ASSOCIATED STUDENTS UCLA
BOARD OF DIRECTORS
FINANCE COMMITTEE MEETING
October 24, 2008 9:00 a.m. Kerckhoff Hall 152
PRESENT:
Richard Delia, ASUCLA Finance Director; Cinthia Flores; Bernice Shaw; Shelley
Sorger (Chair); Bob Williams, ASUCLA Executive Director; and Jennifer WillisGraves (recorder)
ABSENT:
Gary Galbraith; Dave Lowenstein
GUESTS:
Arvli Ward, Director UCLA Student Media
Neil Yamaguchi, UCLA Store General Manager/Director of Academic Support
Amanda York, ASUCLA Board of Directors Undergraduate Representative
CALL TO ORDER
This meeting was called to order at 9:04 a.m.
APPROVAL OF AGENDA
Ms. Flores moved, seconded by Ms. Shaw, to approve the agenda for this meeting. As there were no
objections, the agenda was approved by consent.
APPROVAL OF MINUTES FROM FINANCE COMMITTEE MEETING
HELD ON SEPTEMBER 22, 2008
Ms. Flores moved, seconded by Ms. Shaw, to approve the minutes for this meeting. As there were no
objections, these minutes were approved by consent.
COMMUNICATIONS BOARD FY 2007-2008 FINANCIAL RESULTS
Mr. Arvli Ward, Director of UCLA Student Media reviewed Communications Board FY 2007-2008
financial results. Mr. Ward reported that at year end the Communications Board generated $2,089,428 in
terms of gross income, such that there was a $62,237 negative variance to plan and a $91,649 negative
variance to the prior year. He explained that this variance resulted primarily from declines in most major
advertising categories:
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Campus Advertising decreased by 6.2%;
Local Advertising decreased by 1.8%; and
National Advertising decreased by 17%.
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October 24, 2008
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These decreases were partially offset by increases in several important areas:
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ASUCLA Advertising increased by 24%;
Classified Line Advertising increased by 9.2%; and
Local Display Advertising increased by 2.2%.
Mr. Ward reported that there was a positive variance to plan and the prior year in terms of wages
($27,424 and $9,052 respectively) that resulted primarily from the aggressive cost control efforts as well
as restructuring of the sales commission system. He explained that the addition of a full time office
manager resulted in increased sales and decreased expenses in the current year (to date) as well. In terms
of other controllable expenses, the Communications Board reported a positive variance to plan and the
prior year ($12,416 and $18,522 respectively). Mr. Ward explained that the majority of this positive
variance resulted from savings in printing costs as printing of the Daily Bruin newspaper has been
moved to the San Bernardino Sun whose rates are much more competitive than those offered by the
previous facility.
An in-depth discussion followed regarding the Communication Board’s strategies in the current year
which include further web development of hosted marketing micro-sites (a la Facebook and Myspace),
as well as effective use of the $275,000 received from the James S & John L. Knight Foundation.
EXECUTIVE DIRECTOR’S REPORT
Financial Overview/Operational Updates
September Financial Results. Mr. Williams reported that in September the Association as a whole was
roughly $200,000 off plan in terms of net income. Gross income in the Store was significantly down to
plan as a result of decreased sales in Apparel, the Computer Store, as well as Textbooks and General
Books. While a portion of this negative variance was offset via cost controls in the Store and positive
variances in gross income and expenses in other areas, contribution over all was roughly $200,000 off
plan as well.
October Sales. This downward trend continued into October, as Store sales were over $300,000 off plan
to date, with negative variances appearing in the same areas as in September. Mr. Williams noted
however, that month to date sales in the Health Sciences Store were significantly ahead of plan, in
contrast to the trend of negative variances seen in previous months. He noted also that sales to date in
the Restaurants exceeded both the budget and the same period in the prior year.
Textbook Programs. Mr. Williams presented an analysis of the impact that new textbook pricing
programs have had on textbook sales dollars. He explained that although textbook prices were reduced,
sales increased such that the negative variance between the current and prior years was roughly
$170,000. While $400,000 of this $650,000 price reduction was included in the FY 2008/2009 budget,
top-line sales were budgeted to increase by $200,000 such that the budgeted net effect of this price
reduction program was $200,000. Given the aforementioned unbudgeted additional $250,000 in price
reductions as well as the incremental increase in sales, management is projecting that for the year gross
margin will be about $450,000 below last year. However, if one considers that textbook sales have been
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October 24, 2008
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trending downward at about 4% per year, had we not done the price reductions, we still would have
given up approximately $150,000 in margin; hence the net cost would be about $300,000.
Marketing/Promotions/Events
Halloween Sale. Mr. Williams reminded the committee that the annual UCLA Store Monster Sale was
scheduled to take place the week following this meeting.
Capital Projects
Cooperage. Mr. Williams reported that UCLA Facilities met with management shortly before this
meeting to conduct a line-by-line review of the current budget for the renovation of the Cooperage.
Current estimates suggest that once done this project will have cost roughly $3.2 million, which is less
than the $3.5 million planned but more than the $3 million budgeted by Facilities. Mr. Williams noted
that the savings should have been greater as Carl’s Jr. is anticipated to absorb between $600,000 to
$800,000 of the cost of renovation of the space that operation will occupy.
1st Floor Ackerman Union. Mr. Williams reported that management was a bit disappointed that few
potential operators responded to the Request for Proposals for a casual dining concept on the 1st Floor of
Ackerman Union. At the time of this meeting three proposals had been received, and most recently
management met with representatives from the California Pizza Kitchen and Chili’s and it was
anticipated that a proposal from the latter operator would be received the week following this meeting.
Curbside at Avenue A. At the time of this meeting management was finalizing internal hardware
requirements and product offerings.
South Campus Student Center. Mr. Williams reported that the South Campus Student Center Working
Group heard a report from electricians affiliated with UCLA Facilities that illustrated that space
requirements for electrical transformers could be significantly reduced from what was originally
proposed, thus allowing more space for the restaurant operations that will occupy that building. Mr.
Williams indicated that several Board members intended to attend the next UCLA Capital Programs
meeting so that they might have first-hand information about the most-current status of this project.
FINANCE DIRECTOR’S REPORT
September Financial Statements
At September month end the Association reported $607,000 in net income, which when compared
against $821,000 as planned and $838,000 reported in the prior year resulted in a $214,000 negative
variance to plan and a $231,000 negative variance to the prior year.
He explained that this negative budget variance resulted primarily from decreases in gross income from
the Store, which was $735,000 off plan as the result of negative variances in several areas:
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Bearwear was $121,000 off plan;
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October 24, 2008
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The Computer Store was $311,000 off plan;
New and Used Text, were $250,000 and $147,000 off plan respectively;
Bookzone was $55,000 off plan;
The LuValle Books department was $70,000 off plan; and
The Health Sciences Store Dental Kit department was $81,000 off plan.
In contrast, the negative variance to prior year resulted primarily from decreased Licensing gross income
(the Services Division was $104,000 behind the same period in the prior year).
These negative variances were partially offset by a $72,000 positive budget variance in the Restaurants
Division (which was also $95,000 ahead of the prior year) as the result of strong sales in the Cooperage,
which was $36,000 ahead of plan due to timing of construction closures; Café Synapse, which was
$9,000 ahead of plan due to strong summer traffic; and Catering, which was $25,000 ahead of plan due
to increased bookings and prior period bank card sales. The Student Union Division reported a positive
budget variance of $3,000 and a $5,000 positive variance compared to the prior year.
All divisions save Restaurants reported positive variances to plan in terms of other controllable expenses
which partially mitigated these negative variances in gross income, such that contribution for the
Association as a whole was $225,000 less than planned and $168,000 less than the prior year.
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The Store was $258,000 off plan in terms of contribution as the result of the
aforementioned negative variance in gross income;
The Restaurants Division was $9,000 better than plan in terms of contribution;
The Services Division was $11,000 better than plan in terms of contribution; and
The Student Union Division was $13,000 better than plan in terms of contribution.
In terms of Allocated Expenses, Administrative and Support Services expenses were roughly $7,000
greater than planned and $50,000 greater than the prior year; Maintenance expenses were $6,000 greater
than planned and $18,000 greater than the prior year; utilities were $19,000 greater than planned and
$24,000 greater than the prior year; and depreciation was $29,000 less than planned but $12,000 less
than the prior year.
Year to date net income for the Association as a whole was $446,000, which is $105,000 less than
planned and $211,000 less than the same period in the prior year. These negative variances echo those
seen in month-end results, as significant negative variances in gross income and contribution appeared
in the Store Division ($705,000 and $222,000 respectively). Year to date contribution overall was
$191,000 off plan and $196,000 less than the prior year.
The Association’s cash book balance was $20,359,000 at month end, compared to $19,366,000 in the
prior year. Of this balance, $13,303,000 had been committed to various capital projects, leaving $ in
surplus compared to the $1,223,000 Board Required Cash Reserve.
In September management anticipated that the Association would spend roughly $178,000 less than
planned on capital projects for the year.
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October 24, 2008
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Mr. Delia reported that although total aged accounts receivable rose slightly from the prior month,
accounts past due decreased significantly, from 4% of the total in the prior month to just below 2% in
September. Likewise, Store inventories at cost rose from the prior month but remained below the level
seen in the prior year, and inventory turns remained more or less consistent with the prior month.
October Month to Date Preliminary Sales
Mr. Delia reported that to date in October Store sales were $341,278 off plan. Significant negative
variances appeared in the following areas:
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The Apparel Division was $195,677 off plan, of which, $175,623 resulted from decreased sales
in Bearwear;
The Supply Division was $222,887 off plan, as a $230,774 negative variance in the Computer
Store was partially offset by a $19,956 positive variance in the Market;
The Academic Support Division was $36,895 off plan as the result of negative variances in Used
Text ($41,394), the Academic Publishing Service ($10,822), and Bookzone ($37,480) which
were partially offset by a $58,108 positive variance in New Text;
LuValle Commons was $61,803off plan, of which, $47,942 resulted from the Academic Support
Division and $12,574 resulted from Apparel; and
Mail Telephone and Web was $30,027 off plan.
Mr. Delia called the committee’s attention to a $208,131 positive budget variance in the Health Sciences
Store, but cautioned that these results reflected timing of dental kits to some degree, as year to date sales
from this area remained $67,176 off plan.
Based on these results management estimated that gross margin for the Store would be about $133,000
off plan by October month end.
To date in October sales in the Restaurants Division were $16,969 ahead of plan and $53,821 ahead of
the prior year. Mr. Delia explained that the majority of this positive budget variance resulted from
increased sales in the Cooperage, which was $46,037 ahead of plan given delays in scheduled
construction closures. This and smaller positive variances in Café Synapse ($5,907) and the Kerckhoff
Coffee House ($4,622) helped to offset a $20,300 negative variance in North Campus as well as minor
negative variances in Wetzel’s/Rx, Green House, Broad Art Café, Northern Lights and Jimmy’s. Despite
these negative variances, customer counts for the division as a whole were ahead of plan (6,393) and the
prior year (5,332).
ACTION & DISCUSSION ITEMS
Review of FY 2008-2008 Finance Committee Calendar
Ms. Sorger requested that those present review the current FY 2008-2008 Finance Committee Calendar
to ensure that there would be no scheduling conflicts in the future. Seeing none, Ms. Sorger moved to
item VII.B. “Status of Common Fund”.
Status of Common Fund
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October 24, 2008
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Mr. Delia explained that the management received notice from Wachovia Bank, Trustee of the Common
Fund, that the mutual fund (“Common Fund”) that houses excess cash not invested in the University’s
S.T.I.P. (Short Term Investment Program) would be liquidated as the result of the financial crisis. He
reported that once this occurs these monies would be added to S.T.I.P. as well. A detailed discussion
followed regarding this process and the impact that this change may have on rates of return on
Association investments.
Executive Session
Ms. Flores moved, seconded by Ms. Shaw to enter executive session. As there were no objections, the
committee entered executive session at 10:53 a.m.
Ms. Shaw moved, seconded by Ms. Flores to exit executive session. As there were no objections the
committee left executive session at 11:01 a.m.
Ms. Shaw moved, seconded by Ms. Flores to approve all actions taken while in executive session. As
there were no objections this motion passed with unanimous consent.
This Finance Committee meeting adjourned at 11:02 a.m.
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October 24, 2008
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