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<br />OPERATING PROJECTIONS
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<br />Audited financial statements for previous years of operation were not available for analysis.
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<br />To determine the value of Pinewood as a golf course business, a projection of future net operating
<br />income is necessary. The projections depicted in the following chart assume three (3) percent growth in
<br />the facility's financial performance. This conservative growth assumption is based on stabilizing round
<br />volume at 18,000 rounds annually, 10 percent below the facility's previous peak volume performance
<br />of 20,000 rounds. In addition, the following assumptions were utilized for the projection:
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<br />1. Golf car rental revenues assume 20 percent ridership beginning at current rate of $11 per car rental.
<br />2. Food and beverage sales are projected at $1.50 per golf visit (round).
<br />3. Clubhouse personnel expense projected as:
<br />200 day season @ 12 hours/day = 2,400 hours @ $12/ hour = $28,800 ($30,000 rounded)
<br />4. Golf course. maintenance expense projected as:
<br />Maintenance Supervisor: 40 weeks @ 40 hours/week = 2,400 hours @ $20/hour = $32,000
<br />Laborers: 3 laborers @ 20 weeks @ 20 hours/week = 1,500 hours @ $1 O/hour = $15,000
<br />5. Payroll taxes and benefit costs are projected as 25 percent of total personnel expense.
<br />6. Food and beverage cost of sales equals 50 percent of projected sales.
<br />7. Merchandise cost of sales equals 85 percent of projected sales.
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<br /> projected Projected Projected Projected Projected
<br /> Assumption 2006 'J!Xfl 20CB 2009 2010
<br />REVENUE
<br />Rounds 16,000 16.soo 17,000 17,500 18,000
<br />Average Green Fee 3.0"10 $10.50 $10.81 $11.14 $11.47 $11.82
<br />Green Fee Revenue 168,000 178,448 189,371 200,789 212,721
<br />Golf Car Rentals 3.0"10 18,000 18,540 19,096 19,669 20,259
<br />Food & Beverage Sales 3.0% 24,000 24,720 25,462 26,225 27,012
<br />Merchandise Sales 3.0"10 5,000 5,150 5,304- 5,464 5,628
<br />TOTAL REVENUE 215,000 226,858 239,233 252,147 265,620
<br />OPERATING EXPENSE
<br />Personnel-Clubhouse 3.0"10 30,000 30,900 31,827 32,782 33,765
<br />Personnel-Maintenance 3.0"10 47,000 48,410 49,862 51,358 52,899
<br />Payroll TaxeslBenefits @25% 3.0"10 19,250 19,828 20,422 21,035 21,666
<br />Total Personnel 96,250 99,138 102, 112 105,175 108,330
<br />Clubhouse Other Expense 3.0"/0 30,000 30,900 31,827 32,782 33,765
<br />Maintenance Other Expense 3.0"10 50,000 51,500 53,045 54,636 56,275
<br />Cost of Sales 3.0"10 16,250 16,738 17,240 17,7Sl 18,290
<br />Total Other Expense 96,250 99,138 102,112 105,175 108,330
<br />TOTAL OPER. EXPENSE 192,500 198,275 204,223 210,350 216,660
<br /> NET OPERATING INCOME 22,500 28,582 35,010 41,797 48,960
<br /> NET OPERATING MARGIN 10% 13% 15% 17% 18%
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<br />Due to current market factors, significant revenue performance is limited due to flat demand for rounds
<br />and by probable market resistance to significant rate increases. The resulting net operating income
<br />prediction is in the range of $22,000 to $48,000 for the near term. Projected margin performance is
<br />stabilized at 18 percent, approximating the industry average for comparable nine hole facilities.
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