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Farmer Bros. Reports Fourth Quarter and Fiscal 2011 Results
TORRANCE, Calif.(GLOBE NEWSWIRE)Sept. 12, 2011Farmer Bros. Co. (NASDAQ: FARM) today reported a net loss of $22.3 million, or $1.47 per share, for its fiscal fourth quarter ended June 30, 2011, compared with a net loss of $21.0 million, or $1.40 per share, for its prior year fiscal fourth quarter. For the full fiscal year ended June 30, 2011, the Company reported a net loss of $54.3 million, or $3.61 per share, compared with a net loss of $24.0 million, or $1.61 per share, in the prior fiscal year. As explained below, excluding the impact of accounting for the increase in the Companys LIFO (last-in-first-out) reserve, the Companys net loss would have been substantially lower compared with the prior year.
Net sales for fiscal 2011 increased $13.6 million, or 3%, to $463.9 million from $450.3 million in the prior fiscal year, primarily due to increases in list prices of the Companys coffee, cappuccino, cocoa and selected spice products, offset in part by the effect of a decrease in the number of customers who purchased the Companys products compared to the prior fiscal year.
Cost of goods sold in fiscal 2011 increased $54.0 million, or 21%, to $306.8 million, or 66% of sales, from $252.8 million, or 56% of sales, in fiscal 2010 primarily due to the increase in the cost of green coffee beans. The Companys green coffee costs increased 80% in fiscal 2011 compared to the prior fiscal year, reflective of a similar increase in the green coffee market during the same period. Cost of goods sold in fiscal 2011 included $40.3 million in LIFO charge compared to $1.0 million in LIFO charge in the prior fiscal year. Cost of goods sold was also impacted by an increase in the cost of coffee brewing equipment and service costs, and changes in the mix of customers and the products the Company sells to them.
Interim Co-CEO and Chief Financial Officer, Jeffrey Wahba said, Unlike most of our publicly traded competitors, we have historically valued our coffee, tea and culinary product inventory on a LIFO method of valuation rather than on a first-in-first-out (FIFO) basis. The rapidly escalating coffee prices of the recent past had a significant impact on our cost of goods sold for fiscal 2011, particularly when reporting on a LIFO basis. Excluding the impact of LIFO on our operations, our fiscal 2011 reported net loss would have improved by the amount of the LIFO charge which is over $40 million. We believe that the $21.1 million improvement in Adjusted EBITDAE from $(3.1) million in fiscal 2010 to $18.0 million in fiscal 2011 is a good indication of the progress the Company has been able to achieve with the integration of the former Sara Lee DSD coffee business operations we acquired. The Company now has a LIFO reserve of $70.0 million.
Operating expenses, excluding the impact of non-cash impairment loss on intangible assets, decreased $19.0 million, or 8.0%, in fiscal 2011 compared to fiscal 2010. The reduction in operating expenses in fiscal 2011, as compared to the prior fiscal year, is primarily due to lower payroll and related expenses resulting from a reduction in the number of employees offset in part by higher freight and fuel costs, and severance costs associated with the reduction in headcount of approximately 200 employees in the amount of $3.1 million. Total operating expenses in fiscal 2011 including $7.8 million in non-cash impairment losses on intangible assets decreased $11.2 million to $225.6 million, or 49% of sales, from $236.8 million, or 53% of sales, in fiscal 2010.
The following information was filed by Farmer Brothers Co (FARM) on Tuesday, September 13, 2011 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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