Associated Students Ucla s4

ASSOCIATED STUDENTS UCLA BOARD OF DIRECTORS Regular Meeting January 30, 2009, 12:00 p.m. Kerckhoff Hall Staterooms

PRESENT: Netta Avineri (Chair), Cinthia Flores, Jared Fox, Sandi Gillespie (Recorder), Monroe Gorden, Michael Jedlicka, Dave Lowenstein, Christopher Recht, Bernice Shaw, Mike Soderberg, Shelley Sorger, Bob Williams, and Amanda York

ABSENT: Gary Galbraith

LATE: Jesse Rogel

GUESTS: Cindy Bolton (ASUCLA Director of Food Operations), Robin Broudy (Store Operations Director), Roy Champawat (ASUCLA Student Union Director), Rich Delia (ASUCLA Chief Financial Officer/Finance Director), Karen Noh (ASUCLA Director, Special Projects), and Ben Thaler (Daily Bruin Reporter)

CALL TO ORDER

Ms. Avineri called the meeting to order at 12:10 p.m.

ADOPTION OF CONSENT CALENDAR & ORDERS OF THE DAY

Mr. Fox made a motion, seconded by Mr. Lowenstein that the Associated Students UCLA Board of Directors accept the Orders of the Day. Ms. Avineri called for consent. There being no objections, the motion was approved by unanimous consent.

APPROVAL OF MINUTES

Mr. Soderberg made a motion, seconded by Mr. Lowenstein that the Associated Students UCLA Board of Directors approve the minutes of the December 5, 2008, Regular Meeting. Ms. Avineri called for consent. There being no objections, the motion was approved by unanimous consent.

Draft: January 30, 2009 Draft: January 30, 2009

EXECUTIVE DIRECTOR’S REPORT

Mr. Williams offered the Executive Director’s Report to the Board.

A. Financial/Operational Items

1. Financial Overview November financial results were strong considering the significant shortfalls that continue in the Store. While the Store experienced a negative variance of more than $600,000 in sales versus budget, strong sales in food, excellent cost control across the organization, savings in A&SS, wage savings due to no merit increases, lower depreciation and higher interest income led to a positive net income variance for the month of $65,000.

Store sales in the discretionary areas continue to be the primary financial concern for the Association. The greatest impact is being experienced in Bearwear which missed its sales plan by over $330,000 and its contribution targets by $132,000. All other areas in the apparel division are on plan including Fastrack, Graduation Etc., and the Photo Studio. The Supply Division had better than budget results in the Market, Hill Top Shop and Wooden Center, but the Computer Store fell short of its sales plan by $216,000 and contribution by approximately 30,000. The textbook division had a positive variance in contribution of $11,000, as well as, a positive variance in the APS area.

The Food Services Division rebounded from October and had excellent results in November. Sales exceeded plan by $126,000 leading to a positive variance in contribution of $42,000. Results were relatively consistent across the division with the Greenhouse, Northern Lights, the Bombshelter, Café Synapse, LuValle, Jimmy’s, the Cooperage, and Tsunami all exceeding their planned contribution.

The Services Division also had a strong month with a positive contribution of $38,000 most of which was the result of better than anticipated trademark and licensing international income. The Student Union was very close to plan with the exception of the delay in the completion of Game On. A&SS continues to find savings both in wages (primarily due to the lack of a merit increase) and in miscellaneous expenses leading to an overall positive variance of $46,000.

December Store sales patterns were somewhat consistent with November with sizable shortfalls in Bearwear and MTW sales. The Computer Store had a strong month in December exceeding their plan in hardware sales by $250,000. However, gross margin results in the Store show a sizable shortfall since sales are actually down significantly in key margin areas offset by a positive variance in our lowest margin departments. Overall, contribution in the Store missed plan by $181,000 which was much less than the margin shortfall due to strong wage and expense controls. The LuValle Store saw negative trends throughout the Store partially due to timing but also due to the economic trends.

The Food Service Division had a strong performance in December. They had a positive variance in sales of $47,000 and captured much of this variance in a positive contribution of $40,000. The Service areas with the strongest results include Kerckhoff Coffee House, North

Associated Students UCLA Board of Directors Page 2 of 9 Minutes of the January 30, 2009, Regular Meeting Draft: January 30, 2009

Campus, Café Synapse, LuValle, and Catering.

The Services Division met their plan with solid domestic licensing results, but this was a timing issue and does not indicate a better trend. The Student Union also had a good month with positive results in the operations division. A&SS saw a large positive variance due to wage merit savings and excellent cost controls. These results along with savings in depreciation and additional interest income led to only a small net income negative variance of $15,000.

November and December represented outstanding results relative to the slow sales results in the Store and MTW. Most of the negatives continue to be confined to a few key margin areas of the Association. It is unlikely that the Association will be able to control costs sufficiently to offset these lower gross margin amounts throughout the rest of the year, but these results represent a quick and effective organizational response to economic market conditions.

The AFSMCE Union has agreed on a tentative agreement although the members have not voted yet. This will have a large financial impact on the Association and will be a topic discussed in the months to come.

2. Sales Trends January sales trends in the Store show a similar pattern to the past few months. January Store results will be weaker from a margin and contribution perspective than November or December. This is primarily because in addition to the downward discretionary sales trends, there is the margin impact of our lower textbook prices during January that was unbudgeted (i.e. $250,000 for the year).

3. Book Buyback The Academic Materials Division is exploring the option of giving a higher buyback percentage on book buybacks if you choose to take a UCLA Store gift card instead of cash. Other schools have successfully implemented this program and management believes it can add value for the student and also keep customer loyalty.

B. Marketing/Products/Programs

1. ASUCLA Benefits U The latest Benefits U email, which reached 22,818 students, highlighted the new North Pole yogurt concept at Northern Lights. Five thousand coupons were distributed and the response was overwhelming. Ms. Avineri commented that colleagues of hers from the dental school made the trip to north campus to use their yogurt coupon and were commenting on how delicious the yogurt tasted. There was also a pizza coupon that had the same outstanding results.

The next message will go out on February 9 and will highlight the UCLA v. ASU Men’s Basketball Viewing Party in the Cooperage on February 12. There will be door prizes and special deals from Taco Bell for Benefits U members.

2. Upcoming Marketing Valentine’s Day sale, which is the second largest sale in the Store, will be on February 12.

C. Facilities/Capital Projects/Construction

1. Food Service Master Plan

A. Cooperage The new glass doors at the end of Avenue A have been installed. The walkway is being completed as much as possible before the Carl’s Jr. wall comes down. Carl’s Jr.’s construction is progressing quickly and on schedule, and the work on the new ventilation shaft has begun.

Mr. Williams asked the Board to consider replacing the floor in the Cooperage. The new light color carpet is already damaged. The designer and management are suggesting vinyl flooring that looks like hardwood. Ms. Bolton presented various floor samples and the Board discussed the color palette and the disadvantages and advantages of carpeting. There will be further discussions at the Services and Finance Committees.

Management is currently compiling a budget before starting. Mr. Williams explained that a budget would be presented to the appropriate committees before the next Board meeting. Mr. Champawat presented some additional carpet samples for the Board to consider.

Mr. Williams explained that there have been some service changes in Bruin Buzz to make the line go faster. Since there are only two registers, management is considering an express line as well as some staff swapping with the Coffee House.

B. Curbside on Avenue A Curbside opened on Wednesday, January 7 and comments and sales have been very positive. Daily sales are averaging $1,700 for Monday through Thursday with Fridays slightly lower.

C. South Campus Student Center The project group is continuing to develop the plans that include landscaping, food service design, and materials. The next key step will be estimating the cost of the food equipment to stay within budget. The current food equipment estimate is approximately $800k not including trash, menu boards, registers, etc.

Mr. Williams provided a 3D presentation of what the South Campus Student Center would look like once completed. The presentation is part of full presentation that is going before the Regents next week for approval.

Mr. Williams has asked the architects be present at a future Board meeting for a full presentation.

D. E. Broad Arts

Construction on the wall is underway and the new furniture has been ordered.

F. Concessions Management continues to work with the Pauley planning team on the concession stands and menu design.

D. Campus Partnerships & Integration 1. Licensing RFP Management has been working closely with the Department of Intercollegiate Athletics (DIA) on the Licensing RFP and other marketing efforts.

E. Organizational Priorities

1. Sustainability Management has been working with the student governments regarding utilities costs and trying to keep them down. Another issue that will be discussed is the urinals at South Campus Student Center. The University would like low flow urinals and the Association prefers waterless. This item will be addressed with the Services Committee.

EXECUTIVE COMMITTEE REPORT

Mr. Rogel offered the Executive Committee report to the Board. The Executive Committee met on January 13 and heard and Executive Director’s Report including financials and licensing. The Committee also scheduled an Entities Committee meeting to update the student governments on the first floor project. The mid-year retreat draft agenda was created as well as the agenda for today’s meeting.

FINANCE COMMITTEE REPORT

Ms. Sorger offered the Finance Committee report to the Board. The Finance Committee met on January 21, and discussed and approved the audited financials with PriceWaterhouseCooper. There were a few items that were raised regarding the timing of checks with Student Government Accounting. The USAC Textbook Scholarship Fund Initiative item was tabled pending further information and research. The Committee also held an Executive Session.

SERVICES COMMITTEE REPORT

Ms. York offered the Services Committee report to the Board. The Services Committee met on January 16 and was given an Executive Director’s Report by Mr. Williams. The Committee also viewed and approved the signage for the Blood Donor Center. The Committee also discussed the textbook survey results which were sent out through the Benefits U email, digitizing all the student government applications and forms, and finally extending the battery stations to north campus.

SUMPI COMMITTEE REPORT

Mr. Rogel explained that the Committee met on January 16 and toured campus housing to view other services available on campus. Mr. Jedlicka commented that it was very useful to view the other services on campus. The Committee scheduled an offsite visit for next month to Irvine and San Diego.

ENTITIES COMMITTEE REPORT

Mr. Rogel stated that the Committee met on January 21 and discussed the first floor project which was received very well.

FINANCE DIRECTOR’S REPORT

November Financial Statements Mr. Delia offered the Finance Director’s report to the Board. In November, the Store sales were negative to plan by $602,000. The Restaurants were positive by $123,000, and Services and Union were close to plan. The most outstanding performance is in cost controls; the Store had a savings $48,000 in wages and benefits, and $47,000 in controllables. Even though sales were negative to plan by $600,000, contribution was only negative by $102.000.

Restaurants were positive by $42,000, Services positive by $38,000 in contribution due to International Licensing. Mr. Delia reported that the Scandinavian licensee is interested in renewing their contract.

In November, allocated expenses were lower than plan by $69,000 and deprecation is lower due to less capital expenditures. The STIP fund is still paying about 3.5-4% but Mr. Delia is expecting it to go lower in the future. Even though sales are down in the store net income was positive $65,000 to plan and negative $238,000 year to date.

In terms of cash, the Association’s book balance at the end of November was $17,730,000, $13,203,000 of which had been committed to capital projects, leaving $2,647,000 in uncommitted cash which allowed for a $1,096,000 surplus to the $1,551,000 Board-required cash reserve.

Past due accounts receivable rose slightly from the prior month to just over 2% of the total, however this level remains lower than both the prior year and FY 2006-2007.

Inventory at cost fell sharply in November, to a level significantly below the prior year but consistent with FY 2006-2007. Conversely, inventory turns rose slightly to just below 5.2.

December Financial Statements In December, in terms of net income, the Association reported a negative budget variance of $15,000 and a $243,000 negative variance to the prior year. The Association did very well in controlling costs.

In terms of gross margin, Bearwear’s gross income was $365,000 below plan causing a negative

Associated Students UCLA Board of Directors Page 6 of 9 Minutes of the January 30, 2009, Regular Meeting Draft: January 30, 2009 variance of $195,000. New Text was $70,000 below plan do to the new lowered prices and Bookzone $27,000 due to the weak economy , competition. The Restaurants had a strong month with gross income over plan by $54,000, mostly from the Cooperage, Catering, Café Synapse, and LuValle.

Sales in the Services Division were $30,000 ahead of plan due to the delivery of prior period royalties as well as the receipt of unexpected funds from a licensee in Korea. Despite a $29,000 positive variance in gross margin and a $3,000 positive variance in wages and benefits, contribution from this division was only $4,000 ahead of plan as the result of a $27,000 negative budget variance in other controllable expenses, most of which was due to the accrual for the income sharing with Athletics.

In December allocated expenses were $78,000 less than planned due primarily to savings in Administrative & Support Services wages and benefits that resulted from no merit increases this fiscal year, and due to decreased depreciation (which was $28,000 less than planned) as the result of reduced/delayed capital expenditures.

At December month-end, year to date gross income results were $1,721,000 less than planned and $115,000 less than the same period in the prior year. Similarly, year to date gross margin results were $824,000 down to plan and $525,000 down compared to the prior year.

In terms of cash, the Association’s book balance in December was $15,821,000, compared to $15,147,000 in the same period during the prior fiscal year. This represents a decrease in cash from the prior month as the result of the build up of inventories in preparation for Winter Rush. Of this balance $13,143,000 has been committed to capital projects, leaving $2,088,000 in uncommitted cash, which allowed for a $438,000 surplus over the $1,650,000 Board-required cash reserve.

At the end of December management estimated that the Association would spend about $173,000 less than planned on capital expenditures by the end of the year.

Past due accounts receivable rose in December in a manner consistent with historical trends. Accounts greater than 60 days past due rose to roughly 3% of the total amount due, a level that is slightly less than both the prior year and FY 2006-2007.

Likewise, inventory at cost rose from the prior month to just over $8.5million, a level that is significantly less than the same period in the prior year. Conversely, inventory turns fell slightly from the prior month to roughly 5.1, a level that is well below the prior year but slightly above FY 2006-2007.

January Month to Date Preliminary Sales Mr. Delia reported that to date in January, Store sales were $520,000 less than planned. Significant negative variances continued to appear in discretionary spending areas including Bearwear, which was $174,000 off plan; General Books, which was $24,000 off plan, and Mail Telephone and Web sales, which were $12,000 off plan.

Discussions ensued regarding how the textbook reduction was not budgeted and how raising prices was suppose to cover the costs. Mr. Williams indicated that this will be an item that will be discussed at the Mid-year Retreat. Mr. Delia explained that even though there is a large amount of cash on hand currently, the cost of the South Campus Student Center, Retirement Plan contribution increases, and union contracts, will significantly reduce cash over the next few years.

Based on these results for January, management anticipates that the Store would report a negative variance of approximately $299,000 in terms of gross margin.

Month to date sales in the Restaurants Division were negative to plan by $19,000 due primarily to Carl’s Jr. not being open. It seems the traffic has shifted to the other third party operators.

Mrs. Flores asked about why Taco Bell was not listed in the financials as a third party operator. Mr. Delia and Mr. Williams d explained that Taco Bell is a franchise and operated by ASUCLA.

USAC TEXTBOOK SCHOLARSHIP FUND INITIATIVE

Ms. York stated that this item was tabled at the September meeting and was being resubmitted for approval today. Ms. York explained that the Financial Support Commission is requesting the Association to grant $10,000 to support their textbook scholarship program.

Mr. Rogel asked Ms. Sorger why the Finance Committee was not forwarding this item. Ms. Sorger explained on that the Finance Committee was concerned about funding student groups directly and the sustainability of the project.

Discussion ensued about the process of programming funding within the student governments.

Ms. Sorger made a motion, seconded by Mr. Fox that the Associated Students UCLA Board of Directors table the USAC Textbook Scholarship Fund Initiative. Ms. Avineri called for a vote. The motion failed by a vote of 4 yeas and 5 nays.

Further discussion continued about giving financial support to the program for marketing purposes only.

Mr. Lowenstein made a motion, seconded by Ms. York that the Associated Students UCLA Board of Directors amend the motion to approve a contribution of $5,000 to the USAC Textbook Scholarship Fund Initiative to be used specifically for marketing purposes and such funds be managed by Student Government Accounting and a report rendered back to the Associated Students Board of Directors as to the expenditures of those funds. Ms. Avineri called for a vote. The motion was approved by a vote of 9 yeas and no nays.

Mr. Lowenstein made a motion, seconded by Ms. York that the Associated Students UCLA Board of Directors approve the amended USAC Textbook Scholarship Fund Initiative motion. Ms. Avineri called for a vote. The motion was approved with a vote of 8 yeas, no nays, and 1 abstention.

APPROVAL OF THE 07/08 AUDITED FINANCIAL STATEMENTS

Mr. Fox made a motion, seconded by Mr. Retch that the Associated Students UCLA Board of Directors approve the 07/08 Audited Financial Statements. Ms. Avineri called for a vote. The motion was approved by a vote of 9 yeas and no abstentions.

COOPERAGE VENTILATION SHAFT CAPITAL EXPENDITURE

Mr. Rogel explained that the Executive Committee met on January 21, 2009, to approve $125,000 capital expenditure to renovate the Cooperage ventilation shaft. This meeting and approval occurred to expedite the project.

EXECUTIVE SESSION

Mr. Fox made a motion, seconded by Mr. Lowenstein that the Associated Students UCLA Board of Directors enter into Executive Session and include Rich Delia and Cindy Bolton. Ms. Avineri called for consent. There being no objections, the motion was approved by unanimous consent.

The Board entered into Executive Session at 2:04 p.m.

Mr. Rogel made a motion, seconded by Mr. Recht that the Associated Students UCLA Board of Directors adjourn Executive Session. Ms. Avineri called for consent. There being no objections, the motion was approved by unanimous consent.

The Board adjourned Executive Session at 3:08 p.m.

ADJOURNMENT

Ms. Sorger made a motion, seconded by Ms. Flores, that the Associated Students UCLA Board of Directors adjourn the January 30, 2009, Regular Meeting. Ms. Avineri called for consent. There being no objections, the meeting was adjourned at 3:08 p.m.

* * * * * * * * * * * * Pursuant to Bylaw 3, section 3.6(d) of the ASUCLA Board of Directors Bylaws, I have reviewed these Minutes and hereby attest to their accuracy.

David Lowenstein Board Secretary and Administrative Representative

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