FORM 10-Q
|
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
£
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
FARMER BROS. CO.
|
(exact name of registrant as specified in its charter)
|
|
Delaware
|
|
95-0725980
|
(State of Incorporation)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
20333 South Normandie Avenue, Torrance, California 90502
|
||
(address of principal executive offices, Zip code)
|
||
|
||
Registrant’s telephone number, including area code:
310-787-5200
|
Large accelerated filer
|
|
£
|
|
Accelerated filer
|
|
ý
|
Non-accelerated filer
|
|
£
(Do not check if a smaller reporting company)
|
|
Smaller reporting company
|
|
£
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2013
|
|
June 30, 2012
|
||||
ASSETS
|
(Unaudited)
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
5,525
|
|
|
$
|
3,906
|
|
Restricted cash
|
3,751
|
|
|
—
|
|
||
Short-term investments
|
20,769
|
|
|
21,021
|
|
||
Accounts and notes receivable, net
|
42,793
|
|
|
40,736
|
|
||
Inventories
|
67,273
|
|
|
65,981
|
|
||
Income tax receivable
|
139
|
|
|
762
|
|
||
Prepaid expenses
|
2,800
|
|
|
3,445
|
|
||
Total current assets
|
143,050
|
|
|
135,851
|
|
||
Property, plant and equipment, net
|
93,837
|
|
|
108,135
|
|
||
Intangible assets, net
|
6,586
|
|
|
7,615
|
|
||
Other assets
|
3,026
|
|
|
2,904
|
|
||
Deferred income taxes
|
854
|
|
|
854
|
|
||
Total assets
|
$
|
247,353
|
|
|
$
|
255,359
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
30,909
|
|
|
$
|
27,676
|
|
Accrued payroll expenses
|
16,735
|
|
|
20,494
|
|
||
Short-term borrowings under revolving credit facility
|
9,912
|
|
|
29,126
|
|
||
Short-term obligations under capital leases
|
3,435
|
|
|
3,737
|
|
||
Deferred income taxes
|
1,480
|
|
|
1,480
|
|
||
Other current liabilities
|
16,492
|
|
|
10,176
|
|
||
Total current liabilities
|
78,963
|
|
|
92,689
|
|
||
Long-term borrowings under revolving credit facility
|
10,000
|
|
|
—
|
|
||
Accrued postretirement benefits
|
35,393
|
|
|
34,557
|
|
||
Other long-term liabilities—capital leases
|
9,552
|
|
|
12,130
|
|
||
Accrued pension liabilities
|
41,973
|
|
|
42,513
|
|
||
Accrued workers’ compensation liabilities
|
4,022
|
|
|
4,131
|
|
||
Deferred income taxes
|
718
|
|
|
607
|
|
||
Total liabilities
|
$
|
180,621
|
|
|
$
|
186,627
|
|
Commitments and contingencies
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $1.00 par value, 500,000 shares authorized and none issued
|
$
|
—
|
|
|
$
|
—
|
|
Common stock, $1.00 par value, 25,000,000 shares authorized; 16,449,456 and 16,308,859 issued and outstanding at March 31, 2013 and June 30, 2012, respectively
|
16,449
|
|
|
16,309
|
|
||
Additional paid-in capital
|
33,728
|
|
|
34,834
|
|
||
Retained earnings
|
94,620
|
|
|
100,455
|
|
||
Unearned ESOP shares
|
(20,836
|
)
|
|
(25,637
|
)
|
||
Less accumulated other comprehensive loss
|
(57,229
|
)
|
|
(57,229
|
)
|
||
Total stockholders’ equity
|
$
|
66,732
|
|
|
$
|
68,732
|
|
Total liabilities and stockholders’ equity
|
$
|
247,353
|
|
|
$
|
255,359
|
|
|
Three Months Ended March 31,
|
|
Nine Months Ended March 31,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Net sales
|
$
|
126,343
|
|
|
$
|
121,527
|
|
|
$
|
381,201
|
|
|
$
|
374,494
|
|
Cost of goods sold
|
77,668
|
|
|
78,380
|
|
|
237,552
|
|
|
247,121
|
|
||||
Gross profit
|
48,675
|
|
|
43,147
|
|
|
143,649
|
|
|
127,373
|
|
||||
Selling expenses
|
39,135
|
|
|
37,909
|
|
|
117,171
|
|
|
110,361
|
|
||||
General and administrative expenses
|
10,159
|
|
|
9,345
|
|
|
28,217
|
|
|
27,050
|
|
||||
Pension withdrawal expense
|
—
|
|
|
—
|
|
|
—
|
|
|
4,348
|
|
||||
Operating expenses
|
49,294
|
|
|
47,254
|
|
|
145,388
|
|
|
141,759
|
|
||||
Loss from operations
|
(619
|
)
|
|
(4,107
|
)
|
|
(1,739
|
)
|
|
(14,386
|
)
|
||||
Other (expense) income:
|
|
|
|
|
|
|
|
||||||||
Dividend income
|
286
|
|
|
295
|
|
|
829
|
|
|
958
|
|
||||
Interest income
|
92
|
|
|
63
|
|
|
283
|
|
|
99
|
|
||||
Interest expense
|
(466
|
)
|
|
(498
|
)
|
|
(1,386
|
)
|
|
(1,579
|
)
|
||||
Other, net
|
(764
|
)
|
|
(1,831
|
)
|
|
(3,475
|
)
|
|
(2,458
|
)
|
||||
Total other expense, net
|
(852
|
)
|
|
(1,971
|
)
|
|
(3,749
|
)
|
|
(2,980
|
)
|
||||
Loss before taxes
|
(1,471
|
)
|
|
(6,078
|
)
|
|
(5,488
|
)
|
|
(17,366
|
)
|
||||
Income tax (benefit) expense
|
(56
|
)
|
|
(577
|
)
|
|
347
|
|
|
(171
|
)
|
||||
Net loss
|
$
|
(1,415
|
)
|
|
$
|
(5,501
|
)
|
|
$
|
(5,835
|
)
|
|
$
|
(17,195
|
)
|
Net loss per common share—basic and diluted
|
$
|
(0.09
|
)
|
|
$
|
(0.35
|
)
|
|
$
|
(0.38
|
)
|
|
$
|
(1.11
|
)
|
Weighted average common shares outstanding—basic and diluted
|
15,600,040
|
|
|
15,592,291
|
|
|
15,540,697
|
|
|
15,448,622
|
|
||||
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Nine Months Ended March 31,
|
||||||||||||
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Net income (loss)
|
|
$
|
(1,415
|
)
|
|
$
|
(5,501
|
)
|
|
$
|
(5,835
|
)
|
|
$
|
(17,195
|
)
|
Other comprehensive income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total comprehensive income (loss)
|
|
$
|
(1,415
|
)
|
|
$
|
(5,501
|
)
|
|
$
|
(5,835
|
)
|
|
$
|
(17,195
|
)
|
|
|
Nine Months Ended March 31,
|
||||||
|
|
2013
|
|
2012
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net loss
|
|
$
|
(5,835
|
)
|
|
$
|
(17,195
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
24,778
|
|
|
23,831
|
|
||
(Recovery of) provision for doubtful accounts
|
|
(890
|
)
|
|
880
|
|
||
Deferred income taxes
|
|
111
|
|
|
—
|
|
||
Net gains on sales of assets
|
|
(4,388
|
)
|
|
(1,161
|
)
|
||
ESOP and share-based compensation expense
|
|
2,639
|
|
|
2,519
|
|
||
Net losses on derivatives and investments
|
|
9,315
|
|
|
5,131
|
|
||
Change in operating assets and liabilities:
|
|
|
|
|
||||
Short-term investments
|
|
(9,063
|
)
|
|
1,027
|
|
||
Accounts and notes receivable
|
|
(1,167
|
)
|
|
936
|
|
||
Inventories
|
|
(1,291
|
)
|
|
3,533
|
|
||
Income tax receivable
|
|
622
|
|
|
(377
|
)
|
||
Prepaid expenses and other assets
|
|
522
|
|
|
81
|
|
||
Accounts payable
|
|
4,359
|
|
|
(9,342
|
)
|
||
Accrued payroll expenses and other liabilities
|
|
(1,312
|
)
|
|
1,102
|
|
||
Accrued postretirement benefits
|
|
836
|
|
|
1,130
|
|
||
Other long-term liabilities
|
|
(1,416
|
)
|
|
(1,083
|
)
|
||
Net cash provided by operating activities
|
|
$
|
17,820
|
|
|
$
|
11,012
|
|
Cash flows from investing activities:
|
|
|
|
|
||||
Purchases of property, plant and equipment
|
|
(10,118
|
)
|
|
(10,533
|
)
|
||
Proceeds from sales of property, plant and equipment
|
|
5,556
|
|
|
2,112
|
|
||
Net cash used in investing activities
|
|
$
|
(4,562
|
)
|
|
$
|
(8,421
|
)
|
Cash flows from financing activities:
|
|
|
|
|
||||
Proceeds from revolving credit facility
|
|
22,550
|
|
|
13,700
|
|
||
Repayments on revolving credit facility
|
|
(32,771
|
)
|
|
(17,700
|
)
|
||
Payments of capital lease obligations
|
|
(2,613
|
)
|
|
(1,209
|
)
|
||
Proceeds from stock option exercises
|
|
1,195
|
|
|
—
|
|
||
Net cash used in financing activities
|
|
$
|
(11,639
|
)
|
|
$
|
(5,209
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
$
|
1,619
|
|
|
$
|
(2,618
|
)
|
Cash and cash equivalents at beginning of period
|
|
3,906
|
|
|
6,081
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
5,525
|
|
|
$
|
3,463
|
|
•
|
Level 1—Valuation is based upon quoted prices for identical instruments traded in active markets.
|
•
|
Level 2—Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
|
•
|
Level 3—Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.
|
As of March 31, 2013 (Unaudited)
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Preferred stock(1)
|
|
$
|
20,769
|
|
|
$
|
16,454
|
|
|
$
|
4,315
|
|
|
$
|
—
|
|
Derivative liabilities(2)
|
|
$
|
5,930
|
|
|
$
|
—
|
|
|
$
|
5,930
|
|
|
$
|
—
|
|
Derivative liabilities—interest rate swap(2)
|
|
$
|
35
|
|
|
$
|
—
|
|
|
$
|
35
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
As of June 30, 2012
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Preferred stock(1)
|
|
$
|
19,395
|
|
|
$
|
14,078
|
|
|
$
|
5,317
|
|
|
$
|
—
|
|
Futures, options and other derivative assets(1)
|
|
$
|
1,626
|
|
|
$
|
—
|
|
|
$
|
1,626
|
|
|
$
|
—
|
|
Derivative liabilities(3)
|
|
$
|
410
|
|
|
$
|
—
|
|
|
$
|
410
|
|
|
$
|
—
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
March 31,
|
|
March 31,
|
||||||||||||
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
(In thousands)
|
|
(Unaudited)
|
|
(Unaudited)
|
||||||||||||
Coffee-related derivatives:
|
|
|
|
|
|
|
|
|
||||||||
Unrealized gains (losses), net
|
|
$
|
5
|
|
|
$
|
(1,532
|
)
|
|
$
|
(5,507
|
)
|
|
$
|
(2,551
|
)
|
Realized losses, net
|
|
(2,923
|
)
|
|
(1,786
|
)
|
|
(4,567
|
)
|
|
(4,925
|
)
|
||||
Net realized and unrealized coffee-related derivative losses
|
|
(2,918
|
)
|
|
(3,318
|
)
|
|
(10,074
|
)
|
|
(7,476
|
)
|
||||
Net realized and unrealized gains from investments
|
|
636
|
|
|
436
|
|
|
794
|
|
|
2,345
|
|
||||
Net unrealized gains (losses) from interest rate swap
|
|
4
|
|
|
—
|
|
|
(35
|
)
|
|
—
|
|
||||
Net losses on derivatives and investments
|
|
(2,278
|
)
|
|
(2,882
|
)
|
|
(9,315
|
)
|
|
(5,131
|
)
|
||||
Net gains on sales of assets
|
|
1,185
|
|
|
499
|
|
|
4,388
|
|
|
1,161
|
|
||||
Other gains, net
|
|
329
|
|
|
552
|
|
|
1,452
|
|
|
1,512
|
|
||||
Other, net
|
|
$
|
(764
|
)
|
|
$
|
(1,831
|
)
|
|
$
|
(3,475
|
)
|
|
$
|
(2,458
|
)
|
|
|
March 31, 2013 (Unaudited)
|
||||||||||||||||||||||
|
|
Less than 12 Months
|
|
12 Months and Greater
|
|
Total
|
||||||||||||||||||
(In thousands)
|
|
Fair Value
|
|
Unrealized Loss
|
|
Fair Value
|
|
Unrealized Loss
|
|
Fair Value
|
|
Unrealized Loss
|
||||||||||||
Preferred stock
|
|
$
|
1,100
|
|
|
$
|
(10
|
)
|
|
$
|
1,463
|
|
|
$
|
(53
|
)
|
|
$
|
2,563
|
|
|
$
|
(63
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
June 30, 2012
|
||||||||||||||||||||||
|
|
Less than 12 Months
|
|
12 Months and Greater
|
|
Total
|
||||||||||||||||||
(In thousands)
|
|
Fair Value
|
|
Unrealized Loss
|
|
Fair Value
|
|
Unrealized Loss
|
|
Fair Value
|
|
Unrealized Loss
|
||||||||||||
Preferred stock
|
|
$
|
1,750
|
|
|
$
|
(16
|
)
|
|
$
|
1,141
|
|
|
$
|
(24
|
)
|
|
$
|
2,891
|
|
|
$
|
(40
|
)
|
|
|
As of
|
||||||
(In thousands)
|
|
March 31, 2013
|
|
June 30, 2012
|
||||
|
|
(Unaudited)
|
|
|
||||
Trade receivables
|
|
$
|
42,771
|
|
|
$
|
40,687
|
|
Other receivables
|
|
1,004
|
|
|
1,921
|
|
||
Allowance for doubtful accounts
|
|
(982
|
)
|
|
(1,872
|
)
|
||
Accounts and notes receivable, net
|
|
$
|
42,793
|
|
|
$
|
40,736
|
|
|
|
Processed
|
|
Unprocessed
|
|
Total
|
||||||
March 31, 2013 (Unaudited)
|
|
(In thousands)
|
||||||||||
Coffee
|
|
$
|
13,875
|
|
|
$
|
14,245
|
|
|
$
|
28,120
|
|
Tea and culinary products
|
|
22,880
|
|
|
5,599
|
|
|
28,479
|
|
|||
Coffee brewing equipment
|
|
5,869
|
|
|
4,805
|
|
|
10,674
|
|
|||
|
|
$
|
42,624
|
|
|
$
|
24,649
|
|
|
$
|
67,273
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
|
|
Processed
|
|
Unprocessed
|
|
Total
|
||||||
June 30, 2012
|
|
(In thousands)
|
||||||||||
Coffee
|
|
$
|
15,485
|
|
|
$
|
11,836
|
|
|
$
|
27,321
|
|
Tea and culinary products
|
|
24,502
|
|
|
4,817
|
|
|
29,319
|
|
|||
Coffee brewing equipment
|
|
3,977
|
|
|
5,364
|
|
|
9,341
|
|
|||
|
|
$
|
43,964
|
|
|
$
|
22,017
|
|
|
$
|
65,981
|
|
|
Three Months Ended
March 31, |
|
Nine Months Ended
March 31, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
(In thousands)
|
(Unaudited)
|
|
(Unaudited)
|
||||||||||||
Service cost
|
$
|
119
|
|
|
$
|
124
|
|
|
$
|
357
|
|
|
$
|
371
|
|
Interest cost
|
1,449
|
|
|
1,525
|
|
|
4,347
|
|
|
4,575
|
|
||||
Expected return on plan assets
|
(1,660
|
)
|
|
(1,703
|
)
|
|
(4,980
|
)
|
|
(5,108
|
)
|
||||
Amortization of net loss(1)
|
387
|
|
|
342
|
|
|
1,161
|
|
|
1,027
|
|
||||
Amortization of net prior service cost(1)
|
5
|
|
|
5
|
|
|
15
|
|
|
14
|
|
||||
Net periodic benefit cost
|
$
|
300
|
|
|
$
|
293
|
|
|
$
|
900
|
|
|
$
|
879
|
|
(1)
|
These amounts represent the estimated portion of the net loss and net prior service cost remaining in accumulated other comprehensive income that is expected to be recognized as a component of net periodic benefit cost over the current fiscal year.
|
|
Fiscal
|
||
|
2013
|
|
2012
|
Discount rate
|
4.55%
|
|
5.60%
|
Expected long-term rate of return
|
8.00%
|
|
8.25%
|
Rate of compensation increase(1)
|
—%
|
|
3.00%
|
|
|
Three Months Ended
March 31,
|
|
Nine Months Ended
March 31,
|
||||||||||||
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
(In thousands)
|
|
(Unaudited)
|
|
(Unaudited)
|
||||||||||||
Service cost
|
|
$
|
634
|
|
|
$
|
409
|
|
|
$
|
1,903
|
|
|
$
|
1,227
|
|
Interest cost
|
|
178
|
|
|
330
|
|
|
534
|
|
|
990
|
|
||||
Amortization of net gain
|
|
(218
|
)
|
|
(199
|
)
|
|
(653
|
)
|
|
(597
|
)
|
||||
Amortization of prior service credit
|
|
(240
|
)
|
|
(58
|
)
|
|
(720
|
)
|
|
(174
|
)
|
||||
Net periodic postretirement benefit cost
|
|
$
|
354
|
|
|
$
|
482
|
|
|
$
|
1,064
|
|
|
$
|
1,446
|
|
|
Fiscal
|
||
|
2013
|
|
2012
|
Discount rate
|
4.40%
|
|
5.46%
|
|
Nine Months Ended March 31,
|
||
|
2013
|
|
2012
|
Weighted average fair value of options
|
$5.56
|
|
$4.74
|
Risk-free interest rate
|
0.8%
|
|
1.1%
|
Dividend yield
|
—
|
|
—
|
Average expected life
|
6 years
|
|
6 years
|
Expected stock price volatility
|
49.5%
|
|
52.5%
|
Outstanding Stock Options
|
|
Number
of
Stock
Options
|
|
Weighted
Average
Exercise
Price ($)
|
|
Weighted
Average
Grant Date
Fair Value ($)
|
|
Weighted
Average
Remaining
Life
(Years)
|
|
Aggregate
Intrinsic
Value
($ in
thousands)
|
||
Outstanding at June 30, 2012
|
|
667,235
|
|
|
12.84
|
|
4.78
|
|
4.8
|
|
143
|
|
Granted
|
|
163,446
|
|
|
11.85
|
|
5.56
|
|
6.7
|
|
465
|
|
Exercised
|
|
(116,471
|
)
|
|
10.27
|
|
5.24
|
|
—
|
|
—
|
|
Cancelled/forfeited
|
|
(147,122
|
)
|
|
13.21
|
|
5.75
|
|
—
|
|
—
|
|
Outstanding at March 31, 2013
|
|
567,088
|
|
|
12.99
|
|
5.46
|
|
5.1
|
|
1,875
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Vested and exercisable, March 31, 2013
|
|
244,851
|
|
|
16.66
|
|
6.26
|
|
3.5
|
|
356
|
|
Vested and expected to vest, March 31, 2013
|
|
537,471
|
|
|
13.13
|
|
5.49
|
|
5.0
|
|
1,745
|
|
Outstanding and Nonvested Restricted Stock Awards
|
|
Shares
Awarded
|
|
Weighted
Average
Grant Date
Fair Value
($)
|
|
Weighted
Average
Remaining
Life
(Years)
|
|
Aggregate
Intrinsic
Value
($ in
thousands)
|
|||
Outstanding June 30, 2012
|
|
175,947
|
|
|
10.16
|
|
|
1.9
|
|
1,401
|
|
Granted
|
|
45,230
|
|
|
11.42
|
|
|
2.6
|
|
516
|
|
Vested
|
|
(50,085
|
)
|
|
12.52
|
|
|
—
|
|
638
|
|
Cancelled/forfeited
|
|
(21,104
|
)
|
|
12.34
|
|
|
—
|
|
—
|
|
Outstanding at March 31, 2013
|
|
149,988
|
|
|
9.45
|
|
|
2.0
|
|
2,205
|
|
|
|
|
|
|
|
|
|
|
|||
Expected to vest, March 31, 2013
|
|
127,128
|
|
|
9.41
|
|
|
1.9
|
|
1,869
|
|
|
|
Three Months Ended March 31,
|
|
Nine Months Ended March 31,
|
|
||||||||||||
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
||||||||
(In thousands)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
||||||||||||
Loss before taxes
|
|
$
|
(1,471
|
)
|
|
$
|
(6,078
|
)
|
|
$
|
(5,488
|
)
|
|
$
|
(17,366
|
)
|
|
Income tax benefit at statutory rate
|
|
(500
|
)
|
|
(2,066
|
)
|
|
(1,866
|
)
|
|
(5,904
|
)
|
|
||||
State income tax (benefit) expense (net of federal tax benefit)
|
|
(161
|
)
|
|
(238
|
)
|
|
(52
|
)
|
|
(687
|
)
|
|
||||
Dividend income exclusion
|
|
—
|
|
|
(79
|
)
|
|
—
|
|
|
(137
|
)
|
|
||||
Valuation allowance
|
|
597
|
|
|
2,794
|
|
|
2,214
|
|
|
7,478
|
|
|
||||
ESOP dividend
|
|
—
|
|
|
(464
|
)
|
|
—
|
|
|
(464
|
)
|
|
||||
Changes in FIN48 reserves
|
|
—
|
|
|
(673
|
)
|
|
—
|
|
|
(673
|
)
|
|
||||
Other permanent items
|
|
8
|
|
|
149
|
|
|
51
|
|
|
216
|
|
|
||||
Income tax (benefit) expense
|
|
$
|
(56
|
)
|
|
$
|
(577
|
)
|
|
$
|
347
|
|
|
$
|
(171
|
)
|
|
|
|
As of
|
||||||
|
|
March 31,
2013
|
|
June 30,
2012
|
||||
(In thousands)
|
|
(Unaudited)
|
|
|
||||
Total unrecognized tax benefits(1)
|
|
$
|
3,211
|
|
|
$
|
3,211
|
|
Unrecognized tax benefits that, if recognized, would affect the Company's effective tax rate, subject to the valuation allowance(1)
|
|
$
|
3,064
|
|
|
$
|
3,064
|
|
|
|
Three Months Ended March 31,
|
|
Nine Months Ended March 31,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|||||||||
(In thousands, except share and per share amounts)
|
|
(Unaudited)
|
|
(Unaudited)
|
||||||||||||
Net loss attributable to common stockholders—basic
|
|
(1,403
|
)
|
|
(5,445
|
)
|
|
(5,786
|
)
|
|
(17,019
|
)
|
||||
Net loss attributable to nonvested restricted stockholders
|
|
(12
|
)
|
|
(56
|
)
|
|
(49
|
)
|
|
(176
|
)
|
||||
Total net loss
|
|
$
|
(1,415
|
)
|
|
$
|
(5,501
|
)
|
|
(5,835
|
)
|
|
(17,195
|
)
|
||
Weighted average shares outstanding—basic
|
|
15,600,040
|
|
|
15,592,291
|
|
|
15,540,697
|
|
|
15,448,622
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
||||||||
Shares issuable under stock options
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Weighted average shares outstanding—diluted
|
|
15,600,040
|
|
|
15,592,291
|
|
|
15,540,697
|
|
|
15,448,622
|
|
||||
Net loss per common share—basic and diluted
|
|
$
|
(0.09
|
)
|
|
$
|
(0.35
|
)
|
|
$
|
(0.38
|
)
|
|
$
|
(1.11
|
)
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
March 31, 2013
|
|
June 30, 2012
|
||||
(In thousands)
|
|
(Unaudited)
|
|
|
||||
Current assets
|
|
$
|
143,050
|
|
|
$
|
135,851
|
|
Current liabilities(1)
|
|
78,963
|
|
|
92,689
|
|
||
Working capital
|
|
$
|
64,087
|
|
|
$
|
43,162
|
|
|
|
Nine Months Ended March 31,
|
|||||||
|
|
2013
|
|
2012
|
|
||||
(In thousands)
|
|
(Unaudited)
|
|
||||||
Capital expenditures
|
|
$
|
10,118
|
|
|
$
|
10,533
|
|
|
|
|
Three Months Ended March 31,
|
|
Nine Months Ended March 31,
|
||||||||||||
(In thousands)
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
|
|
(Unaudited)
|
|
(Unaudited)
|
||||||||||||
Net loss, as reported(1)(2)
|
|
$
|
(1,415
|
)
|
|
$
|
(5,501
|
)
|
|
$
|
(5,835
|
)
|
|
$
|
(17,195
|
)
|
Income tax (benefit) expense
|
|
(56
|
)
|
|
(577
|
)
|
|
347
|
|
|
(171
|
)
|
||||
Interest expense
|
|
466
|
|
|
498
|
|
|
1,386
|
|
|
1,579
|
|
||||
Depreciation and amortization expense
|
|
8,138
|
|
|
8,010
|
|
|
24,778
|
|
|
23,831
|
|
||||
ESOP and share-based compensation expense
|
|
733
|
|
|
1,043
|
|
|
2,639
|
|
|
2,519
|
|
||||
Pension withdrawal expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,348
|
|
||||
Net losses on derivatives and investments
|
|
2,278
|
|
|
2,882
|
|
|
9,315
|
|
|
5,131
|
|
||||
EBITDAE(1)(2)
|
|
$
|
10,144
|
|
|
$
|
6,355
|
|
|
$
|
32,630
|
|
|
$
|
20,042
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
(Unaudited)
|
|
Market Value of
Preferred
Securities at
March 31, 2013
|
|
Change in Market
Value
|
||||
Interest Rate Changes
|
|
(In thousands)
|
||||||
–150 basis points
|
|
$
|
21,398
|
|
|
$
|
629
|
|
–100 basis points
|
|
$
|
21,221
|
|
|
$
|
452
|
|
Unchanged
|
|
$
|
20,769
|
|
|
$
|
—
|
|
+100 basis points
|
|
$
|
20,159
|
|
|
$
|
(610
|
)
|
+150 basis points
|
|
$
|
19,862
|
|
|
$
|
(907
|
)
|
(Unaudited)
|
|
Interest Rate
|
|
Annual Interest
Expense
|
||
Interest Rate Changes
|
|
|
|
(In thousands)
|
||
–100 basis points
|
|
0.35%
|
|
$
|
71
|
|
–50 basis points
|
|
0.85%
|
|
$
|
171
|
|
Unchanged
|
|
1.35%
|
|
$
|
271
|
|
+50 basis points
|
|
1.85%
|
|
$
|
372
|
|
+100 basis points
|
|
2.35%
|
|
$
|
472
|
|
(Unaudited)
|
|
Market Value
|
|
(Decrease) Increase in Market Value
|
||||||||||||||||
|
|
Coffee
Inventory
|
|
Futures &
Options
|
|
Total
|
|
Derivatives
|
|
Inventory
|
||||||||||
Coffee Cost (Decrease) Increase
|
|
|
||||||||||||||||||
|
|
(In thousands)
|
||||||||||||||||||
– 10%
|
|
$
|
25,308
|
|
|
$
|
30
|
|
|
$
|
25,338
|
|
|
$
|
30
|
|
|
$
|
(2,812
|
)
|
Unchanged
|
|
$
|
28,120
|
|
|
$
|
—
|
|
|
$
|
28,120
|
|
|
$
|
—
|
|
|
$
|
—
|
|
+10%
|
|
$
|
30,932
|
|
|
$
|
(30
|
)
|
|
$
|
30,902
|
|
|
$
|
(30
|
)
|
|
$
|
2,812
|
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
•
|
increase our vulnerability to general adverse economic and industry conditions;
|
•
|
require us to dedicate a portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow for other purposes, including funding daily operations, investing in future business opportunities and capital expenditures;
|
•
|
limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate thereby placing us at a competitive disadvantage compared to our competitors that may have less debt or debt with less restrictive debt covenants;
|
•
|
limit, by the financial and other restrictive covenants in our loan agreement, our ability to borrow additional funds; and
|
•
|
have a material adverse effect on us if we fail to comply with the covenants in our loan agreement because such failure could result in an event of default which, if not cured or waived, could result in our indebtedness becoming immediately due and payable.
|
•
|
incur additional indebtedness;
|
•
|
pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments;
|
•
|
sell assets;
|
•
|
create liens on certain assets to secure debt; and
|
•
|
consolidate, merge, sell or otherwise dispose of all or substantially all of our assets.
|
•
|
seek additional financing in the debt or equity markets;
|
•
|
refinance or restructure all or a portion of our indebtedness;
|
•
|
sell selected assets; or
|
•
|
reduce or delay planned capital or operating expenditures.
|
Item 6.
|
Exhibits
|
|
|
|
|
|
|
|
F
ARMER
B
ROS
. C
O
.
|
||||
|
|
|
|||
|
By:
|
|
/
S
/ MICHAEL H. KEOWN
|
||
|
|
|
Michael H. Keown
President and Chief Executive Officer (chief executive officer) Date: May 6, 2013 |
||
|
|
|
|||
|
By:
|
|
/S/ MARK J. NELSON
|
||
|
|
|
Mark J. Nelson
Treasurer and Chief Financial Officer (principal financial and accounting officer) Date: May 6, 2013 |
||
|
|
|
|||
|
|
|
|
||
|
|
|
|
3.1
|
|
Certificate of Incorporation (filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 filed with the SEC on May 11, 2009 and incorporated herein by reference).
|
|
|
|
3.2
|
|
Amended and Restated Bylaws (filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the SEC on April 25, 2011 and incorporated herein by reference).
|
|
|
|
4.1
|
|
Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock (filed as Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 filed with the SEC on May 10, 2010 and incorporated herein by reference).
|
|
|
|
4.2
|
|
Rights Agreement, dated March 17, 2005, by and between Farmer Bros. Co. and Wells Fargo Bank, N.A., as Rights Agent (filed as Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 filed with the SEC on May 10, 2010 and incorporated herein by reference).
|
|
|
|
4.3
|
|
Specimen Stock Certificate (filed as Exhibit 4.1 to the Company’s Form 8-A/A filed with the SEC on February 6, 2009 and incorporated herein by reference).
|
|
|
|
10.1
|
|
Amended and Restated Loan and Security Agreement, dated September 12, 2011, by and among Farmer Bros. Co. and Coffee Bean International, Inc., as Borrowers, Coffee Bean Holding Co., Inc. and FBC Finance Company, as Guarantors, the Lenders party thereto, and Wells Fargo Bank, National Association, as Agent (filed as Exhibit 10.12 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2011 filed with the SEC on September 12, 2011 and incorporated herein by reference).
|
|
|
|
10.2
|
|
Amendment No. 1 to Amended and Restated Loan and Security Agreement, effective January 9, 2012, by and among Farmer Bros. Co. and Coffee Bean International, Inc., as Borrowers, Coffee Bean Holding Co., Inc. and FBC Finance Company, as Guarantors, the Lenders party thereto, and Wells Fargo Bank, National Association, as Agent (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2011 filed with the SEC on February 8, 2012 and incorporated herein by reference).
|
|
|
|
10.3
|
|
Amendment No. 2 to Amended and Restated Loan and Security Agreement, dated as of March 18, 2013, by and among Farmer Bros. Co. and Coffee Bean International, Inc., as Borrowers, Coffee Bean Holding Co., Inc. and FBC Finance Company, as Guarantors, the Lenders party thereto, and Wells Fargo Bank, National Association, as Agent (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 20, 2013 and incorporated herein by reference).
|
|
|
|
10.4
|
|
ISDA Master Agreement, dated as of November 19, 2012, by and between Farmer Bros. Co. and Wells Fargo Bank, N.A. (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on November 26, 2012 and incorporated herein by reference).
|
|
|
|
10.5
|
|
Schedule to the ISDA Master Agreement, dated as of November 19, 2012, by and between Farmer Bros. Co. and Wells Fargo Bank, N.A. (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on November 26, 2012 and incorporated herein by reference).
|
|
|
|
10.6
|
|
Farmer Bros. Co. Pension Plan for Salaried Employees (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 filed with the SEC on November 5, 2012 and incorporated herein by reference).*
|
|
|
|
10.7
|
|
Amendment No. 1 to Farmer Bros. Co. Retirement Plan effective June 30, 2011 (filed as Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2011 filed with the SEC on September 12, 2011 and incorporated herein by reference).*
|
|
|
|
10.8
|
|
Action of the Administrative Committee of the Farmer Bros. Co. Qualified Employee Retirement Plans amending the Farmer Bros. Co. Retirement Plan, effective as of December 6, 2012 (filed herewith).*
|
|
|
10.9
|
|
Farmer Bros. Co. 2005 Incentive Compensation Plan (Amended and Restated as of December 31, 2008) (filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2008 filed with the SEC on February 10, 2009 and incorporated herein by reference).*
|
|
|
|
10.10
|
|
Farmer Bros. Co. Amended and Restated Employee Stock Ownership Plan, as adopted by the Board of Directors on December 9, 2010 and effective as of January 1, 2010 (filed as Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2010 filed with the SEC on February 9, 2011 and incorporated herein by reference).*
|
10.11
|
|
Action of the Administrative Committee of the Farmer Bros. Co. Qualified Employee Retirement Plans amending the Farmer Bros. Co. Amended and Restated Employee Stock Ownership Plan, effective as of January 1, 2012 (filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 filed with the SEC on November 5, 2012 and incorporated herein by reference).*
|
|
|
|
10.12
|
|
ESOP Loan Agreement including ESOP Pledge Agreement and Promissory Note, dated March 28, 2000, between Farmer Bros. Co. and Wells Fargo Bank, N.A., Trustee for the Farmer Bros Co. Employee Stock Ownership Plan (filed as Exhibit 10.13 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2010 filed with the SEC on February 9, 2011 and incorporated herein by reference).
|
|
|
|
10.13
|
|
Amendment No. 1 to ESOP Loan Agreement, dated June 30, 2003, between Farmer Bros. Co. and Wells Fargo Bank, N.A., Trustee for the Farmer Bros Co. Employee Stock Ownership Plan (filed as Exhibit 10.14 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2010 filed with the SEC on February 9, 2011 and incorporated herein by reference).
|
|
|
|
10.14
|
|
ESOP Loan Agreement No. 2 including ESOP Pledge Agreement and Promissory Note, dated July 21, 2003 between Farmer Bros. Co. and Wells Fargo Bank, N.A., Trustee for the Farmer Bros Co. Employee Stock Ownership Plan (filed as Exhibit 10.15 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2010 filed with the SEC on February 9, 2011 and incorporated herein by reference).
|
|
|
|
10.15
|
|
Employment Agreement, dated March 9, 2012, by and between Farmer Bros. Co. and Michael H. Keown (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 13, 2012 and incorporated herein by reference).*
|
|
|
|
10.16
|
|
Second Amended and Restated Employment Agreement, effective as of February 13, 2012, by and between
Farmer Bros. Co. and Jeffrey A. Wahba (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K
filed with the SEC on February 17, 2012 and incorporated herein by reference).*
|
|
|
|
10.17
|
|
Consulting Services Agreement, effective as of March 1, 2013, between Farmer Bros. Co. and Jeffrey A. Wahba (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on February 28, 2013 and incorporated herein by reference).*
|
|
|
|
10.18
|
|
Letter Agreement by and between Farmer Bros. Co. and Jeffrey A. Wahba (filed as Exhibit 10.7 to the Company's Current Report on Form 8-K filed with the SEC on April 4, 2013 and incorporated herein by reference).*
|
|
|
|
10.19
|
|
Employment Agreement, dated as of April 4, 2012, by and between Farmer Bros. Co. and Thomas W.
Mortensen (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K/A filed with the SEC on April
10, 2012 and incorporated herein by reference).*
|
|
|
|
10.20
|
|
Amended and Restated Employment Agreement, effective as of February 13, 2012, by and between Farmer
Bros. Co. and Patrick G. Criteser (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed
with the SEC on February 17, 2012 and incorporated herein by reference).*
|
|
|
10.21
|
|
Resignation Agreement, dated as of July 20, 2012, by and between Farmer Bros. Co. and Larry B. Garrett (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K/A filed with the SEC on July 24, 2012 and incorporated herein by reference).*
|
|
|
|
10.22
|
|
Employment Agreement, dated as of April 1, 2013, by and between Farmer Bros. Co. and Mark J. Nelson* (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on April 4, 2013 and incorporated herein by reference).*
|
|
|
|
10.23
|
|
Farmer Bros. Co. 2007 Omnibus Plan, as amended (as approved by the stockholders at the 2012 Annual Meeting of Stockholders on December 6, 2012) (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on December 12, 2012 and incorporated herein by reference).*
|
|
|
|
10.24
|
|
Form of 2007 Omnibus Plan Stock Option Grant Notice and Stock Option Agreement (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on April 4, 2013 and incorporated herein by reference).*
|
|
|
|
10.25
|
|
Form of 2007 Omnibus Plan Restricted Stock Award Grant Notice and Restricted Stock Award Agreement (filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on April 4, 2013 and incorporated herein by reference).*
|
|
|
|
10.26
|
|
Stock Ownership Guidelines for Directors and Executive Officers (filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on April 4, 2013 and incorporated herein by reference).*
|
|
|
|
10.27
|
|
Form of Award Letter (Fiscal 2012) under Farmer Bros. Co. 2005 Incentive Compensation Plan (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on September 24, 2012 and incorporated herein by reference).*
|
|
|
|
10.28
|
|
Form of Target Award Notification Letter (Fiscal 2013) under Farmer Bros. Co. 2005 Incentive Compensation Plan (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on September 28, 2012 and incorporated herein by reference).*
|
|
|
|
10.29
|
|
Form of Target Award Notification Letter (Fiscal 2012) under Farmer Bros. Co. 2005 Incentive Compensation Plan (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on September 21, 2011 and incorporated herein by reference).*
|
|
|
|
10.30
|
|
Form of Change in Control Severance Agreement for Executive Officers of the Company (with schedule of executive officers attached) (filed as Exhibit 10.6 to the Company’s Current Report on Form 8-K filed with the SEC on April 4, 2013 and incorporated herein by reference).*
|
|
|
|
10.31
|
|
Form of Indemnification Agreement for Directors and Officers of the Company, as adopted on May 18, 2006 and as amended on December 31, 2008 (with schedule of indemnitees attached) (filed as Exhibit 10.5 to the Company's Current Report on Form 8-K filed with the SEC on April 4, 2013 and incorporated herein by reference).*
|
|
|
|
31.1
|
|
Principal Executive Officer Certification Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
|
|
31.2
|
|
Principal Financial and Accounting Officer Certification Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
|
|
32.1
|
|
Principal Executive Officer Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
|
|
|
|
32.2
|
|
Principal Financial and Accounting Officer Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
|
|
|
101
|
|
The following financial statements from the Company's Quarterly Report on Form 10-Q for the three and nine months ended March 31, 2013, formatted in eXtensible Business Reporting Language: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements (furnished herewith).
|
*
|
Management contract or compensatory plan or arrangement.
|
/s/ H. Gomez
Title:
VP & Controller
|
/s/ Tom Mattei, Jr
Title:
VP & Corporate Counsel
|
/
s/ L.P. Quiggle
Title: VP Human Resources
|
/s/ Mike H. Keown
Title: President & CEO
|
|
|
|
/
S
/ MICHAEL H. KEOWN
|
Michael H. Keown
President and Chief Executive Officer
(principal executive officer)
|
|
/
S
/ MARK J. NELSON
|
Mark J. Nelson
Treasurer and Chief Financial Officer
(principal financial and accounting officer)
|
|
/
S
/ MICHAEL H. KEOWN
|
Michael H. Keown
President and Chief Executive Officer
(principal executive officer)
|
|
/
S
/ MARK J. NELSON
|
Mark J. Nelson
Treasurer and Chief Financial Officer
(principal accounting and financial officer)
|