2 0 1 5 A N N U A L R E P O R T

desert mountain club, inc.

MISSION STATEMENT

Vision and Mission Statements . . . . . . . . .4

President’s Letter . . . . . . . . . . . . . . . . . . . .5

Board of Directors . . . . . . . . . . . . . . . . . . .6

Committees . . . . . . . . . . . . . . . . . . . . . . . .7

Committee Reports . . . . . . . . . . . . . . . . . .8

By the Numbers . . . . . . . . . . . . . . . . . . . .13

2015 Financial Summary . . . . . . . . . . . . .14

2016 Financial Budget . . . . . . . . . . . . . . .16

Senior Staff 2015 . . . . . . . . . . . . . . . . . . .17

Letter from the COO/General Manager . . . . . . . . . . . . . .18

Welcome to Our New Members in 2015 . . . . . . . . . . . . . .20

Sonoran Renovation Project . . . . . . . . . .22

Event Highlights of 2015 . . . . . . . . . . . . .23

TABLE OF CONTENTS

Desert Mountain Club’s goal is to be one of the finest privategolf and recreational communities in North America.

The Desert Mountain Club is dedicated to providing its members,their families and guests with a commitment to excellence resultingin member pride and a distinguished reputation.

VISION STATEMENT

MISSION STATEMENT

LETTER FROM THE PRESIDENT

Dear Fellow Member,

On behalf of the Desert Mountain Club Board of Directors andClub management, I am pleased to share with you the 2015 Annual Report highlighting the key events and achievements atthe Desert Mountain Club in the past year.

Looking back on my first year as board president, I believe that wehave made meaningful progress in advancing the board’s importantgoal of shifting the Club’s culture to being more inclusive of themembership. Hopefully, you have experienced first-hand our commitment to respond to all member inquiries and to encouragemembers to ask questions and share suggestions one-on-one withboard members during “Office Hours.” In addition, we introducedFrom the Boardroom, an informative newsletter to keep you up to date on the initiatives, policies and matters being discussed bythe board.

I also want to thank all of you who took the time to attend thevarious focus groups to discuss such topics as agronomy and foodand beverage. We will continue to enhance our communicationin the coming year, with a focus on creating a better understandingof Club operations and strategies, and taking advantage of yourideas in positioning us for a successful future.

On the operational side of the house, the Club achieved a numberof important initiatives:

• Managed the Club in a fiscally responsible way and achievedour budgeted earnings;

• Continued to pay down the debt ahead of schedule—$12.5 million since turnover;

• Completed the sale of excess HVID irrigation pipeline capacity. • Invested $1.5 million in infrastructure repairs and maintenance

during 2015;• Set aside 5% of revenue for future repair and maintenance from

the pipeline proceeds;• Exceeded expectations with an improved bottom line for the

Charles Schwab Cup Championship;• Completed Phase 1 construction of the Sonoran Clubhouse in

early December;• Continued on-track progress to complete the renovation of the

Sonoran Clubhouse with a grand opening in the fall;• Finished the first full year of operations at The Ranch and

witnessed strong reservations for horseback rides and luxurycamping;

• Successfully negotiated an agreement to sell Parcel 19 for consideration by the membership; and

• Promoted a closer working relationship with the Desert Mountain Master Association (our HOA) for the mutual benefit of both organizations and respective memberships.

Much work was also done to improve the value of our member-ships while assisting those who wish to exit the Club. More specifically, the board revised the Membership Resale Program byinitiating a monthly minimum base price for participating members and studied the possibility of introducing, at some point

in the future, the sale of Treasury Memberships to offset the loss ofmembers who passed away or have otherwise departed the Club. My review of the last year would not be complete without a personalthank you to more than one-half of the membership who participated in the 2015 Member Survey. You provided invaluableinformation about how well the board, committees and senior management are meeting the needs of our membership. Four themes emerged from the feedback: (1) golf course availabil-ity to the membership; (2) golf course variety during the summermonths; (3) value and dues increases; and (4) consistency in theClub restaurants. In response to your feedback, we have revisedseveral policies and created new programs to address your input,with more to come: • We limited the 2016 dues increase to only 3.6%, to capture an

increase in cost of operations, sufficient funding for repair andreplacement reserves and an offset to membership attrition.

• We adopted an overseed schedule that will result in 16 moregolf days annually and provide access to more courses.

• We revised the golf guest policy (effective June 1) to improvemember accessibility to the courses.

• We introduced a Thursday Burger Bash at Renegade, an expanded Friday Fish Fry and Saturday Taco Bar at Outlaw, and a Sunday Roast at the Cochise/Geronimo men’s grill.

• We featured special wine offerings and pricing.Additionally, we are continuing to review the Club’s options forproviding more casual dining experiences to the membership byleveraging our existing facilities. At the same time, work is underway with the Strategic Planning Committee and seniormanagement to adapt our long-range plan for continuing success.Stay tuned for more information on both fronts… There has never been a more exciting time to be a member ofDesert Mountain. In the year ahead, we will celebrate the grandopening of the Sonoran fitness center and enjoy the new programsand amenities. It is no wonder that the phrase “we are living thedream” is circulating around Desert Mountain! The board and management are committed to making DesertMountain one of the finest clubs in North America. This can onlybe accomplished by focusing on the input from our members andshaping our strategic plan to address future challenges that will realize our goal of making Desert Mountain Club all that it can befor all of us. I’d like to thank the Club divisional directors, managers and all the Desert Mountain Club employees for your hard work in 2015. Thank you to the members, the board, committees and senior management for your continuing support…and here’s to aspectacular 2016!

Joe Maslick, President

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DESERT MOUNTAIN BOARD OF DIRECTORS

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Joe Maslick, President Chuck Harrison, Vice President Gary Thomas, Secretary

Kathy Henderson, Treasurer Robert Borsch Stephen Clark

Harold Eastridge Carol Ann Petren Bill Robinson

DESERT MOUNTAIN COMMITTEES

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The Board of Directors Committeesplay a significant role in the daily operations of the Desert MountainClub. These nine specialized commit-tees help to determine the annualbudget, research and recommendcourses of action, settle differences,review projects, weigh future options,and provide information and insightfrom which the board can make informed decisions that contribute tothe enjoyment of the Club by allmembers.

Joe Maslick, ChairPatrick Allender, Member-at-LargeRobert Baumgartner, Member-at-LargeNora Gevlin, Member-at-LargeHenry Seduski, Member-at-Large

AUDIT

Gary Thomas, ChairStephen Clark, Board MemberHarold Eastridge, Board MemberCarol Ann Petren, Board MemberFrances Emerson, Member-at-LargeJoanne Klonoski, Member-at-Large

COMMUNICATIONS

Robert Borsch, ChairJanet Anderson, Member-at-LargeDavid Balak, Member-at-LargeLynda Baker, Member-at-largeBurt Barnett, Member-at-LargeChuck Borkan, Member-at-LargePete Cunningham, Member-at-LargeBill Friedl, Member-at-LargeMaisie Heiken, Member-at-LargeKeith Kelly, Member-at-LargeMary Kuehn, Member-at-LargeArthur Rosenbloom, Member-at-Large

DISCIPLINARY

Kathy Henderson, ChairStephen Clark, Board MemberGary Thomas, Board MemberGeorge Benz, Member-at-LargeSid Bostic, Member-at-LargeBob Engelman, Member-at-LargeGeorge Juetten, Member-at-Large

FINANCE

Gary Thomas, ChairChuck Harrison, Board MemberCarol Ann Petren, Board MemberBill Robinson, Board MemberStephen Anderson, Member-at-LargeJanet Curry, Member-at-LargeSharon Slattery, Member-at-LargeBarbara Stewart, Member-at-LargeGene Thomas, Member-at-LargeRussell Thornton, Member-at-LargeRalph Whitley, Member-at-Large

GOLF

Harold Eastridge, ChairKathy Henderson, Board MemberBill Robinson, Board MemberDiane Hurter, Member-at-LargeChris Storbeck, Member-at-LargeAnita Wallace, Member-at-LargeChris Wilson, Member-at-Large

MEMBERSHIP

Joe Maslick, ChairRobert Borsch, Board MemberKathy Henderson, Board MemberCarol Ann Petren, Board MemberRon Goade, Member-at-LargeBarb Pearse, Member-at-LargeJerry Strickland, Member-at-LargeRalph Yohe, Member-at-LargeSpecial Sub-Committee (selected in 2016)Leo BirkbyJoanne KlonoskiGeorge KuehnJim MacAllenJames PickettGreg Wylie

NOMINATING

Robert Borsch, ChairStephen Clark, Board MemberBill Robinson, Board MemberRoger Greaves, Member-at-LargeStephen Gregory, Member-at-LargeMike Keskey, Member-at-LargeWayne Mailloux, Member-at-LargeDeborah McIntyre, Member-at-LargeLarry Porcellato, Member-at-LargeScott Urdang, Member-at-Large

STRATEGIC PLANNINGRalph Whitley, ChairJan AndersonNancy BesemerBetsy LindsayKeith ReeseAl SmithJeff ZiekyMike Scully, Director of Golf

HANDICAP

DESERT MOUNTAIN COMMITTEE REPORTS

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AUDIT REPORT

by Chairman and Board President Joe Maslick

The Desert Mountain Club, Inc. (DMCI), Audit Committee isgoverned by the DMCI bylaws which describe, among otherthings, the committee’s oversight responsibilities. In the performance of these, the Audit Committee has reviewed anddiscussed with management and the independent public accounting firm of Rauch, Hermanson, Everroad & Rentscler,Ltd., DMCI’s audited financial statements for the year endedDecember 31, 2015, and the effectiveness of the internal controls over financial reporting as of December 31, 2015.

Also discussed with the independent public accounting firm:

• Matters required to be discussed in accordance with Auditing Standard AU-C Section 260

• Independence requirements of independent public accounting firms and the confirmation of the independenceof Rauch, Hermanson, Everroad & Rentscler, Ltd.

• The overall scope, plans and fees for the audit of the financial statements for the year ended December 31, 2015.

The committee met with the independent public accountingfirm, with and without management present, to discuss the results of its examination, evaluations of DMCI’s internal controls and the overall quality of the Club’s financial reporting.

Based on the reviews and discussions referred to above, in re-liance on management and the independent public accountingfirm, and subject to the limitations of our role, the committeerecommended to the Board of Directors (and the board has approved) the inclusion of the consolidated financial statementsreferred to earlier in DMCI’s Annual Report for the year endedDecember 31, 2015.

COMMUNICATIONS REPORT

by Chairman and Board Secretary Gary Thomas

A new committee was created by the Desert Mountain BoardPresident in 2015 to enhance the effectiveness of communica-tion to and from the staff and the board, for the benefit of Clubmembers. Areas of focus include member face-to-face commu-nication initiatives (i.e. board Office Hours, town hall meetings,focus group meetings) as well as electronic platforms such as an

improved website, appropriate mobile apps and social mediaplatform interfaces.

The committee moved to establish an improved communica-tion with the membership titled “From the Boardroom” (FTB).With a release timeline targeted to be within two weeks after aboard meeting, FTB summarizes the key topics and issues offocus from the most recent meeting in a short, easy to readnewsletter format emailed to the membership.

Committee members analyzed the communication venues thathave been utilized in the past. From January 2014 through June2015, 1,950 email messages were distributed to the membership.Issued by the board, management, and divisional directors andmanagers (agronomy, food and beverage, golf), the e-blasts wereon a variety of topics including informational board letters,meeting recaps, elections, meeting and focus group announce-ments, event invitations, divisional and project updates andmore. The average open rate was 60%, which is quite good, although the effectiveness of the communication cannot be discerned.

Also reviewed by the committee was the process of generatingand publishing Nagonie, the four-color, quarterly newsletter thathas been used to inform, educate and update members aboutDesert Mountain events, issues and projects for nearly twodecades. It is currently hard copy mailed to members, is availableas an electronic “C-Book” that is posted on the member websitehomepage and it is archived by year. It was concluded that whilethe content of Nagonie is appropriate, the value of creating hardcopies may have run its course. So Nagonie was changed froma mailed glossy publication to an email-based publication withonly a limited number of hard copies available for marketingpurposes and upon member request.

In addition, we initiated a project to update the Desert Mountain website, which is to be the communication platformof choice for the membership. With the emergence and growthof mobile devices, the trend in website design is to allow webpages to adapt to the display size and type of device being used(i.e. PC, tablet, smart phone). The committee studied a widevariety of websites from both within and outside the club services industry to be used as a model. A third-party firm(ClubEssentials) was selected to work with the Desert Mountainteam on the redesign.

The new Desert Mountain website will have a cleaner look withmore user-friendly landing pages, reduced clutter, and reducedcontent based on usage data and importance of the data. Theredesign will also focus on providing easier navigation, targetinga maximum of two clicks to get to priority areas (i.e. book a teetime, make a dinner reservation, view statement, directory, posta score). Additionally, an easy to view calendar will be installed.Look for the new website to go live in 2016.

DESERT MOUNTAIN COMMITTEE REPORTS

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MEMBERSHIP REPORT

by Chairman Harold Eastridge

The Desert Mountain Membership Committee is focused onthree initiatives: 1. To review and process all membership applications for approval by the board; 2. To establish and up-hold consistent policies and procedures to protect the Club andmembers’ interests with integrity and assure compliance with

DISCIPLINARY REPORT

by Chairman Robert Borsch

The Disciplinary Committee of the Club, as established in ourbylaws, is the means by which we encourage a culture to ensurethe member’s peaceful enjoyment of their Club, the welfare ofour Club employees and the Club’s good reputation. In 2015,the board approved and implemented two important newinitiatives to make this process even more effective.

The first was to restructure and rebalance the Disciplinary Committee to greatly increase member-at-large involvementand reduce direct board participation. Ten new volunteer members-at-large were recruited to join the committee, andboard participation was reduced to only the chairman position.The second was a major update and repositioning of the DesertMountain Club Rules and Regulations, code of conduct and disciplinary guidelines. This has helped to make our rules andregulations more relevant to today’s culture and provides bettertransparency for the members regarding the acceptable and desired behavior at the Club.

Under this approach, the committee, who are all fellow members,first reviews rules infractions of our Club rules and regulationsand/or code of conduct. Their recommendation then goes to theboard for a final determination of any recommended action.

The goal of a disciplinary process in a fine private club is to helpestablish and maintain a positive and enjoyable culture wheremembers can consistently realize their aspiration of a wonderfulexperience at their club. Our rules and regulations and code ofconduct embrace a set of core and shared values focusing on ourmembers, our people and our Club. At the core of our valuesare integrity, teamwork, mutual respect, civil behavior, courtesyand personal responsibility. Through a common set of sharedvalues we will enhance our commitment to excellence, providethe best possible membership experience, ensure that we con-tinue to attract and retain high performing employees, protectthe reputation of the Club and create a financially sustainablefuture for the Club.

the bylaws; and 3. To assist the Club in achieving its goal of attracting new members to maintain a vibrant membership andincrease the value of a Desert Mountain membership.

In 2015, the committee worked on several initiatives to enhance the membership program by building value and to attract new members:

1.Membership Resale ProgramIn November, the committee initiated a monthly minimumbase pricing for members participating in the MembershipResale Program which was effective December 1, 2015. Thismeans that participating member sellers cannot set an askingprice for their membership that is lower than the base priceset by the board for that month. Base pricing in January 2016was set at $41,000 which increased to $47,000 in Februaryand to $53,000 in March.

2.Treasury MembershipsThe reinstatement of the Club’s treasury memberships givesthe Desert Mountain Board of Directors the option of insert-ing treasuries into the MRP. By this action, we will be addingto the base number of our equity golf members which will stabilize declining dues revenue primarily due to exiting charter members, bankruptcies and delinquencies. At thistime, no treasuries have been issued through the MRP.

3.Revised Member Referral ProgramReferring friends, family and other prospects to join DesertMountain is the primary way that the Club grows its mem-bership. A new incentive was introduced last year—for every referral that results in a membership, the referring memberwill be entered into a drawing for a grand prize of a $25,000club credit. The incentive runs through April 2016 which isalso when the drawing is scheduled. The committee asks formember assistance to help generate new memberships so thatDesert Mountain can remain vital and sustainable now andin the future.

Last year the Club generated 153 new memberships. These included 126 equity golf memberships of which 100 member-ships came to us through the MRP, 21 were real estate transfers,three were legacy transfers and two were member-arrangedtransfers. In addition, there were 27 new equity lifestyle memberships of which 14 were lifestyle purchases and 13 weresenior membership additions.

In 2016, the committee will continue to review current membership levels and marketing programs, monitor the effectiveness and consistent applications of Club policies affecting Club usage and on an ongoing basis, focus on attractingnew members and member retention.

DESERT MOUNTAIN COMMITTEE REPORTS

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GOLF REPORT

by Chairman and Board Secretary Gary Thomas

Now in its fourth year, the Desert Mountain Golf Committee in 2015 focused on initiatives, new policies, and input to Club management insupport of improving the ultimate golfing experience at Desert Mountain.

The Desert Mountain tactics in support of the goal focused on optimizing golf course conditioning, playability and accessibility for alllevels of players, enhancing member tournament and staff-led events,long-range golf course renovation planning, increasing benefits to themembership through the Jim Flick Golf Performance Center, hostingselect high profile professional and amateur regional tournaments, andimplementing new technology.

In 2015 the committee saw good progress in most areas as summarizedbelow:

• Led by Desert Mountain’s Director of Agronomy Shawn Emerson,the golf courses returned to Desert Mountain standards after incur-ring major flood damage in September 2014. For the 2015/2016 golfseason, the board approved and funded an upgraded overseed planto maximize green golf in-season consisting of four fully overseededcourses, one partially overseeded course, and one dormant course.As a result of the agronomy programs and operational practices,Desert Mountain’s 108 greens remained excellent for the year.Excellent greens speed, moisture content, and firmness have beenvery consistent day-in and day-out from course-to-course.

• Many notable golf course renovation items were completed. TheChiricahua and Geronimo sand bunkers were all converted to a newsand mix, resulting in improved playability and better drainage. Several bunker changes were made consistent with the long-rangeplan on Geronimo holes #8 and #15, as well as Cochise hole #8.Tee-it-Forward tees were completed on Geronimo and Apache. Together with Nicklaus Design Associates, initial planning activityhas started on the longer-term renovation of the Renegade course.

• Led by Desert Mountain’s Director of Golf Mike Scully, all majormember tournaments were operated better than in previous years(see the chart below for past and current participation). The resultwas that all received a 90% satisfaction award from the membership.

2015 2014 2013EVENT Participation Participation Participation

The Rattler 104 124 92Dos Amigas 214 230 192Dos Amigos 288 284 232Mountain Magic 208 214 180Mountain Mania 402 422 370

Based on feedback received in the 2015 Member Survey and golf focusgroups, additional golf programming was added. New events such asOutlaw’s Six Shooter, the new couples social golf 9 and Dine, theMountain Madness season-long men’s match play championship, as

well as the Round-Up couples match play have resulted in excellentparticipation.

Additionally, golf rounds were up in 2015 and set a 10-year high. Atotal of 144,067 rounds were played. Balance of play on all of the golfcourses was excellent with all courses exceeding 20,000 rounds.

• New policies for 2015 and 2016 focused on enhancements to theForeTees tee time reservation system to improve member accessibil-ity and better utilization of tee times on Desert Mountain courses. Examples of changes include modifications to group golf for largegroups, changes to group golf access during major tournaments and during summer agronomy periods. A “72 hour window” for enteringplayer names to enable better member access was added and hole #1and #10 starts were introduced during summer months so that members could play at more desirable times. Also, enhancementswere made to the golf guest policy affecting how guests and unaccompanied players may access the courses.

• The state-of-the-art Jim Flick Golf Performance Center saw increasedrevenue, equipment and apparel sales in 2015. Several installmentsof the Instructional Summit Series and an exhibition clinic by Champions Tour Pro Stephen Ames were enjoyed by many members.

• Tournament and charitable event golf experienced a great 2015.Desert Mountain conducted a very successful 2015 Charles SchwabCup Championship and received the PGA Championship Tour andPlayers Award as the “Best Course on the Tour” for the third time.Desert Mountain hosted the 100th Annual Southwestern Amateur and the Desert Mountain Intercollegiate, both of whichhave grown in reputation. We also hosted the CARE and Youth Angels tournaments raising over $400,000 donated to local charitiesby Desert Mountain members. These all bring visibility to DesertMountain and give back to the community in various ways.

• After many years of inactivity, a focus was placed on getting DesertMountain golf back into the state and national rankings. A ratersprogram was put back in place and focused on the top two rankingbodies, Golfweek magazine, and Golf Digest. Golfweek raters wereonsite in late January and raved about the Chiricahua and Geronimocourses. For national ratings, Jack Nicklaus advised focusing on thetwo courses for ratings improvement. It will take a few years to realizethe desired results, but it is an important initiative to keep DesertMountain relevant in the world of golf.

• New technology played a significant role in our Desert Mountaingolf experience. The first full year of Visage GPS technology in ourgolf cart fleet helped improve our pace of play by 10 minutes. Newtechnology on the agronomy side helped Desert Mountain save 125million gallons in reclaimed water for irrigation due to the installa-tion of technology from OnGOLF and IBM ANALYTICS. Newprograms and practices resulted in Desert Mountain’s continued improvement of our bermuda base, necessitating the replacement ofonly one acre of sod on the 480 acres of bermuda contained on ourgolf courses.

Please join me in thanking your dedicated professional and agronomicstaff who strive to continuously enhance the Desert Mountain golf experience for the benefit of our members.

DESERT MOUNTAIN COMMITTEE REPORTS

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HANDICAP REPORT

by Chairman Ralph Whitley

In 2015, the Handicap Committee focused on three initiatives-the first was to assist the golf staff with the transition of theDesert Mountain T-Index system to a new software platform formore efficient tournament management. The T-Index can nowbe calculated directly from postable tournament scores withoutthe need to manually re-enter those scores.

The second initiative of the committee was to communicate tothe members the pertinent USGA handicap changes that wentinto effect January 1, 2016. Among the most notable changeswere that rounds played individually (by yourself) are no longerpostable as well as the putter “anchoring” ban. These changeswere communicated to the members through the Nagonienewsletter, Director of Golf Mike Scully’s “Message from Mike”e-blast and prominent signage in the golf shops. It is a respon-sibility of the committee to help insure that the USGA’s rulesand guidelines are adhered to so that Desert Mountain Club can maintain its USGA certification.

In addition, the committee continued to monitor exceptionaltournament performances.

The group’s goals in 2016 are:

• Ongoing communication, enhancement and improvementof the Desert Mountain T-Index system and formula toachieve the desired objective of measuring an individual’sscoring potential in tournaments at Desert Mountain.

• As required by the USGA, the committee will continue toreview exceptional tournament performances and, when appropriate, take action as necessary.

• Continue efforts to insure that all member golf rounds thatare postable are being posted. To that end, the committee hasrequested the golf staff to work with ForeTees developers totry to improve and enhance the reporting process out of ForeTees which has become somewhat of a challenge for thecommittee and staff.

The Handicap Committee is independent of and does not report to the Desert Mountain Board of Directors. The commit-tee, consisting of seven Club members and the Director of Golf Mike Scully, adheres directly to USGA guidelines. The chairman of the Handicap Committee is a member of the DesertMountain Golf Committee.

FINANCE REPORT

by Chairwoman and Board Treasurer Kathy Henderson

For the Finance Committee, 2015 was another very active and challenging year. From an operations perspective, there were signif-icant budget challenges primarily due to members attempting towalk away from the Club’s contractual obligation costing existingmembers a loss of dues revenue and additional legal expenses. However, these challenges were offset by better than expected membership sales. In the end, the Club met the budget and finishedthe year with a minimal favorable performance in the change of netassets, excluding the gain from the water capacity transaction and the Sonoran assessment. During the year, the Club continued compliance with all debt covenants and reduced the long-term debtby $3.5M, for a cumulative reduction since turnover of $12.5M.

The 2016 budget process was another major focus for the FinanceCommittee. Management was able to balance the additional costs re-quired under the new agronomic plan and employee payroll and benefitchanges while minimizing dues increases compared to prior years.

There were two significant non-recurring financial transactions dur-ing the year: the Sonoran assessment and the IWDS water capacitysale. The Sonoran assessment, with a variety of payment plans, wascollected starting in January 2015. The renovation is currently onbudget and the assessment funds are projected to be on target forproject completion in fall 2016. At year-end, $4.7M in cash remainsin the capital fund to complete the project. In June 2015, the Clubclosed on the sale of the IWDS water capacity transaction with netproceeds of $5.4 million, which is being held in both designated andnon-designated capital funds for current and future project needs.

In addition to the regular financial operations, the committee addressed the following issues with Club management:

• Presentation of the Long-Range Capital Plan with a 20-year financial forecast.

• Benchmarking Club operations with other private multi-coursegolf clubs.

• Approval of the fifth modification of the Club’s loan agreementwith National Bank of Arizona.

• Review and approval of the Total E information technologyproject which will enable the Club to integrate applications, increase productivity and streamline operations, scheduled togo live in summer 2016.

Looking ahead, the Finance Committee will focus on overseeingcurrent operations with improved financial efficiencies, reviewingthe progress of the current capital projects, developing a five-yearfinancial model with the Strategic Planning Committee, and planning for the Parcel 19 sale as well as future capital needs for theRenegade course.

DESERT MOUNTAIN COMMITTEE REPORTS

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STRATEGIC PLANNING REPORT

by Chairman Robert Borsch

The Strategic Planning Committee is charged by the DesertMountain Board of Directors to maintain and refresh from timeto time the long-range plans for the Desert Mountain Club. Ina private club, strategic planning for the future is a primary responsibility of the club board and is one of their most important areas of focus.

The committee members include three members of the boardand usually five or more members-at-large, with an impressivearray of valuable skills in managing complex businesses, branddevelopment and marketing, business planning, communica-tions, real estate development, and economics.

The Strategic Planning Committee supports the board’sstrategic planning activities. This includes doing research on economic trends likely to influence private clubs and real estatein resort and second home communities, consulting with cluband resort community experts, benchmarking our operationswith our top private club peer group and researching best practices employed by other great private clubs. In 2015 theClub board, in conjunction with the Strategic Planning Committee, agreed that it is time to refresh the Club’s strategicplan. The current strategic plan had been developed shortlyafter the Club turnover with most of the original initiatives hav-ing either been completed or in the final phase of completionas the club world continues to evolve.

Throughout 2015 the committee and board have been workingdiligently to assemble the necessary background analysis and research to support our plan update. As part of that, we havecreated a long-range “Financial Roadmap” that enables us toexplore the financial impact of the various strategic options weshould be considering. That roadmap was first reviewed withmembers at our 2015 Annual Meeting. In the late summer andearly fall we conducted an in-depth membership survey to secure extensive input and preferences from the membership toidentify and quantify members’ interests and important issuesthat needed to be addressed. With this research and memberguidance, we have proceeded to draft an updated five-year-planwhich we believe is responsive to market trends and is in touchwith the input from our membership. During 2016, we will bereviewing and sharing with the membership our refreshed planto be sure that it is responsive to the membership’s input and tomake sure that the Club is sustainable long into the future.

In summary, the board and management are confident thatDesert Mountain will continue to be among the finest golf, recreational and real estate communities for many years to come.

NOMINATING REPORT

by Chairman and Board President Joe Maslick

During the past year, the Nominating Committee focused onthe governance of the election of the Desert Mountain ClubBoard of Directors. The goal of the committee was to developan election process that was clear, efficient, and inclusive. Ofequal priority was the call for member engagement in runningfor the board as well as in governing the election process. Toward that end, an election committee was formed consistingof two (2) members-at-large for every one (1) committee boardmember and a process was implemented to select as many candidates as possible with the expertise, experience and diver-sity needed on the board. We could not have been more pleasedwith the enthusiastic response from our members. The 2016election witnessed nine (9) candidates running for the three (3) open seats on the board, and the incredible work of the following nine (9) members-at-large in the governance of theelection process:

Leo Birkby Jim MacAllen Jerry StricklandJoanne Klonoski Barb Pearse Greg Wylie George Kuehn Jim Pickett Ralph Yohe

In the spirit of continuous improvement, the committee’s goalfor 2016 is to enhance the Club’s procedures and protocols inother areas of governance. As part of that effort, the Nominat-ing Committee is committed to broadening the diversity, expanding the skill set and increasing the number of members-at-large serving on board committees and special projects.While there has been progress in increasing the number ofmembers-at-large serving on committees from fifteen (15) in2013 to thirty-nine (39) in 2015, looking ahead, the Nominat-ing Committee will continue to engage even more memberswith the experience needed to make the committees as effectiveas possible.

To support the above initiatives, the Nominating Committeeencourages equity members who are interested in sharing theirtime, talent and insights to volunteer for committee work andto submit their nomination for board candidacy. Please sendyour name and contact information to Francine Keller atfkeller@desertmt.com or call 480-595-4029 if you are willing toserve in any way.

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DESERT MOUNTAIN BY THE NUMBERS

2015 2014

Club’s Mortgage Debt $34.5 million $38 million

Total Memberships 2,101 2,127

Equity Golf Memberships 1,928 1,959

Equity Club/Lifestyle Memberships 81 65

Non-Equity Memberships 92 103

Average Age of Members 66 65

New Members 153 120

Average Age of New Members 62 58

Members from the U.S. 1,970 2,004

States Represented 47 48

International Members 131 123

Countries Represented 10 8

Total Golf Rounds Played 144,067 142,317

Total Member Rounds Played 113,903 113,715

Total Guest Rounds Played 23,198 22,452

Total Online Restaurant Reservations Made 11,322 13,087

Total Meals Served at the Restaurants and Grills in 2015 244,274 246,539

Average Total Spent by Members at the Club $9,378 $9,059

Total Man Hours to Maintain Each Course Annually 56,000 60,000

Number of Employees-High Season 638 653

Number of Employees-Low Season 458 460

Number of Page Views on Member Website Annually 1,725,596 1,673,783

* Includes 13 senior memberships.

*

2015 FINANCIAL SUMMARY

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DESERT MOUNTAIN CLUB generated $64million in total revenue and incurred $63.9million in total expenses during 2015. As thegraphs below demonstrate, the primary sourceof operating revenue is monthly Club Dues of$33.2 million, followed by Golf and Tennis operational revenue of $11.3 million, Food andBeverage revenue of $10.3 million and Initia-tion and Transfer Fee revenue of $8.2 million.The Club’s primary expenditures are GolfCourse and Facility maintenance of $21.5 million followed by Administrative and General expenditures of $12.3 million (whichincludes Sales, General and Administrative expenditures of $11.0 million plus other club-house expenditures of $1.3 million), Food andBeverage expenditures of $7.7 million, Golfand Tennis expenditures of $7.6 million andCost of Sales of $5.7 million. The Clubrecorded one non-cash accounting adjustmentsin 2015 totaling ($183K). The adjustment wasrelated to the fair market value adjustment forthe interest rate swap. The interest rate swaprecognizes the fair market value of the swapand will be adjusted in future years based onchanging interest rate expectations.

DESERT MOUNTAIN CLUB, INC.Condensed and Consolidated Statement of Financial Position

As of December 31, 2015 ($ in 000’s)

ASSETS

Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . .$15,492Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$5,092Other Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$2,665Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$124,184

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$147,433

LIABILITIES

Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$693Other Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .$11,123Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$6,421Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$33,671

Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$51,908

Net Assets, Unrestricted . . . . . . . . . . . . . . . . . . . . . . . . . . .$95,525

Total Liabilities and Net Assets . . . . . . . . . . . . . . . . . . . . . .$147,433

DESERT MOUNTAIN CLUB, INC.Condensed and Consolidated Statement of Activities

For the 12 Months Ended December 31, 2015 ($ in 000’s)

REVENUE AND EXPENSES

Dues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$33,156Other Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$21,938

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$55,094

Cost of Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$5,748

Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$49,126

Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$54,874

Change in Net Assets from Operations . . . . . . . . . . . . . . . . . . .$220

OTHER INCOME AND EXPENSES

Initiation and Transfer Fees & Other . . . . . . . . . . . . . . . . . . .$8,905Assessment and Sale of Asset . . . . . . . . . . . . . . . . . . . . . .$14,074Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .($1,431)Depreciation, Amortization and Taxes . . . . . . . . . . . . . . . .($7,666)

Other Income and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .$13,882

Change in Net Assets Before Other Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . .$14,102

Other Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . .($183)

Change in Net Assets After Other Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . .$13,919

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DESERT MOUNTAIN CLUB, INC.Condensed and Consolidated Statement of Cash Flows

For the 12 Months Ended December 31, 2015 ($ in 000’s)

CASH FLOWS FROM OPERATING ACTIVITIES

Change in Unrestricted Net Assets . . . . . . . . . . . . . . . . . . .$14,102Depreciation and Amortization . . . . . . . . . . . . . . . . . . . . . . .$7,579Assessment and Sale of Asset . . . . . . . . . . . . . . . . . . . . . .($14,074)Change in Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . .($597)

Net Cash Provided By (used in) Operating Activities . . . . . . .$7,010

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from Disposition of Water Capacity . . . . . . . . . . .$5,389Additions to Property, Plant and Equipment, Net . . . . . . .($7,666)

Net Cash Provided By (used in) Investing Activities . . . . . . .($2,277)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds Designated for Capital Improvements . . . . . . . . .$8,686Payment on Intangible Water Rights Obligation . . . . . . . . . .($959)Repayment of Long-Term Debt . . . . . . . . . . . . . . . . . . . . .($4,449)

Net Cash Provided by (used in) Financing Activities . . . . . . .$3,278

Net Increase (Decrease) in Cash and Cash Equivalents . . . . .$8,011

Cash and Cash Equivalents, Beginning of Year . . . . . . . . . . . .$7,481

Cash and Cash Equivalents, End of Year . . . . . . . . . . . . . . . .$15,492

NOTE:Refer to audited consolidated financial statements for more details.

Revenue* 2015 %

Dues $33.2 51.9

Pro Shop and Tennis $11.3 17.7

F&B $10.3 16.1

Initiation and Transfer Fees $8.2 12.8

Other Income (1) $1.0 1.6

$64.0 100

2015 FINANCIAL SUMMARY

(1) Land and building rental, other misc.revenues

*Does not include Assessment and Sale of an Asset

(1) Excludes other comprehensive loss

(2) Clubhouse (i.e. valet/locker rooms andMember Services)

2015 REVENUE (millions of dollars)

Expenses (1) 2015 %

Pro Shop/Tennis Cost of Sales $2.4

F&B Cost of Sales $3.3

Total Cost of Sales $5.7 8.9

Pro Shop and Tennis $7.6 11.9

F&B $7.7 12.1

Golf Course and Facilities $21.5 33.6

SG&A $11.0 17.2

Other Expense (2) $1.3 2.0

Interest $1.4 2.2

Depreciation, Amortization and Tax $7.7 12.1

$63.9 100

2015 EXPENSES (millions of dollars)

Dues52%

Pro Shopand Tennis

18%

F&B16%

Initiation andTransfer Fees

12%Other

2%

Golf Courseand Facilities

34%

SG&A17%

F&B12% Pro Shop

and Tennis12%

Cost ofSales

9%

Depreciation,Amortization

and Tax12%

Interest 2%

Other 2%

2015 REVENUE 2015 EXPENSES

2016 FINANCIAL BUDGET

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DESERT MOUNTAIN CLUB, INC. | Condensed and Consolidated Statement of Activities | ($ in 000’s)

REVENUE AND EXPENSES 2016 BUDGET 2015 BUDGET

Dues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$34,526 $33,551Other Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$22,216 $21,480

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$56,742 $55,031

Cost of Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$5,667 $5,425Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$49,695 $48,612

Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$55,362 $54,037

Change in Net Assets from Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$1,380 $994

OTHER INCOME AND EXPENSES

Initiation and Transfer Fees & Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$7,577 $8,070Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .($1,328) ($1,532)Depreciation, Amortization and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .($8,798) ($7,532)

Total Other Income and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .($2,549) ($994)

Change in Net Assets Before Other Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . . . .($1,169) $0

Dues54%

Pro Shopand Tennis

18%

F&B16%

Initiation andTransfer Fees

11%

Other (1)

Golf Courseand Facilities

33%

SG&A16%

F&B12% Pro Shop

and Tennis12%

Cost ofSales

9%

Depreciation,Amortization

and Tax14%

Interest 2%

Other (1) 2%

2016 REVENUE 2016 EXPENSES

DESERT MOUNTAIN CLUB, INC. | Operating Cash | ($ in 000’s)

CHANGE IN OPERATING CASH 2016 BUDGET 2015 BUDGET

Change in Net Assets Before Other Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . . .($1,169) $0Add Back Depreciation and Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$8,648 $7,384Change in Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .($478) ($493)

Cash Provided by Operating Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$7,001 $6,891

Maintenance Capital Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .($1,349) ($1,474)Repayment of Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .($4,561) ($4,417)Payment on Intangible Water Rights Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .($1,091) ($1,000)

Change in Operating Cash Excluding Sonoran . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$0 $0

Sonoran Capital Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$0 ($1,000)

Change in Operating Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$0 ($1,000)

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Bob JonesCOO/General Manager

Todd BruenDirector ofFacilities & Construction

Kelly RauschCFO

Shawn EmersonDirector ofAgronomy

Mike ScullyDirector of Golf

Keli GreenbergExecutive Director of Human Resources

Christophe HermineDirector of Club Operations

Matt WooldridgeDirector ofTennis, Spa & Fitness

DESERT MOUNTAIN SENIOR STAFF 2015

LETTER FROM CHIEF OPERATING OFFICER/GENERAL MANAGER

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To Our Members,

Looking back on 2015, our fifth year as a member-owned Club, Iwould like to thank the membership, the nine board of directors,and the 44 at-large committee members, together with a talentedand responsible Club staff, for their hard work, dedication and serv-ice. You have taken Desert Mountain from a developer-owned Cluband community to one of the largest private clubs in the nation. Inthat very brief time span, during a challenging global financial period topped off by a sluggish real estate market that is only just recovering, the Club has been remarkably prolific in reaching milestones that have enhanced the Desert Mountain experience.

This five-year period was set in motion with the purchase of theClub by the membership from the developer —in just 80 days—for$73.5 million when the property had a replacement value of $240million—an ambitious accomplishment even under the best circumstances. We started out in 2011 as a privately-owned Clubwith a manageable acquisition debt of $47 million which has sincebeen reduced by $12.5 million. Transactions related to the Club’sirrigation water have provided proceeds or saved the Club from future expenditures of approximately $26 million. We now have apotential buyer of Parcel 19 with a purchase price of $24 millionwith a short game course and clubhouse included for the enjoymentof the membership.

Clearly the success achieved is a record within most industriesand certainly within the private club/lifestyle community industry.Congratulations to all who gave countless hours and leadership tomake this happen for all the members! Our Club turnover to themembership is a benchmark for success within the industry! Also,congratulations to our membership for an outstanding five years.Collectively, we should be proud of our brand, our Club and ourgreatest asset, our team of employees.

MembershipIn 2015 we welcomed 153 equity members to the Desert Moun-

tain Club. Our Director of Membership Sales Nicole Forbes reportsthat interest in the Club continues to come from our cold weathertarget markets of Chicago, Minnesota, Wisconsin, Washington stateand Colorado. But by far, the majority of the members are fromScottsdale and metro Phoenix. While interest in the Club continuesto be strong, we also continue to see a decrease in our member basedue to departing non-equity charter members, bankruptcy anddeath. This accounts for approximately 30 lost memberships eachyear since 2011 that have not been replaced. To date, the board hasdeferred its intention to insert Club treasury memberships into theMembership Resale Program (MRP)-which was communicated tothe membership earlier this year-in order to maintain the currentflow of transactions with the members participating in the programwho wish to leave the Club in a timely manner. Today, each depart-ing member in the MRP is replaced with a new member (averageage of new member is 62). These new members are excited to enjoythe amenities and to join the Desert Mountain community.

To add more value to your membership in 2015, senior manage-ment and Club operations leveraged the feedback from the 2015Member Survey to provide more casual dining choices, alongwith enhanced food and wine value in the restaurants, morevegetarian/vegan dishes, and better consistency among the clubhouses. We developed and re-positioned the culinary teams, refined menus and improved the farm-to-table freshness of ingredi-ents for better consistency across the Mountain. We also added featured wines on a monthly basis at cost plus $20; and added to the“specialty night” line-up with a Thursday Burger Bash, SaturdayTaco Bar and Sunday Roast.

Jack Nicklaus Strategic Master Plan and Renegade RenovationThe board and the Golf Committee completed the Jack Nicklaus

10-Year Strategic Master Plan in 2013 and continued to refine it in2014-2015 with the Nicklaus Signature Design team. In the thirdor fourth quarter of 2016, we will schedule focus groups for the members to discuss the vision for the modernization and capital expenditures for each course. Soon members will be able to reviewthe strategic plan on the member website.

We are currently in the planning stages with Jack and his designteam to develop a recommendation for the complete renovation ofthe Renegade course. This will include a complete irrigation replace-ment, a redesign of the greens, a modernization of the course andthe possible lengthening of the course to provide options for futureevents. The project design and scope will be shared with the membership for input and approval as more specifics are developed.The board and senior management made the decision several yearsago that it is critical for Jack to be involved in any Desert Mountaincourse renovation project to leverage his vision and expertise andto keep our Nicklaus Signature designs intact and pure.

Sonoran Renovation Grand Opening October 2016From the beginning, the vision for the renovation of the Sonoran

clubhouse was to take it from a typical workout facility to acontemporary lifestyle and wellness center complete with enhanced programs and a quick-serve cafe. With Phase 1 construction behindus and Phase 2 rapidly nearing completion, please welcome Via Gibson to our fitness team as our new Fitness and Wellness Manager.Via specializes in wellness management, holistic programming, nutrition plans, personal fitness training, women, family and youthhealth programs and functional golf fitness.

As part of the new Sonoran health and wellness experience, weare developing programming similar to that of the spas at Tucson’sCanyon Ranch and Miraval; a classroom setting that addresseshealth and wellness, behavioral and diet issues as well as leading amore holistic life through meditation and relaxation for healthy living and life extension. Such classes and workshops will be offeredduring the week and will be fee-based. Please look for our first programming calendar in July.

This programming is the very foundation of what new memberstoday expect from their private club in addition to great golf and a

satisfying dining experience. Another very exciting component of the new Sonoran is the luxurious new spa and salon space. Bonnie Cooper will run thisoperation that will offer six treatment rooms, men’s and women’s locker and spawaiting rooms, two manicure and pedicure stations, one hair station and a full retail shop. Our Director of Fitness, Spa and Tennis Matt Wooldridge will focuson the operations of the new, 42,000+ square-foot facility and on the future expansion of the tennis program.

So please join me in acknowledging our new Sonoran team as they work tobring about these highly anticipated amenities in the fall. Feel free to providethem with your feedback so that we can co-create ideas that will lead to positive,memorable experiences.

2016-2020 Strategic Plan Senior Club management has been working with the Strategic Planning

Committee to revise our strategic plan through 2020. While the plan is currentlyin the early stages of development, it is important to engage the membershipthrough a set of focus groups to seek input, test the principles of the strategy andthen complete it in the fourth quarter of 2016 as the management teams standready to implement the plan once it is approved by the board and endorsed bythe membership.

Excellence at Desert MountainAcknowledgement of our successes by our peers in the golf and private club

industries is an affirmation that the Desert Mountain Club is among the best inthe country. In 2015, we were recognized for the following:

• Best Places to WorkPhoenix Business Journal (companies with more than 500 employees)

• Platinum AwardAssociation of Golf Merchandisers (for our five retail golf shops)

• America’s Top 50 Ranges in the Nation Golf Range Association

• Champions TourFor the third time, Champions Tour players formally voted Cochise the best-maintained course on the 2015 schedule

As you can see, Desert Mountain has had incredible success in the years sinceturnover. I would personally like to thank the board for their hard work and thankthe three directors who have come to the end of their board rotation this month:Harold Eastridge, Chuck Harrison and Gary Thomas. Clearly, the managementteam could not have achieved the success described in this report without theirguidance and support.

Once again, thank you to the membership for your support of the managementteam in 2015. Have a wonderful year and I’ll see you at the Club!

Robert JonesCOO/General Manager

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LETTER FROM CHIEF OPERATING OFFICER/GENERAL MANAGER

2011

2012

Members purchase Desert Mountain Club for $73.5 M

Created first strategic plan 2012-2015

Achieved first fiscal 2011 operating budget

Announced a revised, long-term agreement with Jack Nicklaus/Nicklaus Design

Executed long-term contract for Charles Schwab Cup Championship 2012–2016

Constructed Jim Flick Golf Performance Center

Hosted Charles Schwab Cup Championship

Celebrated Desert Mountain’s 25th Anniversary with Jack Nicklaus and Lyle Anderson (original developer)

Desert Mountain Master Association (HOA) and DesertMountain Club, Inc., opened new outdoor recreationalamenities: built the first two private trails of the DesertMountain Trails System (with voluntary member-donatedfunding) and trailhead parking funded by the Club

Constructed new starter station for Cochise/Geronimo courses

Started first green initiative and partnered with IBM to conserve water, energy and manpowerthrough technology

2013

Developed long-term Jack Nicklaus Strategic MasterPlan for Desert Mountain—began implementation offirst priorities of the plan; first major event to be theremodel of the Renegade Course

Received 5-Star Platinum Club Award for excellence (won consecutively since 2000)

2014

Completed central access site for outdoor recreational amenities, trails, horseback riding, overnight glamour camping, trailhead and restroom facility - for“The Ranch” amenity

Completed the 15-mile Desert Mountain Private Trails System, and Founders Club Memorial Way, two picnicareas (with voluntary member-donated funding)

Developed market-based pricing/Membership Resale Program to assist members to exit the Club, due to age,health, and life issues. Developed after one year of study by a member sub-committee with legal counsel

2015

Began Sonoran Renovation Project to expandcenter from 25,000 to 46,000 square feet.Phase 1 construction began February 2015

Desert Mountain Club named among the “Best Places to Work” by Phoenix Business Journal(voted by the employees of the Club)

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WELCOME OUR NEW MEMBERS

Steve AbramScottsdale, Arizona

Cathy and Andrew AdamsOakville, Ontario, Canada

Reginald and Denise AndersonScottsdale, Arizona

Stuart and Ellyn AynsleyChicago, Illinois

Dan and Kayla BeltonScottsdale, Arizona

John and Eileen BenaglioHancock, Michigan

Jim Benson and Lynn HendersonBoston, Massachusetts

Michelle Bergsrud and Tim BergstedtMinnetonka, Minnesota

Jay and Susan BrainardLittle Rock, Arkansas

Fior and Anna BresolinWest Palm Beach, Florida

Bradley and Amy BrodyClive, Iowa

Reb and Tricia BortzPeoria, Illinois

Terry and Diane Budny Chicago, Illinois

Kesha and Steve CardinalCarefree, Arizona

Olive and David CoghlanPennington, New Jersey

Ron and Anita CohenScottsdale, Arizona

Cynthia Comparin and Denny AlbertsDallas, Texas

Christine Crawford and Robert SpinelliKimberton, Pennsylvania

Tom CrowtherScottsdale, Arizona

Craig Culver and Kate WilsonSauk City, Wisconsin

Dick and Kris DavidsonDousman, Wisconsin

Colin and Sharon DaviesOakville, Ontario, Canada

John and Judy DaviesKing City, Ontario, Canada

Dan and Liz DeverScottsdale, Arizona

Steve and Janis DuncanChicago, Illinois

Douglass and Bonnie EbstyneScottsdale, Arizona

Cari EricksonMinneapolis, Minnesota

Tom and Deb FeeMendota Heights, Minnesota

Larry and Linda FeldDeerfield, Illinois

Timothy and Lisa FlanaganSimi Valley, California

Peter and Bonnie FlanzerHighland Park, Illinois

Ronald Fleck and Janet RuggeroWalnut Hills, California

Frederick and Barbara FlorjancicPlano, Texas

Frank and Leigh Ann ForeTulsa, Oklahoma

Cory and Patricia FramptonCarefree, Arizona

John and Alivia FranzoneBaltimore, Maryland

Dan and Tanya FreemanScottsdale, Arizona

Charles and Lorraine FunkColumbus, Ohio

Patti and Ron GardenCuba, Missouri

Edwin and Judy GardiolaMakati City, Philippines

Michael and Donna GaspardCenterville, Massachusetts

Ralph and Jill GentileRacine, Wisconsin

Bob and Peggy GilderCorvallis, Oregon

Anthony GonzalezNaperville, Illinois

Todd and Julie GrahamSouth Bend, Indiana

Bob and Angel HardingToronto, Ontario, Canada

Bill and Karrin HawkinsWilson, Wyoming

Terry and Marie HeilmanScottsdale, Arizona

David and Kathy HeiserScottsdale, Arizona

John and Susan HenningerAurora, Illinois

Greg and Becky HensleeSpringfield, Missouri

Earl and Lori Rose HightowerLos Angeles, California

Ronald and Carolyn HinderbergerBellevue, Washington

Jonathan HoeneckeMequon, Wisconsin

Adam and Stacey HolmesMedina, Washington

Dennis and Susan HouranyFreedom, Wyoming

Mark and Susan HynesScottsdale, Arizona

James and Nadine IngebrandSt. Paul, Minnesota

Bob and Teri JenkinsScottsdale, Arizona

Kirk and Judi JohansenScottsdale, Arizona

Greg Jones and Theresa Dowell JonesSeattle, Washington

Bill and Patricia KantlehnerLouisville, Kentucky

Paul and Brenda KlisterMenasha, Wisconsin

Eugene and Melissa KimScottsdale, Arizona

Bob and Debbie KorbelikScottsdale, Arizona

Mike and Kathy KozakLake in the Hills, Illinois

j 21 i

Jeff and Sheryl LaGoodVancouver, Washington

James and Carole LampiNew Brighton, Minnesota

Daniel and Renee LeGearGlendale, Missouri

Edward and Jami LevyScottsdale, Arizona

Bill and Sandra LoefflerCastle Rock, Colorado

Jay and Gail LundHudson, Wisconsin

Helmut and Brigette LutzMedina, Washington

Bob and Andrea MandelRiver Hills, Wisconsin

George and Julie MannNaperville, Illinois

Rick and Jo MarinoScottsdale, Arizona

Peter and Karen MassoPhoenix, Arizona

Mike and Jackie McGuireColumbus, Ohio

John McKenna, Jr.Stamford, Connecticut

John and Connie McMahonSunfish Lake, Minnesota

Larry and Paulette MikolajcikLatrobe, Pennsylvania

Mike and Gail MillerCave Creek, Arizona

Robert Miller and Linda HamletSteamboat Springs, Colorado

Joe and Christy MontesanoDover, Massachusetts

Peter and Ruth MorrisonRoanoke, Virginia

Jacob and Amy MurdockScottsdale, Arizona

Jay NibbeScottsdale, Arizona

Cole NortonMorrison, Colorado

Laurence Olsen and Katherine VanderbeekVancouver, British Columbia, Canada

Gay and Maria PadiernosGapan City NE, Phillipines

Rodney and Joann ParadiesCave Creek, Arizona

Thomas Phillips and Susan RitchieScottsdale, Arizona

David and Claudia PilotLakeshore, Minnesota

Coye Pointer and Annette LoertscherScottsdale, Arizona

Mark PowellScottsdale, Arizona

Tom Powis and Tracey NilandWalton Hills, Ohio

John PropstraPhoenix, Arizona

Frank and Alice PuleoPark City, Utah

Robert QuellmalzScottsdale, Arizona

Van Rapp and Patricia DelanoHighlands Ranch, Colorado

Charles and Lynne RayMidland, Texas

Felton and Barbara Rhodes Little Rock, Arkansas

Bob Romo and Georgette TsenekosChicago, Illinois

Bob and Susan RoseScottsdale, Arizona

Dawson RutterBoston, Massachusetts

Steve and Debra SanderTroy, Michigan

Dave and Tracy SandersScottsdale, Arizona

Roberta SaundersWayzata, Minnesota

Jim and Christine ScottiHouston, Texas

Pete and Gail SeldaPortland, Oregon

James and Christina SherbertSan Francisco, California

David and Ellen SchoenbeckCave Creek, Arizona

J.T. and Sherry SimsLouisville, Kentucky

Donald and Rose SmithMokena, Illinois

Andreas and Sharon SpeiserSwitzerland

Dr. Tom and Kerstin SpellerFairfax, Virginia

Lee and Debbie StangeBragg Creek, Alberta, Canada

Bonita and Kevin StewartEnglewood, New Jersey

Mark and Claudia StubstadLynchburg, Virginia

Michael and Patti SumergradeScottsdale, Arizona

Marty and Deb ThalkenTulsa, Oklahoma

Greg and Lori VailScottsdale, Arizona

Fred and Julie Van EttenClayton, Missouri

Jeffrey and Susan VolkScottsdale, Arizona

David and Maria WaitrovichAlamo, California

John and Sue WallLakewood, Colorado

Benjamin Weston and Judith CoxTarrytown, New York

Scott and Donna WhittakerSpringfield, Illinois

Raleigh and Jorene WilsonSan Leandro, California

Douglas and Leila WomerScottsdale, Arizona

Terry Woodruff and Julie TollefsonColumbia, Missouri

Ike and Geraldine ZeringueNew Orleans, Louisiana

WELCOME TO OUR NEW MEMBERS

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SONORAN FITNESS CENTER ON TRACK FOR FALL 2016 GRAND OPENING

The long-awaited renovation of the Sonoran Fitness Center got underway one yearago in March 2015 and is on track to be completed and unveiled at a grand openingin fall 2016. The renovation adds more than 17,600 square feet of space for a totalof more than 42,600 square feet.

Phase 1 construction of the south building and breezeway, including an expansivenew fitness, training and stretching space, a more spacious Youth Activity Center, contemporary gathering spaces and other improvements, was completed and openedin December 2015. Also completed were the reconfiguration of parking lot 1 and theaddition of a fourth parking lot. Members have given the new facilities rave reviews.

Scottsdale-based Est Est, the interior design firm for the project, created private seatingareas throughout the building with comfy chairs, upholstered benches and sofas in tex-tured materials and in relaxing shades of teal, blue, tangerine and rustic brown. Otherdesign elements include oversized lamps, tables and accents in wood, bronze, onyx andpetrified wood; and Ed Mell-inspired art to convey a contemporary western ambience.

The expansive new fitness space has been designed in vibrant rust, tangerine and neutral tones and features the latest floor surfaces that are conducive to workout activities. Wood accents on pieces of furniture and contemporary colors define the YouthActivity Center.

Phase 2 construction on the north building began early this year and will be the site of the exercise classrooms, an enhanced spaand salon featuring a tranquil, resort-style ambience, family poolside locker rooms and poolside restrooms. Also opening at theSonoran in the fall is a new quick-serve café with indoor/outdoor seating and a hot and cold menu of healthy items, bakery goodsand other offerings, from an early morning bite to late night snacks.

While some inconvenience to the members will continue through Phase 2, the renewal and reinvestment in the Club’s amenitieswill not only enhance the enjoyment of our present and future Club members but help Desert Mountain to maintain its reputationas one of the finest golf and lifestyle communities in North America.

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2015 DESERT MOUNTAIN MEMBER EVENT HIGHLIGHTS

Charles Schwab Cup Championship 2015

Mountain Magic and Mountain Mania Tournaments

“The Harvest” - Ladies Night Out American Trilogy Dinner Show Spring Carnival at Outlaw Clubhouse

“Wild Kingdom” at The Ranch

DESERT MOUNTAIN CLUB, INC.10550 east desert hills drive | scottsdale, az 85262