Financially ailing ASUCLA has finally received a bit of good news: Figures for the first six months of fiscal year 2000-'01 show the organization earned a net income of $2 million, a dramatic turnaround from last year's $225,000 loss for the same period.

A combination of modest sales and gross margin increases with better use of space in the UCLA Store to showcase higher-margin products has helped the student-controlled, nonprofit organization show a net income of $1.5 million for the full year, said Patricia Eastman, executive director.

"ASUCLA initiated an eight-point turnaround plan in spring 2000 that has proven to be effective," Eastman explained. To help the organization regain some financial ground, ASUCLA set as goals several strategies, including eliminating career positions within the administrative and support areas, leasing excess store and administrative space, boosting its BearWear Internet and catalog business and relocating its distribution center from a leased facility in Pico Rivera back to campus.

Last June, ASUCLA announced that 44 of its 254 non-student staff positions were being cut. Along with layoffs of 19 employees, the work hours of casual and student employees were reduced, and certain overhead activities were cut. The belt-tightening has paid off in savings totaling about $2.2 million.

"We are predicting that we will finish the fiscal year within $100,000 of our $2.1 million net income target," said Rich Delia, ASUCLA chief financial officer.

But Vice Chancellor of Budget and Finance Steve Olsen, who has been assisting ASUCLA's recovery efforts, warned that it's too early to start celebrating. Olsen heads a committee of UCLA administrators and ASUCLA board members, both students and managers, who are trying to help the organization restore financial stability after years of losses.

"It's an important first step, but there are many other steps yet to be taken," Olsen said. "There's more to it than just these numbers, which are accurate. Growth in sales has been very sluggish. The budget for the current year forecasts sales growth of 3.6%. So far, sales have grown by 1.9%. So they have fallen short of what was expected." Sales have been particularly weak in computers, Olsen noted, reflective of a nationwide trend.

"We're looking for ways the enterprise can sustain a little stronger sales growth, similar to what occurred in the '70s and '80s," he noted.

The store, for example, is in negotiations to bring in new product lines, including sporting goods equipment, Eastman said.

Still, the gains ASUCLA has made are primarily due to belt-tightening, a strategy "that is not just sustainable over a long period of time. They can't cut costs or positions forever," the vice chancellor pointed out.

"I'd say they're still on the 'watch' list if I were a stock analyst," Olsen said. "They're not a 'buy' recommendation yet."

A preliminary analysis shows there may be hard times ahead as the organization heads into spring and summer, typically less lucrative quarters in the academic year.

And then there is this: Spiraling utility bills will add $500,000 to ASUCLA's costs this year, Eastman said, and a hike in the minimum wage that took effect Jan. 1 means that ASUCLA will have to correspondingly boost the wages of its part-time workers, who earn more than minimum wage, by a total of $150,000.

"Even so, to date we have been able to absorb those cost increases and still meet our targeted net income," she said. This is an achievement of which I am very proud."