Farmer Brothers (FARM)

Risks

• We face exposure to other commodity cost fluctuations, which could impact our margins and profitability.
• Our efforts to secure an adequate supply of quality coffees and other raw materials may be unsuccessful and impact our ability to supply our customers or expose us to commodity price risk.
• We rely on co-packers to provide our supply of tea, spice, culinary and other products. Any failure by co-packers to fulfill their obligations or any termination or renegotiation of our co-pack agreements could adversely affect our results of operations.
• Customer quality control problems or food safety issues may adversely affect our brands thereby negatively impacting our sales or leading to potential product recalls or product liability claims.
• Our ability to use our net operating loss carryforwards to offset future taxable net income may be subject to certain limitations.
• We could face significant withdrawal liability if we withdraw from participation in the multiemployer pension plans in which we participate.
• Litigation pending against us could expose us to significant liabilities and damage our reputation.
• We are self-insured and our reserves may not be sufficient to cover future claims.
• Our liquidity has been adversely affected as a result of our operating performance in recent periods and may be further materially adversely affected by constraints in the capital and credit markets and limitations under our financing arrangements.
• Our outstanding Series A Preferred Stock or future equity offerings could adversely affect the holders of our common stock in some circumstances.
• Anti-takeover provisions or stockholder dilution could make it more difficult for a third party to acquire us.
• Volatility in the equity markets or interest rate fluctuations could substantially increase our pension funding requirements and negatively impact our financial position.
• Failure to prevent the unauthorized access, use, theft or destruction of personal, financial and other confidential information relating to our customers, suppliers, employees or our Company, could damage our business reputation, negatively affect our results of operations, and expose us to potential liability.