ClubCorp Holdings, Inc. - FORM 10-Q

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EX-32.1 - EXHIBIT 32.1 - ClubCorp Holdings, Inc.	cch-20150908xex321.htm
EX-32.2 - EXHIBIT 32.2 - ClubCorp Holdings, Inc.	cch-20150908xex322.htm
EX-31.2 - EXHIBIT 31.2 - ClubCorp Holdings, Inc.	cch-20150908xex312.htm
EX-31.1 - EXHIBIT 31.1 - ClubCorp Holdings, Inc.	cch-20150908xex311.htm
XML - IDEA: XBRL DOCUMENT - ClubCorp Holdings, Inc.	R9999.htm

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 September 8, 2015.

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 333-189912

ClubCorp Holdings, Inc.

(Exact name of registrant as specified in its charter)



Nevada		20-5818205
(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 x

Non-accelerated filer o		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

As of October 9, 2015, the registrant had 64,747,646 shares of common stock outstanding, with a par value of $0.01.

TABLE OF CONTENTS



		Page
	PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	3
	Unaudited consolidated condensed statements of operations and comprehensive income (loss) for the twelve and thirty-six weeks ended September 8, 2015 and September 9, 2014	3
	Unaudited consolidated condensed balance sheets as of September 8, 2015 and December 30, 2014	4
	Unaudited consolidated condensed statements of cash flows for the thirty-six weeks ended September 8, 2015 and September 9, 2014	5
	Unaudited consolidated condensed statements of changes in equity for the thirty-six weeks ended September 8, 2015 and September 9, 2014	6
	Notes to unaudited consolidated condensed financial statements	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	56
Item 4.	Controls and Procedures	57


	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	57
Item 1A.	Risk Factors	57
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59
Item 3.	Defaults Upon Senior Securities	59
Item 4.	Mine Safety Procedures	59
Item 5.	Other Information	59
Item 6.	Exhibits	60

Signatures.		61

PART I—FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

CLUBCORP HOLDINGS, INC.

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

For the Twelve and Thirty-Six Weeks Ended September 8, 2015 and September 9, 2014

(In thousands, except per share amounts)



	Twelve Weeks Ended						Thirty-Six Weeks Ended
	September 8, 2015			September 9, 2014			September 8, 2015			September 9, 2014
REVENUES:
Club operations	$	189,705		$	149,373		$	526,966		$	418,443
Food and beverage	65,102			54,684			191,785			161,045
Other revenues	553			418			2,428			2,128
Total revenues	255,360			204,475			721,179			581,616

DIRECT AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Club operating costs exclusive of depreciation	168,542			132,774			474,774			377,204
Cost of food and beverage sales exclusive of depreciation	23,191			18,400			65,317			53,338
Depreciation and amortization	24,562			17,160			71,616			50,405
Provision for doubtful accounts	1,373			850			1,876			996
Loss on disposals of assets	3,587			1,744			13,309			6,347
Impairment of assets	1,044			—			2,114			895
Equity in loss (earnings) from unconsolidated ventures	479			(660		)	934			(1,493		)
Selling, general and administrative	15,348			13,553			49,969			40,737
OPERATING INCOME	17,234			20,654			41,270			53,187

Interest and investment income	2,139			1,366			3,818			1,535
Interest expense	(16,170		)	(12,944		)	(48,587		)	(44,242		)
Loss on extinguishment of debt	—			—			—			(31,498		)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	3,203			9,076			(3,499		)	(21,018		)
INCOME TAX (EXPENSE) BENEFIT	(2,018		)	(5,802		)	187			3,028
INCOME (LOSS) FROM CONTINUING OPERATIONS	1,185			3,274			(3,312		)	(17,990		)
Loss from discontinued clubs, net of income tax benefit of $0 and $0 for the twelve weeks ended September 8, 2015 and September 9, 2014, respectively, and $1 and $1 for the thirty-six weeks ended September 8, 2015 and September 9, 2014, respectively	—			(1		)	(2		)	(2		)
NET INCOME (LOSS)	1,185			3,273			(3,314		)	(17,992		)
NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS	67			(63		)	148			(137		)
NET INCOME (LOSS) ATTRIBUTABLE TO CLUBCORP	$	1,252		$	3,210		$	(3,166	)	$	(18,129	)

NET INCOME (LOSS)	$	1,185		$	3,273		$	(3,314	)	$	(17,992	)
Foreign currency translation, net of tax	(2,196		)	(140		)	(3,463		)	7
OTHER COMPREHENSIVE (LOSS) INCOME	(2,196		)	(140		)	(3,463		)	7
COMPREHENSIVE (LOSS) INCOME	(1,011		)	3,133			(6,777		)	(17,985		)
COMPREHENSIVE LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS	67			(63		)	148			(137		)
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO CLUBCORP	$	(944	)	$	3,070		$	(6,629	)	$	(18,122	)

WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC	64,621			63,990			64,350			63,905
WEIGHTED AVERAGE SHARES OUTSTANDING, DILUTED	64,903			64,357			64,350			63,905

EARNINGS (LOSS) PER COMMON SHARE, BASIC:
Income (loss) from continuing operations attributable to ClubCorp	$	0.02		$	0.05		$	(0.05	)	$	(0.28	)
Income (loss) from discontinued clubs attributable to ClubCorp	$	—		$	—		$	—		$	—
Net income (loss) attributable to ClubCorp	$	0.02		$	0.05		$	(0.05	)	$	(0.28	)

EARNINGS (LOSS) PER COMMON SHARE, DILUTED:
Income (loss) from continuing operations attributable to ClubCorp	$	0.02		$	0.05		$	(0.05	)	$	(0.28	)
Income (loss) from discontinued clubs attributable to ClubCorp	$	—		$	—		$	—		$	—
Net income (loss) attributable to ClubCorp	$	0.02		$	0.05		$	(0.05	)	$	(0.28	)

Cash distributions declared per common share	$	0.26		$	0.24		$	0.39		$	0.36

See accompanying notes to unaudited consolidated condensed financial statements

CLUBCORP HOLDINGS, INC.

UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS

As of September 8, 2015 and December 30, 2014

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



	September 8, 2015			December 30, 2014
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	47,133		$	75,047
Receivables, net of allowances of $5,671 and $5,424 at September 8, 2015 and December 30, 2014, respectively	102,753			65,337
Inventories	23,667			20,931
Prepaids and other assets	16,539			15,776
Deferred tax assets, net	26,145			26,574
Total current assets	216,237			203,665
Investments	4,311			5,774
Property and equipment, net (includes $9,501 and $9,422 related to VIEs at September 8, 2015 and December 30, 2014, respectively)	1,538,218			1,474,763
Notes receivable, net of allowances of $758 and $704 at September 8, 2015 and December 30, 2014, respectively	5,908			8,262
Goodwill	312,811			312,811
Intangibles, net	32,622			34,960
Other assets	23,549			24,836
TOTAL ASSETS	$	2,133,656		$	2,065,071

LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	17,409		$	18,025
Membership initiation deposits - current portion	147,961			135,583
Accounts payable	32,152			31,948
Accrued expenses	40,563			44,424
Accrued taxes	24,384			21,903
Other liabilities	95,383			59,550
Total current liabilities	357,852			311,433
Long-term debt (includes $13,144 and $13,302 related to VIEs at September 8, 2015 and December 30, 2014, respectively)	1,021,864			965,187
Membership initiation deposits	204,175			203,062
Deferred tax liability, net	238,946			244,113
Other liabilities (includes $22,993 and $22,268 related to VIEs at September 8, 2015 and December 30, 2014, respectively)	120,988			120,417
Total liabilities	1,943,825			1,844,212
Commitments and contingencies (See Note 14)

EQUITY
Common stock of ClubCorp Holdings, Inc., $0.01 par value, 200,000,000 shares authorized; 64,744,547 and 64,443,332 issued and outstanding at September 8, 2015 and December 30, 2014, respectively	647			644
Additional paid-in capital	269,823			293,006
Accumulated other comprehensive loss	(7,753		)	(4,290		)
Retained deficit	(82,609		)	(79,443		)
Total stockholders’ equity	180,108			209,917
Noncontrolling interests in consolidated subsidiaries and variable interest entities	9,723			10,942
Total equity	189,831			220,859
TOTAL LIABILITIES AND EQUITY	$	2,133,656		$	2,065,071

See accompanying notes to unaudited consolidated condensed financial statements

CLUBCORP HOLDINGS, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

For the Thirty-Six Weeks Ended September 8, 2015 and September 9, 2014

(In thousands of dollars)



	Thirty-Six Weeks Ended
	September 8, 2015			September 9, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(3,314	)	$	(17,992	)
Adjustments to reconcile net loss to cash flows from operating activities:
Depreciation	69,577			50,103
Amortization	2,040			302
Asset impairments	2,114			895
Bad debt expense	1,937			1,012
Equity in loss (earnings) from unconsolidated ventures	934			(1,493		)
Gain on investment in unconsolidated ventures	(3,507		)	(1,276		)
Distribution from investment in unconsolidated ventures	4,035			4,290
Loss on disposals of assets	13,309			6,343
Debt issuance costs and amortization of term loan discount	3,284			5,784
Accretion of discount on member deposits	14,063			14,211
Amortization of above and below market rent intangibles	(245		)	(236		)
Equity-based compensation	3,510			3,037
Redemption premium payment included in loss on extinguishment of debt	—			27,452
Net change in deferred tax assets and liabilities	(4,738		)	(8,098		)
Net change in prepaid expenses and other assets	(3,206		)	(4,390		)
Net change in receivables and membership notes	(29,269		)	3,462
Net change in accounts payable and accrued liabilities	(1,967		)	(8,204		)
Net change in other current liabilities	34,555			(443		)
Net change in other long-term liabilities	(4,498		)	3,594
Net cash provided by operating activities	98,614			78,353
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(76,110		)	(55,087		)
Acquisition of clubs	(55,877		)	(17,187		)
Acquisition of Sequoia Golf (escrow deposit)	—			(10,000		)
Proceeds from dispositions	578			314
Net change in restricted cash and capital reserve funds	(63		)	(287		)
Return of capital in equity investments	—			126
Net cash used in investing activities	(131,472		)	(82,121		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt	(12,046		)	(278,668		)
Proceeds from new debt borrowings, net of loan discount	—			348,250
Repayments of revolving credit facility borrowings	(10,000		)	(11,200		)
Proceeds from revolving credit facility borrowings	57,000			11,200
Redemption premium payment	—			(27,452		)
Debt issuance and modification costs	(1,493		)	(2,930		)
Distribution to owners	(25,183		)	(22,980		)
Share repurchases for tax withholdings related to certain equity-based awards	(1,443		)	—
Distributions to noncontrolling interest	(1,071		)	—
Proceeds from new membership initiation deposits	520			635
Repayments of membership initiation deposits	(1,078		)	(1,075		)
Net cash provided by financing activities	5,206			15,780
EFFECT OF EXCHANGE RATE CHANGES ON CASH	(262		)	8
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(27,914		)	12,020
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD	75,047			53,781
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	47,133		$	65,801
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	$	31,432		$	28,683
Cash paid for income taxes	$	4,515		$	1,956
Non-cash investing and financing activities are as follows:
Capital lease	$	20,881		$	14,057

See accompanying notes to unaudited consolidated condensed financial statements

CLUBCORP HOLDINGS, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY

For the Thirty-Six Weeks Ended September 8, 2015 and September 9, 2014

(In thousands of dollars, except share amounts)



	Shares of Common Stock	Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Deficit			Noncontrolling Interests in Consolidated Subsidiaries			Total
BALANCE - December 31, 2013	63,789,730	$	638	$	320,274		$	(1,070	)	$	(92,669	)	$	10,777		$	237,950
Issuance of shares related to equity-based compensation	638,650	6		(6		)	—			—			—			—
Distributions to owners declared	—	—		(23,187		)	—			—			—			(23,187		)
Equity-based compensation expense	—	—		3,037			—			—			—			3,037
Net (loss) income	—	—		—			—			(18,129		)	137			(17,992		)
Other comprehensive income	—	—		—			7			—			—			7
BALANCE - September 9, 2014	64,428,380	$	644	$	300,118		$	(1,063	)	$	(110,798	)	$	10,914		$	199,815

BALANCE - December 30, 2014	64,443,332	$	644	$	293,006		$	(4,290	)	$	(79,443	)	$	10,942		$	220,859
Issuance of shares related to equity-based compensation, net of forfeitures and shares withheld for taxes	301,215	3		(1,446		)	—			—			—			(1,443		)
Distributions to owners declared	—	—		(25,247		)	—			—			—			(25,247		)
Equity-based compensation expense	—	—		3,510			—			—			—			3,510
Net loss	—	—		—			—			(3,166		)	(148		)	(3,314		)
Other comprehensive loss	—	—		—			(3,463		)	—			—			(3,463		)
Distributions to noncontrolling interest	—	—		—			—			—			(1,071		)	(1,071		)
BALANCE - September 8, 2015	64,744,547	$	647	$	269,823		$	(7,753	)	$	(82,609	)	$	9,723		$	189,831

See accompanying notes to unaudited consolidated condensed financial statements

NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(dollar amounts in thousands, except per share amounts or unless otherwise indicated)

1. ORGANIZATION AND DESCRIPTION OF THE BUSINESS

ClubCorp Holdings, Inc. (“Holdings”) and its wholly owned subsidiaries CCA Club Operations Holdings, LLC (“Operations' Parent”) and ClubCorp Club Operations, Inc. (“Operations” and, together with Holdings and Operations' Parent, “ClubCorp”) were formed on November 10, 2010, as part of a reorganization (“ClubCorp Formation”) of ClubCorp, Inc. (“CCI”), which was effective as of November 30, 2010, for the purpose of operating and managing golf and country clubs and business, sports and alumni clubs. As of September 8, 2015, approximately 14% of Holdings' common stock was 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”.

As of September 8, 2015, we own, lease or operate through joint ventures 148 golf and country clubs and manage 10 golf and country clubs. Likewise, we own, lease or operate through a joint venture 46 business, sports and alumni clubs and manage two business, sports and alumni clubs. Our facilities are located in 26 states, the District of Columbia and two foreign countries.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation—The consolidated condensed financial statements reflect the consolidated operations of ClubCorp, its wholly and majority owned subsidiaries and certain variable interest entities (“VIEs”) for which we are deemed to be the primary beneficiary. 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 (“GAAP”). All intercompany accounts have been eliminated. For clubs that we consolidate, revenues from club operations, food and beverage sales, merchandise sales, membership dues and membership initiation payments are recognized in accordance with the revenue recognition policy described within this note.

Investments in certain unconsolidated affiliates are accounted for by the equity method, while investments in other unconsolidated affiliates are accounted for under the cost method in accordance with GAAP. See Note 4.

We have entered into agreements with third-party owners of clubs to act as a managing agent and provide certain services to the third party club owner in exchange for a management fee. The operations of managed clubs are not consolidated. We recognize the contractual management fees as revenue when earned in accordance with GAAP. Additionally, we recognize reimbursements for certain costs of operations at certain managed clubs as revenue.

The accompanying consolidated condensed financial statements have been prepared by Holdings and are unaudited. Certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP have been omitted from the accompanying financial 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 Holdings for the year ended December 30, 2014.

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.

We 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, including Adjusted EBITDA (“Adjusted EBITDA”), a key financial measurement of segment profit and loss, is reviewed regularly by the chief operating decision maker to evaluate performance and allocate resources. See Note 12.

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 generally billed monthly and recognized in the period earned.

At a majority of our private clubs, members are expected to pay an initiation fee or deposit upon their acceptance as a member to the club. In general, initiation fees are not refundable, whereas initiation deposits 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 fees and deposits over the expected life of an active membership. 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 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 non-refundable 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 received are not refundable and are deferred and recognized within club operations revenue on the consolidated condensed statements of operations over the expected life of an active membership.

The expected lives of active memberships are calculated annually using historical attrition rates. Periods in which attrition rates differ significantly from enrollment rates could have a material effect on our consolidated condensed financial statements by decreasing or increasing the expected lives of active memberships, which in turn would affect the length of time over which we recognize initiation fee and deposit revenues. During the thirty-six weeks ended September 8, 2015 and September 9, 2014, our estimated expected lives ranged from one to 20 years; the weighted-average expected life of a golf and country club membership was approximately seven years and the expected life of a business, sports and alumni club membership was approximately three years.

Membership initiation payments recognized within club operations revenue on the consolidated condensed statements of operations were $3.3 million and $9.5 million for the twelve and thirty-six weeks ended September 8, 2015, respectively, and $3.0 million and $9.1 million for the twelve and thirty-six weeks ended September 9, 2014, respectively.

Equity-Based Awards—We measure the cost of employee services rendered in exchange for equity-based compensation based upon the grant date fair market value of the respective equity-based awards. The value is recognized over the requisite service period, which is generally the vesting period. The following table shows total equity-based compensation expense included in the consolidated condensed statements of operations:



	Twelve Weeks Ended						Thirty-Six Weeks Ended
	September 8, 2015			September 9, 2014			September 8, 2015			September 9, 2014
Club operating costs exclusive of depreciation	$	333		$	256		$	995		$	1,053
Selling, general and administrative	962			693			2,515			1,984
Pre-tax equity-based compensation expense	1,295			949			3,510			3,037
Less: benefit for income taxes	(492		)	(548		)	(1,302		)	(912		)
Equity-based compensation expense, net of tax	$	803		$	401		$	2,208		$	2,125

As of September 8, 2015, there was approximately $5.4 million of unrecognized expense, adjusted for estimated forfeitures, related to non-vested, equity-based awards granted to employees, which is expected to be recognized over a weighted average period of approximately 1.7 years.

The Amended and Restated ClubCorp Holdings, Inc. 2012 Stock Award Plan (the “Stock Plan”) provides for an aggregate amount of no more than 4.0 million shares of common stock to be available for awards. The Stock Plan provides for the grant of stock options, restricted stock awards, restricted stock units, performance-based awards and other equity-based incentive awards. To date, we have granted restricted stock awards, restricted stock units (“RSUs”), and performance restricted stock units (“PSUs”) under the Stock Plan. As of September 8, 2015, approximately 2.7 million shares of common stock were available for future issuance under the Stock Plan.

On April 1, 2012, Holdings granted RSUs to certain executives under the Stock Plan. The RSUs vest based on satisfaction of both a time condition and a liquidity condition and are converted into shares of our common stock upon vesting. On March 15, 2014, the required time period following our initial public offering (“IPO”) was satisfied and the liquidity vesting requirement was met, at which time one third of the RSUs granted were converted into 211,596 shares of our common stock. On April 1, 2014, 211,579 of the RSUs vested and were converted into shares of our common stock. The remaining 190,788 RSUs vested on April 1, 2015 and 122,144 RSUs were converted into shares of our common stock, while 68,644 RSUs were forfeited by employees in lieu of the payment of income tax withholding obligations.

On January 17, 2014, and on February 7, 2014, we granted 103,886 and 111,589 shares of restricted stock, under the Stock Plan, to certain officers and employees. Under the terms of the grants, the restrictions will be removed upon satisfaction of time vesting requirements, subject to the holder remaining employed by us. On February 7, 2014, we granted 111,610 PSUs, under the Stock Plan, to certain officers and employees. Under the terms of the grants, the PSUs will convert into shares of our common stock upon satisfaction of (i) time vesting requirements and (ii) the applicable performance based thresholds. On September 25, 2014, we granted a total of 14,952 shares of restricted stock to our independent directors, which vested on September 25, 2015.

On February 5, 2015, we granted 193,815 shares of restricted stock, under the Stock Plan, to certain officers and employees. Under the terms of the grants, the restrictions will be removed upon satisfaction of time vesting requirements, subject to the respective holders remaining employed by us. Also on February 5, 2015, we granted 138,219 PSUs, under the Stock Plan, to officers and employees. Under the terms of the grants, the PSUs will convert into shares of our common stock upon satisfaction of (i) time vesting requirements and (ii) the applicable performance based thresholds.

On June 25, 2015, we granted a total of 11,656 shares of restricted stock to certain of our independent directors. On August 4, 2015, we granted 3,028 shares of restricted stock to an independent director. Also, subsequent to the twelve weeks ended September 8, 2015, on September 15, 2015, we granted 3,099 shares of restricted stock to an independent director. These shares vest one year from the date of grant.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-9 (“ASU 2014-9”), Revenue from Contracts with Customers. ASU 2014-9 requires revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also specifies the accounting for some costs to obtain or fulfill a contract with a customer, as well as enhanced disclosure requirements. ASU 2014-9 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning after December 15, 2017. We are still evaluating the impact that our adoption of ASU 2014-9 will have on our consolidated financial position or results of operations.

In August 2014, the FASB issued Accounting Standards Update No. 2014-15 (“ASU 2014-15”), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 provides guidance on management's responsibility to perform interim and annual assessments of an entity’s ability to continue as a going concern and to provide related disclosure requirements. ASU 2014-15 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning after December 15, 2016. The adoption of ASU 2014-15 is not expected to have a material impact on our consolidated financial statements.

In February 2015, the FASB issued Accounting Standards Update No. 2015-2 (“ASU 2015-2”), Consolidation (Topic 810)–Amendments to the Consolidation Analysis. ASU 2015-2 applies to entities in all industries and provides a new scope exception to registered money market funds and similar unregistered money market funds. It makes targeted amendments

to existing consolidation guidance and ends the deferral granted to investment companies from applying the VIE guidance. The targeted changes are designed to address most of the concerns of the asset management industry. However, entities across all industries will be impacted, particularly those that use limited partnerships. ASU 2015-2 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning after December 15, 2015. We are still evaluating the impact that our adoption of ASU 2015-2 will have on our consolidated financial position or results of operations.

In April 2015, the FASB issued Accounting Standards Update No. 2015-3 (“ASU 2015-3”), Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. ASU 2015-3 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-3 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning after December 15, 2015. We are still evaluating the impact that our adoption of ASU 2015-3 will have on our consolidated financial statements.

In September 2015, the FASB issued Accounting Standards Update No. 2015-16 (“ASU 2015-16), Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. ASU 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. ASU 2015-16 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning after December 15, 2015. We are still evaluating the impact that our adoption of ASU 2015-16 will have on our consolidated financial position or results of operations.

3. VARIABLE INTEREST ENTITIES

Consolidated VIEs include three managed golf course properties and certain realty interests which we define as “Non-Core Development Entities”. 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 managed golf course property VIEs is financed through a loan payable of $0.8 million collateralized by assets of the entity totaling $4.3 million as of September 8, 2015. The other managed golf course property VIEs are financed through advances from us. Outstanding advances as of September 8, 2015 total $4.2 million compared to recorded assets of $7.0 million. The VIE related to the Non-Core Development Entities is financed through notes which are payable through cash proceeds related to the sale of certain real estate held by the Non-Core Development Entities. Recourse of creditors to these VIEs is limited to the assets of the VIE entities, which total $12.1 million and $11.2 million at September 8, 2015 and December 30, 2014, respectively.

The following summarizes the carrying amount and classification of the VIEs' assets and liabilities in the consolidated condensed balance sheets as of September 8, 2015 and December 30, 2014, net of intercompany amounts:



	September 8, 2015			December 30, 2014
Current assets	$	1,795		$	962
Fixed assets, net	9,501			9,422
Other assets	846			839
Total assets	$	12,142		$	11,223

Current liabilities	$	1,597		$	1,007
Long-term debt	13,144			13,302
Other long-term liabilities	23,513			20,718
Noncontrolling interest	5,706			5,886
Company capital	(31,818		)	(29,690		)
Total liabilities and equity	$	12,142		$	11,223

4. INVESTMENTS

Equity method investments in golf and business club ventures total $1.2 million and $1.3 million at September 8, 2015 and December 30, 2014, respectively, and include one active golf club joint venture and one business club joint venture. Our share of earnings in the equity investments is included in equity in loss (earnings) from unconsolidated ventures in the consolidated condensed statements of operations.

We also have one equity method investment of 10.2% in Avendra, LLC, a purchasing cooperative of hospitality companies. The carrying value of the investment was $2.6 million and $4.0 million at September 8, 2015 and December 30, 2014, respectively. Our share of earnings in the equity investment is included in equity in loss (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 $0.0 million and $2.5 million during the twelve and thirty-six weeks ended September 8, 2015, respectively, and $0.3 million and $2.3 million during the twelve and thirty-six weeks ended September 9, 2014. 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 CCI by affiliates of KSL was allocated to intangible assets of the joint venture and is being amortized over approximately 10 years beginning in 2007. The carrying value of these intangible assets was $2.6 million and $4.0 million at September 8, 2015 and December 30, 2014, respectively.

Our equity in net income from Avendra, LLC is shown below:



	Twelve Weeks Ended						Thirty-Six Weeks Ended
	September 8, 2015			September 9, 2014			September 8, 2015			September 9, 2014
ClubCorp's equity in net income, excluding amortization	$	—		$	1,167		$	354		$	2,967
Amortization	(463		)	(463		)	(1,390		)	(1,390		)
ClubCorp's equity in net (loss) income	$	(463	)	$	704		$	(1,036	)	$	1,577

Additionally, we recognized $2.0 million and $3.5 million of return on our equity investment in Avendra within interest and investment income during the twelve and thirty-six weeks ended September 8, 2015, respectively. We recognized $1.3 million of return on our equity investment in Avendra within interest and investment income during the twelve and thirty-six weeks ended September 9, 2014. All cash distributions from our equity investment are reported as distribution from investment in unconsolidated ventures within the operating section of our consolidated condensed statements of cash flows.

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 September 8, 2015 and December 30, 2014:



	September 8, 2015				December 30, 2014
	Recorded Value		Fair Value		Recorded Value		Fair Value
Level 2 (1)	$	898,103	$	902,232	$	897,729	$	887,589
Level 3	97,389		88,317		51,534		41,648
Total	$	995,492	$	990,549	$	949,263	$	929,237

______________________


(1)	The recorded value for Level 2 Debt is presented net of the $3.0 million and $3.4 million discount as of September 8, 2015 and December 30, 2014, respectively, on the Secured Credit Facilities, as defined in Note 9.

All debt obligations are considered Level 3 except for borrowings under the Secured Credit Facilities, as defined in Note 9, which are considered Level 2. 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 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 September 8, 2015 and December 30, 2014.

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

Our assets and liabilities measured at fair value on a non-recurring basis include equity method investments, property and equipment, mineral rights, goodwill, trade names, liquor licenses, management contracts and other assets and liabilities recorded during business combinations. Assets and liabilities from business combinations were recorded on our consolidated condensed balance sheets at fair value at the date of acquisition. The key assumptions used in determining these values are considered Level 3 measurements. See Note 11.

Property and Equipment—We recognized impairment losses to property and equipment of $1.8 million during the thirty-six weeks ended September 8, 2015, of which $0.8 million was recognized during the twelve weeks ended September 8, 2015, to adjust the carrying amount of certain property and equipment to its fair value of zero due to continued and projected lower operating results as well as changes in the expected holding period of certain fixed assets. We recognized impairment losses of $0.9 million during the thirty-six weeks ended September 9, 2014, of which none was recognized during the twelve weeks ended September 9, 2014, to adjust the carrying amount of certain property and equipment to its fair value of $0.2 million due to continued and projected lower operating results at those clubs as well as changes in the expected holding period of certain fixed assets. The valuation methods used to determine fair value included an evaluation of the sales price of comparable real estate properties (‘‘Sales comparison approach’’), an analysis of discounted future cash flows using a risk-adjusted discount rate (‘‘Income Approach’’), and consideration of historical cost adjusted for economic obsolescence (‘‘Cost Approach’’). The fair value calculations associated with these valuations are classified as Level 3 measurements. See Note 6.

6. PROPERTY AND EQUIPMENT

Property and equipment, including capital lease assets, at cost consists of the following at September 8, 2015 and December 30, 2014:



	September 8, 2015			December 30, 2014
Land and non-depreciable land improvements	$	601,214		$	589,975
Depreciable land improvements	475,092			445,979
Buildings and recreational facilities	505,971			482,493
Machinery and equipment	259,453			225,103
Leasehold improvements	107,626			104,904
Furniture and fixtures	95,862			85,800
Construction in progress	9,322			6,284
	2,054,540			1,940,538
Accumulated depreciation	(516,322		)	(465,775		)
Total	$	1,538,218		$	1,474,763

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. See Note 5.

7. GOODWILL AND INTANGIBLE ASSETS

Goodwill and other intangible assets consist of the following at September 8, 2015 and December 30, 2014:



		September 8, 2015							December 30, 2014
Asset	Useful Life	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Intangible assets with indefinite lives:
Trade names		$	24,790				$	24,790	$	24,790				$	24,790
Liquor Licenses		2,070					2,070		2,042					2,042
Intangible assets with finite lives:
Member Relationships	2-7 years	2,866		$	(1,486	)	1,380		2,866		$	(539	)	2,327
Management Contracts	1-10 years	4,680		(917		)	3,763		5,698		(866		)	4,832
Trade names	2 years	1,100		(481		)	619		1,100		(131		)	969
Total		$	35,506	$	(2,884	)	$	32,622	$	36,496	$	(1,536	)	$	34,960

Goodwill		$	312,811				$	312,811	$	312,811				$	312,811

Intangible Assets—Intangible asset amortization expense was $0.7 million and $2.0 million for the twelve and thirty-six weeks ended September 8, 2015, respectively, and $0.1 million and $0.3 million for the twelve and thirty-six weeks ended September 9, 2014, respectively. We recognized impairment losses to intangible assets of $0.3 million for the twelve and thirty-six weeks ended September 8, 2015. There were no impairments recorded during the twelve and thirty-six weeks ended September 9, 2014.

For each of the five years subsequent to 2014 and thereafter the amortization expense is expected to be as follows:



Year	Amount
Remainder of 2015	$	867
2016	1,928
2017	870
2018	719
2019	450
Thereafter	928
Total	$	5,762

Goodwill—The following table shows goodwill balances for each of our reporting units, which are the same as our reportable segments. No impairments have been recorded for either reporting unit.



	Golf & Country Clubs		Business, Sports & Alumni Clubs		Total
December 30, 2014	$	167,460	$	145,351	$	312,811
September 8, 2015	$	167,460	$	145,351	$	312,811

8. CURRENT AND LONG-TERM LIABILITIES

Current liabilities consist of the following at September 8, 2015 and December 30, 2014:



	September 8, 2015		December 30, 2014
Accrued compensation	$	25,342	$	29,273
Accrued interest	7,895		7,428
Other accrued expenses	7,326		7,723
Total accrued expenses	$	40,563	$	44,424

Taxes payable other than federal income taxes (1)	$	24,384	$	21,903
Total accrued taxes	$	24,384	$	21,903

Advance event and other deposits	$	31,860	$	15,584
Unearned dues	30,779		12,819
Deferred membership revenues	12,031		10,937
Insurance reserves	8,872		8,464
Distributions to owners declared, but unpaid	8,459		8,384
Other current liabilities	3,382		3,362
Total other current liabilities	$	95,383	$	59,550

______________________


(1)	We had no federal income taxes payable as of September 8, 2015 and December 30, 2014.

Other long-term liabilities consist of the following at September 8, 2015 and December 30, 2014:



	September 8, 2015		December 30, 2014
Uncertain tax positions	$	8,368	$	7,670
Deferred membership revenues	45,260		42,894
Casualty insurance loss reserves - long term portion	13,566		14,162
Above market lease intangibles	414		774
Deferred rent	28,662		27,838
Accrued interest on notes payable related to Non-Core Development Entities	22,909		22,174
Other	1,809		4,905
Total other long-term liabilities	$	120,988	$	120,417

9. DEBT AND CAPITAL LEASES

Secured Credit Facilities

Secured Credit Facilities—In 2010, Operations entered into the secured credit facilities (the “Secured Credit Facilities”). The credit agreement governing the Secured Credit Facilities was subsequently amended in 2012, 2013, 2014 and 2015. As of September 8, 2015, the Secured Credit Facilities were comprised of (i) a $901.1 million term loan facility, and (ii) a revolving credit facility with capacity of $135.0 million and $58.3 million available for borrowing, after deducting $29.7 million of standby letters of credit outstanding and $47.0 million of outstanding borrowings.

As of September 8, 2015, the interest rate on the term loan facility is a variable rate calculated as the higher of (i) 4.25% or (ii) an elected LIBOR plus a margin of 3.25% and the maturity date of the term loan facility is July 24, 2020. Operations and its restricted subsidiaries are required to maintain a senior secured leverage ratio (the “Senior Secured Leverage Ratio”) of no greater than 5.00:1.00 as of the end of each fiscal quarter. As of September 8, 2015, Operations' Senior Secured Leverage Ratio was 4.41:1.00.

All remaining revolving credit commitments under the revolving credit facility are related to a tranche which matures on September 30, 2018 and bears interest at a rate of LIBOR plus a margin of 3.0% per annum. Operations is required to pay a commitment fee on all undrawn amounts under the revolving credit facility and a fee on all outstanding letters of credit, payable quarterly in arrears.

On April 11, 2014, Operations entered into a fifth amendment to the credit agreement governing the Secured Credit Facilities to, amongst other matters, (i) provide an aggregate of $350.0 million, before a discount of $1.8 million, of additional senior secured term loans under the existing term loan facility, and (ii) amend the Senior Secured Leverage Ratio.

On September 30, 2014, Operations entered into a sixth amendment to the credit agreement governing the Secured Credit Facilities to (i) provide an aggregate of $250.0 million, before a debt issuance discount of $1.9 million, of incremental senior secured term loans under the existing term loan facility, (ii) modify the interest rate on the term loan facility to a variable rate calculated as the higher of (a) 4.5% or (b) an elected LIBOR plus a margin of 3.5% and (iii) modify the accordion feature under the credit agreement to provide for, subject to lender participation, additional borrowings in revolving or term loan commitments, so long as the Senior Secured Leverage Ratio does not exceed 3.75:1.00.

On May 28, 2015, Operations entered into a seventh amendment to the credit agreement governing the Secured Credit Facilities, which reduced the interest rate on the term loan facility to the higher of (a) 4.25% or (b) an elected LIBOR plus a margin of 3.25%. In conjunction with the seventh amendment, we incurred $1.3 million in debt modification costs, which were expensed in the period incurred.

Senior Notes

On November 30, 2010, Operations issued $415.0 million in senior unsecured notes (the “Senior Notes”), bearing interest at 10.0% and maturing December 1, 2018. On October 28, 2013, Operations repaid $145.3 million in aggregate principal of Senior Notes at a redemption price of 110.00%, plus accrued and unpaid interest thereon. On April 11, 2014, Operations provided notice to the trustee for the Senior Notes that Operations had elected to redeem all of the remaining outstanding Senior Notes at a redemption price of 110.18%, plus accrued and unpaid interest thereon, on May 11, 2014. Operations irrevocably deposited with the trustee $309.2 million, which is the amount sufficient to fund the redemption and to satisfy and discharge Operations' obligations under the Senior Notes. The redemption premium of $27.5 million and the write-off of remaining unamortized debt issuance costs of $4.0 million was accounted for as loss on extinguishment of debt during the twelve weeks ended June 17, 2014.

Mortgage Loans

Stonebriar / Monarch Loan—In July 2008, we entered into a secured mortgage loan with General Electric Capital Corporation for $32.0 million (the “Stonebriar / Monarch Loan”). As of September 8, 2015, the maturity date is November 2015 with two twelve month options to extend the maturity date through November 2017, upon satisfaction of certain conditions of the loan agreement. On June 11, 2015, we were notified that the Stonebriar / Monarch Loan was assigned to an affiliate of Blackstone Mortgage Trust, Inc. As of September 8, 2015, we expected to meet the required conditions and currently intend to extend the maturity date to November 2017.

Atlantic Capital Bank—In October 2010, we entered into a new mortgage loan with Atlantic Capital Bank for $4.0 million of debt maturing in 2015 with twenty-five year amortization. Effective May 6, 2015, we amended the loan agreement with Atlantic Capital Bank to extend the maturity date to April 2020.

BancFirst—In May 2013, in connection with the acquisition of Oak Tree Country Club, we assumed a mortgage loan with BancFirst for $5.0 million with an original maturity of October 2014 and two twelve month options to extend the maturity through October 2016 upon satisfaction of certain conditions in the loan agreement. On October 1, 2014, we extended the term of the loan to October 1, 2015. As of September 8, 2015, we expected to meet the required conditions and intended to extend the maturity date of the loan. Effective October 1, 2015, we extended the term of the loan to October 1, 2016.

Long-term borrowings and lease commitments as of September 8, 2015 and December 30, 2014, are summarized below:



	September 8, 2015					December 30, 2014
	Carrying Value			Interest Rate		Carrying Value			Interest Rate		Interest Rate Calculation	Maturity

Secured Credit Facilities
Term Loan, gross of discount	$	901,106		4.25	%	$	901,106		4.50	%	As of September 8, 2015, greater of (i) 4.25% or (ii) an elected LIBOR + 3.25%; as of December 30, 2014, greater of (i) 4.5% or (ii) an elected LIBOR + 3.5%	2020
Revolving Credit Borrowings - ($135,000 capacity) (1)	47,000			3.20	%	—			3.26	%	LIBOR plus a margin of 3.0%	2018
Mortgage Loans
Stonebriar / Monarch Loan	29,268			6.00	%	29,738			6.00	%	5.00% plus the greater of (i) three month LIBOR or (ii) 1%	2017
Notes payable related to certain Non-Core Development Entities	11,837			9.00	%	11,837			9.00	%	Fixed	(2)
Atlantic Capital Bank	3,227			4.50	%	3,333			4.50	%	Greater of (i) 3.0% + 30 day LIBOR or (ii) 4.5%	2020
BancFirst	3,921			4.50	%	4,266			4.50	%	Greater of (i) 4.5% or (ii) prime rate	2016
Other indebtedness	2,136			4.00% - 8.60%		2,360			4.00% - 8.60%		Fixed	Various
	998,495					952,640
Capital leases	43,781					33,949
	1,042,276					986,589
Less current portion	(17,409		)			(18,025		)
Less discount on the Secured Credit Facilities' Term Loan	(3,003		)			(3,377		)
Long-term debt	$	1,021,864				$	965,187

______________________


(1)	As of September 8, 2015, the revolving credit facility had capacity of $135.0 million, which was reduced by the $47.0 million outstanding balance and $29.7 million of standby letters of credit outstanding, leaving $58.3 million available for borrowing.


(2)	Notes payable and accrued interest related to certain Non-Core Development Entities are payable through the cash proceeds related to the sale of certain real estate held by these Non-Core Development Entities.

The amount of long-term debt maturing in each of the five years subsequent to 2014 and thereafter is as follows. This table reflects the contractual maturity dates as of September 8, 2015.



Year	Debt		Capital Leases		Total
Remainder of 2015	$	404	$	5,315	$	5,719
2016	4,906		14,556		19,462
2017	28,977		11,486		40,463
2018	47,499		7,807		55,306
2019	434		3,702		4,136
Thereafter	916,275		915		917,190
Total	$	998,495	$	43,781	$	1,042,276

10. INCOME TAXES

Holdings files income tax returns in the U.S. federal jurisdiction, numerous state jurisdictions and in three foreign jurisdictions. Income taxes recorded are adjusted to the extent losses or other deductions cannot be utilized in the consolidated federal income tax return. We file state tax returns on a separate company basis or unitary basis as required by law. Additionally, certain subsidiaries of Holdings, owned through lower tier joint ventures, file separate tax returns for federal and state purposes.

Our annual 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. Our tax expense or benefit recognized in 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). Our effective income tax rate for the twelve and thirty-six weeks ended September 8, 2015 and was 63.0% and 5.4%, respectively, compared to 63.9% and 14.4% for the twelve and thirty-six weeks ended September 9, 2014, respectively. For the twelve and thirty-six weeks ended September 8, 2015, the effective tax rate differed from the statutory federal rate of 35.0% primarily due to state taxes and changes in uncertain tax positions, while for the twelve and thirty-six weeks ended September 9, 2014, 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.

As of September 8, 2015 and December 30, 2014, we have recorded $8.4 million and $7.7 million, respectively, of unrecognized tax benefits related to uncertain tax positions, including interest and penalties of $2.5 million and $1.4 million, respectively, which are included in other liabilities in the consolidated condensed balance sheets for both periods. If we were to prevail on all uncertain tax positions, the net effect would be an income tax benefit of approximately $5.8 million, exclusive of any benefits related to interest and penalties.

During 2014, we completed an Internal Revenue Service (“IRS”) audit of certain components for the 2010 tax return, which included cancellation of indebtedness income related to the ClubCorp Formation. We are also subject to a variety of state income tax audits for years open under the statute of limitations and certain of our foreign subsidiaries are under audit in Mexico for the 2008 and 2009 tax years, as described below. No assessments have been received for our state income tax audits and no unrecognized tax benefits have been recorded related to these tax positions.

As of September 8, 2015, the statute of limitations has expired for U.S. federal income taxes for the 2010 tax year. However, the 2010 tax year remains open under statute for most state tax jurisdictions. In Mexico, the statute of limitations is generally five years from the date of the filing of the tax return for any particular year, including amended returns. Accordingly, in general, tax years 2009 through 2014 remain open under statute; although certain prior years are also open as a result of the tax proceedings described below.

Certain of our Mexican subsidiaries are under audit by the Mexican taxing authorities for the 2008 and 2009 tax years. We have received two assessments, for approximately $3.0 million each, plus penalties and interest, for two of our Mexican subsidiaries under audit for the 2008 tax year. We have taken the appropriate procedural steps to vigorously contest these assessments through the appropriate Mexican judicial channels. We have not recorded a liability related to these uncertain tax positions as we believe it is more likely than not that we will prevail based on the merits of our positions. In 2014, we received an audit assessment for the 2009 tax year for another Mexican subsidiary. We have taken the appropriate procedural steps to contest the assessment through the Mexican judicial channels. We recorded a liability in 2014 related to an unrecognized tax benefit for $5.4 million, exclusive of penalties and interest. The unrecognized tax benefit has been recorded due to the technical nature of the tax filing position taken by our Mexican subsidiary and uncertainty around the ultimate outcome of this assessment, which we intend to continue to contest.

Management believes it is unlikely that our unrecognized tax benefits will significantly change within the next 12 months given the current status of the matters being litigated in Mexico. However, as audit outcomes and the timing of related resolutions are subject to significant uncertainties, we will continue to evaluate the tax issues related to these assessments in future periods. In summary, we believe we are adequately reserved for our uncertain tax positions as of September 8, 2015.

11. NEW AND ACQUIRED CLUBS AND CLUB DIVESTITURES

New and Acquired Clubs

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

Southeast Portfolio—On April 7, 2015, we acquired a multi-club portfolio of six golf and country clubs for a combined purchase price of $43.8 million and net cash consideration of $43.6 million.



Golf and Country Clubs	Type of Club	Market	State	Golf Holes
Bermuda Run Country Club	Private Country Club	Charlotte	NC	36
Brookfield Country Club	Private Country Club	Atlanta	GA	18
Firethorne Country Club	Private Country Club	Charlotte	NC	18
Temple Hills Country Club	Private Country Club	Nashville	TN	27
Ford's Colony Country Club	Semi-Private Golf Club	Richmond	VA	54
Legacy Golf Club at Lakewood Ranch	Public Golf	Bradenton	FL	18

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:



	April 7, 2015
Receivables, net of allowances of $228	$	1,757
Inventories and notes receivable	646
Land	9,920
Depreciable land improvements	17,321
Buildings and recreational facilities	13,113
Machinery and equipment and furniture and fixtures	4,959
Current liabilities	(2,063		)
Long-term debt (obligation related to capital leases) and other liabilities	(2,020		)
Total	$	43,633

Rolling Green Country Club—On January 20, 2015, we purchased Rolling Green Country Club, a private golf club in Arlington Heights, Illinois, for a purchase price of $6.5 million and net cash consideration of $6.4 million. 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:



	January 20, 2015
Land, depreciable land improvements and property and equipment	$	6,554
Inventory	125
Other current liabilities and accrued taxes	(110		)
Long-term debt (obligation related to capital leases)	(193		)
Total	$	6,376

Ravinia Green Country Club—On January 13, 2015, we acquired Ravinia Green Country Club, a private golf club in Riverwoods, Illinois, for a purchase price and net cash consideration of $5.9 million. 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:



	January 13, 2015
Land, depreciable land improvements and property and equipment	$	6,034
Inventory and prepaid assets	30
Other current liabilities and accrued taxes	(186		)
Long-term debt (obligation related to capital leases)	(11		)
Total	$	5,867

Oro Valley Country Club—On December 4, 2014, we acquired Oro Valley Country Club, a private golf club in Oro Valley, Arizona, for a purchase price and net cash consideration of $3.1 million. We recorded the following major categories of assets and liabilities:



	December 4, 2014
Land, depreciable land improvements and property and equipment	$	2,997
Inventory and prepaid assets	120
Intangibles, net	230
Other current liabilities and accrued taxes	(53		)
Long-term debt (obligation related to capital leases)	(225		)
Total	$	3,069

Sequoia Golf—On September 30, 2014, we completed the Sequoia Golf acquisition, which was executed through the purchase of all the equity interests in each of Sequoia Golf Holdings, LLC and Parthenon-Sequoia Ltd. (“Sequoia Golf”). On the date of acquisition, Sequoia Golf was comprised of 30 owned golf and country clubs and 20 leased or managed clubs. The total purchase price was $260.0 million, net of $5.6 million of cash acquired and after customary closing adjustments including net working capital. The acquisition was funded through net proceeds of $244.6 million, net of discount and debt issuance costs, from incremental term loan borrowings under the Secured Credit Facilities and from cash and cash equivalents. See Note 9 for further description of the incremental term loan borrowings.

The following summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:



	September 30, 2014
Receivables	$	10,204
Inventories, prepaids, notes receivable, current deferred tax assets and other assets	7,957
Land	54,990
Depreciable land improvements	88,025
Buildings and recreational facilities	46,931
Machinery and equipment and furniture and fixtures	26,954
Intangibles, net	9,756
Goodwill	54,352
Total assets acquired	299,169
Current liabilities	(22,266		)
Long-term debt (obligation related to capital leases)	(2,544		)
Long-term deferred tax liability, net	(14,263		)
Noncontrolling interests in consolidated subsidiaries	(89		)
Total liabilities and noncontrolling interests in consolidated subsidiaries	(39,162		)
Net assets acquired	$	260,007

The excess of the purchase price over the aggregate fair values of assets acquired and liabilities assumed was recorded as goodwill and allocated to the golf and country club reporting unit, which is the only reporting unit within our golf and country club segment. The goodwill recorded is primarily related to: (i) expected cost and revenue synergies from combining operations and expanding our reciprocal access programs and (ii) expected earnings growth due to increased discretionary capital spending. None of the goodwill recorded is deductible for tax purposes. The intangible assets recorded are related to member relationships and management contracts and have a weighted average amortization period of approximately 3 years. Machinery and equipment recorded above includes $4.0 million of assets which are accounted for as capital leases.

Baylor Club—On April 30, 2014, we finalized the lease and management rights to the Baylor Club, an alumni club within the new Baylor University football stadium in Waco, Texas.

TPC Piper Glen—On April 29, 2014, we acquired Tournament Players Club (“TPC”) Piper Glen, a private golf club in Charlotte, North Carolina with a purchase price of $3.8 million for net cash consideration of $3.7 million. We recorded the following major categories of assets and liabilities:



	April 29, 2014
Land, depreciable land improvements and property and equipment	$	3,833
Receivables and inventory	210
Other current liabilities and accrued taxes	(115		)
Long-term debt (obligation related to capital leases) and other liabilities	(197		)
Total	$	3,731

TPC Michigan—On April 29, 2014, we acquired TPC Michigan, a semi-private golf club in Dearborn, Michigan with a purchase price of $3.0 million for net cash consideration of $2.6 million. We recorded the following major categories of assets and liabilities:



	April 29, 2014
Land, depreciable land improvements and property and equipment	$	3,643
Receivables, inventory and prepaid assets	235
Other current liabilities and accrued expenses	(624		)
Long-term debt (obligation related to capital leases)	(157		)
Deferred tax liability	(175		)
Membership initiation deposits	(370		)
Total	$	2,552

The Clubs of Prestonwood—On March 3, 2014, we acquired The Clubs of Prestonwood, a private golf club comprised of two properties, The Creek in Dallas, Texas and The Hills in nearby Plano, Texas, with a purchase price of $11.2 million for net cash consideration of $10.9 million. We recorded the following major categories of assets and liabilities:



	March 3, 2014
Land, depreciable land improvements and property and equipment	$	14,742
Inventory and prepaid assets	97
Other current liabilities and accrued taxes	(362		)
Long-term debt (obligation related to capital leases)	(280		)
Deferred tax liability	(1,300		)
Membership initiation deposits and other liabilities	(1,994		)
Total	$	10,903

Club Dispositions and Management Agreement Terminations

Clubs 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. 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.

During the thirty-six weeks ended September 8, 2015, nine management agreements were terminated, including a management agreement with Shoreby Club, a business and sports club located in Bratenahl, Ohio, a multi-course management agreement for Klein Creek Golf Club, a public golf course located in Winfield, Illinois, The Grove Country Club, a private country club located in Long Grove, Illinois, The Royal Fox Country Club and The Royal Hawk Country Club, private country clubs both located in St. Charles, Illinois, a management agreement with Smoke Rise Country Club, a private country club located in Stone Mountain, Georgia, a management agreement with Stone Creek Golf Club, a semi-private country club located in Ocala, Florida, a management agreement with Regatta Bay Golf and Country Club, a private country club located in Destin, Florida, and a management agreement with University of Massachusetts Club, an alumni club located in Boston, Massachusetts. During the fiscal year ended December 30, 2014, five management agreements were terminated, including a management agreement with Hollytree Country Club, a private country club located in Tyler, Texas, three management agreements acquired with the Sequoia Golf acquisition which terminated after acquisition, and a management agreement with Paragon Club of Hefei, a business club located in Hefei, China. No gain or loss on divestiture was recorded. These divestitures did not qualify as discontinued operations.

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, including Adjusted EBITDA, our financial measure of segment profit and loss, is reviewed regularly by our chief operating decision maker to evaluate performance and allocate resources. Our chief operating decision maker is our Chief Executive Officer. We also use Adjusted EBITDA, on a consolidated basis, to assess our ability to service our debt, incur additional debt and meet our capital expenditure requirements. We believe that the presentation of Adjusted EBITDA is appropriate as it provides additional information to investors about our performance and investors and lenders have historically used EBITDA-related measures.

EBITDA is defined as net income before interest expense, income taxes, interest and investment income, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA plus or minus impairments, gain or loss on disposition and acquisition of assets, losses from discontinued operations, loss on extinguishment of debt, non-cash and other adjustments, equity-based compensation expense and an acquisition adjustment. The acquisition adjustment to revenues and Adjusted EBITDA within each segment represents estimated deferred revenue using current membership life estimates related to initiation payments that would have been recognized in the applicable period but for the application of purchase accounting in connection with the acquisition of CCI in 2006 by affiliates of KSL and the acquisition of Sequoia Golf on September 30, 2014. 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 similarly titled measures reported by other companies. The credit agreement governing the Secured Credit Facilities contains certain financial covenants which require us to maintain specified financial ratios in reference to Adjusted EBITDA, after giving effect to the pro forma impact of acquisitions. The pro forma impact gives effect to all acquisitions in the four quarters ended September 8, 2015 as though they had been consummated on the first day of the fourth quarter of fiscal year 2014 and includes certain expected cost savings.

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 recreational amenities than private country clubs. Public golf facilities are open to the public and generally provide the same amenities 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.

The table below shows summarized financial information by segment for the twelve and thirty-six weeks ended September 8, 2015, and September 9, 2014:



	Twelve Weeks Ended						Thirty-Six Weeks Ended
	September 8, 2015			September 9, 2014			September 8, 2015			September 9, 2014
Golf and Country Clubs
Revenues	$	210,966		$	164,772		$	583,465		$	459,667
Adjusted EBITDA	58,146			46,830			164,823			133,016

Business, Sports and Alumni Clubs
Revenues	$	40,556		$	38,878		$	127,542		$	119,818
Adjusted EBITDA	5,989			5,702			22,692			20,198

Other
Revenues	$	6,951		$	2,440		$	18,280		$	6,473
Adjusted EBITDA	(9,203		)	(7,213		)	(33,504		)	(26,287		)

Elimination of intersegment revenues and segment reporting adjustments	$	(3,317	)	$	(2,446	)	$	(10,118	)	$	(7,402	)
Revenues relating to divested clubs (1)	204			831			2,010			3,060

Total
Revenues	$	255,360		$	204,475		$	721,179		$	581,616
Adjusted EBITDA	54,932			45,319			154,011			126,927

______________________


(1)	When clubs are divested, the associated revenues are excluded from segment results for all periods presented.



	As of
Total Assets	September 8, 2015		December 30, 2014
Golf and Country Clubs	$	1,584,468	$	1,483,856
Business, Sports and Alumni Clubs	94,200		92,525
Other	454,988		488,690
Consolidated	$	2,133,656	$	2,065,071

The following table presents revenue by product type for the twelve and thirty-six weeks ended September 8, 2015 and September 9, 2014:



	Twelve Weeks Ended				Thirty-Six Weeks Ended
	September 8, 2015		September 9, 2014		September 8, 2015		September 9, 2014
Revenues by Type
Dues	$	116,435	$	92,592	$	338,037	$	270,616
Food and beverage	65,102		54,684		191,785		161,045
Golf	49,118		38,249		123,217		97,577
Other	24,705		18,950		68,140		52,378
Total	$	255,360	$	204,475	$	721,179	$	581,616

The table below provides a reconciliation of our net income (loss) to Adjusted EBITDA for the twelve and thirty-six weeks ended September 8, 2015 and September 9, 2014:



	Twelve Weeks Ended						Thirty-Six Weeks Ended
	September 8, 2015			September 9, 2014			September 8, 2015			September 9, 2014
Net income (loss)	$	1,185		$	3,273		$	(3,314	)	$	(17,992	)
Interest expense	16,170			12,944			48,587			44,242
Income tax expense (benefit)	2,018			5,802			(187		)	(3,028		)
Interest and investment income	(2,139		)	(1,366		)	(3,818		)	(1,535		)
Depreciation and amortization	24,562			17,160			71,616			50,405
EBITDA	$	41,796		$	37,813		$	112,884		$	72,092
Impairments and disposition of assets (1)	4,631			1,744			15,423			7,242
Loss (income) from discontinued operations and divested clubs (2)	3			(112		)	211			(423		)
Loss on extinguishment of debt (3)	—			—			—			31,498
Non-cash adjustments (4)	463			464			1,389			1,389
Other adjustments (5)	5,160			3,506			15,450			9,064
Equity-based compensation expense (6)	1,295			949			3,510			3,037
Acquisition adjustment (7)	1,584			955			5,144			3,028
Adjusted EBITDA	$	54,932		$	45,319		$	154,011		$	126,927

______________________


(1)	Includes non-cash impairment charges related to property and equipment and intangible assets and loss on disposals of assets (including property and equipment disposed of in connection with renovations).


(2)	Net income or loss from discontinued operations and divested clubs that do not qualify as discontinued operations.


(3)	Includes loss on extinguishment of debt calculated in accordance with GAAP.


(4)	Includes non-cash items related to purchase accounting associated with the acquisition of CCI in 2006 by affiliates of KSL and expense recognized for our long-term incentive plan related to fiscal years 2011 through 2013.

(5)

Represents adjustments permitted by the credit agreement governing the Secured Credit Facilities including cash distributions from equity method investments less equity in earnings recognized for said investments, income or loss attributable to non-controlling equity interests of continuing operations, fees and expenses associated with readiness efforts for Section 404(b) of the Sarbanes-Oxley Act and related centralization of administrative processes, acquisition costs, debt amendment costs, equity offering costs, other charges incurred in connection with the ClubCorp Formation and management fees, termination fee and expenses paid to an affiliate of KSL.


(6)	Includes equity-based compensation expense, calculated in accordance with GAAP, related to awards held by certain employees, executives and directors.


(7)	Represents estimated deferred revenue using current membership life estimates related to initiation payments that would have been recognized in the applicable period but for the application of purchase accounting in connection with the acquisition of CCI in 2006 and the acquisition of Sequoia Golf on September 30, 2014.

Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, operating income or 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 cash flows or ability to fund our cash needs. Our measurement of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

13. EARNINGS PER SHARE

Basic earnings per share (“EPS”) excludes dilution and is computed by dividing net income (loss) attributable to ClubCorp by the weighted average number of shares of common stock outstanding during the period. Diluted EPS reflects the dilutive effect of equity-based awards that may share in the earnings of ClubCorp when such shares are either issued or vesting restrictions lapse.

Presented below is basic and diluted EPS for the twelve and thirty-six weeks ended September 8, 2015 and September 9, 2014 (in thousands, except per share amounts):



	Twelve Weeks Ended								Thirty-Six Weeks Ended
	September 8, 2015				September 9, 2014				September 8, 2015						September 9, 2014
	Basic		Diluted		Basic		Diluted		Basic			Diluted			Basic			Diluted
Income (loss) from continuing operations attributable to ClubCorp	$	1,252	$	1,252	$	3,211	$	3,211	$	(3,164	)	$	(3,164	)	$	(18,127	)	$	(18,127	)
Weighted-average shares outstanding	64,621		64,621		63,990		63,990		64,350			64,350			63,905			63,905
Effect of dilutive equity-based awards	—		282		—		367		—			—			—			—
Total Shares	64,621		64,903		63,990		64,357		64,350			64,350			63,905			63,905
Income (loss) from continuing operations attributable to ClubCorp per share	$	0.02	$	0.02	$	0.05	$	0.05	$	(0.05	)	$	(0.05	)	$	(0.28	)	$	(0.28	)

Potential common shares are excluded from the calculation of diluted EPS because the effect of their inclusion would reduce our net loss per share and would be anti-dilutive. For the thirty-six weeks ended September 8, 2015 and September 9, 2014 the number of potential common shares excluded are 0.3 million and 0.4 million, respectively. Certain of our outstanding restricted stock shares include rights to receive dividends that are subject to the risk of forfeiture if service requirements are not satisfied, thus these shares are not considered participating securities and are excluded from the basic weighted-average shares outstanding calculation. Restricted stock shares which have rights to receive dividends that are not subject to the risk of forfeiture are considered participating securities.

The following is a summary of dividends declared or paid during the periods presented:



Declaration Date	Dividend Per Share		Record Date	Total Amount		Payment Date
Declaration Date	Dividend Per Share		Record Date	Total Amount		Payment Date
Fiscal Year 2014
December 10, 2013	$	0.12	January 3, 2014	$	7,654	January 15, 2014
March 18, 2014	$	0.12	April 3, 2014	$	7,725	April 15, 2014
June 25, 2014	$	0.12	July 7, 2014	$	7,731	July 15, 2014
September 9, 2014	$	0.12	October 3, 2014	$	7,731	October 15, 2014

Fiscal Year 2015
December 3, 2014	$	0.13	January 2, 2015	$	8,377	January 15, 2015
March 20, 2015	$	0.13	April 2, 2015	$	8,399	April 15, 2015
June 25, 2015	$	0.13	July 6, 2015	$	8,417	July 15, 2015
September 3, 2015	$	0.13	October 1, 2015	$	8,416	October 15, 2015

14. COMMITMENTS AND CONTINGENCIES

We routinely enter into contractual obligations to procure assets used in the day to day operations of our business. As of September 8, 2015, we had capital commitments of $18.9 million at certain of our clubs.

We currently have sales and use tax audits in progress. 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.

We are currently under audit by state income tax authorities. No assessments have been received for our state income tax audits and no unrecognized tax benefits have been recorded related to these tax positions.

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 September 8, 2015, we have an immaterial amount 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.

15. RELATED PARTY TRANSACTIONS

Effective October 1, 2013, we entered into a Financial Consulting Services Agreement with an affiliate of KSL, pursuant to which we are provided certain ongoing financial consulting services. No fees are payable under such agreement, however we have agreed to reimburse the affiliate of KSL for all reasonable out-of-pocket costs and expenses incurred in providing such services to us and certain of our affiliates up to $0.1 million annually. The expense associated with this agreement was not material for the twelve and thirty-six weeks ended September 8, 2015 and September 9, 2014.

Effective May 1, 2013, we entered into a consulting services agreement with an affiliate of KSL whereby we provide certain international golf-related consulting services in exchange for an annual fee of $0.1 million. The revenue associated with this contract was immaterial during the twelve and thirty-six weeks ended September 8, 2015 and September 9, 2014.

As of September 8, 2015, we had receivables of $0.2 million and payables of $0.6 million and as of December 30, 2014, we had receivables of $0.2 million and payables of $0.7 million, for outstanding advances from golf and business club ventures in which we have an equity method investment. We recorded $0.1 million and $0.3 million in the twelve and thirty-six weeks ended September 8, 2015, respectively, and $0.1 million and $0.3 million in the twelve and thirty-six weeks ended September 9, 2014, respectively, in management fees from these ventures. As of September 8, 2015 and December 30, 2014, we had a receivable of $3.5 million and $2.3 million, respectively, for volume rebates from Avendra, LLC, the supplier firm in which we have an equity method investment. See Note 4.

We have entered into arrangements whereby members of certain resorts and clubs owned by affiliates of KSL can pay an upgrade charge to have access to our clubs and facilities. We have revenue sharing arrangements with such resorts and clubs whereby we agree to split the amount of the upgrade charges respectively with such entities. During the twelve and thirty-six weeks ended September 8, 2015 and September 9, 2014 the revenue associated with these arrangements was not material.

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 twelve and thirty-six weeks ended September 8, 2015 and September 9, 2014, royalty payments received in connection with these arrangements were not material.

16. SUBSEQUENT EVENTS

On September 3, 2015, our board of directors declared a cash dividend of $8.4 million, or $0.13 per share of common stock, to all common stockholders of record at the close of business on October 1, 2015. This dividend was paid on October 15, 2015.

On September 15, 2015, we granted 3,099 shares of restricted stock to an independent director. These shares vest one year from the date of grant.

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

The following discussion of our financial condition and results of operations should be read together with the consolidated condensed financial statements and related notes included in “Item 1. Financial Statements” of 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 for the year ended December 30, 2014 contained in our annual report on Form 10-K (“2014 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 constitute forward-looking statements. These 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, but are not only 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;


•	our substantial indebtedness, which may adversely affect our financial condition and 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;


•	restrictions in our debt agreements that limit our flexibility in operating our business;


•	our variable rate indebtedness could cause our debt service obligations to increase significantly;


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


•	unsuccessful or burdensome acquisitions;


•	complications experienced in integrating acquired businesses and properties into our operations;


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


•	insufficient insurance coverage and uninsured losses;


•	accidents or injuries which occur at our properties;


•	adverse judgments or settlements;


•	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 in systems or infrastructure which maintain our internal and customer data, including as a result of cyber attacks;


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


•	write-offs of goodwill;


•	risks related to tax examinations by the IRS;


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


•	future sales of our common stock could cause the market price to decline;


•	certain provisions of our amended and restated articles of incorporation limit our stockholders’ ability to choose a forum for disputes with us or our directors, officers, employees or agents;


•	our stock price may change significantly;


•	our ability to declare and pay dividends;


•	securities analysts could publish information that negatively impacts our stock price and trading volume;


•	anti-takeover provisions could delay or prevent a change of control;


•	the actions of activist stockholders could negatively impact our business and such activism could impact the trading value and volatility of our securities;


•	our ability to phase-in certain corporate governance requirements that provide protection to stockholders of other companies prior to the expiration of the phase-in period in May of 2016;


•	“emerging growth company” status as defined in the JOBS Act may impact attractiveness of our common stock to investors; and


•	other factors described herein and in our 2014 Annual Report filed with the Securities and Exchange Commission (“SEC”).

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 quarterly report on Form 10-Q. These forward-looking statements speak only as of the date of this quarterly report on Form 10-Q. Except as required by law, we do not intend to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

ClubCorp Formation

As a result of the ClubCorp Formation in November 2010, our taxpayer status has changed due to taxable gains and certain tax attribute reductions triggered by the ClubCorp Formation that utilized our net operating loss carryforwards.

Overview

We are a leading owner-operator of private golf and country clubs and business, sports and alumni clubs in North America. As of September 8, 2015, our portfolio of 206 owned or operated clubs, with approximately 185,000 memberships, served over 430,000 individual members. Our operations are organized into two principal business segments: (1) golf and country clubs and (2) business, sports and alumni clubs. We own, lease or operate through joint ventures 148 golf and country clubs and manage 10 golf and country clubs. Likewise, we own, lease or operate through a joint venture 46 business, sports and alumni clubs and manage two business, sports and alumni clubs. We are the largest owner of private golf and country clubs in the United States and own the underlying real estate for 124 of our 158 golf and country clubs. Our golf and country clubs include 131 private country clubs, 16 semi-private clubs and eleven public golf courses. Our business, sports and alumni clubs include 29 business clubs, 11 business and sports clubs, six alumni clubs, and two sports clubs. Our facilities are located in 26 states, the District of Columbia and two foreign countries.

Our golf and country clubs are designed to appeal to the entire family, fostering member loyalty which we believe allows us to capture a greater share of our member households' discretionary leisure spending. Our business, sports and alumni clubs are designed to provide our members with private upscale locations where they can work, network and socialize. We offer our members privileges throughout our entire collection of clubs, and we believe that our diverse facilities, recreational offerings and social programming enhance our ability to attract and retain members across a number of demographic groups. We also have alliances with other clubs, resorts and facilities located worldwide through which our members can enjoy additional access, discounts, special offerings and privileges outside of our owned and operated clubs. Given the breadth of our products, services and amenities, we believe we offer a compelling value proposition to our members.

Factors Affecting our Business

A significant percentage of our revenue is derived from membership dues, and we believe these dues together with the geographic diversity of our clubs help to provide us with a recurring revenue base that limits the impact of fluctuations in regional economic conditions. We believe our efforts to position our clubs as focal points in communities with offerings that can appeal to the entire family has enhanced member loyalty and mitigated attrition rates in our membership base compared to the industry as a whole.

We believe the strength and size of our portfolio of clubs combined with the stability of our mass affluent membership base will enable us to maintain our position as an industry leader in the future. As the largest owner-operator of private golf and country clubs in the United States, we enjoy economies of scale and a leadership position. We expect to strategically expand and upgrade our portfolio through acquisitions and targeted capital investments. As part of our targeted capital investment program, we plan to focus on facility changes and upgrades to improve our members' experience and the utilization of our facilities and amenities, which we believe will yield positive financial results.

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.

We offer various programs at our clubs designed to minimize future attrition rates by increasing member satisfaction and usage. These include programs that are designed to engage current and newly enrolled members in activities and groups that go beyond their home club. Additionally, these programs may grant our members discounts on meals and other items in order to increase their familiarity with and usage of their club's amenities. One such program is our Optimal Network Experiences program (“O.N.E.”), an upgrade product that combines what we refer to as “comprehensive club, community and world benefits”. With this offering, members typically 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 currently to more than 300 golf and country, business, sporting and athletic clubs when traveling outside of their community with additional offerings and discounts to more than 1,000 renowned hotels, resorts, restaurants and entertainment venues. As of September 8, 2015, approximately 49% of our memberships were enrolled in one or more of our upgrade programs, as compared to approximately 39% of memberships that were enrolled in one or more of our upgrade programs as of December 30, 2014. As of September 8, 2015, 152 of our clubs, including those acquired with the Sequoia Golf acquisition, offered O.N.E., compared to 89 as of December 30, 2014.

The following tables present our membership counts for same store and new or acquired clubs at the end of the periods indicated. References to percentage changes that are not meaningful, as new or acquired clubs include different clubs at each point in time, are denoted by “NM”.



	September 8, 2015	December 30, 2014	Change		% Change
Golf and Country Clubs
Same store clubs, excluding managed clubs (1)	86,482	84,884	1,598		1.9	%
Managed same store clubs (1)	988	966	22		2.3	%
New or acquired clubs, excluding managed clubs (2)	32,014	26,574	5,440		NM
Newly added managed clubs (3)	3,508	3,237	271		NM
Total Golf and Country Clubs	122,992	115,661	7,331		6.3	%
Business, Sports and Alumni Clubs
Same store clubs, excluding managed clubs (1)	54,490	55,064	(574	)	(1.0	)%
Managed same store clubs (1)	5,233	5,329	(96	)	(1.8	)%
New or acquired clubs, excluding managed clubs (2)	2,176	1,651	525		NM
Newly added managed clubs (3)	—	—	—		NM
Total Business, Sports and Alumni Clubs (4)	61,899	62,044	(145	)	(0.2	)%
Total
Same store clubs, excluding managed clubs (1)	140,972	139,948	1,024		0.7	%
Managed same store clubs (1)	6,221	6,295	(74	)	(1.2	)%
New or acquired clubs, excluding managed clubs (2)	34,190	28,225	5,965		NM
Newly added managed clubs (3)	3,508	3,237	271		NM
Total memberships at end of period (4)	184,891	177,705	7,186		4.0	%

_______________________


(1)	See “Basis of Presentation—Same Store Analysis”. Membership counts exclude discontinued operations and divested clubs that do not qualify as discontinued operations.

(2)

New or acquired clubs, excluding managed clubs, include those clubs that we are operating currently which were acquired or opened in the thirty-six weeks ended September 8, 2015 and fiscal year 2014 consisting of: The Clubs of Prestonwood, TPC Michigan, TPC Piper Glen, Baylor Club, Oro Valley Country Club, Ravinia Green Country Club, Rolling Green Country Club, Bermuda Run Country Club, Brookfield Country Club, Firethorne Country Club, Temple Hills Country Club, Ford's Colony Country Club, Legacy Golf Club at Lakewood Ranch and 30 owned golf and country clubs, three leased golf and country clubs and one leased sports club acquired through the Sequoia Golf acquisition.


(3)	Newly added managed clubs include those clubs that we are operating currently which were added under management agreements in the thirty-six weeks ended September 8, 2015 and fiscal year 2014 consisting of: River Run Golf & Country Club, Sequoyah National Golf Club and seven managed golf and country clubs acquired through the Sequoia Golf acquisition.


(4)	Does not include certain international club memberships.



	September 9, 2014	December 31, 2013	Change	% Change
Golf and Country Clubs
Same store clubs, excluding managed clubs (1)	83,971	81,569	2,402	2.9	%
Managed same store clubs (1)	946	909	37	4.1	%
New or acquired clubs, excluding managed clubs (2)	5,262	1,959	3,303	NM
Newly added managed clubs	—	—	—	NM
Total Golf and Country Clubs	90,179	84,437	5,742	6.8	%
Business, Sports and Alumni Clubs
Same store clubs, excluding managed clubs (1)	55,281	54,733	548	1.0	%
Managed same store clubs (1)	5,243	5,231	12	0.2	%
New or acquired clubs, excluding managed clubs (2)	1,120	—	1,120	NM
Newly added managed clubs	—	—	—	NM
Total Business, Sports and Alumni Clubs (3)	61,644	59,964	1,680	2.8	%
Total
Same store clubs, excluding managed clubs (1)	139,252	136,302	2,950	2.2	%
Managed same store clubs (1)	6,189	6,140	49	0.8	%
New or acquired clubs, excluding managed clubs (2)	6,382	1,959	4,423	NM
Newly added managed clubs	—	—	—	NM
Total memberships at end of period (3)	151,823	144,401	7,422	5.1	%

_______________________


(1)	See “Basis of Presentation—Same Store Analysis”. Membership counts exclude discontinued operations and divested clubs that do not qualify as discontinued operations.


(2)	New or acquired clubs, excluding managed clubs, include those clubs that we are operating currently which were acquired or opened in fiscal years 2014 and 2013 consisting of: Oak Tree Country Club, Cherry Valley Country Club, Chantilly National Golf and Country Club, The Clubs of Prestonwood, TPC Michigan, TPC Piper Glen and Baylor Club.


(3)	Does not include certain international club memberships.

Seasonality of Demand and Fluctuations in Quarterly Results

The first, second and third fiscal quarters each consist of twelve weeks, whereas, the fourth quarter consists of sixteen or seventeen weeks of operations. Our business clubs typically generate a greater share of their yearly revenues in the fourth fiscal quarter, which includes the holiday and year-end party season. Usage of our golf and country club facilities typically declines significantly during the first and fourth fiscal quarters, when colder temperatures and shorter days reduce the demand for golf and golf-related activities. As a result of these factors, we usually generate a disproportionate share of our revenues and cash flows in the second, third and fourth fiscal quarters of each year and have lower revenues and cash flows in the first

quarter. In addition, the timing of purchases, sales, leasing of facilities or divestitures, has 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”.

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, which we have experienced from time to time. A severe drought affecting a large number of properties could have a material adverse effect on our business and results of operations.

Further, the timing of distributions from our equity method investments, including Avendra, LLC, a purchasing cooperative of hospitality companies, varies due to factors outside of our control. Adjusted EBITDA, as defined in “Basis of Presentation—EBITDA and Adjusted EBITDA” is impacted when cash distributions from equity method investments vary from the equity in earnings recognized for the related investments.

Reinvention Capital Investments

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.

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)	Owned Clubs	Leased Clubs	Managed		Joint Venture	Total		Owned Clubs	Leased Clubs		Managed		Joint Venture	Total
December 31, 2013	81	15	3		6	105		1	43		4		1	49
First Quarter 2014 (1)	2	—	—		—	2		—	—		1		—	1
Second Quarter 2014 (2)	2	—	—		—	2		—	1		—		—	1
Third Quarter 2014 (3)	—	—	(1	)	—	(1	)	—	(1	)	—		—	(1	)
Fourth Quarter 2014 (4)	31	3	15		—	49		—	1		(1	)	—	—
December 30, 2014	116	18	17		6	157		1	44		4		1	50
First Quarter 2015 (5)	2	—	(5	)	—	(3	)	—	—		(1	)	—	(1	)
Second Quarter 2015 (6)	6	—	(1	)	—	5		—	—		—		—	—
Third Quarter 2015 (7)	—	—	(1	)	—	(1	)	—	—		(1	)	—	(1	)
September 8, 2015	124	18	10		6	158		1	44		2		1	48

_______________________


(1)	In March 2014, we purchased The Clubs of Prestonwood, a private country club which features two properties: The Creek in Dallas, Texas and The Hills in nearby Plano, Texas and we began managing and operating Paragon Club of Hefei, a private business club in China.


(2)	In April 2014, we purchased TPC Michigan, a semi-private country club located in Dearborn, Michigan and TPC Piper Glen, a private country club located in Charlotte, North Carolina. In April, 2014, we also finalized the lease and management rights to the Baylor Club, an alumni club located within the new Baylor University football stadium in Waco, Texas.

(3)

In July 2014, the management agreement with Hollytree Country Club, a private country club located in Tyler, Texas, was terminated. In August 2014, we combined the membership of two business clubs within downtown Raleigh, North Carolina into one club which is named City Club Raleigh. City Club Raleigh leases and occupies the space formerly occupied by the Cardinal Club. The space formerly occupied by the Capital City Club is no longer under lease.


(4)	On September 30, 2014, ClubCorp completed the acquisition of Sequoia Golf which included 30 owned golf and country clubs, three leased golf and country clubs, 16 managed golf and country clubs and one leased sports club. Subsequent to September 30, 2014, during the 2014 fiscal year, three management deals acquired with the Sequoia Golf acquisition were terminated.

In October 2014, we entered into management agreements with River Run Golf & Country Club, a private golf club in Davidson, North Carolina and Sequoyah National Golf Club, a semi-private golf club in Whittier, North Carolina. In December 2014, we purchased Oro Valley Country Club, a private country club located in Oro Valley, Arizona. Additionally, in December 2014, the management agreement with Paragon Club of Hefei, a business club located in Hefei, China was terminated.

(5)

In January 2015, we purchased Ravinia Green Country Club, a private golf club in Riverwoods, Illinois and Rolling Green Country Club, a private golf club in Arlington Heights, Illinois. During the twelve weeks ended March 24, 2015, the management agreement with Shoreby Club, a business and sports club located in Bratenahl, Ohio, was terminated. Additionally, during the twelve weeks ended March 24, 2015, certain management agreements acquired with the Sequoia Golf acquisition covering five golf and country club managed properties were terminated.


(6)	In April 2015, we acquired a multi-club portfolio of six golf and country clubs in the southeastern U.S. This acquisition included four private clubs, one semi-private club and one public golf course, which consisted of:



Golf and Country Clubs	Type of Club	Market	State	Golf Holes
Bermuda Run Country Club	Private Country Club	Charlotte	NC	36
Brookfield Country Club	Private Country Club	Atlanta	GA	18
Firethorne Country Club	Private Country Club	Charlotte	NC	18
Temple Hills Country Club	Private Country Club	Nashville	TN	27
Ford's Colony Country Club	Semi-Private Golf Club	Richmond	VA	54
Legacy Golf Club at Lakewood Ranch	Public Golf	Bradenton	FL	18

Additionally, in May 2015, our management agreement with Stone Creek Golf Club, a semi-private golf club located in Ocala, Florida was terminated.


(7)	In June 2015, the management agreement with Regatta Bay Golf and Country Club, a private country club located in Destin, Florida, was terminated. Additionally, in July 2015, the management agreement with University of Massachusetts Club, an alumni club located in Boston, Massachusetts, was terminated.

Critical Accounting Policies and Estimates

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 over which we amortize initiation fees and deposits, our incremental borrowing rate which is used to accrete membership initiation deposit liabilities, assumptions and judgments used in estimating unrecognized tax benefits relating to uncertain tax positions, inputs for impairment testing of goodwill, intangible assets and long-lived assets and assumptions and inputs used to value and recognize expense associated with equity-based awards.

For additional information about our critical accounting policies and estimates, see the disclosure included in our 2014 Annual Report filed with the SEC on March 12, 2015.

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 and Adjusted EBITDA

Adjusted EBITDA (“Adjusted EBITDA”) is a key financial measure used by our management to (1) internally measure our operating performance, (2) evaluate segment performance and allocate resources and (3) assess our ability to service our debt, incur additional debt and meet our capital expenditure requirements. We believe that the presentation of Adjusted EBITDA is appropriate as it provides additional information to investors about our performance and investors and lenders have historically used EBITDA-related measures. Additionally, certain financial covenants under the credit agreement governing the Secured Credit Facilities utilize Adjusted EBITDA, after a pro forma adjustment to give effect to current period acquisitions as though they had been consummated on the first day of the period presented.

EBITDA is defined as net income before interest expense, income taxes, interest and investment income, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA plus or minus impairments, gain or loss on disposition and acquisition of assets, losses from discontinued operations, loss on extinguishment of debt, non-cash and other adjustments, equity-based compensation expense and an acquisition adjustment. The acquisition adjustment to revenues and Adjusted EBITDA within each segment represents estimated deferred revenue using current membership life estimates related to initiation payments that would have been recognized in the applicable period but for the application of purchase accounting in connection with the acquisition of CCI in 2006 by affiliates of KSL and the acquisition of Sequoia Golf on September 30, 2014. 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 similarly titled measures reported by other companies. The credit agreement governing the Secured Credit Facilities contains certain financial and non-financial covenants which require us to maintain specified financial ratios in reference to Adjusted EBITDA, after giving effect to the pro forma impact of acquisitions. The pro forma impact gives effect to all acquisitions in the four quarters ended September 8, 2015 as though they had been consummated on the first day of the fourth quarter of fiscal year 2014 and includes certain expected cost savings.

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



	Twelve Weeks Ended						Thirty-Six Weeks Ended						Four Quarters Ended
	September 8, 2015			September 9, 2014			September 8, 2015			September 9, 2014			September 8, 2015 (8)
	(dollars in thousands)
Net income (loss)	$	1,185		$	3,273		$	(3,314	)	$	(17,992	)	$	28,007
Interest expense	16,170			12,944			48,587			44,242			69,554
Income tax expense (benefit)	2,018			5,802			(187		)	(3,028		)	(38,628		)
Interest and investment income	(2,139		)	(1,366		)	(3,818		)	(1,535		)	(4,868		)
Depreciation and amortization	24,562			17,160			71,616			50,405			102,003
EBITDA	$	41,796		$	37,813		$	112,884		$	72,092		$	156,068
Impairments and disposition of assets (1)	4,631			1,744			15,423			7,242			21,024
Loss (income) from discontinued operations and divested clubs (2)	3			(112		)	211			(423		)	(120		)
Loss on extinguishment of debt (3)	—			—			—			31,498			—
Non-cash adjustments (4)	463			464			1,389			1,389			2,007
Other adjustments (5)	5,160			3,506			15,450			9,064			31,701
Equity-based compensation expense (6)	1,295			949			3,510			3,037			4,776
Acquisition adjustment (7)	1,584			955			5,144			3,028			7,760
Adjusted EBITDA	$	54,932		$	45,319		$	154,011		$	126,927		$	223,216

______________________


(1)	Includes non-cash impairment charges related to property and equipment and intangible assets and loss on disposals of assets (including property and equipment disposed of in connection with renovations).


(2)	Net loss or income from discontinued operations and divested clubs that do not qualify as discontinued operations.


(3)	Includes loss on extinguishment of debt calculated in accordance with GAAP.


(4)	Includes non-cash items related to purchase accounting associated with the acquisition of CCI in 2006 by affiliates of KSL and expense recognized for our long-term incentive plan related to fiscal years 2011 through 2013.

(5)

Represents adjustments permitted by the credit agreement governing the Secured Credit Facilities including cash distributions from equity method investments less equity in earnings recognized for said investments, income or loss attributable to non-controlling equity interests of continuing operations, acquisition costs, fees and expenses associated with readiness efforts for Section 404(b) of the Sarbanes-Oxley Act and related centralization of administrative processes, debt amendment costs, equity offering costs, other charges incurred in connection with the ClubCorp Formation and management fees, termination fee and expenses paid to an affiliate of KSL.


(6)	Includes equity-based compensation expense, calculated in accordance with GAAP, related to awards held by certain employees, executives and directors.


(7)	Represents estimated deferred revenue using current membership life estimates related to initiation payments that would have been recognized in the applicable period but for the application of purchase accounting in connection with the acquisition of CCI in 2006 and the acquisition of Sequoia Golf on September 30, 2014.


(8)	The four quarters ended September 8, 2015 includes fifty-two weeks.

Adjusted EBITDA is not determined in accordance with GAAP and should not be considered as an alternative to, or more meaningful than, operating income or 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 cash flows or ability to fund our cash needs. Our measurement of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

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, clubs added under management agreements 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. 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 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 fiscal quarters each consist of twelve weeks while our fourth fiscal quarter consists of sixteen or seventeen weeks.

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
	September 8, 2015			% of Revenue		September 9, 2014			% of Revenue		September 8, 2015			% of Revenue		September 9, 2014			% of Revenue
	(dollars in thousands, except per share amounts)
Revenues:
Club operations	$	189,705		74.3	%	$	149,373		73.1	%	$	526,966		73.1	%	$	418,443		71.9	%
Food and beverage	65,102			25.5	%	54,684			26.7	%	191,785			26.6	%	161,045			27.7	%
Other revenues	553			0.2	%	418			0.2	%	2,428			0.3	%	2,128			0.4	%
Total revenues	255,360					204,475					721,179					581,616

Direct and selling, general and administrative expenses:
Club operating costs exclusive of depreciation	168,542			66.0	%	132,774			64.9	%	474,774			65.8	%	377,204			64.9	%
Cost of food and beverage sales exclusive of depreciation	23,191			9.1	%	18,400			9.0	%	65,317			9.1	%	53,338			9.2	%
Depreciation and amortization	24,562			9.6	%	17,160			8.4	%	71,616			9.9	%	50,405			8.7	%
Provision for doubtful accounts	1,373			0.5	%	850			0.4	%	1,876			0.3	%	996			0.2	%
Loss on disposals of assets	3,587			1.4	%	1,744			0.9	%	13,309			1.8	%	6,347			1.1	%
Impairment of assets	1,044			0.4	%	—			—	%	2,114			0.3	%	895			0.2	%
Equity in loss (earnings) from unconsolidated ventures	479			0.2	%	(660		)	(0.3	)%	934			0.1	%	(1,493		)	(0.3	)%
Selling, general and administrative	15,348			6.0	%	13,553			6.6	%	49,969			6.9	%	40,737			7.0	%
Operating income	17,234			6.7	%	20,654			10.1	%	41,270			5.7	%	53,187			9.1	%

Interest and investment income	2,139			0.8	%	1,366			0.7	%	3,818			0.5	%	1,535			0.3	%
Interest expense	(16,170		)	(6.3	)%	(12,944		)	(6.3	)%	(48,587		)	(6.7	)%	(44,242		)	(7.6	)%
Loss on extinguishment of debt	—			—	%	—			—	%	—			—	%	(31,498		)	(5.4	)%
Income (loss) from continuing operations before income taxes	3,203			1.3	%	9,076			4.4	%	(3,499		)	(0.5	)%	(21,018		)	(3.6	)%
Income tax (expense) benefit	(2,018		)	(0.8	)%	(5,802		)	(2.8	)%	187			—	%	3,028			0.5	%
Income (loss) from continuing operations	1,185			0.5	%	3,274			1.6	%	(3,312		)	(0.5	)%	(17,990		)	(3.1	)%
Loss from discontinued clubs, net of income tax benefit	—			—	%	(1		)	—	%	(2		)	—	%	(2		)	—	%
NET INCOME (LOSS)	1,185			0.5	%	3,273			1.6	%	(3,314		)	(0.5	)%	(17,992		)	(3.1	)%
Net loss (income) attributable to noncontrolling interests	67			—	%	(63		)	—	%	148			—	%	(137		)	—	%
Net income (loss) attributable to ClubCorp	$	1,252		0.5	%	$	3,210		1.6	%	$	(3,166	)	(0.4	)%	$	(18,129	)	(3.1	)%

WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC	64,621					63,990					64,350					63,905
WEIGHTED AVERAGE SHARES OUTSTANDING, DILUTED	64,903					64,357					64,350					63,905

EARNINGS (LOSS) PER COMMON SHARE, BASIC:
Income (loss) from continuing operations attributable to ClubCorp	$	0.02				$	0.05				$	(0.05	)			$	(0.28	)
Income (loss) from discontinued clubs attributable to ClubCorp	$	—				$	—				$	—				$	—
Net income (loss) attributable to ClubCorp	$	0.02				$	0.05				$	(0.05	)			$	(0.28	)

EARNINGS (LOSS) PER COMMON SHARE, DILUTED:
Income (loss) from continuing operations attributable to ClubCorp	$	0.02				$	0.05				$	(0.05	)			$	(0.28	)
Income (loss) from discontinued clubs attributable to ClubCorp	$	—				$	—				$	—				$	—
Net income (loss) attributable to ClubCorp	$	0.02				$	0.05				$	(0.05	)			$	(0.28	)

Comparison of the Twelve Weeks Ended September 8, 2015 and September 9, 2014

The following table presents key financial information derived from our consolidated condensed statements of operations for the twelve weeks ended September 8, 2015 and September 9, 2014.



	Twelve Weeks Ended
	September 8, 2015			September 9, 2014			Change			% Change
	(dollars in thousands)
Total revenues	$	255,360		$	204,475		$	50,885		24.9	%
Club operating costs and expenses exclusive of depreciation (1)	193,106			152,024			41,082			27.0	%
Depreciation and amortization	24,562			17,160			7,402			43.1	%
Loss on disposals of assets	3,587			1,744			1,843			105.7	%
Impairment of assets	1,044			—			1,044			100.0	%
Equity in loss (earnings) from unconsolidated ventures	479			(660		)	1,139			172.6	%
Selling, general and administrative	15,348			13,553			1,795			13.2	%
Operating income	17,234			20,654			(3,420		)	(16.6	)%
Interest and investment income	2,139			1,366			773			56.6	%
Interest expense	(16,170		)	(12,944		)	(3,226		)	(24.9	)%
Income from continuing operations before income taxes	3,203			9,076			(5,873		)	(64.7	)%
Income tax expense	(2,018		)	(5,802		)	3,784			65.2	%
Income from continuing operations	$	1,185		$	3,274		$	(2,089	)	(63.8	)%

__________________________


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

Total revenues of $255.4 million for the twelve weeks ended September 8, 2015 increased $50.9 million, or 24.9%, over the twelve weeks ended September 9, 2014, largely due to $48.3 million of revenue attributable to club properties added in 2014 and 2015, including the clubs acquired through the Sequoia Golf acquisition on September 30, 2014. Same store golf and country club revenue increased by $2.5 million driven primarily by increases in same store dues and food and beverage revenue which were offset by decreases in other revenue. These factors are discussed below under “Segment Operations—Golf and Country Clubs”. In addition, our same store business, sports and alumni club segment revenue increased $0.8 million primarily due to increases in same store dues. These factors are discussed below under “Segment Operations—Business, Sports and Alumni Clubs”.

Club operating costs and expenses totaling $193.1 million for the twelve weeks ended September 8, 2015 increased $41.1 million, or 27.0%, compared to the twelve weeks ended September 9, 2014. The increase is due to $41.3 million of club operating costs and expenses from club properties added in 2014 and 2015, including the clubs acquired through the Sequoia Golf acquisition on September 30, 2014, offset by decreased club operating costs of $0.2 million for same store clubs.

Depreciation and amortization expense increased $7.4 million, or 43.1%, during the twelve weeks ended September 8, 2015 compared to the twelve weeks ended September 9, 2014. Depreciation expense increased $6.8 million due to our increased fixed asset balances primarily related to club acquisitions in 2014 and 2015, including Sequoia Golf, along with reinvention and expansion capital spend. Amortization expense increased $0.6 million due primarily to increased amortization from intangible assets recognized with the Sequoia Golf acquisition.

Loss on disposal of assets for the twelve weeks ended September 8, 2015 and September 9, 2014 of $3.6 million and $1.7 million, respectively, were largely comprised of losses on asset retirements during the normal course of business, including property and equipment disposed of in connection with our increased spend on reinventions and renovations.

Impairment of assets of $1.0 million for the twelve weeks ended September 8, 2015 were primarily comprised of impairment losses to property and equipment at certain of our business clubs to adjust the carrying amount of certain property and equipment to its fair value due to lower operating results at those clubs as well as changes in the expected holding period of certain fixed assets.

We recognize the earnings of one of our unconsolidated ventures, Avendra, LLC, within equity in earnings or within interest and investment income, depending on the timing of cash distributions and the investment balance. Equity in earnings from unconsolidated ventures was a loss of $0.5 million and income of $0.7 million for the twelve weeks ended September 8, 2015 and September 9, 2014, respectively. Interest and investment income of $2.1 million in the twelve weeks ended September 8, 2015 increased $0.8 million, compared to the twelve weeks ended September 9, 2014 due primarily to increased returns on our Avendra, LLC equity investment.

Selling, general and administrative expenses of $15.3 million for the twelve weeks ended September 8, 2015 increased $1.8 million, or 13.2%, compared to the twelve weeks ended September 9, 2014. The major components of selling, general and administrative expenses are shown in the table below.



	Twelve Weeks Ended
Components of selling, general and administrative expense (1)	September 8, 2015		September 9, 2014		Change			% Change
	(dollars in thousands)
Selling, general and administrative expense, excluding equity-based compensation and capital structure costs	$	13,892	$	12,284	$	1,608		13.1	%
Capital structure costs	494		576		(82		)	(14.2	)%
Equity-based compensation	962		693		269			38.8	%
Selling, general and administrative	$	15,348	$	13,553	$	1,795		13.2	%

______________________


(1)	Selling, general and administrative expense, excluding equity-based compensation and capital structure costs is a non-GAAP financial measure. We believe this measure is informative to investors because excluding capital structure costs and equity-based compensation allows investors to more meaningfully compare our results between periods.

Selling, general and administrative expenses, excluding equity-based compensation and capital structure costs, were $13.9 million for the twelve weeks ended September 8, 2015, an increase of $1.6 million, or 13.1%, compared to the twelve weeks ended September 9, 2014. Fees and expenses associated with readiness efforts for Section 404(b) of the Sarbanes-Oxley Act and related centralization of administrative processes increased $1.3 million, offset by a $1.6 million decrease in professional and consulting fees due primarily to lower fees associated with acquisitions. We also recognized a $1.2 million increase in payroll expense primarily to support the increased effort for clubs acquired with Sequoia Golf. Other expenses increased $1.1 million largely due to incremental support and integration costs related to recent acquisitions, including Sequoia Golf. Additionally, incentive compensation decreased $0.4 million.

Capital structure costs included within selling, general and administrative expenses of $0.5 million and $0.6 million during the twelve weeks ended September 8, 2015 and the twelve weeks ended September 9, 2014, respectively were largely comprised of costs associated with secondary equity offerings.

Interest expense totaled $16.2 million and $12.9 million for the twelve weeks ended September 8, 2015 and September 9, 2014, respectively. The $3.2 million increase of interest expense is primarily comprised of a $2.9 million increase in interest on the term loan facility due to a $250.0 million increase in the principal balance on September 30, 2014 to fund the Sequoia Golf acquisition and higher interest rates in the twelve weeks ended September 8, 2015. During the twelve weeks ended September 8, 2015, the term loan facility bore interest at 4.25%.

Income tax benefit for the twelve weeks ended September 8, 2015 decreased $3.8 million compared to the twelve weeks ended September 9, 2014, and the effective tax rates were 63.0% and 63.9% for the twelve weeks ended September 8, 2015 and September 9, 2014, respectively. The amount of tax expense or benefit recognized in interim financial statements is determined by multiplying the year-to-date pre-tax 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). For the twelve weeks ended September 8, 2015, the effective tax rate differed from the statutory federal rate of 35.0% primarily due to state taxes and changes in uncertain tax positions, while for the twelve weeks ended September 9, 2014, the effective tax rate differed from the statutory federal tax rate of 35.0% primarily due to state taxes, changes in uncertain tax benefits 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 8, 2015 and September 9, 2014:



	Twelve Weeks Ended
Consolidated Summary	September 8, 2015			September 9, 2014			Change			% Change
	(dollars in thousands)
Total Revenue	$	255,360		$	204,475		$	50,885		24.9	%

Adjusted EBITDA:
Golf and Country Clubs	$	58,146		$	46,830		$	11,316		24.2	%
Business, Sports and Alumni Clubs	5,989			5,702			287			5.0	%
Other	(9,203		)	(7,213		)	(1,990		)	(27.6	)%
Total Adjusted EBITDA (1)	$	54,932		$	45,319		$	9,613		21.2	%

_______________________________


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

Golf and Country Clubs

The following table presents key financial information for our golf and country clubs for the twelve weeks ended September 8, 2015 and September 9, 2014. References to percentage changes that are not meaningful, as new or acquired clubs include different clubs for each period, are denoted by ‘‘NM’’.



	Twelve Weeks Ended
Golf and Country Club Segment	September 8, 2015			September 9, 2014			Change			% Change
	(dollars in thousands, except dues and revenue per average same store membership)
Same Store Clubs
Revenue
Dues	$	74,183		$	71,758		$	2,425		3.4	%
Food and Beverage	36,467			35,955			512			1.4	%
Golf Operations	39,275			39,221			54			0.1	%
Other	13,307			13,823			(516		)	(3.7	)%
Revenue	$	163,232		$	160,757		$	2,475		1.5	%
Club operating costs and expenses exclusive of depreciation	$	114,981		$	114,395		$	586		0.5	%
Adjusted EBITDA	$	48,251		$	46,362		$	1,889		4.1	%
Adjusted EBITDA Margin	29.6		%	28.8		%	80 bps			2.8	%

New or Acquired Clubs
Revenue
Dues	$	22,132		$	1,891		$	20,241		NM
Food and Beverage	10,395			863			9,532			NM
Golf Operations	12,380			1,084			11,296			NM
Other	2,827			177			2,650			NM
Revenue	$	47,734		$	4,015		$	43,719		NM
Club operating costs and expenses exclusive of depreciation	$	37,839		$	3,547		$	34,292		NM
Adjusted EBITDA	$	9,895		$	468		$	9,427		NM

Total Golf and Country Clubs
Revenue	$	210,966		$	164,772		$	46,194		28.0	%
Club operating costs and expenses exclusive of depreciation	$	152,820		$	117,942		$	34,878		29.6	%
Adjusted EBITDA	$	58,146		$	46,830		$	11,316		24.2	%
Adjusted EBITDA Margin	27.6		%	28.4		%	(80) bps			(2.8	)%

Same-store memberships, excluding managed club memberships	86,482			86,563			(81		)	(0.1	)%
Same-store average membership, excluding managed club memberships (1)	86,308			86,259			49			0.1	%
Dues per average same-store membership, excluding managed club memberships (2)	$	860		$	832		$	28		3.4	%
Revenue per average same-store membership, excluding managed club memberships (2)	$	1,891		$	1,864		$	27		1.4	%

_______________________________


(1)	Same store average membership, excluding managed club memberships, is calculated using the same store membership count, excluding managed clubs, at the beginning and end of the period indicated.


(2)	Same store dues or revenue divided by same store average membership, excluding managed club memberships.

Total revenue for same store golf and country clubs increased $2.5 million, or 1.5%, for the twelve weeks ended September 8, 2015 compared to the twelve weeks ended September 9, 2014 due primarily to increases in dues and food and beverage revenue offset by a decrease in other revenue. Dues revenue increased $2.4 million, or 3.4%, primarily due to a rate increase in dues per same store average membership and a greater participation in the O.N.E. program. Food and beverage revenue increased $0.5 million, or 1.4%, primarily due to a 4.5% increase in a la carte revenue, partially offset by a decrease in private party revenue. Other revenue decreased $0.5 million largely due to lower revenue recognized for membership initiation payments which are being amortized into revenue over the expected lives of active memberships.

Club operating costs and expenses include costs such as payroll and payroll related expenses, costs of food and beverage sales, costs of retail sales, golf operations and golf course maintenance expenses, utilities and property taxes. Club operating costs and expenses, excluding costs of food and beverage sales, for same store golf and country clubs increased $0.1 million, or 0.1%, for the twelve weeks ended September 8, 2015 compared to the twelve weeks ended September 9, 2014. These operating costs, as a percentage of total same store club revenue, were 62.3% and 63.3% for the same periods, respectively.

Costs of food and beverage sales for same store golf and country clubs increased $0.5 million, or 4.0%, for the twelve weeks ended September 8, 2015 compared to the twelve weeks ended September 9, 2014 due primarily to an increase in food and beverage sales. These costs, as a percentage of food and beverage revenues, were 36.2% and 35.3% for the same periods, respectively.

Adjusted EBITDA for same store golf and country clubs increased $1.9 million, or 4.1%, for the twelve weeks ended September 8, 2015 compared to the twelve weeks ended September 9, 2014, largely due to the increase in higher margin dues revenue combined with well controlled club operating costs and expenses, including labor. As a result, same store Adjusted EBITDA margin for the twelve weeks ended September 8, 2015 increased 80 basis points over the twelve weeks ended September 9, 2014.

New or acquired clubs includes the results, from the date of acquisition, for all clubs acquired or opened in the thirty-six weeks ended September 8, 2015 and fiscal year 2014, including our acquisition of Sequoia Golf on September 30, 2014. New and acquired clubs contributed revenues of $47.7 million and Adjusted EBITDA of $9.9 million during the twelve weeks ended September 8, 2015, which was largely related to Sequoia Golf.

Business, Sports and Alumni Clubs

The following table presents key financial information for our business, sports and alumni clubs for the twelve weeks ended September 8, 2015 and September 9, 2014. References to percentage changes that are not meaningful, as new or acquired clubs include different clubs for each period, are denoted by ‘‘NM’’.



	Twelve Weeks Ended
Business, Sports and Alumni Club Segment	September 8, 2015			September 9, 2014			Change			% Change
	(dollars in thousands, except dues and revenue per average same store membership)
Same Store Clubs
Revenue
Dues	$	18,642		$	17,942		$	700		3.9	%
Food and Beverage	18,021			17,933			88			0.5	%
Other	2,652			2,612			40			1.5	%
Revenue	$	39,315		$	38,487		$	828		2.2	%
Club operating costs and expenses exclusive of depreciation	$	33,409		$	32,580		$	829		2.5	%
Adjusted EBITDA	$	5,906		$	5,907		$	(1	)	—	%
Adjusted EBITDA Margin	15.0		%	15.3		%	(30) bps			(2.0	)%

New or Acquired Clubs
Revenue	$	1,241		$	391		$	850		NM
Club operating costs and expenses exclusive of depreciation	$	1,158		$	596		$	562		NM
Adjusted EBITDA	$	83		$	(205	)	$	288		NM

Total Business, Sports and Alumni Clubs
Revenue	$	40,556		$	38,878		$	1,678		4.3	%
Club operating costs and expenses exclusive of depreciation	$	34,567		$	33,176		$	1,391		4.2	%
Adjusted EBITDA	$	5,989		$	5,702		$	287		5.0	%
Adjusted EBITDA Margin	14.8		%	14.7		%	10 bps			0.7	%

Same-store memberships, excluding managed club memberships	54,490			55,281			(791		)	(1.4	)%
Same-store average membership, excluding managed club memberships (1)	54,499			55,207			(708		)	(1.3	)%
Dues per average same-store membership, excluding managed club memberships (2)	$	342		$	325		$	17		5.2	%
Revenue per average same-store membership, excluding managed club memberships (2)	$	721		$	697		$	24		3.4	%

_______________________________


(1)	Same store average membership, excluding managed club memberships, is calculated using the same store membership count, excluding managed clubs, at the beginning and end of the period indicated.


(2)	Same store dues or revenue divided by same store average membership, excluding managed club memberships.

Total revenues for same store business, sports and alumni clubs increased $0.8 million, or 2.2%, for the twelve weeks ended September 8, 2015 compared to the twelve weeks ended September 9, 2014 primarily due to increases in same store dues. Dues revenue increased $0.7 million, or 3.9%, due primarily to a rate increase in dues per same store average membership.

Club operating costs and expenses include costs such as payroll and payroll related expenses, costs of food and beverage sales and rent. Club operating costs and expenses, excluding costs of food and beverage sales, for same store business, sports and alumni clubs increased $0.7 million, or 2.7%, for the twelve weeks ended September 8, 2015 compared to the twelve weeks ended September 9, 2014. The increase includes higher payroll and payroll related expenses associated with higher revenues. These operating costs, as a percentage of total same store club revenue, were 71.3% and 71.0% for the same periods, respectively.

Costs of food and beverage sales for same store business, sports and alumni clubs increased $0.1 million, or 2.0% for the twelve weeks ended September 8, 2015 compared to the twelve weeks ended September 9, 2014 due primarily to increase in food and beverage sales. These costs, as a percentage of food and beverage revenues, were 29.8% and 29.4% for the same periods, respectively.

Adjusted EBITDA for same store business, sports and alumni clubs for the twelve weeks ended September 8, 2015 was consistent with Adjusted EBITDA for the twelve weeks ended September 9, 2014. Same store Adjusted EBITDA margin for the twelve weeks ended September 8, 2015 decreased 30 basis points compared to the twelve weeks ended September 9, 2014.

Other

The following table presents financial information for Other, which is comprised primarily of activities not related to our two business segments, for the twelve weeks ended September 8, 2015 and September 9, 2014.



	Twelve Weeks Ended
Other	September 8, 2015			September 9, 2014			Change			% Change
	(dollars in thousands)
Adjusted EBITDA	$	(9,203	)	$	(7,213	)	$	(1,990	)	(27.6	)%

Other Adjusted EBITDA decreased $2.0 million, or 27.6%, for the twelve weeks ended September 8, 2015 compared to the twelve weeks ended September 9, 2014 largely due to a $1.2 million increase in expense related to the infrastructure to support Sequoia Golf, which was acquired on September 30, 2014, a $0.5 million increase in payroll and a $0.4 million decrease in net volume rebates and allowances and cash distributions from our equity method investments, which are subject to timing.

Comparison of the Thirty-Six Weeks Ended September 8, 2015 and September 9, 2014

The following table presents key financial information derived from our consolidated condensed statements of operations for the thirty-six weeks ended September 8, 2015 and September 9, 2014.



	Thirty-Six Weeks Ended
	September 8, 2015			September 9, 2014			Change			% Change
	(dollars in thousands)
Total revenues	$	721,179		$	581,616		$	139,563		24.0	%
Club operating costs and expenses exclusive of depreciation (1)	541,967			431,538			110,429			25.6	%
Depreciation and amortization	71,616			50,405			21,211			42.1	%
Loss on disposals of assets	13,309			6,347			6,962			109.7	%
Impairment of assets	2,114			895			1,219			136.2	%
Equity in loss (earnings) from unconsolidated ventures	934			(1,493		)	2,427			162.6	%
Selling, general and administrative	49,969			40,737			9,232			22.7	%
Operating income	41,270			53,187			(11,917		)	(22.4	)%
Interest and investment income	3,818			1,535			2,283			148.7	%
Interest expense	(48,587		)	(44,242		)	(4,345		)	(9.8	)%
Loss on extinguishment of debt	—			(31,498		)	31,498			100.0	%
Loss from continuing operations before income taxes	(3,499		)	(21,018		)	17,519			83.4	%
Income tax benefit	187			3,028			(2,841		)	(93.8	)%
Loss from continuing operations	$	(3,312	)	$	(17,990	)	$	14,678		81.6	%

__________________________


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

Total revenues of $721.2 million for the thirty-six weeks ended September 8, 2015 increased $139.6 million, or 24.0%, over the thirty-six weeks ended September 9, 2014, largely due to $127.5 million of revenue attributable to club properties added in 2014 and 2015, including the clubs acquired through the Sequoia Golf acquisition on September 30, 2014. Same store golf and country club revenue increased by $8.6 million driven primarily by increases in same store dues and food and beverage revenue which were offset by decreases in golf operations and other revenue. These factors are discussed below under “Segment Operations—Golf and Country Clubs”. In addition, our same store business, sports and alumni club segment revenue increased $4.7 million primarily due to increases in food and beverage revenue and same store dues. These factors are discussed below under “Segment Operations—Business, Sports and Alumni Clubs”.

Club operating costs and expenses totaling $542.0 million for the thirty-six weeks ended September 8, 2015 increased $110.4 million, or 25.6%, compared to the thirty-six weeks ended September 9, 2014. The increase is due almost exclusively to $110.0 million of club operating costs and expenses from club properties added in 2014 and 2015, including the clubs acquired through the Sequoia Golf acquisition on September 30, 2014.

Depreciation and amortization expense increased $21.2 million, or 42.1%, during the thirty-six weeks ended September 8, 2015 compared to the thirty-six weeks ended September 9, 2014. Depreciation expense increased $19.5 million due to our increased fixed asset balances primarily related to club acquisitions, including Sequoia Golf, along with reinvention and expansion capital spend. Amortization expense increased $1.7 million due primarily to increased amortization from intangible assets recognized with the Sequoia Golf acquisition.

Loss on disposal of assets for the thirty-six weeks ended September 8, 2015 and September 9, 2014 of $13.3 million and $6.3 million, respectively, were largely comprised of losses on asset retirements during the normal course of business, including property and equipment disposed of in connection with our increased spend on reinventions and renovations.

Impairment of assets of $2.1 million and $0.9 million for the thirty-six weeks ended September 8, 2015 and September 9, 2014, respectively, were primarily comprised of impairment losses to property and equipment at certain of our business clubs to adjust the carrying amount of certain property and equipment to its fair value.

We recognize the earnings of one of our unconsolidated ventures, Avendra, LLC, within equity in earnings from unconsolidated ventures or within interest and investment income, depending on the timing of cash distributions and the investment balance. Equity in earnings from unconsolidated ventures was a loss of $0.9 million and earnings of $1.5 million for the thirty-six weeks ended September 8, 2015 and September 9, 2014, respectively. Interest and investment income of $3.8 million in the thirty-six weeks ended September 8, 2015 increased $2.3 million compared to the thirty-six weeks ended September 9, 2014 due primarily to increased returns on our Avendra, LLC equity investment.

Selling, general and administrative expenses of $50.0 million for the thirty-six weeks ended September 8, 2015 increased $9.2 million, or 22.7%, compared to the thirty-six weeks ended September 9, 2014. The major components of selling, general and administrative expenses are shown in the table below.



	Thirty-Six Weeks Ended
Components of selling, general and administrative expense (1)	September 8, 2015		September 9, 2014		Change			% Change
	(dollars in thousands)
Selling, general and administrative expense, excluding equity-based compensation and capital structure costs	$	45,616	$	35,267	$	10,349		29.3	%
Capital structure costs	1,838		3,486		(1,648		)	(47.3	)%
Equity-based compensation	2,515		1,984		531			26.8	%
Selling, general and administrative	$	49,969	$	40,737	$	9,232		22.7	%

______________________


(1)	Selling, general and administrative expense, excluding equity-based compensation and capital structure costs, is a non-GAAP financial measure. We believe this measure is informative to investors because excluding capital structure costs and equity-based compensation will allow investors to more meaningfully compare our results between periods.

Selling, general and administrative expenses, excluding equity-based compensation and capital structure costs, were $45.6 million for the thirty-six weeks ended September 8, 2015, an increase of $10.3 million, or 29.3%, compared to the thirty-six weeks ended September 9, 2014. We recognized a $3.5 million increase in payroll expense primarily to support the increased effort for clubs acquired with Sequoia Golf. Other expenses increased $3.4 million largely due to incremental support and integration costs related to recent acquisitions, including Sequoia Golf. Fees and expenses associated with readiness efforts for Section 404(b) of the Sarbanes-Oxley Act and related centralization of administrative processes increased $4.2 million, offset by a $0.9 million decrease in professional and consulting fees primarily due to lower fees associated with acquisitions.

Capital structure costs included within selling, general and administrative expenses of $1.8 million during the thirty-six weeks ended September 8, 2015 were largely comprised of costs associated with the seventh amendment to the credit agreement governing the Secured Credit Facilities and costs associated with secondary equity offerings. Capital structure costs of $3.5 million during the thirty-six weeks ended September 9, 2014 were largely comprised of costs associated with the fifth amendment to the credit agreement governing the Secured Credit Facilities, the early redemption of the Senior Notes and costs associated with a secondary equity offering.

Interest expense totaled $48.6 million and $44.2 million for the thirty-six weeks ended September 8, 2015 and September 9, 2014, respectively. The $4.3 million increase of interest expense is primarily comprised of a $13.4 million increase in interest on the term loan facility due to increases to the principal balance during fiscal year 2014, and higher interest rates in the thirty-six weeks ended September 8, 2015, offset by a $9.7 million reduction due to the redemption of the Senior Notes during fiscal year 2014. During our second fiscal quarter in 2014, on May 11, 2014, the outstanding balance of the Senior Notes was redeemed using proceeds from additional borrowings on the term loan facility, which bore interest at 4.00% through the remainder of the thirty-six weeks ended September 9, 2014. During the thirty-six weeks ended September 8, 2015, the term loan facility bore interest at 4.5% through May 28, 2015 and 4.25% through the remainder of the thirty-six weeks ended September 8, 2015. Additionally, we increased the term loan facility by $250.0 million on September 30, 2014 to fund the Sequoia Golf acquisition.

Loss on extinguishment of debt for the thirty-six weeks ended September 9, 2014 consisted of a $27.5 million redemption premium payment and a write-off of $4.0 million in debt issuance costs both resulting from the redemption of $269.8 million of the Senior Notes. We did not incur any losses on extinguishment of debt during the thirty-six weeks ended September 8, 2015.

Income tax benefit for the thirty-six weeks ended September 8, 2015 decreased $2.8 million compared to the thirty-six weeks ended September 9, 2014, and the effective tax rates were 5.4% and 14.4% for the thirty-six weeks ended September 8, 2015 and September 9, 2014, respectively. The amount of tax expense or benefit recognized in interim financial statements is determined by multiplying the year-to-date pre-tax 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). For the thirty-six weeks ended September 8, 2015, the effective tax rate differed from the statutory federal rate of 35.0% primarily due to state taxes and changes in uncertain tax positions, while for the thirty-six weeks ended September 9, 2014, the effective tax rate differed from the statutory federal tax rate of 35.0% primarily due to state taxes, changes in uncertain tax benefits 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 thirty-six weeks ended September 8, 2015 and September 9, 2014:



	Thirty-Six Weeks Ended
Consolidated Summary	September 8, 2015			September 9, 2014			Change			% Change
	(dollars in thousands)
Total Revenue	$	721,179		$	581,616		$	139,563		24.0	%

Adjusted EBITDA:
Golf and Country Clubs	$	164,823		$	133,016		$	31,807		23.9	%
Business, Sports and Alumni Clubs	22,692			20,198			2,494			12.3	%
Other	(33,504		)	(26,287		)	(7,217		)	(27.5	)%
Total Adjusted EBITDA (1)	$	154,011		$	126,927		$	27,084		21.3	%

_______________________________


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

Golf and Country Clubs

The following table presents key financial information for our golf and country clubs for the thirty-six weeks ended September 8, 2015 and September 9, 2014. References to percentage changes that are not meaningful, as new or acquired clubs include different clubs for each period, are denoted by ‘‘NM’’.



	Thirty-Six Weeks Ended
Golf and Country Club Segment	September 8, 2015			September 9, 2014			Change			% Change
	(dollars in thousands, except dues and revenue per average same store membership)
Same Store Clubs
Revenue
Dues	$	218,574		$	210,598		$	7,976		3.8	%
Food and Beverage	104,049			101,828			2,221			2.2	%
Golf Operations	103,095			103,770			(675		)	(0.7	)%
Other	35,092			35,973			(881		)	(2.4	)%
Revenue	$	460,810		$	452,169		$	8,641		1.9	%
Club operating costs and expenses exclusive of depreciation	$	321,908		$	319,689		$	2,219		0.7	%
Adjusted EBITDA	$	138,902		$	132,480		$	6,422		4.8	%
Adjusted EBITDA Margin	30.1		%	29.3		%	80 bps			2.7	%

New or Acquired Clubs
Revenue
Dues	$	59,273		$	3,449		$	55,824		NM
Food and Beverage	26,222			1,848			24,374			NM
Golf Operations	29,330			1,918			27,412			NM
Other	7,830			283			7,547			NM
Revenue	$	122,655		$	7,498		$	115,157		NM
Club operating costs and expenses exclusive of depreciation	$	96,734		$	6,962		$	89,772		NM
Adjusted EBITDA	$	25,921		$	536		$	25,385		NM

Total Golf and Country Clubs
Revenue	$	583,465		$	459,667		$	123,798		26.9	%
Club operating costs and expenses exclusive of depreciation	$	418,642		$	326,651		$	91,991		28.2	%
Adjusted EBITDA	$	164,823		$	133,016		$	31,807		23.9	%
Adjusted EBITDA Margin	28.2		%	28.9		%	(70) bps			(2.4	)%

Same-store memberships, excluding managed club memberships	86,482			86,563			(81		)	(0.1	)%
Same-store average membership, excluding managed club memberships (1)	85,683			85,046			637			0.7	%
Dues per average same-store membership, excluding managed club memberships (2)	$	2,551		$	2,476		$	75		3.0	%
Revenue per average same-store membership, excluding managed club memberships (2)	$	5,378		$	5,317		$	61		1.1	%

_______________________________


(1)	Same store average membership, excluding managed club memberships, is calculated using the same store membership count, excluding managed clubs, at the beginning and end of the period indicated.


(2)	Same store dues or revenue divided by same store average membership, excluding managed club memberships.

Total revenue for same store golf and country clubs increased $8.6 million, or 1.9%, for the thirty-six weeks ended September 8, 2015 compared to the thirty-six weeks ended September 9, 2014 due primarily to increases in same store dues and food and beverage revenue offset by decreases in golf operations and other revenue. Same store dues revenue increased $8.0 million, or 3.8%, due to a rate increase in dues per same store average membership and greater participation in the O.N.E. program. Food and beverage revenue increased $2.2 million, or 2.2%, primarily due primarily to a 3.2% increase in a la carte revenue. Other revenue decreased $0.9 million, or 2.4%, largely due to lower revenue recognized for membership initiation payments which are being amortized into revenue over the expected lives of active memberships. Golf operations revenue decreased $0.7 million, or 0.7%, due to lower cart fees and retail sales resulting from inclement weather, primarily in Texas, leading to fewer golf rounds.

Club operating costs and expenses include costs such as payroll and payroll related expenses, costs of food and beverage sales, costs of retail sales, golf operations and golf course maintenance expenses, utilities and property taxes. Club operating costs and expenses, excluding costs of food and beverage sales, for same store golf and country clubs increased $1.4 million, or 0.5%, for the thirty-six weeks ended September 8, 2015 compared to the thirty-six weeks ended September 9, 2014. The increase is primarily related to higher variable operating costs and expenses, partially offset by decreases in utility expenses. These operating costs, as a percentage of total same store club revenue, were 61.8% and 62.7% for the same periods, respectively.

Costs of food and beverage sales for same store golf and country clubs increased $0.8 million, or 2.3% for the thirty-six weeks ended September 8, 2015 compared to the thirty-six weeks ended September 9, 2014 due primarily to increase in food and beverage sales. These costs, as a percentage of food and beverage revenues, were 35.5% and 35.4% for the same periods, respectively.

Adjusted EBITDA for same store golf and country clubs increased $6.4 million, or 4.8%, for the thirty-six weeks ended September 8, 2015 compared to the thirty-six weeks ended September 9, 2014, largely due to the increase in higher margin dues revenue combined with well controlled variable operating costs and expenses. As a result, same store Adjusted EBITDA margin for the thirty-six weeks ended September 8, 2015 increased 80 basis points over the thirty-six weeks ended September 9, 2014.

New or acquired clubs includes the results, from the date of acquisition, for all clubs acquired or opened in the thirty-six weeks ended September 8, 2015 and fiscal year 2014, including our acquisition of Sequoia Golf on September 30, 2014. New and acquired clubs contributed revenues of $122.7 million and Adjusted EBITDA of $25.9 million during the thirty-six weeks ended September 8, 2015, which was largely related to Sequoia Golf.

Business, Sports and Alumni Clubs

The following table presents key financial information for our business, sports and alumni clubs for the thirty-six weeks ended September 8, 2015 and September 9, 2014. References to percentage changes that are not meaningful, as new or acquired clubs include different clubs for each period, are denoted by ‘‘NM’’.



	Thirty-Six Weeks Ended
Business, Sports and Alumni Club Segment	September 8, 2015			September 9, 2014			Change			% Change
	(dollars in thousands, except dues and revenue per average same store membership)
Same Store Clubs
Revenue
Dues	$	55,867		$	53,631		$	2,236		4.2	%
Food and Beverage	60,438			58,178			2,260			3.9	%
Other	7,864			7,615			249			3.3	%
Revenue	$	124,169		$	119,424		$	4,745		4.0	%
Club operating costs and expenses exclusive of depreciation	$	101,754		$	98,949		$	2,805		2.8	%
Adjusted EBITDA	$	22,415		$	20,475		$	1,940		9.5	%
Adjusted EBITDA Margin	18.1		%	17.1		%	100 bps			5.8	%

New or Acquired Clubs
Revenue	$	3,373		$	394		$	2,979		NM
Club operating costs and expenses exclusive of depreciation	$	3,096		$	671		$	2,425		NM
Adjusted EBITDA	$	277		$	(277	)	$	554		NM

Total Business, Sports and Alumni Clubs
Revenue	$	127,542		$	119,818		$	7,724		6.4	%
Club operating costs and expenses exclusive of depreciation	$	104,850		$	99,620		$	5,230		5.2	%
Adjusted EBITDA	22,692			20,198			$	2,494		12.3	%
Adjusted EBITDA Margin	17.8		%	16.9		%	90 bps			5.3	%

Same-store memberships, excluding managed club memberships	54,490			55,281			(791		)	(1.4	)%
Same-store average membership, excluding managed club memberships (1)	54,777			55,007			(230		)	(0.4	)%
Dues per average same-store membership, excluding managed club memberships (2)	$	1,020		$	975		$	45		4.6	%
Revenue per average same-store membership, excluding managed club memberships (2)	$	2,267		$	2,171		$	96		4.4	%

_______________________________


(1)	Same store average membership, excluding managed club memberships, is calculated using the same store membership count, excluding managed clubs, at the beginning and end of the period indicated.


(2)	Same store dues or revenue divided by same store average membership, excluding managed club memberships.

Total revenues for same store business, sports and alumni clubs increased $4.7 million, or 4.0%, for the thirty-six weeks ended September 8, 2015 compared to the thirty-six weeks ended September 9, 2014 primarily due to increases in food and beverage revenue and same store dues revenue. Food and beverage revenue increased $2.3 million, or 3.9%, primarily due to a 5.6% increase in private party revenue driven by increased spend in corporate private events. Dues revenue increased $2.2 million, or 4.2%, due primarily to a rate increase in dues per same store average membership.

Club operating costs and expenses include costs such as payroll and payroll related expenses, costs of food and beverage sales and rent. Club operating costs and expenses, excluding costs of food and beverage sales, for same store business, sports and alumni clubs increased $2.1 million, or 2.6%, for the thirty-six weeks ended September 8, 2015 compared to the thirty-six weeks ended September 9, 2014. The increase include higher payroll and payroll related expenses associated with higher revenues. These operating costs, as a percentage of total same store club revenue, were 68.1% and 69.1% for the same periods, respectively.

Costs of food and beverage sales for same store business, sports and alumni clubs increased $0.7 million, or 4.2% for the thirty-six weeks ended September 8, 2015 compared to the thirty-six weeks ended September 9, 2014 due primarily to increase in food and beverage sales. These costs, as a percentage of food and beverage revenues, were 28.3% and 28.3% for the same periods, respectively.

Adjusted EBITDA for same store business, sports and alumni clubs increased $1.9 million, or 9.5%, for the thirty-six weeks ended September 8, 2015 compared to the thirty-six weeks ended September 9, 2014, primarily due to increases in food and beverage revenue and higher margin dues revenue. Same store Adjusted EBITDA margin for the thirty-six weeks ended September 8, 2015 increased 100 basis points compared to the thirty-six weeks ended September 9, 2014.

Other

The following table presents financial information for Other, which is comprised primarily of activities not related to our two business segments, for the thirty-six weeks ended September 8, 2015 and September 9, 2014.



	Thirty-Six Weeks Ended
Other	September 8, 2015			September 9, 2014			Change			% Change
	(dollars in thousands)
Adjusted EBITDA	$	(33,504	)	$	(26,287	)	$	(7,217	)	(27.5	)%

Other Adjusted EBITDA decreased $7.2 million, or 27.5%, for the thirty-six weeks ended September 8, 2015 compared to the thirty-six weeks ended September 9, 2014 largely due to $3.9 million increase in expense related to the infrastructure to support Sequoia Golf, which was acquired on September 30, 2014, $0.9 million increase in payroll, a $0.8 million decrease in net volume rebates, allowances and cash distributions from our equity method investments, which are subject to timing. The remaining increase in expense is largely related to increases in software maintenance and health insurance expense.

Liquidity and Capital Resources

We operate through our subsidiaries and have no material assets other than the stock of our subsidiaries. Our ability to pay dividends is dependent on our receipt of dividends or other distributions from our subsidiaries, proceeds from the issuance of our securities and borrowings under the Secured Credit Facilities and other debt instruments.

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 clubs, be poised for external growth and pay dividends to our stockholders. Historically, we have financed our business through cash flows from operations and debt.

We anticipate that cash flows from operations will be our primary source of cash over the next twelve months. We believe current assets and cash generated from operations will be sufficient to meet anticipated working capital needs, planned capital expenditures, debt service obligations and payment of a quarterly cash dividend on our common stock of $0.13 per share, or an indicated annual dividend of $0.52 per share. The payment of such quarterly dividends will be at the discretion of our Board of Directors. We plan to use excess cash reserves, the revolving credit facility, debt proceeds, equity proceeds, or a combination thereof to expand the business through capital improvement and expansion projects and strategically selected club acquisitions.

As of September 8, 2015, cash and cash equivalents totaled $47.1 million and we had $58.3 million available for borrowing under the revolving credit facility of the Secured Credit Facilities for total liquidity of $105.4 million. As of October 9, 2015, we had $58.3 million available for borrowing under the revolving credit facility.

Cash Flows from Operating Activities

Cash flows from operations totaled $98.6 million and $78.4 million for the thirty-six weeks ended September 8, 2015 and September 9, 2014, respectively. The $20.2 million increase in operating cash flows is due largely to an increase in earnings and positive impact of changes in working capital. Earnings contributed approximately $5.5 million, after excluding the $2.8 million decrease in income tax benefit, the $19.5 million increase in depreciation expense and the $31.5 million decrease in loss on extinguishment of debt, each of which do not impact operating cash flows. Changes in working capital during the normal course of business provided $9.7 million positive impact on cash flows from operations.

Cash Flows used in Investing Activities

Cash flows used in investing activities totaled $131.5 million and $82.1 million for the thirty-six weeks ended September 8, 2015 and September 9, 2014, respectively. The $49.4 million increase in cash used for investing activities is primarily due to the $28.7 million increase in cash used for the acquisition of clubs and the $21.0 million increase in capital spent to maintain, renovate and reinvent our existing properties.

Cash Flows used in Financing Activities

Cash flows provided by financing activities totaled $5.2 million and $15.8 million for the thirty-six weeks ended September 8, 2015 and September 9, 2014, respectively. During the thirty-six weeks ended September 8, 2015 and September 9, 2014, respectively, we borrowed $57.0 million and $11.2 million under our revolving credit facility. During the thirty-six weeks ended September 8, 2015, we repaid $10.0 million of outstanding borrowings under our revolving credit facility. During the thirty-six weeks ended September 9, 2014, Operations entered into a fifth amendment to the credit agreement governing the Secured Credit Facilities which increased the term loan facility principal balance to $651.1 million. The proceeds of the additional term loan borrowing of $348.3 million, net of discount, were used to redeem the remaining $269.8 million principal amount of the Senior Notes, pay the related redemption premium of $27.5 million and repay the $11.2 million borrowed under our revolving credit facility earlier in the year.

Additionally, we made scheduled debt repayments of $12.0 million during the thirty-six weeks ended September 8, 2015, which was a $3.1 million increase from the $8.9 million of scheduled debt repayments made during the thirty-six weeks ended September 9, 2014. We paid $1.5 million and $2.9 million for debt issuance and modification costs in the thirty-six weeks ended September 8, 2015 and September 9, 2014, respectively, related primarily to debt amendments to the credit agreement governing the Secured Credit Facilities. Additionally, during the thirty-six weeks ended September 8, 2015, we paid $2.2 million more in dividends to our common stockholders due primarily to the increase in our dividend from $0.12 to $0.13 per share of common stock.

Total cash and cash equivalents decreased by $27.9 million during the thirty-six weeks ended September 8, 2015 and increased by $12.0 million during the thirty-six weeks ended September 9, 2014.

Capital Spending

The nature of our business requires us to invest capital to maintain our existing properties. For the thirty-six weeks ended September 8, 2015 and September 9, 2014, we spent approximately $41.1 million and $22.7 million, respectively, in capitalized costs to maintain our existing properties. During the remainder of fiscal year 2015, we anticipate spending approximately $9.0 million in capital to maintain our existing facilities.

In addition to maintaining our properties, we also spend discretionary capital to expand and improve existing properties, including major reinventions, and expand our business through acquisitions. Capital expansion funding totaled approximately $90.9 million and $59.6 million for the thirty-six weeks ended September 8, 2015 and September 9, 2014, respectively, including acquisitions of $55.9 million and $27.2 million. We anticipate spending approximately $25.0 million on reinvention and expansion projects during the remainder of fiscal year 2015, excluding any potential future acquisitions.

Future discretionary capital spending amounts are subject to change if additional acquisitions or expansion opportunities are identified that fit our strategy to expand the business or as a result of other factors, including but not limited to those described in Item 1A. Risk Factors of our 2014 Annual Report filed with the SEC on March 12, 2015.

Debt

Secured Credit Facilities—In 2010, Operations entered into the credit agreement governing the Secured Credit Facilities. The credit agreement governing the Secured Credit Facilities was subsequently amended in 2012, 2013, 2014 and 2015. As of October 9, 2015, the Secured Credit Facilities were comprised of (i) a $901.1 million term loan facility, and (ii) a revolving credit facility with capacity of $135.0 million and $58.3 million available for borrowing after deducting $29.7 million of standby letters of credit and $47.0 million of borrowings outstanding. In addition, the credit agreement governing the Secured Credit Facilities includes capacity which provides, subject to lender participation, for additional borrowings in revolving or term loan commitments, so long as the Senior Secured Leverage Ratio does not exceed 3.75:1.00.

As of October 9, 2015, the interest rate on the term loan facility was a variable rate calculated as the higher of (i) 4.25% or (ii) an elected LIBOR plus a margin of 3.25% and the maturity date of the term loan facility is July 24, 2020.

As of October 9, 2015, all revolving credit commitments are related to a tranche which matures on September 30, 2018 and bears interest at a rate of LIBOR plus a margin of 3.0% per annum. We are required to pay a commitment fee on all undrawn amounts under the revolving credit facility and a fee on all outstanding letters of credit, payable quarterly in arrears.

As long as commitments are outstanding under the revolving credit facility, we are subject to the Senior Secured Leverage Ratio. The Senior Secured Leverage Ratio is defined as the ratio of Operations' Consolidated Senior Secured Debt to Consolidated EBITDA (disclosed as Adjusted EBITDA and defined in “Basis of Presentation”) and is calculated on a pro forma basis, giving effect to current period acquisitions as though they had been consummated on the first day of the period presented. The credit agreement governing the Secured Credit Facilities requires us to maintain a leverage ratio no greater than 5.00:1.00 for each fiscal quarter.

We may be required to prepay the outstanding term loan facility by a percentage of excess cash flows, as defined by the credit agreement governing the Secured Credit Facilities, each fiscal year end after our 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. No such prepayment was required with respect to fiscal year 2014. We may voluntarily repay outstanding loans under the Secured Credit Facilities in whole or in part upon prior notice without premium or penalty, other than certain fees incurred in connection with a repricing transaction.

As of September 8, 2015, Operations was in compliance with all covenant restrictions under the credit agreement governing the Secured Credit Facilities. The following tables present the Senior Secured Leverage Ratio, as defined in the credit agreement governing the Secured Credit Facilities, on a rolling four quarter basis through September 8, 2015:



	Four Quarters Ended
	September 8, 2015
	(dollars in thousands)
Pro Forma Adjusted EBITDA (1)	$	231,119
Pro Forma Consolidated Senior Secured Debt (2)	$	1,020,380
Senior Secured Leverage Ratio	4.41		x

_______________________


(1)	The following table presents a reconciliation of Adjusted EBITDA to Pro Forma Adjusted EBITDA for the four quarters ended September 8, 2015:



	Four Quarters Ended
	September 8, 2015
	(in thousands)
Adjusted EBITDA (a)	$	223,216
Pro forma adjustment - acquisitions (b)	7,903
Pro Forma Adjusted EBITDA	$	231,119


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


(b)	The pro forma adjustment gives effect to all acquisitions in the four quarters ended September 8, 2015 as though they had been consummated on the first day of the fourth quarter of fiscal year 2014 and includes certain expected cost savings.


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



	As of September 8, 2015
	(in thousands)
Long-term debt (net of current portion and excluding loan discount)	$	1,024,867
Current maturities of long-term debt	17,409
Outstanding letters of credit	29,721
Uncollateralized surety bonds	6,611
Less:
Notes payable related to Non-Core Development Entities	(11,837		)
Adjustment per credit agreement (a)	(46,391		)
Pro Forma Consolidated Senior Secured Debt	$	1,020,380

_______________________

(a)

Represents an adjustment reducing total debt by the lesser of Operations' unrestricted cash or $85.0 million. Adjustment includes a $0.7 million pro forma reduction to Operations’ unrestricted cash, which reflects the cash interest which would have been paid during the four quarters ended September 8, 2015 if the Sequoia Golf acquisition and the associated increase in the term loan balance had occurred on September 9, 2014.

Senior Notes—On November 30, 2010, Operations issued $415.0 million in Senior Notes, bearing interest at 10.0% and maturing December 1, 2018. On October 28, 2013, Operations repaid $145.3 million in aggregate principal of Senior Notes at a redemption price of 110.00%, plus accrued and unpaid interest thereon. On April 11, 2014, Operations provided notice to the trustee for the Senior Notes that Operations had elected to redeem all of the remaining outstanding Senior Notes at a redemption price of 110.18%, plus accrued and unpaid interest thereon, on May 11, 2014. Operations irrevocably deposited with the trustee $309.2 million, which was the amount sufficient to fund the redemption and to satisfy and discharge Operations' obligations under the Senior Notes.

The following table summarizes the components of our interest expense for the twelve and thirty-six weeks ended September 8, 2015:



	Twelve Weeks Ended		Thirty-Six Weeks Ended
	September 8, 2015		September 8, 2015
	(in thousands)
Interest expense related to:
Interest related to funded debt (1)	$	10,074	$	30,758
Capital leases and other indebtedness (2)	410		1,141
Amortization of debt issuance costs and term loan discount	638		1,889
Notes payable related to certain Non-Core Development Entities	246		736
Accretion of discount on member deposits	4,802		14,063
Total Interest expense	$	16,170	$	48,587

_______________________


(1)	Interest expense related to funded debt includes interest on the securities and borrowing under the Secured Credit Facilities, the Stonebriar / Monarch Loan and mortgage loans with Atlantic Capital Bank and BancFirst.


(2)	Includes interest expense on capital leases and other indebtedness (which includes other mortgage loans not included in funded debt above), offset by capitalized interest.

Off-Balance Sheet Arrangements, Contractual Obligations and Commercial Commitments

We are not aware of any off-balance sheet arrangements as of September 8, 2015. There have been no material changes outside the normal course of business to our contractual obligations or commercial commitments from those previously disclosed in our 2014 Annual Report filed with the SEC on March 12, 2015.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our indebtedness consists of both fixed and variable rate debt facilities. As of September 8, 2015, the interest rate on the term loan facility under the Secured Credit Facilities was a variable rate calculated as the higher of (i) a 4.25% “Floor” or (ii) an elected LIBOR plus a margin of 3.25%. Therefore, the term loan facility is effectively subject to a 4.25% Floor until LIBOR exceeds 1.0%. As of October 9, 2015, the three month LIBOR was 0.32%, which is below 1.0%, such that a hypothetical 0.5% increase in LIBOR would not result in an increase in interest expense.

Foreign Currency Exchange Risk

Our interests 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 8, 2015.

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 8, 2015 totaled approximately $0.5 million.

ITEM 4. CONTROLS AND PROCEDURES

Included in this quarterly report on 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 (the “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 an evaluation of the effectiveness of our disclosure controls and procedures at the reasonable assurance level (as defined in Rule 15d-15(e) of the Exchange Act) as of September 8, 2015. We perform this evaluation on a quarterly basis so that the conclusions concerning the effectiveness of our disclosure controls and procedures can be reported in our annual and quarterly reports filed under the Exchange Act. Based on this evaluation, and subject to the limitations described below, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 8, 2015.

Change in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 8, 2015 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and the Chief Financial Officer, does not expect that our disclosure controls and procedures or internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can only provide reasonable, not absolute, assurances that the objectives of the control system are met. The design of a control system reflects resource constraints, and the benefits of controls must be considered relative to their costs. Because there are inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of error or fraud, if any, have been or will be detected.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are involved in litigation that we believe is of the type common to companies engaged in our line of business, including commercial disputes, disputes with members regarding their membership agreements, employment issues and claims relating to personal injury and property damage. We are not involved in any pending legal proceedings that we believe would likely have a material adverse effect on our financial condition, results of operations or cash flows.

ITEM 1A. RISK FACTORS

We have updated the risk factors below. There have been no other material changes to our risk factors that we believe are material to our business, results of operations and financial condition, from the risk factors previously disclosed in our 2014 Annual Report filed with the SEC on March 12, 2015, which is accessible on the SEC's website at www.sec.gov.

Risks Relating to Our Capital Structure

Affiliates of KSL may continue to be able to significantly influence our decisions and their interests may conflict with ours or yours in the future.

As of September 8, 2015, affiliates of KSL beneficially owned approximately 14% of our common stock. As a result, investment funds associated with or designated by affiliates of KSL will continue to have the ability to nominate a percentage (determined, pursuant to our amended and restated articles of incorporation, in proportion to their collective ownership of our common stock) of the total number of members constituting our Board of Directors and thereby may be able to influence our policies and operations, including the appointment of management, future issuances of our common stock or other securities, the payment of dividends, if any, on our common stock, the incurrence or modification of debt by us, amendments to our amended and restated articles of incorporation and amended and restated bylaws and the entering into of extraordinary transactions, until such time as affiliates of KSL substantially reduce their stake in our company. In addition, the interests of affiliates of KSL may not in all cases be aligned with your interests. KSL may have an interest in pursuing acquisitions, divestitures and other transactions that, in its judgment, could enhance its investment, even though such transactions might involve risks to you. For example, KSL may be interested in making acquisitions that increase our indebtedness or in selling revenue‑generating assets. Additionally, in certain circumstances, acquisitions of debt at a discount by purchasers that are related to a debtor can give rise to cancellation of indebtedness income to such debtor for U.S. federal income tax purposes.

KSL is in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us.

Our amended and restated articles of incorporation provide that none of KSL’s affiliates or any director who is not employed by us, or affiliates of such director, will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate. KSL’s affiliates also may pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us. So long as affiliates of KSL continue to own a significant amount of our combined voting power, even if such amount is less than 30%, KSL will continue to be able to influence our decisions and, so long as KSL’s affiliates collectively own at least 5% of all outstanding shares of our stock entitled to vote generally in the election of directors, they will be able to nominate individuals to our Board of Directors pursuant to our amended and restated articles of incorporation. In addition, KSL will be able to influence the outcome of all matters requiring stockholder approval and may be able to prevent a change of control or a change in the composition of our Board of Directors and could impede any unsolicited acquisition of us. The concentration of ownership could deprive you of an opportunity to receive a premium for your shares of common stock as part of a sale of our company and ultimately might affect the market price of our common stock.

We are no longer a “controlled company” within the meaning of the NYSE rules and the rules of the SEC and are currently in the phase-in period for additional governance requirements under NYSE rules.

As of May 11, 2015, affiliates of KSL ceased to control a majority of the voting power of our outstanding common stock and we ceased to be a “controlled company” within the meaning of the corporate governance standards of the NYSE and became subject to additional corporate governance requirements under NYSE rules, including:


•	the requirement that a majority of our Board of Directors consist of “independent directors” as defined under the rules of the NYSE;


•	the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities;


•	the requirement that we have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and


•	the requirement for an annual performance evaluation of the compensation and nominating and corporate governance committees.

The NYSE rules provide for phase-in periods for these requirements, but we must be fully compliant with the new requirements by May 11, 2016. We cannot provide any assurance that we will be able to do so. Currently, we have a majority of independent directors, but our nominating and corporate governance and compensation committees do not consist entirely of independent directors. During this transition period, our stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the NYSE corporate governance requirements.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Unregistered Sales of Equity Securities

None.

Use of Proceeds

Not applicable.

Dividend Policy and Limitations

In December 2013, our Board of Directors adopted a policy to pay, subject to the satisfaction of certain conditions and the availability of funds, a regular quarterly cash dividend at an indicated annual rate of $0.48 per share of common stock, subject to quarterly declaration. On December 3, 2014, our Board of Directors approved an 8% increase in the quarterly dividend, resulting in an indicated annual dividend of $0.52 per share of common stock.

The following is a summary of dividends declared or paid during the periods presented:



Declaration Date	Dividend Per Share		Record Date	Total Amount		Payment Date
Declaration Date	Dividend Per Share		Record Date	(in thousands)		Payment Date
Fiscal Year 2014
December 10, 2013	$	0.12	January 3, 2014	$	7,654	January 15, 2014
March 18, 2014	$	0.12	April 3, 2014	$	7,725	April 15, 2014
June 25, 2014	$	0.12	July 7, 2014	$	7,731	July 15, 2014
September 9, 2014	$	0.12	October 3, 2014	$	7,731	October 15, 2014

Fiscal Year 2015
December 3, 2014	$	0.13	January 2, 2015	$	8,377	January 15, 2015
March 20, 2015	$	0.13	April 2, 2015	$	8,399	April 15, 2015
June 25, 2015	$	0.13	July 6, 2015	$	8,417	July 15, 2015
September 3, 2015	$	0.13	October 1, 2015	$	8,416	October 15, 2015

Our ability to pay dividends depends in part on our receipt of cash distributions from our operating subsidiaries, which may be restricted from distributing us cash as a result of the laws of their jurisdiction of organization, agreements of our subsidiaries or covenants under any existing and future outstanding indebtedness we or our subsidiaries incur. In particular, the ability of our subsidiaries to distribute cash to us is limited by covenants in the credit agreement governing the Secured Credit Facilities. The payment of such quarterly dividends and any future dividends will be at the discretion of our Board of Directors.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The exhibits listed below are incorporated herein by reference to prior SEC filings by Registrant or its affiliates or are included as exhibits in this quarterly report on Form 10-Q.



Exhibit No.		Description of Exhibit
3.1 (a)		Form of Amended and Restated Articles of Incorporation of ClubCorp Holdings, Inc. (Incorporated by reference to Exhibit 3.1(a) to Amendment No. 1 to the Form S-1 filed by ClubCorp Holdings, Inc. on August 6, 2013)
3.1 (b)		Form of Amended and Restated Bylaws of ClubCorp Holdings, Inc. (Incorporated by reference to Exhibit 3.1(b) to Amendment No. 1 to the Form S-1 filed by ClubCorp Holdings, Inc. on August 6, 2013)
10.1	†	Form of Amended Performance Restricted Stock Unit Agreement under ClubCorp Holdings, Inc. 2012 Stock Award Plan (Incorporated by reference to Exhibit 10.2 on Form 8-K filed by ClubCorp Holdings, Inc. on February 6, 2015)
10.2	†	Form of Amended and Restated Performance Restricted Stock Unit Agreement for awards granted on February 7, 2014 under ClubCorp Holdings, Inc. 2012 Stock Award Plan (Incorporated by reference to Exhibit 10.28 on Form 10-K filed by ClubCorp Holdings, Inc. on March 12, 2015)
10.3		Amendment No. 7, dated as of May 28, 2015, to the Credit Agreement dated as of November 30, 2010 among CCA Club Operations Holdings, LLC, ClubCorp Club Operations, Inc. as Borrower, Citicorp North America, Inc. as Administrative Agent, Swing Line Lender and L/C Issuer, the other lenders party thereto and Citigroup Global Markets Inc. as Sole Arranger and Sole Bookrunner (Incorporated by reference to Exhibit 10.1 on Form 8-K filed by ClubCorp Holdings, Inc. on May 28, 2015)
11		Statement of Computation of Per Share Earnings (Included in Part I, Item 1: “Financial Statements” of this quarterly report on Form 10-Q.)
31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002
32.1		Certifications of Chief Executive Officer pursuant to 18 U.S.C. §1350*
32.2		Certifications of Chief Financial Officer pursuant to 18 U.S.C. §1350*
101		The following information from the Company's quarterly report on Form 10-Q for the quarter ended September 8, 2015 formatted in eXtensible Business Reporting Language: (i) Consolidated condensed statements of operations and comprehensive loss for the twelve and thirty-six weeks ended September 8, 2015 and September 9, 2014; (ii) Consolidated condensed balance sheets as of September 8, 2015 and December 30, 2014; (iii) Consolidated condensed statements of cash flows for the thirty-six weeks ended September 8, 2015 and September 9, 2014; (iv) Consolidated condensed statements of changes in equity for the thirty-six weeks ended September 8, 2015 and September 9, 2014 and (v) Notes to the consolidated condensed financial statements.

______________________________


*	Exhibit is furnished rather than filed, and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.


†	Indicates management contract or compensatory plan or arrangement.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



Date:	October 15, 2015	/s/ Curtis D. McClellan
		Curtis D. McClellan
		Chief Financial Officer and Treasurer (Principal Financial Officer)



Date:	October 15, 2015	/s/ Todd M. Dupuis
		Todd M. Dupuis
		Chief Accounting Officer (Principal Accounting Officer)

ClubCorp Holdings, Inc. - FORM 10-Q - October 15, 2015

Attached files

ClubCorp Holdings, Inc. Reports