Financial Report

Introduction

We present condensed financial statements for the Cooperative in this section of our report. The complete audit report with audited financial statements and footnotes is available to any Tree Top member and can found on the internet at http://enter.treetop.com/web/CtlDocument?destination=annualReport2004. Access to the audit report requires the same member password that is used to access Tree Top member accounts. If you need a password, or if you would like a printed copy of this report, you may request either from Mr. Dick Childers in Grower Accounting by email at dchilders@treetop.com or by telephone at 509.697.7251 or 800.367.6571.

Tree Top's fiscal year ends July 31st. Our reference to F'2004 identifies our fiscal year ended July 31, 2004 which includes our members' 2003 harvest.

Returns to Members and Results of Operations

Net proceeds for F'2004 of $29.8 million were 99 percent of the F'2003 net proceeds despite a 14 percent decline in fruit tonnage received. The 337 thousand tons received during F'2004 was Tree Top's lowest processing tonnage since F'1996.

Low apple production in Washington State, combined with an exceptionally clean crop, accounted for most of Tree Top's F'2004 tonnage decline. Indeed, the 2003 harvest produced the lowest level of Washington State processor apples since the 1991 crop. The Cooperative increased its percent of Washington State processor apples to about 60 percent this year compared to about 40 percent for that 1991 crop.

Proceeds paid to members improved on a per ton basis during F'2004. The per ton juice apple return of $70.82 was up $2.55 from the prior year. Peeler grade apple returns were up $7.23 per ton to an average of $136.07. Pears improved $8.48 per ton to average $37.59.

The Tree Top returns exceeded the general market averages, or commercial market value (CMV), for the twelfth straight year. The F'2004 profit per ton was $7.65 compared with prior year amounts of $1.41 for apples and $.56 for pear. A summary of Tree Top returns for juice and peeler grade apples for the last four years follows: