ASSOCIATED STUDENTS UCLA
BOARD OF DIRECTORS
FINANCE COMMITTEE MEETING
February 20, 2009 9:00 a.m. Kerckhoff Hall 152
PRESENT:
Richard Delia, ASUCLA Finance Director; Gary Galbraith; Dave Lowenstein;
Bernice Shaw; Shelley Sorger (Chair); Bob Williams, ASUCLA Executive
Director; and Jennifer Willis-Graves (recorder)
ABSENT:
Cinthia Flores
CALL TO ORDER
This meeting was called to order at 9:07 a.m.
APPROVAL OF AGENDA
Mr. Lowenstein moved, seconded by Ms. Shaw, to approve the agenda for this meeting. As there were
no objections, the agenda was approved by unanimous consent.
APPROVAL OF MINUTES FROM FINANCE COMMITTEE MEETING
HELD ON JANUARY 23, 2009
Ms. Shaw moved, seconded by Mr. Lowenstein, to approve the minutes for this meeting. As there were
no objections, these minutes were approved by consent.
EXECUTIVE DIRECTOR’S REPORT
Financial Overview
January Financial Results. Mr. Williams reported that January financial results showed an
accelerated decrease in gross income. He explained that sales of textbooks were significantly less
than those seen during fall quarter, with the biggest decrease appearing in LuValle Commons
text.
February Preliminary Sales and Prior Years’ Financial Results. Mr. Williams reported that
January trends appear to be continuing in February, with negative variances appearing in both
Store and Restaurants Divisions. He explained however, that declines from the prior year and
negative variances to budget do not represent “losses” as reported in the Daily Bruin. To
illustrate, Mr. Williams reported that net income in January 2005 was $490,000 (compared
against $526,000 in the current year), and at the time this was considered a very positive result.
Fiscal years 05/06, 06/07, and 07/08 were three of the strongest in Association history, and as
such each year budgeted expectations rose. Mr. Williams explained that although current
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February 20, 2009
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decreases are the result of downturns in the national economy, the result is for the Association is
really a reduction in sales to pre-exceptional performance levels.
Capital Projects
Cooperage. Mr. Williams reported that work in the Cooperage continued. He indicated that
hallway doors and flooring were complete and that final touches to woodworking and signage
were in progress at the time of this meeting. He reported also that construction of the Carl’s Jr.
site was moving quickly and that, despite some minor complications involving ventilation,
construction was on schedule such that the grand opening of this restaurant is anticipated to take
place before the start of Spring quarter.
Work also continued on the Game On! arcade located in the Cooperage, and Mr. Williams
informed the committee that a revised budget for remaining construction had been finalized. He
cautioned the committee to expect this budget to be greater than versions they had previously
reviewed as initial cost estimates assumed that the arcade would be managed by an outside party
and current plans call for Association management thereof.
South Campus Student Center. Mr. Williams reported that design plans had been approved by the
UC Regents and those plans would be presented to the Student Activities Center Board of
Governors (SACBOG) and the Wooden Center Board of Governors in February. He also
recommended that similar presentations be offered to the Undergraduate and Graduate Student
Associations as well. At the time of this meeting the project was on schedule, with construction
slated to begin in December 2009.
An extended discussion followed regarding the logistics of rubbish removal from the new South
Campus Student Center facility.
Pauley Pavilion. Mr. Williams indicated that management has begun planning for the renovation
of the Pauley Pavilion that is scheduled to begin in fiscal year FY 2010-2011 and he explained
that concessions stands would be upgraded and expanded as part of that process. An extended
discussion followed regarding preliminary plans for these new stands.
FINANCE DIRECTOR’S REPORT
January Financial Statements
Mr. Delia reported that in January the Associated Students as a whole reported net income of $240,000
against a budgeted net income of $338,000.
In terms of gross income, the Association reported a negative budget variance of $583,000, primarily as
the result of a $516,000 negative variance from the Store. Mr. Delia explained that sales of Bearwear
were roughly $190,000 off plan; and Bookzone gross income was $24,000 off plan. In addition, sales of
new and used textbooks were $63,000 and $74,000 off plan respectively and sales of books in the Health
Sciences Store were $20,000 off plan.
These negative variances in Store gross income were partially mitigated by savings in wages and
benefits, which were $58,000 better than plan; and other controllable expenses, which were $34,000
better than plan; such that the negative variance in contribution from this area was only $188,000.
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February 20, 2009
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Conversely, sales in the Restaurants division were $16,000 ahead of plan due to increased sales in
concessions, which were $18,000 ahead of plan; and sales in LuValle Commons were $9,000 ahead of
plan. Together these results served to offset negative variances in North Campus, which was $9,000 off
plan; and the Cooperage, which was off plan due to delays in opening Carl’s Jr.
This positive variance in gross income was offset by a negative variance of $19,000 in gross margin that
resulted from purchasing cost over-runs, the cause of which is still under investigation. This negative
variance was mitigated by savings in wages and benefits and other controllable expenses which were
$7,000 and $14,000 better than planned respectively, such that contribution from the Restaurants
Division was $1,000 better than planned.
Gross income in the Services Division was $56,000 down to plan primarily due to the bankruptcy of a
key retailer in the UK and the negative impact of the global economy on licensees in Korea and Mexico.
Although this area also produced savings in wages and benefits and other controllable expenses, (which
were $3,000 and $15,000 better than planned respectively), these reductions were not sufficient to offset
gross income negative variances, such that contribution from the Services Division was $39,000 less
than planned for the month.
The Student Union Division also reported a $27,000 negative variance in gross income that resulted
primarily from $17,000 in decreased events income that resulted from the cancellation of two large
student events, and budgeted income from Game On! in the Cooperage was off plan due to delays in
opening. Wages and benefits expenses were $7,000 less than planned and other controllable expenses
were $12,000 less than planned, such that contribution from this area was only $8,000 off plan.
Allocated expenses were $115,000 better than planned for the month despite a $4,000 negative variance
in utilities, as savings appeared in several other areas:
1. Administrative & Support Services, which was $61,000 better than planned, primarily due to
savings in wages and benefits;
2. Maintenance, which was $30,000 better than planned; and
3. Depreciation, which was $28,000 better than planned.
Together these results raised year to date net income to $526,000 against a budget of $875,000, and
against prior year results of $1,478,000. Again Mr. Williams reminded the committee that negative
variances to plan and prior year indicate changing trends and not actual net losses to the Association.
In terms of cash, the Association generated $2,366,000 from operating activities thus raising the book
balance at month end to $18,187,000 against $19,092,000 in the prior year. Of this balance $13,233,000
has been earmarked for capital projects, leaving $4,055,000 in uncommitted cash, a level that is
$2,336,000 above the $1,719,000 Board-required cash reserve. Mr. Delia explained that this build-up of
cash is the result of prior year savings as well as timing of capital expenditures, which at the end of
January were anticipated to be $47,800 less than planned by year end. He also indicated that maintaining
a low balance of past due accounts receivable and tight inventory controls also contribute to the
accumulation of cash.
In January past due accounts receivable rose sharply from the prior period to almost $160,000 or close to
5% of total accounts due. Mr. Delia explained that this resulted from two past due invoices from the
Panda for their rent, but that these funds had already been received in February and that the committee
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February 20, 2009
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could expect to see the percentage of past due accounts receivable decrease by month end. In a manner
consistent with historical trends for Rush months, inventories at cost decreased from the prior month to
roughly $7,400,000 and inventory turns rose slightly, to just below 5.1.
February Month to Date Preliminary Sales
To date in February Store sales were $431,000 off plan and negative variances were scattered
throughout the division.
The Apparel Division was $207,000 off plan due to negative variances in Bearwear, which was
$172,444 off plan; Grad Etc., which was $22,775 off plan; and women’s non-emblematic apparel (Fast
Track) which was $16,000 off plan.
The Supply Division was $82,636 off plan due to a $91,000 negative variance in the Computer Store
($7,000 of which resulted from decreased sales in computer support, the remainder from computer
hardware). This negative variance was partially offset by a $17,100 positive variance in the Market
which is partially caused by the addition of the new card and gift area on the B-level of Ackerman
Union.
The Academic Support Services Division was $14,773 off plan as the result of a $35,266 negative
variance in Bookzone. This variance was partially offset by a $17,600 positive variance in the Academic
Publishing Service and a $9,456 positive variance in Used Text. It appears that more students are
buying course readers.
Sales in LuValle Commons were $50,080 off plan due primarily to a $45,884 negative variance in the
Academic Support department that resulted from a $33,437 negative variance in new text and $6,000
negative variances in both Used Text and Bookzone.
The Health Sciences Store reported a negative variance of $58,837 month to date. A significant negative
variance appeared in the Academic Support department, which was $22,978 off plan primarily due to a
$46,212 negative variance in Medical Books, however this negative variance was offset by a $25,225
positive variance in Bookzone, and the Medical department was $24,262 off plan due primarily to a
$15,880 negative variance in Dental Kits.
Sales at the Hilltop Shop were also less than planned, by $5,222. This resulted from a $12,042 negative
variance in the supply department that was partially offset by a $5,000 positive variance in apparel.
Mail, telephone and web sales were $13,626 off plan to date in February, reinforcing management’s
perception that the Association will continue to see decreases in the sales of discretionary-spending
merchandise.
Based on these results management anticipated that the Store would report about a $152,000 negative
gross margin variance to plan by February month end.
To date in February Restaurant sales were $34,668 off plan due primarily to a $27,810 negative variance
in concessions that resulted from timing and fewer events. Negative variances also appeared in Carl’s
Jr., which was $84,000 off plan as it was budgeted to be, but has yet to open; Jamba Juice, which was
$10,292 off plan; and North Campus, which was $8,304. However, these negative variances were
partially offset by several positive variances:
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February 20, 2009
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1. Sales in the Cooperage were $18,784 ahead of plan;
2. Sales in LuValle Commons were $7,933 ahead of plan; and
3. Sales in the Bombshelter were $5,517 ahead of plan.
Mr. Lowenstein called the committee’s attention to the fact that customer counts month to date were
2,000 higher than budget and year to date were 10,638 ahead of the prior year.
ACTION & DISCUSSION ITEMS
Approval of FY 2009-2010 Tentative Budget Assumptions
Mr. Delia briefly reviewed the general assumptions that management would use while generating FY
09/10 budget and five year forecasts. After an extended discussion Mr. Lowenstein moved, seconded by
Ms. Shaw, to approve these tentative budget assumptions. As there were no objections, this motion
passed with unanimous consent.
Approval of Capital Expenditure for Game On!
Mr. Williams explained the various reasons for this capital expenditure and after a brief discussion Ms.
Shaw moved, seconded by Mr. Lowenstein to approve this capital request. As there were no objections,
this motion passed with unanimous consent.
Executive Session
Mr. Lowenstein moved, seconded by Ms. Shaw to enter executive session. As there were no objections,
the committee entered executive session at 10:32 a.m.
Ms. Shaw moved, seconded by Mr. Lowenstein to exit executive session. As there were no objections
the committee left executive session at 10:39 a.m.
Mr. Lowenstein moved, seconded by Mr. Galbraith to approve all actions taken while in executive
session. As there were no objections this motion passed with unanimous consent.
ADJOURNMENT
Ms. Shaw moved, seconded by Mr. Lowenstein to adjourn this meeting. As there were no objections,
this Finance Committee meeting adjourned at 10:40 a.m.
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February 20, 2009
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