The Members of Quail Ridge Country Club

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Nickolas Hood
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To: Fr: Re: The Members of Quail Ridge Country Club Donald Chip Misch, General Manager/COO 2012-2013 Country Club Budget Date: September 1, 2012 Each year, budget preparation for the Club and POA

1 To: Fr: Re: The Members of Quail Ridge Country Club Donald Chip Misch, General Manager/COO Country Club Budget Date: September 1, 2012 Each year, budget preparation for the Club and POA serves as an opportunity to re-evaluate the operational focus and purpose of the Quail Ridge community. In recent years, the focus has been to maintain our enviable position as an outstanding value. Of equal importance is in our ability to improve at all levels. Each Committee and respective Board has done its part to encourage, support and plan for progress. There is an expectation to find efficiencies, elevate levels of service and anticipate the future needs of the community, which truly embodies the mindset of our operational culture. A lot of time and effort has already gone into identifying operational action steps to key aspects of improving our operational performance focused on making a noticeable impact to all members and their guests. As mentioned in previous years, we expect and plan for improvement and avoid complacency at all levels this remains the ongoing operational mindset that all managers understand. We have a very stable and tenured senior management team leading the way! I remain particularly pleased with the collective focus on strategic issues, yet insisting on the attention to detail that impacts the member experience. Jim Hengel has elevated the overall performance of our Golf Course Maintenance operations and course conditions and has made an impactful impression on the entire team! We intend to use this momentum at all levels. The 2013 budget reflects the careful planning of the entire team. The overall increase of 4.6% reflects the commitment to improving and in elevating standards in each department. Where efficiencies were identified, we incorporated them into the budget. One aspect of the overall budget is apparent: we remain a very good value! A few key comparatives worth noting that best highlight our value at Quail Ridge (comparing to McGladrey s 2012 Club Trends report for SE Florida, without Boca): 2013 Quail Ridge full golf dues: $ 7, Trends average (Southeast Florida): $ 12, budget F &B loss as a % to Food sales: 27.2% 2012 Trends average (Southeast Florida): 52.3% 2013 budget F & B sales/membership: $ 2, Trends average (Southeast Florida): $ 2, budget golf maintenance per hole: $ 81, Trends average (Southeast Florida): $ 76,900 Our focus needs to be elevated wherever possible on the quality front. The Golf Course Maintenance Department is a perfect example where an additional step up in meeting member expectations is evident in the budget. A

2 higher standard is expected and we are responding. Additionally, it is hard to deny the value both Tennis and the Fitness operations bring to the community with $ 178 and $ 140 cost per membership, respectively, on an annual basis! The budget increase reflects an aggregate increase of 1.5% over the past four years. Once again, we are excited about the year ahead and the prospect of another year of measurable progress. Everything Matters could not be more relevant to our sense of purpose! We will be confidently ready for an outstanding Winter Season ahead! 2012 Fiscal Year Projection The management team is collectively holding the line in terms of the YTD performance, particularly as it relates to delivering bottom line expectations on revenue shortfalls. We project to finish this year at budget Budget Dues revenue is budgeted to increase by $348k primarily due to: 1. Enhancing our Golf Course Maintenance programs to improve the health and playing conditions of the courses; 2. Improving the employee benefits package primarily changes in the employee 401k plan to promote greater participation by our hourly employees (note, this action has already been approved by the Board in April); and, 3. Increasing the capital dues portion of the Club Dues The ratio of Social to Golf dues of 58.2% is within the target established for these membership categories. Below is a specific look at how the dues are changing: What your dues pay for and how they are changing: Golf Social Dues Component 2012 Budget 2013 Budget Incr. (Decr.) 2012 Budget 2013 Budget Incr. (Decr.) Golf operations $ 3,050 $ 3,190 $ 140 $ - $ - $ - Food and Beverage Clubhouse 1,060 1, ,060 1, Tennis and Fitness Administration 1,526 1, ,526 1, Common Budget Supplement Capital - Golf only Capital - Golf & Social Total net increase $ 7,360 $ 7,700 $ 340 $ 4,280 $ 4,480 $ % 4.7 %

3 Comparison of 2013 Budget to 2012 Budget The overall increase in dues is $348k ($298k operating dues and $50k capital dues) in the 2013 budget and takes into account: Change in improved Golf Course Maintenance practices ($135k) Salaries and Wage adjustments 2% for staff and contract adjustments ($80k) Modifications to Clubhouse Operations (Food, Beverage and Clubhouse) addressing the value proposition (higher food costs, regular staff training during season partially offset by reduced summer offerings) ($76k) Increased employee benefits (change to the 401k plan to encourage greater participation by hourly employees, changes in the state unemployment tax base/rates, and changes in the number of participating employees in the Club s health insurance program excluding related costs accounted for in GCM and Clubhouse Operations) ($58k) Restoring capital dues to $300k from $250k ($50k) All other factors combined - $51k positive variance 2013 Capital Budget The Capital Equipment and Projects funding (Capital Dues component of the annual dues billing) will be increased to$300,000 from $250,000 for In addition, there are cart fee allocations of $6 per round aggregating $333,600 which will be applied to the 2013 capital expenditures and proceeds from the sale of Golf Course Maintenance equipment of $127,000 (settled in July). The unfunded portion ($229,400) of the capital budget will be provided from designated funds, which are projected to be approximately $ 1.5 Million at year-end. The components of the Capital budget are as follows: Budget Budget Equipment $ 552,000 $544,000 Capital Projects 398,000 $ 950,000* 446,000 $990,000* * The Capital Budget is not part of the Operating Budget. The Capital budget outlines in detail, the Capital requirements and reflects essential needs for each department on both the equipment and project level.

4 Community Services Facility Update During 2013, we will be completing the Community Services Facility project that was approved by the membership in February The total estimated cost of the project at July 31, 2012 is $4,235,000 which includes: 1) construction and soft costs $ 4,020,500; 2) furniture, fixtures and equipment of $145,000; 3) construction period interest of $23,100; and 4) post construction interest of $46,400 which will be expensed as incurred. The Board will authorize the transfer of this asset upon its completion to the POA as Contributed Capital. Please note, as with any large construction project, a significant portion of the costs yet to be incurred are based on estimates that are subject to change. In review of the 5 year plan, it becomes increasingly evident that we are working with an aging facility particularly as it relates to the clubhouse, tennis center and surrounding service areas. Given that we are in a challenging and very competitive private club and real estate market, we will need to be more updated than ever. Several items were put into the plan in anticipation of such a mind set. Conclusion The 2013 budget reflects the valuable input of the Club Finance Committee, which consists of Treasurer, Ralph Palmer, David Chick, George Gaspari, Ray Doin and Ned Pugh. A significant amount of time goes into preparation of the annual budget and the review and strategic discussions of the past year which also play a major role in defining the budget objectives. As noted earlier, the tenure and focus of the senior management team is a strength of the operation. Collectively, we are not only focused on our operational goals but our overall purpose and the synergy is excellent. A very special note of thanks to Charlie Bowie, Jim Hengel, Scott Fleming, David Crandall, Chef Roger Hopkins and Lisa Haggas for their commitment, professionalism and unyielding energy! Thanks too, goes to Marcia Shump, my assistant, Karen McCloskey, Club Administrator and Maureen Johnston-Evans, our Director of Human Resources for their ongoing commitment to enhancing the Quail Ridge experience and playing an important and active role in defining the next level. Andy Transleau, our very capable Chief Financial Officer, continues to elevate and improve the budgeting process. Andy uses his detailed knowledge of all Quail Ridge operations to define the next efficiency, while at the same time remain sensitive to our service culture. He is an invaluable and proven resource to the entire team. Fiscal 2013 will accompany heightened expectations. We are targeting a community wide survey of the membership as a follow up to the 2008 survey. Additionally, plans are slated for updating the Country Club and POA strategic plans, which will naturally incorporate the feedback of the new survey data and lead the way in working with the Planning Committee and initiating important steps in evaluating and solidifying our Master Plan.

5 QUAIL RIDGE COUNTRY CLUB, INC Adopted Budget - Comparative Operations Summary Department Revenue Cost of Sales Gross Profit Payroll Payroll Taxes and Employee Benefits* Operating Expense Departmental income (loss) 2012 Budget: Golf $ 1,715,520 $ 4,550 $ 1,710,970 $ 884,510 $ 196,550 $ 354,540 $ 275,370 Golf Course Maintenance ,187, ,890 1,526,030 (2,976,820) Food 1,808, ,000 1,110,584 1,230, , ,100 (722,040) Beverage 592, , ,700 83,810 18,640 11, ,070 Clubhouse 8,100 4,700 3, ,700 90, ,270 (933,430) Tennis 232, , ,490 61, ,100 (164,440) Fitness Center 331, , , ,970 48,050 98,415 (130,135) Administration 43,560-43, ,495,425 (1,451,865) Common ,400 (547,400) Budget "Supplementary" ,000 (125,000) Dues - Operations 6,313,690-6,313, ,313,690 Board authorized budget amendment, transfer from Designated Funds 185, , ,000 Gross Budget $ 11,230,754 $ 1,112,150 $ 10,118,604 $ 4,059,774 $ 1,033,370 $ 5,025,460 $ Budget: Golf $ 1,754,780 $ 4,550 $ 1,750,230 $ 902,550 $ 235,700 $ 351,980 $ 260,000 Golf Course Maintenance ,203, ,260 1,412,520 (2,929,240) Food 1,865, ,200 1,050,680 1,213, , ,150 (786,050) Beverage 638, , ,800 72,090 19,470 6, ,460 Clubhouse 8,100 4,700 3, ,120 93, ,640 (966,350) Tennis 245, , ,000 68, ,590 (172,090) Fitness Center 350, , , ,170 55, ,050 (135,000) Administration 32,180-32, ,545,690 (1,513,510) Common ,570 (554,570) Budget "Supplement" ,000 (125,000) Dues - Operations 6,611,350-6,611, ,611,350 Gross Budget $ 11,506,790 $ 1,270,050 $ 10,236,740 $ 4,079,260 $ 1,167,510 $ 4,989,970 $ - * Payroll taxes and employee benefits include: FICA, Unemployment, Workers Compensation, Health Insurance and other benefits QUAIL RIDGE COUNTRY CLUB, INC Adopted Budget - Dues Summary Memberships Dues Increase in Dues Increase in Dues Increase in Dues 2013 Budgeted 2010 to to to 2013 Dues Income RESIDENTS Golf $ 7,140 $ 7,360 $ 7,700 $ - 0.0% $ % $ % $ 5,705,700 Social $ 4,150 $ 4,280 $ 4,480 $ - 0.0% $ % $ % 779,520 Full Rental - same as Golf $ 7,140 $ 7,360 $ 7,700 $ - 0.0% $ % $ % 46,200 Rental $ 5,760 $ 5,980 $ 6,320 $ - 0.0% $ % $ % 151,680 Intermediates - 50% of Golf $ 3,570 $ 3,680 $ 3,850 $ - 0.0% $ % $ % $ 6,683,100 NON RESIDENTS Golf Without Equity $ 7,140 $ 7,360 $ 7,700 $ - 0.0% $ % $ % 192,500 Founders - Bylaws $ 100 $ 100 $ 100 $ - 0.0% $ - 0.0% $ - 0.0% 1,000 Social Tennis $ 3,100 $ 3,150 $ 3,250 $ % $ % $ % 26,000 Social $ 2,100 $ 2,150 $ 2,250 $ % $ % $ % 2,250 Social- Age yrs QR $ 3,100 $ 3,150 $ 3,250 $ % $ % $ % 6, $ 228,250 Total Combined Without founders Total Operating ($6,611,350) and Capital Dues ($300,000) to be Levied $ 6,911,350

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