Understanding the Annual Marketing – Fiber Statement

Process for Annual Statement Preparation and Distribution for Fiber Submission

Marketing Division – Fiber

  • 1) Submitted fiber is sorted by grade and color. Information is entered onto the submitted clip report by the Sorter.
  • a) At end of day the clip report is either faxed or emailed to the member for their records. At this time the member has the opportunity to question any concerns
  • b) The annual Excel worksheet is updated which is used to summarize submission by member. The information captured is as follows:
  • i) Member Number
  • ii) Name
  • iii) Farm Name
  • iv) Type of fiber Suri or Huacaya
  • v) Color of fiber
  • vi) Total weight of “box” – in ounces
  • vii) Total weight of fiber – in ounces
  • viii)Grade of the fiber – in ounces
  • ix) Comments listed as on the Clip Report, i.e., great fleece, moths, etc.
  • 2) After the conclusion of the sorting process for the year the Excel worksheet is summarized by member to arrive at a total submission for the year by ‘Total weight of fiber – in ounces’ and ‘Grade of the fiber – in ounces’.
  • 3) The quality value, as determined by the Board for the current year, is then applied to the summarized report by member. For the last two years the following values were given:

Grade

Value

1

2

2

1.5

3

1.5

4

1

5

1

6

.5

NCV

0

  • 4) The weighted value is totaled for each member and a percentage to total useable is determined.
  • 5) Based on the current Board directive for the number of years to be used in the profit distribution, the years are combined and a weighted average is determined. For the 12/15/10 statement two years were used -2008 and 2009. For the statement to be generated in 1012 for 1011 activity we will be using the 2009 and 2010 clip. The determination which years to include is based on the actual fiber used to generate products.

Purchasing Division – e-Commerce Store

  • 6) Obtain list of all Member purchases for the year. Determine each member’s percentage of the total sales. This percentage would be used for all Purchasing Division profits if the Board votes on a distribution. For the 12/15/10 Statement sales made from 9/1/09 to 8/30/10 were included in this average. For the statements to be generated in 1012 for the 1011 activity we will be including sales from 9/1/10 to 12/31/11, or an 18 month time period due to the change in the Co-Op’s fiscal year end.

Current Year Income and Expense Allocation

  • 7) Upon conclusion of the fiscal year when the Net Income is finalized income and expenses are allocated between Members, Wholesale, Retail and Unallocated. Sales and Cost of Goods Sold can be specifically identified to Members, Wholesale and Retail. Certain expenses such as member fiber shipping expense and Credit card fees can also be specifically identified. Other expenses such as rent, utilities, salaries, etc. fall into the Unallocated category. For the 12/15/10 statement the time period was 9/1/09 to 8/31/10. For the statements to be generated in 1012 for the 1011 activity we will be including all activities from 9/1/10 to 12/31/11, or an 18 month time period due to the change in the Co-Op’s fiscal year end.
  • 8) Revenue and Expenses are than broken out into the following divisions:

Marketing Division

Purchasing Division Member Sales

Purchasing Division Non-Member Sales

80 % of the sales and activity related to the manufacturing of product with member fiber

20% of the sales and costs related to the manufacturing of product with member fiber 100% of the activity related to the sales of third party merchandise to members

100% of the Wholesale and Retail sales and related costs of third party merchandise

Expenses not specifically identified to a Division are allocated as a percentage allocation of total revenue

Expenses not specifically identified to a Division are allocated as a percentage allocation of total revenue

Expenses not specifically identified to a Division are allocated as a percentage allocation of total revenue

Difference between the sales and expenses is the Marketing Division’s net profit or loss for the year

Difference between the sales and expenses is the Purchasing Division’s net profit or loss for the year

Difference between the sales and expenses is the Purchasing Division Non-Member’s net profit or loss for the year

20% minimum distribution of net income

Distribution of net income at the discretion of the Board

Net Income retained for ongoing operations and repayment of debt

  • 9) Allocate the Marketing Divisions net profit or loss for the year (as identified in item 8) based on the member’s fiber submission percentage (as identified in item 5).
  • 10) Allocate the Purchasing Division net profit or loss (as identified in item 8) based on the member’s percentage of total members sales (as identified in item 6).
  • 11) Generate and mail summary statements for members and applicable checks.