In an effort to keep the membership informed of the status of the finances of the Coop, the Board of Directors, the Collective Management Team and the Finance committee have collaborated to present you with a narrative of the first half of fiscal year 2004.

The first half of 2004 has been an excellent one in terms of sales for the Coop. When we wrote our budget for 2004, we had forecast a 5% increase in sales, a conservative amount of growth, based on the limitations of our present location and the uncertainty of the economy. In fact our growth rate through June has been 15% over last year!

Personnel Expense: These are all the expenses associated with staff and member workers at the Coop. At the close of the month of June, the Coop’s payroll was running 8.5% below budget (even with the across-the-board raise that we gave all hourly staff last November). We have a very good and productive staff along with a great selection of member workers. Our member labor remains strong with over 30% of the Coop’s labor being provided by members. The Personnel committee, Finance committee, Board and Collective Management Team continue to collaborate on instituting a living wage with next years budget.

Our level of staff discounts is running 10% over budget, an encouraging sign that our staff are doing more of their shopping here at the Coop.

We have remained claim-free in regards to Worker’s Compensation, and our MOD number (the number that the state bases our rates on) took a nice dip to 0.93, thus significantly lowering our premiums. Our expenses for health and dental insurance were well within budget for the first months of the year. This is in spite of the fact that we now offer coverage to domestic partners as of January 1st and the fact that rates have gone up over 15% this year (a fact we took into consideration in writing our budget).

These are the expenses that are directly related to renting and maintaining the store. Areas where we exceeded our budget so far in 2004 are Pest Control, Property/Real Estate Taxes, and Repairs & Maintenance of Equipment. On a positive note we have reduced our utility costs, this is due to the more mild winter and also we have had periodic maintenance on the heating and air conditioning system. Even with the budget overages in these areas we have come in 8% under budget for Occupancy Expense over the first six months of the year.

Property/Real Estate Taxes: Although we were able to determine our cost of taxes for school tax (since the billing takes place in September) we had to estimate what would happen with the property taxes — as our bill does not come until January and the budget had already gone out to the membership. Due to an increase in assessment (which many of you undoubtedly experienced last year) our taxes were higher than we had estimated. We had budgeted $4,500 through the first six months of the year, and the taxes were actually $7,729.26.

Repairs & Maintenance Equipment: Our refrigeration repair expenses have been high over the first six months, we had problems with the freezers, the cheese case and other minor repairs. We have now started a semi-annual maintenance program with our refrigeration repairman, where he comes in every six months and vacuums the compressors and identifies potential problems so we don’t have to call him in on an emergency basis so often; hopefully in the long run this will lower these expenses. Our water machine has been the source of many repairs this year also. We have had to replace the main filtering membrane every three to four weeks, due to a change in the composition of Albany city water. To adjust the pH level, the city has been adding hydrated lime to the water, and this causes the membrane to clog rapidly. We also replaced the motor on the machine, an expense that was not expected, although this seems to have helped extend the life of the membrane; we are hoping that the cost of maintaining this machine will decrease over the next six months. We are also investigating the possible purchase (as a capital expenditure for 2005) of a replacement that has local support for repairs and maintenance. (The machine we currently own comes from Winnipeg, Canada and there is no one here who works on them; so our maintenance person has had to learn to repair the machine and every time we need to replace the main membrane we have the cost of shipping to Canada).

Utilities: Our consumption of electricity is running two-thirds of budget; this is 23% less than the same period last year. Maintenance of the system has helped in this area, as has a cooler-than-usual summer. Gas consumption is 44% less than the same period last year, again maintenance to the system and the new gas oven in the deli (being vastly more efficient than the old) have helped here.

These are the expenses related to operating the store on a day to day basis. We are running over budget due to an error in the calculation of depreciation. Our original depreciation schedule was written by our former CPA, when our new CPA came on, he pointed out to us that we should actually be accelerating the depreciation on our Leasehold Improvements. This was after the budget had already been written so we are running $10,280.20 over budget in depreciation. In our 2005 budget we will have correct figures from the CPA and this should correct this problem going forward.

Store Supplies: We are running over budget in store supplies due to some purchases that were made for the total year but were booked to one of the first six months of the year. These purchases include the little golf pencils we use to record PLU numbers and the plastic bags that we supply for customer use. In comparison to last year we are 34% under what we spent last year in Store Supplies.

Administrative expenses are related to the back office expenses needed to run the Coop. At this point in the year we are running 27.8% under budget. We have substantially reduced our office supplies purchases this year and are running over 50% under budget in this category. We have also had little need, beyond having the Employee Manual reviewed, of the assistance of the Coop attorney, so legal fees are also under budget.

Marketing Expense: These are our advertising, marketing, outreach and donation/contribution expenses. Also included in this category are the various promotional discounts the Coop provides to senior citizens, vendors, visiting Coop members, etc.

Advertising reflects an overage from the budget due to contracts that ran through the first half of 2004 that were negotiated back in 2003, before we trimmed our ad budget by half. Our advertising contracts with WNYT and the Times Union are now completed. Our primary advertiser is now WAMC. We have used a significant part of the budget for marketing/outreach through the first half of the year and a busy season is ahead of us.

Donations/Contributions: We have been running over budget here, not only due to the volume of requests, but because we did not entirely reflect the new policy of donating 5% of profits in our 2004 budget. At present our donations/contributions are running 1.75% of profit, which gives us a cushion to make a donation such as the one we made last year to the Community Foundation.

Governance Expense: These are the expenses associated with the governance of the Coop and are primarily Board expenses. This year we spent monies to send three of our Board members to the Consumer Cooperative Management Association conference in Minneapolis, Minnesota. In addition to touring the Minneapolis coops, which are many, our Board members met and exchanged ideas with other coop board members from around the country and participated in a number of educational seminars.

Copier: We purchased our new copier at the end of January and have been pleased with its performance to date. We are now able to produce in house items that we had to send out to a printer in the past.

Computer Upgrades: We are preparing to upgrade QuickBooks, our accounting software. We are in the process of upgrading some of the back-office computers and have been replacing certain components on the cash register system as needed.

Repair Cracks in Warehouse Floor: This project has been completed.

Air Conditioning for Cheese Area: This project has been completed and has resulted in a much more pleasant atmosphere for both staff/member workers and shoppers. It is much cooler and the noise level has dropped considerably with the wall that was built around the compressors for the large coolers.

Refrigeration: We have purchased a new egg cooler for the Cheese department. This allows us to expand the dairy selection by moving the eggs and allows the cheese workers to more easily restock the eggs.