Mad River Glen Cooperative
Finance Committee Conference Call
December 7, 2009
Telephone Conference began at 8:02 am
Attending: Ken Frey, Jim Elkind, Jed Kalkstein, Deb Steines, Pete Ludlow, Tom Cagnina, Gary Lange, Andy Dulik, Eric Schoenholz, Jamey Wimble, Bruce Button, & Lars Bruns. Also attending was Ray Jennett our auditor.
Absent: Roy Liu, Leigh Michl, Jeff Paduch, Andrew Snow, and George Lesure.
Schedule and Agenda Review
Lars reviewed the objective of the meeting which was to review the draft audit, discuss the latest industry trends and preseason sales, review November month-end financials, and review proposed modifications to the incentive program.
1) Market and Industry News/Trends
Jamey mentioned that most east coast resorts are opening late this year with the mild November. Regional season pass sales are about flat. Jamey mentioned that snowmaking operations are underway and that there were 21 share redemptions requested in the recently closed fiscal year.
2) 2008-2009 Audit Review
Lars and Jamey were joined by auditor Ray Jennett, CPA, to review the audit with the Finance Committee. No significant, material, or minor findings were reported and the Cooperative was found to be in compliance with generally accepted accounting principles in the US. The group reviewed the audit, the management report and letter, as well as various financial statements. The outstanding Single chair mortgage, line of credit, net of loss carry forward tax credit, and interest expense items were noted and discussed. The group spent significant time discussing the statement of cash flow with concerns regarding the current cash position at the time of the audit that was less than cash received for the coming season’s operations. After further discussion, it was determined this was likely due to certain one time unique expenses and prepaid accruals such as the repayment of the double bonds and the recent timing change for prepayment of GL insurance. Concerns were stated and noted regarding this cash flow position. Other questions were posed and answered by Ray and Jamey including the proper segregation of duties which Ray cited as appropriate. Lars also mentioned that for Cooperative purchases above a defined threshold there is the additional requirement for a Treasurer or Board delegate’s signature.
Ray stated that as of fiscal year end 2009 the share value was $1451 per share.
The audit provided a suggestion for next year regarding utilization of software to assist with calculating the summary depreciation schedule and related backup depreciation schedules which are currently calculated manually.
At the conclusion of the audit review the finance committee voted unanimously to recommend approving the audit to the Board.
Due to timing constraints Lars will be polling the Finance Committee vie email regarding a recommendation to redeem or suspend requested share redemptions for the recent fiscal year.
11 December 2009 update: Via email, the Finance Committee overwhelmingly recommended a suspension of share redemptions until at least after the upcoming holiday period or until there is clearer financial visibility for this ski season. This recommendation was based on cashflow concerns as voiced during the audit given the significant pending capital expenditure this summer which is planned to be over $100,000 (structural office fix and Shuss bridge replacement)
3) November P&L and Cashflow Review
Lars then took questions and comments regarding the November Cash flow and P&L statements. Questions were asked and answered regarding NOI, rain fund, preseason sales timing, and facilities expense/contingency timing. Jamey had reflected a prior request to remove summer/fall preseason sales for 2010-2011 from the cash flow projection.
4) Employee Incentive Program – Guidance Discussion
Jim and Lars reviewed additional changes to the employee incentive program with the committee. The modified guideline was reviewed at the November Board meeting at which time the Board supported the concept of the program and requested additional work and details be flushed out. Lars, Jim, Eric S., and Jamey met prior to the FC meeting and briefly discussed recent revisions to the draft guideline. Some modifications to the existing program were made to the guideline proposal to modify the NOI trigger point to be a percentage of projected NOI and to break up the funds into a post-season profit sharing payment for employees and the allocation of a pool of funds for employee incentives in the following season. Additional comments were added to include both incentive program payments as well as projected future fiscal year capex as part of the annual spring budgeting process.
Lars asked for further review and feedback on the guideline via email. No recommendation by the committee was made regarding the guideline.
Lars closed the call by thanking the FC members for their time and reminded them of the Board mtg on Saturday @ 8am in the basebox.
Meeting was closed at 9:03 am.
Treasurer and Chairperson of the MRG Finance Committee