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LOWER ARKANSAS WATER MANAGEMENT ASSOCIATION <br /> Financial Report for the Annual Meeting <br /> November 17, 2011 <br /> Your Association owns water rights assets that are appreciating in value every year. While we have <br /> spent over eleven million dollars to acquire these assets over the past seventeen years, they are <br /> worth considerably more today. The Association has long-term liabilities of $ 9.45 million, which is <br /> approximately $461 per share. <br /> Projected total income and funds available for 2011 total $ 1,218,892. Projected expenses for the <br /> year are $ 974,099. This figure includes $ 490,948 for loan payments, $ 232,059 for legal and <br /> engineering expenses, $ 113,859 for supplemental water and water assessments, $27,000 for <br /> outside well testing and $ 110,233 for regular operations. <br /> The Association was able to purchase over 2500 acre-feet of supplemental water this year to <br /> provide additional pumping to those members that desired to lease additional shares. We continue <br /> to monitor new change cases on the river, to negotiate with the opposers in our new cases, pursue <br /> revegetation of dry-up lands, investigate additional replacement water, remain in compliance with <br /> changing rules, and refine the replacement plans. A great deal of additional effort will be required <br /> to protect our water rights in the various cases that we must monitor in future years. <br /> The Board of Directors recommends that the assessment for 2012 be set at $32.00 per common <br /> share ($73.60 per preferred share), which is a three dollar increase from last year. Assuming that <br /> the stockholders approve the Board of Directors recommendation for assessment at $ 32.00 per <br /> share, we expect to have 2012 assessment income and carryover funds of approximately <br /> $1,101,736 total. Budgeted expenditures for 2012 are projected at approximately $ 855,683. This <br /> would leave a balance in our reserve fund of$ 246,053 to start the next year. <br /> The proposed expenditures for 2012 are depicted in the chart below: <br /> LAWMA Proposed Expenditures 2012 <br /> TF, <br /> $490,948 O $80,000 <br /> E <br /> y ; <br /> O $46,000 <br /> . $27,000 <br /> Oo pe ratio ns <br /> ■engineering <br /> Ole gal <br /> Osu p plem a ntal water <br /> Ewe t testing <br /> Oloan payments <br />