Message #3 From:
NewsBot Date: November 8, 2005 12:00:00 AM
FARM News Farmer Bros. Reports First Quarter Loss of $0.08 Per Share
TORRANCE, Calif.--(BUSINESS WIRE)--Nov. 8, 2005--Farmer Bros. Co. (Nasdaq:FARM) today reported a net loss for its first fiscal quarter ended September 30, 2005 of $1.08 million or $0.08 per share, versus net income of $1.5 million or $0.11 per share in the same quarter last year.
The first quarter's operating results continue to be affected by higher prices for green coffee. The average cost of green coffee in the first quarter of fiscal 2006 was 37% higher than that of the same period of fiscal 2005. Beginning in fiscal 2005, the Company increased prices to offset the rise in green coffee. This resulted in a 4% increase in net sales in the first quarter to $48.4 million compared with $46.7 million in fiscal 2005. The Company's price increases continue to lag costs of green coffee, however, resulting in gross profits for the first quarter of $28.9 million versus $29.2 million for the first quarter of 2005.
The Company reported a loss from operations of $1.12 million in the first fiscal quarter of 2005, compared with income from operations of $1.0 million in the same quarter last year. Selling, general and administrative costs increased 6% this quarter, reflecting in part the increases in the costs of coffee brewing equipment associated with new sales programs, the continuing information technology project, employee medical and retirement benefits and higher fuel costs. The Company expects to complete the final phase of its information systems project in the second half of fiscal 2006, and will begin depreciating accumulated development costs at that time.
At the end of the first quarter of fiscal 2005, the Company had cash, cash equivalents and investments of $171 million, compared with $180 million on September 30, 2004.
"We continued to face challenges during the first quarter. Our business has been affected by the rise in coffee prices and our computer project development costs," said Guenter Berger, Chairman, President and Chief Executive Officer. "However, we've received positive customer responses from our new products and our sales force is working harder than ever. We remain committed to improving the efficiency and effectiveness of our operations and sales, and our new systems are helping us do that. Although we expect our sales momentum to slow for a few months during the last half of our fiscal year as our sales force invests time in training and as we complete our conversion to the new software, we believe the benefits of this project will pay off for years to come."
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 52 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.
FARMER BROS. CO.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share and per share data)
Three months ended September 30,
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2005 2004
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Net sales $48,424 $46,708
Cost of goods sold 19,539 17,469
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Gross profit $28,885 $29,239
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Selling expense 24,069 21,827
General and administrative expenses 5,940 6,410
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Operating expenses $30,009 $28,237
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(Loss) income from operations $(1,124) $1,002
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Other income (expense):
Dividend income 869 869
Interest income 915 476
Other, net (expense) income ( 1,715) 85
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Total other (expense) income $69 $1,430
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(Loss) income before taxes (1,055) 2,432
Income tax (benefit) expense 24 935
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Net (loss) income $(1,079) $1,497
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Net (loss) income per common share $(0.08) $0.11
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Weighted average shares outstanding 13,811,373 13,560,800
Dividends declared per share $0.105 $0.10
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 are not based on historical fact and are forward-looking statements within the meaning of federal securities laws and regulations. These statements are based on management's current expectations, assumptions, estimates and observations of future events and include any statements that do not directly relate to any historical or current fact. These forward-looking statements can be identified by the use of words like "anticipates," "feels," "estimates," "projects," "expects," "plans," "believes," "intends," "will," "assumes" and other words of similar meaning. Owing to the uncertainties inherent in forward-looking statements, actual results could differ materially from those set forth in forward-looking statements. We intend these forward-looking statements to speak only at the time of this report and do not undertake to update or revise these statements as more information becomes available except as required under federal securities laws and the rules and regulations of the SEC. Factors that could cause actual results to differ materially from those in forward-looking statements include, but are not limited to, fluctuations in availability and cost of green coffee, competition, organizational changes, the impact of a weaker economy, business conditions in the coffee industry and food industry in general, the Company's continued success in attracting new customers, variances from budgeted sales mix and growth rates, and weather and special or unusual events, as well as other risks described in this report and other factors described from time to time in the Company's filings with the SEC.
