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LO'L sales hit $7.6 billion; co-op earns $128 million.

Land O'Lakes Inc. had net earnings of $128.9 million for 2005, up sharply from $21.4 million for 2004. Co-op officials said earnings were bolstered by a $69.7-million after-tax gain from the sale of its 38-percent interest in CF Industries (a domestic fertilizer manufacturing venture). The 2005 sales of $7.6 billion were down 1 percent from 2004's $7.7 billion.

Overall, the company reported strong and improved performance in its feed, seed and agronomy businesses, as well as solid performance in its Dairy Foods value-added product categories. This positive performance was partially offset by losses in its Layers business and Dairy Foods manufacturing operations.

The company also reported significant progress on key strategic initiatives of paying down debt and building balance-sheet strength, portfolio management and building its branded businesses. LO'L reduced total debt by about $350 million in 2005 and ended the year with a significantly improved, long-term debt-to-capital ratio of 41.3 percent, compared to 51.9 percent at the end of 2004. It had strong liquidity, with $521 million in cash-on-hand and unused borrowing authority. In the second half of the year, Moody's and Standard and Poor's each upgraded the co-op's financial ratings, with both agencies indicating their ratings carried a positive outlook.

LO'L sold its swine production assets and its 38-percent ownership in CF Industries Inc., generating $385 million in cash from asset dispositions in 2005.

Among other 2005 highlights:

* In dairy foods, the launching of Land O' Lakes Light Butter with Canola Oil and the introduction of a new FlavorProtect wrapper for the company's flagship Land O' Lakes butter;

* In feed, the launch of such diverse new products as Cornerstone full growth milk replacer; RangeLand all-weather beef mineral and Ultium Competition Horse Formula.

* In seed, the rollout of Roundup Ready(R) Alfalfa, developed in 10-year collaboration with Monsanto.

In other LO'L news, the co-op announced plans to close its Greenwood, Wis., cheese manufacturing facility. The decision came after considerable study of market trends and plant capabilities, said Executive Vice President Alan Pierson. "There is declining milk production in the upper Midwest. Given these market conditions, it is not feasible to competitively operate our Greenwood facility." The closing will affect approximately 30 employees.*
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Publication:Rural Cooperatives
Geographic Code:1USA
Date:Mar 1, 2006
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