SUBMITTED AGENDA ITEMS:

Review the 2005 FC yearly calendar and work plan
· #2 (Discuss next year's sales projections compared to pro forma sales projections) from October is being moved to November.

Review of August financial statements
This is the first month that the bottom line has been a loss although for the year they're still above budget. August is a non-inventory month, so COGS is best guess and usually we try to err on the conservative side. Payroll was over budget for August but is under budget both in terms of dollars & percentage year to date. Kitchen sales are better than last year, but under budgeted levels, which is pulling down the bottom line compared to budget. The Balance Sheet is looking considerably healthier than it did at the end of the same month last year. Reviewed the September sales graphs. The growth rate at the North store has started to slow and the growth rate at the South store has started to accelerate. Everything looks on target to make the projected sales for the year of $11 million dollars.

Budget Agenda items: Sales Projections, Major Financial Assumptions, and Capital Budget
Reviewed the 2006 Budget Assumptions. Dana has met with all of the sales department personnel and developed projected sales growth for each department. Based on these discussions, industry trends, and Cooperative Grocer's benchmarks, the 2006 projected growth rate for the combined stores is 14.6%. Discussed the projected labor percentage that includes benefits. The lower quartile for Extra Large is 23.43% and that was the most reasonable figure for use in the budget and still return a positive bottom line. This includes an increase in health benefit costs of 20.1% over 2005. Increased the budgeted quarterly bonus dollar from $18,000 to $22,000 to keep that amount meaningful with our increased number of staff. Discussed Other Operating Expense. As a percent of sales, the budget is the same, but the dollars have been increased by 14.59% over 2005. Gross Profit from Operations is budgeted at 2.94% of sales. 2005 is projected at 3.25%. Non-operating income is projected to go up due to extra Thymes Ads. Under governance, the Board Discretionary is budgeted to increase for trainings, especially with so many new board members. This number could be reforecast as necessary based on input from BDC and the Board. Owner Outreach may be reforecast based on input from the Owner Relations Committee. Discussed the other non-operational line items including R&D which has been increased for 2006 anticipating potential needs such as market studies if we want to consider growth. The Finance committee as a whole is satisfied with the assumptions to be submitted to the Board.

Continue discussion related to "below-the-line" community outreach and education expenditures
and allocation of profits. Work Plan item 6. Explore using a set amount for non-operations budget items rather than percentage of sales
Continued to November

Meeting adjourned: 6:35pm