FINANCIAL STATEMENTS AND INDEPENDENT ACCOUNTANTS’ REVIEW ...

SAMPLE DAIRY

FINANCIAL STATEMENTS AND

INDEPENDENT ACCOUNTANTS' REVIEW REPORT

DECEMBER 31, 2018

SAMPLE DAIRY TABLE OF CONTENTS

Page Financial Highlights Independent Accountants' Review Report ................................................................................................................. 1 Financial Statements:

Balance Sheet ........................................................................................................................................................... 2 Statement of Partners' Capital .................................................................................................................................. 4 Statement of Income ................................................................................................................................................. 5 Statement of Cash Flows .......................................................................................................................................... 6 Notes to the Financial Statements................................................................................................................................ 7 Schedule of Farming, Schedule 1 .............................................................................................................................. 11

SAMPLE DAIRY FINANCIAL HIGHLIGHTS

Milk production statistics Pounds of whole milk produced Average butterfat test Average solids-non-fat test Average protein test Average daily pounds per milking cow Average daily EC pounds per milking cow

2014

2015

2016

2017

46,136,000 3.50% 5.77% 3.13% 79 81

49,786,000 3.55% 5.76% 3.07% 80 82

52,897,260 3.56% 5.75% 3.09% 78 80

59,573,475 3.61% 5.76% 3.03% 81 83

2018

65,864,250 3.78% 5.79% 3.07% 80 82

Dairy herd statistics Average herd size: Milking cows Dry cows Heifers

1,600 200

1,553

1,705 225

1,637

1,858 252

1,841

2,015 283

1,905

2,250 294

2,041

Purchase of cows and bulls: Number of head Total amount paid Average per head

9

95

20

51

22

$ 16,967 $ 180,975 $ 36,000 $ 89,352 $ 33,000

$

1,885 $

1,905 $

1,800 $

1,752 $

1,500

Heifers transferred to milking herd

706

808

835

951

887

Sale of cows and bulls: Number of head Total amount received Average per head

357

489

510

568

$ 400,003 $ 526,776 $ 403,954 $ 360,182

$

1,120 $

1,077 $

792 $

634

642

$ 367,940

$

573

Number of dead and condemned cows

183

109

102

236

223

Herd turnover rate

30%

31%

29%

35%

34%

Average feed cost per cow per day

$

7.74 $

6.33 $

5.73 $

5.75 $

5.44

Product price Average price received per cwt of milk shipped

$

25.99 $

18.05 $

16.99 $

17.29 $

15.85

Summarized dairy operations

per cwt of milk shipped

Total income

$

Operating expenses:

Feed

Herd replacement cost

Other operating expenses

Total operating expenses

Income (loss) from operations $

26.76 $

11.02 1.11 7.83 19.96 6.80 $

19.11 $

8.96 1.12 8.32 18.40 0.71 $

17.48 $

8.36 1.64 8.34 18.34 (0.86) $

17.61 $

8.11 1.72 8.00 17.83 (0.22) $

16.12

7.67 1.62 6.77 16.06 0.06

See independent accountants' Review report.

4803 SISK ROAD, SUITE 201, SALIDA, CALIFORNIA 95368 TEL: 209-523-3573 | FAX: 209-574-0224

Independent Accountants' Review Report

To the Partners Sample Dairy Brookings, South Dakota

We have reviewed the accompanying financial statements of Sample Dairy, which comprise the balance sheet as of December 31, 2018, and the related statements of partners' capital, income and cash flows for the year then ended, and the related notes to the financial statements. A review includes primarily applying analytical procedures to management's financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion.

Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement whether due to fraud or error.

Accountants' Responsibility Our responsibility is to conduct the review engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. Those standards require us to perform procedures to obtain limited assurance as a basis for reporting whether we are aware of any material modifications that should be made to the financial statements for them to be in accordance with accounting principles generally accepted in the United States of America. We believe that the results of our procedures provide a reasonable basis for our conclusion.

Accountants' Conclusion Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in accordance with accounting principles generally accepted in the United States of America.

Supplementary Information The supplementary information included in the Financial Highlights, Schedule 1 and per hundredweight (cwt) of milk, per hundredweight (cwt) of energy-corrected (EC) milk and per cow columns on the Statement of Income is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management. We have not audited or reviewed such information and we do not express an opinion, a conclusion, nor provide any form of assurance on it.

March 21, 2019 Salida, California

Genske, Mulder & Co., LLP

GENSKE, MULDER & CO., LLP Certified Public Accountants

- 1 -

SAMPLE DAIRY

BALANCE SHEET DECEMBER 31, 2018

AS S ETS

CURRENT ASSETS, pledged: Cash and cash equivalents Accounts receivable, Dairymans Cooperative Inc. Inventories: Hay - 3,016 tons Silage - 35,783 tons Investment in growing crops Total inventories Prepaid expenses

Total current assets

$

45,368

463,173

$

238,440

1,206,507

38,723

1,483,670 190,895

2,183,106

DAIRY HERD, pledged: 2,544 Cows 2,041 Heifers Total Accumulated depreciation

Dairy herd, net

3,945,744 1,696,071 5,641,815 (1,429,728)

4,212,087

DAIRY FARM AND EQUIPMENT, pledged: Land - 325 acres Buildings and improvements Machinery and equipment Autos and trucks Total Accumulated depreciation

Dairy farm and equipment, net

1,446,487 7,261,795 1,823,488

166,831 10,698,601 (5,788,995)

4,909,606

OTHER ASSETS: Cooperative retains

Total other assets

Total assets

26,907 $

26,907 11,331,706

See accompanying notes and independent accountants' Review report. - 2 -

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