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ORONO GOLF COURSE <br />OPERATING PROFORMA <br />METHODOLOGY <br />Fininclal Organization <br />The operating proforma format is consistent with the City's existing format of financial reporting. <br />However, the proforma is executed on a cash basis, defining the operational impact to cash and does not <br />reflect annual depreciation amounts beyond the year 2001 . <br />Projection Methodology <br />1.AH revenues from green fees, season tickets, and golf car fees derived from rate and volume <br />analysis preceding this section. Consistent with municipal golf facilities, proforma rates assume <br />state saljBs tax of 6.5 percent backed out post sale. <br />2. <br />3. <br />4. <br />5. <br />Golf Car Rentals. Food & Beverage, and Golf Shop revenue increases 3 percent annually. <br />Non-operating revenue (investment earnings) forecast to increase 5 percent Annually. <br />Annual rate of inflation to operating expenses assumed: 3 percent. <br />Capital Improvement derived from schedule preceding this section (page 21), creating a capital <br />reinvestment rate of approximately 6 percent annually over the 15 year projection (2002 - 2016). <br />Operating Margins <br />1.Timeline • operating margin stabilization for overall facility is depicted below: <br />• 2002 16 percent <br />• 2003 26 percent <br />• 2004 • 2005 29 percent <br />• 2006 stabiOzathn 30 percent <br />Future Factors <br />The following is a partial Fist of factors that could influence future operating results: <br />1 . Competitive changes in the current local golf marketplace. <br />2.Environmental. Change in regulations governing waterways, irrigation permitting, water recycling, <br />Change in regulations governing fertilization and/or pesticide usage. <br />3.Other Regulatory Agencies. Interpretations and enforcement of A.O.A. (American's with <br />Disabilities Act). Continued expansion of O.S.H.A. regulations. <br />4. <br />5. <br />Influence of labor unions to current and/or future salary and wage structures. <br />Changes in the national economy and/or local economic conditions in general. The golf business <br />has historically been healthy through recessionary periods. As demographics and other market <br />factors change, the golf business could feel effects of future ecorwmic recessions.