Farmer Bros. Files for Delaware Reincorporation
Monday February 23, 5:06 pm ET

Shareholder Approval Clears Way for 10-for-One Stock Split

In addition to the reincorporation, shareholders also approved takeover protections and the reelection of all incumbent directors, a majority of whom are independent as defined by the Sarbanes-Oxley Act of 2002. The approved measures had been recommended by the company's board.

The company's approximately 1,100 employees directed the Employee Stock Ownership Program (ESOP), which controls about 18% of the shares outstanding, to cast more than 92% of its votes in favor of each of the proposals recommended by the board. The Farmer family, which controls 39% of the shares, also supported the proposals, as previously announced.

"This was a landmark election: our employees exercised a significant and independent say in the future of their Company," said Chief Executive Officer Roy E. Farmer.

The board, as previously stated, intends to act as soon as practical after completing the reincorporation to implement a 10-for-one split of the company's stock. The new corporate charter authorizes enough shares to enable this split.

During the annual meeting, Chief Financial Officer John Simmons reported on the "state of the company," noting that the recent decline in earnings reflected in large measure heightened competition and a weak economy following several years of record earnings. Simmons said the company continues to benefit from a solid base of 50,000 customers and in response to the recent challenges is working to reinvigorate its relationship-oriented sales efforts and is pushing ahead with its information systems upgrade, which is designed "to cut costs, lower inventory levels, improve customer service and make each employee more efficient and effective."

Simmons said, "We believe that, when we harness the power of these systems, we'll be more nimble in the way we adapt to changes in our market, smarter in the way we apply our resources, more efficient in the way we solicit and serve our customers, and more proficient in how we select and retain our customers, products and employees."

Simmons cited research showing that the stock of companies with ESOPs have outperformed the broader stock markets. He said, "Many investors take comfort when they learn that the people who lead a company have `skin in the game' -- that they have invested their own money along with the shareholders. At Farmer Bros., the management and the employees are owners. When shareholders benefit, everyone benefits."

Simmons concluded by saying, "This remains a company committed to delivering long-term value to our shareholders."

Farmer Bros. Co. is an institutional coffee roaster that sells a variety of coffee and allied products to the food service industry. The company's signature trucks and vans bearing the "Consistently Good" logo are seen throughout Farmer Brothers' 28-state service area. Farmer Brothers has paid a dividend for 50 consecutive years, increased the dividend in each of the last seven consecutive years, and its stock price has grown from $18 in 1980 to over $300 a share today. The company's common stock is traded on the NASDAQ National Market System under the symbol "FARM."

Certain statements contained in this news release regarding the risks, circumstances and financial trends that may affect our future operating results, financial position and cash flows may be forward-looking statements within the meaning of federal securities laws. These statements are based on management's current expectations, assumptions, estimates and observations about our business and are subject to risks and uncertainties. As a result, actual results could materially differ from the forward-looking statements contained herein. These forward looking statements can be identified by the use of words like "expects," "plans," "believes," "intends," "will," "assumes" and other words of similar meanings. These and other similar words can be identified by the fact that they do not relate solely to historical or current facts. While we believe our assumptions are reasonable, we caution that it is impossible to predict the impact of such factors which could cause actual results to differ materially from predicted results. We intend these forward-looking statements to speak only at the time of this report and do not undertake to update or revise these projections as more information becomes available. For these statements, we claim the protection of the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995.
 

     The Abernathy MacGregor Group
     James Lucas, 213-630-6550

Source: Farmer Bros. Co.