UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 25, 2012.

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

For the transition period from to

Commission File Number 333-173127

ClubCorp Club Operations, Inc.

(Exact name of registrant as specified in its charter)



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

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

(972) 243-6191

(Registrant’s telephone number, including area code)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No ý

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 ý No ¨

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 ý No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

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



Large accelerated filer o		Accelerated filer o

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

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

The registrant’s shares of common stock are not traded on an exchange or in any public market. As of December 25, 2012, the number of the shares outstanding of the registrant’s common stock was 1,000.

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TABLE OF CONTENTS



		Page
	PART I.

Item 1.	Business	1
Item 1A.	Risk Factors	12
Item 1B.	Unresolved Staff Comments	25
Item 2.	Properties	26
Item 3.	Legal Proceedings	29
Item 4.	Mine Safety Disclosures	30

	PART II.

Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	31
Item 6.	Selected Financial Data	31
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	56
Item 8.	Financial Statements and Supplementary Data	57
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	98
Item 9A.	Controls and Procedures	98
Item 9B.	Other Information	98

	PART III.

Item 10.	Directors, Executive Officers and Corporate Governance	99
Item 11.	Executive Compensation	102
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	112
Item 13.	Certain Relationships and Related Transactions, and Director Independence	114
Item 14.	Principle Accountant Fees and Services	114

	PART IV.

Item 15.	Exhibits and Financial Statement Schedules	115

Signatures.		118

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PART I — BUSINESS FACTORS

ITEM 1. BUSINESS

Throughout this annual report on Form 10-K ("Form 10-K"), we refer to ClubCorp Club Operations, Inc., together with its subsidiaries (ClubCorp, Inc. and subsidiaries prior to November 30, 2010), as “we,” “us,” “our”, “ClubCorp" or the "Company". Our fiscal year consists of a 52/53 week period ending on the last Tuesday of December. References to 2012, 2011 and 2010 relate to the 52-week fiscal years ended December 25, 2012, December 27, 2011 and December 28, 2010, respectively.

The business section and other parts of this report may contain certain statements which may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks, uncertainties and other factors, which without limitation, are set forth in Item 1A. Risk Factors section of this Form 10-K. These forward-looking words include “expects,”“intends,”“anticipates,” “plans,” “believes,” “estimates,” “projects,” “predicts,” and other similar expressions. Our actual results could differ materially from the results anticipated by the forward-looking statements as a result of various factors, including, but not limited to, those identified in Item 1A.“Risk Factors” or in other sections of this report. The Company assumes no obligation to update these forward looking statements.

General

We are one of the largest owners and managers of private golf, country, business, sports and alumni clubs in North America, with a network of clubs that includes approximately 145,000 memberships and 350,000 individual members. As of December 25, 2012, we owned or operated 102 golf and country clubs and 49 business, sports and alumni clubs in 23 states, the District of Columbia and two foreign countries. We believe our expansive network of clubs and focus on facilities, recreation and social programming enhances our ability to attract members across a number of demographic groups. Our clubs' offerings are designed to appeal to the entire family, resulting in member loyalty that we believe translates financially into a more economically resilient leisure product and allows us a greater ability to capture discretionary leisure spending than traditional clubs. In addition, we offer a network of products, services and amenities that provide access to our extensive network of clubs and leverage alliances with other clubs, facilities and properties. A significant percentage of our revenues are derived from membership dues which provides a stable recurring revenue base, and we believe the geographic diversity of our clubs limits the impact of adverse regional weather patterns and or economic conditions.

Founded in 1957 with one country club in Dallas, Texas, we were one of the first companies to enter into the professional ownership and operation of golf and country club businesses. In 1966, we established our first business club on the belief that we could profitably expand our operations by delivering quality service and focusing on member satisfaction in a related line of business. In 1999, having reached a critical mass, we began selling various upgrade programs that offer participating members reciprocal access to our network of clubs, other clubs, properties and facilities with which we have alliances, providing our members with a wide variety of products, services and amenities. We remained family owned until December 2006, when we were acquired by affiliates of KSL Capital Partners, LLC (“KSL” or “Sponsor”), a private equity firm specializing in travel and leisure businesses.

Our operations are organized into two principal business segments: (1) golf and country clubs and (2) business, sports and alumni clubs. Our golf and country club segment includes a broad offering of clubs designed to appeal to a diverse membership base with a specific focus on the mass affluent market segment, which we define as households with annual income of $75,000 or greater. Our business clubs are generally located in office towers or business complexes and cater to business executives, professionals and entrepreneurs with a need to meet, network and socialize in a private, upscale location. Our sports clubs include a variety of fitness and racquet facilities. Our alumni clubs are associated with universities with significant alumni networks, and are designed to provide a connection between the university and its alumni and faculty.

For the fiscal year ended December 25, 2012, golf and country clubs, accounted for 77% of consolidated operating revenues and business, sports and alumni clubs accounted for 23% of consolidated operating revenues. The following charts provide a breakdown of consolidated operating revenues for the fiscal year ended December 25, 2012 by type and by geography:

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Consolidated Revenue by Type	Consolidated Revenue by Geography

Our Business Segments

Golf and Country Clubs Segment

Our portfolio of 102 golf and country club facilities is comprised of 80 private golf and country clubs and 16 semi-private golf clubs with a total of approximately 83,000 memberships as of December 25, 2012, and 6 public golf facilities. Our 80 private golf and country clubs provide one or more golf courses and a number of the following: driving ranges, practice facilities, dining rooms, lounge areas, meeting rooms, grills, ballrooms, fitness centers, tennis courts, swimming pools and pro shops. Examples include, but are not limited to, Firestone Country Club in Akron, Ohio, Mission Hills Country Club in Rancho Mirage, California, Indian Wells Country Clubs in Indian Wells, California and Gleneagles Country Club in Plano, Texas. Our 22 other golf clubs (16 semi-private and 6 public) offer both private and public play, driving ranges and food and beverage outlets. Many of our semi-private clubs also provide some or all of the additional amenities provided by our private clubs. Examples include, but are not limited to, Nags Head Golf Links in North Carolina, Golden Bear Golf Club at Indigo Run in South Carolina and two “Bear's Best” public courses in Nevada and Georgia, which feature replicas of many of the most famous Jack Nicklaus-designed golf holes from golf courses around the world.

Golf and Country Clubs

Revenue by Type

Operating revenues for our golf and country clubs segment consist primarily of membership dues revenues, golf revenues (comprised mainly of cart rental fees and green fees, public play and outings (e.g., tournaments and charity fundraisers)) and food and beverage sales (comprised of a la carte dining and private events). For this segment, we generally

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focus our operations on private and semi-private clubs because of our expertise in managing membership-based facilities, where we experience recurring revenues through year-round dues compared to transactional or daily fee revenues generated at public courses. For the fiscal year ended December 25, 2012, our golf and country clubs segment generated operating revenues of $583.5 million, representing approximately 77% of our total consolidated operating revenues.

Business, Sports and Alumni Clubs Segment

Our portfolio of 49 business, sports and alumni clubs is comprised of 30 business clubs, 13 business and sports clubs and 6 alumni clubs, with a total of approximately 62,000 memberships as of December 25, 2012. Our 30 business clubs include dining rooms, bar areas, private meeting rooms, and media and telecommunications equipment designed to meet the varying needs of four distinct member personas: the “Power Host,” the “Active Connector,” the “Office Away Member” and the “Comfort Seeker.” The Power Host is primarily serviced by our fine dining rooms and private event spaces; the Active Connector is primarily serviced by our business networking and charitable programs; the Office Away Member is primarily serviced by our business services, flexible work areas, and small conference rooms; and the Comfort Seeking Member is primarily serviced by our anytime lounge, creative casual cuisine, and fun elements such as media rooms. In addition, our 13 business and sports clubs seek to combine the ambiance and amenities of our business clubs with the facilities of premier sports clubs, providing an array of facilities which may include racquetball, squash, tennis and basketball courts, jogging tracks, exercise areas, free-weights, weight machines, aerobic studios or swimming pools. Finally, we have agreements with 6 leading universities to offer alumni clubs in a variety of on-campus, in-stadium or city center locations. The clubs in this segment are strategically located in 17 of the top 25 Metropolitan Statistical Areas, including, but not limited to, University Club atop Symphony Towers in San Diego, Bunker Hill in Los Angeles, The Metropolitan Club in Chicago, the Columbia Tower Club in Seattle, the City Club of Washington D.C., the Buckhead Club in Atlanta and the Boston College Club in Boston.

Business, Sports and Alumni Clubs

Revenue by Type

Operating revenues for our business, sports and alumni clubs segment consist primarily of membership dues and food and beverage sales. For the fiscal year ended December 25, 2012, our business, sports and alumni clubs segment generated operating revenues of $174.3 million, representing approximately 23% of our total consolidated operating revenues.

(For additional information on our business segments, see Note 15 of the notes to the audited consolidated financial statements in Item 8 of this Form 10-K.)

Competitive Strengths

We believe we became a leader in the private club industry by following our commitment to quality of service and focus on member satisfaction, as well as by taking advantage of a variety of organic growth opportunities, including the implementation of network offerings of products, services and amenities, and external growth opportunities, such as through the acquisition and rehabilitation of underperforming clubs. We intend to maintain our leadership position by continuing to capitalize on the following competitive strengths:

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Strong and Diverse Network and Alliances of Clubs. Our expansive network of clubs allows us to provide members with product diversity by offering a range of entry-level to high-end clubs. Product diversity and the ability for members to access our clubs on a national level by participating in one of our membership upgrade programs, make the club experience available to and affordable for a variety of individuals within the mass affluent market that we target.

As of December 25, 2012, we had 151 clubs located in 23 states, the District of Columbia and two foreign countries, with strategic concentrations in strong golf markets and major metropolitan areas. As a result of our size and geographic diversity, our operating revenues and cash flows are not reliant on any one property. Our most significant country club facility, Firestone Country Club, accounted for 3.2% of our consolidated operating revenues and our 10 largest clubs accounted for 22.5% of our consolidated operating revenues for the fiscal year ended December 25, 2012.

We believe the breadth and broad geographic distribution of our network of clubs limits the impact of adverse regional weather patterns and fluctuations in regional economic conditions. To further mitigate adverse weather patterns, we employ strong agronomic practices that help enable golf play throughout all climate zones with strategic concentrations in Texas, California and Florida where climates are typically conducive to year-round play. We are the fee simple real estate owners for 80 of our 102 golf and country clubs, which we believe enhances our ability to maximize the value of our clubs and business. By owning the real estate underlying our clubs, we have been able to implement capital plans as we see fit and generate positive returns on our investments. Additionally, many of our country clubs are located in densely populated areas where land use and other regulatory limitations or the ability to acquire land of sufficient size to develop a new country club or golf facility makes creating a new club impractical or prohibitively expensive.

Reciprocal Privileges and Additional Products and Services. Our extensive network of clubs and alliances with other clubs, facilities and properties, allow us to provide numerous services and amenities to our members, that extend beyond our clubs, a feature which may not be available in member-owned and individual privately-owned clubs. Our membership upgrade offering is a key differentiator that we believe would be difficult for our competitors to replicate. For incremental monthly dues, our reciprocal access program gives our members access to our network in other geographical areas, both domestically and internationally, as well as to locations outside our network through various usage arrangements we have with other property owners. As of December 25, 2012, approximately 40% of our members took advantage of one or more of our upgrade programs, a 2% increase, over the 38% of members who took advantage of upgrade offerings for the fiscal year ended December 27, 2011.

Established alliance arrangements include restaurants, such as Emeril Lagasse and The Capital Grille, resorts such as Barton Creek Resort & Spa and The Homestead, ski resorts such as Squaw Valley and Alpine Meadows ski areas, and hotels such as The Ritz-Carlton, Mandarin Oriental, and numerous other alliances that provide additional benefits, including discounts, upgrades and complimentary items or services. We make reservations convenient for our members by providing an in-house travel concierge (ClubLine), and by offering access to an inventory of VIP tickets through our own web portal (TicketLine).

Marquee Collection of Assets. We believe that we have assembled a portfolio of some of the best known golf and business clubs across the United States that help distinguish us from our competitors. Examples of our iconic assets include:


•	Firestone Country Club in Akron, Ohio (site of the World Golf Championships-Bridgestone Invitational)


•	Mission Hills Country Club in Rancho Mirage, California (site of the Kraft Nabisco Championship)


•	Gleneagles Country Club in Plano, Texas (U.S. site of the International Final Qualifying for the Open Championship)


•	Las Colinas Country Club in Dallas, Texas (site of the 2013 North Texas LPGA Shootout)


•	The Metropolitan Club in Chicago, Illinois


•	The Commerce Club in Atlanta, Georgia


•	University Club atop Symphony Towers in San Diego, California


•	University of Texas Club in Austin, Texas

Furthermore, we believe our clubs are among the top private golf clubs within our respective sub-markets based on the quality of our facilities, breadth of amenities and number of high quality programs and events.

Large Membership Base with Attractive Member Demographics. Our large base of memberships creates a significant and typically stable recurring revenue stream. As of December 25, 2012, our membership count totaled approximately 145,000, including members for all owned and managed private clubs. For the fiscal year ended December 25, 2012, membership dues totaled $347.1 million, representing 46.0% of our consolidated operating revenues. During the same time period, our membership retention was 83.5% in golf and country clubs and 77.1% in business, sports and alumni clubs for a blended retention rate of 80.7%.

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The following chart presents our membership count and retention rate for the past ten years of continuing operations:

We believe the strength and resiliency of our membership base is driven by the integral role our clubs play in the social lives and community of our members. The financial commitments made by our members through initiation payments and recurring dues bolstered by our no capital assessment policy, which provides our members with greater certainty as to the financial commitment to our clubs, also plays a role in our members' loyalty.

Additionally, we believe the presence of our clubs in our members' communities creates a sense of belonging, which is further fostered by our focus on member satisfaction, and as a result drives loyalty and frequent usage of our clubs, lessening our sensitivity to adverse economic conditions. According to our 2012 fiscal year end data, an average member visits one of our clubs 30 times per year with an average spend of $4,100 per year, including dues. More specifically, an average golf member visits one of our clubs 57 times per year with an average spend of $7,200 per year, including dues.

Host of High Profile Golf Events and Winner of National Accolades. Each year, we host a number of high-profile events and win numerous local and national awards which generate substantial publicity and help drive new membership and club utilization. In 2012, we hosted four nationally recognized golf tournaments affiliated with the PGA Tour, the LPGA Tour, Web.com Tour and the R&A Group, which organizes and stages The Open Championship, golf's oldest major. We believe we have established a strong working relationship with these golf organizations. Tournaments hosted by us during 2012 include the World Golf Championships - Bridgestone Invitational at Firestone Country Club, the LPGA Kraft Nabisco Championship at Mission Hills Country Club, the Web.com Midwest Classic Presented by Cadillac at Nicklaus Golf Club at LionsGate and the British Open qualifier at Gleneagles Country Club.

Our clubs perennially appear on national and local “best of” lists for golf, tennis and dining. In 2012, Firestone Country Club ranked No. 43 on Golf Digest’s “America’s 50 Toughest Golf Courses” list, and Aspen Glen Club, Southern Trace Country Club, the Hills Country Club at Lakeway, Firestone Country Club and Diamante Golf Club were each named in their respective states to the Golf Digest “Best-in-State” rankings.

Experienced Management Team. We believe we have some of the most experienced and dedicated professional managers and executives in the private club industry. As of December 25, 2012, our eight executive officers had a combined 206 years of related career experience, including 164 years of hospitality and club specific experience. In addition, we have attracted and retained qualified, dedicated managers for our clubs. As of December 25, 2012, our club general managers had an average of 12 years of service with us, collectively operated an aggregate of 2,367 holes of golf and approximately 1.5 million square feet of business clubs, which combined hosted over 89,000 corporate and social banquet and catering events as well as over 6,200 organized golf outings in 2012. We believe that we have the experience and management skills necessary to continue to increase the utilization of our facilities while maintaining member satisfaction levels.

Business Strategy

Our principal objective is to maximize our revenues and profitability by providing superior delivery of high quality club and golf experiences to our members and guests. To achieve this objective, we intend to continue to:

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Grow Membership Enrollment and Increase Facility Usage. We believe that providing our members and their guests with a high-quality and personalized experience will increase demand for our facilities and services and allow us to add new memberships. As of December 25, 2012, our golf and country club memberships were at 70.0% of golf member capacity across our portfolio of properties, which means that we have significant capacity to add additional golf memberships at most of our facilities. Given the breadth of our network in many areas, we are able to offer memberships that provide access to multiple facilities and accordingly can operate at capacity while still providing superior service. In addition, most of our golf and country clubs offer social memberships with access to our dining facilities, member programming, social events, and fitness facilities which are not typically impacted by golf course capacity constraints. Finally, in our business, sports and alumni club segment, we do not generally have strict capacity constraints, and believe that we have the ability to add a significant number of additional members to many of these facilities.

Leverage our Existing Customer Base by Cross-Selling Products and Services. We believe there are significant opportunities to increase operating revenues by marketing our interrelated products and innovative programs to our existing members. In 2010, we strategically introduced our Optimal Network Experiences (“O.N.E.”) product and have continued to market it across our network of clubs; O.N.E. is an upgrade offering that combines comprehensive club, community and world benefits. With this offering, members receive 50 percent off a la carte dining at their home club, access to ClubCorp's network of clubs and alliances in the local community, and golf and dining privileges when traveling to more than 200 private clubs with additional access to more than 700 renowned hotels, resorts, restaurants and entertainment venues. These programs are designed to increase our recurring monthly revenues while providing a value proposition to our members that helps drive increased usage of our facilities. As of December 25, 2012, approximately 40% of our members participated in at least one of our membership upgrade offerings. We continue to evaluate opportunities for further expansion of O.N.E. into additional geographic areas.

Distinguish and Market Our Properties and Company Brand Names. We believe that many of our country clubs, offer members an experience that combines world class golf facilities and dining opportunities, in an attractive and desirable setting. We seek to develop and accentuate the desirable aspects of our country clubs in order to attract new members and retain existing members, encourage group guests to return individually and consider joining the country club, and increase rates charged for our services and amenities. Key elements of our strategy include making our properties more family friendly through the addition of family water recreation facilities, fitness centers, contemporary and casual dining venues and youth programming. Additionally, our extensive network of business, sports and alumni clubs provides our members access to a network of other civic and business leaders, and our clubs endeavor to host high profile social and civic events in order to become central to the business and civic life of the community in which they operate.

Profit From Previous Significant Capital Expenditure Projects. Since the beginning of fiscal year 2007, we have invested over $349.6 million, or 7.9% of our total consolidated operating revenues, to complete significant expansion and replacement projects at many of our facilities. We believe there are additional opportunities to increase revenues and generate a positive return on investment through additional expansion and renovation projects at a number of our other facilities.

In 2011 and 2012, significant expansion and replacement projects include but are not limited to:


•	Las Colinas Country Club, in Irving Texas


•	The Hills of Lakeway in Austin, Texas


•	The Clubs of Kingwood in Kingwood, Texas


•	Silicon Valley Capital Club in San Jose, California


•	Center Club Costa Mesa in Costa Mesa, California


•	The City Club of Washington in Washington, DC

The recent renovation at Las Colinas Country Club in Irving, Texas is an example of how we profit from capital expenditure projects. From 2011 to early 2012, we invested approximately $2.0 million to renovate the clubhouse, and as a result, fiscal year ended December 25, 2012 revenues increased by 36.5%, compared to pre-construction revenues for the fiscal year ended December 28, 2010.

The capital investments made at the Silicon Valley Capital Club in San Jose, California further demonstrate how we are profiting from capital expenditure projects. From mid 2011 through early 2012, we invested approximately $2.8 million, of which, $0.8 million was funded by the landlord as tenant improvement contributions. As a result, fiscal year ended December 25, 2012 revenues increased by 32.0% compared to pre-construction revenues for the fiscal year ended December 28, 2010.

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Focus on Selected Acquisitions and Opportunities to Expand our Business. We continually evaluate opportunities to expand our business through select acquisitions of attractive properties. Additionally, we evaluate joint ventures and management opportunities that allow us to expand our operations and increase our recurring revenue base without substantial capital outlay. When we do make strategic acquisitions, we do so only after a rigorous evaluation to satisfy ourselves that we can add value given our external growth experience, facility assessment capabilities, operational expertise and economies of scale. We believe that the fragmented nature of the private club industry that includes member-owned private clubs, individual privately-owned clubs and developer-owned clubs presents significant opportunities for us to grow our operations by leveraging our operational expertise. In 2011 and 2012, we took advantage of market conditions to expand into areas where we had a limited presence. These expansion opportunities included the acquisition of Hartefeld National Golf Club, a bank held private country club in Avondale, Pennsylvania, the acquisition of three golf and country club properties in the Long Island area of New York, and the acquisition of Canterwood Golf and Country Club, a previously member-owned club in the Seattle, Washington area. During 2012, we also entered into new agreements to manage and operate LPGA International, a semi-private golf and country club in Daytona Beach, Florida and Hollytree Country Club, a private country club in Tyler, Texas. (See Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations—Club Acquisitions and Dispositions.") Additionally, we believe there is an attractive market to extend our private club expertise through international management arrangements. As of March 11, 2013, we have two management agreements for business clubs being developed in Tianjin, China and Hefei, China.

Our Business Model

Membership Initiation Payments and Dues. The private club industry generally requires members to pay an upfront fee to join and then pay recurring dues on a periodic (generally monthly) basis. In private clubs that are not member-owned, these payments typically come in two forms: initiation fees and initiation deposits. Initiation deposits, which are typically limited to our more prestigious golf clubs, are generally refundable after a specified period of years. Initiation fees, which are typical in our business clubs and mid-market golf clubs, are generally nonrefundable. However, golf memberships associated with these initiation payments may be transferable. Transferable memberships typically allow a resigning member to essentially sell his or her membership through the club and receive a portion of the initiation payment received by the club from the new member, but not to exceed his or her original initiation payment. Membership initiation payments depend both on the type of club, its location and its competition, and can range from a few hundred dollars to tens of thousands of dollars. Membership dues payments are typically paid on a monthly basis, which provides a relatively stable and recurring source of revenue for us. For the fiscal year ended December 25, 2012, approximately 46.0% of our revenues came in the form of membership dues and 2.2% of our revenues came in the form of the amortization of upfront membership initiation payments.

Discretionary Spending. We believe our clubs' offerings are appealing to the entire family of our members, resulting in member loyalty which translates into a greater ability to capture discretionary leisure spending than traditional clubs. Certain of our clubs offer tennis facilities in which we may earn court fees, spa and food and beverage outlets where we earn ancillary revenues as well as extensive programming such as kids camps, swim teams, golf or tennis lessons, where members further utilize our facilities. Additionally, our extensive network of clubs allows us to provide numerous value-added services and amenities to our members that may not be available from individual privately-owned clubs, such as the O.N.E. upgrade offering that combines comprehensive club, community and world benefits.

Reciprocal Privileges and Additional Products and Services. We offer a variety of products, services and amenities through membership upgrades that provide access to our extensive network of clubs and leverage our alliances with other clubs, facilities and properties. We believe these offerings serve as a point of differentiation from our competitors. We believe a greater product offering, when appropriate for the marketplace, enhances the members' ability to utilize the club and appeals to broader family members and therefore creates greater value to the membership. For example, for incremental monthly dues, our reciprocal access program allows our members complimentary access to clubs in certain other geographical areas. These programs are not limited to clubs owned and operated by us, and include our usage arrangements with other clubs, both domestically and internationally.

We have also established arrangements with restaurants, such as Emeril Lagasse and The Capital Grille, resorts such as Barton Creek Resort & Spa and The Homestead, ski resorts such as Squaw Valley and Alpine Meadows ski areas, and hotels such as The Ritz-Carlton, Mandarin Oriental, and numerous other alliances that provide additional benefits, including discounts, upgrades and complimentary items or services to our members. We make reservations within our network of clubs and other properties convenient for members by providing an in-house travel concierge (ClubLine), and by offering access to an inventory of VIP tickets through our own web portal (TicketLine).

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Economies of Scale. As one of the largest owners of private clubs in the United States, we enjoy substantial economies of scale in management, sales and marketing and purchasing over member-owned and individual privately-owned clubs. In March 2001, we participated in the formation of a purchasing cooperative of hospitality companies, which allows us to better control costs associated with operating our clubs. We also provide capital expenditure oversight at our facilities, including, a national agronomist who assists in the maintenance of our golf courses and provides expertise in chemical usage and water management and a national golf cart leasing program. As we take advantage of these economies of scale, our members receive benefits in the form of professional management, lower costs and access to multiple clubs and greater amenities, which we believe helps further drive membership retention and growth.

Our Industry

We primarily operate private golf and country clubs, for which we believe demand is generally more resilient to economic cycles than public golf facilities and other hospitality assets. We expect that positive long-term recreational, travel and tourism spending trends and demographic shifts will increase the demand at our clubs.

Golf Industry Trends. The golf industry is characterized by varied ownership structures, including properties owned by corporations, member equity holders, developers, municipalities and others. Reports prepared by the National Golf Foundation ("NGF") show that during the 1990's, the industry suffered an overbuilding of public golf facilities, with over 3,160 public golf facilities openings, increasing the supply of public golf by 39%. Not coincidentally, during the same time period, their reports show that the influx of public golf caused the closure or conversion of 520 private clubs, or 11% of the private club supply. Throughout the 2000's, growth slowed as the industry struggled to absorb the new supply generated in the 1990's. Further, it is reported that 2012 represented the seventh consecutive year in which total facility closures outnumbered openings, with 141 net 18-hole equivalent golf facility closures. Private golf facilities only represented 12, or 8.5%, of the 141 net closures in 2012, a significant improvement over calendar year 2011. Based on a count by NGF, 2012 year-end U.S. golf supply totaled 15,619 facilities comprised of 11,683 public facilities and 3,936 private golf clubs.



Net Change in Total Golf Facilities		Net Change in Private Golf Facilities

Source: National Golf Foundation		Source: National Golf Foundation

Golf Facilities in the U.S.

Source: National Golf Foundation

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Attractive Demographic Trends. According to NGF, core and avid golfers represent 56.0% of total golfers and represented approximately 94.0% of the $26.3 billion spent on golf in 2012. We believe core and avid golfers are the most likely golf user to become private club members and according to private club trends provided by NGF, private golf clubs have an average golf member spend of $2,057 per year versus public clubs that have an average golf member spend of $634 per year. Further they report the typical private club member is 55 years old with a $124,000 annual household income; whereas, the typical public golfer is 47 years old with a $94,600 annual household income.

Additionally, we believe the golf industry overall will benefit as baby boomers (individuals born between 1946 and 1964) enter the peak leisure phase of their lives. According to publications by NGF, the private golf club industry captures a more affluent segment of baby boomers than the industry as a whole. Members of the baby boomer generation are currently in transition from their professional peak earning years and will soon begin retiring at an unprecedented rate, with 2011 marking the first wave who reached the age of 65. According to the U.S. Census Bureau, there will be a projected 18.6% increase in the U.S. population aged 55 to 64 from 2010 through 2020 and prior year data from the Congressional Budget Office and Federal Reserve indicate that baby boomer households own more than 50 percent of the value of all outstanding financial assets in the U.S. financial market.

Although baby boomers will play a significant roll in the future of the golf industry, NGF believes there is a pipeline of qualified member prospects that looks much like current members, but who are somewhat younger and more affluent. As of December 31, 2012, NGF reports that 46% of total golfers are under the age of 40.



Spend per Golfer		Golfers by Age

Source: National Golf Foundation		Source: National Golf Foundation

Competition

The golf industry is a highly fragmented competitive landscape with approximately 3,900 private golf clubs in the United States, 14.5% of which were under corporate management according to NGF's 2012 year-end data. The data further concludes that the top 12 golf management companies, including ClubCorp, owned or managed 296 golf clubs, or 7.5%, of total private golf club market at the end of calendar year 2012. The data confirms that ClubCorp owns or operates the largest amount of private golf clubs in the industry with more than twice as many private golf clubs as the closest competitor. In fact only five other companies report owning or operating more than 25 private golf clubs in the United States. The U.S. Air Force Services Agency reports a total of 30 private clubs, Canongate and Troon Golf, LLC each report to own or operate 27 private clubs, while Century Golf Partners and American Golf Corporation each report a total of 26 private clubs as of December 31, 2012.

We believe most of our competition is regionally or locally based and the level of competition for any one of our clubs depends on its location and proximity to other golf facilities relative to the location of our members. In several of our strategically concentrated markets, such as California, Texas and Florida, our ownership of multiple facilities allows us to offer access to multiple clubs both locally and beyond. While others have attempted to create their own access and benefit programs, we believe our product offerings would be difficult to replicate on a similar scale, given the size and geographic diversity of our network of clubs and alliances with other clubs, facilities and properties.

Competition for our business, sports and alumni clubs is very dependent on the individual market, and the needs of the individual member. For members looking for a private dining experience, nearby restaurants are our primary competition. For members looking for places to conduct business, our competition includes other facilities that provide meeting space such as

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hotels and convention centers as well as places such as fast casual restaurants and coffee bars, where people can conveniently meet and conduct informal meetings and access the internet. For people looking for a place to hold a private party such as a wedding, our competition includes other catering facilities such as hotels and resort facilities.

Seasonality

Golf club operations are seasonal in nature, with peak golf season beginning in mid-May and running through mid-September in most regions. Usage at our country club and golf facilities decline significantly during the first and fourth quarters, when colder temperatures and shorter days reduce the demand for golf and golf-related activities. However, the seasonality of revenues for many of our golf and country clubs is partially mitigated by our strategic concentration in regions with traditionally warmer climates such as California, Texas and Florida. While nearly all of our golf and country clubs experience at least some seasonality, due to the recurring nature of our year round membership dues income, seasonality has a muted impact on our overall performance as compared to daily fee and public golf facilities. Many of our golf and country clubs also offer other amenities such as dining, indoor tennis and fitness facilities, which provide revenue streams that are typically less affected by seasonality, than our golf operations revenues. We consider the year-round recurring revenue stream to be one of the primary advantages of private club ownership. Our business clubs are less seasonal in nature but typically generate a greater share of their annual revenues in the fourth quarter, due to the holiday and year-end party season. In addition, the first, second and third fiscal quarters each consist of twelve weeks, whereas, the fourth quarter consists of sixteen or seventeen weeks of operations. As a result of these factors, we usually generate a disproportionate share of our revenues and cash flows in the second, third and fourth quarters of each year and have lower revenues and profits in the first quarter.

Sales and Marketing

We promote our clubs through extensive marketing and sales programs that are designed to appeal to either our existing members, prospective members or underrepresented demographic groups. For example, we responded to the younger age of prospective members in the industry with targeted membership programs for young executives. We have targeted similar programs for women and invest in family amenities, like water parks, that broaden the appeal of our clubs. Additionally, we use social media and print advertising, including our award-winning quarterly lifestyle magazine, Private Clubs, to showcase our facilities, products and services and other content relevant to our members. Recent technology advancements include the mobile edition of our Private Clubs magazine, mobile tee times and electronic billing.

Additionally, we enter into strategic alliances with leading brands to enhance our members’ lives both inside and outside the club. A few of the select brands we have strategic alliances with include, but are not limited to, Omni Hotels and Resorts, Fiji Water, Avis and Dell. Further, we create and co-host events with premier brands, most notably our test drive programs with Ferrari, Porsche, Jaguar, BMW, Audi and Acura.

In 2012 we received TV coverage related to the four nationally recognized golf tournaments we hosted, affiliated with the PGA Tour, the LPGA Tour, Web.com Tour and the R&A Group, which organizes and stages The Open Championship, golf's oldest major. Additionally, Firestone Country Club was ranked No. 43 on Golf Digest’s “America’s 50 Toughest Golf Courses” list, and Aspen Glen Club, Southern Trace Country Club, the Hills Country Club at Lakeway, Firestone Country Club and Diamante Golf Club were each named in their respective states to the Golf Digest “Best-in-State” rankings for 2012.

Regulation

Environmental, Health and Safety. Our properties and operations are subject to a number of environmental laws. As a result, we may be required to incur costs to comply with the requirements of these laws, such as those relating to water resources, discharges to air, water and land, the handling and disposal of solid and hazardous waste, and the cleanup of properties affected by regulated materials. Under these and other environmental requirements we may be required to investigate and clean up hazardous or toxic substances or chemical releases from current or formerly owned or operated facilities. Environmental laws typically impose cleanup responsibility and liability without regard to whether the relevant entity knew of or caused the presence of the contaminants. We use certain substances and generate certain wastes that may be deemed hazardous or toxic under such laws, and from time to time have incurred, and in the future may incur, costs related to cleaning up contamination resulting from historic uses of certain of our current or former properties or our treatment, storage or disposal of wastes at facilities owned by others. Our club facilities are also subject to risks associated with mold, asbestos and other indoor building contaminants. The costs of investigation, remediation or removal of regulated materials may be substantial, and the presence of those substances, or the failure to remediate a property properly, may impair our ability to use, transfer or obtain financing for our property. We may be required to incur costs to remediate potential environmental hazards, mitigate environmental risks in the future, or comply with other environmental requirements.

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In addition, in order to improve, upgrade or expand some of our golf clubs, we may be subject to environmental review under the National Environmental Policy Act and, for projects in California, the California Environmental Quality Act. Both acts require that a specified government agency study any proposal for potential environmental impacts and include in its analysis various alternatives. Our improvement proposals may not be approved or may be approved with modifications that substantially increase the cost or decrease the desirability of implementing the project.

We are also subject to regulation by the United States Occupational Safety and Health Administration and similar health and safety laws in other jurisdictions. These regulations impact a number of aspects of operations, including golf course maintenance and food handling and preparation.

Zoning and Land Use. The ownership and management of our properties and facilities, as well as our re-development and expansion of clubs, subjects us to federal, state and local laws regulating zoning, land development, land use, building design and construction, and other real estate-related laws and regulations.

Access. Our facilities and operations are subject to the Americans with Disabilities Act of 1990, as amended (the “ADA”). The rules implementing the ADA have been further revised by the ADA Amendments Act of 2008, which included additional compliance requirements for golf facilities and recreational areas. The ADA generally requires that we remove architectural barriers when readily achievable so that our facilities be made accessible to people with disabilities. Noncompliance could result in imposition of fines or an award of damages to private litigants. Further, federal legislation or regulations may further amend the ADA to impose more stringent requirements with which we would have to comply.

Other. We are also subject to various local, state, and federal laws, regulations and administrative practices affecting our business. We must comply with provisions regulating health and safety standards, equal employment, minimum wages, and licensing requirements and regulations for the sale of food and alcoholic beverages.

Employees. As of March 11, 2013, we had approximately 12,900 employees, of which 9,700 are located at our golf and country clubs, 2,900 are located at our business, sports and alumni clubs and 300 are part of our corporate and regional staff. Other than a small group of golf course maintenance staff at one of our clubs, all of our employees are non-union. We believe we have a good working relationship with our employees and have yet to experience an interruption of business as a result of labor disputes.

Insurance

We believe that our properties are covered by adequate property, casualty and commercial liability insurance with what we believe are commercially reasonable deductibles and limits for our industry. We also carry other insurance, including directors and officers liability insurance, fiduciary coverage and workers' compensation. Changes in the insurance market over the past few years have increased the risk that affordable insurance may not be available to us in the future. While our management believes that our insurance coverage is adequate, if we were held liable for amounts and claims exceeding the limits of our insurance coverage or outside the scope of our insurance coverage, our business, results of operations and financial condition could be materially and adversely affected.

Intellectual Property

We have registered or claim ownership of a variety of trade names, service marks, copyrights and trademarks for use in our business, including, but not limited to: Associate Club; Associate Clubs; Benefits Finder; Building Relationships and Enriching Lives; ClubCater; ClubCorp; ClubCorp Charity Classic; ClubCorp Resorts; Club Corporation of America; ClubLine; Club Resorts; Club Without Walls; Fastee Course; HotelLine; Membercard; My Club. My Community. My World; Private Clubs; The Society; The World Leader in Private Clubs; and Warm Welcomes, Magic Moments and Fond Farewells. While there can be no assurance that we can maintain registration or ownership for the marks, we are not currently aware of any facts that would negatively impact our continuing use of any of the above trade names, service marks or trademarks. We consider our intellectual property rights to be important to our business and actively defend and enforce them.

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Available Information

We file with or furnish to the Securities and Exchange Commission (“SEC”) reports, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. These reports are available free of charge on our corporate website (www.clubcorp.com) as soon as reasonably practicable after such materials are electronically filed with or furnished to the SEC. Information provided on our website is not part of this Form 10-K or our other filings. Copies of any materials we file with the SEC can be obtained at www.sec.gov or at the SEC's public reference room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the public reference room is available by calling the SEC at 1-800-SEC-0330.

ITEM 1A. RISK FACTORS

Economic recessions or downturns could harm our business, financial condition and results of operations, and the recent economic downturn has negatively affected and may continue to negatively affect our business, financial condition and results of operations.

A substantial portion of our revenue is derived from discretionary or leisure spending by our members and guests and such spending can be particularly sensitive to changes in general economic conditions. The recent global recession has led to slower economic activity, increased unemployment, concerns about inflation and energy costs, decreased business and consumer confidence, reduced corporate profits and capital spending, adverse business conditions and lower levels of liquidity in many financial markets, which has negatively affected our business, financial condition and results of operations. For example, for the fiscal years ended December 25, 2012 and December 27, 2011, we experienced attrition in member count of 16.5% and 15.5% in our golf and country clubs and 22.9% and 23.1% in our business, sports and alumni clubs, respectively, as consumers and businesses cut back on discretionary spending. The continuation of the recent economic downturn we experienced in the United States may lead to further increases in unemployment and loss of consumer confidence which would likely translate into additional resignations of existing members, a decrease in the rate of new memberships and reduced spending by our members. As a result, our business, financial condition and results of operations may continue to be materially adversely affected by economic downturns.

Our businesses will remain susceptible to future economic recessions or downturns, and any significant adverse shift in general economic conditions, whether local, regional or national, would likely have a material adverse effect on our business, financial condition and results of operations. During such periods of adverse economic conditions, we may be unable to increase membership dues or the price of our products and services and experience resignations of existing members, a decrease in the rate of new memberships or reduced spending by our members, any of which may result in, among other things, decreased revenues and financial losses. In addition, during periods of adverse economic conditions, we may have difficulty accessing financial markets or face increased funding costs, which could make it more difficult or impossible for us to obtain funding for additional investments and harm our results of operations.

We may not be able to attract and retain club members, which could harm our business, financial condition and results of operations.

Our success depends on our ability to attract and retain members at our clubs and maintain or increase usage of our facilities. Changes in consumer tastes and preferences, particularly those affecting the popularity of golf and private dining, and other social and demographic trends could adversely affect our business. Historically, we have experienced varying levels of membership enrollment and attrition rates and, in certain areas, decreased levels of usage of our facilities. Significant periods where attrition rates exceed enrollment rates or where facilities usage is below historical levels would have a material adverse effect on our business, results of operations and financial condition. For the fiscal year ended December 25, 2012, 46.0% of our total operating revenues came from monthly membership dues. During the same period, 22.9% of our business, sports and alumni club memberships (approximately 14,500 memberships), and 16.5% of our private country club and semi-private golf memberships (approximately 13,200 memberships) were resigned, resulting in a net (loss) gain in memberships of (1.4)% and 0.3%, respectively, after the addition of new memberships. If we cannot attract new members or retain our existing members, our business, financial condition and results of operations could be harmed.

Competition in the industry in which we compete could have a material adverse effect on our business and results of operations.

We operate in a highly competitive industry, and compete primarily on the basis of management expertise, reputation, featured facilities, location, quality and breadth of member product offerings and price. As a result, competition for market share in the industry in which we compete is significant. In order to succeed, we must take market share from local and regional

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competitors and sustain our membership base in the face of increasing recreational alternatives available to our existing and potential members.

Our business clubs compete on a local and regional level with restaurants and other business and social clubs. The number and variety of competitors in this business varies based on the location and setting of each facility, with some situated in intensely competitive upscale urban areas characterized by frequent innovations in the products and services offered by competing restaurants and other business, dining and social clubs. In addition, in most regions, these businesses are in constant flux as new restaurants and other social and meeting venues open or expand their amenities. As a result of these characteristics, the supply in a given region often exceeds the demand for such facilities, and any increase in the number or quality of restaurants and other social and meeting venues, or the products and services they provide, in a given region could significantly impact the ability of our clubs to attract and retain members, which could harm our business and results of operations.

Our country clubs and golf facilities compete on a local and regional level with other country clubs and golf facilities. The level of competition in the country club and golf facility business varies from region to region and is subject to change as existing facilities are renovated or new facilities are developed. An increase in the number or quality of similar clubs and other facilities in a particular region could significantly increase competition, which could have a negative impact on our business and results of operations.

Our results of operations also could be affected by a number of additional competitive factors, including the availability of, and demand for, alternative venues for recreational pursuits, such as multi-use sports and athletic centers. In addition, member owned and individual privately owned clubs may be able to create a perception of exclusivity that we have difficulty replicating given the diversity of our network of clubs and the scope of our holdings. To the extent these alternatives succeed in diverting actual or potential members away from our facilities or affect our membership rates, our business and results of operations could be harmed.

Changes in consumer spending patterns, particularly discretionary expenditures for leisure, travel and recreation, are susceptible to factors beyond our control that may reduce demand for our products and services.

Consumer spending patterns, particularly discretionary expenditures for leisure, travel and recreation, are particularly susceptible to factors beyond our control that may reduce demand for our products and services, including demand for memberships, golf, vacation and business travel and food and beverage sales. These factors include:


•	low consumer confidence;


•	depressed housing prices;


•	changes in the desirability of particular locations, residential neighborhoods, office space, or travel patterns of members;


•	decreased corporate budgets and spending and cancellations, deferrals or renegotiations of group business (e.g., industry conventions);


•	natural disasters, such as earthquakes, tornadoes, hurricanes and floods;


•	outbreaks of pandemic or contagious diseases, such as avian or swine flu, and severe acute respiratory syndrome (SARS);


•	war, terrorist activities or threats and heightened travel security measures instituted in response to these events; and


•	the financial condition of the airline, automotive and other transportation-related industries and its impact on travel.

These factors and other global and national conditions can adversely affect, and from time to time have adversely affected, individual properties, particular regions or our business as a whole. For example, during the recent recession, many businesses dramatically decreased the number of corporate events and meetings hosted at facilities such as convention centers, hotels, resorts and retreats in an effort to cut costs and in response to public opinion relating to excess corporate spending, which negatively impacted the amount of business for such facilities, including certain of our facilities. Any one or more of these factors could limit or reduce demand or the rates our clubs are able to charge for memberships or services, which could harm our business and results of operations.

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Our ability to attract and retain members depends heavily on successfully locating our clubs in suitable locations, and any impairment of a club location, including any decrease in member or customer traffic, could impact our results of operations.

Our approach to identifying locations for our clubs typically favors locations where our facilities can become a part of the community. As a result, our clubs are typically located near urban and residential centers that we believe are consistent with our members' lifestyle choices. Memberships and sales at these locations are derived, in part, from proximity to key local landmarks, business centers, facilities and residential areas. We may be forced to close clubs or club locations may become unsuitable due to, and such locations' results of operations may be harmed by, among other things:


•	economic downturns in a particular area;


•	competition from nearby entertainment venues;


•	changing demographics in a particular market or area;


•	changing lifestyle choices of consumers in a particular market; and


•	the closing or declining of popularity of other businesses and entertainment venues located near our clubs.

For example, in December 2010, we terminated our lease agreement and discontinued operations of the Renaissance Club, a business club in Detroit, Michigan, a city particularly hard hit by the recent recession. Changes in areas around our club locations could render such locations unsuitable and cause memberships at such clubs to decline, which would harm our results of operations.

We have significant operations concentrated in certain geographic areas, and any disruption in the operations of our clubs in any of these areas could harm our results of operations.

We currently operate multiple clubs in several metropolitan areas, including fifteen in and around Dallas, Texas, thirteen near Houston, Texas, eight in the greater Los Angeles, California region, four near Sacramento, California, four in and around Phoenix, Arizona, eight in the greater Atlanta, Georgia region and four near Tampa, Florida. As a result, any prolonged disruption in the operations of our clubs in any of these markets, whether due to technical difficulties, power failures or destruction or damage to the clubs as a result of a natural disaster, fire or any other reason, could harm our results of operations or may result in club closures. In addition, many of the metropolitan areas where we operate clubs have been disproportionately affected, and may continue to be disproportionately affected by the economic downturn and the decline in home prices and increase in foreclosure rates. Concentration in these markets increases our exposure to adverse developments related to competition, as well as economic and demographic changes in these areas.

Unusual weather patterns and extreme weather events, as well as periodic and quasi-periodic weather patterns, such as those commonly associated with the El Niño/La Niña-Southern Oscillation, could adversely affect the value of our golf courses or negatively impact our business and results of operations.

Our operations and results are susceptible to non-seasonal and severe weather patterns. Extreme weather events or patterns in a given region, such as heavy rains, prolonged snow accumulations, extended heat waves and high winds, could reduce our revenues for that region by interrupting activities at affected properties which could negatively impact our business and results of operations.

One factor that specifically affects our real estate investments in golf courses is the availability of water. Turf grass conditions must be satisfactory to attract play on our golf courses, which requires significant amounts of water. Our ability to irrigate a golf course could be adversely impacted by a drought or other cause of water shortage, such as the recent drought affecting the southern United States. A severe drought of extensive duration experienced in regard to a large number of properties could adversely affect our business and results of operations.

We also have a high concentration of golf clubs in California, Florida and Texas, which can experience periods of unusually hot, cold, dry or rainy weather due to a variety of periodic and quasi-periodic global climate phenomenon, such as the El Niño/La Niña-Southern Oscillation. For example, during 2011, we incurred 7.2% higher golf course maintenance utility expenses for the fiscal period starting on June 15, 2011 and ending on September 6, 2011 compared to the corresponding fiscal period in 2010, due to unusually hot and severe drought conditions in certain portions of the southern United States. If these phenomenon and their impacts on weather patterns persist for extended periods of time, our business and results of operations could be harmed.

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Seasonality may adversely affect our business and results of operations.

Our quarterly results fluctuate as a result of a number of factors. Usage of our country club and golf facilities declines significantly during the first and fourth quarters, when colder temperatures and shorter days reduce the demand for golf and golf-related activities. Our business clubs typically generate a greater share of their yearly revenues in the fourth quarter, which includes the holiday and year-end party season. In addition, the fourth quarter consists of 16 or 17 weeks of operations and the first, second and third fiscal quarters each consist of 12 weeks. As a result of these factors, we usually generate a disproportionate share of our revenues and cash flows in the second, third and fourth quarters of each year and have lower revenues and profits in the first quarter. This seasonality makes our business and results of operations more vulnerable to other risks during the periods of increased member usage due to the larger percentage of revenues we generate during such times.

Our future success is substantially dependent on the continued service of our senior management and key employees.

The loss of the services of our senior management could make it more difficult to successfully operate our business and achieve our business goals. We also may be unable to retain existing management and key employees, including club managers, membership sales and support personnel, which could result in harm to our member and employee relationships, loss of expertise or know-how and unanticipated recruitment and training costs. In addition, we have not obtained key man life insurance policies for any of our senior management team. As a result, it may be difficult to cover the financial loss if we were to lose the services of any members of our senior management team. The loss of members of our senior management team or key employees or any financial impact resulting therefrom could have an adverse affect on our business and results of operations.

Our large workforce subjects us to risks associated with increases in the cost of labor as a result of increased competition for employees, higher employee turnover rates and required wage increases and health benefit coverage, lawsuits or labor union activity.

Labor is our primary property-level operating expense. As of December 25, 2012, we employed approximately 12,900 hourly-wage and salaried employees at our clubs and corporate offices. For the fiscal year ended December 25, 2012, labor-related expense accounted for 48.6% of our total operating expense. We may face labor shortages or increased labor costs because of increased competition for employees, higher employee turnover rates, or increases in the federal or state minimum wage or other employee benefit costs. For example, we are continuing to assess the impact of federal health care reform law and regulations on our health care benefit costs, which will likely increase the amount of healthcare expenses paid by us. If labor-related expenses increase, our operating expense could increase and our business, financial condition and results of operations could be harmed.

We are subject to the Fair Labor Standards Act, or FLSA, and various federal and state laws governing such matters as minimum wage requirements, overtime compensation and other working conditions, citizenship requirements, discrimination and family and medical leave. In recent years, a number of companies have been subject to lawsuits, including class action lawsuits, alleging violations of federal and state law regarding workplace and employment matters, overtime wage policies, discrimination and similar matters. A number of these lawsuits have resulted in the payment of substantial damages by the defendants. Similar lawsuits may be threatened or instituted against us from time to time, and we may incur substantial damages and expenses resulting from lawsuits of this type, which could have a material adverse effect on our business, financial condition or results of operations.

From time to time, we have also experienced attempts to unionize certain of our non-union employees. While these efforts have achieved only limited success to date, we cannot provide any assurance that we will not experience additional and more successful union activity in the future. In addition, future legislation could amend the National Labor Relations Act to make it easier for unions to organize and obtain collectively bargained benefits, which could increase our operating expenses and negatively affect our financial condition and results of operations.

Increases in our cost of goods, rent, utilities and taxes could reduce our operating margins and harm our business, financial condition and results of operations.

Increases in operating costs due to inflation and other factors may not be directly offset by increased revenue. Our most significant operating costs, other than labor, are our cost of goods, utilities, rent and property taxes. Many, and in some cases all, of the factors affecting these costs are beyond our control.

Our cost of goods such as food and beverage costs account for a significant portion of our total property-level operating expense. Cost of goods represented 15.2% of our total operating expense for the fiscal year ended December 25,

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2012. If our cost of goods increases significantly and we are not able to pass along those increased costs to our members in the form of higher prices or otherwise, our operating margins could suffer, which would have an adverse effect on our business, financial condition and results of operations.

In addition, rent, which represented 4.9% of our total operating expense for the fiscal year ended December 25, 2012, also accounts for a significant portion of our property-level operating expense. Significant increases in our rent costs would increase our operating expense and our business, financial condition and results of operations may suffer.

Utility costs, including water, represented 5.7% of our total operating expense for the fiscal year ended December 25, 2012. The prices of utilities are volatile, and shortages sometimes occur. In particular, municipalities are increasingly placing restrictions on the use of water for golf course irrigation and increasing the cost of water. Significant increases in the cost of our utilities, or any shortages, could interrupt or curtail our operations and lower our operating margins, which could have a negative impact on our business, financial condition and results of operations.

Each of our properties is subject to real and personal property taxes. During the fiscal year ended December 25, 2012, we paid approximately $10.7 million in property taxes. The real and personal property taxes on our properties may increase or decrease as tax rates change and as our clubs are assessed or reassessed by taxing authorities. If real and personal property taxes increase, our financial condition and results of operations may suffer.

We could be required to make material cash outlays in future periods if the number of initiation deposit refund requests we receive materially increases or if we are required to surrender unclaimed initiation deposits to state authorities under applicable escheatment laws.

In contrast to initiation fees which are generally non-refundable, initiation deposits paid by members upon joining one of our clubs are fully refundable after a fixed number of years, typically 30 years, and upon the occurrence of other contract-specific conditions. Historically, only a small percentage of initiation deposits eligible to be refunded have been requested by members. As of December 25, 2012, the amount of initiation deposits that are eligible to be refunded currently or within the next twelve months is $91.4 million on a gross basis. When refunds are requested, we must fund the payment of such amounts from our available cash. If the number of refunds dramatically increases in the future, our financial condition could suffer and the funding requirement for such refunds could strain our cash on hand or otherwise force us to reduce or delay capital expenditures, sell assets or operations or seek additional capital in order to raise the cash necessary to make such refunds. The discounted value of initiation deposits that may be refunded in future years (not including the next twelve months) is $202.6 million. For more information on our initiation deposit amounts, see Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

While we will make a refund to any member whose initiation deposit is eligible to be refunded, we may be subject to various states' escheatment laws with respect to initiation deposits that have not been refunded to members. All states have escheatment laws and generally require companies to remit to the state cash in an amount equal to unclaimed and abandoned property after a specified period of dormancy, which is typically 3 to 5 years. We currently do not remit to states any amounts relating to initiation deposits that are eligible to be refunded to members based upon our interpretation of the applicability of such laws to initiation deposits. The analysis of the potential application of escheatment laws to our initiation deposits is complex, involving an analysis of constitutional and statutory provisions and contractual and factual issues. While we do not believe that initiation deposits must be escheated, we may be forced to remit such amounts if we are challenged and fail to prevail in our position.

In addition, most of the states in which we conduct business have hired independent agents to conduct unclaimed and abandoned property audits of our operations. Certain categories of property, such as uncashed payroll checks or uncashed vendor payments are escheatable in the ordinary course of business and we have entered into closing agreements with the majority of the states regarding the escheatment of cash amounts for such categories and have remitted these amounts to the respective states. If any state asserts that any or all of the initiation deposits eligible to be refunded to members that have not been refunded to members during the applicable dormancy period, depending on the state in which a club is located, are to be remitted to such state under applicable escheatment laws, we expect to vigorously defend our position on the matter. However, if we are ultimately unsuccessful in arguing our right to continue holding such amounts, we may be forced to pay such amounts to the claiming states. While we believe we have strong arguments against any potential claims for the escheatment of unclaimed initiation deposits made under state escheatment laws, if a material portion of the initiation deposits otherwise eligible to be refunded were awarded to any states, our financial condition could be materially and adversely affected and we may be required to reduce or delay capital expenditures, sell assets or operations or seek additional capital in order to raise the corresponding cash required to satisfy such awards. We cannot assure you that we would be able to take any of these actions, that these actions would be successful and permit us to meet such obligations or that these actions would be permitted under the terms of our existing or future debt agreements.

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We have concentrated our investments in golf-related and business real estate and facilities, which are subject to numerous risks, including the risk that the values of our investments may decline if there is a prolonged downturn in real estate values.

Our operations consist almost entirely of golf-related and business club facilities that encompass a large amount of real estate holdings. Accordingly, we are subject to the risks associated with holding real estate investments. A prolonged decline in the popularity of golf-related or business club services, such as private dining, could adversely affect the value of our real estate holdings and could make it difficult to sell facilities or businesses.

Our real estate holdings (including our long-term leaseholds) are subject to risks typically associated with investments in real estate. The investment returns available from equity investments in real estate depend in large part on the amount of income earned, expenses incurred and capital appreciation generated by the related properties. In addition, a variety of other factors affect income from properties and real estate values, including governmental regulations, real estate, insurance, zoning, tax and eminent domain laws, interest rate levels and the availability of financing. For example, new or existing real estate zoning or tax laws can make it more expensive and time-consuming to expand, modify or renovate older properties. Under eminent domain laws, governments can take real property. Sometimes this taking is for less compensation than the owner believes the property is worth. Any of these factors could have an adverse impact on our business, financial condition or results of operations.

The illiquidity of real estate may make it difficult for us to dispose of one or more of our properties or negatively affect our ability to profitably sell such properties.

We may from time to time decide to dispose of one or more of our real estate assets. Because real estate holdings generally, and clubs like ours in particular, are relatively illiquid, we may not be able to dispose of one or more real estate assets on a timely basis. In some circumstances, sales may result in investment losses which could adversely affect our financial condition. The illiquidity of our real estate assets could mean that we continue to operate a facility that management has identified for disposition. Failure to dispose of a real estate asset in a timely fashion, or at all, could adversely affect our business, financial condition and results of operations.

Our level of indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to plan for and react to changes in the economy, our industry or our business and prevent us from meeting our indebtedness obligations.

As of December 25, 2012, we were significantly leveraged and our total indebtedness was approximately $781.5 million. Our substantial degree of leverage could have important consequences for our investors, including the following:


•	it may limit our ability to obtain additional debt or equity financing for working capital, capital expenditures, product development, debt service requirements, acquisitions or general corporate or other purposes;


•	a substantial portion of our cash flows from operations is dedicated to the payment of principal and interest on our indebtedness and will not be available for other purposes, including our operations, capital expenditures, and other business opportunities;


•	the debt service requirements of our indebtedness could make it more difficult for us to satisfy our financial obligations;


•	certain of our borrowings, including borrowings under our secured credit facilities, are at variable rates of interest, exposing us to the risk of increased interest rates;


•	it may limit our flexibility in planning for, or our ability to adjust to, changes in our business or the industry in which we operate, and place us at a competitive disadvantage compared to our competitors that have less debt; and


•	we may be vulnerable to a downturn in general economic conditions or in our business, or we may be unable to carry out capital spending that is important to our growth.

Although our total indebtedness decreased as a result of the ClubCorp Formation (see Notes 1 and 2 to Item 8. "Financial Statements and Supplementary Data"), our interest expense is substantially higher after giving effect to the ClubCorp Formation, as compared to our interest expense for prior periods, as a result of higher aggregate interest rates on our debt.

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We may not be able to generate sufficient cash to service all of our indebtedness and be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments or to refinance our debt obligations depends on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We cannot guarantee that we will maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness. (See “Cautionary Statement Regarding Forward-Looking Statements” and Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”) If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets or operations, seek additional capital or restructure or refinance our indebtedness. We cannot guarantee that we would be able to take any of these actions, that these actions would be successful and permit us to meet our scheduled debt service obligations or that these actions would be permitted under the terms of our existing or future debt agreements. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. Our Secured Credit Facilities and the indenture that governs our senior unsecured notes restrict our ability to dispose of assets and use the proceeds from the disposition. We may not be able to consummate those dispositions or to obtain the proceeds which we could realize from them and these proceeds may not be adequate to meet any debt service obligations then due.

If we cannot make scheduled payments on our debt, we will be in default and, as a result:


•	our debt holders could declare all outstanding principal and interest to be due and payable;


•	the lenders under our Secured Credit Facilities could terminate their commitments to lend us money and foreclose against the assets securing their borrowings; and


•	we could be forced into bankruptcy or liquidation.

Despite current indebtedness levels, we may still be able to incur substantially more debt. This could further exacerbate the risks described above.

We and our subsidiaries may be able to incur substantial additional indebtedness in the future. The terms of the indenture governing our senior unsecured notes do not fully prohibit us or our subsidiaries from doing so. On November 30, 2010, we entered into the Secured Credit Facilities comprised of (i) a $310.0 million term loan facility and (ii) a revolving credit facility with a maximum borrowing limit of $50.0 million, which includes letter of credit and swing line facilities. As of December 25, 2012, $33.6 million was available for borrowing under the revolving credit facility. Additionally, we have the option to increase the term loan facility by up to $50.0 million and the revolving credit facility by up to an additional $25.0 million, both subject to conditions and restrictions in our Secured Credit Facilities. If new debt is added to our current debt levels, the related risks that we now face could intensify.

Restrictive covenants may adversely affect our operations.

Our Secured Credit Facilities and the indenture governing our senior unsecured notes contain various covenants that limit our ability to, among other things:


•	incur or guarantee additional indebtedness;


•	pay dividends or distributions on capital stock or redeem or repurchase capital stock;


•	make investments;


•	create restrictions on the payment of dividends or other amounts to us;


•	sell stock of our subsidiaries;


•	transfer or sell assets;


•	create liens;

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•	enter into transactions with affiliates; and


•	enter into mergers or consolidations.

In addition, the restrictive covenants in our Secured Credit Facilities require us to maintain specified financial ratios and satisfy other financial condition tests. Our ability to meet those financial ratios and tests can be affected by events beyond our control, and we cannot guarantee that we will meet them. A breach of any of these covenants could result in a default under our Secured Credit Facilities. Upon the occurrence of an event of default under our Secured Credit Facilities, the lenders could elect to declare all amounts outstanding thereunder to be immediately due and payable and terminate all commitments to extend further credit. If we were unable to repay those amounts, the lenders under our Secured Credit Facilities could proceed against the collateral granted to them to secure that indebtedness. We have pledged a significant portion of our assets as collateral under our Secured Credit Facilities. If the lenders under our Secured Credit Facilities accelerate the repayment of borrowings, the holders of our senior unsecured notes could declare a cross-default, and we cannot guarantee that we will have sufficient assets to repay our Secured Credit Facilities, the senior unsecured notes, and our other indebtedness, or borrow sufficient funds to refinance such indebtedness. Even if we are able to obtain new financing, it may not be on commercially reasonable terms, or terms that are acceptable to us.

Variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Certain of our borrowings, primarily borrowings under our Secured Credit Facilities, are subject to variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on our variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income would decrease. The interest rate on our term loan facility is the higher of (i) 5.0% (“Floor”) and (ii) an elected LIBOR plus a margin of 3.75% (less the impact of the interest rate cap agreement that limits our exposure on the elected LIBOR to 2.0% on a notional amount of $155.0 million). Our term loan facility will be effectively subject to the Floor until LIBOR exceeds 1.25%. As of December 25, 2012, LIBOR was below the Floor, such that a hypothetical 0.50% increase in LIBOR applicable to borrowings under our Secured Credit Facilities would not result in an increase in interest expense.

Timing, budgeting and other risks could delay our efforts to develop, redevelop or renovate the properties that we own, or make these activities more expensive, which could reduce our profits or impair our ability to compete effectively.

We must regularly expend capital to construct, maintain and renovate the properties that we own in order to remain competitive, maintain the value and brand standards of our properties and comply with applicable laws and regulations. In addition, we must periodically upgrade or replace the furniture, fixtures and equipment necessary to operate our business. These efforts are subject to a number of risks, including:


•	construction delays or cost overruns (including labor and materials) that may increase project costs;


•	obtaining zoning, occupancy and other required permits or authorizations;


•	governmental restrictions on the size or kind of development;


•	force majeure events, including earthquakes, tornadoes, hurricanes or floods;


•	design defects that could increase costs; and


•	environmental concerns which may create delays or increase costs.

These projects create an ongoing need for cash, which if not generated by operations or otherwise obtained is subject to the availability of credit in the capital markets. Our ability to spend the money necessary to maintain the quality of our properties is significantly impacted by the cost and availability of capital, over which we have little control.

The timing of capital improvements can affect property performance, including membership retention and usage, particularly if we need to close golf courses or a significant number of other facilities, such as ballrooms, meeting spaces or dining areas. Moreover, the investments that we make may fail to improve the performance of the properties in the manner that we expect.

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If we are not able to begin operating properties as scheduled, or if investments harm or fail to improve our performance, our ability to compete effectively would be diminished and our business and results of operations could be adversely affected.

We may seek to expand through acquisitions of and investments in other businesses and properties, or through alliances; and we may also seek to divest some of our properties and other assets, any of which may be unsuccessful or divert our management's attention.

We intend to consider strategic and complementary acquisitions of and investments in other businesses, properties or other assets. In many cases, we will be competing for these opportunities with third parties that may have substantially greater financial resources than we do. Acquisitions or investments in businesses, properties or assets as well as these alliances are subject to risks that could affect our business, including risks related to:


•	spending cash and incurring debt;


•	assuming contingent liabilities;


•	creating additional expenses; or


•	use of management's time and attention.

We cannot assure you that we will be able to identify opportunities or complete transactions on commercially reasonable terms or at all, or that we will actually realize any anticipated benefits from such acquisitions, investments or alliances. Similarly, we cannot assure you that we will be able to obtain financing for acquisitions or investments on attractive terms or at all, or that the ability to obtain financing will not be restricted by the terms of our Secured Credit Facilities or other indebtedness we may incur.

The success of any such acquisitions or investments will also depend, in part, on our ability to integrate the acquisition or investment with our existing operations. We may experience difficulty with integrating acquired businesses, properties or other assets, including difficulties relating to:


•	geographic diversity;


•	integrating information technology systems; and


•	retaining members.

We depend on third parties in our joint ventures and collaborative arrangements, which may limit our ability to manage risk.

As of December 25, 2012, we owned seven properties in partnership with other entities, including joint ventures relating to six of our golf facilities and one of our business clubs, and may in the future enter into further joint venture or other collaborative arrangements related to additional properties. Our investments in these joint ventures may, under certain circumstances, involve risks not otherwise present in our business, including the risk that our partner may become bankrupt, the risk that we may not be able to sell or dispose of our interest as a result of buy/sell rights that may be imposed by the joint venture agreement, the risk that our partner may have economic or other interests or goals that are inconsistent with our interests and goals and the risk that our partner may be able to veto actions which may be in our best interests. Consequently, actions by a co-venturer might subject clubs owned by the joint venture to additional risk. Additionally, we may be unable to take action without the approval of our joint venture partners, or our joint venture partners could take actions binding on the joint venture without our consent. Any of the foregoing could have a negative impact on the joint venture or its results of operations, and subsequently on our business or results of operations.

Our insurance policies may not provide adequate levels of coverage against all claims and we may incur losses that are not covered by our insurance.

We maintain insurance of the type and in amounts that we believe is commercially reasonable and that is available to businesses in our industry. We carry commercial liability, fire, flood, earthquake, catastrophic wind and extended insurance coverage, as applicable, from solvent insurance carriers on all of our properties. We believe that the policy specifications and insured limits are adequate for foreseeable losses with terms and conditions that are reasonable and customary for similar properties and all of our existing golf and business clubs are insured within industry standards. Nevertheless, market forces beyond our control could limit the scope of the insurance coverage that we can obtain in the future or restrict our ability to buy

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insurance coverage at reasonable rates. We cannot predict the level of the premiums that we may be required to pay for subsequent insurance coverage, the level of any deductible and/or self-insurance retention applicable thereto, the level of aggregate coverage available or the availability of coverage for specific risks.

In the event of a substantial loss, the insurance coverage that we carry may not be sufficient to pay the full value of our financial obligations or the replacement cost of any lost investment. As a result, we could lose some or all of the capital we have invested in a property, as well as the anticipated future revenues from the property. Additionally, we could remain obligated for performance guarantees in favor of third-party property owners or for their debt or other financial obligations and we may not have sufficient insurance to cover awards of damages resulting from our liabilities. If the insurance that we carry does not sufficiently cover damages or other losses, our business, financial condition and results of operations could be harmed.

In addition, there are types of losses we may incur that cannot be insured against or that we believe are not commercially reasonable to insure. For example, we maintain business interruption insurance, but there can be no assurance that the coverage for a severe or prolonged business interruption at one or more of our clubs would be adequate. Moreover, we believe that insurance covering liability for violations of wage and hour laws is generally not available. These losses, if they occur, could have a material adverse effect on our business, financial condition and results of operations.

Accidents or injuries in our clubs or in connection with our operations may subject us to liability, and accidents or injuries could negatively impact our reputation and attendance, which would harm our business, financial condition and results of operations.

There are inherent risks of accidents or injuries at our properties or in connection with our operations, including injuries from premises liabilities such as slips, trips and falls. If accidents or injuries occur at any of our properties, we may be held liable for costs related to the injuries. We maintain insurance of the type and in the amounts that we believe are commercially reasonable and that are available to businesses in our industry, but there can be no assurance that our liability insurance will be adequate or available at all times and in all circumstances. There can also be no assurance that the liability insurance we have carried in the past was adequate or available to cover any liability related to previous incidents. Our business, financial condition and results of operations could be harmed to the extent claims and associated expenses resulting from accidents or injuries exceed our insurance recoveries.

Adverse litigation judgments or settlements could impair our financial condition and results of operations or limit our ability to operate our business.

In the normal course of our business, we are often involved in various legal proceedings. The outcome of these proceedings cannot be predicted. If any of these proceedings were to be determined adversely to us or a settlement involving a payment of a material sum of money were to occur, there could be a material adverse effect on our financial condition and results of operations. Additionally, we could become the subject of future claims by third parties, including current or former members, guests who use our properties, our employees or regulators. Any significant adverse litigation judgments or settlements could limit our ability to operate our business and negatively impact our financial condition and results of operations.

We are jointly and severally liable for the pension liabilities of a former affiliate.

We are jointly and severally liable for pension funding liabilities associated with the Homestead Retirement Plan, relating to one of the resorts we sold in connection with the ClubCorp Formation. (See Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations—Commercial Commitments.”) As of December 25, 2012, the underfunded amount of the projected benefit obligation for such plan was approximately $10.7 million. Significant adverse changes in the capital markets could cause the actual amount of underfunding to be higher than projected. If we are found liable for any amounts with respect to this plan, the payment of such liability, if material, could adversely affect our financial condition and results of operations.

The failure to comply with regulations relating to public facilities, or the failure to retain licenses relating to our properties may harm our business and results of operations.

Our business is subject to extensive federal, state and local government regulation in the various jurisdictions in which our clubs are located, including regulations relating to alcoholic beverage control, public health and safety, environmental hazards and food safety. Alcoholic beverage control regulations require each of our clubs to obtain licenses and permits to sell alcoholic beverages on the premises. The failure of a club to obtain or retain its licenses would adversely affect that club's operations and profitability. We may also be subject to dram shop statutes in certain states, which generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages

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to the intoxicated person. Even though we are covered by general liability insurance, a settlement or judgment against us under a dram shop lawsuit in excess of liability coverage could have a material adverse effect on our operations.

We are also subject to the Americans with Disabilities Act of 1990, as amended by the ADA Amendments Act of 2008 (the “ADA”), which, among other things, may require certain renovations to our facilities to comply with access and use requirements. A determination that we are not in compliance with the ADA or any other similar law or regulation could result in the imposition of fines or an award of damages to private litigants. While we believe we are operating in substantial compliance, and will continue to remove architectural barriers in our facilities when readily achievable, in accordance with current applicable laws and regulations, there can be no assurance that our expenses for compliance with these laws and regulations will not increase significantly and harm our business, financial condition and results of operations.

Businesses operating in the private club industry are also subject to numerous other federal, state and local governmental regulations related to building and zoning requirements and the use and operation of clubs, including changes to building codes and fire and life safety codes, which can affect our ability to obtain and maintain licenses relating to our business and properties. If we were required to make substantial modifications at our clubs to comply with these regulations, our business, financial condition and results of operations could be negatively impacted.

Our operations and our ownership of property subject us to environmental regulation, which creates uncertainty regarding future environmental expenditures and liabilities.

Our properties and operations are subject to a number of environmental laws. As a result, we may be required to incur costs to comply with the requirements of these laws, such as those relating to water resources, discharges to air, water and land; the handling and disposal of solid and hazardous waste; and the cleanup of properties affected by regulated materials. Under these and other environmental requirements we may be required to investigate and clean up hazardous or toxic substances or chemical releases from current or formerly owned or operated facilities. Environmental laws typically impose cleanup responsibility and liability without regard to whether the relevant entity knew of or caused the presence of the contaminants. We use certain substances and generate certain wastes that may be deemed hazardous or toxic under such laws, and we from time to time have incurred, and in the future may incur, costs related to cleaning up contamination resulting from historic uses of certain of our current or former properties or our treatment, storage or disposal of wastes at facilities owned by others. Our club facilities are also subject to risks associated with mold, asbestos and other indoor building contaminants. The costs of investigation, remediation or removal of regulated materials may be substantial, and the presence of those substances, or the failure to remediate a property properly, may impair our ability to use, transfer or obtain financing regarding our property. We may be required to incur costs to remediate potential environmental hazards, mitigate environmental risks in the future, or comply with other environmental requirements.

In addition, some projects to improve, upgrade or expand our golf clubs may be subject to environmental review under the National Environmental Policy Act and, for projects in California, the California Environmental Quality Act. Both acts require that a specified government agency study any proposal for potential environmental impacts and include in its analysis various alternatives. Our improvement proposals may not be approved or may be approved with modifications that substantially increase the cost or decrease the desirability of implementing the project.

Changes in laws or regulations, or a failure to comply with any laws and regulations, may harm our business, investments and results of operations.

We are subject to laws and regulations enacted by national, state and local governments. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have an adverse affect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, by any of the persons referred to above could have a material adverse effect on our business, investments and results of operations.

Failure to comply with privacy regulations or maintain the integrity of internal or customer data could result in faulty business decisions, harm to our reputation or subject us to costs, fines or lawsuits.

We collect and maintain information relating to our members and guests, including personally identifiable information, for various business purposes, including maintaining records of member preferences to enhance our customer service and for billing, marketing and promotional purposes. We also maintain personally identifiable information about our employees. The integrity and protection of our customer, employee and company data is critical to our business. Our members expect that we will adequately protect their personal information, and the regulations applicable to security and privacy are increasingly demanding, both in the United States and in other jurisdictions where we operate. Privacy regulation is an evolving area in

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which different jurisdictions (within or outside the United States) may subject us to inconsistent compliance requirements. Compliance with applicable privacy regulations may increase our operating costs or adversely impact our ability to service our members and guests and market our properties and services to our members and guests. A theft, loss, fraudulent or unlawful use of customer, employee or company data, including cyber attacks, could harm our reputation or result in remedial and other costs, fines or lawsuits. In addition, non-compliance with applicable privacy regulations by us (or in some circumstances non-compliance by third parties engaged by us) could result in fines or restrictions on our use or transfer of data. Any of these matters could adversely affect our business, financial condition or results of operations.

The operation of our business relies on technology, and operational risks may disrupt our businesses, result in losses or limit our growth.

We invest in and license technology and systems for property management, procurement, membership records and specialty programs. We believe that we have designed, purchased and installed appropriate information systems to support our business. There can be no assurance, however, that our information systems and technology will continue to be able to accommodate our growth, or that the cost of maintaining such systems will not increase from its current level. Such a failure to accommodate growth, or an increase in costs related to such information systems, could have a material adverse effect on us. Further, there can be no assurance that as various systems and technologies become outdated or new technology is required we will be able to replace or introduce them as quickly as our competitors or within budgeted costs and timeframes. In addition, we rely on third-party service providers for certain aspects of our business. Additionally, while we have cyber security procedures in place, a security breach could disrupt our business and have a material adverse effect on us. Any interruption or deterioration in the performance of our information systems could impair the quality of our operations and could impact our reputation and hence adversely affect our business and limit our ability to grow.

We may be required to write-off a portion of our goodwill and/or indefinite lived intangible asset balances as a result of a prolonged and severe economic recession.

Under accounting principles generally accepted in the United States of America (“GAAP”), we are required to test goodwill and indefinite lived intangible assets for impairment annually as well as on an interim basis to the extent factors or indicators become apparent that could reduce the fair value of our goodwill or indefinite lived intangible assets below book value. We evaluate the recoverability of goodwill by estimating the future discounted cash flows of our reporting units and terminal values of the businesses using projected future levels of income as well as business trends and market and economic conditions. We evaluate the recoverability of indefinite lived intangible assets using the income approach based upon estimated future revenue streams (see Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies”). If a severe prolonged economic downturn were to occur, it could cause less than expected growth or a reduction in terminal values of our reporting units and could result in a goodwill or indefinite lived intangible asset impairment charge attributable to certain goodwill or indefinite lived intangible assets, negatively impacting our results of operations and stockholders' equity.

We are subject to tax examinations of our tax returns by the Internal Revenue Service ("IRS") and other tax authorities. An adverse outcome of any such audit or examination by the IRS or other tax authority could have a material adverse effect on our results of operations, financial condition and liquidity.

We are subject to ongoing tax examinations of our tax returns by the IRS and other tax authorities in various jurisdictions and may be subject to similar examinations in the future. We regularly assess the likelihood of adverse outcomes resulting from ongoing tax examinations to determine the adequacy of our provision for income taxes. These assessments can require considerable estimates and judgments. Intercompany transactions associated with provision of services and cost sharing arrangements, as well as those associated with the ClubCorp Formation, are complex and affect our tax liabilities. On February 14, 2013, we were notified that the IRS will examine certain components of the 2010 tax return, which includes the ClubCorp Formation. The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions. There can be no assurance that the outcomes from ongoing tax examinations will not have an adverse effect on our operating results and financial condition. A difference in the ultimate resolution of tax uncertainties from what is currently estimated could have an adverse effect on our operating results and financial condition.

The cancellation of certain indebtedness in connection with the ClubCorp Formation resulted in cancellation of indebtedness income to us. Should the estimates and judgments used in our calculation of such cancellation of indebtedness income prove to be inaccurate, our financial results could be materially affected.

Cancellation of debt income occurred for U.S. federal income tax purposes in connection with the consummation of the ClubCorp Formation due to the forgiveness of $342.3 million of debt owed under the then existing Secured Credit Facilities. The cancellation of indebtedness income not otherwise excluded will be deferred as further provided by Section 108

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of the Internal Revenue Code of 1986, as amended (the “Code”). The calculation of the amount of cancellation of indebtedness income recognized in connection with the ClubCorp Formation is complex and involves significant judgments and interpretations on our part. Should the estimates and judgments used in our calculation of cancellation of indebtedness income prove to be inaccurate, our financial results could be materially affected.

We are controlled by affiliates of KSL, whose interests may be different than the interests of other investors.

By reason of their majority ownership interest in our parent company, affiliates of KSL have the ability to designate a majority of the members of our board of directors. KSL's affiliates are able to control actions to be taken by us, including amendments to our certificate of incorporation and bylaws and the approval of significant corporate transactions, including mergers, sales of substantially all of our assets, distributions of our assets, the incurrence of indebtedness and any incurrence of liens on our assets. The interests of KSL's affiliates may be materially different from the interests of our other stakeholders. For example, KSL's affiliates may cause us to take actions or pursue strategies that could impact our ability to make payments under our debt agreements or that cause a change in control. In addition, to the extent permitted by our debt agreements, affiliates of KSL may cause us to pay dividends rather than make capital expenditures.

Cautionary Statement Regarding Forward-Looking Statements

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

Some of the key factors that could cause actual results to differ from our expectations include:


•	adverse conditions affecting the United States economy;


•	our ability to attract and retain club members;


•	increases in the level of competition we face;


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


•	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;


•	unusual weather patterns, extreme weather events and periodic and quasi periodic weather patterns, such as the El Nino/La Nina Southern Oscillation;


•	seasonality of demand for our services and facilities usage;


•	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, utilities and taxes;


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


•	decreasing values of our investments;


•	illiquidity of real estate holdings;


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

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•	unsuccessful or burdensome acquisitions or divestitures;


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


•	insufficient insurance coverage and uninsured losses;


•	accidents or injuries which occur at our properties;


•	adverse judgments or settlements;


•	pension plan liabilities;


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


•	future environmental regulation, expenditures and liabilities;


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


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


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


•	write-offs of goodwill;


•	cancellation of certain indebtedness will result in cancellation of indebtedness income;


•	risks related to tax examinations by the Internal Revenue Service;


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


•	our substantial indebtedness, which may adversely affect our financial condition, our ability to operate our business, react to changes in the economy or our industry and pay our debts and 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; and


•	other factors detailed herein, including under “Item 1A. Risk Factors,” “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations” and “Item 7A. Quantitative and Qualitative Disclosures About Market Risk.”

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

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

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ITEM 2. PROPERTIES

As of March 11, 2013, our network consists of 151 clubs located in 23 states, the District of Columbia and two foreign countries. We own 81 clubs in fee simple, lease 43 business, sports and alumni clubs on long-term space leases, hold the leasehold interest in 13 golf and country clubs, hold joint venture interests in 7 clubs, and hold management contracts for 7 clubs.

We believe our leased corporate office space in Dallas, Texas, and all the clubs in our network are well maintained and occupy sufficient space to meet our operating needs. During the normal course of business we evaluate lease terms and club locations and may elect to relocate or combine locations as we see fit.

The following tables illustrate our clubs by segment, location, type of club, and size either in terms of golf holes or approximate square footage, respectively, for golf and country clubs or business, sports and alumni clubs.



Golf and Country Clubs Segment by Region	Type of Club	Market	State	Golf Holes
California Region
Aliso Viejo Golf Club	Private Country Club	Los Angeles	CA	18
Braemar Country Club	Private Country Club	Los Angeles	CA	27
Canyon Crest Country Club	Private Country Club	Los Angeles	CA	18
Coto De Caza Golf & Racquet Club	Private Country Club	Los Angeles	CA	36
Crow Canyon Country Club	Private Country Club	San Francisco	CA	18
Desert Falls Country Club	Private Country Club	Palm Springs	CA	18
Morgan Run Club & Resort	Private Country Club	San Diego	CA	27
Porter Valley Country Club	Private Country Club	Los Angeles	CA	18
Shadowridge Country Club	Private Country Club	San Diego	CA	18
Spring Valley Lake Country Club	Private Country Club	Los Angeles	CA	18
Airways Golf Club	Public Golf	Fresno	CA	18
Empire Ranch Golf Club	Public Golf	Sacramento	CA	18
Indian Wells Country Club	Private Country Club	Palm Springs	CA	36
Mission Hills Country Club	Private Country Club	Palm Springs	CA	54
Teal Bend Golf Club	Public Golf	Sacramento	CA	18
Turkey Creek Golf Club	Public Golf	Sacramento	CA	18
Granite Bay Golf Club	Private Country Club	Sacramento	CA	18
Texas Region
April Sound Country Club	Private Country Club	Houston	TX	27
Bay Oaks Country Club	Private Country Club	Houston	TX	18
Brookhaven Country Club	Private Country Club	Dallas	TX	54
Canyon Creek Country Club	Private Country Club	Dallas	TX	18
The Club at Cimarron	Private Country Club	Mission	TX	18
Fair Oaks Ranch Golf & Country Club	Private Country Club	San Antonio	TX	36
The Club at Falcon Point	Private Country Club	Houston	TX	18
Gleneagles Country Club	Private Country Club	Dallas	TX	36
Hackberry Creek Country Club	Private Country Club	Dallas	TX	18
Hearthstone Country Club	Private Country Club	Houston	TX	27
Hollytree Country Club	Private Country Club	Tyler	TX	18
The Clubs of Kingwood at Deerwood	Private Country Club	Houston	TX	18
The Clubs of Kingwood at Kingwood	Private Country Club	Houston	TX	72
Las Colinas Country Club	Private Country Club	Dallas	TX	18
Lost Creek Country Club	Private Country Club	Austin	TX	18
Oakmont Country Club	Private Country Club	Dallas	TX	18
Shady Valley Golf Club	Private Country Club	Dallas	TX	18
Stonebriar Country Club (1)	Private Country Club	Dallas	TX	36
Stonebridge Country Club	Private Country Club	Dallas	TX	18

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Golf and Country Clubs Segment by Region	Type of Club	Market	State	Golf Holes
The Ranch Country Club at Stonebridge	Private Country Club	Dallas	TX	27
Lakeway Country Club	Semi-Private Golf Club	Austin	TX	36
Flintrock Golf Club at Lakeway	Private Country Club	Austin	TX	18
The Hills Country Club at Lakeway	Private Country Club	Austin	TX	18
Timarron Country Club	Private Country Club	Dallas	TX	18
Trophy Club Country Club	Private Country Club	Dallas	TX	36
Walnut Creek Country Club	Private Country Club	Dallas	TX	36
Wildflower Country Club	Private Country Club	Waco	TX	18
Willow Creek Golf Club	Private Country Club	Houston	TX	18
West Region
Anthem Golf & Country Club	Private Country Club	Phoenix	AZ	18
Ironwood Club at Anthem	Private Country Club	Phoenix	AZ	18
Gainey Ranch Golf Club	Private Country Club	Phoenix	AZ	27
Seville Golf & Country Club	Private Country Club	Phoenix	AZ	18
Aspen Glen Club	Private Country Club	Rocky Mountain	CO	18
Canyon Gate Country Club	Private Country Club	Las Vegas	NV	18
Bear's Best Las Vegas	Public Golf	Las Vegas	NV	18
Canterwood Golf & Country Club	Private Country Club	Seattle	WA	18
Midwest Region
Knollwood Country Club	Private Country Club	South Bend	IN	36
Nicklaus Golf Club at LionsGate	Private Country Club	Kansas City	KS	18
Oak Pointe Country Club	Private Country Club	Detroit	MI	36
Firestone Country Club	Private Country Club	Akron	OH	63
Quail Hollow Country Club	Private Country Club	Cleveland	OH	36
Silver Lake Country Club	Private Country Club	Akron	OH	18
Mid-Atlantic Region
Devils Ridge Golf Club	Private Country Club	Raleigh/Durham	NC	18
Lochmere Golf Club	Semi-Private Golf Club	Raleigh/Durham	NC	18
Nags Head Golf Club	Semi-Private Golf Club	Outer Banks	NC	18
Neuse Golf Club	Semi-Private Golf Club	Raleigh/Durham	NC	18
The Currituck Golf Club	Semi-Private Golf Club	Outer Banks	NC	18
Bluegrass Yacht & Country Club (1)	Private Country Club	Nashville	TN	18
Greenbrier Country Club	Private Country Club	Norfolk	VA	18
Piedmont Club	Private Country Club	Washington, D.C.	VA	18
River Creek Club	Private Country Club	Washington, D.C.	VA	18
Stonehenge Golf & Country Club	Private Country Club	Richmond	VA	18
Northeast Region
Ipswich Country Club	Private Country Club	Boston	MA	18
Hartefeld National Golf Club	Private Country Club	Avondale	PA	18
Diamond Run Golf Club	Private Country Club	Pittsburgh	PA	18
Treesdale Golf & Country Club	Private Country Club	Pittsburgh	PA	27
Hamlet Golf & Country Club	Semi-Private Golf Club	Long Island	NY	18
Willow Creek Golf & Country Club	Semi-Private Golf Club	Long Island	NY	18
Wind Watch Golf & Country Club	Private Country Club	Long Island	NY	18
Southeast Region
Diamante Golf Club	Private Country Club	Hot Springs Village	AR	18
Countryside Country Club	Private Country Club	Tampa	FL	27
Debary Golf & Country Club	Semi-Private Golf Club	Orlando	FL	18
Deercreek Country Club	Private Country Club	Jacksonville	FL	18

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Golf and Country Clubs Segment by Region	Type of Club	Market	State	Golf Holes
East Lake Woodlands Country Club	Private Country Club	Clearwater	FL	36
Haile Plantation Golf & Country Club	Private Country Club	Gainesville	FL	18
Hunter's Green Country Club	Private Country Club	Tampa	FL	18
Monarch Country Club (1)	Private Country Club	Palm Beaches	FL	18
Queens Harbour Yacht & Country Club	Semi-Private Golf Club	Jacksonville	FL	18
Tampa Palms Golf & Country Club	Private Country Club	Tampa	FL	18
Stone Creek Golf Club	Semi-Private Golf Club	Gainesville	FL	18
LPGA International	Semi-Private Golf Club	Daytona Beach	FL	36
Country Club of Gwinnett	Semi-Private Golf Club	Atlanta	GA	18
Country Club of the South (1)	Private Country Club	Atlanta	GA	18
Eagles Landing Country Club	Private Country Club	Atlanta	GA	27
Northwood Country Club	Private Country Club	Atlanta	GA	18
Bear's Best Atlanta	Public Golf	Atlanta	GA	18
Laurel Springs Golf Club	Private Country Club	Atlanta	GA	18
Southern Trace Country Club	Private Country Club	Shreveport	LA	18
Country Club of Hilton Head	Private Country Club	Hilton Head	SC	18
Golden Bear Golf Club at Indigo Run	Semi-Private Golf Club	Hilton Head	SC	18
The Golf Club at Indigo Run	Private Country Club	Hilton Head	SC	18
Woodside Plantation Country Club	Private Country Club	Augusta, GA	SC	45
International Region
Cozumel Country Club	Semi-Private Golf Club	International	Mexico	18
Vista Vallarta	Semi-Private Golf Club	International	Mexico	36
Marina Vallarta Club de Golf	Semi-Private Golf Club	International	Mexico	18
Total Golf & Country Clubs				2,367



Business, sports and alumni Clubs Segment by Region	Business Type	Market	State	Square Footage (2)
California Region
City Club on Bunker Hill	Business Club	Los Angeles	CA	27,000
Center Club	Business Club	Los Angeles	CA	22,000
Silicon Valley Capital Club	Business/Sports Club	San Jose	CA	14,000
University Club atop Symphony Towers	Business Club	San Diego	CA	18,000
Texas Region
Greenspoint Club	Business/Sports Club	Houston	TX	40,000
Houston City Club	Business/Sports Club	Houston	TX	130,000
The Downtown Club at Met	Business/Sports Club	Houston	TX	110,000
The Downtown Club at Houston Center	Business/Sports Club	Houston	TX	55,000
The Downtown Club at Plaza n/k/a The Houston Club	Business Club	Houston	TX	16,000
La Cima Club	Business Club	Dallas	TX	15,000
Plaza Club	Business Club	San Antonio	TX	19,000
Texas Tech University Club	Alumni Club	Lubbock	TX	20,000
Tower Club	Business Club	Dallas	TX	29,000
The University of Texas Club	Alumni Club	Austin	TX	34,000
West Region
Columbia Tower Club	Business Club	Seattle	WA	29,000
Midwest Region
Metropolitan Club	Business/Sports Club	Chicago	IL	60,000
Mid-America Club	Business Club	Chicago	IL	34,000
Skyline Club	Business Club	Indianapolis	IN	16,000

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Business, sports and alumni Clubs Segment by Region	Business Type	Market	State	Square Footage (2)
Skyline Club	Business Club	Detroit	MI	20,000
Shoreby Club	Business/Sports Club	Cleveland	OH	21,000
Dayton Racquet Club	Business/Sports Club	Dayton	OH	28,000
The Club at Key Center	Business/Sports Club	Cleveland	OH	34,000
Mid-Atlantic Region
City Club of Washington at Columbia Square	Business Club	Washington, D.C.	DC	17,000
Carolina Club	Alumni Club	Chapel Hill	NC	15,000
Capital City Club	Business Club	Raleigh/Durham	NC	18,000
Cardinal Club	Business Club	Raleigh/Durham	NC	22,000
Piedmont Club	Business Club	Winston-Salem	NC	14,000
Club LeConte	Business Club	Knoxville	TN	18,000
Crescent Club	Business Club	Memphis	TN	14,000
Tower Club Tysons Corner	Business Club	Vienna	VA	23,000
Town Point Club	Business Club	Norfolk	VA	18,000
Northeast Region
University of Massachusetts Club	Alumni Club	Boston	MA	26,000
Boston College Club	Alumni Club	Boston	MA	17,000
The Athletic & Swim Club at Equitable Center	Sports Club	New York City	NY	25,000
Pyramid Club	Business Club	Philadelphia	PA	21,000
Rivers Club	Business/Sports Club	Pittsburgh	PA	69,000
Southeast Region
Capital City Club	Business Club	Montgomery	AL	24,000
The Summit Club	Business Club	Birmingham	AL	19,000
University Center Club at Florida State	Alumni Club	Tallahassee	FL	64,000
Centre Club	Business Club	Tampa	FL	14,000
Citrus Club	Business/Sports Club	Orlando	FL	27,000
Tower Club	Business Club	Ft. Lauderdale	FL	12,000
University Club	Business/Sports Club	Jacksonville	FL	28,000
Buckhead Club	Business Club	Atlanta	GA	25,000
The Commerce Club	Business Club	Atlanta	GA	26,000
Capital City Club	Business Club	Columbia	SC	21,000
Commerce Club	Business Club	Greenville	SC	16,000
Harbour Club	Business Club	Charleston	SC	18,000
International Region
Capital Club	Business Club	International	China	60,000
Total Business, Sports and Alumni Clubs				1,462,000


(1)	Golf and country clubs subject to a mortgage.

(2) Business, sports and alumni clubs size is represented in approximate square footage.

ITEM 3. 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. As of the date of this filing, 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.

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ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II — FINANCIAL INFORMATION

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF COMMON EQUITY

Market Information

Our common stock is privately held and there is no established public trading market for our stock.

Holders

As of March 11, 2013, there was 1 holder of record of our common stock.

Dividends

We did not declare or pay any cash dividends on our common stock in the fiscal years ended December 25, 2012 and December 27, 2011. While our Secured Credit Facilities and the indenture that governs our senior unsecured notes limit our ability to pay cash dividends, on December 26, 2012, in accordance with these limitations, we declared a cash dividend of $35.0 million to the owners of our common stock. This dividend was paid on December 27, 2012. We do not currently anticipate paying any additional cash dividends in the near future.

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth our selected financial data for the periods presented. Our fiscal year consists of a 52/53 week period ending on the last Tuesday of December. For 2008, our fiscal year was comprised of the 53 weeks ended December 30, 2008. For 2009, 2010, 2011 and 2012, our fiscal years were comprised of the 52 weeks ended December 29, 2009, December 28, 2010, December 27, 2011 and December 25, 2012, respectively.

The statements of operations data set forth below for the fiscal years ended December 28, 2010, December 27, 2011 and December 25, 2012 and the balance sheet data as of December 27, 2011 and December 25, 2012, are derived from our audited consolidated financial statements that are included elsewhere herein. The statements of operations data set forth below for the fiscal years ended December 30, 2008 and December 29, 2009 and the balance sheet data as of December 29, 2009, are derived from our consolidated financial statements that are not included elsewhere herein. The consolidated balance sheet data as of December 30, 2008 is derived from our unaudited consolidated financial statements not included elsewhere herein. The unaudited consolidated financial statements were prepared on a basis consistent with our audited consolidated financial statements.

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This selected financial data should be read in conjunction with “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations” and our audited financial statements and the related notes included elsewhere herein.



	Fiscal Years Ended (1)
	December 25, 2012			December 27, 2011			December 28, 2010 (3)			December 29, 2009			December 30, 2008
Statements of Operations Data:
Revenues:
Club operations	$	535,274		$	513,282		$	495,424		$	506,324		$	550,290
Food and beverage	216,269			203,508			189,391			188,612			215,372
Other revenues	3,401			3,172			2,882			2,467			3,637
Total revenues	754,944			719,962			687,697			697,403			769,299
Club operating costs exclusive of depreciation	483,626			468,509			451,220			451,742			519,194
Cost of food and beverage sales exclusive of depreciation	68,735			64,256			59,671			60,145			62,037
Depreciation and amortization	78,286			93,035			91,700			97,539			100,916
Provision for doubtful accounts	2,765			3,350			3,194			4,769			4,490
Loss (gain) on disposals and acquisitions of assets	10,904			9,599			(5,380		)	6,379			3,818
Impairment of assets	4,783			1,173			8,936			11,808			2,397
Equity in earnings from unconsolidated ventures	(1,947		)	(1,487		)	(1,309		)	(706		)	(1,514		)
Selling, general and administrative	45,343			52,382			38,946			39,266			45,136
Operating income	62,449			29,145			40,719			26,461			32,825
Interest and investment income	1,212			138			714			2,684			4,290
Interest expense	(88,263		)	(83,547		)	(56,645		)	(57,801		)	(93,067		)
Change in fair value of interest rate cap agreements	(43		)	(137		)	(3,529		)	2,624			(10,454		)
Gain on extinguishment of debt	—			—			334,423			—			—
Other income	2,132			3,746			3,929			6,006			7,387
(Loss) income from continuing operations before taxes	(22,513		)	(50,655		)	319,611			(20,026		)	(59,019		)
Income tax benefit (expense)	7,137			16,015			(57,512		)	823			17,415
(Loss) income from continuing operations	(15,376		)	(34,640		)	262,099			(19,203		)	(41,604		)
Loss from discontinued Non-Core Entities, net of tax	—			—			(8,779		)	(11,487		)	(4,134		)
Loss from discontinued clubs, net of tax	(10,917		)	(258		)	(443		)	(814		)	(23,774		)
Net (loss) income	$	(26,293	)	$	(34,898	)	$	252,877		$	(31,504	)	$	(69,512	)
Balance Sheet Data:
Cash and cash equivalents	$	81,851		$	50,317		$	56,531		$	73,568		$	213,289
Restricted cash	—			—			525			14,100			9,324
Total assets	1,719,596			1,732,474			1,772,998			2,155,584			2,421,732
Membership initiation deposits-current portion(2)	91,398			69,870			53,646			38,161			31,240
Long-term debt (net of current portion)	756,532			772,272			772,079			1,391,367			1,512,994
Membership initiation deposits(2)	202,630			203,542			201,910			197,486			184,854
Total equity (deficit)	$	173,064		$	198,409		$	231,157		$	(244,229	)	$	(115,946	)

__________________________


(1)	Our fiscal year consists of a 52/53 week period ending on the last Tuesday of December. For 2008, our fiscal year was comprised of the 53 weeks ended December 30, 2008. For 2009, 2010, 2011 and 2012, our fiscal years were comprised of the 52 weeks ended December 29, 2009, December 28, 2010, December 27, 2011 and December 25, 2012, respectively.

(2)

The liability for membership initiation deposits is the present value of the refund obligation. The present value of the refund obligation of the membership initiation deposit liability accretes over the nonrefundable term using the effective interest method with an interest rate defined as our incremental borrowing rate adjusted to reflect the life of the maturity which is generally a 30-year time frame.


(3)	The statements of operations and balance sheet data reflect the ClubCorp Formation from November 30, 2010, which was treated as a reorganization of entities under common control. The gain on extinguishment of debt was recognized as lenders under certain facilities forgave debt in conjunction with the ClubCorp Formation.

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ITEM 7. 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 audited consolidated financial statements and related notes included in Item 8 "Financial Statements and Supplementary Data" of this report. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Item 1A. "Risk Factors” or in other sections of this report.

ClubCorp Formation

ClubCorp is a holding company that was formed on November 30, 2010, as part of a reorganization of ClubCorp, Inc. (“CCI”) for the purpose of operating and managing golf, country, business, sports and alumni clubs. (A full description of the ClubCorp Formation is included in Notes 1 and 2 of the audited consolidated financial statements in Item 8 of this Form 10-K.)

Discontinued Non-Core Entities

In connection with the ClubCorp Formation, ClubCorp sold its Non-Core Entities to affiliates of KSL on November 30, 2010. The financial results of such entities prior to November 30, 2010 are presented as discontinued Non-Core Entities.

Overview

We are one of the largest owners and operators of private golf, country, business, sports and alumni clubs in North America, with a network of clubs that includes approximately 145,000 memberships and 350,000 individual members. Our operations are organized into two business segments: (1) golf and country clubs and (2) business, sports and alumni clubs. We operate our properties through sole ownership, partial ownership (including joint venture interests), operating leases and management agreements. As of December 25, 2012, we owned or operated 102 golf and country clubs and 49 business, sports and alumni clubs in 23 states, the District of Columbia and two foreign countries. We believe that our expansive network of clubs and our focus on facilities, recreation and social programming enhances our ability to attract members across a number of demographic groups.

Factors Affecting our Business

A significant percentage of our revenues are 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. The economic environment had a negative impact on our business and the private club industry in general during 2010 and 2011 and to a lesser extent in 2012, resulting in member attrition. For different reasons, we have closed certain business, sports and alumni clubs that were underperforming and terminated certain golf and country club management agreements. (See "Club Acquisitions and Dispositions")

Despite the impact of the recent economic environment and club closings, we believe our efforts to position our clubs as focal points in communities with offerings that can appeal to the entire family of our members, has enhanced member loyalty and mitigated attrition rates in our membership base compared to the industry as a whole. We believe the strength of our network of clubs combined with the stability of our membership base will enable us to maintain our position as an industry leader in the future.

As one of the largest operators of private clubs in the world, we enjoy economies of scale and a leadership position. We expect to strategically expand and upgrade our portfolio through acquisitions and targeted capital investments. Our targeted capital investment program is expected to yield positive financial results, focus on facility upgrades to improve our members' experience and the utilization of our private club products.

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Club Acquisitions and Dispositions

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



	Golf & Country Clubs							Business, Sports & Alumni Clubs
	Owned Clubs	Leased Clubs	Managed		Joint Venture	Total		Owned Clubs		Leased Clubs		Managed	Joint Venture	Total
December 28, 2010	76	12	4		6	98		2		48		4	1	55
Clubs added during 2011 (1)	4	—	—		—	4		—		—		—	—	—
Clubs divested during 2011 (2)	—	—	(1	)	—	(1	)	—		(4	)	—	—	(4	)
December 27, 2011	80	12	3		6	101		2		44		4	1	51
Clubs added during 2012 (3)	—	1	2		—	3		—		—		—	—	—
Clubs divested during 2012 (4)	—	—	(2	)	—	(2	)	(1	)	(1	)	—	—	(2	)
December 25, 2012	80	13	3		6	102		1		43		4	1	49

_______________________

(1) In June 2011, we acquired three golf and country club properties in the Long Island area of New York. In August 2011, we acquired Canterwood Golf and Country Club in the Seattle, Washington area.

(2) In February 2011, we ceased operating First City Club in Savannah, Georgia. In August 2011, we ceased operating the Franklin Square location of City Club of Washington in Washington, D.C. The City Club had two locations, Columbia Square and Franklin Square. The members remain members of the City Club of Washington at Columbia Square. In December 2011, we ceased operating the University Club of Jackson in Jackson, Mississippi. Additionally, the management agreement for The Club at Viniterra in our Golf and Country Club segment terminated in December 2011 as a result of the owners’ sale of the underlying real property.

(3) In January 2012, we entered into a new agreement to manage and operate LPGA International, a semi-private golf and country club located in Daytona Beach, Florida. In March 2012, we entered into an agreement to manage and operate Hollytree Country Club, a private country club in Tyler, Texas, and, in April 2012, we acquired Hartefeld National Golf Club, a private country club in Avondale, Pennsylvania.

(4) Our management agreement with the owner of Eagle Ridge Golf Club and the Preserve Golf Club was amended to remove the Preserve Golf Club in January 2012 and then terminated with respect to Eagle Ridge in December 2012 as a result of the owner’s sale of the underlying properties. In August 2012, we ceased operating the Westlake Club in Houston, Texas, and we sold Le Club in September 2012, an owned sports club in Milwaukee, Wisconsin.

Enrollment and Retention of Members

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

We offer various programs at our clubs designed to minimize future attrition rates by increasing member satisfaction and usage. One such offering is our Optimal Network Experiences (“O.N.E.”) product, which is a type of membership upgrade offering that combines comprehensive club, community and world benefits. With this offering, members receive 50 percent off a la carte dining at their home club, access to ClubCorp’s network of clubs in the local community, and golf and dining privileges when traveling to more than 200 private clubs with additional access to more than 700 renowned hotels, resorts, restaurants and entertainment venues. As of December 25, 2012, approximately 40% of our members took advantage of an upgrade offering, a 2% increase, over the 38% of members who took advantage of upgrade offerings in the fiscal year ended December 27, 2011.

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



	Fiscal Year Ended						Fiscal Year Ended
Total memberships at end of period:	Dec. 25, 2012	Dec. 27, 2011	# Change		% Change		Dec. 27, 2011	Dec. 28, 2010	# Change		% Change
Golf and Country Clubs
Same Store Clubs (1)	79,814	79,540	274		0.3	%	78,905	79,092	(187	)	(0.2	)%
New or Acquired Clubs	2,905	1,079	1,826		169.2	%	1,714	564	1,150		203.9	%
Total Golf and Country Clubs	82,719	80,619	2,100		2.6	%	80,619	79,656	963		1.2	%
Business, Sports and Alumni Clubs
Same Store Clubs (1)	62,046	62,953	(907	)	(1.4	)%	61,415	63,108	(1,693	)	(2.7	)%
New or Acquired Clubs	—	—	—		—		1,538	859	679		79.0	%
Total Business, Sports and Alumni Clubs	62,046	62,953	(907	)	(1.4	)%	62,953	63,967	(1,014	)	(1.6	)%
Total
Same Store Clubs (1)	141,860	142,493	(633	)	(0.4	)%	140,320	142,200	(1,880	)	(1.3	)%
New or Acquired Clubs	2,905	1,079	1,826		169.2	%	3,252	1,423	1,829		128.5	%
Total memberships at end of period	144,765	143,572	1,193		0.8	%	143,572	143,623	(51	)	—	%

(1) See “Basis of Presentation—Same Store Analysis” for further definition of same store clubs. Same store clubs must be open for the entire year during both years of comparison, therefore, same store membership counts may vary for a given year depending on the years of comparison.

Seasonality of Demand and Fluctuations in Quarterly Results

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

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

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

Implications of the ClubCorp Formation

Our operating results and financial condition have been and will continue to be impacted by the ClubCorp Formation. As a result of the ClubCorp Formation in November 2010, we began incurring increased interest expense as a result of higher aggregate interest rates on our outstanding indebtedness. In addition, our taxpayer status has changed due to taxable gains and certain tax reductions triggered by the ClubCorp Formation that utilized our net operating loss carryforwards.

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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 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 average expected life of an active membership used to amortize initiation fees and deposits, our weighted average borrowing rate used to accrete membership initiation deposit liability, and inputs for impairment testing of goodwill, intangibles and long-lived assets. The following is a discussion of our critical accounting policies and the related management estimates and assumptions used in determining the value of related assets and liabilities. (A full description of all our significant accounting policies is included in Note 3 of the audited consolidated financial statements included in Item 8 of this Form 10-K.)

Revenue Recognition

Revenues from club operations, food and beverage and merchandise sales are recognized when the service is provided and are reported net of sales taxes. Revenues from membership dues are billed monthly and recognized in the period earned. Service charges in excess of amounts paid to employees are recognized in revenue. The monthly dues are expected to cover the cost of providing membership services and are generally adjusted annually depending on national, regional or local economic conditions, which could limit our ability to increase revenues from membership dues.

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. These initiation fees and deposits vary in amount based on a variety of factors such as the supply and demand for our services in each particular market, number of golf courses or breadth of amenities available to the members and the prestige of the club. In general, initiation fees are not refundable, whereas initiation deposits are not refundable until after a fixed number of years (generally 30). We recognize revenue related to initiation fees over the average expected life of an active membership. For initiation deposits, the difference between the amount paid by the member and the present value of the refund obligation is deferred and recognized as revenue on a straight-line basis over the average expected life of an active membership. We determined the average expected life of an active membership to be approximately six years for golf and country club memberships and approximately four years for business, sports and alumni club memberships effective December 29, 2010.

The present value of the refund obligation is recorded as an initiation deposit liability in our consolidated balance sheet and accretes over the nonrefundable term using the effective interest method with an interest rate defined as our incremental borrowing rate at the time the initiation deposit was paid adjusted to reflect the life of the maturity which is generally a 30-year time frame.

Average Expected Life of an Active Membership

The calculation of the average expected life of an active membership is a critical estimate in the recognition of revenues associated with initiation fees and deposits and is used for the amortization associated with our member relationship intangibles. Average expected life of an active membership is calculated separately for business, sports and alumni clubs and golf and country clubs by taking the inverse of the total number of members lost in a particular period divided by the total number of members at the end of the prior period. This base-level calculation is performed at the end of each fiscal year, using a 10-year rolling average of each year's data to determine the average expected life of an active membership. Periods in which attrition rates differ significantly from enrollment rates could have a material effect on our consolidated financial statements by decreasing or increasing the average expected life of an active membership, which in turn would affect the length of time over which we recognize initiation fee and deposit revenues. Because initiation fees and deposits generally have minimal direct incremental costs associated with them, a change in our average expected life of an active membership would likely materially affect our results of operations.

For the fiscal years ended December 25, 2012 and December 27, 2011, the average expected life of an active membership was approximately six years for golf and country club memberships and approximately four years for business, sports and alumni club memberships. For the fiscal year ended December 28, 2010, the average expected life of an active membership was approximately seven years for golf and country club memberships and approximately five years for business, sports and alumni club memberships.

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Impairment of Long-Lived Assets

Long-lived assets to be held and used and to be disposed of are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We perform a recoverability test to determine if the future undiscounted cash flows over our expected holding period for the property exceed the carrying amount of the assets of the property in question. If the recoverability test is not met, the impairment is determined by comparing the carrying value of the property to its fair value which may be approximated by using future discounted cash flows using a risk-adjusted discount rate. Future cash flows of each property are determined using management's projections of the performance of a given property based on its past performance and expected future performance given changes in marketplace, local operations and other factors both within our control and out of our control. Additionally, we review current property appraisals when available to assess recoverability. Actual results that differ from these estimates can generate material differences in impairment charges recorded, and ultimately, net income or loss in our consolidated statements of operations and the carrying value of properties on our consolidated balance sheet. Impairment charges are recorded as a component of operating income or loss in our consolidated statements of operations.

Impairment of Goodwill and Intangible Assets

We classify intangible assets into three categories: (1) intangible assets with finite lives subject to amortization, (2) intangible assets with indefinite lives not subject to amortization and (3) goodwill. Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Indefinite lived intangibles are also evaluated upon the occurrence of such events, but not less than annually. We utilize a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. We test our trade name intangible assets, which are indefinite lived, utilizing the relief from royalty method to determine the estimated fair value for each trade name which is classified as a Level 3 measurement. The relief from royalty method estimates our theoretical royalty savings from ownership of the intangible asset. Key assumptions used in this model include discount rates, royalty rates, growth rates, sales projections and terminal value rates.

We test our liquor licenses annually for impairment. We use quoted prices in active markets when they are available (“Market Approach”), which are considered Level 2 measurements. When quoted prices in active markets are not available, methods used to determine fair value include analysis of the discounted future free cash flows that sales under a liquor license generate (“Income Approach”), and a comparison to liquor licenses sold in an active market in other jurisdictions (“Market Approach”). These valuations are considered Level 3 measurements. Key assumptions include future cash flows, discount rates and projected margins, among other factors.

We evaluate goodwill for impairment at the reporting unit level (golf and country clubs and business, sports and alumni clubs), which are the same as our operating segments. When testing for impairment, we first compare the fair value of our reporting units to the recorded values. Valuation methods used to determine fair value include analysis of the discounted future free cash flows that a reporting unit is expected to generate (“Income Approach”) and an analysis, which is based upon a comparison of reporting units to similar companies utilizing a purchase multiple of earnings before interest, taxes, depreciation and amortization (“Market Approach”). These valuations are considered Level 3 measurements. Key assumptions used in this model include future cash flows, growth rates, discount rates, capital needs and projected margins, among other factors.

If the carrying amount of the reporting units exceeds its fair value, goodwill is considered potentially impaired and a second step is performed to measure the amount of impairment loss. In the second step of the goodwill impairment test, we compare the implied value of the reporting unit's goodwill with the carrying value of that unit's goodwill. If the carrying value of the reporting unit's goodwill exceeds the implied value, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. Accordingly, the fair value of a reporting unit is allocated to all the assets and liabilities of that unit, including intangible assets, and any excess of the value of the reporting unit over the amounts assigned to its assets and liabilities is the implied value of its goodwill.

We test goodwill for impairment as of the first day of our last fiscal quarter. Based on this analysis, no impairment of goodwill was recorded for all years presented and we are not currently aware of any material events that would cause us to reassess the fair value of our goodwill and trade name intangible assets. Estimates utilized in the future evaluations of goodwill for impairment could differ from estimates used in the current period calculations. Unfavorable future estimates could result in an impairment of goodwill.

The most significant assumptions used in the Income Approach to determine the fair value of our reporting units in connection with impairment testing include: (i) the discount rate, (ii) the expected long-term growth rate and (iii) future cash

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flows projections. If we used a discount rate that was 50 basis points higher or used an expected long-term growth rate that was 50 basis points lower or used future cash flow projections that were 50 basis points lower in our impairment analysis of goodwill for the fiscal year ended December 25, 2012, it would not have resulted in either reporting unit's carrying value exceeding its fair value. In addition, future changes in market conditions will impact estimates used in the Market Approach and could result in an impairment of goodwill. The estimated fair values of our golf and country clubs and business, sports and alumni clubs reporting units both exceeded their carrying values by approximately 10%.

As of December 25, 2012 and December 27, 2011, ClubCorp had $113.1 million and $113.1 million, respectively, of goodwill allocated to the golf and country club segment and $145.4 million and $151.9 million, respectively, of goodwill allocated to the business, sports and alumni club segment.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recognized. Judgment is required in addressing the future tax consequences of events that have been recognized in our financial statements or tax returns (e.g., realization of deferred tax assets, changes in tax laws or interpretations thereof). A change in the assessment of the outcomes of such matters could materially impact our consolidated financial statements. We may be liable for proposed tax liabilities and the final amount of taxes paid may exceed the amount of applicable reserves, which could reduce our profits. In addition, we may be subject to examination of our income tax returns by the Internal Revenue Service and other tax authorities. On February 14, 2013, we were notified that the Internal Revenue Service will audit certain components of the tax return for the year ended December 28, 2010, which includes the consummation of the ClubCorp Formation. Should the estimates and judgments used in the ClubCorp Formation prove to be inaccurate, our financial results could be materially affected.

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

As of December 25, 2012 and December 27, 2011, $52.7 million and $49.0 million, respectively, of unrecognized tax benefits are included in other liabilities in the audited consolidated financial statements in Item 8 of this Form 10-K. Currently, unrecognized tax benefits are not expected to change significantly over the next twelve months.

Basis of Presentation

Total revenues recorded in our two principle 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 for in network products), food and beverage operations and golf operations. Operating expenses recorded in our two principle business segments primarily consist of labor expenses, food and beverage costs, golf course maintenance costs and general and administrative costs.

Other operations not allocated to our two principle business segments are comprised primarily of income from arrangements with third parties for access privileges, corporate overhead expenses, shared services and intercompany eliminations made in the consolidation between other operations and our two principle business segments. Membership upgrade revenues associated with access privileges to third party clubs, facilities and properties are also recorded in other operations.

EBITDA and Adjusted EBITDA

EBITDA is calculated as net income plus interest, taxes, depreciation and amortization less interest and investment income. Adjusted EBITDA (“Adjusted EBITDA”) is based on the definition of Consolidated EBITDA as defined in the credit agreement governing our Secured Credit Facilities and may not be comparable to other companies. Adjusted EBITDA differs from Segment EBITDA and is included because the credit agreement governing our Secured Credit Facilities contains certain financial and non-financial covenants which require ClubCorp and its restricted subsidiaries to maintain specified financial ratios on a rolling four quarter basis and utilize this measure of Adjusted EBITDA.

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Adjusted EBITDA is not a measure determined in accordance with GAAP and should not be considered as an alternative to, or more meaningful than, net income (as determined in accordance with GAAP) as a measure of our operating results or net cash provided by operating activities (as determined in accordance with GAAP) as a measure of our liquidity. (See "Liquidity and Capital Resources" for a reconciliation of net income (loss) to Adjusted EBITDA.)

Segment EBITDA

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

We define Segment EBITDA as net income before discontinued operations, interest and investment income, interest expense and the change in fair value of interest rate cap agreements, income taxes, gain or loss on disposal, acquisition and impairment of assets, gain on extinguishment of debt and depreciation and amortization. Segment EBITDA differs from Adjusted EBITDA, although, Segment EBITDA may be adjusted for items similar to those defined in the credit agreement governing our Secured Credit Facilities. Segment EBITDA has been calculated using this definition for all periods presented. (For more information see Note 15 of the audited consolidated financial statements in Item 8 of this Form 10-K.)

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

The following table below provides a reconciliation of our Segment EBITDA to net (loss) income before income taxes and discontinued operations for the periods indicated:



	Fiscal Years Ended
	December 25, 2012			December 27, 2011			December 28, 2010
	(dollars in thousands)
Total Segment EBITDA	$	165,516		$	154,102		$	144,490
Interest and investment income	1,212			138			714
Interest expense and change in fair value of interest rate cap agreements	(88,306		)	(83,684		)	(60,174		)
Loss on disposals and impairment of assets	(15,687		)	(10,772		)	(3,556		)
Gain on extinguishment of debt	—			—			334,423
Depreciation and amortization	(78,286		)	(93,035		)	(91,700		)
Translation loss	(126		)	(554		)	(146		)
Business interruption insurance	309			—			—
Severance payments	(360		)	(431		)	(515		)
Management fees and expenses paid to an affiliate of KSL	(1,141		)	(1,255		)	(1,150		)
Acquisition costs	(837		)	(1,629		)	—
Amortization of step-up in certain equity method investments	(2,027		)	(2,048		)	(2,048		)
ClubCorp Formation costs	(51		)	(2,087		)	(752		)
Environmental compliance costs	(27		)	(454		)	—
Property tax increases prior to 2011	—			(2,655		)	—
Arbitration award	—			(3,968		)	—
Long term incentive plan	(1,661		)	(1,661		)	—
Other	(1,041		)	(662		)	25
Net (loss) income before income taxes and discontinued operations	$	(22,513	)	$	(50,655	)	$	319,611

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Same Store Analysis

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

Our fiscal year consists of a 52/53 week period ending on the last Tuesday of December. Our first, second and third quarters each consist of twelve weeks while our fourth quarter consists of sixteen or seventeen weeks. For 2010, 2011, and 2012, the fiscal years were comprised of the 52 weeks ended December 28, 2010, December 27, 2011 and December 25, 2012, respectively.

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Results of Operations

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



	Fiscal Years Ended
		December 25, 2012			% of Revenue		December 27, 2011			% of Revenue		December 28, 2010			% of Revenue
	(dollars in thousands)
REVENUES:
Club operations		$	535,274		70.9	%	$	513,282		71.3	%	$	495,424		72.0	%
Food and beverage		216,269			28.6	%	203,508			28.3	%	189,391			27.5	%
Other revenues		3,401			0.5	%	3,172			0.4	%	2,882			0.4	%
Total revenues		754,944					719,962					687,697
DIRECT AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Club operating costs exclusive of depreciation		483,626			64.1	%	468,509			65.1	%	451,220			65.6	%
Cost of food and beverage sales exclusive of depreciation		68,735			9.1	%	64,256			8.9	%	59,671			8.7	%
Depreciation and amortization		78,286			10.4	%	93,035			12.9	%	91,700			13.3	%
Provision for doubtful accounts		2,765			0.4	%	3,350			0.5	%	3,194			0.5	%
Loss (gain) on disposals and acquisitions of assets		10,904			1.4	%	9,599			1.3	%	(5,380		)	(0.8	)%
Impairment of assets		4,783			0.6	%	1,173			0.2	%	8,936			1.3	%
Equity in earnings from unconsolidated ventures		(1,947		)	(0.3	)%	(1,487		)	(0.2	)%	(1,309		)	(0.2	)%
Selling, general and administrative		45,343			6.0	%	52,382			7.3	%	38,946			5.7	%
OPERATING INCOME		62,449			8.3	%	29,145			4.0	%	40,719			5.9	%
Interest and investment income		1,212			0.2	%	138			—	%	714			0.1	%
Interest expense		(88,263		)	(11.7	)%	(83,547		)	(11.6	)%	(56,645		)	(8.2	)%
Change in fair value of interest rate cap agreements		(43		)	—	%	(137		)	—	%	(3,529		)	(0.5	)%
Gain on extinguishment of debt		—			—	%	—			—	%	334,423			48.6	%
Other income		2,132			0.3	%	3,746			0.5	%	3,929			0.6	%
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(22,513		)	(3.0	)%	(50,655		)	(7.0	)%	319,611			46.5	%
INCOME TAX BENEFIT (EXPENSE)		7,137			0.9	%	16,015			2.2	%	(57,512		)	(8.4	)%
(LOSS) INCOME FROM CONTINUING OPERATIONS		(15,376		)	(2.0	)%	(34,640		)	(4.8	)%	262,099			38.1	%
Loss from discontinued Non-Core Entities, net of income tax expense of $(6,748) in 2010		—			—	%	—			—	%	(8,779		)	(1.3	)%
Loss from discontinued clubs, net of income tax benefit (expense) of $2,669, $(152) and $398 in 2012, 2011 and 2010, respectively		(10,917		)	(1.4	)%	(258		)	—	%	(443		)	(0.1	)%
NET (LOSS) INCOME		(26,293		)	(3.5	)%	(34,898		)	(4.8	)%	252,877			36.8	%
NET LOSS ATTRIBUTABLE TO DISCONTINUED NON-CORE ENTITIES' NONCONTROLLING INTERESTS		—			—	%	—			—	%	1,966			0.3	%
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		(283		)	—	%	(575		)	(0.1	)%	(346		)	(0.1	)%
NET (LOSS) INCOME ATTRIBUTABLE TO CLUBCORP		$	(26,576	)	(3.5	)%	$	(35,473	)	(4.9	)%	$	254,497		37.0	%

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Comparison of the Fiscal Years Ended December 25, 2012 and December 27, 2011

The following table presents key financial information derived from our consolidated statements of operations for the fiscal years ended December 25, 2012 and December 27, 2011:



	Fiscal Years Ended
	December 25, 2012			December 27, 2011			Change			% Change
	(dollars in thousands)
Total revenues	$	754,944		$	719,962		$	34,982		4.9	%
Club operating costs and expenses exclusive of depreciation (1)	555,126			536,115			19,011			3.5	%
Depreciation and amortization	78,286			93,035			(14,749		)	(15.9	)%
Loss on disposals and acquisitions of assets	10,904			9,599			1,305			13.6	%
Impairment of assets	4,783			1,173			3,610			307.8	%
Equity in earnings from unconsolidated ventures	(1,947		)	(1,487		)	(460		)	(30.9	)%
Selling, general and administrative	45,343			52,382			(7,039		)	(13.4	)%
OPERATING INCOME	62,449			29,145			33,304			114.3	%
Interest and investment income	1,212			138			1,074			778.3	%
Interest expense	(88,263		)	(83,547		)	4,716			5.6	%
Change in fair value of interest rate cap agreements	(43		)	(137		)	94			68.6	%
Other income	2,132			3,746			(1,614		)	(43.1	)%
(LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(22,513		)	(50,655		)	28,142			55.6	%
INCOME TAX BENEFIT	7,137			16,015			(8,878		)	(55.4	)%
LOSS FROM CONTINUING OPERATIONS	$	(15,376	)	$	(34,640	)	$	19,264		55.6	%

__________________________

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

Total revenues of $754.9 million for the fiscal year ended December 25, 2012 increased $35.0 million, or 4.9%, over the fiscal year ended December 27, 2011, primarily due to increased golf and country club revenues. Golf and country club revenues increased $32.6 million, or 5.9%, of which $12.4 million is attributable to golf and country club properties added in 2011 and 2012. The remaining $20.2 million increase is primarily due to increases in membership, food and beverage and golf operations revenues. In addition, business, sports and alumni clubs revenues increased $3.0 million, or 1.8%, largely due to a $2.8 million increase in food and beverage sales, driven by increased spend in corporate and social private party events.

Club operating costs and expenses of $555.1 million for the fiscal year ended December 25, 2012 increased $19.0 million, or 3.5%, compared to the fiscal year ended December 27, 2011, of which $10.4 million is attributable to club properties added in 2011 and 2012. The remaining $8.6 million increase is primarily due to increased variable labor and employee costs and an increase in cost of goods sold associated with increased revenues from food and beverage and retail sales.

Depreciation and amortization decreased $14.7 million, or 15.9%, for the fiscal year ended December 25, 2012 compared to the fiscal year ended December 27, 2011 due to a decrease in amortization expense related to member relationship intangibles that were fully amortized during the fiscal year ended December 27, 2011 for our business, sports and alumni clubs segment.

Loss on disposal of assets of $10.9 million for the fiscal year ended December 25, 2012 largely consisted of losses on asset retirements, but was partially offset by insurance proceeds related to Hurricane Irene, a property settlement and eminent domain proceeds of $2.0 million, $1.2 million and $0.3 million, respectively. Loss on disposal of assets of $9.6 million for the fiscal year ended December 27, 2011 primarily consisted of losses on asset retirements.

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Impairment of assets for the fiscal year ended December 25, 2012 of $4.8 million was largely due to the impairment of unproven mineral interests on certain golf properties where we had third party mineral lease agreements. Impairment of assets for the fiscal year ended December 27, 2011 of $1.2 million was primarily comprised of liquor license impairments.

Selling, general and administrative expenses of $45.3 million for the fiscal year ended December 25, 2012 decreased $7.0 million, or 13.4%, compared to the fiscal year ended December 27, 2011. The decrease is primarily due to one-time expenses that occurred during the fiscal year ended December 27, 2011, including a $4.0 million arbitration award arising out of a dispute related to a series of agreements first entered into in 1999 relating to the acquisition and development of a golf course property, $2.1 million of professional fees incurred in connection with becoming a public filer with the SEC and higher legal, professional and other costs incurred in connection with the acquisition of three golf and country club properties in the Long Island area of New York and one property in Seattle, Washington.

Interest expense totaled $88.3 million and $83.5 million for the fiscal years ended December 25, 2012 and December 27, 2011, respectively. The $4.7 million increase is largely due to the accretion of initiation deposit liabilities. There was minimal fluctuation related to our indebtedness as a significant portion is at a fixed rate and variable interest rates remained consistent for the majority of the year. (See "Liquidity and Capital Resources—Debt" for the recent amendment to our term loan facility.)

Other income decreased $1.6 million, or 43.1%, for the fiscal year ended December 25, 2012 compared to the fiscal year ended December 27, 2011, largely due to proceeds from certain mineral lease and surface right agreements that have become fully amortized.

Income tax benefit of $7.1 million for the fiscal year ended December 25, 2012 decreased $8.9 million, or 55.4%, compared to $16.0 million for the fiscal year ended December 27, 2011. The decrease was driven primarily by a $28.1 million decrease in pre-tax loss. The effective tax rates were 31.7% and 31.6% for the fiscal years ended December 25, 2012 and December 27, 2011, respectively. For the fiscal year ended December 25, 2012, the effective tax rate differed from the statutory federal tax rate of 35.0% primarily due to changes in uncertain tax positions, state and foreign taxes. For the fiscal year ended December 27, 2011, the effective tax rate differed from the statutory federal tax rate of 35.0% primarily due to state taxes.

Segment Operations

Golf and Country Clubs

The following tables present key financial information for our golf and country clubs for the fiscal years ended December 25, 2012 and December 27, 2011:



	Fiscal Years Ended
Same Store Golf and Country Clubs	December 25, 2012			December 27, 2011			Change			% Change
	(dollars in thousands)
Number of facilities at end of period in continuing operations	95			95
Total revenues	$	561,015		$	540,821		$	20,194		3.7	%
Segment EBITDA	162,396			150,291			12,105			8.1	%
Segment EBITDA %	28.9		%	27.8		%	1.1		%



	Fiscal Years Ended
Total Golf and Country Clubs	December 25, 2012			December 27, 2011			Change			% Change
	(dollars in thousands)
Number of facilities at end of period in continuing operations	102			99
Total revenues	$	583,523		$	550,898		$	32,625		5.9	%
Segment EBITDA	166,327			151,554			14,773			9.7	%
Segment EBITDA %	28.5		%	27.5		%	1.0		%

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Total revenues for same store golf and country clubs increased $20.2 million, or 3.7%, for the fiscal year ended December 25, 2012 compared to the fiscal year ended December 27, 2011, primarily due to increases in membership, food and beverage and golf operation revenues. Membership revenues increased $10.3 million or 3.9%, largely due to an increase in average dues per membership and partially due to upgrade revenues from the O.N.E. offering. Food and beverage revenues increased $5.3 million, or 4.5%, due to increases in a la carte volume and private party revenues, driven by the O.N.E. offering and increased spend in social private party events. Golf operations revenues increased $3.2 million, or 2.6%, over the fiscal year ended December 27, 2011, largely due to a 5.9% and 3.2% increase in merchandise sales and cart rental revenues, respectively. The increase in merchandise sales and cart rental revenues was driven by a 2.5% increase in retail revenue per round and 3.0% increase in member golf rounds.

Segment EBITDA for same store golf and country clubs increased $12.1 million, or 8.1%, for the fiscal year ended December 25, 2012 compared to the fiscal year ended December 27, 2011 due to increases in higher margin membership revenues. As a result, same store Segment EBITDA margin for the fiscal year ended December 25, 2012 increased 1.1% over the fiscal year ended December 27, 2011.

Business, Sports and Alumni Clubs

The following table presents key financial information for our business, sports and alumni clubs for the fiscal years ended December 25, 2012 and December 27, 2011:



	Fiscal Years Ended
Same Store & Total Business, Sports and Alumni Clubs	December 25, 2012			December 27, 2011			Change			% Change
	(dollars in thousands)
Number of facilities at end of period in continuing operations	49			49
Total revenues	$	174,344		$	171,328		$	3,016		1.8	%
Segment EBITDA	34,373			32,606			1,767			5.4	%
Segment EBITDA %	19.7		%	19.0		%	0.7		%

Total revenues for business, sports and alumni clubs increased $3.0 million, or 1.8%, for the fiscal year ended December 25, 2012 compared to the fiscal year ended December 27, 2011 primarily due to increases in food and beverage revenues of $2.8 million, or 3.4%. The increase was largely driven by a $2.0 million, or 3.7%, improvement in private party revenues.

Segment EBITDA for business, sports and alumni clubs increased $1.8 million, or 5.4%, for the fiscal year ended December 25, 2012 compared to the fiscal year ended December 27, 2011 partially due to increased revenues but primarily attributable to our continued focus on cost controls and expense management. Segment EBITDA margin of 19.7% for fiscal year ended December 25, 2012 increased 0.7% over 19.0% for the fiscal year ended December 27, 2011.

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Comparison of the Fiscal Years Ended December 27, 2011 and December 28, 2010

The following table presents key financial information derived from our consolidated statements of operations for the fiscal years ended December 27, 2011 and December 28, 2010:



	Fiscal Years Ended
	December 27, 2011			December 28, 2010			Change			% Change
	(dollars in thousands)
Total revenues	$	719,962		$	687,697		$	32,265		4.7	%
Club operating costs and expenses exclusive of depreciation(1)	536,115			514,085			22,030			4.3	%
Depreciation and amortization	93,035			91,700			1,335			1.5	%
Loss (gain) on disposals and acquisitions of assets	9,599			(5,380		)	14,979			(278.4	)%
Impairment of assets	1,173			8,936			(7,763		)	(86.9	)%
Equity in earnings from unconsolidated ventures	(1,487		)	(1,309		)	(178

ClubCorp Club Operations, Inc. 10-K