Management Discussion and Analysis of March 2018 Results of Operations and Financial Position

By Tyler Ingle, Controller

The following is intended to be read in connection with a review of the unaudited financials for the period ending March 31, 2018.

 Association Financials - March 2018

Purpose

My objective in writing this article is to provide the reader with a summary of the significant items:

  • Comparing the year to date (YTD) statement of revenues and expenses of the Association with the YTD 2018 budget; and,
  • Comparing the March 31, 2018 balance sheet to the balance sheet as of December 31, 2017.

YTD thru 03/31/2018

On golf and food & beverage:

Total golf revenues were $56K more than budget.  Green fee revenues were $47K more than budget.  Total rounds played thru 03/31/18 was 28,870 which was 1,574 more than budget.

Golf expenses, including depreciation, were $961K or $79K less than budget.  This favorable variance is primarily due to personnel expenses were less than anticipated due to unfilled open positions in the golf maintenance staff.

Food & Beverage subsidy was $45K or $14K less than budget primarily due to Shadows restaurant revenue greater than anticipated.

Replacement fund expenses were $225K or $152K less than budget.  This favorable variance is due to timing and it is expected that these expenses will be incurred in future months.

On the other Operating Fund revenues and expenses:

Total operating fund revenues were $34K more than budget.  The net favorable variance was the result of:  Fitness Class income $10K more than budget; and, Fines for CC&R Violations $9K more than budget.

Total personnel expenses, including salaries and related expenses, including temporary employees for all departments, were $114K less than budget; mostly due to unfilled, open positions.

General and administrative expenses were $66K less than budget.  The net savings YTD is the result of favorable variances including:

  • $30K in personnel expenses
  • $16K in Emergency Preparedness Center – timing variance
  • $17K in printing and copying – timing variance
  • $7K in election expense – timing variance
  • $28K of unused contingency

The favorable variances were partially offset by unfavorable variances including:

  • $9K in audit and tax return (2017 audit completed earlier than anticipated) – timing variance
  • $25K in legal services
  • $7K in property taxes

Landscape expenses were $8K less than budget.  This favorable variance is due to timing and it is expected that these expenses will incurred in future months.

Property protection expenses were on budget.

Maintenance expenses were $18K less than budget; this is primarily due to the delay in completion of certain planned repairs and maintenance.  This favorable variance is due to timing and it is expected that these expenses will be incurred in future months.

Utilities expenses were $4K less than budget; water and electric usage was greater than anticipated.

Fitness expenses were $11K less than budget; this is primarily due to savings in personnel expenses.

Capital improvement expense and common area improvement expense was $13K and $11K less than budget, respectively.  This favorable variance is due to timing and it is expected that these expenses will be incurred in future months.

03/31/18 Balance Sheet as compared to 12/31/17 Balance Sheet

Cash and cash equivalents were $3.1M or $49K more than December 31, 2017.

Certificates of Deposits and Investments, in the replacement fund, were $11.5M or $1.2M more than December 31, 2017. A replacement fund investment in the amount of $1M matured at the end of 2017 which was invested in January 2018.

Assessments receivable were $145K or $13K more than December 31, 2017.

Accounts receivable, other were $145 or $7K less than December 31, 2017.  This amount includes $123K due from Associa related to the financial discrepancy.

Accrued expenses were $424K or $395K less than December 31, 2017.  The reduction in primarily related to payment to the landscape maintenance vendor after the contract was amended and the certificates of insurance and related endorsements required were obtained.

Assessments received in advance were $389K, an increase of $95K from December 31, 2017.

Operating fund balance was $1.75M or $857K more than December 31, 2017 because of the excess of revenues over expenses.

Replacement fund balance was $11.5M or $314K more than December 31, 2017 because of the excess of revenues over expenses.