| SUBMITTED AGENDA ITEMS:
Review of October Financials
· Sales were still below budget for October. The bridge, which
was closed for Sept. and most of October, reopened last Friday and we
noticed an appreciable change in sales. The margin is off in some departments.
It's possible that there may be errors in inventory, so we took inventory
in those departments again at the end of October. Despite the lack of
sales, the control of payroll has kept net income in line.
o Any errors that may have been made in previous months inventories will
be corrected in subsequent inventories.
o We are checking to find where the errors may have occurred in the most
recent inventory.
o We are also working on accounting for the effect of sale items on the
overall margin.
· Reviewed the income statement and balance sheet for the third
quarter. Discussed the need for notes accompanying the quarterly financials
that are submitted to the board.
o I think that the narrative is useful for people who are not used to
looking at numbers. I don't find that there is a problem with any redundancy.
The notes help to reinforce the financials.
Begin Review of Finalized '07 Budget
· We are one month ahead of where we usually are in the budget
cycle. The finance committee will take a month to review the most recent
budget draft, further preparing for the Dec. presentation of the final
budget draft and the January approval.
· There are no major changes to this draft. It is still predicated
upon all the major assumptions that were approved at the Oct. Board meeting.
· One assumption to note is that this budget is based upon a two-store
organization.
· Will take the next month to review the budget draft and discuss
at the next meeting
Questions for the Finance Manager
· Reviewed the answers to the finance questions from the board
retreat that the finance committee sent to Dana to respond to.
o Expansion would serve the dual purpose of solidifying our position in
the Corvallis market and increasing awareness of cooperatives and natural
foods. By taking the best location in town, we are insuring that one of
our competitors does not. Also, it would allow us to serve a customer
base that would not be accessible if we decide not to expand.
o The vulnerability of the south store is something that may be exploited
by our own expansion or by a competitor. We would prefer that any loss
of sales remain within the organization. We are actively preparing for
a loss of sales at our south location that may accompany any expansion.
o Due to our five year contract with UNFI, an expansion will decrease
prices but not until our contract has ended. Also, a UNFI distribution
center opening in Portland may lower prices, but again not for five years.
Access to a new distributor, serving any crossover needs we may have,
will lower prices as well. The bottom line is that a larger organization
will ultimately get us lower prices.
o We are actively paying back debt, but unfortunately we are in a cash
crunch. We do have favorable interest rates on our loans, a portion of
it at a fixed rate, so we are in a good position with our debt.
Meeting adjourned: 6:25pm
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