2014ANNUALREPORT

desert mountain club, inc.

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

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

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

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

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

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

2014 Financial Summary . . . . . . . . . . . . .14

2015 Financial Budget . . . . . . . . . . . . . . .16

Senior Staff 2014 . . . . . . . . . . . . . . . . . . .17

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

Welcome to Our New Members in 2014 . . . . . . . . . . . . . .20

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

Event Highlights of 2014 . . . . . . . . . . . . .23

TABLE OF CONTENTS

Desert Mountain Club’s goal is to be the finest privategolf and recreational community in the world.

The Desert Mountain Club is dedicated to providing itsmembers, their families and guests with a commitment toexcellence resulting in member pride and a distinguishedreputation.

VISION STATEMENT

MISSION STATEMENT

LETTER FROM THE PRESIDENT

Dear Fellow Member,

Your Board of Directors is pleased to present you with the Desert Mountain Club 2014 Annual Report. As mentionedin the mid-year update letter you received in February, last year was a very busy one for the Club. It was highlighted byyour approval of the Sonoran Clubhouse renovation, a revised Membership Resale Program and opening of our latestamenity, The Ranch at Desert Mountain. In addition, we hosted another successful Charles Schwab Cup tournamentand turned our attention to giving our golf courses a facelift, courtesy of the Nicklaus Design Group, and the rainfalldispensed by Mother Nature. These and the other achievements of 2014, as well as the surge of new home constructionoccurring within our gates, are all reflective of the continuing vitality and well-being of our Club and community.

As we continue to read in various newspaper and magazine articles, the world of golf remains an uncertain one. However,the top-tier private golf clubs continue to succeed by following the simple and straightforward philosophy of safeguardingtheir prestige and appeal in what is now an increasingly competitive marketplace. They accomplish that with experiencedand capable management teams, healthy balance sheets and a commitment to refresh and broaden their amenities tosatisfy existing members and attract new ones. This is the formula we have followed since the December 2010 turnoverand has resulted in the purchase of over 54 new equity lifestyle memberships and the transfer of over 400 equity golfmemberships to new members replacing those who have exited the club during these past four years.

While that all sounds fine, we do share the same challenges that all private clubs face due to changing demographics,the declining popularity of golf and the stature of a private club membership not quite what it used to be. The refrainsometimes heard on our practice ranges and in the restaurants is that Desert Mountain isn’t as exceptional as it oncewas and that our dues have soared compared to the good old developer days. However, the fact is that our average annualdues increase after turnover has been 4.2%. By way of comparison, the pre-turnover annual increase was routinely 5%,the maximum allowed by the developer membership agreement. In addition, the developer heavily subsidized theoperational costs of the Club to the tune of millions of dollars every year in order to promote and sell their building lotsand homes. Unfortunately, that is a luxury we do not have.

Your Board of Directors recognizes that there will always be varying points of view in a club of our size and demographicdiversity. However, the realities of governing a private club in today’s world require us to continuously evaluate thecircumstances as they are and not as they once were or as we would wish them to be. We always do this with the bestinterests of our Club in mind and results in developing strategies and implementing policies to achieve the goals spelledout in the Club’s Strategic Plan and Mission/Vision Statements. That will always be a work in progress but our firmbelief is that, with your ongoing support, we will continue to successfully maintain the Desert Mountain brand and ouroutstanding reputation.

In closing, this year’s Annual Meeting is a personal milestone for me as it will mark the end of my tenure as both a Director and as Club President. I am proud to have served Desert Mountain for a total of seven years, three years on theMember Advisory Board prior to turnover and four plus years on the current Board of Directors. It has been a privilegeto have worked alongside our dedicated management team and my fellow Board members, past and present, who haveunselfishly volunteered their time and talent for the benefit of our Club. To all of them, I extend a heartfelt thank you.

Paul F. WutzPresident

j 5 i

DESERT MOUNTAIN BOARD OF DIRECTORS

j 6 i

Paul Wutz, President Roger Dunbar, Vice President(January-October 2014)

Chuck Harrison, Vice President(November 2014-Present)

Gary Thomas, Secretary Joe Maslick, Treasurer Bob Borsch

Harold Eastridge Kathy Henderson John Quicke

DESERT MOUNTAIN COMMITTEES

j 7 i

The eight committees of the DesertMountain Board of Directors playa significant role by providing member input and insight to theboard and management fromwhich the board can make informed decisions that ensure thevitality and relevance of the club.These specialized committees helpdetermine the annual budget, research and recommend courses ofaction, settle differences, reviewprojects and weigh future options,among other responsibilities.

Harold Eastridge, ChairChuck Harrison, Board MemberKathy Henderson, Board MemberPatrick Allender, Member-at-Large Robert Baumgartner, Member-at-LargeAl Forman, Member-at-Large*Len Geissenberger, Member-at-Large*Nora Gevlin, Member-at-LargeHenry Seduski, Member-at-Large

AUDIT

Gary Thomas, ChairBob Borsch, Board MemberJoe Maslick, Board MemberJohn Quicke, Board MemberJanet Anderson, Member-at-LargeDavid Balak, Member-at-LargeBurt Barnett, Member-at-LargeChuck Borkan, Member-at-LargeArt Rosenbloom, Member-at-Large

DISCIPLINARY

Joe Maslick, ChairRoger Dunbar, Board MemberHarold Eastridge, Board MemberKathy Henderson, Board MemberGeorge Benz, Member-at-LargeSid Bostic, Member-at-LargeBob Engelman, Member-at-LargeGeorge Juetten, Member-at-Large

FINANCE

Chuck Harrison, ChairGary Thomas, Board MemberStephen Anderson, Member-at-LargeBud Ardell, Member-at-Large*Janet Curry, Member-at-LargeCharlie Davis, Member-at-LargeCarolyn Marchuk, Member-at-LargeBarbara Stewart, Member-at-LargeGene Thomas, Member-at-LargeRalph Whitley, Member-at-Large

GOLF

Kathy Henderson, ChairBob Borsch, Board MemberJohn Quicke, Board MemberDiane Hurter, Member-at-LargeChris Storbeck, Member-at-LargeAnita Wallace, Member-at-LargeChris Wilson, Member-at-Large

MEMBERSHIP

Roger Dunbar, ChairHarold Eastridge, Board MemberChuck Harrison, Board MemberJoe Maslick, Board MemberPaul Wutz, Board MemberRon Goade, Member-at-LargeRoger Greaves, Member-at-LargeCraig Parker, Member-at-Large*Barb Pearse, Member-at-LargeJohn Quicke, Member-at-Large*Ralph Yohe, Member-at-Large

NOMINATING

Bob Borsch, ChairRoger Dunbar, Board MemberHarold Eastridge, Board MemberGary Thomas, Board MemberSteve Gregory, Member-at-LargeRoger Greaves, Member-at-LargeMichael Keskey, Member-at-LargeDeborah McIntyre, Member-at-LargeChris Storbeck, Member-at-Large*Scott Urdang, Member-at-Large

STRATEGIC PLANNING

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

HANDICAP

*Partial service in 2014

DESERT MOUNTAIN COMMITTEE REPORTS

j 8 i

AUDIT REPORT

by Chairman Harold Eastridge

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, 2014, and the effectiveness of the internal controls over financial reporting as of December 31, 2014.

Also discussed with the independent public accounting firm:

• Matters required to be discussed in Statement onAuditing Standards No. 61, as amended.

• Independence requirements of independent publicaccounting 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, 2014.

The committee met with the independent public accountingfirm, with and without management present, to discuss theresults of its examination, evaluations of DMCI’s internal con-trols 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 hasapproved) the inclusion of the consolidated financial statementsreferred to earlier in DMCI’s Annual Report for the year endedDecember 31, 2014.

DISCIPLINARY REPORT

by Chairman and Board Secretary Gary Thomas

We, as members of the Desert Mountain Club, live in one of thefinest golf and recreational, residential communities in the world.Members are entitled to a peaceful enjoyment and use of theclub’s facilities, amenities and programs. The vast majority of themembership enjoys the club and shows respect towards fellowmembers and the Desert Mountain staff without incident.

The Disciplinary Committee (DC) is one of the five “standingcommittees” that the Board is required to create as stated in theDesert Mountain Club, Inc., (DMCI) bylaws. The DC is chairedby a Board member, and contains other Board members and fellow at-large members on the committee.

The purpose of the DC is to review written complaints andreferrals from staff and the membership. The DC then conductshearings with members regarding potential misconduct, andmakes a recommendation to the Board of Directors for potentialdiscipline due to misconduct. The Board makes the final decisionon any sanctions, which may include the temporary or permanentloss of some or all club privileges. This may also result in a mem-bership being placed on probation, suspension, or terminated.Due to the sensitive nature of the issues, the proceedings and thepublication of individual names in Board minutes are consideredconfidential for the protection of all members involved.

The committee meets ad-hoc, whenever a hearing is needed.Our goal would be that the committee NEVER has to meet; indicating that we have a member culture at Desert Mountainbased on a much deeper and profound value of mutual respectand not rules and regulations. This is what one would expectwhen joining a premier club with the reputation of Desert Mountain. Unfortunately this is not always the case. Althoughnothing is “typical”, the DC may conduct on average 2-3 hearings per month in-season. These complaints and grievancesrange from various forms of member conduct and abusive behavior toward other fellow members, verbal abusive and inappropriate behavior directed at club staff and employees,and/or inappropriate behavior resulting in damage to club facilities. Further inappropriate behavior examples include theftof member/club property (range golf balls/food trays/snacks/robesand personal items from locker rooms); golf cart violations withcarts out-of-position and repeatedly near greens and greensidebunkers; and misuse of the confidential member directory. Mostof the membership is courteous to each other and to staff.

On behalf of the DC, we thank the membership for exemplifyingthe highest standards and helping to make Desert Mountain theclub we all envision.

DESERT MOUNTAIN COMMITTEE REPORTS

j 9 i

FINANCE REPORT

by Chairman and Board Treasurer Joe Maslick

In 2014, the Finance Committee and club management accomplished for the fourth consecutive year their financial andoperating goals which included:

• Delivering the year’s financial operating results againstbudget (change in net assets before interest, taxes, depreciation and amortization)

• Continued compliance with the club’s loan covenants

• Managing the club’s revenue streams to comply with the501(c)(7) regulations

• Developed a cash neutral budget for 2015

The club faced budget challenges in the agronomy division dueto significant storm damages as a result of the August 19 andSeptember 8 floods impacting course operations and golf division operating income. All in all, management overcamethese challenges including successful management of the flooddamage insurance claim which resulted in the club collectingapproximately $1.1 million. In addition, the club finalized theCity of Scottsdale IWDS/HVID land swap transaction whichresulted in a refund of $1.3 million. The club finished the yearwith a favorable performance at the change in net assets afterother comprehensive income (loss) by approximately $0.1million. Finally, from a cash flow perspective, the club had a netdecrease in cash and cash equivalents of $1.6 million which isthe net result oflong-term debt reduction ($3.5 million) andnew capital (Ranch Lot and Sonoran) initiatives. On the whole,it wasanother successful year financially for the club!

Moving forward in 2015, the committee will continue its effortsto identify incremental revenue opportunities, develop processimprovement strategies to make the club’s operations more efficient in spite of the negative impact due to the AffordableHealthcare Act and increased irrigation costs. The goal is tocontinue to manage the operations on a favorable cash basis inorder to generate a level of cash flow to meet the liquidity needsof the club, and to facilitate future investment in the club facilities and amenities. The Finance Committee continues towork with the club’s Strategic Planning Committee on a long-term financial road map analysis.

MEMBERSHIP REPORT

by Chairwoman Kathy Henderson

The Desert Mountain Membership Committee is a standingcommittee established under the bylaws of the club. It is chairedby a board member and is comprised of both board membersand several at-large equity members. The committee has threemajor roles: 1.) To review and process all membership applica-tions for approval by the board; 2.) To establish and maintainconsistent policies and procedures that protect the club andmembers’ interests with integrity and assures compliance withthe bylaws; and 3.) To assist the club in achieving its goals toattract new members to the club.

During 2014, the committee implemented several key programchanges and improvements:

1.) Membership Resale ProgramLast summer, the membership approved bylaw changes thatestablished the new Membership Resale Program whichcreated a market-based pricing program for transfers ofmemberships. Each month, an equity member who wishesto transfer a membership submits a “resale notice” settingforth an “ask price.” Since the August 1, 2014 effective datethrough February 28, 2015, 53 equity golf membershipshave been transferred under the program at prices averag-ing $43,000.

2.) Member-Arranged TransfersThe bylaw changes approved during the year also allow eq-uity members to arrange a private transfer of a membership.The candidate for membership is required to submit amembership application for approval and the transfer issubject to the current transfer fee. Since August 1, 2014,there have been four member-arranged transfers.

3.) Other New Membership ProgramsEffective July 1, 2013, three new equity membership programs were also implemented. During 2014, the clubaccepted eight junior equity golf members; issued five seniorequity club lifestyle memberships; and allowed 20 equitygolf members to widow status.

The committee continues to review our current membership lev-els and marketing programs. One of the programs the committeewill launch in 2015 is a revised Member Referral Program as referrals are the club’s best source of new memberships. In orderto improve the enjoyment of the club by all members, the committee also will continue to review both the effectivenessand consistent application of the policies affecting club usage. Inthe year ahead, the committee plans to focus on attracting newmembers to the club and improving member retention.

DESERT MOUNTAIN COMMITTEE REPORTS

j 10 i

GOLF REPORT

by Chairman and Board Vice President Chuck Harrison

Comprised of Desert Mountain Board members and at-largemembers whose golf skill levels match the diversity of the general membership, the committee serves as a liaison betweenthe membership and club management.

Consistent and balanced member feedback related to the golfexperience is utilized to set fair policies and to insure that DesertMountain continues to offer the ultimate golfing experience,including more playability for individuals and groups. From anagronomic standpoint, the committee strives to communicateto the members a greater understanding of our golf course agronomy with the goal of maximizing playability year-round tomatch the seasonal demands of the membership.

Several goals were achieved amid a challenging 2014 and include:

• Charles Schwab Cup ChampionshipThe 2014 event was a resounding success. Attendance all fourdays reached approximately 46,500 which surpassed previoustournament attendance at San Francisco’s Harding Park in2013, and a total of 30,000 when Desert Mountain hostedthe event for the first time in 2012. Desert Mountain golfrounds during tournament week topped out at 4,793 (3,987member rounds, 806 guest rounds). The televised tournamentrounds on the Golf Channel had an estimated reach of 225million households in 207 countries around the globe andprovided extraordinary exposure for Desert Mountain.

• Increased Member Tournament ParticipationParticipation in the top five member tournaments heldthroughout 2014 were on the rise. Contributing factors werean overall increase in golf rounds for the year; and the factthat more new members joined the club and played in theevents; along with the golf staff retooling the tournaments toprovide better value. Please see the participation below:

Event 2014 Participation 2013 ParticipationThe Rattler 120 92Dos Amigas 216 (a record) 192 Dos Amigos 274 232Mountain Magic 214 180Mountain Mania 422 370

• Golf Rounds Up in 2014Golf rounds played on Desert Mountain courses in 2014 wereup dramatically over the previous year. A total of 142,317rounds were played in 2014, up by more than 10,000 roundsfrom 2013, which totaled 131,868. Member rounds last yeartotaled 113,715 (105,958 in 2013); and guest rounds were22,452 (21,381 in 2013). Desert Mountain tournamentrounds went from 4,529 in 2013 to 6,150 in 2014 and thereis every indication that this trend will continue in 2015.

• T-Index Handicap SystemWith strong support from and excellent work by the HandicapCommittee, chaired by Ralph Whitley, the T-Index tourna-ment handicap system was completed and is now being utilized.The system provides more accurate handicaps for all DesertMountain Club tournament play and is now administered bythe golf staff instead of the Handicap Committee. Read moreabout the T-Index in the Handicap Committee Report.

• Nicklaus Plan and Golf Course Infrastructure This 20-year plan for all six Desert Mountain courses was approved by the Board of Directors and senior managementin 2014. Its goal is to remain true to the era in which eachDesert Mountain course was built and to maintain architec-tural and competitive relevancy. Rather than change the original design of the six courses, the Nicklaus Plan will helpevolve the courses to match the modern technologicalimprovements in golf equipment. A meeting to introducethe plan to the members will be held in spring 2015.

• New Golf Carts with VISAGE GPSA new fleet of golf carts equipped with VISAGE, the latestGPS technology available, was approved by the Board ofDirectors and the Golf Committee last year and becameoperational in early 2015. The system enables members toview flyovers, yardages, and exact hole locations and can sendand receive messages. It also enables the Desert Mountaingolf staff to monitor carts as well as pace of play at a higherlevel. A food and beverage module is scheduled to be imple-mented later this year.

• Committee Seats AddedThe Golf Committee added two members at-large in 2014for a total of six which consists of three men and three womenwith varying handicaps. The committee plans to continue toincrease member participation on the committee on anongoing basis.

• Golf and Agronomy ChallengesThe most severe challenges to the Desert Mountain golf andagronomy operations in 2014 were two major monsoonstorms within weeks of each other in August and Septemberthat dumped record-setting rain on the courses in a short time period and caused monumental damage to all six courses. Thestorms also altered the golf course overseeding program andchallenged the playing conditions across the Mountain resulting in great difficulty in the course agronomic manage-ment process. The level of damage sustained on the coursesrequired 12,000 in-house man hours to repair and to put thecourses back into play as well as to prepare for Charles SchwabCup Championship week. The damage and other storm-re-lated issues also exposed member concerns about the qualityand overseeding of the courses at Desert Mountain. These issues and concerns will be thoroughly addressed directly withthe Golf Committee, Board of Directors, club managementand with direct member input in 2015.

DESERT MOUNTAIN COMMITTEE REPORTS

j 11 i

HANDICAP REPORT

by Chairman Ralph Whitley

There were four main initiatives on which the Handicap Committee focused in 2014. The first was to minimize non-posted rounds using the reporting provided by the ForeTeessystem. The committee succeeded in reducing the number ofnon-posted rounds by approximately 50% last year. This wasachieved through peer review and publicizing posting require-ments in the Nagonie, the Message from Mike e-blasts sent bythe director of golf and signage located in every golf shop.

The committee also introduced and assisted in the developmentof the revised Desert Mountain Tournament Handicap Systemor T-Index. The system, which was originally created by theHandicap Committee, was based on historical tournament per-formance data provided by the Desert Mountain tournamentstaff and updated by the staff after postable tournament roundswere completed. The revised T-Index is now calculated for allqualifying tournament participants but only applies if theirUSGA Index is higher than their T-Index at the time of thetournament. All T-Index information is updated and applicableafter each postable tournament round and available on themember website. The new system was implemented at the firsttournament of 2015.

Supporting the Desert Mountain golf staff to insure that all tour-nament scorecards are completed and signed in an acceptablemanner continued to be a focus of the committee.

In addition, the committee continued its review of exceptionaltournament scores after each Desert Mountain tournament, asrequired by the USGA.

Goals for 2015• Continue to enhance and improve the Desert Mountain

Tournament Handicap System.

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

• Continue its efforts to insure the posting of all golf roundsthat are played by members.

The Handicap Committee is independent of and does not report to the Desert Mountain Board of Directors. The commit-tee, which consists of seven club members and the Desert Mountain director of golf, adheres to USGA guidelines. Thechairman of the Handicap Committee is a member of the DesertMountain Golf Committee.

NOMINATING REPORT

by Chairman Roger Dunbar

The focus of the Nominating Committee in 2014 was primarilythe 2015 election for four seats on the Desert Mountain ClubBoard of Directors. The committee also worked to engage mem-bers-at-large willing to serve on board committees, providingthem the opportunity to serve the club and community whilegaining an increased understanding of the club’s operations. Thelong-term objective is to secure at least 4-5 qualified candidatesfor each of the future board elections.

In the spirit of continuous improvement, one of the committee’sgoals in 2015 is to refine the club’s governance procedures and protocols on an ongoing basis. As part of that effort, theNominating Committee has worked with the board to increasethe number of members-at-large serving on board committeesand special projects. In 2013, there were 15 members at-largeserving on board committees. In 2014, the number rose to 33.In addition, the committee focused on the number and dynamics of board and committee meetings. Looking ahead, theNominating Committee will conduct meetings with volunteersthroughout the year to understand their backgrounds and gaugetheir interest level while maintaining a pool of volunteers whichis updated periodically on key club information.

To support the above initiatives, the Nominating Committeeis looking for equity members who are interested in sharing theirtime, talent and insights through committee work and boardcandidacy in order to maintain the quality of the club today andin the future. If you are interested, please send your name andcontact information to Francine Keller at fkeller@desertmt.comor call 480-595-4029.

DESERT MOUNTAIN COMMITTEE REPORTS

j 12 i

STRATEGIC PLANNING REPORT

by Chairman Robert Borsch

The role of the Strategic Planning Committee is to guide thelong-range planning process for the Club. The committee iscomprised of several members of the Club board, is chaired bya board member as are all the committees, and has a number ofmembers at-large who provide their diverse skills and input tothe planning process.

The Desert Mountain Club Strategic Plan is a crucial businesstool that helps the board and the management team make decisions and choices about priorities for major capital and operating investments, particularly those that affect the long-term direction and sustainability of the Club. In today’senvironment where nationally there have been major and sustained declines in golf participation and high club failurerates, it has never been so important that our Club have a wellthought out long-range plan for the future.

In 2015 the committee will lead a major update to the Club’sstrategic plan. Our first plan, completed in 2011, has served uswell with 24 of 28 of our major initiatives either completed orwell underway. Our next plan must guide us into some challeng-ing and somewhat uncharted territory as massive changes inconsumer tastes, ways of spending their time and shifting spending patterns are challenging clubs and golf communitiesto up their game and broaden their appeal.

We are already well into the first phase of our planning work:The Situation Analysis. In this phase we have already performedsome extensive research and analysis including:

• Consulting with leading experts on emerging economictrends and the state of the club and golf community industry.

• Reviewing a number of research papers and recently published studies focusing on membership, amenity and investment trends in the industry.

• Performed an extensive analysis of the key performance indicators of the important activities at the Club: golf, dining, spa and fitness, tennis, social activities, hiking andoutdoor pursuits.

• Completed an intensive study of the Club’s baseline, long-term capital and financial operating requirements giving us a financial model to test the economic impact of potential ideas for the future.

Our next major step is to get member input about the Club, including discussion groups and a full member survey, currentlyplanned in May of 2015. Working with all of this information,the committee plans to work with the board to develop a draftstrategic plan for presentation to the membership in the fall of 2015.

Our ultimate goal is to fulfill the promise of being “the finestgolf and recreational community in the world.” As the largestprivate golf community anywhere, there are few who can standwith us in making that claim. We would love to hear your ideason how to make that a permanent reality as we plan our future.

j 13 i

DESERT MOUNTAIN BY THE NUMBERS

2014 2013

Club’s Mortgage Debt $38 million $41.4 million

Total Memberships 2,127 2,125

Equity Golf Memberships 1,959 1,969

Equity Club/Lifestyle Memberships 65 40

Non-Equity Memberships 103 116

Average Age of Members 65 64

New Members 120 126

Average Age of New Members 58 57

Members from the U.S. 2,004 2,005

States Represented 48 46

International Members 123 120

Countries Represented 8 9

Total Golf Rounds Played 142,317 131,868

Total Member Rounds Played 113,715 105,958

Total Guest Rounds Played 22,452 21,381

Total Tournament Rounds Played 6,150 4,529

Total Online Restaurant Reservations Made 13,087 11,744

Total Meals Served at the Restaurants and Grills in 2014 246,539 236,913

Average Total Spent by Members at the Club $9,059 $7,859

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

Number of Employees-High Season (Full-Time Equivalent) 653 635

Number of Employees-Low Season (Full-Time Equivalent) 460 421

Number of Page Views on Member Website Annually 1,673,783 1,543,587

*This represents a 19% decrease in Desert Mountain’s mortgage debt since 2011 when the debt was $47 million.**For the first time in its history, more than 20,000 rounds were played on the Outlaw course in 2014.

***There were 4,000 additional man hours spent per course to repair course damage from two monsoon storms in summer 2014 and additional hours due to the agronomic plan and the tournament schedule.

*

**

***

2014 FINANCIAL SUMMARY

j 14 i

DESERT MOUNTAIN CLUB generated$63.5 million in total revenue and incurred$62.1 million in total expenses during 2014.As the graphs below demonstrate, the primarysource of operating revenue is monthly ClubDues of $32.0 million, followed by Golf andTennis operational revenue of $10.9 million,Food and Beverage revenue of $9.7 million andInitiation and Transfer Fee revenue of $7.6 million. The club’s primary expenditures areGolf Course and Facility maintenance of$22.4 million followed by Administrative andGeneral expenditures of $9.3 million, Foodand Beverage expenditures of $7.8 million,Golf and Tennis expenditures of $7.3 millionand Cost of Sales of $5.4 million. General andAdministrative expenditures include salariesand wages, property tax expense, rent expense,legal and accounting fees and insurance. Theclub recorded one non-cash accountingadjustments in 2014 totaling ($1.3 million).The adjustment was related to the fair marketvalue adjustment for the interest rate swap.The interest rate swap recognizes the fairmarket value of the swap and will be adjustedin future years based on changing interest rateexpectations.

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

As of December 31, 2014 ($ in 000’s)

ASSETS

Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . .$7,481Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$4,962Other Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$2,098Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$122,989

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$137,530

LIABILITIES

Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$328Other Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .$10,318Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$7,045Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$38,232

Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$55,923

Net Assets, Unrestricted . . . . . . . . . . . . . . . . . . . . . . . . . . .$81,607

Total Liabilities and Net Assets . . . . . . . . . . . . . . . . . . . . . .$137,530

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

For the 12 Months Ended December 31, 2014 ($ in 000’s)

REVENUE AND EXPENSES

Dues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$32,038

Other Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$21,929

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$53,967

Cost of Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$5,444

Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$48,075

Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$53,519

Change in Net Assets from Operations . . . . . . . . . . . . . . . . . . .$448

OTHER INCOME AND EXPENSES

Initiation and Transfer Fees & Other . . . . . . . . . . . . . . . . . . .$9,552Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .($1,559)Depreciation, Amortization and Taxes . . . . . . . . . . . . . . . .($7,020)

Other Income and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$973

Change in Net Assets Before Other Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . .$1,421

Other Comprehensive Income (Loss) . . . . . . . . . . . . . . . . .$(1,285)

Change in Net Assets After Other Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . .$136

j 15 i

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

For the 12 Months Ended December 31, 2014 ($ in 000’s)

CASH FLOWS FROM OPERATING ACTIVITIES

Change in Unrestricted Net Assets . . . . . . . . . . . . . . . . . . . .$1,421Depreciation and Amortization . . . . . . . . . . . . . . . . . . . . . . .$6,943Change in Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . .($875)

Net Cash Provided By (used in) Operating Activities . . . . . . .$7,489

CASH FLOWS FROM INVESTING ACTIVITIES

Additions to Property, Plant and Equipment . . . . . . . . . . .($4,070)

Net Cash Provided By (used in) Investing Activities . . . . . . .($4,070)

CASH FLOWS FROM FINANCING ACTIVITIES

Payment on Intangible Water Rights Obligation . . . . . . . . . .($720)Repayment of Long-Term Debt . . . . . . . . . . . . . . . . . . . . .($4,342)

Net Cash Provided by (used in) Financing Activities . . . . . .($5,062)

Net Increase (Decrease) in Cash and Cash Equivalents . . . .($1,643)

Cash and Cash Equivalents, Beginning of Year . . . . . . . . . . . .$9,124

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

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

Revenue 2014 %

Dues $32.0 50.5

Pro Shop and Tennis $10.9 17.2

F&B $9.7 15.3

Initiation and Transfer Fees $7.6 11.9

Other Income (1) $3.3 5.2

$63.5 100.0

2014 FINANCIAL SUMMARY

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

(1) Clubhouse (i.e. valet/locker rooms andMember Services)(2) Excludes other comprehensive loss

2014 REVENUE (millions of dollars)

Expenses 2014 %

Pro Shop/Tennis Cost of Sales $2.3

F&B Cost of Sales $3.1

Total Cost of Sales $5.4 8.7

Pro Shop and Tennis $7.3 11.7

F&B $7.8 12.5

Golf Course and Facilities $22.4 36.1

SG&A $9.3 15.0

Other Expense (1) $1.3 2.1

Interest $1.6 2.6

Depreciation, Amortization and Tax (2) $7.0 11.3

$62.1 100.0

2014 EXPENSES (millions of dollars)

Dues51%

Pro Shop17%

F&B15%

Initiation andTransfer Fees

12%

Other5%

Golf Courseand Facilities

36%

SG&A15%

F&B12% Pro Shop

and Tennis12%

Cost ofSales

9%

Depreciation,Amortization

and Tax (2)11%

Interest 3%

Other 2%

2014 REVENUE 2014 EXPENSES

2015 FINANCIAL BUDGET

j 16 i

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

2015 Budget ($ in 000’s)

REVENUE AND EXPENSES

Dues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$33,551

Other Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$21,480

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$55,031

Cost of Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$5,425

Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$48,612

Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$54,037

Change in Net Assets from Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$994

OTHER INCOME AND EXPENSES

Initiation and Transfer Fees & Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$8,070

Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .($1,532)

Depreciation, Amortization and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .($7,532)

Total Other Income and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .($994)

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

Dues53%

Pro Shopand Tennis

18%

F&B16%

Initiation andTransfer Fees

12%

Other (1)

Golf Courseand Facilities

34%

SG&A16%

F&B12% Pro Shop

and Tennis12%

Cost ofSales

9%

Depreciation,Amortization

and Tax (2)12%

Interest 3%

Other (1) 2%

2015 REVENUE 2015 EXPENSES

j 17 i

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 2014

LETTER FROM CHIEF OPERATING OFFICER/GENERAL MANAGER

j 18 i

To Our Members,As I look back on 2014, I am amazed by the many accomplish-

ments achieved by the Board of Directors and eight board committees, with support from senior management and staff, toinvest in the future of the Desert Mountain Club. By providinggreater value to the members with new amenities, efficient cluboperations and enhanced customer service, the club continues tomaintain its standing as one of the greatest golf and recreationallifestyle communities in the country.

Club OperationsMore members are enjoying the club’s amenities as never before.

At a time when many private clubs are experiencing fewer roundsof golf, in 2014, we experienced an increase in golf rounds by morethan 10,000 over 2013. Member rounds went from 105,958 in2013, to 113,715 last year. There also has been a renewed interestin tournament play for events such as Dos Amigas and Dos Amigosas well as Mountain Magic, Mountain Mania and The Rattler,which can be directly attributed to better event value and the manynew members who have joined (and are now enjoying) the club.

Our talented golf team is working hard to provide members withthe best private golf experience anywhere. Director of Golf MikeScully has created a competitive work environment that offers ouryoung staff many opportunities in which to grow and advance intheir careers. To balance the present staff, Mike recently broughton two new head professionals with many years of experience andwho will take your enjoyment of the game to a higher level. Youmay have already met them—Jeremy Smith and Matthew Tinti—both coming to Desert Mountain from private clubs in Florida andMexico, respectively. They replace positions left by TommyO’Neill, who returned to the East Coast, and Tom Van Haaren,who chose to go to seasonal employment.

Club dining was also on the rise. In 2014, food and beverage revenue was up at the club’s restaurants and grills, which served246,539 meals, an increase of 9,626 meals over 2013. The averagemonthly spending of members at the club rose to $9,059 in 2014, an increase of $1,200 over the previous year. For more interestingcomparisons, please turn to By the Numbers on page 13.

Director of Club Operations Christophe Hermine and his talented staff continue to refine menus and to improve the farm-to-table freshness of its culinary offerings. Christophe recentlyhired our new Executive Chef Sean O’Connell who brings nearly30 years of experience to the food and beverage division. Seancame to Desert Mountain from Caesars Palace in Las Vegas, wherehe has been credited with improving the standards of the casino’snumerous restaurants as well as overall concept and menu devel-opment. He also played an integral role in the opening of Vegas’Bellagio Resort and Casino, a Wynn Resorts property, which wasrecognized as a Five Diamond Property in 2001 during his tenureas executive sous chef for food and beverage. In addition, Sean hasextensive experience at other hotels and resorts includingThe Homestead, KSL Resorts, in Hot Springs, Va., the MandarinOriental Hong Kong, Rancho Las Palmas Resort & Spa in

California, and the Fountainebleau Resorts in Miami Beach, toname just a few. His wealth of experience will take our chefs andour culinary to a new level of quality and consistency.

As important as the meals you enjoy, the golf you play and theclub activities and events in which you participate, is the level ofservice provided by our staff across seven divisions. Every staffmember takes the responsibility for providing superior service andoutstanding amenities in an atmosphere of excellence. All clubemployees are guided by six core values to help them achieve thisgoal—Integrity, Teamwork, Spirit to Serve, Financial Responsi-bility, Innovate and have Fun—from the people who maintainpristine conditions on the golf courses to those who perform thehundreds of small details that contribute to the club’s smooth operation on a daily basis.

Because excellence begins at the top, Desert Mountain managerstake it another step by following FranklinCovey’s “4 Disciplines ofExecution.” 4DX is a process to help us improve how we do businesswith the overriding goal of increasing member loyalty while im-proving productivity and financial sustainability. The 4DX programfocuses on the achievement of important goals with excellencethrough the identification of “Wildly Important Goals,” the creation of measures to help us achieve these goals, tracking teamprogress on a weekly basis and being accountable for producing tangible results. Empowering employees to be successful not onlyresults in unparalleled customer service for the members, but createsa supportive environment for the staff which is reflected in DesertMountain’s employee tenure rate—7.25 years—which far exceedsthe norm in the hospitality and private club industries today.Membership Resale Program

In the summer of 2014, following a successful vote by 92% of themembership to revise the amendments to Article 4 of the club’s bylaws, the revised Membership Resale Program (MRP) went intoeffect to speed a member’s exit from the club if he or she wishes toleave. The program was revised in order to remedy the backloggedreissuance list and the absence of a clear-cut exit strategy whichhindered the efforts of our membership sales team. Since the enactment of the MRP, the club has welcomed 63 new equity golfand lifestyle members. Currently, a membership selling time aver-ages about 30 days if priced competitively. Referrals by memberscontinue to be our top lead generator. In 2015, we will launch a revamped member referral program with generous incentives forreferrals that successfully result in a membership sale. Please lookfor informational materials later this year.The Ranch and Private Trails

A new generation of family lifestyle amenities opened at DesertMountain in late 2014 to much fanfare and celebration. TheRanch, which was built with $1.3 million of available capital, waseagerly awaited by members as a compliment to the trails, whichadded a seventh segment to the Phase I private trails system simul-taneously with The Ranch grand opening and dedication. The clubnow has 15 miles of trails in addition to horseback rides and ridinginstruction, luxury camping and the kiva, another amazing outdoor

setting in which to hold meetings, events and private gatherings. There has been broad support for the horseback riding amenity

since the club began taking reservations in December 2014. Morethan 480 reservations have been made by members who can nowoffer a wilderness adventure experience to family and guests, children and grandchildren in addition to our many other amenities. Our luxury camping excursion, which is managed andoperated by our local outfitter H2R, has generated much moredemand than the club first anticipated. Since opening for businessin mid-February of this year, 40 reservations have been booked.

I’d like to share an excerpt from an email from members Steveand Alli Garry, whose granddaughters Rylee, 11, and Ashlyn, 10,recently came to visit from South Dakota and Minnesota, and whoscheduled a camping excursion and horseback riding.

“The highlight of our weekend was the luxury camping and horseback riding. The girls loved every second of the adventure…Theaccommodations were great and the food was fabulous (thanks to Barb,the best mountain camping cook ever). This is a must-do event and aperfect addition to our amenities at Desert Mountain.”

Well said, Steve and Alli. The Ranch and trails are not just“nice to have” amenities, they’re “must-haves” in order for the clubto offer diversity to our present and future members.

Sonoran Renovation ProjectPerhaps the most exciting milestone came at the end of 2014

when 64% of the members voted 2-1 to expand the Sonoran clubhouse in order to add more than 17,000 square feet of spaceto include the expansion of fitness, training and group exerciseareas, greater spa space with a resort feel, more parking space, anew quick serve café, poolside locker rooms/ restrooms and otherenhancements. Phase 1 construction has already begun and Phase2 is scheduled to start in August. It will take a total of 16 monthsto complete the project and it is anticipated that the grand openingof the new Sonoran will launch the Desert Mountain season infall 2016.

While some services have temporarily moved to other locationson the Mountain, Desert Mountain management and staff areworking to minimize any inconvenience the construction processmay precipitate. However, once the renovation is done, the newSonoran will enable the club to better appeal to a younger demo-graphic, such as Generations X and Y, who will soon be shoppingfor a club with diverse lifestyle amenities including a contemporaryfitness component.

Charles Schwab Cup Championship 2014The 2014 Charles Schwab Cup Championship was highly

successful on many levels. More golf fans attended, comparedto 2013 at San Francisco’s Harding Park, and in 2012 whenDesert Mountain first hosted the tournament. According to theChampions Tour, attendance over the five days totaled approxi-mately 46,500.

The live coverage on the Golf Channel was broadcast in 207countries and reached 225 million households (80 million house-

holds in the U.S. and 145 million internationally). To maximizethis incredible exposure, we produced in-house two, 30-second advertising spots for the Golf Channel which appeared more than50 times during tournament week and beyond. From the volumeof calls received by the membership sales team, the combinationof the televised rounds, broadcast and print advertising, and manynewspaper articles generated a lot of interest in membershipsand real estate. During tournament week, new member prospectinquiries directly attributable to the tournament, totaled 59and five membership sales could be directly attributed to thetournament. Russ Lyon|Sotheby’s International Realty at Desert Mountain also received eight strong web leads with one, long-terminterest in real estate and a membership, and one high probabilitysales lead between $1.5 and $2 million.

There is no doubt that the Charles Schwab Cup Championshipis one of Desert Mountain’s most effective marketing opportunitiesthat exists today.

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

private club industries is an affirmation that the Desert MountainClub is among the best in the country. In 2014, we were recognizedfor the following:

Platinum Club — Desert Mountain was again selected by ClubLeaders Forum, comprised of club managers, presidents andowners across the nation, as a Platinum Club of America for2014-2016. The club has received this designation consecutivelysince 2000.Top Golf Ranges in the Nation — Desert Mountain’s golfranges (including the Jim Flick Golf Performance Center) werenamed to the list of the top 50 by Golf Range Magazine.Top Golf Shops — The club’s five golf retail operations wererecognized by the Association of Golf Merchandisers with the2014 AGM Platinum Award for excellence.

Thank you to Director of Instruction Dale Abraham, Director ofRetail Mark Thush, our Divisional Directors Mike Scully, ShawnEmerson, Kelly Rausch, Keli Greenberg, Todd Bruen, MattWooldridge and Christophe Hermine, and all staff members forcontributing every day to the success of the Desert Mountain Club.I would also like to recognize the board and the members at-largeof the board committees for the time they devoted to make DesertMountain one of the finest golf and lifestyle communities in thecountry. Without their support and the support of the membership,none of the accomplishments of 2014 would be possible.

Robert JonesCOO/General Manager

j 19 i

LETTER FROM CHIEF OPERATING OFFICER/GENERAL MANAGER

j 20 i

WELCOME OUR NEW MEMBERS

Steven and Laura AdamsDallas, Texas

Craig and Joanna AdamsonSalt Lake City, Utah

Dr. Scott Anderson and Lisa BaileyScottsdale, Arizona

Paul and Jeannette ArlingIrvine, California

James Azzinaro, Jr. and Ann AzzinaroScottsdale, Arizona

Shane and Manda BaghaiToronto, Ontario, Canada

David Baldwin and Lisa PereaAlbuquerque, New Mexico

Thomas and Betty BarrOshkosh, Wisconsin

Donald and Joy BetmanScottsdale, Arizona

Timothy and Debbie BloomerScottsdale, Arizona

Lawrence and Jane BoltonScottsdale, Arizona

Stephen and Barbara BovaLittle Rock, Arkansas

Kevin and Barbara BowenScottsdale, Arizona

Michael and Marianne BrewsterScottsdale, Arizona

Larry and Karen BullardScottsdale, Arizona

John ChandlerHutchinson, Kansas

James and Pamala CiesligaSt. Clair Shores, Michigan

Dave and Kalah ClementEvansville, Indiana

Dr. Kevin and Julie CookOverland Park, Kansas

Henry Cooper, IV and Kim CooperWestport, Connecticut

Andrea CsaszarBethlehem, Pennsylvania

Jonas and Jacqueline DahlenScottsdale, Arizona

Dr. Gary DaubertBanks, Oregon

Brian and Regan DeeringDecatur, Illinois

George DeFalco, Jr. and Elizabeth DeFalco

Westborough, Massachusetts

John and Marie DeVivoMill Neck, New York

Mark and Michele DickinsonScituate, Massachusetts

Lawrence and Monika DoyleWest Vancouver, British Columbia, Canada

Catherine Durboraw and Daniel CarlIdaho Falls, Idaho

Jason and Letty EbelGeneva, Illinois

Glenn Essebaggers and Wendy Crawford

Scottsdale, Arizona

David and Jan FairScottsdale, Arizona

John and Samantha FechterScottsdale, Arizona

Mark and Kristina FenlonScottsdale, Arizona

Christopher Flynn and Gail ThomasWoodinville, Washington

Robert and Carol FosterSt. Charles, Illinois

Paul and Tanya Rae FreemanSan Tan Valley, Arizona

Liam Gallacher and Ekaterina PetrovitchCalgary, Alberta, Canada

Benjamin GallacherCalgary, British Columbia, Canada

Steven and Ruby GonzalezMcAllen, Texas

David and Carol GrahamScottsdale, Arizona

Michael and Jami HannaCoeur d’Alene, Idaho

Kyle HoffmanLincoln, Rhode Island

Gary and Marie HooverScottsdale, Arizona

Dana and Cheryl HunterNewport Coast, California

Dr. Bruce and Annette IrickArvada, Colorado

Darryl and Jan IwaiAurora, Manitoba, Canada

Steven and Victoria JacobsonScottsdale, Arizona

Edward and Janice JonesScottsdale, Arizona

Paul and Cathy KalenianSanta Fe, New Mexico

John and Judy KaumeyerPenticton, British Columbia, Canada

D. Craig and Patricia KeeverScottsdale, Arizona

Barbara and Dean KleinNorth Oaks, Minnesota

John and Norma KoberSouthlake, Texas

Dr. Richard and Jessica KootmanParadise Valley, Arizona

Kevin and Linda KraftScottsdale, Arizona

Ingrid Kress and Jeffrey SchomakerGreen Bay, Wisconsin

Stephen and Kimberly LandaalFlint, Michigan

Donald and Sheri LopezTucson, Arizona

Alan and Jillian LoweLake Forest, Illinois

Lukas Magnusson and Dorothy EtterScottsdale, Arizona

j 21 i

Shawn and Kelle McCarterCastle Rock, Colorado

Robert and Kathleen McElligottKirkwood, Missouri

Deborah and Thomas McIntyreScottsdale, Arizona

Blaine and Anne McPeakNiwot, Colorado

Mark and Debra MeinersChesterfield, Missouri

Richard and Devon MillerScottsdale, Arizona

Murray and Mary Beth MindlinScottsdale, Arizona

Craig Mitchell and Sharon WongScottsdale, Arizona

Michael and Cindy MolitorScottsdale, Arizona

Niles and Jennifer MoserScottsdale, Arizona

Ray and Ellen MullenSoda Springs, Idaho

Dr. Michael Murphy, Jr. and Jenna MurphyEau Claire, Wisconsin

James NoskeHouston, Texas

Kenneth Olivier and Angela NomelliniHillsborough, California

Brian and Carol OshustBentley, Alberta, Canada

Wayne and Gail OverlandCarefree, Arizona

Ashton and Pat PageScottsdale, Arizona

Jonathan and Robin PainterSudbury, Massachusetts

Mario and Karen ParisePhoenix, Arizona

Mark and Laurie PetersonNaperville, Illinois

Dennis and Jayne PetrocelliWest Orange, New Jersey

Martin and Barbara PluthScottsdale, Arizona

Scott and Marcy PohlmanMaple Grove, Minnesota

Larry and Jileen PorcellatoWadsworth, Ohio

Harold and Sandra PriceScottsdale, Arizona

David and Faith RachofskySnowmass Village, Colorado

Mark and Jacqueline RedmondRichmond Hill, Ontario, Canada

Charles and Julie RolleScottsdale, Arizona

John RookeFort Collins, Colorado

Paul Rosow and Pamela ChurchillScottsdale, Arizona

John and Regina RyanBallston Lake, New York

Dr. Frank and Phyllis SallustioScottsdale, Arizona

William and Jane SautherSpokane Valley, Washington

Shane and Hanna SchuckmanScottsdale, Arizona

Rick Schwieterman and Beverly FarlowDublin, Ohio

Brenda SelfScottsdale, Arizona

John Shaffer and Kathryn Babcock ShafferChicago, Illinois

Allen Shimizu and Maureen ShieldsScottsdale, Arizona

Murali and Lila SitaramLos Altos, California

Dr. James and Debra SlackScottsdale, Arizona

Nicholas and Jeanne SommerValparaiso, Indiana

Sean StansfieldToronto, Ontario, Canada

Ian StansfieldToronto, Ontario, Canada

David and Tara StewartScottsdale, Arizona

Matthew and Donna SuheyDeerfield, Illinois

Michael and Marilynn TomaszChicago, Illinois

Anthony Treccapelli and Armine GiorgettiManhasset, New York

John and Leslie TrudeauScottsdale, Arizona

Franklin Tucker and V. Dian GarrettWashoe Valley, Nevada

Andrew TurnerMinneapolis, Minnesota

Dale and Michelle Van DamBrookfield, Wisconsin

Shelly White and Blain RaabScottsdale, Arizona

Ronald Whitney, M.D. and Jeanette Eaton Whitney

Scottsdale, Arizona

Robert and Sharon WiborgHacienda Heights, California

Michael and Sheryl WilbonBethesda, Maryland

Christopher and Terry WilsonWayland, Massachusetts

William and Shelagh WilsonToronto, Ontario, Canada

Dr. Tom Woo and Dr. Janis CampbellCalgary, Alberta, Canada

Harry and Lily ZobermanNorthbrook, Illinois

WELCOME TO OUR NEW MEMBERS

j 22 i

SONORAN RENOVATION PROJECT BECOMES REALITY IN 2014

F ollowing numerous focus groups and informational sessions, the Desert Mountain membership passed theSonoran Renovation Project initiative in late 2014. This

milestone is the welcome result of an information campaign,based on club industry research, market trends and memberinput, that the Board of Directors, the Sonoran Steering Committee and senior management initiated back in 2012 withthe first survey of the membership since club turnover in late2010. The survey revealed that 60% of the participants consid-ered the expansion of the Sonoran facilities a priority in thevery near future, which would have lasting benefits for the club.

You may have attended one or more of a series of focus groupsand other informative meetings and town halls in 2013 and2014 that were held in order for the board, the work group and management to ascertain the improvements in which memberswere interested to enhance their Desert Mountain health andfitness experience. Or, you may have filled out comment cardsand sent emails to the board and management with your recommendations, concerns and your wish list of improvements.

Only a few months ago the “get out the vote” campaign, includ-ing the distribution of numerous informational materials as wellas an in-depth brochure outlining the proposed new design, improvements and the cost of the project, was launched so thatmembers could fully understand the benefits of a new and improved Sonoran and cast an informed vote during the voting

period of October 27-December 1, 2014. Three days after votingclosed, on December 4, it was confirmed by our independent auditors Rauch, Hermanson, Everroad & Rentschler, Ltd., thata majority of the eligible members who participated in the election had voted to move forward on the project.

The total cost of the renovation is $12 million and will addmore than 17,600 square feet of space to the Sonoran includinga new quick serve café, family poolside locker rooms, andpoolside restrooms; more expansive fitness, training and groupexercise areas; an enhanced spa and salon space with a resort-style ambience; a bigger Youth Activity Center and moreparking space, among other improvements.

Phase 1 construction is now underway with Phase 2 scheduledto begin in summer 2015. It is anticipated that construction willbe completed in the summer of 2016 and a grand opening willbe held in fall 2016 to launch the 2016-17 club season.

The renovation of the Sonoran facilities will greatly enhanceand rejuvenate the fitness and lifestyle experience that will helpretain Desert Mountain’s viability in the private club industryand add to the value of your membership while attracting vibrant, new members in the years to come.

j 23 i

2014 DESERT MOUNTAIN MEMBER EVENT HIGHLIGHTS

Charles Schwab Cup Championship 2014

Mountain Magic and Mountain Mania golf tournaments

Our resident Rembrandts at Vino & Canvas and Kiddos & Canvas The Black & White Dinner at Apache clubhouse

The Ranch grand opening

DESERT MOUNTAIN CLUB, INC.10550 East Desert Hills Drive | Scottsdale, AZ 85262