Back to GetFilings.com
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period from January 1, 2003 to March 31, 2003.
Commission File Number: 0-1375
FARMER BROS. CO.
(Exact name of registrant as specified in its charter)
California 95-0725980
(State of Incorporation) (IRS Employer Identification Number)
20333 S. Normandie Avenue, Torrance, California 90502
(Address of principal executive offices) (Zip Code)
(310) 787-5200
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer
(as
defined in Rule 12b-2 of the Act). Yes [ ] No [X]
Number of shares of Common Stock outstanding: 1,926,414 as of March 31,
2003.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Dollars in thousands, except per share data)
FARMER BROS. CO.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the three months For the nine months
ended March 31, ended March 31,
2003 2002 2003 2002
Net sales $49,267 $51,298 $153,774 $155,453
Cost of goods sold 17,229 16,512 55,050 50,761
32,038 34,786 98,724 104,692
Selling expense 22,696 21,753 66,256 64,176
General and administrative
expenses 4,357 3,190 11,810 9,496
27,053 24,943 78,066 73,672
Income from operations 4,985 9,843 20,658 31,020
Other income:
Dividend income 811 802 2,440 2,406
Interest income 834 1,540 3,195 5,951
Other, net 3,677 (1,683) 2,725 (193)
5,322 659 8,360 8,164
Income before taxes 10,307 10,502 29,018 39,184
Income taxes 3,968 4,096 11,172 15,282
Net income $ 6,339 $ 6,406 $17,846 $23,902
Net income per share $3.52 $3.47 $9.78 $12.95
Weighted average shares
outstanding 1,800,914 1,846,388 1,824,802 1,845,501
Dividends declared per share $0.90 $0.85 $2.70 $2.55
The accompanying notes are an integral part of these financial statements.
FARMER BROS. CO.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, June 30,
2003 2002
ASSETS
Current assets:
Cash and cash equivalents $ 56,336 $ 7,047
Short term investments 231,712 285,540
Accounts and notes receivable, net 13,322 14,004
Inventories 36,332 37,361
Income tax receivable - 2,553
Deferred income taxes 1,188 1,188
Prepaid expenses 2,489 741
Total current assets 341,379 348,434
Property, plant and equipment, net 40,571 38,572
Notes receivable 224 224
Other assets 27,940 27,622
Deferred income taxes 2,672 2,672
Total assets $412,786 $417,524
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,641 $ 4,827
Accrued payroll expenses 5,468 6,407
Other 6,697 5,025
Total current liabilities 16,806 16,259
Accrued postretirement benefits 24,172 22,726
Other long term liabilities 5,486 5,486
29,658 28,212
Commitments and contingencies - -
Shareholders' equity:
Common stock, $1.00 par value, authorized
3,000,000 shares; 1,926,414 shares
issued and outstanding 1,926 1,926
Additional paid-in capital 18,418 17,627
Retained earnings 378,655 365,725
Unearned ESOP shares (32,677) (12,225)
Total shareholders' equity 366,322 373,053
Total liabilities and shareholders' equity $412,786 $417,524
The accompanying notes are an integral part of these financial statements.
FARMER BROS. CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the nine months
ended March 31,
2003 2002
Cash flows from operating activities:
Net income $17,846 $ 23,902
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 4,316 4,126
Gain on sales of assets 367 (200)
ESOP Compensation expense 2,835 1,622
Net (gain) or loss on investments (2,025) 654
Change in assets and liabilities:
Short term investments 55,853 16,284
Accounts and notes receivable ( 640) 897
Inventories 1,029 (410)
Income tax receivable 2,553 1,208
Prepaid expenses and other assets (2,066) (1,358)
Accounts payable (186) (3,025)
Accrued payroll and expenses and other
liabilities 733 (2,522)
Accrued postretirement benefits 1,446 1,443
Total adjustments 64,761 18,719
Net cash provided by operating activities $ 82,607 $ 42,621
The accompanying notes are an integral part of these financial statements.
FARMER BROS. CO
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(Unaudited)
For the nine months
ended March 31,
2003 2002
Net cash provided by operating activities: $ 82,607 $ 42,621
Cash flows from investing activities:
Purchases of property, plant and equipment (6,445) (3,735)
Proceeds from sales of property, plant
and equipment 497 254
Notes issued - (35)
Notes repaid 42 2,625
Net cash used in investing activities ( 5,906) ( 891)
Cash flows from financing activities:
Dividends paid ( 4,916) (4,706)
ESOP contributions (22,496) ( 815)
Net cash used in financing activities (27,412) ( 5,521)
Net increase in cash and cash equivalents 49,289 36,209
Cash and cash equivalents at beginning
of period 7,047 19,362
Cash and cash equivalents at end of period $ 56,336 $ 55,571
Supplemental disclosure of
cash flow information:
Income tax payments $ 7,044 $ 14,095
The accompanying notes are an integral part of these financial statements.
Notes to Consolidated Financial Statements (Unaudited)
Note 1. Unaudited Financial Statements
The accompanying unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
for interim financial information and with the instructions to Form 10-Q of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the nine
month period ended March 31, 2003 are not necessarily indicative of the
results that may be expected for the year ended June 30, 2003.
The balance sheet at June 30, 2002 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by accounting principles generally accepted in the
United States for complete financial statements.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Farmer Bros Co. annual report on Form 10-K
for the year ended June 30, 2002.
Note 2. Investments
Investments are as follows (in thousands):
March 31, June 30,
2003 2002
Trading securities at fair value
Corporate debt $ - $ 18,863
U.S. Treasury obligations 173,836 184,756
U.S. Agency obligations - 26,983
Preferred stock 50,658 48,873
Other fixed income 5,048 5,181
Futures, options and other
derivative investments 2,170 884
$231,712 $285,540
Note 3. Inventories
(In thousands)
March 31, 2003
Processed Unprocessed Total
Coffee $ 2,997 $11,039 $14,036
Allied products 11,453 5,138 16,591
Coffee brewing equipment 2,045 3,660 5,705
$16,495 $19,837 $36,332
June 30, 2002
Processed Unprocessed Total
Coffee $ 3,438 $10,393 $13,831
Allied products 12,482 5,116 17,598
Coffee brewing equipment 2,528 3,404 5,932
$18,448 $18,913 $37,361
Interim LIFO Calculations
An actual valuation of inventory under the LIFO method can be made only
at the end of each year based on the inventory levels and costs at that
time. Accordingly, interim LIFO calculations must necessarily be based
on management's estimates of expected year-end inventory levels and costs.
Because these are subject to many forces beyond management's control,
interim results are subject to the final year-end LIFO inventory valuation.
Note 4. Recently Issued Accounting Standards
In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets," which supercedes SFAS 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of." SFAS No. 144 addresses financial accounting and reporting for the
impairment of long-lived assets and for long-lived assets to be disposed of
and is effective for fiscal years beginning after December 15, 2001. SFAS
retains certain fundamental provisions of SFAS No. 121 including recognition
and measurement of the impairment of long-lived assets to be held and used
and measurement of long-lived assets to be disposed of by sale. The adoption
of this standard, effective July 1, 2002, had no material effect on the
Company.
In June 2002, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 146 ("SFAS 146"), "Accounting for Exit
or Disposal Activities". SFAS 146 addresses significant issues regarding
the recognition, measurement, and reporting of costs that are associated
with exit and disposal activities, including restructuring activities that
are currently accounted for under Emerging Issues Task Force ("EITF") Issue
No. 94-3, "Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." The scope of SFAS 146 also includes costs related to
terminating a contract that is not a capital lease and termination benefits
that employees who are involuntarily terminated receive under the terms of
a one-time benefit arrangement that is not an ongoing benefit arrangement
or an individual deferred-compensation contract. SFAS 146 will be effective
for exit or disposal activities that are initiated after December 31, 2002
but early application is encouraged. The provisions of EITF Issue No. 94-3
shall continue to apply for an exit activity initiated under an exit plan
that met the criteria of EITF Issue No. 94-3 prior to the adoption of SFAS
146. Adopting the provisions of SFAS 146 will change, on a prospective
basis, the timing of when restructuring charges are recorded from a
commitment date approach to when the liability is incurred.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Financial Condition
There have been no material changes in the Company's liquidity or financial
condition since the year ended June 30, 2002.
(in thousands) March 31, June 30,
2003 2002
Current assets $341,379 $348,434
Current liabilities 16,806 $ 16,259
Working capital $324,573 $332,175
Total assets $412,786 $417,524
All present and future liquidity needs are expected to be met by internal
sources. The Company tries not to rely on banks or other third parties for
its working capital and other liquidity needs. Our operations are often
affected by the green coffee market. At present the cost of green coffee has
increased more than 20% over costs at the end of fiscal 2002. The market is
volatile and although green coffee prices at March 31, 2003 declined about 6%
from December 31, 2002 we are not able to predict future market changes. An
increase in green coffee prices could require a substantial additional
investment in inventory by the Company. In 2000 the board of directors
authorized an initial loan to the ESOP of up to $50,000,000 for the purchase
of Company stock. As of March 31, 2003 the ESOP loan balance is $33,539,000
and the ESOP holds 139,796 shares of stock. The Company is presently
converting to a new enterprise resource planning system. Costs to implement
the new system are likely to exceed $2,000,000 per year over the next three
years. The Company has no commitments at this time, but has plans to
purchase improved properties for certain of its branch warehouse locations,
and where buildings are not available, has purchased land and developed the
property itself.
Results of Operations
Fiscal 2003
Most operating trends discussed in the Form 10-K for fiscal 2002 have
continued throughout fiscal 2003. Green coffee costs during the second
quarter of fiscal 2003 were volatile and ended the quarter at a level 20%
greater than green coffee prices at the June 30, 2002 year end. The cost of
green coffee declined about 6% during the third fiscal quarter ended March
31, 2003 from December 31, 2002. Continued speculation about a weather
damaged Brazilian coffee crop have added support to current price levels.
Sales have continued to be weak as the economy has not improved.
Net sales for the third quarter of fiscal 2003 decreased 4% to $49,267,000
as compared to $51,298,000 in the same quarter of fiscal 2002. Net sales for
the first nine months of fiscal 2003 decreased 1% as compared to the first
nine months of fiscal 2002, reaching $153,774,000 and $155,453,000,
respectively. Third quarter gross profit decreased 8% to $32,038,000 in
fiscal 2003 as compared to $34,786,000 in the same quarter of fiscal 2002
primarily from higher green coffee costs in the current quarter. Gross
profit for the first nine months of fiscal 2003 decreased 6% to $98,724,000
as compared to $104,692,000 in the same period of fiscal 2002.
Operating expenses for the first nine months of fiscal 2003 increased 6% to
$78,066,000 as compared to $73,672,000 in the same period of the prior fiscal
year. The increase is primarily attributed to an increase in employee
benefit expenses, including the ESOP, of more than $1,800,000, as well as an
increase in pension plan expenses of more than $775,000 resulting from a
decreased discount rate. Operating expenses in the third quarter of fiscal
2003, consisting of selling and general and administrative expenses,
increased 8% to $27,053,000 as compared to $24,943,000 in the same quarter of
fiscal 2002.
Other income in the third quarter of fiscal 2003 increased 700% to $5,322,000
from $659,000 in the third quarter of fiscal 2002. The primary components of
other income include dividend & interest income and realized and unrealized
gains (losses) on investments. During the first nine months of fiscal 2003,
the Company had realized and unrealized gains (losses) on securities of
approximately ($1,086,000) and $3,111,000, respectively, as compared to
realized and unrealized (losses) on securities of approximately ($416,000)
and ($238,000), respectively, in the same period of fiscal 2002. Other
income for the first nine months of fiscal 2003 increased 2% to $8,360,000 as
compared to $8,164,000 in the same period of the prior fiscal year.
As the result of the above mentioned factors, net income for the third
quarter of fiscal 2003 reached $6,339,000, or $3.52 per share, as
compared to $6,406,000 or $3.48 per share for the third quarter of fiscal
2002. Net income for the first nine months of fiscal 2003 decreased 25% to
$17,846,000 as compared to $23,902,000 in the same period of the prior fiscal
year. Earnings per share decreased to $9.78 for the first nine months of
fiscal 2003, as compared to $12.94 per share in the same period of fiscal
2002.
Fiscal 2002
Results of Operations
Net sales for the third quarter of fiscal 2002 decreased 6.4% to $51,298,000
as compared to $54,814,000 in the same period of fiscal 2001. Sales in the
first 9 months of fiscal 2002 decreased 5.6% to $155,453,000 as compared to
$164,624,000 in the first 9 months of fiscal 2001. We believe that continued
weakness in the economy has affected our customers. Reportedly, business
travel and entertainment have been reduced by the recession, and individuals
have reduced their discretionary spending in restaurants which the Company
believes accounts for most of the decrease in sales volume in the first three
quarters of fiscal 2002 as compared to the same period of the prior fiscal
year.
Cost of goods sold decreased 10.3% to $16,512,000, or 32% of sales in the
quarter ended March 31, 2002 from $18,401,000 or 34% of sales in the same
quarter of fiscal 2001. Cost of goods sold decreased 11.4% to $50,761,000 or
33% of sales in the first three quarters of fiscal 2002 as compared to
$57,277,000 or 35% of sales in the same period of fiscal 2001. The average
cost of green coffee has continued to decline through the current fiscal
year, and at March 31, 2002 is approximately 22% below the March 31, 2001
cost. Gross profit decreased 4.5% to $34,786,000 or 68% of sales for the
fiscal quarter just ended as compared to $36,413,000, or 66% of sales, in the
same period of fiscal 2001. Gross profit for the 2002 fiscal year to date
decreased 2.4% to $104,692,000 or 67% of sales as compared to $107,347,000 or
65% of sales in the same period of fiscal 2001.
Selling and General and Administrative Expenses (Operating Expenses)
increased 1.7% to $24,943,000 or 49% of sales in the quarter ended March 31,
2002 as compared to $24,531,000 or 45% of sales in the comparable quarter of
the prior fiscal year. Similarly, year to date Operating Expenses increased
3.4% to $73,672,000 or 47% of sales in fiscal 2002 as compared to $71,243,000
or 43% of sales in fiscal 2001. This increase is primarily the result of
higher pension costs ($1,000,000), ESOP expenses ($800,000) and employee
medical expenses ($700,000).
Upon adoption of SFAS 133, on July 1, 2000, the Company transferred all of
its investments classified as "available for sale" at June 30, 2000 into the
"trading" category. Accordingly, the Company recognized the accumulated
unrealized loss of $3,894,000 in the consolidated statement of net income for
the period ended December 31, 2000 as other income.
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities", as amended by SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities-An Amendment of FASB Statement
133." The adoption of Statement Nos. 133 and 138 on July 1, 2001 resulted in
a cumulative effect of an accounting change of $515,000 ($310,000 net of
taxes) being recognized in the Statement of Net Income.
Other income decreased 84.7% in the three months ended March 31, 2002 to
$659,000 from $4,305,000 in the like period of the prior fiscal year. Other
income for the nine months ended March 31, 2002 decreased 35.6% to $8,164,000
as compared to $12,675,000 in the same period of the prior fiscal year. This
decline is primarily the result of reduced interest income ($1,664,000 for
the quarter and $3,453,000 year to date as compared to the results from
similar periods of the prior fiscal year) in addition to both realized and
unrealized losses on investments and interest rate futures and options
($1,990,000 for the quarter and $1,297,000 year to date as compared to the
results from similar periods of the prior fiscal year). This is a
consequence of lower interest rates.
During the first nine months of fiscal 2002, the Company had realized and
unrealized gains (losses) on securities of approximately $(416,000) and
$(238,000), respectively, as compared to realized and unrealized gains
(losses) on securities of approximately $(1,559,000) and $1,475,000,
respectively, in the same period of fiscal 2001. Lower interest rates in the
current fiscal year have resulted in a lesser amount of interest earned.
Interest earned decreased 52% to $1,540,000 as compared to $3,204,000 in the
quarters ended March 31, 2002 and 2001, respectively, and decreased 37% to
$5,951,000 as compared to $9,404,000 for the first nine months of fiscal 2002
and 2001, respectively.
Quarterly Summary of Results (in thousands of dollars):
3/31/02 6/30/02 9/30/02 12/31/02 3/31/03
Net sales $51,298 $50,404 $50,389 $54,118 $49,267
Gross profit 34,786 33,401 31,532 35,154 32,038
Income from operations 9,843 7,190 7,354 8,319 4,985
Net income 6,406 6,667 5,608 5,899 6,339
Net income per common share $3.47 $3.60 $3.03 $3.24 $3.52
Forward Looking Statements
Certain statements contained in this Quarterly Report on Form 10-Q 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 meanings. 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 report 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. Many but
not all of these factors and assumptions are identified in the Company's
Annual Report on Form 10-K for the year ended June 30, 2002.
Item 3. Quantitative and Qualitative Disclosure About Market Risk.
Financial Markets
We are exposed to market value risk arising from changes in interest rates on
our securities portfolio. Our portfolio of investment grade money market
instruments is primarily invested in treasury securities. As of March 31,
2003 over 60% of these funds were invested in instruments with maturities
shorter than 90 days. This portfolio's interest rate risk is not hedged and
its average maturity is approximately 80 days. A 100 basis point increase in
the general level of interest rates would result in a change in the market
value of the portfolio of approximately ($1,799,000).
Our portfolio of preferred securities includes investments in derivatives
that provide a natural economic hedge of interest rate risk. We review the
interest rate sensitivity of these securities and (a) enter into "short
positions" in futures contracts on U.S. Treasury securities or (b) hold put
options on such futures contracts in order to reduce the impact of certain
interest rate changes on such preferred stocks. Specifically, we attempt to
manage the risk arising from changes in the general level of interest rates.
We do not transact in futures contracts or put options for speculative
purposes.
The following table demonstrates the impact of varying interest rate changes
based on the preferred stock holdings, futures and options positions, and
market yield and price relationships at March 31, 2003. This table is
predicated on an instantaneous change in the general level of interest rates
and assumes predictable relationships between the prices of preferred
securities holdings, the yields on U.S. Treasury securities and related
futures and options.
Interest Rate Changes
(In thousands)
Market Value of March 31, 2003 Change in Market
Preferred Futures & Total Value of Total
Stock Options Portfolio Portfolio
- -150 basis points
("b.p.") $55,145 $1 $55,146 $3,112
- -100 b.p. 54,144 33 54,177 2,143
Unchanged 50,658 1,376 52,034 0
+100 b.p. 46,286 5,661 51,947 ( 88)
+150 b.p. 44,136 7,820 51,956 ( 79)
The number and type of future and option contracts entered into depends on,
among other items, the specific maturity and issuer redemption provisions for
each preferred stock held, the slope of the Treasury yield curve, the
expected volatility of Treasury yields, and the costs of using futures and/or
options.
Commodity Price Changes
We are exposed to commodity price risk arising from changes in the market
price of green coffee. We price our inventory on the LIFO basis. In the
normal course of business, we enter into commodity purchase agreements with
suppliers and we purchase green coffee contracts.
The following table demonstrates the impact of changes in the price of green
coffee on inventory and green coffee contracts at March 31, 2003. It
assumes an immediate change in the price of green coffee, and the valuations
of coffee index futures and put options and relevant commodity purchase
agreements at March 31, 2003.
Commodity Risk Disclosure
(In thousands)
Market Value of
Coffee Cost Coffee March 31, 2003 Change in Market Value
Change Inventory Futures & Options Totals Derivatives Inventory
-10% $12,923 $ 665 $13,588 $ 800 ($1,436)
unchanged 14,359 ( 135) 14,224 - -
10% 15,795 ( 935) 14,860 ( 800) 1,436
At March 31, 2003 the derivatives consisted mainly of commodity futures
with maturities shorter than four months.
Item 4 Controls & Procedures
Based on our most recent evaluation in December 2002, we have found (a) no
significant deficiencies in the design or operation of internal controls
which could adversely affect our ability to record, process, summarize and
report financial data; and (b) no fraud, whether or not material, that
involves management or other employees who have a significant role in the
registrant's internal controls. No significant changes in the Company's
internal controls or in other factors that could significantly affect these
controls have occurred subsequent to the December 2002, evaluation.
PART II OTHER INFORMATION
Item 1. Legal proceedings. not applicable.
Item 2. Changes in securities none.
Item 3. Defaults upon senior securities. none.
Item 5. Other information none.
Item 6. Exhibits and reports on Form 8-K.
(a) Exhibits.
(3)(i) Amended and Restated Articles of Incorporation filed January 29,
2002.
(b) Reports on Form 8-K.
A Form 8-K was filed on March 19, 2003 reporting the election of Roy E.
Farmer to the position of President and CEO. Roy F. Farmer will continue as
Chairman of the Board and will remain active in Company operations. He will
serve as the Company's "back-up" coffee buyer.
A Form 8-K was filed on April 30, 2003 reporting the election of Thomas
Maloof and John Samore Jr. to the Company's Board of Directors. In addition,
John M. Anglin resigned his seat on the Board and was elected Corporate
Secretary. With these actions, a majority of the seven Directors are
"independent" as defined by the Sarbanes-Oxley Act of 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Farmer Bros. Co.
Date: March 13, 2003 /s/ John E. Simmons
John E. Simmons
Treasurer and Chief Financial Officer
CERTIFICATIONS
I, John E. Simmons, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Farmer Bros. Co.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: March 12, 2003
/s/ John E. Simmons
John E. Simmons
Chief Financial Officer
I, Roy E. Farmer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Farmer Bros. Co.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: March 12, 2003
/s/ Roy E. Farmer
Roy E. Farmer
President and CEO