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http://www.latimes.com/business/la-fi-farmer1oct01,1,4770298.story?coll=la-headlines-business
CALIFORNIA
Farmer Bros. Drop in Profit Continues
The coffee firm has its seventh consecutive decline, as earnings fall
13% to $5.78 million in the fourth quarter.
By Jerry Hirsch
Times Staff Writer
October 1, 2003
Coffee roaster Farmer Bros. Co. reported the seventh
straight period of earnings decline Tuesday and a drop in both profit and
revenue during its fiscal year.
The Torrance-based company also disclosed in a regulatory filing that its
87-year-old chairman, Roy F. Farmer, took a 36% cut in pay and other
compensation in the latest fiscal year, as he yielded day-to-day operations
to his son, Roy E. Farmer.
The senior Farmer was paid a salary of $850,000, $150,000 less than the
prior year, and did not receive the $450,000 bonus he collected the year
before.
Roy E. Farmer, who serves as the company's president and chief operating
officer, received $636,050 — about $10,000 more than last year. That
included a $300,000 bonus, which he has received for three consecutive
years.
Since 1998, when Farmer Bros.' annual sales hit $240 million, the company
has seen its revenue gradually decline. Net income, too, has fallen — from a
high of $37.6 million in 2000 to $23.6 million in fiscal 2003.
More than half of the company's earnings may now be coming from more than
$294 million it holds in cash and securities rather than its coffee
operations, said Gary Lutin, a New York investment banker seeking greater
disclosure from Farmer Bros. about its investment and operating strategies.
The thinly traded company, which although public is tightly controlled by
Roy F. Farmer and his branch of the founding family, declined to discuss its
plans for improving operations.
Executives declined to comment, but the company said in its annual report
filed with the Securities and Exchange Commission late Monday that most of
its customers were independently owned restaurants or chains that have
struggled in recent years, driving down the firm's sales.
"The weak economy is especially hard on these entrepreneurs who do not have
the geographic or thematic diversity of the large restaurant chains," the
company said.
Higher prices for unroasted green coffee, which were about 25% more than in
the prior fiscal year, also have cut into earnings, Farmer Bros. said.
Earnings in the fiscal fourth quarter fell 13% to $5.78 million, or $3.23 a
share, from $6.67 million, or $3.60, the previous year. Revenue fell 5% to
$47.8 million from $50.4 million.
Net income for the fiscal year ended June 30 was $23.6 million, or $13.02 a
share, compared with $30.6 million, or $16.54, the year before. Revenue fell
2% to $201.5 million from $205.9 million in fiscal 2002.
Following its earnings report, Farmer Bros. shares fell $3.50 to close at
$320 on the Nasdaq.
Copyright 2003 Los Angeles Times
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