2015 annual report

2016 ANNUAL REPORT

Letter from the President

Membership Committee Report

Golf Committee Report

Greens Committee Report

Strategic Planning Committee Report

House Committee Report

Bylaws & Rules Committee

Activities Committee Report

Finance Committee report

Club Audit

TABLE O F CONT E NTS

BOARD OF DIRECTORS

OFFICERS

Murray Nelson, PresidentScott Blumenthal, Vice PresidentJack Rosenstock, TreasurerCrawford Love, Secretary

DIRECTORS

Jay Berens, MembershipCraig Degnaro, GolfJudy Guten, HouseKathy Goldman, ActivitiesDennis Kaufman, MembershipMike Kieffer, Greens

PAST PRESIDENTSScott Simanson 2015Duane Meek 2014Judy Frost 2013Hal Purkey 2011/2012Roy Brown 2010Mike Devaney 2009Ira Edelson 2007/2008Sharon Re 2006Jim McNally 2005Bill Entringer 2004Jim Senna 2003Bill Hall 2001/2002Jack Bowman 2000Jim Kuhlman 1998/1999Jerry Graunke 1997Vaemond Crane 1996Harry Paston 1995

2016 marked Troon Country Club’s 30th anniversary! I think it was therefore appropriate that this year realized some significant achievements in the Club’s positioning for another 30 years of success.

The Facility Renovation Project, a significant element of our Strategic Planning over the last 3 years, was approved by membership. Fiscal results for 2016, specifically the Operating and Capital Budget were achieved, which confirmed the finance plan developed for the renovation capital expenditure is sound. The project allows the Club to better accommodate the needs of future memberships in view of a changing marketplace.

Member participation levels were up in virtually all areas of Club activity relative to 2015. A good example of this was the summer’s Desert Rat series which saw a 50% increase in participants. Overall golf rounds for the year were up 5% over prior year.

As mentioned in the House Committee report, the mission of the Food and Beverage Department is to plan and implement dining experiences that create member delight. I can point to many areas of success in this endeavor, particularly the new menu selections and special event agendas that were released through the summer and start of the new season. Obviously, we face challenges associated with the renovation in the upcoming year to maintain food, beverage and banquet participation levels; however, I encourage everyone to keep engaging and utilizing the Club as

1 | Troon Country Club Annual Report 2016

services and experiences through the renovation, so we welcome your support and participation through this exciting period of time at the Club.

In closing I think we, the current membership, need to pay tribute to all those members who have over the past 30 years built this Club into what we are today, a premier country club known for its hospitable and caring environment. All of us have an obligation to preserve this heritage and tradition for another 30 years.

I would like to thank management and staff for delivering to all of us, our Troon Experience .

Obviously there is much work that takes place at the committee level to create and enhance that experience. To all of you, the committee volunteers, thank you for the time and effort devoted to the Club. For the last four years I have enjoyed the opportunity to work with a great cast of board members; our sometimes diverse opinions lead to constructive dialogue and decisions made are mindful of our Memberships’ wants and needs.

Finally, to all of you, the membership, thank you for your support during this time. It is a great thing to walk through the front doors of the Club knowing you are among good friends who “have got your back”. It’s been a privilege to serve as your President.

Thank you.

the team keeps services available throughout the renovation period.

While we have come to expect the best in our golf course condition, this year’s over seed resulted in what many of our longer term members deemed, “the best of the best”. Nothing feels better than hearing from an outside source how great our course is. While successfully hosting the Arizona Open for another year, those words were the testimony of every player.

The vote of approval for the Facility Renovation Project created interest in the market which resulted in new golf membership sales. The fourth quarter of 2016 reflected an increase in prospective new member activity which resulted in an uptick in applications from prior year end which ultimately mitigated an initiation fee increase in 2017.

At the end of the year we commenced construction activity on the project. In fact, as I author this report, all of the construction permits are in place, demolition work is proceeding well, and engineering work is nearing completion. Please have patience with the disruption that the renovation may bring through the year knowing that once the project is complete we will have a bigger, improved clubhouse with significantly more square footage for activity groups and fitness work out areas. Remember during the renovation, that the course is not impacted. Management and staff will continue to deliver innovative dining

LET TE R F RO M T HE PRE SIDENT –MUR RAY NELS ON


WELCOME 2016 NEW MEMBERS!

Ray & Darlene RobertsJames & Karin Poirier

Stephen & Sara BrandenburgJuan & Samantha Gaytan

Jeff & Leslie CunixJared & Becky ConnorsPaul & Donna KeshtkarMichael & Karen BoberPaul & Carla McElrath

Grant McGrath & Lisa LeopoldRobert & Donna ChoppPaul & Glad Markunas

Daryl Ann MoorePatrick Laux & Lynda Ludwig

Richard & Patricia WilsonJeffrey & Allison Davis

Roy & Kellie LawsonKyle Hudelson

Jim & Sheryl BohlanderScott & Katherine Sibigtroth

Arthur & Judy WattMike & Robin DearingJohn & Sylvia NewellBarend & Doris Lotz

Steven Buller & Anne WalshFrank & Sandy Sun

Mark & Alison Epstein

The excitement surrounding the renovation —specifically expanded wellness center and patio dining are a big plus to our new members. The golf course sells itself – it is the best!

Allen Miller, Director of Membership joined the Club in June 2016 and hit the ground running! Efforts include new marketing material, advertising in select publications, new homeowner letters and outreach, and lots of personal tours and attention. Allen is very clear — the one ingredient that sells the most memberships is excitement of our Members.

As a result, this year’s committee embarked on a membership drive entitled: Oppor-TROON-ity which enlists the help of our overall membership to meet the 2017 membership goals listed above.

Our goal is to have a full golf membership (limit of 325 Golf and Associates) and significantly increase our Sport/Social membership ranks by the end of 2017.

MEMB ERSHIP COMMIT TEE


CATEGORY 2011 2012 2013 2014 2015 2016 GOAL

GOLF 283 280 282 290 281 275 290

ASSOCIATE GOLF 10 9 14 16 35 35 35

SENIOR GOLF 23 21 25 33 40 44 45

SPORT/SOCIAL 148 139 137 132 121 106 135

TOTAL 464 449 458 471 477 460 505

Jay Berens, Chair, Dennis Kaufman, Vice Chair,

Carolyn Peters, Donna Sanfilippo, Dana Craig, Craig Smith, Terri Allen,

Pat Fridley, Dana Birsch, Michael Sullivan. Troon Staff: Allen Miller, Garrett Wallace

PURPOSEThe purpose of the Golf Committee is to advise and assist the Head Golf Professional in setting and carrying out golf related policies, practices and programs. The committee also facilitates feedback from the membership.

SCOPEAll golf practices, policies and programs with the exception of the care, maintenance and construction of the course.

RESPONSIBILITIES Include, but not limited to:• Establish policies regarding the conduct of Members, as well as

acceptable dress on the course.

• Establish and enforce acceptable speed of play.

• Review course availability and hours of play.

• Manage guest and tournament fees and outside tournaments, make recommendations to the Board.

• Oversee the correct handicaps of Members, make adjustments as necessary.

• Review the golf instruction program.

• Monitor current rules of golf, including any local rules.

• Review tournament scheduling, format and rules.

• Oversee preparation of the golf packet, which includes a calendar of events, sufficiently in advance of the golf season.

• Oversee operations of the golf shop.

• Consider any local rules of golf that may be appropriate.

30TH ANNIVERSARYThe committee developed a new pin flag that we felt celebrated our past and embraced our future, by returning to our checkboard background, while still utilizing the Troon quail on the improved visibility white background.

DESERT RAT Using the results of our inaugural 2015 season, the committee modified the event’s format, eliminated the food and beverage component of the 9 hole events and changed the scheduling of events to better encourage Member participation. The changes were well received as participation increased almost 50%.

COMPETITIVE EVENTS Based on Member feedback, we will be restructuring the Club Championship back to a 3 day event. Also, based on Member input, we will add a “Super Senior” flight to this year’s Club Championship. Further, in recognition of the ever changing demographics of our membership, the committee will review all events to ensure formats are relevant to all demographic segments of the membership in efforts to increase participation.

LOCAL RULES The committee implemented a new local rule based upon recommendations of the USGA. The new rule pertains to the accidental movement of a ball while on the putting surface. Notification of the rule has been posted in the clubhouse and included in Troon Tracks.

ARIZONA OPENOnce again, Troon CC was the host of the 2016 Arizona Open. In an effort to increase Member involvement with the tournament, the committee restructured the member volunteer program and significantly increased Member participation during the event.

PACE OF PLAY . . . VISAGE GPSBased upon the recommendation of the committee, the Club leased the new cart fleet equipped with the Visage GPS system. As a result of the Visage GPS there was an improvement in the average pace of play in 2016 to 4 hours 1 minute, from our long established goal of 4 hours 10 minutes.

MANAGING THE BUDGETGolf operations demonstrated significant strength in beating their budget for 2016. Member participation (rounds), were strong and our Head Golf Professional managed his budgetary targets extremely well.

LEARNING STRUCTURELast year, our Learning Structure was irreparably damaged in a storm. After examining several alternatives, we have replaced the structure with another of similar design, but with more sturdy anchors. The structure will be permanently located on the Northwest corner of the driving range.

GOLF COMMI T TEECraig Degnaro, Chair, Dennis Kaufman, Vice Chair, Judy Frost, Stan Greanias, Karlene Kieffer, Art Peters, Jeanne Palmer, Hal Purkey, Dr. Gordon Scott, Ray Sharpe, Richard Tompeck. Troon Staff: Tim Rafferty, Garrett Wallace. Finance Committee Liaison: Martin Waldinger

Troon Country Club Annual Report 2016 | 4

2016 and early 2017 were extremely busy, and sometimes hectic, times for the Course Maintenance staff. I think the entire golf membership would agree that we have a course that is in remarkably wonderful playing condition, most especially when compared to our neighboring courses, both private and public. This is a great testimony to Seth and his crew who worked the entire period with less than a full staff complement (they were 2 FTEs down all year).

As Chair of the Greens Committee it was a unique, educational and pleasurable experience working with Seth, and I wish every Golf Member had an opportunity to appreciate firsthand the immense body of knowledge he brings to his position. Every meeting was similar to taking a Graduate course in Agronomy! A special acknowledgement also to the Greens Committee (Jack Bishop, Jim David, Jim Palmer, Mike

RESURFACING PUTTING GREENIn mid-August the PG was prepared for seeding with Bentgrass by a process of heavy aerifications, verticutting, sand topdressing and fumigation. This process increased air and water movement in the green profile, removed thatch, smoothed the surface and removed all unwanted turfgrass species. Areas of the PG that were overgrown with bermudagrass on the eastside were recaptured and increased the putting surface by 1000 square feet. The PG had been significantly contaminated with bermudagrass and a population of Poa Annua, not to mention mutations in the old bentgrass variety. The green was seeded on September 9th and opened for play on November 29th.

TEE LEVELING-#5 BLUE/SILVER, #9 RED AND #13 SILVERThis annual project addresses the worst three tees on the course, with regard to crowning or unevenness of the playing surface. The old turf is stripped off and the subsurface is leveled and expanded if needed, e.g. #5 blue/silver and #13 silver. The expansions help provide quality turf throughout the slow growing season (December-February) when rounds dramatically increase and ryegrass

seed does not germinate quickly. Irrigation changes are made if necessary and new sod installed.

REPLACE BROKEN CART PATH SECTIONSSections of the cart paths are replaced annually to remove cracked or broken concrete panels. This year’s replacements included holes 1,3,9,13,16.

LANDSCAPING ADDITIONS ON HOLE 4 / 9 AND VEGETATION REMOVAL ON 2 / 7 GREENSDuring the early summer, additional landscape material was added to the back of #4; including large boulders, mature saguaros and an array of landscape material to provide a finished look to the backdrop. The bank around #9 lake was cleaned of old plant material, drip irrigation and colorful landscaping plants were installed to provide an exceptional vista from the newly designed patio of the club house.

Significant “volunteer” vegetation (the bushes and weeds that sprout up because of the closeness of watering the green complex) was removed behind the green complex for holes 2 & 7, to enhance the natural beauty of the boulder background.

G R EENS COMMIT TEE


Peters, Neil Stacey, John Thompson, Sandy Friedman (Finance Liaison), and Craig Degnaro (Golf liaison) for their strong contribution. The significant amount of time they gave on behalf of the Membership, both in meeting attendance but also in special tours of the course, was exceeded in value only by their thoughtful, and sometimes provocative, questions and discussions which led to several important decisions.

With Seth’s leadership, the committee began the year with two primary goals: 1) continue the effort to maintain our course in the excellent condition it is in (Seth, as mentioned, exceeded our expectations); and, 2) to begin the “beautification” of our course -- as the perfect complement to taking our course to the next level of excellence. As the vegetation continues to bloom and grow, you will notice even more the effects of this program.

CA PITAL PROJECTS

Specifics from Seth of the various programs undertaken this past year, as well as some early thoughts for 2017:

COURSE BEAUTIFICATION: ADDING DESERT PLANTS, CLEANING/TRIMMING DESERT MATERIALAreas in between the turf and cart paths or around the greens are considered “landscape” areas. Initially, the desert plants in these areas were trimmed or removed if damage or causing turf issues, followed by preparations for new plantings. In an effort to enhance the aesthetics of the course, more colorful desert plant material was installed and will mature to full size over time on holes 1, 2, 3, 6, 7, 8, 9, 10, 11, 16.

GRADE CART PATHSMany of the cart paths provided limited access to the turf, constricting the area in which carts could enter or exit each hole. Consequentially, these areas had poor turf quality from the constant traffic and substantial soil compaction effecting the turf long term. By grading the cart paths to the turf level, additional access points were created, the safety issue of large drop-offs removed and additional protection of irrigation heads positioned on the periphery of each hole obtained.

#6 BRIDGE During overseed the bridge on hole 6 leading to the silver tee was completely rebuilt with a new steel frame and cedar wooden planks. Additional supports were put in place to eliminate any bounce.

Mike Kieffer, Chair, Jack Bishop, James David, James Palmer, Mike Peters, Neil Stacey, John Thompson.Troon Staff: Seth Miller, Garrett Wallace. Finance Liaison: Sandy Friedman

COURSE PROJECTS

#6 CART PATH ADDITION A new decomposed granite (DG) cart path was installed from the red tee to the left side of the hole. This new path will significantly reduce the cart traffic crossing the hole to the left side.

RETURN TO ORIGINAL DESIGNSeth and the committee toured the entire course with Tim, who had pictures of the original course design from Tom Weiskopf. Many changes were made to improve sight lines, based on this tour. You may have noticed on #16, that you now can actually see the entire green from the far left fairway and rough. Previously a major portion of the green was not visible due to overgrown bushes.

REMOVAL OF BERMUDAGRASS ON COURSE GREENSThis annual project, like tee leveling, addresses the green perimeters that have the greatest amount of bermudagrass encroachment present. During the summer months, the bermudagrass is actively growing and out competes the bentgrass along the edges of the putting greens surface. During this time, the Bermuda can move into the green by several inches. Even with the bentgrass growing back over the Bermuda during the winter months, the Bermuda still lies dormant and will resume its growth and continue to advance as temperatures climb.



OVERSEED TRANSITION MOVED TO OCTOBER DATEMoving the most important course conditioning event of the year to an optimal time has great advantages. The cooler temperatures: reduce the bermudagrass competition during grow-in; decrease the downtime with scalping equipment that prepares the course for seeding; lower disease incidence on the ryegrass; lower water requirements; and, provide safer working conditions for the employees. In addition, the ability to control Poa Annua during its optimal germinating period in September is enhanced. Chemical controls for Poa can be used right up to the onset of overseed; therefore, the later overseed is scheduled in fall, the greater efficacy will be achieved with its control. Also, an October overseed is less likely to see significant damage from a late season monsoon.

TRANSITIONThe transition from winter ryegrass turf back to bermudagrass was tremendous last summer. There were many factors that played a part in this process: from a lower density ryegrass stand last winter, which was a result from an early and long cold winter, to the aggressive cultural practices that began in February. The use of lowering mowing heights, verticutting, solid tine aerification, sand topdressing and increased

3 & 3 PROGRAM Engage the membership in the initiative to fix 3 ball marks and fill 3 divots when possible. The Board of Directors enthusiastically supports this program and, as overall metrics show improvement, will recognize the Members who have enrolled in the program.

RENOVATE SELECT GREEN SURROUND IRRIGATIONRemove the original block system irrigation and install valve-in-head for single station control to provide accurate irrigation water, increased playability and conditions to provide high quality turf.

REPLACE BROKEN CART PATH SECTIONS AND ADD CURBING ON HOLES 1, 4, 14

CONTINUE COURSE BEAUTIFICATION Vegetate all desert paths and areas devoid of vegetation throughout the course, while maintain current desert plant

G OLF COU RSE CONDITIONS

SOME PLANNED 2017 PROJECTS

irrigation create a better environment for the bermudagrass regrowth during February through April. However, the greatest attribute to transition was completing hollow core aerification on all playing surfaces during the first week of May. By removing soil compaction, turf thatch and creating open voids, the Bermuda could take advantage of the warmer temperatures and out-compete the heat stressed ryegrass early in the summer. The sequential steps of chemically removing the ryegrass and fertilization allow the bermudagrass to quickly fill in the voids left by the desiccating ryegrass.

2016 ANNUAL WEATHER SUMMARYThe following data is collected by the course weather station between #9 approach and the driving range. The total accumulated rainfall was 9.51”, with the heaviest rain event of 0.99” on January 6, 2016. The hottest day of the year was June 20th at 114 degrees and the coldest temperature recorded was on February 2 at 29.5 degrees. We had one storm that caused course damage over the period August 5 & 6 (0.82” and 0.93” respectively) resulting in torrential rain water rushing through the course and eroding the bank facing north on the second half of hole 3.

material for playability and aesthetics.

SUBSURFACE DRAIN LINESInstalling subsurface drain line and catch basins in select areas of the course to reduce the high moisture level of low lying areas.

LEVEL AND SOD THE 3 TEES MOST IN NEED. The precise tees will be identified once we get through the heavy part of the golf season; and replacement will occur in June. This will allow sufficient time for the new bermudagrass to become established prior to overseed.

LOWER TURF AREAS AROUND THE GREENS This will allow water runoff and smoother playing conditions. Overtime, through sand topdressing and hollow core aerification, areas outside the greens may become slightly higher and require additional hollow core aerification and/or sod removal and regarding to maintain a smooth topography.

The charge of the Strategic Planning Committee is to assist the current Board in addressing the long-term health and welfare of the Club. By anticipating the future needs of the Club and through the creation of a plan to assure those needs are met, there is a roadmap for future Boards to work from. In this way we can assure consistency and address all major Club issues that could inhibit the long-term viability of our Club.

With the positive membership vote on the renovation of the Club, the culmination of two years’ of work through the Strategic Planning Committee became reality. The committee was diligent in their effort to include in their recommendations to the Board, input from the membership as a whole to insure that the majority’s desires were represented.

As we all are aware, work is underway and the Board is acutely aware of the need to fulfill the objective of

STRATEGIC PLAN NI NG COMMI T TEE

Scott Blumenthal, Vice President & Chair, Jack Rosenstock Treasurer & Vice Chair, Bill Camp, Richard Jaffe, Steve Kimpton, Alan Lutz, Craig Smith. Troon Staff: Michelle Solomon, Garrett Wallace, Finance Liaison: Alan Lutz

the plan on time and on budget. Now the Strategic Planning Committee has turned it’s focus toward the future again, operating as a “think tank” for the development of new members.

Their discussions, input and recommendations have included operational structure, marketing, branding, pricing and general communication throughout the Club.

The ideas shared from the committee have been valuable to not only the Board, but also all of the other committees including bylaws, membership, house and golf.

For the future, this committee will continue to focus on the development of all elements of our operation in order to maximize the benefits of Troon Country Club to our current membership as well as potential new members.


The House Committee is responsible for advising the Board of Directors regarding the use, maintenance, and operation activities within the clubhouse including food and beverage services, locker rooms, fitness facilities, swimming pool, and dining and bar areas. The House Committee has oversight over the second largest financial component of the Club – second to the golf course.

For the 2016/2017 calendar year much of our emphasis was on planning for and implementing dining experiences to achieve Member delight. Due to the Club’s renovation plans, the committee’s attention to facility focused on safety and ease of use during construction. Tactical decisions for construction are made by committees overseeing the renovation, so our discussions centered on creating dining experiences in the Quail’s Nest during the day and the Troon Room for evening meals and events.

At the outset of our committee work, we addressed the question: “what is of greatest value to us and our colleagues, as Members?” What came through loud and clear is that our Members expect a first rate, top quality dining and facility experience. What they

HOUSE COMMIT TEE


Judy Guten, Chair. Allen Barry, Lou Ayers, Craig Smith, Bill Tabinsky, Angela Ziemer-Italiano, Sual Schwartz, Jeanne Palmer, Kathy Goldman, Vice Chair, Jan Conrad, Phyllis Rosenstock, Joyce Dolin, Denise Glass, Jo Ann Nidetz

seek in a Troon membership, aside from utilizing the activities available, is a feeling of community – or family. Therefore, our focus for the year centered on these motivations.

In looking at usage we noted that the majority of our Members dine at the Club once a week or less, and it is our committee goal to increase usage – this achievement, in our assessment, is tied to increased Member satisfaction. Therefore, the benchmarks for our decisions needed to result in outcomes beyond Member satisfaction and instead, create Member delight.

We focused on creating Member delight in two overall areas: menu diversity and selection, and Member feedback with regard to their dining experiences. With regard to evening menu selection and diversity, Chef and Lou revised our menus toward creating an emphasis on country club favorites – food that our Members look for.

Additionally, in order to create interest, specials are rotated into menu each quarter. With the addition of Pizza Night on Tuesdays, the continued success

of Wednesday Patio Nights, and a well-received Thursday – Friday – Saturday menu, we are not where we want to be yet in terms of usage, but we are achieving some success.

Additionally, a salad bar at noon in conjunction with the lunch menu has been well-received – enabling Members who want lunch without waiting.

Because feedback received days after an experience does not allow our staff to correct a problem or make a change in real time, we implemented the Humm program, in which Members give feedback through the use of an iPad immediately after completing their dining experience. Consequently Chef, Lou, and Garrett know immediately what is working, what is creating satisfaction, and what a Member would like to see changed. This has led to on-site change in real time and is being met with appreciation by our Members.

Topics on the committee agenda for the reminder of this year include bulk wine sales, summer service hours during the renovation, and connectivity with Members and staff during disruptions caused by the renovation.

In summary we have made positive steps to increase our Members’ use of the Club. We will work to accommodate Member needs during the renovation yet note that, during summer hours when the creation of our new facility will creep into more areas, Members and staff will need to rely on quality and proactive communication: this will also present a major focus of planning for the House Committee in the next few months.

Thank you to the Members of the House Committee for your dedication to the committee’s work, for making decisions in the interest of Members, and for your commitment to enhancing the quality of Club life for all within our Troon Country Club family!

2016 RULE S & BYLAWS COMMIT TEE

Scott Blumenthal Chair. Mike Devaney, Ira Edelson, Judy Frost, Duane Meek. Troon Staff: Garrett Wallace

COMMITTEE DESCRIPTIONThe Committee is chaired by the Vice President and typically includes Past Presidents, Members are selected by the Vice President and approved by the Board.

PURPOSESupport the General Manager and staff in their efforts to enforce the Bylaws, Rules and Regulations of Troon Country Club. Also, as requested by the Board of Directors, the committee prepares new and amended Bylaws for presentation to and for the approval of membership. The committee also serves as the Grievance Committee for the Club. The committee is not meant to replace management’s responsibility, but to provide a means to review those instances where Members bring a grievance to the Board or in the event a Member does not meet acceptable standards of conduct for Troon Country Club. It makes recommendations to the Board for possible resolution. During this year, the committee has taken on the responsibility of a complete review of the existing Bylaws. To aide in this effort, the Board retained the services of Dennis Hillier and Glenn Gerena of Greenberg Traurig who specialize in representing private clubs and are highly regarded as experts in private club governance. With their help, three purposes were identified for this review:

FIRST After many years of changes, it was necessary to ensure that all elements of the documents were in compliance with Arizona Statutes governing private clubs and also in line with the IRS tax code for 501(c)7 private club operations.

SECOND For purposes of clarity, as well as consistency, a review needed to confirm that the current rules and regulations, as well as general policies, were not contrary to the bylaws.

THIRD It was an appropriate time to make sure that the Bylaws accurately reflected the current operation of the Club and desires of membership.

As will be reflected in the document to be released for a vote at the annual meeting, all three of these were accomplished.



The Activities Committee focused on building upon the work of the preceding year by continuing with programs that were a success and with new programs that would enhance Member delight.

Activities chosen address the cultural, educational and social interests of both the Golf and Sport/Social Members of Troon.

However, because of our awareness that our Sport/Social Members, in particular, seek involvement with activities that are not golf oriented, we worked to create opportunities for fun, learning, and socialization for all, throughout the year. “Throughout the year” is significant because of the increased numbers of Members who are now year round residents!

The committee’s planning was done in partnership with Club personnel, who assumed responsibility for holiday-based events such as New Year’s Eve, Valentine’s Day, and Fourth of July. Therefore, the committee was able to focus on planning events which encouraged diverse choices of activities so that our Members, regardless of age, interests, or ability, would find opportunities of value to them.

Activities planned by the committee included Comedy Night in January, Dueling Pianos in March and a Polynesian Luau in April, as well as attendance at the Phoenix Little Theater production of Beehive.

ACTIVITIE S COMMIT TEE

Kathy Goldman – Chair, Jude DeRaad, Carole Feinberg, Mary

Fisher, Gail Gordon, Cheryl Kaufman, Ann Martin, Tonni

Milker, Steve Wahl, Angie Ziemer. Troon Staff: Nicole Pound

The committee also introduced activities to build on Troon’s successful Patio Nights. October had a very popular Pumpkin Carving Contest with the diners voting on their favorite pumpkin. December brought a vendor night with a variety of items for the holidays. Later in the year we will have a sing along for those diners who wish to stay longer and sing some old favorites.

The committee focused on increasing utilization of the Club during evenings traditionally marked by low participation. Additionally, the committee improved the calendaring of Club events through more effective coordination with the general Troon calendar.

More of our Members are involved in the highly successful Bridge program. Additionally, daily, the Club is active with games for men and women including canasta, Mexican Train, Gin Rummy, Mah Jongg, and Poker.

As previously stated, our membership has increased year round, and the committee’s planning reflects this. With a nod to the challenges that this year’s renovation will present, the Activities Committee has planned events and activities during the summer which will continue to grow our goal for Member delight. Congratulations to the activities team for their hard work and commitment to deliver a successful 2016 – 2017 social season.

OPERATING RESULTS Financially, 2016 was a year of strong financial performance for Troon CC. NOI of $20,373 exceeded our budget by $5,073. The positive variance was attributable to efficient expense control by our management team, positive momentum in new membership sales, and active membership participation in Club activities.

MEMBERSHIP Total golf memberships at year end were 354 including full golf, associate Golf, and Senior Golf categories. While membership sales did keep pace with attrition, the refocused new membership program generated significant momentum during the fall. Aggressive marketing, coupled with membership approval of the Facility Renovation Project resulted in 18 new full golf members during the year, with an additional 3 joining in January. In total for the year, new member initiation fees generated $884,000.

While Sport/Social memberships decreased from 121 to 106 last year, the ongoing Facility Renovation Project will be an important element to the new marketing program focusing on increasing that membership category throughout 2017.

REVENUES Actual revenues of $7,906,078 fell slightly short of budget of $8,007,574, but up substantially from 2015 actual of $7,691,143. The increase from 2015 was driven by membership’s positive response to the current food and beverage program, increased

FINA NCE COMMIT TEE

Jack Rosenstock, Chair & Treasurer, Alan Barry, Pat Fridley, Sandy Friedman, Alan LutzMartin Waldinger. Troon Staff: Janelle Prater, Michelle Solomon, Garrett Wallace

Member and guest rounds on our outstanding golf course, and the 2016 dues increase.

EXPENSES Overall, total expenses of $7,885,705 were 1.3% better than budget of $7,992,274. Our management team’s effective control of labor and food costs enabled us to absorb budget overages in water costs and personnel benefit expenses.

CAPITAL With strong new membership initiation fees, the continuing 2014 capital contribution, and the Facility Renovation Project capital contribution, we ended the year with $858,019 in capital. During 2016, $641,667 in capital expense was incurred for the beginning stages of the clubhouse renovation project. Our $6mm construction loan agreement was successfully negotiated at a 3.25% rate. The loan will be drawn upon early in 2017 as the project progresses, with principal repayment not beginning until December 2017.

OVERVIEW 2016 was an exciting year for Troon CC with membership overwhelmingly approving the Facility Renovation Project. Member enthusiasm for the future success of Troon CC is strong. While membership sales managed to keep up with attrition during 2016, the renovation project, together with our premier golf course, will position Troon CC to aggressively drive new Golf and Sport/Social membership through 2017 and the years ahead.



Financial Statements December 31, 2016 and 2015 Troon Country Club, Inc.


Troon Country Club, Inc. Table of Contents

December 31, 2016 and 2015

Independent Auditor’s Report .................................................................................................................................... 1

Financial Statements

Statements of Financial Position ............................................................................................................................ 3 Statements of Activities .......................................................................................................................................... 4 Statements of Cash Flows ....................................................................................................................................... 5 Notes to Financial Statements ................................................................................................................................ 6

Supplementary Information

Actual to Budget for the Year Ended December 31, 2016 and Budget for the Year Ending December 31, 2017 ............................................................................................................................................... 15


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7033 E. Greenway Pkwy., Ste. 310 | Scottsdale, AZ 85254-2046 | T 480.315.1040 | F 480.315.1041 | EOE

Independent Auditor’s Report The Board of Directors Troon Country Club, Inc. Scottsdale, AZ Report on the Financial Statements We have audited the accompanying financial statements of Troon Country Club, Inc. (a nonprofit organization) which comprise the statement of financial position as of December 31, 2016, and the related statements of activities and cash flows for the year then ended, and the related notes to the financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Troon Country Club, Inc. as of December 31, 2016, and the results of its changes in net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.


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Adjustments to Prior Period Financial Statements The financial statements of Troon Country Club, Inc. as of and for the year ended December 31, 2015, were audited by Rauch, Hermanson, Everroad & Rentschler, Ltd., who joined Eide Bailly LLP on October 30, 2016, and whose report dated February 22, 2016, expressed an unmodified opinion on those statements. As discussed in Note 11 to the financial statements, certain errors resulting in overstatement of amounts previously reported for accounts receivables and deferred dues and fees as of December 31, 2015, were discovered by management of the Troon Country Club, Inc. during the current year. Accordingly the 2015 financial statements have been restated to correct this error. Rauch, Hermanson, Everroad & Rentschler, Ltd reported on the 2015 financial statements before the restatement. As part of our audit of the 2016 financial statements, we also audited the adjustments described in Note 11 that were applied to restate the 2015 financial statements. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review or apply any procedures to the 2015 financial statements of the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2015 financial statements as a whole. Report on Supplementary Information Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The supplementary information on page 15 is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and, except for that portion marked “unaudited,” was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information, except for that portion marked “unaudited,” has been subjected to the auditing procedures applied in the audits of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, except for that portion marked “unaudited,” on which we express no opinion or any assurance, the information is fairly stated in all material respects in relation to the financial statements as a whole. Scottsdale, Arizona February 23, 2017


See Notes to Financial Statements 3

Troon Country Club, Inc. Statements of Financial Position

December 31, 2016 and 2015

2016 2015(as restated)

Assets

Current AssetsCash, operations 248,699$ 148,670$ Cash, reserves 858,021 710,695Member receivables 373,229 391,290Initiation fees receivable, net 38,250 92,250Inventory 229,873 263,192Prepaid expenses 82,223 54,102

Total current assets 1,830,295 1,660,199

Property and Equipment, net 16,148,217 15,978,773

Initiation Fees Receivable, net 128,250 166,500

18,106,762$ 17,805,472$

Current LiabilitiesAccounts payable and accrued expenses 447,444$ 400,844$ Deposits and prepaid dues 58,282 61,689 Current maturities of capital leases 201,153 160,806 Current maturities of notes payable 7,451 10,781

Total current liabilities 714,330 634,120

Capital Leases, net of current maturities 324,326 365,515

Notes Payable, net of current maturities - 7,451

Unrestricted Net AssetsRefundable initiation fees and initial assessments

Resigned members 4,217,267 4,010,067 Active members 9,808,786 10,403,386

Undesignated 3,042,053 2,384,933

Total unrestricted net assets 17,068,106 16,798,386

18,106,762$ 17,805,472$

Liabilities and Unrestricted Net Assets


See Notes to Financial Statements 4

Troon Country Club, Inc. Statements of Activities

Years Ended December 31, 2016 and 2015

2016 2015

RevenuesMember dues 4,312,147$ 4,063,582$ Food and beverage operations 1,799,704 1,817,362 Golf shop merchandise 492,451 488,753 Greens and cart fees 741,455 742,670 Fitness fees 124,213 152,951 Locker fees 103,140 103,199 Other 332,968 322,626

Total revenues 7,906,078 7,691,143

ExpensesFood and beverage 2,211,989 2,288,433 Golf course and grounds 1,888,947 1,698,895 Administrative and general 1,583,737 1,552,068 Golf shop merchandise 370,703 368,851 Golf shop operations 912,381 865,017 Clubhouse 394,211 389,568 Member benefits 261,681 214,341 Locker room - 21,690 Fitness 189,443 212,987 Tennis 72,613 75,485

Total expenses 7,885,705 7,687,335

Increase (Decrease) in Unrestricted Net AssetsBefore Nonoperating Income and Expense 20,373 3,808

Membership initiation fees, net 883,557 704,174 Capital assessments 697,808 425,318 Gain (Loss) on disposal of assets 15,904 227 Depreciation (936,278) (791,009) Interest income 44 - Interest Expense (24,281) (16,488)

Change in Unrestricted Net Assets 657,127 326,030

Unrestricted Net Assets, Beginning of the Year 16,798,386 16,907,116

Reductions Due to Membership Activities (387,407) (434,760)

Unrestricted Net Assets, End of the Year 17,068,106$ 16,798,386$


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Troon Country Club, Inc. Statements of Cash Flows

Years Ended December 31, 2016 and 2015

2016 2015(as restated)

Operating ActivitiesChange in unrestricted net assets 657,127$ 326,030$ Adjustments to reconcile change in

unrestricted net assets to net cashprovided by operating activitiesGain on disposition of equipment (15,904) (227) Depreciation 936,278 791,009Relief of member receivables through refundable fees (17,657) -

Changes in assets and liabilitiesReceivables 18,061 477,592 Inventory 33,319 (33,063) Prepaid expenses (28,121) 53,419 Initiation fees receivable 92,250 159,750 Accounts payable and accrued expenses 46,600 (9,027) Deposits and prepaid dues (3,407) 25,677 Deferred dues and fees - (462,722)

Net Cash Provided by Operating Activities 1,718,546 1,328,438

Investing ActivitiesNet deposits to cash reserves (147,326) (83,524) Proceeds from sale of property and equipment 23,571 227 Purchases of property and equipment (930,643) (792,668)

Net Cash used in Investing Activities (1,054,398) (875,965)

Financing ActivitiesRepayment of notes payable (10,781) (26,162) Refund payments to resigned members (369,750) (434,760) Repayment of capitalized lease obligations (183,588) (153,323)

Net Cash used in Financing Activities (564,119) (614,245)

Net Change in Cash 100,029 (161,772)

Cash, Beginning of Year 148,670 310,442

Cash, End of Year 248,699$ 148,670$

Supplemental Disclosure of Cash Flow InformationCash payments for

Interest 24,281$ 16,488$

Non-Cash Investing and Financing ActivitiesCapitalization of leases 182,746$ 593,048$


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Troon Country Club, Inc. Notes to Financial Statements December 31, 2016 and 2015

Note 1 - Summary of Significant Accounting Policies and Summary of Operations Organization Troon Country Club, Inc. (the "Club"), an Arizona nonprofit corporation, was incorporated in 1986, and was established to operate and maintain a golf course and a clubhouse in Scottsdale, Arizona for the benefit of its members. The Club’s primary sources of revenue are derived from membership dues, fees and services provided to members. Cash Reserves Cash reserves are restricted by the by-laws of the Club and are to be used for future renovations of the Club. Inventory Inventory is valued at the lower of cost (average cost method) or market. Member Receivables and Credit Policy Member receivables consist of amounts due from members for dues, assessments and other services rendered by the Club. Member receivables are stated at the amount billed to members. The Club charges a late fee on outstanding receivables in lieu of interest. Historically, the Club has not provided an allowance for doubtful accounts based upon management’s review of outstanding receivables, historical collection information and members’ refund accounts. Member receivables are ordinarily due within 30 days. Member refunds are reduced by the amount of any receivables that remain unpaid when the refund is made. Therefore, accounts of members who have a refund account are not written off. If the member has no equity balance, any delinquent receivables are written off based on individual credit evaluation and specific circumstances of the member. Historically, bad debt write-offs have not been material. Property and Equipment Property and equipment is recorded at cost. Major improvements, renewals and betterments are charged to property accounts; replacements, maintenance and repairs that do not extend the lives of the respective assets are charged to earnings. Depreciation is provided using the straight-line method over the estimated useful lives of the respective assets. Gains or losses on the disposition of assets are credited or charged to earnings and the related asset costs and accumulated depreciation are removed from the appropriate accounts. The Club reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors. Based on this assessment there was no impairment at December 31, 2016 and 2015.


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Initiation Fees Receivable In 2004, the Club began to offer payment plans for new member initiation fees. Payment plans are structured with an initial down payment and the remaining initiation fees due over a certain number of years, depending on the type of membership. The Club does not charge interest on the initiation fee receivables. Members that choose the payment plan option for initiation fees may also choose to terminate their membership prior to paying the initiation fees in full without penalty. In 2016 and 2015, the Club had 9 and 12 members, respectively, on the payment plan. Initiation fees are stated at the full price of the membership. The Club provides an allowance for doubtful accounts based on historical rates of membership turnover. Future uncollectible fees receivable will be recorded against this allowance. Revenue Recognition Membership dues are recognized as revenue in the applicable membership period. Deferred dues and fees are amounts paid in advance by members for dues not yet billed nor due. Initial fees are recognized as revenue when the member is accepted into the Club. Golf shop merchandise revenue is recognized at the point of sale. Golf related revenues, as well as food and beverage revenues are recognized at the time the services have been rendered. Advertising Advertising costs are charged to earnings as incurred. For the years ended December 31, 2016 and 2015, advertising expense was $73,018 and $2,411, respectively. Income Taxes The Club is a not-for-profit organization exempt from income tax under Section 501(c)(7) of the Internal Revenue Code. Such exemption does not apply to unrelated business taxable income. Such income, pursuant to the Internal Revenue Code and related regulations, includes investment income such as interest received from sources other than directly from the membership and rental income. Net income taxes paid for the years ended December 31, 2016 and 2015 were $24,664 and $13,682, respectively. The Club evaluates its tax positions that have been taken or are expected to be taken on income tax returns to determine if an accrual is necessary for uncertain tax positions. As of December 31, 2016 and 2015, the unrecognized tax benefits accrual was zero. The Club will recognize future accrued interest and penalties related to unrecognized tax benefits in income tax expense if incurred. Credit Risk The Club’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and accounts receivable. The Club places its cash with high credit worthy institutions. At times such cash may be in excess of the FDIC insurance limit. The Club believes that its cash and accounts receivable credit risk exposure is limited.


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Estimates Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions may affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and reported revenues and expenses. Actual results could differ from those estimates. Subsequent Events Subsequent events have been evaluated through February 23, 2017, which is the date the financial statements were available to be issued. Note 2 - Members’ Dues, Initiation Fees, Assessments and Refunds The Club began solely selling memberships which do not contain a refundable initiation fee portion in 2011. This practice has continued through 2016. Refundable initiation fees and initial assessments still remain from prior years’ activity. Except for resignations relating to a ‘Right of First Refusal”, the Club’s policy is to make refunds in the order in which members have resigned. A qualifying member, who existed prior to March 1, 2002, that resigns upon the sale of his or her property in Troon Village to a purchaser that desires to exercise a “Right to First Refusal” is paid any refund due directly from the proceeds of his or her purchaser’s initiation fee. Additionally, the exercise of this right provides the purchaser (subject to all application and admission policies of the Club) the right to be admitted to membership prior to any other person. For some memberships, a portion of their initiation fees and assessments become eligible to be refunded upon a member’s resignation or termination. Refunds are payable solely from proceeds received by the Club from future sales of golf memberships, except in the event of liquidation or dissolution of the Club. As of December 31, 2016 and 2015, 102 former members were on the wait list to receive refunds and the longest on the wait list had been there for 77 and 68 months during the years ended December 31, 2016 and 2015, respectively. A summary of refundable initiation fees to resigned members at December 31, 2016 and 2015, and changes during the years then ended, is presented below:

2016 2015

Outstanding, beginning of year 4,010,067$ 3,904,383$ Refund payments to resigned members (369,750) (443,310) Refunds due to members resigned during the year 626,000 697,750 Reinstated memberships (50,150) (157,306) Receivables netted against refunds 1,100 8,550

Outstanding, end of the year 4,217,267$ 4,010,067$

This balance represents membership initiation fees and assessments of active members that become eligible for refunds once the membership has terminated. When a member resigns and becomes eligible for a refund, they are placed at the end of the refund wait list, except in the case of a “Right of First Refusal”.


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A summary of refunds eligible to be paid to active members at December 31, 2016 and 2015, and the changes during the years ended, are presented below:

2016 2015

Outstanding, beginning of year 10,403,386$ 10,943,830$ Refundable portion of resigned memberships (644,750) (697,750) Refundable portion of reinstated members 50,150 157,306

Outstanding, end of the year 9,808,786$ 10,403,386$

Note 3 - Inventory Inventory consists of the following at December 31, 2016 and 2015:

2016 2015

Golf Shop 125,940$ 146,512$ Food 25,895 51,683Bar and liquor 78,038 64,997

229,873$ 263,192$

Note 4 - Initiation Fees Receivable Initiation fees receivable consist of the following at December 31, 2016 and 2015:

2016 2015

Due within one year 42,500$ 102,500$ Due in more than one year 142,500 185,000

185,000 287,500 Less allowance for uncollectible initiation fees (18,500) (28,750)

166,500$ 258,750$

Initiation fees, current, net 38,250$ 92,250$ Initiation fees, long-term, net 128,250 166,500

166,500$ 258,750$


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Note 5 - Property and Equipment Property and equipment consists of the following at December 31, 2016 and 2015:

Useful Life2016 2015 Assigned

Land 8,480,896$ 8,480,896$ Improvements 4,421,020 4,400,483 15-40 yearsClubhouse and improvements 9,329,112 9,185,574 30 yearsMachinery and equipment 2,217,888 2,222,278 3-7 yearsFurniture and fixtures 368,177 400,884 5-10 yearsConstruction in progress 597,633 20,101

Total property and equipment 25,414,726 24,710,216

Less accumulated depreciation (9,266,509) (8,731,443)

Net property and equipment 16,148,217$ 15,978,773$

As of December 31, 2016, the Club had entered into a contract with an architectural builder in order to renovate the clubhouse. As of December 31, 2016, costs incurred on the project totaled $540,000, with a projected $5,272,000 remaining future commitment on the construction. This project will be financed through a $6,000,000 line of credit (Note 6), which the Club had not yet drawn on as of December 31, 2016. Note 6 - Line of Credit The Club has a $6,000,000 and a $500,000 revolving bank line of credit that expires in September 2026 and in September 2017, respectively. At December 31, 2016, there was no outstanding balance borrowed against the lines of credit. Both lines of credit are collateralized by the property of the Club. Interest is charged at 3.25% and 3.95%, respectively. Note 7 - Long-Term Debt Long-term debt consists of the following at December 31, 2016 and 2015:

2016 2015Note payable to a bank in monthly installments of

$946, including interest at 4 1/4%, maturing August 2017, collateralized by equipment. 7,451$ 18,232$

Less current maturities (7,451) (10,781)

-$ 7,451$


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Maturities of long-term debt at December 31, 2016 are:

Amount

2017 7,451$

Year Ending December 31,

Interest paid approximated interest expensed during the years ended December 31, 2016 and 2015. Note 8 - Capital Leases and Commitments The Club leases equipment and golf carts. Certain leases are classified as operating leases and require the Club to pay all executory costs such as property taxes, maintenance and insurance. Total rent expense for the years ended December 31, 2016 and 2015 was $134,528 and $104,995, respectively. The Club also leases equipment under long-term lease agreements that are classified as capital leases and are for periods of three to five years, expiring through 2020. Property and equipment includes the following leased property under capital leases at December 31, 2016 and 2015:

2016 2015

Equipment 775,784$ 541,255$ Less accumulated amortization (262,938) (284,362)

Ending balance 512,846$ 256,893$

The following is a schedule of future minimum payments for leases as of December 31, 2016 and 2015:

Capital Operating

219,487$ 107,873$ 198,910 107,873 102,472 101,300

36,583 -

557,452 317,046$

Less amount representing interest (31,973)

Present value of future minimum lease payments 525,479$

Year Ending December 31,

2017

202020192018


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The Club leases equipment under capital lease obligations. Capital lease obligations consist of the following at December 31, 2016 and 2015:

2016 2015Capital lease obligations payable in monthly installments

of $4,317, including interest imputed at 4.00%, dueApril 2019, collateralized by equipment. 111,980$ 158,298$

Capital lease obligations payable in monthly installmentsof $3,040, including interest imputed at 4.00%, dueMay 2019, collateralized by equipment. 83,891 116,307

Capital lease obligations payable in monthly installmentsof $2,348, including interest imputed at 4.00%, dueJune 2018, collateralized by equipment. 40,963 66,940

Capital lease obligations payable in monthly installmentsof $2,167, including interest imputed at 4.75%, dueJuly 2020, collateralized by equipment. 85,535 106,924

Capital lease obligations payable in monthly installmentsof $2,162, including interest imputed at 4.70%, dueSeptember 2018, collateralized by equipment. 43,148 65,971

Capital lease obligations payable in monthly installmentsof $2,439, including interest imputed at 2.50%, dueMarch 2016 through July 2016, collateralized by equipment. - 11,882

Capital lease obligations payable in monthly installmentsof $573, including interest imputed at 3.18%, dueJune 2019, collateralized by equipment. 16,462 -

Capital lease obligation payable in monthly installmentsof $542, including interest imputed at 4.00%, dueJune 2020, collateralized by equipment. 21,211 -

Capital lease obligation payable in monthly installmentsof $1,905, including interest imputed at 4.00%, dueMay 2020, collateralized by equipment. 72,875 -

Capital lease obligations payable in monthly installmentsof $1,236, including interest imputed at 4.00%, dueSeptember 2018, collateralized by equipment. 49,414 -

525,479 526,322

Less current maturities (201,153) (160,806)

324,326$ 365,516$


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Note 9 - Management Agreement During 2012, the Club entered into a Private Golf Club Management Agreement with Troon Golf, L.L.C. ("Troon Golf"). The agreement allows Troon Golf to operate the Club’s day-to-day activities as directed by the Club’s Board of Directors. All employees at the Club are employed by Troon Golf. The agreement was renewed on May 29, 2015. The most recent agreement expires December 31, 2020 with an option to renew for two more years thereafter. Note 10 - Intangible Water Rights In accordance with the First Amendment to the Pipeline Capacity Agreement dated April 1, 2008, the Club is obligated to contribute to the Reclaimed Water Distribution System Replacement and Construction Fund of the City of Scottsdale, Arizona (the "City"), which as of January 1, 2013, include monthly assessments of $2,438 through June 2035 for the Advanced Water Treatment System expansion and $4,063 until 2033 for the replacement of the reserve fund. Future undiscounted payments under this agreement as of December 31, 2016 are:

Amount

78,006$ 78,006 78,006 78,006 78,006

Thereafter 979,947

Total 1,369,977$

Year Ended December 31,

20212020201920182017

It is the intention of the Club to fund these assessments because it has determined that this is the most efficient and reliable source of water at the present time. The initial Pipeline Capacity Agreement (dated July 15, 1996) and the Amended Pipeline Capacity Agreement, referenced above, provides the Club non-potable water utilized for golf course irrigation. Under these Agreements, the City constructed a Wastewater Treatment Plant, the Reclaimed Water Distribution System, and most recently, an Advanced Water Treatment System for which it incurs operating and capital costs. The monthly assessments are the Club’s obligation for the reimbursement to the City for its share of those costs.


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Note 11 - Prior Period Misstatement Due to a reclassification error, accounts receivable and deferred dues and fees were overstated as of December 31, 2015. Details of the restatement in the December 31, 2015 financial statements are as follows:

As Previously Restatement AsReported Adjustment Restated

Member receivables 887,892$ (496,602)$ 391,290$ Total current assets 2,156,801 (496,602) 1,660,199 Total assets 18,302,074 (496,602) 17,805,472

Deferred dues and fees 496,602 (496,602) - Total current liabilities 1,130,722 (496,602) 634,120 Total liabilities and unrestricted net assets 18,302,074 (496,602) 17,805,472

Change in assets and liabilitiesReceivables (19,010)$ 496,602$ 477,592$ Deferred dues and fees 33,880 (496,602) (462,722)

Net cash used in operating activities 1,328,438 - 1,328,438

Statement of Financial Position

Cash Flows


Supplementary Information December 31, 2016 and 2015 Troon Country Club, Inc.


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Troon Country Club, Inc. Actual to Budget for the Year Ended December 31, 2016 and

Budget for the Year Ending December 31, 2017

2016 2016 2017Actual Budget Budget

(Unaudited) (Unaudited)Income

Dues 4,312,147$ 4,369,892$ 4,337,077$ Food and beverage 1,799,704 1,801,660 1,636,912 Golf shop merchandise 492,451 472,598 425,500 Golf operations 795,878 808,098 756,459 Range, rental and other 121,478 122,225 54,250 Fitness fees 124,213 154,100 66,800 Golf professional teaching fees 46,430 57,600 57,600 Miscellaneous 213,777 221,401 184,029

Total income 7,906,078 8,007,574 7,518,627

Cost of SalesCost of sales - food & beverage 905,078 961,436 887,305 Cost of sales - golf professional

teaching fees 44,090 54,950 55,150 Cost of sales - merchandise 370,703 370,328 318,143 COS service commissions

(fitness & tennis) 58,809 60,473 39,700

Total cost of sales 1,378,680 1,447,187 1,300,298

Gross profit 6,527,398 6,560,387 6,218,329

Operating ExpensesFood and beverage 1,307,471 1,241,023 1,127,382 Golf shop operations 868,291 913,587 870,705 Golf course maintenance 1,889,735 1,888,740 2,031,230 Fitness department 150,020 164,918 112,919 Tennis department 53,227 48,494 54,185 Clubhouse maintenance operations 632,725 679,725 553,246 Member benefits 376,813 423,982 436,821 General and administrative department 1,228,743 1,184,618 1,253,272

Total operating expenses 6,507,025 6,545,087 6,439,760

Net Operating Profit 20,373$ 15,300$ (221,431)$

25000 North Windy Walk Drive Scottsdale, Arizona 85255

480-585-4310 • TroonCC.com

2015 annual report

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