UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~June~~September 113, 2013.

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number 333-173127

ClubCorp Club Operations, Inc.

(Exact name of registrant as specified in its charter)



Delaware		27-3894784
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3030 LBJ Freeway, Suite 600
Dallas, Texas		75234
(Address of principal executive offices)		(Zip Code)

(972) 243-6191

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer o		Accelerated filer o

Non-accelerated filer x		Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The registrant’'s shares of common stock are not traded on an exchange or in any public market. As of ~~June 11~~October 15, 2013, the number of the shares outstanding of the registrant’'s common stock was 1,000.

Table of Contents

TABLE OF CONTENTS

		Page
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Unaudited consolidated condensed statements of operations and comprehensive income (loss) for the twelve and twenty-four weeks ended June 11, 2013 and June 12, 2012	1
	Unaudited consolidated condensed statements of operations and comprehensive income (loss) for the twelve and thirty-six weeks ended September 3, 2013 and September 4, 2012	1
	Unaudited consolidated condensed balance sheets as of June 11, 2013 and December 25, 2012	2
	Unaudited consolidated condensed balance sheets as of September 3, 2013 and December 25, 2012	2
	Unaudited consolidated condensed statements of cash flows for the twenty-four weeks ended June 11, 2013 and June 12, 2012	3
	Unaudited consolidated condensed statements of cash flows for the thirty-six weeks ended September 3, 2013 and September 4, 2012	3
	Unaudited consolidated condensed statements of changes in equity for the twenty-four weeks ended June 11, 2013 and June 12, 2012	4
	Unaudited consolidated condensed statements of changes in equity for the thirty-six weeks ended September 3, 2013 and September 4, 2012	4
	Notes to unaudited consolidated condensed financial statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2831
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4550
Item 4.	Controls and Procedures	4652
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	4753
Item 1A.	Risk Factors	4753
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5953
Item 3.	Defaults Upon Senior Securities	5953
Item 4.	Mine Safety Disclosures	5953
Item 5.	Other Information	5954
Item 6.	Exhibits	5954
Signatures.		6155

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CLUBCORP CLUB OPERATIONS, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the Twelve and ~~Twenty~~Thirty-~~Four~~Six Weeks Ended ~~June~~September 113, 2013 and ~~June~~September 124, 2012

(In thousands of dollars)

	Twelve Weeks Ended						~~Twenty~~Thirty-~~Four~~Six Weeks Ended
	June 11, 2013			June 12, 2012			June 11, 2013			June 12, 2012
	September 3, 2013			September 4, 2012			September 3, 2013			September 4, 2012
REVENUES:
Club operations	$	~~136~~143,~~871~~487		$	~~129~~131,~~858~~557		$	~~251~~394,~~209~~696		$	~~240~~372,~~735~~292
Food and beverage	5750,~~890~~809			5547,~~404~~778			97148,~~806~~615			93141,~~525~~303
Other revenues	~~858~~539			~~794~~662			12,~~664~~203			12,~~502~~164
Total revenues	~~195~~194,~~619~~835			~~186~~179,~~056~~997			~~350~~545,~~679~~514			~~335~~515,~~762~~759
DIRECT AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Club operating costs exclusive of depreciation	~~122~~127,~~656~~732			~~116~~117,~~981~~333			~~226~~354,~~838~~570			~~218~~335,~~004~~337
Cost of food and beverage sales exclusive of depreciation	1817,~~126~~185			1715,~~229~~780			3149,~~994~~179			3045,~~172~~952
Depreciation and amortization	1617,~~312~~030			17,~~731~~592			3249,~~467~~497			3653,~~334~~926
Provision for doubtful accounts	~~192~~1,102			~~491~~983			~~902~~2,004			12,~~233~~216
Loss on disposals of assets	2,~~412~~745			12,~~544~~536			36,~~631~~376			~~920~~3,456
Impairment of assets	~~1,881~~24			~~770~~—			1,~~881~~905			770
Equity in earnings from unconsolidated ventures	(~~325~~424		)	(~~291~~349		)	(~~542~~966		)	(~~610~~959		)
Selling, general and administrative	1011,~~589~~250			109,~~096~~679			2031,~~497~~747			2030,~~646~~325
OPERATING INCOME	2318,~~776~~191			2116,~~505~~443			3351,~~011~~202			2844,~~293~~736
Interest and investment income	6980			3429			~~144~~224			5786
Interest expense	(19,~~322~~254		)	(19,~~778~~831		)	(3857,~~657~~911		)	(3959,~~679~~510		)
Other income	—			~~866~~92			—			1,~~731~~823
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	4,523			2,627			(5,502		)	(9,598		)
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(983		)	(3,267		)	(6,485		)	(12,865		)
INCOME TAX BENEFIT (EXPENSE)	2,718			(4,353		)	2,427			(1,650		)
INCOME TAX (EXPENSE) BENEFIT	(3,887		)	1,601			(1,460		)	(49		)
INCOME (LOSS) FROM CONTINUING OPERATIONS	7,241			(1,726		)	(3,075		)	(11,248		)
LOSS FROM CONTINUING OPERATIONS	(4,870		)	(1,666		)	(7,945		)	(12,914		)
Income (loss) from discontinued clubs, net of income tax benefit (expense) of $4 and $(4) for the twelve weeks ended June 11, 2013 and June 12, 2012, respectively, and $4 and $28 for the twenty-four weeks ended June 11, 2013 and June 12, 2012, respectively	4			56			(1		)	(4		)
Loss from discontinued clubs, net of income tax (expense) benefit of $(2) and $1,232 for the twelve weeks ended September 3, 2013 and September 4, 2012, respectively, and $2 and $1,260 for the thirty-six weeks ended September 3, 2013 and September 4, 2012, respectively	(4		)	(10,571		)	(5		)	(10,575		)
NET INCOME (LOSS)	7,245			(1,670		)	(3,076		)	(11,252		)
NET LOSS	(4,874		)	(12,237		)	(7,950		)	(23,489		)
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	(43129		)	(~~167~~15		)	(2131		)	(~~154~~169		)
NET INCOME (LOSS) ATTRIBUTABLE TO CLUBCORP	$	7,202		$	(1,837	)	$	(3,078	)	$	(11,406	)
NET LOSS ATTRIBUTABLE TO CLUBCORP	$	(5,003	)	$	(12,252	)	$	(8,081	)	$	(23,658	)
NET INCOME (LOSS)	7,245			(1,670		)	(3,076		)	(11,252		)
NET LOSS	(4,874		)	(12,237		)	(7,950		)	(23,489		)
Foreign currency translation, net of tax	(~~640~~1,430		)	(21,~~925~~582		)	~~442~~(988		)	~~(471~~1,111		)
OTHER COMPREHENSIVE (LOSS) INCOME	(~~640~~1,430		)	(21,~~925~~582		)	~~442~~(988		)	~~(471~~1,111		)
COMPREHENSIVE INCOME (LOSS)	6,605			(4,595		)	(2,634		)	(11,723		)
COMPREHENSIVE LOSS	(6,304		)	(10,655		)	(8,938		)	(22,378		)
COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	(43129		)	(~~167~~15		)	(2131		)	(~~154~~169		)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CLUBCORP	$	6,562		$	(4,762	)	$	(2,636	)	$	(11,877	)
COMPREHENSIVE LOSS ATTRIBUTABLE TO CLUBCORP	$	(6,433	)	$	(10,670	)	$	(9,069	)	$	(22,547	)

See accompanying notes to unaudited consolidated condensed financial statements

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CLUBCORP CLUB OPERATIONS, INC.

UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS

As of ~~June~~September 113, 2013 and December 25, 2012

(In thousands of dollars, except share and per share amounts)

	June 11, 2013			December 25, 2012
	September 3, 2013			December 25, 2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	4043,~~435~~226		$	81,851
Receivables, net of allowances of $2,676 and $2,626 at June 11, 2013 and December 25, 2012, respectively	77,329			51,580
Receivables, net of allowances of $3,295 and $2,626 at September 3, 2013 and December 25, 2012, respectively	84,230			51,580
Inventories	16,~~832~~409			14,361
Prepaids and other assets	1514,~~060~~962			12,199
Deferred tax assets	8,076			8,076
Total current assets	~~157~~166,~~732~~903			168,067
Investments	109,~~109~~110			11,166
Property and equipment, net (includes $9,674 and $9,870 related to VIEs at June 11, 2013 and December 25, 2012, respectively)	1,232,463			1,223,539
Property and equipment, net (includes $9,598 and $9,870 related to VIEs at September 3, 2013 and December 25, 2012, respectively)	1,239,899			1,223,539
Notes receivable, net of allowances of $608 and $563 at June 11, 2013 and December 25, 2012, respectively	4,086			3,183
Notes receivable, net of allowances of $652 and $563 at September 3, 2013 and December 25, 2012, respectively	4,468			3,183
Goodwill	258,459			258,459
Intangibles, net	30,~~641~~512			31,958
Other assets	2228,~~598~~120			23,224
TOTAL ASSETS	$	1,~~716~~737,~~088~~471		$	1,719,596
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	1411,~~498~~376		$	24,988
Membership initiation deposits - current portion	~~101~~105,~~965~~810			91,398
Accounts payable	2927,~~136~~876			27,441
Accrued expenses	3245,~~578~~509			35,989
Accrued taxes	1020,~~366~~772			16,637
Other liabilities	7780,~~654~~903			52,915
Total current liabilities	~~266~~292,~~197~~246			249,368
Long-term debt (includes $1,454 and $1,571 related to VIEs at June 11, 2013 and December 25, 2012, respectively)	763,013			756,532
Long-term debt (includes $1,424 and $1,571 related to VIEs at September 3, 2013 and December 25, 2012, respectively)	773,967			756,532
Membership initiation deposits	~~203~~204,~~105~~012			202,630
Deferred tax liability	~~212~~206,~~000~~206			208,993
Other liabilities	~~136~~131,~~343~~914			129,009
Total liabilities	1,~~580~~608,~~658~~345			1,546,532
Commitments and contingencies (See Note 13)
EQUITY
Common stock of ClubCorp Club Operations, Inc., $1.00 par value, 1,000 shares authorized, issued and outstanding at June 11, 2013 and December 25, 2012	1			1
Common stock of ClubCorp Club Operations, Inc., Inc., $1.00 par value, 1,000 shares authorized, issued and outstanding at September 3, 2013 and December 25, 2012	1			1
Additional paid-in capital	178,310			213,310
Accumulated other comprehensive loss	(~~230~~1,660		)	(672		)
Retained deficit	(5358,~~218~~221		)	(50,140		)
Total stockholders’ equity	~~124~~118,~~863~~430			162,499
Noncontrolling interests in consolidated subsidiaries and variable interest entities	10,~~567~~696			10,565
Total equity	~~135~~129,~~430~~126			173,064
TOTAL LIABILITIES AND EQUITY	$	1,~~716~~737,~~088~~471		$	1,719,596

See accompanying notes to unaudited consolidated condensed financial statements

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CLUBCORP CLUB OPERATIONS, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

For the ~~Twenty~~Thirty-~~Four~~Six Weeks Ended ~~June~~September 113, 2013 and ~~June~~September 124, 2012

(In thousands of dollars)

	Twenty-Four Weeks Ended
	Thirty-Six Weeks Ended
	June 11, 2013			June 12, 2012
	September 3, 2013			September 4, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(37,~~076~~950	)	$	(1123,~~252~~489	)
Adjustments to reconcile net loss to cash flows from operating activities:
Depreciation	3147,~~149~~521			3147,~~985~~393
Amortization	1,~~318~~977			46,~~554~~826
Asset impairments	1,~~881~~905			~~862~~5,973
Bad debt expense	~~909~~2,014			12,~~284~~256
Equity in earnings from unconsolidated ventures	(~~542~~966		)	(~~610~~959		)
Distribution from investment in unconsolidated ventures	12,~~545~~429			1,~~321~~346
Loss on disposals of assets	36,~~627~~376			110,~~019~~113
Amortization of debt issuance costs	1,~~053~~550			~~922~~1,388
Accretion of discount on member deposits	914,~~328~~149			913,~~251~~836
Amortization of surface rights bonus revenue	—			(1,~~731~~823		)
Amortization of above and below market rent intangibles	95115			~~117~~176
Net change in deferred tax assets and liabilities	2(3,~~285~~509		)	(46,~~099~~039		)
Net change in prepaid expenses and other assets	(5,~~804~~241		)	(42,~~595~~766		)
Net change in receivables and membership notes	(2128,~~746~~659		)	(1519,~~730~~858		)
Net change in accounts payable and accrued liabilities	(47,~~537~~104		)	(26,~~058~~521		)
Net change in other current liabilities	1730,~~640~~561			2528,~~754~~079
Net change in other long-term liabilities	(2,~~640~~516		)	(12,~~737~~872		)
Net cash provided by operating activities	3766,~~765~~860			3566,~~257~~101
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(2142,~~321~~066		)	(1731,~~853~~467		)
Acquisitions of clubs	(510,~~228~~785		)	(3,570		)
Proceeds from dispositions	4390			~~359~~393
Proceeds from insurance	—			1,978
Net change in restricted cash and capital reserve funds	~~(96~~34		)	~~202~~97
Return of capital in equity investments	54592			—
Net cash used in investing activities	(2652,~~548~~135		)	(1832,~~884~~569		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt	(1821,~~207~~999		)	(710,~~353~~797		)
Proceeds from new debt borrowings	10,713			—
Debt issuance and modification costs	(13		)	—
Purchase of interest rate cap agreement	—			(8		)
Debt issuance and modification costs	(6,684		)	(167		)
Distribution to owners	(35,000		)	—
Proceeds from new membership initiation deposits	~~494~~760			~~414~~552
Repayments of membership initiation deposits	(~~659~~1,030		)	(~~208~~455		)
Net cash used in financing activities	(5253,~~672~~240		)	(710,~~147~~875		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	39(110		)	~~668~~787
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(4138,~~416~~625		)	923,~~894~~444
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD	81,851			50,317
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	4043,~~435~~226		$	6073,~~211~~761

See accompanying notes to unaudited consolidated condensed financial statements

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CLUBCORP CLUB OPERATIONS, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY

For the ~~Twenty~~Thirty-~~Four~~Six Weeks Ended ~~June~~September 113, 2013 and ~~June~~September 124, 2012

(In thousands of dollars)

	Total			CommonStock		AdditionalPaid-inCapital			AccumulatedOtherComprehensiveIncome (Loss)			Retained Equity(Deficit)			NoncontrollingInterests inConsolidatedSubsidiaries
BALANCE - December 27, 2011	$	198,409		$	1	$	213,310		$	(2,562	)	$	(23,564	)	$	11,224
Net (loss) income	(1123,~~252~~489		)	—		—			—			(1123,~~406~~658		)	~~154~~169
Other comprehensive loss	(471		)	—		—			(471		)	—			—
Other comprehensive income	1,111			—		—			1,111			—			—
BALANCE - June 12, 2012	$	186,686		$	1	$	213,310		$	(3,033	)	$	(34,970	)	$	11,378
BALANCE - September 4, 2012	$	176,031		$	1	$	213,310		$	(1,451	)	$	(47,222	)	$	11,393
BALANCE - December 25, 2012	$	173,064		$	1	$	213,310		$	(672	)	$	(50,140	)	$	10,565
Distributions to owners	(35,000		)	—		(35,000		)	—			—			—
Net (loss) income	(37,~~076~~950		)	—		—			—			(38,~~078~~081		)	2131
Other comprehensive income	442			—		—			442			—			—
Other comprehensive loss	(988		)	—		—			(988		)	—			—
BALANCE - June 11, 2013	$	135,430		$	1	$	178,310		$	(230	)	$	(53,218	)	$	10,567
BALANCE - September 3, 2013	$	129,126		$	1	$	178,310		$	(1,660	)	$	(58,221	)	$	10,696

See accompanying notes to unaudited consolidated condensed financial statements

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NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(dollar amounts in thousands, unless otherwise indicated)

1. ORGANIZATION

ClubCorp Club Operations, Inc. (“ClubCorp”) is a holding company that was formed on November 3010, 2010, as part of a reorganization of ClubCorp, Inc. (“CCI”), which was effective as of November 30, 2010 for the purpose of operating and managing golf, and country clubs, business, sports and alumni clubs. ClubCorp has two reportable segments (1) golf and country clubs and (2) business, sports and alumni clubs. ClubCorp, ~~together with its subsidiaries, may be referred to as “we,” “us,” “our,” or the “Company.” ClubCorp~~ is a wholly owned subsidiary of CCA Club Operations Holdings, LLC (“Parent”), which is a wholly owned subsidiary of ClubCorp Holdings, Inc. (“Holdings”). As of October 15, ~~which~~2013, isthe ~~wholly~~majority of Holdings' common stock is owned by Fillmore CCA Investment, LLC (“Fillmore”), which is wholly owned by an affiliate of KSL Capital Partners, LLC (“KSL”), a private equity fund that invests primarily in the hospitality and leisure business. ClubCorp, together with its subsidiaries, may be referred to as “we,” “us,” “our,” or the “Company.”

On September 25, 2013, Holdings completed an initial public offering in which it sold 13,200,000 shares of common stock and Fillmore sold 4,800,000 shares. The offering generated net proceeds to Holdings of approximately $168.8 million after deducting underwriting discounts and commissions and estimated offering expenses. Holdings subsequently contributed the net proceeds to the Company. We did not receive any proceeds from the sale of shares of common stock offered by Fillmore. See further discussion in Note 16.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation—The consolidated condensed financial statements reflect the consolidated operations of ClubCorp, its subsidiaries and certain variable interest entities (“VIEs”). The consolidated condensed financial statements presented herein reflect our financial position, results of operations, cash flows and changes in equity in conformity with accounting principles generally accepted in the United States, or “GAAP.”. All intercompany accounts have been eliminated.

The accompanying consolidated condensed financial statements have been prepared by ClubCorp and are unaudited. Certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP have been omitted from the accompanying statements. We believe the disclosures made are adequate to make the information presented not misleading. However, the financial statements should be read in conjunction with the consolidated financial statements and notes thereto of ClubCorp ~~Club Operations, Inc.~~ for the year ended December 25, 2012.

We believe that the accompanying consolidated condensed financial statements reflect all adjustments, including normal recurring items, considered necessary for a fair presentation of the interim periods. Interim results are not necessarily indicative of fiscal year performance because of the impact of seasonal and short-term variations and other factors such as timing of acquisitions and dispositions of facilities.

Use of Estimates—The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in the consolidated condensed financial statements and accompanying notes. Actual results could differ materially from such estimated amounts.

Revenue Recognition—Revenues from club operations, food and beverage and merchandise sales are recognized at the time of sale or when the service is provided and are reported net of sales taxes.

Revenues from membership dues are billed monthly and recognized in the period earned. The monthly dues are expected to cover the cost of providing membership services.

The majority of membership initiation deposits sold are not refundable until a fixed number of years (generally 30) after the date of acceptance of a member. We recognize revenue related to membership initiation deposits over the expected life of an active membership which is approximately six years for golf and country club memberships and approximately four years for business, sports and alumni club memberships. For membership initiation deposits, the difference between the amount paid by the member and the present value of the refund obligation is deferred and recognized within club operations revenue on the consolidated condensed statements of operations, on a straight-line basis over the expected life of an active membership. The present value of the refund obligation is recorded as a membership initiation deposit liability in the consolidated condensed balance sheets and accretes over the nonrefundable term using the effective interest method with an interest rate defined as our incremental borrowing rate adjusted to reflect a 30-year time frame. The accretion is included in interest expense.

The majority of membership initiation fees sold are not refundable and are deferred and recognized within club operations revenue on the consolidated condensed statements of operations, on a straight line basis over the expected life of an active membership.

Membership initiation fees and deposits recognized within club operations revenue on the consolidated condensed statements of operations was $4.1 million and $8.0 million for the twelve and twenty-four weeks ended June 11, 2013, respectively, and $3.5 million and $6.9 million, for the twelve and twenty-four weeks ended June 12, 2012, respectively.

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Membership initiation fees and deposits recognized within club operations revenue on the consolidated condensed statements of operations was $4.2 million and $12.2 million for the twelve and thirty-six weeks ended September 3, 2013, respectively, and $3.5 million and $10.5 million, for the twelve and thirty-six weeks ended September 4, 2012, respectively.

Notes Receivable, Net of Allowances—Notes receivable reflect amounts due from our financing of membership initiation fees and deposits and typically range from one to six years in original maturity. We recognize interest income as earned and provide an allowance for doubtful accounts. This allowance is based on factors including the historical trends of write-offs and recoveries, the financial strength of the member and projected economic and market conditions.

Foreign Currency—The functional currency of our entities located outside the United States of America is the local currency. Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the current exchange rate in effect at ~~year~~period-end. All foreign income and expenses are translated at the monthly weighted-average exchange rates during the year. Translation gains and losses are reported separately as a component of comprehensive loss, until realized. No translation gains or losses have been reclassified into earnings for the twelve and ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 113, 2013 and ~~June~~September 124, 2012. Realized foreign currency transaction gains and losses are reflected in the consolidated condensed statements of operations and comprehensive income (loss) in club operating costs.

Income Taxes—We recognize the tax benefit from an uncertain tax position only if it is “more likely than not” that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. If the position drops below the “more likely than not” standard, the benefit can no longer be recognized. Assumptions, judgment and the use of estimates are required in determining if the “more likely than not” standard has been met when developing the provision for income taxes. We recognize accrued interest and penalties related to uncertain tax positions as a component of income tax expense.

Equity‑Based Awards—Equity‑based unit awards were previously issued under a Management Profits Interest Program (“MPI”) which constituted grants of time-vesting non-voting profits interests in Fillmore. These awards entitled participants to participate in the appreciation of the value of Fillmore above an applicable threshold and thereby share in its future profits. Fillmore converted previously issued Class B units into Class A units, subject to remaining vesting periods, in connection with the ClubCorp Formation. Fillmore also granted 10,000.00 Class C units in connection with the ClubCorp Formation. As of September 3, 2013, there were 9,100.00 Class C units and 10,039.44 Class A units (including Converted Units) outstanding.

MPI participants could receive a distribution upon the occurrence of a liquidity event or upon the declaration of a distribution or dividend payment, in each case in accordance with the terms of the distribution “waterfall” set forth in Fillmore’s Second Amended and Restated LLC Agreement. Because the distributions would be contingent on the value of Holdings at the time of such liquidity event, distribution, or dividend payment, no expense has been recognized relating to such awards as of September 3, 2013. In connection with the consummation of Holdings' initial public offering on September 25, 2013, the MPI participants, including our executives, employees, directors and consultants surrendered all Class A units (including Converted Units) and Class C units held by them in exchange for an aggregate of 2,251,027 shares of Holdings' common stock previously held by Fillmore, a portion of which will be restricted, subject to remaining time vesting requirements.

On April 1, 2012, Holdings granted 12,552 Restricted stock units (“RSUs”) to certain executives under the ClubCorp Holdings, Inc. 2012 Stock Award Plan, which was amended and restated as of August 14, 2013 (the “Stock Plan”), and allows the holders to receive and maintain an interest in us, which interest may be measured by the value of the common stock of Holdings. The RSUs vest based on satisfaction of both a time condition subject to the holders' continued employment and a liquidity condition. The time condition is satisfied with respect to one‑third of the RSUs on each of the first three anniversaries of the grant date, subject to the holder remaining employed by us. The liquidity condition is satisfied upon the earlier of a change of control (as defined in the Stock Plan) or after a period of time following the effective date of an initial public offering by us.

Because the vesting of RSUs is contingent on the satisfaction of a liquidity condition, no expense has been recognized relating to such awards as of September 3, 2013. After giving effect to the 50 for 1 forward stock split effected on August 2, 2013 and the 1.0113946 for 1 forward stock split effected on September 6, 2013, 613,963 RSUs remain outstanding as of September 3, 2013. On March 15, 2014, the required time period following Holding's initial public offering will be satisfied and the liquidity vesting requirement will be met, at which time all then outstanding RSUs will be converted into shares of common stock, a portion of which will be restricted, subject to remaining time vesting requirements.

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Subsequent to Holdings' initial public offering, we expect to record equity-based compensation expense of approximately $14.0 million during the fourth quarter of 2013 related to the unit awards previously issued and outstanding under the MPI program and all outstanding RSUs granted under the Stock Plan, to the extent the time vesting conditions have been satisfied. See Note 16.

Recently Issued Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2013-02 (“ASU 2013-02”), Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The update clarifies how to report the effect of significant reclassifications out of accumulated other comprehensive income. ASU 2013-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2012 and is to be applied prospectively. Our adoption of this ASU in the first quarter of 2013 did not materially change the presentation of our consolidated condensed financial statements.

In February 2013, the FASB issued Accounting Standards Update No. 2013-04 (“ASU 2013-04”), Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed as the Reporting Date. ASU No. 2013-04 requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The guidance in the update also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of ASU 2013-04 is not expected to have a material impact on our consolidated condensed financial statements.

In July 2013, the FASB issued Accounting Standards Update No. 2013-11 (“ASU 2013-11”), Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. ASU No. 2013-11 clarifies that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of ASU 2013-11 is not expected to have a material impact on our consolidated condensed financial statements.

3. VARIABLE INTEREST ENTITIES

Consolidated VIEs include three managed golf course properties. We have determined we are the primary beneficiary of these VIEs as we have the obligation to absorb the majority of losses from and direct activities of these operations. One of these VIEs is financed through a loan payable of $1.21 million collateralized by assets of the entity totaling $4.21 million as of September 3, 2013. The other VIEs are financed through advances from us. Outstanding advances as of September 3, 2013 total $3.3 million compared to recorded assets of $6.9 million.

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~~June 11,~~The ~~2013.~~following ~~The~~summarizes ~~other~~the carrying amount and classification of the VIEs’ ~~are~~assets ~~financed~~and ~~through~~liabilities ~~advances~~in ~~from~~the ~~us.~~consolidated ~~Outstanding~~condensed ~~advances~~balance sheets as of ~~June~~September 113, 2013 ~~total~~and ~~$3.5~~December 25, ~~million~~2012, ~~compared~~net ~~to recorded assets~~ of ~~$7.1~~intercompany ~~million.~~amounts:

The following summarizes the carrying amount and classification of the VIEs’ assets and liabilities in the consolidated condensed balance sheets as of June 11, 2013 and December 25, 2012, net of intercompany amounts:



	September 3, 2013		December 25, 2012
Current assets	$	1,431	$	858
Fixed assets, net	9,598		9,870
Total assets	$	11,029	$	10,728

Current liabilities	$	1,486	$	1,024
Long-term debt	1,424		1,571
Other long-term liabilities	567		594
Noncontrolling interest	6,053		6,260
Company capital	1,499		1,279
Total liabilities and equity	$	11,029	$	10,728

	June 11, 2013		December 25, 2012
Current assets	$	1,656	$	858
Fixed assets, net	9,674		9,870
Total assets	$	11,330	$	10,728
Current liabilities	$	1,500	$	1,024
Long-term debt	1,454		1,571
Other long-term liabilities	576		594
Noncontrolling interest	6,092		6,260
Company capital	1,708		1,279
Total liabilities and equity	$	11,330	$	10,728

Recourse of creditors to the three VIEs is limited to the assets of the managed golf operations and their management entities, which total $11.0 million and $10.7 million at September 3, 2013 and December 25, 2012, respectively.

Recourse of creditors to the three VIEs is limited to the assets of the managed golf operations and their management entities, which total $11.3 million and $10.7 million at June 11, 2013 and December 25, 2012, respectively.

4. INVESTMENTS

Equity method investments in golf and business club ventures total $1.4 million and $1.3 million at ~~June~~September 113, 2013 and December 25, 2012, respectively, and include two golf club joint ventures and one business club joint venture. Our share of earnings in the equity investments is included in equity in earnings from unconsolidated ventures in the consolidated condensed statements of operations.

During the twelve ~~and twenty-four~~ weeks ended June 12, 2012, we determined that one of our equity method investments had a decrease in value that was other than temporary. We recognized an impairment loss of $0.7 million during the twelve ~~and twenty-four~~ weeks ended June 12, 2012 to adjust its carrying amount to its fair value. See Note 5. We recognized no additional impairment losses in the twelve weeks ended September 4, 2012 and we have not recognized any impairment losses in the twelve and thirty-six weeks ended September 3, 2013.

Additionally, we have one equity method investment of 10.2% in Avendra, LLC, a purchasing cooperative of hospitality companies. The carrying value of the investment was $87.3 million and $9.4 million at ~~June~~September 113, 2013 and December 25, 2012, respectively. Our share of earnings in the equity investment is included in equity in earnings from unconsolidated ventures in the consolidated condensed statements of operations. We have contractual agreements with the joint venture to provide procurement services for our clubs for which we received net volume rebates and allowances totaling $20.10 million and $2.1 million during the twelve and ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 113, 2013, respectively, and $10.70 million and $1.9 million during the twelve and ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 124, 2012, respectively. The difference between the carrying value of the investment and our share of the equity reflected in the joint venture’s financial statements at the time of the acquisition of the Company by affiliates of KSL was allocated to intangible assets of the joint venture and amortized over approximately 10 years beginning in 2007. The carrying value of these intangible assets was $76.16 million and $8.0 million at ~~June~~September 113, 2013 and December 25, 2012, respectively.

Our equity in net income from the investment described in the preceding paragraph is shown below:

Twelve Weeks Ended

~~Twenty~~Thirty-~~Four~~Six Weeks Ended

June 11, 2013

June 12, 2012

June 11, 2013

June 12, 2012

September 3, 2013

September 4, 2012

September 3, 2013

September 4, 2012

ClubCorp's equity in net income, excluding amortization

~~782~~885

771

12,~~487~~372

12,~~554~~325

Amortization

(~~464~~463

)

(~~464~~463

)

(~~927~~1,390

)

(~~927~~1,390

)

ClubCorp's equity in net income

~~318~~422

~~307~~308

~~560~~982

~~627~~935

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5. FAIR VALUE

GAAP establishes a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. The three levels of inputs are defined as follows:

Level 1—unadjusted quoted prices for identical assets or liabilities in active markets accessible by the Company;

Level 2—inputs that are observable in the marketplace other than those inputs classified as Level 1; and

Level 3—inputs that are unobservable in the marketplace and significant to the valuation.

We maximize the use of observable inputs and minimize the use of unobservable inputs. If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument is categorized based upon the lowest level of input that is significant to the fair value calculation. We recognize transfers between levels of the fair value hierarchy on the date of the change in circumstances that caused the transfer.

Fair Value of Financial Instruments

Debt—We estimate the fair value of our debt obligations, excluding capital lease obligations, as follows, as of ~~June~~September 113, 2013 and December 25, 2012:

	June 11, 2013				December 25, 2012
	September 3, 2013				December 25, 2012
	Recorded Value		Fair Value		Recorded Value		Fair Value
Level 2	$	~~706~~716,~~881~~106	$	~~742~~758,~~420~~878	$	719,575	$	765,744
Level 3	4241,~~487~~926		4142,~~592~~026		37,790		37,790
Total	$	~~749~~758,~~368~~032	$	~~784~~800,~~012~~904	$	757,365	$	803,534

We use quoted prices for identical or similar liabilities to value debt obligations classified as Level 2. We use adjusted quoted prices for similar liabilities to value debt obligations classified as Level 3. Key inputs include: 1) the determination that certain other debt obligations are similar, 2) nonperformance risk, and 3) interest rates. Changes or fluctuations in these assumptions and valuations will result in different estimates of value. The use of different techniques to determine the fair value of these debt obligations could result in different estimates of fair value at the reporting date.

The carrying value of other financial instruments including cash, cash equivalents, receivables, notes receivable, accounts payable and other short-term and long-term assets and liabilities approximate their fair values as of ~~June~~September 113, 2013 and December 25, 2012.

Assets and Liabilities Measured Fair Value on a Non-recurring Basis

Property and Equipment—We recognized impairment losses to property and equipment of $1.9 million during the twelve ~~and twenty-four~~ weeks ended June 11, 2013, to adjust the carrying amount of certain property and equipment to its fair value of $0.3 million due to continued and projected negative operating results as well as changes in the expected holding period of certain fixed assets. We did not recognize any material impairment losses in the twelve weeks ended September 3, 2013. The valuation method used to determine fair value was based on an analysis of discounted future free cash flows using a risk-adjusted discount rate (‘‘Income Approach’’), and based on cost adjusted for economic obsolescence (‘‘Cost Approach’’). The fair value calculations associated with these valuations are classified as Level 3 measurements. See Note 6.

Equity Method Investments—During the twelve ~~and twenty-four~~ weeks ended June 12, 2012, we determined that one of our equity method investments had a decrease in value that was other than temporary. We recognized an impairment loss of $0.7 million during the twelve ~~and twenty-four~~ weeks ended June 12, 2012 to adjust its carrying amount to its fair value. The valuation method used to determine fair value was based on a third party valuation unobservable in the marketplace. This valuation is considered a Level 3 measurement. See Note 4. We recognized no additional impairment losses in the twelve weeks ended September 4, 2012 and we have not recognized any impairment losses in the twelve and thirty-six weeks ended September 3, 2013.

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6. PROPERTY AND EQUIPMENT

Property and equipment at cost consists of the following at ~~June~~September 113, 2013 and December 25, 2012:

	June 11, 2013			December 25, 2012
	September 3, 2013			December 25, 2012
Land and non-depreciable land improvements	$	~~533~~532,~~118~~096		$	531,265
Depreciable land improvements	~~332~~337,~~197~~051			325,688
Buildings and recreational facilities	~~406~~413,~~707~~759			401,607
Machinery and equipment	~~176~~180,~~221~~145			164,005
Leasehold improvements	8485,~~806~~751			84,444
Furniture and fixtures	6770,~~936~~017			64,960
Construction in progress	79,~~783~~478			2,912
	1,608,768			1,574,881
	1,628,297			1,574,881
Accumulated depreciation	(~~376~~388,~~305~~398		)	(351,342		)
Total	$	1,~~232~~239,~~463~~899		$	1,223,539

We evaluate property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through future cash flows. We recognized impairment losses to property and equipment of $1.9 million during the twelve ~~and twenty-four~~ weeks ended June 11, 2013, to adjust the carrying amount of certain property and equipment to its fair value of $0.3 million due to continued and projected negative operating results as well as changes in the expected holding period of certain fixed assets. We did not recognize any material impairment losses in the twelve weeks ended September 3, 2013. See Note 5.

We recognized impairment losses to property and equipment of $0.1 million in the twelve ~~and twenty-four~~ weeks ended June 12, 2012. We did not recognize any impairment losses in the twelve weeks ended September 4, 2012.

7. GOODWILL AND INTANGIBLE ASSETS

Intangible assets consist of the following at ~~June~~September 113, 2013 and December 25, 2012:

		June 11, 2013							December 25, 2012
		September 3, 2013							December 25, 2012
Asset	UsefulLife	Gross CarryingAmount		AccumulatedAmortization			Net CarryingAmount		Gross CarryingAmount		AccumulatedAmortization			Net CarryingAmount
Intangible assets with indefinite lives:
Trade names		$	24,850	$	—		$	24,850	$	24,850	$	—		$	24,850
Liquor Licenses		34,~~886~~416		—			34,~~886~~416		3,886		—			3,886
Intangible assets with finite lives:
Member Relationships	7 years	19,068		(17,~~341~~970		)	1,~~727~~098		19,068		(16,084		)	2,984
Management Contracts	9 years	598		(~~453~~469		)	~~145~~129		598		(421		)	177
Other	7 years	426		(~~393~~407		)	3319		426		(365		)	61
Total		$	4849,~~828~~358	$	(18,~~187~~846	)	$	30,~~641~~512	$	48,828	$	(16,870	)	$	31,958
Goodwill		$	258,459				$	258,459	$	258,459				$	258,459

Intangible Assets—Intangible assets include trade names, liquor licenses and member relationships. Intangible asset amortization expense was $0.7 million and $12.30 million during the twelve and ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 113, 2013, respectively, and $2.3 million and $4.6.8 million for the twelve and ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 124, 2012, respectively.

9We evaluate goodwill for impairment annually or whenever events or circumstances indicate that the carrying amount may not be fully recoverable.

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~~The~~During ~~following~~the ~~table~~twelve ~~shows~~and ~~goodwill~~thirty-six ~~activity~~weeks byended ~~reporting~~September 4, ~~unit~~2012, we entered into an agreement to sell a business, sports and alumni club for expected proceeds of $5.9 Nomillion. ~~impairments~~See ~~have~~Note ~~been~~11. ~~recorded~~We evaluated goodwill for ~~either~~impairment ~~reporting~~in ~~unit~~conjunction ~~during~~with this agreement. Based on this analysis, no impairment of goodwill was required prior to entering into the ~~twelve~~sales ~~and~~agreement. As ~~twenty-four~~a ~~weeks~~result ~~ended~~of ~~June 11~~the classification of assets related to this property as held for sale, ~~2013~~we allocated $6.5 million of goodwill to this property and subsequently recognized a loss on disposal of goodwill for this amount. This loss is presented in loss from discontinued operations in the consolidated condensed statements of operations and comprehensive loss.

	Golf & Country Clubs		Business, Sports & Alumni Clubs		Total
December 25, 2012	$	113,108	$	145,351	$	258,459
June 11, 2013	$	113,108	$	145,351	$	258,459

The following table shows goodwill activity by reporting unit. No impairments have been recorded for either reporting unit during the twelve and thirty-six weeks ended September 3, 2013.



	Golf & Country Clubs		Business, Sports & Alumni Clubs			Total
December 27, 2011	$	113,108	$	151,851		$	264,959
Loss on disposal - discontinued operations	$	—	$	(6,500	)	$	(6,500	)
December 25, 2012	$	113,108	$	145,351		$	258,459
September 3, 2013	$	113,108	$	145,351		$	258,459

8. CURRENT AND LONG-TERM LIABILITIES

Current liabilities consist of the following at ~~June~~September 113, 2013 and December 25, 2012:

	June 11, 2013		December 25, 2012
	September 3, 2013		December 25, 2012
Accrued compensation	$	1824,~~852~~049	$	24,060
Accrued interest	412,~~625~~521		4,957
Other accrued expenses	98,~~101~~939		6,972
Total accrued expenses	$	3245,~~578~~509	$	35,989
Taxes payable other than federal income taxes	$	1020,~~070~~425	$	16,170
Federal income taxes payable to Holdings	296		467
Federal income taxes payable	347		467
Total accrued taxes	$	1020,~~366~~772	$	16,637
Advance deposits from members	$	22,~~642~~053	$	12,489
Prepaid dues	2630,~~771~~694		11,916
Deferred membership revenues	16,~~755~~777		16,519
Insurance reserves	8,333		8,659
Other current liabilities	3,~~153~~046		3,332
Total other current liabilities	$	7780,~~654~~903	$	52,915

Other long-term liabilities consist of the following at ~~June~~September 113, 2013 and December 25, 2012:

	June 11, 2013		December 25, 2012
	September 3, 2013		December 25, 2012
Uncertain tax positions	$	5455,~~505~~546	$	52,713
Deferred membership revenues	3938,~~401~~266		41,218
Casualty insurance loss reserves - long term portion	11,~~554~~571		10,936
Above market lease intangibles	1,~~729~~576		2,040
Deferred rent	22,~~396~~349		19,127
Other	62,~~758~~606		2,975
Total other long-term liabilities	$	~~136~~131,~~343~~914	$	129,009

~~9. DEBT AND CAPITAL LEASES~~11

General Electric Capital Corporation (“GECC”)—In July 2008, we entered into a secured mortgage loan with GECC for $32.0 million with an original maturity of July 2011. During the fiscal year ended December 27, 2011, we extended the term of the loan to July 2012. Effective August 1, 2012, we amended our loan agreement with GECC which extended the maturity to November 2015 with two additional twelve month options to extend through November 2017 upon satisfaction of certain conditions of the loan agreement. As of June 11, 2013, we expect to meet the required conditions and currently intend to extend the loan with GECC to November 2017.

BancFirst—In connection with the acquisition of Oak Tree Country Club in May 2013, we assumed a mortgage loan with BancFirst for $5.0 million. See Note 11. The loan has an original maturity of October 2014 and two twelve month options to extend the maturity through October 2016 upon satisfaction of certain conditions of the loan agreement. As of June 11, 2013,

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~~we expect to meet the required conditions and currently intend to extend the loan with BancFirst to October 2016~~9. ~~The~~DEBT ~~loan~~AND isCAPITAL collateralized by the assets of one golf and country club with a book value of $8.6 million as of June 11, 2013. The interest rate is the greater of 4.5% or the prime rate. We incurred an immaterial amount of debt issuance costs in conjunction with the assumption of this mortgage loan. These costs have been capitalized and are being amortized over the term of the loan.LEASES

~~2010~~ General ~~Secured~~Electric ~~Credit~~Capital ~~Facilities~~Corporation (“GECC”)—OnIn ~~November~~July 302008, ~~2010~~ we entered into a secured ~~credit~~mortgage ~~facilities~~loan (with GECC for $32.0 million with an original maturity of July 2011. During the ~~“Secured~~fiscal ~~Credit~~year ended December 27, 2011, we extended the term of the loan to July 2012. Effective August 1, 2012, we amended the loan agreement with GECC which extended the maturity to November 2015 with two additional twelve month options to extend through November 2017 upon satisfaction of certain conditions of the loan agreement. As of September 3, 2013, we expect to meet the required conditions and currently intend to extend the loan with GECC to November 2017.

~~Facilities”).~~BancFirst—In ~~These~~connection ~~facilities~~with ~~were~~the ~~originally~~acquisition ~~comprised~~ of ~~(i)~~Oak aTree ~~$310.0~~Country ~~million~~Club ~~term~~in ~~loan~~May ~~facility~~2013, ~~and~~we ~~(ii)~~assumed a ~~revolving~~mortgage ~~credit~~loan ~~facility~~ with aBancFirst ~~maximum~~for ~~borrowing limit of~~ $505.0 million,. ~~which~~See ~~includes~~Note ~~letter~~11. ofThe ~~credit~~loan ~~and~~has ~~swing~~an ~~line~~original ~~facilities.~~maturity ~~The~~of ~~credit~~October ~~agreement~~2014 ~~includes~~with ~~incremental~~two ~~facilities,~~twelve ~~whereby~~month weoptions ~~have~~to extend the ~~option~~maturity tothrough ~~increase~~October ~~the~~2016 ~~term~~upon ~~loan~~satisfaction ~~facility~~of bycertain upconditions toin ~~$50.0~~the ~~million~~loan ~~and~~agreement. ~~the~~As ~~revolving~~of ~~credit~~September 3, ~~facility~~2013, bywe upexpect to anmeet ~~additional~~the ~~$25.0~~required ~~million,~~conditions ~~both~~and ~~subject~~currently intend to ~~conditions~~extend ~~and~~the ~~restrictions~~loan inwith ~~the~~BancFirst ~~credit~~to ~~agreement~~October 2016. The ~~term~~ loan ~~facility~~is ~~was~~collateralized ~~scheduled~~by tothe ~~mature~~assets onof ~~November 30~~the club, ~~2016~~which ~~and~~had ~~the~~a ~~revolving~~book ~~credit~~value ~~facility~~of ~~was~~$8.1 ~~scheduled~~million toas ~~expire~~of ~~on November~~September 303, ~~2015~~2013. The interest rate onis the ~~Secured~~greater ~~Credit~~of ~~Facilities~~4.5% ~~was~~or ~~originally~~the prime rate. We incurred an immaterial amount of debt issuance costs in conjunction with the ~~higher~~assumption of ~~(i)~~this 6mortgage loan.0% orThese ~~(ii)~~costs anhave ~~elected~~been ~~LIBOR~~capitalized ~~plus~~and aare ~~margin~~being amortized over the term of ~~4.5%.~~the loan.

2010 Secured Credit Facilities—On November 30, 2010 we entered into secured credit facilities (the “Secured Credit Facilities”). These facilities were originally comprised of (i) a $310.0 million term loan facility and (ii) a revolving credit facility with a maximum borrowing limit of $50.0 million, which included letter of credit and swing line facilities. The credit agreement included incremental facilities, whereby we had the option to increase the term loan facility by up to $50.0 million and the revolving credit facility by up to an additional $25.0 million, both subject to conditions and restrictions in the credit agreement. The term loan facility was scheduled to mature on November 30, 2016 and the revolving credit facility expires on November 30, 2015. The interest rate on the Secured Credit Facilities was originally the higher of (i) 6.0% or (ii) an elected LIBOR plus a margin of 4.5%.

On November 16, 2012, we entered into an amendment to the credit agreement governing the Secured Credit Facilities, which reduced the interest rate on the term loan facility to the higher of (i) 5.0% or (ii) an elected LIBOR plus a margin of 3.75%. This amendment did not apply to the revolving credit facility or any incremental facilities.

~~Subsequent~~On ~~to the twelve weeks ended June 11, 2013, on~~ July 24, 2013, we entered into a second amendment to the credit agreement governing the Secured Credit Facilities to reduce the interest rate on the term loan facility, increase the principal borrowed under the term loan facility, extend the maturity date of the term loan facility, eliminate the quarterly principal payment requirement under the term loan facility, increase the amount of permissible incremental facilities and modify certain financial covenants and non-financial terms and conditions associated with the credit agreement governing the Secured Credit Facilities.

The interest rate on the term loan facility was reduced to the higher of (i) 4.25% or (ii) an elected LIBOR plus a margin of 3.25%, with an additional reduction to the higher of (i) 4.0% or (ii) an elected LIBOR plus a margin of 3.0%, upon successful completion of an initial public offering with proceeds of at least $50.0 million, which condition was satisfied subsequent to the twelve weeks ended September 3, 2013 on September 25, 2013, by our receipt, by way of contribution from Holdings, the amount of more than $50.0 million in proceeds from the completion of an initial public offering by Holdings. The term loan facility principal balance was increased to $301.1 million. The maturity date of the term loan facility was extended to July 24, 2020. ~~The~~In addition to the $19.6 million of standby letters of credit outstanding, capacity available under the incremental facilities was increased to $135.0 million in new revolving credit ~~commitments~~, plus $75.0 million in new revolving credit and term loan ~~commitments~~ combined, with additional capacity for incremental revolving credit and/or term loan commitments thereafter if certain financial covenants are met.

The total leverage and interest coverage ratio financial covenants were replaced in the second amendment with a new senior secured leverage ratio covenant (the “Senior Secured Leverage Ratio”) ~~that applies to the revolving credit facility~~. The Senior Secured Leverage Ratio, as defined in the credit agreement, requires ~~ClubCorp~~us and ~~its~~our restricted subsidiaries to maintain a ~~coverage~~leverage ratio of no greater than 4.00:1.00 for each fiscal quarter ended on or after June 30, 2013. IfAs ~~the Senior Secured Leverage Ratio would have been in place as~~ of ~~June~~September 113, 2013, our ~~coverage~~leverage ~~would~~ratio ~~have~~was ~~been approximately 2~~1.0099:1.00.

We may be required to prepay the outstanding term loan facility by a percentage of ~~our~~ excess cash flows, as defined by the Secured Credit Facilities, each fiscal year end after ~~our~~their annual consolidated financial statements are delivered, which percentage may decrease or be eliminated depending on the results of the Senior Secured Leverage Ratio test at the end of each fiscal year.

WeThis ~~are~~second ~~currently~~amendment ~~evaluating~~was ~~the~~accounted ~~accounting~~for ~~and~~as ~~financial~~a ~~statement~~debt ~~impact~~modification. We incurred additional debt issuance costs of ~~this~~$4.4 ~~amendment~~million, which ~~will~~have bebeen ~~recorded~~capitalized ~~during~~and ~~the~~are ~~thirty-six~~being ~~weeks~~amortized ~~ended~~over ~~September~~the 3,remaining ~~2013~~term of the loan.

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~~Our~~On ~~long-term~~August 30, ~~borrowings~~2013, ~~and~~we ~~lease~~entered ~~commitments~~into asa ofthird ~~June~~amendment to the credit agreement governing the Secured Credit Facilities to conditionally secure the $135.0 million incremental revolving credit facility. The third amendment became effective on September 1130, 2013, subsequent to the satisfaction of certain conditions, including the receipt by us, by way of contribution from Holdings, of more than $150.0 million of proceeds from the completion of an initial public offering by Holdings. The $135.0 million revolving credit commitments mature five years from the effective date of the third amendment and ~~December 25~~borrowings will bear interest at a rate of LIBOR plus a margin of 3.0% per annum. Additionally, ~~2012~~the third amendment reduced the existing $50.0 million revolving credit facility to $19.6 million, ~~are~~the ~~summarized~~amount ~~below:~~ of standby letters of credit outstanding as of the effective date of the third amendment.

	June 11, 2013					December 25, 2012
	Carrying Value			Interest Rate		Carrying Value			Interest Rate		Interest Rate Calculation	Maturity
Senior Notes	$	415,000		10.00	%	$	415,000		10.00	%	Fixed	2018
Secured Credit Facilities
Term Loan	291,881			5.00	%	304,575			5.00	%	Greater of (i) 5.0% or (ii) an elected LIBOR + 3.75%	2016
Revolving Notes ($50,000 capacity)	—			6.00	%	—			6.00	%	Greater of (i) 6.0% or (ii) an elected LIBOR + 4.5%	2015
Mortgage Loans
General Electric Capital Corporation	30,678			6.00	%	30,992			6.00	%	5.00% plus the greater of (i) three month LIBOR or (ii) 1%	2017
Atlantic Capital Bank	3,573			4.50	%	3,653			4.50	%	Greater of (i) 3.0% + 30 day LIBOR or (ii) 4.5%	2015
BancFirst	4,916			4.50	%	—			—		Greater of (i) 4.50% or prime rate	2016
Other indebtedness	3,320			5.75% - 8.00%		3,145			5.75% - 8.00%		Fixed	Various
	749,368					757,365
Capital leases	28,143					24,155
	777,511					781,520
Less current portion	(14,498		)			(24,988		)
	$	763,013				$	756,532

In conjunction with this third amendment, we will incur total additional debt issuance costs of $3.4 million, which will be capitalized and will be amortized over the remaining term of the new revolving credit facility.

Long-term borrowings and lease commitments of the Company as of September 3, 2013 and December 25, 2012, are summarized below:



	September 3, 2013					December 25, 2012
	Carrying Value			Interest Rate		Carrying Value			Interest Rate		Interest Rate Calculation	Maturity

Senior Notes	$	415,000		10.00	%	$	415,000		10.00	%	Fixed	2018
Secured Credit Facilities
Term Loan	301,106			4.25	%	304,575			5.00	%	As of September 3, 2013, greater of (i) 4.25% or (ii) an elected LIBOR + 3.25%; as of December 25, 2012, greater of (i) 5.0% or (ii) an elected LIBOR + 3.75%	2020
Revolving Credit Borrowings ($50,000 capacity) (1)	—			6.00	%	—			6.00	%	Greater of (i) 6.0% or (ii) an elected LIBOR + 4.5%	2015
Mortgage Loans
General Electric Capital Corporation	30,521			6.00	%	30,992			6.00	%	5.00% plus the greater of (i) three month LIBOR or (ii) 1%	2017
Atlantic Capital Bank	3,547			4.50	%	3,653			4.50	%	Greater of (i) 3.0% + 30 day LIBOR or (ii) 4.5%	2015
BancFirst	4,804			4.50	%	—			—		Greater of (i) 4.50% or prime rate	2016
Other indebtedness	3,054			5.75% - 8.00%		3,145			5.75% - 8.00%		Fixed	Various

	758,032					757,365
Capital leases	27,311					24,155
	785,343					781,520
Less current portion	(11,376		)			(24,988		)
	$	773,967				$	756,532

__________


(1)	As of September 3, 2013, $19.6 million of standby letters of credit reduced the availability under the revolving credit borrowings.

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The amount of long-term debt maturing in each of the five years subsequent to 2012 and thereafter is as follows:

Year	Debt		Capital Leases		Total
Remainder of 2013	$	~~3,274~~541	$	52,~~283~~952	$	83,~~557~~493
2014	31,~~843~~517		9,~~170~~586		1311,~~013~~103
2015	74,~~829~~728		7,~~448~~823		1512,~~277~~551
2016	~~288~~4,~~695~~567		4,~~262~~616		~~292~~9,~~957~~183
2017	28,885		1,~~702~~965		30,~~587~~850
Thereafter	~~416~~717,~~842~~794		~~278~~369		~~417~~718,~~120~~163
Total	$	~~749~~758,~~368~~032	$	2827,~~143~~311	$	~~777~~785,~~511~~343

10. INCOME TAXES

~~The~~We ~~Company~~join ~~joins~~ in the filing of a consolidated federal income tax return with Holdings, ~~the~~our ~~Company's~~ indirect parent. ~~The~~We ~~Company~~record ~~records~~ income taxes based on the separate return method determined as if ~~the~~we ~~Company~~were ~~was~~ not included in a consolidated return. Income taxes recorded by ~~the~~us ~~Company~~ are further adjusted to the extent losses or other deductions cannot be utilized in the consolidated federal income tax return. ~~The~~We ~~Company~~file ~~files~~ state tax returns on a separate company basis or unitary basis as required by law. Additionally, certain ~~subsidiaries~~ of ~~the~~our ~~Company~~subsidiaries owned through lower tier joint ventures file separate tax returns for federal and state purposes.

~~The~~Our ~~Company's~~ tax expense or benefit recognized in ~~its~~our interim financial statements is determined by multiplying the year-to-date income or loss by the annual effective tax rate, which is an estimate of the expected relationship between tax expense or benefit for the full year to the pre-tax income or loss for the full year (pre-tax income or loss excluding unusual or infrequently occurring discrete items). ~~The~~Our ~~Company's~~ effective income tax rate for the twelve and ~~twenty~~thirty-~~four~~six weeks ended September 3, 2013 was 395.4% and (22.5)%, respectively, compared to 49.0% and (0.4)%, for the twelve and thirty-six weeks ended September 4, 2012, respectively. For the twelve and thirty-six weeks ended September 3, 2013 and September 4, 2012, the effective tax rate differed from the U.S. statutory federal income tax rate of 35% primarily due to state taxes, changes in uncertain tax positions and certain other permanent differences. The relative impact that the preceding items have on the effective tax rate varies based on the amount of pre-tax income forecast for the year as well as whether that pre-tax amount is profit or loss.

12We are subject to taxation in the U.S. federal jurisdiction, as well as various state and foreign jurisdictions. Our annualized effective income tax rate is determined by the level and composition of pre-tax income and the mix of income subject to varying foreign, state and local taxes.

~~Table~~As of ~~Contents~~September 3, 2013 and December 25, 2012, we have recorded $55.5 million and $52.7 million, respectively, of unrecognized tax benefits related to uncertain tax positions, which are included in other liabilities in the consolidated condensed balance sheets.

~~June 11,~~We ~~2013~~are ~~was~~currently ~~(60.1)%~~undergoing ~~and~~an ~~44.2%,~~Internal ~~respectively,~~Revenue ~~compared~~Service toaudit ~~162.5%~~of ~~and~~certain ~~(17.2)%,~~components ~~for~~of the ~~twelve~~tax ~~and~~return ~~twenty-four~~for ~~weeks~~the year ended ~~June~~December 1228, ~~2012~~2010, ~~respectively.~~which ~~For~~includes the ~~twelve~~consummation ~~and~~of ~~twenty-four~~the ~~weeks~~ClubCorp ~~ended~~Formation. ~~June 11~~In addition, ~~2013~~certain ~~and~~of ~~June 12,~~our ~~2012,~~foreign subsidiaries are under audit in Mexico for the ~~effective~~2008 and 2009 tax ~~rate~~years. ~~differed~~It ~~from~~is reasonably possible that within the ~~U.S.~~next ~~statutory~~12 ~~federal~~months ~~income~~our unrecognized tax ~~rate~~benefits will be impacted by the resolution of ~~35%~~some ~~primarily~~or ~~due~~all toof ~~state~~the ~~taxes,~~matters ~~changes~~currently inunder ~~uncertain~~audit ~~tax~~by ~~positions~~the U.S. and ~~certain~~Mexican ~~other~~taxing ~~permanent differences~~authorities. ~~The~~However, ~~relative~~as ~~impact~~audit ~~that~~outcomes and the ~~preceding~~timing ~~items~~of ~~have~~audit onresolutions are subject to significant uncertainty given the ~~effective~~current status of the U.S. and Mexican tax ~~rate~~examinations, ~~varies~~we ~~based~~are onunable to estimate the possible amount of ~~pre-~~change in the unrecognized tax ~~income~~benefits, ~~forecast~~if ~~for~~any, ~~the~~that ~~year~~may asoccur ~~well~~within asthe ~~whether~~next ~~that~~12 ~~pre-tax~~months ~~amount~~as isa ~~profit~~result orof ~~loss~~the above examinations.

The Company is subject to taxation in the U.S. federal jurisdiction, as well as various state and foreign jurisdictions. Our annualized effective income tax rate is determined by the level and composition of pre-tax income and the mix of income subject to varying foreign, state and local taxes.

As of June 11, 2013 and December 25, 2012, the Company has recorded $54.5 million and $52.7 million, respectively, of unrecognized tax benefits related to uncertain tax positions, which are included in other liabilities in the consolidated condensed balance sheets.

The Company is currently undergoing an Internal Revenue Service audit of certain components of the tax return for the year ended December 28, 2010, which includes the consummation of the ClubCorp Formation. In addition, certain of the Company's foreign subsidiaries are under audit in Mexico for the 2008 and 2009 tax years. It is reasonably possible that within the next 12 months the Company's unrecognized tax benefits will be impacted by the resolution of some or all of the matters currently under audit by the U.S. and Mexican taxing authorities. However, as audit outcomes and the timing of audit resolutions are subject to significant uncertainty given the current status of the U.S. and Mexican tax examinations, the Company is unable to estimate the possible amount of change in the unrecognized tax benefits, if any, that may occur within the next 12 months as a result of the above examinations.

11. CLUB ACQUISITIONS, CLUB DISPOSITIONS AND DISCONTINUED OPERATIONS

Club Acquisitions

Assets and liabilities from business combinations were recorded on our consolidated balance sheets at fair value at the date of acquisition. The results of operations of such businesses have been included in the consolidated statements of operations since their date of acquisition.

Oak Tree Country Club—On May 22, 2013, we acquired Oak Tree Country Club, a private golf club located in Edmond, Oklahoma, in exchange for net cash consideration of $5.2 million. We assumed debt of $5.0 million in connection with the acquisition. We recorded the following major categories of assets and liabilities, which are subject to change until our information is finalized, no later than twelve months from the acquisition date:14

Land, property and equipment	$	12,254
Prepaid real estate taxes	59
Receivables and other assets	395
Inventory	233
Current maturities of long-term debt	(468		)
Long-term debt	(4,486		)
Deferred tax liability	(722		)
Membership initiation deposits and other liabilities	(2,037		)
Total	$	5,228

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~~Hartefeld~~Cherry ~~National~~Valley ~~Golf~~Country Club—On ~~April~~June 18, ~~2012~~2013, we acquired ~~Hartefeld~~Cherry ~~National~~Valley ~~Golf~~Country Club, a private ~~golf~~country club located in ~~Avondale~~Skillman, ~~Pennsylvania~~New Jersey, in exchange for net cash consideration of $5. 6 million. We recorded the following major categories of assets and liabilities, inwhich ~~exchange~~are ~~for~~subject ~~consideration~~to ofchange ~~$3.6~~until ~~million~~our information is finalized, no later than twelve months from the acquisition date:



Land, property and equipment	$	5,976
Prepaid assets	121
Inventory	179
Long-term debt	(311		)
Other liabilities	(408		)
Total	$	5,557

Oak Tree Country Club—On May 22, 2013, we acquired Oak Tree Country Club, a private country club located in Edmond, Oklahoma, in exchange for net cash consideration of $5.2 million. We assumed debt of $5.0 million in connection with the acquisition. We recorded the following major categories of assets and liabilities, which are subject to change until our information is finalized, no later than twelve months from the acquisition date:



Land, property and equipment	$	12,108
Receivables, prepaid assets and other assets	662
Inventory	233
Current maturities of long-term debt	(468		)
Long-term debt	(4,486		)
Deferred tax liability	(722		)
Membership initiation deposits and other liabilities	(2,099		)
Total	$	5,228

Hartefeld National Golf Club—On April 18, 2012, we acquired Hartefeld National Golf Club, a private country club located in Avondale, Pennsylvania. We recorded the following major categories of assets and liabilities in exchange for consideration of $3.6 million:



Land, property and equipment	$	3,999
Prepaid real estate taxes	31
Inventory	112
Deferred revenue and other liabilities	(572		)
Total	$	3,570

Revenues and operating income associated with acquired clubs were as follows for the twelve and ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 113, 2013 and ~~June~~September 124, 2012.

	Twelve Weeks Ended						~~Twenty~~Thirty-~~Four~~Six Weeks Ended
	June 11, 2013			June 12, 2012			June 11, 2013		June 12, 2012
	September 3, 2013			September 4, 2012			September 3, 2013		September 4, 2012
Revenues	$	15,~~928~~246		$	~~916~~1,119		$	27,~~688~~935	$	~~916~~2,035
Operating income	$	377		$	37		$	264	$	37
Operating (loss) income	$	(12	)	$	(37	)	$	253	$	—

The pro forma information related to these acquisitions is not material to our historical results of operations.

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Club Dispositions

Subsidiaries may be divested when we determine they will be unable to provide a positive contribution to cash flows from operations in future periods and/or when they are determined to be non-strategic holdings for the Company. Gains from divestitures are recognized in the period in which operations cease and losses are recognized when we determine that the carrying value is not recoverable and exceeds fair value.

WeGlendale ~~did~~Racquet ~~not~~Club, Inc.—On ~~discontinue~~September 27, ~~any~~2012, ~~clubs~~we insold ~~the~~certain ~~twelve~~assets and ~~twenty~~liabilities of Glendale Racquet Club, Inc., a sports club located in Milwaukee, Wisconsin, to an unrelated third party for $5.9 million. The sale resulted in a pre-~~four~~tax ~~weeks~~loss ~~ended~~of ~~June~~ $11,.1 ~~2013~~million orrecorded ~~June~~in the twelve weeks ended September 124, 2012 including a $6.5 million loss recognized for goodwill allocated to this entity. See Note 7. These losses are included in loss from discontinued operations in the consolidated condensed statements of operations and comprehensive loss.

~~There~~One ~~were~~additional nobusiness, ~~assets~~sports ~~held~~and ~~for~~alumni ~~sale~~club atwas ~~June~~discontinued in the twelve and thirty-six weeks ended September 114, ~~2013~~2012 orfor ~~December~~a pre-tax gain of $0.1 million. 25We did not discontinue any clubs in the twelve and thirty-six weeks ended September 3, ~~2012~~2013.

There were no assets held for sale at September 3, 2013 or December 25, 2012.

Discontinued Club Operations

Operations of the clubs that have been disposed ofalong with the held for sale property were reclassified to discontinued operations on the consolidated condensed statements of operations. Summarized financial information for these clubs is as follows:

	Twelve Weeks Ended						~~Twenty~~Thirty-~~Four~~Six Weeks Ended
	June 11, 2013			June 12, 2012			June 11, 2013			June 12, 2012
	September 3, 2013			September 4, 2012			September 3, 2013			September 4, 2012
Revenues	$	—		$	~~1,318~~983		$	—		$	23,~~578~~561
Operating expenses, excluding loss on disposals and impairments of assets	—			(1,~~129~~094		)	(9		)	(23,~~350~~444		)
(Loss) gain on disposals and impairments of assets	—(2		)	(9411,670		)	42			(~~191~~11,861		)
Interest expense	—			(3522		)	—			(6991		)
Income (loss) from discontinued club operations, before taxes	—			60			(5		)	(32		)
Loss from discontinued club operations, before taxes	(2		)	(11,803		)	(7		)	(11,835		)
Income tax benefit (expense)	4			(4		)	4			28
Income tax (expense) benefit	(2		)	1,232			2			1,260
Net income (loss) from discontinued clubs	$	4		$	56		$	(1	)	$	(4	)
Net loss from discontinued clubs	$	(4	)	$	(10,571	)	$	(5	)	$	(10,575	)

12. SEGMENT INFORMATION

We currently have two reportable segments: (1) golf and country clubs and (2) business, sports and alumni clubs. These segments are managed separately and discrete financial information is reviewed regularly by the chief operating decision maker to evaluate performance and allocate resources. Our chief operating decision maker is our Chief Executive Officer.

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Golf and country club operations consist of private country clubs, golf clubs and public golf facilities. Private country clubs provide at least one 18-hole golf course and various other recreational amenities that are open to members and their guests. Golf clubs provide both private and public golf play and usually offer fewer other recreational amenities. Public golf facilities are open to the public and generally provide the same services as golf clubs.

Business, sports and alumni club operations consist of business clubs, business/sports clubs, sports clubs and alumni clubs. Business clubs provide a setting for dining, business or social entertainment. Sports clubs provide a variety of recreational facilities and business/sports clubs provide a combination of the amenities available at business clubs and sports clubs. Alumni clubs provide the same amenities as business clubs while targeting alumni and staff of universities.

We also disclose other (“Other”), which consists of other business activities including ancillary revenues related to alliance arrangements, a portion of the revenue associated with upgrade offerings, reimbursements for certain costs of operations at managed clubs, corporate overhead expenses, and shared services. Other also includes corporate assets such as cash, goodwill, intangible assets, and loan origination fees.

We evaluate segment performance and allocate resources based on Segment EBITDA. We define Segment EBITDA as net income before discontinued operations, interest and investment income, interest expense, income taxes, gain or loss on disposal, acquisition and impairment of assets, gain on extinguishment of debt and depreciation and amortization. Additionally, Segment EBITDA differs from Adjusted EBITDA which is used in calculating our compliance with our debt covenants. These additional items are excluded to determine Segment EBITDA: 16

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We evaluate segment performance and allocate resources based on Segment EBITDA. We define Segment EBITDA as net income before discontinued operations, interest and investment income, interest expense, income taxes, gain or loss on disposal, acquisition and impairment of assets, gain on extinguishment of debt and depreciation and amortization. Additionally, Segment EBITDA differs from Adjusted EBITDA which is used in calculating the Company's compliance with debt covenants. These additional items are excluded to determine Segment EBITDA:


•	translation gains and losses;


•	proceeds from business interruption insurance;


•	severance payments;


•	expenses related to accruals for unclaimed property settlements;


•	management fees and expenses paid to an affiliate of KSL;


•	acquisition costs;


•	amortization of step-up in certain equity method investments;


•	expenses related to the November 30, 2010 reorganization (“ClubCorp Formation”);


•	expenses related to adjustments in accruals for certain environmental compliance obligations incurred prior to 2011;


•	expenses related to adjustments in accruals for certain property tax increases prior to 2011;


•	expenses related to an arbitration award arising out of a dispute related to a series of agreements first entered into in 1999 related to the acquisition and development of a golf course property;


•	expenses accrued under our long-term incentive plan; and


•	certain other incidental expenses.

Segment EBITDA for all periods presented has been calculated using this definition. Segment EBITDA should not be construed as an alternative to, or a better indicator of, operating income or loss, is not based on GAAP and is not necessarily a measure of our cash flows or ability to fund our cash needs. Our measurements of Segment EBITDA may not be comparable to similarly titled measures reported by other companies.

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The table below shows summarized financial information by segment for continuing operations for the twelve and ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 113, 2013 and ~~June~~September 124, 2012:

Twelve Weeks Ended

~~Twenty~~Thirty-~~Four~~Six Weeks Ended

June 11, 2013

June 12, 2012

June 11, 2013

June 12, 2012

September 3, 2013

September 4, 2012

September 3, 2013

September 4, 2012

Golf and Country Clubs

Revenues

~~151~~155,~~711~~847

~~146~~143,~~109~~865

~~270~~426,~~370~~217

~~260~~404,~~287~~152

Segment EBITDA

4643,~~490~~091

4339,~~456~~738

78121,~~460~~551

72112,~~923~~661

Business, Sports and Alumni Clubs

Revenues

4136,~~648~~628

4036,~~866~~420

79116,~~496~~124

78114,~~008~~428

Segment EBITDA

84,~~418~~717

85,~~423~~386

1418,~~126~~843

1419,~~114~~500

Other

Revenues

3,~~641~~766

~~609~~1,212

37,~~573~~339

~~543~~1,755

Segment EBITDA

(86,~~792~~973

)

(76,~~862~~852

)

(1825,~~286~~259

)

(1522,~~842~~694

)

Elimination of intersegment revenues

(1,~~381~~406

)

(1,~~528~~500

)

(24,~~760~~166

)

(34,~~076~~576

)

Total

Revenues

~~195~~194,~~619~~835

~~186~~179,~~056~~997

~~350~~545,~~679~~514

~~335~~515,~~762~~759

Segment EBITDA

4640,~~116~~835

4438,~~017~~272

74115,~~300~~135

71109,~~195~~467

As of

Total Assets

~~June~~September 113, 2013

December 25, 2012

Golf and Country Clubs

1,~~263~~268,~~414~~066

1,222,966

Business, Sports and Alumni Clubs

8385,~~155~~083

79,678

Other

~~369~~384,~~519~~322

416,952

Consolidated

1,~~716~~737,~~088~~471

1,719,596

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The table below provides a reconciliation of our Segment EBITDA to ~~Income (~~loss) from continuing operations before income taxes for the twelve and ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 113, 2013 and ~~June~~September 124, 2012:

	Twelve Weeks Ended						~~Twenty~~Thirty-~~Four~~Six Weeks Ended
	June 11, 2013			June 12, 2012			June 11, 2013			June 12, 2012
	September 3, 2013			September 4, 2012			September 3, 2013			September 4, 2012
Total Segment EBITDA	$	4640,~~116~~835		$	4438,~~017~~272		$	74115,~~300~~135		$	71109,~~195~~467
Interest and investment income	6980			3429			~~144~~224			5786
Interest expense	(19,~~322~~254		)	(19,~~778~~831		)	(3857,~~657~~911		)	(3959,~~679~~510		)
Loss on disposals	(4,293		)	(2,314		)	(5,512		)	(1,690		)
Loss on disposals and impairment of assets	(2,769		)	(2,536		)	(8,281		)	(4,226		)
Depreciation and amortization	(1617,~~312~~030		)	(17,~~731~~592		)	(3249,~~467~~497		)	(3653,~~334~~926		)
Foreign currency transaction (loss) gain	(19		)	105			(94		)	(30		)
Foreign currency transaction gain (loss)	92			(47		)	(2		)	(77		)
Severance payments	(3531		)	(5677		)	(5687		)	(~~184~~261		)
Management fees and expenses paid to an affiliate of KSL	(~~282~~270		)	(~~278~~273		)	(~~534~~804		)	(~~541~~814		)
Acquisition costs	(~~150~~677		)	(~~337~~126		)	(~~202~~879		)	(~~349~~475		)
Amortization of step-up in certain equity method investments	(~~463~~464		)	(~~472~~464		)	(~~926~~1,390		)	(~~945~~1,409		)
ClubCorp Formation costs	—			24(1		)	—			(5051		)
Environmental compliance costs	(~~150~~58		)	—(27		)	(~~150~~208		)	—(27		)
Long term incentive plan	(~~380~~656		)	(~~383~~384		)	(~~727~~1,383		)	(~~766~~1,150		)
Other	(~~256~~781		)	(~~204~~210		)	(~~621~~1,402		)	(~~282~~492		)
Income (loss) from continuing operations before income taxes	$	4,523		$	2,627		$	(5,502	)	$	(9,598	)
Loss from continuing operations before income taxes	$	(983	)	$	(3,267	)	$	(6,485	)	$	(12,865	)

13. COMMITMENTS AND CONTINGENCIES

We routinely enter into contractual obligations to procure assets used in the day to day operations of our business. As of ~~June~~September 113, 2013, we had capital commitments of $1913.05 million at certain of our clubs.

We currently have sales and use tax audits and a federal tax ~~audit~~audits of certain foreign subsidiaries in progress. See Note 10. We believe the potential for a liability related to the outcome of these audits may exist. However, we believe that the outcome of these audits would not materially affect our consolidated condensed financial statements.

The Company is currently undergoing an Internal Revenue Service audit of certain components of the tax return for the year ended December 28, 2010, which includes the consummation of the ClubCorp Formation. Should the estimates and judgments used in the ClubCorp Formation prove to be inaccurate, our financial results could be materially affected. See Note 10.

We are currently undergoing audits related to unclaimed property. We believe the potential for a liability related to the outcome of these audits is probable and we ~~currently~~ have aestimated ~~$1.8~~and ~~million~~recorded ~~estimate~~an ~~included~~immaterial inamount within accrued expenses on the consolidated condensed balance sheet as of ~~June~~September 113, 2013.

Each of our properties is subject to real and personal property taxes. If local taxing authorities reassess the taxable value of certain properties in accordance with local and state regulations, we may be subject to additional property tax assessments, penalties and interest. At ~~June~~September 113, 2013, we have $2.1 million recorded in accrued taxes on the consolidated condensed balance sheet related to certain of these properties. While the outcome of such reassessments cannot be predicted with certainty, we believe that any potential liability from these matters would not materially affect our consolidated condensed financial statements.

We are subject to certain pending or threatened litigation and other claims that arise in the ordinary course of business. While the outcome of such legal proceedings and other claims cannot be predicted with certainty, after review and consultation with legal counsel, we believe that any potential liability from these matters would not materially affect our consolidated condensed financial statements.

We guarantee principal amounts on loans made by a ~~third~~lender ~~party~~ to purchasers of certain real estate interests in case of default. These loans have remaining terms of approximately one to two years. The total principal amount outstanding on these

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loans as of ~~June~~September 113, 2013 is $0.3 million. As of ~~June~~September 113, 2013, ~~ClubCorp~~we ~~was~~were indemnified by ~~affiliates~~a ofthird ~~KSL~~party from losses on these guarantees in the event of default. The fair value of the guarantees is immaterial.

As of June 11, 2013, we were jointly and severally liable for certain pension funding liabilities associated with one of the resorts we sold in connection with the ClubCorp Formation. We have not accrued a liability, as we do not believe it is probable that claims will be made against ClubCorp. As of June 11, 2013, the unfunded obligation for such plan was approximately $10.4 million and no claims have been made against ClubCorp for funding. We have not agreed to pay, nor do we expect to pay, any amounts related to this plan. See Note 16.

14. FINANCIAL STATEMENTS OF GUARANTORS

In November 2010, we issued $415.0 million of senior unsecured notes. The senior unsecured notes are fully and unconditionally guaranteed on a joint and several basis by certain of our subsidiaries (“Guarantor Subsidiaries”), each of which is one hundred percent owned by ClubCorp. The senior unsecured notes are not guaranteed by other subsidiaries (“Non-Guarantor Subsidiaries”).

Set forth below is the consolidating condensed financial information presenting the results of operations and comprehensive income, financial position and cash flows of ClubCorp ~~Club Operations~~, ~~Inc.,~~ the Guarantor Subsidiaries on a consolidated basis and the Non-Guarantor Subsidiaries on a consolidated basis, along with the eliminations necessary to arrive at the information for ClubCorp on a consolidated basis.

Eliminations represent adjustments to eliminate investments in subsidiaries and intercompany balances and transactions between or among ClubCorp ~~Club Operations~~, ~~Inc.,~~ the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries. For this presentation, investments in subsidiaries are accounted for using the equity method of accounting.

1820

Table of Contents

Consolidating Condensed Statements of Operations and Comprehensive Income (Loss)

For the Twelve Weeks Ended ~~June~~September 113, 2013

(In thousands of dollars)

	ClubCorp			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			ConsolidatingEliminations			Consolidated
REVENUES:
Club operations	$	—		$	~~125~~133,~~665~~828		$	119,~~658~~979		$	(~~452~~320	)	$	~~136~~143,~~871~~487
Food and beverage	—			5347,~~832~~666			43,~~058~~143			—			5750,~~890~~809
Other revenues	—			~~1,251~~857			—1			(~~393~~319		)	~~858~~539
Total revenues	—			~~180~~182,~~748~~351			1513,~~716~~123			(~~845~~639		)	~~195~~194,~~619~~835
DIRECT AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Club operating costs exclusive of depreciation	—284			~~113~~118,~~846~~717			9,~~655~~370			(~~845~~639		)	~~122~~127,~~656~~732
Cost of food and beverage sales exclusive of depreciation	—			16,~~832~~063			1,~~294~~122			—			1817,~~126~~185
Depreciation and amortization	—			15,~~010~~758			1,~~302~~272			—			1617,~~312~~030
Provision for doubtful accounts	—			~~180~~1,048			1254			—			~~192~~1,102
Loss (gain) on disposals of assets	—			2,464			(52		)	—			2,412
Loss on disposals of assets	—			2,619			126			—			2,745
Impairment of assets	—			~~1,881~~24			—			—			~~1,881~~24
Equity in earnings from unconsolidated ventures	—			(~~325~~424		)	—			—			(~~325~~424		)
Selling, general and administrative	—			1011,~~589~~250			—			—			1011,~~589~~250
OPERATING INCOME	—			20,271			3,505			—			23,776
OPERATING (LOSS) INCOME	(284		)	17,296			1,179			—			18,191
Interest and investment income	12,~~834~~833			~~266~~278			1211			(13,~~043~~042		)	6980
Interest expense	(13,~~747~~450		)	(16,~~661~~844		)	(12,~~957~~002		)	13,~~043~~042			(19,~~322~~254		)
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(~~913~~901		)	~~3,876~~730			~~1,560~~(812		)	—			~~4,523~~(983		)
INCOME TAX BENEFIT (EXPENSE)	1,280			1,907			(469		)	—			2,718
INCOME TAX (EXPENSE) BENEFIT	(683		)	(3,485		)	281			—			(3,887		)
INCOME FROM CONTINUING OPERATIONS	367			5,783			1,091			—			7,241
LOSS FROM CONTINUING OPERATIONS	(1,584		)	(2,755		)	(531		)	—			(4,870		)
Income from discontinued clubs, net of tax	—			1			3			—			4
Income (loss) from discontinued clubs, net of tax	—			30			(34		)	—			(4		)
Equity in net income of subsidiaries	6,835			—			—			(6,835		)	—
Equity in net loss of subsidiaries	(3,419		)	—			—			3,419			—
NET INCOME	7,202			5,784			1,094			(6,835		)	7,245
NET LOSS	(5,003		)	(2,725		)	(565		)	3,419			(4,874		)
NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—			8338			(~~126~~167		)	—			(43129		)
NET INCOME ATTRIBUTABLE TO CLUBCORP	$	7,202		$	5,867		$	968		$	(6,835	)	$	7,202
NET LOSS ATTRIBUTABLE TO CLUBCORP	$	(5,003	)	$	(2,687	)	$	(732	)	$	3,419		$	(5,003	)
NET INCOME	7,202			5,784			1,094			(6,835		)	7,245
NET LOSS	(5,003		)	(2,725		)	(565		)	3,419			(4,874		)
Foreign currency translation, net of tax	—			—			(~~640~~1,430		)	—			(~~640~~1,430		)
Equity in other comprehensive loss of subsidiaries	(~~640~~1,430		)	—			—			~~640~~1,430			—
OTHER COMPREHENSIVE LOSS	(~~640~~1,430		)	—			(~~640~~1,430		)	~~640~~1,430			(~~640~~1,430		)
COMPREHENSIVE INCOME	6,562			5,784			454			(6,195		)	6,605
COMPREHENSIVE LOSS	(6,433		)	(2,725		)	(1,995		)	4,849			(6,304		)
COMPREHENSIVE LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—			8338			(~~126~~167		)	—			(43129		)
COMPREHENSIVE INCOME ATTRIBUTABLE TO CLUBCORP	$	6,562		$	5,867		$	328		$	(6,195	)	$	6,562
COMPREHENSIVE LOSS ATTRIBUTABLE TO CLUBCORP	$	(6,433	)	$	(2,687	)	$	(2,162	)	$	4,849		$	(6,433	)

1921

Table of Contents

Consolidating Condensed Statements of Operations and Comprehensive Income (Loss)

For the ~~Twenty~~Thirty-~~Four~~Six Weeks Ended ~~June~~September 113, 2013

(In thousands of dollars)

	ClubCorp			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			ConsolidatingEliminations			Consolidated
REVENUES:
Club operations	$	—		$	~~230~~364,~~360~~188		$	2131,~~686~~665		$	(~~837~~1,157	)	$	~~251~~394,~~209~~696
Food and beverage	—			91138,~~246~~912			69,~~560~~703			—			97148,~~806~~615
Other revenues	—			23,~~383~~240			—1			(~~719~~1,038		)	12,~~664~~203
Total revenues	—			~~323~~506,~~989~~340			2841,~~246~~369			(12,~~556~~195		)	~~350~~545,~~679~~514
DIRECT AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Club operating costs exclusive of depreciation	—284			~~210~~329,~~483~~200			1727,~~911~~281			(12,~~556~~195		)	~~226~~354,~~838~~570
Cost of food and beverage sales exclusive of depreciation	—			2945,~~759~~822			23,~~235~~357			—			3149,~~994~~179
Depreciation and amortization	—			2945,~~893~~651			23,~~574~~846			—			3249,~~467~~497
Provision for doubtful accounts	—			~~862~~1,910			4094			—			~~902~~2,004
Loss on disposals of assets	—			36,~~427~~046			~~204~~330			—			36,~~631~~376
Impairment of assets	—			1,~~881~~905			—			—			1,~~881~~905
Equity in earnings from unconsolidated ventures	—			(~~542~~966		)	—			—			(~~542~~966		)
Selling, general and administrative	—			2031,~~497~~747			—			—			2031,~~497~~747
OPERATING INCOME	—			27,729			5,282			—			33,011
OPERATING (LOSS) INCOME	(284		)	45,025			6,461			—			51,202
Interest and investment income	2538,~~667~~500			~~538~~816			2435			(2639,~~085~~127		)	~~144~~224
Interest expense	(2741,~~608~~058		)	(3349,~~214~~970		)	(36,~~920~~010		)	2639,~~085~~127			(3857,~~657~~911		)
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(12,~~941~~842		)	(4,~~947~~129		)	~~1,386~~486			—			(56,~~502~~485		)
INCOME TAX BENEFIT (EXPENSE)	~~1,381~~698			(1,~~662~~823		)	(~~616~~335		)	—			2(1,~~427~~460		)
(LOSS) INCOME FROM CONTINUING OPERATIONS	(~~560~~2,144		)	(35,~~285~~952		)	~~770~~151			—			(37,~~075~~945		)
Income (loss) from discontinued clubs, net of tax	—			11			(12		)	—			(1		)
Loss from discontinued clubs, net of tax	—			(3		)	(2		)	—			(5		)
Equity in net loss of subsidiaries	(25,~~518~~937		)	—			—			25,~~518~~937			—
NET (LOSS) INCOME	(38,~~078~~081		)	(35,~~274~~955		)	~~758~~149			25,~~518~~937			(37,~~076~~950		)
NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—			~~169~~207			(~~171~~338		)	—			(2131		)
NET (LOSS) INCOME ATTRIBUTABLE TO CLUBCORP	$	(3,078	)	$	(3,105	)	$	587		$	2,518		$	(3,078	)
NET LOSS ATTRIBUTABLE TO CLUBCORP	$	(8,081	)	$	(5,748	)	$	(189	)	$	5,937		$	(8,081	)
NET (LOSS) INCOME	(38,~~078~~081		)	(35,~~274~~955		)	~~758~~149			25,~~518~~937			(37,~~076~~950		)
Foreign currency translation, net of tax	—			—			~~442~~(988		)	—			~~442~~(988		)
Equity in other comprehensive income of subsidiaries	442			—			—			(442		)	—
Equity in other comprehensive loss of subsidiaries	(988		)	—			—			988			—
OTHER COMPREHENSIVE INCOME	442			—			442			(442		)	442
OTHER COMPREHENSIVE LOSS	(988		)	—			(988		)	988			(988		)
COMPREHENSIVE (LOSS) INCOME	(2,636		)	(3,274		)	1,200			2,076			(2,634		)
COMPREHENSIVE LOSS	(9,069		)	(5,955		)	(839		)	6,925			(8,938		)
COMPREHENSIVE LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—			~~169~~207			(~~171~~338		)	—			(2131		)
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO CLUBCORP	$	(2,636	)	$	(3,105	)	$	1,029		$	2,076		$	(2,636	)
COMPREHENSIVE LOSS ATTRIBUTABLE TO CLUBCORP	$	(9,069	)	$	(5,748	)	$	(1,177	)	$	6,925		$	(9,069	)

2022

Table of Contents

Consolidating Condensed Statements of Operations and Comprehensive Income (Loss)

For the Twelve Weeks Ended ~~June~~September 124, 2012

(In thousands of dollars)

	ClubCorp			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			ConsolidatingEliminations			Consolidated
REVENUES:
Club operations	$	—		$	~~119~~122,~~423~~660		$	109,~~884~~194		$	(~~449~~297	)	$	~~129~~131,~~858~~557
Food and beverage	—			5144,~~685~~915			32,~~719~~863			—			5547,~~404~~778
Other revenues	—			~~1,155~~928			—64			(~~361~~330		)	~~794~~662
Total revenues	—			~~172~~168,~~263~~503			1412,~~603~~121			(~~810~~627		)	~~186~~179,~~056~~997
DIRECT AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Club operating costs exclusive of depreciation	—			~~108~~109,~~814~~021			8,~~977~~939			(~~810~~627		)	~~116~~117,~~981~~333
Cost of food and beverage sales exclusive of depreciation	—			1614,~~029~~760			1,~~200~~020			—			1715,~~229~~780
Depreciation and amortization	—			16,~~450~~325			1,~~281~~267			—			17,~~731~~592
Provision for doubtful accounts	—			~~442~~867			49116			—			~~491~~983
Loss on disposals of assets	—			12,~~511~~425			33111			—			12,~~544~~536
Impairment of assets	—			770			—			—			770
Equity in earnings from unconsolidated ventures	—			(349		)	—			—			(349		)
Equity in earnings from unconsolidated ventures	—			(291		)	—			—			(291		)
Selling, general and administrative	—			9,679			—			—			9,679
Selling, general and administrative	—			10,096			—			—			10,096
OPERATING INCOME	—			15,775			668			—			16,443
OPERATING INCOME	—			18,442			3,063			—			21,505
Interest and investment income	12,834			236			1			(13,042		)	29
Interest and investment income	12,833			241			3			(13,043		)	34
Interest expense	(14,476		)	(16,431		)	(1,966		)	13,042			(19,831		)
Interest expense	(14,479		)	(16,607		)	(1,735		)	13,043			(19,778		)
Other income	—			92			—			—			92
Other income	—			866			—			—			866
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(1,642		)	(328		)	(1,297		)	—			(3,267		)
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(1,646		)	2,942			1,331			—			2,627
INCOME TAX BENEFIT (EXPENSE)	5,191			(3,117		)	(473		)	—			1,601
INCOME TAX (EXPENSE) BENEFIT	(996		)	(3,736		)	379			—			(4,353		)
INCOME (LOSS) FROM CONTINUING OPERATIONS	3,549			(3,445		)	(1,770		)	—			(1,666		)
(LOSS) INCOME FROM CONTINUING OPERATIONS	(2,642		)	(794		)	1,710			—			(1,726		)
Loss from discontinued clubs, net of tax	—			(1,479		)	(9,092		)	—			(10,571		)
Income (loss) from discontinued clubs, net of tax	—			57			(1		)	—			56
Equity in net loss of subsidiaries	(15,801		)	—			—			15,801			—
Equity in net income of subsidiaries	805			—			—			(805		)	—
NET LOSS	(12,252		)	(4,924		)	(10,862		)	15,801			(12,237		)
NET (LOSS) INCOME	(1,837		)	(737		)	1,709			(805		)	(1,670		)
NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—			44			(59		)	—			(15		)
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—			(16		)	(151		)	—			(167		)
NET LOSS ATTRIBUTABLE TO CLUBCORP	$	(12,252	)	$	(4,880	)	$	(10,921	)	$	15,801		$	(12,252	)
NET (LOSS) INCOME ATTRIBUTABLE TO CLUBCORP	$	(1,837	)	$	(753	)	$	1,558		$	(805	)	$	(1,837	)
NET LOSS	(12,252		)	(4,924		)	(10,862		)	15,801			(12,237		)
NET (LOSS) INCOME	(1,837		)	(737		)	1,709			(805		)	(1,670		)
Foreign currency translation, net of tax	—			—			1,582			—			1,582
Foreign currency translation, net of tax	—			—			(2,925		)	—			(2,925		)
Equity in other comprehensive income of subsidiaries	1,582			—			—			(1,582		)	—
Equity in other comprehensive loss of subsidiaries	(2,925		)	—			—			2,925			—
OTHER COMPREHENSIVE INCOME	1,582			—			1,582			(1,582		)	1,582
OTHER COMPREHENSIVE LOSS	(2,925		)	—			(2,925		)	2,925			(2,925		)
COMPREHENSIVE LOSS	(10,670		)	(4,924		)	(9,280		)	14,219			(10,655		)
COMPREHENSIVE LOSS	(4,762		)	(737		)	(1,216		)	2,120			(4,595		)
COMPREHENSIVE LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—			44			(59		)	—			(15		)
COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—			(16		)	(151		)	—			(167		)
COMPREHENSIVE LOSS ATTRIBUTABLE TO CLUBCORP	$	(10,670	)	$	(4,880	)	$	(9,339	)	$	14,219		$	(10,670	)
COMPREHENSIVE LOSS ATTRIBUTABLE TO CLUBCORP	$	(4,762	)	$	(753	)	$	(1,367	)	$	2,120		$	(4,762	)

2123

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Consolidating Condensed Statements of Operations and Comprehensive Income (Loss)

For the ~~Twenty~~Thirty-~~Four~~Six Weeks Ended ~~June~~September 124, 2012

(In thousands of dollars)

	ClubCorp			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			ConsolidatingEliminations			Consolidated
REVENUES:
Club operations	$	—		$	~~221~~343,~~021~~681		$	2029,~~578~~772		$	(~~864~~1,161	)	$	~~240~~372,~~735~~292
Food and beverage	—			87132,~~522~~437			68,~~003~~866			—			93141,~~525~~303
Other revenues	—			23,~~147~~075			—64			(~~645~~975		)	12,~~502~~164
Total revenues	—			~~310~~479,~~690~~193			2638,~~581~~702			(12,~~509~~136		)	~~335~~515,~~762~~759
DIRECT AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Club operating costs exclusive of depreciation	—			~~202~~311,~~737~~758			1625,~~776~~715			(12,~~509~~136		)	~~218~~335,~~004~~337
Cost of food and beverage sales exclusive of depreciation	—			2842,~~156~~916			23,~~016~~036			—			3045,~~172~~952
Depreciation and amortization	—			3350,~~788~~113			23,~~546~~813			—			3653,~~334~~926
Provision for doubtful accounts	—			12,~~174~~041			59175			—			12,~~233~~216
Loss on disposals of assets	—			~~886~~3,311			34145			—			~~920~~3,456
Impairment of assets	—			770			—			—			770
Equity in earnings from unconsolidated ventures	—			(~~610~~959		)	—			—			(~~610~~959		)
Selling, general and administrative	—			2030,~~646~~325			—			—			2030,~~646~~325
OPERATING INCOME	—			2338,~~143~~918			5,~~150~~818			—			2844,~~293~~736
Interest and investment income	2538,~~666~~500			~~470~~706			67			(2639,~~085~~127		)	5786
Interest expense	(2843,~~961~~437		)	(3349,~~159~~544		)	(35,~~644~~656		)	2639,~~085~~127			(3959,~~679~~510		)
Other income	—			1,~~731~~823			—			—			1,~~731~~823
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(34,~~295~~937		)	(78,~~815~~097		)	~~1,512~~169			—			(912,~~598~~865		)
INCOME TAX (EXPENSE) BENEFIT	(503		)	(1,328		)	181			—			(1,650		)
INCOME TAX BENEFIT (EXPENSE)	4,688			(4,445		)	(292		)	—			(49		)
(LOSS) INCOME FROM CONTINUING OPERATIONS	(3,798		)	(9,143		)	1,693			—			(11,248		)
LOSS FROM CONTINUING OPERATIONS	(249		)	(12,542		)	(123		)	—			(12,914		)
Loss from discontinued clubs, net of tax	—			(21,481		)	(29,094		)	—			(410,575		)
Equity in net loss of subsidiaries	(723,~~608~~409		)	—			—			723,~~608~~409			—
NET (LOSS) INCOME	(11,406		)	(9,145		)	1,691			7,608			(11,252		)
NET LOSS	(23,658		)	(14,023		)	(9,217		)	23,409			(23,489		)
NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—			64108			(~~218~~277		)	—			(~~154~~169		)
NET (LOSS) INCOME ATTRIBUTABLE TO CLUBCORP	$	(11,406	)	$	(9,081	)	$	1,473		$	7,608		$	(11,406	)
NET LOSS ATTRIBUTABLE TO CLUBCORP	$	(23,658	)	$	(13,915	)	$	(9,494	)	$	23,409		$	(23,658	)
NET (LOSS) INCOME	(11,406		)	(9,145		)	1,691			7,608			(11,252		)
NET LOSS	(23,658		)	(14,023		)	(9,217		)	23,409			(23,489		)
Foreign currency translation, net of tax	—			—			~~(471~~1,111		)	—			~~(471~~1,111		)
Equity in other comprehensive loss of subsidiaries	(471		)	—			—			471			—
Equity in other comprehensive income of subsidiaries	1,111			—			—			(1,111		)	—
OTHER COMPREHENSIVE LOSS	(471		)	—			(471		)	471			(471		)
OTHER COMPREHENSIVE INCOME	1,111			—			1,111			(1,111		)	1,111
COMPREHENSIVE (LOSS) INCOME	(11,877		)	(9,145		)	1,220			8,079			(11,723		)
COMPREHENSIVE LOSS	(22,547		)	(14,023		)	(8,106		)	22,298			(22,378		)
COMPREHENSIVE LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—			64108			(~~218~~277		)	—			(~~154~~169		)
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO CLUBCORP	$	(11,877	)	$	(9,081	)	$	1,002		$	8,079		$	(11,877	)
COMPREHENSIVE LOSS ATTRIBUTABLE TO CLUBCORP	$	(22,547	)	$	(13,915	)	$	(8,383	)	$	22,298		$	(22,547	)

2224

Table of Contents

Consolidating Condensed Balance Sheet

As of ~~June~~September 113, 2013

(In thousands of dollars, except share and per share amounts)

	ClubCorp			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			ConsolidatingEliminations			Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—		$	3336,~~865~~903		$	6,~~570~~323		$	—		$	4043,~~435~~226
Receivables, net of allowances	42,~~697~~613			6976,~~600~~662			54,~~116~~955			~~(2,084~~—		)	7784,~~329~~230
Inventories	—			1514,~~250~~872			1,~~582~~537			—			16,~~832~~409
Prepaids and other assets	~~117~~1,454			109,~~994~~599			3,~~949~~909			—			1514,~~060~~962
Deferred tax assets	—			8,~~031~~039			4537			—			8,076
Total current assets	4,~~814~~067			~~137~~146,~~740~~075			1716,~~262~~761			~~(2,084~~—		)	~~157~~166,~~732~~903
Investments	—			109,~~109~~110			—			—			109,~~109~~110
Property and equipment, net	—			1,~~106~~114,~~052~~228			~~126~~125,~~411~~671			—			1,~~232~~239,~~463~~899
Notes receivable, net of allowances	—			3,~~548~~860			~~538~~608			—			4,~~086~~468
Goodwill	—			258,459			—			—			258,459
Intangibles, net	—			30,~~097~~061			~~544~~451			—			30,~~641~~512
Investment in subsidiaries	~~164~~159,~~142~~293			—			—			(~~164~~159,~~142~~293		)	—
Intercompany receivables	~~655~~666,~~801~~759			—			5667,~~252~~730			(~~712~~734,~~053~~489		)	—
Other assets	1118,~~891~~088			109,~~352~~694			~~355~~338			—			2228,~~598~~120
Long-term deferred tax asset	—1,951			—			87,~~387~~018			(8,~~387~~969		)	—
TOTAL ASSETS	$	~~836~~850,~~648~~158		$	1,~~556~~571,~~357~~487		$	~~209~~218,~~749~~577		$	(~~886~~902,~~666~~751	)	$	1,~~716~~737,~~088~~471
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	~~3,100~~—		$	9,~~496~~474		$	1,902		$	—		$	1411,~~498~~376
Membership initiation deposits - current portion	—			5455,~~907~~100			4750,~~058~~710			—			~~101~~105,~~965~~810
Accounts payable	—2,237			2824,~~237~~631			~~899~~1,008			—			2927,~~136~~876
Accrued expenses	412,~~541~~471			2631,~~918~~929			1,~~119~~109			—			3245,~~578~~509
Accrued taxes	—774			613,~~408~~194			6,~~042~~804			~~(2,084~~—		)	1020,~~366~~772
Other liabilities	140			7175,~~945~~112			5,~~569~~651			—			7780,~~654~~903
Total current liabilities	715,~~781~~622			~~197~~209,~~911~~440			6267,~~589~~184			~~(2,084~~—		)	~~266~~292,~~197~~246
Intercompany payables	—			~~664~~687,~~875~~676			4746,~~178~~813			(~~712~~734,~~053~~489		)	—
Long-term debt	~~703~~716,~~781~~106			2423,~~182~~101			3534,~~050~~760			—			~~763~~773,~~013~~967
Membership initiation deposits	—			158,~~584~~192			4445,~~521~~820			—			~~203~~204,~~105~~012
Deferred tax liability	~~223~~—			~~220~~215,~~164~~175			—			(8,~~387~~969		)	~~212~~206,~~000~~206
Other liabilities	—			130,729			5,614			—			136,343
Other Liabilities	—			126,187			5,727			—			131,914
Total liabilities	~~711~~731,~~785~~728			1,~~396~~419,~~445~~771			~~194~~200,~~952~~304			(~~722~~743,~~524~~458		)	1,~~580~~608,~~658~~345
EQUITY
Common stock of ClubCorp Club Operations, Inc., $1.00 par value, 1,000 shares authorized, issued and outstanding	1			—			—			—			1
Additional paid-in capital	178,310			~~161~~139,~~156~~852			1738,~~154~~458			(178,310		)	178,310
Accumulated other comprehensive loss	(~~230~~1,660		)	(21		)	(~~209~~1,639		)	~~230~~1,660			(~~230~~1,660		)
Retained deficit	(53,218		)	(7,313		)	(6,625		)	13,938			(53,218		)
Retained (deficit) earnings	(58,221		)	5,833			(23,190		)	17,357			(58,221		)
Total stockholders’ equity	~~124~~118,~~863~~430			~~153~~145,~~822~~664			1013,~~320~~629			(~~164~~159,~~142~~293		)	~~124~~118,~~863~~430
Noncontrolling interests in consolidated subsidiaries and variable interest entities	—			6,~~090~~052			4,~~477~~644			—			10,~~567~~696
Total equity	~~124~~118,~~863~~430			~~159~~151,~~912~~716			1418,~~797~~273			(~~164~~159,~~142~~293		)	~~135~~129,~~430~~126
TOTAL LIABILITIES AND EQUITY	$	~~836~~850,~~648~~158		$	1,~~556~~571,~~357~~487		$	~~209~~218,~~749~~577		$	(~~886~~902,~~666~~751	)	$	1,~~716~~737,~~088~~471

2325

Table of Contents

Consolidating Condensed Balance Sheet

As of December 25, 2012

(In thousands of dollars, except share and per share amounts)

	ClubCorp			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			ConsolidatingEliminations			Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—		$	77,844		$	4,007		$	—		$	81,851
Receivables, net of allowances	2,613			48,448			3,132			(2,613		)	51,580
Inventories	—			12,911			1,450			—			14,361
Prepaids and other assets	—			8,169			4,030			—			12,199
Deferred tax assets	—			8,~~031~~039			4537			—			8,076
Total current assets	2,613			155,~~403~~411			12,~~664~~656			(2,613		)	168,067
Investments	—			11,166			—			—			11,166
Property and equipment, net	—			1,097,558			125,981			—			1,223,539
Notes receivable, net of allowances	—			2,771			412			—			3,183
Goodwill	—			258,459			—			—			258,459
Intangibles, net	—			31,228			730			—			31,958
Investment in subsidiaries	201,218			—			—			(201,218		)	—
Intercompany receivables	669,772			—			5667,~~192~~843			(~~725~~737,~~964~~615		)	—
Other assets	12,917			9,903			404			—			23,224
Long-term deferred tax asset	480			—			7,~~384~~140			(7,~~864~~620		)	—
TOTAL ASSETS	$	887,000		$	1,566,~~488~~496		$	~~203~~215,~~767~~166		$	(~~937~~949,~~659~~066	)	$	1,719,596
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	15,080		$	7,960		$	1,948		$	—		$	24,988
Membership initiation deposits - current portion	—			5048,~~757~~875			4042,~~641~~523			—			91,398
Accounts payable	—			26,~~394~~363			1,~~047~~078			—			27,441
Accrued expenses	4,786			30,594			609			—			35,989
Accrued taxes	—			1312,~~901~~606			56,~~349~~644			(2,613		)	16,637
Other liabilities	140			48,656			4,119			—			52,915
Total current liabilities	20,006			~~178~~175,~~262~~054			5356,~~713~~921			(2,613		)	249,368
Intercompany payables	—			~~678~~690,~~509~~162			47,~~455~~453			(~~725~~737,~~964~~615		)	—
Long-term debt	704,495			16,563			35,474			—			756,532
Membership initiation deposits	—			~~154~~152,~~007~~161			4850,~~623~~469			—			202,630
Deferred tax liability	—			216,~~857~~613			—			(7,~~864~~620		)	208,993
Other liabilities	—			123,287			5,722			—			129,009
Other Liabilities	—			123,273			5,736			—			129,009
Total liabilities	724,501			1,~~367~~373,~~485~~826			~~190~~196,~~987~~053			(~~736~~747,~~441~~848		)	1,546,532
EQUITY
Common stock of ClubCorp Club Operations, Inc., $1.00 par value, 1,000 shares authorized, issued and outstanding	1			—			—			—			1
Additional paid-in capital	213,310			~~196~~174,~~156~~852			1738,~~154~~458			(213,310		)	213,310
Accumulated other comprehensive loss	(672		)	(21		)	(651		)	672			(672		)
Retained deficit	(50,140		)	(3,390		)	(8,030		)	11,420			(50,140		)
Retained (deficit) earnings	(50,140		)	11,581			(23,001		)	11,420			(50,140		)
Total stockholders’ equity:	162,499			~~192~~186,~~745~~412			814,~~473~~806			(201,218		)	162,499
Noncontrolling interests in consolidated subsidiaries and variable interest entities	—			6,258			4,307			—			10,565
Total equity	162,499			~~199~~192,~~003~~670			1219,~~780~~113			(201,218		)	173,064
TOTAL LIABILITIES AND EQUITY	$	887,000		$	1,566,~~488~~496		$	~~203~~215,~~767~~166		$	(~~937~~949,~~659~~066	)	$	1,719,596

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Consolidating Condensed Statements of Cash Flows

For the ~~Twenty~~Thirty-~~Four~~Six Weeks Ended ~~June~~September 113, 2013

(In thousands of dollars)

	ClubCorp			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			ConsolidatingEliminations			ConsolidatedCondensed
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash (used in) provided by operating activities	$	(1,275	)	34,268			$	4,772		$	—		37,765
Net cash provided by operating activities	$	7,129		51,839			$	7,892		$	—		$	66,860
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	—			(1938,~~519~~609		)	(13,~~802~~457		)	—			(2142,~~321~~066		)
Acquisitions of clubs	—			(510,~~228~~785		)	—			—			(510,~~228~~785		)
Proceeds from dispositions	—			4386			—4			—			4390
Net change in restricted cash and capital reserve funds	—			~~(96~~34		)	—			—			~~(96~~34		)
Return of capital in equity investments	—			54592			—			—			54592
Net intercompany transactions	4838,~~969~~011			—			—			(4838,~~969~~011		)	—
Net cash provided by (used in) investing activities	4838,~~969~~011			(2448,~~746~~682		)	(13,~~802~~453		)	(4838,~~969~~011		)	(2652,~~548~~135		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt	(1213,~~694~~469		)	(47,~~496~~028		)	(1,~~017~~502		)	—			(1821,~~207~~999		)
Proceeds from new debt borrowings	—10,000			713			—			—			10,713
Debt issuance and modification costs	—(6,671		)	(13		)	—			—			(136,684		)
Distribution to owners	(35,000		)	—			—			—			(35,000		)
Proceeds from new membership initiation deposits	—			~~424~~603			70157			—			~~494~~760
Repayments of membership initiation deposits	—			(~~538~~748		)	(~~121~~282		)	—			(~~659~~1,030		)
Net intercompany transactions	—			(4937,~~591~~625		)	~~622~~(386		)	4838,~~969~~011			—
Net cash used in financing activities	(4745,~~694~~140		)	(5344,~~501~~098		)	(~~446~~2,013		)	4838,~~969~~011			(5253,~~672~~240		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			39(110		)	—			39(110		)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	—			(4340,~~979~~941		)	2,~~563~~316			—			(4138,~~416~~625		)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD	—			77,844			4,007			—			81,851
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	—		$	3336,~~865~~903		$	6,~~570~~323		$	—		$	4043,~~435~~226

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Consolidating Condensed Statements of Cash Flows

For the ~~Twenty~~Thirty-~~Four~~Six Weeks Ended ~~June~~September 124, 2012

(In thousands of dollars)

	ClubCorp			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			ConsolidatingEliminations			ConsolidatedCondensed
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash (used in) provided by operating activities	$	(4,946	)	34,489			$	5,714		$	—		35,257
Net cash provided by operating activities	$	7,047		58,967			$	87		$	—		$	66,101
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	—			(1528,~~816~~434		)	(23,~~037~~033		)	—			(1731,~~853~~467		)
Acquisitions of clubs	—			(3,570		)	—			—			(3,570		)
Proceeds from dispositions	—			~~359~~391			—2			—			~~359~~393
Proceeds from insurance	—			1,978			—			—			1,978
Net change in restricted cash and capital reserve funds	—			~~202~~97			—			—			~~202~~97
Net intercompany transactions	6(4,~~496~~722		)	—			—			(64,~~496~~722		)	—
Net cash provided by (used in) investing activities	6,496			(16,847		)	(2,037		)	(6,496		)	(18,884		)
Net cash used in investing activities	(4,722		)	(29,538		)	(3,031		)	4,722			(32,569		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt	(12,~~550~~325		)	(46,~~670~~801		)	(1,~~133~~671		)	—			(710,~~353~~797		)
Proceeds from new membership initiation deposits	—			383			31			—			414
Purchase of interest rate cap agreement	—			—			(8		)	—			(8		)
Repayments of membership initiation deposits	—			(111		)	(97		)	—			(208		)
Debt issuance and modification costs	—			—			(167		)	—			(167		)
Net intercompany transactions	—			(5,225		)	(1,271		)	6,496			—
Proceeds from new membership initiation deposits	—			504			48			—			552
Net cash used in financing activities	(1,550		)	(9,623		)	(2,470		)	6,496			(7,147		)
Repayments of membership initiation deposits	—			(303		)	(152		)	—			(455		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			668			—			668
Net intercompany transactions	—			(1,269		)	5,991			(4,722		)	—
NET INCREASE IN CASH AND CASH EQUIVALENTS	—			8,019			1,875			—			9,894
Net cash (used in) provided by financing activities	(2,325		)	(7,869		)	4,041			(4,722		)	(10,875		)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD	—			43,751			6,566			—			50,317
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			787			—			787
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	—		$	51,770		$	8,441		$	—		$	60,211
NET INCREASE IN CASH AND CASH EQUIVALENTS	—			21,560			1,884			—			23,444
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD	—			43,723			6,594			—			50,317
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	—		$	65,283		$	8,478		$	—		$	73,761

15. RELATED PARTY TRANSACTIONS

WeDuring ~~have~~the ~~entered~~twelve ~~into~~and thirty-six weeks ended September 3, 2013 we were a party to a management agreement (the "Management Agreement") with an affiliate of KSL, pursuant to which we ~~are~~were provided financial and management consulting services in exchange for an annual fee of $1.0 million. In the event of a future financing, refinancing or direct or indirect sale of all or substantially all of our equity or assets, the management company may also be entitled to receive a fee equal to 1% of the lenders’ maximum commitments, in the case of a financing or refinancing, or 1% of the total consideration paid, in the case of a sale. In addition, we have agreed to reimburse the management company for all of its reasonable out-of-pocket costs and expenses incurred in providing management services to us and certain of our affiliates. During the twelve and ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 113, 2013 we paid an affiliate of KSL approximately $0.3 million and $0.58 million, respectively, and during the twelve and ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 124, 2012, we paid them approximately $0.3 million and $0.58 million, respectively, in management fees. The Management Agreement allowed that, in the event of a financing, refinancing or direct or indirect sale of all or substantially all of our equity or assets, the management company may also be entitled to receive a fee equal to 1% of the lenders’ maximum commitments, in the case of a financing or refinancing, or 1% of the total consideration paid, in the case of a sale. On September 25, 2013, we made a one-time payment of $5.0 million in connection with the termination of the Management Agreement. See Note 16.

During the ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 113, 2013, we made a distribution to our owners of $35.0 million.

During the twelve and ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 113, 2013, we paid $0.30 million and $0.4 million, respectively, and during the twelve and ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 124, 2012, we paid $0.14 million and $0.36 million, respectively, to affiliates of KSL for private party events. In addition, during the twelve and twenty-four weeks ended June 12, 2012 we received $0.0 million and $0.1 million, respectively, from an affiliate of KSL for taxes paid on behalf of affiliates of KSL.

2628

Table of Contents

~~During~~affiliates ~~the~~of ~~twelve~~KSL ~~weeks~~for ~~ended~~private ~~June~~party events. 11In addition, ~~2013~~during wethe ~~entered~~twelve ~~into~~and athirty-six aweeks ~~consulting~~ended ~~services~~September 4, ~~agreement~~2012 ~~with an affiliate of KSL whereby~~ we ~~provide~~received ~~consulting services in exchange for an annual fee of~~ $0.1 million. ~~The~~and ~~revenue~~$0.2 ~~associated~~million, ~~with~~respectively, ~~this~~from ~~contract~~an ~~was~~affiliate ~~immaterial~~of ~~during~~KSL ~~the~~for ~~twelve~~taxes ~~and~~paid ~~twenty-four~~on ~~weeks~~behalf ~~ended~~of ~~June 11,~~affiliates ~~2013~~of KSL.

AsDuring ofthe ~~June~~thirty-six weeks ended September 113, 2013 we ~~had~~entered ~~receivables~~into ofa ~~$0.2~~a ~~million~~consulting ~~and~~services ~~payables~~agreement ofwith ~~$0.7~~an ~~million~~affiliate ~~and as~~ of ~~December 25,~~KSL ~~2012,~~whereby we ~~had~~provide ~~receivables~~consulting ofservices ~~$0.2~~in ~~million~~exchange ~~and payables of $0.2 million,~~ for ~~outstanding advances from golf and business club ventures in which we have~~ an ~~equity~~annual ~~method~~fee ~~investment.~~of ~~We recorded~~ $0.1 million ~~and $0~~.2 ~~million~~The inrevenue ~~the~~associated ~~twelve~~with ~~and~~this ~~twenty-four~~contract ~~weeks~~was ~~ended~~immaterial ~~June 11, 2013, respectively, and $0.1 million and $0.3 million~~ during the twelve and ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 123, ~~2012, respectively, in management fees from these ventures. As of June 11,~~ 2013 ~~and December 25, 2012, we had a receivable of $1~~.~~7 million and $1.9 million, respectively, for volume rebates from Avendra, LLC, the supplier firm in which we have an equity method investment. See Note 4.~~

WeAs ~~have~~of ~~entered~~September 3, ~~into~~2013 ~~arrangements~~we ~~whereby~~had ~~members~~receivables of ~~certain~~$0.2 ~~resorts~~million and ~~clubs~~payables ~~owned~~of by$0.7 ~~affiliates~~million ofand ~~KSL~~as ~~can~~of ~~pay~~December 25, an2012, ~~upgrade~~we ~~charge~~had toreceivables ~~have~~of ~~access~~$0.2 tomillion ~~our~~and ~~clubs~~payables ~~and~~of ~~facilities~~$0.2 Wemillion, ~~have~~for ~~revenue~~outstanding ~~sharing~~advances ~~arrangements~~from ~~with~~golf ~~such~~and ~~resorts~~business ~~and~~club ~~clubs~~ventures ~~whereby~~in which we ~~agree~~have toan ~~split~~equity ~~the~~method ~~amount~~investment. ofWe ~~the~~recorded ~~upgrade~~$0.1 ~~charges~~million ~~respectively~~and ~~with~~$0.3 ~~such~~million ~~entities.~~in Wethe ~~recognized~~twelve and ~~collected~~thirty-six weeks ended September 3, 2013, respectively, and $0.1 million and $0.14 million during the ~~twenty~~twelve and thirty-~~four~~six weeks ended ~~June~~September 114, ~~2013 and June 12,~~ 2012, respectively, in ~~revenue~~management ~~associated~~fees ~~with~~from these ~~arrangements~~ventures. ~~During~~As ~~the~~of ~~twelve weeks ended June~~September 113, 2013 and ~~June~~December 1225, 2012, ~~revenue~~we ~~associated~~had ~~with~~a ~~these~~receivable ~~arrangements~~of ~~was~~$2.3 ~~immaterial~~million and $1.9 million, respectively, for volume rebates from Avendra, LLC, the supplier firm in which we have an equity method investment. See Note 4.

We have ~~also~~ entered into arrangements ~~with~~whereby ~~affiliates~~members of ~~KSL,~~certain ~~whereby~~resorts weand ~~remit~~clubs ~~royalty~~owned ~~payments~~by weaffiliates ~~receive~~of inKSL ~~connection~~can ~~with~~pay ~~mineral~~an ~~leases~~upgrade atcharge ~~certain~~to ofhave access to our ~~golf~~clubs and ~~country clubs~~facilities. ~~During~~We ~~the~~have ~~twenty-four~~revenue ~~weeks~~sharing ~~ended~~arrangements ~~June 11,~~with ~~2013~~such resorts and ~~June 12,~~clubs ~~2012,~~whereby we ~~collected~~agree to split the amount of the upgrade charges respectively with such entities. We recognized and ~~remitted~~collected $0.1 million and $0.1 million during the thirty-six weeks ended September 3, 2013 and September 4, 2012, respectively, in ~~conjunction~~revenue associated with these ~~agreements~~arrangements. ~~The~~During ~~amounts collected and remitted during~~ the twelve weeks ended ~~June~~September 113, 2013 and ~~June~~September 124, 2012, ~~were~~revenue associated with these arrangements was immaterial.

We have also entered into arrangements with affiliates of KSL, whereby we remit royalty payments we receive in connection with mineral leases at certain of our golf and country clubs. During the thirty-six weeks ended September 3, 2013 and September 4, 2012, we collected and remitted $0.1 million and $0.1 million, respectively, in conjunction with these agreements. The amounts collected and remitted during the twelve weeks ended September 3, 2013 and September 4, 2012 were immaterial.

The Company joins in the filing of a consolidated federal income tax return with Holdings, whereby we remit our federal income taxes through Holdings. See Notes 10 and 13.

16. SUBSEQUENT EVENTS

OnInitial ~~June 18,~~Public ~~2013, we acquired Cherry Valley Country Club, a private golf club located in Skillman,~~Offering

~~New~~On ~~Jersey~~September 25, 2013, Holdings closed its initial public offering in ~~exchange~~which ~~for~~it sold 13,200,000 shares of common stock and Fillmore sold 4,800,000 shares. The offering generated net ~~cash~~proceeds ~~consideration~~to Holdings of approximately $5168.68 million. Weafter ~~are~~deducting inunderwriting ~~the~~discounts ~~process~~and ofcommissions ~~finalizing~~and ~~our~~estimated ~~purchase~~offering ~~price~~expenses. ~~allocations,~~Holdings ~~which~~subsequently ~~are~~contributed ~~subject~~the tonet ~~change~~proceeds ~~until~~to ~~our~~the ~~information~~Company. isThe ~~finalized,~~Company nodid ~~later~~not ~~than~~receive ~~twelve~~any ~~months~~proceeds from the ~~acquisition~~sale ~~date~~of shares of common stock offered by Fillmore.

OnWe ~~July 1,~~intend ~~2013,~~to ~~certain~~use ~~resorts~~the ~~and~~net ~~clubs~~proceeds ~~were~~received ~~sold~~ by ~~affiliates~~us offrom ~~KSL~~this offering to redeem $145.3 ~~The~~million ~~usage~~in ~~and~~aggregate ~~revenue~~principal ~~sharing~~amount ~~agreements~~of ~~described~~our $415.0 million in ~~Note~~senior 15unsecured ~~will~~notes ~~continue~~(the at"Senior ~~these~~Notes"), ~~resorts~~plus approximately $5.9 million in accrued and ~~clubs~~unpaid interest thereon, ~~but~~and ~~certain~~to pay approximately $14.5 million of ~~the~~redemption ~~resorts~~premium. ~~sold~~This ~~will~~redemption nois ~~longer~~pursuant beto ~~between~~a ~~related~~provision ~~parties.~~in ~~Additionally,~~the indenture governing the ~~purchaser~~Senior Notes that permits us to redeem up to 35% of ~~one~~the aggregate principal amount of ~~these~~the ~~resorts~~Senior ~~assumed~~Notes with the ~~pension~~net ~~liability~~cash ~~described~~proceeds inof ~~Note~~certain 13equity ~~for~~offerings ~~which~~at wea ~~were~~redemption ~~previously~~price ~~contingently~~equal ~~liable~~to 110% of the aggregate principal amount thereof, plus accrued and ~~agreed~~unpaid interest, if any, to ~~indemnify~~the redemption date. We anticipate this redemption will occur subsequent to the ~~affiliates~~satisfaction of ~~KSL~~a notice period, ~~which~~in ~~are~~accordance ~~our~~with ~~affiliates,~~the ~~for~~terms ~~such~~of ~~liability~~the indenture governing the Senior Notes.

OnWe ~~July 12,~~also ~~2013,~~used ~~Holdings~~a ~~filed~~portion aof ~~registration~~the ~~statement~~net onproceeds ~~Form~~received ~~S-1~~by ~~with~~us ~~the~~from ~~Securities~~this offering and ~~Exchange~~cash ~~Commission~~on ~~(the~~hand ~~“SEC”)~~to ~~for~~make a ~~proposed~~one-time ~~initial~~payment ~~public offering~~ of ~~its common stock (the “Offering”)~~$5.0 ~~Holdings~~million ~~intends~~ to ~~use~~an ~~the~~affiliate ~~net~~of ~~proceeds~~KSL itin ~~receives~~connection ~~from~~with the ~~Offering~~termination ~~to reduce a portion~~ of ~~our~~the ~~outstanding~~Management ~~indebtedness~~Agreement ~~and~~with ~~for~~such ~~other~~affiliate ~~general~~of ~~corporate~~KSL ~~purposes.~~pursuant ~~The registration statement relating~~ to ~~the~~which ~~Offering~~we ~~has~~were ~~been~~provided ~~filed~~financial ~~with~~and ~~the~~management ~~SEC~~consulting ~~but~~services. ~~has~~See ~~not~~Note ~~yet become effective~~15.

On July 24, 2013, we entered into a second amendment to the credit agreement governing the Secured Credit Facilities to reduce the interest rate on the term loan facility, increase the principal borrowed under the term loan facility, extend the maturity date of the term loan facility, eliminate the quarterly principal payment requirement under the term loan facility, increase the amount of incremental facilities and modify certain financial covenants and non-financial terms and conditions associated with the credit agreement governing the Secured Credit Facilities. See Note 9. 29

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Shares of Common Stock Issued to Employees

As described in Note 2, equity-based unit awards have been issued under the MPI. In connection with the consummation of Holdings' initial public offering on September 25, 2013, the MPI participants, including our executives, employees, directors and consultants surrendered all Class A units (including Converted Units) and Class C units held by them and in exchange for an aggregate of 2,251,027 shares of Holdings' common stock previously held by Fillmore, a portion of which will be restricted, subject to remaining time vesting requirements. Also, as described in Note 2, RSUs have been granted to certain executives under the Stock Plan. On March 15, 2014, the required time period following Holding's initial public offering will be satisfied and the liquidity vesting requirement will be met, at which time all then outstanding RSUs will be converted into shares of common stock, a portion of which will be restricted, subject to remaining time vesting requirements.

Amendment No. 3 to the Credit Agreement governing the Secured Credit Facilities

As described in Note 9, on August 30, 2013, we entered into a third amendment to the credit agreement governing the Secured Credit Facilities to conditionally secure the $135.0 million incremental revolving credit facility. The third amendment became effective on September 30, 2013, subsequent to the satisfaction of certain conditions, including the receipt by us, by way of contribution from Holdings, of more than $150.0 million of proceeds from the completion of an initial public offering by Holdings. The $135.0 million revolving credit commitments mature five years from the effective date of the third amendment and borrowings will bear interest at a rate of LIBOR plus a margin of 3.0% per annum. Additionally, the third amendment reduced the existing $50.0 million revolving credit facility to $19.6 million, the amount of standby letters of credit outstanding as of the effective date of the third amendment.

2012 Stock Award Plan

On September 24, 2013, Holdings registered 4,000,000 shares of common stock reserved for future issuance under the Stock Plan. In connection with the closing of Holdings' initial public offering, 20,000 shares of Holdings' restricted common stock, which vest after one year, were issued to certain of our directors under the Stock Plan.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read together with the consolidated condensed financial statements and related notes included in this quarterly report and in conjunction with the audited consolidated financial statements, related notes and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our annual report on Form 10-K for the fiscal year ended December 25, 2012 (“"2012 Annual Report”").

Forward-Looking Statements

All statements (other than statements of historical facts) in this quarterly report on Form 10-Q regarding the prospects of the industry and our prospects, plans, financial position and business strategy may beconstitute ~~considered~~ forward‑looking statements. In addition, forward‑looking statements generally can be identified by the use of forward‑looking terminology such as “may”, “should”, “expect”, “intend”, “will”, “estimate”, “anticipate”, “believe”, “predict”, “potential” or “continue” or the negatives of these terms or variations of them or similar terminology. Although we believe that the expectations reflected in these forward‑looking statements are reasonable, we cannot assure you that these expectations will prove to be correct. Such statements reflect the current views of our management with respect to our operations, results of operations and future financial performance. The following factors are among those that may cause actual results to differ materially from the forward‑looking statements:


•	adverse conditions affecting the United States economy;


•	our ability to attract and retain club members;


•	changes in consumer spending patterns, particularly with respect to demand for products and services;


•	unusual weather patterns, extreme weather events and periodic and quasi‑periodic weather patterns, such as the El Niño/La Niña‑Southern Oscillation;


•	material cash outlays required in connection with refunds or escheatment of membership initiation deposits;


•	impairments to the suitability of our club locations;


•	regional disruptions such as power failures, natural disasters or technical difficulties in any of the major areas in which we operate;


•	seasonality of demand for our services and facilities usage;


•	increases in the level of competition we face;


•	the loss of members of our management team or key employees;


•	increases in the cost of labor;


•	increases in other costs, including costs of goods, rent, water, utilities and taxes;


•	decreasing values of our investments;


•	illiquidity of real estate holdings;


•	timely, costly and unsuccessful development and redevelopment activities at our properties;


•	unsuccessful or burdensome acquisitions or divestitures;


•	restrictions placed on our ability to limit risk due to joint ventures and collaborative arrangements;


•	insufficient insurance coverage and uninsured losses;

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•	accidents or injuries which occur at our properties;


•	adverse judgments or settlements;

• pension plan liabilities;


•	our failure to comply with regulations relating to public facilities or our failure to retain the licenses relating to our properties;


•	future environmental regulation, expenditures and liabilities;


•	changes in or failure to comply with laws and regulations relating to our business and properties;


•	failure to comply with privacy regulations or maintain the integrity of internal customer data;


•	sufficiency and performance of the technology we own or license;


•	write-offs of goodwill;


•	cancellation of indebtedness income resulting from cancellation of certain indebtedness;


•	risks related to tax examinations by the IRS;


•	the ownership of a majority of our equity by affiliates of KSL;


•	our substantial indebtedness, which may adversely affect our financial condition, our ability to operate our business, react to changes in the economy or our industry and pay our debts and which could divert our cash flows from operations for debt payments;


•	our need to generate cash to service our indebtedness;


•	the incurrence by us of substantially more debt, which could further exacerbate the risks associated with our substantial leverage; and

• restrictions in our debt agreements that limit our flexibility in operating our business~~, and~~.

• other factors detailed in Part II Item 1A. Risk Factors of this Form 10-Q.

All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements included in this Form 10-Q. These forward-looking statements speak only as of the date of this Form 10-Q. We do not intend to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, unless the securities laws require us to do so.

Overview

We are a leading owner-operator of private golf, and country clubs, business, sports and alumni clubs in North America. As of ~~June~~September 113, 2013, our portfolio of ~~152~~153 owned or operated clubs, with over ~~147~~148,000 memberships, served more than ~~360~~370,000 individual members. Our operations are organized into two business segments: (1) golf and country clubs and (2) business, sports and alumni clubs. We operate our properties through sole ownership, partial ownership (including joint venture interests), operating leases and management agreements. As of ~~June~~September 113, 2013, we owned or operated ~~103~~104 golf and country clubs and 49 business, sports and alumni clubs in 2425 states, the District of Columbia and two foreign countries.

Factors Affecting our Business

Enrollment and Retention of Members

Our success depends on our ability to attract and retain members at our clubs and maintain or increase usage of our facilities. Historically, we have experienced varying levels of membership enrollment and attrition rates and, in certain areas, decreased levels of usage of our facilities. We devote substantial efforts to maintaining member and guest satisfaction, although many of the factors affecting club membership and facility usage are beyond our control. Periods where attrition rates exceed enrollment rates or where facility usage is below historical levels could have a material adverse effect on our business, operating results and financial position.

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~~many~~We ofoffer ~~the~~various ~~factors~~programs ~~affecting~~at ~~club~~our ~~membership~~clubs ~~and~~designed ~~facility~~to minimize future attrition rates by increasing member satisfaction and usage. These programs are designed to engage current and newly enrolled members in activities and groups that go beyond ~~our~~their ~~control~~home club. ~~Periods~~Additionally, ~~where~~these ~~attrition~~programs ~~rates~~may ~~exceed~~grant ~~enrollment~~our ~~rates~~members ordiscounts ~~where~~on ~~facility~~meals and other items in order to increase their familiarity with and usage of their club’s amenities. One such offering is ~~below~~our ~~historical~~O.N.E. ~~levels~~program, ~~could~~an ~~have~~upgrade offering that combines what we refer to as ‘‘comprehensive club, community and world benefits’’. With this offering, members receive 50% off a ~~material~~la ~~adverse~~carte ~~effect~~dining onat ~~our~~their home club; preferential offerings to clubs in their community (including those owned by us), as well as at local spas, restaurants and other venues; and complimentary privileges to more than 200 golf and country, business, ~~operating~~sporting ~~results~~and athletic clubs when traveling outside of their community with additional offerings and ~~financial~~discounts ~~position~~to more than 700 renowned hotels, resorts, restaurants and entertainment venues.

We offer various programs at our clubs designed to minimize future attrition rates by increasing member satisfaction and usage. These programs take a proactive approach to getting current and newly enrolled members involved in activities and groups that go beyond their physical club. Additionally, these programs grant discounts on meals and other items in order to increase their familiarity with and usage of their club’s amenities. One such offering is our O.N.E. program, an upgrade offering that combines what we refer to as ‘‘comprehensive club, community and world benefits’’. With this offering, members receive 50% off a la carte dining at their home club; preferential offerings to clubs in their community (including those owned by us), as well as at local spas, restaurants and other venues; and complimentary privileges to more than 200 golf and country, business, sporting and athletic clubs when traveling outside of their community with additional offerings and discounts to more than 700 renowned hotels, resorts, restaurants and entertainment venues.

The following table presents our membership counts for continuing operations at the end of the periods indicated:

Total memberships at end of period:	Jun. 11, 2013	Dec. 25, 2012	# Change		% Change		Jun. 12, 2012	Dec. 27, 2011	# Change		% Change
	Sept. 3, 2013	Dec. 25, 2012	# Change		% Change		Sept. 4, 2012	Dec. 27, 2011	# Change		% Change
Golf and Country Clubs
Same Store Clubs (1)	8283,~~750~~320	81,112	12,~~638~~208		2.07	%	7981,~~200~~437	79,540	~~(340~~1,897	)	(02.4	)%
New or Acquired Clubs	23,~~615~~308	1,607	1,~~008~~701		62105.78	%	2,~~875~~995	1,079	1,~~796~~916		~~166~~177.56	%
Total Golf and Country Clubs	8586,~~365~~628	82,719	23,~~646~~909		34.27	%	8284,~~075~~432	80,619	13,~~456~~813		14.87	%
Business, Sports and Alumni Clubs
Same Store Clubs (1)	6261,~~022~~882	62,046	(24164	)	—(0.3	)%	62,~~439~~511	62,953	(~~514~~442	)	(0.87	)%
New or Acquired Clubs	—	—	—		—	%	—	—	—		—	%
Total Business, Sports and Alumni Clubs (2)	6261,~~022~~882	62,046	(24164	)	—(0.3	)%	62,~~439~~511	62,953	(~~514~~442	)	(0.87	)%
Total
Same Store Clubs (1)	~~144~~145,~~772~~202	143,158	12,~~614~~044		1.14	%	~~141~~143,~~639~~948	142,493	~~(854~~1,455	)	(01.60	)%
New or Acquired Clubs	23,~~615~~308	1,607	1,~~008~~701		62105.78	%	2,~~875~~995	1,079	1,~~796~~916		~~166~~177.56	%
Total memberships at end of period	~~147~~148,~~387~~510	144,765	23,~~622~~745		12.86	%	~~144~~146,~~514~~943	143,572	~~942~~3,371		02.73	%

_______________________

(1) See “Basis of Presentation—" for a definition of Same Store ~~Analysis~~analysis.”

(2) Does not include certain international club memberships.

Seasonality of Demand and Fluctuations in Quarterly Results

Our quarterly results fluctuate as a result of a number of factors. Usage of our country club and golf facilities decline significantly during the first and fourth quarters, when colder temperatures and shorter days reduce the demand for golf and golf-related activities. Our business clubs typically generate a greater share of their yearly revenues in the fourth quarter, which includes the holiday and year-end party season.

Our results can also be affected by non-seasonal and severe weather patterns. Periods of extremely hot, dry, cold or rainy weather in a given region can be expected to impact our golf-related revenue for that region. Similarly, extended periods of low rainfall can affect the cost and availability of water needed to irrigate our golf courses and can adversely affect results for facilities in the impacted region. Keeping turf grass conditions at a satisfactory level to attract play on our golf courses requires significant amounts of water. Our ability to irrigate a course could be adversely impacted by a drought or other water shortage. A severe drought affecting a large number of properties could have a material adverse affect on our business and results of operations.

In addition, the first, second and third fiscal quarters each consist of twelve weeks, whereas, the fourth quarter consists of sixteen or seventeen weeks of operations. Fiscal year 2013 will consist of a seventeen week fourth quarter and a 53-week fiscal year ending on December 31, 2013. As a result of these factors, we usually generate a disproportionate share of our revenues and cash flows in the second, third and fourth quarters of each year and have lower revenues and profits in the first quarter. The timing of purchases, sales, leasing of facilities or divestitures, has also caused and may cause our results of operations to vary significantly in otherwise comparable periods. To clarify variations caused by newly acquired or divested operations, we employ a same store analysis for year-over-year comparability purposes. (See “Basis of Presentation—Same Store Analysis.”)

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~~operations,~~Reinvention weCapital ~~employ~~Investments ~~a same store analysis for year-over-year comparability purposes. (See “Basis of Presentation—Same Store Analysis.”)~~

We continue to identify and prioritize capital projects and believe the reinvention of our clubs through strategic capital investments help drive membership sales, facility usage and member retention. A significant portion of our invested capital is used to add reinvention elements to "major reinvention" clubs, defined as clubs receiving $750,000 or more gross capital spend on a project basis, as we believe these club enhancements represent opportunities to increase revenues and generate a positive return on our investment, although we cannot guarantee such returns. Elements of reinvention capital expenditures include “Touchdown Rooms”, which are small private meeting rooms allowing members to hold impromptu private meetings while leveraging the other services of their club. “Anytime Lounges” provide a contemporary and casual atmosphere to work and network, while “Media Rooms” provide state of the art facilities to enjoy various forms of entertainment. Additional reinvention elements include refitted fitness centers, enhanced pool area amenities such as shade cabanas, pool slides and splash pads, redesigned golf practice areas for use by beginners to avid golfers, and newly created or updated indoor and outdoor dining and social gathering areas designed to take advantage of the expansive views and natural beauty of our clubs.

Club Acquisitions and Dispositions

We continually explore opportunities to expand our business through select acquisitions of attractive properties. We also evaluate joint ventures and management opportunities that allow us to expand our operations and increase our recurring revenue base without substantial capital outlay. We believe that the fragmented nature of the private club industry presents significant opportunities for us to expand our portfolio by leveraging our operational expertise and by taking advantage of market conditions. Additionally, during the normal course of business, we have closed certain business, sports and alumni clubs that were underperforming and terminated certain golf and country club management agreements.

The table below summarizes the number and type of club acquisitions and dispositions during the periods indicated:

	Golf & Country Clubs							Business, Sports & Alumni Clubs
Acquisitions / (Dispositions)	OwnedClubs	LeasedClubs	Managed		JointVenture	Total		OwnedClubs		LeasedClubs		Managed	JointVenture	Total
December 27, 2011	80	12	3		6	101		2		44		4	1	51
First Quarter 2012 (1)	—	—	—		—	—		—		—		—	—	—
Second Quarter 2012 (2)	—	1	1		—	2		—		—		—	—	—
Third Quarter 2012 (3)	—	—	—		—	—		(1	)	(1	)	—	—	(2	)
Fourth Quarter 2012 (4)	—	—	(1	)	—	(1	)	—		—		—	—	—
December 25, 2012	80	13	3		6	102		1		43		4	1	49
First Quarter 2013	—	—	—		—	—		—		—		—	—	—
Second Quarter 2013 (5)	1	—	—		—	1		—		—		—	—	—
June 11, 2013	81	13	3		6	103		1		43		4	1	49
Third Quarter 2013 (6)	—	1	—		—	1		—		—		—	—	—
September 3, 2013	81	14	3		6	104		1		43		4	1	49

_______________________

(1) In January 2012, we entered into a new agreement to manage and operate LPGA International, a semi-private golf and country club located in Daytona Beach, Florida, and ~~the~~our management agreement with ~~the owner of Eagle Ridge Golf Club and the~~ Preserve Golf Club ~~was~~ended ~~amended to remove the Preserve Golf Club~~ as a result of the owner'’s sale of the underlying property.


(2)	In March 2012, we entered into an agreement to manage and operate Hollytree Country Club, a private country club in Tyler, Texas, and in April 2012, we acquired Hartefeld National Golf Club, a private country club in Avondale, Pennsylvania.

(3) In August 2012, we ceased operating the Westlake Club in Houston, Texas, and we sold LeGlendale Racquet Club in September 2012, an owned sports club in Milwaukee, Wisconsin.

(4) ~~The~~ ~~management~~In ~~agreement~~December ~~with~~2012, the ~~owner~~management ofagreement with Eagle Ridge Golf Club ~~and the Preserve Golf Club~~ was terminated ~~with respect to Eagle Ridge in December 2012~~ as a result of the owner’s sale of the underlying property.

(5) In May 2013, we acquired Oak Tree Country Club, a private ~~golf~~country club located in Edmond, Oklahoma.

~~Critical Accounting Policies and Estimates~~34

The process of preparing financial statements in conformity with GAAP requires us to use estimates and assumptions that affect the amounts reported in the consolidated condensed financial statements and accompanying notes included elsewhere in this report. We base these estimates and assumptions upon the best information available to us at the time the estimates or assumptions are made. Accordingly, our actual results could differ materially from our estimates. The most significant estimates made by management include the expected life of an active membership used to amortize initiation fees and deposits, our weighted average borrowing rate used to accrete membership initiation deposit liabilities, assumptions and judgments used in

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~~estimating~~(6) ~~unrecognized~~In ~~tax~~June ~~benefits~~2013, ~~relating~~we toacquired ~~uncertain~~Cherry ~~tax~~Valley ~~positions~~Country Club, ~~and~~a ~~inputs~~private ~~for~~country ~~impairment~~club ~~testing~~located ofin ~~goodwill~~Skillman, ~~intangible~~New ~~assets and long-lived assets~~Jersey.

Critical Accounting Policies and Estimates

Income Taxes

We recognize the tax benefit from an uncertain tax position only if it is “more likely than not” that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. If the position drops below the “more likely than not” standard, the benefit can no longer be recognized. Assumptions, judgment and the use of estimates are required in determining if the “more likely than not” standard has been met when developing the provision for income taxes. We recognize accrued interest and penalties related to uncertain tax positions as a component of income tax expense.

As of ~~June~~September 113, 2013 and December 25, 2012, ~~the~~we ~~Company~~have ~~has~~ recorded $5455.5 million and $52.7 million, respectively, of unrecognized tax benefits related to uncertain tax positions, which are included in other liabilities in the consolidated condensed balance sheets.

For additional information about our critical accounting policies and estimates, see the disclosure included in our 2012 Annual Report.

Basis of Presentation

Total revenues recorded in our two principal business segments (1) golf and country clubs and (2) business, sports and alumni clubs, are comprised mainly of revenues from membership dues (including upgrade dues), food and beverage operations and golf operations. Operating expenses recorded in our two principal business segments primarily consist of labor expenses, food and beverage costs, golf course maintenance costs and general and administrative costs.

EBITDA, Segment EBITDA and Adjusted EBITDA

EBITDA is calculated as net income plus interest, taxes, depreciation and amortization less interest and investment income. ~~Adjusted~~We ~~EBITDA~~evaluate issegment ~~based~~performance onand ~~the~~allocate ~~definition~~resources ofbased ~~Consolidated~~on Segment EBITDA. ~~defined~~We inconsider ~~the~~Segment ~~credit~~EBITDA ~~agreement~~an ~~governing~~important ~~the~~indicator ~~Secured~~of ~~Credit~~the ~~Facilities~~operational strength and ~~may~~performance ~~not~~of beour ~~comparable~~business. toWe ~~other~~include ~~companies.~~Segment ~~Adjusted~~ EBITDA isbecause ~~included~~it ~~because~~is ~~the~~a ~~indenture~~key ~~governing~~financial ~~our~~measure ~~10%~~used ~~senior~~by ~~notes~~our ~~due~~management ~~2018~~to (~~"Senior Notes"~~1) internally ~~and~~measure ~~the~~our ~~credit~~operating ~~agreement~~performance ~~governing the Secured Credit Facilities contains certain financial~~ and ~~non-financial~~(2) assess ~~covenants~~our ~~which~~ability ~~require ClubCorp and its restricted subsidiaries~~ to ~~maintain~~service ~~specified~~our ~~financial~~debt, ~~ratios~~incur onadditional adebt ~~rolling four quarter basis~~ and ~~utilize~~meet ~~this~~our ~~measure~~capital ofexpenditure ~~Adjusted EBITDA~~requirements. ~~Adjusted EBITDA is also considered when evaluating executive compensation.~~

Adjusted EBITDA is not a measure determined in accordance with GAAP and should not be considered as an alternative to, or more meaningful than, net income (as determined in accordance with GAAP) as a measure of our operating results or net cash provided by operating activities (as determined in accordance with GAAP) as a measure of our liquidity. Our measurements of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. 35

The following table provides a reconciliation of net income (loss) to EBITDA and Adjusted EBITDA for the periods indicated:

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	Twelve Weeks Ended						Twenty-Four Weeks Ended						Four Quarters Ended
	June 11, 2013			June 12, 2012			June 11, 2013			June 12, 2012			June 11, 2013
	(dollars in thousands)
Net income (loss)	$	7,245		$	(1,670	)	$	(3,076	)	$	(11,252	)	$	(18,117	)
Interest expense	19,322			19,778			38,657			39,679			87,284
Income tax (benefit)	(2,718		)	4,353			(2,427		)	1,650			(11,214		)
Interest and investment income	(69		)	(34		)	(144		)	(57		)	(1,299		)
Depreciation and amortization	16,312			17,731			32,467			36,334			74,419
EBITDA	40,092			40,158			65,477			66,354			131,073
Impairments and disposition of assets (a)	4,289			2,258			5,513			1,694			30,422
Non-cash adjustments (b)	890			86			1,773			160			3,850
Other adjustments (c)	198			1,153			1,879			1,083			3,634
Acquisition adjustment (d)	389			591			979			1,182			2,358
Adjusted EBITDA	$	45,858		$	44,246		$	75,621		$	70,473		$	171,337

We define Segment EBITDA as net income before discontinued operations, interest and investment income, interest expense, income taxes, gain or loss on disposal, acquisition and impairment of assets, gain on extinguishment of debt and depreciation and amortization. Segment EBITDA differs from Adjusted EBITDA, although, Segment EBITDA may be adjusted for items similar to those defined in the indenture governing the Senior Notes and the credit agreement governing the Secured Credit Facilities. Segment EBITDA has been calculated using this definition for all periods presented. (See Note 12 of the consolidated condensed financial statements.)

Segment EBITDA should not be construed as an alternative to, or a better indicator of, operating income or loss, is not based on GAAP and is not necessarily a measure of our cash flows or ability to fund our cash needs. Our measurements of Segment EBITDA may not be comparable to similarly titled measures reported by other companies.

Adjusted EBITDA is based on the definition of Consolidated EBITDA as defined in the credit agreement governing the Secured Credit Facilities and may not be comparable to other companies. Adjusted EBITDA is included because the indenture governing our Senior Notes and the credit agreement governing the Secured Credit Facilities contain certain financial and non-financial covenants which require ClubCorp and its restricted subsidiaries to maintain specified financial ratios on a rolling four quarter basis and utilize this measure of Adjusted EBITDA.

We believe that the presentation of Adjusted EBITDA is appropriate to provide additional information to investors about the calculation, and compliance with certain financial covenants in the indenture governing our Senior Notes and under the credit agreement governing the Secured Credit Facilities, as Adjusted EBITDA is a material component of these covenants. In addition, investors, lenders, financial analysts and rating agencies have historically used EBITDA related measures in our industry, along with other measures, to evaluate a company’s ability to meet its debt service requirement, to estimate the value of a company and to make informed investment decisions. Adjusted EBITDA is also considered when evaluating our executive compensation.

The following table provides a reconciliation of net loss to EBITDA, Segment EBITDA and Adjusted EBITDA for the periods indicated:



	Twelve Weeks Ended						Thirty-Six Weeks Ended						Fiscal Year Ended			Four Quarters Ended
	September 3, 2013			September 4, 2012			September 3, 2013			September 4, 2012			December 25, 2012			September 3, 2013
	(dollars in thousands)
Net loss	$	(4,874	)	$	(12,237	)	$	(7,950	)	$	(23,489	)	$	(26,293	)	$	(10,754	)
Interest expense	19,254			19,831			57,911			59,510			88,263			86,664
Income tax expense (benefit)	3,887			(1,601		)	1,460			49			(7,137		)	(5,726		)
Interest and investment income	(80		)	(29		)	(224		)	(86		)	(1,212		)	(1,350		)
Depreciation and amortization	17,030			17,592			49,497			53,926			78,286			73,857
EBITDA	$	35,217		$	23,556		$	100,694		$	89,910		$	131,907		$	142,691
Impairments and disposition of assets (1)	2,773			13,107			8,286			14,801			26,604			20,089
Non-cash adjustments (2)	1,139			925			2,889			2,794			4,072			4,167
Other adjustments (3)	1,706			684			3,266			1,962			2,933			4,237
Segment EBITDA	$	40,835		$	38,272		$	115,135		$	109,467		$	165,516		$	171,184
Acquisition adjustment (4)	219			591			1,198			1,773			2,560			1,985
Non-cash and other adjustments (5)	514			(825		)	857			(2,730		)	(1,887		)	1,700
Adjusted EBITDA	$	41,568		$	38,038		$	117,190		$	108,510		$	166,189		$	174,869

______________________

(a) Includes non-cash impairment charges related to: liquor licenses, property and equipment, equity method investments, mineral rights, loss on disposals of assets and net loss from discontinued clubs.36

(b) Includes non-cash items related to purchase accounting associated with the acquisition of ClubCorp, Inc. in 2006, by affiliates of KSL, amortization of proceeds received from certain mineral lease and surface right agreements and expense recognized for our long-term incentive plan.

(c) Other adjustments include management fees and expenses paid to an affiliate, earnings of equity method investments less cash distributions from said investments, income or loss attributable to non-controlling equity interests of continuing operations, non-recurring charges incurred in connection with the ClubCorp Formation, costs and other non-recurring charges permitted to be excluded by the credit agreement governing the Secured Credit Facilities.

(d) Represents deferred revenue related to initiation deposits and fees that would have been recognized in the applicable period but for the application of purchase accounting in connection with the purchase of ClubCorp, Inc. in 2006.

Segment EBITDA

We evaluate segment performance and allocate resources based on Segment EBITDA. We consider Segment EBITDA an important indicator of the operational strength and performance of our business. We include Segment EBITDA because it is a key financial measure used by our management to (1) internally measure our operating performance and (2) assess our ability to service our debt, incur additional debt and meet our capital expenditure requirements.

We define Segment EBITDA as net income before discontinued operations, interest and investment income, interest expense, income taxes, gain or loss on disposal, acquisition and impairment of assets, gain on extinguishment of debt and depreciation and amortization. Segment EBITDA differs from Adjusted EBITDA, although, Segment EBITDA may be adjusted for items similar to those defined in the credit agreement governing the Secured Credit Facilities. Segment EBITDA has been calculated using this definition for all periods presented.

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	Twelve Weeks Ended						Twenty-Four Weeks Ended
	June 11, 2013			June 12, 2012			June 11, 2013			June 12, 2012
	(dollars in thousands)
Total Segment EBITDA	$	46,116		$	44,017		$	74,300		$	71,195
Interest and investment income	69			34			144			57
Interest expense	(19,322		)	(19,778		)	(38,657		)	(39,679		)
Loss on disposals	(4,293		)	(2,314		)	(5,512		)	(1,690		)
Depreciation and amortization	(16,312		)	(17,731		)	(32,467		)	(36,334		)
Foreign currency transaction (loss) gain	(19		)	105			(94		)	(30		)
Severance payments	(35		)	(56		)	(56		)	(184		)
Management fees and expenses paid to an affiliate of KSL	(282		)	(278		)	(534		)	(541		)
Acquisition costs	(150		)	(337		)	(202		)	(349		)
Amortization of step-up in certain equity method investments	(463		)	(472		)	(926		)	(945		)
ClubCorp Formation costs	—			24			—			(50		)
Environmental compliance costs	(150		)	—			(150		)	—
Long term incentive plan	(380		)	(383		)	(727		)	(766		)
Other	(256		)	(204		)	(621		)	(282		)
Income (loss) from continuing operations before income taxes	$	4,523		$	2,627		$	(5,502	)	$	(9,598	)


(1)	Includes non-cash impairment charges related to: liquor licenses, property and equipment, equity method investments, mineral rights, loss on disposals of assets and net loss from discontinued clubs.


(2)	Includes non-cash items related to purchase accounting associated with the acquisition of ClubCorp, Inc. in 2006, by affiliates of KSL and expense recognized for our long-term incentive plan.


(3)	Other adjustments include management fees and expenses paid to an affiliate, acquisition costs, loan origination fees and other charges incurred in connection with the ClubCorp Formation.


(4)	Represents deferred revenue related to initiation deposits and fees that would have been recognized in the applicable period but for the application of purchase accounting in connection with the purchase of ClubCorp, Inc. in 2006.


(5)	Represents adjustments permitted by the credit agreement governing the Secured Credit Facilities including cash distributions from equity method investments less earnings of said investments, income or loss attributable to non-controlling equity interests of continuing operations, exclusion of non-cash income related to surface rights agreements and franchise tax expense.

For the twelve and thirty-six weeks ended September 3, 2013, Adjusted EBITDA increased $3.5 million and $8.7 million, or 9.3% and 8.0%, respectively, over the twelve and thirty-six weeks ended September 4, 2012, due primarily to the EBITDA growth in our golf and country club segment and increases in other adjustments permitted under the credit agreement governing the Secured Credit Facilities.

Same Store Analysis

We employ “same store” analysis techniques for a variety of management purposes. By our definition, clubs are evaluated at the beginning of each year and considered same store once they have been fully operational for one fiscal year. Newly acquired or opened clubs and divested clubs are not classified as same store; however, clubs held for sale are considered same store until they are divested. Once a club has been divested, it is removed from the same store classification for all periods presented and included in discontinued operations. For same store year-over-year comparisons, clubs must be open the entire year for both years in the comparison to be considered same store, therefore, same store facility counts and operating results may vary depending on the years of comparison. We believe this approach provides for a more effective analysis tool because it allows us to assess the results of our core operating strategies by tracking the performance of our established same store clubs without the ~~in-comparability caused by the~~ inclusion of newly acquired or opened clubs.

Our fiscal year consists of a 52/53 week period ending on the last Tuesday of December. Our first, second and third quarters each consist of twelve weeks while our fourth quarter consists of sixteen or seventeen weeks. Fiscal year 2013 will consist of a seventeen week fourth quarter and a 53-week fiscal year ending on December 31, 2013.

3437

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Results of Operations

The following table presents our consolidated condensed statements of operations as a percent of total revenues for the periods indicated:



	Twelve Weeks Ended										Thirty-Six Weeks Ended
	Sept. 3, 2013			% of Revenue		Sept. 4, 2012			% of Revenue		Sept. 3, 2013			% of Revenue		Sept. 4, 2012			% of Revenue
	(dollars in thousands)
REVENUES:
Club operations	$	143,487		73.6	%	$	131,557		73.1	%	$	394,696		72.4	%	$	372,292		72.2	%
Food and beverage	50,809			26.1	%	47,778			26.5	%	148,615			27.2	%	141,303			27.4	%
Other revenues	539			0.3	%	662			0.4	%	2,203			0.4	%	2,164			0.4	%
Total revenues	194,835					179,997					545,514					515,759
DIRECT AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Club operating costs exclusive of depreciation	127,732			65.6	%	117,333			65.2	%	354,570			65.0	%	335,337			65.0	%
Cost of food and beverage sales exclusive of depreciation	17,185			8.8	%	15,780			8.8	%	49,179			9.0	%	45,952			8.9	%
Depreciation and amortization	17,030			8.7	%	17,592			9.8	%	49,497			9.1	%	53,926			10.5	%
Provision for doubtful accounts	1,102			0.6	%	983			0.5	%	2,004			0.4	%	2,216			0.4	%
Loss on disposals of assets	2,745			1.4	%	2,536			1.4	%	6,376			1.2	%	3,456			0.7	%
Impairment of assets	24			—	%	—			—	%	1,905			0.3	%	770			0.1	%
Equity in earnings from unconsolidated ventures	(424		)	(0.2	)%	(349		)	(0.2	)%	(966		)	(0.2	)%	(959		)	(0.2	)%
Selling, general and administrative	11,250			5.8	%	9,679			5.4	%	31,747			5.8	%	30,325			5.9	%
OPERATING INCOME	18,191			9.3	%	16,443			9.1	%	51,202			9.4	%	44,736			8.7	%
Interest and investment income	80			—	%	29			—	%	224			—	%	86			—	%
Interest expense	(19,254		)	(9.9	)%	(19,831		)	(11.0	)%	(57,911		)	(10.6	)%	(59,510		)	(11.5	)%
Other income	—			—	%	92			0.1	%	—			—	%	1,823			0.4	%
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(983		)	(0.5	)%	(3,267		)	(1.8	)%	(6,485		)	(1.2	)%	(12,865		)	(2.5	)%
INCOME TAX (EXPENSE) BENEFIT	(3,887		)	(2.0	)%	1,601			0.9	%	(1,460		)	(0.3	)%	(49		)	—	%
LOSS FROM CONTINUING OPERATIONS	(4,870		)	(2.5	)%	(1,666		)	(0.9	)%	(7,945		)	(1.5	)%	(12,914		)	(2.5	)%
Loss from discontinued clubs, net of income tax (expense) benefit of $(2) and $1,232 for the twelve weeks ended September 3, 2013 and September 4, 2012, respectively, and $2 and $1,260 for the thirty-six weeks ended September 3, 2013 and September 4, 2012, respectively	(4		)	—	%	(10,571		)	(5.9	)%	(5		)	—	%	(10,575		)	(2.1	)%
NET LOSS	(4,874		)	(2.5	)%	(12,237		)	(6.8	)%	(7,950		)	(1.5	)%	(23,489		)	(4.6	)%
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	(129		)	(0.1	)%	(15		)	—	%	(131		)	—	%	(169		)	—	%
NET LOSS ATTRIBUTABLE TO CLUBCORP	$	(5,003	)	(2.6	)%	$	(12,252	)	(6.8	)%	$	(8,081	)	(1.5	)%	$	(23,658	)	(4.6	)%

	Twelve Weeks Ended										Twenty-Four Weeks Ended
	June 11, 2013			% of Revenue		June 12, 2012			% of Revenue		June 11, 2013			% of Revenue		June 12, 2012			% of Revenue
	(dollars in thousands)
REVENUES:
Club operations	$	136,871		70.0	%	$	129,858		69.8	%	$	251,209		71.6	%	$	240,735		71.7	%
Food and beverage	57,890			29.6	%	55,404			29.8	%	97,806			27.9	%	93,525			27.9	%
Other revenues	858			0.4	%	794			0.4	%	1,664			0.5	%	1,502			0.4	%
Total revenues	195,619					186,056					350,679					335,762
DIRECT AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Club operating costs exclusive of depreciation	122,656			62.7	%	116,981			62.9	%	226,838			64.7	%	218,004			64.9	%
Cost of food and beverage sales exclusive of depreciation	18,126			9.3	%	17,229			9.3	%	31,994			9.1	%	30,172			9.0	%
Depreciation and amortization	16,312			8.3	%	17,731			9.5	%	32,467			9.3	%	36,334			10.8	%
Provision for doubtful accounts	192			0.1	%	491			0.3	%	902			0.3	%	1,233			0.4	%
Loss on disposals of assets	2,412			1.2	%	1,544			0.8	%	3,631			1.0	%	920			0.3	%
Impairment of assets	1,881			1.0	%	770			0.4	%	1,881			0.5	%	770			0.2	%
Equity in earnings from unconsolidated ventures	(325		)	(0.2	)%	(291		)	(0.2	)%	(542		)	(0.2	)%	(610		)	(0.2	)%
Selling, general and administrative	10,589			5.4	%	10,096			5.4	%	20,497			5.8	%	20,646			6.1	%
OPERATING INCOME	23,776			12.2	%	21,505			11.6	%	33,011			9.4	%	28,293			8.4	%
Interest and investment income	69			—	%	34			—	%	144			—	%	57			—	%
Interest expense	(19,322		)	(9.9	)%	(19,778		)	(10.6	)%	(38,657		)	(11.0	)%	(39,679		)	(11.8	)%
Other income	—			—	%	866			0.5	%	—			—	%	1,731			0.5	%
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	4,523			2.3	%	2,627			1.4	%	(5,502		)	(1.6	)%	(9,598		)	(2.9	)%
INCOME TAX BENEFIT (EXPENSE)	2,718			1.4	%	(4,353		)	(2.3	)%	2,427			0.7	%	(1,650		)	(0.5	)%
INCOME (LOSS) FROM CONTINUING OPERATIONS	7,241			3.7	%	(1,726		)	(0.9	)%	(3,075		)	(0.9	)%	(11,248		)	(3.3	)%
Income (loss) from discontinued clubs, net of income tax benefit (expense) of $4 and $(4) for the twelve weeks ended June 11, 2013 and June 12, 2012, respectively, and $4 and $28 for the twenty-four weeks ended June 11, 2013 and June 12, 2012, respectively	4			—	%	56			—	%	(1		)	—	%	(4		)	—	%
NET INCOME (LOSS)	7,245			3.7	%	(1,670		)	(0.9	)%	(3,076		)	(0.9	)%	(11,252		)	(3.4	)%
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	(43		)	—	%	(167		)	(0.1	)%	(2		)	—	%	(154		)	—	%
NET INCOME (LOSS) ATTRIBUTABLE TO CLUBCORP	$	7,202		3.7	%	$	(1,837	)	(1.0	)%	$	(3,078	)	(0.9	)%	$	(11,406	)	(3.4	)%

Comparison of the twelve weeks ended September 3, 2013 and September 4, 2012

35The following table presents key financial information derived from our consolidated condensed statements of operations for the twelve weeks ended September 3, 2013 and September 4, 2012:

Table of Contents

Comparison of the twelve weeks ended June 11, 2013 and June 12, 2012



	Twelve Weeks Ended
	September 3, 2013			September 4, 2012			Change			% Change
	(dollars in thousands)
Total revenues	$	194,835		$	179,997		$	14,838		8.2	%
Club operating costs and expenses exclusive of depreciation (1)	146,019			134,096			11,923			8.9	%
Depreciation and amortization	17,030			17,592			(562		)	(3.2	)%
Loss on disposals of assets	2,745			2,536			209			8.2	%
Impairment of assets	24			—			24			—	%
Equity in earnings from unconsolidated ventures	(424		)	(349		)	(75		)	(21.5	)%
Selling, general and administrative	11,250			9,679			1,571			16.2	%
OPERATING INCOME	18,191			16,443			1,748			10.6	%
Interest and investment income	80			29			51			175.9	%
Interest expense	(19,254		)	(19,831		)	(577		)	(2.9	)%
Other income	—			92			(92		)	(100.0	)%
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(983		)	(3,267		)	2,284			69.9	%
INCOME TAX (EXPENSE) BENEFIT	(3,887		)	1,601			(5,488		)	(342.8	)%
LOSS FROM CONTINUING OPERATIONS	$	(4,870	)	$	(1,666	)	$	(3,204	)	(192.3	)%

The following table presents key financial information derived from our consolidated condensed statements of operations for the twelve weeks ended June 11, 2013 and June 12, 2012:

	Twelve Weeks Ended
	June 11, 2013			June 12, 2012			Change			%Change
	(dollars in thousands)
Total revenues	$	195,619		$	186,056		$	9,563		5.1	%
Club operating costs and expenses exclusive of depreciation (1)	140,974			134,701			6,273			4.7	%
Depreciation and amortization	16,312			17,731			(1,419		)	(8.0	)%
Loss on disposals of assets	2,412			1,544			868			56.2	%
Impairment of assets	1,881			770			1,111			144.3	%
Equity in earnings from unconsolidated ventures	(325		)	(291		)	(34		)	11.7	%
Selling, general and administrative	10,589			10,096			493			4.9	%
OPERATING INCOME	23,776			21,505			2,271			10.6	%
Interest and investment income	69			34			35			102.9	%
Interest expense	(19,322		)	(19,778		)	456			2.3	%
Other income	—			866			(866		)	(100.0	)%
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	4,523			2,627			1,896			72.2	%
INCOME TAX BENEFIT (EXPENSE)	2,718			(4,353		)	7,071			162.4	%
INCOME (LOSS) FROM CONTINUING OPERATIONS	$	7,241		$	(1,726	)	$	8,967		519.5	%

__________________________

(1) Comprised of club operating costs, cost of food and beverage sales and provision for doubtful accounts.

Total revenues of $~~195~~194.68 million for the twelve weeks ended ~~June~~September 113, 2013 increased $914.68 million, or 58.12%, over the twelve weeks ended ~~June~~September 124, 2012, largely due to increased golf and country club ~~revenues~~revenue. Golf and country club ~~revenues~~revenue increased $512.60 million, or 3.8.3%, of which $14.02 million is attributable to golf and country club properties added ~~during~~in ~~the~~2012 ~~past~~and ~~year~~2013. The remaining $47.68 million golf and country club revenue increase is driven by increases in same store ~~membership~~dues, ~~revenues~~golf ~~and~~operations, food and beverage ~~revenues~~and other revenue. In addition, our business, sports and alumni club segment ~~revenues~~revenue increased $0.82 million, or 10.96%, ~~due~~primarily tofrom ~~increases~~an increase in ~~food and beverage and membership~~ dues revenue. ~~Revenues~~Revenue ~~within~~also ~~Other~~ increased $3.2.7 million, ofdue ~~which~~to ~~$2.8 million represents~~ reimbursements for certain operating costs at managed clubs. ~~The~~These ~~recorded~~ reimbursements do not include a markup and have no net impact on operating income, as such costs are included within club operating costs and expenses.

Club operating costs and expenses totaling $~~141~~146.0 million for the twelve weeks ended ~~June~~September 113, 2013 increased $611.39 million, or 48.79%, compared to the ~~$134.7 million during the~~ twelve weeks ended ~~June~~September 124, 2012. The increase is partially due to a $23.95 million ~~increase~~of inclub ~~labor~~operating ~~and~~costs ~~food~~ and ~~beverage~~expenses ~~cost~~related ofto ~~goods~~club ~~sold~~properties ~~associated~~added ~~with~~in ~~higher~~2012 ~~revenues.~~and An2013 ~~increase~~and of $03.65 million ~~was~~of ~~attributable~~increased tolabor ~~club~~and ~~properties~~food ~~added~~and ~~during~~beverage ~~the~~cost ~~past~~of ~~year.~~goods ~~The~~sold ~~remaining~~associated $2with higher revenues.8 ~~million~~The remaining increase is largely related to certain operating costs at managed clubs, which are offset by reimbursements to the Company recorded within revenue, ~~having~~resulting in no net impact on operating income.

Depreciation and amortization decreased $10.46 million, or 83.02% during the twelve weeks ended ~~June~~September 113, 2013 compared to the twelve weeks ended ~~June~~September 124, 2012, due to lower amortization expense from intangible assets that fully amortized at the end of fiscal 2012.

Loss on disposal of assets ~~of $2.4 million~~ for the twelve weeks ended ~~June~~September 113, 2013 ~~was~~and ~~comprised~~September 4, ~~primarily~~2012 of ~~losses on asset retirements during the normal course of business~~$2.7 ~~The~~million ~~loss~~and ~~on disposal of assets of~~ $12.5 million, ~~for the twelve weeks ended June 12~~respectively, ~~2012~~were ~~was~~primarily comprised ~~primarily~~ of losses on asset retirements ~~partially~~during ~~offset~~the bynormal ~~eminent~~course ~~domain proceeds~~ of $0business.3 ~~million.~~

36Selling, general and administrative expenses of $11.3 million for the twelve weeks ended September 3, 2013 increased $1.6 million, or 16.2%, compared to the twelve weeks ended September 4, 2012 primarily due to increased professional fees related to the acquisition of a golf and country club and incremental costs incurred in connection with the second amendment to the credit agreement governing the Secured Credit Facilities.

Table of Contents

~~Impairment~~Interest ofexpense ~~assets~~totaled of$19.3 million and $119.98 million for the twelve weeks ended ~~June~~September 113, 2013 ~~was~~and ~~primarily~~September 4, ~~comprised~~2012, ofrespectively. ~~impairment~~The ~~losses~~$0.6 tomillion ~~property~~reduction ~~and~~is ~~equipment~~largely atdue ~~certain~~to ofamendments ~~our business clubs~~ to ~~adjust~~ the ~~carrying~~credit ~~amount~~agreement ofgoverning ~~certain~~the ~~property~~Secured ~~and~~Credit ~~equipment~~Facilities tothat ~~its~~reduced ~~fair~~the ~~value.~~interest ~~Impairment~~rate ofon ~~assets~~our ofterm ~~$0.8~~loan ~~million~~facility ~~for~~in ~~the~~November ~~twelve weeks ended June 12,~~ 2012 ~~was~~and ~~primarily~~again ~~comprised~~in ofJuly ~~an impairment of an equity method investment~~2013.

~~Selling,~~The ~~general~~effective ~~and~~tax ~~administrative~~rates ~~expenses of $10.6 million~~ for the twelve weeks ended ~~June~~September 113, 2013 ~~increased~~and ~~$0.5 million~~September 4, or2012 were 395.4% and 49.90%, ~~compared~~respectively. The amount of tax expense or benefit recognized in interim financial statements is determined by multiplying our year-to-date pre-tax income or loss by an annual effective tax rate, which is an estimate of the expected relationship between tax expense or benefit for the full year to the pre-tax income or loss for the full year (pre-tax income or loss excluding unusual or infrequently occurring discrete items). For the twelve weeks ended ~~June~~September 123, 2013 and September 4, 2012, the effective tax rate differed from the statutory federal tax rate of 35.0% primarily due to anstate ~~increase~~taxes, changes in ~~professional~~uncertain ~~fees~~tax positions and ~~labor~~certain ~~and~~other ~~payroll~~permanent ~~related~~differences. The ~~expenses~~relative ~~partially~~impact ~~offset~~these byitems ahave ~~reduction~~on inthe ~~rent~~effective ~~expense~~tax ~~for~~rate ~~our~~varies ~~corporate~~based ~~office~~on ~~space.~~the forecasted amount of pre-tax income or loss for the year.

Interest expense totaled $19.3 million and $19.8 million for the twelve weeks ended June 11, 2013 and June 12, 2012, respectively. The $0.5 million reduction is largely due to the November 2012 amendment to the credit agreement governing the Secured Credit Facilities, which reduced the interest rate on our term loan facility.

The effective tax rates for the twelve weeks ended June 11, 2013 and June 12, 2012 were (60.1)% and 162.5%, respectively. The amount of tax expense or benefit recognized in interim financial statements is determined by multiplying our year-to-date pre-tax income or loss by an annual effective tax rate, which is an estimate of the expected relationship between tax expense or benefit for the full year to the pre-tax income or loss for the full year (pre-tax income or loss excluding unusual or infrequently occurring discrete items). For the twelve weeks ended June 11, 2013 and June 12, 2012, the effective tax rate differed from the statutory federal tax rate of 35.0% primarily due to state taxes, changes in uncertain tax positions and certain other permanent differences. The relative impact these items have on the effective tax rate varies based on the forecasted amount of pre-tax income or loss for the year.

Segment Operations

The following table presents key financial information for our Segments and Adjusted EBITDA for the twelve weeks ended September 3, 2013 and September 4, 2012:



	Twelve Weeks Ended
Consolidated Summary	Sept 3, 2013			Sept 4, 2012			Change			% Change
	(dollars in thousands)
Total Revenue	$	194,835		$	179,997		$	14,838		8.2	%

Segment EBITDA:
Golf and Country Club	$	43,091		$	39,738		$	3,353		8.4	%
Business, Sports and Alumni Club	4,717			5,386			(669		)	(12.4	)%
Other EBITDA	(6,973		)	(6,852		)	(121		)	(1.8	)%
Total Segment EBITDA (1)	$	40,835		$	38,272		$	2,563		6.7	%
Acquisition adjustment	219			591			(372		)	(62.9	)%
Non-cash and other adjustments	514			(825		)	1,339			162.3	%
Adjusted EBITDA (1)	$	41,568		$	38,038		$	3,530		9.3	%

_______________________________


(1)	See ‘‘Basis of Presentation’’ for the definition of Segment EBITDA and Adjusted EBITDA and a reconciliation of net loss to Segment EBITDA and Adjusted EBITDA.

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Golf and Country Clubs

The following ~~tables~~table ~~present~~presents key financial information for our golf and country clubs for the twelve weeks ended ~~June~~September 113, 2013 and ~~June~~September 124, 2012:

	Twelve Weeks Ended
Same Store Golf and Country Clubs	June 11, 2013			June 12, 2012			Change			%Change
Golf and Country Club Segment	September 3, 2013			September 4, 2012			Change			%Change
	(dollars in thousands)
Number of facilities at end of period in continuing operations	99			99
Same Store Clubs
Total revenues	$	149,667		$	145,102		$	4,565		3.1	%
Revenue
Segment EBITDA	45,835			43,260			2,575			6.0	%
Dues	$	65,604		$	62,731		$	2,873		4.6	%
Segment EBITDA %	30.6		%	29.8		%	0.8		%
Food and Beverage	33,112			31,187			1,925			6.2	%
Golf Operations	38,231			36,159			2,072			5.7	%
Other	13,557			12,590			967			7.7	%
Revenue	$	150,504		$	142,667		$	7,837		5.5	%
Segment EBITDA	$	42,412		$	39,626		$	2,786		7.0	%
Segment EBITDA Margin	28.2		%	27.8		%	40 bps			1.5	%
Acquisitions
Revenue	$	5,343		$	1,198		$	4,145		346.0	%
Segment EBITDA	$	679		$	112		$	567		506.3	%
Total Golf and Country Clubs
Revenue	$	155,847		$	143,865		$	11,982		8.3	%
Segment EBITDA	$	43,091		$	39,738		$	3,353		8.4	%
Segment EBITDA Margin	27.6		%	27.6		%	3 bps			0.1	%
Same Store Memberships	83,320			82,796			524			0.6	%
Total Memberships	86,628			84,432			2,196			2.6	%
Same Store Average Membership (1)	83,035			82,436			599			0.7	%
Dues per Average Same Store Membership (2)	$	790		$	761		$	29		3.8	%
Revenue per Average Same Store Membership (2)	$	1,813		$	1,731		$	82		4.7	%

	Twelve Weeks Ended
Total Golf and Country Clubs	June 11, 2013			June 12, 2012			Change			%Change
	(dollars in thousands)
Number of facilities at end of period in continuing operations	103			100
Total revenues	$	151,711		$	146,109		$	5,602		3.8	%
Segment EBITDA	46,490			43,456			3,034			7.0	%
Segment EBITDA %	30.6		%	29.7		%	0.9		%

_______________________________

~~Total~~(1) Same ~~revenues for same~~ store ~~golf~~average ~~and~~membership ~~country~~is ~~clubs~~calculated ~~increased~~using ~~$4.6 million, or 3.1%, for~~ the ~~twelve~~same ~~weeks~~store ~~ended June 11, 2013 compared to the twelve weeks ended June 12, 2012, largely due to increases in~~ membership ~~and~~count ~~food~~at ~~and beverage revenues partially offset by lower golf operation revenues. Membership revenues increased $3.5 million or 5.4%, largely due to~~ the ~~increase~~beginning ~~in memberships during the twelve weeks ended June 11, 2013. Food~~ and ~~beverage~~end ~~revenues~~of ~~increased $1.3 million, or 3.7%, due to increases in a la carte and private party revenues. A la carte covers increased 7.2% for~~ the ~~twelve weeks ended June 11, 2013 compared to the same~~ period ~~in the prior year contributing to the increase in a la carte revenue~~indicated. ~~Golf operations revenues decreased $0.3 million, or 0.8%, largely due to a 7.4% decline in member rounds caused by unfavorable weather in the mid Atlantic region.~~

37(2) Same store revenue (dues or segment) divided by same store average membership.

Total revenue for same store golf and country clubs increased $7.8 million, or 5.5%, for the twelve weeks ended September 3, 2013 compared to the twelve weeks ended September 4, 2012, largely due to increases in dues, golf operations, food and beverage and other revenue. Dues revenue increased $2.9 million, or 4.6%, due to an increase in average dues per membership and an increase in memberships. Golf operations revenue increased $2.1 million, or 5.7%, due to increases in golf rounds, average green fees and cart fees and increased retail revenue. Food and beverage revenue increased $1.9 million, or 6.2%, largely due to an increase in a la carte revenue driven by a 9.9% increase in a la carte covers.

Segment EBITDA for same store golf and country clubs increased $2.8 million, or 7.0%, for the twelve weeks ended September 3, 2013 compared to the twelve weeks ended September 4, 2012, largely due to the increase in higher margin dues revenue. As a result, same store Segment EBITDA margin for the twelve weeks ended September 3, 2013 increased 40 basis points over the twelve weeks ended September 4, 2012.

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Segment EBITDA for same store golf and country clubs increased $2.6 million, or 6.0%, for the twelve weeks ended June 11, 2013 compared to the twelve weeks ended June 12, 2012, largely due to the increase in high margin membership dues revenue. As a result, same store Segment EBITDA margin for the twelve weeks ended June 11, 2013 increased 0.8% over the twelve weeks ended June 12, 2012.

Business, Sports and Alumni Clubs

The following table presents key financial information for our business, sports and alumni clubs for the twelve weeks ended ~~June~~September 113, 2013 and ~~June~~September 124, 2012:

	Twelve Weeks Ended
Same Store & Total Business, Sports and Alumni Clubs	June 11, 2013			June 12, 2012			Change			%Change
Business, Sports and Alumni Club Segment	September 3, 2013			September 4, 2012			Change			%Change
	(dollars in thousands)
Number of facilities at end of period in continuing operations	49			49
Same Store Clubs
Total revenues	$	41,648		$	40,866		$	782		1.9	%
Revenue
Segment EBITDA	8,418			8,423			(5		)	(0.1	)%
Dues	$	17,580		$	17,222		$	358		2.1	%
Segment EBITDA %	20.2		%	20.6		%	(0.4		)%
Food and Beverage	16,354			16,331			23			0.1	%
Other	2,694			2,867			(173		)	(6.0	)%
Revenue	$	36,628		$	36,420		$	208		0.6	%
Segment EBITDA	$	4,717		$	5,386		$	(669	)	(12.4	)%
Segment EBITDA Margin	12.9		%	14.8		%	(191) bps			(12.9	)%
Acquisitions
Revenue	$	—		$	—		$	—		—	%
Segment EBITDA	$	—		$	—		$	—		—	%
Total Business, Sports and Alumni Clubs
Revenue	$	36,628		$	36,420		$	208		0.6	%
Segment EBITDA	4,717			5,386			$	(669	)	(12.4	)%
Segment EBITDA Margin	12.9		%	14.8		%	(191) bps			(12.9	)%
Same Store Memberships	61,882			62,511			(629		)	(1.0	)%
Total Memberships	61,882			62,511			(629		)	(1.0	)%
Same Store Average Membership (1)	61,952			62,475			(523		)	(0.8	)%
Dues per Average Same Store Membership (2)	$	284		$	276		$	8		2.9	%
Revenue per Average Same Store Membership (2)	$	591		$	583		$	8		1.4	%

Total revenues for business, sports and alumni clubs increased $0.8 million, or 1.9%, for the twelve weeks ended June 11, 2013 compared to the twelve weeks ended June 12, 2012, due to increases in food and beverage revenues and membership revenues. Food and beverage revenue increased $0.7 million, or 3.3%, due to increases in a la carte revenue, driven by a 5% increase in a la carte check average, and increases in private party revenue. The remaining membership revenue increase is largely due to the increase in average dues per membership._______________________________

~~Segment~~(1) Same ~~EBITDA~~store ~~for~~average ~~business,~~membership ~~sports~~is ~~and~~calculated ~~alumni~~using ~~clubs for~~ the ~~twelve~~same ~~weeks~~store ~~ended~~membership ~~June 11,~~count ~~2013~~at ~~was flat compared to~~ the ~~twelve~~beginning weeks ended June 12, 2012. Segment EBITDA margin declined 0.4% for the twelve weeks ended June 11, 2013 compared to the twelve weeks ended June 12, 2012 primarily due to increased leasing costs associated with the relocation and ~~reinvention~~end of ~~one~~the ofperiod ~~our business clubs~~indicated.

~~Other~~(2) Same store revenue (dues or segment) divided by same store average membership.

~~The~~Total ~~following~~revenues ~~table~~for ~~presents~~business, ~~financial~~sports ~~information~~and alumni clubs increased $0.2 million, or 0.6%, for ~~Other~~the twelve weeks ended September 3, ~~which~~2013 iscompared ~~comprised~~to ~~primarily~~the oftwelve ~~activities~~weeks ~~not~~ended ~~related~~September 4, 2012, largely due to ~~our~~the ~~two~~$0.4 ~~business~~million, ~~segments~~or 2.1%, increase in dues revenue, driven by increases in average dues per membership, partially offset by the decline in other revenue. Food and beverage revenue was flat for the twelve weeks ended ~~June~~September 113, 2013 ~~and~~compared ~~June~~to the twelve weeks ended September 124, 2012:, as the increase in a la carte revenue, driven by a 6.3% increase in a la carte covers and a 2.0% increase in a la carte check average, was offset by a decline in private event revenues.

	Twelve Weeks Ended
Other	June 11, 2013			June 12, 2012			Change			%Change
	(dollars in thousands)
Segment EBITDA	$	(8,792	)	$	(7,862	)	$	(930	)	(11.8	)%

Segment EBITDA for business, sports and alumni clubs declined $0.7 million, or 12.4%, for the twelve weeks ended September 3, 2013 compared to the twelve weeks ended September 4, 2012, as improved revenues were more than offset by increased leasing costs associated with the relocation and reinvention of one of our business clubs. As a result, segment EBITDA margin for the twelve weeks ended September 3, 2013 declined 191 basis points compared to the twelve weeks ended September 4, 2012.

Other EBITDA decreased $0.9 million, or 11.8%, for the twelve weeks ended June 11, 2013 compared to the twelve weeks ended June 12, 2012 primarily due to the expiration of certain mineral lease and surface rights agreements during fiscal 2012.42

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~~Comparison of the twenty-four weeks ended June 11, 2013 and June 12, 2012~~ Other

The following table presents ~~key~~ financial information ~~derived~~for ~~from~~Other, ~~our~~which ~~consolidated~~is ~~condensed~~comprised ~~statements~~primarily of ~~operations~~activities not related to our two business segments, for the ~~twenty-four~~twelve weeks ended ~~June~~September 113, 2013 and ~~June~~September 124, 2012:

	Twenty-Four Weeks Ended
		Twelve Weeks Ended
	June 11, 2013				June 12, 2012				Change				%Change
Other		September 3, 2013				September 4, 2012				Change				%Change
	~~(dollars in thousands)~~	(dollars in thousands)
Total revenues	$	350,679			$	335,762			$	14,917			4.4	%
EBITDA		$	(6,973	)		$	(6,852	)		$	(121	)		(1.8	)%
Club operating costs and expenses exclusive of depreciation (1)	259,734				249,409				10,325				4.1	%
Depreciation and amortization	32,467				36,334				(3,867		)		(10.6	)%
Loss on disposals of assets	3,631				920				2,711				294.7	%
Equity in earnings from unconsolidated ventures	(542		)		(610		)		68				(11.1	)%
Impairment of assets	1,881				770				1,111				144.3	%
Selling, general and administrative	20,497				20,646				(149		)		(0.7	)%
OPERATING INCOME	33,011				28,293				4,718				16.7	%
Interest and investment income	144				57				87				152.6	%
Interest expense	(38,657		)		(39,679		)		1,022				2.6	%
Other income	—				1,731				(1,731		)		(100.0	)%
(LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(5,502		)		(9,598		)		4,096				42.7	%
INCOME TAX BENEFIT (EXPENSE)	2,427				(1,650		)		4,077				247.1	%
(LOSS) FROM CONTINUING OPERATIONS	$	(3,075	)		$	(11,248	)		$	8,173			72.7	%

Other EBITDA decreased $0.1 million, or 1.8%, for the twelve weeks ended September 3, 2013 compared to the twelve weeks ended September 4, 2012 primarily due to the expiration of certain mineral lease and surface rights agreements during fiscal 2012.

Comparison of the thirty-six weeks ended September 3, 2013 and September 4, 2012

The following table presents key financial information derived from our consolidated condensed statements of operations for the thirty-six weeks ended September 3, 2013 and September 4, 2012:



	Thirty-Six Weeks Ended
	September 3, 2013			September 4, 2012			Change			% Change
	(dollars in thousands)
Total revenues	$	545,514		$	515,759		$	29,755		5.8	%
Club operating costs and expenses exclusive of depreciation (1)	405,753			383,505			22,248			5.8	%
Depreciation and amortization	49,497			53,926			(4,429		)	(8.2	)%
Loss on disposals of assets	6,376			3,456			2,920			84.5	%
Impairment of assets	1,905			770			1,135			147.4	%
Equity in earnings from unconsolidated ventures	(966		)	(959		)	(7		)	(0.7	)%
Selling, general and administrative	31,747			30,325			1,422			4.7	%
OPERATING INCOME	51,202			44,736			6,466			14.5	%
Interest and investment income	224			86			138			160.5	%
Interest expense	(57,911		)	(59,510		)	(1,599		)	(2.7	)%
Other income	—			1,823			(1,823		)	(100.0	)%
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(6,485		)	(12,865		)	6,380			49.6	%
INCOME TAX (EXPENSE) BENEFIT	(1,460		)	(49		)	(1,411		)	(2,879.6	)%
LOSS FROM CONTINUING OPERATIONS	$	(7,945	)	$	(12,914	)	$	4,969		38.5	%

__________________________

(1) Comprised of club operating costs, cost of food and beverage sales and provision for doubtful accounts.

Total revenues of $~~350~~545.75 million for the ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 113, 2013 increased $1429.98 million, or 45.48%, compared to the ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 124, 2012, primarily due to increased golf and country club ~~revenues~~revenue. Golf and country club ~~revenues~~revenue increased $1022.1 million, or 35.95%, of which $16.90 million is attributable to golf and country club properties added in ~~the~~2012 ~~past~~and ~~year~~2013. The remaining $816.21 million golf and country club revenue increase is driven by increases in same store ~~membership~~ dues, ~~revenue and~~ food and beverage, ~~revenues~~golf ~~partially~~operations ~~offset~~and byother ~~lower golf operation revenues~~revenue. In addition, business, sports and alumni clubs ~~revenues~~revenue increased $1.57 million, or 1.95%, due to increases in food and beverage and ~~membership~~ dues revenue. ~~Revenues~~ ~~within~~Revenue ~~Other~~also increased $35.36 million, ofdue ~~which~~to ~~$2.8 million represents~~ reimbursements for certain operating costs at managed clubs. ~~The~~These ~~recorded~~ reimbursements do not include a markup and have no net impact on operating income, as such costs are included within club operating costs and expenses.

Club operating costs and expenses of $259.7 million for the twenty-four weeks ended June 11, 2013 increased $10.3 million, or 4.1%, compared to the twenty-four weeks ended June 12, 2012. The increase is partially due to a $6.1 million increase in labor and food and beverage cost of goods sold associated with higher revenues. An increase of $1.4 million was attributable to club properties added during the past year. The remaining $2.8 million increase is related to certain operating costs at managed clubs, which are offset by reimbursements to the Company recorded within revenue, having no impact on operating income. 43

Depreciation and amortization expense decreased $3.9 million, or 10.6%, for the twenty-four weeks ended June 11, 2013 compared to the twenty-four weeks ended June 12, 2012, due to lower amortization expense from intangible assets that fully amortized at the end of fiscal 2012.

Loss on disposal of assets of $3.6 million for the twenty-four weeks ended June 11, 2013 primarily consisted of losses on asset retirements during the normal course of business. The loss on disposal of assets of $0.9 million for the twenty-four

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Club operating costs and expenses of $405.8 million for the thirty-six weeks ended ~~June~~September 123, ~~2012~~2013 ~~was~~increased ~~comprised~~$22.2 ~~primarily~~million, ofor ~~losses~~5.8%, oncompared ~~asset~~to ~~retirements~~the ~~offset~~thirty-six byweeks ~~insurance~~ended ~~proceeds~~September 4, of2012. The increase is partially due to $17.51 million of increased labor and ~~eminent~~food ~~domain~~and ~~proceeds~~beverage cost of goods sold associated with higher revenues and $04.39 million of club operating costs and expenses related to club properties added in 2012 and 2013. The remaining increase is largely related to certain operating costs at managed clubs, which are offset by reimbursements to the Company recorded within revenue, resulting in no net impact on operating income.

~~Impairment~~Depreciation ofand ~~assets~~amortization ofexpense decreased $14.94 million, or 8.2%, for the ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 113, 2013 ~~was~~compared ~~primarily comprised of impairment losses~~ to ~~property and equipment at certain of our business clubs to adjust~~ the ~~carrying~~thirty-six ~~amount~~weeks ofended ~~certain~~September 4, ~~property~~2012, ~~and~~due ~~equipment~~ to ~~its~~lower ~~fair~~amortization ~~value.~~expense ~~Impairment~~from ofintangible assets ofthat ~~$0.8~~fully ~~million~~amortized ~~for~~at the ~~twenty-four~~end ~~weeks ended June 12, 2012 was primarily comprised~~ of anfiscal ~~impairment of an equity method investment~~2012.

~~Selling,~~Loss ~~general~~on ~~and~~disposal ~~administrative~~of ~~expenses~~assets of $206.54 million for the ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 113, 2013 ~~decreased~~primarily ~~$0.1~~consisted ~~million,~~of orlosses ~~(0.7)%,~~on ~~compared~~asset toretirements during the ~~twenty-four~~normal ~~weeks~~course ~~ended~~of ~~June 12,~~business. ~~2012,~~The ~~due~~loss toon adisposal ~~reduction~~of inassets ~~rent~~of ~~expense~~$3.5 ~~partially~~million ~~offset~~for bythe anthirty-six ~~increase~~weeks inended ~~labor and payroll related expenses. Furthermore, on July~~September 124, ~~2013,~~2012 ~~Holdings,~~was ~~filed~~comprised aprimarily ~~registration~~of ~~statement~~losses on ~~Form~~asset ~~S-1~~retirements ~~with~~partially ~~the~~offset ~~SEC~~by ~~for~~$1.5 amillion ~~proposed initial public offering~~ of ~~its~~insurance ~~common~~proceeds ~~stock~~and $0.3 Inmillion ~~connection~~of ~~with~~eminent ~~the~~domain ~~Offering, we anticipate an increase in selling, general and administrative expenses~~proceeds.

~~Interest~~Impairment ~~expense~~of ~~totaled~~assets ~~$38.7~~of ~~million and~~ $391.79 million for the ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 113, 2013 ~~and~~was ~~June 12,~~primarily ~~2012,~~comprised ~~respectively.~~of ~~The~~impairment ~~$1.0~~losses ~~million~~to ~~reduction~~property isand ~~largely~~equipment ~~due~~at certain of our business clubs to adjust the ~~November~~carrying ~~2012~~amount ~~amendment~~of certain property and equipment to ~~the~~its ~~credit~~fair ~~agreement~~value. ~~governing~~Impairment of assets of $0.8 million for the ~~Secured~~thirty-six ~~Credit~~weeks ~~Facilities~~ended September 4, ~~which~~2012 ~~reduced~~was ~~the~~primarily ~~interest~~comprised ~~rate~~of onan ~~our~~impairment ~~term~~of ~~loan~~an ~~facility~~equity method investment.

~~The~~Selling, ~~effective~~general ~~tax~~and ~~rates~~administrative expenses of $31.7 million for the ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 113, 2013 ~~and~~increased ~~June 12, 2012 were 44~~$1.2%4 ~~and (17.2)%~~million, ~~respectively. The amount of tax expense~~ or ~~benefit recognized in interim financial statements is determined by multiplying our year-to-date pre-tax income or loss by an annual effective tax rate~~4.7%, ~~which~~compared ~~is an estimate of the expected relationship between tax expense or benefit for the full year~~ to the ~~pre~~thirty-~~tax~~six ~~income or loss for the full year (pre-tax income or loss excluding unusual or infrequently occurring discrete items). For the twenty-four~~ weeks ended ~~June~~September 114, ~~2013 and June 12,~~ 2012, ~~the effective tax rate differed from the statutory federal tax rate of 35.0%~~ primarily due to ~~state~~incremental ~~taxes,~~costs ~~changes~~incurred in ~~uncertain~~connection ~~tax~~with ~~positions~~the ~~and~~second ~~certain~~amendment ~~other~~to ~~permanent~~the ~~differences. The~~credit ~~relative~~agreement ~~impact~~governing ~~these~~the ~~items~~Secured ~~have~~Credit onFacilities ~~the~~and ~~effective~~increased ~~tax~~professional ~~rate~~fees ~~varies~~related ~~based~~to on the ~~forecasted~~acquisition ~~amount~~ of ~~pre-tax~~two ~~income~~golf orand ~~loss~~country ~~for the year~~clubs.

Interest expense totaled $57.9 million and $59.5 million for the thirty-six weeks ended September 3, 2013 and September 4, 2012, respectively. The $1.6 million reduction is largely due to amendments to the credit agreement governing the Secured Credit Facilities that reduced the interest rate on our term loan facility in November 2012 and again in July 2013.

The effective tax rates for the thirty-six weeks ended September 3, 2013 and September 4, 2012 were (22.5)% and (0.4)%, respectively. The amount of tax expense or benefit recognized in interim financial statements is determined by multiplying our year-to-date pre-tax income or loss by an annual effective tax rate, which is an estimate of the expected relationship between tax expense or benefit for the full year to the pre-tax income or loss for the full year (pre-tax income or loss excluding unusual or infrequently occurring discrete items). For the thirty-six weeks ended September 3, 2013 and September 4, 2012, the effective tax rate differed from the statutory federal tax rate of 35.0% primarily due to state taxes, changes in uncertain tax positions and certain other permanent differences. The relative impact these items have on the effective tax rate varies based on the forecasted amount of pre-tax income or loss for the year.

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Segment Operations

The following table presents key financial information for our Segments and Adjusted EBITDA for the thirty-six weeks ended September 3, 2013 and September 4, 2012:



	Thirty-Six Weeks Ended
Consolidated Summary	September 3, 2013			September 4, 2012			Change			% Change
	(dollars in thousands)
Total Revenue	$	545,514		$	515,759		$	29,755		5.8	%

Segment EBITDA:
Golf and Country Club	$	121,551		$	112,661		$	8,890		7.9	%
Business, Sports and Alumni Club	18,843			19,500			(657		)	(3.4	)%
Other EBITDA	(25,259		)	(22,694		)	(2,565		)	(11.3	)%
Total Segment EBITDA (1)	$	115,135		$	109,467		$	5,668		5.2	%
Acquisition adjustment	1,198			1,773			(575		)	(32.4	)%
Non-cash and other adjustments	857			(2,730		)	3,587			131.4	%
Adjusted EBITDA (1)	$	117,190		$	108,510		$	8,680		8.0	%

_______________________________

(1) See ‘‘Basis of Presentation’’ for the definition of Segment EBITDA and Adjusted EBITDA and a reconciliation of net loss to Segment EBITDA and Adjusted EBITDA.

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Golf and Country Clubs

The following ~~tables~~table ~~present~~presents key financial information for our golf and country clubs for the ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 113, 2013 and ~~June~~September 124, 2012:

	Twenty-Four Weeks Ended
	Thirty-Six Weeks Ended
Same Store Golf and Country Clubs	June 11, 2013			June 12, 2012			Change			%Change
Golf and Country Club Segment	September 3, 2013			September 4, 2012			Change			%Change
	(dollars in thousands)
Number of facilities at end of period in continuing operations	99			99
Same Store Clubs
Total revenues	$	267,480		$	259,247		$	8,233		3.2	%
Revenue
Segment EBITDA	77,724			72,702			5,022			6.9	%
Dues	$	192,565		$	183,797		$	8,768		4.8	%
Segment EBITDA %	29.1		%	28.0		%	1.1		%
Food and Beverage	91,231			87,174			4,057			4.7	%
Golf Operations	99,514			98,387			1,127			1.1	%
Other	34,674			32,556			2,118			6.5	%
Revenue	$	417,984		$	401,914		$	16,070		4.0	%
Segment EBITDA	$	120,136		$	112,328		$	7,808		7.0	%
Segment EBITDA Margin	28.7		%	27.9		%	79 bps			2.8	%
Acquisitions
Revenue	$	8,233		$	2,238		$	5,995		267.9	%
Segment EBITDA	$	1,415		$	333		$	1,082		324.9	%
Total Golf and Country Clubs
Revenue	$	426,217		$	404,152		$	22,065		5.5	%
Segment EBITDA	$	121,551		$	112,661		$	8,890		7.9	%
Segment EBITDA Margin	28.5		%	27.9		%	64 bps			2.3	%
Same Store Memberships	83,320			82,796			524			0.6	%
Total Memberships	86,628			84,432			2,196			2.6	%
Same Store Average Membership (1)	82,216			81,708			508			0.6	%
Dues per Average Same Store Membership (2)	$	2,342		$	2,249		$	93		4.1	%
Revenue per Average Same Store Membership (2)	$	5,084		$	4,919		$	165		3.4	%

	Twenty-Four Weeks Ended
Total Golf and Country Clubs	June 11, 2013			June 12, 2012			Change			%Change
	(dollars in thousands)
Number of facilities at end of period in continuing operations	103			100
Total revenues	$	270,370		$	260,287		$	10,083		3.9	%
Segment EBITDA	78,460			72,923			5,537			7.6	%
Segment EBITDA %	29.0		%	28.0		%	1.0		%

_______________________________

~~Total~~(1) Same ~~revenues for same~~ store ~~golf~~average ~~and~~membership ~~country~~is ~~clubs~~calculated ~~increased~~using ~~$8.2 million, or 3.2%, for~~ the ~~twenty-four~~same ~~weeks~~store ~~ended~~membership ~~June 11,~~count ~~2013~~at ~~compared to~~ the ~~twenty-four~~beginning ~~weeks ended June 12, 2012, primarily due to increases in membership~~ and ~~food~~end ~~and~~of ~~beverage revenues partially offset by lower golf operation revenues. Membership revenues increased $7.0 million or 5.5%, largely due to an increase in average dues per membership combined with~~ the ~~increase~~period ~~in memberships during the twenty-four~~ indicated.

40(2) Same store revenue (dues or segment) divided by same store average membership.

Total revenue for same store golf and country clubs increased $16.1 million, or 4.0%, for the thirty-six weeks ended September 3, 2013 compared to the thirty-six weeks ended September 4, 2012, primarily due to increases in dues, food and beverage, golf operations and other revenue. Dues revenue increased $8.8 million or 4.8%, largely due to an increase in average dues per membership combined with an increase in memberships. Food and beverage revenues increased $4.1 million, or 4.7%, due to an increase in a la carte revenue, driven by a 6.2% increase in a la carte covers, and increases in private party revenue. Golf operations revenues increased $1.1 million, or 1.1%, due largely to increased retail revenue driven by a 5.9% increase in retail revenue per round.

Segment EBITDA for same store golf and country clubs increased $7.8 million, or 7.0%, for the thirty-six weeks ended September 3, 2013 compared to the thirty-six weeks ended September 4, 2012, largely due to the increase in higher margin dues revenue. As a result, same store Segment EBITDA margin for the thirty-six weeks ended September 3, 2013 increased 79 basis points over the thirty-six weeks ended September 4, 2012.

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weeks ended June 11, 2013. Food and beverage revenues increased $2.1 million, or 3.8%, due to an increase in a la carte revenue, driven by a 4.0% increase in a la carte covers, and increases in private party revenue. Golf operations revenues decreased $1.0 million, or 1.7%, largely due to favorable weather in the first quarter of 2012 providing an early start to the 2012 golf season and an 8.0% decline in member rounds for the twenty-four weeks ended June 12, 2012, caused by unfavorable weather in the mid Atlantic region.

Segment EBITDA for same store golf and country clubs increased $5.0 million, or 6.9%, for the twenty-four weeks ended June 11, 2013 compared to the twenty-four weeks ended June 12, 2012, due to the increase in higher margin membership dues revenue. As a result, same store Segment EBITDA margin for the twenty-four weeks ended June 11, 2013 increased 1.1% over the twenty-four weeks ended June 12, 2012.

Business, Sports and Alumni Clubs

The following table presents key financial information for our business, sports and alumni clubs for the ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 113, 2013 and ~~June~~September 124, 2012:

	Twenty-Four Weeks Ended
	Thirty-Six Weeks Ended
Same Store & Total Business, Sports and Alumni Clubs	June 11, 2013			June 12, 2012			Change			%Change
Business, Sports and Alumni Club Segment	September 3, 2013			September 4, 2012			Change			%Change
	(dollars in thousands)
Number of facilities at end of period in continuing operations	49			49
Same Store Clubs
Total revenues	$	79,496		$	78,008		$	1,488		1.9	%
Revenue
Segment EBITDA	14,126			14,114			12			0.1	%
Dues	$	52,770		$	51,991		$	779		1.5	%
Segment EBITDA %	17.8		%	18.1		%	(0.3		)%
Food and Beverage	55,281			53,968			1,313			2.4	%
Other	8,073			8,469			(396		)	(4.7	)%
Revenue	$	116,124		$	114,428		$	1,696		1.5	%
Segment EBITDA	$	18,843		$	19,500		$	(657	)	(3.4	)%
Segment EBITDA Margin	16.2		%	17.0		%	(81) bps			(4.8	)%
Acquisitions
Revenue	$	—		$	—		$	—		—	%
Segment EBITDA	$	—		$	—		$	—		—	%
Total Business, Sports and Alumni Clubs
Revenue	$	116,124		$	114,428		$	1,696		1.5	%
Segment EBITDA	$	18,843		$	19,500		$	(657	)	(3.4	)%
Segment EBITDA Margin	16.2		%	17.0		%	(81) bps			(4.8	)%
Same Store Memberships	61,882			62,511			(629		)	(1.0	)%
Total Memberships	61,882			62,511			(629		)	(1.0	)%
Same Store Average Membership (1)	61,964			62,732			(768		)	(1.2	)%
Dues per Average Same Store Membership (2)	$	852		$	829		$	23		2.8	%
Revenue per Average Same Store Membership (2)	$	1,874		$	1,824		$	50		2.7	%

Total revenues for business, sports and alumni clubs increased $1.5 million, or 1.9%, for the twenty-four weeks ended June 11, 2013 compared to the twenty-four weeks ended June 12, 2012, due to increases in food and beverage revenues and membership revenues. Food and beverage revenue increased $1.3 million, or 3.5%, due to increases in a la carte revenue driven by an 8.1% increase in a a la carte check average, and increases in private party revenue. The remaining membership revenue increase is largely due to increases in average dues per membership._______________________________

~~Segment EBITDA for business, sports and alumni clubs for the twenty-four weeks ended June 11, 2013 was flat compared to the twenty-four weeks ended June 12, 2012.~~(1) ~~Segment~~Same ~~EBITDA~~store ~~margin~~average ~~for~~membership ~~the~~is ~~twenty-four~~calculated ~~weeks~~using ~~ended June 11, 2013 declined 0.3% compared to~~ the ~~twenty-four~~same ~~weeks~~store ~~ended~~membership ~~June 12,~~count ~~2012~~at ~~primarily due to increased leasing costs associated with~~ the ~~relocation~~beginning and ~~reinvention~~end of ~~one~~the ofperiod ~~our business clubs~~indicated.

(2) Same store revenue (dues or segment) divided by same store average membership.

Total revenues for business, sports and alumni clubs increased $1.7 million, or 1.5%, for the thirty-six weeks ended September 3, 2013 compared to the thirty-six weeks ended September 4, 2012, due to increases in food and beverage and dues revenue. Food and beverage revenue increased $1.3 million, or 2.4%, due to increases in a la carte revenue driven by a 6.1% increase in a la carte check average and a 1.6% increase in a la carte covers. Dues revenue increased $0.8 million, or 1.5%, due to increases in average dues per membership.

Segment EBITDA for business, sports and alumni clubs declined $0.7 million, or 3.4%, for the thirty-six weeks ended September 3, 2013 compared to the thirty-six weeks ended September 4, 2012, as improved revenues were more than offset by increased leasing costs associated with the relocation and reinvention of one of our business clubs. As a result, segment EBITDA margin for the thirty-six weeks ended September 3, 2013 declined 81 basis points compared to the thirty-six weeks ended September 4, 2012.

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Other

The following table presents financial information for Other, which is comprised primarily of activities not related to our two business segments, for the for ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 113, 2013 and ~~June~~September 124, 2012:

	Twenty-Four Weeks Ended
	Thirty-Six Weeks Ended
Other	~~June~~September 113, 2013			~~June~~September 124, 2012			Change			%Change
	(dollars in thousands)
Segment EBITDA	$	(18,286	)	$	(15,842	)	$	(2,444	)	(15.4	)%
EBITDA	$	(25,259	)	$	(22,694	)	$	(2,565	)	(11.3	)%

Other EBITDA decreased $2.46 million, or 1511.43%, for the ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 113, 2013 compared to the ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 124, 2012 primarily due to the expiration of certain mineral lease and surface rights agreements during fiscal 2012.

Liquidity and Capital Resources

Our primary goal as it relates to liquidity and capital resources is to attain and retain the right level of debt and cash to maintain and fund expansions, replacement projects and other capital investments at our ~~properties~~clubs, be poised for external growth in the marketplace and ~~make~~pay ~~distributions~~dividends to ~~our equity holders~~shareholders. Historically, we have financed our business through cash flows from operations and debt. For the remainder of fiscal 2013, we anticipate cash flows from operations to be our primary source of cash and believe current assets and cash generated from operations will be sufficient to meet anticipated working capital needs, planned capital expenditures and debt service obligations. We plan to use excess cash reserves and our revolving credit facility to expand the business through capital improvement and expansion projects and strategically selected club acquisitions.

41As of September 3, 2013, cash and cash equivalents totaled $43.2 million and we had access to an unused $30.4 million revolving credit facility for total liquidity of $73.6 million. In September 2013, we completed a third amendment to the credit agreement governing the Secured Credit Facilities for $135.0 million in incremental revolving credit commitments and agreed to reduce the existing $50.0 million revolving credit facility to the $19.6 million of standby letters of credit outstanding as of the effective date of the amendment.

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fiscal 2013, we anticipate cash flows from operations to be our primary source of cash and believe current assets and cash generated from operations will be sufficient to meet working capital needs, planned capital expenditures, and debt service obligations. We plan to use our remaining excess cash reserves to expand the business through capital improvement or expansion projects. We may elect to use cash from operations, debt or a combination thereof to finance future acquisition opportunities.

As of June 11, 2013, cash and cash equivalents totaled $40.4 million and we had access to an unused $30.4 million revolving credit facility for total liquidity of $70.8 million. Additionally, as of June 11, 2013, we held the option to increase the term loan facility by up to $50.0 million and the revolving credit facility by up to $25.0 million, subject to conditions and restrictions governing the Secured Credit Facilities.

Cash Flows from Operating Activities

Cash flows from operations totaled $3766.89 million and $3566.31 million for the ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 113, 2013 and ~~June~~September 124, 2012, respectively. The $20.58 million increase in operating cash flows is due to the $815.26 million improvement in earnings partially offset by $514.78 million of changes in working capital during the normal course of business.

Cash Flows used in Investing Activities

Cash flows used in investing activities totaled $2652.51 million and $1832.96 million for the ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 113, 2013 and ~~June~~September 124, 2012, respectively. The increase in cash used for investing activities is largely due to a $310.56 million increase in capital spent to maintain, renovate and reinvent our existing properties and a $1.7.2 million increase in cash used for acquisitions. In addition, during the thirty-six weeks ended September 4, 2012 we received $2.0 million of insurance proceeds ~~during the twenty-four weeks ended June 12, 2012~~ for damages caused by a hurricane.

Cash Flows used in Financing Activities

Cash flows used in financing activities totaled $5253.72 million and $710.19 million for the ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 113, 2013 and ~~June~~September 124, 2012, respectively. During the ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 113, 2013, we made a distribution of $35.0 million to the owners of our common stock and scheduled debt repayments of $1822.20 million.

WeAs ~~may~~described ~~from time to time repurchase our Senior Notes~~ in ~~open~~Note ~~market~~16 orof ~~privately~~the ~~negotiated~~consolidated ~~purchases~~condensed orfinancial ~~redeem~~statements, ~~our~~we ~~Senior~~intend ~~Notes pursuant~~ to ~~the~~use ~~terms of~~ the ~~indenture~~net ~~governing~~proceeds ~~our~~received ~~Senior~~by ~~Notes. On July 12, 2013,~~ Holdings, ~~filed~~from ~~a registration statement on Form S-1 with~~ the ~~SEC for a proposed~~ initial public offering ofto ~~its~~redeem ~~common stock~~$145.25 ~~Upon~~million ~~effectiveness,~~in ~~Holdings~~aggregate ~~intends~~principal toamount ~~use the net proceeds it receives from this offering to reduce a portion~~ of our ~~outstanding~~Senior ~~indebtedness~~Notes, ~~and~~plus ~~for~~approximately ~~other general corporate purposes~~$5.9 Inmillion ~~addition,~~in ~~after~~accrued ~~completion~~and ofunpaid ~~this~~interest ~~offering~~thereon, ~~Holdings~~and ~~intends~~ to pay ~~cash~~approximately ~~dividends~~$14.5 onmillion ~~its~~of ~~common~~redemption ~~stock, subject to compliance with the credit agreement governing the Secured Credit Facilities and the indenture governing the Senior Notes~~premium.

Total cash and cash equivalents decreased by $4138.46 million for the ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 113, 2013 and increased by $923.94 million for the ~~twenty~~thirty-~~four~~six weeks ended ~~June~~September 124, 2012.

~~Capital Spending~~48

The nature of our business requires us to invest a significant amount of capital to maintain our existing properties. For the twenty-four weeks ended June 11, 2013 and June 12, 2012, we spent approximately $10.1 million and $8.5 million, respectively, in capitalized costs to maintain our existing properties. Throughout the second half of fiscal year 2013, we anticipate spending approximately $13.0 million in capital to maintain our existing facilities.

In addition to maintaining our properties, we also elect to spend discretionary capital to expand and improve existing properties and enter into new business opportunities through acquisitions. Capital expansion funding totaled approximately $16.4 million and $12.9 million for the twenty-four weeks ended June 11, 2013 and June 12, 2012, respectively. We currently anticipate spending approximately $33.0 million on expansion projects and club acquisitions during the remainder of fiscal year 2013. This amount is subject to change should we identify additional opportunities to expand our business, acquire new properties or become aware of events that could adversely impact our discretionary spending ability.

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Capital Spending

The nature of our business requires us to invest a significant amount of capital to maintain our existing properties. For the thirty-six weeks ended September 3, 2013 and September 4, 2012, we spent approximately $18.3 million and $10.9 million, respectively, in capitalized costs to maintain our existing properties. For the remainder of fiscal year 2013, we anticipate spending approximately $6.0 million in capital to maintain our existing facilities.

In addition to maintaining our properties, we also elect to spend discretionary capital to expand and improve existing properties, including major reinvention, and enter into new business opportunities through acquisitions. Capital expansion funding totaled approximately $34.5 million and $24.1 million for the thirty-six weeks ended September 3, 2013 and September 4, 2012, respectively. We anticipate spending approximately $19.0 million on expansion projects during the remainder of fiscal year 2013. This amount is subject to change if additional acquisitions or expansion opportunities are identified that fit our strategy to expand the business or as a result of many known and unknown factors, including but not limited to those described in the “Risk Factors” section of our last quarterly report on Form 10-Q.

Debt

2010 Secured Credit Facilities — On November 30, 2010, we entered into secured credit facilities (the “Secured Credit Facilities”). These facilities ~~are~~were originally comprised of (i) a $310.0 million term loan facility and (ii) a revolving credit facility with a maximum borrowing limit of $50.0 million, which ~~includes~~included letter of credit and swing line facilities. The credit agreement included incremental facilities, whereby we had the option to increase the term loan facility ~~matures~~by up to $50.0 million and the revolving credit facility by up to an additional $25.0 million, both subject to conditions and restrictions in the credit agreement. The term loan facility was scheduled to mature on November 30, 2016 and the revolving credit facility expires on November 30, 2015. The interest rate on the Secured Credit Facilities was originally the higher of (i) 6.0% or (ii) an elected LIBOR plus a margin of 4.5%.

AsOn ~~of June~~November 1116, ~~2013~~2012, we ~~had~~entered ~~$19.6~~into ~~million~~an ofamendment ~~standby~~to ~~letters~~the credit agreement governing the Secured Credit Facilities, which reduced the interest rate on the term loan facility to the higher of ~~credit~~(i) ~~outstanding~~5.0% ~~and~~or ~~$30~~(ii) an elected LIBOR plus a margin of 3.475%. ~~million~~This ~~remaining~~amendment ~~available~~did ~~for~~not ~~borrowing~~apply ~~under~~to the revolving credit facility or any incremental facilities.

AsOn ~~of June~~July 1124, 2013, we entered into a second amendment to the credit agreement governing the Secured Credit Facilities ~~required~~to ~~ClubCorp~~reduce ~~and~~the ~~its~~interest ~~restricted~~rate ~~subsidiaries~~on tothe ~~maintain~~term ~~specified~~loan facility, increase the principal borrowed under the term loan facility, extend the maturity date of the term loan facility, eliminate the quarterly principal payment requirement under the term loan facility, increase the amount of permissible incremental facilities and modify certain financial ~~ratios~~covenants onand anon-financial ~~rolling~~terms ~~four~~and ~~quarter~~conditions ~~basis~~associated aswith ~~shown~~the incredit agreement governing the ~~following~~Secured ~~table:~~Credit Facilities.

		June 11, 2013
Financial ratios:
Total adjusted debt to Adjusted EBITDA(“Total Leverage Ratio”)	Less than:	5.35x
Adjusted EBITDA to total adjusted interest expense (“Interest Coverage Ratio”)	Greater than:	2.15x

The interest rate on the term loan facility was reduced to the higher of (i) 4.25% or (ii) an elected LIBOR plus a margin of 3.25%, with an additional reduction to the higher of (i) 4.0% or (ii) an elected LIBOR plus a margin of 3.0%, upon successful completion of an initial public offering with proceeds of at least $50.0 million, which condition was satisfied subsequent to the twelve weeks ended September 3, 2013 on September 25, 2013, by our receipt by way of contribution from Holdings, the amount of more than $50.0 million in proceeds from the completion of an initial public offering by Holdings. The term loan facility principal balance was increased to $301.1 million. The maturity date of the term loan facility was extended to July 24, 2020. In addition to the $19.6 million of standby letters of credit outstanding, capacity available under the incremental facilities was increased to $135.0 million in new revolving credit, plus $75.0 million in new revolving credit and term loan combined, with additional capacity for incremental revolving credit and/or term loan commitments thereafter if certain financial covenants are met.

AsAdditionally, ofthe ~~June 11,~~total ~~2013,~~leverage weand ~~were~~interest incoverage ~~compliance~~ratio ~~with~~financial ~~all~~covenants ~~covenant~~were ~~restrictions~~replaced ~~under~~by the Senior Secured ~~Credit~~Leverage ~~Facilities~~Ratio covenant. The ~~following~~Senior ~~table~~Secured ~~shows~~Leverage Ratio, defined as Consolidated Senior Secured Debt (exclusive of the ~~financial~~Senior ~~ratios~~Notes) to Consolidated EBITDA (disclosed as Adjusted EBITDA and defined in "Basis of Presentation"), requires Operations to maintain a leverage ratio no greater than 4.00:1.00 for each fiscal quarter ended on or after June 11 30, 2013. onWe may also be required to prepay the outstanding term loan facility by a ~~four~~percentage ~~quarter~~of ~~rolling~~excess ~~basis~~cash ~~for~~flows ~~continuing~~after ~~operations:~~each fiscal year end. The percentage of excess cash flows payable may decrease or be eliminated depending on the results of the Senior Secured Leverage Ratio test at the end of each fiscal year.

	Four Quarters Ended
	June 11, 2013
	(dollars in thousands)
Adjusted EBITDA (1)	$	171,337
Total adjusted debt (2)	$	762,782
Total adjusted interest expense (3)	$	62,586
Financial ratios:
Total Leverage Ratio	4.45		x
Interest Coverage Ratio	2.74		x

On August 30, 2013, we entered into a third amendment to the credit agreement governing the Secured Credit Facilities to conditionally secure the $135.0 million incremental revolving credit facility. The third amendment became effective on September 30, 2013, subsequent to the satisfaction of certain conditions, including our receipt by way of contribution from Holdings, of more than $150.0 million of proceeds from the completion of an initial public offering by

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Holdings. The $135.0 million revolving credit commitments mature five years from the effective date of the third amendment and borrowings will bear interest at a rate of LIBOR plus a margin of 3.0% per annum. Additionally, the third amendment reduced the existing $50.0 million revolving credit facility to $19.6 million, the amount of standby letters of credit outstanding as of the effective date of the third amendment.

As of September 3, 2013, we were in compliance with all covenant restrictions under the credit agreement governing the Secured Credit Facilities. The following tables present our Senior Secured Leverage Ratio on a a rolling four quarter basis through September 3, 2013:



	Four Quarters Ended
	September 3, 2013
	(dollars in thousands)
Adjusted EBITDA (1)	$	174,869
Consolidated Senior Secured Debt (2)	$	347,248

Senior Secured Leverage Ratio	1.99		x

_______________________

(1) See ‘‘—Basis of Presentation’’ for the ~~definitions~~definition of ~~EBITDA and~~ Adjusted EBITDA and a reconciliation of net ~~income (~~loss) to ~~EBITDA and~~ Adjusted EBITDA.

(2) The reconciliation of total debt to ~~adjusted~~Consolidated ~~debt~~Senior Secured Debt is as follows:

	As of June 11, 2013
	As of September 3, 2013
	(dollars in thousands)
Long-term debt (net of current portion)	$	~~763~~773,~~013~~967
Current maturities of long-term debt	1411,~~498~~376
Outstanding letters of credit (a)	19,550
Uncollateralized surety bonds (b)	~~721~~655
Adjustment per credit agreement (c)	(35,000		)
Less:
Total adjusted debt	$	762,782
Unsecured high yield Senior Notes (c)	(415,000		)
Adjustment per credit agreement (d)	(43,300		)
Consolidated Senior Secured Debt	$	347,248

_______________________________

(a) Represents total outstanding letters of credit.

(b) Represents surety bonds not collateralized by letters of credit.

43(c) Represents unsecured high yield Senior Notes excluded per the credit agreement.

~~Table~~(d) Represents an adjustment per the credit agreement reducing total debt by the lesser of ~~Contents~~total unrestricted cash or $75 million.

(i) $35.0 million or (ii) total unrestricted cash and cash equivalents.

(3) The reconciliation of interest expense to to adjusted interest expense is as follows:

	Twenty-Four Weeks Ended			Four Quarters Ended
	June 11, 2013			June 11, 2013
	(dollars in thousands)
Interest expense	$	38,657		$	87,284
Less: Interest expense related to initiation deposit liabilities (a)	(9,334		)	(22,551		)
Less: Loan origination fee amortization (b)	(1,053		)	(2,164		)
Less: Revolver commitment fees (c)	(116		)	(214		)
Add: Capitalized interest (d)	129			284
Add: Interest income	(25		)	(53		)
Total adjusted interest expense	$	28,258		$	62,586

_______________________________

(a) Represents amortization of discount on initiation deposit liabilities.

(b) Represents amortization of loan origination fees on long-term debt.

(d) Represents capitalized interest.

On November 16, 2012, we entered into an amendment to the credit agreement governing the Secured Credit Facilities, which reduced the interest rate on the term loan facility from the higher of (i) 6.0% or (ii) an elected LIBOR plus a margin of 4.5% to the higher of (i) 5.0% or (ii) an elected LIBOR plus a margin of 3.75%. This amendment did not apply to the revolving credit facility or any incremental facilities.

Subsequent to the twelve weeks ended June 11, 2013, on July 24, 2013, we entered into a second amendment to the credit agreement governing the Secured Credit Facilities to reduce the interest rate on the term loan facility, increase the principal borrowed under the term loan facility, extend the maturity date of the term loan facility, eliminate the quarterly principal payment requirement under the term loan facility, increase the amount of incremental facilities and modify certain financial covenants and non-financial terms and conditions associated with the credit agreement governing the Secured Credit Facilities.

Additionally, the total leverage ratio and interest coverage ratio financial covenants were replaced by the Senior Secured Leverage Ratio covenant which applies to the revolving credit facility. The Senior Secured Leverage Ratio, defined as Consolidated Senior Secured Debt (exclusive of the Senior Notes) to Consolidated EBITDA (disclosed as Adjusted EBITDA and defined in “Basis of Presentation"), requires ClubCorp and its restricted subsidiaries to maintain a coverage no greater than 4.00:1.00 for each fiscal quarter ended on or after June 30, 2013. If the Senior Secured Leverage Ratio would have been in place as of June 11, 2013 our coverage would have been approximately 2.00:1.00.

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Off-Balance Sheet Arrangements, Contractual Obligations and Commercial Commitments

As There ofhave ~~June 11,~~been ~~2013,~~no weother ~~were~~material ~~jointly~~changes ~~and~~outside ~~severally~~the ~~liable~~normal ~~for~~course ~~certain pension funding liabilities associated with one~~ of ~~the~~business ~~resorts~~to weour ~~sold~~contractual inobligations ~~connection~~or ~~with~~commercial ~~the~~commitments ~~ClubCorp~~from ~~Formation.~~those Wepreviously ~~did~~disclosed ~~not~~in ~~accrue~~our a2012 ~~liability,~~Annual asReport weand ~~did~~last ~~not~~quarterly ~~believe~~report iton ~~was~~Form ~~probable that claims would be made against ClubCorp. The unfunded obligation for such plan was approximately $~~10-Q.~~4 million and no claims were made against ClubCorp for funding.~~

On July 1, 2013, certain resorts and clubs were sold by affiliates of KSL and the purchaser of one of these resorts assumed the pension liability for which we were previously contingently liable and agreed to indemnify the affiliates of KSL, which are our affiliates, for such liability.

There have been no other material changes outside the normal course of business to our contractual obligations or commercial commitments from those previously disclosed in our 2012 Annual Report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~There~~Interest ~~have~~Rate ~~been no material changes to our market risk during the twenty-four weeks ended June 11, 2013 from those previously disclosed in our 2012 Annual Report.~~Risk

45Our indebtedness consists of both fixed and variable rate debt facilities. As of September 3, 2013, the interest rate on our term loan facility was the higher of (i) 4.25% "Floor" or (ii) an elected LIBOR plus a margin of 3.25%. On September 25, 2013, subsequent to the thirty-six weeks ended September 3, 2013, the rate was reduced to the higher of (i) 4.0% "Floor" or (ii) an elected LIBOR plus a margin of 3.0%. Therefore, our term loan facility is effectively subject to a 4.0% Floor until

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LIBOR exceeds 1.0%. As of September 25, 2013, the three month LIBOR was 0.25%, which is below the Floor, therefore a hypothetical 0.5% increase in LIBOR would not result in an increase in interest expense.

Foreign Currency Exchange Risk

Our investments in foreign economies include three golf properties in Mexico and one business club in China. We translate foreign currency denominated amounts into U.S. dollars and we report our consolidated financial results of operations in U.S. dollars. Because the value of the U.S. dollar fluctuates relative to other currencies, revenues that we generate or expenses that we incur in other currencies could increase or decrease our revenues or expenses as reported in U.S. dollars. Total foreign currency denominated revenues and expenses comprised less than 1.0% of our consolidated revenues and expenses, respectively, for the thirty-six weeks ended September 3, 2013.

Fluctuations in the value of the U.S. dollar relative to other currencies could also increase or decrease foreign currency transaction gains and losses which are reflected as a component of club operating costs. Total foreign currency transaction losses for the thirty-six weeks ended September 3, 2013 totaled less than $0.1 million.

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ITEM 4. CONTROLS AND PROCEDURES

Included in this Form 10-Q are certifications of our Chief Executive Officer and our Chief Financial Officer, which are required in accordance with Rule 15d-14 of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This section includes information concerning the controls and controls evaluation referred to in the certifications.

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer, with the assistance of senior management personnel, have conducted

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