Increasing revenues and decreasing costs celebrated at Sunkist Growers'annual meeting

February 20, 2008, Visalia, Calif…..“As we look back on the 2006-07 season, all of us – growers, packers and marketers alike – can take pride in doing the right things during a very difficult year,” Sunkist Chairman of the Board Nick Bozick told the nearly 1000 growers and guests attending Sunkist Growers’ 114th annual meeting at the Visalia Convention Center in Visalia, CA.

“Last season’s results, which could have been disastrous for most, were instead, excellent for many. Growers with harvestable fruit enjoyed very good returns, and the lemon season was one for the record books as revenue-generation reached new highs.”

Bozick gave some of the credit to Mother Nature for leaving more high quality post-freeze fruit on the trees than anyone thought possible. “But Mother Nature had a great deal of help,” he added, “from growers and shippers who did an excellent job keeping freeze-damaged fruit out of the market and from our Sunkist staff, who did an exceptional job during very trying times.”

Bozick reported that in 2007 Sunkist undertook a top-to-bottom review of every aspect of its business “to take stock of where we are and to clearly identify where we want to be in the future. The resulting restructuring is providing better service to both growers and customers, at significantly reduced costs.”

The efficiencies put in place, Bozick said, are proving very effective. The fresh fruit assessment for the 2007/08 season was reduced 12.5¢. At 55¢, this year’s per carton assessment is 19% less than last year and the lowest rate in many years.

“Despite the freeze, our 2006/07 sales were close to $1 billion,” Sunkist’s President and CEO Tim Lindgren said in his operational report. “And grower returns were proportionally higher than volume would indicate, not only because of the shorter supply, but also because of aggressive selling.

“In 2007, every Sunkist grower received a refund of 5¢ per carton,” Lindgren added. In addition, efficiencies in our Citrus Juice & Oils (CJ&O) operation made it possible to eliminate the 5¢ per carton Product Delivery Rights charge this year – and in the future.

“These are the very tangible results of our successful efforts to offer increasing value to our growers. And there is much more to come as we continue to better utilize our resources and more effectively manage our brand in the global marketplace,” Lindgren said.

The freeze offered a huge challenge, and a huge opportunity, to Sunkist’s Citrus Juice & Oils business, Lindgren reported. The post-freeze navel processing tonnage surpassed the record set the previous year and achieved the best pay price in five years. The combination of excellent quality navel juice and increased volumes of Not-from-Concentrate (NFC) juice drove revenues higher.

During the year, Sunkist devoted a great deal of time and effort to the successful conclusion to its anti-dumping action filed against companies in Argentina and Mexico, he added. The suspension agreement proffered by U.S. Department of Commerce has brought about greatly improved pricing which now allows U.S. lemon growers to be very competitive.

In May 2007, Ted Leaman was named vice president of CJ&O operations. Under his guidance, Sunkist took a major step – the consolidation of its processing plants. The lemon processing unit housed in Ontario is moving to Sunkist’s state-of-the-art facility in Tipton, where oranges and tangerines are processed.

“The freeze-driven shortage of lemons made this the optimum time to consolidate,” Lindgren said. The extraction equipment is already installed at Tipton and the new lemon lines will be up and running next month. When all the functions are moved from Ontario in about a year, only the tank farm for lemon juice storage will remain there.

This move will pay for itself several times over in greater economies of scale and increased efficiencies, said Lindgren. The consolidation will be funded through the sale of the On

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