SUBMITTED AGENDA ITEMS:

July Sales Graphs
· Growth picked up in July, hopefully this trend will continue. The bonus owner appreciation sale was successful for July. We'll watch how it goes in August to see how the bonus sale affects the next owner sale day. Monthly owner sales days will be evaluated at the end of the year to see what how it went overall.

Review of June / 2nd Quarter Financials
· Income Statement:
o Sales are still behind budget for the year so far. If this continues we'll end up being off our budgeted projections by about $700,000 for the year. The gross profit margin is also below budget. Management is investigating what is causing this result, as there haven't been any changes in how products are being marked up. It's been noted that write-offs are up and freight expense is up. We've done a great job on controlling payroll expense and keeping it in line with the budget as a % of sales. Fixed expenses are within budget in terms of dollars, but as sales are down, they're up as a % of sales. Store supplies expense is up so far this year. This could be due to timing issues with orders as well as increased transportation costs. These should be in line overall with the total annual budget by the end of the year. Next month there will be a large miscellaneous expense to account for a large water bill from a leak that we didn't know about. Michele negotiated the bill with the city to less than 25% of the original bill. Non-Ops is doing better than budget. The OW program has been under utilized in prior years, this year its budget is being used fully. Special Events expense is up, went over the analysis Dana did with Outreach on this. Even with sales being so far below budget, net income YTD is only $8,000 below budget.
· Balance Sheet
o Total Assets decreased from the prior period due to depreciation and a reduction in cash. Long-term liabilities are down due to paying off debt. We went over the 6,000 owner mark in June. The debt to equity ratio has continued to improve. The Co-op Grocers targets have been updated to the 2005 Survey figures for large stores. The targets have changed quite a bit from the 2004 survey, noticeably in the debt to equity ratio.
· Cooperative Grocers Survey
o The new figures are in and the Board Financials for L-11 have been updated with these new ranges.
o Discussed whether these figures are a good benchmark for us to use. Agreed that it was as a measurement of how we're doing compared to other businesses like ours.

Discussion of report details needed for the BOD
· Reviewed what financial materials go to the Board to keep them apprised of the financial health of the business. Agreed that what we're doing now should be continued.

Review Financial Contingency Plan
· The current contingency plan is dated May 2005. This was developed as a plan for declining revenue. What does the term declining revenue mean. Does it just mean revenues below last year, or does it mean not meeting budgeted growth targets. It could be both. Declining growth would probably be the trigger to start planning and being diligent. Reviewed the list item-by-item and discussed what measures management has taken so far. We've started doing the pro-active things on the list as well as putting off the purchase of assets that aren't immediately necessary. Added a bullet to the initial reactions section "Maintain payroll and variable expenses within budgeted percentages of sales". Is there enough detail and refinement? Will bring back to the Sept meeting and ask Marty to include some discussion of financial contingencies as part of his training, Michele and Dana are currently monitoring the growth trends and financials and taking action as needed.

Review L11 and Discussion
· The changes that Michele made in her rewrite of the L statements includes proposing to shift some of the items from L-11 to L-10 that don't need to be reported on every quarter. We'll put off this discussion until after the changes the Board is making to the L statements is finalized.

General discussion of the financial impact of property purchases
· The monthly costs of owning the property we currently lease from Evanite will cost us less than the lease, so the financial impact is positive. Ownership also gives us more flexibility than if we just lease the property. In a time of declining revenues we could lease the space to another party for rental income, instead of having to get ourselves out of lease contract. We've just received the paperwork back from the attorneys and we'll start the next stage of moving forward.

Meeting adjourned: 6:30pm