Southern States Cooperative today announced it posted a pre-tax profit of $68.5 million in the fiscal year that ended June 30. The cooperative's overall results and its balance sheet benefited not only from improved operations but also from a debt restructuring that resulted in a gain of nearly $65 million.
The announcement marked a major turn-around from losses in the previous three fiscal years when the cooperative was involved in major restructuring efforts.
"In many ways, the recently completed fiscal year was the most successful in Southern States' history," said Thomas R. Scribner, president and chief executive officer. "The year showed that efforts to focus on our core business of production agriculture, to reduce debt and operating expenses and to re-establish sound business principles have resulted in a successful turn-around," he added.
Scribner emphasized the pretax income of $4 million (excluding the gain) was the single most important indicator of the cooperative's turn-around. "The additional income recognized from the debt restructuring was a one-time, non-cash bottom-line increase whose primary benefit was a substantial improvement in our balance sheet's leverage position," he explained.
The year's results reflected a team effort that began with the cooperative's board of directors, which has acted in a timely, prudent manner on numerous difficult decisions during a period of major restructuring moves, Scribner noted. "At all levels, our employees have worked hard to implement the many changes necessary to reach our recovery goals, while continuing to provide the high level of customer service that is such an important part of Southern States' reputation.
"In addition, it's impossible to overstate the support and loyalty of our producer-members and other customers," the co-op CEO asserted.
According to Scribner, progress was made in a number of key areas during the year, including:
* Continued reductions in operating expenses.
* Further reductions in debt. At the end of Fiscal 04, Southern States' debt was almost 70 percent below where it stood three years ago.
* Customer service improvements.
* Improved inventory control and efficiency at the co-op's distribution centers.
* Steps to boost marketing effectiveness and efficiency.
* Development of a strategic plan.
Southern States also made its first acquisition in four years by exercising an option late in Fiscal 2004 to buy out Agway's 50 percent ownership of a livestock feed mill at Gettysburg, Pa. Southern States and Agway, a New York-based cooperative, had operated the mill as a joint venture since 1999.
Southern States is one of the nation's largest agricultural cooperatives. Serving more than 300,000 producer-members, it provides a range of farm inputs, including fertilizer, seed, feed and pet food, animal health supplies and petroleum products, as well as other items for the farm and home. The cooperative's distribution network includes more than 1,200 retail outlets in an area that extends from Maine to the Gulf Coast and as far west as Kentucky.