Farmer Bros. Confirms U.S. District Court Decision

TORRANCE, Calif. -- Farmer Bros. Co. (FARM) said a federal court declined to issue a preliminary injunction against the company for allegedly manipulating its employee stock ownership plan for the benefit of its founding family.

In a press release Wednesday, the coffee processor said the request for an injunction was rejected because the action was found outside the court's jurisdiction and plaintiff Leon Rosenthal was found to lack standing.

Rosenthal, who reportedly owns nine shares in the company, wasn't immediately available. Rosenthal's suit alleged the company loaned corporate funds to the ESOP as a way to increase management's control over the company.

Insiders including the company's 87-year-old founder and chairman Roy F. Farmer, control 53.11% of the company's voting stock, including a 9% stake held by the ESOP, according to a proxy dated Dec. 15.

Rosenthal's lawsuit was supported by Farmer's 9.56% stake-holder Franklin Mutual Advisors, of San Mateo, Calif. A Franklin representative wasn't immediately available.

Farmer Bros. has seen lower earnings in each of the past several years, and is separately facing inquiries from the Securities and Exchange Commission on whether it should comply with more stringent disclosure rules that govern investment firms, according to a report in the Los Angeles Times Dec. 16. Its cash and equivalents equal 70% of total assets.

-John Seward; Dow Jones Newswires; 201-938-5400

Updated December 24, 2003 10:29 a.m.