Land o Lakes 10k

2 0 0 9 A N N UA L R E P O RT
Member Owned — Idea Driven
2009 Annual Report 3

Highlights of 2009 Table of Contents
2009 2008
Letter to Stakeholders . . . . . . . . . . . . . . . . . . . . . 1
For the Year: ($ in thousands)
Dairy Foods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Net sales $ 10,408,509 $ 12,039,259
Net earnings 209,100 159,620 Ag Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Allocated patronage equities 151,913 114,170
Cash returned to members 108,266 97,590 Our Community Commitment . . . . . . . . . . . . . . . . . 8
At Year End: ($ in thousands) Advisory Board of Directors . . . . . . . . . . . . . . . . . 9

Total assets $ 4,923,575 $ 4,981,312
Working capital 527,615 348,389 Dairy Board of Directors . . . . . . . . . . . . . . . . . . . 10
Long-term debt 530,472 531,955
Equities 1,041,927 995,774
Ag Board of Directors . . . . . . . . . . . . . . . . . . . . . 11
Senior Strategy Team . . . . . . . . . . . . . . . . . . . . . 12

Financial Measures:
Return on equity 21.4% 15.7%
Return on invested capital 12.1% 15.1%
Long-term debt-to-capital 33.7% 34.8%
Current ratio 1.18 1.11
Membership: Corporate Social Responsibility

Member associations 980 1,036 Land O’Lakes has a deep and long-standing commitment to
Individual members 4,638 4,883 Corporate Social Responsibility (CSR). For the cooperative,
this means making a positive difference in the world — today,
tomorrow and well into the future. We promote environmental
stewardship and sustainability, a safe and healthful work
environment, workforce diversity and inclusion, and honest and
ethical business practices.
In 2009, we documented our Corporate Social Responsibility

commitments and initiatives in our first-ever CSR Report.
Our second CSR Report will be issued in 2010, outlining
the work of the Land O’Lakes Foundation, our International
Development Division, the Land O’Lakes Sustainability
Council, our Environmental Safety and Health team and
a host of additional CSR efforts. To learn more about
Corporate Social Responsibility at Land O’Lakes, please visit
the cooperative’s website at www.landolakesinc.com.
4 Land O’Lakes, Inc.

Pete Kappelman
Chairman of the Board
Dear Stakeholders:
Christopher J. Policinski
President and
Chief Executive Officer
Member Owned — Idea Driven … the theme for our 2009 Annual Report
defines the character of Land O’Lakes.
Member Owned reflects our cooperative ideals; our unique relationship

with members and customers; and the long-term, multi-generational nature
of our business.
Idea Driven reflects our long-standing commitment to innovation. Consistently,

Land O’Lakes delivers products and services that create competitive advantage,
drive growth and optimize efficiency — for our business, our system, our
members and our customers.
In 2009, despite a challenging economy, the impact of a recessionary economy on consumer
strength of our character and our business and customer purchasing decisions, we continued
enabled Land O’Lakes to: to focus intensely on performance — holding or
»» Deliver strong financial results; improving volumes in key business segments and
achieving record financial results.
»» Enhance the balance sheet;
»» Grow our market presence; Net earnings for 2009 were $209 million, our
highest reported net earnings ever and a 31 percent
»» Continue as a leader in innovation; and
increase over 2008’s $160 million. These results
»» Position our system for future success. included the impact of $37 million in unrealized
pretax hedging gains as of Dec. 31, 2009, versus $52
Performance Overview million in unrealized hedging losses as of Dec. 31,
2008. If we factor out unrealized hedging gains or
For 2009, we achieved $10 billion in net sales, down losses, net earnings for 2009 would be $186 million,
14 percent from $12 billion in 2008. This decline was second only to our comparable net earnings of
driven by the significantly lower value of agricultural $192 million in 2008.
commodities, nearly across the board, throughout
the year. Despite these depressed markets, and the

We also maintained a strong and stable 4. Pursue appropriate growth Crop Inputs: In late 2007, we established
balance sheet. As Land O’Lakes closed opportunities, particularly those Winfield Solutions, aligning our Seed and
the year, total debt was down more than fueled by brand strength, innovation, Crop Protection Products businesses under
$250 million, key financial measures were enhanced customer relationships a unified marketing identity. In 2008, that
maintained or improved, and we completed and expansion into new distribution strategy — coupled with an advantageous
an advantageous refinancing package. channels or geographies. supply/demand situation — paid immediate
benefits with $161 million in 2008 pretax
In addition, we returned a record-high These priorities proved to be an effective earnings. In 2009, we again achieved
$108 million in cash to members — a formula for success in a difficult business strong performance in this business, with
critical advantage for our members in these environment. $137 million in pretax earnings. Without
difficult economic times. This brought total unrealized hedging gains or losses, 2009
cash returned to members over the past Business Review pretax earnings for this business totaled $126
five years to more than $400 million. Moving on to business unit performance, million, compared to $176 million in 2008.
as we did with overall net earnings, we
Action Plans will report results both with unrealized Financial results for 2009 include a $24
A key reason Land O’Lakes achieved solid hedging gains or losses (as required by million pretax loss related to our investment
2009 performance is that, in the face of the accounting conventions) and without those in Agriliance LLC, a retail agronomy joint
looming economic crisis, we adjusted our unrealized gains or losses, which is a more venture. We are in the final stages of
business plans to focus on the following performance-specific measure. repositioning these assets, as we focus on
priorities: our core mission of being the preferred
Dairy Foods: We achieved solid earnings wholesaler to the cooperative system.
1. Concentrate on what we can control,
in Dairy Foods despite weak commodity
getting the basics right, controlling Although we remained the nation’s
prices and a price-conscious consumer
and reducing costs, and doing more No. 1 crop protection products and seed
market. Our performance was driven by a
with less. For the year, our efforts wholesaler, 2009 volumes were down
combination of effective marketing, product
delivered nearly $70 million in new due to reduced acreage planted in some
mix adjustments, cost control, supply chain
cost savings. We delivered these segments, stress in the dairy and livestock
efficiency, risk management and a continued
savings while strengthening our core industries, and higher than normal
focus on product innovation.
competencies and our commitment carryover from the previous strong year.
to quality. In Seed, for example, corn and soybean
For the year, Dairy Foods pretax earnings
2. Maintain a long-term point of view, were $61 million, up from $16 million in volumes were both down 7 percent. In
reacting — but not overreacting — to 2008. Pretax earnings without unrealized Crop Protection Products, volume was
economic and market conditions. We hedging were $48 million in 2009, up from down 10 percent from the previous year.
altered our “tactics” as appropriate, $30 million in 2008.
but remained focused on our financial Margins remained strong thanks to:
and strategic goals. In Branded Butter, we continued our »» O
ur continued commitment to deliver
3. Continue to strengthen the leadership with a 2 percent volume the top-performing seed genetics
cooperative system. We did this by increase — clear evidence of the strength and traits and effective crop
developing and delivering products of the LAND O LAKES brand. We also led protection products;
and services that help producer- in Deli Cheese, despite a 1 percent volume
»» T
he strength of our CROPLAN
members and member cooperatives decline. In Dairy Solutions (Foodservice
GENETICS and AgriSolutions brands;
succeed. We also pursued aggressive and Ingredient Solutions), volume was
advocacy efforts to promote member up 7 percent, as we offset an industry- »» T
he development and delivery
interests in the political, social and wide decline in the full-service restaurant of industry-leading insights and
economic arenas. segment by building our school foodservice production solutions through our
and government business. growing Answer Plot® and Expert
Seller programs; and
On the Industrial side of the Dairy Foods »» C
ost savings and marketing success
business, results were adversely affected by generated through the Seed/Crop
lower commodity markets across the board. Protection Products alignment.
We worked to offset market conditions by
focusing on cost reduction, risk management
and supply chain efficiency.

Feed: It was a challenging year in the 2010 and Beyond Growth: Growth is essential to our future
Feed business, with lower beef and dairy success, and we will continue to grow
Economic conditions over the past year put
markets affecting volumes and product mix our business in a disciplined manner.
our strength as a Member Owned and Idea
in the livestock segment. Pretax earnings Even in challenging times, well-managed
Driven organization to the test. Our strong
increased to $30 million, compared with companies with strong balance sheets can
results indicate we passed that test, and are
$500,000 in 2008. This was due largely to capture opportunity — and Land O’Lakes
well-positioned for 2010 and beyond.
2009 unrealized hedging gains, reversing intends to pursue profitable growth.
2008’s significant unrealized hedging losses.
Although uncertainty and volatility
Pretax earnings without unrealized hedging Looking ahead, we expect another
continue to shape the economy and
were $11 million, down from $30 million in challenging year in 2010. Land O’Lakes will
marketplace, our four Strategic
2008. Effective cost control, supply meet those challenges by translating the
Imperatives provide the foundation
chain efficiency and aggressive risk strength of our cooperative ideals and the
for future performance.
management contributed to 2009 energy of innovation into strong results for
earnings in a difficult market. our members. Throughout our history, being
Total Margin Management: This Strategic
Member Owned and Idea Driven has served
Imperative takes our commitment to Best
Our Purina and LAND O LAKES branded us well. It’s the foundation of who we are
Cost discipline — which has driven nearly
feed products, industry-leading research today, and the driver of what Land O’Lakes
$140 million in cost savings since 2006 — to
and development, and a strong local retail will become in the years ahead.
the next level. In 2010, we will focus on:
distribution system enabled us to maintain
our position as the No. 1 U.S. animal feed »» V
ariable margin expansion, which Sincerely,
manufacturer. Volumes were mixed, with combines cost reduction with
Livestock feed down 13 percent, Lifestyle revenue-enhancing actions;
feed up 2 percent, and Milk Replacers up »» B
usiness simplification, which focuses
4 percent versus 2008. on directing our energy toward
aspects of our business that create
Layers/Eggs: The Layers/Eggs business, the greatest value for members and Pete Kappelman
conducted through MoArk, LLC, customers; and Chairman of the Board
experienced a challenging year, with
average egg prices in this very cyclical »» R
isk management, which includes
business down 20 percent, as compared expanding our risk management
with 2008. As a result, we experienced a capability as we respond to ongoing
$3 million pretax loss in Eggs, compared market volatility. Christopher J. Policinski
with $30 million in pretax earnings for President and Chief Executive Officer
2008. Unrealized hedging had little impact Best Talent: We will continue to focus
on this business. Without hedging, 2009’s on recruiting, retaining and developing
pretax loss would be $3 million, versus $31 the best talent across the organization.
million in 2008 pretax earnings. A strong employment “brand” and our
commitment to diversity and inclusion will
Despite the challenging market drive this Strategic Imperative.
environment in 2009, we achieved a
5 percent overall volume increase and Best Customer and Member Relationships:
continued to build our branded and An important priority is to continue
specialty egg volume (up 7 percent). building strong relationships and
communicating effectively with members
and customers as we work to develop the
best customer insights.

Dairy Foods

DAIRY FOODS BUTTER/SPREADS
The LAND O LAKES
Low commodity markets and declining
Branded Butter business
consumer confidence created a challenging
delivered impressive
year for the dairy foods industry. Despite
performance, closing
these difficult conditions, the Land O’Lakes
strong in the second
Dairy Foods division delivered impressive
half of the year with
earnings gains in 2009. Market-focused
record volumes
innovation and capitalizing on the strength
during the key holiday
of the LAND O LAKES brand contributed
baking season —
to very positive year-end results, as did a
reflecting excellent
combination of improving markets, effective
merchandising support
risk management and early-year hedging.
from our customers.
Innovative new
INDUSTRIAL
products contributed
Continued market volatility and deep to top-line growth in
declines in commodity prices created a 2009. LAND O LAKES® Butter with Olive Oil DAIRY SOLUTIONS
difficult business environment for both was successfully introduced, capitalizing on Facing the worst environment for “away-
producer-members and the cooperative’s the consumer’s growing interest in olive oil from-home” eating in a generation, Dairy
Dairy Foods Industrial operations. as a healthy choice and in the convenience Solutions (Foodservice and Ingredient
of spreadable options. This new product, Solutions) posted excellent year-over-
Despite the challenges, the Industrial supported by national advertising, year volume growth and delivered record
business continued to provide market contributed to another year of double- profits. Foodservice grew volume in key
access for members’ milk and served digit growth for the tub-butter product customer segments, and was especially
customers with strategically located line. Following a highly successful Eastern strong in school foodservice, where
processing facilities. Responding to and Southeastern regional launch in 2008, meaningful new market penetration was
poor economic conditions, adjustments LAND O LAKES® Butter in convenient “half- achieved in the colleges and universities
were made to meet customer needs and stick” packaging was introduced to the rest segment. Foodservice also accelerated
maintain efficient operations. Additionally, of the nation in 2009, delivering volumes growth for its customer-preferred Extra
in 2009, Land O’Lakes worked to alleviate that far exceeded expectations. Melt® Cheese and delivered a significant
the economic stress on our dairy members reduction in costs. Ingredient Solutions
by providing a 24-hour member hotline, a CHEESE reported record profits and was named
special non-qualified equity distribution Consumer Cheese experienced a decline “Supplier of the Year” by its largest
of $10 million and aggressive advocacy in overall sales volumes in 2009, driven by customer, Frito-Lay, while continuing its
efforts — working both individually consumers moving to less expensive strategic evolution toward more value-
and with industry and government alternatives in response to economic added business segments.
organizations to address market pressures. Despite the decline in total
conditions for dairy members. volume, the focus on core deli product LOOKING AHEAD
lines and innovation drove record-high Looking to the future, the Land O’Lakes
VALUE ADDED Consumer Cheese profitability. This was Dairy Foods business will continue to
Managing through the difficult economic led by volume increases in branded deli grow the Value Added businesses by
environment, the Dairy Foods Value Added American cheese, effective pricing and strengthening the brand, investing in
business delivered solid results in 2009 — hedging strategies, and the successful market-focused innovation for consumers
including record-setting pretax earnings launch of a new LAND O LAKES® 2% Milk and customers, and maintaining our strong
for Branded Butter, Consumer Cheese and American Deli Cheese Product to address commitment to quality. At the same
Dairy Solutions — by leveraging strong the demand for healthier options. time, the Industrial side of the business
customer relationships, innovative new will continue to deliver on its promise to
products and the strength of the ensure market access for member milk,
LAND O LAKES brand. while maintaining a right-sized,
strategically located and profitable
manufacturing infrastructure.

Ag Services

FEED and Crop Protection Products (CPP)
businesses, under the WinField Solutions™
In a competitive and changing marketplace,
marketing banner, leveraged the
the Feed business delivered operating
cooperative’s crop production expertise
performance in 2009 at lower levels than
to maintain our position as the No. 1 Crop
2008, while maintaining its leading market
Protection Products and Seed wholesaler.
positions in key segments.
CPP delivered impressive earnings, despite
Volume trends in many segments were
reduced wholesale demand and severe
challenged during the year, with lower
price devaluation in some product lines.
beef and dairy markets negatively affecting
In 2009, CPP experienced significant
Livestock feed volumes and certain parts
growth in the adjuvant, micronutrient and
of the Lifestyle segment. The Companion
seed treatment segments, which offset
Animal and Milk Replacer segments,
volume and pricing challenges in the
however, continued to grow.
more established herbicide, insecticide
and fungicide sectors. The Emerald Extras
Feed continued to optimize its supply chain
program — designed to deliver bundled
infrastructure. The business successfully
value to dealers — outpaced the industry,
implemented several cost-saving initiatives
allowing us to grow significantly with our
and ensured the best possible utilization of
most loyal customers.
plant capacity by shifting product mix to meet
customer needs and capitalize on opportunity. egg sales were up 7 percent and Eggland’s
Seed delivered record earnings in 2009, Best branded eggs were up 12 percent,
leveraging crop production expertise and reflecting strong customer relationships
Innovation also remained the hallmark of
the value of seed traits. Winfield Solutions and enhanced investment in marketing.
Land O’Lakes Purina Feed, as the business
also continued to invest and partner with
leveraged the work of our LongView
Animal Nutrition Center, which develops
local cooperatives to grow their seed BUSINESS DEVELOPMENT
industry-leading feed products. During the
businesses. SERVICES
year, Feed introduced several new products Land O’Lakes Business Development
Marketing of vended seed brands was
for the equine, dairy, beef, swine and zoo Services (BDS) continues to build on its
highly successful during the year, while
markets, including: commitment to strengthen the cooperative
our proprietary CROPLAN GENETICS brand
e-staged OmoleneTM and Equine
»» R system. A service unit that focuses on
experienced some volume softness. Our
Senior® (equine) Feed helping member cooperatives grow and
investment in Answer Plot® knowledge
succeed in the marketplace, BDS partners
»» Propel® Energy Nugget (dairy) events, which demonstrate the value of
with other service units, Winfield Solutions
genetics and traits in test fields, continues
»» RangeLand® Complete Mineral Tub (beef) and Land O’Lakes Purina Feed to meet
to help local cooperatives grow their seed
cooperatives’ needs.
»» EcoCare® Sow Feed (swine) and crop protection businesses.
»» Mazuri® Hand Feeding Diets (zoo) Since its inception in July 2008, BDS has
LAYERS/EGGS
gained significant momentum. Hundreds
To promote product sales, Feed increased In 2009, the Layers/Eggs business — which of cooperatives have benefitted from
its brand investment in mass media consists of the operations of MoArk, LLC, the business insights and consulting tools
advertising to support the Purina brand. our wholly owned subsidiary — experienced provided by the BDS field team. More than
The business also launched a major strong volumes and lower prices in an 400 employees from member cooperatives
initiative to expand product availability extremely challenging and volatile market. As have gained new tools, skills and information
in underserved markets and channels and 2009 concluded, however, results improved through BDS training courses. In addition,
continued to commercialize technologies due to operating enhancements, cost control 300 employee and intern placements have
and innovations in young animal nutrition efforts, strengthening markets and a new been successfully delivered by the Ag
to drive performance. LAND O LAKES brand advertising campaign. Business Placement team, including several
CEO placements.
SEED AND CROP PROTECTION Commodity egg volumes were strong for
PRODUCTS the year, indicative of consumers moving to Going forward, BDS will continue to launch
more value-priced offerings, as well as the new services to meet emerging needs, such
The Company’s Winfield Solutions crop
increased “dine-at-home” trend. as the Professional Applicator Program,
inputs business successfully managed
through another volatile year with which trained more than 300 professional
Although the difficult economy affected custom applicators in its first nine sessions.
aggressive inventory management, growth
higher-priced specialty eggs in all channels,
in key segments and a solid focus on
LAND O LAKES branded and specialty
operational improvements. The Seed

Rosie Cervantes, Executive Director of St. Vincent
de Paul Center, Hanford, Calif. The Foundation
donated $20,000 for the center’s food program.
Our Community Commitment
Greg Gniffke and Ray Cherry (left), representing

the Foundation, present a $25,000 donation
check to Professional Dairy Producers of
Wisconsin (PDPW) for their endowment. PDPW’s
mission is sharing ideas, solutions, resources and
Land O’Lakes employees participate in the Let’s Kick Hunger Day Radiothon. experiences that help dairy producers succeed.
In 13 hours, $190,000 was raised for food shelves nationwide.
Our Foundation of Giving especially for grant programs

addressing rural nutrition
In 2009, the Land O’Lakes Foundation
needs. Funds for this program
increased its commitment to improving the
are still available, and the
quality of life in communities where
Land O’Lakes Foundation
Land O’Lakes has members, employees,
will match up to an additional
plants and facilities. A new strategic
$300,000 for future grants to
initiative called Feeding Our Communities
rural communities. The ultimate
was launched in the fourth quarter. Its focus
goal of the program is to
is on alleviating hunger locally in Minnesota
generate $1 million in funding
and nationally in rural America.
for rural hunger-relief efforts.
The Feeding Our Communities initiative in
In addition, $100,000 was
Minnesota included partnering with a local
contributed in direct grants to
television station and the United Way to
both the California and Mid-
promote the Land O’Lakes Foundation’s
Atlantic regions ($200,000
“Operation Co-Operation” campaign.
total) to fund hunger-reduction In 2009, Land O’Lakes launched the Feeding Our Communities initiative
This multimedia program raised $100,000 — dedicated to helping alleviate hunger locally, nationally and globally.
programs and projects for rural
for the United Way and hunger-relief
communities, as identified by
organizations serving communities in
regional leadership. universities and public radio or television.
our home office area. In addition,
Employees and retirees volunteered
Land O’Lakes employees and the
Globally, the Land O’Lakes International more than 14,500 hours with nonprofit
Land O’Lakes Foundation contributed
Development Division supports organizations and $21,350 was donated to
nearly $900,000 to the Greater Twin
hunger-relief efforts by remaining those organizations.
Cities United Way.
dedicated to providing year-round
humanitarian assistance, agricultural Land O’Lakes donated 1.5 percent of
To fight rural hunger in America, a
development and technical training for its 2009 pretax profits as cash to the
nationwide Feeding Our Communities
developing nations around the world. Foundation, with an additional 0.5 percent
grant program was established to match
in the form of in-kind donations. The
hunger-related donations from
The Foundation has two additional funds went primarily to Feeding America,
Land O’Lakes member cooperatives. The
matching programs: Matching Gifts to the nation’s leading hunger-relief charity.
member contributions and corresponding
Education and Dollars for Doers. In 2009, The Foundation channeled more than $1.6
Foundation match provided grants
250 donations were matched (for a total million through 862 grants throughout the
totaling more than $200,000 to support
of $86,517) and awarded for education- United States during 2009.
an expanded focus on hunger issues,
related activities of K–12 schools, colleges,

INTERNATIONAL DEVELOPMENT
INTERNATIONAL DEVELOPMENT
As a successful cooperative, Land O’Lakes
knows the value of agricultural producers
pooling their resources to accomplish their
goals. Since 1981, Land O’Lakes International
Development Division (IDD) has taken
this cooperative philosophy around the
world, assisting farmers and families in
developing countries.
Mary Batson received a cow through “Cows for Africa,” a program sponsored by Land O’Lakes Foodservice
and Prosperity Worldwide, a nonprofit organization created to enhance IDD programs. Donations
IDD’s mission is to generate economic through Cows for Africa provide IDD program beneficiaries with cows, which provide the income for
growth, improve health and nutrition, and families to send their children to school, get health care and meet their basic needs of food, clothing
alleviate poverty through market-driven and shelter.
business solutions. To date, our efforts have Around the world, Land O’Lakes programs A few examples of success include an eight-
improved the quality of life for people in are improving the quality, quantity and year school nutrition program in Bangladesh
75 nations through more than 170 projects development of small dairy farms and crop and a five-year program in Pakistan that
funded primarily by the U.S. Agency for production efforts. Programs provide at-risk have provided milk and healthy snacks to
International Development and the U.S. communities with access to quality seed more than 300,000 children. Land O’Lakes
Department of Agriculture. and fertilizer. We also help farmers maximize is also proud of a five-year program in
their yields post-harvest through effective Zambia that enabled more than 2,700 poor
To achieve a major impact internationally, processing, marketing and access to credit. households to build sustainable livelihoods
in 2009 IDD’s staff collaborated with through dairy farming. For the families
volunteers and consultants to implement 35 Some of IDD’s activities promote stability involved, this effort increased incomes by
development projects in 28 countries, while and economic opportunity in countries more than 50 percent and dramatically
also leveraging the power of additional that have been ravaged by conflict — such reduced food insecurity. For Land O’Lakes,
resources from member cooperatives, as Afghanistan, Iraq, Pakistan, Sri Lanka this program demonstrated how hands-on
producer groups and agriculture associations. and Sudan — while others promote food efforts can change the world for the
security in famine-prone nations, including better — one family at a time.
Ethiopia, Malawi and Zambia.
board of directors — ADVISORY Board
Howard Liszt Robert Thompson Galen Vetter

Wayzata, Minn. Urbana, Ill. Minneapolis, Minn.

Board of Directors — Dairy Regions
51 52 53 65 66 68
Larry Kulp Tom Wakefield Al Wanner Mark Clark Paul Kent Pete Kappelman
Martinsburg, Pa. Bedford, Pa. Narvon, Pa. Rollingstone, Minn. Mora, Minn. Two Rivers, Wis.
68 80
Wayne Wedepohl Bob Bignami Ben Curti Cornell Kasbergen James Netto John Zonneveld
Sheboygan Falls, Wis. Orland, Calif. Tulare, Calif. Tulare, Calif. Hanford, Calif. Hanford, Calif.

Board of Directors — Ag Regions
1 2
Harley Buys Mark Christenson Jim Hager Jim Miller Doug Reimer Rich Richey
Edgerton, Minn. Madelia, Minn. Colby, Wis. Hardy, Neb. Guttenberg, Iowa Columbus, Neb.
3 4 5
James Deatherage Myron Voth Bob Marley Ronnie Mohr David Andresen Ron Muzzall
Bryan, Texas Walton, Kan. Seymour, Ind. Greenfield, Ind. Britton, S.D. Oak Harbor, Wash.

Senior Strategy Team
Back row, left to right Front row, left to right
1. D
ave Seehusen 5. Fernando Palacios 1. Alan Pierson 5. JP Ruiz-Funes
Executive Vice President, Executive Vice President, Executive Vice President, Senior Vice President,
Ag Business Development Chief Operating Officer Chief Operating Officer Corporate Strategy and
Feed Dairy Foods Industrial Business Development
2. P
eter Janzen
Senior Vice President, 6. Mike Vande Logt 2. Barry Wolfish 6. Rod Schroeder
General Counsel Executive Vice President, Senior Vice President, Executive Vice President,
Chief Operating Officer Corporate Marketing and Chief Operating Officer
3. S
teve Dunphy Seed Communications Crop Protection Products
Executive Vice President,
Chief Operating Officer 7. Dan Knutson 3. Chris Policinski
Dairy Foods Value Added Senior Vice President, President and
Chief Financial Officer Chief Executive Officer
4. Jim Fife
Senior Vice President, 4. Karen Grabow
Public Affairs and Business Senior Vice President,
Development Human Resources

Land O’Lakes, Inc.
P.O. Box 64101 St. Paul, MN 55164
www.landolakesinc.com
Design: Eisenman Associates

Portrait Photography: Steve Neidorf
Printing: Shapco
Printed on recycled paper with soybean-based inks.
2009 Annual Report 1 XX%

2009 Financial Results
Member Owned — Idea Driven
Land O’Lakes, Inc.

P.O. Box 64101
St. Paul, MN 55164
Table of Contents
Financial Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . 6
Consolidated Statements of Equities and Comprehensive Income . . . 7
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . 8
Independent Auditors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Financial Overview
Land O’Lakes, Inc. and consolidated subsidiaries (“Land O’Lakes”or the Dairy Foods earnings were higher in 2009 due to stronger margins on
“Company”) operates in four segments: Dairy Foods, Feed, Crop Inputs and most branded products and were further increased by unrealized hedging
Layers. Dairy Foods develops, produces, markets and sells a variety of pre- gains, compared to unrealized hedging losses in 2008. Feed earnings
mium butter, spreads, cheese and other related dairy products. Feed develops, increased in 2009 primarily due to unrealized hedging gains compared
produces, markets and distributes animal feed to both the lifestyle and to unrealized hedging losses in 2008, which more than offset volume
livestock animal markets. Crop Inputs primarily consists of the operations of declines in livestock and lower margins in 2009. Crop Inputs earnings were
Winfield Solutions, LLC, which develops, markets and sells seed for a variety lower due to lower margins in crop protection due to lower glyphosate
of crops (including alfalfa, corn, soybeans and forage and turf grasses) and prices and volume declines in crop protection and seed, partially offset
distributes crop protection products (including herbicides, pesticides, fungi- by stronger margins in seed. In addition, Crop Inputs generated unrealized
cides and adjuvants). Layers produces, markets and distributes shell eggs. hedging gains in 2009, as opposed to losses in 2008. Decreased earnings in
Layers were mainly due to lower egg markets as egg prices averaged $1.06
SALES AND EARNINGS per dozen in 2009 compared to $1.32 in 2008.
Earnings from equity in affiliated companies, which are primarily from
Net sales for Land O’Lakes Land O’Lakes investments within Crop Inputs and Layers, were lower in
in 2009 were $10.4 billion Sales 2009 than a year ago. The decrease was mainly due to lower earnings
compared with $12.0 billion in (dollars in billions) from Layers investments driven by lower egg markets and Agriliance
2008, a decrease of $1.6 billion losses in 2009 due to lower margins in crop nutrients and fertilizer
12
or 14% below last year. Sales inventory devaluations.
declines were reported in each 10
of the Company’s segments.
8 FINANCIAL CONDITION
Dairy Foods sales declined
due to lower milk, cheese 6
Debt comprises notes and
and nonfat dry milk market
4 short-term obligations, the Long-Term Debt-to-Capital
prices. Feed sales decreased current portion of long- (as a percentage)
mainly due to lower volumes 2 term debt and long-term
in livestock. Crop Inputs sales
0
05 06 07 08 09 debt. Notes and short-term 50
declined as increases in seed obligations at December 31,
(due to higher selling prices 2009 were $160.5 million 40
of corn and soybeans driven by market conditions) were more than offset compared with $409.4
by crop protection declines from lower glyphosate prices and decreased million at December 31, 2008. 30
volume. Sales in Layers were negatively impacted by lower egg market prices. The decrease in short-term
Net earnings for Land O’Lakes obligations was primarily due 20
in 2009 were $209.1 million Net Earnings to a temporary reduction
compared with $159.6 million (dollars in millions) in seasonal working capital, 10
in 2008, an increase of $49.5
million. These results include 250
based upon the timing
of customer and vendor 0
05 06 07 08 09
the impact of the year-to-year prepayments. Long-term
change in unrealized hedging 200 debt, including the current portion, was $533.3 million at December 31,
gains and losses on derivative 2009, compared with $534.8 million at December 31, 2008.
contracts due to volatility in 150
On October 29, 2009, the Company announced that it had refinanced its
commodity markets. In 2009, principal debt facilities in order to, among other things, extend the term of
unrealized hedging gains 100
its debt portfolio to provide liquidity for general corporate purposes and to
increased net earnings by $22.9 take advantage of lower interest rates. The refinancing included the following
million and in 2008 unrealized 50 elements: the call of the Company’s 8.75 percent Senior Unsecured Notes
hedging losses decreased
0
05 06 07 08 09 totaling $174.0 million and 9.00 percent Senior Secured Notes totaling $149.7
net earnings by $32.1 million. million, which were redeemed on December 15, 2009; the issuance of $325
Unrealized gains and losses million in new secured private placement term debt; the replacement of the
in earnings represent the changes in value of futures contracts from one existing $400 million revolving credit facility with a new $375 million senior
period to another. Per the accounting rules, the offsetting gain or loss secured revolving credit facility; and the amendment of the Company’s
on the underlying commodity purchase or product sale being hedged is existing $400 million receivables securitization facility. As a result of the
excluded from earnings until the transaction is completed. redemption of its public debt, the Company has ceased its periodic filings
In 2009, net earnings included a one-time gain related to an investment with the Securities and Exchange Commission.
in Golden Oval of $7.3 million, net of income taxes. In 2008, net earnings At December 31, 2009, the Company maintained a $375 million revolving
included a $5.5 million charge, net of income taxes, to establish an credit facility (the “Revolver”), which is secured by the majority of the
environmental reserve related to the Hudson Refinery Superfund Site Company’s assets and matures in April 2013. Borrowings bear interest at the
and a $4.2 million gain, net of income taxes, related to the sale of the London Interbank Offered Rate (“LIBOR”) or an alternative base rate plus
Agronomy Company of Canada. 2009 net earnings increased in Dairy applicable spreads. As of December 31, 2009, this facility had a $60.0 million
Foods and Feed and declined in Crop Inputs and Layers. outstanding balance and $273.9 million was available after giving effect to $41.1
million of outstanding letters of credit.

At December 31, 2009, the Company maintained a $400 million receivables PERFORMANCE MEASURES
securitization facility that matures in April 2013. The Company’s wholly
Land O’Lakes is committed to increasing returns to members and enhancing
owned, consolidated special purpose entity (“SPE”) enters into borrowings
ownership value by improving profitability in each core business through the
under this facility. Borrowings are secured solely by the SPE’s receivables and
effective use of invested capital and equity. The Company uses two primary
bear interest at LIBOR plus an applicable margin. As of December 31, 2009,
performance measures—return on invested capital (“ROIC”) and return on
there were no outstanding borrowings and $400 million was available under
equity (“ROE”). ROIC indicates the operating return on invested capital before
this facility.
considering the costs of
As of December 31, 2009, the Company had $325 million in privately placed financing and income taxes. Return on Invested Capital
secured notes as follows: $155.0 million of 6.24 percent notes due December ROE combines the results (as a percentage)
15, 2016; $85.0 million of 6.67 percent notes due December 15, 2019; and of operating performance
$85.0 million of 6.77 percent notes due December 15, 2021. with the effects of financial 20
These notes are senior secured obligations on a pari passu basis with leverage and income taxes
the Revolver. to measure the return on
members’ equity in 15
The Company’s capital securities of $190.7 million, which are also included in Land O’Lakes.
long-term debt, carry an interest rate of 7.45 percent and are due in 2028. The
Return on invested capital 10
capital securities are subordinated to all other senior debt.
in 2009 was 12.1 percent
Land O’Lakes long-term debt-to-capital ratio was 33.7 percent at December compared with 15.1 percent 5
31, 2009, compared with 34.8 percent a year ago. in 2008. Land O’Lakes
Equities at December 31, average ROIC for the five- 05 06 07 08 09
Equities
0
2009 were $1,041.9 million, year period ended in 2009
compared with $995.8 million (dollars in millions) was 12.4 percent.
at December 31, 2008. The Return on equity in 2009
increase of $46.1 million was 21.4 percent compared Return on Equity
resulted primarily from $209.1 1200 (as a percentage)
with 15.7 percent in 2008.
million in net earnings less This increase was driven by
1000
the current period impact higher net earnings in 2009 25
of $30.7 million related to 800 compared to 2008. Average
accounting for pension 20
ROE for the five-year
600
and other postretirement period ended in 2009
benefits and was also reduced 400 15
was 15.6 percent.
by equity revolvement,
age retirements, estate 200 10
redemptions and patronage

0
05 06 07 08 09
5
refunds payable.
Cash returned to members 0
05 06 07 08 09
in 2009 was $108.3 million, Cash Returned to Members
compared with $97.6 million (dollars in millions)
in 2008. Members received Five Years in Review
$63.7 million of equity
revolvement, $39.4 million 120 ($ in millions) 2009 2008 2007 2006 2005
of cash patronage related to Operations:
100
the prior year earnings and Net sales $ 10,409 $ 12,039 $ 8,925 $ 7,102 $ 7,336
$5.2 million of age retirement, 80 Earnings before income taxes 232 190 199 74 142
estate and other payments Net earnings 209 160 161 69 132
60 Allocated patronage equities 152 114 97 72 118
during the year.
Cash returned to members 108 98 58 81 69
40
Financial Position:
20 Working capital $ 528 $ 348 $ 441 $ 305 $ 336
0
05 06 07 08 09 Investments 197 314 304 251 244
Property, plant and equipment 704 658 565 679 676
Total assets 4,924 4,981 4,419 3,000 3,032
Long-term debt 530 532 587 616 623
Total equities 1,042 996 1,021 927 931
Financial Measures:
Return on equity 21% 16% 18% 8% 16%
Return on invested capital 12% 15% 15% 8% 12%
Long-term debt-to-capital 33.7% 34.8% 36.5% 39.9% 40.1%
Current ratio 1.18 1.11 1.17 1.24 1.26

Consolidated Balance Sheets
LAND O’LAKES, INC.

($ in thousands)
As of December 31 2009 2008
Assets
Current assets:
Cash and cash equivalents $ 28,788 $ 30,820
Receivables, net 1,098,755 1,104,261
Inventories 1,130,618 1,083,978
Prepaid assets 1,150,364 1,101,005
Other current assets 79,220 123,504
Total current assets 3,487,745 3,443,568
Investments 196,958 314,487
Property, plant and equipment, net 703,952 658,261
Goodwill, net 274,670 277,176
Other intangibles, net 115,090 120,982
Other assets 145,160 166,838
Total assets $ 4,923,575 $ 4,981,312
Liabilities and Equities

Current liabilities:
Notes and short-term obligations $ 160,521 $ 409,370
Current portion of long-term debt 2,802 2,864
Accounts payable 1,082,272 1,175,995
Customer advances 1,328,844 1,045,705
Accrued liabilities 336,393 423,494
Patronage refunds and other member equities payable 49,298 37,751
Total current liabilities 2,960,130 3,095,179
Long-term debt 530,472 531,955
Employee benefits and other liabilities 391,046 358,404
Commitments and contingencies (Note 22) — —
Equities:
Capital stock 985 1,611
Member equities 986,339 947,141
Accumulated other comprehensive loss (180,902) (150,277)
Retained earnings 228,326 178,377
Total Land O’Lakes, Inc. equities 1,034,748 976,852
Noncontrolling interest 7,179 18,922
Total equities 1,041,927 995,774
Total liabilities and equities $ 4,923,575 $ 4,981,312
See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF OPERATIONS

($ in thousands)
Years Ended December 31 2009 2008 2007
Net sales $ 10,408,509 $ 12,039,259 $ 8,924,895
Cost of sales 9,448,987 11,083,910 8,160,306
Gross profit 959,522 955,349 764,589
Selling, general and administrative 680,943 756,606 623,526
Restructuring and impairment 11,822 2,893 3,970
Gain on insurance settlements (3,239) (10,638) (5,941)
Earnings from operations 269,996 206,488 143,034
Interest expense, net 53,353 63,232 49,645
Other income (7,200) (12,028) (37,157)
Equity in earnings of affiliated companies (8,199) (34,972) (68,183)
Earnings before income taxes 232,042 190,256 198,729
Income tax expense 26,720 14,772 36,697
Net earnings 205,322 175,484 162,032
Less: net (loss) earnings attributable to noncontrolling interests (3,778) 15,864 1,103
Net earnings attributable to Land O’Lakes, Inc. $ 209,100 $ 159,620 $ 160,929
Applied to:
Member equities
Allocated patronage $ 151,913 $ 114,170 $ 97,147
Deferred equities 3,911 2,231 5,496
155,824 116,401 102,643
Retained earnings 53,276 43,219 58,286
$ 209,100 $ 159,620 $ 160,929

CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in thousands)
Years Ended December 31 2009 2008 2007
Cash flows from operating activities:
Net earnings attributable to Land O’Lakes, Inc. $ 209,100 $ 159,620 $ 160,929
Adjustments to reconcile net earnings attributable to Land O’Lakes, Inc.
to net cash provided by operating activities:
Depreciation and amortization 94,586 91,809 85,560
Amortization of deferred financing costs 4,709 4,443 2,981
Gain on extinguishment of debt — (379) —
Bad debt expense 8,133 6,850 22,818
Proceeds from patronage revolvement received 3,150 7,490 6,706
Non-cash patronage income (1,102) (5,757) (2,543)
Insurance recovery — business interruption — — 4,551
Deferred income tax expense (benefit) 39,990 (5,417) (31,415)
Increase in other assets (876) (1,121) (3,766)
Increase in other liabilities 24,974 17,851 4,156
Restructuring and impairment 11,822 2,893 3,970
Loss (gain) from divestiture of businesses 866 — (28,474)
Gain on sale of investments (7,589) (7,458) (8,683)
Gain on foreign currency exchange contracts on sale of investment (177) (4,191) —
Gain on insurance settlements (3,239) (10,638) (5,941)
Equity in earnings of affiliated companies (8,199) (34,972) (68,183)
Dividends from investments in affiliated companies 38,197 45,142 33,699
Net (loss) earnings attributable to noncontroling interests (3,778) 15,864 1,103
Other (8,098) (1,232) (3,288)
Changes in current assets and liabilities, net of acquisitions and divestitures:
Receivables (14,486) (88,736) (294,013)
Inventories (47,158) (97,017) (206,950)
Prepaid and other current assets 195,513 (269,075) (511,679)
Accounts payable 121,267 19,171 586,712
Customer advances (137,660) 101,292 506,724
Accrued liabilities (94,027) 58,515 75,985
Net cash provided by operating activities 425,918 4,947 330,959
Cash flows from investing activities:
Additions to property, plant and equipment (148,051) (171,344) (91,061)
Acquisitions, net of cash acquired (37,118) (9,040) (2,930)
Investments in affiliates (3,415) (51,136) (331,674)
Distributions from investments in affiliated companies 70,000 1,678 25,000
Net settlement on repositioning investment in joint venture — — (87,875)
Net proceeds from divestiture of businesses 13,812 — 212,101
Net proceeds from sale of investments 17,596 21,213 626
Proceeds from foreign currency exchange contracts on sale of investment 518 3,850 —
Proceeds from sale of property, plant and equipment 1,626 6,215 10,502
Insurance proceeds for replacement assets 7,708 4,903 8,635
Change in notes receivable (13,054) (11,596) (18,406)
Other 627 3,050 (202)
Net cash used by investing activities (89,751) (202,207) (275,284)
Cash flows from financing activities:
(Decrease) increase in short-term debt (218,966) 266,829 75,399
Proceeds from issuance of long-term debt 329,459 496 5,790
Principal payments on long-term debt and capital lease obligations (326,204) (58,344) (41,432)
Payments for debt issuance costs (11,961) — —
Payments for redemption of member equities (108,266) (97,590) (58,049)
Other (2,261) (150) (251)
Net cash (used) provided by financing activities (338,199) 111,241 (18,543)
Net (decrease) increase in cash and cash equivalents (2,032) (86,019) 37,132
Cash and cash equivalents at beginning of year 30,820 116,839 79,707
Cash and cash equivalents at end of year $ 28,788 $ 30,820 $ 116,839

CONSOLIDATED STATEMENTS OF EQUITIES AND COMPREHENSIVE INCOME

($ in thousands)
Accumulated
Other
Comprehensive
Capital Member Equities Income Retained Noncontrolling Total
Stock Allocated Deferred Net (Loss) Earnings Interests Equities
Balance, December 31, 2006 $ 1,828 $ 923,876 $ (19,693) $ 904,183 $ (66,276) $ 78,028 $ 8,830 $ 926,593
Capital stock issued 6 — — — — — — 6
Capital stock redeemed (133) — — — — — — (133)
Cash patronage and redemption
of member equities — (58,049) — (58,049) — — — (58,049)
Redemption included in prior
year’s liabilities — 18,626 — 18,626 — — — 18,626
Other, net — (2,209) (3) (2,212) — 1,126 (3,947) (5,033)
Comprehensive income:
2007 earnings, as applied — 97,147 5,496 102,643 — 58,286 1,103 162,032
Other comprehensive income, net of
income taxes — — — — 66,787 — 189 66,976
Total comprehensive income 229,008
Adjustment to initially apply FASB
Statement No. 158, net of income taxes — — — — (62,442) — — (62,442)
Patronage refunds payable — (28,065) — (28,065) — — — (28,065)
Balance, December 31, 2007 1,701 951,326 (14,200) 937,126 (61,931) 137,440 6,175 1,020,511
Redemption included in prior
year’s liabilities — 28,065 — 28,065 — — — 28,065
Other, net — 852 38 890 — (1,212) (2,937) (3,259)
2008 earnings, as applied — 114,170 2,231 116,401 — 43,219 15,864 175,484
Other comprehensive loss, net of
income taxes — — — — (88,675) — (180) (88,855)
Effects of changing the pension
plan measurement date pursuant to
FASB Statement No. 158,
net of income taxes — — — — 329 (1,070) — (741)
Balance, December 31, 2008 1,611 959,072 (11,931) 947,141 (150,277) 178,377 18,922 995,774
Redemption included in
prior year’s liabilities — 37,751 — 37,751 — — — 37,751
Other, net — 3,200 (13) 3,187 — (3,327) (7,965) (8,105)
2009 earnings, as applied — 151,913 3,911 155,824 — 53,276 (3,778) 205,322
Other comprehensive loss, net of
income taxes — — — — (30,654) — — (30,654)
Effects of changing the pension
plan measurement date of an
equity method investee pursuant
to FASB Statement No. 158,
net of income taxes — — — — 29 — — 29
Balance, December 31, 2009 $ 985 $ 994,372 $ (8,033) $ 986,339 $ (180,902) $ 228,326 $ 7,179 $ 1,041,927

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands in tables) shipment based on various factors including historical returns and market
trends and conditions. For certain crop protection product sales within Crop
1. Nature of Operations and Basis of Presentation Inputs, customers receive a one-time, non-repeatable extension of credit for
unused purchased product for a defined additional period. For these sales
Nature of Operations Land O’Lakes, Inc. (“Land O’Lakes” or the arrangements, revenue related to the unused purchased product is recognized
“Company”) is a diversified member-owned food and agricultural cooper- upon collection of the amount re-billed.
ative serving agricultural producers throughout the United States. Through The Company periodically enters into prepayment contracts with customers
its four segments of Dairy Foods, Feed, Crop Inputs (previously Seed and in the Crop Inputs and Feed segments and receives advance payments for prod-
Agronomy) and Layers, Land O’Lakes procures approximately 12.7 billion uct to be delivered in future periods. These payments are recorded as customer
pounds of member milk annually, markets more than 300 dairy products, advances in the consolidated balance sheet. Revenue associated with customer
provides member cooperatives, farmers and ranchers with an extensive advances is deferred and recognized as shipments are made and title, ownership
line of agricultural supplies (including feed, seed and crop protection and risk of loss pass to the customer.
products) and, through its MoArk, LLC (“MoArk”) subsidiary, produces,
markets and distributes shell eggs. Advertising and Promotion Costs Advertising and promotion costs are
expensed as incurred. Advertising and promotion costs were $74.2 million,
Basis of Presentation $82.6 million and $77.1 million in 2009, 2008 and 2007, respectively.
Basis of Consolidation The consolidated financial statements include the Research and Development Expenditures for research and development
accounts of Land O’Lakes and its wholly owned and majority-owned are charged to administrative expense in the year incurred. Total research
subsidiaries. Intercompany transactions and balances have been eliminated. and development expenses were $35.1 million, $40.0 million and $34.3
Fiscal Year The Company’s fiscal year ends on December 31 each year. However, million in 2009, 2008 and 2007, respectively.
the Company’s MoArk subsidiary is a wholly owned, consolidated subsidiary Share-based Compensation The Company offers a Value Appreciation
with a 52- to 53-week reporting period ending in December. The 2009 MoArk Right (“VAR”) Awards plan to certain eligible employees. Participants are
fiscal year consisted of a 53-week period while the 2008 and 2007 MoArk fiscal granted an annual award of VAR Units, which are not traditional stock.
years each consisted of 52-week periods. The Company measures its liability for this plan at intrinsic value.
Adjustments to Prior Years’ Consolidated Financial Statements Income Taxes Land O’Lakes is a nonexempt agricultural cooperative and
On January 1, 2009, the Company adopted Accounting Standards Codification is taxed on all nonmember earnings and any member earnings not paid or
(“ASC”) Topic 810-10-65, “Noncontrolling Interests in Consolidated Financial allocated to members by qualified written notices of allocation as that term
Statements – An Amendment to ARB No. 51.” The objective of this guidance is used in section 1388(c) of the Internal Revenue Code. The Company files a
was to improve the relevance, comparability and transparency of the financial consolidated tax return with its fully taxable subsidiaries.
information that a reporting entity provides in its consolidated financial The Company recognizes interest and penalties accrued related to
statements by establishing accounting and reporting standards for the non- unrecognized tax benefits as components of income tax expense, when
controlling interest in a subsidiary and for the deconsolidation of a subsidiary. applicable. Deferred income tax assets and liabilities are established based
ASC 810-10-65 requires the reclassification of noncontrolling interests, also on the difference between the financial and income tax carrying values of
referred to as minority interest, to the equity section of the consolidated bal- assets and liabilities using existing tax rates.
ance sheet presented upon adoption. Minority interest expense is no longer The Company records taxes collected from customers and remitted
separately reported as a reduction to net income on the consolidated income to governmental authorities on a net basis within the consolidated
statement, but is instead shown below net income under the heading “net financial statements.
earnings (loss) attributable to noncontrolling interests.” Total provision for
income taxes remains unchanged; however, the Company’s effective tax rate Cash and Cash Equivalents Cash and cash equivalents include short-term,
as calculated from the balances shown on the consolidated income statement highly liquid investments with original maturities of three months or less.
has changed as net earnings (loss) attributable to noncontrolling interests is no Vendor Rebates Receivable The Company receives vendor rebates
longer included in the determination of income from continuing operations. primarily from seed and chemical suppliers. These rebates are usually
The Company has changed the presentation of its noncontrolling interests in covered by binding arrangements, which are signed agreements between
compliance with this requirement. the vendor and the Company or published vendor rebate programs; but
they can also be open-ended, subject to future definition or revisions.
2. Significant Accounting Policies Rebates are recorded as earned when probable and reasonably estimable
Use of Estimates The preparation of financial statements in conformity based on terms defined in binding arrangements, or, in the absence of
with U.S. generally accepted accounting principles requires management such arrangements, when cash is received. Rebates covered by binding
to make estimates and assumptions that affect the reported amounts of arrangements that are not probable and reasonably estimable are accrued
assets and liabilities and disclosure of contingent assets and liabilities at when certain milestones are achieved. Because of the timing of vendor
the date of the financial statements and the reported amounts of revenues crop year programs relative to the Company’s fiscal year end, a significant
and expenses during the reporting period. Actual results could differ from portion of rebates have been collected prior to the end of the Company’s
those estimates. Significant estimates include, but are not limited to, year end for the prior crop year. The actual amount of rebates recognized,
allowance for doubtful accounts, sales returns and allowances, vendor however, can vary year over year, largely due to the timing of when bind-
rebates receivable, asset impairments, valuation of goodwill and unamor- ing arrangements are finalized.
tized other intangible assets, tax contingency reserves, deferred tax Inventories Inventories are valued at the lower of cost or market. Cost is
valuation allowances, trade promotion and consumer incentives and determined on an average cost or first-in, first-out basis.
assumptions related to pension and other postretirement plans.
Vendor Prepayments The Company prepays a substantial amount for
Revenue Recognition The Company’s revenues are derived from a wide seed and crop protection products, which it will procure and distribute at
range of products sold to a diversified base of customers. Revenue is a later date. The Company also accepts prepayments from its customers,
recognized when products are shipped and the customer takes ownership which generally exceed the amount it sends to its suppliers. In the event
and assumes risk of loss, collection of the relevant receivables is probable, that one of the suppliers to whom a prepayment is made is unable to
persuasive evidence of an arrangement exists and the sales price is fixed or continue as a going concern or is otherwise unable to fulfill its contractual
determinable. Sales include shipping and handling charges billed to custom- obligations, the Company may not be able to take delivery of all of the
ers and are reduced by customer incentives and trade promotion activities, product for which it has made a prepayment, and, as a trade creditor, may
which are estimated based on redemption rates, customer participation and not be able to reclaim the remaining amounts of cash held by such supplier
performance levels and historical experience. Estimated product returns in in its prepaid account.
the Company’s Crop Inputs segment are deducted from sales at the time of

In 2009, certain customers of the Company participated in a prepay unit over the fair value of all identified assets and liabilities. The test for
program, whereby the customers remitted prepayments for future crop impairment of unamortized other intangible assets is performed on at least
inputs products, directly to a vendor of the Company. The vendor then an annual basis. The Company deems unamortized other intangible assets
assigned the customer prepayments to the Company, which were applied to be impaired if the carrying amount of an asset exceeds its fair value. The
to the customers’ accounts; in exchange, the Company received from the fair value of the Company’s unamortized trademarks and license agreements
vendor a credit for amounts currently payable and a prepayment credit is determined using a discounted cash flow model with assumed royalty
towards future product purchases. This transaction was recorded in the fees and sales projections. The Company tests the recoverability of all other
Company’s consolidated financial statements as a non-cash increase to long-lived assets whenever events or changes in circumstance indicate that
customer advances of $421.1 million, a non-cash decrease to accounts expected future undiscounted cash flows might not be sufficient to support
payable of $226.0 million and a non-cash increase to prepaid assets of the carrying amount of an asset. The Company deems these other assets
$195.1 million. to be impaired if a forecast of undiscounted future operating cash flows is
As of December 31, 2009 and 2008, vendor prepayments for seed and less than its carrying amount. If these other assets were determined to be
crop protection products, which are presented as prepaid assets in the impaired, the loss is measured as the amount by which the carrying value of
consolidated balance sheets, were $1,118.8 million and $1,063.0 million, the asset exceeds its fair value.
respectively, most of which was concentrated with Monsanto Company, While the Company currently believes that goodwill and unamortized
Syngenta and Bayer AG. trademarks and license agreements are not impaired, materially different
assumptions regarding the future performance of its businesses could result
Derivative Commodity Instruments In the normal course of operations,
in significant impairment losses. Specifically, within Feed, detrimental changes
the Company purchases commodities such as milk, butter and soybean oil
in the current business conditions could bring about significant differences
in Dairy Foods, soybean meal and corn in Feed, soybeans in Crop Inputs
between actual and projected financial results and cause the Company to
and corn and soybean meal in Layers. Derivative commodity instruments,
incur an impairment loss related to its goodwill or unamortized trademarks or
consisting primarily of futures contracts offered through regulated com-
license agreements.
modity exchanges, are used to reduce exposure to changes in commodity
prices. These contracts are not designated as hedges. The futures contracts
are marked-to-market each month and gains and losses (“unrealized hedg- 3. Recent Accounting Pronouncements
ing gains and losses”) are recognized in cost of sales. The Company has In June 2009, the Financial Accounting Standards Board (“FASB”) issued
established formal limits to monitor its positions and generally does not Statement of Financial Accounting Standards (“SFAS”) No. 168, “The
use derivative commodity instruments for speculative purposes. FASB Accounting Standards Codification and the Hierarchy of Generally
Investments Investments in other cooperatives are stated at cost plus Accepted Accounting Principles (“GAAP”), a replacement of FASB
unredeemed patronage refunds received, or estimated to be received, Statement No. 162.” This statement modifies the GAAP hierarchy by
in the form of capital stock and other equities. Estimated patronage establishing only two levels of GAAP, authoritative and non-authoritative
refunds are not recognized for tax purposes until notices of allocation are accounting literature. Effective July 2009, the FASB ASC, also known
received. Investments in less than 20%-owned companies are generally collectively as the “Codification,” is considered the single source of
stated at cost as the Company does not have the ability to exert signifi- authoritative U.S. accounting and reporting standards, except for addi-
cant influence. The equity method of accounting is used for investments tional authoritative rules and interpretive releases issued by the Securities
in other companies, including joint ventures, in which the Company has and Exchange Commission (the “SEC”). Non-authoritative guidance and
significant influence, but not control, and voting interests of 20% to 50%. literature would include, among other things, FASB Concepts Statements,
Investments with voting interests that exceed 50% are consolidated. American Institute of Certified Public Accountants Issue Papers and
Significant investments, whether accounted for under the cost or equity Technical Practice Aids and accounting textbooks. The Codification was
method, are reviewed regularly to evaluate if they have experienced a developed to organize GAAP pronouncements by topic so that users can
decline in fair value. more easily access authoritative accounting guidance. It is organized by
topic, subtopic, section and paragraph, each of which is identified by a
Property, Plant and Equipment Property, plant and equipment are stated numerical designation. Following the Codification, the FASB will not issue
at cost. Depreciation is calculated using the straight-line method over the new standards in the form of Statements, FASB Staff Positions or Emerging
estimated useful life (10 to 30 years for land improvements and buildings Issues Task Force Abstracts. Instead, it will issue Accounting Standards
and building equipment, 3 to 10 years for machinery and equipment and Updates (“ASU”), which will serve to update the Codification, provide
3 to 5 years for software) of the respective assets in accordance with the background information about the guidance and provide the basis for
straight-line method. Accelerated methods of depreciation are used for conclusions on the changes to the Codification. This statement and the
income tax purposes. application of the Codification was effective for and adopted by the
Goodwill and Other Intangible Assets Goodwill represents the excess Company as of July 1, 2009. All accounting references have been updated,
of the purchase price of an acquired entity over the amounts assigned to and therefore SFAS references have been replaced with ASC references.
assets acquired and liabilities assumed. In December 2008, the FASB issued ASC 715-20-65-2, “Employers’
In 2008, the Company changed the timing of its annual goodwill Disclosures about Postretirement Benefit Plan Assets” (“ASC 715-20-65-2”),
impairment testing from November 30 to October 1. This accounting which requires that an employer disclose the following information about
change is preferable as this date provides additional time prior to the the fair value of plan assets: 1) how investment allocation decisions are made,
Company’s December 31 year end to complete the impairment testing including the factors that are pertinent to understanding investment policies
and report the results of those tests as part of the annual financial and strategies; 2) the major categories of plan assets; 3) the inputs and valua-
reporting to member shareholders and other investors. tion techniques used to measure the fair value of plan assets; 4) the effect of
Other intangible assets consist primarily of trademarks, patents, fair value measurements using significant unobservable inputs on changes in
customer relationships and agreements not to compete. Certain plan assets for the period; and 5) significant concentrations of risk within plan
trademarks are not amortized because they have indefinite lives. The assets. At initial adoption, application of this guidance would not be required
remaining other intangible assets are amortized using the straight-line for earlier periods that are presented for comparative purposes. The adop-
method over their estimated useful lives, ranging from 3 to 25 years. tion of this guidance in 2009 increased the disclosures within the Company’s
consolidated financial statements related to the assets of its defined benefit
Recoverability of Long-lived Assets The test for goodwill impairment is a pension and other postretirement benefit plans. This guidance was effective
two-step process and is performed on at least an annual basis. The first step is for fiscal years ending after December 15, 2009. The Company adopted this
a comparison of the fair value of the reporting unit with its carrying amount, guidance as of December 31, 2009.
including goodwill. If this step reflects impairment, then the loss would be In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers
measured in the second step as the excess of recorded goodwill over its of Financial Assets” (“SFAS 166”). This guidance removes the concept of a
implied fair value. Implied fair value is the excess of fair value of the reporting qualifying special-purpose entity (“QSPE”) and removes the exception from

applying consolidation guidance to these entities. SFAS 166 also clarifies the 4. Business Combinations
requirements for isolation and limitations on portions of financial assets that
2009 Acquisitions
are eligible for sale accounting. This statement is effective for fiscal years
In January 2009, Feed contributed $0.3 million in cash to Superior Feed
beginning after November 15, 2009. Accordingly, the Company will adopt this
Solutions, LLC, a 50/50 joint venture with Ceres Solutions LLP. The joint
standard as of January 1, 2010. In December 2009, this standard was adopted
venture is accounted for under the equity method of accounting.
into the Codification as ASU No. 2009-16.
On April 9, 2009, the Company announced that Agriliance LLC (“Agriliance”),
In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB
a 50/50 joint venture between the Company and United Country Brands,
Interpretation No. 46R” (“SFAS 167”). SFAS 167 requires an analysis to determine
LLC (a wholly owned subsidiary of CHS Inc. (“CHS”)), entered into an operat-
whether a variable interest gives the entity a controlling financial interest in a
ing lease and an asset purchase agreement with Agri-AFC, LLC (“Agri-AFC”),
variable interest entity. This statement requires an ongoing reassessment and
a wholesale and retail crop inputs supplier. At the time of this transaction,
eliminates the quantitative approach previously required for determining whether
Agri-AFC was a consolidated joint venture between Winfield Solutions, LLC
an entity is the primary beneficiary. This statement is effective for fiscal years
(“Winfield”), a Land O’Lakes wholly owned subsidiary, and Alabama Farmers
beginning after November 15, 2009. Accordingly, the Company will adopt this
Cooperative, Inc. (“AFC”). Under the terms of the transaction documents,
standard as of January 1, 2010. The Company is currently evaluating the impact
Agri-AFC immediately began operating nine former Agriliance retail locations
of adopting this standard on the consolidated financial statements. In December
located in Georgia and Mississippi and purchased the working capital, primar-
2009, this standard was adopted into the Codification as ASU No. 2009-17.
ily inventory, associated with such locations for $18.3 million. In July 2009,
During 2009, the FASB issued several ASUs: ASU No. 2009-01 through ASU No.
Agri-AFC completed the transaction and acquired the property, plant and
2009-17. ASU 2009-01 amended the Codification, ASC 105, for the issuance of
equipment located at these sites for $2.8 million in cash.
SFAS 168 discussed above. Except for the ASUs discussed below, the ASUs entail
In August 2009, Feed contributed $0.3 million in cash to DaLOL Bio-
technical corrections to existing guidance or affect guidance related to specialized
Nutrition (HK) Co., Ltd, a 50/50 joint venture with Hwabei Agri Corporation.
industries or topics and therefore have minimal, if any, impact on the Company.
The joint venture is accounted for under the equity method of accounting.
In August 2009, the FASB issued ASU No. 2009-05, which amends Fair Value
On October 2, 2009, as part of Agriliance’s ongoing restructuring, Retail
Measurements and Disclosures – Overall (“ASC Topic 820-10”) to provide
Agronomy Solutions, LLC (“RAS”), a wholly owned subsidiary of Winfield,
guidance on the fair value measurement of liabilities. This update requires clari-
entered into an operating lease agreement with Agriliance. The purpose
fication for circumstances in which a quoted price in an active market for the
of the transaction was to maintain the retail distribution channels for
identical liability is not available, in which case a reporting entity is required to
the Company’s crop protection and seed products. Under the terms of
measure fair value using one or more of the following techniques: 1) a valuation
the transaction documents, RAS immediately began operating 34 former
technique that uses either the quoted price of the identical liability when traded
Agriliance retail locations in Louisiana, Arkansas and Mississippi and
as an asset or quoted prices for similar liabilities or similar liabilities when traded
purchased the working capital, primarily inventory, associated with such
as an asset; or 2) another valuation technique that is consistent with the prin-
locations for $24.8 million. In December 2009, RAS completed the transac-
ciples in ASC Topic 820 such as the income and market approach to valuation.
tion and closed on the property, plant and equipment located at these sites
The amendments in this update also clarify that when estimating the fair value
for $11.4 million in cash. As part of the closing, RAS also assumed potential
of a liability, a reporting entity is not required to include a separate input
future environmental liability in return for a payment of $1.9 million from
or adjustment to other inputs relating to the existence of a restriction that
Agriliance. Since RAS obtained control over these retail locations on
prevents the transfer of the liability. This update further clarifies that if the
October 2, 2009, the results of operations are included in the consolidated
fair value of a liability is determined by reference to a quoted price in an
financial statements from that date forward and the purchase price alloca-
active market for an identical liability, that price would be considered a Level
tion was determined as of that date.
1 measurement in the fair value hierarchy. Similarly, if the identical liability has
The following table summarizes the recognized amounts of identifiable
a quoted price when traded as an asset in an active market, it is also a Level 1
assets and liabilities acquired based upon independent appraisals and
fair value measurement if no adjustments to the quoted price of the asset are
management estimates:
required. This update is effective for the Company beginning October 1, 2009.
The Company adopted ASU No. 2009-05 as of October 1, 2009, which had no
Receivables, net $ 880
impact on the consolidated financial statements.
Inventories 24,061
In September 2009, the FASB issued ASU No. 2009-06, which amends
Property, plant and equipment 11,815
Income Taxes (“ASC Topic 740”) in order to clarify certain implementation
Customer advances (364)
issues specific to nonpublic entities and amend certain disclosure require-
Employee benefits and other liabilities (947)
ments. This update was effective for nonpublic entities for any interim or
Total fair value of identifiable assets and liabilities 35,445
annual periods ending after September 15, 2009. The Company became a
Purchase price, net of cash assumed 34,291
nonpublic entity on December 15, 2009 when it refinanced its principal debt
Bargain purchase gain $ 1,154
facilities including calling and redeeming its public debt and issuing new
private placement debt. See Note 11 for further discussion. Accordingly, the The Company determined that the fair value of assets acquired
Company adopted this amendment as of December 31, 2009 as the first exceeded the purchase price by approximately $1.2 million, which was
reporting period ending after September 15, 2009 in which the Company was recorded as a bargain purchase gain within selling, general and administra-
a nonpublic entity; therefore, the adoption of ASU No. 2009-06 did not have tive expense in the consolidated statements of operations. An additional
an impact on the consolidated financial statements. $0.9 million of gain on the acquisition was deferred and will be recognized
In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” over the life of the assets acquired, as this was a related party transaction.
(“SFAS 141(R)”), which was implemented into ASC 805 of the Codification. SFAS In December 2009, Winfield entered into an asset purchase agreement with
141(R) requires most identifiable assets, liabilities, noncontrolling interests and Agriliance to acquire four retail locations. Winfield purchased the existing work-
goodwill acquired in a business combination to be recorded at “full fair value.” ing capital, primarily inventory, associated with such locations for $3.2 million.
The statement applies to all business combinations, including combinations 2009 Deconsolidations
among mutual enterprises. SFAS 141(R) requires all business combinations to In October 2009, the Company renegotiated the operating agreement for
be accounted for by applying the acquisition method and was effective its joint venture Agri-AFC, a consolidated joint venture between Winfield
for periods beginning on or after December 15, 2008, with early adoption and AFC. The purpose of the transaction was to equalize the governance of
prohibited. The Company adopted SFAS 141(R) prospectively for all business the joint venture between the two owners to align with economic interests.
combinations where the acquisition date is on or after January 1, 2009 and Under the terms of the new operating agreement, the Company reduced its
has ceased amortizing goodwill created as a result of business combinations governance percentage from 51% to 50% for fair value, which was not mate-
between mutual enterprises. Amortization of goodwill was $7.9 million and rial, while AFC increased its governance percentage from 49% to 50%. The
$7.7 million for the years ended December 31, 2008 and 2007, respectively. Company deconsolidated Agri-AFC immediately and began recording its
See Note 9 for further information. portion of Agri-AFC’s operations under the equity method of accounting.

2008 Acquisitions In August 2007, the Company acquired Gold Medal Seeds LTD, a
In January and February of 2008, Agriliance distributed its interest in four Canadian corporation, for $2.9 million in cash.
agronomy joint ventures to the Company and CHS, and the Company
acquired from CHS its partial interest in the joint ventures for a total 5. Receivables
cash payment of $8.3 million representing the net book value of these
investments. In April 2008, a consolidated feed joint venture purchased A summary of receivables at December 31 is as follows:
the remaining interest in a subsidiary for $0.4 million in cash. In May 2009 2008
2008, the Company acquired a native grass seed company for $1.7 million Trade accounts $ 874,772 $ 846,794
in cash and acquired a seed treatment business for $1.1 million in cash. Notes and contracts 106,957 89,736
These acquisitions, individually and in aggregate, are immaterial to the Vendor rebates 78,571 57,007
Company’s financial position, net earnings and cash flows. Other 54,685 130,591
1,114,985 1,124,128
2007 Acquisitions Less allowance for doubtful accounts (16,230) (19,867)
In September 2007 the Company, CHS and Agriliance entered into an Total receivables, net $ 1,098,755 $ 1,104,261
agreement whereby Agriliance distributed a portion of its assets, primarily its
A substantial portion of the Company’s receivables is concentrated in
wholesale Crop Protection Products business (“CPP”) assets and its wholesale
agriculture as well as in the wholesale and retail food industries. Collection
Crop Nutrients business (“CN”) assets, to the parent companies in an effort to
of receivables may be dependent upon economic returns in these industries.
enhance operating efficiencies and more closely align the businesses within the
The Company’s credit risks are continually reviewed, and management
parent companies. Based on ownership interests, each parent would be enti-
believes that adequate provisions have been made for doubtful accounts.
tled to receive 50% of the CPP and CN assets distributed. In order to meet the
The Company operates a wholly owned subsidiary that provides operating
objectives of the distributions, Land O’Lakes granted CHS the right to receive
loans and facility financing to farmers and livestock producers, which are
100% of the CN assets distributed in exchange for the right to receive 100% of
collateralized by the real estate, equipment and livestock of their farming
the CPP assets distributed. Land O’Lakes agreed to pay $229.8 million and CHS
operations. These loans, which relate primarily to dairy, swine, cattle and
agreed to pay $141.9 million for their respective distribution rights. The parent
other livestock production, are presented as notes and contracts for the
companies net settled the transaction in 2007 whereby the Company paid
current portion and as other assets for the non-current portion. Total notes
$87.9 million to CHS. In 2007, the Company also recorded an $8.8 million gain
and contracts were $163.4 million at December 31, 2009 and $139.7 million
on sale of investment for the repositioning related to the CN assets distributed.
at December 31, 2008, of which $96.3 million and $82.1 million, respectively,
The net book value of CPP assets distributed by Agriliance to Land O’Lakes,
were the current portions included in the table above.
as of the date of distribution, was $333.0 million. The $166.5 million portion of
Vendor rebate receivables are primarily generated as a result of seed and
the CPP assets distributed to Land O’Lakes attributable to its 50% ownership
chemical purchases. These receivables can vary significantly from period to
interest was recorded as a non-cash transaction, which reduced the Company’s
period based on a number of factors, including, but not limited to, specific
investment in Agriliance. The $229.8 million that Land O’Lakes agreed to pay for
terms and conditions set forth in the underlying agreements, the timing of
the right to receive an additional 50% of the CPP assets distributed was treated
when such agreements become binding arrangements and the timing of cash
as a step acquisition using the purchase method of accounting. The $63.3 mil-
receipts. The Company may, on occasion, enter into inventory purchase com-
lion excess purchase price over book value of assets acquired was allocated to
mitments with vendors in order to achieve an optimal rebate return.
inventories, property, plant and equipment, identifiable intangible assets and
Other receivables include margin receivables from commodity brokers on
deferred tax liabilities, with the remaining consideration allocated to goodwill.
open derivative instruments, interest and expected insurance settlements.
The closing date of the transaction was effective as of September 1, 2007, and
accordingly, the results of operations of CPP are included in the consolidated
financial statements from that date forward. 6. Inventories
During 2008, the purchase price allocation was adjusted due to final A summary of inventories at December 31 is as follows:
determination of deferred tax positions. As a result, goodwill increased 2009 2008
$4.8 million and employee benefits and other liabilities increased by the Raw materials $ 197,732 $ 217,087
same amount. The following table summarizes the amounts assigned to Work in process 909 1,639
major balance sheet captions based upon independent appraisals and Finished goods 931,977 865,252
management estimates including the 2008 allocation adjustment: Total inventories $ 1,130,618 $ 1,083,978
Receivables $104,096
Inventories 307,152 7. Investments
Other current assets 712 A summary of investments at December 31 is as follows:
Property, plant and equipment 30,338 2009 2008
Goodwill 27,079 Agriliance LLC $ 44,278 $ 176,191
Other intangibles 27,051 Advanced Food Products, LLC 34,916 33,870
Investments 1,325 Ag Processing Inc 29,932 31,858
Other assets 307 Delta Egg Farm, LLC 12,672 11,464
Accounts payable (32,633) Melrose Dairy Proteins, LLC 10,515 6,397
Accrued liabilities (58,939) Universal Cooperatives, Inc. 7,857 7,877
Employee benefits and other liabilities (10,174) Agri-AFC, LLC 5,893 —
Net assets distributed and acquired $396,314 CoBank, ACB 5,345 4,892
The excess purchase price allocation resulted in the recognition of $27.1 Pro-Pet, LLC 4,522 2,123
million of identifiable intangible assets of which $22.5 million related to Hi-Plains, LLC 3,147 3,244
customer relationships to be amortized over a period of 25 years, $2.8 Wilco-Winfield, LLC 3,095 3,131
million related to trademarks and tradenames to be amortized over 15 years Other — principally cooperatives
and $1.8 million related to other finite-lived intangible assets that are amor- and joint ventures 34,786 33,440
tized over an average period of eight years. The entire amount of intangible Total investments $ 196,958 $ 314,487
assets and goodwill recognized is not deductible for income tax purposes. As of December 31, 2009, the Company maintained a 50% voting
Also in 2007, the Company contributed $330.9 million in cash to interest in numerous joint ventures, including Agriliance LLC, Agri-AFC,
Agriliance, along with equivalent funds provided by CHS, for the pay-down LLC and Wilco-Winfield, LLC in Crop Inputs, Delta Egg Farm, LLC in
of certain debt and to support ongoing working capital requirements. Layers, Melrose Dairy Proteins, LLC in Dairy and Hi-Plains, LLC in Feed.

The Company also maintained a 35% voting interest in Advanced Food Goodwill amortization was $0, $7.9 million and $7.7 million for
Products, LLC in Dairy and a 33.3% voting interest in Pro-Pet, LLC in the years ended December 31, 2009, 2008 and 2007, respectively.
Feed at December 31, 2009. The Company’s largest investments in other Amortization of goodwill created as a result of business combinations
cooperatives as of December 31, 2009 were Ag Processing Inc, Universal between mutual enterprises ceased with the adoption of revised guid-
Cooperatives, Inc. and CoBank, ACB (“CoBank”). ance within ASC 805, “Business Combinations,” as of January 1, 2009.
In 2009, the Company’s investment in Agriliance decreased by $131.9 mil-
Other Intangible Assets
lion, due to $95.0 million of dividends received, $12.0 million in equity losses
A summary of other intangible assets at December 31 is as follows:
and a $24.9 million other comprehensive loss related to Agriliance’s annual 2009 2008
pension adjustments. In 2008, the Company received $20.0 million of divi- Amortized other intangible assets:
dend distributions from Agriliance. Dealer networks and customer relationships,
In February 2008, the Company and Golden Oval Eggs, LLC (“Golden Oval”) less accumulated amortization
entered into an Amendment to Asset Purchase Agreement that modified of $6,498 and $4,045, respectively $ 48,024 $ 50,478
certain terms and conditions of the sale of MoArk’s liquid egg operations Patents, less accumulated amortization
to Golden Oval, including the cancellation of the principal amount owed of $9,575 and $8,414, respectively 7,136 8,297
under the note and the issuance of a warrant to the Company for the right to Trademarks, less accumulated amortization
purchase 880,492 convertible preferred units. As of the date the warrant was of $3,362 and $2,668, respectively 4,252 4,946
issued, the Company determined that the underlying units had an insignificant Other intangible assets, less accumulated
fair value. In December 2008, Golden Oval announced that it entered into an amortization of $3,806 and
agreement to sell substantially all of its assets. As of December 31, 2008, the $4,412, respectively 4,053 5,636
Company held the warrant for the 880,492 convertible preferred units, which Total amortized other intangible assets 63,465 69,357
carried a preference upon liquidation of $11.357 per unit, and 697,350 Class A Total non-amortized other intangible assets
units. In February 2009, the Company notified Golden Oval that it intended to — trademarks and license agreements 51,625 51,625
exercise the warrant prior to Golden Oval’s scheduled asset sale, noted above. Total other intangible assets $ 115,090 $ 120,982
The Company had the right, in its sole discretion, to convert to Class A units Amortization expense for the years ended December 31, 2009, 2008
any preferred units it received upon exercise of its warrant. On March 2, 2009, and 2007 was $5.2 million, $5.4 million and $4.2 million, respectively. The
in conjunction with Golden Oval’s planned sale of substantially all of its assets estimated amortization expense related to other intangible assets subject
to Rembrandt Enterprises, Inc. (“Rembrandt”), the Company exercised its right to amortization for the next five years will approximate $4.5 million
to purchase 880,492 Class A Convertible Preferred Units (the “Preferred Units”) annually. The weighted-average life of the intangible assets subject to
of Golden Oval. The Company also elected to convert the Preferred Units to an amortization is approximately 18 years. Non-amortized other intangible
equal number of Golden Oval’s Class A Common Units on the condition that assets relate to Feed and the majority of the amortized other intangible
it would retain the preferred payment rights established in the certificate of assets relate to Feed, Crop Inputs and Layers.
designation of the Preferred Units. The sale of substantially all of Golden Oval’s
assets to Rembrandt closed as of March 30, 2009. In 2009, upon closing of the 10. Accrued Liabilities
asset sale, the Company recorded a $6.4 million gain, which represented the
preferred payment related to the 880,492 Preferred Units that were converted A summary of accrued liabilities is as follows:
to Class A units in accordance with the terms of the warrant’s execution. The 2009 2008
Company recorded an additional $5.4 million gain, which represented distribu- Employee compensation and benefits $ 120,661 $ 141,376
tion payments from the asset sale related to the total 1,577,842 Class A units Unrealized hedging losses and deferred
owned by the Company. For the year ended December 31, 2009, the Company option premiums received 8,180 99,964
received a total of $11.8 million in cash related to this transaction. The Company Marketing programs and
does not expect to receive any further cash distributions from Golden Oval consumer incentives 70,032 70,209
related to the asset sale; therefore all 1,577,842 Class A units held by the Other 137,520 111,945
Company are deemed to have no remaining value. Total accrued liabilities $ 336,393 $ 423,494
Other accrued liabilities primarily include accrued taxes, interest, self-
8. Property, Plant and Equipment insurance reserves and environmental liabilities.
A summary of property, plant and equipment at December 31 is as follows:
2009 2008 11. Debt Obligations
Machinery and equipment $ 765,711 $ 668,279 Notes and Short-term Obligations
Buildings and building equipment 437,535 393,156 The Company had notes and short-term obligations at December 31, 2009
Land and land improvements 74,427 68,977 and 2008 of $160.5 million and $409.4 million, respectively. The Company
Software 91,272 102,570 maintains credit facilities to finance its short-term borrowing needs,
Construction in progress 52,486 93,402 including a revolving credit facility and a receivables securitization facility.
1,421,431 1,326,384 On October 29, 2009, the Company announced that it had refinanced
Less accumulated depreciation 717,479 668,123 its principal debt facilities in order to, among other things, extend the
Total property, plant and equipment, net $ 703,952 $ 658,261 term of its debt portfolio to provide liquidity for general corporate
purposes and to take advantage of lower interest rates. The refinancing
included the following elements: the call of the Company’s 8.75% Senior
9. Goodwill and Other Intangible Assets
Unsecured Notes (the “Unsecured Notes”) totaling $174.0 million and
Goodwill 9.00% Senior Secured Notes (the “Secured Notes”) totaling $149.7 million,
The carrying amount of goodwill by segment at December 31 is as follows: which were redeemed on December 15, 2009; the issuance of $325.0
2009 2008 million in new secured private placement term debt; the replacement of
Feed $ 124,911 $ 126,959 the existing $400 million revolving credit facility with a new $375 million
Dairy Foods 68,525 68,525 revolving credit facility; and the amendment of the Company’s existing
Crop Inputs 61,345 61,345 $400 million receivables securitization facility.
Layers 19,889 20,347 As noted above, on October 29, 2009, the Company entered into
Total goodwill $ 274,670 $ 277,176 a replacement $375 million revolving credit facility led by CoBank as
In 2009, goodwill within Feed decreased by $2.0 million due to the administrative agent, bookrunner, collateral agent and joint lead arranger,
divestiture of three facilities. See Note 21 for further information. and Banc of America Securities LLC as joint lead arranger (the “CoBank
Revolving Credit Facility”).

Under the terms of the CoBank Revolving Credit Facility, lenders have is it secured by Company assets. The revolving credit facility is subject to
committed to make advances and issue letters of credit until April 2013 certain debt covenants, which were all satisfied at December 31, 2009 and
in an aggregate amount not to exceed $375 million. Borrowings bear 2008. The facility is scheduled to mature on June 1, 2012.
interest at a variable rate (either LIBOR or an Alternative Base Rate) plus In 2008, the Company’s Agri-AFC subsidiary maintained a $45 million
an applicable margin. The margin is dependent upon the Company’s revolving credit facility, which was subject to a borrowing base limitation and
leverage ratio. Based on the leverage ratio at the end of December 2009, terminates in March 2010. Borrowings bore interest at a variable rate of LIBOR
the LIBOR margin for the CoBank Revolving Credit Facility was 250 basis plus 250 basis points. At December 31, 2008, the outstanding borrowings
points. Spreads for the Alternative Base Rate are 100 basis points lower were $34.9 million. Agri-AFC’s facility is not guaranteed by the Company nor is
than the applicable LIBOR spreads. LIBOR may be set for one, two, three it secured by Company assets, but it does contain a minimum net worth cov-
or six month periods at the Company’s election. At December 31, 2009, enant that could require the Company to make subordinated loans or equity
there was $60.0 million outstanding on the CoBank Revolving Credit infusions into Agri-AFC if Agri-AFC’s net worth falls below certain levels. The
Facility and $273.9 million was available after giving effect to $41.1 million revolving credit facility is subject to certain debt covenants, which were all
of outstanding letters of credit, which reduced availability. satisfied as of the entity’s fiscal years ended July 31, 2009 and 2008. Agri-AFC’s
The borrowings under the CoBank Revolving Credit Facility are secured, joint venture operating agreement was renegotiated in 2009, which resulted
on a pari passu basis with the new private placement notes, by substantially in the Company deconsolidating the entity. See Note 4 for further discussion
all of the Company’s material assets and the assets and guarantees of regarding the deconsolidation.
certain of the Company’s wholly owned domestic subsidiaries. The CoBank The weighted-average interest rate on short-term borrowings
Revolving Credit Facility imposes certain restrictions on the Company and notes outstanding at December 31, 2009 and 2008 was 2.81%
and certain of its subsidiaries, including, but not limited to, the Company’s and 1.94%, respectively.
ability to incur additional indebtedness, make payments to members, make
Long-term Debt
investments, grant liens, sell assets and engage in certain other activities.
A summary of long-term debt at December 31 is as follows:
Until its replacement on October 29, 2009, the Company’s $400
2009 2008
million, five-year revolving credit agreement, which was amended on
New Notes, due 2016–2021 (6.24%–6.77%) $ 325,000 $ —
May 4, 2009 to increase its capacity from $225 million, was scheduled to
Senior Unsecured Notes, due 2011 (8.75%) — 174,002
mature in 2011. Borrowings bore interest at a variable rate (either LIBOR
Senior Secured Notes, due 2010 (9.00%) — 149,700
or an Alternative Base Rate) plus an applicable margin. The margin was
Capital Securities of Trust Subsidiary,
dependent upon the Company’s leverage ratio. Based on the Company’s
due 2028 (7.45%) 190,700 190,700
leverage ratio at the end of December 2008, the LIBOR margin for the
MoArk, LLC debt, due 2009 through
revolving credit facility was 87.5 basis points and the spread for the
2023 (8.53% weighted average) 14,526 15,449
Alternative Base Rate was 20 basis points. LIBOR was allowed to be set
MoArk, LLC capital lease obligations
for one, two, three or six month periods at the election of the Company.
(7.00% to 8.25%) 3,463 4,668
At December 31, 2008, there was no outstanding balance on the revolving
Other debt, including discounts and
credit facility and $188.6 million was available after giving effect to $36.4
fair value adjustments (415) 300
million of outstanding letters of credit, which reduced availability.
Total debt 533,274 534,819
The Company’s $400 million, five-year receivables securitization facility
Less current portion 2,802 2,864
arranged by CoBank was amended and extended on October 29, 2009
Total long-term debt $ 530,472 $ 531,955
and now matures in April 2013. The Company and certain wholly owned
consolidated entities sell Dairy Foods, Feed, Crop Inputs and certain other As part of its overall refinancing, the Company redeemed $174.0
receivables to LOL SPV, LLC, a wholly owned, consolidated special purpose million in aggregate principal amount of 8.75% Unsecured Notes, dated
entity (the “SPE”). The SPE enters into borrowings that are effectively as of November 14, 2001, and $149.7 million in aggregate principal amount
secured solely by the SPE’s receivables. The SPE has its own separate of 9.00% Secured Notes, dated as of December 23, 2003 (the Unsecured
creditors that are entitled to be satisfied out of the assets of the SPE prior Notes and Secured Notes, together, the “Called Notes”). The Called
to any value becoming available to the Company. Borrowings under the Notes were redeemed at par on December 15, 2009. Once the Called
receivables securitization facility bear interest at LIBOR plus an applicable Notes were redeemed, the Company was no longer contractually
margin. The amendment increased the margin from 87.5 basis points to obligated to file periodic reports with the SEC. Accordingly, the
225 basis points. Apart from the interest rate and the tenor of the facility, Company does not plan to make any further filings with the SEC.
all material terms of the facility were unchanged by the amendment. At The Company also entered into a Note Purchase Agreement with certain
December 31, 2009 and 2008, the SPE’s receivables were $774.8 million and institutional lenders that governs the issuance of $325 million of privately
$771.3 million, respectively. At December 31, 2009 and 2008, outstanding placed notes (the “New Notes”). The New Notes were issued and sold in
balances under the facility, recorded as notes and short-term obligations, three series, as follows: (i) $155 million aggregate principal amount of 6.24%
were $0 and $280.0 million, respectively, and availability was $400.0 and notes, due December 2016, (ii) $85 million aggregate principal amount of
$120.0 million, respectively. 6.67% notes, due December 2019 and (iii) $85 million aggregate principal
The Company also had $80.5 million and $74.5 million as of December amount of 6.77% notes, due December 2021. The sale of the New Notes
31, 2009 and 2008, respectively, of notes and short-term obligations occurred on December 15, 2009, and the Company applied the proceeds
outstanding under a revolving line of credit and other borrowing arrange- to the redemption of the Called Notes. The New Notes are secured on a
ments for a wholly owned subsidiary that provides operating loans and pari passu basis with the debt issued under the CoBank Revolving Credit
facility financing to farmers and livestock producers. These outstanding Facility (described above), by substantially all of the Company’s material
notes and short-term obligations are collateralized by the wholly owned assets and the assets and guarantees of certain of the Company’s wholly
subsidiary’s loans receivable from the farmers and livestock producers. owned domestic subsidiaries. The Note Purchase Agreement imposes cer-
Additionally, the Company had $20.0 million outstanding as of December tain restrictions on the Company and certain of its subsidiaries, including,
31, 2009 and 2008, respectively, of notes and short-term obligations under a but not limited to, the Company’s ability to incur additional indebtedness,
credit facility with Agriliance. The purpose of the credit facility is to provide make payments to members, make investments, grant liens, sell assets and
additional working capital liquidity and allows the Company to borrow from engage in certain other activities.
or lend to Agriliance at a variable rate of LIBOR plus 100 basis points. As part of the refinancing, deferred charges of $2.0 million were
The Company’s MoArk subsidiary maintains a $40 million revolving written off to interest expense in the consolidated financial statements.
credit facility, which is subject to a borrowing base limitation. Borrowings Land O’Lakes Capital Trust I (the “Trust”) was created in 1998 for the
bear interest at a variable rate (either LIBOR or an Alternative Base Rate) sole purpose of issuing $200.0 million of Capital Securities and invest-
plus an applicable margin. At December 31, 2009 and 2008, the outstanding ing the proceeds thereof in an equivalent amount of debentures of the
borrowings were $0. MoArk’s facility is not guaranteed by the Company nor Company. The sole assets of the Trust, $206.2 million principal amount

Junior Subordinated Deferrable Interest Debentures of the Company, The components of accumulated other comprehensive loss as of
bearing interest at 7.45% and maturing on March 15, 2028, are eliminated December 31 are as follows:
upon consolidation. 2009 2008
At December 31, 2009 and 2008, MoArk had $3.5 million and $4.7 million, Pension and other postretirement
respectively, in obligations under capital lease, which represent the present adjustments, net of income taxes
value of the future minimum lease payments. MoArk leases machinery, of $112,302 and $93,293, respectively $ (181,298) $ (150,610)
buildings and equipment at various locations. Minimum commitments for Unrealized gain on available-for-
obligations under capital leases at December 31, 2009 total $3.5 million, sale securities, net of income taxes
comprising $1.6 million for 2010, $1.8 million for 2011 and $0.1 million for 2012. of $(5) and $(5), respectively 8 9
In December 2008, the Company entered into a transaction with the City Foreign currency translation adjustment,
of Russell, Kansas (the “City”), whereby the City purchased the Company’s net of income taxes of $(241) and
Russell, Kansas, feed facility (the “Facility”) by issuing $4.9 million in industrial $(201), respectively 388 324
development revenue bonds due December 2018 and leased the Facility Accumulated other comprehensive loss $ (180,902) $ (150,277)
back to the Company for an identical term under a capital lease. The City’s
bonds were purchased by the Company. Because the City has assigned the
13. Derivative Instruments
lease to a trustee for the benefit of the Company as the sole bondholder,
the Company, in effect, controls enforcement of the lease against itself. As The Company is exposed to the impact of price fluctuations in dairy and
a result of the capital lease treatment, the Facility will remain a component agriculture commodity inputs consumed in operations and the impact of
of property, plant and equipment in the Company’s consolidated balance fluctuations in the relative value of currencies. The Company periodically
sheet and no gain or loss was recognized related to this transaction. The enters into derivative instruments in order to mitigate the effects of
capital lease obligation and the corresponding bond investment have been changing commodity prices and to mitigate its foreign currency risks.
eliminated upon consolidation. Additional bonds may be issued to cover In the normal course of operations, the Company purchases commodi-
the costs of certain improvements to the Facility. The maximum amount of ties such as: milk, butter, soybean oil and various energy needs (“energy”)
bonds authorized for issuance is $6.0 million. in Dairy Foods; soybean meal, corn and energy in Feed and Layers; and
Substantially all of the Company’s assets, excluding assets of MoArk soybeans, corn and energy in Crop Inputs. The Company’s commodity
and its subsidiaries, have been pledged to its lenders under the terms price risk management strategy is to use derivative instruments to reduce
of its revolving credit facility and the Secured Notes. Land O’Lakes debt risk caused by volatility in commodity prices due to fluctuations in the
covenants include certain required financial ratios that were all satisfied market value of inventories and fixed or partially fixed purchase and
as of December 31, 2009 and 2008. sales contracts. The Company enters into futures, forward and options
The maturity of long-term debt for the next five years and thereafter contract derivative instruments for periods consistent with the related
is summarized in the table below. underlying inventory and purchase and sales contracts. These contracts
Year Amount are not designated as hedges under ASC 815, “Derivatives and Hedging.”
2010 $ 2,802 The futures and option contracts are marked-to-market each month and
2011 2,786 unrealized hedging gains and losses are primarily recognized in cost of
2012 978 sales. The Company has established formal position limits to monitor
2013 1,059 its price risk management activities and executes derivative instruments
2014 1,129 only with respect to those commodities that the Company consumes or
2015 and thereafter 524,520 produces in its normal business operations.
Interest paid on debt obligations was $58.7 million, $67.9 million and $62.4 The notional or contractual amount of derivative instruments provides an
million in 2009, 2008 and 2007, respectively. indication of the extent of the Company’s involvement in such instruments
at that time, but does not represent exposure to market risk or future cash
requirements under certain of these instruments. As of December 31, 2009,
12. O
ther Comprehensive Income
the total absolute notional value associated with the Company’s outstanding
commodity derivative instruments and foreign currency derivative instru-
2009 2008 2007
ments was $268.6 million and $3.7 million, respectively.
Net earnings $ 205,322 $ 175,484 $ 162,032
The unrealized (gains) and losses on derivative instruments related to
Pension and other postretirement
commodity contracts and foreign currency exchange contracts for the
adjustments, net of income taxes
year ended December 31, is as follows:
of $19,028, $52,858 and
$(39,871), respectively (30,717) (85,333) 64,366 Derivative Instrument Location 2009
Foreign currency translation adjustment, Commodity derivatives Cost of sales $ (34,740)
net of income taxes of $(40), $1,905 Commodity derivatives Selling, general
and $(1,329), respectively 64 (3,076) 2,146 and administrative (1,140)
Unrealized (loss) gain on available-for-sale Foreign currency Cost of sales (1,488)
securities, net of income taxes of exchange contracts
$0, $5 and $0, respectively (1) (446) 464 Foreign currency Other (income)
Total comprehensive income 174,668 86,629 229,008 exchange contracts expense, net 341
Less other comprehensive loss (earnings) The gross fair market value of all derivative instruments and their loca-
attributable to noncontrolling interests 3,778 (15,684) (1,292) tion in the consolidated balance sheet are shown by those in an asset or
Total comprehensive income liability position and are further categorized by commodity and foreign
attributable to Land O’Lakes, Inc. $ 178,446 $ 70,945 $ 227,716 currency derivatives at December 31, 2009:
The pension and other postretirement adjustment, net of income Asset Liability
taxes, for 2009, 2008 and 2007 reflects $(14.0) million, $(86.8) million Derivative Instrument Derivatives(a) Derivatives(a)
and $64.3 million, respectively, for Land O’Lakes defined benefit pension Commodity derivatives $ 7,205 $ 6,564
plans. Also, the Company recorded its portion of pension and other post- Foreign currency
retirement adjustments for its ownership percentage in its joint ventures, exchange contracts 563 —
primarily Agriliance, for $(16.7) million, $1.5 million and $0.01 million for Total $ 7,768 $ 6,564
2009, 2008 and 2007, respectively. (a) Asset derivative instruments are recorded in other current assets and liability derivative
instruments are recorded in accrued liabilities in the consolidated balance sheet.

The Company enters into derivative instruments with a variety of cash in deposits with major banks and limits the amounts invested in any single
counterparties. These instruments are primarily purchased and sold through institution to reduce risk. The Company regularly evaluates its credit risk to the
brokers and regulated commodity exchanges. By using derivative financial extent that financial instruments are concentrated in certain industries or with
instruments to manage exposures to changes in commodity prices and significant customers and vendors, including the collectibility of receivables and
exchange rates, the Company exposes itself to the risk that the counter- prepaid deposits with vendors.
party might fail to perform its obligations under the terms of the derivative The Company believes it is not feasible to readily determine the fair value
contracts. The Company mitigates this risk by entering into transactions of investments as there is no established market for these investments. The fair
with high-quality counterparties and does not anticipate any losses due value of certain current and non-current notes receivable with a financial state-
to non-performance. The Company manages its concentration of counter- ment carrying value of $6.2 million and $5.2 million as of December 31, 2009
party credit risk on derivative instruments prior to entering into derivative and $1.5 million and $18.6 million as of December 31, 2008, respectively, was not
contracts by evaluating the counterparty’s external credit rating, where estimated because it is not feasible to readily determine the fair value.
available, as well as assessing other relevant information such as current ASC 820, “Fair Value Measurements and Disclosures,” establishes a valuation
financial statements, credit agency reports and/or credit references. As of hierarchy for disclosure of the inputs to valuation used to measure fair value.
December 31, 2009, the maximum amount of loss that the Company would This hierarchy prioritizes the inputs into three broad levels as follows:
incur if the counterparties to derivative instruments fail to meet their obli- Level 1: inputs are quoted prices (unadjusted) in active markets for identi-
gations, not considering collateral received or netting arrangements, was cal assets or liabilities.
$7.8 million. The Company reviewed its counterparties and believes that a Level 2: inputs are quoted prices for similar assets and liabilities in active
concentration of risk does not exist and that a failure of any or all coun- markets or inputs that are observable for the asset or liability, either directly
terparties would not have a material effect on the consolidated financial or indirectly through market corroboration, for substantially the full term of
statements as of December 31, 2009. the financial instrument.
Level 3: inputs are unobservable inputs based on the Company’s own
14. Fair Value Measurement of Financial Instruments assumptions used to measure assets and liabilities at fair value.
A financial asset or liability’s classification within the hierarchy is determined
The carrying amounts and estimated fair values of the Company’s financial based on the lowest level input that is significant to the fair value measure-
instruments are as follows as of: ment. The following table provides the assets and liabilities carried at fair value
December 31, 2009 December 31, 2008
Carrying Fair Carrying Fair measured on a recurring basis:
Amount Value Amount Value Fair Value Measurements at
Financial Derivatives: December 31, 2009 Using:
Commodity derivative assets $ 7,205 $ 7,205 $ 50,053 $ 50,053 Quoted Significant
Commodity derivative Prices Other Significant
liabilities 6,564 6,564 85,292 85,292 Total Carrying in Active Observable Unobservable
Foreign currency exchange Value at Markets Inputs Inputs
contract assets 563 563 341 341 December 31, 2009(a) (Level 1) (Level 2) (Level 3)
Foreign currency exchange Commodity derivative assets $7,205 $6,840 $365 $—
contract liabilities — — 925 925 Commodity derivative
liabilities 6,564 6,209 355 —
Available-for-sale securities 45 45 47 47 Foreign currency exchange
Loans receivable 161,535 161,303 137,869 140,762 contract assets 563 — 563 —
Available-for-sale securities 45 45 — —
Debt:
New Notes, due 2016–2021 325,000 336,908 — —
Senior Unsecured Notes, Fair Value Measurements at
due 2011 — — 174,002 161,410 December 31, 2008 Using:
Senior Secured Notes, Quoted Significant
due 2010 — — 149,700 150,999 Prices Other Significant
Capital Securities of Trust Total Carrying in Active Observable Unobservable
Subsidiary, due 2028 190,700 162,281 190,700 107,580 Value at Markets Inputs Inputs
MoArk, LLC fixed-rate debt 17,989 21,132 20,117 17,548 December 31, 2008(a) (Level 1) (Level 2) (Level 3)
Unrealized gains and losses on financial derivative instruments are recorded Commodity derivative assets $50,053 $49,139 $914 $—
at fair value in the consolidated financial statements. Commodity derivative
The fair value of derivative instruments is determined using quoted prices in liabilities 85,292 85,128 164 —
active markets or is derived from prices in underlying futures markets. Foreign currency exchange
The fair value of loans receivable, which are loans made to farmers and contract assets 341 — 341 —
livestock producers by the Company’s financing subsidiary, was estimated using Foreign currency exchange
a present value calculation based on similar loans made or loans repriced to contract liabilities 925 — 925 —
borrowers with similar credit risks. This methodology is used because no active Available-for-sale securities 47 47 — —
market exists for these loans and the Company cannot determine whether the (a) ASC 815-10 permits, but does not require, companies that enter into master netting
arrangements to offset fair value amounts recognized for derivative instruments
fair values presented would equal the value negotiated in an actual sale. The against the right to reclaim cash collateral or the obligation to return cash collateral.
Company manages its credit risk related to these loans by using established The Company has master netting arrangements with brokers for its exchange-traded
credit limits, conducting ongoing credit evaluation and account monitoring futures and option contracts, however, it does not elect to offset fair value amounts
recognized for derivative instruments under such master netting arrangements with
procedures, and securing collateral when deemed necessary. Negative eco- amounts recognized for margin balances due from or due to brokers.
nomic factors that may impact farmers and livestock producers could increase
the level of losses within this portfolio. Since commodity derivative forward contracts and the foreign currency
The fair value of fixed-rate long-term debt was estimated through a present exchange forward contracts are not actively traded, they are priced at a
value calculation based on available information on prevailing market interest fair value derived from an underlying futures market for the commod-
rates for similar securities. ity or currency. Therefore, they have been categorized as Level 2. The
The carrying value of financial instruments classified as current assets and available-for-sale equity securities and puts, calls and commodity futures
current liabilities, such as cash and cash equivalents, trade receivables, accounts are measured at fair value based on quoted prices in active markets and as
payable and notes and short-term obligations, approximate fair value due to such are categorized as Level 1.
the short-term maturity of the instruments. The Company invests its excess

The fair value hierarchy for nonfinancial assets measured on a nonre- The effective tax rate differs from the statutory rate primarily as a
curring basis as of December 31, 2009 is as follows: result of the following:
2009 2008 2007
Fair Value Measurements Statutory rate 35.0% 35.0% 35.0%
at December 31, 2009 Using: Patronage refunds (22.9) (21.0) (17.1)
Loss(b) (Before State income tax, net of federal benefit 1.3 0.9 1.2
Quoted Significant Income Tax) Amortization of goodwill 0.3 0.3 0.7
Total Carrying Prices Other Significant for the Year
Value at in Active Observable Unobservable Ended Effect of foreign operations — 0.5 —
December Markets Inputs Inputs December Disposal of investment — 0.4 (0.1)
31, 2009 (Level 1) (Level 2)

(Level 3) 31, 2009 Additional tax expense (benefit) 0.4 (1.7) 0.4
Property, plant and Meals and entertainment 1.0 0.6 1.0
equipment, net Tax credits (0.4) (0.6) (0.5)
(held and used) $ 2,810 $ — $ 2,810 $ — $ 5,304 Manufacturing deduction (3.8) (4.0) (1.8)
Property, plant and Noncontrolling interests in LLCs 0.6 (2.9) (0.1)
equipment, net Other, net — 0.3 (0.2)
(held and used) 2,857 — — 2,857 3,118 Effective tax rate 11.5% 7.8% 18.5%
Total $ 5,667 $ — $ 2,810 $ 2,857 $ 8,422 The significant components of the deferred tax assets and liabilities at
(b) The losses were recorded in the restructuring and impairment line of the December 31 are as follows:
Consolidated Statements of Operations for the year ended December 31, 2009. 2009 2008
Deferred tax assets related to:
In accordance with ASC 360-10-05, “Impairment or Disposal of Deferred patronage $ 33,951 $ 40,507
Long-Lived Assets,” long-lived assets related to the Company’s announced Accrued liabilities 180,452 156,064
closure of one of its Dairy Foods facilities with a carrying value of $8.1 mil- Allowance for doubtful accounts 4,172 6,930
lion were written down to a fair value of $2.8 million based on significant Asset impairments 9,817 7,592
other observable inputs (level 2) during the second quarter of 2009. This Inventories — 11,592
resulted in the Company recording an impairment loss (before income tax) Joint ventures 26,461 20,811
of $5.3 million for the year ended December 31, 2009. Loss carryforwards 4,251 12,646
Additionally, during the year ended December 31, 2009, the Company Deferred revenue 5,501 3,323
incurred $3.1 million of impairment losses. Specifically, two Feed facilities Deferred tax credits 683 —
were impaired due to ongoing and expected future underperformance Gross deferred tax assets 265,288 259,465
of the facilities in which the carrying value prior to impairment of the Valuation allowance (16,620) (16,620)
facilities totaled $1.8 million and the facilities were written down to their Total deferred tax assets 248,668 242,845
total estimated fair value of $0, and a $1.3 million impairment loss (before Deferred tax liabilities related to:
income tax) related to a Layers facility in which the carrying value of $4.2 Property, plant and equipment 111,079 91,103
million was written down to its estimated fair value of $2.9 million due Inventories 3,155 —
to the announced closure of the facility in 2010. The fair values were Intangibles 33,940 29,128
determined by the application of an internal discounted cash-flow model Other, net 9,771 11,534
(level 3). Cash flows were determined based on management’s estimates Total deferred tax liabilities 157,945 131,765
of future production and using a discounted internal rate of return con- Net deferred tax assets $ 90,723 $ 111,080
sistent with that used by the Company to evaluate cash flows of other ASC 740 related to income taxes requires consideration of a valuation
assets of a similar nature. allowance if it is “more likely than not” that benefits of deferred tax
assets will not be realized. In 2007, as a result of the CPP asset distribution
15. Income Taxes from Agriliance, a valuation allowance of $16.1 million was established to
The components of the income tax provision are summarized as follows: reduce the Company’s deferred tax asset to an amount that is more likely
2009 2008 2007 than not to be realized. In 2008, an additional $0.5 million was added to
Current (benefit) expense: the allowance related to the CPP asset distribution with a corresponding
Federal $(13,448) $16,769 $ 59,692 increase in goodwill.
State 178 3,420 8,420 The net deferred tax assets are classified in the consolidated balance
(13,270) 20,189 68,112 sheets as follows:
Deferred expense (benefit): 2009 2008
Federal 35,361 (4,689) (26,781) Other current assets $ 66,323 $ 59,528
State 4,629 (728) (4,634) Other assets 24,400 51,552
39,990 (5,417) (31,415) Total net deferred tax assets $ 90,723 $ 111,080
Income tax expense $ 26,720 $14,772 $ 36,697 At December 31, 2009 and 2008, the Company had unrecognized tax
In 2009, the Company recorded income tax expense of 26.7 million benefits of approximately $22.4 million and $19.7 million, respectively,
primarily as a result of non-member earnings offset by the domestic pro- including $1.9 million and $1.2 million, respectively, of interest. For the years
duction activities deduction. ended December 31, 2009 and 2008, the effective tax rate was impacted by
In 2008, the Company recorded income tax expense of $7.4 million a $3.5 million increase and a $2.0 million increase, respectively, to income
related to the sale of Agronomy Company of Canada, Ltd. (“ACC”). Earnings tax expense due to unrecognized tax benefits as a result of tax positions
from other activities resulted in income tax expense of $7.4 million for the taken. The Company does not believe it is reasonably possible that the
year ended December 31, 2008. total amounts of unrecognized tax benefits will significantly increase or
In 2007, the Company recorded income tax expense of $7.1 million decrease during the next 12 months.
related to the sale of the Cheese & Protein International, LLC operations The Company and its subsidiaries file income tax returns in the U.S.
(“CPI”) and an income tax benefit of $8.5 million related to reserves federal jurisdiction and various state and foreign jurisdictions. With few
established for assets received in 2006 from MoArk’s sale of its liquid exceptions, the Company is no longer subject to U.S. federal, state and
egg operations to Golden Oval. Earnings from other activities resulted in local or non-U.S. income tax examinations by tax authorities for years
income tax expense of $38.1 million for the year ended December 31, 2007. before 2005.

As of December 31, 2009, the Company had loss carryforwards of approxi- Obligation and Funded Status at December 31
mately $8.9 million for tax purposes available to offset future taxable income. Pension Benefits
If not used, these carryforwards will expire, primarily in the year 2023. Qualified Plan Non-qualified Plans
The Company considers unremitted earnings of certain subsidiaries 2009 2008 2009 2008
operating outside the United States to be invested indefinitely. No U.S. Change in benefit obligation:
income taxes or foreign withholding taxes are provided on such perma- Benefit obligation at
nently reinvested earnings. The Company regularly reviews the status of beginning of year $ 511,799 $ 508,707 $ 52,366 $ 51,102
the accumulated earnings of each of its foreign subsidiaries and reassesses Service cost 12,729 14,251 606 438
this determination as part of its overall financial plans. Following this Interest cost 34,436 32,523 3,459 3,209
assessment, the Company establishes deferred income taxes, net of any Plan amendments — — — 114
foreign tax credits, on any earnings that are determined to no longer be SFAS 158 measurement
indefinitely invested. As of December 31, 2009, there were no deferred date change — 3,898 — 304
tax liabilities recorded for estimated U.S. income taxes, net of foreign tax Actuarial loss (gain) 71,439 (22,639) 9,910 1,816
credits, for undistributed earnings of foreign subsidiaries that were no Benefits paid (23,703) (24,941) (4,419) (4,617)
longer considered permanently reinvested. Benefit obligation
Income taxes (recovered)/paid in 2009, 2008 and 2007 were $(38.0) mil- at end of year $ 606,700 $ 511,799 $ 61,922 $ 52,366
lion, $59.9 million and $50.3 million, respectively. At December 31, 2009 and
2008, prepaid income taxes were $5.9 million and $27.5 million, respectively. Change in plan assets:
Fair value of plan assets
16. Pension and Other Postretirement Plans at beginning of year $ 386,829 $ 519,869 $ — $ —
Actual gain (loss) on
The Company has a qualified, defined benefit pension plan, which generally plan assets 92,077 (133,099) — —
covers all eligible employees hired before January 1, 2006 not participat- Company contributions 20,000 25,000 4,419 4,617
ing in a labor-negotiated plan. Plan benefits are generally based on years Benefits paid (23,703) (24,941) (4,419) (4,617)
of service and highest compensation during five consecutive years of Fair value of plan assets
employment. Annual payments to the pension trust fund are determined in at end of year $ 475,203 $ 386,829 $ — $ —
compliance with the Employee Retirement Income Security Act (“ERISA”).
Amounts recognized in the consolidated balance sheets consist of:
In addition, the Company has a noncontributory, supplemental executive
Accrued liabilities $ — $ — $ (4,767) $ (4,557)
retirement plan and a discretionary capital accumulation plan, both of
Employee benefits and
which are non-qualified, defined benefit pension plans and are unfunded.
other liabilities (131,497) (124,970) (57,155) (47,809)
The Company also sponsors plans that provide certain health care ben-
Net amount recognized $ (131,497) $ (124,970) $ (61,922) $ (52,366)
efits for retired employees. Generally, employees hired by the Company
prior to October 1, 2002 become eligible for these benefits upon meeting Amounts recognized in accumulated other comprehensive income (pretax)
certain age and service requirements; employees hired by the Company as of December 31 consist of:
after September 30, 2002 are eligible for access-only retirement health Prior service cost $ 282 $ 351 $ (281) $ (791)
care benefits at their expense. The Company funds only the plans’ annual Net loss 236,040 218,902 20,116 11,109
cash requirements. Ending balance $ 236,322 $ 219,253 $ 19,835 $ 10,318
In September 2006, the FASB issued SFAS No. 158, “Employers’ The accumulated benefit obligation for the Company’s defined benefit
Accounting for Defined Benefit Pension and Other Postretirement Plans” pension plan was $569.0 million and $479.6 million at December 31, 2009
(“SFAS 158”), which was implemented into ASC 715 of the Codification. and 2008, respectively. The accumulated benefit obligation for the
This standard had two phases. The first phase required employers to Company’s non-qualified, defined benefit pension plans was $56.6 million
recognize the overfunded or underfunded status of defined benefit and $48.3 million at December 31, 2009 and 2008, respectively.
pension and postretirement plans as an asset or liability in their state- The following table sets forth the plans’ projected benefit obligations,
ment of financial position and recognize changes in the funded status in fair value of plan assets and funded status at December 31, as follows:
the year in which the changes occur through accumulated other compre- Pension Benefits
hensive income, which is a component of the Company’s consolidated Qualified Plan Non-qualified Plans
statements of equities and comprehensive income. The first phase was 2009 2008 2009 2008
effective for the Company for fiscal periods ending after June 15, 2007 Projected benefit obligation $ 606,700 $ 511,799 $ 61,922 $ 52,366
and was adopted by the Company as of December 31, 2007. The second Fair value of plan assets 475,203 386,829 — —
phase of this standard required companies to measure their plan assets Funded status at end of
and benefit obligations as of their fiscal year ends and was effective for measurement date $ (131,497) $ (124,970) $ (61,922) $ (52,366)
fiscal years ending after December 15, 2008. The Company adopted the
second phase of this provision as of December 31, 2008 and changed its A financial asset’s classification within the fair value hierarchy is deter-
measurement date from November 30 to December 31 for its plans for the mined based on the lowest level input that is significant to the fair value
fiscal year ended December 31, 2008. measurement. The following table provides the plans’ assets fair value
measurement hierarchy as of December 31, 2009:
Fair Value Measurements at

December 31, 2009 Using:
Quoted Significant
Prices Other Significant
Total Carrying in Active Observable Unobservable
Value at Markets Inputs Inputs
December 31, 2009 (Level 1) (Level 2) (Level 3)
Cash $ 12 $ 12 $ — $ —
Stable value funds 5,797 — 5,797 —
Investments in registered
investment companies 291,609 291,609 — —
Common stocks 117,357 117,357 — —
Common collective trusts 60,428 — 60,428 —

Obligation and Funded Status at December 31 Additional Information
Other Weighted-average assumptions used to determine benefit obligations at
Postretirement December 31:
Benefits
Other
2009 2008
Postretirement
Change in benefit obligation:
Pension Benefits Benefits
Benefit obligation at beginning of year $ 54,777 $ 62,600
2009 2008 2009 2008
Service cost 512 724
Discount rate 5.90% 6.90% 5.90% 6.90%
Interest cost 3,629 3,953
Rate of compensation increase 4.00% 4.25% N/A N/A
Plan participants’ contributions 2,486 2,838
Medicare Part D reimbursements 780 1,010 Weighted-average assumptions used to determine net periodic benefit
SFAS 158 measurement date change — 390 cost for years ended December 31:
Actuarial gain (2,719) (9,527) Other
Benefits paid (7,542) (7,211) Postretirement
Benefit obligation at end of year $ 51,923 $ 54,777 Pension Benefits Benefits
2009 2008 2007 2009 2008 2007
Change in plan assets: Discount rate 6.90% 6.55% 5.70% 6.90% 6.55% 5.70%
Company contributions $ 4,276 $ 3,363 Rate of long-term
Plan participants’ contributions 2,486 2,838 return on plan assets 8.25% 8.25% 8.25% N/A N/A N/A
Medicare Part D reimbursements 780 1,010 Rate of compensation
Benefits paid (7,542) (7,211) increase 4.25% 4.50% 4.25% N/A N/A N/A
Fair value of plan assets at end of year $ — $ —
The Company employs a building-block approach in determining the
Amounts recognized in the consolidated balance sheets consist of: long-term rate of return for the assets in the qualified, defined benefit
Accrued liabilities $ (4,117) $ (4,438) pension plan. Historical markets are studied and long-term historical
Employee benefits and other liabilities (47,806) (50,339) relationships between equities and fixed income are preserved consistent
Net amount recognized $ (51,923) $ (54,777) with the widely accepted capital market principle that assets with higher
Amounts recognized in accumulated other comprehensive income volatility generate a greater return over the long run. Current market
(pretax) consist of: factors, such as inflation and interest rates, are evaluated before long-term
Net transition obligation $ 1,247 $ 1,675 capital market assumptions are determined. Diversification and rebalancing
Net loss 9,015 12,470 of the plan assets are properly considered as part of establishing the
Ending balance $ 10,262 $ 14,145 long-term portfolio return. Peer data and historical returns are reviewed
to assess for reasonableness. The Company determined its discount rate
The following table sets forth the plans’ accumulated benefit obligations,
assumption at year end based on a hypothetical double A yield curve
fair value of plan assets and funded status at December 31, as follows:
represented by a series of annualized individual discount rates from
2009 2008
one-half to 30 years.
Accumulated benefit obligation $ 51,923 $ 54,777
Assumed health care cost trend rates at December 31:
Fair value of plan assets — —
2009 2008
Funded status at end of
Health care cost trend rate assumed
measurement date $ (51,923) $ (54,777)
for next year 8.50% 9.25%
Components of net periodic benefit cost are as follows: Rate to which the cost trend is assumed to
Other decline (ultimate trend rate) 5.00% 5.00%
Postretirement Year that rate reaches ultimate trend rate 2019 2015
Pension Benefits Benefits
2009 2008 2007 2009 2008 2007 Assumed health care cost trend rates affect the amounts reported for the
Service cost $ 13,335 $ 14,689 $ 14,265 $ 512 $ 724 $ 729 health care plans. A one-percentage-point change in the assumed health care
Interest cost 37,895 35,733 33,183 3,629 3,953 3,923 cost trend rate at December 31, 2009 would have the following effects:
Expected return 1 Percentage 1 Percentage
on assets (42,143) (40,814) (37,601) — — — Point Point
Amortization of Increase Decrease
actuarial loss 5,269 4,763 12,946 736 1,805 2,943 Effect on total of service and
Amortization of prior interest cost $ 196 $ (176)
service cost (441) (487) (487) — — — Effect on postretirement
Amortization of benefit obligation 3,327 (2,977)
transition obligation — — — 428 428 428
Plan Assets
Net periodic
The Company’s qualified, defined benefit pension plan weighted-average
benefit cost $ 13,915 $ 13,884 $ 22,306 $ 5,305 $ 6,910 $ 8,023
asset allocations at December 31, 2009 and 2008, by asset category, are as
The following table sets forth the plans’ estimated amortization in follows:
fiscal 2010 from accumulated other comprehensive income into net Asset category 2009 2008 Target
periodic benefit costs: U.S. equity securities 52% 41% 50%
Other International equity securities 16% 12% 15%
Qualified Non-qualified Postretirement Fixed-income securities
Pension Plan Pension Plans Benefits and bonds 32% 47% 35%
Amortization of net actuarial loss $ 14,352 $ 1,788 $ 415 Total 100% 100% 100%
Amortization of prior service cost 67 (76) —
Amortization of transition obligation — — 428 The Company has a Statement of Pension Investment Policies and
Net periodic benefit cost $ 14,419 $ 1,712 $ 843 Objectives (the “Statement”) that guides the retirement plan committee
in its mission to effectively monitor and supervise the pension plan assets.
Two general investment goals are reflected in the Statement: 1) the invest-
ment program for the pension plan should provide returns that improve
the funded status of the plan over time and reduce the Company’s pension
costs, and 2) the Company expects to receive above-average performance
relative to applicable benchmarks for the actively managed portfolios and For 2009, the number of Units granted, canceled and settled was
accurately track the applicable benchmarks for the passive or index strate- 65,000, 0 and 103,937.5, respectively. The number of units converted to
gies. All portfolio strategies will be provided at competitive, institutional interest-bearing deferred compensation was 4,250. The number of Units
management fees. The total fund’s annualized return before fees should vested during 2009 was 79,312.5 with an intrinsic value of $4.9 million. The
exceed, by one percentage point, over a five-year horizon, the annualized number of vested Units outstanding at December 31, 2009 was 445,437.5
total return of the following customized index: 1) 45% Russell 1000 Index, with an intrinsic value of $37.3 million. The number of non-vested Units
2) 10% Russell 2000 Index, 3) 10% EAFE Index and 4) 35% Barclay’s Capital at December 31, 2009 was 122,375, and the total remaining unrecognized
Aggregate Index, and the fund should rank in the top 35th percentile of the compensation cost related to non-vested Units was $2.1 million. As of
total pension fund universe. December 31, 2009, 21,437.5 of the non-vested Units were held by partici-
Although not a guarantee of future results, the total plan assets’ pants who had reached the age and years of service required for early
20-year annualized return through December 31, 2009, before fees, was retirement eligibility. For any such participant, prior to the date that the
9.19%, which exceeded the customized index by 1.42 percentage points. non-vested Units will vest through the normal course, the non-vested
The 2009 total plan assets’ annualized return was 25.87%, which exceeded Units will immediately vest upon the voluntary termination of the par-
the customized index by 4.71 percentage points and ranked in the top ticipant. As of December 31, 2009, the weighted-average remaining service
22nd percentile of the Hewitt Associates pension fund universe. period for the non-vested Units was 2.3 years.
For 2008, the number of Units granted, canceled and settled was
Cash Flow
110,750, 3,188 and 27,438, respectively. The number of Units vested dur-
The Company expects to contribute approximately $24.8 million to its
ing 2008 was 69,328 with an intrinsic value of $2.9 million. The number
defined benefit pension plans and $5.2 million to its other postretirement
of vested Units outstanding at December 31, 2008 was 474,687.5 with
benefits plan in 2010.
an intrinsic value of $32.5 million. The number of non-vested Units at
The benefits anticipated to be paid from the benefit plans, which reflect
December 31, 2008 was 136,312.5, and the total remaining unrecognized
expected future years of service, and the Medicare subsidy expected to be
compensation cost related to non-vested Units was $2.2 million. As of
received are as follows:
Other Health December 31, 2008, 17,500 of the non-vested Units were held by partici-
Qualified Non-qualified Postretirement Care Subsidy pants who had reached the age and years of service required for early
Pension Plan Pension Plans Benefits Receipts retirement eligibility. For any such participant, prior to the date that the
2010 $ 27,500 $ 4,800 $ 5,200 $ (1,100) non-vested Units will vest through the normal course, the non-vested
2011 29,400 4,900 5,500 (1,100) Units will immediately vest upon the voluntary termination of the partici-
2012 31,400 4,000 5,700 (1,300) pant. As of December 31, 2008, the weighted-average remaining service
2013 33,800 4,500 5,900 (1,400) period for the non-vested Units was 2.5 years.
2014 36,000 4,800 6,100 (1,500) For 2007, the number of Units granted, canceled and settled was 76,750
2015–2019 221,000 28,100 31,400 (9,600) and 0 and 73,500, respectively. The number of Units vested during 2007
was 63,875 with an intrinsic value of $2.0 million. The number of vested
Other Benefit Plans Units outstanding at December 31, 2007 was 443,875 with an intrinsic
Certain eligible employees are covered by defined contribution plans. The value of $15.3 million. The number of non-vested Units at December 31,
expense for these plans was $30.3 million, $26.5 million and $22.4 million 2007 was 87,000, and the total remaining unrecognized compensation
for 2009, 2008 and 2007, respectively. cost related to non-vested Units was $1.1 million. As of December 31, 2007,
The Company participates in a trustee-managed multi-employer the weighted-average remaining service period for the non-vested Units
pension and health and welfare plan for employees covered under was 2.4 years.
collective bargaining agreements. Several factors could result in potential
funding deficiencies, which could cause the Company to make significantly 18. Equities
higher future contributions to this plan, including unfavorable investment The authorized capital stock at December 31, 2009 consisted of 2,000
performance, changes in demographics and increased benefits to partici- shares of Class A Common, $1,000 par value; 50,000 shares of Class B
pants. The Company contributed $0.7 million, $1.7 million and $1.4 million Common, $1 par value; 500 shares of non-voting Class C Common, $1,000
to this plan for 2009, 2008 and 2007, respectively. par value; 10,000 shares of non-voting Class D Common, $1 par value; and
1,000,000 shares of non-voting, 8% non-cumulative Preferred, $10 par value.
17. Share-Based Compensation The following table reflects the activity in membership shares during
Accounting for share-based payments requires the recognition of the intrinsic the three years ended December 31, 2009.
value of share-based compensation in net earnings. Share-based compensa-
tion consists solely of VAR Units granted to certain eligible employees NUMBER OF SHARES
under a Company-sponsored incentive plan (the “VAR plan”). The Units are Common Preferred
not traditional stock and do not provide the recipient any voting rights in A B C D
the Company nor any right to receive assets of the Company. A maximum December 31, 2006 959 4,026 167 1,023 69,684
of 200,000 Units may be granted annually to certain employees at a price New members 4 251 2 228 —
based on a formula that includes growth, debt levels and cash payments to Redemptions (54) (348) (6) (195) (7,268)
members for the five-year period ending at the close of the preceding year. December 31, 2007 909 3,929 163 1,056 62,416
Generally, Units fully vest four years from the grant date per the VAR plan. New members 9 291 5 244 —
Vested Units are settled upon the earlier of a predetermined date chosen Redemptions (46) (347) (4) (290) (5,391)
by the employee at the date of grant, or upon retirement or termination. December 31, 2008 872 3,873 164 1,010 57,025
Participants can also elect, per the VAR plan provisions, to convert fully New members 5 191 2 58 —
vested Units to interest-bearing deferred compensation. The Company rec- Transfers between
ognizes compensation expense for the estimated intrinsic value appreciation classes — 39 — (39) —
of Units over the vesting period using the graded vesting method. The Units Redemptions (49) (311) (14) (183) (57,025)
are reflected as a liability in the consolidated balance sheets and upon settle- December 31, 2009 828 3,792 152 846 —
ment are paid in cash to participants. In 2009, the Company fully redeemed all outstanding Preferred shares.
For the years ended December 31, 2009, 2008 and 2007, compensation Allocated patronage to members of $151.9 million, $114.2 million and
expense for the share-based payment plan was $15.1 million, $17.2 million $97.1 million for the years ended December 31, 2009, 2008 and 2007,
and $10.9 million, respectively. Cash payments for Units settled for 2009, respectively, is based on earnings in specific patronage or product
2008 and 2007 were $6.8 million, $1.0 million and $1.0 million, respectively. categories and in proportion to the business each member does within
The actual income tax benefit realized from this plan was $2.6 million, $0.4 each category. For 2009, the Company issued $151.9 million of quali-
million and $0.4 million, for 2009, 2008 and 2007, respectively. fied patronage and $0 of non-qualified patronage equities. Qualified

patronage equities are tax deductible by the Company when qualified 20. Insurance Proceeds and Gains on Insurance
written notices of allocation are issued, and non-qualified patronage Settlements
equities are tax deductible when redeemed with cash.
The allocation to retained earnings of $53.3 million in 2009, $43.2 In 2005, a Feed facility in Statesville, North Carolina, was destroyed by fire.
million in 2008 and $58.3 million in 2007 represents earnings or losses The Company subsequently filed an insurance claim for replacement of
generated by non-member businesses plus amounts under the retained capital assets and business interruption. In 2009, the Company received the
earnings program as provided in the bylaws of the Company. final insurance proceeds of $6.5 million, of which $6.4 million was applied
to a previously recorded receivable and $0.1 million was recorded within
the selling, general and administrative line of the consolidated statements
19. Restructuring and Impairment
of operations. In 2008, the Company had received notification from its
insurance carrier that it would receive $6.7 million of insurance proceeds, of
2009 2008 2007 which $0.3 million was received as of December 31, 2008 and a gain of $6.7
Restructuring $ 3,400 $ 1,760 $ 460 million was recorded in the consolidated statements of operations. In 2007,
Impairment 8,422 1,133 3,510 the Company received $13.8 million of proceeds for business interruption
Total restructuring and and capital asset replacement recoveries and recorded a gain on insurance
impairment $ 11,822 $ 2,893 $ 3,970 settlement of $5.9 million. Business interruption recoveries in 2007 were
recorded as a reduction to cost of sales in the Feed segment. The Company
Restructuring
does not anticipate any further significant insurance recoveries related to
In 2009, the Company announced its intent to close one of its Dairy
the Statesville fire.
Foods facilities and recorded charges of $2.1 million to restructuring,
In 2007, MoArk’s egg processing facility in Anderson, Missouri, was
primarily related to employee severance. All 120 employees at the
damaged by fire. The aggregate net book value of damaged inventory
Madison, Wisconsin, plant were affected by the closure. The remaining
and property, plant and equipment was approximately $1.1 million, and
restructuring liability of $0.9 million was presented in accrued liabilities
was covered under the terms of applicable insurance policies, subject to
in the consolidated balance sheet at December 31, 2009.
deductibles. MoArk filed insurance claims for replacement of assets and
Additionally in 2009, Feed incurred restructuring charges of $1.1 million,
business interruption. In December 2009, the Company was notified of
primarily related to employee severance due to reorganization of Feed
settlements related to this claim of $2.1 million for property, plant and
personnel. In 2008, the Company recorded $1.8 million of restructuring
equipment losses and $2.1 million for business interruption losses. For
charges, also related to employee severance due to reorganization of
the year ended December 31, 2009, the Company recorded a gain on
Feed personnel. The remaining liability at December 31, 2009, for severance
insurance settlement of $2.1 million related to the property, plant and
and other exit costs, including restructuring charges incurred in 2008, was
equipment while the remaining $2.1 million for business interruption was
$1.6 million and was presented in accrued liabilities in the consolidated
recorded as a reduction to selling, general and administrative expenses
balance sheet.
in the consolidated statement of operations within the Layers segment.
Finally in 2009, Layers incurred restructuring charges of $0.1 million,
A receivable for the insurance proceeds of $4.2 million remains as of
primarily related to employee severance due to the planned closure of its
December 31, 2009. In 2008, MoArk received $2.5 million of insurance
Berino, New Mexico, facility in 2010. The remaining liability at December
proceeds for the replacement of capital assets and recorded a gain on
31, 2009 for severance and other exit costs was $0.1 million and was
insurance settlement of $2.0 million.
presented in accrued liabilities in the consolidated balance sheet.
Additionally, in 2008, MoArk received $2.0 million of total insurance
In 2007, the Company had restructuring charges, primarily for
proceeds related to the settlement of a fraud loss claim involving a former
employee severance due to the announced closure of Feed facilities
employee of a previously owned subsidiary during the years 2002 through
in Wisconsin and Kansas.
2004. The proceeds were recorded as a gain on insurance settlement.
Impairment In May 2008, the Company experienced a fire at a Feed facility located
In connection with the announced closure of the Madison, Wisconsin, in Caldwell, Idaho. Damage was extensive and caused operations to
facility within Dairy Foods, the Company incurred $5.3 million of impair- cease. Costs of repair or replacement of inventory, property, plant and
ment charges for the year ended December 31, 2009, as the carrying equipment were covered under the terms of applicable insurance policies,
values of certain fixed assets were written down to fair value based on an subject to deductibles. In November 2009, the Company was notified
estimated highest and best use of the fixed assets within this asset group. of a partial settlement of $2.4 million, net of deductibles of $1.0 million,
In 2009, Feed incurred $1.8 million of impairment charges related to regarding this claim. A gain on insurance settlement of $1.1 million was
two feed facilities due to ongoing and expected future underperformance recorded on a consolidated basis for the year ended December 31, 2009.
of the facilities. The carrying value prior to impairment of the facilities As of December 31, 2009, the Company had received $1.2 million in
totaled $1.8 million and the facilities were written down to their total proceeds and had a receivable of $1.2 million for the remainder.
estimated fair value of $0. In December 2008, the Company experienced a fire at a dairy facility in
Additionally in 2009, Layers incurred $1.3 million of impairment charges Tulare, California. The carrying value of the damaged building and supplies
related to the Berino, New Mexico, facility’s asset group within Layers in inventory was minimal. Costs to repair the damaged property are covered
which the carrying value of $4.2 million was written down to its estimated fair under the terms of applicable insurance policies, subject to deductibles.
value of $2.9 million due to the announced closure of the facility in 2010. The Company expects to receive insurance proceeds for reconstruction
In 2008, the Company incurred a $1.0 million impairment charge in costs, which, when received, may result in a gain on insurance settlement.
Layers related to the write-down of fixed assets to fair value as a result of
changes in California state laws that limited the future use of the assets. 21. Other Income
Additionally, the Company incurred a $0.1 million impairment charge in
Dairy Foods related to the write-down of fixed assets to fair value. 2009 2008 2007
In 2007, the Company incurred impairment charges of $3.5 million. Gain on sale of investments, net $ (7,589) $ (7,458) $ (8,683)
The Company recorded a $1.8 million charge to write down a Dairy Foods Gain on foreign currency
investment to estimated fair value. Crop Inputs incurred a $0.5 million exchange contracts (177) (4,191) —
impairment charge related to structural deterioration of a soybean facility Gain on extinguishment of debt — (379) —
in Vincent, Iowa, and a $0.2 million charge for impairment of a software Loss (gain) on divestiture
asset. A $0.6 million impairment charge was recorded in Layers related to of businesses 866 — (28,474)
the closing of various facilities. Feed impairment charges of $0.4 million Gain on sale of intangibles (300) — —
were incurred for the write-down of various manufacturing facilities Total $ (7,200) $ (12,028) $ (37,157)
held for sale.

In 2008, the Company received $19.5 million in cash and recognized Company had $4.6 million of other contractual commitments, primarily to
a $7.5 million gain on the sale of investment related to the sale of its purchase consulting services and capital equipment, comprising $2.6 million
investment in ACC within Crop Inputs. The Company’s consolidated in 2010, $0.5 million in 2011, $0.4 million in 2012, $0.3 million in 2013, $0.3
balance sheet at December 31, 2008 reflected a $10.8 million receivable million in 2014 and $0.4 million thereafter.
for cash proceeds expected to be received in 2009. In 2009, the Company MoArk has guaranteed 50% of the outstanding loan balance for a joint
received $6.4 million in cash. The remaining $4.4 million receivable rep- venture. The loan matures in 2018 and has a remaining principal balance
resented the portion recorded by the Company at December 31, 2008 in totaling $6.5 million as of December 31, 2009. These notes are fully secured
accordance with the sales agreement. The sales agreement required a final by collateral of the equity investee and all covenants have been satisfied as
purchase price true-up based on the audited financial statements for ACC of December 31, 2009.
as of December 31, 2008. The Company received the audited financial The Company is currently and from time to time involved in litigation
statements for ACC in 2009, which reflected significantly different finan- and environmental claims incidental to the conduct of business. The dam-
cial results than expected or previously reported to the Company. The ages claimed in some of these cases are substantial.
Company has disputed the results of the audit. However, based on the On March 6, 2007, the Company announced that one of its indirect
available information, the Company established a reserve for the amount wholly owned subsidiaries, Forage Genetics Inc., filed a motion to intervene
in dispute and has recorded a $4.2 million loss on sale of investment for in a lawsuit brought against the U.S. Department of Agriculture (“USDA”) by
the year ended December 31, 2009. the Center for Food Safety, the Sierra Club, two individual farmers/seed
In 2009, the Company recognized $11.8 million of gains on sale of producers (together, the “Plaintiffs”) and others regarding Roundup Ready®
investment in Golden Oval within Layers. The Company does not expect Alfalfa. The Plaintiffs claim that the USDA did not sufficiently assess the
to receive any further cash distributions from Golden Oval related to the potential environmental impact of its decision to approve Roundup Ready®
asset sale, therefore all 1,577,842 Class A units held by the Company are Alfalfa in 2005. The Monsanto Company and several independent alfalfa
deemed to have no remaining value. See Note 7 for additional informa- growers also filed motions to intervene in the lawsuit. On March 12, 2007,
tion regarding this transaction. the United States District Court for the Northern District of California (the
In 2009, Feed divested three businesses for $13.8 million in cash, which “Court”) issued a preliminary injunction enjoining all future plantings of
resulted in a $0.9 million loss. These businesses consisted of: a facility in Roundup Ready® Alfalfa beginning March 30, 2007. The Court specifically
Owatonna, Minnesota, that was sold for $2.7 million in cash and resulted permitted plantings until that date only to the extent that the seed to
in a loss of $0.4 million; and facilities in Gooding and Twin Falls, Idaho, that be planted was purchased on or before March 12, 2007. On May 3, 2007,
were sold for $11.1 million in cash and resulted in a loss of $0.5 million. the Court issued a permanent injunction enjoining all future plantings of
In 2009, Feed recognized a $0.3 million gain on the sale of intangibles. Roundup Ready® Alfalfa until after an environmental impact study can
In 2009, the Company received $0.5 million in cash and recognized a be completed and a deregulation petition is approved. Roundup Ready®
$0.2 million gain on foreign currency exchange contracts on the sale of its Alfalfa planted before March 30, 2007 may be grown, harvested and sold
investment related to ACC. to the extent that certain court-ordered cleaning and handling conditions
In 2008, the Company recognized $4.2 million of foreign currency are satisfied. In January 2008, the USDA filed a notice of intent to file an
exchange gains related to positions taken for the sale of ACC. Environmental Impact Study (the “EIS”). In December 2009, the USDA
In 2008, the Company recorded a $0.4 million of gain on extinguishment published a draft EIS, which triggered a 60-day public comment period,
of debt related to the purchase and retirement of a portion of its 8.75% which was subsequently extended another 15 days and now expires March
Unsecured Notes and 9.00% Secured Notes at market prices below par. 3, 2010. Once the public comment period has ended, the USDA will review
In 2007, the Company recognized a gain on the sale of investment of $8.8 the comments, finalize the EIS and issue a decision on the regulatory status
million related to the repositioning of its investment in Agriliance’s CN assets. of Roundup Ready® Alfalfa. Although the Company believes the outcome
See Note 4 for further discussion. The Company also recognized a $0.1 million of the EIS will be favorable, which would allow for the reintroduction of
loss in 2007 on the sale of an investment held in its Other segment. the product into the market in 2010, there are approximately $0.3 million
In 2007, Dairy Foods sold substantially all of the assets of CPI to a U.S. of purchase commitments with seed producers over the next year and
subsidiary of Saputo, Inc. for approximately $211.9 million in cash, net of $36.2 million of inventory as of December 31, 2009, which could negatively
related transaction fees, and recognized a gain on divestiture of $28.5 impact future earnings if the results of the study are unfavorable or delayed.
million for the year ended December 31, 2007. The divestiture included In a letter dated January 18, 2001, the Company was identified by the
$19.8 million of inventory, $149.5 million of property, plant and equipment, United States Environmental Protection Agency (“EPA”) as a potentially
$13.4 million of goodwill and $1.2 million of accrued liabilities offset by an responsible party in connection with hazardous substances and wastes at
additional $1.9 million of other accrued liabilities incurred. the Hudson Refinery Superfund Site (the “Site”) in Cushing, Oklahoma. The
letter invited the Company to enter into negotiations with the EPA for the
22. Commitments and Contingencies performance of a remedial investigation and feasibility study at the Site and
also demanded that the Company reimburse the EPA approximately $8.9
The Company leases various equipment and real properties under million for removal costs already incurred at the Site. In March 2001, the
long-term operating leases. Total rental expense was $74.5 million in Company responded to the EPA, denying any responsibility with respect
2009, $65.9 million in 2008 and $57.6 million in 2007. Most of the leases to the costs incurred for the remediation expenses incurred through that
require payment of operating expenses applicable to the leased assets. date. On February 25, 2008, the Company received a Special Notice Letter
Management expects that in the normal course of business most leases (“Letter”) from the EPA inviting the Company to enter into negotiations
that expire will be renewed or replaced by other leases. with the EPA to perform selected remedial action for remaining contamina-
Minimum lease commitments under noncancelable operating leases at tion and to resolve the Company’s potential liability for the Site. In the
December 31, 2009 totaled $99.0 million, comprising $40.2 million for 2010, Letter, the EPA claimed that it has incurred approximately $21.0 million in
$29.1 million for 2011, $17.0 million for 2012, $8.5 million for 2013, $1.8 million response costs at the Site through October 31, 2007 and is seeking reim-
for 2014 and $2.4 million for later years. bursement of these costs. The EPA has also stated that the estimated cost
The Company has noncancelable commitments to purchase raw of the selected remedial action for remaining contamination is $9.6 million.
materials in Dairy Foods, Feed, Crop Inputs and Layers. These purchase The Company maintains that the costs incurred by the EPA were the direct
commitments are contracted on a short-term basis, typically one year result of damage caused by owners subsequent to the Company, including
or less, and totaled $2.8 billion at December 31, 2009. The Company has negligent salvage activities and lack of maintenance. On January 6, 2009, the
contracted commitments to purchase weaner and feeder pigs, which are EPA issued a Unilateral Administrative Order (“UAO”) directing the Company
sold to producers or local cooperatives under long-term supply contracts. to perform remedial design and remedial action (“RD/RA”) at the Site. The
At December 31, 2009 these purchase commitments total $44.9 million, Company filed its Notice of Intent to Comply with the UAO on February
comprising $31.5 million in 2010, $8.6 million in 2011, $4.6 million in 2012, $0.2 10, 2009. On April 20, 2009, the EPA issued its authorization to proceed with
million in 2013 and $0.01 million in 2014 and are used to fulfill supply agree- RD/RA activities. In addition, the Company is analyzing the amount and
ments with local cooperatives and producers. At December 31, 2009, the

extent of its insurance coverage that may be available to further mitigate its Related party transactions and balances for the years ended December
ultimate exposure. At the present time, the Company’s request for coverage 31, 2009, 2008 and 2007, respectively, and as of December 31, 2009 and
has been denied. The Company initiated litigation against two carriers on 2008, respectively, are as follows:
February 18, 2009. As of December 31, 2009, based on the most recent facts 2009 2008 2007
and circumstances available to the Company, an $8.9 million environmental Sales $ 827,038 $ 1,082,721 $ 705,606
reserve was recorded in 2008, of which $7.9 million remained in accrued Purchases 103,600 141,830 127,433
liabilities within the Company’s consolidated financial statements. Services provided 6,085 4,102 3,055
On October 27, 2008, the Office of the Attorney General of the State
of Florida issued Civil Investigative Demands (“CIDs”) to MoArk and its 2009 2008
wholly owned subsidiary, Norco Ranch, Inc. (“Norco”). The CIDs seek Notes receivable $ 7,283 $ 15,712
documents and information relating to the production and sale of eggs Notes payable 20,000 20,000
and egg products. MoArk and Norco have cooperated with the Office Accounts receivable 78,405 60,735
of the Attorney General of the State of Florida and have provided docu- Accounts payable 38,887 22,387
ments requested pursuant to the CIDs. Neither MoArk nor Norco have
received further correspondence from the Office of the Attorney General
of the State of Florida since responding to the CIDs. The Company cannot 24. Subsequent Event
predict what, if any, impact this inquiry and any results from such inquiry The Company has evaluated all subsequent events through February 23,
could have on the future financial position or results of operations of 2010, the date of issuing this report.
MoArk, Norco or the Company.
Between September 2008 and January 2009, a total of 22 related
25. Segment Information
class action lawsuits were filed against a number of producers of eggs and
egg products in three different jurisdictions alleging violations of antitrust The Company operates in four segments: Dairy Foods, Feed, Crop Inputs
laws. The 13 remaining cases have been consolidated for pretrial proceed- and Layers.
ings in the District Court for the Eastern District of Pennsylvania, and two Dairy Foods produces, markets and sells products such as butter,
separate consolidated amended class action complaints have been filed spreads, cheese and other dairy-related products. Products are sold
that supersede the earlier filed complaints: one on behalf of those per- under well-recognized national brand names including LAND O LAKES,
sons who purchased eggs or egg products directly from defendants, and the Indian Maiden logo and Alpine Lace, as well as under regional brand
the second on behalf of “indirect” purchasers (i.e., persons who purchased names such as New Yorker.
eggs or egg products from defendants’ customers). The consolidated Feed largely comprises the operations of Land O’Lakes Purina Feed, the
amended complaints allege concerted action by producers of shell eggs Company’s wholly owned subsidiary. Land O’Lakes Purina Feed develops,
to restrict output and thereby increase the price of shell eggs and egg produces, markets and distributes animal feeds such as ingredient feed,
products. The Plaintiffs in these suits seek unspecified damages and formula feed, milk replacers, vitamins and additives.
injunctive relief on behalf of all purchasers of eggs and egg products, as Crop Inputs consists of both the seed and agronomy operations of the
well as attorneys’ fees and costs. MoArk, Norco and the Company deny Company and primarily consists of activities conducted by the Company’s
the allegations set forth in the complaints. The Company cannot predict wholly owned Winfield Solutions, LLC subsidiary. Winfield is a supplier
what, if any, impact these lawsuits could have on the future financial and distributor of crop seed and crop protection products, primarily in
position or results of operations of MoArk, Norco or the Company. the United States. A variety of crop seed is sold, including corn, soybeans,
In 2005, MoArk sold its Lakeview, California, property and simultaneously alfalfa and forage and turf grasses. Crop protection products sold includes
entered into an asset lease agreement for a portion of the property. This herbicides, pesticides, fungicides and adjuvants. Crop Inputs also includes
agreement required MoArk to treat the proceeds received as a financing the Company’s 50% ownership in Agriliance, which operates retail
transaction as the original lease terms did not require MoArk to pay any agronomy distribution businesses, primarily in the Florida market, and is
rent. Therefore, no gain was recognized on the transaction at that time. In accounted for under the equity method.
January 2009, MoArk renegotiated the terms of the lease. The new lease The Crop Inputs segment was previously reported as separate segments
requires MoArk to pay market-value rent and therefore qualifies for sales- for the seed and agronomy businesses. However, in 2009, the Company
leaseback accounting and has been classified as an operating lease pursuant changed its internal structure and combined the seed and agronomy
to ASC 840, “Leases.” As such, $3.5 million of previously deferred gain on the businesses to create a single business approach to total crop inputs.
sale of the property was recognized for the year ended December 31, 2009. Therefore, the Crop Inputs segment reflects the performance of both the
MoArk will continue to ratably recognize the remainder of the deferred seed and agronomy businesses and the prior years’ presentations have
gain of $1.3 million over the life of the new lease. been restated accordingly.
Layers consists primarily of the Company’s MoArk subsidiary. MoArk
23. Related Party Transactions produces, distributes and markets shell eggs that are sold to retail and
wholesale customers for consumer and industrial use, primarily in the
The Company has related party transactions, primarily with equity United States.
investees. The Company purchases products from and sells products to Other/Eliminated includes the Company’s remaining operations and
Melrose Dairy Proteins, LLC, a 50% voting interest joint venture with the elimination of intersegment transactions. Other operations consist
Dairy Farmers of America. The Company sells seed and crop protection principally of a captive insurance company, finance company and special
products and sells services to Agriliance, a 50% voting interest joint ven- purpose entity.
ture with CHS. The Company purchases aseptic products and sells dairy The Company’s management uses earnings before income taxes to
ingredients to Advanced Food Products, LLC, a 35% voting interest joint evaluate a segment’s performance. The Company allocates corporate
venture with a subsidiary of Bongrain, S.A. Additionally, the Company’s administrative expense, interest expense and centrally managed expenses,
MoArk, Land O’Lakes Purina Feed LLC (“Land O’Lakes Purina Feed”) and including insurance and employee benefits expense, to all of its business
Winfield subsidiaries purchase products from and sell products to other segments, both directly and indirectly. Corporate administrative functions
equity investees and related parties. The Company also has financing that are able to determine actual services provided to each segment allocate
arrangements with Melrose Dairy Proteins, LLC and Agriliance. expense on a direct basis. Interest expense is allocated based on invested
capital usage. All other corporate administrative functions and centrally
managed expenses are allocated indirectly based on a predetermined
measure such as a percentage of total invested capital or head count.

SEGMENT INFORMATION

($ in thousands)
Total Other/
Dairy Foods Feed Crop Inputs Layers Eliminated Consolidated
For the year ended December 31, 2009:
Net sales $ 3,208,457 $ 3,440,508 $ 3,283,593 $ 522,599 $ (46,648) $ 10,408,509
Cost of sales(1) 2,943,282 3,141,496 2,918,468 493,710 (47,969) 9,448,987
Selling, general and administrative 194,507 248,563 201,052 38,141 (1,320) 680,943
Restructuring and impairment 7,425 2,929 — 1,468 — 11,822
Gain on insurance settlement — (1,907) — (2,082) 750 (3,239)
Interest expense (income), net 12,431 26,863 10,044 9,272 (5,257) 53,353
Other expense (income), net — 566 4,046 (11,812) — (7,200)
Equity in earnings of affiliated companies (10,200) (7,838) 13,154 (3,315) — (8,199)
Earnings (loss) before income taxes $ 61,012 $ 29,836 $ 136,829 $ (2,783) $ 7,148 $ 232,042

Net sales $ 4,136,389 $ 3,857,411 $ 3,520,282 $ 606,242 $ (81,065) $ 12,039,259
Cost of sales(1) 3,922,833 3,570,914 3,128,206 535,073 (73,116) 11,083,910
Selling, general and administrative 188,355 263,435 238,525 51,348 14,943 756,606
Restructuring and impairment 179 1,771 — 943 — 2,893
Gain on insurance settlement — (6,606) — (4,032) — (10,638)
Interest expense (income), net 14,293 30,838 10,677 12,514 (5,090) 63,232
Other expense (income), net — 64 (11,713) — (379) (12,028)
Equity in earnings of affiliated companies (5,538) (3,518) (6,452) (19,464) — (34,972)
Earnings (loss) before income taxes $ 16,267 $ 513 $ 161,039 $ 29,860 $ (17,423) $ 190,256

Net sales $ 4,176,844 $ 3,061,591 $ 1,204,393 $ 513,948 $ (31,881) $ 8,924,895
Cost of sales(1) 3,899,398 2,761,697 1,092,123 436,757 (29,669) 8,160,306
Selling, general and administrative 194,892 249,214 120,650 54,065 4,705 623,526
Restructuring and impairment 1,989 645 688 648 — 3,970
Gain on insurance settlement — (5,941) — — — (5,941)
Interest expense (income), net 22,278 25,592 (8,082) 15,625 (5,768) 49,645
Other (income) expense, net (28,481) 7 (8,796) (72) 185 (37,157)
Equity in earnings of affiliated companies (652) (2,030) (52,476) (13,018) (7) (68,183)
Earnings (loss) before income taxes $ 87,420 $ 32,407 $ 60,286 $ 19,943 $ (1,327) $ 198,729
2009:
Total assets $ 835,557 $ 1,028,125 $ 2,531,443 $ 262,537 $ 265,913 $ 4,923,575
Intersegment sales 10,953 37,403 1,386 — (49,742) —
Depreciation and amortization 35,532 33,401 11,445 11,947 2,261 94,586
Capital expenditures 69,325 35,676 19,617 16,854 6,579 148,051
2008:
Total assets $ 879,494 $ 1,129,037 $ 2,469,468 $ 269,732 $ 233,581 $ 4,981,312
2007:
Total assets $ 865,046 $ 1,062,686 $ 1,968,177 $ 271,713 $ 251,573 $ 4,419,195
Cost of sales includes the year-to-year change in unrealized hedging (gains) losses of:
(1)
2009 $ (12,958) $ (18,423) $ (11,128) $ (520) $ 6,801 $ (36,228)

2008 13,522 29,047 14,491 847 (5,657) 52,250
2007 (48) (5,905) (2,737) (475) (1,120) (10,285)
Unrealized hedging (gains) losses attributable to hedging activities within Agriliance are recognized in equity in (earnings) loss of affiliated companies in the Crop Inputs segment for 2007.

INDEPENDENT AUDITORS’ REPORT
The Board of Directors

Land O’Lakes, Inc.:
We have audited the accompanying consolidated balance sheets of Land O’Lakes, Inc. and subsidiaries as of December 31, 2009 and 2008, and the
related consolidated statements of operations, cash flows, and equities and comprehensive income for each of the years in the three-year period ended
December 31, 2009. These consolidated financial statements, presented on pages 4 to 23 of this annual report, are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards as established by the Auditing Standards Board (United States) and
in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of express-
ing an opinion on the effectiveness of the Company’s internal controls over financial reporting. Accordingly, we express no opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Land O’Lakes, Inc.
and subsidiaries as of December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the years in the three-year period
ended December 31, 2009 in conformity with U.S. generally accepted accounting principles.
As disclosed in Note 3 and Note 16 to the consolidated financial statements, the Company adopted Financial Accounting Standards Board Accounting
Standards Codification (“ASC”) 805, “Business Combinations,” on January 1, 2009 and the measurement date provisions of ASC 175, “Employers’ Accounting
for Defined Benefit Pension and Other Postretirement Plans,” on December 31, 2008.
Minneapolis, Minnesota
February 23, 2010

Land O’Lakes, Inc.
P.O. Box 64101 St. Paul, MN 55164

Land o Lakes 10k

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2 0 0 9 A N N UA L R E P O RT

Member Owned — Idea Driven

2009 Annual Report 3

At Year End: ($ in thousands) Advisory Board of Directors . . . . . . . . . . . . . . . . . 9

Senior Strategy Team . . . . . . . . . . . . . . . . . . . . . 12

Membership: Corporate Social Responsibility

In 2009, we documented our Corporate Social Responsibility

4 Land O’Lakes, Inc.

Member Owned reflects our cooperative ideals; our unique relationship

Idea Driven reflects our long-standing commitment to innovation. Consistently,

2009 Annual Report 1

2 Land O’Lakes, Inc.

2009 Annual Report 3

4 Land O’Lakes, Inc.

2009 Annual Report 5

6 Land O’Lakes, Inc.

2009 Annual Report 7

Our Community Commitment

Greg Gniffke and Ray Cherry (left), representing

Our Foundation of Giving especially for grant programs

8 Land O’Lakes, Inc.

board of directors — ADVISORY Board

Howard Liszt Robert Thompson Galen Vetter

2009 Annual Report 9

10 Land O’Lakes, Inc.

2009 Annual Report 11

Back row, left to right Front row, left to right

12 Land O’Lakes, Inc.

Design: Eisenman Associates

2009 Annual Report 1 XX%

Member Owned — Idea Driven

Land O’Lakes, Inc.

2009 Annual Report 1

2 Land O’Lakes, Inc.

redemptions and patronage

2009 Annual Report 3

LAND O’LAKES, INC.

Liabilities and Equities

4 Land O’Lakes, Inc.

LAND O’LAKES, INC.

2009 Annual Report 5

LAND O’LAKES, INC.

6 Land O’Lakes, Inc.

LAND O’LAKES, INC.

2009 Annual Report 7

8 Land O’Lakes, Inc.

2009 Annual Report 9

10 Land O’Lakes, Inc.

2009 Annual Report 11

12 Land O’Lakes, Inc.

2009 Annual Report 13

14 Land O’Lakes, Inc.

2009 Annual Report 15

16 Land O’Lakes, Inc.

Fair Value Measurements at

2009 Annual Report 17

2009 Annual Report 19

20 Land O’Lakes, Inc.

2009 Annual Report 21

22 Land O’Lakes, Inc.

LAND O’LAKES, INC.

For the year ended December 31, 2008:

For the year ended December 31, 2007:

Howard Liszt Robert Thompson Galen Vetter