July 1, 2008

Record $11.1 Billion Revenue for DFA

By Anonymous

Dairy Farmers of America, Inc. (DFA) had record revenue and operating income in 2007, but because of one-time, non-cash charges of $144.8 million, the co-op recorded a net loss of $109.3 million for the year. The noncash charges were a result of plant closures and the re-valuation of DFAs past investments. "DFAs financial outlook has never been better," said Tom Camerlo, of Florence, CoIo., chairman of DFAs board. "We had record revenues and strong profits in most of our businesses. The non-cash charges will not affect our continuing operations, cash flow or member milk checks."

Driven by record-high milk prices, DFA had record revenues of $11.1 billion in 2007, up $3.6 billion from 2006. DFA members received an average price of $19.38 per hundredweight, up $6.30 from 2006. DFA marketed a record 61.9 billion pounds of milk in 2007, and continues to grow its international business, increasing export sales to $211.4 million in 2007.

Operating income from DFAs Dairy Food Products Group was very strong in 2007. Both Formulated Dairy Food Products and Keller's Creamery butter divisions had record earnings.

The Italian cheese division recorded very strong operating income, and the American cheese division improved from recent years. American Dairy Brands, the retail branded cheese division of DFA, had strong revenue and volume, though operating income was impacted by rising cheese markets.

As part of its focus on improved profitability and long-term growth, DFA closed two cheese plants in 2007, resulting in the one- time, non-cash charges. Closing the plants in Lovington, N.M., and Corona, Calif., will improve DFA's profitability.

Record milk prices negatively impacted a number of DFA's fluid milk joint ventures. The businesses were not always able to pass higher milk costs to the marketplace, resulting in reduced profits and, in some cases, devaluation of assets.

Copyright Superintendent of Documents May/Jun 2008

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