Finance Committee Meeting Minutes: January 10, 2008







Mad River Cooperative

Finance Committee Meeting (Teleconference)

January 10, 2008


Attendees: Chairman Eric Schoenholz, Andy Dulik, Lars Bruns, Jed Kalkstein, Pete Ludlow, Roy Liu, and Sharon Crawford (part time).


The telephone conference was call to order by the Chair at approximately 8 am.


Review of the P&L through December

  • December was an outstanding month however expenses are up due to the fact we operated almost the entire month while we budget to open on the 15th.Operating profit was $118,700 (385%) better than budget.
  • When Single related revenues (donations) and expenses are removed the YTD results are disappointing based upon the crowds and the ski conditions.We are only $29,500 (10%) ahead of budget through December.
  • Confidence in our ability to continue to make money (at least in the short term) is fading as we look out the window and see the snow melt run down the Mill Brook.


Share Redemption


To kick off the discussion each member was asked for an “opening opinion”.This lasted for a while until it became a free-for-all.



  • The Coop financial results show a lot a variability
  • Share redemption is really “return of capital” which is not responsible at this time (fiduciary responsibility).
  • Board opening up to lawsuit for not acting in the good of the common shareholders.



  • Reasonable to redeem shares based on financial situation.
  • Redeem some at the end of fiscal year based upon the number of new shares sold, consistent with past understandings / interpretations based upon so type of formula or guideline. (Some doesn’t mean all.)
  • Need to remember double bonds and Single mortgage obligations that need to be paid first.  Rather than considering big load of operating expenses, look at the financial condition of coop at the end of year and redeem based on net profitability. 


Andrew Snow’s concept – submitted via email and raised by Eric S.

  • Use a the formula for determining capital spending each year (5-year average net op income + current year’s share sales – $75k savings for long-term capital projects)
  • Set a maximum percentage of that value which can be set aside for share redemptions.  The percentage could either be fixed (5% no matter what our capital # is each year) or on a sliding scale (2% for <$100k, 4% for $100-150k, etc)
  • Capital spending is determined in the spring, when we have the best idea of the co-op’s current financial health, and I think it makes sense to redeem shares at the same time. 


Eric S

  • Likes idea of combining Andrew / Pete’s ideas with modification(s).
  • Based upon current numbers these guidelines are not favorable for redeeming many shares (noted by the committee that this is an accurate representation).
  • Example – 5 year average net income is south of $90k/year, add share sales of $50K and subtract $75K results in $65K.Take 5% you get enough to do 3 shares.


Team discussion

  • Need to include the Single mortgage obligation and the Double bonds which are due this summer to guideline.
  • When those are included there is no capital to be “returned”.
  • Maybe capital expenditures should not be included?Should redemptions go ahead of capital improvements?
  • Final measure should always be:Is there end of year cash available?
  • General consensus that we don’t want to take out debt to redeem shares.



  • Added due to variability of earning (dependency on snow) we should be careful about using 5 year average and take a look at the lesser of the 5 year average or the current year.This protects the Coop after a poor financial year.
  • Should consider the “formula” more of a guideline for the Board to use because it is difficult to capture all of the eventualities in a “formula”.



  • Recommended that we define the term “replacement capital” for current and future Finance Committee and Board members.
  • Suggested as a process we might include the pending shareholder redemptions for consideration during “spring” capex discussions.


Conclusion by All


  • Recommending to continue to suspend redemptions (unanimous by the committee)
    • Current financials are promising but not outstanding (only $29,500 ahead of budget through December)
    • We will probably lose a few weeks (and maybe Martin Luther King weekend) of revenue before we recover from the meltdown.
    • Debt load on the Coop is substantial
    • Single Campaign has been very successful but we have to close the deal with additional pledges and collect on the pledges made so far.
    • Hardship requests should be honored
  • Wish to establish a guideline for the Board to use as follows:
    • Look only at the end of the fiscal year
    • Take lesser of 5 year average of Net Operating income or the Net Operating Income of the year
    • Add value of shares sold during the year
    • Subtract debt services (mortgage payments and / or bond payments due)
    • Results in Capital Available for Expenditure and / or redemption
    • If positive – look at capital needs and decide the appropriate % to apply for redemption.In no case should this be more than 25%.
  • Aware of the pressure the Board feels and understands we might get overruled.
  • Some other ideas were thrown around as we ran out of time.To be continued at our next meeting.


Meeting adjourned promptly at 8:59 am


Eric Schoenholz

Treasurer and Finance Chairman