As we entered F'2005, we were in the midst of transition and facing a number of challenges-some new, some ongoing. As we ended the fiscal year, although the details have changed, we are still in transition and continue to face challenges. Experience in recent years has taught us this dynamic environment is now the norm. With that in mind, we continue taking steps to position ourselves for long-term success.

Whether sparse or abundant, crop size is always a significant factor in how our year went. We continue to see increasing competition in many areas of our business. We've completed some restructuring and are working on additional operational changes. As we reached year-end, and reflected on the year's events, we are confident we were successful in addressing each of those areas, as well as in returning a profit to our growers. We've streamlined for efficiencies, strengthened operations, and set forth a plan for continuing along that path, well into the future.

The 2004 crop was the largest crop we've handled in history. We processed more than 535,000 tons of apples and pears... completing the cooperatives' 13th consecutive profitable year! In prior years, we'd have been seriously stretched to simply handle that amount of fruit, not to mention doing it efficiently and cost-effectively, as we did with this crop. This is a testament to hard work, ingenuity, and a thorough long-term operations plan.

Brix levels in last year's crop were significantly lower than the norm. Historically, large crops tend to have higher brix and lower acid. That was not the case with the 2004 crop. While we consider this an aberration, it nonetheless significantly impacted yields and efficiencies. Because of our technical expertise, we were able to adapt, but not without incurring higher processing costs.

Having come off a couple of short crop years, our inventories were down as we began F'2005. Because of the abundance of last year's crop, our inventories are higher as we end the year than we'd prefer, but they're not at record levels and we have plans in place for movement. Managing inventories will be especially important this year, as we anticipate the 2005 crop to again be on the large side.