In the poetic outlook of Charles Dickens in “The Tale of Two Cities,” he described a memorable opening scene with “…it was the best of times, it was the worst of times…”.

At Sussex Pines, with respect to our financial status, we don’t have such a paradox, but we do have some really good things happening and some challenges that lie ahead of us for the remainder of 2007.

Good news>br> • We are moving towards financial solvency – we are in better shape today than we have been over the past 4-5 years.
• Our managers are aggressively and successfully managing their costs to their budgets – all departments combined are about $63K underbudget for the year. Way to go Guys!!!!
• With the capital fund, we are investing in the future of our club and reducing redundant annual maintenance by replacing deteriorating course and house equipment and facilities, most notably:
Golf Course
new tractors and mowers, Replaced irrigation pump, Replaced irrigation intake pipes, Replacing main submersible pump.

Clubhouse
Two new (2) Smoke Eaters, Replacing all pipes-heat/a-c system, Replaced sewer system pump and electrical panel, Replaced Boiler in Furnace, Replaced geothermal heat/a-c unit.

The challenges

(that will have a negative impact on our cashflow for the remainder of the year)
• Membership Attrition Rate was greater than expected we lost more full shareholder members from the end of last year to this year than we had expected

• New member Full Shareholder Targets not achieved resulting in lower Initiation Fees, Dues and House Income We had expected that throughout the year, that we’d grow our membership by about 40 new full share members (or over the whole year – an average of 20)

• New Membership targets for Limited Social not achieved,p> • Refinanced Bank Loan – first principal payment not deferrable to 2008

As we developed the budget, we had anticipated that upon the loan refinancing in March 2007, that we would be able to defer our annual ($90K) principal payment for 2007 to January of 2008. However, as we approached County Bank for the refinancing, a condition of the refinancing that was not negotiable, was a longer-term loan which reduces our annual principal payment, but is required to be paid quarterly starting in June 2007. (a negative impact of $60K in our 2007 cashflow)

• Major Unplanned Capital Expenditures – Air conditioning overhaul. We budgeted to spend $87K in 2007, as you can see in the list above, we are moving along in our capital replacement program, but the air conditioning overhaul is costing us approx. $50K more than we had expected.

To summarize our expected 2007 cashflow shortages:

Budget --------------Year-end-------Shortfall----------Commentment

2006 Carryover------$80K------- -$80K-----$0 This was expected - met with line of credit
Member dues/ initiation fees----$138K------$138K Member Numbers not met
Bank Principal pymnt -$60K -$60K expected 1st pymt in Jan'08 HVAC*** -$25K -$25K $0 This was expected - met with line of credit Totals -$105K -$303K -$198K capital income $87K $82K -$5K Member Numbers not met capital spend*** -$87K -$109K -$22K Air Conditioning costs higher ($50K higher) When we refinanced the loan for the club in March, we were able to build in a flexible line of credit up to $250K. In July, we expect that we’ll be borrowing $150K against that Line of Credit to help us meet these shortfalls. What can we, as members, do to help mange our cashflow needs: • Continue to keep your account current, preferably, to help our cashflow, we’d appreciate payment by the 15th of the month. o For the month of June, we received over 40 checks at the end of the day on the last business day and a bunch on Saturday/Sunday - too late for the bank – and too late to be processed for “on-time” payment. • Help us market the club – bringing in guests for prospective new membership, and promote outside banquets. • Social members, please consider a voluntary contribution to the Capital Fund. A quick look at our financials through May 2007

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