SUBMITTED AGENDA ITEMS:

Review of Dec & Preliminary Year End Financials
· December sales were down and the growth rate is down for the months of Dec & Jan. We'll be monitoring this closely.
· The year-end financials are preliminary. The auditors are not done with their work yet and the bottom line may still change. Our increase over budget was much narrower in December than it was earlier in the year. Sales for the year were over budget. Gross margin of 37.44% over the budgeted margin of 37.16% for the year. Dec is an adjustment month and COGS reflects that.
· For the year the variance between budget and actual is very small. Payroll was over for the quarter, though. Michele is working with the department managers on their labor. Cafeteria benefits has a variance of -$26,455 due to a year end adjustment made to the liability account to bring it in line with the anticipated actual bills that will be coming in.
· Kitchen sales did not reach their budgeted target for the year in large part due to a case that was to be installed in June that won't be done until Feb this year instead.
· Other Operating expense is up for December, but under budget for the year. Utilities are under budget by $17,753 for the year. The Charge Card Fees are up for the year as customers use their cards more and more.
· Net Income from Operations was $450,701 for the year, $77,382 over budget.
· Non Ops income from interest earnings & the Thymes were up for the year and expenses for the year were down, so Other Income Inc/Exp was better than budget by $20,250
· The bottom line income for the year is $219,124, which is $122,056 over budget.
· Reviewed the balance sheet, cash is down from an extra payroll and asset purchases in December. The net change in assets over last year is $355,736. Liabilities are up partially due to the additional borrowing from the line of credit. The Debt to Equity ratio is 1.94 which is an improvement over last year's 2.41. Equity has returned to pre-2003 levels.

Board Financials
· Reviewed the Board Financial Statements for the year to date through then end of the 4th Quarter. Most of the same points as above. COGS, Payroll, Operating Profit, and Net Income, are all better than the Coop Grocer Benchmarks for 2005. The Debt to Equity has improved over 2004 and is dropping closer to the Coop Grocers Benchmark. Average customers per day have increased from 1375 in 2004 to 1533 in 2005. Average basket is $19.92.
o Please add a note to the Board financials indicating that net income is not cash and is not what is available for a patronage refund. It should also note that these are only preliminary and may change once the auditors are through with their work. Be very clear that a great deal of cash was used for investment in capital. We've even had to borrow money on the line of credit this year and cash is very tight.
o Dana will edit the notes to emphasize the difference between net income and cash. She'll email the revisions to the Finance committee to review before submitting them to the Exec.

Owner Patronage Possibilities
· The 2005 adjustment entries aren't in yet to determine the actual net income for the year. As indicated above, cash is very tight right now. Dana will have a presentation for the Finance Committee next month. At this point it doesn't seem like we would have cash available to give any sort of meaningful patronage dividend to our owners this year. This year we've made a lot of investment into the stores, increasing capital assets by $335,000.
· Discussed the other benefits of ownership including owner appreciation sales days.
· Discussed current job trends in the Corvallis area and speculated on growth trends.

Feedback from the Board on the 2005 Budgeting Process
· The board was satisfied and no changes were requested for next year.

Meeting adjourned: 6:20pm