TORRANCE, Calif.--(BUSINESS WIRE)--Sept. 13, 2005--Farmer Bros. Co. (Nasdaq:FARM)
today reported a net loss for its fourth fiscal quarter ended June 30,
2005 of $3.7 million or $0.27 per share, compared with net income of
$2.0 million or $0.15 per share in the same quarter last year. For the
fiscal year, the Company reported a net loss of $5.4 million or $0.40
per share, compared with last year's net income of $12.7 million or
$0.81 per share.
Higher prices for green coffee continued to affect the Company's
operating results. The Company's average cost of green coffee was 74%
higher in fiscal 2005 than in 2004. In response, the Company raised
its prices to customers, pushing net sales in the fourth quarter to
$50.2 million, up from $47.3 million in last year's fourth quarter.
For fiscal 2005, the Company reported net sales of $198.4 million
compared with $193.6 million for fiscal 2004.
The Company reported quarterly gross profit of $26.6 million versus
$29.4 million for last year's fourth quarter. This reflects the rise
in green coffee costs in fiscal 2005 and the lag in passing the price
increases to the Company's customers. It also reflects the effects of
the Company's GAAP accounting of its inventory costs using LIFO
method, which results in higher costs during periods of rising
commodity prices. The costs of goods sold increased 16% in fiscal
2005, leading to a decline in gross profit to $115.5 million compared
with $122.2 million in the prior fiscal year.
The Company reported a loss from operations of $6.1 million in the
fourth fiscal quarter of 2005, versus a loss from operations of $1.2
million in the same quarter last year, and an operating loss for the
fiscal year of $6.6 million, compared with operating income in fiscal
2004 of $3.8 million.
The fiscal year results reflected a 3% increase in selling, general
and administrative costs, primarily resulting from higher depreciation
expenses for the Company's ongoing information technology project, as
well as higher costs for the Company's Employee Stock Ownership
Program (ESOP) and employee medical benefits. The Company also
reported, as "Other, net (expense) income," a net realized expense of
$10.9 million on green coffee futures and options used by the Company
to hedge against a decline in commodity prices.
At the end of the fiscal year, the Company had cash, cash
equivalents and investments of $180.9 million, compared with $198.7
million on June 30, 2004.
"I share our shareholders' and employees' disappointment with our
results during this challenging year," said Guenter Berger, Chairman,
President and Chief Executive Officer. "We are working hard to improve
all aspects of our operations, and focusing particular attention on
our efforts to improve our sales.
"We are especially optimistic about the potential of our chain
sales group. That effort, along with our new products in development
and the improving vitality of our traditionally upbeat sales
organization, reinforces our confidence in our long term prospects,"
added Mr. Berger. "During the past year we have faced the challenges
presented by the coffee market, the implementation of our information
technology project, and the death of Roy E. Farmer. We launched most
of these initiatives under his leadership and now they are being
extended by our management team and the 1,100 employee-owners of
Farmer Brothers."
Mr. Berger said the initiatives to restore sales growth include:
- Creating a new sales team to focus on the Company's larger
customer relationships, primarily chain restaurants. The team
includes sales professionals who have been drawn from the ranks of
the Company's route sales organization, and it is charged with
maintaining existing relationships as well as soliciting new
relationships among larger customers, including chain restaurants
whose deliveries and inventory management and product demands must
be coordinated across many of the Company's regional routes.
- Setting an aggressive trade show schedule and redesigning key
merchandising and point-of-sale materials.
- Launching new products that meet the needs of new and existing
customers. These include cultural drinks such as horchata, fruit
smoothies, an expanded line of teas, liquid coffee and new seasonal
products such as Pumpkin Pie Cappuccino.
In addition, Mr. Berger said the Company, in its final year of the
information technology project, has budgeted $4 million for fiscal
2006 to complete the overhaul of its computer systems. The Company has
completed the upgrades to its finance and manufacturing systems, and
is preparing to launch its sales system, which is expected to give
management rapid access to more detailed information on product
profitability and demand.
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 Brothers has paid a dividend for 51 consecutive years,
increased the dividend in each of the last seven consecutive years,
and its stock price has grown on a split-adjusted basis from $1.80 a
share in 1980.
Forward-Looking Statements
Certain statements contained in this press release regarding the
risks, circumstances and financial trends that may affect our future
operating results, financial position and cash flows may be
forward-looking statements within the meaning of federal securities
laws. These statements are based on management's current expectations,
assumptions, estimates and observations about our business and are
subject to risks and uncertainties. As a result, actual results could
materially differ from the forward-looking statements contained
herein. These forward-looking statements can be identified by the use
of words like "expects," "plans," "believes," "intends," "will,"
"assumes" and other words of similar meaning. These and other similar
words can be identified by the fact that they do not relate solely to
historical or current facts. While we believe our assumptions are
reasonable, we caution that it is impossible to predict the impact of
such factors which could cause actual results to differ materially
from predicted results. We intend these forward-looking statements to
speak only at the time of this press release and do not undertake to
update or revise these projections as more information becomes
available. For these statements, we claim the protection of the safe
harbor for forward-looking statements provided by the Private
Securities Litigation Reform Act of 1995.
FARMER BROS. CO.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share and per share data)
Years ended June 30,
2005 2004 2003
Net sales $198,420 $193,589 $201,558
Cost of goods sold 82,964 71,405 70,662
Gross profit $115,456 122,184 $130,896
Selling expense 92,112 92,029 88,658
General and administrative
expenses 29,927 26,392 18,350
Operating expenses $122,039 $118,421 $107,008
(Loss) income from operations ($6,583) $3,763 $23,888
Other income (expense):
Dividend income 3,420 3,396 3,246
Interest income 2,721 2,518 3,974
Other, net (expense) income (10,887) 6,305 6,463
Total other (expense) income ($4,746) $12,219 $13,683
(Loss) income before taxes (11,329) 15,982 37,571
Income tax (benefit) expense (5,902) 3,295 13,942
Net (loss) income ($5,427) $12,687 $23,629
Net (loss) income per common share ($0.40) $0.81 $1.30
Weighted average shares
outstanding 13,653,420 15,576,450 18,145,910
QUARTERLY FINANCIAL DATA (UNAUDITED)
(In thousands except per share data; all per share disclosures
have been split adjusted.)
September December March June
30 31 31 30
2004 2004 2005 2005
Net sales $46,708 $51,220 $50,271 $50,221
Gross profit $29,239 $30,298 $29,343 $26,576
Income from operations $1,002 $699 ($2,167) ($6,117)
Net income (loss) $1,497 ($4,068) $856 ($3,712)
Net income per common shares $0.11 ($0.30) $0.06 ($0.27)
September December March June
30 31 31 30
2003 2003 2004 2004
Net sales $45,665 $51,511 $49,069 $47,345
Gross profit $29,632 $32,573 $30,581 $29,398
Income from operations $1,057 $3,124 $743 ($1,161)
Net income $2,511 $2,565 $5,603 $2,008
Net income per common shares $0.14 $0.15 $0.42 $0.15
Contact:
Abernathy MacGregor Group
Jim Lucas/Whitney Hays, 213-630-6550