PROXY
FARMER BROS. CO. ANNUAL MEETING OF SHAREHOLDERS, NOVEMBER 30, 1998
This proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints ROY F. FARMER, GUENTER W. BERGER and
LEWIS A. COFFMAN, as Proxies, each with the power to appoint his substitute,
and hereby authorizes them to represent and to vote as designated below, all
the shares of common stock of Farmer Bros. Co. held of record by the
undersigned, at the annual meeting of shareholders to be held on November 30,
1998, and any adjournments thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS YOU HAVE INDICATED.
IF NO INDICATION HAS BEEN MADE, THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED IN FAVOR OF EACH OF THE BELOW PERSONS AND PROPOSALS.
You are requested to date and sign this proxy and return it in the
enclosed envelope. This proxy will not be used if you attend the meeting and
vote in person.
SHARES OF COMMON STOCK
NOTE: Please date this Proxy and sign it exactly as your name or names appear
hereon, and return promptly in the enclosed envelope. Executors,
administrators, trustees, etc., should so indicate when signing. If the
signature is for a corporation, please sign full corporate name by authorized
officer. If shares are registered in more than one name, all holders must
sign.
(Continued, and to be marked, dated and signed, on the other side)
FOLD AND DETACH HERE
<PAGE>
The Board of Directors recommends a vote FOR items 1, 2 and 3.
FOR AGAINST
ABSTAIN
WITHHELD 0 0 0
Item 1-ELECTION OF DIRECTORS FOR FOR ALL Item 2-APPOINTMENT OF
Nominees: 0 0 ERNST & YOUNG LLP
Roy F. Farmer as the independent
Roy E. Farmer public accountants.
Guenter W. Berger
Lewis A. Coffman Item 3-In their discretion,
Catherine E. Crowe the proxies
John M. Anglin are authorized to
vote upon other
such business as may
properly come before
the meeting.
WITHHELD FOR: (Write that nominee's name on the space provided below).
Signature(s) ______________________ Date ___________________________________
NOTE: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
<PAGE>
Farmer Bros. Co.
20333 SOUTH NORMANDIE AVENUE
TORRANCE, CALIFORNIA 90502
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be Held November 30, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Farmer
Bros. Co. will be held at the main office of the Company located at 20333
South Normandie Ave., Torrance, California, on Monday, November 30, 1998, at
10:00 o'clock a.m., Los Angeles time, for considering and acting upon the
following:
1. The election of a board of six directors to serve until the next Annual
Meeting or until their successors are duly elected and qualify;
2. Approval of the appointment of Ernst & Young LLP as the independent
public accountants of Farmer Bros. Co. for the year ending June 30, 1999; and
3. Any and all other matters that may properly come before the meeting or
any adjournment thereof.
Only holders of common stock of record at the close of business on October 16,
1998, will be entitled to notice of and to vote at the meeting and any
adjournments thereof.
MANAGEMENT HOPES YOU WILL ATTEND THE MEETING, BUT IF YOU CANNOT BE THERE,
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY.
DAVID W. UHLEY
Secretary
NOTICE: THE PROXY STATEMENT MAILED ON OR ABOUT
OCTOBER 30, 1998 CONTAINED SEVERAL ERRORS. AN
AMENDED PROXY STATEMENT FOLLOWS. PLEASE USE THE
PROXY CARD INCLUDED IN THE FIRST MAILING. THE
COMPANY REGRETS ANY INCONVENIENCE THIS MAY HAVE
CAUSED.
Torrance, California
November 9, 1998
<PAGE>
Farmer Bros. Co.
20333 SOUTH NORMANDIE AVENUE
TORRANCE, CALIFORNIA 90502
AMENDED PROXY STATEMENT
This amended proxy statement is furnished in connection with the
solicitation by the Board of Directors of proxies from holders of common
stock of Farmer Bros. Co. (hereinafter called the "Company") for the Annual
Meeting of Shareholders of the Company to be held at 20333 South Normandie
Avenue, Torrance, California, on Monday, November 30, 1998, at 10:00 o'clock
a.m., and for any adjournment thereof.
The cost of soliciting proxies by the Board of Directors will be
borne by the Company. Such solicitation will be made primarily by mail. In
addition, certain directors, officers or regular employees of the Company
may solicit proxies by telephone or other device or in person.
The mailing of proxy materials will commence on or about October
30, 1998. The Company will request known nominees to forward proxy
materials to the beneficial owners of the Company's shares.
On the October 16, 1998 record date, the Company had outstanding
1,926,414 shares of common stock. The Company has no other class of
securities outstanding. Only holders of shares of common stock of record at
the close of business on that date will be entitled to notice of and to vote
at the meeting or any adjournment thereof, and each such holder present or
represented at the meeting will be entitled to one vote for each share of
common stock held. In electing directors a shareholder may not cumulate his
or her vote. Shareholders are entitled to only one vote per share with the
six nominees receiving the highest number of votes being elected.
Shares of common stock represented by proxies received will be
voted: (1) unless authority is withheld, for the election of the nominees
listed on page 5 as directors; and (2) unless otherwise specified, for
approval of the appointment of Ernst & Young LLP as the Company's
independent public accountants for the ensuing year. In the event that one
or more of said nominees should become unavailable to serve as a director
for any reason, the proxy holders will vote the shares for such other
person, if any, as shall be designated by the Board of Directors.
Any proxy delivered in the form enclosed may be revoked by the
person executing it at any time prior to the voting thereof
<PAGE>
OWNERSHIP OF COMMON STOCK
Principal Shareholders
The following are all persons known to management who own beneficially
more than 5% of the Company's common stock (as of October 16, 1998):
Amount and Nature Percent
Name and Address of of Beneficial of
Beneficial Owner Ownership (1) Class
Roy F. Farmer 833,162 shares (2) 43.25%
c/o Farmer Bros. Co.
20333 South Normandie Ave.
Torrance, California 90502
Catherine E. Crowe 203,430 shares (3)(4) 10.56%
c/o Farmer Bros. Co.
20333 South Normandie Ave.
Torrance, California 90502
According to a Schedule 13G filing with the Securities and Exchange
Commission dated January 16, 1998, filed by Franklin Resources, Inc.,
Franklin Resources, Inc. at that date owned beneficially 164,988 shares
(8.6%). Franklin Resources, Inc. is reported to have sole voting and
investment power over these shares.
According to a Schedule 13G filing with the Securities and Exchange
Commission dated March 6, 1997, filed by Everett Harris & Co. at that date
owned beneficially 141,990 shares (7.37%). Everett Harris is reported to
have investment power over these shares. No subsequent filing or amendment
has been received by the Company.
__________________________
(1) Sole voting and investment power.
(2) Includes 171,041 shares owned outright by Mr. Farmer and his wife as
trustees of a revocable living trust and 662,121 shares held by various
trusts of which Mr. Farmer is sole trustee. Mr. Farmer disclaims
beneficial ownership of said trust shares. Excludes 1,849 shares owned
by his wife in which Mr. Farmer disclaims any beneficial interest, and
excludes shares held by a family trust of which Mr. Farmer formerly was
trustee and which shares formerly were reported by Mr. Farmer.
(3) Excludes 9,900 shares held by trusts for Mrs. Crowe's benefit. Mr.
Farmer is sole trustee of said trusts and said shares are included in
his reported holdings.
(4) During the Company's fiscal year 1995, a loan in the amount of $739,500
was made to Steven Crowe, son of Catherine Crowe, a director of the
Company. The loan was made for the purpose of enabling him to purchase a
residence. The loan is collateralized by a deed of trust against the
residence and a pledge of 2,400 shares of Farmer Bros. Co. stock held in
trust for Steven Crowe. The Company receives interest at a competitive
rate of 8.75% per annum. As of October 16, 1998, a total of $724,448
remains outstanding.
<PAGE>
Management Shareholdings
The following sets forth the beneficial ownership of the common stock of
the Company by each director and nominee, each executive officer named in the
Summary Compensation Table and all directors and executive officers as a
group:
Number of Shares Percent
and Nature of of
Name Beneficial Ownership (1) Class
Roy F. Farmer (See "Principal Shareholders," supra)
Guenter W. Berger 212 (2) *
Lewis A. Coffman 15 (3) *
Catherine E. Crowe (See "Principal Shareholders," supra)
Roy E. Farmer 36,611 (4) 1.90%
John M. Anglin None -
Kenneth R. Carson 89 *
John E. Simmons 150 *
All directors and
executive officers
as a group (9 persons) 1,073,669 55.73%
___________________________
(1) Sole voting and investment power unless indicated otherwise in following
footnotes.
(2) Held in trust with voting and investment power shared by Mr. Berger and
his wife.
(3) Voting and investment power shared by Mr. Coffman and his wife.
(4) Includes 2,400 shares owned outright by Mr. Farmer and 34,211 shares
held by various trusts of which Mr. Farmer is sole trustee.
*less than 1%.
<PAGE>
PROPOSAL ONE:
ELECTION OF DIRECTORS
Six directors are to be elected at the meeting, each to serve for the
ensuing year and until his or her successor is elected and qualify. All of
the nominees are presently directors of the Company. All of the present
directors were elected to their current term by the shareholders. All of the
nominees have consented to be named and have indicated their intent to serve
if elected. None of the nominees is a director of any other publicly-held
company. The names of the nominees for election as directors are set forth
below, and the following information is furnished with respect to them:
Served as
a Director
Continuously
Name Age Since Principal Occupation
Roy F. Farmer (1) 82 1951 Chairman and Chief Executive
Officer, Farmer Bros. Co.
Roy E. Farmer (1) 46 1993 President and Chief Operating
Officer, Farmer Bros. Co.
Guenter W. Berger 61 1980 Vice President-Production,
Farmer Bros. Co.
Lewis A. Coffman 79 1983 Retired (formerly Vice
President-Sales,
Farmer Bros. Co.)
Catherine E. Crowe (1) 80 1981 Private Investor
John M. Anglin (2) 51 1985 Partner in Law Firm
of Walker, Wright, Tyler & Ward,
Los Angeles
____________________________
(1) Roy F. Farmer is the father of Roy E. Farmer. Roy F. Farmer and
Catherine E. Crowe are siblings.
(2) Walker, Wright, Tyler & Ward provides legal services to the company.
<PAGE>
PROPOSAL TWO:
APPROVAL OF PUBLIC ACCOUNTANTS
Subject to the approval of the shareholders, the firm of Ernst & Young
LLP has been appointed by the Board as the Company's independent public
accountants for the year ending June 30, 1999, subject to the Board's right
to change firms should it deem such a change to be in the best interests of
the Company. Ernst & Young LLP was retained in 1997 as the Company's
independent public accountants. It has no direct financial interest or any
material indirect financial interest in the Company or its subsidiary.
During the past three years, it has had no connection with the Company or its
subsidiary in the capacity of promoter, underwriter, voting trustee,
director, officer or employee.
A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting to answer appropriate questions and to make a statement if he
or she desires to do so.
Recommendation
The Board of Directors recommends a vote "FOR" approval of the
appointment of Ernst & Young LLP.
OTHER MATTERS
Voting Requirements
Under the California General Corporation Law and the Company's Bylaws,
the nominees receiving the highest number of votes will be elected as
directors of the Company; and the approval of the public accountants requires
the affirmative vote of a majority of those shares represented at the meeting
in person or by proxy. A quorum consisting of a majority of the outstanding
shares of common stock must be present at the meeting in person or by proxy
to transact business. Votes will be counted by those persons appointed to
act as inspectors of the election. Abstentions and broker non-votes will not
be counted as voted either "for" or "against" any matter but will be counted
in determining whether a quorum exists.
Director and Committee Meetings
The Board of Directors met four times during fiscal 1998. No director
receives fees or expense reimbursements for his or her attendance at the
meetings, except Mr. Anglin who was paid an hourly fee of $265 for each
meeting attended.
Messrs. Anglin and Coffman and Mrs. Crowe constitute the Audit Committee
and also constitute the Compensation Committee. The Audit Committee met once
in fiscal 1998. The newly-created Compensation Committee held its initial
meeting shortly after the end of fiscal 1998. The functions of the Audit
Committee are to recommend to the Board of Directors the independent public
accountants to be retained by the Company annually, to meet with such
accountants to discuss the results of the audit and the accountants'
recommendations concerning accounting and related functions, and to discuss
those recommendations with the Board of Directors. The Compensation
Committee makes all determinations with respect to executive compensation and
administers the Company's Incentive Compensation Plan.
<PAGE>
Summary Compensation Table
The following table sets forth all remuneration paid to the Chief
Executive Officer and the four other most highly compensated officers whose
total compensation during the last fiscal year exceeded $100,000, for
services in all capacities to the Company and its subsidiary.
Annual
Name and Principal Fiscal Compensation (1) Other Annual All Other
Position Year Salary Bonus Compensation Compensation(2)
ROY F. FARMER 1998 $ ---- $ ---- $ 997,856 (3) $3,800
President and C.E.O. 1997 $ ---- $ ---- (4) $3,488
1993; Chairman 1996 $ ---- $ ---- (4) $3,213
and C.E.O. 1994-1998
ROY E. FARMER 1998 $233,400 $ ---- $ ---- $ 267
Vice President 1993; 1997 $223,800 $ ---- $ ---- $ 217
President and C.O.O. 1996 $214,406 $ ---- $ ---- $ 177
1994-1998
GUENTER W. BERGER 1998 $198,600 $ ---- $ ---- $ 420
Vice President, 1997 $190,200 $ ---- $ ---- $ 375
Production 1996 $182,303 $ ---- $ ---- $ 335
KENNETH R. CARSON 1998 $174,600 $ ---- $ ---- $ 281
Vice President, Sales 1997 $167,400 $ ---- $ ---- $ 256
1996 $160,499 $ ---- $ ---- $ 236
JOHN E. SIMMONS 1998 $158,400 $ ---- $ ---- $ 140
Treasurer 1997 $151,200 $ ---- $ ---- $ 128
1996 $144,756 $ ---- $ ---- $ 117
(1) The Company has an Incentive Compensation Plan under which current or
deferred bonuses may be granted to key management employees. The size
of the award is keyed to profit levels and the amount of previous
awards. No awards have been made since 1987. The Company has no other
long term incentive compensation plan, no stock option plan and no stock
appreciation rights plan or similar plan.
(2) The amount shown represents the dollar value of the benefit to the
executive officer for the years shown under the Company's executive life
insurance plan.
(3) Includes a payment by the Company of a $688,634 premium on a life
insurance policy insuring Mr. Farmer's life and benefitting Mr. Farmer's
family exclusively and cash payments totaling $309,222 to Mr. Farmer for
income taxes. Excludes an unsecured loan made to Mr. Farmer in September,
1998 in the principal amount of $252,472 to assist him in paying income taxes
on the foregoing amounts. The loan is payable on demand and bears interest
at the rate of 8% per annum. As of October 16, 1998, the entire initial
principal balance remains outstanding.
(4) The Company paid premiums on two split-dollar insurance policies, one
insuring the life of Mr. Farmer and the other insuring the joint lives
of Mr. Farmer and his wife. A trust for the benefit of Mr. Farmer's
family is the owner and beneficiary of these policies, subject to an
assignment to the Company of a collateral interest in the policies
designed to refund to the Company the aggregate premiums paid by it
($612,833 in fiscal 1996 and $606,066 in fiscal 1997). Because of the
collateral assignment, no part of the cash value accrued to Mr. Farmer
or his trust. In addition, cash amounts of $150,853 and $131,725
related to these policies were paid to Mr. Farmer in fiscal 1997 and
1996 respectively.
<PAGE>
Employment Agreement
The employment contract between the Company and Roy F. Farmer, Chairman
and Chief Executive Officer of the Company, expired on January 31, 1998. The
Compensation Committee is presently considering a new compensation package
for Mr. Farmer, and Ernst & Young LLP has been retained as consultant to
provide the Compensation Committee with additional relevant information.
Retirement Plan
The following table shows estimated annual benefits payable under the
Retirement Plan upon retirement at age 62 to persons at various average
compensation levels and years of credited service based on a straight life
annuity. The Retirement Plan is a contributory defined benefit plan covering
all non-union Company employees. The following figures assume that employee
contributions (2% of annual gross earnings) are made throughout the
employees' first five years of service and are not withdrawn. After five
years of participation in the plan, employees make no further contributions.
Benefits under a predecessor plan are included in the following figures.
Maximum annual combined benefits under both plans generally cannot exceed the
lesser of $120,000 or the average of the employee's highest three years of
compensation.
Annualized Pension Compensation
for Highest 60 Consecutive Months
in Last Ten Years of Employment Credited Years of Service
15 20 25 30 35
$100,000 $22,500 $30,000 $37,500 $ 45,000 $ 52,500
125,000 $28,125 $37,500 $46,875 $ 56,250 $ 65,625
150,000 $33,750 $45,000 $56,250 $ 67,500 $ 78,750
175,000 $39,375 $52,500 $65,625 $ 78,750 $ 91,875
200,000 $45,000 $60,000 $75,000 $ 90,000 $105,000
225,000 $50,625 $67,500 $84,375 $ 101,250 $118,125
250,000 $56,250 $75,000 $93,750 $ 112,500 $120,000
Note: Table does not reflect Internal Revenue Code Section 401(a)(17)
restrictions that might limit benefits in the future.
The earnings of executive officers by which benefits in part are
measured consist of the amounts reportable under "Annual Compensation" in the
Summary Compensation Table less certain allowance items (none in 1998).
Credited years of service through December 31, 1997 were as follows:
Guenter W. Berger - 33 years; Roy E. Farmer - 21 years; Kenneth R. Carson -
32 years; John E. Simmons - 16 years. After 37 years of credited service,
Roy F. Farmer began receiving maximum benefits during fiscal 1988.
The above straight life annuity amounts are not subject to deductions
for Social Security or other offsets. Other payment options, one of which is
integrated with Social Security benefits, are available.
<PAGE>
Compensation Committee Interlocks and Insider Participation
The Board of Directors of the Company has a newly-created Compensation
Committee consisting of Messrs. John M. Anglin, a director, and Lewis A.
Coffman, a director and retired executive officer of the Company, and Mrs.
Catherine E. Crowe, a director, principal shareholder (see "Principal
Shareholders," supra) and sibling of Mr. Roy F. Farmer, the Chairman and
Chief Executive Officer of the Company.
Report of Compensation Committee on Executive Compensation
The Board of Directors created a Compensation Committee comprised of
Mr. Coffman, Mr. Anglin and Mrs. Crowe at its regular May 28, 1998 meeting
and empowered the Compensation Committee to make all determinations with
respect to executive compensation. The Compensation Committee made the
determination with respect to compensation paid to the Company's Chief
Executive Officer, Roy F. Farmer, for fiscal 1998. Mrs. Crowe, Mr. Farmer's
sister, abstained from the determinations with respect to Mr. Farmer's
compensation.
While the compensation paid to Mr. Farmer for fiscal 1998 was not
computed under a performance formula, the Compensation Committee took into
consideration the Company's record earnings for that year. The Compensation
Committee also considered the relative amounts of compensation being paid to
chief executive officers of other publicly-held companies in the same
industry group. The Compensation Committee also believes that Mr. Farmer's
significant shareholdings in the Company (see "Ownership of Common Stock,"
supra) provide substantial incentive to Mr. Farmer with respect to his
efforts as Chief Executive Officer.
The Compensation Committee has set the salaries of other executive
officers of the Company for fiscal 1999. In so doing, it acted consistently
with the policies applied by the Board of Directors in fiscal 1998 and prior
years, namely that compensation for executive officers other than the Chief
Executive Officer is primarily in the form of salary with salary adjustments
made annually by reference primarily to each executive officer's job
performance during the preceding year, the Company's profitability and
cost of living changes.
(The foregoing report will not be deemed to be incorporated by reference by
any general statement incorporating this Proxy Statement into any filing by
the Company under the Securities Act of 1933 or the Securities Exchange Act
of 1934 unless the Company specifically incorporates this report by
reference. This report shall not otherwise be deemed soliciting material or
be deemed filed under such Acts.)
Lewis A. Coffman
Catherine E. Crowe
John M. Anglin
<PAGE>
Performance Graph
Comparison of Five-Year Cumulative Total Return*
Farmer Brothers Co., Russell 2000 Index And Value Line Food Processing Index
(Performance Results Through 6/30/98)
GRAPH
1993 1994 1995 1996 1997 1998
Farmer Brothers Co. 100.00 82.59 83.61 95.76 89.61 171.86
Russell 2000 Index 100.00 104.40 125.15 154.97 180.27 209.35
Food Processing 100.00 102.16 128.66 152.41 225.95 304.91
Assumes $100 invested at the close of trading 6/30/93 in Farmer Brothers Co.
common stock, Russell 2000 Index, and Food Processing Index.
*Cumulative total return assumes reinvestment of dividends.
Source: Value Line, Inc.
Factual material is obtained from sources believed to be reliable, but the
publisher is not responsible for any errors or omissions contained herein.
The Value Line Food Processing Small Cap Index used in prior years is no
longer published. The new index, the Value Line Food Processing Index,
includes 80% of the companies comprising the previous index. In addition
it includes a number of companies with a substantially larger market
capitalization than the Company.
<PAGE>
CLOSING DATE FOR PROPOSALS BY SHAREHOLDERS
Shareholders who wish to present proposals at the 1999 Annual Meeting
must submit those proposals in writing to the Secretary of the Company no
later than July 1, 1999.
Compliance with Section 16(a) of the Exchange Act
Based on a review of filing received by it and a representation from
Company officers and directors, the Company believes that all filing
requirements applicable to Company officers and directors were met for fiscal
1998.
Other Business
Management does not know of any other matters to be brought before the
meeting. However, if any other matters properly come before the meeting, the
persons named in the enclosed proxy will vote said proxy in accordance with
their judgment on such matters.
By Order of the Board of Directors
David W. Uhley
Secretary
November 9, 1998
