ANNUAL FINANCIAL REPORT

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AGTEGRA COOPERATIVE

Aberdeen, South Dakota

PERSONNEL AND ORGANIZATIONAL DATA

July 31, 2018

OFFICERS AND DIRECTORS

Name Address District Term Expires Position

Hal Clemensen ......... Aberdeen, SD..................... District 1 ............ 2018 ...................... President

Joel Erickson ........... Langford, SD ..................... District 1 ............ 2018 ........................ Director

Marlin Nilsson ......... Mansfield, SD .................... District 1 ............ 2018 ........................ Director

Phillip Shanley ........ Warner, SD ........................ District 1 ............ 2018 ........................ Director

Lance Hanson .......... Groton, SD ......................... District 1 ............ 2019 ........................ Director

Matt Johnson ........... Webster, SD ....................... District 1 ............ 2019 ........................ Director

Glen Crawford ......... Aberdeen, SD..................... District 1 ............ 2020 ........................ Director

Mark Bushfield ........ Hitchcock, SD .................... District 2 ............ 2019 ........................ Director

Ron Frericks ............ Northville, SD.................... District 2 ............ 2019 . Second-Vice President

Wallace Knock ........ Willow Lake, SD ............... District 2 ............ 2020 ...................... Secretary

Jeff Lakner............... Wessington, SD ................. District 2 ............ 2020 ........................ Director

Chris Eymer ............. Reliance, SD ...................... District 3 ............ 2018 ........................ Director

David Salmen .......... Wessington Springs, SD .... District 3 ............ 2018 ........................ Director

Dale Swanson .......... Pukwana, SD ..................... District 3 ............ 2019 ........................ Director

Mike Clements ......... Miller, SD .......................... District 3 ............ 2020 ........................ Director

Steve Halverson ....... Pierre, SD .......................... District 3 ............ 2020 ........................ Director

Colby Beck .............. Artas, SD ........................... District 4 ............ 2018 ........................ Director

Dan Malsam ............. Roscoe, SD ........................ District 4 ............ 2018 ........................ Director

Larry Vetch.............. Onaka, SD.......................... District 4 ............ 2018 ........................ Director

Nathan Davis ........... Ipswich, SD ....................... District 4 ............ 2019 ........................ Director

Dale Gill .................. Java, SD ............................. District 4 ............ 2019 ........................ Director

Derek Merkel ........... Leola, SD ........................... District 4 ............ 2019 ........................ Director

Steve Pfeifer ............ McLaughlin, SD ................ District 4 ............ 2019 ........................ Director

Quentin Larson ........ Pollock, SD ........................ District 4 ............ 2020 ........................ Director

Rick Osterday .......... Java, SD ............................. District 4 ............ 2020 ..... First-Vice President

Ken Rau ................... Mobridge, SD .................... District 4 ............ 2020 ........................ Director

LEADERSHIP TEAM

Name Position

Chris Pearson .......................................................................................... Chief Executive Officer

Mike Nickolas.................... Executive Vice-President & Chief Operating Officer, Grain Division

John Husk ............................................................................................... Chief Operating Officer

Blake Bomesberger .................................................................................. Chief Financial Officer

Dan Rosenbaum ................................................................................... Chief Information Officer

Tracy Linbo ............................ Senior Vice-President, Agronomy, Communications & Marketing

Judy Stulken .............................. Senior Vice-President, Organizational & Member Development

ORGANIZATIONAL DATA

Articles of Incorporation ...................................................................... Restated February 1, 2018

Under the Code of ............................................................................... South Dakota, as Amended

Federal Identification Number ................................................................................... 46-0191930

10555 New York Ave., Suite 200 • Des Moines, IA 50322-3793 • Phone: (515) 270-1446 • Fax: (515) 270-1811 • www.gardinercpa.com

Independent Auditor’s Report

To the Board of Directors

Agtegra Cooperative

Aberdeen, South Dakota

We have audited the accompanying consolidated financial statements of Agtegra Cooperative,

Aberdeen, South Dakota, which comprise the consolidated balance sheet as of July 31, 2018,

and the related consolidated statements of savings, members’ equity and cash flows for the year

then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated

financial statement in accordance with accounting principles generally accepted in the United

States of America; this includes the design, implementation and maintenance of internal

control relevant to the preparation and fair presentation of consolidated financial statements

that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on

our audits. We conducted our audits in accordance with auditing standards generally accepted

in the United States of America. Those standards require that we plan and perform the audit to

obtain reasonable assurance about whether the consolidated financial statements are free from

material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the consolidated financial statements. The procedures selected depend on the

auditor’s judgment, including assessment of the risks of material misstatement of the

consolidated financial statements, whether due to fraud or error. In making those risk

assessments, the auditor considers internal control relevant to the entity’s preparation and fair

presentation of the consolidated financial statements in order to design audit procedures that

are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An

audit also includes evaluating the appropriateness of accounting policies used and the

reasonableness of significant accounting estimates made by management, as well as evaluating

the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a

basis for our audit opinion.

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Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all

material respects, the financial position of Agtegra Cooperative, Aberdeen, South Dakota, as

of July 31, 2018, and the results of their operations and their cash flows for the year then

ended in accordance with accounting principles generally accepted in the United States of

America.

Other Matter

We also have audited, in accordance with auditing standards generally accepted in the United

States of America, the consolidated balance sheet of Agtegra Cooperative and all of its

subsidiaries as of July 31, 2018, and the related consolidated statements of savings, members’

equity and cash flows for the year then ended (none of which is presented herein), and we

expressed an unmodified opinion on those consolidated financial statements. Such

consolidated financial statements are the general-purpose financial statements of Agtegra

Cooperative and its subsidiaries, and the financial statements of parent company presented

herein are not a valid substitute for those consolidated financial statements.

November 19, 2018

The accompanying notes are an integral part of the consolidated financial statements.

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AGTEGRA COOPERATIVE

Aberdeen, South Dakota

CONSOLIDATED BALANCE SHEET

July 31, 2018

ASSETS

CURRENT ASSETS

Cash $ 740,991

Marketable Securities 1,826,105

Receivables

Notes and Contracts 15,715,789

Trade – Net of Allowance for Doubtful Accounts of

$2,000,000 44,966,791

Grain in Transit 31,938,006

Unadvanced Loan Commitment 65,000,000

Other 55,611,588

Margin Account 7,954,138

Inventories

Grain 158,128,497

Merchandise 89,279,263

Prepayments on Inventory 14,883,140

Prepaid Expenses 5,209,759

Deferred Income Taxes 1,318,208

Total Current Assets 492,572,275

PROPERTY, PLANT AND EQUIPMENT

Land 21,364,081

Buildings and Equipment 625,309,604

646,673,685

Accumulated Depreciation (302,527,083)

Undepreciated Cost 344,146,602

Construction and Purchases in Process 3,472,795

Total Property, Plant and Equipment 347,619,397

OTHER ASSETS

Notes and Contracts 2,405,888

Finance Costs 127,585

Other Developmental Costs 39,500

Goodwill 730,840

Total Other Assets 3,303,813

INVESTMENTS

Equity in Other Cooperatives 50,887,279

Investment in Other Companies 40,346,095

Total Investments 91,233,374

TOTAL ASSETS $ 934,728,859

The accompanying notes are an integral part of the consolidated financial statements.

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AGTEGRA COOPERATIVE

Aberdeen, South Dakota

CONSOLIDATED BALANCE SHEET

July 31, 2018

LIABILITIES AND MEMBERS' EQUITY

CURRENT LIABILITIES

Checks in Excess of Bank Balance $ 17,617,677

Current Maturities of Long–Term Debt

Notes Payable – Term 6,478,697

Notes Payable – Seasonal 18,000,000

Notes Payable – Patron Demand 12,012,983

Payables

Trade 14,863,886

Unpaid Grain 210,635,917

Patron Credit Balances 16,513,200

Grain Contracts to Market/Other 28,145,478

Accrued Expenses

Property Taxes 2,348,732

Interest 11,059,481

Accrued Compensated Absences 3,294,770

Other 4,694,609

Patronage Dividends Payable 4,000,000

Total Current Liabilities 349,665,430

LONG–TERM LIABILTIES

Notes Payable – Term 174,936,431

Unpaid Grain 41,617,055

Total Long–Term Liabilities 216,553,486

DEFERRED INCOME TAXES 7,892,360

MEMBERS' EQUITY

Patrons’ Reserve 110,040,896

Retired Patrons’ Reserve 2,293,058

Equity Acquired in Merger 42,908,644

Reserve Capital 205,374,985

Total Members' Equity 360,617,583

TOTAL LIABILITIES AND MEMBERS’ EQUITY $934,728,859

10555 New York Ave., Suite 200 • Des Moines, IA 50322-3793 • Phone: (515) 270-1446 • Fax: (515) 270-1811 • www.gardinercpa.com

AGTEGRA COOPERATIVE

Aberdeen, South Dakota

CONSOLIDATED STATEMENT OF SAVINGS

Year Ended July 31, 2018

Sales and Service Income $1,544,288,478

Cost of Goods Sold 1,379,376,337

Gross Savings on Sales and Service Income 164,912,141

Other Revenue 26,559,246

Total Gross Revenue 191,471,387

Operating Expenses, Including Interest 171,910,108

Operating Savings – Local 19,561,279

Loss on Investment Buyout (475,971)

Income from Investments 1,848,812

Patronage Dividend Income 2,216,787

Savings Before Taxes 23,150,907

Income Taxes

Current (257,058)

Deferred (9,141,420)

Net Savings $ 32,549,385

DISTRUBUTION OF NET SAVINGS

Patronage Dividend Provision

Qualified

Cash – 40% $ 4,000,000

Deferred – 60% 6,000,000

10,000,000

Capital Reserve 22,549,385

$ 32,549,385