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L!LATONS’TAHTDANHAB’s foodservice promotion efforts in 2006-07 producedsubstantial results. Operator seasonal promotions wereconducted with Aramark, Baker’s Square, Togo’s andSodexho Senior Services.A variety of other marketing activities in advertising, public relations, merchandising andfoodservice kept Hass Avocados top of mind with consumer and trade audiences.FOOOn the merchandising front, retailers demonstrated more interest than ever in maximizingtheir performance with avocados, a proven performer in the produce category. HAB’s dataDICESERVPROIONTOMSassets provide the platform for the HAB merchandising team to discuss market level avocadoperformance and recommendations to grow retailer avocado business. During 2007, 36 HABVolume-driving retailer ads distributed through directmail, local newspapers, online and via in-storecirculars continue to be key to encouraging purchaseof Hass Avocados. Many of the feature ads promotednew usage ideas with recipes and photos.The HAB merchandising team successfully worked withretailers to promote brand awareness and avocadoconsumption around entertaining events such as BigGame Day, March Madness, Cinco de Mayo and theholiday season.RECONSUMERCOMMUNICATIONScategory reviews were prepared and presented to major grocery chains.A 30-second consumer advertising spot on the Food Networkreinforced the connection between fresh Hass Avocados and holidayentertaining. The ad featured the versatility of avocados in a varietyof uses, offering viewers suggestions on how to use Hass Avocadosin new ways throughout the holidays and directing them toavocadocentral.com for additional recipes and usage ideas.O-STThe successful Big Game Day promotion generated a high level of Web traffic.This online promotion featured search and pay-per-click campaigns, e-mailand banner advertising on the popular Web site allrecipes.com.Four HAB e-newsletters were distributed to 5,000 foodservice operatorsin December 2006, March, June and August 2007, encouragingseasonal menu concepts and new usage ideas for Hass Avocados.For Cinco de Mayo, Hass Avocados were promotedas an essential fiesta ingredient, resulting inwidespread consumer awareness leading up to andduring the celebration.Delivering fresh recipe ideas to consumers prior toCinco de Mayo, HAB’s Cinco de Mayo micro sitefeatured four recipes, including two new recipes fromthe Border Girls celebrity chefs. The Cinco de MayoSweepstakes offered a Grand Prize: a trip for four toLas Vegas, dinner at the Border Grill and a set ofthree cookbooks from the Border Girls.INBig Game Day continues to be a provenperformer as a key occasion to promotethe consumption of Hass Avocadosthrough strategic media outreach efforts.HAB actively seized this opportunity,launching a multi-faceted advertisingand public relations program.In all, promotions and updates onavocadocentral.com helped deliverover 880,000 page views, as wellas more than 860,000 e-mailrecipes during the year.Excerpt from Hass Avocado Foodservice NewsIn-store display card available during national college basketball championship.In-store promotional material createdin partnership with Gourmet Garden.

RESEARCH VA L I D ATEHAB's recently completed consumer research study on U.S. Hispanic avocado purchasinghabits confirms what many suspected: the Hispanic market loves avocados even more thanthe general market. According to the research study, Hispanics buy significantly moreavocados than the average consumer. In fact, nearly all of them buy the fruit. In the pastyear, 97 percent of Hispanic shoppers bought avocados compared to 49 percent of thegeneral population.S U.S. H I S PANICSLOVE OF AV OCADOSWhat's more, 60 percent of Hispanic shoppers place avocados in their shopping carts ona weekly basis and purchase 4.8 avocados per trip compared to 2.8 for the generalmarket, a whopping 58 percent more!Survey data provides valuable insight for use in targeting marketing activities to theHispanic consumer.r k e tsin ta rg e t m akeewaecns a t le a st o:a se a vo c a d ote la ng ua g e)hrcupohwlu m ns in di cascoicenreathpstis( firHS IG H TNIHCRARESESAvocado sellers are correct in assuming that Hispanics represent a significant market fortheir products. Hispanics purchase significantly greater volume and buy more frequentlythan consumers in the general market.While the purchase and consumption of avocados is ingrained among Hispanics, there isopportunity to increase awareness and preference for Hass Avocados specifically.Avocado industry associations should note that both knowledge and buying habits vary inthe two distinct niches of the Hispanic market: U.S.-born Hispanics who predominantlyspeak English in the home and Hispanics in Spanish language-dominant households.There is a greater opportunity to increase purchase frequency and buying rate among U.S.Hispanics who are bilingual or predominantly English-speaking because they are moreaware of the Hass Avocado variety but purchase less avocados than their predominantlySpanish-speaking counterparts. Advertising in media targeted for the more acculturated,bilingual and English-oriented Latino audience may be fruitful for Hass Avocadoassociations to continue building momentum among this target group.Taken as a whole, the research finds that additional focused marketing toward the Hispanicaudience may well increase consumption among these important consumers.H is p a n ic s Aw a re o f H ass Av o c a d os in Tr a d i t ionalA d v e rt is e dTa rg e t M a rke t s:

HABa SSYe s i c AVOC(W ar e Finaith nde nci ADInd d O al S Otat BOepcten ob em ARde erent31 nts DAudit , 200ors’ 7ReportThereon)Board of DirectorsHass Avocado BoardIrvine, CaliforniaINDEPENDENT AUDITORS’ REPORTWe have audited the accompanying financial statements of the Hass Avocado Board (“Board”)as of and for the year ended October 31, 2007, as listed in the table of contents. These financialstatements are the responsibility of the Hass Avocado Board’s management. Our responsibility isto express an opinion on these financial statements based on our audit. The prior year partialcomparative information has been derived from the Board’s basic financial statements for theyear ended October 31, 2006 and, in our report dated December 14, 2006, we expressed anunqualified opinion on those financial statements.We conducted our audit in accordance with auditing standards generally accepted in the UnitedStates of America and the standards applicable to financial audits contained in GovernmentAuditing Standards issued by the Comptroller General of the United States of America. Thosestandards require that we plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free of material misstatement. An audit includes examining,on a test basis, evidence supporting the amounts and disclosures in the financial statements. Anaudit also includes assessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation. We believe thatour audit provides a reasonable basis for our opinion.In our opinion, the financial statements referred to above present fairly, in all material respects, therespective financial position of the Hass Avocado Board as of October 31, 2007 and the respectivechanges in financial position and cash flows of the Hass Avocado Board for the year then ended inconformity with accounting principles generally accepted in the United States of America.The information identified in the accompanying table of contents as management’s discussionand analysis is not a required part of the basic financial statements, but is supplementaryinformation required by accounting principles generally accepted in the Unites States ofAmerica. We have applied certain limited procedures, which consisted principally of inquiries ofmanagement regarding the methods of measurement and presentation of the requiredsupplementary information. However, we did not audit the information and express no opinionon it.In accordance with Government Auditing Standards, we have also issued a report dated January8, 2008, on our consideration of the Board’s internal control over financial reporting and ourtests of its compliance with certain provisions of laws, regulations, contracts and grantagreements and other matters. The purpose of that report is to describe the scope of our testing ofinternal controls over financial reporting and compliance and the results of that testing, and notto provide an opinion on internal control over financial reporting or on compliance. That reportis an integral part of an audit performed in accordance with Government Auditing Standards andshould be considered in assessing the results of our audit.Irvine, CaliforniaJanuary 8, 2008

HASS AVOCADO BOARDHASS AVOCADO BOARDManagement’s Discussion and AnalysisManagement’s Discussion and AnalysisINTRODUCTIONThis report, Management’s Discussion and Analysis (MD&A), provides an overview andanalysis of the financial activities of the Hass Avocado Board (Board) for the fiscal year endedOctober 31, 2007. It has been prepared by management and is required supplementalinformation to the financial statements. Please read it in conjunction with the financialstatements identified in the accompanying table of contents.OVERVIEW OF THE BASIC FINANCIAL STATEMENTSThis MD&A is intended to serve as an introduction to the Board’s financial reports. The Board’sfinancial reports include three basic financial statements: Statement of Net Assets; Statement ofRevenues, Expenses and Changes in Net Assets-Budget and Actual; and Statement of CashFlows. These basic financial statements are designed to present a broad overview of thefinancial data for the Board, in a manner similar to a private-sector business.The Board is a federal government instrumentality created September 6, 2002 by the HassAvocado Promotion, Research, and Information Order. The Board is an administrative bodyestablished pursuant to 7 CFR Part 1219, with supervisory oversight by the United States (U. S.)Department of Agriculture. The purpose of the industry-funded program is to increaseconsumption and demand for domestic and imported Hass avocados in the U. S. market.Fund Financial Statements:The Statement of Net Assets presents information on all assets and liabilities of the Board usingthe accrual basis of accounting, with the difference between the two reported as net assets. Overtime, increases or decreases in net assets may serve as a useful indicator of the current financialcondition of the Board. Assets and liabilities are generally measured using current values. Onenotable exception is capital assets, which are stated at historical cost less an allowance fordepreciation.The Board consists of 12 Directors, 7 of whom represent domestic producers and 5 representingimporters. Each Board member has an alternate. Appointed by the Secretary of Agriculture, theBoard was officially seated March 18, 2003 in Washington D. C.Producers and importers of Hass avocados pay an assessment under the program, with firsthandlers involved in the domestic assessment collection process and U. S. Customs responsiblefor assessment collections on imported Hass avocados. The initial rate of assessment wasmandated at 2.5 cents per pound on fresh Hass avocados produced and handled in the U. S. andon fresh Hass avocados imported into the U. S.An association of avocado importers is eligible to receive an amount of assessment funds equalto 85% of the assessments paid on Hass avocados imported by its members. Additionally, anavocado organization established by State statute in a State with the majority of Hass avocadoproduction in the U. S. shall receive an amount of assessment funds equal to 85% of theassessments paid on Hass avocados produced in such State. Funds received by importerassociations or a State avocado organization must be used to finance promotion, research,consumer information and/or industry information programs, plans or projects in the U. S.The Board contracted with the California Avocado Commission to manage its marketingprograms and administrative services for the current year. Strategic programs, plans, projectsand budgets were developed and approved. Implementation of marketing communications andindustry information programs commenced at the beginning of the fiscal year and continuedthroughout the year.FINANCIAL HIGHLIGHTS The assets of the Board exceeded its liabilities as of October 31, 2007 by 3,343,606 (netassets). Of this amount, 3,334,248 totaling 99.7% is restricted net assets and may only beused for Board promotions, research and information obligations. The Board’s 2007 total net assets of 3,343,606 increased by 902,534 from 2,441,072. Ofthis amount, net assets invested in capital assets, net of related debt, decreased 7,004 to 9,358. Net assets restricted for promotions, research and information increased 909,538 to 3,334,248.A fund is a grouping of related accounts that is used to maintain control over resources that havebeen segregated for specific activities or objectives. The Board, like other federal governmententities, uses fund accounting to ensure and demonstrate compliance with finance-related legalrequirements. The Board’s fund is considered an enterprise fund (which is a proprietary fundtype) and accounts for assessment collections for avocado marketing programs and activities.Notes to the Financial Statements:The notes provide additional information that is essential to a full understanding of theinformation provided in the basic financial statements.FINANCIAL ANALYSISComparative data for the year ended October 31, 2006 has been presented in the accompanyingfinancial statements (including Management’s Discussion and Analysis) to facilitate financialanalysis for the current year ended October 31, 2007.STATEMENT OF NET ASSETS:As noted earlier, net assets may serve over time as a useful indicator of the Board’s financialposition.The largest portion (99.8%) of the Board’s assets were current assets, consisting primarily ofcash, investments, and accounts receivable, totaling 5,251,502; down 1,538,079 from the prioryear amount of 6,789,581. This decrease was mainly due to less cash and investments from areduction in assessment revenue due to a freeze in California affecting the Hass crop. Totalcurrent assets cover liabilities 2.7 times, and indicate good liquidity.Liabilities totaled 1,917,254 for 2007, which decreased 2,447,617 from 4,364,871 from theprior year. The decrease is mainly due to a reduction in payables owed to vendors and importassociations. Liabilities were primarily accounts payable and are considered current liabilities.Net assets invested in capital assets, net of related debt, represent the Board’s capital assets net ofaccumulated depreciation and outstanding principal balances of debt attributable to theacquisition, construction, or improvement of those assets. Net assets invested in capital assets

HASS AVOCADO BOARDManagement’s Discussion and Analysis(net of accumulated depreciation) total 9,358; a decrease of 7,004 from the prior year amountof 16,362 primarily due to accumulated depreciation. Capital assets make up .28% of total netassets.HASS AVOCADO BOARDRestricted net assets for promotions, research, industry information and consumer informationactivities are subject to imposed restrictions by federal statute governing their use. Restricted netassets total 3,334,248, an increase of 909,538 over the prior year amount of 2,424,710, due toan increase in assessment revenues. Restricted net assets are 99.7% of total net assets and aresubject to external restrictions on how they can be used.October 31, 2007(with comparative data for the prior year)STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS-BUDGETAND ACTUAL:Key highlights and financial analysis are as follows: Actual operating revenues of 24,236,860 in 2007 were 55,930 or .23% lower than the 24,292,790 in 2006. The majority of the decrease was from lower assessment revenue fromdomestic Hass avocado volume. Of the operating revenue, the largest portion 18,011,946(74.3%) reflects assessments from imported volume; 6,209,728 (25.6%) is generated fromdomestic volume and the balance of 15,186 (.1%) is from prior year assessments andpenalties. Actual operating expenses totaled 23,540,816 in 2007, which was a decrease of 1,035,108or 4.2% from the prior year amount of 24,575,924. This was mainly due to less rebatepayments to the California Avocado Commission resulting from a reduction in Hass avocadoproduction and a freeze experienced early in 2007. At the end of the current 2007 fiscal year, the Board reported ending net assets of 3,343,606, which was an increase of 902,534 from the prior year of 2,441,072. This wasprimarily due to less rebate payments to the import associations.BUDGETARY HIGHLIGHTSThe 2007 final budget for the Board’s operations represents the original budget and amendmentsthat may have occurred during the year. There was no change in the revenue budget of 24,760,000. The expenditure budget of 26,206,325 increased 192,500 from 26,013,825mainly for marketing and related communications programs. In addition, beginning reserveswere increased by 441,072 to 2,441,072 from 2,000,000 to reflect the actual audited amountfrom the prior year financial statements.During the year, the Board was involved in developing, analyzing and implementing current andlong-range financial goals and activities for strategic planning purposes. Next year’s 2008budget and programs were developed, reviewed and approved for implementation.CAPITAL ASSET AND DEBT ADMINISTRATIONThe Board’s investment in capital assets for its business type activities as of October 31, 2007,total 9,358 (net of accumulated depreciation), which is a decrease of 7,004 from the prior yearamount of 16,362 (net of accumulated depreciation). The decrease represents depreciation ofequipment used for program activities of the Board. The Board had no debt as of October 31,2007.CONTACTING THE BOARD’S FINANCIAL MANAGEMENTThis financial report is designed to provide a general overview of the Board’s finances and toshow the Board’s accountability for the money it receives. Questions concerning any of theinformation provided in this report or requests for additional financial information should beaddressed to Valetta Weaver, Administrator, Hass Avocado Board, 38 Discovery #150, Irvine,California 92618-3105.Statement of Net AssetsAssetsCurrent assets:Cash and investments (note 2)Receivables:CaliforniaCustomsInterestLeases (note 5)MiscellaneousPrepaid expensesTotal current assetsNoncurrent assets:Capital assets (note 3):DepreciableAccumulated depreciation20072006 3,420,382 ,534,2672

national and regional restaurant chains. Materials such as table tents, server buttons, menu inserts and mini-brochures helped operators organize their own tailgate parties. Foodservice editors, who have the ability to influence operators, received a special tailgate-themed mailer to generate interest. A HAB tailgating release offered free .