Finance Committee Meeting: January 20, 2011

Finance Committee Conference Call

January 20, 2011

Attendees: Roy Liu,John Stetson, Jed Kalkstein Jim Elkind, Pete Ludlow, Jamey Wimble, Bruce Button

Review of financials:

Jamey Wimble reviewed January monthly and YTD results. Due primarily to inclement weather conditions, the mountain was restricted to running only the Practice Slope chair through the second week of January. Day ticket sales were off-plan commensurately, with a negative variance to budget of $134k.

Employee hours were scaled back resulting in a reduction of facilities expenses ($27.5k) and workers’ comp, which is on a pay-as-you-go basis ($11k) along with other miscellaneous expenses that moderated the overall Net Income variance to a negative $100k. NOTE: this will be revised by $7.5k, as Credit Card Service Charges were not accrued in the January financial statements, overstating Net Income by approximately $7.5k (John Stetson had noted that charges for January were showing “0” in the financials; Jed Kalkstein noted that an estimated accrual should be factored in going forward). While February preliminary results are favorable in spite of the Double Chair failure, it is unlikely to have made up much ground on the YTD negative variance in Day Ticket sales.

The impact of the Double Chair motor failure was briefly discussed:

–          Jamey has filed a claim for business interruption insurance; the insurance company runs a formula that is based on prior year’s revenues. On this basis, Jamey has filed a claim for lost revenue of $153k. In addition to any claims adjustments, there is a 10% deductible.

–          To date, total cash-out-of-pocket costs for motor repair are ~$12k. The motor is a spare, and post-ski season, the co-op will be acquiring a re-conditioned motor for roughly $15k. Adding in over-time and installation costs will bring the total cash costs to roughly $30k. Insurance claim under the equipment insurance will be filed, but that policy carries a $20k deductible; total recovery through claims best case will be ~$10k.

–          Business process changes: Jamey’s staff is re-engineering the motor set-up to reduce the load bearing on the motor shaft. Diagnosis of the actual problem and failure conditions led the staff to conclude that it would have been difficult to find or forestall at an earlier date. Discussions with outside parties at other ski operations indicated that the failure was “one-of-a-kind”, albeit on a motor that had been operating for 30 years.

Jim Elkind asked whether there was a specific decision to not include departmental P&L’s, as had been done in the past. Jamey indicated that those would be included going forward. Roy Liu also asked that comparative balance sheet data be provided, i.e., balance sheets from prior year period be included.

Motion to adjourn by Bruce Button, seconded by Jim Elkind.

Respectively submitted by,

Roy Liu

Treasurer

Mad River Glen Ski Cooperative