79th Annual Report
2014
From the CEO To our patron member owners: As you know, the purpose of a cooperative is to work together for the benefit of all the members: creating more buying power and, in turn, offering products and services to you at competitive prices and helping you to be more financially successful.
David A. Cramer United Cooperative President and Chief Executive Officer
In 2014, we accomplished this through unit growth. Our revenue dollars were down slightly, but in most of our core business, volume or units are up nicely, leading to increased profits. These increases in profits were complimented by an outstanding year for the ethanol industry. All this adds up to a year of record profits. We appreciate all the support shown by you, our patron members, both new and existing. Due to this support, we’re able to accomplish our purpose as a cooperative. Another asset of the cooperative is all our dedicated employees. Without them, your cooperative would not be able to accomplish the delivery of goods and services as effectively as we do. After you review the financial report, I’m sure you will agree United Cooperative had an outstanding year in 2014, as we continue to create benefits for you, our members. Revenues for 2014 were $579 million. Our core cooperative businesses generated $23.8 million in profits, up $1 million from 2013. Our investments in ethanol performed very well and contributed 33.5 million in profits to our net income. In addition, patronage from our regional cooperatives equaled almost 7.4 million. Adding everything up, United Cooperative had a total net income before taxes of almost $65 million. This is a new record for the cooperative. With these profitable numbers, United Cooperative is returning almost $35.3 million in total patronage to our members, with $14.1 million being paid in cash and the balance in equity credits. The cash portion will be distributed in April. In addition, we plan to continue revolving stock in October, retire stock at age 77 and pay all estates as requested. As we move into the future, I am very optimistic about the great things in store for agriculture and United Cooperative. By working together we all benefit. I know all United Cooperative employees are looking forward to serving new and existing patron members in 2015 and beyond. In addition, we will continue efforts to retain our strong history of financial success. Cooperatively yours,
David Cramer United Cooperative President and Chief Executive Officer N7160 Raceway Road Beaver Dam, WI 53916 T 1-800-924-2991 P 920-887-1756 F 920-885-2753 www.unitedcooperative.com
Officers and directors Howard Bohl........................................Chairman Gary Nolden................................ Vice Chairman Robin Craker....................................... Secretary David A. Cramer.................................. Treasurer David Bischoff.........................................Director Duane Hinchley......................................Director Tom Langenfeld......................................Director Anthony Schadt......................................Director Daniel Swan...........................................Director Brad Krueger..........................................Director Greg Tauchen.........................................Director Rod Leiterman........................................Director Peter Mlsna............................................Director
Personnel David A. Cramer, President and Chief Executive Officer
Additional information
The 2014 United Cooperative Board of Directors: front row, left to right, Peter Mlsna, Hillsboro; Rod Leiterman, Denmark; Howard Bohl, Beaver Dam, chairman; Tom Langenfeld, Eldorado; and Brad Krueger, Shawano. Back row, left to right, Anthony Schadt, Watertown; Dan Swan, Beaver Dam; Greg Tauchen, Bonduel; Gary Nolden, Prairie du Sac, vice chairman; David Cramer, Beaver Dam, treasurer; Robin Craker, Reedsburg, secretary; Duane Hinchley, Cambridge; and David Bischoff, Juneau.
Date of incorporation...........................................................................................................................................Jan. 27, 1936 Fiscal year end............................................................................................................................................................. Dec. 31 Annual meeting date......................................................................................................................... Set by board of directors This year’s annual meeting date........................................................................................................................ April 13, 2015 This year’s Reedsburg informational meeting date............................................................................................ April 15, 2015 This year’s Green Bay informational meeting date............................................................................................ April 16, 2015
In 2014, your cooperative ... •
Returned over $27 million in cash to our members in 2014.
•
Acquired approximately 90 pieces of agronomy equipment (airflows, sprayers, spreaders, tenders, etc.)
•
Received scholarship applications from 82 graduating high-school seniors. Thirty students were selected by the Federated Youth Foundation to receive $1,000 scholarships.
•
Completed expansion in Denmark, which began in 2013. This included increasing our receiving capacity, a 7,000-bushel-per-hour dryer, 600,000-bushel grain bin and 11,000-square-foot feed and seed warehouse/office area/truck scale.
•
Convenience stores featured the Cenex Tanks of Thanks™ program – rewarding people in their communities with free fuel for doing good deeds/volunteering. Forty two of our customers received $50 Cenex gift cards through this promotion.
•
United Cooperative ranked 29th on the list of the Top 100 Agronomy Companies in the United States by Crop Life Magazine and 57th on the USDA’s top 100 list of Agricultural Cooperatives in the United States, by Rural Cooperatives magazine in 2014.
•
Donated $28,000 to 28 different food pantries throughout our trade territory in December and early January.
•
Added approximately 20 zero-entry bin sweeps throughout our grain facilities for added safety and labor efficiency.
•
Completed construction on the following: Sauk City - feed mill and warehouse expansion Prairie du Sac - agronomy warehouse expansion Rock Springs - new grain office and a 4,700 bu/hr grain dryer Pulaski - a high-capacity receiving and 850,000 bushel bin Auroraville - 690,000 bushel bin
•
Began planning construction of new feed mills at Wilton and Shawano and an agronomy facility at Hillsboro.
Balance sheet Current assets Cash and cash equivalents Receivables, net Inventories Margin account Unrealized gain on forward contracts Prepaid expenses Other current assets Total current assets Investments and other assets Investments Other assets Total investments and other assets Property and equipment Less accumulated depreciation Net property and equipment Total assets Current liabilities Notes payable Current maturities of long-term debt Accounts payable Grain payables Patron credit balances Unrealized loss of forward contracts Accrued expenses Taxes payable Patronage refunds payable in cash Patron prepayments Remediation payable Income taxes payable Other Total current liabilities Long-term liabilities Long-term debt, less current maturities above Deferred compensation Remediation payable Deferred income taxes Total long-term liabilities Total liabilities Patron equities Preferred equities Equity credits Patronage refunds payable in equity General reserve Total patron equities Total liabilities and equities
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2014 $26,412,932 22,823,406 166,633,215 6,970,633 188,256 54,819,427 2,229,292 280,077,161
2013 $20,984,538 25,683,431 141,059,517 4,688,234 862,597 48,069,370 481,810 241,829,497
87,425,308 2,982,694 90,408,002
90,072,869 2,526,207 92,599,076
218,492,072 (106,508,795) 111,983,277
201,782,759 (95,478,970) 106,303,789
$482,468,440 $440,732,362 $5,146,239 8,044,400 13,306,613 23,734,155 3,187,226 1,126,520 9,135,389 1,838,809 14,117,000 59,201,953 526,000 3,008,587 10,497,622 152,870,513
$ -6,666,334 15,972,568 26,259,225 4,464,671 1,657,864 7,719,431 2,086,512 10,678,000 45,208,360 516,000 4,341,524 5,197,850 130,768,339
28,970,510 312,798 176,500 4,920,000 34,379,808
54,776,630 298,312 186,500 4,711,000 59,972,442
$187,250,321
$190,740,781
67,906,439 90,550,482 21,176,000 115,585,198 295,218,119
53,030,935 86,824,688 16,016,000 94,119,958 249,991,581
$482,468,440
$440,732,362
Assets
Total Assets
$482,468,440 Dollars (in millions)
(in millions and percentage) Prepaids $54.82 11.40%
Investments $87.43 18.10%
Cash $26.41 5.50% Receivables $22.82 4.70% Grain on contracts $.19 0% Other Assets $2.98 .70%
Inventories $166.63 34.50% Other current assets $2.23 .50%
$440.73
2012
2013
$364.57
$300 $200 $100
2010
2011
2014
(in millions and percentage)
Current liabilities $152.87 32% Patron equities $295.22 61%
$295.2
300
Dollars (in millions)
$331.5
$440
Liabilities and patron equities
Margin account $6.97 1.40%
Patron equities $250
250 200
$185.3
150 100
$400
0
Property and equipment $111.99 23.20%
$482.47
$500
$133
Long-term Current liabilities $34.38 7%
$107.1
50 0
2010
2011
2012
2013
2014
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Statement of operations Sales Less discounts Net sales Cost of sales Gross margin Operating expenses Merchandising expenses Salaries and wages Less: wages reimbursed Payroll taxes Employee insurance Pension expense Vehicle expense Supplies and licenses Utilities Repairs and maintenance Advertising Merchandising fee Corn dryer expense Bean roasting expense Employee training and travel Field men Miscellaneous Total merchandising expenses Total administrative expense General Depreciation and amortization Insurance Property taxes Education, rent and miscellaneous Total general expenses
2014 $579,310,499 100.00% (2,078,940) (.36) 577,231,559 99.64 487,743,156 89,488,403
84.19 15.45
2013 $629,919,592 100.00% (1,932,440) (.31) 627,987,152 99.69 547,158,917 80,828,235
86.86 12.83
31,422,832 27,714,684 (6,193,179) (5,882,789) 1,932,795 1,775,848 4,318,090 3,915,942 626,339 539,686 6,036,851 5,152,223 1,263,378 1,224,135 2,596,208 2,096,467 1,650,888 1,578,375 293,840 268,347 123,522 123,094 1,651,926 1,443,929 30,189 18,528 124,289 94,419 380,141 367,582 120,120 50,828 46,378,229 8.01 40,481,328 6.42 1,227,473
.21
1,193,432
.19
14,691,377 12,613,245 2,091,212 1,684,400 1,633,797 1,532,508 400,022 392,719 18,816,408 3.25 16,222,872 2.58
Interest and other expenses (Income) Gain on removal of property and equipment (1,363,754) (314,015) Finance charges income (452,996) (465,242) Purchase discounts (944,536) (717,576) Other revenue (1,865,525) (1,008,006) Interest expense 870,707 1,573,248 Provision for doubtful accounts (13,642) (297,677) Collection and other expense 1,805,486 915,038 Total interest and other expenses (income) (1,964,260) (.34) (314,230) (0.05) Net operating expenses
64,457,850
11.13
57,583,402
9.14
Local net margin Income from affiliates Patronage refunds received Net margin before income taxes
25,030,553 33,541,805 7,367,334 65,939,692
4.32 5.79 1.27 11.38
23,244,833 18,064,029 8,791,209 50,100,071
3.69 2.87 1.39 7.95
8,365,000
1.44
4,700,000
.75
Income taxes Net margin 5
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57,574,692 9.94% $45,400,071 7.20%
Total Sales $579,310,499
(in millions and percentage) Petroleum $32.4 5.59%
C-Stores $38.8 6.7%
Agronomy $147.2 25.41%
United Cooperative’s agronomy division has one of the largest amounts of total liquid and dry fertilizer storage in the Midwest, and cutting-edge equipment greatly enhances the effectiveness of our agronomy services. With quality equipment for spraying, spreading, delivery, soil sampling, grid-soil sampling, test-stand calibration, precision agriculture, etc., United Cooperative is always looking for new ways to maximize your crop-yield potential.
Grain and trucking $184.5 31.85% Feed $147.5 25.46%
Retail $1.5 .26%
Restaurants $3.1 .54%
Propane $24.3 4.19%
Feed volume
Grain volume
300,000
Bushels (in millions)
Tonage
250,000
228,069 204,990
200,000 148,921
150,000 100,000
106,076
50,000 0
40
264,060
2010
2011
2012
2013
38.19
35.80
35 30
28.25
20 15 10 5
2010
2011
2012
2013
181,330
Tonage
150,000 113,397
150,933
118,512
100,000 50,000 0
2010
2011
2012
2013
2014
Gallons (in millions)
35 160,593
2014
Fuel volume
Fertilizer volume 200,000
33.03
25
0
2014
36.86
30.75
30
26.86
25 20
19.34
20.55
21.52
15 10 5 0
2010
2011
2012
2013
2014
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Net income total for five years $194,275,673 Dollars (in millions)
Dollars (in millions)
50
$45.4
40
$35
$34.97
30 $21.33
10 0
800
$57.5
60
20
Annual Sales
2010
2011
2012
2013
2014
700
$643.46
600
$629.92
$524.66
$579.31
500 400 $325.86 300 200 100 0
2010
2011
2012
2013
2014
Return on equity 30
26.32%
25
Percentage
20
19.90%
18.87%
18.16%
2012
2013
19.50%
15 10 5 0
2010
2011
2014
The United Cooperative grain location in Hillsboro features 15,000-bushel-per-hour receiving capacity and 2.8 million bushels of storage.
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Net margin based on an average sale of $100
2014
Sales Less discount Cost of sales Gross margin
As a Cenex propane partner, United Cooperative also provides Cenex propane that’s clean, efficient, reliable, and affordable; service that’s safe; and delivery that’s dependable.
2013
$100.00 (0.36) 84.19 15.45
$100.00 (.31) 86.86 12.83
Merchandising expense Administrative expense General expense Interest and other expense Total operating expenses
8.01 .21 3.25 (0.34) 11.13
6.42 .19 2.58 (.05) 9.14
Local net Income from affiliates Patronage refunds received Income taxes
4.32 5.79 1.27 (1.44)
3.69 2.87 1.39 (.75)
Net margin*
$9.94
$7.20
*Net margin used for debt repayment, capital expenditures, and equity retirements
Cash returned to members in five years
$79,290,000
30,000,000
$27,500,000
Dollars
25,000,000 20,000,000
$17,800,000 $15,395,000
15,000,000 10,000,000
$12,405,000
$6,190,000
5,000,000 0
2010
2011
2012
2013
2014
Today’s animal producers can turn to United Cooperative’s personal commitment in feeding their dairy and livestock, including nutrition specialists; customized-feeding programs; excellent customer service; feed blending and mixing; and bagged, barreled, and bulk deliveries.
www.unitedcooperative.com
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Notes
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From a portable fuel tank at a construction site to, an on-farm tank filled with Ruby FieldmasterTM premium ag diesel, United Cooperative delivers Cenex® premium fuel appropriate for your equipment. Jeremy Peebles, right, United Cooperative Energy Sales Specialist, discusses how Fieldmaster premium diesel fuel has been helping Terry Farms save money and time because of its unmatched additive package.
United Cooperative locations Corporate Office . . . . . . . . . . . . . . . . . . . . . . 920-887-1756 Auroraville Grain . . . . . . . . . . . . . . . . . . . . . . 920-361-3361 Baraboo Cenex Lubricant Terminal . . . . . . . . 608-524-2822 Baraboo Ash St. Cenex C-Store . . . . . . . . . . 608-356-2703 Baraboo Hwy. 12 Cenex Pump 24, exit 215 . 608-356-2703 Beaver Dam Cenex C-Store . . . . . . . . . . . . . 920-887-1756 Beaver Dam Feed . . . . . . . . . . . . . . . . . . . . . 920-885-5522 Deerfield Agronomy and Energy . . . . . . . . . . 608-764-5454 Denmark Feed/Grain/Agronomy/Energy . . . . 920-863-2171 Denmark Cenex C-Store . . . . . . . . . . . . . . . . 920-863-2171 Gresham Grain (in-season) . . . . . . . . . . . . . . 715-853-3118 Hartford Feed/Grain/Agronomy/Energy . . . . . 262-673-8960 Hartford C-store . . . . . . . . . . . . . . . . . . . . . . . 262-673-8960 Hillsboro Office/Energy/Feed/Farm Supply . . 608-489-2231 Hillsboro Grain . . . . . . . . . . . . . . . . . . . . . . . . 608-489-4120 Hillsboro Agronomy . . . . . . . . . . . . . . . . . . . . 608-489-3444 Horicon Grain . . . . . . . . . . . . . . . . . . . . . . . . 920-485-9707 Hustisford Cenex C-Store . . . . . . . . . . . . . . . 920-349-3989 Johnson Creek Agronomy . . . . . . . . . . . . . . . 920-699-4990 Johnson Creek Grain . . . . . . . . . . . . . . . . . . .920-699-2771 Kendall Cenex Fastrip C-Store . . . . . . . . . . . 608-463-7872 Kendall Feed and Farm Supply . . . . . . . . . . . 608-463-7161 Mayville Agronomy and Energy . . . . . . . . . . . 920-387-2410
Ontario Cenex Fastrip C-Store . . . . . . . . . . . 608-337-4525 Pickett Agronomy/Energy . . . . . . . . . . . . . . . 920-589-2311 Pickett Cenex C-Store . . . . . . . . . . . . . . . . . . 920-589-2311 Ponderosa, Beaver Dam . . . . . . . . . . . . . . . . 920-885-2755 Ponderosa, Hartford . . . . . . . . . . . . . . . . . . . 262-673-2248 Poynette Cenex C-Store . . . . . . . . . . . . . . . . 608-635-7002 Prairie du Sac Agronomy . . . . . . . . . . . . . . . . 608-643-2348 Pulaski Ace Hardware . . . . . . . . . . . . . . . . . . 920-822-6396 Pulaski Agronomy . . . . . . . . . . . . . . . . . . . . . 920-822-3341 Pulaski Energy and Office . . . . . . . . . . . . . . . 920-822-3235 Pulaski Feed and Grain . . . . . . . . . . . . . . . . . 920-822-3252 Reedsburg Agronomy and Energy . . . . . . . . 608-524-2822 Reedsburg Cenex C-Store . . . . . . . . . . . . . . 608-524-6115 Ripon Grain . . . . . . . . . . . . . . . . . . . . . . . . . . 920-748-7488 Rock Springs Grain . . . . . . . . . . . . . . . . . . . . 608-524-5246 Sauk City Feed and Grain . . . . . . . . . . . . . . . 608-643-3345 Shawano Energy and Office . . . . . . . . . . . . . 715-526-3197 Shawano Feed and Grain . . . . . . . . . . . . . . . 715-526-6115 South Beaver Dam Grain and Agronomy . . . 920-887-7671 Watertown Energy . . . . . . . . . . . . . . . . . . . . . 920-262-6770 Wilton Cenex Fastrip C-Store . . . . . . . . . . . . 608-435-6977 Wilton Feed/Agronomy/Energy/Farm Supply . 608-435-6421 Wonewoc Cenex Fastrip C-Store . . . . . . . . . 608-464-7191 Wyocena Cenex C-Store . . . . . . . . . . . . . . . . 608-429-9262
Visit our Website Learn more about our locations, the employees at United Cooperative, the services and manufacturing ability we provide, and our distribution of agricultural and energy products at www.unitedcooperative.com.