Financial Report - Financial Report for Fiscal Year End June 30, 2002

We had another great year. Sales were up 11.5%, expenses were up 11.3%, Patronage Refund was up 28.1%, and Net Income was up 67%. Just about the only thing that wasn't up was our Income Tax expense, which was down 9.1%. Total sales were $22,964,309, an increase of $2,360,000.

Our Gross Profit Margin went up as a percent of sales, from 39.2% to 39.8%, an increase of $1,066,000. So, we brought more money in (higher sales), and our buyers all did a really good job, which resulted in our Cost of Goods going down, which means that our Gross Profit went up.

We paid just over 4 million in wages, which is an increase of 9.7%, or $360,000 over last year. Benefits and taxes came to an additional 1.8 million, so we spent a total of almost $5.9 million on labor, or 25.6% of sales. Of this, $397,000 was spent on health insurance.

All the other general and administrative expenses totaled 2.2 million. This includes $66,000 to produce the newsletter, $118,000 in utility bills, $26,000 in postage and mailing, $42,000 in insurance costs, $86,000 in real estate taxes, and $282,000 in member discounts.

Other expenses, $5,239, are losses on the disposal of equipment. Other income of $164,500 includes classroom fees of about $48,000 (to offset classroom expenses of $42,000) and a patronage refund of $55,000 from our main supplier, Blooming Prairie Natural Foods. Speaking of Patronage Refunds, we are declaring, once again, our largest Patronage Refund ever, $822,982!

Of this total refund, we will be returning a quarter of a million dollars in cash, which is 30.4%.

This cash portion is a 1.7% return on purchases; combined with the discounts we get a 3.7% cash return; the entire refund and discounts together are a 7.7% return on purchases.

We paid $155,000 in State and Federal Income Taxes, which is about $15,000 less than last year. Our real income before taxes is the amount called "Income before Income tax" added to the Patronage Refund. Remember, profit attributable to sales to members (Patronage Refund) is not taxable to the Co-op, or to the members. So, this year, our income before taxes is $1,200,206. Roughly calculated, having member-owners make 68.6% of purchases saved us about $330,000 in taxes.

Our Current Assets are up $603,000 over last year. Cash and Investments are up $630,000. We have started building a strong reserve fund, so in the coming years this should continue to be high. Also, some of this cash was already spent to pay off our last loan, and $250,000 will be paid out in Patronage Refund checks.

The other Current Assets are pretty stable, as compared to last year. The $150,000 in receivables is primarily money owed from the wholesale customers of the warehouse.

Fixed Assets are up about $500,000, reflecting our building addition on the south side of the property and the equipment that went into it. We moved everything out of the line called "Expansion in Progress" and that all went to equipment. We also posted $140,000 in depreciation during the year.

Other Assets is partly a deferred tax benefit, and mostly the equity we have in other coops, such as our main supplier, BP. We have about $240,000 equity in BP, about $63,000 equity in Frontier Herbs, $8,000 equity in North Country Cooperative Development Fund, and the rest in other coops.

We end the year with over $7 million in assets.

Our total Current Liabilities are up $680,000. Of this increase, $230,000 is the record Patronage Refund, $70,000 is an increase in Accounts Payable, $120,000 is the result of us reclassifying 100% of our remaining loan as current, and the balance is an increase in accrued expenses, which are mostly payroll costs. We paid off our final loan this past August, 9 years early, so we knew it was all current, and not long term, as of June 30th.

Our Current Ratio, which compares Current assets to Current Liabilities, is very strong. As of June 30, 2002, we had $1.36 to pay for every dollar we owe in the next 12 months.

Our Long Term debt is now zero. It's quite remarkable. We made a concerted effort, as soon as we finished the first expansion in 1991 to pay off our debt early. We are now in a very good long-term position because our occupancy costs are relatively low. We own our building, so we don't have annual rent increases, and we aren't paying interest to banks. Of course we do have annual property tax increases, but we are way ahead of the game by having no long-term debt.

Equity increased by $675,000, of which $104,000 is member stock purchases, $350,000 is the increase in equity certificates from last year's Patronage Refund, and $221,871 is this year's Net Income.