From #105, March-April 2003

Frontier CEO Describes Turnaround Progress,
New Board Election

B Y   A N D Y   P A U L E Y

Since I last wrote in these pages, a few months ago (CG #103, Nov.—Dec. 2002), our financial situation has continued to improve steadily. We have been able to make a quick turnaround and position ourselves for a successful future, due to our strong customer base and to skilled managers with a passion for Frontier and its history, tradition, and integrity. The current management team is the group that led Frontier to the most profitable year in its history in 2000. New management members are providing additional experience and depth in sales and marketing.

The overall result of our efforts has been positive. We have succeeded in reducing our expenses significantly with difficult measures that included reducing our staff by more than fifty employees during last year’s management transition. In addition,we have cut out-of-stock rate almost in half. Our past 30 days payables to vendors is now one-tenth what it was last July. Monthly profits in October, November, and December show a reversal of last summer’s trend, when our losses were over half a million dollars per month.

Our plan for the second half of this fiscal year (ending June 30) is to make up for losses incurred during the management transition of the first half of the year. Strategic planning for next year is also beginning. Its focus is on improved service and customer satisfaction in our core businesses. We will strengthen and revitalize what we have done well for so many years, while continuing to support our new products.

Recognizing the need to reestablish member confidence after the management transition, the Frontier board of directors voted to create an independent nominating committee of five to develop a strong group of director candidates. The committee was led by Karen Zimbelman with support from current management member Kathy Larson and Jesse Singerman, then Blooming Prairie CEO. Two members of the current board of directors completed the group. The committee sought a slate of candidates with a broad range of experience in areas such as finance, business management, organic agriculture, co-ops, and the natural products industry.

The eight Board candidates for the five positions are: Michael Funk, Gene Kahn, Lynn MacDonald, John Murray, Ken Olendzki, Andy Pauley, Adam Strauss, and Jeff Voltz. The board election process is underway, and we hope to have election results back to our offices by end of March.

Given the flux in the industry, one of the many important questions the new board will be reviewing is the future structure of Frontier. We remain committed to our cooperative structure, and we have additional flexibility with our corporate subsidiary, Frontier Natural Brands. Currently, we are exploring strategic possibilities with our "Simply Organic" brand that was started under previous management. Within a few months we should have appropriate market responses and more to say about our options and decisions at that time.

At Frontier, we all remain dedicated in our efforts to make Frontier an outstanding cooperative and a successful business that we all share.

Andy Pauley is CEO of Frontier Natural Products Cooperative

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