Financial Report for Fiscal Year End June 30, 2003

The audit for Fiscal Year 2003 is complete, and the news is very good. Overall, sales were up 10.5%. Specifically, sales in the retail grocery store grew 7.7%, and sales at the perishables warehouse grew 40.8%. Sales topped 25 million, a new record. Sales per square foot at the Co-op were $2,117. This is about 4 to 5 times the national average.

Our Gross Profit Margin went down as a percent of sales, from 39.8% to 39%, but due to the increase in sales our Gross Profit Dollars were increased by $746,834.

We paid almost 4.5 million in wages, which is an increase of 6.9% or $279,600 over last year. Benefits and taxes came to an additional 1.84 million, of which $424,500 was spent on health and dental insurance. In total, we spent almost $6.2 million on labor, or 24.4% of sales, making it our largest expense after Cost of Goods.

All the other general and administrative expenses totaled 2.5 million. This includes $20,000 for last year's WedgeShare, $28,000 to have the trash collected, $35,000 in office supplies, $60,000 for business insurance, $62,000 in Worker's Comp insurance, $72,000 for the newsletter, $101,000 in real estate taxes, $199,000 in bank and credit card acceptance fees, and $324,000 given out as member discounts.

Other expense, $1,010, is for losses on the disposal of equipment. Other income of $624,600 includes classroom fees of $38,000 (to offset classroom expenses of $37,000) and both patronage refund and Gain on Sale from our Co-op supplier, Blooming Prairie (BP). We received $113,000 in patronage refunds from BP (which, unlike the refund you receive from us, is taxable), and our portion of the gain from selling BP to United Natural Foods, Inc. (UNFI) was $434,000, also taxable.

This year's Patronage Refund is both extra-large and extra-complicated. The refund from store operations is $981,370; as always, this goes to all who were members as of June 30, 2003, proportionately by purchases.

We are also allocating for Patronage Refund $280,017 from the Gain on Sale of BP. This segment of the refund will go to all who were members as of each fiscal year end, over the past three years. We are doing this in order to comply with an IRS ruling on how the proceeds from the sale should be treated.

The total allocated to Patronage Refund is $1,261,387. Of this, 31.7% will be returned as cash, for a total cash refund of just over $400,000. Setting aside the complications of the BP refund, Wedge members will get a 3.7% return on their purchases when discounts and the cash portion of the operational refund are added together. The average cash return in this one-year period on a member's $80.00 stock is 78.2%.

We paid $258,266 in State and Federal Income Taxes, which is $102,913 more than last year; the increase is due to the one-time windfall from BP. Our real income before taxes is the amount called "Income before Income tax" added to the Patronage Refund. This year, our income before taxes is $1,870,107. Excluding the BP monies, it is $1,436,000, or about $200,000 more than last year. 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.