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January 7, 2016
Dear Member:
We have enclosed a copy of the audited financial statements of The Stanwich Club for the fiscal years ended October 31, 2015 and October 31, 2014 for your review. As in past years, the financial statements show the Operating Fund and the Capital Improvement Fund results separately and the results of the two funds combined.
Financial Overview
Financially, the results of the Operating Fund met expectations in fiscal 2015. The Club ended the year with a small loss of $19,000 in the Operating Fund. Vibrant member usage, strong outing revenue and exceptionally good weather drove the 2015 Operating Fund results.
The Capital Improvement Fund result is a loss of $49,000. This year was marked by the continued increase in junior and junior legacy member admissions. While junior and junior legacy member admissions depress the Capital Improvement Fund revenue, they help to ensure the long term viability to the Club. Additionally, the Board has increased spending on capital projects in response to the continued need to maintain and improve the Club’s infrastructure.
The Club’s financial position is sound as we enter fiscal 2016. However, the past year saw some erosion in the cash positions of both the Operating and Capital Funds. While the Club has an adequate cash position in the combined Operating and Capital Improvement Funds, ongoing capital improvement expenditures decisions require careful consideration during the coming years. The current rate of capital expenditures is not allowing the Club to build its cash position in the Capital Improvement Fund in a meaningful manner.
2015 Operating Fund Activities
Total revenue in the Operating Fund is better than budget by $83 thousand and is $366 thousand ahead of last year. Revenue from membership dues was slightly less than budgeted. Net revenue from food and beverage operations was ahead of budget by $61 thousand reflecting increased member usage of the dining facilities and strong outing results. Net revenue from cart usage, greens fees (including outings) and other golf related activities was $27 thousand ahead of budget.
Operating expenses were $106 thousand more than budgeted; much of the excess due to higher than expected utility costs and unexpected repair costs. Golf course maintenance expenses were less than budgeted by $11 thousand due in part to lower employee costs. Golf activity expenses were more than budgeted by $15 thousand in part due to higher than budgeted employee costs. The Day Camp proved to be very popular again and was $20 thousand more than the budgeted profit of $13 thousand. Due to the changes in the tennis program, costs were higher than budgeted by approximately $60 thousand. Clubhouse expenses were $84 thousand more than budgeted due to expenditures to upgrade and maintain the facility. Finally, general and administrative costs and fixed costs were favorable to budget by $23 thousand.
The result is a net loss of $19 thousand on $9.3 million of Operating Fund revenue. The loss is $23 thousand more than the Operating Fund budget of a $4 thousand profit for fiscal 2015.
2015 Capital Improvement Fund Activities
Capital Improvement Fund revenue after debt service was $1.420 million. The capital expenditures for the year were $1.482 million; $62 thousand more than the Club took in.
In total, expenditures in the Capital Improvement Fund were consistent with the capital projects approved by the Board of Directors. There were several large projects undertaken during the year including redoing the greenside bunkers with new linings and sand, building the 5 target greens on the practice range, paving a significant portion of our roadways and drilling a new well. After interest expense and depreciation (a non-cash charge), the capital improvement fund had a $49 thousand loss in fiscal 2015 (a $119 thousand loss before the interest rate swap adjustment).
2015 Balance Sheet
Members’ equity (unrestricted net assets) at the end of fiscal 2015 is $17.1 million and is $.1 million less than last year due to the combined losses in the Operating and Capital Improvement Funds. Operating Fund working capital decreased slightly by $22 thousand to $1.104 million. The Capital Improvement Fund working capital decreased $106 thousand to $1.126 million.
In September 2007, the Club borrowed $4.9 million from Wachovia Bank (now Wells Fargo) to fund the Golf Course and Clubhouse renovations which is being repaid over 13 years. At October 31, 2015, the loan balance is $2.4 million payable over the next 5 years.
Other Matters
I wish to remind members that under the Club’s by-laws, members who resign during the fiscal year are obligated for the payment of dues and minimum charges through October 31st, the end of the Club’s fiscal year. Membership at Stanwich is annual based on our fiscal year. At its discretion, the Board may waive the payment of these dues and charges for the remainder of the year. When a new member is available for admission to membership, the Board may waive future dues payments, assessments and minimum charges beginning at the quarter following the Board meeting at which the member’s request for resignation is approved. Quarterly dues payments are not prorated. Since the Club does not have a waiting list for nonresident members, those members are obligated for any unpaid quarterly dues payments for the remainder of the fiscal year. Nonresidents who wish to resign should plan to do so in time for approval at the October Board meeting.
In conclusion, I would like to thank the Finance Committee, Guy D’Ambrosio, Mike Summa, Scott Niven, and Richard King for all their contributions during 2015.
Sincerely,
Jeffrey P. Rudolph
Treasurer
JPR:gm
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