b'Financial PerformanceSound financial performance is critical to the success of theThe financial performance of Club Cascadas has beenClub and the comfort and enjoyment of its members. The Clubstrongover the past several years with very modest averagehas performed well for a number of years. increases in maintenance fees. That performance is expectedto continue.Theoperatingbudgetsaredevelopedverycarefullywithinput from all of the resorts department heads. The on-sitemanagementteamsabilitytomanageoperationswithin FACTOIDbudget while providing members and guests with an amazing vacation experience has become legendary. TheCluboperatesareverseosmosiswaterdesalination plant right on the premises that makes about 80,000 gallons Another reason for the Clubs excellent financial performanceper day, enough to provide pure water to all the villas, kitchens, has been the weak Mexican peso. Nearly all of the Clubs annual laundry, pools, and landscaping.revenues come from members annual maintenance fees, whichare paid, of course, in dollars. Throughout the year, approximately The Club operates its own commercial-scale laundry. Members 80 percent of those dollars are converted to pesos to pay forand guests can choose to have this facility launder clothes for payroll,employmenttaxes,utilities,purchasesofgoodsandthem. The price list is posted in each villa.services needed to operate the resort, property taxes, and otheroverheadoftheClub.ThebudgetedMexicanexpensesare translated from pesos to dollars using a conservative budgetedexchangerate.Ifthepesosaresubsequentlypurchasedata lowerpricethanthebudgetedpriceduringtheyear,fewerdollars will be used and a financial surplus can result.Of course, it is possible that the peso may strengthen against thedollar,therebycostingtheClubmoredollarsthanhad been budgeted. With this risk in mind, the Board protects itsoperating budget by implementing certain techniques to hedge against an unexpectedly strong peso. The Board is ever mindfulthat it is in the business of operating a resort in Mexico and not in the business of speculating on the value of the peso.1011'