114	$	—	$	114	$	—

____________________ 

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Goodwill and Intangible Assets (Tables)

6 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets Disclosure

The following is a summary of the Company’s amortized and unamortized intangible assets other than goodwill:

		December 31, 2019							June 30, 2019
(In thousands)	Weighted Average Amortization Period as of December 31, 2019	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Amortized intangible assets:
Customer relationships	7.3	$	33,003	$	(16,391	)	$	16,612	$	33,003	$	(15,291	)	$	17,712
Non-compete agreements	2.2	220		(142		)	78		220		(122		)	98
Recipes	3.8	930		(420		)	510		930		(354		)	576
Trade name/brand name	4.5	510		(365		)	145		510		(346		)	164
Total amortized intangible assets		$	34,663	$	(17,318	)	$	17,345	$	34,663	$	(16,113	)	$	18,550
Unamortized intangible assets:
Trademarks, trade names and brand name with indefinite lives		$	10,328	$	—		$	10,328	$	10,328	$	—		$	10,328
Total unamortized intangible assets		$	10,328	$	—		$	10,328	$	10,328	$	—		$	10,328
Total intangible assets		$	44,991	$	(17,318	)	$	27,673	$	44,991	$	(16,113	)	$	28,878

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Inventories

6 Months Ended

Dec. 31, 2019

Inventory Disclosure [Abstract]

Inventories

Inventories

(In thousands)	December 31, 2019		June 30, 2019
Coffee
Processed	$	27,492	$	25,769
Unprocessed	30,337		33,259
Total	$	57,829	$	59,028
Tea and culinary products
Processed	$	19,385	$	21,767
Unprocessed	94		74
Total	$	19,479	$	21,841
Coffee brewing equipment parts	$	7,826	$	7,041
Total inventories	$	85,134	$	87,910

In addition to product cost, inventory costs include expenditures such as direct labor and certain supply, freight, warehousing, overhead variances, purchase price variance (“PPVs”) and other expenses incurred in bringing the inventory to its existing condition and location. The “Unprocessed” inventory values as stated in the above table represent the value of raw materials and the “Processed” inventory values represent all other products consisting primarily of finished goods.

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Summary of Significant Accounting Policies

6 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Recent Accounting Pronouncements

The Company considers the applicability and impact of all ASUs issued. ASUs not listed below were assessed and either determined to be not applicable or expected to have minimal impact on its condensed consolidated financial statements.

The following table provides a brief description of the applicable recent ASUs issued by the FASB:

Standard	Description	Effective Date	Effect on the Financial Statements or Other Significant Matters
In August 2018, the FASB issued ASU No. 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”).	ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.	Annual periods beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period.	Effective for the Company beginning July 1, 2020. The Company is currently evaluating the impact ASU 2018-15 will have on its consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-14, “Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans” (“ASU 2018-14”).	ASU 2018-14 modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing disclosures that no longer are considered cost beneficial, clarifying the specific requirements of disclosures and adding disclosure requirements identified as relevant.	Annual periods beginning after December 15, 2020.  Early adoption is permitted.	Effective for the Company beginning July 1, 2021. The Company is currently evaluating the impact ASU 2018-14 will have on its consolidated financial statements.
In February 2018, the FASB issued ASU No. 2018-02, “Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”).	ASU 2018-02 provides entities an option to reclassify certain stranded tax effects resulting from the tax reform from accumulated other comprehensive income to retained earnings.	The guidance in ASU 2018-02 is effective for annual periods beginning after December 15, 2018, and interim periods within those fiscal years, and should be applied either in the period of adoption or retrospectively.	The Company did not elect the option to reclassify certain stranded tax effects resulting from the tax reform from accumulated other comprehensive income to retained earnings.
In January 2017, the FASB issued ASU No. 2017-04, “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”).	The amendments in ASU 2017-04 address concerns regarding the cost and complexity of the two-step goodwill impairment test, and remove the second step of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 does not amend the optional qualitative assessment of goodwill impairment.	Annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019.	Effective for the Company beginning July 1, 2020. Adoption of ASU 2017-04 is not expected to have a material effect on the results of operations, financial position or cash flows of the Company.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Since that date, the FASB has issued additional ASUs clarifying certain aspects of ASU 2016-13.	The objective of the guidance in ASU 2016-13 is to allow entities to recognize estimated credit losses in the period that the change in valuation occurs. The amendments in ASU 2016-13 requires an entity to present financial assets measured on an amortized cost basis on the balance sheet net of an allowance for credit losses. The model requires an estimate of the credit losses expected over the life of an exposure or pool of exposures. The income statement will reflect the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period.	Annual reporting periods beginning after December 15, 2019 and interim periods within those reporting periods.	Effective for the Company beginning July 1, 2020. The Company is currently evaluating the impact of adoption on its financial statements and related disclosures, but does not anticipate a material impact to the consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases. Since that date, the FASB has issued additional ASUs clarifying certain aspects of ASU 2016-02.	ASU 2016-02 requires a lessee to recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term for both finance and operating leases. Subsequent guidance issued after February 2016 did not change the core principle of ASU 2016-02.	Annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early application is permitted.	The Company adopted the new guidance effective July 1, 2019, using the modified retrospective transition method, which did not require the Company to adjust comparative periods. See Note 3 for the applicable disclosure of ASU 2016-02 adoption. .

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Debt Obligations

6 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Debt Obligations

Debt Obligations

The following table summarizes the Company’s debt obligations:

				December 31, 2019				June 30, 2019
(In thousands)	Debt Origination Date	Maturity	Original Borrowing Amount	Carrying Value		Weighted Average Interest Rate		Carrying Value		Weighted Average Interest Rate
Credit Facility	Revolver	11/6/2023	N/A	$	70,000	4.05	%	$	92,000	3.98	%

On November 6, 2018, the Company entered into a new $150.0 million senior secured revolving credit facility (the “Revolving Facility”) with Bank of America, N.A, Citibank, N.A., JPMorgan Chase Bank, N.A., PNC Bank, National Association, Regions Bank, and SunTrust Bank, with a sublimit on letters of credit and swingline loans of $15.0 million each. The Revolving Facility includes an accordion feature whereby the Company may increase the revolving commitments or enter into one or more tranches of incremental term loans, up to an additional $75.0 million in aggregate of increased commitments and incremental term loans, subject to certain conditions. The commitment fee is based on a leverage grid and ranges from 0.20% to 0.40%. Borrowings under the New Revolving Facility bear interest based on a leverage grid with a range of PRIME + 0.25% to PRIME + 0.875% or Adjusted LIBO Rate + 1.25% to Adjusted LIBO Rate + 1.875%. Effective March 27, 2019, the Company entered into a rate swap agreement and in December 2019 amended the agreement. The impact of the amendment was $0.4 million of realized loss due to the partial unwinding of interest rate swap resulting from the amendment of the notional amount from $80.0 million to $65.0 million. See Note 4 for details.

Under the Revolving Facility, the Company is subject to a variety of affirmative and negative covenants of types customary in a senior secured lending facility, including financial covenants relating to leverage and interest expense coverage. The Company is allowed to pay dividends, provided, among other things, a total net leverage ratio is met, and no default exists or has occurred and is continuing as of the date of any such payment and after giving effect thereto.

At December 31, 2019, the Company was in compliance with all of the covenants under the Revolving Facility.

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Employee Benefit Plans - Schedule of Single Employer Pension Plans (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Components of net periodic benefit cost
Pension settlement charge	$ 0	$ 10,948	$ 0	$ 10,948
Pension Plan
Components of net periodic benefit cost
Service cost	0	0	0	0
Interest cost	1,059	1,426	2,118	2,852
Expected return on plan assets	(1,102)	(1,485)	(2,203)	(2,970)
Amortization of net loss (gain)	370	370	740	740
Pension settlement charge	0	10,948	0	10,948
Net periodic benefit cost	$ 327	$ 11,259	$ 655	$ 11,570
Weighted average assumptions used to determine benefit obligations
Discount rate			3.45%	4.05%
Expected long-term return on plan assets			6.75%	6.75%

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Other Current Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
Payables and Accruals [Abstract]
Accrued postretirement benefits	$ 1,068	$ 1,068
Accrued workers’ compensation liabilities	1,681	1,495
Liability, Defined Benefit Plan, Current	1,198	305
Earnout payable	0	1,000
Working capital dispute payable	354	354
Other (including net taxes payable)	3,681	3,087
Other current liabilities	$ 7,982	$ 7,309

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Preferred Stock - Narrative (Details) - $ / shares	Dec. 31, 2019	Jun. 30, 2019	Oct. 02, 2017
Class of Stock [Line Items]
Preferred Stock, Shares Authorized (in shares)	500,000	500,000
Preferred stock, par value (in US$ per share)	$ 1	$ 1
Convertible Preferred Stock
Class of Stock [Line Items]
Preferred Stock, Shares Authorized (in shares)	21,000
Cumulative Preferred Stock
Class of Stock [Line Items]
Preferred Stock, Shares Authorized (in shares)	21,000	21,000
Preferred stock, issued (in shares)	14,700	14,700	14,700
Series A Preferred Stock
Class of Stock [Line Items]
Preferred Stock, Shares Authorized (in shares)	21,000,000
Preferred stock, issued (in shares)	14,700,000
Preferred stock, par value (in US$ per share)	$ 1,082

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Employee Stock Ownership Plan - Number and Value of ESOP Shares (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
Share-based Payment Arrangement [Abstract]
Allocated shares	1,393,530	1,393,530
Committed to be released shares	0	0
Unallocated shares	0	0
Total ESOP shares	1,393,530	1,393,530
Fair value of ESOP shares	$ 20,987	$ 22,812

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Share-Based Compensation - Restricted Stock Activity (Details) - Restricted Stock - $ / shares	6 Months Ended
	Dec. 31, 2019	Jun. 30, 2019
Number of Restricted Stock [Roll Forward]
Shares Awarded, Beginning balance (in shares)	32,056
Restricted stock granted (in shares)	48,654
Shares Awarded, Exercised/Released (in shares)	(18,298)
Shares Awarded, Cancelled/Forfeited (in shares)	(1,704)
Shares Awarded, Ending balance (in shares)	60,708
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value	$ 15.66	$ 21.10
Restricted stock granted, weighted average grant date fair value (in US$ per share)	15.05
Weighted Average Grant Date Fair Value, Exercised/Released (in US$ per share)	23.98
Weighted Average Grant Date Fair Value, Cancelled/Forfeited (in US$ per share)	$ 31.70

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Sales of Assets (Details) - USD ($)					1 Months Ended		3 Months Ended	6 Months Ended
	Dec. 31, 2019	Dec. 23, 2019	Nov. 19, 2019	Aug. 28, 2019	Nov. 30, 2019	Jul. 31, 2019	Dec. 31, 2019	Dec. 31, 2019	Dec. 31, 2018
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from sales of property, plant and equipment								$ 35,247,000	$ 105,000
Sale Leaseback Transaction, Term								3 years
Sale Leaseback Transaction, Rent Expense								$ 50,000
Coffee Brewing Equipment
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from sales of property, plant and equipment						$ 9,300,000
Disposal Group, Including Discontinued Operation, Earnout Amount						$ 2,300,000	$ 7,200,000
Seattle Branch
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal Group, Including Discontinued Operation, Consideration				$ 7,900,000
Proceeds From Sale of Property Held-for-Sale, Gross				7,300,000
Gain (Loss) on Sale of Properties				$ 6,800,000
Indianapolis, Indiana Branch
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal Group, Including Discontinued Operation, Consideration			$ 250,000
Proceeds From Sale of Property Held-for-Sale, Gross			186,000
Gain (Loss) on Sale of Properties			$ (173,000)
Howard, California Branch
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal Group, Including Discontinued Operation, Consideration		$ 7,050,000
Proceeds From Sale of Property Held-for-Sale, Gross		6,569,000
Gain (Loss) on Sale of Properties		$ 2,016,000
Sale Leaseback Transaction, Term		5 years
Sale Leaseback Transaction, Rent Expense		$ 28,000
Denver, Colorado Branch
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal Group, Including Discontinued Operation, Consideration	$ 2,300,000						2,300,000	2,300,000
Proceeds From Sale of Property Held-for-Sale, Gross	2,075,000
Gain (Loss) on Sale of Properties	$ 1,989,000
Sale Leaseback Transaction, Term	7 years
Sale Leaseback Transaction, Rent Expense	$ 17,000
Casper, Wyoming Branch
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal Group, Including Discontinued Operation, Consideration	385,000						$ 385,000	385,000
Proceeds From Sale of Property Held-for-Sale, Gross	355,000
Gain (Loss) on Sale of Properties	$ 304,000
Houston Texas Facility
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal Group, Including Discontinued Operation, Consideration					$ 10,000,000
Proceeds From Sale of Property Held-for-Sale, Gross								$ 7,300,000
Proceeds from Sale of Property Held-for-sale					$ 9,000,000

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Derivative Instruments - Schedule of Notional Volumes of Derivative Instruments (Details) - lb lb in Thousands	Dec. 31, 2019	Jun. 30, 2019
Derivative [Line Items]
Derivative, Nonmonetary Notional Amount	(41,963)	(48,183)
Cash Flow Hedging | Designated as Hedging Instrument
Derivative [Line Items]
Derivative, Nonmonetary Notional Amount	(40,725)	(42,113)
Cash Flow Hedging | Not Designated as Hedging Instrument | Long
Derivative [Line Items]
Derivative, Nonmonetary Notional Amount	(1,238)	(6,070)

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Leases - Lease Obligations (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jul. 01, 2019
Operating Leases
Lessee, Operating Lease, Liability, Payments, Remainder of Fiscal Year	$ 2,826
Lessee, Operating Lease, Liability, Payments, Due Year Two	5,102
Lessee, Operating Lease, Liability, Payments, Due Year Three	3,631
Lessee, Operating Lease, Liability, Payments, Due Year Four	2,995
Lessee, Operating Lease, Liability, Payments, Due Year Five	2,699
Lessee, Operating Lease, Liability, Payments, Due after Year Five	5,375
Lessee, Operating Lease, Liability, Payments, Due	22,628
Lessee, Operating Lease, Liability, Undiscounted Excess Amount	(2,739)
Operating Lease, Liability	19,889	$ 16,300
Finance Leases
Finance Lease, Liability, Payments, Remainder of Fiscal Year	27
Finance Lease, Liability, Payments, Due Year Two	9
Finance Lease, Liability, Payments, Due Year Three	0
Finance Lease, Liability, Payments, Due Year Four	0
Finance Lease, Liability, Payments, Due Year Five	0
Finance Lease, Liability, Payments, Due after Year Five	0
Finance Lease, Liability, Payment, Due	36
Finance Lease, Liability, Undiscounted Excess Amount	(1)
Finance Lease, Liability	$ 35

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Derivative Instruments (Tables)

6 Months Ended

Dec. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Notional Amounts of Outstanding Derivative Positions

The following table summarizes the notional volumes for the coffee-related derivative instruments held by the Company at December 31, 2019 and June 30, 2019:

(In thousands)	December 31, 2019	June 30, 2019
Derivative instruments designated as cash flow hedges:
Long coffee pounds	40,725	42,113
Derivative instruments not designated as cash flow hedges:
Long coffee pounds	1,238	6,070
Total	41,963	48,183

Schedule of Fair Values of Derivative Instruments on the Consolidated Balance Sheets

Fair values of derivative instruments on the Company’s condensed consolidated balance sheets:

	Derivative Instruments Designated as Cash Flow Hedges				Derivative Instruments Not Designated as Accounting Hedges
	December 31, 2019		June 30, 2019		December 31, 2019		June 30, 2019
(In thousands)
Financial Statement Location:
Short-term derivative assets:
Coffee-related derivative instruments(1)	$	8,718	$	1,254	$	333	$	611
Long-term derivative assets:
Coffee-related derivative instruments (2)	$	443	$	671	$	—	$	3
Short-term derivative liabilities:
Coffee-related derivative instruments (3)	$	1	$	1,114	$	7	$	114
Interest rate swap derivative instruments (3)	$	360	$	246	$	—	$	—
Long-term derivative liabilities:
Coffee-related derivative instruments (4)	$	—	$	13	$	—	$	—
Interest rate swap derivative instruments (4)	$	1,069	$	1,599	$	—	$	—

________________

(1) Included in “Short-term derivative assets” on the Company’s condensed consolidated balance sheets.

(2) Included in “Long-term derivative assets” on the Company's condensed consolidated balance sheets.

(3) Included in “Short-term liabilities” on the Company's condensed consolidated balance sheets.

(4) Included in “Other long-term liabilities” on the Company's condensed consolidated balance sheets.

Schedule of Pretax Effect of Derivative Instruments on Earnings and OCI

The following table presents pretax net gains and losses for the Company's derivative instruments designated as cash flow hedges, as recognized in “AOCI,” “Cost of goods sold” and “Other, net”.

	Three Months Ended December 31,						Six Months Ended December 31,						Financial Statement Classification
(In thousands)	2019			2018			2019			2018
Net gains (losses) recognized in AOCI - Interest rate swap	$	448		$	—		$	(48	)	$	—		AOCI
Net losses recognized from AOCI to earnings - Interest rate swap	$	(52	)	$	—		$	(32	)	$	—		Interest Expense
Net losses reclassified from AOCI to earnings for partial unwind of our interest swap - Interest rate swap (1)	$	(407	)	$	—		$	(407	)	$	—		Interest Expense
Net gains (losses) recognized in AOCI - Coffee-related	$	12,130		$	1,005		$	7,431		$	(7,188	)	AOCI
Net losses recognized in earnings - Coffee - related	$	(3,451	)	$	(2,217	)	$	(6,922	)	$	(4,179	)	Cost of goods sold

Schedule of Net Realized and Unrealized Gains and Losses Recorded in 'Other, net'

Net gains and losses recorded in “Other, net” are as follows:

	Three Months Ended December 31,						Six Months Ended December 31,
(In thousands)	2019			2018			2019			2018
Net losses on coffee-related derivative instruments(1)	$	419		$	(920	)	$	(624	)	$	(2,025	)
Non-operating pension and other postretirement benefit plans cost (2)	1,248			1,763			2,496			3,526
Other (losses) gains, net	(5		)	110			(7		)	109
Other, net	$	1,662		$	953		$	1,865		$	1,610

___________

(1) Excludes net gains and losses on coffee-related derivative instruments designated as cash flow hedges recorded in cost of goods sold in the three and six months ended December 31, 2019 and 2018.

(2) Presented in accordance with ASU 2017-07.

Schedule of Offsetting Assets

The following table presents the Company’s net exposure from its offsetting derivative asset and liability positions, as well as cash collateral on deposit with its counterparties as of the reporting dates indicated:

(In thousands)		Gross Amount Reported on Balance Sheet			Netting Adjustments			Cash Collateral Posted		Net Exposure
December 31, 2019	Derivative Assets	$	9,494		$	(8	)	$	—	$	9,486
	Derivative Liabilities	$	(1,437	)	$	(8	)	$	—	$	(1,445	)
June 30, 2019	Derivative Assets	$	2,539		$	(698	)	$	—	$	1,841
	Derivative Liabilities	$	3,086		$	(698	)	$	—	$	2,388

Schedule of Offsetting Liabilities

The following table presents the Company’s net exposure from its offsetting derivative asset and liability positions, as well as cash collateral on deposit with its counterparties as of the reporting dates indicated:

(In thousands)		Gross Amount Reported on Balance Sheet			Netting Adjustments			Cash Collateral Posted		Net Exposure
December 31, 2019	Derivative Assets	$	9,494		$	(8	)	$	—	$	9,486
	Derivative Liabilities	$	(1,437	)	$	(8	)	$	—	$	(1,445	)
June 30, 2019	Derivative Assets	$	2,539		$	(698	)	$	—	$	1,841
	Derivative Liabilities	$	3,086		$	(698	)	$	—	$	2,388

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Property, Plant and Equipment (Tables)

6 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

(In thousands)	December 31, 2019			June 30, 2019
Buildings and facilities (1)	$	100,316		$	107,915
Machinery and equipment (1)	243,397			249,477
Capitalized software	28,770			27,666
Office furniture and equipment	13,858			14,035
	$	386,341		$	399,093
Accumulated depreciation	(227,671		)	(225,826		)
Land	13,313			16,191
Property, plant and equipment, net	$	171,983		$	189,458

__________

(1) Decrease as of December 31, 2019 is due to the sale of assets. See Note 21 for details.

Coffee Brewing Equipment (“CBE”) and Service

Capitalized CBE included in machinery and equipment above are:

(In thousands)	December 31, 2019			June 30, 2019
Coffee Brewing Equipment	$	103,520		$	106,593
Accumulated depreciation	(69,581		)	$	(70,202	)
Coffee Brewing Equipment, net	$	33,939		$	36,391

Depreciation expense related to capitalized CBE and other CBE related expenses (excluding CBE depreciation) provided to customers and reported in cost of goods sold were as follows:

	Three Months Ended December 31,				Six Months Ended December 31,
(In thousands)	2019		2018		2019		2018
Depreciation expense	$	2,327	$	2,201	$	4,666	$	4,396
Other CBE expenses	$	8,446	$	8,410	$	16,171	$	16,916

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Employee Stock Ownership Plan

6 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Employee Stock Ownership Plan

Employee Stock Ownership Plan

The Company’s ESOP was established in 2000. As of December 31, 2018, the Company froze the ESOP such that (i) no employees of the Company may commence participation in the ESOP on or after December 31, 2018; (ii) no Company contributions will be made to the ESOP with respect to services performed or compensation received after December 31, 2018; and (iii) the ESOP accounts of all individuals who are actively employed by the Company and participating in the ESOP on December 31, 2018 will be fully vested as of such date. Additionally, the Administrative Committee, with the consent of the Board of Directors, designated certain employees who were terminated in connection with certain reductions-in-force in 2018 to be fully vested in their ESOP accounts as of their severance dates.

Shares are held by the plan trustee for allocation among participants using a compensation-based formula. Subject to vesting requirements, allocated shares are owned by participants and shares are held by the plan trustee until the participant retires.

	December 31, 2019		June 30, 2019
Allocated shares	1,393,530		1,393,530
Committed to be released shares	—		—
Unallocated shares	—		—
Total ESOP shares	1,393,530		1,393,530
(In thousands)
Fair value of ESOP shares	$	20,987	$	22,812

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Property, Plant and Equipment

6 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, Plant and Equipment

(In thousands)	December 31, 2019			June 30, 2019
Buildings and facilities (1)	$	100,316		$	107,915
Machinery and equipment (1)	243,397			249,477
Capitalized software	28,770			27,666
Office furniture and equipment	13,858			14,035
	$	386,341		$	399,093
Accumulated depreciation	(227,671		)	(225,826		)
Land	13,313			16,191
Property, plant and equipment, net	$	171,983		$	189,458

__________

(1) Decrease as of December 31, 2019 is due to the sale of assets. See Note 21 for details.

Coffee Brewing Equipment (“CBE”) and Service

Capitalized CBE included in machinery and equipment above are:

(In thousands)	December 31, 2019			June 30, 2019
Coffee Brewing Equipment	$	103,520		$	106,593
Accumulated depreciation	(69,581		)	$	(70,202	)
Coffee Brewing Equipment, net	$	33,939		$	36,391

Depreciation expense related to capitalized CBE and other CBE related expenses (excluding CBE depreciation) provided to customers and reported in cost of goods sold were as follows:

	Three Months Ended December 31,				Six Months Ended December 31,
(In thousands)	2019		2018		2019		2018
Depreciation expense	$	2,327	$	2,201	$	4,666	$	4,396
Other CBE expenses	$	8,446	$	8,410	$	16,171	$	16,916

Other expenses related to CBE provided to customers, such as the cost of servicing that equipment (including service employees’ salaries, cost of transportation and the cost of supplies and parts), are considered directly attributable to the generation of revenues from the customers. Therefore, these costs are included in cost of goods sold.

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Derivative Instruments

6 Months Ended

Dec. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

Derivative Instruments Held

Coffee-Related Derivative Instruments

The Company is exposed to commodity price risk associated with its price to fixed green coffee purchase contracts, which are described further in Note 2 to the consolidated financial statements in the 2019 Form 10-K. The Company utilizes forward and option contracts to manage exposure to the variability in expected future cash flows from forecasted purchases of green coffee attributable to commodity price risk. Certain of these coffee-related derivative instruments utilized for risk management purposes have been designated as cash flow hedges, while other coffee-related derivative instruments have not been designated as cash flow hedges or do not qualify for hedge accounting despite hedging the Company’s future cash flows on an economic basis.

The following table summarizes the notional volumes for the coffee-related derivative instruments held by the Company at December 31, 2019 and June 30, 2019:

(In thousands)	December 31, 2019	June 30, 2019
Derivative instruments designated as cash flow hedges:
Long coffee pounds	40,725	42,113
Derivative instruments not designated as cash flow hedges:
Long coffee pounds	1,238	6,070
Total	41,963	48,183

Coffee-related derivative instruments designated as cash flow hedges outstanding as of December 31, 2019 will expire within 17 months. At December 31, 2019 and June 30, 2019 approximately 97% and 87%, respectively, of the Company's outstanding coffee-related derivative instruments were designated as cash flow hedges.

Interest Rate Swap Derivative Instruments

Pursuant to an International Swap Dealers Association, Inc. Master Agreement (“ISDA”) which was effective March 20, 2019, the Company on March 27, 2019, entered into an interest rate swap transaction utilizing a notional amount of $80.0 million, with an effective date of April 11, 2019 and a maturity date of October 11, 2023 (the “Rate Swap”). In December 2019, the Company amended the notional amount to $65.0 million. The Rate Swap is intended to manage the Company’s interest rate risk on its floating-rate indebtedness under the Company’s revolving credit facility. Under the terms of the Rate Swap, the Company receives 1-month LIBOR, subject to a 0% floor, and makes payments based on a fixed rate of 2.1975%. The Company’s obligations under the ISDA are secured by the collateral which secures the loans under the revolving credit facility on a pari passu and pro rata basis with the principal of such loans. The Company has designated the Rate Swap derivative instruments as a cash flow hedge.

Effect of Derivative Instruments on the Financial Statements

Balance Sheets

Fair values of derivative instruments on the Company’s condensed consolidated balance sheets:

	Derivative Instruments Designated as Cash Flow Hedges				Derivative Instruments Not Designated as Accounting Hedges
	December 31, 2019		June 30, 2019		December 31, 2019		June 30, 2019
(In thousands)
Financial Statement Location:
Short-term derivative assets:
Coffee-related derivative instruments(1)	$	8,718	$	1,254	$	333	$	611
Long-term derivative assets:
Coffee-related derivative instruments (2)	$	443	$	671	$	—	$	3
Short-term derivative liabilities:
Coffee-related derivative instruments (3)	$	1	$	1,114	$	7	$	114
Interest rate swap derivative instruments (3)	$	360	$	246	$	—	$	—
Long-term derivative liabilities:
Coffee-related derivative instruments (4)	$	—	$	13	$	—	$	—
Interest rate swap derivative instruments (4)	$	1,069	$	1,599	$	—	$	—

________________

(1) Included in “Short-term derivative assets” on the Company’s condensed consolidated balance sheets.

(2) Included in “Long-term derivative assets” on the Company's condensed consolidated balance sheets.

(3) Included in “Short-term liabilities” on the Company's condensed consolidated balance sheets.

(4) Included in “Other long-term liabilities” on the Company's condensed consolidated balance sheets.

Statements of Operations

The following table presents pretax net gains and losses for the Company's derivative instruments designated as cash flow hedges, as recognized in “AOCI,” “Cost of goods sold” and “Other, net”.

	Three Months Ended December 31,						Six Months Ended December 31,						Financial Statement Classification
(In thousands)	2019			2018			2019			2018
Net gains (losses) recognized in AOCI - Interest rate swap	$	448		$	—		$	(48	)	$	—		AOCI
Net losses recognized from AOCI to earnings - Interest rate swap	$	(52	)	$	—		$	(32	)	$	—		Interest Expense
Net losses reclassified from AOCI to earnings for partial unwind of our interest swap - Interest rate swap (1)	$	(407	)	$	—		$	(407	)	$	—		Interest Expense
Net gains (losses) recognized in AOCI - Coffee-related	$	12,130		$	1,005		$	7,431		$	(7,188	)	AOCI
Net losses recognized in earnings - Coffee - related	$	(3,451	)	$	(2,217	)	$	(6,922	)	$	(4,179	)	Cost of goods sold

________________

(1) The $407 thousand of realized loss was due to partial unwinding of interest rate swap resulting from the amendment of the notional amount from $80 million to $65 million.

For the three and six months ended December 31, 2019 and 2018, there were no gains or losses recognized in earnings as a result of excluding amounts from the assessment of hedge effectiveness.

Net losses (gains) on derivative instruments in the Company’s condensed consolidated statements of cash flows also include net losses (gains) on coffee-related derivative instruments designated as cash flow hedges reclassified to cost of goods sold from AOCI in the three and six months ended December 31, 2019 and 2018. Gains and losses on derivative instruments not designated as accounting hedges are included in “Other, net” in the Company’s condensed consolidated statements of operations and in “Net losses (gains) on derivative instruments and investments” in the Company’s condensed consolidated statements of cash flows.

Net gains and losses recorded in “Other, net” are as follows:

	Three Months Ended December 31,						Six Months Ended December 31,
(In thousands)	2019			2018			2019			2018
Net losses on coffee-related derivative instruments(1)	$	419		$	(920	)	$	(624	)	$	(2,025	)
Non-operating pension and other postretirement benefit plans cost (2)	1,248			1,763			2,496			3,526
Other (losses) gains, net	(5		)	110			(7		)	109
Other, net	$	1,662		$	953		$	1,865		$	1,610

___________

(1) Excludes net gains and losses on coffee-related derivative instruments designated as cash flow hedges recorded in cost of goods sold in the three and six months ended December 31, 2019 and 2018.

(2) Presented in accordance with ASU 2017-07.

Offsetting of Derivative Assets and Liabilities

The Company has agreements in place that allow for the financial right of offset for derivative assets and liabilities at settlement or in the event of default under the agreements. Additionally, under certain coffee derivative agreements, the Company maintains accounts with its counterparties to facilitate financial derivative transactions in support of its risk management activities.

The following table presents the Company’s net exposure from its offsetting derivative asset and liability positions, as well as cash collateral on deposit with its counterparties as of the reporting dates indicated:

(In thousands)		Gross Amount Reported on Balance Sheet			Netting Adjustments			Cash Collateral Posted		Net Exposure
December 31, 2019	Derivative Assets	$	9,494		$	(8	)	$	—	$	9,486
	Derivative Liabilities	$	(1,437	)	$	(8	)	$	—	$	(1,445	)
June 30, 2019	Derivative Assets	$	2,539		$	(698	)	$	—	$	1,841
	Derivative Liabilities	$	3,086		$	(698	)	$	—	$	2,388

Cash Flow Hedges

Changes in the fair value of the Company’s coffee-related derivative instruments designated as cash flow hedges are deferred in AOCI and subsequently reclassified into cost of goods sold in the same period or periods in which the hedged forecasted purchases affect earnings, or when it is probable that the hedged forecasted transaction will not occur by the end of the originally specified time period. Based on recorded values at December 31, 2019, $5.2 million of net gains on coffee-related derivative instruments designated as a cash flow hedge are expected to be reclassified into cost of goods sold within the next twelve months. These recorded values are based on market prices of the commodities as of December 31, 2019.

Changes in the fair value of the Company's interest rate swap derivative instruments designated as a cash flow hedge are deferred in AOCI and subsequently reclassified into interest expense in the period or periods when the hedged transaction affects earnings or when it is probable that the hedged forecasted transaction will not occur by the end of the originally specified time period. As of December 31, 2019, $0.4 million of net losses on interest rate swap derivative instruments designated as a cash flow hedge are expected to be reclassified into interest expense within the next twelve months assuming no significant changes in the LIBOR rates. Due to LIBOR volatility, actual gains or losses realized within the next twelve months will likely differ from these values.

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Commitments and Contingencies

6 Months Ended

Dec. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

For a detailed discussion about the Company’s commitments and contingencies, see Note 22, “Commitments and Contingencies” in the Notes to Consolidated Financial Statements in the 2019 Form 10-K. During the six months ended December 31, 2019, other than the following, or as otherwise disclosed in these footnotes in the current Form 10-Q, there were no material changes in the Company’s commitments and contingencies.

Purchase Commitments

As of December 31, 2019, the Company had committed to purchase green coffee inventory totaling $60.7 million under fixed-price contracts, $6.2 million in other inventory under non-cancelable purchase orders and $5.4 million in other purchases under non-cancelable purchase orders.

Legal Proceedings

Council for Education and Research on Toxics (“CERT”) v. Brad Berry Company Ltd., et al., Superior Court of the State of California, County of Los Angeles

On August 31, 2012, CERT filed an amendment to a private enforcement action adding a number of companies as defendants, including the Company’s subsidiary, Coffee Bean International, Inc., which sell coffee in California under the State of California's Safe Drinking Water and Toxic Enforcement Act of 1986 (“Prop 65”). The suit alleges that the defendants have failed to issue clear and reasonable warnings in accordance with Prop 65 that the coffee they produce, distribute, and sell contains acrylamide. This lawsuit was filed in Los Angeles Superior Court (the “Court”). CERT alleges that the Company and the other defendants failed to provide warnings for their coffee products of exposure to the chemical acrylamide as required under Prop 65. Plaintiff seeks equitable relief, including providing warnings to consumers of coffee products, as well as civil penalties in the amount of the statutory maximum of $2,500.00 per day per violation of Prop 65. The Plaintiff asserts that every consumed cup of coffee, absent a compliant warning, is equivalent to a violation under Prop 65.

The Company, as part of a joint defense group (“JDG”) organized to defend against the lawsuit, disputes the claims of CERT. Acrylamide is not added to coffee but is present in all coffee in small amounts (parts per billion) as a byproduct of the coffee bean roasting process. Acrylamide is produced naturally in connection with the heating of many foods, especially starchy foods, and is believed to be caused by the Maillard reaction, though it has also been found in unheated foods such as olives. With respect to coffee, acrylamide is produced when coffee beans are heated during the roasting process-it is the roasting itself that produces the acrylamide. While there has been a significant amount of research concerning proposals for treatments and other processes aimed at reducing acrylamide content of different types of foods, to our knowledge there is currently no known strategy for reducing acrylamide in coffee without negatively impacting the sensorial properties of the product.

The Company has asserted multiple affirmative defenses. Trial of the first phase of the case commenced on September 8, 2014, and was limited to three affirmative defenses shared by all defendants. On September 1, 2015, the trial court issued a final ruling adverse to defendants on all Phase 1 defenses. Trial of the second phase of the case commenced in the fall of 2017. On May 7, 2018, the trial court issued a ruling adverse to defendants on the Phase 2 defense, the Company's last remaining defense to liability. On June 22, 2018, the California Office of Environmental Health Hazard Assessment (OEHHA) proposed a new regulation clarifying that cancer warnings are not required for coffee under Proposition 65. The case was set to proceed to a third phase trial on damages, remedies and attorneys' fees on October 15, 2018. However, on October 12, 2018, the California Court of Appeal granted the defendants request for a stay of the Phase 3 trial.

On June 3, 2019, the Office of Administrative Law (OAL) approved the coffee exemption regulation. The regulation became effective on October 1, 2019. On June 24, 2019, the Court of Appeal lifted the stay of the litigation. A status conference was held on July 11, 2019. The Court granted the JDG’s motion for leave to amend its answers to add the coffee exemption regulation as a defense. Concurrently, the Court denied CERT’s motion to add OEHHA as a party but granted CERT’s motions to complete the administrative record with respect to the exemption and to undertake certain third party discovery. A status conference was held November 12, 2019 to discuss discovery issues and dispositive motions. Plaintiff’s motion to compel OEHHA to add documents to the rulemaking file for the new coffee exemption regulation was denied. CERT continues to pursue third-party discovery with plans to file motions to compel appearances of proposed deponents. These motions, along with CERT’s eight summary judgment motions, were heard at a January 21, 2020 hearing where the Court denied several of CERT’s discovery requests. Further, the Court of Appeals scheduled a hearing on February 14, 2020 for additional discovery issues in the CERT vs OEHHA case. The JDG’s reply in support of its motion for summary judgment is currently due to the Court on March 16, 2020.

Subsequent to the hearing on January 21, 2020, Plaintiff issued broad discovery against each of the defendants in hopes of opening up a third round of discovery. The discovery focuses on “additives to and “flavorings” in coffee. Objections to discovery requests are due March 2, 2020.

At this time, the Company is not able to predict the probability of the outcome or estimate of loss, if any, related to this matter. 

The Company is a party to various other pending legal and administrative proceedings. It is management’s opinion that the outcome of such proceedings will not have a material impact on the Company’s financial position, results of operations, or cash flows.

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Income Taxes

6 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The income tax expense (benefit) and the related effective tax rates are as follows (in thousands, except effective tax rate):

	Three Months Ended December 31,						Six Months Ended December 31,
	2019			2018			2019			2018
Income tax benefit	$	(81	)	$	(2,725	)	$	(188	)	$	(4,012	)
Effective tax rate	(1.1		)%	21.0		%	(1.5		)%	23.3		%

The lower effective tax rate is primarily due to the previously recorded valuation allowance and change in the Company’s estimated deferred tax liability. The Company’s interim tax provision is determined using an estimated annual effective tax rate and adjusted for discrete taxable events that may occur during the quarter. The Company recognizes the effects of tax legislation in the period in which the law is enacted. Deferred tax assets and liabilities are remeasured using enacted tax rates expected to apply to taxable income in the years the Company estimates the related temporary differences to reverse. The Company evaluates its deferred tax assets quarterly to determine if a valuation allowance is required. In making such assessment, significant weight is given to evidence that can be objectively verified, such as recent operating results, and less consideration is given to less objective indicators such as future income projections.

The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by U.S. federal, state and local tax authorities. With limited exceptions, as of December 31, 2019 and June 30, 2019, the Company is no longer subject to income tax audits by taxing authorities for any years prior to 2016. Although the outcome of tax audits is always uncertain, the Company does not believe the outcome of any future audit will have a material adverse effect on the Company’s condensed consolidated financial statements.

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Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2019	Jun. 30, 2019
Finite-Lived Intangible Assets [Line Items]
Accumulated Amortization	$ (17,318)	$ (16,113)
Finite-Lived Intangible Assets, Net	27,673	28,878
Total intangible assets	44,991	44,991
Trademarks, trade names and brand name with indefinite lives
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Net	10,328	10,328
Unamortized intangible assets, Gross Carrying Amount	10,328	10,328
Total unamortized intangible assets
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Net	10,328	10,328
Unamortized intangible assets, Gross Carrying Amount	$ 10,328	10,328
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, weighted average useful life	7 years 3 months 19 days
Amortized intangible assets, Gross Carrying Amount	$ 33,003	33,003
Accumulated Amortization	(16,391)	(15,291)
Finite-Lived Intangible Assets, Net	$ 16,612	17,712
Non-compete agreements
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, weighted average useful life	2 years 2 months 12 days
Amortized intangible assets, Gross Carrying Amount	$ 220	220
Accumulated Amortization	(142)	(122)
Finite-Lived Intangible Assets, Net	$ 78	98
Recipes
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, weighted average useful life	3 years 9 months 18 days
Amortized intangible assets, Gross Carrying Amount	$ 930	930
Accumulated Amortization	(420)	(354)
Finite-Lived Intangible Assets, Net	$ 510	576
Trade name/brand name
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, weighted average useful life	4 years 6 months
Amortized intangible assets, Gross Carrying Amount	$ 510	510
Accumulated Amortization	(365)	(346)
Finite-Lived Intangible Assets, Net	145	164
Total amortized intangible assets
Finite-Lived Intangible Assets [Line Items]
Amortized intangible assets, Gross Carrying Amount	34,663	34,663
Accumulated Amortization	(17,318)	(16,113)
Finite-Lived Intangible Assets, Net	$ 17,345	$ 18,550

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Accounts Receivable, net - Narrative (Details) $ in Millions	6 Months Ended
	Dec. 31, 2019 USD ($)
Receivables [Abstract]
Decrease in allowance for doubtful accounts	$ (0.8)

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Derivative Instruments - Net Realized and Unrealized Gains and Losses Recorded in "Other, net" (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Derivative Instruments, Gain (Loss) [Line Items]
Other, net	$ 1,662	$ 953	$ 1,865	$ 1,610
Coffee
Derivative Instruments, Gain (Loss) [Line Items]
Net realized and unrealized losses from coffee-related derivatives not designated as accounting hedges	419	(920)	(624)	(2,025)
Net (losses) gains on derivatives and investments	1,248	1,763	2,496	3,526
Other gains, net	(5)	110	(7)	109
Other, net	$ 1,662	$ 953	$ 1,865	$ 1,610

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Other Current Liabilities (Tables)

6 Months Ended

Dec. 31, 2019

Payables and Accruals [Abstract]

Schedule of Other Current Liabilities

Other current liabilities consist of the following:

(In thousands)	December 31, 2019		June 30, 2019
Accrued postretirement benefits	$	1,068	$	1,068
Accrued workers’ compensation liabilities	1,681		1,495
Cumulative preferred dividends, undeclared and unpaid (4)	1,198		305
Earnout payable (1)	—		1,000
Working capital dispute payable(2)	354		354
Other (3)	3,681		3,087
Other current liabilities	$	7,982	$	7,309

___________

(1) Represents estimated fair value of earnout payable in connection with the Company’s acquisition of substantially all of the assets of West Coast Coffee completed on February 7, 2017.

(2) Represents accrued expenses related to working capital disputes in connection with the Company's acquisition of Boyd Coffee on October 2, 2017.

(3) Includes accrued property taxes, sales and use taxes and insurance liabilities.

(4) Per the agreement, all the cumulative preferred dividends, undeclared and unpaid are now payable. Therefore, the previously accrued long-term portion has been reclassified to current liabilities.

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
Current assets:
Cash and cash equivalents	$ 9,130	$ 6,983
Accounts receivable, net	60,404	55,155
Inventories	85,134	87,910
Income tax receivable	1,631	1,191
Short-term derivative assets	9,051	1,865
Prepaid expenses	5,820	6,804
Total current assets	171,170	159,908
Property, plant and equipment, net	171,983	189,458
Goodwill	36,224	36,224
Intangible assets, net	27,673	28,878
Other assets	9,520	9,468
Long-term derivatives assets	443	674
Right-of-use operating lease assets	19,696	0
Total assets	436,709	424,610
Current liabilities:
Accounts payable	59,828	72,771
Accrued payroll expenses	16,021	14,518
Operating leases liabilities - current	5,571	0
Short-term derivative liabilities	368	1,474
Other current liabilities	7,982	7,309
Total current liabilities	89,770	96,072
Long-term borrowings under revolving credit facility	70,000	92,000
Accrued pension liabilities	45,717	47,216
Accrued postretirement benefits	22,597	23,024
Accrued workers’ compensation liabilities	5,000	4,747
Operating lease liabilities - noncurrent	14,318	0
Other long-term liabilities	3,147	4,057
Total liabilities	250,549	267,116
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $1.00 par value, 500,000 shares authorized; Series A Convertible Participating Cumulative Perpetual Preferred Stock, 21,000 shares authorized; 14,700 shares issued and outstanding as of December 31, 2019 and June 30, 2019; liquidation preference of $15,899 and $15,624 as of December 31, 2019 and June 30, 2019, respectively	15	15
Common stock, $1.00 par value, 25,000,000 shares authorized; 17,177,448 and 17,042,132 shares issued and outstanding as of December 31, 2019 and June 30, 2019, respectively	17,180	17,042
Additional paid-in capital	59,663	57,912
Retained earnings	158,310	146,177
Accumulated other comprehensive loss	(49,008)	(63,652)
Total stockholders’ equity	186,160	157,494
Total liabilities and stockholders’ equity	$ 436,709	$ 424,610

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Preferred Stock (Tables)

6 Months Ended

Dec. 31, 2019

Preferred Stock [Abstract]

Schedule of Auction Market Preferred Securities by Stock Series

At December 31, 2019, Series A Preferred Stock consisted of the following:

(In thousands, except share and per share amounts)
Shares Authorized	Shares Issued and Outstanding	Stated Value per Share		Carrying Value		Cumulative Preferred Dividends, Undeclared and Unpaid		Liquidation Preference
21,000	14,700	$	1,082	$	15,899	$	1,199	$	15,899

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Preferred Shares	Common Stock	Additional Paid-in Capital	Retained Earnings	Unearned ESOP Shares	Accumulated Other Comprehensive Income (Loss)
Beginning Balance (in shares) at Jun. 30, 2018		14,700	16,951,659
Beginning Balance at Jun. 30, 2018	$ 229,055	$ 15	$ 16,952	$ 55,965	$ 220,307	$ (2,145)	$ (62,039)
Net income (loss)	(2,986)				(2,986)
Unrealized losses on cash flow hedges, net of reclassifications to earnings	(4,637)						(4,637)
ESOP compensation expense, including reclassifications	529			529
Share based compensation	433			433
Stock option exercises (in shares)			26,042
Stock option exercises	326		$ 26	300
Cumulative preferred dividends, undeclared and unpaid	(132)				(132)
Ending Balance (in shares) at Sep. 30, 2018		14,700	16,977,701
Ending Balance at Sep. 30, 2018	222,588	$ 15	$ 16,978	57,227	217,189	(2,145)	(66,676)
Beginning Balance (in shares) at Jun. 30, 2018		14,700	16,951,659
Beginning Balance at Jun. 30, 2018	229,055	$ 15	$ 16,952	55,965	220,307	(2,145)	(62,039)
Net income (loss)	(13,086)
Change in funded status of retiree benefit obligations, net of tax	(5,651)
Ending Balance (in shares) at Dec. 31, 2018		14,700	17,002,529
Ending Balance at Dec. 31, 2018	218,325	$ 15	$ 17,003	56,134	206,955	0	(61,782)
Beginning Balance (in shares) at Sep. 30, 2018		14,700	16,977,701
Beginning Balance at Sep. 30, 2018	222,588	$ 15	$ 16,978	57,227	217,189	(2,145)	(66,676)
Net income (loss)	(10,100)				(10,100)
Unrealized losses on cash flow hedges, net of reclassifications to earnings	2,398						2,398
Pension Settlement Charge	8,147
Change in funded status of retiree benefit obligations, net of tax	(5,651)						(5,651)
ESOP compensation expense, including reclassifications	405			(1,740)		2,145
Share-based compensation (in shares)			16,266
Share based compensation	490		$ 16	474
Stock option exercises (in shares)			8,562
Stock option exercises	182		$ 9	173
Cumulative preferred dividends, undeclared and unpaid	(134)				(134)
Ending Balance (in shares) at Dec. 31, 2018		14,700	17,002,529
Ending Balance at Dec. 31, 2018	218,325	$ 15	$ 17,003	56,134	206,955	$ 0	(61,782)
Beginning Balance (in shares) at Jun. 30, 2019		14,700	17,042,132
Beginning Balance at Jun. 30, 2019	157,494	$ 15	$ 17,042	57,912	146,177		(63,652)
Net income (loss)	4,654
Unrealized losses on cash flow hedges, net of reclassifications to earnings	(1,301)						(1,301)
ESOP compensation expense, including reclassifications (in shares)			52,534
ESOP compensation expense, including reclassifications	860		$ 53	807
Share based compensation	(1)			(1)
Stock option exercises (in shares)			532
Stock option exercises	0
Cumulative preferred dividends, undeclared and unpaid	(137)				(137)
Ending Balance (in shares) at Sep. 30, 2019		14,700.0	17,095,198.000
Ending Balance at Sep. 30, 2019	161,569	$ 15	$ 17,095	58,718	150,694		(64,953)
Beginning Balance (in shares) at Jun. 30, 2019		14,700	17,042,132
Beginning Balance at Jun. 30, 2019	157,494	$ 15	$ 17,042	57,912	146,177		(63,652)
Net income (loss)	12,408
Change in funded status of retiree benefit obligations, net of tax	0
Ending Balance (in shares) at Dec. 31, 2019		14,700	17,177,448
Ending Balance at Dec. 31, 2019	186,160	$ 15	$ 17,180	59,663	158,310		(49,008)
Beginning Balance (in shares) at Sep. 30, 2019		14,700.0	17,095,198.000
Beginning Balance at Sep. 30, 2019	161,569	$ 15	$ 17,095	58,718	150,694		(64,953)
Net income (loss)	7,754				7,754
Unrealized losses on cash flow hedges, net of reclassifications to earnings	15,945						15,945
Change in funded status of retiree benefit obligations, net of tax	0
ESOP compensation expense, including reclassifications (in shares)			55,623
ESOP compensation expense, including reclassifications	581		$ 56	525
Share based compensation	319			319
Stock option exercises (in shares)			26,627
Stock option exercises	130		$ 29	101
Cumulative preferred dividends, undeclared and unpaid	(138)				(138)
Ending Balance (in shares) at Dec. 31, 2019		14,700	17,177,448
Ending Balance at Dec. 31, 2019	$ 186,160	$ 15	$ 17,180	$ 59,663	$ 158,310		$ (49,008)

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Leases - Cash Flow Information (Details)	6 Months Ended
	Dec. 31, 2019 USD ($)
Leases [Abstract]
Operating Lease, Payments	$ 2,165,000
Finance Lease, Interest Payment on Liability	1,000
Finance Lease, Principal Payments	25,000
Right-of-Use Asset Obtained in Exchange for Finance Lease Liability	0
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability	$ 0

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Leases - Balance Sheet (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jul. 01, 2019	Jun. 30, 2019
Leases [Abstract]
Right-of-use operating lease assets	$ 19,696	$ 16,300	$ 0
Finance Lease, Right-of-Use Asset	34
Leases, Right Of Use Assets	19,730
Operating Lease, Liability, Current	5,571		0
Operating lease liabilities - noncurrent	14,318		0
Finance Lease, Liability, Noncurrent	35		$ 32
Leases, Liabilities	$ 19,924

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Derivative Instruments - Pretax Effect of Derivative Instruments on Earnings and OCI (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Interest Rate Swap
Derivative Instruments, Gain (Loss) [Line Items]
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, before Tax	$ 448	$ 0	$ (48)	$ 0
Coffee - related
Derivative Instruments, Gain (Loss) [Line Items]
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, before Tax	12,130	1,005	7,431	(7,188)
Interest Expense | Interest Rate Swap
Derivative Instruments, Gain (Loss) [Line Items]
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, before Tax	(52)	0	(32)	0
Other Comprehensive Income (Loss), Cash Flow Hedge, Reclassification for Discontinuance, before Tax	407	0	407	0
Cost of goods sold | Coffee - related
Derivative Instruments, Gain (Loss) [Line Items]
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, before Tax	$ (3,451)	$ (2,217)	$ (6,922)	$ (4,179)

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Employee Benefit Plans - Schedule of Multi-Employer Pension Plans (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Jun. 30, 2019
Local 807 Pension Plan
Multiemployer Plans [Line Items]
Other Commitment	$ 182,000		$ 182,000
Multiemployer Plans, Pension
Multiemployer Plans [Line Items]
Defined Benefit Plan, Plan Assets, Contributions by Employer	452,000	$ 283,000	880,000	$ 778,000
Multiemployer Plans, Pension | WCT Pension Trust
Multiemployer Plans [Line Items]
Other Commitment	344,000		344,000		$ 1,487,000
Multiemployer Plans, Pension | Local 807 Pension Plan
Multiemployer Plans [Line Items]
Multiemployer plan, quarterly installments for withdrawal liability			91,000
Defined Benefit Plan, Benefit Obligation, Payment for Settlement			3,000,000
Other Commitment, Due after Fifth Year	200,000		200,000
Multiemployer Plans, Pension | WCTPP
Multiemployer Plans [Line Items]
Multiemployer Plans, Withdrawal Obligation, Assessment	3,400,000		3,400,000
Multiemployer Plans, Pension | Employee-related | WCTPP
Multiemployer Plans [Line Items]
Multiemployer plan, quarterly installments for withdrawal liability			190,507
Defined Benefit Plan, Benefit Obligation, Payment for Settlement			153,822
Other Postretirement Benefit Plan
Multiemployer Plans [Line Items]
Defined Benefit Plan, Service Cost	147,000	133,000	294,000	266,000
Defined Benefit Plan, Interest Cost	214,000	222,000	428,000	444,000
Defined Benefit Plan, Amortization of Gain (Loss)	(125,000)	(209,000)	(250,000)	(418,000)
Amortization of prior service credit	(392,000)	(439,000)	(784,000)	(878,000)
Net periodic benefit cost	$ (156,000)	$ (293,000)	$ (312,000)	$ (586,000)
Postretirement Health Coverage
Multiemployer Plans [Line Items]
Discount rate			3.62%	4.25%
Postretirement Life Insurance
Multiemployer Plans [Line Items]
Discount rate			3.64%	4.25%

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Income Taxes - Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Income Tax Disclosure [Abstract]
Income tax benefit	$ (81)	$ (2,725)	$ (188)	$ (4,012)
Effective tax rate	(1.10%)	21.00%	(1.50%)	23.30%

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Revenue Recognition (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Jun. 30, 2019
Disaggregation of Revenue [Line Items]
Net Sales	$ 152,498	$ 159,773	$ 291,098	$ 307,213
% of total	100.00%	100.00%	100.00%	100.00%
Receivables from contracts with customers	$ 57,652		$ 57,652		$ 53,593
Coffee (Roasted)
Disaggregation of Revenue [Line Items]
Net Sales	$ 96,177	$ 99,286	$ 183,547	$ 194,640
% of total	63.10%	62.10%	63.10%	63.40%
Coffee (Frozen Liquid)
Disaggregation of Revenue [Line Items]
Net Sales	$ 8,556	$ 9,318	$ 16,484	$ 17,874
% of total	5.60%	5.80%	5.70%	5.80%
Tea (Iced & Hot)
Disaggregation of Revenue [Line Items]
Net Sales	$ 7,563	$ 8,651	$ 15,268	$ 17,555
% of total	5.00%	5.40%	5.20%	5.70%
Culinary
Disaggregation of Revenue [Line Items]
Net Sales	$ 15,158	$ 16,795	$ 29,361	$ 32,789
% of total	10.00%	10.50%	10.10%	10.70%
Spice
Disaggregation of Revenue [Line Items]
Net Sales	$ 6,126	$ 6,002	$ 12,332	$ 12,160
% of total	4.00%	3.80%	4.20%	4.00%
Other Beverages
Disaggregation of Revenue [Line Items]
Net Sales	$ 17,299	$ 18,915	$ 30,032	$ 30,541
% of total	11.30%	11.80%	10.30%	9.90%
Other Revenues
Disaggregation of Revenue [Line Items]
Net Sales	$ 946	$ 0	$ 2,701	$ 0
% of total	0.60%	0.00%	0.90%	0.00%
Product
Disaggregation of Revenue [Line Items]
Net Sales	$ 151,825	$ 158,967	$ 289,725	$ 305,559
% of total	99.60%	99.00%	99.50%	99.50%
Fuel Surcharge
Disaggregation of Revenue [Line Items]
Net Sales	$ 673	$ 806	$ 1,373	$ 1,654
% of total	0.40%	0.60%	0.50%	0.50%

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Share-Based Compensation - Weighted-average assumptions using Black-Scholes model (Details) - PNQs	6 Months Ended
	Dec. 31, 2019 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value	$ 4.65
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate	1.70%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate	0.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term	4 years 7 months 12 days
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate	35.40%

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Employee Benefit Plans

6 Months Ended

Dec. 31, 2019

Retirement Benefits [Abstract]

Employee Benefit Plans

Employee Benefit Plans

Single Employer Pension Plans

Effective June 30, 2011, the Company amended its defined benefit pension plans, freezing the benefit for all participants. As of the effective date, participants do not accrue any benefits under the plans, and new hires are not eligible to participate in the plans.

The net periodic benefit cost for the defined benefit pension plans is as follows:

	Three Months Ended December 31,						Six Months Ended December 31,
	2019			2018			2019			2018
(In thousands)
Service cost	$	—		$	—		$	—		$	—
Interest cost	1,059			1,426			2,118			2,852
Expected return on plan assets	(1,102		)	(1,485		)	(2,203		)	(2,970		)
Amortization of net loss(1)	370			370			740			740
Pension settlement charge	—			10,948			—			10,948
Net periodic benefit cost	$	327		$	11,259		$	655		$	11,570

___________

(1) These amounts represent the estimated portion of the net loss in AOCI that is expected to be recognized as a component of net periodic benefit cost over the current fiscal year. 

Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost

	December 31, 2019	June 30, 2019
Discount rate	3.45%	4.05%
Expected long-term return on plan assets	6.75%	6.75%

Multiemployer Pension Plans

The Company participates in two multiemployer defined benefit pension plans that are union sponsored and collectively bargained for the benefit of certain employees subject to collective bargaining agreements, of which the Western Conference of Teamsters Pension Plan ("WCTPP") is individually significant. The Company makes contributions to these plans generally based on the number of hours worked by the participants in accordance with the provisions of negotiated labor contracts.

Contributions made by the Company to the multiemployer pension plans were as follows:

	Three Months Ended December 31,				Six Months Ended December 31,
	2019		2018		2019		2018
(In thousands)
Contributions	$	452	$	283	$	880	$	778

Outstanding balance of settlement obligations of the Company to certain multiemployer pension plans are as follows:

(In thousands)	December 31, 2019		June 30, 2019
WCT Pension Trust (1)	$	344	$	1,487
Local 807 Pension Fund (2)	$	182	$	182

__________

(1) Initial liability amount of $3.4 million, including interest, commencing in September 10, 2018, payable in 17 monthly installments of $190,507 followed by a final monthly installment of $153,822 in February 2020.

(2) Lump sum cash settlement payment of $3.0 million plus two remaining installment payments of $91,000 due on or before October 1, 2034 and on or before January 1, 2035. As of December 31, 2019, the Company has paid the Local 807 Pension Fund $3.0 million and has accrued $0.2 million within “Accrued pension liabilities” on the Company’s condensed consolidated balance sheet.

Multiemployer Plans Other Than Pension Plans

The Company participates in nine multiemployer defined contribution plans other than pension plans that provide medical, vision, dental and disability benefits for active, union-represented employees subject to collective bargaining agreements. The plans are subject to the provisions of the Employee Retirement Income Security Act of 1974, and provide that participating employers make monthly contributions to the plans in an amount as specified in the collective bargaining agreements. Also, the plans provide that participants make self-payments to the plans, the amounts of which are negotiated through the collective bargaining process. The Company’s participation in these plans is governed by collective bargaining agreements which expire on or before June 30, 2022.

401(k) Plan

The Company’s 401(k) Plan is available to all eligible employees. Participants in the 401(k) Plan may choose to contribute a percentage of their annual pay subject to the maximum contribution allowed by the Internal Revenue Service. The Company recorded matching contributions of $0.6 million and $0.4 million in operating expenses in the three months ended December 31, 2019 and 2018. The Company recorded matching contributions of $1.3 million and $0.9 million in operating expenses in the six months ended December 31, 2019 and 2018.

Additionally, the Company makes an annual safe harbor non-elective contribution of shares of the Company’s common stock equal to 4% of each eligible participant’s annual plan compensation. During the three and six months December 31, 2019, the Company contributed a total of 54,025 and 109,649 shares of the Company’s common stock with a value of $0.6 millionand $1.4 million, respectively, to eligible participants’ annual plan compensation.

Postretirement Benefits

Retiree Medical Plan and Death Benefit

The following table shows the components of net periodic postretirement benefit cost for the Retiree Medical Plan and Death Benefit for the three and six months ended December 31, 2019 and 2018. Net periodic postretirement benefit cost was based on employee census information and asset information as of June 30, 2019.

	Three Months Ended December 31,						Six Months Ended December 31,
	2019			2018			2019			2018
(In thousands)
Components of Net Periodic Postretirement Benefit Cost (Credit):
Service cost	$	147		$	133		$	294		$	266
Interest cost	214			222			428			444
Amortization of net gain	(125		)	(209		)	(250		)	(418		)
Amortization of prior service credit	(392		)	(439		)	(784		)	(878		)
Net periodic postretirement benefit credit	$	(156	)	$	(293	)	$	(312	)	$	(586	)

Weighted-Average Assumptions Used to Determine Net Periodic Postretirement Benefit Cost 

	Fiscal
	2020	2019
Retiree Medical Plan discount rate	3.62%	4.25%
Death Benefit discount rate	3.64%	4.25%

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Accounts Receivable, net

6 Months Ended

Dec. 31, 2019

Receivables [Abstract]

Accounts Receivable, net

Accounts Receivable, Net

(In thousands)	December 31, 2019			June 30, 2019
Trade receivables	$	57,652		$	53,593
Other receivables(1)	3,293			2,886
Allowance for doubtful accounts	(541		)	(1,324		)
Accounts receivable, net	$	60,404		$	55,155

__________

(1) Includes vendor rebates and other non-trade receivables.

The $0.8 million decrease in the allowance for doubtful accounts during the six months ended December 31, 2019 was due to improvement of the Company’s accounts receivable aging balance.

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Employee Benefit Plans (Tables)

6 Months Ended

Dec. 31, 2019

Retirement Benefits [Abstract]

Schedule of Net Periodic Benefit Costs

The net periodic benefit cost for the defined benefit pension plans is as follows:

	Three Months Ended December 31,						Six Months Ended December 31,
	2019			2018			2019			2018
(In thousands)
Service cost	$	—		$	—		$	—		$	—
Interest cost	1,059			1,426			2,118			2,852
Expected return on plan assets	(1,102		)	(1,485		)	(2,203		)	(2,970		)
Amortization of net loss(1)	370			370			740			740
Pension settlement charge	—			10,948			—			10,948
Net periodic benefit cost	$	327		$	11,259		$	655		$	11,570

___________

(1) These amounts represent the estimated portion of the net loss in AOCI that is expected to be recognized as a component of net periodic benefit cost over the current fiscal year. 

Contributions made by the Company to the multiemployer pension plans were as follows:

	Three Months Ended December 31,				Six Months Ended December 31,
	2019		2018		2019		2018
(In thousands)
Contributions	$	452	$	283	$	880	$	778

Outstanding balance of settlement obligations of the Company to certain multiemployer pension plans are as follows:

(In thousands)	December 31, 2019		June 30, 2019
WCT Pension Trust (1)	$	344	$	1,487
Local 807 Pension Fund (2)	$	182	$	182

__________

(1) Initial liability amount of $3.4 million, including interest, commencing in September 10, 2018, payable in 17 monthly installments of $190,507 followed by a final monthly installment of $153,822 in February 2020.

(2) Lump sum cash settlement payment of $3.0 million plus two remaining installment payments of $91,000 due on or before October 1, 2034 and on or before January 1, 2035. As of December 31, 2019, the Company has paid the Local 807 Pension Fund $3.0 million and has accrued $0.2 million within “Accrued pension liabilities” on the Company’s condensed consolidated balance sheet.

The following table shows the components of net periodic postretirement benefit cost for the Retiree Medical Plan and Death Benefit for the three and six months ended December 31, 2019 and 2018. Net periodic postretirement benefit cost was based on employee census information and asset information as of June 30, 2019.

	Three Months Ended December 31,						Six Months Ended December 31,
	2019			2018			2019			2018
(In thousands)
Components of Net Periodic Postretirement Benefit Cost (Credit):
Service cost	$	147		$	133		$	294		$	266
Interest cost	214			222			428			444
Amortization of net gain	(125		)	(209		)	(250		)	(418		)
Amortization of prior service credit	(392		)	(439		)	(784		)	(878		)
Net periodic postretirement benefit credit	$	(156	)	$	(293	)	$	(312	)	$	(586	)

Defined Benefit Plan, Assumptions

Weighted-Average Assumptions Used to Determine Net Periodic Postretirement Benefit Cost 

	Fiscal
	2020	2019
Retiree Medical Plan discount rate	3.62%	4.25%
Death Benefit discount rate	3.64%	4.25%

Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost

	December 31, 2019	June 30, 2019
Discount rate	3.45%	4.05%
Expected long-term return on plan assets	6.75%	6.75%

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Basis of Accounting

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 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 (“GAAP”) for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial data have been included. Operating results for the three and six months ended December 31, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2020. Events occurring subsequent to December 31, 2019 have been evaluated for potential recognition or disclosure in the unaudited condensed consolidated financial statements for the three and six months ended December 31, 2019.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019, filed with the Securities and Exchange Commission (the “SEC”) on September 11, 2019 (the “2019 Form 10-K”).

For a detailed discussion about the Company’s significant accounting policies, see Note 2, “Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements in the 2019 Form 10-K.

During the three and six months ended December 31, 2019, other than as set forth below and the adoption of Financial Accounting Standards Board Accounting (“FASB”) Standards Update (“ASU”) ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), there were no significant updates made to the Company’s significant accounting policies.

Consolidation, Policy

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its direct and indirect wholly owned subsidiaries FBC Finance Company, a California corporation, Coffee Bean Holding Co., Inc., a Delaware corporation, the parent company of Coffee Bean International, Inc., an Oregon corporation (“CBI”), CBI, China Mist Brands, Inc., a Delaware corporation, Boyd Assets Co., a Delaware corporation, and Coffee Bean International LLC, a Delaware limited liability company. All inter-company balances and transactions have been eliminated.

Use of Estimates, Policy

Use of Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. The Company reviews its estimates on an ongoing basis using currently available information. Changes in facts and circumstances may result in revised estimates and actual results may differ from those estimates.

Concentration of Credit Risk

Concentration of Credit Risk

At December 31, 2019 and June 30, 2019, the financial instruments which potentially expose the Company to concentration of credit risk consist of cash in financial institutions (in excess of federally insured limits), derivative instruments and trade receivables.

The Company does not have any credit-risk related contingent features that would require it to post additional collateral in support of its net derivative liability positions. At December 31, 2019 and June 30, 2019, none of the cash in the Company’s coffee-related derivative margin accounts was restricted. Further changes in commodity prices and the number of coffee-related derivative instruments held, could have a significant impact on cash deposit requirements under certain of the Company's broker and counterparty agreements.

Approximately 34% and 28% of the Company’s trade accounts receivable balance was with five customers at December 31, 2019 and June 30, 2019, respectively. The Company estimates its maximum credit risk for accounts receivable at the amount recorded on the balance sheet. The trade accounts receivables are generally short-term and all probable bad debt losses have been appropriately considered in establishing the allowance for doubtful accounts.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

The Company considers the applicability and impact of all ASUs issued. ASUs not listed below were assessed and either determined to be not applicable or expected to have minimal impact on its condensed consolidated financial statements.

The following table provides a brief description of the applicable recent ASUs issued by the FASB:

Standard	Description	Effective Date	Effect on the Financial Statements or Other Significant Matters
In August 2018, the FASB issued ASU No. 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”).	ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.	Annual periods beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period.	Effective for the Company beginning July 1, 2020. The Company is currently evaluating the impact ASU 2018-15 will have on its consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-14, “Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans” (“ASU 2018-14”).	ASU 2018-14 modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing disclosures that no longer are considered cost beneficial, clarifying the specific requirements of disclosures and adding disclosure requirements identified as relevant.	Annual periods beginning after December 15, 2020.  Early adoption is permitted.	Effective for the Company beginning July 1, 2021. The Company is currently evaluating the impact ASU 2018-14 will have on its consolidated financial statements.
In February 2018, the FASB issued ASU No. 2018-02, “Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”).	ASU 2018-02 provides entities an option to reclassify certain stranded tax effects resulting from the tax reform from accumulated other comprehensive income to retained earnings.	The guidance in ASU 2018-02 is effective for annual periods beginning after December 15, 2018, and interim periods within those fiscal years, and should be applied either in the period of adoption or retrospectively.	The Company did not elect the option to reclassify certain stranded tax effects resulting from the tax reform from accumulated other comprehensive income to retained earnings.
In January 2017, the FASB issued ASU No. 2017-04, “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”).	The amendments in ASU 2017-04 address concerns regarding the cost and complexity of the two-step goodwill impairment test, and remove the second step of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 does not amend the optional qualitative assessment of goodwill impairment.	Annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019.	Effective for the Company beginning July 1, 2020. Adoption of ASU 2017-04 is not expected to have a material effect on the results of operations, financial position or cash flows of the Company.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Since that date, the FASB has issued additional ASUs clarifying certain aspects of ASU 2016-13.	The objective of the guidance in ASU 2016-13 is to allow entities to recognize estimated credit losses in the period that the change in valuation occurs. The amendments in ASU 2016-13 requires an entity to present financial assets measured on an amortized cost basis on the balance sheet net of an allowance for credit losses. The model requires an estimate of the credit losses expected over the life of an exposure or pool of exposures. The income statement will reflect the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period.	Annual reporting periods beginning after December 15, 2019 and interim periods within those reporting periods.	Effective for the Company beginning July 1, 2020. The Company is currently evaluating the impact of adoption on its financial statements and related disclosures, but does not anticipate a material impact to the consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases. Since that date, the FASB has issued additional ASUs clarifying certain aspects of ASU 2016-02.	ASU 2016-02 requires a lessee to recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term for both finance and operating leases. Subsequent guidance issued after February 2016 did not change the core principle of ASU 2016-02.	Annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early application is permitted.	The Company adopted the new guidance effective July 1, 2019, using the modified retrospective transition method, which did not require the Company to adjust comparative periods. See Note 3 for the applicable disclosure of ASU 2016-02 adoption. .

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Accounts Receivable, net (Tables)

6 Months Ended

Dec. 31, 2019

Receivables [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable

(In thousands)	December 31, 2019			June 30, 2019
Trade receivables	$	57,652		$	53,593
Other receivables(1)	3,293			2,886
Allowance for doubtful accounts	(541		)	(1,324		)
Accounts receivable, net	$	60,404		$	55,155

__________

(1) Includes vendor rebates and other non-trade receivables.

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Preferred Stock Preferred Stock

6 Months Ended

Dec. 31, 2019

Preferred Stock [Abstract]

Preferred Stock

Preferred Stock

The Company is authorized to issue 500,000 shares of preferred stock at a par value of $1.00, including 21,000 authorized shares of Series A Preferred Stock.

On October 2, 2017, the Company issued 14,700 shares of Series A Preferred Stock in connection with the Boyd Coffee acquisition. At December 31, 2019, Series A Preferred Stock consisted of the following:

(In thousands, except share and per share amounts)
Shares Authorized	Shares Issued and Outstanding	Stated Value per Share		Carrying Value		Cumulative Preferred Dividends, Undeclared and Unpaid		Liquidation Preference
21,000	14,700	$	1,082	$	15,899	$	1,199	$	15,899

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Other Current Liabilities

6 Months Ended

Dec. 31, 2019

Payables and Accruals [Abstract]

Other Current Liabilities

Other Current Liabilities

Other current liabilities consist of the following:

(In thousands)	December 31, 2019		June 30, 2019
Accrued postretirement benefits	$	1,068	$	1,068
Accrued workers’ compensation liabilities	1,681		1,495
Cumulative preferred dividends, undeclared and unpaid (4)	1,198		305
Earnout payable (1)	—		1,000
Working capital dispute payable(2)	354		354
Other (3)	3,681		3,087
Other current liabilities	$	7,982	$	7,309

___________

(1) Represents estimated fair value of earnout payable in connection with the Company’s acquisition of substantially all of the assets of West Coast Coffee completed on February 7, 2017.

(2) Represents accrued expenses related to working capital disputes in connection with the Company's acquisition of Boyd Coffee on October 2, 2017.

(3) Includes accrued property taxes, sales and use taxes and insurance liabilities.

(4) Per the agreement, all the cumulative preferred dividends, undeclared and unpaid are now payable. Therefore, the previously accrued long-term portion has been reclassified to current liabilities.

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Subsequent Event Subsequent Event

6 Months Ended

Dec. 31, 2019

Subsequent Events [Abstract]

Subsequent Event

Subsequent Events

The Company evaluated all events or transactions that occurred after December 31, 2019 through the date the condensed consolidated financial statements were issued. During this period the Company had the following material subsequent events that require disclosure:

None.

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Sales of Assets (Tables)

6 Months Ended

Dec. 31, 2019

Discontinued Operations and Disposal Groups [Abstract]

Assets held-for-sale

During the six months endedDecember 31, 2019, the Company completed the sale of five branch properties and entered into two operating lease agreements with the purchasers of two of the branch properties as detailed in the following table:

(In thousands)
Name of Branch Property	Date Sold	Sales Price		Net Proceed		Gain (loss)			Long-Term Leaseback	Lease Term	Monthly Base Rent
Seattle, Washington	8/28/2019	$	7,900	$	7,300	$	6,800		No	N/A	N/A
Indianapolis, Indiana	11/19/2019	$	250	$	186	$	(173	)	No	N/A	N/A
Hayward, California(1)	12/23/2019	$	7,050	$	6,569	$	2,016		Yes	5 years	$	28
Denver, Colorado(1)	12/31/2019	$	2,300	$	2,075	$	1,989		Yes	7 years	$	17
Casper, Wyoming	12/31/2019	$	385	$	355	$	304		No	N/A	N/A

___________

(1) Has an option to renew the lease for additional five years.

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Introduction and Basis of Presentation

6 Months Ended

Dec. 31, 2019

Introduction and Basis of Presentation [Abstract]

Introduction and Basis of Presentation

Introduction and Basis of Presentation

Farmer Bros. Co., a Delaware corporation (including its consolidated subsidiaries unless the context otherwise requires, the “Company”), is a national coffee roaster, wholesaler and distributor of coffee, tea, and culinary products.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 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 (“GAAP”) for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial data have been included. Operating results for the three and six months ended December 31, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2020. Events occurring subsequent to December 31, 2019 have been evaluated for potential recognition or disclosure in the unaudited condensed consolidated financial statements for the three and six months ended December 31, 2019.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019, filed with the Securities and Exchange Commission (the “SEC”) on September 11, 2019 (the “2019 Form 10-K”).

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its direct and indirect wholly owned subsidiaries FBC Finance Company, a California corporation, Coffee Bean Holding Co., Inc., a Delaware corporation, the parent company of Coffee Bean International, Inc., an Oregon corporation (“CBI”), CBI, China Mist Brands, Inc., a Delaware corporation, Boyd Assets Co., a Delaware corporation, and Coffee Bean International LLC, a Delaware limited liability company. All inter-company balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. The Company reviews its estimates on an ongoing basis using currently available information. Changes in facts and circumstances may result in revised estimates and actual results may differ from those estimates.

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Employee Stock Ownership Plan (Tables)

6 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Schedule of Share-based Compensation, Employee Stock Purchase Plan, Activity

	December 31, 2019		June 30, 2019
Allocated shares	1,393,530		1,393,530
Committed to be released shares	—		—
Unallocated shares	—		—
Total ESOP shares	1,393,530		1,393,530
(In thousands)
Fair value of ESOP shares	$	20,987	$	22,812

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
Preferred stock, par value (in US$ per share)	$ 1	$ 1
Preferred Stock, Shares Authorized (in shares)	500,000	500,000
Liquidation preference	$ 15,899	$ 15,624
Common stock, par value (in US$ per share)	$ 1	$ 1
Common stock, shares authorized (in shares)	25,000,000	25,000,000
Common stock, shares issued (in shares)	17,177,448	17,042,132
Common stock, shares outstanding (in shares)	17,177,448	17,042,132
Cumulative Preferred Stock
Preferred Stock, Shares Authorized (in shares)	21,000	21,000
Preferred stock, issued (in shares)	14,700	14,700

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Income Taxes (Tables)

6 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Tax

The income tax expense (benefit) and the related effective tax rates are as follows (in thousands, except effective tax rate):

	Three Months Ended December 31,						Six Months Ended December 31,
	2019			2018			2019			2018
Income tax benefit	$	(81	)	$	(2,725	)	$	(188	)	$	(4,012	)
Effective tax rate	(1.1		)%	21.0		%	(1.5		)%	23.3		%

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Property, Plant and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Jun. 30, 2019
Property, Plant and Equipment
Property, plant and equipment gross	$ 386,341		$ 386,341		$ 399,093
Accumulated depreciation	(227,671)		(227,671)		(225,826)
Land	13,313		13,313		16,191
Property, plant and equipment, net	171,983		171,983		189,458
Building and Facilities
Property, Plant and Equipment
Property, plant and equipment gross	100,316		100,316		107,915
Machinery and Equipment
Property, Plant and Equipment
Property, plant and equipment gross	243,397		243,397		249,477
Capitalized Software Costs
Property, Plant and Equipment
Property, plant and equipment gross	28,770		28,770		27,666
Office furniture and equipment
Property, Plant and Equipment
Property, plant and equipment gross	13,858		13,858		14,035
Coffee Brewing Equipment
Property, Plant and Equipment
Property, plant and equipment gross	103,520		103,520		106,593
Accumulated depreciation	(69,581)		(69,581)		(70,202)
Property, plant and equipment, net	33,939		33,939		$ 36,391
Depreciation	2,327	$ 2,201	4,666	$ 4,396
Other Expenses	$ 8,446	$ 8,410	$ 16,171	$ 16,916

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Fair Value Measurements - Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis (Details) - Estimate of Fair Value Measurement - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
Coffee-related Derivative Instruments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Coffee-related derivative assets (1)	$ 9,161	$ 1,925
Interest rate swap derivative liabilities (2)	1	1,127
Coffee-related derivative assets (1)	333	614
Coffee-related derivative liabilities (1)	7	114
Coffee-related Derivative Instruments | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Coffee-related derivative assets (1)	0	0
Interest rate swap derivative liabilities (2)	0	0
Coffee-related derivative assets (1)	0	0
Coffee-related derivative liabilities (1)	0	0
Coffee-related Derivative Instruments | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Coffee-related derivative assets (1)	9,161	1,925
Interest rate swap derivative liabilities (2)	1	1,127
Coffee-related derivative assets (1)	333	614
Coffee-related derivative liabilities (1)	7	114
Coffee-related Derivative Instruments | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Coffee-related derivative assets (1)	0	0
Interest rate swap derivative liabilities (2)	0	0
Coffee-related derivative assets (1)	0	0
Coffee-related derivative liabilities (1)	0	0
Interest Rate Swap Derivative Liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap derivative liabilities (2)	1,429	1,845
Interest Rate Swap Derivative Liabilities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap derivative liabilities (2)	0	0
Interest Rate Swap Derivative Liabilities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap derivative liabilities (2)	1,429	1,845
Interest Rate Swap Derivative Liabilities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap derivative liabilities (2)	$ 0	$ 0

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Sales of Assets (Notes)

6 Months Ended

Dec. 31, 2019

Discontinued Operations and Disposal Groups [Abstract]

Sales of Assets

Sales of Assets

Sale of Office Coffee Assets

In order to focus on its core product offerings, in July 2019, the Company completed the sale of certain assets associated with its office coffee customers for $9.3 million in cash paid at the time of closing plus an earnout of up to an additional $2.3 million if revenue expectations are achieved during test periods scheduled to occur at various branches at various times and concluding by early third quarter of fiscal year 2020. The Company recognized an initial net gain on the asset sales of $7.2 million during the six months endedDecember 31, 2019. The sale of office coffee assets did not represent a strategic shift for the Company and did not have a material impact on the Company's results of operations because the Company has signed a supply agreement to provide certain coffee products to the assets purchaser.

Sale of Branch Properties

During the six months endedDecember 31, 2019, the Company completed the sale of five branch properties and entered into two operating lease agreements with the purchasers of two of the branch properties as detailed in the following table:

(In thousands)
Name of Branch Property	Date Sold	Sales Price		Net Proceed		Gain (loss)			Long-Term Leaseback	Lease Term	Monthly Base Rent
Seattle, Washington	8/28/2019	$	7,900	$	7,300	$	6,800		No	N/A	N/A
Indianapolis, Indiana	11/19/2019	$	250	$	186	$	(173	)	No	N/A	N/A
Hayward, California(1)	12/23/2019	$	7,050	$	6,569	$	2,016		Yes	5 years	$	28
Denver, Colorado(1)	12/31/2019	$	2,300	$	2,075	$	1,989		Yes	7 years	$	17
Casper, Wyoming	12/31/2019	$	385	$	355	$	304		No	N/A	N/A

___________

(1) Has an option to renew the lease for additional five years.

Sale leaseback of Houston Facility

In November 2019, the Company completed the sale of its Houston, Texas manufacturing facility and warehouse (the “Property”) for an aggregate purchase price, exclusive of closing costs, of $10.0 million. Cash proceeds from the sale of the Property were $9.0 million. The Company recognized a net gain on the Property sale of $7.3 million during the six months endedDecember 31, 2019. The Property did not meet the accounting guidance criteria to be classified as discontinued operations.

Following the close of the sale of the Property, the Company and the purchaser of the Property entered into a three-year leaseback agreement with respect to the Property for a base rent of $50,000 per month. The Company may terminate the leaseback no earlier than the first day of the eighteenth full calendar month of the term providing at least nine months’ notice. The purchaser of the Property does not have any material relationship with the Company or its subsidiaries.

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Net Income (loss) Per Common Share

6 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

Net Income (loss) Per Common Share

Net Income (loss) Per Common Share

Basic net income (loss) per common share is calculated by dividing net income (loss) attributable to the Company by the weighted average number of common shares outstanding during the periods presented. Diluted net income (loss) per common share is calculated by dividing diluted net income (loss) attributable to the Company by the weighted average number of common shares outstanding adjusted to include the effect, if dilutive, of the exercise of in-the-money stock options, unvested performance-based restricted stock units, and shares of Series A Preferred Stock, as converted, during the periods presented. The calculation of dilutive shares outstanding excludes out-of-the-money stock options (i.e., such option’s exercise prices were greater than the average market price of our common shares for the period) and unvested performance-based restricted stock units because their inclusion would be have been anti-dilutive.

The following table presents the computation of basic and diluted earnings per common share:

	Three Months Ended December 31,					Six Months Ended December 31,
(In thousands, except share and per share amounts)	2019		2018			2019		2018
Undistributed net earnings (loss) available to common stockholders	$	7,595	$	(10,225	)	$	12,104	$	(13,341	)
Undistributed net earnings (loss) available to nonvested restricted stockholders and holders of convertible preferred stock	21		(9		)	29		(11		)
Net earnings (loss) available to common stockholders—basic	$	7,616	$	(10,234	)	$	12,133	$	(13,352	)
Weighted average common shares outstanding—basic	17,159,108		16,985,157			17,127,153		16,971,995
Effect of dilutive securities:
Shares issuable under stock options	1,236		—			1,819		—
Shares issuable under PBRSUs	8,091		—			6,272		—
Shares issuable under convertible preferred stock	414,900		—			414,900		—
Weighted average common shares outstanding—diluted	17,583,335		16,985,157			17,550,144		16,971,995
Net earnings (loss) per common share available to common stockholders—basic	$	0.44	$	(0.60	)	$	0.71	$	(0.79	)
Net earnings (loss) per common share available to common stockholders—diluted	$	0.43	$	(0.60	)	$	0.69	$	(0.79	)

The following table summarizes anti-dilutive securities excluded from the computation of diluted net income (loss) per common share for the periods indicated:

	Three Months Ended December 31,		Six Months Ended December 31,
	2019	2018	2019	2018
Shares issuable under stock options	190,117	201,543	121,113	165,013
Shares issuable under convertible preferred stock	—	400,691	—	400,691
Shares issuable under PBRSUs	16,195	64,991	8,097	52,890

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Share-Based Compensation

6 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Share-Based Compensation

Share-based Compensation

Farmer Bros. Co. 2017 Long-Term Incentive Plan

As of December 31, 2019, there were 565,112 shares available under the 2017 Plan including shares that were forfeited under the Prior Plans for future issuance.

Non-qualified stock options with time-based vesting (“NQOs”)

One-third of the total number of shares subject to each stock option vest ratably on each of the first three anniversaries of the grant date, contingent on continued employment, and subject to accelerated vesting in certain circumstances.

Following are the assumptions used in the Black-Scholes valuation model for NQOs granted during the six months endedDecember 31, 2019:

	Six Months Ended December 31, 2019
Weighted average fair value of NQOs	$	4.65
Risk-free interest rate	1.7		%
Dividend yield	—		%
Average expected term	4.6 years
Expected stock price volatility	35.4		%

The following table summarizes NQO activity for the six months endedDecember 31, 2019:

Outstanding NQOs:	Number of NQOs		Weighted Average Exercise Price ($)	Weighted Average Remaining Life (Years)	Aggregate Intrinsic Value ($ in thousands)
Outstanding at June 30, 2019	198,049		27.35	5.25	40
Granted	431,344		14.48	—	—
Exercised	(10,360	)	12.48	—	28
Forfeited	(104,288	)	27.28	—	—
Expired	(27,970	)	31.66	—	—
Outstanding at December 31, 2019	486,775		16.03	6.54	432
Exercisable at December 31, 2019	30,074		28.96	3.76	—

The weighted-average grant-date fair value of options granted during the six months endedDecember 31, 2019 was $4.65. The aggregate intrinsic values outstanding at the end of period in the table above represent the total pretax intrinsic values, based on the Company’s closing stock price of $15.06 at December 31, 2019 and $16.37 at June 28, 2019, representing the last trading day of the respective periods, which would have been received by NQO holders had all award holders exercised their NQOs that were in-the-money as of those dates. The aggregate intrinsic value of NQO exercises in the six months endedDecember 31, 2019 represents the difference between the exercise price and the value of the Company’s common stock at the time of exercise. NQOs outstanding that are expected to vest are net of estimated forfeitures.

The Company received $0.1 million and $0.3 million in proceeds from exercises of vested NQOs during the six months endedDecember 31, 2019 and 2018, respectively.

At December 31, 2019 and June 30, 2019, respectively, there were $2.1 million and $1.1 million of unrecognized NQO compensation cost. The unrecognized NQO compensation cost at December 31, 2019 is expected to be recognized over the weighted average period of 2.7 years. Total compensation expense for NQOs was $178.1 thousand and $185.0 thousand for the three months ended December 31, 2019 and 2018, respectively. Total compensation expense for NQOs was $277.2 thousand and $283.0 thousand for the six months ended December 31, 2019 and 2018, respectively.

Non-qualified stock options with performance-based and time-based vesting (“PNQs”)

The following table summarizes PNQ activity for the six months ended December 31, 2019:

Outstanding PNQs:	Number of PNQs		Weighted Average Exercise Price ($)	Weighted Average Remaining Life (Years)	Aggregate Intrinsic Value ($ in  thousands)
Outstanding at June 30, 2019	229,961		26.21	1.23	—
Granted	—		—	—	—
Exercised	—		—	—	—
Forfeited	(6,212	)	32.85	—	—
Expired	(202,753	)	25.67	—	—
Outstanding at December 31, 2019	20,996		29.39	1.92	—
Exercisable at December 31, 2019	12,730		27.95	1.78	—

The aggregate intrinsic values outstanding at the end of each fiscal period in the table above represent the total pretax intrinsic values, based on the Company’s closing stock price of $15.06 at December 31, 2019 and $16.37 at June 28, 2019, representing the last trading day of the respective fiscal periods, which would have been received by PNQ holders had all award holders exercised their PNQs that were in-the-money as of those dates. The aggregate intrinsic value of PNQ exercises in the six months ended December 31, 2019 represents the difference between the exercise price and the value of the Company’s common stock at the time of exercise. PNQs outstanding that are expected to vest are net of estimated forfeitures.

There were no options exercised during the six months endedDecember 31, 2019. The Company received $0.1 million in proceeds from exercises of vested PNQs during the six months ended December 31, 2018.

At December 31, 2019 and June 30, 2019, there were zero and $39.7 thousand, respectively, of unrecognized PNQ compensation cost. Total compensation expense related to PNQs in the three months ended December 31, 2019 and 2018 were $4.6 thousand and $146.4 thousand, respectively. Total compensation expense related to PNQs in the six months ended December 31, 2019 and 2018 were $18.3 thousand and $324.5 thousand, respectively.

Restricted Stock

The following table summarizes restricted stock activity for the six months ended December 31, 2019:

Outstanding and Nonvested Restricted Stock Awards:	Shares Awarded		Weighted Average Grant Date Fair Value ($)
Outstanding and nonvested at June 30, 2019	32,056		21.10
Granted	48,654		15.05
Vested/Released	(18,298	)	23.98
Cancelled/Forfeited	(1,704	)	31.70
Outstanding and nonvested at December 31, 2019	60,708		15.66

The total grant-date fair value of restricted stock granted during the six months ended December 31, 2019 was $0.7 million.

At December 31, 2019 and June 30, 2019, there were $0.7 million and $0.4 million, respectively, of unrecognized compensation cost related to restricted stock. The unrecognized compensation cost related to restricted stock at December 31, 2019 is expected to be recognized over the weighted average period of 0.8 years. Total compensation expense for restricted stock were $0.2 million and $0.1 million, respectively, in the three months ended December 31, 2019 and 2018. Total compensation expense for restricted stock in the six months ended December 31, 2019 and 2018 were $0.4 million and $0.2 million, respectively.

Performance-Based Restricted Stock Units (“PBRSUs”)

The following table summarizes PBRSU activity for the six months ended December 31, 2019:

Outstanding and Nonvested PBRSUs:	PBRSUs Awarded(1)		Weighted Average Grant Date Fair Value ($)
Outstanding and nonvested at June 30, 2019	51,237		27.69
Granted(1)	76,256		14.42
Vested/Released	—		—
Cancelled/Forfeited	(36,049	)	27.92
Outstanding and nonvested at December 31, 2019	91,444		16.54

_____________

(1) The target number of PBRSUs is presented in the table. Under the terms of the awards, the recipient may earn between 0% and 200% of the target number of PBRSUs depending on the extent to which the Company meets or exceeds the achievement of the applicable financial performance goals.

The total grant-date fair value of PBRSUs granted during the six months ended December 31, 2019 was $1.1 million.

At December 31, 2019 and June 30, 2019, there were $1.1 million and $0.3 million, respectively, of unrecognized PBRSU compensation cost. The unrecognized PBRSU compensation cost at December 31, 2019 is expected to be recognized over the weighted average period of 2.6 years. Total compensation expense for PBRSUs were $77.2 thousand and $117.0 thousand, respectively, for the three months ended December 31, 2019 and 2018. Total compensation expense for PBRSUs were $0.1 million and $0.2 million, respectively, for the six months ended December 31, 2019 and 2018.

Performance Cash Awards (“PCAs”)

In November 2019, the Company granted PCAs under the 2017 Plan to certain employees. The PCAs cliff vest on the third anniversary of the date of grant based on the Company’s achievement of certain financial performance goals for the performance period July 1, 2019 through June 30, 2022, subject to certain continued employment conditions and subject to acceleration provisions of the 2017 Plan. At the end of the three-year performance period, the amount of PCAs that actually vest will be 0% to 200% of the target amount, depending on the extent to which the Company meets or exceeds the achievement of those financial performance goals measured over the full three-year performance period.

The PCAs are measured initially based on a fixed amount of the awards at the date of grant and are required to be re-measured based on the probability of achieving the performance conditions at each reporting date until settlement. Compensation expense for PCAs is recognized over the applicable performance periods. The Company records a liability equal to the cost of PCAs for which achievement of the performance condition is deemed probable. As of December 31, 2019, the Company had recognized accrued liabilities of $16.9 thousand.

At December 31, 2019, there was $0.4 million of unrecognized PCA compensation cost. The unrecognized PCA compensation cost at December 31, 2019 is expected to be recognized over the weighted average period of 2.9 years. Total compensation expense for PCAs was $16.9 thousand for the three and six months ended December 31, 2019.

XML

Document and Entity Information - shares	6 Months Ended
	Dec. 31, 2019	Jan. 31, 2020
Document Documentand Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 31, 2019
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2020
Entity Registrant Name	FARMER BROTHERS CO
Entity Central Index Key	0000034563
Current Fiscal Year End Date	--06-30
Entity Filer Category	Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding		17,151,510
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity Interactive Data Current	Yes

XML

Share-Based Compensation (Tables)

6 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

Following are the assumptions used in the Black-Scholes valuation model for NQOs granted during the six months endedDecember 31, 2019:

	Six Months Ended December 31, 2019
Weighted average fair value of NQOs	$	4.65
Risk-free interest rate	1.7		%
Dividend yield	—		%
Average expected term	4.6 years
Expected stock price volatility	35.4		%

Schedule of Share-based Compensation, Stock Options, Activity

The following table summarizes NQO activity for the six months endedDecember 31, 2019:

Outstanding NQOs:	Number of NQOs		Weighted Average Exercise Price ($)	Weighted Average Remaining Life (Years)	Aggregate Intrinsic Value ($ in thousands)
Outstanding at June 30, 2019	198,049		27.35	5.25	40
Granted	431,344		14.48	—	—
Exercised	(10,360	)	12.48	—	28
Forfeited	(104,288	)	27.28	—	—
Expired	(27,970	)	31.66	—	—
Outstanding at December 31, 2019	486,775		16.03	6.54	432
Exercisable at December 31, 2019	30,074		28.96	3.76	—

The following table summarizes PNQ activity for the six months ended December 31, 2019:

Outstanding PNQs:	Number of PNQs		Weighted Average Exercise Price ($)	Weighted Average Remaining Life (Years)	Aggregate Intrinsic Value ($ in  thousands)
Outstanding at June 30, 2019	229,961		26.21	1.23	—
Granted	—		—	—	—
Exercised	—		—	—	—
Forfeited	(6,212	)	32.85	—	—
Expired	(202,753	)	25.67	—	—
Outstanding at December 31, 2019	20,996		29.39	1.92	—
Exercisable at December 31, 2019	12,730		27.95	1.78	—

Schedule of Share-based Compensation, Nonvested Restricted Stock Shares Activity

The following table summarizes restricted stock activity for the six months ended December 31, 2019:

Outstanding and Nonvested Restricted Stock Awards:	Shares Awarded		Weighted Average Grant Date Fair Value ($)
Outstanding and nonvested at June 30, 2019	32,056		21.10
Granted	48,654		15.05
Vested/Released	(18,298	)	23.98
Cancelled/Forfeited	(1,704	)	31.70
Outstanding and nonvested at December 31, 2019	60,708		15.66

Schedule of Nonvested Performance-Based Restricted Stock Units Activity

The following table summarizes PBRSU activity for the six months ended December 31, 2019:

Outstanding and Nonvested PBRSUs:	PBRSUs Awarded(1)		Weighted Average Grant Date Fair Value ($)
Outstanding and nonvested at June 30, 2019	51,237		27.69
Granted(1)	76,256		14.42
Vested/Released	—		—
Cancelled/Forfeited	(36,049	)	27.92
Outstanding and nonvested at December 31, 2019	91,444		16.54

_____________

(1) The target number of PBRSUs is presented in the table. Under the terms of the awards, the recipient may earn between 0% and 200% of the target number of PBRSUs depending on the extent to which the Company meets or exceeds the achievement of the applicable financial performance goals.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 7,754	$ (10,100)	$ 12,408	$ (13,086)
Other comprehensive (loss) income, net of tax:
Unrealized gains (losses) on derivative instruments designated as cash flow hedges, net of tax	11,284	748	7,395	(5,349)
Losses on derivative instruments designated as cash flow hedges reclassified to cost of goods sold and interest expense, net of tax	4,661	1,650	7,249	3,110
Change in funded status of retiree benefit obligations, net of tax	0	5,651	0	5,651
Pension settlement charge, net of tax	0	8,147	0	8,147
Total comprehensive income (loss), net of tax	$ 23,699	$ (5,206)	$ 27,052	$ (12,829)

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Net Income (loss) Per Common Share (Tables)

6 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

Schedule of Earnings (Loss) Per Common Share, Basic and Diluted

The following table presents the computation of basic and diluted earnings per common share:

	Three Months Ended December 31,					Six Months Ended December 31,
(In thousands, except share and per share amounts)	2019		2018			2019		2018
Undistributed net earnings (loss) available to common stockholders	$	7,595	$	(10,225	)	$	12,104	$	(13,341	)
Undistributed net earnings (loss) available to nonvested restricted stockholders and holders of convertible preferred stock	21		(9		)	29		(11		)
Net earnings (loss) available to common stockholders—basic	$	7,616	$	(10,234	)	$	12,133	$	(13,352	)
Weighted average common shares outstanding—basic	17,159,108		16,985,157			17,127,153		16,971,995
Effect of dilutive securities:
Shares issuable under stock options	1,236		—			1,819		—
Shares issuable under PBRSUs	8,091		—			6,272		—
Shares issuable under convertible preferred stock	414,900		—			414,900		—
Weighted average common shares outstanding—diluted	17,583,335		16,985,157			17,550,144		16,971,995
Net earnings (loss) per common share available to common stockholders—basic	$	0.44	$	(0.60	)	$	0.71	$	(0.79	)
Net earnings (loss) per common share available to common stockholders—diluted	$	0.43	$	(0.60	)	$	0.69	$	(0.79	)

The following table summarizes anti-dilutive securities excluded from the computation of diluted net income (loss) per common share for the periods indicated:

	Three Months Ended December 31,		Six Months Ended December 31,
	2019	2018	2019	2018
Shares issuable under stock options	190,117	201,543	121,113	165,013
Shares issuable under convertible preferred stock	—	400,691	—	400,691
Shares issuable under PBRSUs	16,195	64,991	8,097	52,890

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Leases - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2019
Leases [Abstract]
Lessee, Operating Lease, Term of Contract		10 years
Lessee, Operating Lease, Renewal Term		20 years
Payments for Rent	$ 6.4

XML

Leases (Notes)

6 Months Ended

Dec. 31, 2019

Leases [Abstract]

Leases

Leases

The Company makes a determination if an arrangement constitutes a lease at inception, and categorizes the lease as either an operating or finance lease. Operating leases are included in right-of-use operating lease assets and operating lease liabilities in the Company's Condensed Consolidated Balance Sheets. Finance leases are included in property, plant and equipment, net and other long-term liabilities in the Condensed Consolidated Balance Sheets. Leases with an initial term of 12 months or less are not recorded on the Condensed Consolidated Balance Sheets.

The Company has entered into leases for building facilities, vehicles and other equipment. The Company’s leases have remaining contractual terms of up to 10 years, some of which have options to extend the lease for up to 20 years. For purposes of calculating operating lease liabilities, lease terms are deemed not to include options to extend the lease termination until it is reasonably certain that the Company will exercise that option. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Supplemental unaudited consolidated balance sheet information related to leases is as follows:

	Classification	December 31, 2019
(In thousands)
Operating lease assets	Right-of-use operating lease assets	$	19,696
Finance lease assets	Property, plant and equipment, net	34
Total lease assets		$	19,730
Operating lease liabilities - current	Operating lease liabilities - current	$	5,571
Operating lease liabilities - noncurrent	Operating lease liabilities - noncurrent	14,318
Finance lease liabilities	Other long-term liabilities	35
Total lease liabilities		$	19,924

The components of lease expense are as follows:

		Three Months Ended December 31,		Six Months Ended December 31,
	Classification	2019		2019
(In thousands)
Operating lease expense	General and administrative expenses and cost of goods sold	$	1,253	$	2,363
Finance lease expense:
Amortization of finance lease assets	General and administrative expenses	13		26
Interest on finance lease liabilities	Interest expense	—		1
Total lease expense		$	1,266	$	2,390

	December 31, 2019
(In thousands)	Operating Leases			Finance Leases
Maturities of lease liabilities are as follows:
2020	$	2,826		$	27
2021	5,102			9
2022	3,631			—
2023	2,995			—
2024	2,699			—
Thereafter	5,375			—
Total lease payments	22,628			36
Less: interest	(2,739		)	(1		)
Total lease obligations	$	19,889		$	35

Lease term and discount rate:

	December 31, 2019
Weighted-average remaining lease terms (in years):
Operating lease	8.8
Finance lease	0.7
Weighted-average discount rate:
Operating lease	4.50	%
Finance lease	4.50	%

Other Information:

	Six Months Ended   December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,165
Operating cash flows from finance leases	$	1
Financing cash flows from finance leases	$	25
Leased assets obtained in exchange for new finance lease liabilities	$	—
Leased assets obtained in exchange for new operating lease liabilities	$	—

Disclosures related to periods prior to adoption of ASU 2016-02

Rent expense paid for the fiscal year ended June 30, 2019 was $6.4 million.

The minimum annual payments under operating and capital leases as of June 30, 2019 are as follows:

(In thousands)	Operating  Lease Obligations		Capital  Lease Obligations
Year Ended June 30,
2020	$	4,434	$	36
2021	3,238		1
2022	2,472		—
2023	2,131		—
2024	2,025		—
Thereafter	4,389		—
Total minimum lease payments	$	18,689	37
Less: imputed interest (0.82% to 10.66%)			(2		)
Present value of future minimum lease payments			35
Less: current portion			(34		)
Long-term capital lease obligations			$	1

Leases

Leases

The Company makes a determination if an arrangement constitutes a lease at inception, and categorizes the lease as either an operating or finance lease. Operating leases are included in right-of-use operating lease assets and operating lease liabilities in the Company's Condensed Consolidated Balance Sheets. Finance leases are included in property, plant and equipment, net and other long-term liabilities in the Condensed Consolidated Balance Sheets. Leases with an initial term of 12 months or less are not recorded on the Condensed Consolidated Balance Sheets.

The Company has entered into leases for building facilities, vehicles and other equipment. The Company’s leases have remaining contractual terms of up to 10 years, some of which have options to extend the lease for up to 20 years. For purposes of calculating operating lease liabilities, lease terms are deemed not to include options to extend the lease termination until it is reasonably certain that the Company will exercise that option. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Supplemental unaudited consolidated balance sheet information related to leases is as follows:

	Classification	December 31, 2019
(In thousands)
Operating lease assets	Right-of-use operating lease assets	$	19,696
Finance lease assets	Property, plant and equipment, net	34
Total lease assets		$	19,730
Operating lease liabilities - current	Operating lease liabilities - current	$	5,571
Operating lease liabilities - noncurrent	Operating lease liabilities - noncurrent	14,318
Finance lease liabilities	Other long-term liabilities	35
Total lease liabilities		$	19,924

The components of lease expense are as follows:

		Three Months Ended December 31,		Six Months Ended December 31,
	Classification	2019		2019
(In thousands)
Operating lease expense	General and administrative expenses and cost of goods sold	$	1,253	$	2,363
Finance lease expense:
Amortization of finance lease assets	General and administrative expenses	13		26
Interest on finance lease liabilities	Interest expense	—		1
Total lease expense		$	1,266	$	2,390

	December 31, 2019
(In thousands)	Operating Leases			Finance Leases
Maturities of lease liabilities are as follows:
2020	$	2,826		$	27
2021	5,102			9
2022	3,631			—
2023	2,995			—
2024	2,699			—
Thereafter	5,375			—
Total lease payments	22,628			36
Less: interest	(2,739		)	(1		)
Total lease obligations	$	19,889		$	35

Lease term and discount rate:

	December 31, 2019
Weighted-average remaining lease terms (in years):
Operating lease	8.8
Finance lease	0.7
Weighted-average discount rate:
Operating lease	4.50	%
Finance lease	4.50	%

Other Information:

	Six Months Ended   December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,165
Operating cash flows from finance leases	$	1
Financing cash flows from finance leases	$	25
Leased assets obtained in exchange for new finance lease liabilities	$	—
Leased assets obtained in exchange for new operating lease liabilities	$	—

Disclosures related to periods prior to adoption of ASU 2016-02

Rent expense paid for the fiscal year ended June 30, 2019 was $6.4 million.

The minimum annual payments under operating and capital leases as of June 30, 2019 are as follows:

(In thousands)	Operating  Lease Obligations		Capital  Lease Obligations
Year Ended June 30,
2020	$	4,434	$	36
2021	3,238		1
2022	2,472		—
2023	2,131		—
2024	2,025		—
Thereafter	4,389		—
Total minimum lease payments	$	18,689	37
Less: imputed interest (0.82% to 10.66%)			(2		)
Present value of future minimum lease payments			35
Less: current portion			(34		)
Long-term capital lease obligations			$	1

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Inventories - Schedule of Inventory (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
Product Information
Total	$ 85,134	$ 87,910
Coffee
Product Information
Processed	27,492	25,769
Unprocessed	30,337	33,259
Total	57,829	59,028
Tea and Culinary Products
Product Information
Processed	19,385	21,767
Unprocessed	94	74
Total	19,479	21,841
Coffee Brewing Equipment
Product Information
Total	$ 7,826	$ 7,041

XML

Derivative Instruments - Schedule of Offsetting Derivative Asset and Liability Positions (Details) - Counterparty A - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
Derivatives, Fair Value [Line Items]
Derivative asset, fair value	$ 9,494	$ 2,539
Derivative asset, netting adjustment	(8)	(698)
Derivative asset, cash collateral posted	0	0
Derivative asset, net	9,486	1,841
Derivative liability, fair value	(1,437)	3,086
Derivative liability, netting adjustment	(8)	(698)
Derivative liability, cash collateral posted	0	0
Derivative liability, net	$ (1,445)	$ 2,388

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Derivative Instruments - Fair Value of Derivative Instruments on the Consolidated Balance Sheets (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
Designated as Cash Flow Hedges | Short-term Investments | Cash Flow Hedging
Derivatives, Fair Value [Line Items]
Derivative asset, fair value	$ 8,718	$ 1,254
Designated as Cash Flow Hedges | Long-term Derivative Assets | Cash Flow Hedging
Derivatives, Fair Value [Line Items]
Derivative asset, fair value	443	671
Designated as Cash Flow Hedges | Short-Term Derivative Liabilities | Cash Flow Hedging
Derivatives, Fair Value [Line Items]
Derivative liability, fair value	1	1,114
Designated as Cash Flow Hedges | Long-term derivative liabilities | Cash Flow Hedging
Derivatives, Fair Value [Line Items]
Derivative liability, fair value	0	13
Not Designated as Hedging Instrument | Short-term Investments
Derivatives, Fair Value [Line Items]
Derivative asset, fair value	333	611
Not Designated as Hedging Instrument | Long-term Derivative Assets
Derivatives, Fair Value [Line Items]
Derivative asset, fair value	0	3
Not Designated as Hedging Instrument | Short-Term Derivative Liabilities
Derivatives, Fair Value [Line Items]
Derivative liability, fair value	7	114
Not Designated as Hedging Instrument | Long-term derivative liabilities
Derivatives, Fair Value [Line Items]
Derivative liability, fair value	0	0
Interest Rate Swap | Designated as Cash Flow Hedges | Short-Term Derivative Liabilities | Cash Flow Hedging
Derivatives, Fair Value [Line Items]
Derivative liability, fair value	360	246
Interest Rate Swap | Designated as Cash Flow Hedges | Long-term derivative liabilities | Cash Flow Hedging
Derivatives, Fair Value [Line Items]
Derivative liability, fair value	1,069	1,599
Interest Rate Swap | Not Designated as Hedging Instrument | Short-Term Derivative Liabilities
Derivatives, Fair Value [Line Items]
Derivative liability, fair value	0	0
Interest Rate Swap | Not Designated as Hedging Instrument | Long-term derivative liabilities
Derivatives, Fair Value [Line Items]
Derivative liability, fair value	$ 0	$ 0

XML

Leases - Weighted Average Information (Details)	Dec. 31, 2019
Leases [Abstract]
Operating Lease, Weighted Average Remaining Lease Term	8 years 9 months 23 days
Finance Lease, Weighted Average Remaining Lease Term	7 months 60 days
Operating Lease, Weighted Average Discount Rate, Percent	4.50%
Finance Lease, Weighted Average Discount Rate, Percent	4.50%

XML

Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Jun. 30, 2019	Jul. 01, 2019
Property, Plant and Equipment
% of total	100.00%	100.00%	100.00%	100.00%
Right-of-use operating lease assets	$ 19,696		$ 19,696		$ 0	$ 16,300
Operating Lease, Liability	$ 19,889		$ 19,889			$ 16,300
Accounts Receivable | Five Customers
Property, Plant and Equipment
% of total			34.00%		28.00%

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Debt Obligations (Details) - USD ($)		3 Months Ended		6 Months Ended
	Nov. 06, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Jun. 30, 2019	Mar. 27, 2019
Line of Credit Facility
Long-term borrowings under revolving credit facility		$ 70,000,000		$ 70,000,000		$ 92,000,000
Revolving Credit Facility
Line of Credit Facility
Long-term borrowings under revolving credit facility		$ 70,000,000		$ 70,000,000		$ 92,000,000
Debt, weighted average interest rate		4.05%		4.05%		3.98%
JP Morgan Chase | Amended Credit Agreement | Revolving Credit Facility | Minimum
Line of Credit Facility
Line of credit, commitment fee percent	0.20%
JP Morgan Chase | Amended Credit Agreement | Revolving Credit Facility | Maximum
Line of Credit Facility
Line of credit, commitment fee percent	0.40%
JP Morgan Chase | JPM Chase Loan Agreement | Revolving Credit Facility
Line of Credit Facility
Line of credit, maximum borrowing capacity	$ 150,000,000
Line of Credit Facility, Revolving Loan Commitment, Accordion Feature	75,000,000
JP Morgan Chase | JPM Chase Loan Agreement | Swing Line Loans
Line of Credit Facility
Line of credit, maximum borrowing capacity	$ 15,000,000
Prime Rate | JP Morgan Chase | Minimum
Line of Credit Facility
Line of credit, description of interest rate	PRIME + 0.25%
Prime Rate | JP Morgan Chase | Maximum
Line of Credit Facility
Line of credit, description of interest rate	PRIME + 0.875%
London Interbank Offered Rate (LIBOR) | JP Morgan Chase | Minimum
Line of Credit Facility
Line of credit, description of interest rate	Adjusted LIBO Rate + 1.25%
London Interbank Offered Rate (LIBOR) | JP Morgan Chase | Maximum
Line of Credit Facility
Line of credit, description of interest rate	Adjusted LIBO Rate + 1.875%
Interest Rate Swap
Line of Credit Facility
Derivative, Notional Amount		$ 65,000,000		$ 65,000,000			$ 80,000,000
Interest Rate Swap | Interest Expense
Line of Credit Facility
Other Comprehensive Income (Loss), Cash Flow Hedge, Reclassification for Discontinuance, before Tax		$ (407,000)	$ 0	$ (407,000)	$ 0
Option One | JP Morgan Chase | JPM Chase Loan Agreement | Revolving Credit Facility
Line of Credit Facility
Debt Instrument, Description of Variable Rate Basis	Prime Rate
Option One | JP Morgan Chase | JPM Chase Loan Agreement | Revolving Credit Facility | Minimum
Line of Credit Facility
Debt Instrument, Basis Spread on Variable Rate	0.25%
Option One | JP Morgan Chase | JPM Chase Loan Agreement | Revolving Credit Facility | Maximum
Line of Credit Facility
Debt Instrument, Basis Spread on Variable Rate	0.875%
Option Two | JP Morgan Chase | JPM Chase Loan Agreement | Revolving Credit Facility
Line of Credit Facility
Debt Instrument, Description of Variable Rate Basis	LIBOR Rate
Option Two | JP Morgan Chase | JPM Chase Loan Agreement | Revolving Credit Facility | Minimum
Line of Credit Facility
Debt Instrument, Basis Spread on Variable Rate	1.25%
Option Two | JP Morgan Chase | JPM Chase Loan Agreement | Revolving Credit Facility | Maximum
Line of Credit Facility
Debt Instrument, Basis Spread on Variable Rate	1.875%

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Net Income (loss) Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Undistributed Earnings (Loss) Available to Common Shareholders, Basic	$ 7,595	$ (10,225)	$ 12,104	$ (13,341)
Undistributed net earnings (loss) available to nonvested restricted stockholders and holders of convertible preferred stock	21	(9)	29	(11)
Undistributed net earnings (loss) available to common stockholders	$ 7,616	$ (10,234)	$ 12,133	$ (13,352)
Weighted average common shares outstanding - basic (in shares)	17,159,108	16,985,157	17,127,153	16,971,995
Incremental Common Shares Attributable to Dilutive Effect of Conversion of Preferred Stock (in shares)	414,900	0	414,900	0
Weighted average common shares outstanding—diluted (in shares)	17,583,335	16,985,157	17,550,144	16,971,995
Earnings Per Share, Basic, Undistributed (in USD per share)	$ 0.44	$ (0.60)	$ 0.71	$ (0.79)
Earnings Per Share, Diluted, Undistributed (in USD per share)	$ 0.43	$ (0.60)	$ 0.69	$ (0.79)
Stock Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares issuable under stock options (in shares)	1,236	0	1,819	0
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	190,117	201,543	121,113	165,013
Cumulative Preferred Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	0	400,691	0	400,691
Performance-Based Restricted Stock Units (PBRSUs)
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares issuable under stock options (in shares)	8,091	0	6,272	0
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	16,195	64,991	8,097	52,890

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Commitments and Contingencies - Narrative (Details) $ in Millions	6 Months Ended
	Dec. 31, 2019 USD ($)
Contractual Obligations
Long-term Purchase Commitment, additional	$ 5.4
Inventories | Coffee
Contractual Obligations
Purchase Obligation, Due in Next Twelve Months	60.7
Inventories | Other Inventory
Contractual Obligations
Purchase Obligation, Due in Next Twelve Months	$ 6.2

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Share-Based Compensation - Stock Option Activity NQOs and PNQs (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Jun. 30, 2019
NQOs
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Number of options granted (shares)	431,344
Number of options exercised (shares)	(10,360)
Number of options forfeited (shares)	(104,288)
Number of options expired (shares)	(27,970)
Number of options - Ending balance (in shares)	486,775
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Weighted average purchase price (in US$ per share)	$ 14.48
Weighted Average Exercise Price, Exercised (in US$ per share)	12.48
Weighted Average Exercise Price, Forfeited (in US$ per share)	27.28
Weighted Average Exercise Price, Expired (in US$ per share)	31.66
Weighted Average Exercise Price, Ending balance (in US$ per share)	$ 16.03
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Weighted Average Remaining Life, Beginning balance	6 years 6 months 14 days
Weighted Average Remaining Life, Ending balance	6 years 6 months 14 days
Aggregate Intrinsic Value, Beginning balance	$ 432
Aggregate intrinsic value, exercised	$ 28
PNQs
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Weighted Average Remaining Life, Beginning balance	1 year 9 months 63 days
Weighted Average Remaining Life, Ending balance	1 year 9 months 63 days
PNQs | Farmer Bros. Co. Amended and Restated 2007 Long-term Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Number of options - Beginning balance (in shares)	229,961
Number of options granted (shares)	0
Number of options exercised (shares)	0
Number of options forfeited (shares)	(6,212)
Number of options expired (shares)	(202,753)
Number of options - Ending balance (in shares)	20,996
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Weighted Average Exercise Price, Beginning balance (in US$ per share)	$ 26.21
Weighted average purchase price (in US$ per share)	0.00
Weighted Average Exercise Price, Exercised (in US$ per share)	0.00
Weighted Average Exercise Price, Forfeited (in US$ per share)	32.85
Weighted Average Exercise Price, Expired (in US$ per share)	25.67
Weighted Average Exercise Price, Ending balance (in US$ per share)	$ 29.39
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Weighted Average Remaining Life, Beginning balance		1 year 2 months 23 days
Weighted Average Remaining Life, Ending balance		1 year 2 months 23 days
Aggregate Intrinsic Value, Beginning balance			$ 0
Aggregate intrinsic value, exercised	$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest [Abstract]
Options, Vested and exercisable, Outstanding (in shares)	12,730
Options, Vested and exercisable, Weighted Average Exercise Price (in US$ per share)	$ 27.95
Options, Vested and exercisable, Weighted Average Remaining Contractual Term	1 year 8 months 41 days
Vested | NQOs
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Number of options - Beginning balance (in shares)	198,049
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Weighted Average Exercise Price, Beginning balance (in US$ per share)	$ 27.35
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Weighted Average Remaining Life, Beginning balance		5 years 3 months
Weighted Average Remaining Life, Ending balance		5 years 3 months
Aggregate Intrinsic Value, Beginning balance			$ 40
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest [Abstract]
Options, Vested and exercisable, Outstanding (in shares)	30,074
Options, Vested and exercisable, Weighted Average Exercise Price (in US$ per share)	$ 28.96
Options, Vested and exercisable, Weighted Average Remaining Contractual Term	3 years 9 months 4 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value	$ 0

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Goodwill and Intangible Assets

6 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

There were no changes to the carrying value of goodwill in the six months ended December 31, 2019. The carrying value of goodwill at December 31, 2019 and June 30, 2019 was $36.2 million.

The following is a summary of the Company’s amortized and unamortized intangible assets other than goodwill:

		December 31, 2019							June 30, 2019
(In thousands)	Weighted Average Amortization Period as of December 31, 2019	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Amortized intangible assets:
Customer relationships	7.3	$	33,003	$	(16,391	)	$	16,612	$	33,003	$	(15,291	)	$	17,712
Non-compete agreements	2.2	220		(142		)	78		220		(122		)	98
Recipes	3.8	930		(420		)	510		930		(354		)	576
Trade name/brand name	4.5	510		(365		)	145		510		(346		)	164
Total amortized intangible assets		$	34,663	$	(17,318	)	$	17,345	$	34,663	$	(16,113	)	$	18,550
Unamortized intangible assets:
Trademarks, trade names and brand name with indefinite lives		$	10,328	$	—		$	10,328	$	10,328	$	—		$	10,328
Total unamortized intangible assets		$	10,328	$	—		$	10,328	$	10,328	$	—		$	10,328
Total intangible assets		$	44,991	$	(17,318	)	$	27,673	$	44,991	$	(16,113	)	$	28,878

Aggregate amortization expense for the three months ended December 31, 2019 and 2018 was $0.6 million and $0.7 million, respectively. Aggregate amortization expense for the six months ended December 31, 2019 and 2018 was $1.2 million and $1.3 million, respectively.

The Company tests goodwill and intangible assets for impairment annually, as of January 31, or when events or changes in circumstances would indicate that the carrying amounts of the assets may not be recoverable. The Company is currently undergoing its annual testing. Events and circumstances have occurred, including those during the current fiscal year, such as declining operating results, that may have a negative impact on the fair value of these assets.

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Fair Value Measurements

6 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Assets and liabilities measured and recorded at fair value on a recurring basis were as follows:

(In thousands)	Total		Level 1		Level 2		Level 3
December 31, 2019
Derivative instruments designated as cash flow hedges:
Coffee-related derivative assets (1)	$	9,161	$	—	$	9,161	$	—
Coffee-related derivative liabilities (1)	$	1	$	—	$	1	$	—
Interest rate swap derivative liabilities (2)	$	1,429	$	—	$	1,429	$	—
Derivative instruments not designated as accounting hedges:
Coffee-related derivative assets(1)	$	333	$	—	$	333	$	—
Coffee-related derivative liabilities(1)	$	7	$	—	$	7	$	—
(In thousands)	Total		Level 1		Level 2		Level 3
June 30, 2019
Derivative instruments designated as cash flow hedges:
Coffee-related derivative assets (1)	$	1,925	$	—	$	1,925	$	—
Coffee-related derivative liabilities (1)	$	1,127	$	—	$	1,127	$	—
Interest rate swap derivative liabilities (2)	$	1,845	$	—	$	1,845	$	—
Derivative instruments not designated as accounting hedges:
Coffee-related derivative assets (1)	$	614	$	—	$	614	$	—
Coffee-related derivative liabilities (1)	$	114	$	—	$	114	$	—

____________________ 

(1) The Company's coffee-related derivative instruments are traded over-the-counter and, therefore, classified as Level 2.

(2) The Company's interest rate swap derivative instrument are model-derived valuations with directly or indirectly observable significant inputs such as interest rate and, therefore, classified as Level 2.

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Leases (Tables)

6 Months Ended

Dec. 31, 2019

Leases [Abstract]

Assets And Liabilities, Lessee

Lease term and discount rate:

	December 31, 2019
Weighted-average remaining lease terms (in years):
Operating lease	8.8
Finance lease	0.7
Weighted-average discount rate:
Operating lease	4.50	%
Finance lease	4.50	%

Supplemental unaudited consolidated balance sheet information related to leases is as follows:

	Classification	December 31, 2019
(In thousands)
Operating lease assets	Right-of-use operating lease assets	$	19,696
Finance lease assets	Property, plant and equipment, net	34
Total lease assets		$	19,730
Operating lease liabilities - current	Operating lease liabilities - current	$	5,571
Operating lease liabilities - noncurrent	Operating lease liabilities - noncurrent	14,318
Finance lease liabilities	Other long-term liabilities	35
Total lease liabilities		$	19,924

Lease, Cost

The components of lease expense are as follows:

		Three Months Ended December 31,		Six Months Ended December 31,
	Classification	2019		2019
(In thousands)
Operating lease expense	General and administrative expenses and cost of goods sold	$	1,253	$	2,363
Finance lease expense:
Amortization of finance lease assets	General and administrative expenses	13		26
Interest on finance lease liabilities	Interest expense	—		1
Total lease expense		$	1,266	$	2,390

Other Information:

	Six Months Ended   December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,165
Operating cash flows from finance leases	$	1
Financing cash flows from finance leases	$	25
Leased assets obtained in exchange for new finance lease liabilities	$	—
Leased assets obtained in exchange for new operating lease liabilities	$	—

Lessee, Operating Lease, Liability, Maturity

	December 31, 2019
(In thousands)	Operating Leases			Finance Leases
Maturities of lease liabilities are as follows:
2020	$	2,826		$	27
2021	5,102			9
2022	3,631			—
2023	2,995			—
2024	2,699			—
Thereafter	5,375			—
Total lease payments	22,628			36
Less: interest	(2,739		)	(1		)
Total lease obligations	$	19,889		$	35

Schedule of Future Minimum Rental Payments for Operating Leases

The minimum annual payments under operating and capital leases as of June 30, 2019 are as follows:

(In thousands)	Operating  Lease Obligations		Capital  Lease Obligations
Year Ended June 30,
2020	$	4,434	$	36
2021	3,238		1
2022	2,472		—
2023	2,131		—
2024	2,025		—
Thereafter	4,389		—
Total minimum lease payments	$	18,689	37
Less: imputed interest (0.82% to 10.66%)			(2		)
Present value of future minimum lease payments			35
Less: current portion			(34		)
Long-term capital lease obligations			$	1

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Inventories (Tables)

6 Months Ended

Dec. 31, 2019

Inventory Disclosure [Abstract]

Schedule of Inventory, Current

(In thousands)	December 31, 2019		June 30, 2019
Coffee
Processed	$	27,492	$	25,769
Unprocessed	30,337		33,259
Total	$	57,829	$	59,028
Tea and culinary products
Processed	$	19,385	$	21,767
Unprocessed	94		74
Total	$	19,479	$	21,841
Coffee brewing equipment parts	$	7,826	$	7,041
Total inventories	$	85,134	$	87,910

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Debt Obligations (Tables)

6 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Schedule of Debt

The following table summarizes the Company’s debt obligations:

				December 31, 2019				June 30, 2019
(In thousands)	Debt Origination Date	Maturity	Original Borrowing Amount	Carrying Value		Weighted Average Interest Rate		Carrying Value		Weighted Average Interest Rate
Credit Facility	Revolver	11/6/2023	N/A	$	70,000	4.05	%	$	92,000	3.98	%