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EXHIBIT F.-Comparative consolidated financial statement, 17 major regional farm supply cooperatives, for years ending in 1945 and 1955

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May 31, 1939

May 31, 1940

EXHIBIT G.-Farmers Union Grain Terminal Association, comparative operating statements, 1939–56, inclusive

Description

May 31, 1941

May 31, 1942

May 31, 1943

May 31, 1944 May 31, 1945

May 31, 1946

May 31, 1947

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4,857, 350

230, 606

Net savings for period...

144,842

203, 120

218,998

571,248

1, 157, 583

2,503, 676

2,176, 773

3,650, 354

4,626, 744

3, 517, 043

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"Terminal" refers to dividends paid from earnings of terminal grain operation.

2 "Line" refers to earnings of line elevators division but not available every year.

EXHIBIT G.-Farmers Union Grain Terminal Association, comparative operating statements, 1939-56, inclusive-Continued

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1 "Terminal" refers to dividends paid from earnings of terminal grain operation.

NOTES

(1) The term "gross margins" has essentially the same meaning as the term "gross profits" in the ordinary corporation financial statement. It includes receipts from the sales of grain and other merchandise as well as from services performed less the cost of the goods sold. The operations which contribute to gross margins are:

Merchandising.-Grain is purchased and resold and the excess of receipts over disbursements is treated as merchandising gross margins. Included are the margins which result from the purchase and sale of grain by the country elevator division. FUGTA also pur

2 "Line" refers to earnings of line elevators division but not available every year.

20 percent cash patronage dividend. The 1956 annual report indicates that in 18 years $3,107,920 has been paid in cash out of annual savings.

(6) It has been the regular policy of FUGTA to distribute all of its net savings after provision for reserves in the form of preferred stock or preferred stock credits. An exception is the distribution of a 20 percent cash dividend payment in 1952 and later years. The preferred stock so issued is nonvoting, transferable on approval of the board of directors, and has preference over the common stock in the event of any liquidation,

chases a substantial amount of grain much of which has originally been consigned to it.
The profits on this grain when sold are included in gross margins.

Storage and handling.-This includes all receipts derived from the storage and handling
of all grain. A substantial part of income derived from this operation results from grain
stored and handled for Commodity Credit Corporation, a Government agency. Also
included are receipts from the storage and handling of all kinds of grain belonging to
others.

Commissions.-FUGTA charges a commission for the service which it performs in sell-
ing grain belonging to others. The commissions so charged are determined by the rules
of the grain exchanges upon which Farmers Union does business. Much of the grain
upon which a commission has been charged is purchased by the Farmers Union and
subsequently resold. Profits resulting from such purchases and sales are treated as mer-
chandising margins.

Interest.-FUGTA provides financing for many of the country grain elevators which
ship grain to it for sale. The interest charges made result in interest income. This in-
terest income in recent years is without deduction for the cost of interest paid. In the
early years, however, interest income was determined on a net basis excluding therefrom
the cost of the money which was borrowed for the purpose of loaning to customers.

Service, auditing.--Auditing services are performed for many country grain elevators
and the charges which are made result in gross income.

Miscellaneous.-This includes various items of income which are excluded from the
preceding classifications.

(2) The bylaws of FUGTA provide that a sum not exceeding 5 percent of the net savings
shall be distributed as educational funds. This money, as a general rule, is distributed
to various State Farmers Union organizations, mainly in the upper Midwest. The 1955
annual report (p. 20) indicates that $1,696,210 had been distributed during the past 13
years. To this must be added $164,345 distributed in the 1956 fiscal year, making a total
distribution of $1,860,555.

(3) Dividends on the preferred stock of the corporation were payable only for a limited
time. In 1945 dividends were discontinued "first to make the GTA a Simon-
pure cooperative and to protect the cooperative against possible assessment of in-
come *. Second, since the preferred stock that comes into your hands is the result
of patronage savings invested in preferred stock to enable your cooperative to grow
there is no economic reason for paying interest on said stock."

(4) The 1956 annual report states that FUGTA is required by the Minnesota coopera-
tive law to place 10 percent of their annual savings in a permanent reserve. It is believed
that the amounts credited to such permanent reserve are accounted for in such a manner
that the interest of each patron who contributed to the same is shown. Presumably
this permanent reserve would be distributable to patrons in the event of dissolution
although the mechanics of such distribution are not explained. The 1956 report indicates
that the permanent reserve amounted to $3,808,352 on May 31, 1956.

The amounts allocated each year to the permanent capital reserve are believed to be
reasonably accurate. Minor differences occur during the period 1945-47 but it is believed
these are attributable to the sale of Farmers Lumber & Supply Co. and Farmers Union
Grain & Supply Co. As a result of such sale the financial statements of those two
companies were no longer consolidated with FUGTA.

(5) The stockholders of FUGTA in 1951 voted to apportion each year's earnings, setting
aside sums for debt retirement, stock retirement, cash dividend payments and reinvest-
ment for working capital. Since that time the corporation has regularly distributed a

dissolution, or winding up of the corporation. The preferred stock is callable and may be retired only at the option of the board of directors.

The amounts of preferred stock and credits issued in each year are believed to be
reasonably accurate, although the total of all of the stock issued less the amount retired
does not tie in directly with the balance sheet amount as of May 31, 1956. The informa-
tion available made it impossible to reconcile this difference.

(7) The surplus adjustments which are made reconcile the difference between the net
savings for the period and the distribution of such savings. The necessity for such adjust-
ments results from the inadequacy of financial information. Adjustments are relatively
minor, however, except for the period 1943-47. The adjustments for the years 1943 and
1944 substantially cancel. It is believed that the adjustments in 1945 and 1946 are attribu-
table to the sale of Farmers Lumber & Supply Co. and Farmers Union Grain & Supply
Co. and the nonconsolidation of those statements.

(8) For 1947 and prior years the balance sheet amount of preferred stock in any given
year does not include the preferred stock issued as a patronage dividend in such year.
Such preferred stock is included in "Savings for the year" which is stated separately on
the balance sheet. The preferred stock per balance sheet in these years has been adjusted
therefore to reflect the preferred stock actually issued in such year. The result is believed
to be reasonably accurate, although dependent upon the accuracy of the preferred stock
and credits issued figure for any given year. This problem is not encountered in 1948 and
subsequent years for the amount of preferred stock and credits stated on the balance sheet
for any given year includes the amount of preferred stock issued during such year.
(9) The amount of the increase of preferred stock and credits in any given year is the
difference between the adjusted balance sheet figure of preferred stock and credits issued
(as determined in note 8) for such year less the same figure for the preceding year. The
actual increase in preferred stock for 1949 and subsequent years is accurate. For 1948
and prior years, however, the increase is dependent upon the accuracy of component
figures which because of the inadequacy of information are subject to minor error.
(10) The preferred stock sold or retired in any given year is the difference between the
preferred stock and credits issued for such year (as determined in note 6) and the increase
În preferred stock during the year (as determined in note 9). The annual reports for 1952
and subsequent years state the amount of preferred stock actually retired. In certain of
these years there is a slight difference between the stated amount and that determined
in the manner previously stated.

A large amount of preferred stock was retired in the year ending in 1947. It is believed
that a sbstantial part of this amount is the result of the sale of certain properties to Farmers
Lumber & Supply Co. and Farmers Union Grain & Supply Co. and nonconsolidation of
their financial statements.

FUGTA retired all of the preferred stock issued in 1939, 1940, and 1941 during the years
1944, 1945, and 1946. This policy was changed in 1946, and it has been the practice of
FUGTA since that time to redeem the stock of any farmer who retires from farming. This
policy is of course subject to the approval of the stockholders.

The 1956 annual report states that the corporation has paid a total of $4,553,999 to retire
preferred stock during the 18 years of the corporation's existence. This is less than the
total preferred retired according to the comparative operating statements, but it is be-
lieved this difference is attributable to retirement of a substantial amount of preferred
because of the sale of Farmers Lumber & Supply and Farmers Union Grain & Supply
as previously noted.

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EXHIBIT H.-Farmers Union Grain Terminal Association, comparative balance sheets, 1939–56, inclusive

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1, 355, 758

278, 000 27, 929 1, 554, 970

716, 676 306, 384

903, 439 2,232,306

667, 464 3,830, 354

843, 817 3,290, 515

813, 582 3,422, 672

829, 232

2,207, 730

4,281, 592

4,854, 345

2,093, 019 5,739, 340

3,770, 355 6, 520, 350 11, 914, 883 14, 659, 786 19, 990, 210 22,496, 555 25, 355, 109

27, 545, 274

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1,355, 758

1,554, 970

3, 770, 355

6, 520, 350 11,914, 883 14, 659, 786 19,990, 210 22,496, 555 25,355, 109

27, 545, 274

Current assets:

Cash..

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1 See operating statement. In this and preceding years, savings for the year were stated separately on the balance sheet. Such savings are stated before allocation and hence

include amounts subsequently allocated to capital reserve and preferred stock and in some instances as dividends on preferred stock.

Preferred stock and credits.

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