Tiburon Peninsula Club - 2011 Annual Member Meeting Financial Review

1. Tiburon Peninsula Club 2011 Annual Member Meeting Financial Review November 15, 2011

2. TPC’s Financial Model – A Review Two Major Constraints: • Membership roll limited by Town of Tiburon (700/175) • TPC is a multi-activity club Operating Assumptions: • Dues pay for operations only • Five “Activities” are engineered to be financially self-sufficient (Tennis, Swim, Fitness, F&B, Youth) • New member initiation fees do not pay for operations but are used for capital expenses and debt reduction • Capital Replacement funds are reserved annually (in the form of debt reduction) • Emergency Reserves set aside: $550,000 (3 months or operating expenses)

3. TPC - Strategic Financial Model Dues Non-Member Surcharges Initiation Fees Monthly Debt Retirement Fees Revenues Expenses Administration Cap-Ex and Debt Retirement Mortgage Payments Facility Operations Activities – Set at Operational Breakeven Aquatics Personnel/Operations- Aqua Activity Specific Member Charges Personnel/Operations - Fit Fitness Food/Bev Personnel /Operations– F/B Non-Member Activity Charges Tennis Personnel/Operations - Tennis 80% Activity Fee Personnel/Operations - Youth Youth 20%

4. TPC - Tactical Financial Model Dues Non-Member Surcharges Monthly Debt Retirement Fees Initiation Fees Reserve Savings Account (2 mos. of Ops Expense) Operating Cash/Checking Acct Mortgage Payments Cap Ex Cash/Checking Acct Administration Facility Operations Cap-Ex and Debt Retirement Operating Condition “Code” Code RED – An unexpected event wipes out Reserve Account – immediate member assessment is considered 0% of the time Code Orange – Reserve Savings Account is Not Full; All Initiation Fees Flow into Reserve Savings until Full + Examine Expense Cuts + Consider Dues Increase 20% of the time Code Green – Reserve Savings is full; all initiation goes toward Capital Expenses & Debt Retirement. 80% of the time * Currently 3 months of Op Expense = $550,000

5. TPC – Capital Reserve and Accelerated Debt Retirement Initiation Fees $525,000 Assume Membership “roll” – 35 members/yr at “steady state” Gross Initiation Fees (@$15,000 non-refundable fee) - $525,000 Reserve Savings Account (3 mos. of Ops Expense) • To meet upkeep and replacement demands • To fund “new” Cap Ex projects In the event of a slow new membership period, I. has preference to II. by 2:1 until $250k is deposited into I. At the end of every year – one half of I and II balances will be applied to mortgage prepayment. Cap Ex Cash/Checking Acct I Capital Reserve “Replacement” ~$250,000/yr II Cap-Ex New Projects ~$275,000/yr Half of Year End Balance Mortgage Debt Retirement

6. TPC Comprehensive Financial Model Monthly Debt Retirement Fees Initiation Fees Dues Non-Member Surcharges Revenues Expenses Mortgage Emergency Reserve Savings Account (3 mos. of Ops Expense) Operating Cash/Checking Acct I Capital Reserve “Replacement” $250,000/yr II Capital Expense New Administration Half of Year End Balance Facility Operations Capital Expenses Activities – Set at Operational Breakeven Activity Specific Member Charges Aquatics Personnel/Operations- Aqua Fitness Personnel/Operations - Fit Food/Bev Personnel /Operations– F/B Non-Member Activity Charges Tennis Persn/Ops - Tennis 80% Youth Persn/Ops - Youth Activity Fee 20%

7. 2011 Annual Meeting – Finance Review Summary • 2011 characterized as: “Steady As She Goes” • Solved our debt problem by refinancing again and pre-paying $1 million without increasing monthly member debt assessment • All 5 Activity Units are in the black • With the exception of one physical area of the club – all other areas were maintained or upgraded to match the overall look and feel of our Club.

8. October 2011 Review - Dashboard

9. October 2011 Review - Dashboard 1 2 3

10. Annual Meeting 2011- Dashboard Review 1 Operations / Pre - Bonus Note – through Oct 2011 only Ignore – not a useful number (to be explained below) Key Driver of TPC Finances In-line with 2010 forecast Phew! Non-cash item This is where your dues money goes - basically breakeven – small increase required for next year (see below) Any year end excess is “bonus” within each activity unit

11. Annual Meeting 2011- Dashboard Review 2 Calculation (through Oct 2011) Coffers (sum of 4 accounts): $1,303,394.29 Working Capital: $100,000 -ish Reserve: ($550,000-ish) Cap Expenditure Reserve: ($654,000)

12. Annual Meeting 2011- Dashboard Review 3 Note – through Oct 2011 only Forward annual budget expectations (guesstimate) is for 35 new members per year (5% member turnover) which translates to $525k for capital expenditures – divided by replacement/maintenance ($200k-ish) and new projects ($300k-ish).

13. 2011 Annual Meeting – Snapshot Comparison

14. 2011 Annual Meeting – 2012 Dues Increase In 2011 Operational Expenses = Dues Revenues There are four primary drivers of the need for a dues increase in 2012: • Health Insurance: $63k in 2011 to $95k in 2012 = $22k jump • 401k Expenses: $9k to $35k = $25k jump • D&O Insurance: $10k to $35k = $25k jump • IT Services: $10k to $32k = $22k jump Total: $94k of additional expenses in 2012 / divided by 788 members = $9.95/mo

15. Looking Ahead to 2011 (a look back) • Operations are set to breakeven, consider small (2-3%) dues increase mid-year • The Big Five are set to breakeven – 5 of 5 confident • Undertake the Youth Tennis Center project (Rut Row!) • Re-sign our GM to a new long term contract and replace our Club Treasurer (yeah!)

16. Looking Ahead to 2012 • Operations are set to breakeven after a 5% dues increase • The Big Five are set to breakeven – 5 of 5 confident • Upgrade the whole lower court area • Begin to reserve for our 53yr old Main Pool

17. Annual Meeting 2011 2011 was another great year for our TPC – A special note of appreciation to Jerry Pang and his whole staff. For all your work on the finances, thank you Catherine Sanders. Thank you!