By Elka Malkis, Financial Manager

INCOME STATEMENTS

This year, The Wedge began using a new auditing firm. One result of that change is a slightly new format for the statement of income and retained earnings.

The gross sales listed, $49.3 million, are the combined sales at the store, the warehouse, and the farm, an increase of more than $4.9 million (11.2 percent).

The next line shows member discounts of $511,556. We used to include member discounts as an expense, and in FY 11 it was included in general and administrative expenses. The new auditors prefer to show these discounts as a reduction in sales—so now we have gross sales minus member discounts to equal net sales. Last year, member discounts were $492,482.

Our gross profit margin went down, from 36.6 percent to 35.6 percent. This is primarily due to increased sales at Co-op Partners Warehouse (CPW), our warehouse. As it is a wholesaler, the margin at CPW is about half what it is at the retail store.

We averaged 2,860 customers per day at the store, which is 206 (or 8 percent) more than last year. The average transaction was $31.89, virtually the same as $31.90 from last year. At the warehouse, we had 320 regular customers, which is 20 percent more than last year.

At the Gardens of Eagan (GOE) farm, we sold 55,000 pounds of broccoli, which is 14 percent over last year. Sales of organic starter plants have increased 45 percent since their introduction in 2010. This year, during peak harvest weeks, the farm crew brought in almost 2 tons of produce per week. That is an increase of 26 percent—in spite of the drought.

We paid over $7.1 million in wages. We employ 273 people, with 219 of those at full-time and 54 part-time. Shipping and delivery are, as you can well imagine, significant expenses. That cost grows as the warehouse grows. In previous years, we included the shipping and delivery costs in general and administrative expenses. (Last year, shipping costs totaled $1,093,293.) General and administrative expenses equal about $6.8 million. Highlights are:

• $46,000 for trash disposal;
• $158,000 for property taxes;
• $226,000 for telephone and utilities;
• $420,000 in credit and debit card processing and bank fees; and
• $3.2 million in benefits and payroll taxes, of which $898,000 was spent on health, dental, and disability insurance.

Members saved 314,887 bags, as tracked by our Green Patch program. About 57 percent of shoppers regularly donate their green patches to support community gardens, and 43 percent take the 10¢ credit.

We earned $73,000 in interest and booked other income of $151,000—most of which is patronage refunds from other co-ops.

Our total patronage refund this year is $1,368,561; this will be distributed to everyone who was a member in fiscal year 2012, in proportion to their purchases. Of the total refund, 60 percent will be returned as cash and 40 percent will be retained by the co-op. The cash portion is a 2.6 percent return on your purchases.

We paid $300,417 in state and federal income taxes. Our net income for the year, after we pay taxes and distribute the patronage refund, will be $548,266.

BALANCE SHEET

Looking at current assets, we had less cash in checking and savings accounts than we did last year, but more money has been invested. Our receivables grew quite a bit, but that is not at all surprising given the growth at the warehouse.

Land and building expenses increased due to our purchase of land and a large greenhouse for GOE. Equipment costs went up an additional $340,000 over last year. We upgraded the security system, got a new ice machine and a second fireproof safe, and we replaced the dishwasher in the classroom. In the Deli, we bought a slicer, a new espresso machine, a coffee grinder and a better soft-serve machine. We replaced the juice bar’s counter. The bakehouse got a 30-quart mixer. The warehouse got new accounting software.

For the GOE farm, we bought 116 acres of farmland with a 10-bay greenhouse across the street. The greenhouse came with lots of equipment, like conveyors and a generator, a forklift, a pin seeder, and a plug popper. We also bought a tractor, a grain drill and a mobile diesel tank.

Other assets didn’t see much change from last year.

On the liabilities side, our current liabilities are up about $500,000 dollars over last year. The difference is spread out, and there is nothing really significant to point out.

Changes in equity come from member stock purchases, posting last year’s equity portion of the patronage refund, and posting this year’s net income, which, when added to all previous years’ income, becomes retained earnings.