SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



þ☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Delaware		95-0725980
(State or Other Jurisdiction of ~~Incorporation)~~Incorporation of Organization)		(I.R.S. Employer Identification No.)
1912 Farmer Brothers Drive, Northlake, Texas 76262
(Address of Principal Executive Offices; Zip Code)

~~888-998-2468~~682-549-6600
(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $1.00 per share	FARM	Nasdaq Global Select Market

None
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the ~~registrant:~~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~~ ýYes ☒ NO ¨☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). ~~YES~~ ýYes ☒ NO ¨☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

ý☒

Non-accelerated filer

☐

~~(Do not check if a smaller reporting company)~~

Smaller reporting company

¨☐

Emerging growth company

¨☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the

Exchange Act.

¨☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

As of ~~February 6, 2018,~~April 28, 2022, the registrant had ~~16,899,667~~18,448,058 shares outstanding of its common stock, par value $1.00 per share, which is the registrant’s only class of common stock.

TABLE OF CONTENTS



		Page
PART I – FINANCIAL INFORMATION (UNAUDITED)

Item 1. Financial Statements		1

~~Condensed~~ Consolidated Balance Sheets at ~~December~~March 31, ~~2017~~2022 and June 30, ~~2017~~2021		1

~~Condensed~~ Consolidated Statements of Operations for the Three and ~~Six~~Nine Months Ended ~~December~~March 31, ~~2017~~2022 and ~~2016~~2021		2

~~Condensed~~ Consolidated Statements of Comprehensive ~~(Loss) Income~~Loss for the Three and ~~Six~~Nine Months Ended ~~December~~March 31, ~~2017~~2022 and ~~2016~~2021		3

~~Condensed~~ Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended March 31, 2022 and 2021		4

Consolidated Statements of Cash Flows for the ~~Six~~ Nine Months Ended ~~December~~March 31, ~~2017~~2022 and ~~2016~~2021		46

Notes to ~~Condensed~~ Consolidated Financial Statements		67

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		3425

Item 3. Quantitative and Qualitative Disclosures About Market Risk		4936

Item 4. Controls and Procedures		5137

PART II – OTHER INFORMATION

Item 1. Legal Proceedings		5237

Item 1A. Risk Factors		37

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		37

Item 3. Defaults Upon Senior Securities		37

Item 4. Mine Safety Disclosures		37

Item 5. Other Information		37

Item 6. Exhibits		5238

SIGNATURES		5339

~~EXHIBIT INDEX~~	54

PART I - FINANCIAL INFORMATION (UNAUDITED)

Item 1. Financial Statements

FARMER BROS. CO.

~~CONDENSED~~ CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share and per share data)


								March 31, 2022		June 30, 2021
	December 31, 2017			June 30, 2017
ASSETS							ASSETS
Current assets:							Current assets:
Cash and cash equivalents	$	5,414		$	6,241		Cash and cash equivalents	$	10,378	$	10,263
Short-term investments	—			368
Accounts receivable, net	62,275			46,446
Restricted cash							Restricted cash	175		175
Accounts receivable, net of allowance for doubtful accounts of $369 and $325, respectively							Accounts receivable, net of allowance for doubtful accounts of $369 and $325, respectively	47,443		40,321
Inventories	73,284			56,251			Inventories	100,645		76,791
Income tax receivable	206			318

Short-term derivative assets							Short-term derivative assets	6,088		4,351
Prepaid expenses	9,176			7,540			Prepaid expenses	4,834		5,594
Assets held for sale							Assets held for sale	—		1,591
Total current assets	150,355			117,164			Total current assets	169,563		139,086
Property, plant and equipment, net	178,148			176,066			Property, plant and equipment, net	141,614		150,091
Goodwill	21,861			10,996
Intangible assets, net	51,036			18,618			Intangible assets, net	16,456		18,252
Right-of-use operating lease assets							Right-of-use operating lease assets	28,011		26,254
Other assets	7,263			6,837			Other assets	3,145		4,323
Deferred income taxes	45,593			63,055
Total assets	$	454,256		$	392,736		Total assets	$	358,789	$	338,006
LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:							Current liabilities:
Accounts payable	51,218			39,784			Accounts payable	63,059		45,703
Accrued payroll expenses	17,286			17,345			Accrued payroll expenses	13,662		15,345
Short-term borrowings under revolving credit facility	84,430			27,621
Short-term obligations under capital leases	488			958
Operating lease liabilities - current							Operating lease liabilities - current	7,311		6,262
Term loan - current							Term loan - current	3,800		950
Short-term derivative liabilities	1,649			1,857			Short-term derivative liabilities	1,691		1,555
Other current liabilities	10,991			9,702			Other current liabilities	7,834		6,425
Total current liabilities	166,062			97,267			Total current liabilities	97,357		76,240
Long-term borrowings under revolving credit facility							Long-term borrowings under revolving credit facility	54,500		43,500
Term loan - noncurrent							Term loan - noncurrent	40,894		44,328
Accrued pension liabilities	50,505			51,281			Accrued pension liabilities	37,947		39,229
Accrued postretirement benefits	19,112			19,788			Accrued postretirement benefits	1,007		960
Accrued workers’ compensation liabilities	6,365			7,548			Accrued workers’ compensation liabilities	3,381		3,649
Other long-term liabilities-capital leases	116			237
Operating lease liabilities - noncurrent							Operating lease liabilities - noncurrent	21,175		20,049
Other long-term liabilities	2,156			1,480			Other long-term liabilities	1,822		5,092
Total liabilities	$	244,316		$	177,601		Total liabilities	$	258,083	$	233,047
Commitments and contingencies (Note 21)
Commitments and contingencies							Commitments and contingencies	0		0
Stockholders’ equity:							Stockholders’ equity:
Preferred stock, $1.00 par value, 500,000 shares authorized; Series A Convertible Participating Cumulative Perpetual Preferred Stock, 21,000 shares authorized; 14,700 and zero shares issued and outstanding at December 31, 2017 and June 30, 2017, respectively; liquidation preference of $38.32 at December 31, 2017	15			—
Common stock, $1.00 par value, 25,000,000 shares authorized; 16,899,667 and 16,846,002 shares issued and outstanding at December 31, 2017 and June 30, 2017, respectively	16,900			16,846
Preferred stock, $1.00 par value, 500,000 shares authorized; Series A Convertible Participating Cumulative Perpetual Preferred Stock, 21,000 shares authorized; 14,700 shares issued and outstanding as of March 31, 2022 and June 30, 2021; liquidation preference of $17,196 and $16,752 as of March 31, 2022 and June 30, 2021, respectively							Preferred stock, $1.00 par value, 500,000 shares authorized; Series A Convertible Participating Cumulative Perpetual Preferred Stock, 21,000 shares authorized; 14,700 shares issued and outstanding as of March 31, 2022 and June 30, 2021; liquidation preference of $17,196 and $16,752 as of March 31, 2022 and June 30, 2021, respectively	15		15
Common stock, $1.00 par value, 50,000,000 and 25,000,000 shares authorized as of March 31, 2022 and June 30, 2021, respectively; 18,300,855 and 17,852,793 shares issued and outstanding as of March 31, 2022 and June 30, 2021, respectively							Common stock, $1.00 par value, 50,000,000 and 25,000,000 shares authorized as of March 31, 2022 and June 30, 2021, respectively; 18,300,855 and 17,852,793 shares issued and outstanding as of March 31, 2022 and June 30, 2021, respectively	18,302		17,853
Additional paid-in capital	53,322			41,495			Additional paid-in capital	70,187		66,109
Retained earnings	203,289			221,182			Retained earnings	53,983		66,311
Unearned ESOP shares	(2,145		)	(4,289		)

Accumulated other comprehensive loss	(61,441		)	(60,099		)	Accumulated other comprehensive loss	(41,781)		(45,329)
Total stockholders’ equity	$	209,940		$	215,135		Total stockholders’ equity	$	100,706	$	104,959
Total liabilities and stockholders’ equity	$	454,256		$	392,736		Total liabilities and stockholders’ equity	$	358,789	$	338,006

The accompanying notes are an integral part of these unaudited ~~condensed~~ consolidated financial statements.

FARMER BROS. CO.

~~CONDENSED~~ CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except share and per share data)

Three Months Ended December 31, Six Months Ended December 31,
2017 2016 2017 2016
Net sales $ 167,366
$ 139,025
$ 299,079
$ 269,513
Cost of goods sold 101,847
83,929
184,553
163,219
Gross profit 65,519
55,096
114,526
106,294
Selling expenses 49,328
39,097
88,243
77,535
General and administrative expenses 13,914
13,793
25,241
22,729
Restructuring and other transition expenses 139
3,965
259
6,995
Net gain from sale of Torrance Facility —
(37,449 ) —
(37,449 )
Net gains from sale of spice assets (395 ) (334 ) (545 ) (492 )
Net losses (gains) from sales of other assets 91
114
144
(1,439 )
Operating expenses 63,077
19,186
113,342
67,879
Income from operations 2,442
35,910
1,184
38,415
Other (expense) income:
Dividend income 6
270
11
535
Interest income 1
159
2
288
Interest expense (861 ) (524 ) (1,384 ) (913 )
Other, net 554
(2,323 ) 641
(2,132 )
Total other expense (300 ) (2,418 ) (730 ) (2,222 )
Income before taxes 2,142
33,492
454
36,193
Income tax expense 20,910
13,416
20,200
14,499
Net (loss) income $ (18,768 ) $ 20,076
$ (19,746 ) $ 21,694
Less: Cumulative preferred dividends, undeclared and unpaid 129
—
129
—
Net (loss) income available to common stockholders $ (18,897 ) $ 20,076
$ (19,875 ) $ 21,694
Net (loss) income per common share available to common stockholders—basic $ (1.13 ) $ 1.21
$ (1.19 ) $ 1.31
Net (loss) income per common share available to common stockholders—diluted $ (1.13 ) $ 1.20
$ (1.19 ) $ 1.30
Weighted average common shares outstanding—basic 16,723,498
16,584,106
16,711,660
16,573,545
Weighted average common shares outstanding—diluted 16,723,498
16,707,003
16,711,660
16,695,687


	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Net sales	$	119,398	$	93,152	$	346,205	$	294,993
Cost of goods sold	83,838		69,274		244,197		222,447
Gross profit	35,560		23,878		102,008		72,546
Selling expenses	27,477		22,767		81,505		71,035
General and administrative expenses	11,595		11,018		34,796		32,334
Net losses (gains) from sales of assets	426		488		(4,003)		(62)
Impairment of fixed assets	—		—		—		1,243
Operating expenses	39,498		34,273		112,298		104,550
Loss from operations	(3,938)		(10,395)		(10,290)		(32,004)
Other (expense) income:
Interest expense	(1,591)		(2,993)		(7,106)		(9,174)
Other, net	1,579		(356)		5,790		17,283
Total other (expense) income	(12)		(3,349)		(1,316)		8,109
Loss before taxes	(3,950)		(13,744)		(11,606)		(23,895)
Income tax expense (benefit)	90		(60)		278		13,785
Net loss	$	(4,040)	$	(13,684)	$	(11,884)	$	(37,680)
Less: Cumulative preferred dividends, undeclared and unpaid	149		144		444		428
Net loss available to common stockholders	$	(4,189)	$	(13,828)	$	(12,328)	$	(38,108)
Net loss available to common stockholders per common share—basic	$	(0.23)	$	(0.78)	$	(0.68)	$	(2.17)
Net loss available to common stockholders per common share—diluted	$	(0.23)	$	(0.78)	$	(0.68)	$	(2.17)
Weighted average common shares outstanding—basic	18,289,815		17,756,619		18,118,469		17,569,026
Weighted average common shares outstanding—diluted	18,289,815		17,756,619		18,118,469		17,569,026

The accompanying notes are an integral part of these unaudited ~~condensed~~ consolidated financial statements.

FARMER BROS. CO.

~~CONDENSED~~ CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~(LOSS) INCOME~~LOSS (UNAUDITED)

(In thousands)


	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Net loss	$	(4,040)	$	(13,684)	$	(11,884)	$	(37,680)
Other comprehensive income (loss):
Unrealized gains (losses) on derivatives designated as cash flow hedges	383		(1,315)		11,374		6,012
Gains on derivatives designated as cash flow hedges reclassified to cost of goods sold	(3,110)		(973)		(8,742)		(1,233)
Losses on derivative instruments undesignated as cash flow hedges reclassified to interest expense, net of tax	294		301		916		960
Change in pension and retiree benefit obligations	—		—		—		(1,105)

Total comprehensive loss, net of tax	$	(6,473)	$	(15,671)	$	(8,336)	$	(33,046)

Three Months Ended
December 31,

Six Months Ended
December 31,
2017 2016 2017 2016
Net (loss) income $ (18,768 ) $ 20,076
$ (19,746 ) $ 21,694
Other comprehensive (loss) income, net of tax:
Unrealized losses on derivative instruments designated as cash flow hedges, net of tax (1,279 ) (1,800 ) (1,711 ) (1,356 )
Losses (gains) on derivative instruments designated as cash flow hedges reclassified to cost of goods sold, net of tax 365
(132 ) 369
153
Total comprehensive (loss) income, net of tax $ (19,682 ) $ 18,144
$ (21,088 ) $ 20,491

The accompanying notes are an integral part of these unaudited ~~condensed~~ consolidated financial statements.

FARMER BROS. CO.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
Six Months Ended December 31,
2017 2016
Cash flows from operating activities:
Net (loss) income $ (19,746 ) $ 21,694
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization 15,330
10,086
Provision for (recovery of) doubtful accounts 129
(44 )
Interest on sale-leaseback financing obligation —
681
Restructuring and other transition expenses, net of payments (958 ) 1,082
Deferred income taxes 19,375
13,640
Net gain from sale of Torrance Facility —
(37,449 )
Net gains from sales of spice assets and other assets (401 ) (1,931 )
ESOP and share-based compensation expense 1,844
2,094
Net losses on derivative instruments and investments 1,033
2,583
Change in operating assets and liabilities:
Purchases of trading securities —
(2,959 )
Proceeds from sales of trading securities 375
1,268
Accounts receivable (8,102 ) (4,545 )
Inventories (7,682 ) (10,071 )
Income tax receivable 112
(27 )
Derivative assets (liabilities), net (3,000 ) 4,329
Prepaid expenses and other assets 352
33
Accounts payable 1,264
18,356
Accrued payroll expenses and other current liabilities 1,178
(5,210 )
Accrued postretirement benefits (676 ) (447 )
Other long-term liabilities (1,960 ) (1,849 )
Net cash (used in) provided by operating activities $ (1,533 ) $ 11,314
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired $ (39,608 ) $ (11,183 )
Purchases of property, plant and equipment (14,672 ) (26,864 )
Purchases of assets for construction of New Facility (1,577 ) (21,783 )
Proceeds from sales of property, plant and equipment 85
3,332
Net cash used in investing activities $ (55,772 ) $ (56,498 )
(continued on next page)

FARMER BROS. CO.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
Six Months Ended December 31,
2017 2016
Cash flows from financing activities:
Proceeds from revolving credit facility $ 69,758
$ 34,323
Repayments on revolving credit facility (12,949 ) (15,900 )
Proceeds from sale-leaseback financing obligation —
42,455
Proceeds from New Facility lease financing obligation —
7,662
Repayments of New Facility lease financing obligation —
(35,772 )
Payments of capital lease obligations (591 ) (641 )
Payment of financing costs (365 ) —
Proceeds from stock option exercises 625
405
Net cash provided by financing activities $ 56,478
$ 32,532
Net decrease in cash and cash equivalents $ (827 ) $ (12,652 )
Cash and cash equivalents at beginning of period 6,241
21,095
Cash and cash equivalents at end of period $ 5,414
$ 8,443

Supplemental disclosure of non-cash investing and financing activities:
        Net change in derivative assets and liabilities
           included in other comprehensive (loss) income, net of tax
$ (1,342 ) $ (1,203 )
    Non-cash additions to property, plant and equipment $ 557
$ 11,253
    Non-cash portion of earnout receivable recognized—spice assets sale $ 545
$ 492
    Non-cash portion of earnout payable recognized—China Mist acquisition $ —
$ 500
    Non-cash receivable from West Coast Coffee—post-closing final working capital adjustment $ 218
$ —
    Non-cash consideration given—Issuance of Series A Preferred Stock $ 11,756
$ —
    Non-cash Multiemployer Plan Holdback payable recognized—Boyd Coffee acquisition $ 1,056
$ —
    Cumulative preferred dividends, undeclared and unpaid $ 129
$ —


FARMER BROS. CO. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (In thousands, except share and per share data)

	Preferred Shares	Preferred Stock Amount		Common Shares	Common Stock Amount		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
Balance at June 30, 2021	14,700	$	15	17,852,793	$	17,853	$	66,109	$	66,311	$	(45,329)	$	104,959
Net loss	—	—		—	—		—		(2,424)		—		(2,424)
Net reclassification of gain (loss) on cash flow hedges	—	—		—	—		—		—		4,253		4,253


ESOP compensation expense, including reclassifications	—	—		51,597	52		619		—		—		671
Share-based compensation	—	—		—	—		721		—		—		721
Issuance of common stock and Stock option exercises	—	—		94,407	94		(94)		—		—		—
Cumulative preferred dividends, undeclared and unpaid	—	—		—	—		—		(147)		—		(147)
Balance at September 30, 2021	14,700	15		17,998,797	17,999		67,355		63,740		(41,076)		108,033
Net loss	—	—		—	—		—		(5,420)		—		(5,420)
Net reclassification of gain (loss) on cash flow hedges	—	—		—	—		—		—		1,728		1,728


ESOP compensation expense, including reclassifications	—	—		82,437	84		664		—		—		748
Share-based compensation	—	—		—	—		858		—		—		858
Issuance of common stock and stock option exercises, net of shares withheld for taxes	—	—		129,292	129		(618)		—		—		(489)
Cumulative preferred dividends, undeclared and unpaid	—	—		—	—		—		(148)		—		(148)
Balance at December 31, 2021	14,700	15		18,210,526	18,212		68,259		58,172		(39,348)		105,310
Net loss	—	—		—	—		—		(4,040)		—		(4,040)
Net reclassification of (loss) gain on cash flow hedges	—	—		—	—		—		—		(2,433)		(2,433)


ESOP and 401 (k) compensation expense, including reclassifications	—	—		90,329	90		1,099		—		—		1,189
Share-based compensation	—	—		—	—		829		—		—		829
Issuance of common stock and stock option exercises	—	—		—	—		—		—		—		—
Cumulative preferred dividends, undeclared and unpaid	—	—		—	—		—		(149)		—		(149)
Balance at March 31, 2022	14,700	$	15	18,300,855	$	18,302	$	70,187	$	53,983	$	(41,781)	$	100,706

The accompanying notes are an integral part of these unaudited ~~condensed~~ consolidated financial statements.


FARMER BROS. CO. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (Continued) (In thousands, except share and per share data)

	Preferred Shares	Preferred Stock Amount		Common Shares	Common Stock Amount		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
Balance at June 30, 2020	14,700	$	15	17,347,774	$	17,348	$	62,043	$	108,536	$	(76,029)	$	111,913
Net loss	—	—		—	—		—		(6,270)		—		(6,270)
Net reclassification of gain (loss) on cash flow hedges	—	—		—	—		—		—		4,271		4,271

Change in the funded status of retiree benefit obligations, net of taxes	—	—		—	—		—		—		(7,289)		(7,289)
ESOP compensation expense, including reclassifications	—	—		76,671	77		323		—		—		400
Share-based compensation	—	—		—	—		745		—		—		745
Issuance of common stock and Stock option exercises	—	—		7,370	7		(7)		—		—		—
Cumulative preferred dividends, undeclared and unpaid	—	—		—	—		—		(142)		—		(142)
Balance at September 30, 2020	14,700	15		17,431,815	17,432		63,104		102,124		(79,047)		103,628
Net loss	—	—		—	—		—		(17,725)		—		(17,725)
Net reclassification of gain (loss) on cash flow hedges	—	—		—	—		—		—		3,455		3,455

Change in the funded status of retiree benefit obligations, net of taxes	—	—		—	—		—		—		6,184		6,184
ESOP compensation expense, including reclassifications	—	—		108,426	108		287		—		—		395
Share-based compensation	—	—		—	—		399		—		—		399
Issuance of common stock and Stock option exercises	—	—		50,843	51		(51)		—		—		—
Cumulative preferred dividends, undeclared and unpaid	—	—		—	—		—		(143)		—		(143)
Balance at December 31, 2020	14,700	15		17,591,084	17,591		63,739		84,256		(69,408)		96,193
Net loss	—	—		—	—		—		(13,684)		—		(13,684)
Net reclassification of (loss) gain on cash flow hedges	—	—		—	—		—		—		(1,987)		(1,987)


ESOP compensation expense, including reclassifications	—	—		162,259	162		769		—		—		931
Share-based compensation	—	—		—	—		680		—		—		680
Issuance of common stock and stock option exercises	—	—		17,898	18		(18)		—		—		—
Cumulative preferred dividends, undeclared and unpaid	—	—		—	—		—		(144)		—		(144)
Balance at March 31, 2021	14,700	$	15	17,771,241	$	17,771	$	65,170	$	70,428	$	(71,395)	$	81,989

The accompanying notes are an integral part of these unaudited consolidated financial statements.


FARMER BROS. CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
	Nine Months Ended March 31,
	2022		2021
Cash flows from operating activities:
Net loss	$	(11,884)	$	(37,680)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	18,119		21,231
Impairment of fixed assets	—		1,243
Postretirement Medical benefits gains	—		(14,577)
Deferred income taxes	—		13,472
Net gains from sales of assets	(4,003)		(62)
Net gains on derivatives instruments	(12,798)		(2,875)
Other adjustments	4,963		3,124
Change in operating assets and liabilities:
Accounts receivable	(7,559)		4,210
Inventories	(25,610)		(7,744)
Derivative assets, net	13,223		3,309
Other assets	1,989		3,184
Accounts payable	16,921		6,496
Accrued expenses and other	(2,988)		3,181
Net cash used in operating activities	(9,627)		(3,488)
Cash flows from investing activities:
Purchases of property, plant and equipment	(8,896)		(12,796)
Proceeds from sales of property, plant and equipment	9,062		2,009
Net cash provided by (used in) investing activities	166		(10,787)
Cash flows from financing activities:
Proceeds from Credit Facilities	15,000		27,150
Repayments on Credit Facilities	(4,950)		(61,150)
Payments of finance lease obligations	(144)		(57)
Payment of financing costs	(330)		(3,207)
Net cash provided by (used in) financing activities	9,576		(37,264)
Net increase (decrease) in cash and cash equivalents and restricted cash	115		(51,539)
Cash and cash equivalents and restricted cash at beginning of period	10,438		60,013
Cash and cash equivalents and restricted cash at end of period	$	10,553	$	8,474


Supplemental disclosure of non-cash investing and financing activities:
Non cash additions to property, plant and equipment	$	435	$	297
Non-cash issuance of 401-K common stock	224		347
Cumulative preferred dividends, undeclared and unpaid	444		428

The accompanying notes are an integral part of these unaudited consolidated financial statements.

FARMER BROS. CO.

NOTES TO UNAUDITED ~~CONDENSED~~ CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Introduction and Basis of Presentation

Farmer Bros. Co., a Delaware corporation (including its consolidated subsidiaries unless the context otherwise requires, the “Company”), is a ~~national~~leading coffee roaster, wholesaler and distributor of coffee, tea, and ~~culinary products.~~other allied products manufactured under our owned brands, as well as under private labels on behalf of certain customers.

Basis of Presentation

The accompanying unaudited ~~condensed~~ consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 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 (“GAAP”) for complete consolidated financial statements. In the opinion of management, all adjustments ~~(consisting only of normal recurring accruals, unless otherwise indicated)~~ considered necessary for a fair presentation of the interim financial data have been included. Operating results for the three and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2022 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, ~~2018.~~2022. Events occurring subsequent to ~~December~~March 31, ~~2017~~2022 have been evaluated for potential recognition or disclosure in the unaudited ~~condensed~~ consolidated financial statements for the three and ~~six~~nine months ended ~~December~~March 31, ~~2017.~~2022.

The accompanying unaudited ~~condensed~~ consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2017,~~2021, filed with the Securities and Exchange Commission (the “SEC”) on September ~~28, 2017~~10, 2021 (the ~~“2017~~“2021 Form 10-K”).

Principles of Consolidation

The ~~condensed~~ consolidated financial statements include the accounts of the Company and its direct and indirect wholly owned subsidiaries FBC Finance Company, a California corporation, Coffee Bean Holding Co., Inc., a Delaware corporation and, the parent company of Coffee Bean International, Inc., an Oregon corporation, ~~(“CBI”), CBI,~~ China Mist Brands, Inc., a Delaware corporation, and Boyd Assets Co., a Delaware corporation. All ~~inter-company~~intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the ~~condensed~~ consolidated financial statements and accompanying notes. The Company reviews its estimates on an ongoing basis using currently available information. Changes in facts and circumstances may result in revised estimates and actual results may differ from those estimates.

Note 2. Summary of Significant Accounting Policies

For a detailed discussion about the Company’s significant accounting policies, see Note 2, “Summary of Significant Accounting Policies,” ~~to the consolidated financial statements~~ in the ~~2017~~Notes to Consolidated Financial Statements in the 2021 Form 10-K.

During the three and ~~six~~nine months ended ~~December~~March 31, 2017, other than as set forth below and the adoption of Accounting Standards Update (“ASU”) No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities” (“ASU 2017-12”), ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”), and ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory” (“ASU 2015-11”),2022, there were no significant updates made to the Company’s significant accounting policies.

~~Coffee Brewing Equipment~~Concentration of Credit Risk

At March 31, 2022 and ~~Service~~June 30, 2021, the financial instruments which potentially expose the Company to concentration of credit risk consist of cash in financial institutions (in excess of federally insured limits), derivative instruments and trade receivables.

The Company ~~classifies certain expenses~~does not have any credit-risk related contingent features that would require it to ~~coffee brewing equipment provided to customers as cost~~post additional collateral in support of ~~goods sold. These costs include the cost~~its net derivative asset positions. At March 31, 2022 and June 30, 2021, none of the ~~equipment as well as~~cash in the ~~cost~~Company’s coffee-related derivative margin accounts was restricted. Further changes in commodity prices and the number of ~~servicing that equipment (including service~~coffee-related derivative instruments held could have a significant impact on cash deposit requirements under certain of the Company's broker and counterparty agreements.

Approximately 50% and 31% of the Company’s trade accounts receivable balance was with five customers at March 31, 2022 and June 30, 2021, respectively. The Company estimates its maximum credit risk for accounts receivable at

Farmer Bros. Co.

Notes to Unaudited ~~Condensed~~ Consolidated Financial Statements (continued)

the amount recorded on the balance sheet. The trade accounts receivables are generally short-term and all estimated credit losses have been appropriately considered in establishing the allowance for doubtful accounts.

employees’ salaries, cost of transportation and the cost of supplies and parts) and are considered directly attributable to the generation of revenues from its customers. Accordingly, such costs included in cost of goods sold in the accompanying unaudited condensed consolidated financial statements in the three months ended December 31, 2017 and 2016 were $7.1 million and $5.8 million, respectively. Coffee brewing equipment costs included in cost of goods sold in the six months ended December 31, 2017 and 2016 were $13.5 million and $12.3 million, respectively.Recent Accounting Pronouncements

The Company ~~capitalizes coffee brewing equipment~~considers the applicability and ~~depreciates it over five years~~impact of all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board (the “FASB”). ASUs not listed below were assessed and ~~reports~~either determined to be not applicable or expected to have minimal impact on its consolidated financial statements.

The following table provides a brief description of the ~~depreciation expense in cost of goods sold. Such depreciation expense related~~recent ASUs applicable to ~~capitalized coffee brewing equipment reported in cost of goods sold in~~ the ~~three months ended December 31, 2017 and 2016 was $2.3 million and $2.1 million, respectively, and $4.4 million and $4.5 million, respectively, in the six months ended December 31, 2017 and 2016.~~ Company:

Standard

Description

Effective Date

Effect on the Financial Statements or Other Significant Matters

In March 2020, the FASB issued ASU No. 2020-04, “Facilitation of the Effect of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”)

The London Interbank Offered Rate (LIBOR) is being discontinued between December 2021 and June 2023. The Company has not entered into any new contracts after December 31, 2021. With the overnight, 1-month, 3-month, 6-month and 12-month USD LIBOR rates being published through June 30, 2023, we will continue to leverage these for the existing contracts.

ASU 2020-04 provides temporary optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the transition from LIBOR to alternative reference rate.

Issuance date of March 12, 2020 through December 31, 2022.

The Company does not anticipate any material impacts on its consolidated financial statements.

Note 3. Leases

The Company ~~capitalized coffee brewing equipment (included in machinery~~has entered into leases for building facilities, vehicles and ~~equipment) in~~other equipment. The Company’s leases have remaining contractual terms through September 30, 2028, some of which have options to extend the ~~amounts~~lease for up to 10 years. For purposes of ~~$4.8 million and $5.9 million in~~calculating operating lease liabilities, lease terms are deemed not to include options to extend the ~~six months ended December 31, 2017 and 2016, respectively.~~

~~Net (Loss) Income Per Common Share~~

Net (loss) income per share (“EPS”) represents net (loss) income available to common stockholders divided by the weighted-average number of common shares outstanding for the period, excluding unallocated shares held by the Company's Employee Stock Ownership Plan (“ESOP”). Dividends on the Company’s outstanding Series A Convertible Participating Cumulative Perpetual Preferred Stock, par value $1.00 per share (“Series A Preferred Stock”),lease renewal until it is reasonably certain that the Company ~~has paid~~will exercise that option. The Company's lease agreements do not contain any material residual value guarantees or ~~intends~~material restrictive covenants.

Supplemental unaudited consolidated balance sheet information related to ~~pay are deducted from net (loss) income in computing net (loss) income available to common stockholders.~~leases is as follows:

Under the two-class method, net (loss) income available to nonvested restricted stockholders and holders of Series A Preferred Stock is excluded from net (loss) income available to common stockholders for purposes of calculating basic and diluted EPS.

Diluted EPS represents net income available to holders of common stock divided by the weighted-average number of common shares outstanding, inclusive of the dilutive impact of common equivalent shares outstanding during the period. Common equivalent shares include potentially dilutive shares from share-based compensation including stock options, unvested restricted stock, performance-based restricted stock units, and shares of Series A Preferred Stock, as converted, because they are deemed participating securities. In the absence of contrary information, the Company assumes 100% of the target shares are issuable under performance-based restricted stock units.

The dilutive effect of Series A Preferred Stock is reflected in diluted EPS by application of the if-converted method. In applying the if-converted method, conversion will not be assumed for purposes of computing diluted EPS if the effect would be anti-dilutive. The Series A Preferred Stock is anti-dilutive whenever the amount of the dividend declared or accumulated in the current period per common share obtainable upon conversion exceeds basic EPS. See ~~Note 19~~.

~~Impairment of Goodwill and Indefinite-lived Intangible Assets~~

Historically, the Company performed its annual assessment of impairment of goodwill and indefinite-lived intangible assets as of June 30. During the three months ended December 31, 2017, the Company voluntarily changed its annual impairment assessment date from June 30 to January 31. The Company believes this change in assessment date, which represents a change in the method of applying an accounting principle, is preferred under the circumstances. Due to recent acquisitions, the Company’s goodwill and indefinite-lived intangible asset balances have increased. The Company believes the change in measurement date will provide additional time to complete the annual assessment of impairment of goodwill and indefinite-lived intangible assets in advance of year-end reporting.

~~Shipping and Handling Costs~~

Shipping and handling costs incurred through outside carriers are recorded as a component of the Company’s selling expenses and were $6.9 million and $6.4 million, respectively, in the three months ended December 31, 2017 and 2016, and $12.1 million and $11.2 million, respectively, in the six months ended December 31, 2017 and 2016.

~~Share-based Compensation~~


(In thousands)	Classification	March 31, 2022		June 30, 2021
Operating lease assets	Right-of-use operating lease assets	$	28,011	$	26,254
Finance lease assets	Property, plant and equipment, net	615		739
Total lease assets		$	28,626	$	26,993

Operating lease liabilities - current	Operating lease liabilities - current	7,311		6,262
Finance lease liabilities - current	Other current liabilities	193		192
Operating lease liabilities - noncurrent	Operating lease liabilities - noncurrent	21,175		20,049
Finance lease liabilities -noncurrent	Other long-term liabilities	446		563
Total lease liabilities		$	29,125	$	27,066

The ~~Company measures all share-based compensation cost at the grant date, based on the fair values~~components of ~~the awards that~~lease expense are ~~ultimately expected to vest, and recognizes that cost~~ as ~~an expense on a straight line-basis in its consolidated statements of operations over the requisite service period. Fair value of restricted stock and performance-based restricted stock units is~~follows:


		Three Months Ended March 31,				Nine Months Ended March 31,
(In thousands)	Classification	2022		2021		2022		2021

Operating lease expense	General and administrative expenses and cost of goods sold	$	1,887	$	1,838	$	5,557	$	5,415
Finance lease expense:
Amortization of finance lease assets	General and administrative expenses	41		54		123		63
Interest on finance lease liabilities	Interest expense	11		13		34		13
Total lease expense		$	1,939	$	1,905	$	5,714	$	5,491

Farmer Bros. Co.

Notes to Unaudited ~~Condensed~~ Consolidated Financial Statements (continued)

Maturities of lease liabilities are as follows:

the closing price of the Company's common stock on the date of grant. The Company estimates the fair value of option awards using the Black-Scholes option valuation model, which requires management to make certain assumptions for estimating the fair value of stock options at the date of grant. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. Because the Company’s stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimates, in management’s opinion, the existing models may not necessarily provide a reliable single measure of the fair value of the Company’s stock options. Although the fair value of stock options is determined using an option valuation model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction.


	March 31, 2022
(In thousands)	Operating Leases		Finance Leases
2022	$	1,839	$	47
2023	7,264		193
2024	6,985		193
2025	5,727		193
2026	4,525		96
Thereafter	6,707		—
Total lease payments	33,047		722
Less: interest	(4,561)		(83)
Total lease obligations	$	28,486	$	639

In addition, the Company estimates the expected impact of forfeited awards and recognizes share-based compensation cost only for those awards ultimately expected to vest. If actual forfeiture rates differ materially from the Company’s estimates, share-based compensation expense could differ significantly from the amounts the Company has recorded in the current period. The Company periodically reviews actual forfeiture experience and will revise its estimates, as necessary. The Company will recognize as compensation cost the cumulative effect of the change in estimated forfeiture rates on current and prior periods in earnings of the period of revision. As a result, if the Company revises its assumptions and estimates, the Company’s share-based compensation expense could change materially in the future.

The Company’s outstanding share-based awards include performance-based non-qualified stock options (“PNQs”) and performance-based restricted stock units (“PBRSUs”) that have performance-based vesting conditions in addition to time-based vesting. Awards with performance-based vesting conditions require the achievement of certain financial and other performance criteria as a condition to the vesting. The Company recognizes the estimated fair value of performance-based awards, net of estimated forfeitures, as share-based compensation expense over the service period based upon the Company’s determination of whether it is probable that the performance targets will be achieved. At each reporting period, the Company reassesses the probability of achieving the performance criteria and the performance period required to meet those targets. Determining whether the performance criteria will be achieved involves judgment, and the estimate of share-based compensation expense may be revised periodically based on changes in the probability of achieving the performance criteria. Revisions are reflected in the period in which the estimate is changed. If performance goals are not met, no share-based compensation expense is recognized for the cancelled PNQs or PBRSUs, and, to the extent share-based compensation expense was previously recognized for those cancelled PNQs or PBRSUs, such share-based compensation expense is reversed. If performance goals are exceeded and the payout is more than 100% of the target shares, additional compensation expense is recorded in the period when that determination is certified by the Compensation Committee of the Board of Directors. See ~~Note 16~~.

~~Recently Adopted Accounting Standards~~

In August 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-12. ASU 2017-12 amends the hedge accounting model in Accounting Standards Codification (“ASC”) 815 to enable entities to better portray the economics of their risk management activities in the financial statements and enhance the transparency and understandability of hedge results. ASU 2017-12 expands an entity’s ability to hedge non-financial and financial risk components and reduce complexity in fair value hedges of interest rate risk. The guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The guidance also eases certain documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness. The guidance in ASU 2017-12 is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years, and is effective for the Company beginning July 1, 2019. Early adoption is permitted in any interim period or fiscal year before the effective date. For cash flow and net investment hedges existing at the date of adoption, entities will apply the new guidance using a modified retrospective approach (i.e., with a cumulative effect adjustment recorded to the opening balance of retained earnings as of the initial application date). The guidance provides transition relief to make it easier for entities to apply certain amendments to existing hedges (including fair value hedges) where the hedge documentation needs to be modified. The Company early adopted ASU 2017-12 as of September 30, 2017 for its cash flow hedges related to coffee commodity purchases. Adoption of ASU 2017-12 resulted in a cumulative adjustment of $0.3 million to the opening balance of retained earnings. Adoption of ASU 2017-12 did not have any other material effect on the results of operations, financial position or cash flows of the Company.

In March 2016, the FASB issued ASU 2016-09. ASU 2016-09 was issued as part of the FASB’s Simplification Initiative. The areas for simplification in ASU 2016-09 involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification

~~Farmer Bros. Co.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

on the statement of cash flows. ASU 2016-09 requires that the tax impact related to the difference between share-based compensation for book and tax purposes be recognized as income tax benefit or expense in the reporting period in which such awards vest. ASU 2016-09 also required a modified retrospective adoption for previously unrecognized excess tax benefits. The guidance in ASU 2016-09 is effective for public business entities for annual periods beginning after December 15, 2016, including interim periods within those annual reporting periods. The Company adopted ASU 2016-09 beginning July 1, 2017 on a modified retrospective basis, recognizing all excess tax benefits previously unrecognized, as a cumulative-effect adjustment increasing deferred tax assets by $1.6 million and increasing retained earnings by the same amount as of July 1, 2017. Adoption of ASU 2016-09 did not have any other material effect on the results of operations, financial position or cash flows of the Company.

In July 2015, the FASB issued ASU 2015-11. ASU 2015-11 simplifies the subsequent measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value. Entities will continue to apply their existing impairment models to inventories that are accounted for using last-in first-out or LIFO and the retail inventory method or RIM. Under current guidance, net realizable value is one of several calculations an entity needs to make to measure inventory at the lower of cost or market. ASU 2015-11 is effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, and the guidance must be applied prospectively after the date of adoption. The Company adopted ASU 2015-11 beginning July 1, 2017. Adoption of ASU 2015-11 did not have a material effect on the results of operations, financial position or cash flows of the Company.

~~New Accounting Pronouncements~~

In March 2017, the FASB issued ASU No. 2017-07, “Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (“ASU 2017-07”). ASU 2017-07 amends the requirements in GAAP related to the income statement presentation of the components of net periodic benefit cost for an entity’s sponsored defined benefit pension and other postretirement plans. ASU 2017-07 changes the income statement presentation of defined benefit plan expense by requiring separation between operating expense (service cost component) and non-operating expense (all other components, including interest cost, amortization of prior service cost, curtailments and settlements, etc.). The operating expense component is reported with similar compensation costs while the non-operating expense components are reported in other income and expense. In addition, only the service cost component is eligible for capitalization as part of an asset such as inventory or property, plant and equipment. The guidance in ASU 2017-07 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years, and is effective for the Company beginning July 1, 2018. Because the expected operating expense component and non-operating expense components of net periodic benefit cost are not material to the consolidated financial statements of the Company, adoption of ASU 2017-07 is not expected to have a material effect on the results of operations, financial position or cash flows of the Company.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). The amendments in ASU 2017-04 address concerns regarding the cost and complexity of the two-step goodwill impairment test, and remove the second step of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 does not amend the optional qualitative assessment of goodwill impairment. The guidance in ASU 2017-04 is effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019, and is effective for the Company beginning July 1, 2020. Adoption of ASU 2017-04 is not expected to have a material effect on the results of operations, financial position or cash flows of the Company.

In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU 2017-01”). The amendments in ASU 2017-01 clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of businesses and provide a screen to determine when an integrated set of assets and activities (collectively referred to as a “set”) is not a business. If the screen is not met, the amendments (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace the missing elements. The guidance in ASU 2017-01 is effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. Early application is permitted in certain circumstances. ASU 2017-01 is effective for the Company beginning July 1, 2018. Adoption of ASU 2017-01 is not expected to have a material effect on the results of operations, financial position or cash flows of the Company.

~~Farmer Bros. Co.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” (“ASU 2016-18”). The amendments require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments do not provide a definition of restricted cash or restricted cash equivalents. The guidance in ASU 2016-18 is effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. Early application is permitted in certain circumstances. ASU 2016-18 is effective for the Company beginning July 1, 2018. Adoption of ASU 2016-18 is not expected to have a material effect on the results of operations, financial position or cash flows of the Company.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force)” (“ASU 2016-15”). ASU 2016-15 addresses certain issues where diversity in practice was identified in classifying certain cash receipts and cash payments based on the guidance in ASC 230. ASC 230 is principles based and often requires judgment to determine the appropriate classification of cash flows as operating, investing or financing activities. The application of judgment has resulted in diversity in how certain cash receipts and cash payments are classified. Certain cash receipts and cash payments may have aspects of more than one class of cash flows. ASU 2016-15 clarifies that an entity will first apply any relevant guidance in ASC 230 and in other applicable topics. If there is no guidance that addresses those cash receipts and cash payments, an entity will determine each separately identifiable source or use and classify the receipt or payment based on the nature of the cash flow. If a receipt or payment has aspects of more than one class of cash flows and cannot be separated, classification will depend on the predominant source or use. The guidance in ASU 2016-15 is effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. Early application is permitted in certain circumstances. ASU 2016-15 is effective for the Company beginning July 1, 2018. Adoption of ASU 2016-15 is not expected to have a material effect on the results of operations, financial position or cash flows of the Company.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which introduces a new lessee model that brings substantially all leases onto the balance sheet. Under the new guidance, lessees are required to recognize a lease liability, which represents the discounted obligation to make future minimum lease payments and a related right-of-use asset. For public business entities, ASU 2016-02 is effective for financial statements issued for annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early application is permitted. ASU 2016-02 is effective for the Company beginning July 1, 2019. The Company is evaluating the impact this guidance will have on its consolidated financial statements and expects the adoption will have a significant impact on the Company’s financial position resulting from the increase in assets and liabilities.

In May 2014, the FASB issued accounting guidance which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers under ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. On August 12, 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” which defers the effective date of ASU 2014-09 by one year allowing early adoption as of the original effective date of January 1, 2017. The deferral results in the new accounting standard being effective for public business entities for annual reporting periods beginning after December 31, 2017, including interim periods within those fiscal years. ASU 2014-09 is effective for the Company beginning July 1, 2018. The Company is in the process of evaluating the provisions of ASU 2014-09 and assessing its impact on the Company’s financial statements, information systems, business processes, and financial statement disclosures. The Company has analyzed its revenue streams and is in the process of performing detailed contract reviews for each stream, and evaluating the impact ASU 2014-09 may have on revenue recognition. The Company primarily recognizes revenue at point of sale or delivery and does not expect that this will change under the new standard. Based on its preliminary reviews, the Company does not expect that the adoption of ASU 2014-09 will have a material impact on its consolidated financial statements; however, the Company’s assessment of contracts related to recent acquisitions is still in process. At a minimum, the Company anticipates expanded disclosures related to revenue in order to comply with ASU 2014-09. The Company will continue to evaluate the impact of the adoption of ASU 2014-09. Preliminary assessments made by the Company are subject to change. The Company has not yet concluded which transition method it will elect but will determine the transition method in the third quarter of fiscal 2018.

~~Farmer Bros. Co.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

~~Note 3. Acquisitions~~

~~China Mist Brands, Inc.~~

On October 11, 2016, the Company, through a wholly owned subsidiary, acquired substantially all of the assets and certain specified liabilities of China Mist Brands, Inc. dba China Mist Tea Company (“China Mist”), a provider of flavored and unflavored iced and hot teas. As part of the transaction, the Company assumed the lease on China Mist’s existing 17,400 square foot distribution and warehouse facility in Scottsdale, Arizona which is terminable upon twelve months’ notice.

The Company acquired China Mist for aggregate purchase consideration of $12.2 million, consisting of $11.2 million in cash paid at closing including estimated working capital adjustments of $0.4 million, post-closing final working capital adjustments of $0.6 million, and up to $0.5 million in contingent consideration to be paid as earnout if certain sales levels are achieved in the calendar years of 2017 or 2018. This contingent earnout liability is estimated to have a fair value of $0.5 million as of the closing date and is recorded in other long-term liabilities on the Company’s Condensed Consolidated Balance Sheet at December 31, 2017 and June 30, 2017. The earnout is estimated to be paid in calendar 2019.

The financial effect of this acquisition was not material to the Company’s condensed consolidated financial statements. The Company has not presented pro forma results of operations for the acquisition because it is not significant to the Company’s consolidated results of operations.

~~The following table summarizes the final allocation of consideration transferred as of the acquisition date:~~

(In thousands) Fair Value
Estimated
Useful Life
(years)

Cash paid, net of cash acquired $ 11,183

Post-closing final working capital adjustments 553

Contingent consideration 500

Total consideration $ 12,236

Accounts receivable $ 811

Inventory 544

Prepaid assets 48

Property, plant and equipment 189

Goodwill 2,927

Intangible assets:
  Recipes 930
7
  Non-compete agreement 100
5
  Customer relationships 2,000
10
  Trade name/Trademark—indefinite-lived 5,070

Accounts payable (383 )
  Total consideration, net of cash acquired $ 12,236

In connection with this acquisition, the Company recorded goodwill of $2.9 million, which is deductible for tax purposes. The Company also recorded $3.0 million in finite-lived intangible assets that included recipes, a non-compete agreement and customer relationships and $5.1 million in indefinite-lived trade name/trademark. The weighted average amortization period for the finite-lived intangible assets is 8.9 years. See ~~Note 13~~.

~~Farmer Bros. Co.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

The determination of the fair value of intangible assets acquired was primarily based on significant inputs not observable in an active market and thus represent Level 3 fair value measurements as defined under GAAP.

The fair value assigned to the recipes was determined utilizing the replacement cost method, which captures the direct cost of the development effort plus lost profits over the time to re-create the recipes.

The fair value assigned to the non-compete agreement was determined utilizing the with and without method. Under the with and without method, the fair value of the intangible asset is estimated based on the difference in projected earnings with the agreement in place versus projected earnings based on starting with no agreement in place. Revenue and earnings projections were significant inputs into estimating the value of China Mist’s non-compete agreement.

The fair value assigned to the customer relationships was determined based on management’s estimate of the retention rate utilizing certain benchmarks. Revenue and earnings projections were also significant inputs into estimating the value of customer relationships.

The fair value assigned to the trade name/trademark was determined utilizing a multi-period excess earnings approach. Under the multi-period excess earnings approach, the fair value of the intangible asset is estimated to be the present value of future earnings attributable to the asset and this method utilizes revenue and cost projections including an assumed contributory asset charge.

~~West Coast Coffee Company, Inc.~~

On February 7, 2017, the Company acquired substantially all of the assets and certain specified liabilities of West Coast Coffee Company, Inc. (“West Coast Coffee”), a coffee roaster and distributor with a focus on the convenience store, grocery and foodservice channels. As part of the transaction, the Company entered into a three-year lease on West Coast Coffee’s existing 20,400 square foot production, distribution and warehouse facility in Hillsboro, Oregon, which expires January 31, 2020, and assumed leases on six branch warehouses consisting of an aggregate of 24,150 square feet in Oregon, California and Nevada, expiring on various dates through November 2020. The Company acquired West Coast Coffee for aggregate purchase consideration of $15.5 million, which included $14.7 million in cash paid at closing including working capital adjustments of $1.2 million, post-closing final working capital adjustments of $(0.2) million, and up to $1.0 million in contingent consideration to be paid as earnout if certain sales levels are achieved in the twenty-four months following the closing. This contingent earnout liability is estimated to have a fair value of $0.6 million as of the closing date and is recorded in other long-term liabilities on the Company’s Condensed Consolidated Balance Sheet at December 31, 2017 and June 30, 2017. The earnout is estimated to be paid within twenty-four months following the closing.

~~Farmer Bros. Co.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

~~The following table summarizes the final allocation of consideration transferred as of the acquisition date:~~

(In thousands) Fair Value Estimated Useful Life (years)

Cash paid, net of cash acquired $ 14,671

Post-closing final working capital adjustments (218 )
Fair value of contingent consideration 600

Total consideration $ 15,053

Accounts receivable $ 956

Inventory 910

Prepaid assets 16

Property, plant and equipment 1,546

Goodwill 7,630

Intangible assets:
  Non-compete agreements 100
5
  Customer relationships 4,400
10
  Trade name—finite-lived 260
7
  Brand name—finite-lived 250
1.7
Accounts payable (833 )
Other liabilities (182 )
  Total consideration, net of cash acquired $ 15,053

In connection with this acquisition, the Company recorded goodwill of $7.6 million, which is deductible for tax purposes. The Company also recorded $5.0 million in finite-lived intangible assets that included non-compete agreements, customer relationships, a trade name and a brand name. The weighted average amortization period for the finite-lived intangible assets is 9.3 years. See ~~Note 13~~.

The fair value assigned to the non-compete agreements was determined utilizing the with and without method. Under the with and without method, the fair value of the intangible asset is estimated based on the difference in projected earnings with the agreements in place versus projected earnings based on starting with no agreements in place. Revenue and earnings projections were significant inputs into estimating the value of West Coast Coffee’s non-compete agreements.

The fair value assigned to the customer relationships was determined utilizing a multi-period excess earnings approach. Under the multi-period excess earnings approach, the fair value of the intangible asset is estimated to be the present value of future earnings attributable to the asset and this method utilizes revenue and cost projections including an assumed contributory asset charge.

The fair values assigned to the trade name and the brand name were determined utilizing the relief from royalty method. The relief from royalty method is based on the premise that the intangible asset owner would be willing to pay a royalty rate to license the subject asset. The analysis involves forecasting revenue over the life of the asset, applying a royalty rate and a tax rate, and then discounting the savings back to present value at an appropriate discount rate.

~~Boyd Coffee Company~~

On October 2, 2017 (“Closing Date”), the Company, through a wholly owned subsidiary, acquired substantially all of the assets and certain specified liabilities of Boyd Coffee Company (“Boyd Coffee” or “Seller”), a coffee roaster and distributor with a focus on restaurants, hotels, and convenience stores on the West Coast of the United States. The acquired business of Boyd Coffee (the “Boyd Business”) is expected to add to the Company’s product portfolio, improve growth potential, increase the density and penetration of the Company’s distribution footprint, and increase capacity utilization at

~~Farmer Bros. Co.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

~~the Company’s production facilities.~~

~~At closing, as consideration for the purchase, the Company paid the Seller $38.9 million in cash from borrowings under its senior secured revolving credit facility (see~~ ~~Note 15~~), and issued to Boyd Coffee 14,700 shares of the Company’s Series A Preferred Stock, with a fair value of $11.8 million as of the Closing Date. Additionally, the Company held back $3.2 million in cash (“Holdback Cash Amount”) and 6,300 shares of Series A Preferred Stock (“Holdback Stock”) with a fair value of $4.8 million as of the Closing Date, for the satisfaction of any post-closing working capital adjustment and to secure the Seller’s (and the other seller parties’) indemnification obligations under the purchase agreement. Any Holdback Cash Amount and Holdback Stock not used to satisfy indemnification claims (including pending claims) will be released to the Seller on the 18-month anniversary of the Closing Date.

In addition to the Holdback Cash, as part of the consideration for the purchase, at closing the Company held back $1.1 million in cash (the “Multiemployer Plan Holdback”) to pay, on behalf of the Seller, any assessment of withdrawal liability made against the Seller following the Closing Date in respect of the Seller’s multiemployer plans. As the Company has not made this payment as of December 31, 2017 and expects settling the pension liability will take greater than twelve months, the Multiemployer Plan Holdback is recorded in other long-term liabilities on the Company’s Condensed Consolidated Balance Sheet at December 31, 2017. See ~~Note 17~~.

The parties are in the process of determining the final net working capital under the purchase agreement. At December 31, 2017, the Company estimated a net working capital adjustment of $(8.1) million, which is reflected in the preliminary purchase price allocation set forth below.

~~The following table summarizes the preliminary allocation of consideration transferred as of the acquisition date:~~

(In thousands) Fair Value
Estimated
Useful Life
(years)

Cash paid $ 38,871

Holdback Cash Amount 3,150

Multiemployer Plan Holdback 1,056

Fair value of Series A Preferred Stock (14,700 shares)(1) 11,756

Fair value of Holdback Stock (6,300 shares)(1) 4,825

Preliminary estimated post-closing working capital adjustment (8,059 )
Total consideration $ 51,599

Accounts receivable $ 7,166

Inventory 9,415

Prepaid expense and other assets 1,951

Property, plant and equipment 4,936

Goodwill 11,032

Intangible assets:
  Customer relationships 31,000
10
  Trade name/trademark—indefinite-lived 2,800

Accounts payable (15,080 )
Other liabilities (1,621 )
  Total consideration $ 51,599

~~______________~~

(1) Fair value of Series A Preferred Stock and Holdback Stock as of the Closing Date, estimated as the sum of (a) the present value of the dividends payable thereon and (b) the stated value of the Series A Preferred Stock or Holdback Stock, as the case may be, adjusted for both the conversion premium and the discount for lack of marketability arising from conversion restrictions.

~~Farmer Bros. Co.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

The acquisition was accounted for as a business combination. The fair value of consideration transferred was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date, with the remaining unallocated amount recorded as goodwill. The purchase price allocation is preliminary as the Company is in the process of finalizing the valuation inputs including growth assumptions, cost projectionsLease term and discount rates which are used in the fair value calculation of certain assets as well as the determination of the final post-closing net working capital adjustment. The preliminary purchase price allocation is subject to change and such change could be material based on numerous factors, including the final estimated fair value of the assets acquired and liabilities assumed and the amount of the final post-closing net working capital adjustment.rate:


	March 31, 2022		June 30, 2021
Weighted-average remaining lease terms (in years):
Operating lease	6.5		7.3
Finance lease	3.8		4.5

Weighted-average discount rate:
Operating lease	5.69	%	5.23	%
Finance lease	6.50	%	6.50	%

In connection with this acquisition, the Company recorded goodwill of $11.0 million, which is deductible for tax purposes. The Company also recorded $31.0 million in finite-lived intangible assets that included customer relationships and $2.8 million in indefinite-lived intangible assets that included a trade name/trademark. The amortization period for the finite-lived intangible assets is 10.0 years. See ~~Note 13~~.Other Information:


	Nine Months Ended March 31,
(In thousands)	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	5,138	$	5,807
Operating cash flows from finance leases	34		13
Financing cash flows from finance leases	144		44

The fair value assigned to the customer relationships was determined based on management's estimate of the retention rate utilizing certain benchmarks. Revenue and earnings projections were also significant inputs into estimating the value of customer relationships.

The following table presents the net sales and income before taxes from the Boyd Business operations that are included in the Company’s Condensed Consolidated Statements of Operations for the three and six months ended December 31, 2017 (unaudited):

Closing Date through December 31, 2017
(In thousands)
Net sales $ 26,290
Income before taxes $ 511

The Company has not presented pro forma results of operations for the acquisition because it is not significant to the Company’s consolidated results of operations. However, the Company considers the acquisition to be material to the Company’s financial statements and has provided certain pro forma disclosures pursuant to ASC 805, “Business Combinations.”

The following table sets forth certain unaudited pro forma financial results for the Company for the three and six months ended December 31, 2017 and 2016, as if the acquisition of the Boyd Business was consummated on the same terms as of the first day of the applicable fiscal period.

Three Months Ended December 31, Six Months Ended December 31,
2017 2016 2017 2016
(In thousands)
Net sales $ 167,366
$ 166,107
$ 321,061
$ 319,411
Income before taxes $ 2,142
$ 34,171
$ 779
$ 36,414

At closing, the parties entered into a transition services agreement where the Seller agreed to provide certain accounting, marketing, sales and distribution support during a transition period of up to 12 months. The Company also entered into a co-manufacturing agreement with the Seller for a transition period of up to 12 months as the Company

~~Farmer Bros. Co.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

~~transitions production into its plants. Amounts paid by the Company to the Seller for these services totaled $9.2 million in the three and six months ended December 31, 2017.~~

The Company incurred transaction costs related to the Boyd Business acquisition, consisting primarily of legal and consulting expenses of $1.0 million and $3.4 million during the three and six months ended December 31, 2017, respectively, which are included in general and administrative expenses in the Company's Condensed Consolidated Statements of Operations.

~~Note 4. Restructuring Plans~~

~~Corporate Relocation Plan~~

On February 5, 2015, the Company announced a plan (the “Corporate Relocation Plan”) to close its Torrance, California facility (the “Torrance Facility”) and relocate its corporate headquarters, product development lab, and manufacturing and distribution operations from Torrance, California to a new facility in Northlake, Texas (“New Facility”). Approximately 350 positions were impacted as a result of the Torrance Facility closure. The Company’s decision resulted from a comprehensive review of alternatives designed to make the Company more competitive and better positioned to capitalize on growth opportunities.

In the three and six months ended December 31, 2017, no expenses associated with the Corporate Relocation Plan were incurred. As of December 31, 2017, the Company had $0.1 million in unpaid expenses related to employee-related costs, which is expected to be paid by the end of fiscal 2018.

The Company estimated that it would incur approximately $31 million in cash costs in connection with the Corporate Relocation Plan consisting of $18 million in employee retention and separation benefits, $5 million in facility-related costs and $8 million in other related costs. Since the adoption of the Corporate Relocation Plan through December 31, 2017, the Company has recognized a total of $31.5 million in aggregate cash costs including $17.1 million in employee retention and separation benefits, $7.0 million in facility-related costs related to the temporary office space, costs associated with the move of the Company’s headquarters, relocation of the Company’s Torrance operations and certain distribution operations and $7.4 million in other related costs. The Company also recognized from inception through December 31, 2017 non-cash depreciation expense of $2.3 million associated with the Torrance production facility resulting from the consolidation of coffee production operations with the Houston and Portland production facilities and $1.4 million in non-cash rent expense recognized in the sale-leaseback of the Torrance Facility. The Company may incur certain pension-related costs in connection with the Corporate Relocation Plan.

~~Direct Store Delivery (“DSD”) Restructuring Plan~~

On February 21, 2017, the Company announced a restructuring plan to reorganize its DSD operations in an effort to realign functions into a channel-based selling organization, streamline operations, acquire certain channel specific expertise, and improve selling effectiveness and financial results (the “DSD Restructuring Plan”). The strategic decision to undertake the DSD Restructuring Plan resulted from an ongoing operational review of various initiatives within the DSD selling organization. The Company has revised its estimated time of completion of the DSD Restructuring Plan from the end of the second quarter of fiscal 2018 to the end of fiscal 2018.

The Company estimates that it will recognize approximately $3.7 million to $4.9 million of pre-tax restructuring charges by the end of fiscal 2018 consisting of approximately $1.9 million to $2.7 million in employee-related costs, including severance, prorated bonuses for bonus eligible employees, contractual termination payments and outplacement services, and $1.8 million to $2.2 million in other related costs, including legal, recruiting, consulting, other professional services, and travel. The Company may also incur other charges not currently contemplated due to events that may occur as a result of, or associated with, the DSD Restructuring Plan.

Expenses related to the DSD Restructuring Plan in the three and six months ended December 31, 2017 consisted of $0 and $24,000, respectively, in employee-related costs and $0.1 million and $0.2 million, respectively, in other related costs. Since the adoption of the DSD Restructuring Plan through December 31, 2017, the Company has recognized and paid a total of $2.7 million in aggregate cash costs including $1.1 million in employee-related costs, and $1.6 million in other related

~~Farmer Bros. Co.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

~~costs. The remaining estimated costs of $1.0 million to $2.2 million are expected to be incurred in the remainder of fiscal 2018.~~

~~Note 5. New Facility~~

~~Lease Agreement and Purchase Option Exercise~~

On June 15, 2016, the Company exercised the purchase option to purchase the land and the partially constructed New Facility located thereon pursuant to the terms of the lease agreement dated as of July 17, 2015, as amended (the “Lease Agreement”). On September 15, 2016 (“Purchase Option Closing Date”), the Company closed the purchase option and acquired the land and the partially constructed New Facility located thereon for an aggregate purchase price of $42.5 million (the “Purchase Price”), consisting of the purchase option price of $42.0 million based on actual construction costs incurred as of the Purchase Option Closing Date plus the option exercise fee, plus amounts paid in respect of real estate commissions, title insurance, and recording fees. Upon closing of the purchase option, the Company recorded the aggregate purchase price of the New Facility in “Property, plant and equipment, net” on its consolidated balance sheet. The asset related to the New Facility lease obligation included in “Property, plant and equipment, net,” the offsetting liability for the lease obligation included in “Other long-term liabilities” and the rent expense related to the land were reversed. Concurrent with the purchase option closing, on September 15, 2016, the Company terminated the Lease Agreement. The Company did not pay any early termination penalties in connection with the termination of the Lease Agreement.

~~Development Management Agreement~~

In conjunction with the Lease Agreement, the Company also entered into a Development Management Agreement with an affiliate of Stream Realty Partners (the “DMA”) to manage, coordinate, represent, assist and advise the Company on matters from the pre-development through construction of the New Facility. Services under the DMA have concluded. The Company incurred and paid $4.0 million under this agreement which is included in “Buildings and Facilities” (see ~~Note 12~~).

~~Amended Building Contract~~

On September 17, 2016, the Company and The Haskell Company (“Builder”) entered into a Change Order, which, among other things, amended the building contract previously entered into between the Company and Builder to provide a guaranteed maximum price and the basis for the price and the scope of Builder’s services in connection with the construction of the New Facility (the “Amended Building Contract”).

Pursuant to the Amended Building Contract, Builder provided pre-construction and construction services, including specialized industrial design and construction work in connection with Builder’s construction of certain production equipment installed in portions of the New Facility (the “Project”). In April 2017, the Company and Builder entered into a change order to change the scope of work which added $0.6 million to the Amended Building Contract. Builder's work on the Project has been completed. The Company incurred and paid $22.5 million for Builder’s services in connection with the Project which amount is included in “Machinery and equipment” (see ~~Note 12~~).

~~New Facility Costs~~

The Company estimated that the total construction costs including the cost of land for the New Facility would be approximately $60 million. As of December 31, 2017, the Company has incurred an aggregate of $60.8 million in construction costs. In addition to the costs to complete the construction of the New Facility, the Company estimated that it would incur approximately $35 million to $39 million for machinery and equipment, furniture and fixtures and related expenditures in connection with construction of the New Facility of which the Company has incurred an aggregate of $33.2 million as of December 31, 2017, including $22.5 million under the Amended Building Contract. The majority of the capital expenditures associated with machinery and equipment, furniture and fixtures, and related expenditures in connection with the initial construction of the New Facility were incurred in the first three quarters of fiscal 2017. The Company commenced distribution activities at the New Facility during the second quarter of fiscal 2017 and initial production activities late in the third quarter of fiscal 2017. The Company began roasting coffee in the New Facility in the fourth quarter of fiscal 2017.

~~At December 31, 2017, the Company had committed to purchase additional equipment for the New Facility totaling $6.3 million.~~

~~Farmer Bros. Co.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

~~Note 6. Sales of Assets~~

~~Sale of Torrance Facility~~

On July 15, 2016, the Company completed the sale of the Torrance Facility, consisting of approximately 665,000 square feet of buildings located on approximately 20.3 acres of land, for an aggregate cash sale price of $43.0 million, which sale price was subject to customary adjustments for closing costs and documentary transfer taxes. Cash proceeds from the sale of the Torrance Facility were $42.5 million.

Following the closing of the sale, the Company leased back the Torrance Facility on a triple net basis through October 31, 2016 at zero base rent, and exercised two one-month extensions at a base rent of $100,000 per month. In accordance with ASC 840, “Leases,” due to the Company’s continuing involvement with the property, the Company accounted for the transaction as a financing transaction, deferred the gain on sale of the Torrance Facility and recorded the net sale proceeds of $42.5 million and accrued non-cash interest expense on the financing transaction in “Sale-leaseback financing obligation” on the Company's Condensed Consolidated Balance Sheet at September 30, 2016. The Company vacated the Torrance Facility in December 2016 and concluded the leaseback transaction. As a result, at December 31, 2016, the financing transaction qualified for sales recognition under ASC 840. Accordingly, in the three and six months ended December 31, 2016, the Company recognized the net gain from sale of the Torrance Facility in the amount of $37.4 million, including non-cash interest expense of $0.7 million and non-cash rent expense of $1.4 million, representing the rent for the zero base rent period previously recorded in “Other current liabilities” and removed the amounts recorded in “Assets held for sale” and the “Sale-leaseback financing obligation” on its consolidated balance sheet.

~~Sale of Northern California Branch Property~~

On September 30, 2016, the Company completed the sale of its branch property in Northern California for a sale price of $2.2 million and leased it back through March 31, 2017, at a base rent of $10,000 per month. The Company recognized a net gain on sale of the Northern California property in the six months ended December 31, 2016 in the amount of $2.0 million.

Note 7.4. Derivative Instruments

Derivative Instruments Held

Coffee-Related Derivative Instruments

The Company is exposed to commodity price risk associated with its price to be fixed green coffee purchase contracts, which are described further in Note 2, “Summary of Significant Accounting Policies,” in the Notes to the ~~consolidated financial statements~~Consolidated Financial Statements in the ~~2017~~2021 Form 10-K. The Company utilizes forward and option contracts to manage exposure to the variability in expected future cash flows from forecasted purchases of green coffee attributable to commodity price risk. Certain of these coffee-related derivative instruments utilized for risk management purposes have been designated as cash flow hedges, while other coffee-related derivative instruments have not been designated as cash flow hedges or do not qualify for hedge accounting despite hedging the Company’s future cash flows on an economic basis.

The following table summarizes the notional volumes for the coffee-related derivative instruments held by the Company at ~~December~~March 31, ~~2017~~2022 and June 30, ~~2017:~~2021:


(In thousands)	March 31, 2022	June 30, 2021
Derivative instruments designated as cash flow hedges:
Long coffee pounds	10,838	14,625
Derivative instruments not designated as cash flow hedges:
Long coffee pounds	2,735	6,886
Total	13,573	21,511

Farmer Bros. Co.

Notes to Unaudited Consolidated Financial Statements (continued)

(In thousands) December 31, 2017 June 30, 2017
Derivative instruments designated as cash flow hedges:
  Long coffee pounds 31,763
33,038
Derivative instruments not designated as cash flow hedges:
  Long coffee pounds 1,612
2,121
      Total 33,375
35,159

Coffee-related derivative instruments designated as cash flow hedges outstanding as of ~~December~~March 31, ~~2017~~2022 will expire within 1912 months. At March 31, 2022 and June 30, 2021 approximately 80% and 68%, respectively, of the Company's outstanding coffee-related derivative instruments were designated as cash flow hedges.

Interest Rate Swap Derivative Instruments

~~Farmer Bros. Co.~~Pursuant to an International Swap Dealers Association, Inc. (“ISDA”) Master Agreement which was effective March 20, 2019, the Company on March 27, 2019, entered into an interest rate swap transaction utilizing a notional amount of $80.0 million, with an effective date of April 11, 2019 and a maturity date of October 11, 2023 (the “Rate Swap”). In December 2019, the Company amended the notional amount to $65.0 million. The Rate Swap is intended to manage the Company’s interest rate risk on its floating-rate indebtedness under the Company’s revolving credit facility. Under the terms of the Rate Swap, the Company receives 1-month LIBOR, subject to a 0% floor, and makes payments based on a fixed rate of 2.1975%.

~~Notes~~The Company had designated the Rate Swap derivative instrument as a cash flow hedge; however, during the three months ended September 30, 2020, the Company de-designated the Rate Swap derivative instrument. As a result, the balance in accumulated other comprehensive income, or “AOCI” was frozen at the time of de-designation. The Company recognized $0.3 million and $0.9 million, respectively, out of AOCI and into interest expense for the three and nine months ended March 31, 2022. The remaining balance of $1.7 million frozen in AOCI will be amortized over the life of the Rate Swap through October 11, 2023.

In connection with a new revolver credit facility agreement in April 2021 (see Note 11 for details), the Company also executed a new ISDA agreement (the “Amended Rate Swap”) to ~~Unaudited Condensed Consolidated Financial Statements (continued)~~transfer its interest swap to Wells Fargo Bank, N.A. (“Wells Fargo”). Under the terms of the Amended Rate Swap, the Company receives 1-month LIBOR, subject to a 0% floor, and makes payments based on a fixed rate of 2.4725%, an increase of 0.275% from its original Rate Swap fixed rate of 2.1975%. The Amended Rate Swap utilizes the same notional amount of $65.0 million and maturity date of October 11, 2023 as the original interest rate swap.

The Company did not designate the Amended Rate Swap as a cash flow hedge. The Company’s obligations under the Amended Rate Swap are secured by the collateral which secures the loans under the new Revolver Credit Facility (see Note 11 for details) on a pari passu and pro rata basis with the principal of such loans.

Effect of Derivative Instruments on the Financial Statements

Balance Sheets

Fair values of derivative instruments on the Company’s ~~Condensed Consolidated Balance Sheets:~~

consolidated balance sheets:


	Derivative Instruments Designated as Cash Flow Hedges				Derivative Instruments Not Designated as Accounting Hedges
	December 31, 2017		June 30, 2017		December 31, 2017		June 30, 2017			Derivative Instruments Designated as Cash Flow Hedges				Derivative Instruments Not Designated as Accounting Hedges
(In thousands)									(In thousands)	March 31, 2022		June 30, 2021		March 31, 2022		June 30, 2021
Financial Statement Location:									Financial Statement Location:
Short-term derivative assets(1):
Short-term derivative assets:									Short-term derivative assets:
Coffee-related derivative instruments	$	233	$	66	$	40	$	—	Coffee-related derivative instruments	$	5,561	$	3,823	$	526	$	528
Long-term derivative assets(2):
Long-term derivative assets:									Long-term derivative assets:
Coffee-related derivative instruments (1)									Coffee-related derivative instruments (1)	—		292		—		—
Interest rate swap derivative instruments (1)									Interest rate swap derivative instruments (1)	—		—		162		—
Short-term derivative liabilities:									Short-term derivative liabilities:
Coffee-related derivative instruments	$	99	$	66	$	—	$	—	Coffee-related derivative instruments	24		20		1,123		3
Short-term derivative liabilities(1):
Coffee-related derivative instruments	$	1,665	$	1,733	$	258	$	190
Long-term derivative liabilities(2):
Coffee-related derivative instruments	$	—	$	446	$	—	$	—
Interest rate swap derivative instruments									Interest rate swap derivative instruments	—		—		544		1,532
Long-term derivative liabilities:									Long-term derivative liabilities:
Coffee-related derivative instruments (2)									Coffee-related derivative instruments (2)	—		—		—		—
Interest rate swap derivative instruments (2)									Interest rate swap derivative instruments (2)	—		—		—		1,653

________________

(1) Included in ~~“Short-term derivative liabilities”~~“Other assets” on the ~~Company’s Condensed Consolidated Balance Sheets.~~Company's consolidated balance sheets.

(2) Included in ~~"Other assets" and~~ “Other long-term liabilities” on the ~~Company’s Condensed~~Company's consolidated balance sheets.

Farmer Bros. Co.

Notes to Unaudited Consolidated ~~Balance Sheets at December 31, 2017 and June 30, 2017, respectively.~~Financial Statements (continued)

Statements of Operations

The following table presents pretax net gains and losses for the ~~Company’s coffee-related~~Company's derivative instruments designated as cash flow hedges, as recognized in ~~accumulated other comprehensive income (loss)~~ “AOCI,” “Cost of goods sold” and “Other, net”:

Three Months Ended
December 31,

Six Months Ended
December 31,
Financial Statement Classification
(In thousands) 2017 2016 2017 2016
Net losses recognized in AOCI $ (2,094 ) $ (2,943 ) $ (2,459 ) $ (2,217 ) AOCI
Net (losses) gains recognized in earnings $ (597 ) $ 215
$ (604 ) $ (250 ) Costs of goods sold
Net (losses) gains recognized in earnings (ineffective portion)(1) $ —
$ (41 ) $ 48
$ (28 ) Other, net


	Three Months Ended March 31,				Nine Months Ended March 31,				Financial Statement Classification
(In thousands)	2022		2021		2022		2021
Net losses recognized in AOCI - Interest rate swap	$	—	$	—	$	—	$	(304)	AOCI
Net (losses) gains recognized from AOCI to earnings - Interest rate swap	(1)		9		(6)		(354)		Interest Expense
Net losses reclassified from AOCI to earnings for de-designated Interest rate swap	(293)		(320)		(910)		(960)		Interest Expense
Net gains (losses) recognized in AOCI - Coffee-related	383		(1,315)		11,374		6,051		AOCI
Net gains recognized in earnings - Coffee - related	3,110		983		8,742		1,587		Cost of goods sold

~~________________~~

~~(1) Amount included in six months ended December 31, 2017 relates to trades terminated prior to the adoption of ASU 2017-12. See~~ ~~Note 2~~.

For the three and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2022 and ~~2016,~~2021, there were no ~~gains~~ gains or losses recognized in earnings as a result of excluding amounts from the assessment of hedge ~~effectiveness or as a result of reclassifications to earnings following the discontinuance of any cash flow hedges.~~effectiveness.

Net (gains) losses on derivative instruments ~~and investments~~ in the Company’s ~~Condensed Consolidated Statements~~consolidated statements of ~~Cash Flows~~cash flows also include net (gains) losses on coffee-related derivative instruments designated as cash flow hedges reclassified to cost of goods sold from AOCI in the ~~six~~three and nine months ended ~~December~~March 31, ~~2017~~2022 and ~~2016.~~2021. Gains and losses on coffee-related derivative instruments not designated as accounting hedges are included in “Other, net” in the Company’s ~~Condensed Consolidated Statements~~consolidated statements of ~~Operations~~operations and in ~~“Net~~Net (gains) losses on derivative instruments ~~and investments”~~ in the Company’s ~~Condensed Consolidated Statements~~consolidated statements of ~~Cash Flows.~~cash flows.

~~Farmer Bros. Co.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

Net gains and losses recorded in “Other, net” are as follows:

Three Months Ended December 31, Six Months Ended December 31,
(In thousands) 2017 2016 2017 2016
Net losses on coffee-related derivative instruments $ (190 ) $ (1,204 ) $ (93 ) $ (1,240 )
Net gains (losses) on investments 16
(1,320 ) 7
(1,092 )
     Net losses on derivative instruments and investments(1) (174 ) (2,524 ) (86 ) (2,332 )
     Other gains, net 728
201
727
200
             Other, net $ 554
$ (2,323 ) $ 641
$ (2,132 )


	Three Months Ended March 31,				Nine Months Ended March 31,
(In thousands)	2022		2021		2022		2021
Net gains (losses) on coffee-related derivative instruments (1)	$	665	$	(832)	$	3,087	$	1,002


Non-operating pension and other postretirement benefits	896		455		2,685		15,943
Other gains (losses), net	18		21		18		338
Other, net	$	1,579	$	(356)	$	5,790	$	17,283

___________

(1) Excludes net gains and losses on coffee-related derivative instruments designated as cash flow hedges recorded in cost of goods sold in the three and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2022 and ~~2016.~~2021.

Offsetting of Derivative Assets and Liabilities

The Company has agreements in place that allow for the financial right of offset for derivative assets and liabilities at settlement or in the event of default under the agreements. Additionally, under certain coffee derivative agreements, the Company maintains accounts with its ~~brokers~~counterparties to facilitate financial derivative transactions in support of its risk management activities. ~~Based on the value of the Company’s positions in these accounts and the associated margin requirements, the Company may be required to deposit cash into these broker accounts.~~

The following table presents the Company’s net exposure from its offsetting derivative asset and liability positions, as well as cash collateral on deposit with its counterparties as of the reporting dates indicated:

(In thousands) Gross Amount Reported on Balance Sheet Netting Adjustments Cash Collateral Posted Net Exposure
December 31, 2017 Derivative Assets $ 372
$ (372 ) $ —
$ —
Derivative Liabilities $ 1,923
$ (372 ) $ —
$ 1,551
June 30, 2017 Derivative Assets $ 132
$ (132 ) $ —
$ —
Derivative Liabilities $ 2,369
$ (132 ) $ —
$ 2,237


(In thousands)		Gross Amount Reported on Balance Sheet		Netting Adjustments		Cash Collateral Posted		Net Exposure
March 31, 2022	Derivative Assets	$	6,250	$	(1,147)	$	—	$	5,103
	Derivative Liabilities	1,691		(1,147)		—		544
June 30, 2021	Derivative Assets	4,643		(23)		—		4,620
	Derivative Liabilities	3,208		(23)		—		3,185

Cash Flow Hedges

Changes in the fair value of the Company’s coffee-related derivative instruments designated as cash flow hedges ~~to the extent effective,~~ are deferred in AOCI and subsequently reclassified into cost of goods sold in the same period or periods in which the hedged forecasted purchases affect earnings, or when it is probable that the hedged forecasted transaction will not occur by the end of the originally specified time period. Based on recorded values at ~~December~~March 31, ~~2017, $(4.1)~~2022, $9.4 million of net ~~losses~~gains on ~~coffee-related~~coffee-

Farmer Bros. Co.

Notes to Unaudited Consolidated Financial Statements (continued)

related derivative instruments designated as a cash flow ~~hedges~~hedge are expected to be reclassified into cost of goods sold within the next twelve months. These recorded values are based on market prices of the commodities as of ~~December~~March 31, ~~2017. Due~~2022.

The Company had designated the Rate Swap derivative instrument as a cash flow hedge; however, during the three months ended September 30, 2020, the Company de-designated the Rate Swap derivative instrument. The frozen AOCI is subsequently reclassified into interest expense in the period or periods when the hedged transaction affects earnings or when it is probable that the hedged forecasted transaction will not occur by the end of the originally specified time period. As of March 31, 2022, $1.1 million of net losses on the Rate Swap de-designated as a cash flow hedge are expected to ~~the volatile nature of commodity prices, actual gains or losses realized~~be reclassified into interest expense within the next twelve ~~months will likely differ from these values.~~

months.

~~Note 8. Investments~~

~~The following table shows gains and losses on trading securities:~~

Three Months Ended December 31, Six Months Ended December 31,
(In thousands) 2017 2016 2017 2016
Total gains (losses) recognized from trading securities $ 16
$ (1,350 ) $ 7
$ (1,091 )
Less: Realized (losses) gains from sales of trading securities —
(2 ) 7
(2 )
Unrealized gains (losses) from trading securities $ 16
$ (1,348 ) $ —
$ (1,089 )

Note 9.5. Fair Value Measurements

Assets and liabilities measured and recorded at fair value on a recurring basis were as follows:


(In thousands)									(In thousands)	Total		Level 1		Level 2		Level 3
March 31, 2022									March 31, 2022

Derivative instruments designated as cash flow hedges:									Derivative instruments designated as cash flow hedges:
Coffee-related derivative assets (1)									Coffee-related derivative assets (1)	$	5,561	$	—	$	5,561	$	—
Coffee-related derivative liabilities (1)									Coffee-related derivative liabilities (1)	24		—		24		—
Derivative instruments not designated as accounting hedges:									Derivative instruments not designated as accounting hedges:
Coffee-related derivative assets(1)									Coffee-related derivative assets(1)	526		—		526		—
Interest rate swap derivative assets (1)									Interest rate swap derivative assets (1)	162		—		162		—
Coffee-related derivative liabilities(1)									Coffee-related derivative liabilities(1)	1,123		—		1,123		—
Interest rate swap derivative liabilities (2)									Interest rate swap derivative liabilities (2)	544		—		544		—

										Total		Level 1		Level 2		Level 3
(In thousands)	Total		Level 1		Level 2		Level 3
December 31, 2017
Preferred stock	$	—	$	—	$	—	$	—
June 30, 2021									June 30, 2021

Derivative instruments designated as cash flow hedges:									Derivative instruments designated as cash flow hedges:
Coffee-related derivative assets(1)	$	332	$	—	$	332	$	—
Coffee-related derivative liabilities(1)	$	1,665	$	—	$	1,665	$	—
Coffee-related derivative assets (1)									Coffee-related derivative assets (1)	$	4,115	$	—	$	4,115	$	—
Coffee-related derivative liabilities (1)									Coffee-related derivative liabilities (1)	20		—		20		—
Derivative instruments not designated as accounting hedges:									Derivative instruments not designated as accounting hedges:
Coffee-related derivative assets(1)	$	40	$	—	$	40	$	—
Coffee-related derivative liabilities(1)	$	258	$	—	$	258	$	—

	Total		Level 1		Level 2		Level 3
June 30, 2017
Preferred stock(2)	$	368	$	—	$	368	$	—
Derivative instruments designated as cash flow hedges:
Coffee-related derivative assets(1)	$	132	$	—	$	132	$	—
Coffee-related derivative liabilities(1)	$	2,179	$	—	$	2,179	$	—
Derivative instruments not designated as accounting hedges:
Coffee-related derivative liabilities(1)	$	190	$	—	$	190	$	—
Coffee-related derivative assets (1)									Coffee-related derivative assets (1)	528		—		528		—
Coffee-related derivative liabilities (1)									Coffee-related derivative liabilities (1)	3		—		3		—
Interest rate swap derivative liabilities (2)									Interest rate swap derivative liabilities (2)	3,185		—		3,185		—

____________________


~~(1)~~	~~The Company’s coffee-related derivative instruments are traded over-the-counter and, therefore, classified as Level 2.~~


~~(2)~~	~~Included in “Short-term investments” on the Company’s Condensed Consolidated Balance Sheets.~~

(1)The Company's coffee-related derivative instruments are traded over-the-counter and, therefore, classified as Level 2.

(2)The Company's interest rate swap derivative instrument are model-derived valuations with directly or indirectly observable significant inputs such as interest rate and, therefore, classified as Level 2.

Note ~~10.~~6. Accounts Receivable, Net


(In thousands)	December 31, 2017			June 30, 2017			(In thousands)	March 31, 2022		June 30, 2021
Trade receivables	$	58,727		$	44,531		Trade receivables	$	45,943	$	37,208
Other receivables(1)	4,320			2,636			Other receivables(1)	1,869		3,438
Allowance for doubtful accounts	(772		)	(721		)	Allowance for doubtful accounts	(369)		(325)
Accounts receivable, net	$	62,275		$	46,446		Accounts receivable, net	$	47,443	$	40,321

(1) ~~At December~~Includes vendor rebates and other non-trade receivables.

There was no material change in the allowance for doubtful accounts during the nine months ended March 31, 2017 and June 30, 2017, respectively, the Company had recorded $1.0 million and $0.4 million, in “Other receivables” included in “Accounts receivable, net” on its Condensed Consolidated Balance Sheets representing earnout receivable from Harris Spice Company.2022.

Farmer Bros. Co.

Notes to Unaudited ~~Condensed~~ Consolidated Financial Statements (continued)

~~Note 11. Inventories~~

In addition to product cost, inventory costs include expenditures such as direct labor and certain supply, freight, warehousing, overhead variances, purchase price variance and ~~overhead~~other expenses incurred in bringing the inventory to its existing condition and location. The “Unprocessed” inventory values as stated in the above table represent the value of raw materials and the “Processed” inventory values represent all other products consisting primarily of finished goods.

The Company does not expect inventory levels at June 30, 2018 to decrease from the levels at June 30, 2017 and, therefore, recorded no expected beneficial effect of the liquidation of LIFO inventory quantities in the three and six months ended December 31, 2017. The Company recorded $0.8 million and $1.7 million in expected beneficial effect of the liquidation of LIFO inventory quantities in cost of goods sold in the three and six months ended December 31, 2016, respectively. Interim LIFO calculations must necessarily be based on management’s estimates of expected fiscal year-end inventory levels and costs. Because these estimates are subject to many forces beyond management’s control, interim results are subject to the final fiscal year-end LIFO inventory valuation.

Note ~~12.~~8. Property, Plant and Equipment


(In thousands)	March 31, 2022		June 30, 2021
Buildings and facilities	$	95,049	$	94,846
Machinery, vehicles and equipment	219,893		223,579

Capitalized software	25,238		24,218
Office furniture and equipment	14,240		13,834
	$	354,420	$	356,477
Accumulated depreciation	(224,761)		(218,341)
Land	11,955		11,955
Property, plant and equipment, net	$	141,614	$	150,091

(In thousands) December 31, 2017 June 30, 2017
Buildings and facilities $ 108,999
$ 108,682
Machinery and equipment 212,180
201,236
Equipment under capital leases 7,516
7,540
Capitalized software 23,063
21,794
Office furniture and equipment 12,612
12,758
364,370
352,010
Accumulated depreciation (202,558 ) (192,280 )
Land 16,336
16,336
Property, plant and equipment, net $ 178,148
$ 176,066
Coffee Brewing Equipment (“CBE”) and Service

Capitalized CBE included in machinery and equipment above are:


(In thousands)	March 31, 2022		June 30, 2021
Coffee Brewing Equipment	$	94,917	$	97,105
Accumulated depreciation	(70,039)		(70,705)
Coffee Brewing Equipment, net	$	24,878	$	26,400

Depreciation expense related to capitalized CBE and other CBE related expenses provided to customers and reported in cost of goods sold were as follows:

~~Note 13. Goodwill~~


	Three Months Ended March 31,				Nine Months Ended March 31,
(In thousands)	2022		2021		2022		2021
Depreciation expense in COGS	$	1,829	$	2,263	$	5,698	$	6,957
CBE Costs excl. depreciation exp	6,479		5,499		18,242		17,035

Other expenses related to CBE provided to customers, such as the cost of servicing that equipment (including service employees’ salaries, cost of transportation and ~~Intangible Assets~~

~~The carrying value~~the cost of ~~goodwill in the six months ended December 31, 2017 increased by $10.9 million. This was due~~supplies and parts), are considered directly attributable to the ~~acquisition~~generation of revenues from the ~~Boyd Business adding $11.0 million~~customers. Therefore, these costs are included in cost of goodwill as well as the final working capital adjustment made to the West Coast Coffee purchase price allocation which reduced goodwill by $0.1 million. The carrying value of goodwill at December 31, 2017 and June 30, 2017 was $21.9 million and $11.0 million, respectively.goods sold.

Farmer Bros. Co.

Notes to Unaudited ~~Condensed~~ Consolidated Financial Statements (continued)

Note 9. Intangible Assets

The following is a summary of the Company’s amortized and unamortized intangible assets other than goodwill:


		March 31, 2022				June 30, 2021
(In thousands)	Weighted Average Amortization Period as of March 31, 2022	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Amortized intangible assets:
Customer relationships	5.0	$	33,003	$	(21,342)	$	11,661	$	33,003	$	(19,692)	$	13,311
Non-compete agreements	0.0	220		(220)		—		220		(202)		18
Recipes	1.6	930		(719)		211		930		(619)		311
Trade name/brand name	1.7	510		(448)		62		510		(420)		90
Total amortized intangible assets		$	34,663	$	(22,729)	$	11,934	$	34,663	$	(20,933)	$	13,730
Unamortized intangible assets:
Trademarks, trade names and brand name with indefinite lives		$	4,522	$	—	$	4,522	$	4,522	$	—	$	4,522
Total unamortized intangible assets		$	4,522	$	—	$	4,522	$	4,522	$	—	$	4,522
Total intangible assets		$	39,185	$	(22,729)	$	16,456	$	39,185	$	(20,933)	$	18,252

December 31, 2017 June 30, 2017
(In thousands)
Gross Carrying
Amount(1)

Accumulated
Amortization(1)

Gross Carrying
Amount(1)

Accumulated
Amortization(1)
Amortized intangible assets:
Customer relationships $ 48,353
$ (12,074 ) $ 17,353
$ (10,883 )
Non-compete agreements 220
(61 ) 220
(38 )
Recipes 930
(155 ) 930
(88 )
Trade name/brand name 510
(185 ) 510
(84 )
Total amortized intangible assets $ 50,013
$ (12,475 ) $ 19,013
$ (11,093 )
Unamortized intangible assets:
Trade names with indefinite lives $ 3,640
$ —
$ 3,640
$ —
Trademarks and brand name with indefinite lives 9,858
—
7,058
—
Total unamortized intangible assets $ 13,498
$ —
$ 10,698
$ —
Total intangible assets $ 63,511
$ (12,475 ) $ 29,711
$ (11,093 )

(1) Reflects the preliminary purchase price allocation for the acquisition of the Boyd Business. Subject to change based on numerous factors, including the final estimated fair value of the assets acquired and the liabilities assumed and the amount of the final post-closing net working capital adjustment. Adjustments in the purchase price allocation may require a recasting of the amounts allocated to goodwill and intangible assets.

Aggregate amortization expense for the three months ended ~~December~~March 31, ~~2017~~2022 and ~~2016~~2021 was ~~$1.1~~$0.6 million ~~and $0.1 million, respectively.~~ in each period. Aggregate amortization expense for the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2022 and ~~2016~~2021 was ~~$1.4~~$1.8 million ~~and $0.1 million, respectively.~~in each period.

Note ~~14.~~10. Employee Benefit Plans

The Company provides benefit plans for most full-time employees, including 401(k), health and other welfare benefit plans and, in certain circumstances, pension benefits. Generally, the plans provide benefits based on years of service and/or a combination of years of service and earnings. In addition, the Company contributes to two multiemployer defined benefit pension plans, one multiemployer defined contribution pension plan and ten multiemployer defined contribution plans other than pension plans that provide medical, vision, dental and disability benefits for active, union-represented employees subject to collective bargaining agreements. In addition, the Company sponsors a postretirement defined benefit plan that covers qualified non-union retirees and certain qualified union retirees and provides retiree medical coverage and, depending on the age of the retiree, dental and vision coverage. The Company also provides a postretirement death benefit to certain of its employees and retirees.

The Company is required to recognize the funded status of a benefit plan in its consolidated balance sheets. The Company is also required to recognize in other comprehensive income (“OCI”) certain gains and losses that arise during the period but are deferred under pension accounting rules.

Single Employer Pension Plans

~~The~~As of March 31, 2022, the Company has a defined benefit pension plan, the Farmer Bros. Co. Pension Plan for Salaried Employees (the “Farmer Bros. Plan”), for Company employees hired prior to January 1, 2010, who are not covered under a collective bargaining agreement. The Company amended the Farmer Bros. Plan, freezing the benefit for all participants effective June 30, 2011. After the plan freeze, participants do not accrue any benefits under the Farmer Bros. Plan, and new hires are not eligible to participate in the Farmer Bros. Plan. As all plan participants became inactive following this pension curtailment, net (gain) loss is now amortized based on the remaining life expectancy of these participants instead of the remaining service period of these participants.

~~The Company also~~ has two defined benefit pension plans for certain ~~hourly~~ employees, ~~covered under collective bargaining agreements (the “Brewmatic Plan”~~the "Farmer Bros. Plan" and the “Hourly ~~Employees’~~Employees' Plan”). ~~Effective October 1, 2016, the~~The Company

~~Farmer Bros. Co.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

froze benefit accruals and participation in ~~the Hourly Employees’ Plan.~~these plans effective June 30, 2011 and October 1, 2016, respectively. After the plan ~~freeze,~~freezes, participants do not accrue any benefits under the plan, and new hires are not eligible to participate in the plan. ~~After the freeze, the participants in the plan are eligible to receive the Company’s matching contributions to their 401(k).~~

The net periodic benefit (credit) cost for the defined benefit pension plans is as follows:

Amortization of net loss⁽¹⁾

(1) These amounts represent the estimated portion of the net loss in AOCI that is expected to be recognized as a component of net periodic benefit cost over the current fiscal year.

Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost


	Fiscal
	2018	2017		March 31, 2022	June 30, 2021
Discount rate	3.80%	3.55%	Discount rate	2.60%	2.55%
Expected long-term return on plan assets	6.75%	7.75%	Expected long-term return on plan assets	6.25%	6.25%

~~Basis Used to Determine Expected Long-Term Return on Plan Assets~~

The expected long-term return on plan assets assumption was developed as a weighted average rate based on the target asset allocation of the plan and the Long-Term Capital Market Assumptions (CMA) 2014. The capital market assumptions were developed with a primary focus on forward-looking valuation models and market indicators. The key fundamental economic inputs for these models are future inflation, economic growth, and interest rate environment. Due to the long-term nature of the pension obligations, the investment horizon for the CMA 2014 is 20 to 30 years. In addition to forward-looking models, historical analysis of market data and trends was reflected, as well as the outlook of recognized economists, organizations and consensus CMA from other credible studies.

Multiemployer Pension Plans

The Company participates in ~~two~~one multiemployer defined benefit pension plan that is union sponsored and collectively bargained for the benefit of certain employees subject to collective bargaining agreements, called the Western Conference of Teamsters Pension Plan ("WCTPP"). The Company makes contributions to this plan generally based on the number of hours

Farmer Bros. Co.

Notes to Unaudited Consolidated Financial Statements (continued)

worked by the participants in accordance with the provisions of negotiated labor contracts. The company also contributes to two defined contribution pension plans (All Other Plans) that are union sponsored and collectively bargained for the benefit of certain employees subject to collective bargaining agreements, of which the Western Conference of Teamsters Pension Plan (“WCTPP”) is individually significant. The Company makes contributions to these plans generally based on the number of hours workedagreements.

Contributions made by the ~~participants in accordance with~~Company to the ~~provisions of negotiated labor contracts.~~

~~The risks of participating in~~ multiemployer pension plans are different from single-employer plans in that: (i) assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers; (ii) if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers; and (iii) if the Company stops participating in the multiemployer plan, the Company may be required to pay the plan an amount based on the underfunded status of the plan, referred towere as ~~a withdrawal liability.~~follows:

On October 30, 2017, counsel to the Company received written confirmation that the Western Conference of Teamsters Pension Trust (the “WCT Pension Trust”) will be retracting its claim, stated in its letter to the Company dated July 10, 2017 (the “WCT Pension Trust Letter”), that certain of the Company’s employment actions in 2015 resulting from the Corporate Relocation Plan constituted a partial withdrawal from the WCTPP. The written confirmation stated that the WCT Pension Trust has determined that a partial withdrawal did not occur in 2015 and further stated that the withdrawal liability assessment has been rescinded. This rescinding of withdrawal liability assessment applies to Company employment actions in 2015 with respect to the bargaining units that were specified in the WCT Pension Trust Letter. As of

~~Farmer Bros. Co.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

December 31, 2017, the Company is not able to predict whether the WCT Pension Trust may make a claim, or estimate the extent of potential withdrawal liability, related to the Corporate Relocation Plan for actions or bargaining units other than those specified in the WCT Pension Trust Letter.

In fiscal 2012, the Company withdrew from the Local 807 Labor-Management Pension Fund (“Pension Fund”) and recorded a charge of $4.3 million associated with withdrawal from this plan, representing the present value of the estimated withdrawal liability expected to be paid in quarterly installments of $0.1 million over 80 quarters. On November 18, 2014, the Pension Fund sent the Company a notice of assessment of withdrawal liability in the amount of $4.4 million, which the Pension Fund adjusted to $4.9 million on January 5, 2015. The Company is in the process of negotiating a reduced liability amount. The Company has commenced quarterly installment payments to the Pension Fund of $91,000 pending the final settlement of the liability. The total estimated withdrawal liability is $4.0 million and its present value are reflected in the Company’s Condensed Consolidated Balance Sheets at December 31, 2017 and June 30, 2017 as short-term with the expectation of paying off the liability in fiscal 2018.

Future collective bargaining negotiations may result in the Company withdrawing from the remaining multiemployer pension plans in which it participates and, if successful, the Company may incur a withdrawal liability, the amount of which could be material to the Company’s results of operations and cash flows.


	Three Months Ended March 31,				Nine Months Ended March 31,
(In thousands)	2022		2021		2022		2021
Contributions to WCTPP	$	275	$	260	$	679	$	783
Contributions to All Other Plans	7		12		19		26

Multiemployer Plans Other Than Pension Plans

The Company participates in ~~ten~~9 multiemployer defined contribution plans other than pension plans that provide medical, vision, dental and disability benefits for active, union-represented employees subject to collective bargaining agreements. The plans are subject to the provisions of the Employee Retirement Income Security Act of 1974, and provide that participating employers make monthly contributions to the plans in an amount as specified in the collective bargaining agreements. Also, the plans provide that participants make self-payments to the plans, the amounts of which are negotiated through the collective bargaining process. The Company’s participation in these plans is governed by collective bargaining agreements which expire on or before ~~July~~January 31, ~~2020.~~2025.

~~The Company’s~~Farmer Bros. Co. 401(k) Plan (the “401(k) Plan”) is available to all eligible employees. The 401(k) Plan match portion is available to all eligible employees who have worked more than 1,000 hours during a calendar year and were employed at the end of the calendar year. Participants in the 401(k) Plan may choose to contribute a percentage of their annual pay subject to the maximum contribution allowed by the Internal Revenue Service. The ~~Company’s~~Company's matching contribution is discretionary, based on approval by the ~~Company’s~~Company's Board of Directors. ~~For~~

In March 2020, due to the ~~calendar years 2018~~impact the COVID-19 pandemic had on our business and ~~2017,~~financial results, the ~~Company’s Board of Directors approved a~~ Company elected to suspend the 401(k) Plan matching contribution offor non-union employees.

Beginning in July 2021, the Company re-instated a 401(k) Plan matching program (the “401(k) Match”) for non-union employees, by matching 50% of ~~an employee’s~~any non-union employee's annual contribution to the 401(k) Plan, up to 6% of ~~the employee’s~~such employee's eligible ~~income. The matching contributions (and any earnings thereon) vest at the rate of 20% for each of the participant’s first 5 years of vesting service, so that a participant~~income, which is fully vested in his or her matching contribution account after 5 years of vesting service, subject to accelerated vesting under certain circumstances in connection with the Corporate Relocation Plan duesubstantially similar to the ~~closure~~program prior to its suspension in March 2020.

Beginning in January 2022, the Company amended the 401(k) Match, whereby the Company on a quarterly basis, will contribute, instead of cash, shares of the Company’s ~~Torrance Facility,~~common stock., par value $1.00 per share (the “Common Stock”) with a ~~reduction-in-force at another Company facility designated by~~value equal to 50% of any non-union employee's annual contribution to the ~~Administrative Committee~~401(k) Plan, up to 6% of such employee's eligible income . The terms of the ~~Farmer Bros. Co. Qualified Employee Retirement Plans, or in connection with certain reductions-in-force that occurred during 2017. A participant is automatically vested in~~match are substantially the ~~event of death, disability or attainment of age 65 while employed by~~same as the ~~Company. Employees are 100% vested in their contributions. For employees subject to a collective bargaining agreement, the match is only available if so provided in the labor agreement.~~

safe-harbor non-elective contribution. The Company recorded matching contributions of ~~$0.5~~$0.5 million and ~~$0.3~~$1.6 million in operating expenses in the three and nine months ended ~~December~~March 31, ~~2017~~2022.

Additionally, the Company makes an annual safe harbor non-elective contribution of Common Stock equal to 4% of each eligible participant’s annual plan compensation. During the three months ended March 31, 2022 and ~~2016, respectively,~~2021, the Company contributed a total of 90,329 and ~~$1.0~~162,259 of shares Common Stock with a value of $0.6 million and $0.8 million, ~~in operating expenses~~respectively, to eligible participants’ annual plan compensation.

During the nine months ended March 31, 2022 and 2021, the Company contributed a total of 224,363 and 347,356 shares of Common Stock with a value of $1.8 million and $1.4 million, respectively, to eligible participants’ annual plan compensation.

Effective January 1, 2022, the Company amended the 401(k) Plan to, among other things, increase the number of shares of Common Stock, available for issuance under the 401(k) Plan by 2,000,000 additional shares of Common Stock and permit participants in the ~~six months ended December 31, 2017~~401(k) Plan to invest a portion of their 401(k) Plan accounts into Common Stock.

Effective January 1, 2022, the Company merged the Company’s Employee Stock Ownership Plan (“ESOP”) into the 401(k) Plan and ~~2016, respectively.~~transferred all of the assets and shares in the ESOP to the 401(k) Plan.

Farmer Bros. Co.

Notes to Unaudited Consolidated Financial Statements (continued)

Postretirement Benefits

~~The~~Retiree Medical Plan and Death Benefit

On March 23, 2020, the Company ~~sponsors~~announced a plan to amend and terminate the postretirement ~~defined~~medical benefit plan that covers qualified non-union retirees and certain qualified union retirees (“Retiree Medical Plan”). effective January 1, 2021. As a result, the re-measurement generated a prior service credit. This credit, along with actuarial gains, were amortized over the remaining months of the plan through January 1, 2021. The plan provides medical, dental and vision coverage for retirees under age 65 and medical coverage only for retirees age 65 and above. Under this postretirement plan, the Company’s contributions toward premiums for retiree medical, dental and vision coverage for participants and dependents are scaled based on length of service, with greater Company contributions for retirees with greater length of service, subject to a maximum monthly Company contribution.

~~Farmer Bros. Co.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

Retiree Medical Plan is now terminated.

The Company ~~also~~ provides a postretirement death benefit ~~(“Death~~(the “Death Benefit”) Plan) to certain ~~of its~~ employees and retirees, subject, in the case of current employees, to continued employment with the Company until retirement and certain other conditions related to the manner of employment termination and manner of death. ~~The~~In June 2021, the Company ~~records~~amended the ~~actuarially determined liability for the present value~~Death Benefit Plan effective immediately, which triggered re-measurement of the ~~postretirement death benefit. The Company has purchased life insurance policies to fund~~plan. In conjunction with the ~~postretirement death benefit wherein~~amendment, the Company ~~owns~~created a new Executive Death Benefit Plan (the “Executive Death Benefit Plan”) for a small group of participants in the ~~policy but~~Death Benefit Plan. Under the ~~postretirement death benefit is paid to~~Executive Death Benefit Plan, the ~~employee’s or retiree’s beneficiary. The Company records an asset for~~participants receive the ~~fair value of~~same benefits they would have received under the ~~life insurance policies which equates to the cash surrender value of the policies.~~

~~Retiree Medical Plan and~~ Death Benefit Plan.

The following table shows the components of net periodic postretirement benefit cost (credit) for the Retiree Medical Plan and Death Benefit Plan for the three and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2022 and ~~2016. Net periodic postretirement benefit cost for the three and six months ended December 31, 2017 was based on employee census information and asset information as of June 30, 2017.~~2021.

Weighted-Average Assumptions Used to Determine Net Periodic Postretirement Benefit Cost


	Fiscal year
	2022	2021
Retiree Medical Plan discount rate	N/A	0.06%
Death Benefit Plan discount rate	2.72%	2.87%

Fiscal
2018 2017
Retiree Medical Plan discount rate 4.13% 3.73%
Death Benefit discount rate 4.12% 3.79%

Note ~~15. Bank Loan~~11. Debt Obligations

The following table summarizes the Company’s debt obligations:

(1) The weighted average interest rate excludes the fixed rate on the de-designated Amended Rate Swap

On April 26, 2021, the Company ~~maintains~~entered into a ~~$125.0 million~~new senior secured ~~revolving credit~~ facility composed of (a) a Credit Agreement, (the ~~“Revolving Facility”~~“Revolver Credit Facility Agreement”) ~~with JPMorgan Chase Bank, N.A.~~by and ~~SunTrust Bank~~among the Company, Boyd Assets Co., FBC Finance Company, Coffee Bean Holding Co., Inc., Coffee Bean International, Inc. and China Mist Brands, Inc., as borrowers (collectively, the ~~“Lenders”~~“Borrowers”), ~~with~~Wells Fargo, as administrative agent and lender, and the other lenders party thereto, and various loan documents relating thereto including the Guaranty and Security Agreement, (the “Revolver Security Agreement”), by and among the Borrowers, as grantors, and Wells Fargo, as administrative agent, and (b) a Credit Agreement, (the “Term Credit Facility Agreement”) by and among the Borrowers, MGG Investment Group LP. (“MGG”), as administrative agent, and the lenders party thereto, and various loan documents relating thereto including the Guaranty and Security Agreement, (the “Term Security Agreement”), by and among the Borrowers, as grantors, and MGG, as administrative agent.

Farmer Bros. Co.

Notes to Unaudited Consolidated Financial Statements (continued)

The following is a summary description of the Revolver Credit Facility Agreement and the Revolver Security Agreement key items. Please refer to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 for the full text of the agreements.

The Revolver Credit Facility Agreement, among other things includes:

1.A commitment of up to $80.0 million (“Revolver”);

2.sublimit on letters of credit of $10.0 million;

3.maturity date of April 25, 2025, and ~~swingline loans~~has no scheduled payback required on the principal prior to the maturity date;

4.full collateralization by all existing and future capital stock of ~~$30.0~~the Borrowers (other than the Company) and all of the Borrowers' personal and real property;

5.Revolver calculated as the lesser of (a) $80.0 million and ~~$15.0 million respectively. The Revolving Facility includes an accordion feature whereby~~(b) the ~~Company may increase~~amount derived pursuant to a borrowing base composed of the ~~Revolving Commitment by up to an additional $50.0 million, subject to certain conditions. Advances are based on the Company’s~~sum of (i) 85% of eligible accounts receivable (less a dilution reserve), plus (ii) the lesser of: (a) 80% of eligible raw material inventory, eligible in-transit inventory and eligible finished goods inventory (collectively, “Eligible Inventory”), and (b) 85% of the net orderly liquidation value of ~~certain real property and trademarks, less required reserves. The commitment fee is a flat fee of 0.25%~~Eligible Inventory, minus (c) applicable reserve;

6.interest under the Revolver equal to either LIBOR + 2.25% per annum, ~~irrespective of average revolver usage. Outstanding obligations are collateralized by all of the Company’s assets, excluding certain real property not included~~with LIBOR floor 0.50%, or base rate + 1.25% per annum; and

7.Financial covenants, in the ~~borrowing base and machinery and equipment (other than inventory). Borrowings~~event that Borrowers' availability to borrow under the ~~Revolving Facility bear interest based on average historical excess availability levels with a range of PRIME - 0.25%~~Revolver falls below $10.0 million requiring the Company to PRIME + 0.50% or Adjusted LIBO Rate + 1.25% to Adjusted LIBO Rate + 2.00%. The Company is subject to a variety of affirmative and negative covenants of types customary in an asset-based lending facility, including financial covenants relating to the maintenance ofhave a fixed charge coverage ratio ~~in certain circumstances,~~of at least 1.00:1.00 at all such times.

The Revolver Credit Facility Agreement and the ~~right~~Revolver Security Agreement contain customary affirmative and negative covenants and restrictions typical for a financing of this type that, among other things, require the Company to satisfy certain financial covenants and restrict the Company's and its subsidiaries' ability to incur additional debt, pay dividends and make distributions, make certain investments and acquisitions, repurchase its stock and prepay certain indebtedness, create liens, enter into agreements with affiliates, modify the nature of its business, transfer and sell material assets and merge or consolidate. Non-compliance with one or more of the ~~Lenders~~covenants and restrictions could result in the full or partial principal balance of the Revolver Credit Facility Agreement becoming immediately due and payable and termination of the commitments.

The following is a summary description of the Term Credit Facility Agreement and the Term Security Agreement key items. Please refer to ~~establish reserve~~Exhibit 10.3 to our Quarterly Report on Form 10-Q for quarter ended March 31, 2021 for the full text of the agreements.

The Term Credit Facility Agreement, among other things includes:

1.total commitment of $47.5 million in the form of a term loan (“Term Loan”);

2.maturity date of April 25, 2025;

3.full collateralization by all existing and future capital stock of the Borrowers (other than the Company) and all of the Borrowers' personal and real property;

4.interest under the Term Loan is either (a) LIBOR + 6.5% per annum, with LIBOR Floor 1.0%, or (b) base rate + 5.50% per annum, with a 3% floor on base rate; and

5.financial covenants include;

(i) commencing on the fiscal quarter ending on March 31, 2022, quarterly minimum EBITDA and fixed charge coverage ratio requirements ~~which may reduce~~specified therein.

The Term Credit Facility Agreement and the Term Security Agreement contain customary affirmative and negative covenants and restrictions typical for a financing of this type that, among other things, require the Company to satisfy certain financial covenants and restrict the Company's and its subsidiaries' ability to incur additional debt, pay dividends and make distributions, make certain investments and acquisitions, repurchase its stock and prepay certain indebtedness, create liens, enter into agreements with affiliates, modify the nature of its business, transfer and sell material assets and merge or consolidate. Non-compliance with one or more of the covenants and restrictions could result in the full or partial principal balance of the Term Credit Facility Agreement becoming immediately due and payable and termination of the commitments.

During the quarter ended March 31, 2022, the Company commenced quarterly principal payments due on the Term Loan debt obligation in the amount of ~~credit otherwise available to~~$950 thousand. At March 31, 2022, the ~~Company. The~~ Company is allowed to pay dividends, provided, among other things, certain excess availability requirements are met, and no event of default exists or has occurred and is continuing as of the date of any such payment and after giving effect thereto. The Revolving Facility matures on August 25, 2022.

~~At December 31, 2017, the Company was eligible to borrow up to a total of $110.0 million under the Revolving Facility and~~ had outstanding borrowings on the Revolver Credit Facility of ~~$84.4~~$54.5 million and had utilized ~~$1.1~~$4.1 million of the letters of credit ~~sublimit, and~~sublimit. At March 31, 2022, we had ~~excess availability under the Revolving Facility~~$22.3 million available on our Revolver Credit Facility.

Farmer Bros. Co.

Notes to Unaudited Consolidated Financial Statements (continued)

As of ~~$24.5 million. At December~~March 31, ~~2017, the weighted average interest rate~~

~~on the Company’s outstanding borrowings under the Revolving Facility was 3.62% and~~2022, the Company was in compliance with all of the ~~restrictive~~financial covenants under the ~~Revolving Facility.~~Revolver Credit Facility Agreement and the Term Credit Facility Agreement (collectively, the “Credit Facilities”). Furthermore, the Company believes it will be in compliance with the related financial covenants under these agreements for the next twelve months.

In connection with the Credit Facilities, the Company executed the Amended Rate Swap. Under the terms of the Amended Rate Swap, the Company receives 1-month LIBOR, subject to a 0% floor, and makes payments based on a fixed rate of 2.4725%, an increase of 0.275% from its original interest rate swap fixed rate of 2.1975%. The Amended Rate Swap utilizes the same notional amount of $65.0 million and maturity date of October 11, 2023 as the original interest rate swap.

Note 12. Employee Stock Ownership Plan

The Company’s Employee Stock Ownership Plan (“ESOP”) was established in 2000. As of December 31, 2018, the Company froze the ESOP such that (i) no employees of the Company may commence participation in the ESOP on or after December 31, 2018; (ii) no Company contributions will be made to the ESOP with respect to services performed or compensation received after December 31, 2018; and (iii) the ESOP accounts of all individuals who are actively employed by the Company and participating in the ESOP on December 31, 2018 will be fully vested as of such date. Additionally, the Administrative Committee, with the consent of the Board of Directors, designated certain employees who were terminated in connection with certain reductions-in-force in 2018 to be fully vested in their ESOP accounts as of their severance dates.

Effective January 1, 2022, the Company merged the ESOP plan into the 401(k) Plan and transferred all of the assets and shares in the ESOP to the 401(k) Plan. As of March 31, 2022, there are no shares left in the ESOP plan.

Note ~~16.~~13. Share-based Compensation

Farmer Bros. Co. ~~2017 Long-Term Incentive Plan~~

~~On June 20, 2017 (the “Effective Date”), the Company’s stockholders approved the Farmer Bros. Co.~~Amended and Restated 2017 Long-Term Incentive Plan (the “2017 Plan”). The 2017 Plan succeeded the Company’s prior long-term incentive plans, the Farmer Bros. Co. Amended and Restated 2007 Long-Term Incentive Plan (the “Amended Equity Plan”) and the Farmer Bros. Co. 2007 Omnibus Plan (collectively, the “Prior Plans”). On the Effective Date, the Company ceased granting awards under the Prior Plans; however, awards outstanding under the Prior Plans will remain subject to the terms of the applicable Prior Plan. The 2017 Plan provides for the grant of stock options (including incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, performance shares and other stock- or cash-based awards to eligible participants. The 2017 Plan also authorizes the grant of awards that are intended to qualify as “qualified performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code. Non-employee directors of the Company and employees of the Company or any of its subsidiaries are eligible to receive awards under the 2017 Plan.

The 2017 Plan authorizes the issuance of (i) 900,000 shares of common stock plus (ii) the number of shares of common stock subject to awards under the Company’s Prior Plans that are outstanding as of the Effective Date and that expire or are forfeited, cancelled or similarly lapse following the Effective Date. Subject to certain limitations, shares of common stock covered by awards granted under the 2017 Plan that are forfeited, expire or lapse, or are repurchased for or paid in cash, may be used again for new grants under the 2017 Plan. As of ~~December~~March 31, ~~2017,~~2022, there were ~~950,914~~1,616,697 shares available under the 2017 Plan including shares that were forfeited under the ~~Prior Plans. Shares of common stock granted under~~prior plans for future issuance.

On December 15, 2021, the Company’s stockholders approved an amendment (the “Plan Amendment”) to the 2017 Plan, ~~may be authorized but unissued shares, shares purchased on~~which (i) increased the ~~open market or treasury shares. In no event will more than 900,000~~number of shares of ~~common stock be issuable pursuant to the exercise of incentive stock options~~Common Stock available for grant under the ~~2017 Plan.~~Plan by 1,500,000 additional shares of Common Stock and (ii) allows the Company to utilize awards to attract and incentivize non-employee consultants.

~~The 2017~~Farmer Bros. Co. 2020 Inducement Incentive Award Plan ~~contains a minimum vesting requirement, subject to limited exceptions, that awards made~~(the “2020 Inducement Plan”)

As of March 31, 2022, there were 138,520 shares available under the 2017 Plan may not vest earlier than the date that is one year following the grant date of the award. The 2017 Plan also contains provisions with respect to payment of exercise or purchase prices, vesting and expiration of awards, adjustments and treatment of awards upon certain corporate transactions, including stock splits, recapitalizations and mergers, transferability of awards and tax withholding requirements.

The 2017 Plan may be amended or terminated by the Board at any time, subject to certain limitations requiring stockholder consent or the consent of the applicable participant. In addition, the Administrator of the 2017 Plan may not, without the approval of the Company’s stockholders, authorize certain re-pricings of any outstanding stock options or stock appreciation rights granted under the 20172020 Inducement Plan. ~~The 2017 Plan will expire on June 20, 2027.~~

Non-qualified stock options with time-based vesting (“NQOs”)

In the six months ended December 31, 2017, the Company granted 124,278 shares issuable upon the exercise of NQOs to eligible employees under the 2017 Plan. These NQOs have an exercise price of $31.70 per share, which was the closing price of the Company’s common stock as reported on the NASDAQ Global Select Market on the date of grant. One-third of the total number of shares subject to each ~~such~~ stock option vest ratably on each of the first three anniversaries of the grant date, contingent on continued employment, and subject to accelerated vesting in certain circumstances. There were no NQOs granted during the nine months ended March 31, 2022.

The following table summarizes NQO activity for nine months ended March 31, 2022:


Outstanding NQOs:	Number of NQOs	Weighted Average Exercise Price ($)	Weighted Average Remaining Life (Years)	Aggregate Intrinsic Value ($ in thousands)
Outstanding at June 30, 2021	513,325	13.06	5.17	$	706
Granted	—	—	—	—
Exercised	—	—	—	—
Forfeited	(19,173)	16.24	—	—
Expired	(27,028)	20.67	—	—
Outstanding at March 31, 2022	467,124	12.52	4.50	$	35
Exercisable at March 31, 2022	277,762	13.60	4.33	$	12

The aggregate intrinsic values outstanding at the end of period in the table above represent the total pretax intrinsic values, based on the closing price of Common Stock of $7.12 at March 31, 2022 and $12.69 at June 30, 2021, representing the last trading day of the respective periods, which would have been received by NQO holders had all award holders exercised their NQOs that were in-the-money as of those dates. NQOs outstanding that are expected to vest are net of estimated forfeitures.

Farmer Bros. Co.

Notes to Unaudited ~~Condensed~~ Consolidated Financial Statements (continued)

~~Following are the assumptions used in the Black-Scholes valuation model for NQOs granted during the six months ended December 31, 2017.~~



		~~Six Months Ended~~ ~~December 31, 2017~~
~~Weighted average fair value of NQOs~~	~~$31.70~~
~~Risk-free interest rate~~	~~2.0%~~
~~Dividend yield~~	—%
~~Average expected term~~	~~4.6 years~~
~~Expected stock price volatility~~	~~35.4%~~

There were no options exercised during nine months ended March 31, 2022 and 2020.

At March 31, 2022 and June 30, 2021, respectively, there was $0.4 million and $0.9 million of unrecognized NQO compensation cost. The unrecognized NQO compensation cost at March 31, 2022 is expected to be recognized over the weighted average period of eight months. Total compensation expense for NQOs was $95.3 thousand and $167.7 thousand for the three months ended March 31, 2022 and 2021, respectively and $432.9 thousand and $586.8 thousand for the nine months ended March 31, 2022 and 2021, respectively.

Non-qualified stock options with performance-based and time-based vesting (“PNQs”)

The following table summarizes ~~NQO~~PNQ activity for the ~~six~~nine months ended ~~December~~March 31, ~~2017:~~

2022:

Outstanding NQOs:
Number
of NQOs

Weighted
Average
Exercise
Price ($)

Weighted
Average
Grant Date
Fair Value ($)

Weighted
Average
Remaining
Life
(Years)

Aggregate
Intrinsic
Value
($ in thousands)
Outstanding at June 30, 2017 133,464
13.05 5.99 2.6 2,299
Granted 124,278
31.70 10.41 6.9 —
Exercised (37,266 ) 12.09 5.57 — 752
Cancelled/Forfeited (4,194 ) 24.41 10.60 — —
Outstanding at December 31, 2017 216,282
23.71 8.51 4.8 1,825
Vested and exercisable at December 31, 2017 89,055
12.33 5.74 2.0 1,765
Vested and expected to vest at December 31, 2017 205,308
23.28 8.41 4.7 1,820


Outstanding PNQs:	Number of PNQs	Weighted Average Exercise Price ($)	Weighted Average Remaining Life (Years)	Aggregate Intrinsic Value ($ in thousands)
Outstanding at June 30, 2021	11,750	29.76	0.71	$	—
Granted	—	—	—	—
Exercised	—	—	—	—
Forfeited	—	—	—	—
Expired	(9,538)	29.51	—	—
Outstanding at March 31, 2022	2,212	30.91	1.07	$	—
Exercisable at March 31, 2022	2,211	30.91	1.07	$	—

The aggregate intrinsic values outstanding at the end of each fiscal period in the table above represent the total pretax intrinsic values, based on the Company’s closing stock price of ~~$32.15~~$7.12 at ~~December 29, 2017~~March 31, 2022 and ~~$30.25~~$12.69 at June 30, 2017, representing the last trading day of the respective fiscal periods, which would have been received by NQO holders had all award holders exercised their NQOs that were in-the-money as of those dates. The aggregate intrinsic value of NQO exercises in the six months ended December 31, 2017 represents the difference between the exercise price and the value of the Company’s common stock at the time of exercise. NQOs outstanding that are expected to vest are net of estimated forfeitures.

During the six months ended December 31, 2017, 945 NQOs vested and 37,266 NQOs were exercised. Total fair value of NQOs vested during the six months ended December 31, 2017 was $12,000. The Company received $0.5 million and $0.4 million in proceeds from exercises of vested NQOs in the six months ended December 31, 2017 and 2016, respectively.

At December 31, 2017 and June 30, 2017, respectively, there was $1.3 million and $80,000 of unrecognized compensation cost related to NQOs. The unrecognized compensation cost related to NQOs at December 31, 2017 is expected to be recognized over the weighted average period of 2.8 years. Total compensation expense for NQOs in the three months ended December 31, 2017 and 2016 was $62,000 and $47,000, respectively. Total compensation expense for NQOs in the six months ended December 31, 2017 and 2016 was $64,000 and $89,000, respectively.

~~Farmer Bros. Co.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

~~Non-qualified stock options with performance-based and time-based vesting (~~“~~PNQs”)~~

~~In the six months ended December 31, 2017, the Company granted no shares issuable upon the exercise of PNQs. The following table summarizes PNQ activity for the six months ended December 31, 2017:~~

Outstanding PNQs:
Number
of
PNQs

Weighted
Average
Exercise
Price ($)

Weighted
Average
Grant Date
Fair Value ($)

Weighted
Average
Remaining
Life
(Years)

Aggregate
Intrinsic
Value
($ in
thousands)
Outstanding at June 30, 2017 358,786
27.75 10.96 5.2 1,181
Granted —
— — — —
Exercised (6,679 ) 26.10 10.87 — 45
Cancelled/Forfeited (43,330 ) 32.10 11.43 — —
Outstanding at December 31, 2017 308,777
27.17 10.93
10.90 4.6 1,590
Vested and exercisable at December 31, 2017 200,904
25.87 10.80 4.2 1,278
Vested and expected to vest at December 31, 2017 303,990
27.10 10.89 4.5 1,585

There were no options exercised during nine months ended ~~December~~March 31, ~~2017 represents the difference between the exercise price~~2022 and ~~the value of the Company’s common stock at the time of exercise. PNQs outstanding that are expected to vest are net of estimated forfeitures.~~2021.

~~During the six months ended December~~At March 31, 2017, 56,822 PNQs vested and 6,679 PNQs were exercised. Total fair value of PNQs vested during the six months ended December 31, 2017 was $0.6 million. The Company received $0.2 million and $0.1 million in proceeds from exercises of vested PNQs in the six months ended December 31, 2017 and 2016, respectively.

~~As of December 31, 2017, the Company met the performance targets for the fiscal 2016 PNQ awards and the fiscal 2015 PNQ awards.~~

In the six months ended December 31, 2017, based on the Company’s failure to achieve certain financial objectives over the applicable performance period, a total of 33,738 shares subject to fiscal 2017 PNQ awards were forfeited, representing 20% of the shares subject to each such award. Subject to certain continued employment conditions and subject to accelerated vesting in certain circumstances, one half of the remaining PNQs subject to the fiscal 2017 PNQ awards are scheduled to vest on each of the second and third anniversaries of the grant date.

~~At December 31, 2017~~2022 and June 30, ~~2017,~~2021, there was ~~$0.9 million and $1.8 million, respectively, of~~ no unrecognized PNQ compensation ~~cost related to PNQs. The unrecognized compensation cost related to PNQs at December 31, 2017 is expected to be recognized over the weighted average period of 1.2 years. Total~~ cost. There was no compensation expense related to PNQs in the three and nine months ended ~~December~~March 31, ~~2017~~2022 and ~~2016 was $0.2 million and $0.4 million, respectively. Total compensation expense related to PNQs in the six months ended December 31, 2017 and 2016 was $0.4 million and $0.6 million, respectively.~~2021.

During the six months ended December 31, 2017, the Company granted 13,110 shares of restricted stock under the 2017 Plan, including 11,406 shares of restricted stock to non-employee directors with a grant date fair value of $34.20 per share and 1,704 shares of restricted stock to eligible employees with a grant date fair value of $31.70 per share. The fiscal 2018 restricted stock awards cliff vest on the earlier of the one year anniversary of the grant date or the date of the first annual meeting of the Company’s stockholders immediately following the grant date, in the case of non-employee directors, and the third anniversary of the grant date, in the case of eligible employees, in each case subject to continued service to the Company through the vesting date and the acceleration provisions of the 2017 Plan and restricted stock agreement. During the six months ended December 31, 2016, the Company granted 5,106 shares of restricted stock to non-employee directors.

~~During the six months ended December 31, 2017, 7,934 shares of restricted stock vested.~~

~~Farmer Bros. Co.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

The following table summarizes restricted stock activity for the ~~six~~nine months ended ~~December~~March 31, ~~2017:~~

2022:

The total grant-date fair value of restricted stock granted during the nine months ended March 31, 2022 was $3.5 million.

The aggregate intrinsic values of shares outstanding at the end of each fiscal period in the table above represent the total pretax intrinsic values, based on the Company’s closing stock price of $32.15 at December 29, 2017 and $30.25 at June 30, 2017, representing the last trading day of the respective fiscal periods. Restricted stock that is expected to vest is net of estimated forfeitures.

At ~~December~~March 31, ~~2017~~2022 and June 30, ~~2017,~~2021, there was ~~$0.5~~$4.0 million and ~~$0.3~~$2.8 million, respectively, of unrecognized compensation cost related to restricted stock. The unrecognized compensation cost related to restricted stock at ~~December~~March 31, ~~2017~~2022 is expected to be recognized over the weighted average period of ~~1.1 years.~~ 1.4 years. Total compensation expense for restricted stock was ~~$0.1~~$0.5 million and $0.4 million, respectively, in ~~each of~~ the three months ended ~~December~~March 31, ~~2017~~2022 and ~~2016.~~2021. Total compensation expense for restricted stock was ~~$0.1~~$1.5 million and $1.5 million, respectively, in ~~each of~~ the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2022 and ~~2016.~~2021.

Farmer Bros. Co.

Notes to Unaudited Consolidated Financial Statements (continued)

Performance-Based Restricted Stock Units (“PBRSUs”)

~~During~~The following table summarizes PBRSU activity for the ~~six~~nine months ended ~~December~~March 31, ~~2017,~~2022:


Outstanding and Nonvested PBRSUs:	PBRSUs Awarded(1)	Weighted Average Grant Date Fair Value ($)
Outstanding and nonvested at June 30, 2021	354,466	$	6.06
Granted(1)	158,659	8.91
Vested/Released	(381)	25.04
Cancelled/Forfeited	(17,671)	3.11
Outstanding and nonvested at March 31, 2022	495,073	$	5.14

The total grant-date fair value of PBRSUs granted during the nine months ended March 31, 2022 was $1.4 million.

At March 31, 2022 and June 30, 2021, there was $1.9 million and $1.0 million, respectively, of unrecognized PBRSU compensation cost. The unrecognized PBRSU compensation cost at March 31, 2022 is expected to be recognized over the weighted average period of 2.2 years. Total compensation expense for PBRSUs was $173.3 thousand and $192.5 thousand, respectively, for the three months ended March 31, 2022 and 2021. Total compensation expense for PBRSUs was $0.5 million for the nine months ended March 31, 2022. For the nine months ended March 31, 2021, the Company reversed the previously recognized nonvested compensation expense of $295.8 thousand for awards granted prior to fiscal 2021 since it was deemed not probable that the Company will achieve the target performance conditions.

Cash-Settled Restricted Stock Units (“CSRSUs”)

CSRSUs vest in equal installments over a three-year period from the grant date, and are cash-settled upon vesting based on the closing share price of Common Stock on the vesting date.

The CSRSUs are accounted for as liability awards, and compensation expense is measured at fair value on the date of grant and recognized on a straight-line basis over the vesting period net of forfeitures. Compensation expense is remeasured at each reporting date with a cumulative adjustment to compensation cost during the period based on changes in the closing share price of Common Stock.

The following table summarizes CSRSU activity for the nine months ended March 31, 2022:


Outstanding and Nonvested CSRSUs:	CSRSUs Awarded	Weighted Average Grant Date Fair Value ($)
Outstanding and nonvested at June 30, 2021	185,602	$	4.31
Granted	85,851	8.91
Vested/Released	(52,583)	4.31
Cancelled/Forfeited	(59,211)	5.52
Outstanding and nonvested at March 31, 2022	159,659	$	6.34

The total grant-date fair value of CSRSUs granted during the nine months ended March 31, 2022 was $0.8 million.

At March 31, 2022 and June 30, 2021, there was $1.0 million and $2.0 million, respectively, of unrecognized compensation cost related to CSRSU. The unrecognized compensation cost related to CSRSU at March 31, 2022 is expected to be recognized over the weighted average period of 2.0 years. Total compensation expense for CSRSUs was $25.0 thousand and $142.0 thousand, respectively for the three and nine months ended March 31, 2022. Total compensation expense for CSRSUs was $192.5 thousand and $213.1 thousand in the three and nine months ended March 31, 2021.

Performance Cash Awards (“PCAs”)

In November 2019, the Company granted ~~37,414 PBRSUs~~PCAs under the 2017 Plan to ~~eligible employees with a grant date fair value of $31.70 per unit.~~certain employees. The ~~fiscal 2018 PBRSU awards~~PCAs cliff vest on the third anniversary of the date of grant based on the Company’s achievement of certain financial performance goals for the performance period July 1, ~~2017~~2019 through June 30, ~~2020,~~2022, subject to certain continued employment conditions and subject to acceleration provisions of the 2017 ~~Plan and restricted stock unit agreement.~~Plan. At the end of the three-year performance period, the ~~number~~amount of ~~PBRSUs~~PCAs that actually vest will be 0% to ~~150%~~200% of the target amount, depending on the extent to which the Company meets or exceeds the achievement of those financial performance goals measured over the full three-year performance period. ~~No PBRSUs were granted during the six months ended December 31, 2016.~~

~~The following table summarizes PBRSU activity for the six months ended December 31, 2017:~~

Outstanding and Nonvested PBRSUs:
PBRSUs
Awarded

Weighted
Average
Grant Date
Fair Value
($)

Weighted
Average
Remaining
Life
(Years)

Aggregate
Intrinsic
Value
($ in thousands)
Outstanding and nonvested at June 30, 2017 —
—
—
—
Granted(1) 37,414
31.70
—
1,186
Vested/Released —
—
—
—
Cancelled/Forfeited —
—
—
—
Outstanding and nonvested at December 31, 2017 37,414
31.70
2.9
1,203
Expected to vest at December 31, 2017 32,495
31.70
2.9
1,045

(1) The target number of PBRSUs is presented in the table. Under the terms of the awards, the recipient may earn between 0% and 150% of the target number of PBRSUs depending on the extent to which the Company meets or exceeds the achievement of the applicable financial performance goals.

The aggregate intrinsic value of PBRSUs outstanding at December 31, 2017 represents the total pretax intrinsic value, based on the Company’s closing stock price of $32.15 at December 29, 2017, representing the last trading day of the fiscal period. PBRSUs that are expected to vest are net of estimated forfeitures.

Farmer Bros. Co.

Notes to Unaudited ~~Condensed~~ Consolidated Financial Statements (continued)

~~At December 31, 2017~~The PCAs are measured initially based on a fixed amount of the awards at the date of grant and ~~June 30, 2017, there was $1.1 million and $0, respectively,~~are required to be re-measured based on the probability of ~~unrecognized compensation cost related to PBRSUs. The unrecognized compensation cost related to PBRSUs~~achieving the performance conditions at ~~December 31, 2017~~each reporting date until settlement. Compensation expense for PCAs is ~~expected to be~~ recognized over the ~~weighted average period~~applicable performance periods. The Company records a liability equal to the cost of ~~2.9 years. Total~~PCAs for which achievement of the performance condition is deemed probable. As of March 31, 2022 and 2021, there was no liability and no unrecognized PCA compensation ~~expense for PBRSUs~~cost since it was ~~$48,000~~deemed not probable that the Company will achieve the target performance conditions.


(In thousands)	March 31, 2022		June 30, 2021
Cumulative preferred dividends, undeclared and unpaid	$	2,496	$	2,051
Accrued workers’ compensation liabilities	989		1,016
Finance lease liabilities	193		192

Other (1)	4,156		3,166
Other current liabilities	$	7,834	$	6,425

~~On December 22, 2017,~~The income tax expense and the ~~President of the United States signed into law the Tax Cuts and Jobs Act of 2017 (the “Tax Act”).~~ related effective tax rates are as follows (in thousands, except effective tax rate):

The ~~SEC subsequently issued Staff Accounting Bulletin No. 118, “Income Tax Accounting Implications of the Tax Cuts and Jobs Act” (“SAB 118”), which provides guidance on accounting for the~~Company’s interim tax ~~effects of the Tax Act. Under SAB 118, companies are able to record a reasonable estimate of the impacts of the Tax Act if one~~provision is ~~able to be~~ determined and report it as a provisional amount during the measurement period. The measurement period is not to extend beyond one year from the enactment date. Impacts of the Tax Act that a company is not able to make a reasonable estimate for should not be recorded until a reasonable estimate can be made during the measurement period.

~~In the three months ended December 31, 2017, the Company revised its~~using an estimated annual effective tax rate ~~to reflect a change~~and adjusted for discrete taxable events that may occur during the quarter. The Company recognizes the effects of tax legislation in the ~~federal statutory rate from 35.0%~~period in which the law is enacted. Deferred tax assets and liabilities are remeasured using enacted tax rates expected to ~~28.1%. The change~~apply to taxable income in ~~statutory rate was made as a result of~~ the ~~Tax Act. The rate change is administratively effective as of the enactment date and~~years the Company ~~is using a blended rate of 28.1% for its fiscal year ending on June 30, 2018, as prescribed. In addition, in~~estimates the ~~three months ended December 31, 2017, the Company recognized tax expense~~ related temporary differences to adjusting its deferred tax balances to reflect the new corporate tax rate. Deferred tax amounts are calculated based on the rates at which they are expected to reverse in the future. The Company is analyzing certain aspects of the Tax Act and refining its calculations which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. The provisional amount recorded related to the re-measurement of the Company’s deferred tax balance was $(20.3) million at December 31, 2017.

The Company’s effective tax rates for the three months ended December 31, 2017 and 2016 were 976.2% and 40.1%, respectively. The Company’s effective tax rates for the six months ended December 31, 2017 and 2016 were 4,449.3% and 40.1%, respectively. The effective tax rates for the three and six months ended December 31, 2017 and 2016 were higher than the U.S. statutory rates of 28.1% and 35.0%, respectively, primarily due to income tax expense of $(20.3) million resulting from the adjustment of deferred tax amounts due to enactment of the Tax Act.

reverse. The Company evaluates its deferred tax assets quarterly to determine if a valuation allowance is required. In making such assessment, significant weight is given to evidence that can be objectively verified, such as recent operating results, and less consideration is given to less objective indicators such as future income projections. ~~After consideration~~The difference between the Company’s effective tax rate and the federal statutory rate in each period presented primarily results from state tax expenses and changes in the Company’s valuation allowance. The effective tax rates for the nine month periods ended March 31, 2021 were also affected by tax expense of ~~positive and negative evidence, including~~$13.5 million related to previously deferred non-cash tax expense in accumulated other comprehensive income associated with gains on the ~~recent history~~postretirement medical plan in prior years.

Tax expense in the three months ended March 31, 2022 was $89.5 thousand compared to income tax benefit of $60.0 thousand in the three months ended March 31, 2021. Tax expense in the nine months ended March 31, 2022 was $278.0 thousand compared to $13.8 million in the nine months ended March 31, 2021, which primarily relates to $13.5 million of previously deferred non-cash tax expense in accumulated other comprehensive income associated with gains on the postretirement medical plan in prior years.

The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company ~~concluded that it~~ is ~~more likely than not that~~subject to examination by U.S. federal, state and local tax authorities. With limited exceptions, as of March 31, 2022, the Company ~~will generate future~~is no longer subject to income ~~sufficient to realize the majority of the Company’s deferred~~ tax ~~assets.~~audits by taxing authorities for any years

~~As of December 31, 2017 and June 30, 2017 the Company had no unrecognized tax benefits.~~

~~As discussed in~~ ~~Note 2~~, the Company adopted ASU 2016-09 beginning July 1, 2017 and upon adoption recognized the excess tax benefits of $1.6 million as an increase to deferred tax assets and a corresponding increase to retained earnings.

Farmer Bros. Co.

Notes to Unaudited ~~Condensed~~ Consolidated Financial Statements (continued)

prior to 2019. Although the outcome of tax audits is always uncertain, the Company does not believe the outcome of any future audit will have a material adverse effect on the Company’s consolidated financial statements.

Note ~~19.~~17. Net ~~(Loss) Income~~Loss Per Common Share

~~Computation~~Basic net (loss) per common share is calculated by dividing net loss attributable to the Company by the weighted average number of ~~EPS for~~common shares outstanding during the ~~three and six months ended December 31, 2017 excludes~~periods presented. Diluted net (loss) per common share is calculated by dividing diluted net loss attributable to the Company by the weighted average number of common shares outstanding adjusted to include the effect, if dilutive, ~~effect~~ of ~~525,059 shares issuable under~~the exercise of in-the-money stock options, ~~37,414 PBRSUs~~unvested performance-based restricted stock units, and ~~383,611~~ shares ~~issuable upon the assumed conversion~~ of the ~~outstanding~~ Company’s Series A Convertible Participating Cumulative Perpetual Preferred Stock, par value $1.00 per share (“Series A Preferred ~~Stock because~~Stock”), as converted, during the ~~Company incurred net losses in~~periods presented. The calculation of dilutive shares outstanding excludes out-of-the-money stock options (i.e., such option’s exercise prices were greater than the ~~three and six months ended December 31, 2017 so their inclusion would be anti-dilutive.~~

~~Computation~~average market price of ~~EPS~~our common shares for the ~~three~~period) and ~~six months ended December 31, 2016 includes the dilutive effect of 122,897 shares and 122,142 shares, respectively, issuable under~~unvested performance-based restricted stock options with exercise prices below the closing price of the Company’s common stock on the last trading day of the applicable period, but excludes the dilutive effect of 29,032 and 24,804 shares, respectively, issuable under stock options with exercise prices above the closing price of the Company’s common stock on the last trading day of the applicable periodunits because their inclusion would behave been anti-dilutive.

Three Months Ended
December 31,

Six Months Ended
December 31,
(In thousands, except share and per share amounts) 2017 2016 2017 2016
Undistributed net (loss) income available to common stockholders $ (18,887 ) $ 20,052
$ (19,865 ) $ 21,669
Undistributed net (loss) income available to nonvested restricted stockholders (10 ) 24
(10 ) 25
Net (loss) income available to common stockholders—basic $ (18,897 ) $ 20,076
$ (19,875 ) $ 21,694

Weighted average common shares outstanding—basic 16,723,498
16,584,106
16,711,660
16,573,545
Effect of dilutive securities:
Shares issuable under stock options —
122,897
—
122,142
Shares issuable PBRSUs —
—
—
—
Shares issuable under convertible preferred stock —
—
—
—
Weighted average common shares outstanding—diluted 16,723,498
16,707,003
16,711,660
16,695,687
Net (loss) income per common share available to common stockholders—basic $ (1.13 ) $ 1.21
$ (1.19 ) $ 1.31
Net (loss) income per common share available to common stockholders—diluted $ (1.13 ) $ 1.20
$ (1.19 ) $ 1.30


	Three Months Ended March 31,				Nine Months Ended March 31,
(In thousands, except share and per share amounts)	2022		2021		2022		2021
Undistributed net loss available to common stockholders	$	(3,993)	$	(13,234)	$	(11,854)	$	(36,601)
Undistributed net loss available to nonvested restricted stockholders and holders of convertible preferred stock	(196)		(594)		(474)		(1,507)
Net loss available to common stockholders - basic	$	(4,189)	$	(13,828)	$	(12,328)	$	(38,108)

Weighted average common shares outstanding - basic	18,289,815		17,756,619		18,118,469		17,569,026
Effect of dilutive securities:
Shares issuable under stock options	—		—		—		—
Shares issuable under PBSRUs	—		—		—		—
Shares issuable under convertible preferred stock	—		—		—		—
Weighted average common shares outstanding - diluted	18,289,815		17,756,619		18,118,469		17,569,026
Net loss available to common stockholders per common share—basic	$	(0.23)	$	(0.78)	$	(0.68)	$	(2.17)
Net loss available to common stockholders per common share—diluted	$	(0.23)	$	(0.78)	$	(0.68)	$	(2.17)

The following table summarizes anti-dilutive securities excluded from the computation of diluted net loss per common share for the periods indicated:


	Three Months Ended March 31,		Nine Months Ended March 31,
	2022	2021	2022	2021
Shares issuable under stock options	467,124	421,167	471,380	421,167
Shares issuable under convertible preferred stock	448,741	433,373	448,741	433,373
Shares issuable under PBRSUs	495,073	185,236	454,110	104,271

The Company is authorized to issue 500,000 shares of preferred stock at a par value of $1.00, including 21,000 authorized shares of Series A Preferred Stock.

~~Series A Convertible Participating Cumulative Perpetual Preferred Stock~~

On October 2, 2017, the Company issued 14,700 shares of Series A Preferred Stock in connection with the acquisition of substantially all of the assets of the Boyd Coffee ~~acquisition. The~~Company. At March 31, 2022, Series A Preferred Stock ~~pays an annual dividend, when, as and if declared by the Company’s Board of Directors, of 3.5%~~consisted of the ~~stated value per share payable in four quarterly installments in arrears,~~following:

The Company’s primary sources of revenue are sales of coffee, tea and has an initial stated value of $1,000 per share, adjustable up or down by the amount of undeclared and unpaid dividends or subsequent payment of accumulated dividends thereon, respectively, and a conversion premium of 22.5%. Dividends may be paid in cash. At December 31, 2017, theculinary products. The Company had undeclared and unpaid preferred dividends of $128,625 on 14,700 issued and outstanding shares of Series A Preferred Stock. Series A Preferred Stock is a participating security because it has rights to earnings that otherwise would have been available to common stockholders. On an as converted basis, holders of Series A Preferred Stock are entitled to vote together with the holdersrecognizes revenue when control of the ~~Company’s common stock and are entitled to share in the dividends on common stock, when declared. Each share of Series A Preferred Stock~~promised good or service is ~~convertible into 26 shares of the Company’s common stock (rounded down~~transferred to the ~~nearest whole share~~customer and ~~subject to adjustment~~ in accordance with the terms of the Certificate of Designations filed with the Secretary of State of the State of Delaware). Series A Preferred Stock is a perpetual stock and, therefore, not redeemable. Based on its characteristics,amounts that the Company ~~classified Series A Preferred Stock as permanent equity.~~

Farmer Bros. Co.

Notes to Unaudited ~~Condensed~~ Consolidated Financial Statements (continued)

expects to collect. The timing of revenue recognition takes into consideration the various shipping terms applicable to the Company’s sales.


(In thousands)	December 31, 2017		June 30, 2017		(In thousands)	March 31, 2022		June 30, 2021
Coffee					Coffee
Processed	$	14,514	$	14,085	Processed	$	27,058	$	20,917
Unprocessed	27,436		17,083		Unprocessed	53,473		34,762
Total	$	41,950	$	31,168	Total	$	80,531	$	55,679
Tea and culinary products					Tea and culinary products
Processed	$	23,432	$	20,741	Processed	$	13,003	$	15,228
Unprocessed	999		74		Unprocessed	72		60
Total	$	24,431	$	20,815	Total	$	13,075	$	15,288
Coffee brewing equipment parts	$	6,903	$	4,268	Coffee brewing equipment parts	$	7,039	$	5,824
Total inventories	$	73,284	$	56,251	Total inventories	$	100,645	$	76,791


	Three Months Ended December 31,						Six Months Ended December 31,
	2017			2016			2017			2016				Three Months Ended March 31,				Nine Months Ended March 31,
(In thousands)													(In thousands)	2022		2021		2022		2021
Service cost	$	—		$	124		$	—		$	248		Service cost	$	—	$	—	$	—	$	—
Interest cost	1,432			1,397			2,864			2,794			Interest cost	848		859		2,544		2,578
Expected return on plan assets	(1,456		)	(1,607		)	(2,912		)	(3,214		)	Expected return on plan assets	(1,237)		(1,038)		(3,711)		(3,113)
Amortization of net loss⁽¹⁾	418			508			836			1,016
Net periodic benefit cost	$	394		$	422		$	788		$	844
Amortization of net loss(1)													Amortization of net loss(1)	339		502		1,017		1,507

Net periodic benefit (credit) cost													Net periodic benefit (credit) cost	$	(50)	$	323	$	(150)	$	972


				March 31, 2022				June 30, 2021
(In thousands)	Debt Origination Date	Maturity	Principal Borrowing Amount	Carrying Value		Weighted Average Interest Rate (1)		Carrying Value		Weighted Average Interest Rate
Revolver	Various	4/25/2025	N/A	$	54,500	2.75	%	$	43,500	6.21	%
Term Loan	4/26/2021	4/25/2025	$47,500	44,694		7.50	%	45,278		7.50	%
Total				$	99,194			$	88,778



¨☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	Three Months Ended December 31,						Six Months Ended December 31,
	2017			2016			2017			2016
Net sales	$	167,366		$	139,025		$	299,079		$	269,513
Cost of goods sold	101,847			83,929			184,553			163,219
Gross profit	65,519			55,096			114,526			106,294
Selling expenses	49,328			39,097			88,243			77,535
General and administrative expenses	13,914			13,793			25,241			22,729
Restructuring and other transition expenses	139			3,965			259			6,995
Net gain from sale of Torrance Facility	—			(37,449		)	—			(37,449		)
Net gains from sale of spice assets	(395		)	(334		)	(545		)	(492		)
Net losses (gains) from sales of other assets	91			114			144			(1,439		)
Operating expenses	63,077			19,186			113,342			67,879
Income from operations	2,442			35,910			1,184			38,415
Other (expense) income:
Dividend income	6			270			11			535
Interest income	1			159			2			288
Interest expense	(861		)	(524		)	(1,384		)	(913		)
Other, net	554			(2,323		)	641			(2,132		)
Total other expense	(300		)	(2,418		)	(730		)	(2,222		)
Income before taxes	2,142			33,492			454			36,193
Income tax expense	20,910			13,416			20,200			14,499
Net (loss) income	$	(18,768	)	$	20,076		$	(19,746	)	$	21,694
Less: Cumulative preferred dividends, undeclared and unpaid	129			—			129			—
Net (loss) income available to common stockholders	$	(18,897	)	$	20,076		$	(19,875	)	$	21,694
Net (loss) income per common share available to common stockholders—basic	$	(1.13	)	$	1.21		$	(1.19	)	$	1.31
Net (loss) income per common share available to common stockholders—diluted	$	(1.13	)	$	1.20		$	(1.19	)	$	1.30
Weighted average common shares outstanding—basic	16,723,498			16,584,106			16,711,660			16,573,545
Weighted average common shares outstanding—diluted	16,723,498			16,707,003			16,711,660			16,695,687



FARMER BROS. CO.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
	Six Months Ended December 31,
	2017			2016
Cash flows from operating activities:
Net (loss) income	$	(19,746	)	$	21,694
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization	15,330			10,086
Provision for (recovery of) doubtful accounts	129			(44		)
Interest on sale-leaseback financing obligation	—			681
Restructuring and other transition expenses, net of payments	(958		)	1,082
Deferred income taxes	19,375			13,640
Net gain from sale of Torrance Facility	—			(37,449		)
Net gains from sales of spice assets and other assets	(401		)	(1,931		)
ESOP and share-based compensation expense	1,844			2,094
Net losses on derivative instruments and investments	1,033			2,583
Change in operating assets and liabilities:
Purchases of trading securities	—			(2,959		)
Proceeds from sales of trading securities	375			1,268
Accounts receivable	(8,102		)	(4,545		)
Inventories	(7,682		)	(10,071		)
Income tax receivable	112			(27		)
Derivative assets (liabilities), net	(3,000		)	4,329
Prepaid expenses and other assets	352			33
Accounts payable	1,264			18,356
Accrued payroll expenses and other current liabilities	1,178			(5,210		)
Accrued postretirement benefits	(676		)	(447		)
Other long-term liabilities	(1,960		)	(1,849		)
Net cash (used in) provided by operating activities	$	(1,533	)	$	11,314
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired	$	(39,608	)	$	(11,183	)
Purchases of property, plant and equipment	(14,672		)	(26,864		)
Purchases of assets for construction of New Facility	(1,577		)	(21,783		)
Proceeds from sales of property, plant and equipment	85			3,332
Net cash used in investing activities	$	(55,772	)	$	(56,498	)
(continued on next page)



Supplemental disclosure of non-cash investing and financing activities:
Net change in derivative assets and liabilities included in other comprehensive (loss) income, net of tax	$	(1,342	)	$	(1,203	)
Non-cash additions to property, plant and equipment	$	557		$	11,253
Non-cash portion of earnout receivable recognized—spice assets sale	$	545		$	492
Non-cash portion of earnout payable recognized—China Mist acquisition	$	—		$	500
Non-cash receivable from West Coast Coffee—post-closing final working capital adjustment	$	218		$	—
Non-cash consideration given—Issuance of Series A Preferred Stock	$	11,756		$	—
Non-cash Multiemployer Plan Holdback payable recognized—Boyd Coffee acquisition	$	1,056		$	—
Cumulative preferred dividends, undeclared and unpaid	$	129		$	—



(In thousands)	Fair Value			Estimated Useful Life (years)

Cash paid, net of cash acquired	$	11,183
Post-closing final working capital adjustments	553
Contingent consideration	500
Total consideration	$	12,236

Accounts receivable	$	811
Inventory	544
Prepaid assets	48
Property, plant and equipment	189
Goodwill	2,927
Intangible assets:
Recipes	930			7
Non-compete agreement	100			5
Customer relationships	2,000			10
Trade name/Trademark—indefinite-lived	5,070
Accounts payable	(383		)
Total consideration, net of cash acquired	$	12,236



(In thousands)	Fair Value			Estimated Useful Life (years)

Cash paid, net of cash acquired	$	14,671
Post-closing final working capital adjustments	(218		)
Fair value of contingent consideration	600
Total consideration	$	15,053

Accounts receivable	$	956
Inventory	910
Prepaid assets	16
Property, plant and equipment	1,546
Goodwill	7,630
Intangible assets:
Non-compete agreements	100			5
Customer relationships	4,400			10
Trade name—finite-lived	260			7
Brand name—finite-lived	250			1.7
Accounts payable	(833		)
Other liabilities	(182		)
Total consideration, net of cash acquired	$	15,053



	Closing Date through December 31, 2017
(In thousands)
Net sales	$	26,290
Income before taxes	$	511


Outstanding and Nonvested Restricted Stock Awards:	Shares Awarded		Weighted Average Grant Date Fair Value ($)	Weighted Average Remaining Life (Years)	Aggregate Intrinsic Value ($ in thousands)	Outstanding and Nonvested Restricted Stock Awards:	Shares Awarded	Weighted Average Grant Date Fair Value ($)
Outstanding and nonvested at June 30, 2017	15,445		29.79	0.9	467
Outstanding and nonvested at June 30, 2021						Outstanding and nonvested at June 30, 2021	681,570	$	10.47
Granted	13,110		33.88	1.7	444	Granted	423,408	7.61
Vested/Released	(7,934	)	32.77	—	272	Vested/Released	(260,011)	5.02
Cancelled/Forfeited	(3,390	)	25.57	—	—	Cancelled/Forfeited	(105,072)	7.00
Outstanding and nonvested at December 31, 2017	17,231		32.35	1.6	554
Expected to vest at December 31, 2017	16,411		32.32	1.5	528
Outstanding and nonvested at March 31, 2022						Outstanding and nonvested at March 31, 2022	739,895	$	6.78



Outstanding and Nonvested PBRSUs:	PBRSUs Awarded	Weighted Average Grant Date Fair Value ($)	Weighted Average Remaining Life (Years)	Aggregate Intrinsic Value ($ in thousands)
Outstanding and nonvested at June 30, 2017	—	—	—	—
Granted(1)	37,414	31.70	—	1,186
Vested/Released	—	—	—	—
Cancelled/Forfeited	—	—	—	—
Outstanding and nonvested at December 31, 2017	37,414	31.70	2.9	1,203
Expected to vest at December 31, 2017	32,495	31.70	2.9	1,045


(In thousands, except share and per share amounts)
Shares Authorized	Shares Issued and Outstanding	Stated Value per Share		Carrying Value		Cumulative Preferred Dividends, Undeclared and Unpaid		Liquidation Preference
21,000	14,700	$	1,170	$	17,196	$	2,496	$	17,196


(In thousands)
Name of Branch Property	Date Sold	Sales Price		Net Proceeds		Gain on Sale
Santa Ana, California	7/2/2021	$	4,299	$	4,072	$	3,571
Santa Fe Springs, California	7/7/2021	2,650		2,507		1,509
San Antonio, Texas	11/2/2021	898		820		729



Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations


	Three Months Ended March 31,						Favorable (Unfavorable)				Nine Months Ended March 31,						Favorable (Unfavorable)
	2022			2021			Change		% Change		2022			2021			Change		% Change
Income Statement Data:
Net sales	$	119,398		$	93,152		$26,246		28.2%		$	346,205		$	294,993		$51,212		17.4%
Gross margin	29.8		%	25.6		%	4.2%		NM		29.5		%	24.6		%	4.9%		NM
Operating expenses as a % of sales	33.1		%	36.8		%	3.7%		NM		32.4		%	35.4		%	3.0%		NM
Loss from operations	$	(3,938)		$	(10,395)		$6,457		62.1%		$	(10,290)		$	(32,004)		$21,714		67.8%
Net loss	$	(4,040)		$	(13,684)		$9,644		70.5%		$	(11,884)		$	(37,680)		$25,796		68.5%

Operating Data:
Coffee pounds	18,797			18,026			771		4.3%		58,466			60,366			(1,900)		(3.1)%
EBITDA(1)	$	2,577		$	(4,800)		$7,377		153.7%		$	11,055		$	3,391		$7,664		226.0%
EBITDA Margin(1)	2.2		%	(5.2)		%	7.4%		NM		3.2		%	1.1		%	2.1%		NM
Adjusted EBITDA(1)	$	5,021		$	(759)		$5,780		761.5%		$	13,009		$	13,207		$(198)		(1.5)%
Adjusted EBITDA Margin(1)	4.2		%	(0.8)		%	5.0%		NM		3.8		%	4.5		%	(0.7)%		NM

Percentage of Total Net Sales By Product Category
Coffee (Roasted)	64.9		%	65.2		%	(0.3)%		(0.5)%		64.6		%	66.6		%	(2.0)%		(3.0)%
Tea & Other Beverages (2)	17.6		%	18.4		%	(0.8)%		(4.3)%		18.2		%	17.5		%	0.7%		4.0%
Culinary	11.6		%	11.3		%	0.3%		2.7%		11.8		%	11.0		%	0.8%		7.3%
Spices	4.8		%	4.8		%	—%		—%		4.6		%	4.6		%	—%		—%
Net sales by product category	98.9		%	99.7		%	(0.8)%		NM		99.2		%	99.7		%	(0.5)%		NM
Delivery Surcharge	1.1		%	0.3		%	0.8%		NM		0.8		%	0.3		%	0.5%		NM
Net sales	100.0		%	100.0		%	—%		—%		100.0		%	100.0		%	—%		—%

Other data:
Capital expenditures related to maintenance	$	2,985		$	2,042		$	(943)	(46.2)	%	$	7,893		$	5,783		$	(2,110)	(36.5)	%
Total capital expenditures	3,009			3,133			124		4.0	%	8,896			12,769			3,873		30.3	%
Depreciation and amortization expense	5,791			6,883			1,092		15.9	%	18,119			21,231			3,112		14.7	%


•	~~(* EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures. See~~ ~~Non-GAAP Financial Measures~~ ~~in Part I, Item 2 of this report for a reconciliation of these non-GAAP measures to their corresponding GAAP measures.)~~


							Three Months Ended March 31, 2022 vs. 2021		% of Total Mix Change		Nine Months Ended March 31, 2022 vs. 2021		% of Total Mix Change
(In millions)	Three Months Ended December 31, 2017 vs. 2016			Six Months Ended December 31, 2017 vs. 2016
Effect of change in unit sales	$	29.7		$	18.9	Effect of change in unit sales	$	5.8	22.1	%	$	(5.6)	(10.9)	%
Effect of pricing and product mix changes	(1.3		)	10.7		Effect of pricing and product mix changes	20.4		77.9	%	56.8		110.9	%
Total increase in net sales	$	28.4		$	29.6	Total increase in net sales	$	26.2	100.0	%	$	51.2	100.0	%



	Three Months Ended December 31,						Six Months Ended December 31,
(In thousands, except per share data)	2017			2016			2017			2016
Net (loss) income, as reported	$	(18,768	)	$	20,076		$	(19,746	)	$	21,694
Restructuring and other transition expenses	139			3,965			259			6,995
Net gain from sale of Torrance Facility	—			(37,449		)	—			(37,449		)
Net gains from sale of spice assets	(395		)	(334		)	(545		)	(492		)
Net losses (gains) from sales of other assets	91			114			144			(1,439		)
Non-recurring 2016 proxy contest-related expenses	—			3,719			—			4,990
Interest expense on sale-leaseback financing obligation	—			371			—			681
Acquisition and integration costs	972			—			3,382			—
Income tax (benefit) expense on non-GAAP adjustments	(258		)	11,549			(1,037		)	10,418
Non-GAAP net (loss) income	$	(18,219	)	$	2,011		$	(17,543	)	$	5,398

Net (loss) income per common share—diluted, as reported	$	(1.12	)	$	1.20		$	(1.18	)	$	1.30
Impact of restructuring and other transition expenses	$	0.01		$	0.24		$	0.02		$	0.42
Impact of net gain from sale of Torrance Facility	$	—		$	(2.24	)	$	—		$	(2.24	)
Impact of net gains from sale of spice assets	$	(0.02	)	$	(0.02	)	$	(0.03	)	$	(0.03	)
Impact of net losses (gains) from sales of other assets	$	0.01		$	0.01		$	0.01		$	(0.09	)
Impact of non-recurring 2016 proxy contest-related expenses	$	—		$	0.22		$	—		$	0.30
Impact of interest expense on sale-leaseback financing obligation	$	—		$	0.02		$	—		$	0.04
Impact of acquisition and integration costs	$	0.06		$	—		$	0.20		$	—
Impact of income tax (benefit) expense on non-GAAP adjustments	$	(0.02	)	$	0.69		$	(0.06	)	$	0.62
Non-GAAP net (loss) income per diluted common share	$	(1.09	)	$	0.12		$	(1.05	)	$	0.32



	Expenditures Incurred						Budget
(In thousands)	Six Months Ended December 31, 2017		Through Fiscal Year Ended June 30, 2017		Total		Lower bound		Upper bound
Building and facilities, including land	$	—	$	60,770	$	60,770	$	55,000	$	60,000
Machinery and equipment; furniture and fixtures	—		33,241		$	33,241	35,000		39,000
Total	$	—	$	94,011	$	94,011	$	90,000	$	99,000



Item 3.			Quantitative and Qualitative Disclosures About Market Risk


(In thousands)	Principal	Interest Rate		Annual Interest Expense
–150 basis points	$101,050	4.94	%	$4,992
–100 basis points	$101,050	4.94	%	$4,992
Unchanged	$101,050	4.94	%	$4,992
+100 basis points	$101,050	5.66	%	$5,719
+150 basis points	$101,050	6.16	%	$6,225



($ in thousands)	Principal	Interest Rate		Annual Interest Expense
–150 basis points	$84,430	2.13	%	$	1,798
–100 basis points	$84,430	2.63	%	$	2,221
Unchanged	$84,430	3.63	%	$	3,065
+100 basis points	$84,430	4.63	%	$	3,909
+150 basis points	$84,430	5.13	%	$	4,331


	Increase (Decrease) to Net Income					Increase (Decrease) to AOCI						Increase (Decrease) to Net Loss				Increase (Decrease) to AOCI
	10% Increase in Underlying Rate		10% Decrease in Underlying Rate			10% Increase in Underlying Rate		10% Decrease in Underlying Rate				10% Increase in Underlying Rate		10% Decrease in Underlying Rate		10% Increase in Underlying Rate		10% Decrease in Underlying Rate
(In thousands)											(In thousands)
Coffee-related derivative instruments⁽¹⁾	$	211	$	(211	)	$	4,202	$	(4,202	)
Coffee-related derivative instruments(1)											Coffee-related derivative instruments(1)	$	568	$	(568)	$	1,883	$	(1,883)


Exhibit No.						Description

3.1						Amended and Restated Certificate of Incorporation of Farmer Bros. Co. (filed as Exhibit 3.1 to the Company’s Annual Report on Form 10-K filed with the SEC on September 11, 2019 and incorporated herein by reference).

3.2						Certificate of Amendment of Amended and Restated Certificate of Incorporation of Farmer Bros. Co. (filed as Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 filed with the SEC on May 8, 2020 and incorporated herein by reference).

3.3						Certificate of Amendment of Amended and Restated Certificate of Incorporation of Farmer Bros. Co. (filed as Exhibit 4.4 to the Company’s Registration Statement on Form S-8 filed with the SEC on December 28, 2021 and incorporated herein by reference).

3.4						Certificate of Designations of Series A Convertible Participating Cumulative Perpetual Preferred Stock of Farmer Bros. Co. (filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 3, 2017 and incorporated herein by reference).

3.5						Amended and Restated Bylaws (filed as Exhibit 3.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2019 filed with the SEC on February 11, 2019 and incorporated herein by reference).

3.6						Amendment No. 1 to Amended and Restated Bylaws of Farmer Bros. Co. (filed as Exhibit 3.4 to the Company’s Annual Report on Form 10-K filed with the SEC on September 11, 2020 and incorporated herein by reference).

31.1*						Principal Executive Officer Certification Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*						Principal Financial Officer Certification Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**						Principal Executive Officer Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**						Principal Financial Officer Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*						Inline XBRL Instance Document

101.SCH*						Inline XBRL Taxonomy Extension Schema Document.

101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104						The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, formatted in Inline XBRL (included in Exhibit 101).



~~Item 6.~~			~~Exhibits~~
*			Filed herewith

**			Furnished, not filed, herewith

Chief Executive Officer (principal executive officer)

~~10.3~~		Joinder Agreement, dated as of October 11, 2016, by and among China Mist Brands, Inc., Farmer Bros. Co., as the Borrower Representative, and JPMorgan Chase Bank, N.A., as Administrative Agent, under that certain Credit Agreement dated as of March 2, 2015 (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2016 filed with the SEC on February 9, 2017 and incorporated herein by reference).

~~10.4~~	Joinder to Pledge and Security Agreement, dated as of October 11, 2016, by and among Farmer Bros. Co., Coffee Bean International, Inc., FBC Finance Company, Coffee Bean Holding Co., Inc., China Mist Brands, Inc. and JPMorgan Chase Bank, N.A., as Administrative Agent (filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2016 filed with the SEC on February 9, 2017 and incorporated herein by reference).

~~10.5~~	First Amendment to Credit Agreement and First Amendment to Pledge and Security Agreement, dated as of August 25, 2017, by and among Farmer Bros. Co., China Mist Brands, Inc., Coffee Bean International, Inc., FBC Finance Company, Coffee Bean Holding Company, Inc., the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 30, 2017 and incorporated herein by reference).

~~10.6~~	Joinder Agreement, dated as of November 29, 2017, by and among Boyd Assets Co., Farmer Bros. Co., as the Borrower’s Representative, and JPMorgan Chase Bank, N.A., as Administrative Agent, under that certain Credit Agreement dated as of March 2, 2015, as amended by that certain First Amendment to Credit Agreement, dated as of August 25, 2017(filed herewith).

~~10.7~~	Joinder to Pledge and Security Agreement, dated as of November 29, 2017, by and among Farmer Bros. Co., Coffee Bean International, Inc., FBC Finance Company, Coffee Bean Holding Co., Inc., China Mist Brands, Inc., Boyd Assets Co. and JPMorgan Chase Bank, N.A., as Administrative Agent (filed herewith).

~~10.8~~	Farmer Bros. Co. Pension Plan for Salaried Employees (filed (filed as Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 7, 2017 and incorporated herein by reference).**

~~10.9~~	Amendment No. 1 to Farmer Bros. Co. Retirement Plan effective June 30, 2011 (filed as Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016 filed with the SEC on September 14, 2016 and incorporated herein by reference).**

~~10.10~~	Action of the Administrative Committee of the Farmer Bros. Co. Qualified Employee Retirement Plans amending the Farmer Bros. Co. Retirement Plan, effective as of December 6, 2012 (filed as Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 filed with the SEC on May 6, 2013 and incorporated herein by reference).**

~~10.11~~	Farmer Bros. Co. 2005 Incentive Compensation Plan (filed as Exhibit 10.10 to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 2013 filed with the SEC on February 10, 2014 and incorporated herein by reference).**

~~10.12~~	Amendment to Farmer Bros. Co. 2005 Incentive Compensation Plan (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 10, 2014 and incorporated herein by reference).**

~~10.13~~	Farmer Bros. Co. Amended and Restated Employee Stock Ownership Plan, as adopted by the Board of Directors on December 9, 2010 and effective as of January 1, 2010 (filed as Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 filed with the SEC on May 6, 2016 and incorporated herein by reference).**

~~10.14~~	Action of the Administrative Committee of the Farmer Bros. Co. Qualified Employee Retirement Plans amending the Farmer Bros. Co. Amended and Restated Employee Stock Ownership Plan, effective as of January 1, 2012 (filed as Exhibit 10.12 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2017 filed with the SEC on September 28, 2017 and incorporated herein by reference).**

R. Drake Chief Financial Officer (principal financial officer)

~~10.28~~		Form of First Amendment to Employment Agreement entered into between Farmer Bros. Co. and each of Michael H. Keown, David G. Robson, Ellen D. Iobst, Scott W. Bixby, Scott A. Siers and Thomas J. Mattei, Jr. (filed as Exhibit 10.25 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 filed with the SEC on May 10, 2017 and incorporated herein by reference).**

~~10.29~~	Confidential General Release and Separation Agreement by and between Barry C. Fischetto and Farmer Bros. Co. dated February 17, 2017 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 17, 2017 and incorporated herein by reference).**

~~10.30~~	Farmer Bros. Co. 2007 Omnibus Plan, as amended (as approved by the stockholders at the 2012 Annual Meeting of Stockholders on December 6, 2012) (filed as Exhibit 10.27 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 7, 2017 and incorporated herein by reference).**

~~10.31~~	~~Farmer Bros. Co. Amended and Restated 2007 Long-Term Incentive Plan (as approved by the stockholders at the 2013 Annual Meeting of Stockholders on December~~ 5, 2013) (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on December 11, 2013 and incorporated herein by reference).**

~~10.32~~	Addendum to Farmer Bros. Co. Amended and Restated 2007 Long-Term Incentive Plan (filed as Exhibit 10.30 to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 2014 filed with the SEC on February 9, 2015 and incorporated herein by reference).**

~~10.33~~	Form of Farmer Bros. Co. 2017 Long-Term Incentive Plan Stock Option Award Agreement (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 4, 2017 and incorporated herein by reference).**

~~10.34~~	Form of Farmer Bros. Co. 2017 Long-Term Incentive Plan Stock Restricted Stock Unit Award Agreement (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 4, 2017 and incorporated herein by reference).**

~~10.35~~	Form of Farmer Bros. Co. 2017 Long-Term Incentive Plan Stock Restricted Stock Grant Agreement (Directors) (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 4, 2017 and incorporated herein by reference).**

~~10.36~~	Form of Farmer Bros. Co. 2017 Long-Term Incentive Plan Stock Restricted Stock Grant Agreement (Employees) (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 4, 2017 and incorporated herein by reference).**

~~10.37~~	Farmer Bros. Co. 2017 Long-Term Incentive Plan (as approved by the stockholders at the Special Meeting of Stockholders on June 20, 2017) filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on June 26, 2017 and incorporated herein by reference)**

~~10.38~~	Form of Farmer Bros. Co. 2007 Omnibus Plan Stock Option Grant Notice and Stock Option Agreement (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on April 4, 2013 and incorporated herein by reference).**

~~10.39~~	Form of Farmer Bros. Co. Amended and Restated 2007 Long-Term Incentive Plan Stock Option Grant Notice and Stock Option Agreement (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on December 18, 2013 and incorporated herein by reference).**

~~10.40~~	Form of Farmer Bros. Co. 2007 Omnibus Plan Restricted Stock Award Grant Notice and Restricted Stock Award Agreement (filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on April 4, 2013 and incorporated herein by reference).**

~~10.41~~	Form of Farmer Bros. Co. Amended and Restated 2007 Long-Term Incentive Plan Restricted Stock Award Grant Notice and Restricted Stock Award Agreement (filed as Exhibit 10.3 to the Company's Current Report on Form 8-K filed with the SEC on December 18, 2013 and incorporated herein by reference).**
	2022



~~10.42~~		Stock Ownership Guidelines for Directors and Executive Officers (filed as Exhibit 10.27 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016 filed with the SEC on September 14, 2016 and incorporated herein by reference).**

~~10.43~~		Form of Change in Control Severance Agreement for Executive Officers of the Company (with schedule of executive officers attached) (filed as Exhibit 10.35 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 filed with the SEC on May 10, 2017 and incorporated herein by reference).**

~~10.44~~		Form of First Amendment to Change in Control Severance Agreement entered into between Farmer Bros. Co. and each of Michael H. Keown, David G. Robson, Ellen D. Iobst, Scott W. Bixby, Scott A. Siers and Thomas J. Mattei, Jr. (filed as Exhibit 10.36 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 filed with the SEC on May 10, 2017 and incorporated herein by reference).**

~~10.45~~		Form of Indemnification Agreement for Directors and Officers of the Company, as adopted on December 8, 2017 (with schedule of indemnitees attached) (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 13, 2017 and incorporated herein by reference).**

~~10.46~~		Lease Agreement, dated as of July 17, 2015, by and between Farmer Bros. Co. as Tenant, and WF-FB NLTX, LLC as Landlord (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on July 23, 2015 and incorporated herein by reference).

~~10.47~~		First Amendment to Lease Agreement dated as of December 29, 2015, by and between Farmer Bros. Co. as Tenant, and WF-FB NLTX, LLC as Landlord (filed as Exhibit 10.36 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 filed with the SEC on May 6, 2016 and incorporated herein by reference).

~~10.48~~		Amendment No. 2 to Lease Agreement dated as of March 10, 2016, by and between Farmer Bros. Co. as Tenant, and WF-FB NLTX, LLC as Landlord (filed as Exhibit 10.37 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 filed with the SEC on May 6, 2016 and incorporated herein by reference).

~~10.49~~		Termination of Lease Agreement, dated as of September 15, 2016, by and between Farmer Bros. Co. as Tenant, and WF-FB NLTX, LLC as Landlord (filed as Exhibit 10.33 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 filed with the SEC on November 9, 2016 and incorporated herein by reference).

~~10.50~~		Development Management Agreement dated as of July 17, 2015, by and between Farmer Bros. Co., as Tenant and Stream Realty Partners-DFW, L.P., as Developer (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on July 23, 2015 and incorporated herein by reference).

~~10.51~~		First Amendment to Development Management Agreement dated as of January 1, 2016, by and between Farmer Bros. Co., as Tenant and Stream Realty Partners-DFW, L.P., as Developer (filed as Exhibit 10.39 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 filed with the SEC on May 6, 2016 and incorporated herein by reference).

~~10.52~~		Second Amendment to Development Management Agreement dated as of March 25, 2016, by and between Farmer Bros. Co., as Tenant and Stream Realty Partners-DFW, L.P., as Developer (filed as Exhibit 10.40 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 filed with the SEC on May 6, 2016 and incorporated herein by reference).

~~10.53~~		AIA Document A141 - 2014, Standard Form of Agreement Between Owner and Design-Builder, dated as of September 22, 2015, between Farmer Bros. Co. and The Haskell Company (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 22, 2016 and incorporated herein by reference).

~~10.54~~		Change Order No. 12, dated as of September 17, 2016, between Farmer Bros. Co. and The Haskell Company (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on September 22, 2016 and incorporated herein by reference).



~~10.55~~		Agreement of Purchase and Sale and Joint Escrow Instructions, dated as of April 11, 2016, by and between Farmer Bros. Co. as Seller, and Bridge Acquisition, LLC as Buyer (filed as Exhibit 10.41 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 filed with the SEC on May 6, 2016 and incorporated herein by reference).

~~10.56~~		First Amendment to Agreement of Purchase and Sale and Joint Escrow Instructions, dated as of June 1, 2016, by and between Farmer Bros. Co. and Bridge Acquisition, LLC (filed as Exhibit 10.39 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016 filed with the SEC on September 14, 2016 and incorporated herein by reference).

~~31.1~~		~~Principal Executive Officer Certification Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).~~

~~31.2~~		Principal Financial and Accounting Officer Certification Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

~~32.1~~		~~Principal Executive Officer Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).~~

~~32.2~~		~~Principal Financial and Accounting Officer Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).~~

~~101~~		The following financial statements from the Company’s Quarterly Report on Form 10-Q for the fiscal period ended December 31, 2017, formatted in eXtensible Business Reporting Language: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive (Loss) Income, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Unaudited Condensed Consolidated Financial Statements (furnished herewith).



*	Pursuant to Item 601(b)(2) of Regulation S-K, the schedules and/or exhibits to this agreement have been omitted. The Registrant undertakes to supplementally furnish copies of the omitted schedules and/or exhibits to the Securities and Exchange Commission upon request.

**	~~Management contract or compensatory plan or arrangement.~~