Farmer Bros. Reports Income Per Share of $0.06 for Third Quarter.TORRANCE, Calif. -- Farmer Bros BROS Brothers BROS Benefits and Retirement Operations Section (King County, Washington) BROS Barnes and Richmond Operatic Society (London, UK) . Co. (Nasdaq:FARM) today reported net income for its third fiscal quarter ended March 31, 2005 of $856,000 or $0.06 per share, compared with net income of $5.6 million or $0.42 per share in the same quarter last year. The increase in green coffee prices continued to affect the Company's operating results in the quarter. Green coffee prices, as reported by the CSCE CSCE See Coffee, Sugar and Cocoa Exchange (CSCE). of the New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of Board of Trade, increased more than 50% between September 30, 2004 and March 31, 2005, with much of that increase occurring during the Company's third fiscal quarter. The Company's price hikes for roast coffee, however, lag this rise in green coffee costs. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight increased to $50.3 million, compared with $49.1 million in the third fiscal quarter of last year, primarily as a result of higher sales prices of roast coffee reflecting higher green coffee costs and a modest increase in the sales of non-coffee products. As a group, non-coffee products continue to represent about half of the Company's net sales. The Company reported a loss from operations of $2.2 million in the third fiscal quarter of 2005, versus income from operations of $743,000 in the same quarter last year. In addition to the effects of the rising green coffee prices, this loss from operations also reflected a 6 percent increase in selling, general and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. , primarily resulting from higher expenditures for information systems, fuel and oil, and the Employee Stock Ownership Program (ESOP ESOP See: Employee Stock Ownership Plan ESOP See Employee Stock Ownership Plan (ESOP). ). In addition, the Company reported an expense of $3.0 million, recorded as "Other, net (expense) income." This primarily results from the decrease in the value of the green coffee futures and options used by the Company to hedge against a decline in commodity prices. This loss in the third quarter of fiscal 2005 compares with net income of $4.9 million in the same quarter last year. These futures contracts Futures Contract An exchange traded agreement to buy or sell a particular type and grade of commodity for delivery at an agreed upon place and time in the future. Futures contracts are transferable between parties. and options lose value as green coffee prices rise and gain value as prices fall. The Company said dividend income and interest income were essentially unchanged from the prior year. The Company recognized a tax benefit of $4.5 million in the third quarter of fiscal 2005 that added approximately $0.32 per share to net income in the third quarter and $0.44 per share for the nine months ended March 31, 2005. This benefit resulted from a reduction in the Company's tax reserve during the third fiscal quarter following a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. determination from a California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). tax audit, as well as an income tax benefit relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the loss in fiscal 2005. At the end of the third quarter, the Company had cash, cash equivalents and investments of $187.5 million, compared with $198.7 million on June 30, 2004. "Our results followed trends that also have been reported by our largest competitors: profits declined due to higher green coffee prices not entirely offset by price increases. Nonetheless, we continue to focus on ways to restore our growth, including efforts to energize en·er·gize v. en·er·gized, en·er·giz·ing, en·er·giz·es v.tr. 1. To give energy to; activate or invigorate: "His childhood our sales team and to harness our new information systems," said Interim Chief Executive Officer Guenter Berger. "We increased roast coffee prices again in the third quarter in line with the market, and we expect those higher prices to be reflected in our fourth quarter operating results." Farmer Bros. Co. is an institutional coffee roaster roaster a young fowl for eating; weighs 5 to 7 lb at 6 months of age. 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 51 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.
For the three months For the nine months
ended March 31, ended March 31,
2005 2004 2005 2004
Net sales $50,271 $49,069 $148,199 $146,245
Cost of goods sold 20,928 18,488 59,319 53,459
Gross profit $29,343 $30,581 $88,880 $92,786
Selling expense $23,943 $22,735 $68,492 $68,019
General and
administrative expense 7,567 7,103 20,854 19,843
Operating expenses $31,510 $29,838 $89,346 $87,862
(Loss) income from
operations $(2,167) $743 $(466) $4,924
Other expense and
income:
Dividend income $850 $844 $2,584 $2,527
Interest income 738 935 1,799 2,156
Other, net
(expense) income (3,019) 4,980 (11,241) 6,149
$(1,431) $6,759 $(6,858) $10,832
(Loss) income before
taxes $(3,598) $7,502 $(7,324) $15,756
Income taxes (benefit) (4,454) 1,899 (5,609) 5,077
Net income (loss) $856 $5,603 $(1,715) $10,679
Net income (loss) per
common share $0.06 $0.42 ($0.13) $0.66
Weighted average
shares outstanding 13,687,840 13,457,300 13,621,390 16,266,410
Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Certain statements contained in this press release regarding the risks, circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or 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 "expects," "will," and other words of similar meaning. Owing to owing to prep. Because of; on account of: I couldn't attend, owing to illness. owing to prep → debido a, por causa de 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 press release 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 retaining and attracting new customers, variances from budgeted sales mix sales mix See product mix. and growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. , and weather and special or unusual events, as well as other risks described from time to time in the Company's filings with the SEC. |
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