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 September 30, 1995
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 September 30,
1995.
PAGE 1 OF 9
<PAGE>
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
ended September 30,
1995 1994
Net sales $55,038 $54,182
Cost of goods sold 27,511 28,274
27,527 25,908
Selling expense 19,220 18,422
General and administrative expenses 1,894 2,972
21,114 21,394
Income from operations 6,413 4,514
Other income (expense):
Dividend income 625 553
Interest income 1,208 958
Other 154 247
1,987 1,758
Income before taxes and
cumulative effect of
accounting change 8,400 6,272
Provision for income taxes 3,609 2,515
Income before cumulative
effect of accounting change 4,791 3,757
Cumulative effect of
accounting change,
net of income taxes - -
Net income $ 4,791 $ 3,757
Income per share:
Before accounting change $2.49 $1.95
Cumulative effect of
accounting change - -
Net income per share $2.49 $1.95
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
FARMER BROS. CO.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, June 30,
1995 1995
ASSETS
Current assets:
Cash and cash equivalents $ 14,871 $ 8,321
Short term investments 77,259 80,530
Accounts and notes receivable, net 18,707 18,481
Inventories 35,027 36,761
Income tax receivable - 1,266
Deferred income taxes 3,577 3,577
Prepaid expenses 1,156 871
Total current assets 150,597 149,807
Property, plant and equipment, net 34,734 33,213
Notes receivable 1,880 1,880
Long term investments, net 44,249 43,337
Other assets 16,082 15,887
Deferred income taxes (20) 217
Total assets $247,522 $244,341
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,677 $ 9,408
Accrued payroll expenses 4,971 4,711
Other 6,683 4,605
Total current liabilities 17,331 18,724
Accrued postretirement benefits 11,946 11,505
Commitments and contingencies
Shareholders' equity:
Common stock, $1.00 par value,
authorized 3,000,000 shares; issued
and outstanding 1,926,414 shares 1,926 1,926
Additional paid-in capital 569 569
Retained earnings 215,446 211,619
Investment valuation allowance 304 (2)
Total shareholders' equity 218,245 214,112
Total liabilities and
shareholders' equity $247,522 $244,341
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
FARMER BROS. CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the three months
ended September 30,
1995 1994
Cash flows from operating
activities:
Net Income $ 4,791 $ 3,757
Adjustments to reconcile net
income to net cash provided
by operating activities:
Cumulative effect of
accounting changes
Depreciation 1,253 1,323
Deferred income taxes 33 -
Other (32) 10
Net (gain) loss on
investments (46) (113)
Change in assets and
liabilities:
Short term investments - -
Accounts and notes
receivable (275) (2,277)
Inventories 1,734 (807)
Income tax receivable 1,266 5,357
Prepaid expenses and other
assets (486) (1,029)
Accounts payable (3,730) 2,848
Accrued payroll expenses
and other liabilities 2,338 21
Other long term liabilities 441 390
Total adjustments 2,496 5,723
Net cash provided by operating
activities $7,287 $9,480
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
FARMER BROS. CO
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(Unaudited)
For the three months
ended September 30,
1995 1994
Net cash provided by operating
activities: $ 7,287 $ 9,480
Cash flows from investing
activities:
Purchases of property, plant
and equipment (2,809) (2,380)
Proceeds from sales of property,
plant and equipment 72 20
Purchases of investments (26,777) (34,539)
Proceeds from sales of
investments 29,693 26,884
Notes issued - -
Notes repaid 50,000 61,000
Net cash (used in)
provided by investing
activities 229 (9,954)
Cash flows from financing
activities:
Dividends paid (963) (963)
Net cash used in financing
activities (963) (963)
Net (decrease) in cash
and cash equivalents 6,553 (1,437)
Cash and cash equivalents at
beginning of year 8,321 8,681
Cash and cash equivalents at
end of quarter $14,874 $ 7,244
Supplemental disclosure of
cash flow information:
Income tax payments $ 215 $ 2
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
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
September 30, June 30,
1995 1995
Fair Fair
Cost Value Cost Value
(In thousands)
Current Assets
U.S. Government
Obligations $77,280 $77,259 $80,608 $80,530
$77,280 $77,259 $80,608 $80,530
Non-Current Assets
U.S. Government
Obligations $ 8,608 $ 8,546 $ 8,617 $ 8,610
Corporate bonds 1,499 1,499 1,599 1,569
Preferred stocks 31,161 33,161 30,456 31,896
Liquid asset fund
and other 1,082 1,043 1,262 1,262
$42,350 $44,249 $41,934 $43,337
The Company hedges interest rate risk in its portfolio of preferred stock.
Deferred losses associated with the hedge are $1,410,000 and $1,329,000 at
September 30 and June 30, 1995, respectively.
The contractual maturities of debt securities classified as current and non-
current available for sale are as follows:
Fair Value
09/30/95 06/30/95
(In thousands)
Within 1 year $77,259 $80,530
After 1 year through 5 years 8,546 8,610
After 5 years through 10 years 1,499 1,569
After 10 years - -
$87,304 $90,709
6
<PAGE>
C. Inventories
Processed Unprocessed Total
(In thousands)
September 30, 1995
Coffee $ 3,416 $10,288 $13,704
Allied products 9,604 4,390 13,994
Coffee brewing equipment 1,462 5,867 7,329
$14,482 $20,545 $35,027
June 30, 1995
Coffee $ 3,093 $10,809 $13,902
Allied products 11,308 4,096 15,404
Coffee brewing equipment 2,120 5,335 7,455
$16,521 $20,240 $36,761
Item 2. Management's Discussion and Analysis of Financial Condition and
Continued high green coffee prices continue to effect Registrant's
operations. Although green coffee costs have retreated from the highs
experienced in fiscal 1995, the higher average product costs and resulting
higher sales prices (and lower sales volume) are directly reflected in
financial results. Improved profit margins and controlled operating expenses
have had a direct effect on profits. First quarter 1996 sales increased 1.6%
to $55,038,000 as compared to $54,182,000 in the same quarter of fiscal 1995.
Gross profit in the first quarter increased 6.2% to $27,527,000 from
$25,908,000 in the same quarter of fiscal 1995. First quarter 1996 operating
expenses decreased (1.3%) to $21,114,000 from $21,394,000 in the first
quarter of fiscal 1995. Net income for the three months ended September 30,
1995 increased 27.5% to $4,791,000 or $2.49 per share, as compared to
$3,757,000 or $1.95 per share in the same quarter of the prior fiscal year.
Quarterly Summary of Results
(in thousands of dollars)
09/30/94 12/31/94 03/31/95 06/30/95 09/30/95
Net sales 54,182 62,598 59,514 58,368 55,038
Gross profit 25,908 30,085 26,818 30,088 27,527
Operating income 4,514 8,023 4,448 8,250 6,413
Net income 3,757 5,706 3,220 6,834 4,791
(as a percentage of sales)
09/30/94 12/31/94 03/31/95 06/30/95 09/30/95
Net sales 100.00 100.00 100.00 100.00 100.00
Gross profit 47.82 48.06 45.06 51.55 50.01
Operating income 8.33 12.82 7.47 14.13 11.65
Net income 6.93 9.12 5.41 11.71 8.70
(in dollars)
09/30/94 12/31/94 03/31/95 06/30/95 09/30/95
EPS 1.95 2.96 1.67 3.55 2.49
7
<PAGE>
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
security holders. none.
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.
(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 none.
8
<PAGE>
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: November 13, 1995 FARMER BROS. CO.
(Registrant)
John E. Simmons
John E. Simmons
Treasurer and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1995
<CASH> 14871
<SECURITIES> 77259
<RECEIVABLES> 18707
<ALLOWANCES> 525
<INVENTORY> 35027
<CURRENT-ASSETS> 150597
<PP&E> 34734
<DEPRECIATION> 50482
<TOTAL-ASSETS> 247522
<CURRENT-LIABILITIES> 17331
<BONDS> 0
<COMMON> 1926
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 247522
<SALES> 55038
<TOTAL-REVENUES> 55038
<CGS> 27511
<TOTAL-COSTS> 21114
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 8400
<INCOME-TAX> 3609
<INCOME-CONTINUING> 4791
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4791
<EPS-PRIMARY> 2.49
<EPS-DILUTED> 2.49
</TABLE>
