April 2007

ANNUAL REPORT
A publication of Ukiah Natural Foods Co-op, community-owned since 1976

2006
in review

Our
Core Values
•Integrity
•Community Involvem
ent
& Leadership
•Quality Food & Goo
d
•Customer Ser vice s
•Prosperity
We love good food...from the ground up!

Ukiah Natural Foods Co-op

721 South State Street
Ukiah, CA 95482

PERMIT #16
Petaluma, CA
PAID
US Postage
PRSRT-STD
2006 Annual Report www.ukiahcoop.com 2

GREETINGS FROM THE GENERAL MANAGER

Cheers to Another Great Year!

A natural foods cooperative

since 1976 2006 was another successful year for our
co-op—it was also our 30th year in
operation! Our sales growth for the year was 13.20%, and we
721 South State Street managed to operate the store efficiently and effectively in our
Ukiah, CA 95482 congested facility. We ended 2006 with annual sales of $8.7
707-462-4778 million dollars, 67% of which were to our member-owners.
www.ukiahcoop.com We welcomed 672 new members to the Co-op’s total member-
email: UNF@ukiahcoop.com ship of 5,912 and returned $260,438 to member-owners via
discounts at the registers.
Store Hours We employed 58 people of whom 39 were full time and 19
Mon–Fri.....8–8 p.m. part time. That amounted to $1,769,306 that we contributed
Sat.....8–6 p.m. to our local economy in wages and benefits. The Co-op fol-
Sun...10–6 p.m. lows a livable wage model and, like co-ops across the country,
we are an example of responsible employment practices. We are continuing to grow and
UNF Management maintain a cooperative business that provides a rewarding work environment. I appreci-
General Manager ate and commend my staff for all of the time, effort and care that they contribute to the
Lori Rosenberg Co-op on a daily basis.
Yes, 2006 marked our 30th year anniversary and we celebrated it with a great outdoor
Finance
Anne Wright
fun-packed party for our member-owners and the community. Live music, samplings
from local vendors, a local farmers’ market, crafts and games for kids, and lots of great
Front End prizes were just some of the attractions that contributed to the success of this celebration.
Rebecca Winter It is really exciting to watch our co-op grow through all of the aches and pains that have
Grocery transpired over the past 30 years. The support from our little community has built the
Barbara Verenis foundation, stability, and community center that the Co-op represents.
Please read on for more details and highlights of 2006 in this annual report. How
Human Resources & Operations
Susan Winter
proud I am to be part of a trusted, cooperative marketplace of goods and services that
provides for the needs of our diverse community!
Produce
Libby Uhuru
Wellness
In Cooperation,
Lori Rosenberg
General Manager
New Co-op member-Owners
Mike Tilander
672 new households joined
the Co-op in 2006!
Vision: We envision Ukiah Natural Foods Co-op to be the foundation of a trusted, cooperative
marketplace of goods and services that provides for the needs of our diverse community.
5,912 households in our
Purpose: The purpose of Ukiah Natural Foods Co-op is to be a vital, thriving, and community were member-
growing community center that will: owners of the Co-op by

1
•Provide and promote organically grown, sustainably produced food, goods, and services that are
locally and regionally sourced whenever possible.
January 1, 2007.
•Promote the health and wellness of our community by providing facilities, Co-op
resources, and information and by offering effective, positive community Principle 1:
education and services. Voluntary &
•Embody and model sustainable, humane, equitable, green ways of working and living,
creating and maintaining an ideal workplace. Open
•Add to the enjoyment and enrichment of our greater community ventures and networks. Membership
•Have fun doing it!
 3 www.ukiahcoop.com 2006 Annual Report

CO-OPS WORK
Department Highlights from 2006

5
Co-op
Principle 5:
Education, Front End welcomed a new manager...
Training & Co-op Front End veteran Becca Winter
Information became our Front End Manager and led the
cashiers through record-high sales days.
Wellness staff studied hard...
Garden of Life sent Max & Traci to West Palm Beach
to learn about the company’s high quality product lines,
and staff had in-store trainings from
MegaFoods, EnzymaticTherapy, and New Chapter.
Espresso Bar expanded...
You patiently waited for the Espresso
Bar to get remodeled so we could offer Grocery got serious...
wheatgrass, veggie juices & smoothies. At the close of 2006, the grocery aisles had
The drink menu continues to expand— 4,581 organic items—that’s
have you tried the Almond Joy? 57.4% of the products offered!

Produce broke records... During
Thanksgiving week the department had its
highest sales ever, but the staff still
gracefully made sure we all had cranberries
& mushrooms for our feasts!
Human Resources squeezed a few more staff in the building...
Sales increased 13.2% over the previous year and so did our employees!
We started 2006 with 53 employees and ended with 60, a 13.2% increase.
Employee turnover was 48%, a fairly low figure for our industry.
Of those employees, 36 (60%) have been here for an entire year or longer.
2006 Annual Report www.ukiahcoop.com 4

FROM THE ACCOUNTING DEPARTMENT

2006 Year-End Financial Report
by Anne Wright
Finance Manager

T he Co-op ended 2006 with sales of

$8,705,911! This is a 13.2% increase
over 2005 sales. This is also our second con-
a margin of 33.41% for store expenses.

secutive year of slower sales growth, compared
to our 20% average sales growth that happened
between 1998 and 2004. We are projecting sales
growth of 12% for 2007. The store averaged a
record-setting 836 customers per day and organ-
ic food sales rose to 69% of total food sales.
The cost of goods sold was 63.6% of sales. Af-
ter deducting member-owner discounts we have
Employee benefits
Labor is our largest expense after cost of goods.
The Co-op currently has 60 employees; the aver-
age wage is $12.38 per hour. Employee benefits
include an 11% discount on purchases, health
insurance, paid vacation and sick time, 401K
retirement account and profit sharing.
Total operating expenses of the store totaled
27.08% of gross sales; 1.77% under projected
budget. After income tax expense, we have
a net profit of $348,713 or 4.01% of gross
sales.
Balance sheet
Our balance sheet shows a strong co-op
with assets far exceeding liabilities. We
currently have approximately 1.4 million
dollars set aside for our expansion project.
After paying off our mortgage in 2005, we
have not incurred any other long-term debt.

Annual Gross Sales Comparison 2003—2006

4
% Increase % Increase % Increase % Increase
2006 Over Prior 2005 Over Prior 2004 Over Prior 2003 Over Prior Co-op
Year Year Year Year Principle
Grocery 2,647,647 13% 2,345,440 17% 1,980,309 -16% 2,364,476 19% Autonom 4:
Non-foods 290,087 13% 262,189 2% 257,136 4% 248,163 10% Independ y &
ence
Produce 1,407,594 12% 1,254,400 17% 1,073,341 17% 919,101 18%
Liquor 181,488 29% 140,263 14% 122,915 26% 97,229 17%
Frozen 391,666 19% 320,992 5% 305,788 n/a n/a n/a
Gen Mrch 254,188 6% 238,875 23% 193,496 n/a n/a n/a
The Co-op
Cheese 279,529 10% 254,889 11% 228,657 n/a n/a n/a
is an
Bulk 519,133 12% 463,993 16% 401,602 19% 338,434 14% independent,
Herbs 67,710 14% 59,224 18% 50,306 14% 44,253 15% thriving
Wellness 1,174,656 10% 1,070,799 7% 999,082 16% 864,199 17% community-
Dairy 467,361 11% 420,193 11% 377,361 37% 276,230 28% owned
Bodycare 460,754 12% 411,894 11% 372,415 14% 327,988 7% business with
Housewares 97,688 -11% 109,856 18% 93,407 6% 88,292 -13% no corporate
Coffee 133,372 7% 124,339 2% 121,484 n/a n/a n/a
ownership.
And it’s
Espresso Bar 138,942 60% 86,960 26% 69,052 7% 64,354 216%
financially
Food-to-go 188,340 44% 126,502 -23% 169,955 n/a n/a n/a
strong!
Yearly Sales $ $8,705,721 $7,690,807 $6,816,307 $5,632,719
Sales Increase % 13.20% 12.83% 21.01% 17.48%
5 www.ukiahcoop.com 2006 Annual Report

How was money spent in 2006?

Governance Operations
Marketing
Administrative
Depreciation

Occupancy

Owner’s equity in the Co-op increased to $2.5 Labor

million, from a combination of share purchases
and retained earnings.

Expansion update? Marketing $139,612

With sales of $1232 per square foot, we are Labor $1,769,306 Governance $30,329
hoping that facility expansion will occur this year. Occupancy $146,948 Operations $157,467
We have spent much time and energy trying to Depreciation $52,536
find a solution that is not in the 7 or 8 million Administrative $61,729
dollar range; although we are a financially strong
Co-op, we don’t want to take on a debt load that
is equal to our annual sales. Stay tuned to the Income Statement
newsletter in the next few months for updates on
the expansion issue. Years Ended 12/31/06 & 12/31/05
SALES 8,705,911 7,690,807
COST OF GOODS SOLD 5,536,856 4,917,019
GROSS MARGIN 3,169,055 2,773,788

Balance Sheet 2006 & 2005 ASSETS AT 12/31/06 AT 12/31/05

MEMBER DISCOUNTS
GROSS MARGIN STORE OPER.
260,438
2,908,616
210,435
2,563,354

CURRENT ASSETS 2,401,567 1,783,622

EXPENSES
PROPERTY AND EQUIPMENT 522,841 550,861
LABOR EXPENSE 1,769,306 1,598,597
OTHER ASSETS 38,637 34,829
OCCUPANCY EXPENSE 146,948 143,514
DEPRECIATION EXPENSE 52,536 60,485
TOTAL ASSETS 2,963,045 2,369,312
MARKETING EXPENSE 139,612 119,074
GOVERNANCE EXPENSE 30,329 26,603
LIABILITIES
394,576 OPERATING EXPENSE 157,467 139,615
CURRENT LIABILITIES 407,838 257,360
ADMINISTRATIVE EXPENSE 61,729 98,261
LONG TERM LIABILITIES 0 0
LONG TERM MORTGAGE PAY. 0 0
TOTAL OPERATING EXPENSES 2,357,926 2,186,148

MEMBERS EQUITY
NET SAVINGS FROM STORE OPER. 550,690 377,206
MEMBER A & B SHARES 492,375 424,450
RETAINED EARNINGS 1,714,119 1,452,003
OTHER INCOME 48,219 15,600
Y.T.D. NET SAVINGS (LOSS) 361,975
348,713 235,499
OTHER EXPENSES 1,972 9,281

TOTAL LIABILITIES & MEMBERS EQUITY 2,963,045 2,369,312

EARNINGS BEFORE INCOME TAX 596,938 383,524
INCOME TAX EXPENSE 248,225
234,963 148,025
NET PROFIT (LOSS) 348,713
361,975 235,499
2006 Annual Report www.ukiahcoop.com 6

5 fun ways we met our neighbors in 2006

We threw a birthday party

to celebrate our 30th year in busi-
ness. Hundreds of you came & en- Who grows our food ..and wine and
joyed the festivities—so much that medicine? We visited some of the folks
we’re planning more who bring over 2,000 local products to
community events in 2007. the Co-op’s shelves and reported on
them in the Co-op News. In 2006 our
local product sales were about 16% of
our total sales. In 2007 watch for special
events and sales with the monthly
We got out and met people all over town. Featured Local Vendor program.
Perhaps you visited our table at the Farmers’ Market,
La Buena Vida Health Fair, the Full Circle Wellness
Health Faire, or at one of the other community events
we visited to share good food and make new friends.

Live music
became a regular
feature in the store in
2006. Bob Laughton
& Kristine Robin
played on the first day
of each new season
& they’ll continue Eat Local! Picnic got us out to Tom Palley’s farm for a
this lovely tradition relaxing, sumptuous picnic of local foods prepared by Jacquie
in 2007. Lee. Live music from the Willits Farmers Market Band and a
tour of the farm rounded out this delicious day in Covelo. If you
missed out, watch for details about this year’s picnic in September.
7 www.ukiahcoop.com 2006 Annual Report

CO-OPS WORK
Co-op Programs Gave Back to the Community in 2006

Co-op Community Grants

awarded $30,000 in grant money to local nonprofit
groups working on nutrition, wellness, and housing.
The Co-op Board is accepting applications for the
2007 grants until May 30. Applications available at
ukiahcoop.com & at Customer Service.
7Co-op
Princ
Concerniple 7:
Commufor the
nity

John Milder Scholarship

awarded a $2,500 scholarship to a Mendocino College ag stu-
dent. Students interested in applying for this annual scholarship Support
in 2007 should contact the college financial aid department. We were able to offer support to groups putting on
special events in the community. Last year, we aided
Sundays in the Park, Pastels on the Plaza, and
the Waldorf Pumpkin Patch.
Give Back to Schools Week
donated $9,604 to local schools—shoppers selected a
school & we donated a portion of their sale to that school.
Monthly Donations
were given all year long. In 2006 this amounted to over $1,500
Watch for this fund-raiser in October 2007. School ad-
to nonprofit groups to help with their events. Forty groups were
ministrators, you can apply at ukiahcoop.com or get an
gifted last year, including the Human Race, SPACE, Willits Food
application at Customer Service starting in September.
Bank, the Humane Society, United Peace Relief,
Ukiah Skate Park, and Yoga Mendocino.

Where did the money come from in 2006?

3
14 15 16 1
Ever wonder how you 12 13 Co-o
Princip p
11
& other shoppers are
le
spending your money 10 Membe 3:
at the Co-op? Here’s Econom r
the breakdown. Particip ic
ation
9
2
8
7 6 3
5 4

1. Grocery $2,647,647 6. General Merch. $254,188 11. Dairy $467,361

2. Non-Foods $295,821 7. Cheese $279,529 12. Bodycare $460,654
3. Produce $1,407,594 8. Bulk $519,133 13. Housewares $97,688
4. Wine & Beer $181,489 9. Herbs $67,710 14. Coffee $133,372
5. Frozen $391,666 10. Wellness $1,174,656 15. Espresso Bar $138,942
16. Food-to-go $188,340
 Looking Ahead to 2007
Calendar Highlights...
Tasting Fairs
We love good food—and sharing all
Category Sales the good food at the Co-op. Join us
for tasting events throughout the
These sales were year. Watch in the store or at
so popular in ukiahcoop.com for exact dates
2006 that we will and times.
continue to offer a
April 7: Good Food Fest!
sale each month
April 5 Wellness department 5% off June: Wine & cheese
on a unique group
May 9 Chips & salsa 9% off
of products—
September: Eat local picnic
June 8 Wine & cheese 8% off including the
October: Slow food tasting
July 6 Juice & sodas 6% off entire produce
November: Cheese sampling
August 7 Bulk herbs 7% off department in December: Holiday food tasting
September 6 Produce 6% off

6
September! Dates
October 10 Pasta & sauces 10% off may change, so
November 9 Cheese & crackers 9% off watch for details Co-op
December 12 Bulk foods 12% off in the store. Principle 6:
Co-op Advantage Program (CAP) Cooperation
is our top-notch savings program that brings Among

2
monthly sales and quarterly coupon books to shoppers. Co-ops

Co-op Cooperation among all co-ops nationwide

:
Principle 2ic
(by pooling our collective buying power!) makes these

Democrat
great sales possible. In 2007, look for expanded

Member
CAP offerings in Wellness.

Control
Get involved
in Co-op activities...
Appreciation Days
A festive tradition at the Co-op, Appreciation Days are
Perhaps 2006 is your year to
scheduled all year long in 2007. This year, we’re putting
join a Co-op committee? There are small
a special emphasis on sales just for member-
groups working on donations & grants,
owners. Dates are tentative, so watch in the store for details.
education & outreach, elections &
nominations, finance, and gover- May 17–19
nance. Member Appreciation: 6% extra off for owners
To join or just find out more, go to August 16–18
ukiahcoop.com or pick up Customer Appreciation: 4% off for all
an application at October 18–20
Customer Service. Member Appreciation: 6% extra off for owners
December 6–8
Member Appreciation: 6% extra off for owners