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 ----- Original Message -----
Sent: Wednesday, December 15, 2004 8:03 PM
Subject: Report of Annual Meeting


Farmer Bros. Co. filed an SEC Form 8-K report this morning with the prepared speech presented at yesterday's annual meeting by John Simmons, the company's CFO, following last year's practice.  But, as of the close of business today, there has been no press release or any other report of the results of the meeting.


Based on what has been reported from people attending the meeting, the directors were present but there was no representative of the auditor whose engagement was presented for shareholder approval, and nobody other than Mr. Simmons addressed the shareholders.  Attendees were told that the nominated directors were re-elected, but with a substantial "withhold" vote as recommended in the Glass Lewis "Proxy Paper."  It is assumed that the company will report the details of voting soon.


The SEC filing of Mr. Simmons' statements includes several important disclosures:

  •  Management continues to attribute the company's declining coffee sales and profits to general economic conditions.
  •  Since management has been making significant hedging investments, recent increases in coffee commodity prices may generate losses in those positions which exceed the gains realized from increased inventory value during the current quarter.
  •  The company is still struggling with its information technology project, now budgeted for $20 million (more than double its initial estimate), and management expects the project to divert employees from sales and other activities during the next year.

Mr. Simmons did not describe any strategies to reverse the continuing deterioration of the coffee operation’s revenue and profits, but did make the following statement about the evaluation of “strategic options” to which management committed in April 2003:



   Strategic options we are considering, as we told you last year, include
(but are not limited to and are subject to market conditions and available
opportunities) the possibility of:
* Acquiring another Company;
* Making additional investments in production capabilities;
* Investing in expansions of our product lines;
* Making additional share repurchases; and
* The possibility of paying an extraordinary dividend.
   Last year we made a comment that, once again, bears repeating. We have no
interest in buying a Company that competes with our customers by operating its
own restaurants and retail outlets.
   But most vitally, I need to impress all of you with our reluctance to
proceed with any of these options, especially a business acquisition strategy,
until our new information systems are in place and the organization is ready
to administer them.  Doing so before we are ready is too great a risk for us.



An observer reported that a question was asked during the meeting about how the company would respond to someone offering to buy the business, and that management stated they would discuss it.  The report of this reply indicated that it was not precisely clear, but we should assume in any event that management and their professional advisers would responsibly consider any offers that might benefit the company’s shareholders.


Please let me know if there is anything you would like to know about the meeting, either from the company or from Forum participants who attended it.




Gary Lutin
Lutin & Company
575 Madison Avenue, 10th Floor
New York, New York 10022
Tel: 212-605-0335
Fax: 212-605-0325



The Forum is open to all Farmer Bros. shareholders, whether institutional or individual, and to professionals concerned with their investment decisions.  Its purpose is to provide shareholders with access to information and a free exchange of views on issues relating to their evaluations of alternatives.  As stated in the Forum's Conditions of Participation, participants are expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

There is no charge for participation.  Franklin Mutual Advisers, LLC, the manager of funds owning approximately 12.6% of Farmer Bros. shares, provided initial sponsorship for the Forum and arranged for it to be chaired by Gary Lutin.  Continuing support and guidance of the Forum is provided by an Advisory Panel of actively interested shareholders.

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