GROWMARK, Inc.

GROWMARK, Inc.

August 29, 2005 06:00 ET

GROWMARK Reports Year-End Results

CHICAGO, ILLINOIS--(CCNMatthews - Aug. 29, 2005) - At the GROWMARK Annual Meeting in Chicago Friday, Vice President of Finance Jeff Solberg reported unaudited, estimated after-tax results on a consolidated basis. The agricultural cooperative announced sales of $2.7 billion for the 2004-05 fiscal year, up more than $600 million from last year. GROWMARK net income is $81 million, compared to $29.8 million last year.

Contributing to the improved earnings was the sale of a portion of the cooperative's investment in CF Industries. The fertilizer manufacturer transitioned from a cooperative corporation to a publicly traded company on Aug. 11 with an initial public offering on the New York Stock Exchange.

In addition, GROWMARK's income from operations is up, and gains were recorded from patronage received from National Cooperative Refinery Association (NCRA) and from the sale of Archer Daniels Midland Company (ADM) stock.

More than $48 million in cash will be returned to GROWMARK member cooperatives.

"This will be the largest amount of cash returned to members in one year in the history of the company," Solberg says.

Energy Division

In the Energy Division, volume grew to more than one billion gallons of gasoline, distillates, and propane. In addition to fuels, the combined sales of lube oils, greases, and other automotive products totaled $14 million.

"Member cooperatives were able to use the 'Home Grown Fuels' campaign to promote the use of ethanol and soy biodiesel products. Approximately 70 percent of gasoline marketed by FS members contains a 10 percent ethanol blend," Solberg says. "GROWMARK continues to market an 85 percent ethanol-blended fuel in nine states. The GROWMARK System has grown annual sales of soy-based biodiesel fuels to 275 million gallons, which represents a market for nearly four million bushels of soybeans annually."

UPI Inc., the Ontario-based energy company jointly owned by GROWMARK and Suncor Energy Products Inc., is a major fuel supplier in the province. GROWMARK projects a dividend from UPI of $1.1 million for 2005, according to Solberg.

In addition, retail fuel is a growth market for the GROWMARK System and accounts for more than half the System gasoline volume.

Agronomy/Seed Divisions

Total nitrogen tons sold were nearly equal to last year, as were phosphate and postash volumes. The GROWMARK Seed Division had an excellent year, topping $100 million in sales.

"This success in seed results from our strong commitment to be the best seed marketing system in North America," Solberg says.

Facility Planning and Supply Division

The cooperative's Facility Planning and Supply Division's sales and income improved. Grain systems demand was strong and bulk seed equipment sales grew 30 percent. Sales to independent dealers improved by 40 percent. Commercial grain equipment sales to GROWMARK member cooperatives were up significantly, Solberg added.

Grain Division

In the Grain Division, the fall of 2005 marks the 20th anniversary of the relationship between ADM and GROWMARK. A new agreement for the origination of grain from GROWMARK members in Illinois, Missouri, and Wisconsin has been executed.

In addition, a new alliance was established with Central States Enterprises (CSE) for the origination of Iowa grain. The new entity, known as CSE/GROWMARK L.L.C., is sourcing grain from Iowa member cooperatives and shipping it via rail to new markets in the West, Southwest, and Mexico.

Subsidiary Operations

MID-CO COMMODITIES, Inc. offers commodity hedging and advisory services to member cooperatives and their producers through the Bloomington, Ill. and Des Moines, Iowa offices, and to farmers through branch offices at country elevators. MID-CO Earnings were $900,000, and $375,000 in cash patronage will be paid to member cooperatives this year.

FS Agri-Finance®, a financing program administered through an alliance agreement with ProPartners Financial, is an important marketing tool as local co-ops provide products and services to farmers. Approved loans in 2005 totaled $195 million, a record year.

GROWMARK FS, the retail agronomy subsidiary in New York, Pennsylvania, New Jersey, Maryland, Delaware, and Virginia, is completing its third year of operations with another year of profitability. Seedway, which wholesales farm, turf, and vegetable seeds across the eastern United States, was also profitable.

"This was a watershed year for GROWMARK. Significant earnings and cash from the CF transaction will allow for nearly $50 million of cash to be paid to members and for us to continue to maintain a strong balance sheet," Solberg added.

GROWMARK, Inc. is a regional cooperative that provides agriculture-related products and services in 21 states and Ontario, Canada. Visit the GROWMARK Web site at www.growmark.com.

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