Urges Stockholders to Vote “FOR” Each of Farmer Bros.’ Highly Qualified Director Nominees on the GOLD Proxy Card
Provides Additional Detail on Management’s Successful Execution of the Company’s Turnaround Plan and Refreshed Leadership Driving Improved Performance and Higher Value
The Waite Group Offers No Plan and Has Nominated Candidates that the Board Believes Would Add No Value and Would Derail the Company’s Proven Turnaround Plan

FT. WORTH, Texas, Oct. 31, 2016 /PRNewswire/ — Farmer Bros. Co. (NASDAQ: FARM, the “Company” or “Farmer Bros.”) today announced that it has filed definitive proxy materials with the Securities and Exchange Commission (“SEC”) in connection with its Annual Meeting of Stockholders to be held on December 8, 2016. The Company’s stockholders of record as of October 17, 2016 will be entitled to vote at the meeting.

The Farmer Bros.’ Board of Directors (the “Board”) recommends that stockholders vote on the GOLD proxy card “FOR” the Company’s experienced and highly qualified directors: Michael H. Keown, Charles F. Marcy and Christopher P. Mottern.

In conjunction with the mailing of the Company’s definitive proxy statement, Farmer Bros. is mailing a letter to its stockholders with several important points for investors to consider:

  • The Board and management team have led a successful turnaround that has driven an increase in the Company’s stock price of over 225%, representing over $400 million in value creation for stockholders since the Board appointed Mr. Keown as President and Chief Executive Officer. Under the current leadership, Farmer Bros.’ total stockholder return has consistently outperformed the market and the Company’s industry peers.i
  • The Board and management team are successfully driving green coffee pound volume increases, improving profitability and executing a thoroughly planned corporate relocation that is expected to rationalize and simplify the Company’s supply chain and produce annualized cost savings of approximately $18 million to $20 million.
  • The Board, with enhanced governance and fresh perspectives from a new independent Chairman and five new directors added in the past five years, is highly engaged and has the right mix of independence, experience, expertise, company knowledge and Farmer family representation to deliver value to all stockholders.
  • The Board believes that the Waite Group’s nominees bring no added value to the Board and lack the necessary qualifications and experience to lead the Company and enhance stockholder value.
  • The Board believes that electing the Waite Group’s nominees would put your investment in Farmer Bros. at significant risk. The Board believes that the Waite Group has made false and misleading statements and failed to present Farmer Bros. and its stockholders with any plan to deliver superior value. If elected, the Board believes that the Waite Group’s nominees would derail the Company’s proven turnaround plan.

The full text of the letter being mailed to stockholders follows:

VOTE THE ENCLOSED GOLD PROXY CARD TODAY
“FOR” ALL THREE OF FARMER BROS.’ HIGHLY QUALIFIED DIRECTOR NOMINEES

October 31, 2016

Dear Farmer Bros. Co. Stockholder:

At the Farmer Bros. Co. (the “Company” or “Farmer Bros.”) 2016 Annual Meeting of Stockholders on December 8, 2016, you will be asked to make an important decision regarding the composition of the Company’s Board of Directors (the “Board”) that the Board believes will impact the future of the Company and the value of your investment.

Under the leadership and direction of the Board and President and Chief Executive Officer Michael Keown, Farmer Bros. continues to successfully execute a proven turnaround plan that is expanding the Company’s customer base, improving operational performance, reducing costs through corporate relocation initiatives and creating substantial value for all stockholders. Despite this track record, Carol Farmer Waite and certain other individuals (collectively, the “Waite Group”) have publicly stated that they will solicit proxies in opposition to the Board’s three highly qualified nominees for reelection in order to elect three of their own nominees to the Board.

Your Board has thoughtfully reviewed the Waite Group’s nominees, and believes that replacing any of the Board’s candidates for reelection with any of the Waite Group’s nominees would deprive the Company of skills and expertise that have significantly contributed to the Company’s turnaround.

Your vote is very important. The Board encourages you to protect the value of your investment in Farmer Bros. by signing and dating the enclosed GOLD proxy card and returning it in the postage-paid envelope provided or by voting over the Internet or by telephone today.

Farmer Bros. Has the Right Board, Management Team and Plan

  • Delivering superior value for all stockholders
  • Executing a proven turnaround plan
  • Advancing corporate relocation and achieving cost savings
  • Driving strong financial results, including a return to profitability
  • Effective Board leadership with the right mix of expertise

CURRENT BOARD AND MANAGEMENT TEAM DELIVERING TOTAL STOCKHOLDER RETURN THAT SIGNIFICANTLY EXCEEDS MARKET AND PEERS

Under the direction of the current Board and management team, the Company continues to execute a successful turnaround that has created substantial value for all stockholders. Since March 13, 2012, when the Board appointed Mr. Keown as President and Chief Executive Officer, Farmer Bros.’ stock price has appreciated over 225%, representing strong value creation of over $400 million for stockholders.i In that timeframe, the Company’s total stockholder return outperformed the Russell 2000 Index as well as the Food Processing Index. Additionally, the Company’s total stockholder return has consistently outperformed both the S&P 500 and its peer set over almost any timeframe since 2012:

Total Stockholder Return since March 2012ii,iii

  • Since March 13, 2012, Farmer Bros.’ total stockholder return has been ~227% vs. ~71% for the S&P 500 and ~86% for its peers
  • Over the past three years, Farmer Bros.’ total stockholder return has been ~139% vs. ~37% for the S&P 500 and ~37% for its peers
  • Over the past year, Farmer Bros.’ total stockholder return has been ~33% vs. ~18% for the S&P 500 and ~17% for its peers

Total Stockholder Return since March 2012

YOUR BOARD AND MANAGEMENT TEAM ARE DRIVING VOLUME AND SALES INCREASES, COST REDUCTIONS AND IMPROVEMENT IN PROFITABILITY

From fiscal 2012 through fiscal 2016, the Company has won significant new customers and expanded existing customer programs, and, within the last year, has realigned its Direct Store Delivery organization. Such efforts helped drive an increase of green coffee pounds sold and processed of over 40% from fiscal 2012 through fiscal 2016, or compound annual growth of approximately 9% during the same time period. As a result of the successful execution of the Company’s turnaround, Farmer Bros. has increased gross margin by 493 basis points to 38.3% in fiscal 2016 from 33.4% in fiscal 2012, and reversed from a net GAAP loss of $26.6 million in fiscal 2012 to GAAP net income of $89.9 million in fiscal 2016.iv

In addition, the Board and management team are executing a corporate relocation that rationalizes and simplifies the Company’s supply chain and is expected to produce annual cost savings of approximately $18 million to $20 million. The relocation plan includes moving from an aging and inefficient facility in Torrance, California, to a new, state-of-the-art facility in Northlake, Texas. The new facility is centrally located to the Company’s nationwide customer base, provides manufacturing capacity to support future growth and is expected to introduce new efficiencies and help control supply chain costs. As of year-end fiscal 2016, the Company had already achieved more than half of the expected annual savings rate, with the majority of the savings flowing through the 220 basis point improvement in gross margin seen in fiscal 2016.

Contrary to claims made by the Waite Group, Farmer Bros.’ decision to relocate its facilities and headquarters to Texas followed a thorough, methodical and thoughtful 18+-month review of the Company’s operations as well as the potential manufacturing, distribution and supply chain savings.

THE BOARD BELIEVES THAT FARMER BROS.’ REFRESHED BOARD HAS THE RIGHT MIX OF EXPERTISE, COMPANY KNOWLEDGE AND FRESH PERSPECTIVES TO DELIVER VALUE TO ALL STOCKHOLDERS

Based on the recommendation of the Nominating and Corporate Governance Committee, the Board has nominated Michael H. Keown, Charles F. Marcy and Christopher P. Mottern for reelection to the Board as Class I directors.

Michael H. Keown, who joined Farmer Bros. as President and Chief Executive Officer in March 2012, has more than 25 years of consumer goods industry and executive experience, with in-depth knowledge of food manufacturing, the foodservice business, consumer branding, global sourcing, sustainability and corporate responsibility. Prior to joining Farmer Bros., Mr. Keown spent almost a decade in various executive roles at Dean Foods Company and his experience also includes roles at The Coca-Cola Company, E.&J. Gallo Winery and The Procter & Gamble Company.

Charles F. Marcy brings over four decades of experience as a senior executive, or advisor, of companies in the food industry. His corporate executive roles include most recently serving as Interim CEO of Turtle Mountain, LLC, and previously as President and CEO and a member of the Board of Directors of Healthy Food Holdings, President, CEO and a member of the Board of Directors of Horizon Organic Holdings, President of the Golden Grain Company and President of National Dairy Products Corp. In addition to his extensive industry and executive leadership experience, Mr. Marcy also brings corporate governance and public company board and executive compensation experience.

Christopher P. Mottern brings over three decades of senior executive experience in the food and beverage industry, having served as President and CEO and a member of the Board of Directors of Peet’s Coffee & Tea, Inc. In addition, he previously served as President of The Heublein Wines Group and as President and CEO of Capri Sun, Inc. Not only does Mr. Mottern provide valuable industry perspective and experience in consumer branding and risk oversight, he qualifies as an audit committee financial expert under applicable SEC rules.

The current Board, including the Board’s three nominees, is highly engaged and collectively represents a strong mix of independence, executive experience, industry expertise, deep understanding of the Company’s business, Farmer family representation and stockholder perspective:

  • 6 directors are outside, non-employee directors
  • 5 directors are independent
  • 5 directors were appointed within the last 5 years
  • 4 of the independent directors are former CEOs of public and private companies in the foodservice industry

Representing the Farmer family perspective, Jeanne Farmer Grossman, who is the sister of Carol Farmer Waite and the late Roy Edward Farmer, and the daughter of the late Roy F. Farmer, has served as a director since 2009. Additionally, Guenter W. Berger, Chairman Emeritus, has served on the Board since 1980, when he was appointed by the controlling members of the Farmer family, and Hamideh Assadi, a former manager in the Company’s tax department, was appointed to the Board in 2011 upon the recommendation of Richard F. Farmer, Ph.D.

The Waite Group’s claim that the Board lacks “significant shareholder representation,” ignores the fact that three of the seven directors on the Board today are either a member of the Farmer family or serve on the Board as a result of Farmer family actions or requests.

THE BOARD BELIEVES THAT THE WAITE GROUP’S NOMINEES LACK QUALIFICATIONS AND EXPERIENCE AND WOULD ADD ZERO VALUE TO THE COMPANY’S BOARD

Unlike the current Board, including the three nominees for reelection, the Waite Group’s nominees do not offer the qualifications or experience necessary to enhance stockholder value.

Tom Mortenson’s knowledge of Farmer Bros. is already well represented on the Company’s Board, including by Ms. Assadi, Mr. Berger, Ms. Grossman and Mr. Keown. Mr. Mortensen does not have any C-level executive experience, has never served on the board of a public company, does not hold either an undergraduate or advanced college degree, and would not be considered “independent” under NASDAQ standards and thus would be unable to serve on any of the Board’s standing committees.

Likewise, John Samore’s experience in finance and capital management is already well represented on the Board, including by Randy Clark, Charles Marcy and Christopher Mottern, though Mr. Samore lacks the diversity of operating experience that Messrs. Clark, Marcy and Mottern bring to Farmer Bros. During his previous tenure on the Board, the Company experienced declines in both revenue and profitability. Prior to Mr. Samore’s retirement from the Board in 2007, Ms. Assadi, then a manager in the Company’s tax department, wrote a letter to the Board to express her concerns regarding the difficulty of her interactions with Mr. Samore and has since informed the Board that she would resign if Mr. Samore were elected.

Jennifer Gonzalez-Yousef would not bring any relevant experience to the Board. Despite her prior work at Deloitte Consulting LLP, she does not have any experience in finance or capital management. She also lacks executive management or public company board experience, and she is not an executive officer in her current role at WNS (Holdings) Limited, a foreign private issuer listed on the NYSE.

THE WAITE GROUP HAS MADE FALSE AND MISLEADING COMMENTS,
OFFERS NO FUTURE PLAN FOR FARMER BROS. AND THE BOARD BELIEVES
THAT THE WAITE GROUP NOMINEES WOULD DERAIL THE COMPANY’S PROVEN TURNAROUND PLAN

The Waite Group has misled investors by materially overstating its voting authority and support among the extended Farmer family. The Waite Group’s beneficial ownership is through numerous family trusts with multiple co-trustees. In fact, while the Waite Group claims voting power of 26.4% of Farmer Bros.’ common stockv, more than half of that amount is held in trusts for which the Waite Group does not have the sole voting power. Richard F. Farmer, Ph.D. serves as a co-trustee on trusts owning approximately 12.9% of the Company’s common stock and Ms. Grossman serves as a co-trustee on trusts owning approximately 1.8% of the Company’s common stock. Under relevant law, and the terms of the trusts, where the co-trustees do not agree on how to vote the “co-trustee shares,” those shares either cannot be voted, or if they are allowed to vote, must be voted on a proportionally split basis. Without agreement from the co-trustees – which has not been provided – the Waite Group’s alleged voting power falls to either approximately 10.2% (if the “co-trustee shares” are not voted) or approximately 17.6% (if the “co-trustees shares” are voted on a proportionally split basis).v

Moreover, Dr. Farmer has publicly stated his support of the Board and management:

” I believe the management team is executing the right strategy to position Farmer Bros. Co. to better compete and grow the business long-term and to honor the principles established by my grandfather when he founded the Company and upheld by my father when he ran the Company. Further, I recognize and appreciate the significant improvements across the Company’s operations that have already been made, which have resulted in substantial increases in the Company’s stock price I have found the Board and management team to be open to engaging in a dialogue with stockholders and am confident in their commitment to acting in the best interest of Farmer Bros. Co. and all of the Company’s stockholders. I look forward to supporting the Company’s Board nominees at the upcoming 2016 Annual Meeting of Stockholders.”

The Waite Group has also falsely asserted that the Board and management team have made poor capital allocation decisions, while the truth is that during fiscal 2005 to fiscal 2009 when Ms. Waite served as a member of the Company’s Board, the Board regularly approved an annual cash dividend despite Farmer Bros. having $35 million of cumulative net losses. Further, Farmer Bros.’ stock price declined 36% during this same period. In contrast, since fiscal 2012 under the direction of a refreshed Board, the Company’s capital allocation policy has been organized to maximize efficiency and drive stockholder value.

The Waite Group has deliberately misled stockholders by suggesting that, if elected, the Waite Group nominees would cause the Company to “explore all reasonable options to