Deli

The Good News: Co-op
Declares Patronage Dividend Earlier Than Expected
by George Schroeder, Board President

The Board of Directors, management and staff of La Montanita Co-op are pleased to announce the good news: We will have a patronage dividend this year! That’s right, Co-op member/owners will receive a cash dividend proportionate to their purchases at their Co-op during fiscal year 2000/2001. This will be our 11th annual patronage refund in the past 12 years.

Some of you may remember the last time this happened was in 1999. That year, La Montanita paid out $118,000 in cash to members and placed almost $60,000 in member equity accounts. This year the dividend is modest in comparison, but, coming a year earlier than expected, it shows the awesome strength of this cooperative and the dedication of our members.

When the second La Montanita location opened at Rio Grande and Matthew in the north valley, we expected to operate at a loss in the first year (which we did and did not give a patronage dividend last year), break even in the second year, and be back to profitable condition in the third. Clearly, our ability to declare a patronage dividend this year shows we are doing much better than just breaking even.

Members, you have yourselves to thank for this excellent performance. Here is a breakdown of the numbers for this year’s dividend (I am using round numbers; actual figures will be slightly different): $32,000 will be paid out in cash and $63,000 will be paid into member equity accounts.

This brings up the question, “What is member equity and why doesn’t the Co-op pay out the whole $95,000 in cash to members?” There is a two-part answer: First, member equity is the way the Co-op capitalizes the business. When we build up equity it gives us the ability to open another store, or do a remodel, or make major capital improvements that benefit the cooperative as a whole. Equity is the difference between what we owe and what we own.

If the Co-op were to sell itself today (which, of course, it absolutely won’t do) the equity would be the tangible monetary result, which would be paid out to everybody who is a member.

The second half of the answer is that if the Co-op paid out the whole cash amount it would not be increasing its equity. Building up equity is something the board and management have a strong need to do at this time since we invested so much of our previous capital opening the second store.

Another way of looking at the breakdown ($32,000 in cash and $63,000 in equity) is that this exceeds the legal requirement that New Mexico cooperatives return at least 20% of dividends in cash and reaches La Montanita’s Board and Management goal of increasing equity.

So, you might ask, how much will I get back? Basically, members will receive 0.5% of their total annual purchases for the fiscal year 2000/2001 in cash. Remember, the fiscal year at La Montanita goes from September 1, 2000 to August 31, 2001. After the year ends, it takes about two months to close out the books and declare the dividend.

Approximately 1,000 members will receive a check in the mail of ten dollars or more. Almost 4,000 members will receive a dividend notice of between $1 and $9.99. This can be redeemed in cash at the register or used as credit toward a purchase.

The remaining 3,000 members will receive no formal notification because their dividends will be less than $1. The average dividend for this group would be about the cost of print and postage for the notice.

Quite simply, and in keeping with the cooperative principles, the more you spend at the Co-op, the greater your dividend at year’s end. You can help your community even more by simply not redeeming your dividend.

Each year, La Montanita donates all unredeemed checks and certificates to worthy, local environmentally and socially responsible charities. This is another of the great ways your Co-op continues to nurture the community. You are what we are all about!

Thanks again, loyal members, for supporting your Co-op and making this another great Co-op year! Wishing you the very best this holiday season, and a healthy, happy New Year!