In April, we announced the intended closure of our Milton-Freewater plant, which we will complete in December. A number of factors, including transportation and shipping costs, logistical efficiencies, and excess capacity in other facilities, were carefully considered. We moved the blanched/frozen line to Wenatchee, the freezer cherry line to Prosser, and will relocate the Fresh Slice line to a new, state-of-the-art plant, now under construction, adjacent to the Ross Plant in Selah. We are in contact with potential buyers and anticipate the sale of the Milton-Freewater property in 2006.

Phase two of our long-term plan involves moving the single serve apple sauce line from Prosser to Selah. Having recently upgraded sauce processing equipment in Selah to state-of-the-art technology, it makes sense to have like processes together, and maintain one set of equipment rather than two.

We anticipate continuing to make changes in our facilities over the next year, as we work through our long-term plan. From a business perspective, these were easy decisions. The operational changes will allow us to do what we do better, more efficiently, and more cost-consciously. They're the right things to do for our grower-owners, and will put us in a much stronger competitive position over time. From the perspective of displacing people, these were very difficult decisions; impacting the lives of our employees and their families, which is never easy or comfortable. We are doing everything we can to facilitate the transition.

Another milestone of this fiscal year was negotiating a new three-year contract at our union plants. Although negotiations took longer than expected, we were able to finalize an equitable contract without any disruption in our operations. As with any other business you hear about in the news, health care and pension benefits are emotionally charged issues, that will continue to be difficult bargaining points in the years ahead.

One last noteworthy milestone, as our growers begin their fall harvest, Dick Bailey, our Executive Vice President of Finance and Chief Financial Officer, will begin his retirement after 20 years with Tree Top. His expertise has been invaluable, and he will be missed, but we are well prepared for the transition. Rob Farrow, Vice President of Finance & Administration, has worked closely with Dick the past several years and will ensure a smooth transition.

Having said all that, I am comfortable in my belief that Tree Top continues to prove its value in a dynamic, competitive market. In recent years, we've shown our ability to adapt to the unexpected, taking in small and abundant crops, processing it all, managing inventories, strengthening operations, creating efficiencies, and providing a return to our grower-owners.

We've moved into F’2006 excited about the future. We're expanding our blended juices line and are developing other value-added products for both consumers and our ingredients customers. We continue to focus on our long-term plan, and are committed to doing those things that will maximize our value for our growers, employees, customers, and the industry. Key to our success will be the continued support of the Tree Top growers and the continued outstanding leadership of your Board of Directors.
Sincerely,

Tom Stokes