Mad River Glen Cooperative
Finance Committee Conference Call
January 7, 2010
Telephone Conference began at 8:02 am
Attending: Deb Steines, George Lesure, Jim Elkind, Eric Schoenholz, Tom Cagnina, Ken Frey, Jim Elkind, Andy Dulik, Gary Lange, Bruce Button, Pete Ludlow, Geordie Hall, Jamey Wimble, & Lars Bruns.
Absent: Leigh Michl, Jeff Paduch, and Andrew Snow.
Schedule and Agenda Review
Lars reviewed the objective of the meeting which was to discuss the latest industry/area trends and holiday season, review the December/YTD financials, and discuss a recommendation for the Board regarding share redemption.
1) Market and Industry Holiday Trends
Jamey mentioned that Christmas week volume increased as the week went on. We had a good New Years Day – as did everyone else. The potential weekend storm may have scared a few folks away. It was a good holiday week since we had a poor front end weekend right after Christmas. The skiing was very good, although more people tend to ski after a big dump than smaller incremental snowfalls.
2) December and YTD Financials
Jamey reviewed the financials and took questions from the group. We are behind on day ticket sales. The last 3 days of the holiday period fell in January and are not in the December numbers….they’ll be in the January P&L and will help us in the January P&L. These were our 3 strongest days. We don’t budget for the calendars; the flash reports take that into account for adjustment/regulation. Retail income is down, number of days the store was open on the mountain was less, and we don’t have the book sales like we did last year. Net Op Income for retail is close. The website is getting looked at for improvements. Jim asked about unexpected expenses and Jamey mentioned $5900 in facilities for summer capex electrical capacitors, $1800 for snowcat pump, $1800 for the transformer, more to come but not to exceed $5000. There was a question on marketing expense to which Jamey mentioned this is timing and tough to predict.
Jim Elkind asked a question regarding flash reports and the shortfall of revenue against budget. Jamey answered that the month of December is often very variable and hit or miss by the day. Jamey looks at the model and measures against the model. Jamey looks at the model and we’re usually either close to the model or beating it. Geordie mentioned it is something to be concerned about. Expenses were reduced to show a ~$40k delta from YTD budget NOI.
Jamey discussed the new departmental tab introduced at the FC’s request and reviewed the breakouts. Jim applauded being able to take reservations in the Cricket Club. Jamey reviewed detailed questions from the group regarding departmental revenue and expense. Jamey highlighted that the retail store and the cricket club are lower and we’d like to focus on that. George requested to show a prior year’s data to compare with. Jamey mentioned that data is available and could be included next time and that the Flash reports do help too. Eric asked about YTD single chair expense to which Jamey wants/needs to go back and check.
Single Chair Campaign pledges are coming in on the Single from PTV and look to be ~$45k. There is $66k left on the note, SMF amounts are currently unknown but Ken Frey mentioned good progress. We’re probably going to be close to pay the note off very soon. Outstanding pledges were $34k prior to ’09 numbers. We were due ~$100k in pledges for 2009. SMF’s website is not clear according to Geordie, he will discuss with SMF for clarification.
Jamey reviewed the positive turn in cashflow. The $100k in the rain fund is not included. Preseason 2010 and 2011 is not included in the spreadsheet. The cashflow Includes assumptions for $150k in capex, $75k for rain, and also includes prepayment of the GL, $40k for FY2011.
Share sales are at 7 so far this year. Prior year sales were budgeted for 40 and were 19. Budget for share sales is for 40 this year, however the cashflow projection was for 20 (for the net of sales and redemptions).
3) Share Redemption Discussion
Lars then opened discussion on whether or not the FC would recommend redemption of shares and read Section 9.6 from the bylaws as below for reference:
MRG Coop By-Laws, Section 9.6 - Redemption. Shares may be redeemed upon request of the holder following termination of ownership for any reason or under other extraordinary circumstances approved by the Board. Redemption shall be made only after replacement capital is obtained from another owner. Redemption proceeds shall be limited to the carrying value of the share on the books of the Cooperative or the Cooperative's net book value per share, whichever is lesser, less a reasonable processing fee, if any, as determined by the Board. Reapplication for ownership following redemption of shares shall be subject to purchase of a share of stock of the Cooperative. For all purposes of this Article of the Bylaws, the term "carrying value" shall mean the price paid to the Cooperative for a share at the time the share is first issued.
Jamey opened the discussion recommending redemption of share sales. He mentioned that there may never be a good time to redeem shares and suggested looking at things from a “cost of doing business” perspective. Lars cited that replacement capital had arguably been obtained and that the cashflow projection and budgeted NOI do not appear to predict dire financial straits at this time.
Tom Cagnina asked about the split of full payment vs monthly payment plan program. At this point ~70% of new share sales are paid in full, 30% are on a monthly payment plan. Gary Lange mentioned based on his assumptions and understanding as a shareholder, he would expect he’d get his money paid out. Geordie was concerned that we are currently operating $60k below budgeted revenue YTD. Deb recommended paying off the shares, since it ends up hurting us later as it is good will to redeem requests. Pete Ludlow agreed, per Deb’s thoughts. Bruce confirmed his support to pay off shares. Eric Schoenholz felt that we are in a position to pay things off. George and Jim were also supportive of redeeming shares.
Lars closed the call by thanking the FC members for their time and reminded them of the Board mtg on Saturday @ 5pm in the basebox. He will be distributing the December Flash reports to the group via email.
Meeting was closed at 8:58am.
Treasurer and Chairperson of the MRG Finance Committee