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Flyer Enterprises | 300 College Park | Miriam Hall Room 303 | Dayton, Ohio 45469-2226 937.229.4722 | FlyerEnterprises.com


University of Dayton Flyer Enterprises Annual Report 08–09


Vision Mission Strategy Values

Board of Directors and Leadership Team

“We have on campus, and in the School of Business, a commitment to entrepreneurship... well here in fact, is entrepreneurship in action.” - Dr. Joe Castellano, Accounting Professor

Letter to Shareholders Artstreet Café Coffee Divisions

Dinning Services Joint Ventures Flyer Spirit

IT Group

Financial Review Balance Sheet

Income Statement

Notes to Financial Acknowledgements

2 3 4 6 8 9 10 11 12 13 14 15 16 17

Contents

About Flyer Enterprises

Education beyond the classroom

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About Flyer Enterprises Flyer Enterprises started as a student-run corporation at the University of Dayton in 2001 with two divisions, and has experienced stellar and steady growth ever since. Today, as one of the largest student-run corporations in the nation, Flyer Enterprises provides unparalleled experiential business education to employees and ethically-focused services to the University of Dayton community through chosen ventures. The reason for Flyer Enterprises’ success is clear. By offering students the opportunity to apply classroom lessons on business, communication and leadership to practical daily work experience, Flyer Enterprises serves the University community while acting as a learning laboratory for tomorrow’s top professionals. The corporation prides itself on providing an environment for hands-on learning about enterprise and strives to become the national leader for experiential learning. Flyer Enterprises is completely comprised of undergraduate students, from the sales associates and managers to the Chief Executive Officer. Students make all the business decisions at every level of the organization, with limited advisement from a faculty advisor, and answer to a Board of Directors. Flyer Enterprises operates seven divisions, employs more than 170 students at the University of Dayton and has annual revenues of more than $1.4 million.

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seven 180

Vision and Mission

divisions, with more

than

employees

Vision: to become the national leader for experiential business education

Mission: to create a competitive advantage for our employees by providing experiential education through the operation of profitable, ethically-focused businesses that serve the needs of our stakeholders

Strategy

Flyer Enterprises provides campus employment for a diverse group of students and desired services to the University of Dayton community through its ventures. FE works to incorporate the University of Dayton community into its ventures, thereby extending the FE experience to other individuals. This occurs by integrating the School of Business Administration curriculum into the management of FE and maintaining dialogues with campus organizations.

Corporate Values Teamwork Tenacity

Education

Enjoyment

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BOARD OF DIRECTORS (all members of the University of Dayton community)

Ray Lane – Executive in Residence, Chairman of the Board Dr. Matthew Shank – Dean of the School of Business Administration Sr. Annette Schmeling – Vice President of Student Development and Dean of Students Dr. Deborah Bickford – Associate Provost for Academic Affairs and Learning Initiatives John Shishoff – Director of Undergraduate Programs , School of Business Administration Ken Soucy – Director of Purchasing and Business Services Paula Smith – Director of Dining Services Bob Chelle – Entrepreneur in Residence and Director of Crotty Center for Entrepreneurial Leadership Rebecca Wells – Associate Professor of Marketing and Former Advisor of DSA Don Vince – Associate Director of Financial Aid and Office of Student Success Art Santoianni – School of Business Administration Information Techonology Professor Dick Flaute – Executive in Residence, Former Chairman of the Board Mike Kaiser – Founder of the Blend Jeffrey Firestone – Student Government Association Business Senator Joseph Recker – Student Manager of the Davis Center for Portfolio Management Lauren Clarisey – Chief Executive Officer of Flyer Enterprises

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“A $1.4 million company, Flyer Enterprises at the University of Dayton is one of the largest studentrun enterprises in the country” —Young Money


Leadership Team

Executive Team Members: Chief Executive Officer – Lauren Clarisey Chief Financial Officer – Ryan Noonan Chief Information Officer – Jordan Barth President of ArtStreet Café – Melissa Peters President of Coffee – Diane Korte President of Dining Services Joint Ventures – Jackie Dorsey President of Retail – Sarah Lingo Vice President of Accounting – Jessi Neff

The CHILL: General Manager - Cara Frericks Assistant General Manager - Jenna Hagemann

university of da

Coffee Divisions:

Director of Merchandise - Carmon Bens Director of Human Resources - Emily Cipolla General Manager, The Blend - Joe Guy Financial Manager, The Blend - Bobbi Schreiber General Manager, The Blend Express - Dan DeBacco Financial Manager, The Blend Express - Steven Parker

ArtStreet Cafe:

General Manager - Steve Cabanski Director of Human Resources - Kelsie Noe Director of Marketing - Jerry Stoffl Financial Manager - Julie Besmer

Dining Services Joint Ventures: General Manager - Terry Stewart Director of Human Resources - Jessica Benoit

Stuart’s Landing:

General Manager- Annie Fiehrer Director of Merchandising - Josh Multhauf Assistant General Manager - David Yenney

Flyer Spirit:

General Manager - Keri Crist-Wagner Director of Operations - Matt Ferriss

Corporate Staff:

Corporate Accountant - Dan Laycock Director of Marketing Communications – Rania Shakkour

IT Group:

IT Specialist - Kris Turkaly IT Specialist - Mike Berg IT Specialist - Jake Weber IT Specialist – Pat Seggerson

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Fellow Flyer Enterprises Stakeholders: Over the past five years, Flyer Enterprises has grown tremendously, opening four new divisions and doubling the number of student employees. This expansion has allowed our business to diversify and offer a wide range of opportunities for experiential learning. In order to sustain and continue this development, it is crucial that our current business provide a solid foundation. By focusing on succession planning, knowledge management, and standardization, the 2008-2009 team has again ensured that Flyer Enterprises is a strong organization poised for future growth. We are proud to report another year of strong financial numbers, with revenue again exceeding $1.4 million. New budgeting processes and financial reporting capabilities will allow next year’s team to work with even more detailed information regarding each division’s performance throughout the year. This year, Flyer Enterprises established its first ever IT Group to support both divisional and corporate initiatives. The creation of this team provides even broader opportunities for experiential learning, especially for students interested in the

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growing field of information technology. In its first year, the IT Group has already made great strides in integrating technology into many of Flyer Enterprises’ essential business processes. A data warehouse now enables automated reporting which can be accessed through an intranet, giving managers timely access to the key measures of their business. The IT Group also developed and launched a new corporate website, www.flyerenterprises. com. The site is an excellent representation of Flyer Enterprises, with new content including organizational history, divisional information, and even a new online application for prospective employees. The new website is just one piece of a larger strategy around establishing Flyer Enterprises’ corporate identity. As regional and national recognition of Flyer Enterprises continues to increase, it is important for us to portray a professional and consistent image. The Director of External Marketing (Public Relations) is a new role in 2008, responsible for handling press inquiries, creating promotional materials, managing website content, improving alumni relations, and more. This corporate staff position supports the business as a whole and reports directly to the CEO. To ensure that the corporate identity and culture is embodied through strong branding, Flyer Enterprises

Letter to the Shareholders


enlisted the help of an upper-level Visual Communication & Design class to update the company logo. This talented group of students presented Flyer Enterprises with ten different logos, each one representing the organization in a different way. All employees were given the opportunity to vote on their logo of choice, resulting in the one you see today! This classroom connection was extremely beneficial to Flyer Enterprises as well as the VCD students.

Other classroom connections include partnerships between Flyer Spirit and an Internet Marketing class, as well as the IT Group and an MIS Senior Project course. These associations show an increase in collaboration with the University, which will strengthen both Flyer Enterprises and the curriculum of the School of Business Administration. Relationships have also been forged outside the University. Renewed communication with other student-run businesses led to an invitation to the Penn Student Agencies Conference at UPenn. The forum was an excellent chance to share with other universities including Georgetown, Princeton, and Harvard. For the development of the IT Group, we received the conference’s

award for Best New Initiative. The team was proud to confirm that Flyer Enterprises’ vision, “to become the national leader in experiential business education,” is a very real testament to the incredible work being done at the University of Dayton. Thank you to the faculty, staff, administration, and students of the University of Dayton. A special thank you to Raymond Lane, Flyer Enterprises’ Chairman of the Board, for his dedication and mentorship, and the rest of the Board of Directors for their continued guidance. We are especially grateful for the support of Dean Matthew Shank and the School of Business Administration as we work together to grow opportunities for experiential business education. Thank you to our partners at the Bookstore and Dining Services for helping to strengthen Flyer Enterprises through our collaborative relationships. Lastly, we thank all of our employees and customers for once again making this year our best. Lauren Clarisey ‘09 Chief Executive Officer

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Art Street Cafe

‘ 8

This year has been one that can be attributed completely to the hard work and dedication of the management and staff at the ArtStreet Café. The 08-09 academic year can be summed up in two words, extraordinary growth. We achieved a record breaking year with revenues soaring well above expectations. Careful planning and strategic management resulted in deductions of payroll expenditures and food costs beganto reach a plateau.

We had record breaking sales days, with our first $2,000 sales day in history. The Café ended with an increase in net income of 790% The Café was having a year of milestones as well. Our fourth consecutive year in business brought us to a new point in our business cycle. All four classes knew and experienced a campus that included ArtStreet Cafe.

ArtStreet Café became in integrated member of the University of Dayton community. The management team utilized this fact and sought new ways to reach out our target markets. Innovative electronic marketing initiatives proved to be a huge success, allowing us to reach our customers, and more importantly, allowing our customers to reach us. New product creation contests, live internet feeds to our Director of Merchandise, and many other creative initiatives connected the Café to its customers. We now were able to hear, and respond accordingly to what our customers wanted, with great success. Through the diligence and creativity of the management and staff, the

café transformed itself into a hub of entertainment and enjoyment. The walls are now adorned with artwork from former students, board games are scattered throughout the café for all to play, and Thursday Night Live has become an avenue of artistic expression for those with musical talent and skill. ArtStreet Café has no longer become just a place to grab a bite to eat, but a place to stay and make lasting collegiate memories. Finally, one of the most important strides has been the rapport built between the management and staff. Employees have become the crucial element that makes the Café the success it has been this year. The staff and management team sought to answer the question of “What is ArtStreet Café?” The result was the development and formation of a vision and mission that articulated values to work and live by. This year has been the year where at ArtStreet Café one could truly eat, express, and enjoy. Melissa Peters ‘09

President of ArtStreet Café

900

Slices of

Bread: The number used to make the Café’s Panini sandwiches on a weekly basis.


Coffee Divisions The Blend and the Blend Express has another strong year due to the focus and drive of its employees and management. To begin the year, the Blend Express opened with a refacing. With new menus, a coffee cart, and a refaced siding, the Blend Express finally is organic within the Atrium and Miriam Hall. This renovation solidified the Blend Express as the face of Flyer Enterprises in the business school. The two divisions took a strong focus on costs by closely tracking cost of goods and reducing expenses. By having a better understanding of product costs, the marketing team was able to create campaigns which focused on selling our higher end and higher profit margin drinks. With the help of the IT division, both divisions benefited greatly from gift card sales, especially during the holiday season. Both divisions used the latest marketing trends to help advertise. Understanding that the customer base is largely gen Y, the marketing teamed used e-marketing techniques such as Twitter and strategic email blasts. The Blend and Blend Express also went green this year, with the introduction of recycling programs, and discounted drinks to customers who used their own mugs. Financially both divisions had a challenging year. Both divisions income increased, which is impressive during a time when luxuries

like coffee were being cutout of customers budgets. However increased costs and tough economic times for our divisional suppliers attributed to a decline in profit for the divisions. One of the management teams goals was to ensure every employee had the opportunity truly become involved in their division. Management created divisional teams giving employees this opportunity.These teams focused on HR, operations, marketing, graphic design, and catering. Starting with the interview process, training, and reaffirming with current employees, management continually encouraged employee involvement on these teams. This proved beneficial to the employees by giving them a better FE experience, and giving them an idea of what management positions entail. Howard Schultz, founder of Starbucks, said, “You’ll be left with an empty feeling if you hit the finish line alone. When you run a race as a team though, you’ll discover that much of the reward comes from hitting the tape together. [...] Success is sweeter when it’s shared.” This truly reflects the 2008/2009 year for the Blend and Blend Express. I could not have asked for a better group to work with, the successes of both divisions are truly because of them. Diane Korte ‘09

President of Coffee

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DSJV Dining Services Joint Ventures The fiscal year of 2008-2009 for dining services joint ventures was a year of challenges and progress. The three divisions faced very different trials but continued to strive towards another successful and profitable year. The president’s position allowed for continued growth in the relationship between Dining Services and Flyer Enterprises. This relationship has evolved into one of a team that pushes the divisions to reach their potential.

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In its third year of business, the CHILL has seen market saturation with only a 1.25% increase in its top line. However, this year did not go without its struggles. The month of October saw a month long closure due to some original construction flaws. Nevertheless, this closure did not slow this division down. With the re-opening, we researched and introduced new product lines that appeal

to a masculine market, something we have not focused on in the past. The majority of our second semester was dedicated to our second annual 3 on 3 tournament. The entire CHILL management team and staff worked to put on a very successful tournament that raised more than $700 for the American Cancer Society.

After a strong 2007-2008 fiscal year there were high hopes for Stuart’s Landing. In hindsight we learned that numbers were inflated because of a different market on campus due to Dining Services construction. This fiscal year has reflected a more realistic revenue for Stuart’s Landing’s present and future. As the year progressed the Stuart’s Landing culture developed and created a strong environment that still provided Flyer Enterprises with over $520,000 in revenue. Throughout this year the management team has placed an increased focus on the customer, for example we introduced a pizza by the slice product line for our late night and weekend hours.

For the 2008-2009 fiscal year the Galley generated stronger top and bottom lines than in past years. Throughout the year the management team placed an intense focus on employee empowerment. By creating shift leaders, human resources assistants, and marketing focus groups this year, the Galley provided different ways for every employee to be involved in different parts of the operation. This year also focused on marketing and philanthropy efforts by working with different groups and events on campus such as Relay for Life, Spike for Charity and Christmas on Campus. These two separate focuses allowed for a concentration on cutting waste and decreasing unnecessary expenses to have an increase of 50% in the operational income and an $8000 increase in Flyer Enterprises income. The Dining Services Joint Ventures will continue to maintain the partnership with Dining Services and strive to operate prosperous ventures. Jackie Dorsey ‘10

President of Dining Services Joint Ventures


Flyer Spirit The 2008-2009 fiscal year was filled with tremendous growth for Flyer Spirit. The store experienced increased sales of $85,000 over the previous year. This success can be attributed to the overall increased awareness of Flyer Spirit and how the store can serve customer needs.

During the year Flyer Spirit worked on improving external marketing and e-commerce. The partnership between Flyer Spirit and WHIO throughout basketball season was vital. Flyer Spirit team members were able to attend events each week to promote the store, Flyer Enterprises, and the University of Dayton. Flyer Spirit was also offered a unique opportunity to work with Irene Dickey, a University of Dayton marketing professor. Professor Dickey is working closely with Flyer Spirit to strengthen the store’s web presence and truly utilize e-commerce. Throughout the year, Flyer Spirit faced many external issues. First, there has still been no other development in University Place since the opening of Flyer Spirit. The lack of store presence on Brown Street decreases the amount of traffic flow through University Place. Second, the Stewart Street bridge has been torn down for reconstruction, which made it difficult for customers to

access the store during basketball season. Finally, the recent economic downturn is forcing Flyer Spirit to reevaluate its merchandising mix and more closely identify the products that customers are willing to purchase. Flyer Spirit continues to work on process improvement. The increase in revenue this year created an opportunity for the Flyer Spirit management team to examine both weak and strong processes. Flyer Spirit is still testing different operational options and determining what best meets the store’s needs. The relationship between Flyer Enterprises and the University of Dayton Bookstore continues to be successful. The financial and operational improvements would have been possible without the continued collaboration. Finally, Flyer Spirit would not have had such a successful year without the hard work and dedication from the store’s management team and sales associates. Sarah Lingo ‘09

President of Retail

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Information Technology Group Now completing its very first year in existence, the IT Group has accomplished tremendous work throughout Flyer Enterprises. Established in February of 2009, the IT Group placed the IT Director and IT Assistant into new positions of IT Specialists under a Chief Information Officer. The group has established a 3-fold purpose:

•To maintain and provide quality support to new and existing operational systems at the division and corporate levels of Flyer Enterprises •Position any IT assets within Flyer Enterprises to provide the best return-on-investment to our stakeholders

•To develop or acquire technology to help divisions provide better return-on-investment to our stakeholders

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The group immediately set about creating systems that could streamline support requests and financial reporting. FE’s first project was a data warehouse, accessible through an ondemand reporting website. Financial Dashboards for Division Presidents were also prototyped and continue to be developed for future use through a partnership with Tableau Software. Flyer Enterprises also saw for the first time the integration of Dining Services data into FE’s systems.

Other projects included a revamped Flyer Enterprises corporate website, Human Resources Management application, Online Hiring website, Online Knowledge Management wiki and an asset management tool. Additionally, the group expanded its team from three to five IT Specialists during the fall semester to handle the large influx of work.

With a developed structure and strong foundational systems in place, the IT Group is poised to take on new challenges and new learning in the coming year. Its talented team of Management Information Systems majors are on track to continue providing quality support, improve corporate and divisional processes, and gain a learning experience in information technology that is unmatched in any other campus environment. Jordan Barth ‘09

Chief Information Officer


Financial Review

The goals of the accounting team this year were to standardize reporting and to increase the use of financial information at the executive level for each of our divisions. In order to achieve these goals, the budgeting process was revisited half way through the year. Actual financial results were compared to budgeted numbers monthly and necessary adjustments to the year’s updated forecast were made periodically. This helped to establish more realistic forecasts for the year and to provide more helpful feedback to the presidents about the performance of their division(s).

Even during the economic downturn, Flyer Enterprise was able to again earn $1.4 million in revenue. While we saw a revenue increase at many of our divisions, the slowing of sales at Stuart’s Landing balanced out the gains at the other divisions. Also, since we had no major equipment investments this year and due to our increased focus on managing costs at each of our divisions, Flyer Enterprises was able to achieve an increase in bottom line profit from the previous fiscal year.

An unforeseen challenge that we faced this year was the increase in minimum wage from $7.00 to $7.30. In the past few years, minimum wage has continued to increase on a periodic basis, yet our compensation for managers and executives had not been altered due to the these increases. This year, the accounting team worked to establish a pay structure that will adjust to future changes in minimum wage that will help to ensure that manager and employee pay is streamlined, while still allowing some fluctuation for raises.

One of the main focuses for the accounting team this year was to align FE accounting with the University of Dayton accounting processes. This involved several meetings with Tom Weckesser, the VP of Finance, and Hal Rogero, a member of the university’s Internal Audit Team, to fully understand the types of university accounts that we are included in and how they process transactions and major investments. Per these conversations, it was decided that in order to accurately reflect the assets and equity of FE, the balance sheet must be represented in a cash basis format. No equipment or depreciation is listed in the current balance sheet because they are rolled up into the university’s financial statements. The accounting team is working closely with the IT Group to develop an asset management system to record equipment useful life, depreciation, and warranty information.

Towards the end of the year, with the help of Dean Shank, a UD alumnus who is currently a partner from Deloitte came in to talk with the accounting team about the soundness of our financial processes. The progress made this year to standardize processes and reporting has helped FE accounting to reach a level where we now have the required information to be audited by an outside firm. The only recommendations that they auditor had dealt with internal controls for cash deposits, which is something that we will continue to focus on during the next fiscal year. Ryan Noonan Chief Financial Officer

Jessi Neff

Vice President of Accounting

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Income Statement


Balance Sheet


Notes to Financial Statement 1. The ArtStreet Café was funded through a contract with the University of Dayton. Flyer Enterprises was given a $290,000 line of credit from the University to design the venture, cover startup expenses and make capital purchases associated with the development of the Café. In return, Flyer Enterprises distributes 51% of positive cash flow annually to the University and does not pay any rent or utilities to the University of Dayton. 2. The Galley, Stuart’s Landing, and The Chill are joint ventures with Dining Services. Dining Services provides all capital and technological investments and accounting responsibilities. Flyer Enterprises is responsible for all daily operational decisions and employee development. Per contractual agreements with Dining Services, Flyer Enterprises retains 35% of The Galley’s operational income, 10% of Stuart’s Landing’s operational income and 35% of The Chill’s operational income. The remainder of the operational income for each division is distributed to Dining Services.

3. Cash on Hand-The amount of cash available in the safe and cash drawers as petty cash at the divisions. 4. Meal Plan Revenue – Revenue collected from student’s Dining Dollars purchased from the University of Dayton, which are only accepted at Dining Services Joint Ventures. 5. Staff Benefits Pay – The University of Dayton collects a 2% employee benefit charge for regular student labor and a 4% charge for work study student labor. These charges are to cover student employees’ workers compensation coverage and a composite charge on students’ wages subject to social security.

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6. Share of UD Admin –The University of Dayton charges 2% of expenses for Flyer Enterprises using the University’s payroll, purchasing, accounts payable, and bursar ad accounting offices

7. Share of FE Corporate –The divisions that are not participants in a joint ventures are charged 2% of expected revenues to the Flyer Enterprises Corporate account to assist in covering corporate wide expenses. 8. Previous financial statements indicated certain assets were held under Flyer Enterprises. After consultation with University officials and members of the Board of Directors, including the Chairman, the policy has changed. In an effort to streamline our accounting processes with those of the University, Flyer Enterprises is treated as cash basis operation beginning in 2007. Since the University depreciates Flyer Enterprises’ equipment on the University’s books, those assets are not maintained on Flyer Enterprises’ balance sheet per Generally Accepted Accounting Principles.

9. Any equipment or facility improvement to ArtStreet Café, The Blend, or The Blend Express over $1,000 is funded out of the Flyer Enterprises Retained Earnings account and not out of the individual division’s operating income in order to facilitate easier year to year comparisons. The income statement indicates major purchases for each division. While this is shown as an income statement expense, it is noted that the corporation pays for all major purchases reaching the $1,000 USD threshold. These decisions are made by the Division President in consultation with the Chief Executive Officer and Chief Financial Officer. Any purchase over $10,000 must be approved by the Board of Directors.

10. The University of Dayton School of Business Administration pays for all corporate expenses. These included, but were not limited to, company-wide advertising, personnel compensation, and other general expenses.


Acknowledgements Special Thanks To DESIGNED BY Alexander R. Smith PHOTOGRAPHED BY Kelsie Noe FLYER ENTERPRISES LOGO Created By Daniel R. Santoli

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