Land O'Lakes, Inc. today reported sales of $1.7 billion and net earnings of $34.8 million for the second quarter, as compared to $1.8 billion and $25.8 million for the second quarter of 2005. The company also reported year-to-date sales of $3.8 billion and net earnings of $60.9 million, as compared to $3.8 billion and $50.1 million, respectively, one year ago. Total EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) was $75.5 million for the quarter and $145.0 million year to date, versus $74.8 million and $146.1 million for the same periods in 2005.

The company also reports EBITDA on a normalized basis, excluding the effects of unrealized hedging, significant asset sales or impairments, legal settlements, debt extinguishment costs and other special items. Normalized EBITDA for the quarter was $65.0 million, compared to $73.2 million for the second quarter of 2005. Year-to-date normalized EBITDA was $126.6 million, versus $140.2 million for the first half of 2005. The company reduced its guidance for full-year normalized EBITDA to $240 million (from $260 million) for 2006.

In respect to the balance sheet, the company reported an improved Long-Term Debt to Capital ratio (39.9 percent versus 48.0 percent as of June 30, 2005) and strong liquidity ($347 million in cash-on-hand and unused borrowing authority).

During an overview of business unit performance, company officials reported solid performance in Dairy Foods Value Added, Lifestyle Feeds and Seed, driven primarily by its branded and proprietary businesses and product lines. They indicated performance in these businesses was offset by challenges in its Dairy Foods Industrial, Livestock/Commodity Feeds, Agronomy and Layers/Eggs businesses.

The company reported continuing efforts to optimize its portfolio of businesses, with a focus on reducing involvement and investment in non-core or underperforming businesses, while intensifying its focus on core businesses. In the second quarter, this effort was reflected in the divestiture of the liquid egg processing business of the company’s MoArk LLC subsidiary. MoArk LLC continues to operate its shell egg business.

Dairy Foods

In Dairy Foods, Land O'Lakes reported second-quarter sales of $773 million and $0.2 million in pretax earnings for the quarter, as compared to second-quarter sales of $936 million and an $8.3 million pretax loss one year ago. Land O'Lakes reported year-to-date sales of $1.7 billion in Dairy Foods, versus $1.9 billion for the first two quarters of 2005. The company reported a $2.7 million pretax loss in Dairy Foods through June, versus a $9.0 million pretax loss for the first two quarters of 2005.

Year-to-date retail butter volume was up 1 percent, with branded butter leading with way with an 8-percent volume increase. Spreads volume, however, was down 16 percent, with total butter and spreads off 3 percent from one year ago. Cheese volume was up in nearly all categories, with Total Cheese up 4 percent, led by Retail Cheese with a 12-percent increase. Volume was flat in Deli Cheese, where the company holds the number-one U.S. market share.

Feed

The Feed division reported $646 million in sales and a $1.1 million pretax loss for the second quarter, as compared to $627 million in sales and $9.2 million in pretax earnings for the second quarter of 2005. Feed reported $1.3 billion in sales year-to-date, and $2.2 million in pretax earnings, versus $1.3 billion in sales and $18.0 million in pretax earnings through the first two quarters of 2005.

Land O’Lakes continued to report growth in its Lifestyle Feeds segment, where volumes were up 4 percent through June. Year-to-date volumes were also up in the smaller Milk Replacer (up 5 percent) and Ingredients (up 8 percent) segments. Livestock Feed volume, however, was down 4 percent.

Layers/Eggs

The company participates in the layers/eggs industry through MoArk LLC, a wholly owned subsidiary. While shell volume was improved versus last year, company officials said depressed egg prices continued to have an adverse impact on earnings.

For the second quarter, the company recorded $105 million in sales and a $5.8 million pretax loss in this business, as compared to $86 million in sales and a $16.1 million pretax loss in the second quarter of 2005. First-half sales in eggs totaled $213 million, with a pretax loss through June of $12.1 million. This compares to sales of $192 million and a pretax loss of $22.4 million through June of 2005. Company officials noted that financial results in the Layers/Eggs segment included an $8 million pretax gain on the sale of MoArk’s liquid egg processing business.

Year-to-date, shell egg volume was up 3 percent, led by branded and specialty eggs, where volumes were up 24 percent versus the first two quarters of 2005.

Seed

For the second quarter, the Seed division reported sales of $163 million and pretax earnings of $6.9 million, as compared to sales of $153 million and pretax earnings of $1.9 million for the second quarter of 2005. For the first half, the company reported $552 million in sales and $47.1 million in pretax earnings, versus $490 million in sales and $30.6 million in pretax earnings one year ago.

The company reported volume increases, through the first two quarters, of 8 percent in corn, 7 percent in soybeans and 31 percent in alfalfa. Alfalfa sales, company officials indicated, were bolstered by the success of Roundup Ready alfalfa, developed in collaboration with Monsanto.

Agronomy

Land O'Lakes conducts its Agronomy business through Agriliance, a joint venture in which the company holds a 50-percent ownership interest. Second-quarter Agronomy earnings totaled $38.4 million, as compared to $41.5 million for the second quarter of 2005. Year-to-date, Agronomy operations contributed $32.0 million in pretax earnings, versus $34.5 million one year ago. Dollar sales from the agronomy joint venture are not consolidated in Land O’Lakes financial reports.

Land O’Lakes, Inc. is a national farmer-owned food and agricultural cooperative with annual sales of more than $7 billion. Land O’Lakes does business in all 50 states and more than 50 countries. It is a leading marketer of a full line of dairy-based consumer, foodservice and food ingredient products across the United States; serves its international customers with a variety of food and animal feed ingredients; and provides farmers and ranchers with an extensive line of agricultural supplies (feed, seed, crop nutrients and crop protection products) and services.