-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SVSBDU67lDLe5sW8M2JQC1eR+RYMxsc/x3eDd9dm2QOG2IuzV7zgOBanCPUHjb9D +w02iCoLo+XVt8xZl30atg== 0000034563-97-000006.txt : 19970515 0000034563-97-000006.hdr.sgml : 19970515 ACCESSION NUMBER: 0000034563-97-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FARMER BROTHERS CO CENTRAL INDEX KEY: 0000034563 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FOOD PREPARATIONS & KINDRED PRODUCTS [2090] IRS NUMBER: 950725980 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-01375 FILM NUMBER: 97605297 BUSINESS ADDRESS: STREET 1: 20333 S NORMANDIE AVE CITY: TORRANCE STATE: CA ZIP: 90502 BUSINESS PHONE: 3107875200 MAIL ADDRESS: STREET 1: 20333 SOUTH NORMANDIE AVENUE CITY: TORRANCE STATE: CA ZIP: 90502 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended March 31, 1997 Commission file number 0-1375 FARMER BROS. CO. California 95-0725980 State of Incorporation Federal ID Number 20333 S. Normandie Avenue, Torrance, California 90502 Registrant's Address Zip (310) 787-5200 Registrant's telephone number Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Number of shares of Common Stock outstanding: 1,926,414 as of March 31, 1997. PAGE 1 OF 9 PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Dollars in thousands, except per share data) FARMER BROS. CO. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) For the three months For the nine months ended March 31, ended March 31, 1997 1996 1997 1996 Net sales $55,336 $56,774 $165,581 $170,383 Cost of goods sold 33,440 25,889 84,763 81,106 21,896 30,885 80,818 89,277 Selling expense 20,114 20,972 61,038 60,990 General and administrative expenses 1,853 1,974 5,501 5,927 21,967 22,946 66,539 66,917 Income from operations (71) 7,939 14,279 22,360 Other income (expense): Dividend income 633 619 1,978 1,892 Interest income 1,685 1,656 4,823 4,586 Other 550 463 951 807 2,868 2,738 7,752 7,285 Income before taxes 2,797 10,677 22,031 29,645 Income taxes 1,202 4,286 8,943 11,889 Net income $ 1,595 $ 6,391 $ 13,088 $ 17,756 Net income per share $.83 $3.32 $6.79 $9.22 The accompanying notes are an integral part of these financial statements. FARMER BROS. CO. CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, June 30, 1997 1996 ASSETS Current assets: Cash and cash equivalents $ 60,291 $ 28,165 Short term investments 48,187 74,937 Accounts and notes receivable, net 19,727 18,822 Inventories 39,109 40,818 Income tax receivable - 1,000 Deferred income taxes 2,616 2,616 Prepaid expenses and other 3,524 701 Total current assets 173,454 167,059 Property, plant and equipment, net 33,425 33,343 Notes receivable 1,841 1,841 Long term investments, net 51,634 40,058 Other assets 17,864 17,320 Deferred taxes 930 1,269 Total assets $279,148 $260,890 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 12,225 $ 4,635 Accrued payroll expenses 4,597 4,153 Other 4,910 5,542 Total current liabilities 21,732 14,330 Accrued postretirement benefits 13,636 12,892 Commitments and contingencies - - Shareholders' equity: Common stock, $1.00 par value, authorized 3,000,000 shares; issued and outstanding 1,926,414 shares 1,926 1,926 Additional paid-in capital 568 568 Retained earnings 240,461 230,840 Investment valuation allowance 825 334 Total shareholders' equity 243,780 233,668 Total liabilities and shareholders' equity $279,148 $260,890 The accompanying notes are an integral part of these financial statements. FARMER BROS. CO. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the nine months ended March 31, 1997 1996 Cash flows from operating activities: Net Income $ 13,088 $ 17,756 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 3,370 3,518 Deferred income taxes - (472) Other (80) (164) Net (gain) loss on investments (521) (351) Change in assets and liabilities: Accounts and notes receivable (935) (1,331) Inventories 1,709 2,478 Income tax receivable 1,000 1,265 Prepaid expenses and other assets (3,573) (1,041) Accounts payable 7,590 (873) Accrued payroll expenses and other liabilities (188) 2,525 Other long term liabilities 743 1,323 Total adjustments 9,115 6,877 Net cash provided by operating activities $ 22,203 $ 24,633 The accompanying notes are an integral part of these financial statements. FARMER BROS. CO CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (Unaudited) For the nine months ended March 31, 1997 1996 Net cash provided by operating activities: $ 22,203 $ 24,633 Cash flows from investing activities: Purchases of property, plant and equipment (3,299) (4,499) Proceeds from sales of property, plant and equipment 134 246 Purchases of investments (303,503) (165,351) Proceeds from sales of investments 320,028 151,689 Notes repaid 30 78 Net cash (used in)provided by investing activities 13,390 (17,837) Cash flows from financing activities: Dividends paid (3,467) (3,082) Net cash used in financing activities (3,467) (3,082) Net increase in cash and cash equivalents 32,126 3,714 Cash and cash equivalents at beginning of period 28,165 8,321 Cash and cash equivalents at end of quarter $ 60,291 $ 12,035 Supplemental disclosure of cash flow information: Income tax payments $ 12,507 $ 10,013 The accompanying notes are an integral part of these financial statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) A. Unaudited Financial Statements The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. It is Management's opinion that all adjustments of a normal recurring nature necessary for a fair statement of the results of operations for the interim periods have been made. B. Investments March 31 June 30, 1997 1996 Fair Fair Cost Value Cost Value (In thousands) Current Assets Commercial Paper $26,765 $26,853 $34,609 $34,775 U.S. Government Obligations 21,431 21,334 40,129 40,162 $48,196 $48,187 $74,738 $74,937 Non-Current Assets U.S. Government Obligations $11,490 $11,332 $ 2,096 $ 2,043 Commercial Paper - - 1,400 1,350 Preferred stocks 34,303 36,226 34,475 35,114 Liquid asset fund and other 3,690 4,076 1,551 1,551 $49,483 $51,634 $39,522 $40,058 The gross unrealized gains and (losses) on securities classified as available for sale were $2,484,000 and $(342,000), respectively, at March 31, 1997 and $1,263,000 and $(528,000), respectively, at June 30, 1996. Gross realized gain from available for sale securities were $521,000 and $351,000 at March 31, 1997 and 1996, respectively. The Company hedges interest rate risk in its portfolio of preferred stock. Deferred losses associated with the hedge are $352,000 and $162,000 at March 31 and June 30, 1996, respectively. The contractual maturities of debt securities classified as current and non- current available for sale are as follows: Fair Value Maturities 03/31/97 06/30/96 (In thousands) Within 1 year $ 48,187 $ 74,937 After 1 year through 5 years 11,332 2,043 After 5 years through 10 years - 1,350 After 10 years - - $ 59,519 $ 78,330 C. Inventories (In thousands) Processed Unprocessed Total March 31, 1997 Coffee $ 5,503 $12,134 $17,637 Allied products 8,619 5,004 13,623 Coffee brewing equipment 2,290 5,559 7,849 $16,412 $22,697 $39,109 June 30, 1996 Coffee $ 5,302 $12,259 $17,561 Allied products 10,846 4,847 15,693 Coffee brewing equipment 2,475 5,089 7,564 $18,623 $22,195 $40,818 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The cost of Registrant's primary raw material, green coffee, has increased by more than 60% during the third quarter of fiscal 1997. Since the end of 1996, coffee prices as represented by futures traded on the Coffee, Sugar and Cocoa Exchange have more than doubled. Concerns about green coffee stockpiles, labor problems in producing countries and the possibility of weather related crop reductions have spurred prices to current levels. The frost season in coffee growing areas of Brazil begins near the end of May and continues through July. This introduces additional volatility into green coffee prices. As Registrant raises roast coffee prices to reflect higher green coffee costs, roast coffee sales volume is likely to decrease. It has been reported by the National Coffee Association that in 1995, after the Brazilian coffee crop was damaged by cold weather, high coffee prices reduced consumption by 14%. The market for green coffee is very unpredictable, and Registrant cautions against predicting the future based upon past results. Net sales for the third quarter of fiscal 1997 decreased 3% to $55,336,000 from $56,774,000 in the same quarter of the prior fiscal year. Net sales for the first nine months of fiscal 1997 decreased 3% to $165,581,000 from $170,383,000 in the same period of fiscal 1996. Gross profit in the third quarter decreased 29% to $21,896,000, or 40% of sales, as compared to $30,885,000, or 54% of sales, in the same quarter of the prior fiscal year. Gross profit for the nine months ending March 31, 1997 decreased 9% to $80,818,000 from $89,277,000 in the same period of fiscal 1996. Operating expenses decreased 4% to $21,967,000 in the third quarter of fiscal 1997 as compared to $22,946,000 in the third quarter of fiscal 1996. Net income for the three months ended March 31, 1996, reached $1,595,000, or $0.83 per share, as compared to $6,834,000, or $3.55 per share in the second quarter of fiscal 1997 and $6,391,000 or $3.32 per share in the same quarter of fiscal 1996. Net income for the first nine months of fiscal 1997 reached $13,088,000, or $6.79 per share, as compared to $17,756,000, or $9.22 per share, in the first nine months of fiscal 1996. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, (CONTINUED) Quarterly Summary of Results (in thousands of dollars) 03/31/96 06/30/96 09/30/96 12/31/96 03/31/97 Net sales 56,774 53,692 52,785 57,460 55,336 Gross profit 30,885 29,534 27,416 31,506 21,896 Operating income 7,939 6,839 5,717 8,633 (71) Net income 6,391 5,608 4,659 6,834 1,595 (as a percentage of sales) 03/31/96 06/30/96 09/30/96 12/31/96 03/31/97 Net sales 100.00 100.00 100.00 100.00 100.00 Gross profit 54.40 55.00 51.94 54.83 39.57 Operating income 13.98 12.74 10.83 15.02 (.13) Net income 11.26 10.44 8.82 11.89 2.88 (in dollars) 03/31/96 06/30/96 09/30/96 12/31/96 03/31/97 EPS 3.32 2.91 2.42 3.55 .83 PART II OTHER INFORMATION Item 1. Legal proceedings. not applicable. Item 2. Changes in securities. none. Item 3. Defaults upon senior securities. none. Item 4. Submission of matters to a vote of none. security holders. Item 5. Other information. none. Item 6. Exhibits and reports on Form 8-K. (a) Exhibits. (2) Plan of acquisition, reorganization, arrangement, liquidation or succession not applicable. (4) Instruments defining the rights of security holders, including indentures. not applicable. (11) Statement re computation of per share earnings. not applicable. PART II OTHER INFORMATION, (CONTINUED) (15) Letter re unaudited interim financial information. not applicable. (18) Letter re change in accounting principles. not applicable. (19) Report furnished to security holders not applicable. (22) Published report regarding matters submitted to vote of security holders. not applicable. (23) Consents of experts and counsel. not applicable. (24) Power of attorney. not applicable. (27) Financial Data Schedule See attached Form EX-27. (99) Additional exhibits. not applicable. (b) Reports on Form 8-K Registrant filed a report reporting a change in accountant. April 14, 1997. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: May 14, 1997 FARMER BROS. CO. (Registrant) John E. Simmons John E. Simmons Treasurer and Chief Financial Officer EX-27 2
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