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Sent: Tuesday, May 08, 2007 5:33 PM
Subject: Report of resumed quarterly operating losses
In its
quarterly report on Form 10-Q just filed with the SEC, Farmer Bros
reported a return to operating losses for the three months ended March 31,
2007. Their summary of quarterly financial data from the "Item 2" section
of the report, "Management’s Discussion and Analysis of Financial
Condition and Results of Operations," is copied below.
Management also reported further declines in
coffee sales, in spite of their geographic expansion and new marketing
initiatives, stating on page 9 of the report that "A decline in coffee
sales during the third quarter of fiscal 2007 and the first nine months
of fiscal 2007 was offset by an increase in sales of allied products in
each period, resulting in the modest sales increase."
Income from investments also declined, but the
total $2,783,000 was still enough to offset the $2,247,000 operating
loss. Management offered the following explanation on page 9 of the MD&A,
attributing the decline to "interest sensitive investments" which are
presumed to be the derivatives referred to on page 5:
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Total other income, net in the third quarter of
fiscal 2007 decreased to $2,783,000 from $3,318,000 in the same
period of fiscal 2006. Higher interest rates during the third
quarter of fiscal 2007 compared favorably with interest rates in the
same quarter of the prior fiscal year, but investment income,
composed primarily of realized and unrealized gains and losses on
interest sensitive investments, was $318,000 in the third quarter
of fiscal 2007 as compared to $1,226,000 in the same quarter of
fiscal 2006. Total other income in the first nine months of fiscal
2007 increased to $9,333,000 from $5,525,000 in the same period of
fiscal 2006. This increase is largely the result of higher interest
rates and investment income in the first nine months of fiscal 2007
as compared to the first nine months of fiscal 2006. |
The report did not provide any additional
information about the company's acquisition of Coffee Bean International,
or about that company's current or past financial performance.
Please let me know if you have any questions.
GL
Gary Lutin
Lutin & Company
575 Madison Avenue, 10th Floor
New York, New York 10022
Tel: 212-605-0335
Email: gl@shareholderforum.com
Farmer Bros. Co.
Form 10-Q
filed 5/8/07, page 10:
***
Quarterly
Financial Data
(In
thousands except per share data)
|
|
|
September 30,
2006 |
|
December 31,
2006 |
|
March 31,
2007 |
|
|
Net
sales |
|
$ |
48,264 |
|
$ |
55,476 |
|
$ |
54,382 |
|
|
Gross
profit |
|
$ |
28,083 |
|
$ |
32,481 |
|
$ |
31,664 |
|
|
(Loss)
income from operations |
|
$ |
(2,737 |
) |
$ |
1,140 |
|
$ |
(2,247 |
) |
|
Net
income |
|
$ |
1,013 |
|
$ |
2,953 |
|
$ |
1,512 |
|
|
Net
income per common share |
|
$ |
0.07 |
|
$ |
0.21 |
|
$ |
0.11 |
|
|
|
|
September 30,
2005 |
|
December 31,
2005 |
|
March 31,
2006 |
|
June 30,
2006 |
|
|
Net
sales |
|
$ |
48,424 |
|
$ |
54,950 |
|
$ |
53,561 |
|
$ |
50,518 |
|
|
Gross
profit |
|
$ |
28,885 |
|
$ |
33,154 |
|
$ |
32,039 |
|
$ |
28,465 |
|
|
(Loss)
income from operations |
|
$ |
(1,124 |
) |
$ |
3,149 |
|
$ |
67 |
|
$ |
(5,057 |
) |
|
Net
(loss) income |
|
$ |
(1,079 |
) |
$ |
4,164 |
|
$ |
2,463 |
|
$ |
(792 |
) |
|
Net
(loss) income per common share |
|
$ |
(0.08 |
) |
$ |
0.30 |
|
$ |
0.18 |
|
$ |
(0.06 |
) |
|