Farmer Bros.’ profit drops By Muhammed El-Hasan
Torrance-based Farmer Bros. Co. reported Tuesday a drop in profit for its fiscal fourth quarter on lower sales and increased expenses. The coffee roaster and distributor earned $5.78 million, or $3.23 a share, in the quarter ended June 30. For its fourth fiscal quarter of 2002, the company earned $6.67 million, or $3.60 a share. Revenue fell in the quarter to $47.8 million, compared with $50.4 million for the same period last year. For the year, Farmer Bros. reported profit of $23.6 million, or $13.02 a share. That’s lower than a year ago when profit was $30.6 million, or $16.54 a share. Sales were $201.5 million for the year, down from $205.9 million in fiscal year 2002. The company said its increased costs came from higher prices for green coffee beans, higher employee costs and expenses related to installing a new companywide information system. “We are in the third year of an economic downturn that has been especially hard on our core service area of California,” said the company’s annual report recently filed with the Securities and Exchange Commission. The annual report states that 171,480 shares are held in the company’s Employee Stock Ownership Plan, known as the ESOP. The firm has spent tens of millions of dollars on the ESOP. The ESOP represents a block of voting shares equal to 8.9 percent of outstanding shares. The ESOP has come under fire from dissident investors who say management is using it to expand its power in proxy votes. “I think many shareholders find it troubling that management is using corporate funds for the benefit of one group rather than for all shareholders,” said Gary Lutin, who runs an investor forum. Farmer Bros. spokesman James Lucas said stock held in the ESOP eventually goes to the employees, who then have full voting control over the shares. The company’s thinly traded stock fell $3.50 on the Nasdaq Tuesday to close at $320 a share. Publish Date:October 1, 2003
© Copyright 2003 Copley Press, Inc.
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