http://www.latimes.com/business/la-fi-farmer16may16,1,3274477.story?coll=la%2Dheadlines%2Dbusiness

CALIFORNIA

Farmer Bros.' Earnings Have Sixth Straight Drop

By Jerry Hirsch
Times Staff Writer

May 16, 2003

Farmer Bros. Co. reported a dip in fiscal third-quarter earnings Thursday, the sixth straight period of earnings decline for the Torrance-based coffee distributor. Sales also fell.

Net income dropped slightly to $6.34 million in the quarter ended March 31, from $6.41 million in the same period a year earlier.

Because of accounting treatments related to its employee stock option plan, Farmer Bros. did grind out a small gain in earnings per share for the latest quarter — $3.52 compared with $3.47 a year earlier.

Revenue declined 4% to $49.3 million, compared with $51.3 million a year ago.

Farmer Bros.' earnings were announced after the markets closed. The company's shares fell $4.89 to $323.01 on Nasdaq.

Farmer Bros. attributed the revenue dip to fewer sales to its restaurant customers. Higher prices for the green coffee Farmer Bros. purchases for roasting ate into profit.

The run of declining profitability is accompanied by growing criticism from a group of dissident shareholders over the company's corporate governance practices. They also have questioned what the company intends to do with its roughly $300-million cash stockpile.

Farmer Bros. said the funds are necessary to protect it from the volatility of coffee prices.

Last month, Farmer Bros. named two independent directors to its board in a move to comply with stricter federal regulations for the governance of public companies.
 

The Forum is open to all Farmer Bros. shareholders, whether institutional or individual, and to professionals concerned with their investment decisions.  Its purpose is to provide shareholders with access to information and a free exchange of views on issues relating to their evaluations of alternatives.  As stated in the Forum's Conditions of Participation, participants are expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

For additional information or to be included in an email distribution list, send an inquiry to farm@shareholderforum.com.