SecProbe.io

CORRESP
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filename1.htm

March 12,
2008

Ms. Jill
Davis

Branch
Chief

Division
of Corporate Finance Mail Stop 7010

United
States Securities and Exchange Commission

100
F Street, N.E.

Washington,
D.C.  205497010

Re:                               Farmer Bros.
Co.

Form 10-K
for Fiscal Year Ended June 30, 2007

File
No. 000-01375

We
have considered the comments in your letter of January 31, 2008 and have
the following response.

Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of  Equity Securities, page 11

1.                                        Please expand your disclosure to include the
frequency and amount of  dividends
declared for the two most recent fiscal years and the subsequent interim
period. Additionally, consider indicating your intention to pay dividends in
the future, or if no such intention exists, consider stating that fact. Refer
to Item 201(c) of Regulation S-K.

Response:                             We will expand our
future disclosure to include any dividend declared in the interim period prior
to filing the Form 10-K.

Management’s Discussion and
Analysis of  Financial Condition and Results of  Operations
Critical Accounting Policies — Self-Insurance
Retention, page 14

2.                                       We note your disclosure of
accruals for estimated losses from workers’ compensation self insurance and
other self-insured deductible amounts. Please expand your disclosure to include
the methods used to determine accruals for other self-insured deductibles (e.g.
actuarially-adjusted loss history, event-specific loss estimates, or other
methods). Also, please expand your discussion

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                                                and analysis,
as it relates to both workers’ compensation and self-insured deductibles, to
include the significant assumptions used in estimating the accrual, and the
potential financial statement effect of variability of the estimates. Please
refer to Section V of release numbers 33-8350 and 34-48960, “Commission
Guidance Regarding Management’s Discussion and Analysis of Financial Condition
and Results of Operations” (Release 34-48960) located on our website at:    http ://www. sec.gov/rules/interp/3 3-8350
.htm

Response:                             We will provide
additional disclosure in future filings.

Critical Accounting Policies
- Retirement Plans, page 14

3.                                       We note your disclosure of significant
assumptions in relation to your retirement plan valuations, including the
discount rate and the estimated return on plan assets. Due to the nature of
these estimates, please expand your Management’s Discussion and Analysis to
quantify, within a reasonable range of outcomes for these estimates, the impact
that could result from variability in the estimates. Please refer to Release
34-48960.

Response:                             We will provide
additional disclosure in future filings.

Results of  Operations,
page 15

4.                                      We note that you identify and quantify
various factors that impacted the year to year trends of your results of
operations and the related financial statement line items. For example, on page 16
of your Results of Operations — Fiscal Years Ended June 30, 2007 and 2006
you state “net sales in fiscal 2007 increased $8,806,000 or 4%... primarily
because of increased sales of allied products and an additional $5,500,000 in
sales associated with CBI from the date of its acquisition” but did not discuss
the business developments or external events that underlie the increase in
sales of allied products. As a result, the reader of the financial statements
does not have an understanding of why sales of allied products have increased.
Please expand your Management’s Discussion and Analysis to explain in greater
detail what business developments or external events gave rise to the factors
that you have identified, and indicate whether or not you expect them to have a
continuing impact on your results of operations in the future. Please refer to
Release 34-48960.

Response:                             The significant
change that occurred during fiscal 2007 was the acquisition of Coffee Bean
International (“CBI”).  We will consider
these comments when we prepare our discussion of Results of Operations in
future filings.

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5.                                         In relation to
your Management’s Discussion and Analysis of net sales, please expand your
disclosure to include quantitative analysis of the affect of sales volumes and
price changes on total net sales and the changes therein. Refer to Item
303(a)(3)(iii) of Regulation S-K.

Response:                             As in (4) above,
the acquisition of CBI was the significant change that occurred in fiscal 2007.
However, we will consider these comments and provide additional information in
future filings.

Fiscal Years Ended June 30,
2007 and 2006 -  Comparative
Information, page 16

6.                                         We note you
cite higher costs of coffee brewing equipment as a driver of increased selling
expenses in fiscal 2007 as compared to fiscal 2006. Please tell us the nature
of these expenses and the basis for including them within selling expense.

Response:                             It is common in
this industry for the coffee supplier to furnish coffee brewing equipment to
customers.  Most coffee brewers cost $150
- $1,000 each and we expense those brewers when acquired by the Company.  We also service and repair coffee brewing
equipment and stock a wide variety of parts that are expensed when
purchased.  We will consider providing
additional information in future filings.

Contractual Obligations, page 17

7.                                         Please revise
to include amounts expected to be paid for pension and other postretirement
benefits in your table of contractual obligations, or tell us why you believe
such items should not be included within the table. Refer to Item 303(a)(5) of Regulation S-K.

Response:                             We will consider
adding this to future filings.  We
question whether these amounts should be included in a table of contractual
obligations.  The footnotes contain a
complete disclosure of these liabilities.

                 We think this comment may be appropriate
for our Brewmatic Co. defined benefit plan which is required to be maintained
by a union contract.  It is presently
fully funded.

                 The Farmer Bros. Co. (“FBC”)
defined benefit plan is not subject to any contract.  It can be terminated at any time.  It is presently fully funded and capable of
meeting its obligations without additional Company contribution.  If that were to change, we would consider
adding a disclosure.

                 The post retirement medical
program is subject to no contractual liability; the Company may make changes to
this plan at any time, and in fact did so recently.

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Consolidated Balance Sheet, page 20

8.                                         We note your
accounts and notes receivable are presented as “net.” Please expand your
disclosure to include the amount recorded as the allowance for doubtful
accounts and notes receivable. Refer to Rule 5-02.4 of Regulation S-X.

Response:                             This was eliminated
from this presentation because the amounts were not material: the allowance for
bad debts for each of the past three years has been less than $300,000 (it was
$261,000 for fiscal 2007).

Consolidated Statements of  Stockholders’
Equity, page 23

9.                                         In disclosing
other comprehensive income and the beginning and ending balances of accumulated
other comprehensive income, please identify the amount(s) attributable to
each classification within other comprehensive income and accumulated other
comprehensive income. If there is only one classification of other
comprehensive income or accumulated other comprehensive income, please state
that fact on the face of, or within the notes to, the financial statements.
Refer to paragraphs 17 and 26 of FAS 130.

Response:                             We will revise this
presentation in future filings to address these concerns.

10.                                   Please expand
your presentation of other comprehensive income to include the tax effects
attributable to each component and classification within other comprehensive
income. Refer to paragraphs 24 and 25 of FAS 130.

Response:                             This is disclosed
in the footnotes.  We will revise this
presentation in future filings to address these concerns.

11.                                   It appears you
have recorded the effects of adopting FAS 158 as a component of comprehensive
income in the year of adoption. Please explain why you have elected to record
the adoption effects as a component of comprehensive income and not as a
component of the ending balance of accumulated other comprehensive income,
below the measure of comprehensive income, net of tax. Refer to paragraph 16.a
of FAS 158.

Response:                             This is fully
disclosed in the footnotes and has been booked correctly.  It was inadvertently included in a subtotal
in the current presentation.  We will
revise this presentation in future filings.

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Note 1. Summary  of  Significant
Accounting Policies, page 24

12.                                 We note your acquisition of Coffee Bean
International, Inc. as an existing business with its own activities,
including revenues and expenses, and discreet financial information.
Furthermore, from your description, we note that Coffee Bean International, Inc.
has distinct categories of customers different from those of the company prior
to the acquisition as well as different roasting processes which may result in
different production costs and inventory flows. We also note your disclosure
that roasted coffee products comprise approximately 50% of your sales while no
other product accounted for more than 10 % of your revenue. Please explain
whether you have considered Coffee Bean International, Inc. or roasted
coffee products for separate segment reporting.
Refer to paragraph 16 of FAS 131. In your response, please identify the
factors you have considered in arriving at your conclusion.

Response:                             We did consider segment reporting in
connection with this acquisition, but do not believe that CBI meets the
criteria to be reported as a separate segment.

·                  Our chief operating decision maker, the CEO, both before and after the
acquisition of CBI, has continued to evaluate the performance of our business
and make decisions about resource allocation based on the consolidated
operating results of the Company, including CBI.  Most of our operating expenses are allocated
internally between the selling divisions so only the consolidated income
statement reflects total operations.  The
Board has set the CEO’s compensation, including incentive compensation, based
on the Company’s consolidated results.

·                  The CEO receives monthly
consolidated results of operations, a consolidated balance sheet and results by
selling division, including costs and internal allocations.

·                  The Board of Directors receives
operating results quarterly with consolidated financial statements.  At board meetings sales projections are
discussed on a consolidated basis and by selling division.  Costs, with internal allocations, are
compared to plan and history.

·                  We believe the CBI acquisition was attractive to FBC because of the
synergies we expected to derive from combining these operations.  As we move ahead with this consolidation, we
are combining operations in the same manner that FBC currently operates.

·                  Products:  CBI’s product lines
are complementary to FBC product lines: CBI adds a super premium specialty
coffee line to the FBC line of premium and economy coffee and restaurant supplies.
The combined companies now offer an expanded variety of the same basic coffee
product.  We expect to produce cocoa and
cappuccino mixes for CBI (they use a co-packer for these products) from our
Torrance plant, and CBI will produce our flavored coffees (FBC uses a co-packer
for these products) in Portland further integrating operations of FBC and CBI.

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·                  Customers:  Customer base and prospects overlap.  CBI markets to coffee houses, restaurants,
food service, convenience stores, private label retail and private label
grocery; FBC markets to restaurants, food service, convenience stores, grocery,
office retail and institutions such as hospitals and convalescent homes.

·                  Marketing: We are consolidating
the two sales organizations.  We can now
offer services and a product line to customers we might not have been
successful selling as separate companies.
A recent example is a new, very large account signed last week:  it is a national truck stop chain that CBI
has been soliciting for many months.  The
account is administered by CBI in Portland, OR, and FBC will roast and package
the coffee in Torrance, CA, and deliver it using the FBC fleet to the customer’s
distribution centers across the nation.

·                  Manufacturing:  We are
integrating the production processes of the two companies.

·                  Adding a second plant through
this acquisition created redundancy in case of fire or other disaster at our
main plant in Torrance, California.

·                  We are adding new roasters,
additional packaging flexibility and revised material handling at FBC which
will provide back-up if our Portland plant goes down.

·                  We are, this month, combining the
green coffee procurement and inventory management functions of the two
companies.  Although the functions will
remain decentralized because of geographic location and the need for local
quality control, the goal is to maximize buying power and combine purchasing
expertise and inventory control between the two plants.

·                  Administration:  We are combining
our back office operations.  A portion
has already been combined, including payroll and employee benefits (group
medical coverage, ESOP, 401(K) and defined benefit plan), and FBC’s
computer software is currently being configured and CBI’s processes are being
revised to add CBI this summer.

·                  Additionally, for the fiscal year ended June 30, 2007, CBI
accounted for less than 10% of consolidated revenues, profits or assets.

·                  The overall direction of the changes we are making as a Company is to
further combine operations.

Acquisition of  Coffee Bean
International, Inc., page 24

13.                                   In relation to
your acquisition of Coffee Bean International, please expand your disclosure to
include the pro forma information prescribed by paragraphs 54 and 55 of FAS
141.

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Response:                             We relied on the
guidance of Regulation S-X Rule 3-05 regarding a material business combination.  The tests include three tests, an asset,
income and investment test.  We concluded
that CBI was not a significant subsidiary and therefore no pro forma
information was required.

14.                                   Please indicate
whether you have considered the requirements to furnish separate financial
statements of an acquired business and/or the requirements to furnish pro forma
financial information. Refer to Rule 3-05 and Article 11 of
Regulation 5-X.

Response:                                                        Based upon our analysis
described in (13.) above, we do not believe this is required.

Note 2. Investments and
Derivative Instruments, page 28

15.                              We note your designation of all
investments and non-hedging derivative instruments as trading sec