Financial Report

By Elka Malkis, Financial Manager

INCOME STATEMENTS

Our sales continue to grow. Sales were slightly over 30 million, increasing over the previous year by 11.7%. Specifically, sales in the retail grocery store grew 6.8% to $25,312,155 and sales at the perishables warehouse grew 46.2% to $4,982,824. This continued growth at the warehouse is really important because wholesale, even more than retail, is all about economies of scale. At the store, we averaged 2,436 customers per day, an increase of 4.7%, with an average transaction of $28.57, an increase of 7.4%. By the way, in 2004 the rate of inflation for groceries was 3.8%.

Our overall Gross Profit Margin went down just a little bit, from 38.5% to 38.3%. The store's Gross margin went up from 39.2% to 39.8%. The Warehouse Gross Margin went up from 17.4% to 18.3%. Our Gross Margin dollars were $11,593,327, an increase of just over one million dollars over the previous year.

We paid 5 million in wages. As a point of reference, during fiscal year 1993 which was the year of our first expansion, our total sales were only 4.9 million. Now we pay more than that in wages alone! Benefits and taxes came to an additional 2.6 million, of which over $460,000 was spent on health and dental insurance. In total, we spent 25.3% of sales on labor related expenses, making it, as always, our largest expense after Cost of Goods.

All the other general and administrative expenses totaled 2.9 million. This includes $25,000 for last year's WedgeShare, $47,000 to keep our computers running and upgraded, $44,000 in office supplies and postage, $73,000 for business insurance, $143,000 in utilities, $84,000 for the newsletter, $131,000 in real estate taxes, $251,000 in bank and credit card acceptance fees, and $359,000 given out as member discounts - oh, and $1,600 in business lunches.

The line called Other Expense represents our reserves against money we have on loan in the community for Co-op Development. Other Income of $116,689 includes classroom income of $5,000, $74,000 in service and delivery fees at the warehouse, and $30,000 in equity in the new National Co-op Grocer's Association.

This year's Patronage Refund is $733,535, which is distributed, proportionately by purchases, to all who were members in fiscal year 2005. Of this, 76.34% will be returned as cash, for a total cash refund of $560,000. It's the largest cash distribution we've ever been able to make, exceeding last year's record $500,000, and the 2nd largest cash percentage, that record being held by FY 1990 when we returned 100% of a $3,549 total patronage refund as cash.

The refund is 3.5% of purchases, and the cash portion is 2.7% of purchases.

When we add the cash portion to member discounts, Wedge members get a 4.4% return on their purchases.

We paid $137,842 in State and Federal Income Taxes, about the same as the previous year. Our real income before taxes is the amount called "Income before Income tax" (right there above the line for taxes) added to the Patronage Refund. This year, our income before taxes plus patronage refund equals $1,051,512.

BALANCE SHEET

Looking at the Balance Sheet...things really haven't changed very much from June 30, 2004.

On the Asset side, we have a little more cash in checking and savings accounts.

Our Receivables are higher, due to increased business at the warehouse.

We replaced various pieces of Equipment during the year but the book value of our Fixed Assets is lower than last year due to accumulated depreciation.

Other Assets are higher due mainly to our growing Rainy Day Fund and a growing Deferred Tax Benefit. That has to do with the differences between how you treat things on the financial statements and how you must treat them on the Income Tax returns. For example, we write off certain assets over 5 years on the statements, but must use a 9-year life for tax returns.

On the Liabilities side, our current liabilities are almost the same as last year. We still have NO outside debt- hurrah! Changes in Equity are due to member stock purchases, posting last year's equity portion of the patronage refund, and this year's Net Income which adds to previous years' income to become Retained Earnings.