As we move into fiscal 2007, we are maintaining our focus on those areas of business we were engrossed in last year—those opportunities to realize growth in value-added products and ingredients—along with taking on some new challenges.

In keeping with last year’s expansion into blended juices and flavored apple sauce, we anticipate introducing new flavors of both juice and sauce into the market in the coming year. Our Sales & Marketing team has action plans in place targeting a number of new distribution points within our core markets, as well as for expansion into new markets.

Another aspect of our focus on growth is the development of a strategy regarding acquisitions. Over the years, Tree Top has acquired other fruit-based businesses that have benefited the cooperative and its grower-owners. What started as a customer-vendor relationship between Northwest Naturals and Tree Top has turned into a shining example of the potential for leveraging an organization’s strengths in concert with our own. Their expertise in beverage bases, flavors, and formulations coupled with our expertise in producing a variety of fruit concentrates and our reputation in the industry, has provided both entities with some pretty exciting growth opportunities. In the coming years, we will seek out similar opportunities.

With no relief in site regarding energy and related costs, we are committed to cost containment through reducing our energy consumption, making appropriate capital improvements in our facilities, and identifying and implementing labor efficiencies. Early in this new fiscal year, we will begin a thorough energy audit of all our plants, beginning with Wenatchee. Capital improvement projects are already underway at some facilities, with others scheduled for later in the year. Finally, we are working closely with employees to identify more efficient processes, which should allow us to reduce labor costs.

Our growers are currently harvesting what is one of the more unpredictable crops in recent history. The impact of the July hailstorms and the expectation of a large 2006 crop leave us all with many unanswered questions. It's hard to predict just how big this crop will be and how much of it will come to Tree Top for processing; it will likely be well into this new fiscal year before we have the answers. However, we’ve met similar challenges before, and will again rise to the occasion to support our growers as the year progresses.

Overall, I’m confident that with the continuing outstanding support of this cooperative’s grower-owners, we are well positioned for the future: we’re focused on improving operating efficiencies, managing inventory at appropriate levels, ensuring our pricing strategies—both buying and selling—support our grower-owners and our brand, and pursuing a variety of opportunities for growth. As we move into this new fiscal year, we’re projecting a return per ton that’s higher than those in recent history and total proceeds back into the $30+ million range.