Forum Report: SEC Reports of Changes in Farmer Family Holdings of Stock

Since yesterday afternoon's filing of an SEC Form 3 report of an apparent shift in Farmer family holdings of the company's stock, summarized in the Forum report below, there have been two subsequent SEC filings of a Form 4 and a Form 13D/A providing additional information.

Based on a preliminary review of the information presented in each of the three separate reports, it appears that 2,663,664 shares of Farmer Bros. stock (16.6% of the total outstanding) have been transferred from direct ownership by family trusts into a newly created limited partnership, Farmer Equities, LP. (This is less than half of the total 6,314,984 shares, representing 39.3% of the total outstanding, held by the Farmer family in what is now referred to as the "Farmer Group.") The trusts making the transfer were for the benefit of Carol Lynn Farmer Waite, who currently serves as a director of the company, Jeanne Ann Farmer Grossman, and Richard Francis Farmer, Ph.D. The trusts received limited partnership interests in the new entity in exchange for the transfers of shares, and three of the family trusts became general partners controlling the entity. Each of the three trusts acting as a general partner is reported to have one of the three named individuals - Ms. Waite, Ms. Grossman, or Dr. Farmer - as both sole beneficiary and sole trustee.

It should also be noted that there is a reference in Item 3 of the Form 13D/A to a previously unreported June 16, 2005 court appointment of Ms. Waite, Ms. Grossman and Dr. Farmer as successor co-trustees of one of the trusts which held 1,463,640 of the shares transferred to the limited partnership. No court records or other documents relating to the control of that trust have been found in SEC flings.

Other records which could not be found in SEC filings include presumed agreements (a) establishing control or economic interests relating to stock held by members of the Farmer Group, (b) supporting a statement in Item 6 of the 13D/A report that each member of the Farmer Group "shares an understanding" that all their stock "will be held and voted in unison," and (c) defining the relationships according to which members of the Farmer Group are permitted to use the company's address and other corporate resources for the benefit of Farmer Group interests.

The Form 3 report does not appear to disclose the identities of economic or controlling interests of the entity that now holds 2,663,664 shares of Farmer Bros. stock, or 16.6% of the total outstanding. It should also be noted that Footnote 1 of the report refers to a separate Form 4 report which had not appeared in the SEC EDGAR database as of 6:00PM today. The effects and purposes of the transfer are therefore unclear.

Table I - Non-Derivative Securities Beneficially Owned

1. Title of Security (Instr. 4)

2. Amount of Securities Beneficially Owned (Instr. 4)

3. Ownership Form: Direct (D) or Indirect (I) (Instr. 5)

4. Nature of Indirect Beneficial Ownership (Instr. 5)

Farmer Bros Co Common Stock

2,620,024

D ^{( 1 )} ^{( 2 )}

Farmer Bros Co Common Stock

21,820

D ^{( 3 )}

Farmer Bros Co Common Stock

21,820

D ^{( 4 )}

Table II - Derivative Securities Beneficially Owned
(e.g., puts, calls, warrants, options, convertible securities)

1. Title of Derivative Security (Instr. 4)

2. Date Exercisable and Expiration Date (Month/Day/Year)

3. Title and Amount of Securities Underlying Derivative Security (Instr. 4)

4. Conversion or Exercise Price of Derivative Security

5. Ownership Form: Direct (D) or Indirect (I) (Instr. 5)

6. Nature of Indirect Beneficial Ownership (Instr. 5)

Date Exercisable

Expiration Date

Title

Amount or Number of Shares