TORRANCE, Calif.--(BUSINESS WIRE)--Dec. 24,
2003--Farmer Bros. Co. (NASDAQ:FARM) announced today that it has
purchased the 443,845 shares of its common stock held by the Crowe Family
and related trusts for approximately $110.96 million or approximately $250
per share. The purchase is part of a settlement of all outstanding issues
between the Crowe and Farmer families and was approved today by
California's Superior Court for Los Angeles County.
Concurrently with the purchase, the Company
has offered its Employee Stock Ownership Plan (ESOP) the opportunity to
purchase approximately 125,000 shares at the same price, fulfilling its
previously announced authorization for the ESOP to purchase 300,000 shares
in the aggregate. The ESOP's purchase of these shares is subject to
approval of the ESOP's directed institutional trustee. After giving effect
to the Crowe family purchase, and assuming approval by the ESOP trustee,
the ESOP will own 18.7% of the Company's shares outstanding, the Farmer
family will hold 39.6% of the shares, leaving ownership of the remaining
public shareholders at 41.7%.
The Company also announced a modification
of the structure of its ESOP. As before, the employees who have been
awarded shares under the ESOP will vote their shares on all proxy matters.
In addition, the shares held by the ESOP that have not been voted by
employees or allocated to employees, which previously had been voted by a
management committee, will in the future be voted in proportion to the
votes that employees cast for their allocated shares.
This "pass-through" voting of all ESOP
shares will be in effect for the upcoming Annual Meeting of Shareholders,
now scheduled for Jan. 21, 2004 with a record date of Dec. 29, 2003. In
addition, the administration of the ESOP has been transitioned to a
committee of three Directors, two of whom are independent members of the
Company's Board of Directors.
"The Board determined that the opportunity
to purchase shares at this price was a prudent use of some of the
company's cash. This agreement removes a distraction as management
explores additional steps to enhance shareholder value," said Roy E.
Farmer, Chief Executive Officer. "We are especially pleased that the
changes in the ESOP will give employees an increasingly significant and
independent say in the future of their Company."
The Company has retained Credit Suisse
First Boston LLC to assist it in continuing to explore its strategic
options to improve its earnings outlook. Options under ongoing
consideration include -- subject to market conditions and available
opportunities -- potential acquisitions, additional share repurchases and
extraordinary dividends. While the company retains cash and equivalents of
more than $190 million, which can be used to pursue such strategies and
protect its existing business, there can be no assurance that any of such
options will be implemented. The Company is not currently pursuing a
"going private" transaction or the sale of the Company, but may decide to
do so in the future.
The Board of Directors also approved in
principle a 10-for-one stock split in the Company's shares, which is
designed to improve trading liquidity for existing shareholders. The
implementation of the split is subject to shareholder approval of the
Delaware reincorporation proposal, which authorizes enough shares to
enable this split. The Company intends to implement the split as soon as
practical after the annual shareholders' meeting, if such approval is
obtained.
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 Bros. 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."
Contact:
Abernathy MacGregor Group
Jim Lucas, 213-630-6550