UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 19, 2013.

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

For the transition period from to

Commission File Number 333-173127

ClubCorp Club Operations, Inc.

(Exact name of registrant as specified in its charter)



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

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

(972) 243-6191

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes 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 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 March 19, 2013, 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. FINANCIAL INFORMATION

Item 1.	Financial Statements	1
	Unaudited consolidated condensed statements of operations and comprehensive income (loss) for the twelve weeks ended March 19, 2013 and March 20, 2012	1
	Unaudited consolidated condensed balance sheets as of March 19, 2013 and December 25, 2012	2
	Unaudited consolidated condensed statements of cash flows for the twelve weeks ended March 19, 2013 and March 20, 2012	3
	Unaudited consolidated condensed statements of changes in equity for the twelve weeks ended March 19, 2013 and March 20, 2012	4
	Notes to unaudited consolidated condensed financial statements	5


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	39

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Mine Safety Disclosures	40
Item 5.	Other Information	40
Item 6.	Exhibits	40

Signatures.		42

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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CLUBCORP CLUB OPERATIONS, INC.

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

For the Twelve Weeks Ended March 19, 2013 and March 20, 2012

(In thousands of dollars)



	Twelve Weeks Ended
	March 19, 2013			March 20, 2012
REVENUES:
Club operations	$	114,338		$	110,877
Food and beverage	39,916			38,121
Other revenues	806			708
Total revenues	155,060			149,706

DIRECT AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Club operating costs exclusive of depreciation	104,182			101,023
Cost of food and beverage sales exclusive of depreciation	13,868			12,943
Depreciation and amortization	16,155			18,603
Provision for doubtful accounts	710			742
Loss (gain) on disposals of assets	1,219			(624		)
Equity in earnings from unconsolidated ventures	(217		)	(319		)
Selling, general and administrative	9,908			10,550
OPERATING INCOME	9,235			6,788

Interest and investment income	75			23
Interest expense	(19,335		)	(19,901		)
Other income	—			865
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(10,025		)	(12,225		)
INCOME TAX (EXPENSE) BENEFIT	(291		)	2,703
LOSS FROM CONTINUING OPERATIONS	(10,316		)	(9,522		)
Loss from discontinued clubs, net of income tax benefit of $0 and $32 for the twelve weeks ended March 19, 2013 and March 20, 2012, respectively	(5		)	(60		)
NET LOSS	(10,321		)	(9,582		)
NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS	41			13
NET LOSS ATTRIBUTABLE TO CLUBCORP	$	(10,280	)	$	(9,569	)

NET LOSS	(10,321		)	(9,582		)
Foreign currency translation, net of tax	1,082			2,454
OTHER COMPREHENSIVE INCOME	1,082			2,454
COMPREHENSIVE LOSS	(9,239		)	(7,128		)
COMPREHENSIVE LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS	41			13
COMPREHENSIVE LOSS ATTRIBUTABLE TO CLUBCORP	$	(9,198	)	$	(7,115	)

See accompanying notes to unaudited consolidated condensed financial statements

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CLUBCORP CLUB OPERATIONS, INC.

UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS

As of March 19, 2013 and December 25, 2012

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



	March 19, 2013			December 25, 2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	60,085		$	81,851
Receivables, net of allowances of $2,929 and $2,626 at March 19, 2013 and December 25, 2012, respectively	54,137			51,580
Inventories	15,603			14,361
Prepaids and other assets	12,414			12,199
Deferred tax assets	8,076			8,076
Total current assets	150,315			168,067
Investments	9,861			11,166
Property and equipment, net (includes $9,729 and $9,870 related to VIEs at March 19, 2013 and December 25, 2012, respectively)	1,218,186			1,223,539
Notes receivable, net of allowances of $525 and $563 at March 19, 2013 and December 25, 2012, respectively	3,517			3,183
Goodwill	258,459			258,459
Intangibles, net	31,299			31,958
Other assets	22,956			23,224
TOTAL ASSETS	$	1,694,593		$	1,719,596

LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	24,171		$	24,988
Membership initiation deposits - current portion	96,904			91,398
Accounts payable	21,951			27,441
Accrued expenses	42,552			35,989
Accrued taxes	22,298			16,637
Other liabilities	70,407			52,915
Total current liabilities	278,283			249,368
Long-term debt (includes $1,494 and $1,571 related to VIEs at March 19, 2013 and December 25, 2012, respectively)	755,661			756,532
Membership initiation deposits	201,468			202,630
Deferred tax liability	201,711			208,993
Other liabilities	128,645			129,009
Total liabilities	1,565,768			1,546,532
Commitments and contingencies (See Note 13)

EQUITY
Common stock of ClubCorp Club Operations, Inc., $1.00 par value, 1,000 shares authorized, issued and outstanding at March 19, 2013 and December 25, 2012	1			1
Additional paid-in capital	178,310			213,310
Accumulated other comprehensive income (loss)	410			(672		)
Retained deficit	(60,420		)	(50,140		)
Total stockholders’ equity	118,301			162,499
Noncontrolling interests in consolidated subsidiaries and variable interest entities	10,524			10,565
Total equity	128,825			173,064
TOTAL LIABILITIES AND EQUITY	$	1,694,593		$	1,719,596

See accompanying notes to unaudited consolidated condensed financial statements

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CLUBCORP CLUB OPERATIONS, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

For the Twelve Weeks Ended March 19, 2013 and March 20, 2012

(In thousands of dollars)



	Twelve Weeks Ended
	March 19, 2013			March 20, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(10,321	)	$	(9,582	)
Adjustments to reconcile net loss to cash flows from operating activities:
Depreciation	15,496			16,449
Amortization and depletion	659			2,281
Bad debt expense	712			773
Equity in earnings from unconsolidated ventures	(217		)	(319		)
Distribution from investment in unconsolidated ventures	762			—
Loss (gain) on disposals of assets	1,215			(528		)
Amortization of debt issuance costs	522			457
Accretion of discount on member deposits	4,618			4,649
Amortization of surface rights bonus revenue	—			(865		)
Amortization of above and below market rent intangibles	62			58
Net change in deferred tax assets and liabilities	(7,282		)	(7,100		)
Net change in prepaid expenses and other assets	(1,948		)	(1,296		)
Net change in receivables and membership notes	(2,982		)	2,134
Net change in accounts payable and accrued liabilities	584			1,791
Net change in other current liabilities	22,967			18,856
Net change in other long-term liabilities	(927		)	(1,088		)
Net cash provided by operating activities	23,920			26,670
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(7,862		)	(6,506		)
Proceeds from dispositions	32			7
Proceeds from insurance	—			1,978
Net change in restricted cash and capital reserve funds	(43		)	(105		)
Return of capital in equity investments	760			—
Net cash used in investing activities	(7,113		)	(4,626		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt	(3,524		)	(3,870		)
Distribution to owners	(35,000		)	—
Proceeds from new membership initiation deposits	94			243
Repayments of membership initiation deposits	(256		)	(97		)
Net cash used in financing activities	(38,686		)	(3,724		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	113			103
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(21,766		)	18,423
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD	81,851			50,317
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	60,085		$	68,740

See accompanying notes to unaudited consolidated condensed financial statements

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CLUBCORP CLUB OPERATIONS, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY

For the Twelve Weeks Ended March 19, 2013 and March 20, 2012

(In thousands of dollars)



	Total			Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Equity (Deficit)			Noncontrolling Interests in Consolidated Subsidiaries
BALANCE - December 27, 2011	$	198,409		$	1	$	213,310		$	(2,562	)	$	(23,564	)	$	11,224
Net loss	(9,582		)	—		—			—			(9,569		)	(13		)
Other comprehensive income	2,454			—		—			2,454			—			—
BALANCE - March 20, 2012	$	191,281		$	1	$	213,310		$	(108	)	$	(33,133	)	$	11,211

BALANCE - December 25, 2012	$	173,064		$	1	$	213,310		$	(672	)	$	(50,140	)	$	10,565
Distributions to owners	(35,000		)	—		(35,000		)	—			—			—
Net loss	(10,321		)	—		—			—			(10,280		)	(41		)
Other comprehensive income	1,082			—		—			1,082			—			—
BALANCE - March 19, 2013	$	128,825		$	1	$	178,310		$	410		$	(60,420	)	$	10,524

See accompanying notes to unaudited consolidated condensed financial statements

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NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(dollar amounts in thousands, unless otherwise indicated)

1. ORGANIZATION

ClubCorp Club Operations, Inc. (“ClubCorp”) is a holding company that was formed on November 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. ClubCorp has two reportable segments (1) golf and country clubs and (2) business, sports and alumni clubs. ClubCorp is a wholly owned subsidiary of CCA Club Operations Holdings, LLC (“Parent”), which is a wholly owned subsidiary of ClubCorp Holdings, Inc. (“Holdings”), which is wholly owned by Fillmore CCA Investment, LLC (“Fillmore”). ClubCorp, together with its subsidiaries, may be referred to as “we,” “us,” “our,” or the “Company,” and is principally owned by Holdings which is owned by affiliates of KSL Capital Partners, LLC (“KSL”), a private equity fund that invests primarily in the hospitality and leisure business.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

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

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

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

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

Membership initiation fees and deposits recognized within club operations revenue on the consolidated condensed statements of operations was $3.9 million and $3.4 million, for the twelve weeks ended March 19, 2013 and March 20, 2012, respectively.

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

Foreign Currency—The functional currency of our entities located outside the United States of America is the local currency. Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the current exchange rate in effect at year-end. All foreign income and expenses are translated at the monthly weighted-average exchange rates during the year. Translation gains and losses are reported separately as a component of comprehensive loss, until realized. No translation gains or losses have been reclassified into earnings for the twelve weeks ended March 19, 2013 and March 20, 2012. Realized foreign currency transaction gains and losses are reflected in the consolidated condensed statements of operations and comprehensive income (loss) in club operating costs.

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

Recently Issued Accounting Pronouncements

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

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

3. VARIABLE INTEREST ENTITIES

Consolidated VIEs include three managed golf course properties. We have determined we are the primary beneficiary of these VIEs as we have the obligation to absorb the majority of losses from and direct activities of these operations. One of these VIEs is financed through a loan payable of $1.2 million collateralized by assets of the entity totaling $4.0 million as of March 19, 2013. The other VIEs are financed through advances from us. Outstanding advances as of March 19, 2013 total $3.4 million compared to recorded assets of $6.6 million.

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The following summarizes the carrying amount and classification of the VIEs’ assets and liabilities in the consolidated condensed balance sheets as of March 19, 2013 and December 25, 2012, net of intercompany amounts:



	March 19, 2013		December 25, 2012
Current assets	$	885	$	858
Fixed assets, net	9,729		9,870
Total assets	$	10,614	$	10,728

Current liabilities	$	1,043	$	1,024
Long-term debt	1,494		1,571
Other liabilities	585		594
Noncontrolling interest	6,174		6,260
Company capital	1,318		1,279
Total liabilities and equity	$	10,614	$	10,728

Recourse of creditors to the three VIEs is limited to the assets of the managed golf operations and their management entities, which total $10.6 million and $10.7 million at March 19, 2013 and December 25, 2012, respectively.

4. INVESTMENTS

Equity method investments in golf and business club ventures total $1.3 million at each of March 19, 2013 and December 25, 2012, and include two golf club joint ventures and one business club joint venture. Our share of earnings in the equity investments is included in equity in earnings from unconsolidated ventures in the consolidated condensed statements of operations.

Additionally, we have one equity method investment of 10.2% of Avendra, LLC, a purchasing cooperative of hospitality companies. The carrying value of the investment was $8.1 million and $9.4 million at March 19, 2013 and December 25, 2012, respectively. Our share of earnings in the equity investment is included in equity in earnings from unconsolidated ventures in the consolidated condensed statements of operations. We have contractual agreements with the joint venture to provide procurement services for our clubs for which we received volume rebates totaling $0.0 million and $0.3 million during the twelve weeks ended March 19, 2013 and March 20, 2012, respectively. The difference between the carrying value of the investment and our share of the equity reflected in the joint venture’s financial statements at the time of the acquisition of the Company by affiliates of KSL was allocated to intangible assets of the joint venture and amortized over approximately 10 years beginning in 2007. The carrying value of these intangible assets was $7.6 million and $8.0 million at March 19, 2013 and December 25, 2012, respectively.

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



	Twelve Weeks Ended
	March 19, 2013			March 20, 2012
ClubCorp's equity in net income, excluding amortization	$	705		$	783
Amortization	(463		)	(463		)
ClubCorp's equity in net income	$	242		$	320

5. FAIR VALUE

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

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

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

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

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

Fair Value of Financial Instruments

Debt—We estimate the fair value of our debt obligations, excluding capital lease obligations, as follows, as of March 19, 2013 and December 25, 2012:



	March 19, 2013				December 25, 2012
	Recorded Value		Fair Value		Recorded Value		Fair Value
Level 2	$	718,800	$	770,156	$	719,575	$	765,744
Level 3	37,321		37,321		37,790		37,790
Total	$	756,121	$	807,477	$	757,365	$	803,534

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

The carrying value of other financial instruments including cash, cash equivalents, receivables, notes receivable, accounts payable and other short-term and long-term assets and liabilities approximate their fair values as of March 19, 2013 and December 25, 2012.

6. PROPERTY AND EQUIPMENT

Property and equipment at cost consists of the following at March 19, 2013 and December 25, 2012:



	March 19, 2013			December 25, 2012
Land and non-depreciable land improvements	$	531,497		$	531,265
Depreciable land improvements	326,164			325,688
Buildings and recreational facilities	402,156			401,607
Machinery and equipment	167,835			164,005
Leasehold improvements	85,251			84,444
Furniture and fixtures	65,586			64,960
Construction in progress	4,664			2,912
	1,583,153			1,574,881
Accumulated depreciation	(364,967		)	(351,342		)
Total	$	1,218,186		$	1,223,539

We evaluate property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through future cash flows. No impairments were recorded during the twelve weeks ended March 19, 2013 or March 20, 2012.

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7. GOODWILL AND INTANGIBLE ASSETS

Intangible assets consist of the following at March 19, 2013 and December 25, 2012:



		March 19, 2013							December 25, 2012
Asset	Useful Life	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Intangible assets with indefinite lives:
Trade names		$	24,850	$	—		$	24,850	$	24,850	$	—		$	24,850
Liquor Licenses		3,886		—			3,886		3,886		—			3,886
Intangible assets with finite lives:
Member Relationships	7 years	19,068		(16,713		)	2,355		19,068		(16,084		)	2,984
Management Contracts	9 years	598		(437		)	161		598		(421		)	177
Other	7 years	426		(379		)	47		426		(365		)	61
Total		$	48,828	$	(17,529	)	$	31,299	$	48,828	$	(16,870	)	$	31,958

Goodwill		$	258,459				$	258,459	$	258,459				$	258,459

Intangible Assets—Intangible assets include trade names, liquor licenses and member relationships. Intangible asset amortization expense was $0.7 million and $2.3 million for the twelve weeks ended March 19, 2013 and March 20, 2012, respectively.

The following table shows goodwill activity by reporting unit. No impairments have been recorded for either reporting unit.



	Golf & Country Clubs		Business, Sports & Alumni Clubs		Total
December 25, 2012	$	113,108	$	145,351	$	258,459
March 19, 2013	$	113,108	$	145,351	$	258,459

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8. CURRENT AND LONG-TERM LIABILITIES

Current liabilities consist of the following at March 19, 2013 and December 25, 2012:



	March 19, 2013		December 25, 2012
Accrued compensation	$	21,739	$	24,060
Accrued interest	13,611		4,957
Other accrued expenses	7,202		6,972
Total accrued expenses	$	42,552	$	35,989

Taxes payable other than federal income taxes	$	21,907	$	16,170
Federal income taxes payable to Holdings	391		467
Total accrued taxes	$	22,298	$	16,637

Advance deposits from members	$	20,179	$	12,489
Prepaid dues	21,562		11,916
Deferred membership revenues	16,729		16,519
Insurance reserves	8,659		8,659
Other current liabilities	3,278		3,332
Total other current liabilities	$	70,407	$	52,915

Other long-term liabilities consist of the following at March 19, 2013 and December 25, 2012:



	March 19, 2013		December 25, 2012
Uncertain tax positions	$	53,828	$	52,713
Deferred membership revenues	39,633		41,218
Casualty insurance loss reserves - long term portion	11,417		10,936
Above market lease intangibles	1,887		2,040
Deferred rent	19,013		19,127
Other	2,867		2,975
Total other long-term liabilities	$	128,645	$	129,009

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9. DEBT AND CAPITAL LEASES

General Electric Capital Corporation—In July 2008, we entered into a secured mortgage loan with GECC for $32.0 million with an original maturity of July 2011. During the fiscal year ended December 27, 2011, we extended the term of the loan to July 2012. Effective August 1, 2012, we amended our loan agreement with GECC which extended the maturity to November 2015 with two additional twelve month options to extend through November 2017 upon satisfaction of certain conditions of the loan agreement. As of March 19, 2013, we expect to meet the required conditions and currently intend to extend the loan with GECC to November 2017.

Long-term borrowings and lease commitments of the Company as of March 19, 2013 and December 25, 2012, are summarized below:



	March 19, 2013					December 25, 2012
	Carrying Value			Interest Rate		Carrying Value			Interest Rate		Interest Rate Calculation	Maturity

Senior Unsecured Notes	$	415,000		10.00	%	$	415,000		10.00	%	Fixed	2018
Secured Credit Facilities
Term Loan	303,800			5.00	%	304,575			5.00	%	Greater of (i) 5.0% or (ii) an elected LIBOR + 3.75%	2016
Revolving Notes ($50,000 capacity)	—			6.00	%	—			6.00	%	Greater of (i) 6.0% or (ii) an elected LIBOR + 4.5%	2015
Mortgage Loans
General Electric Capital Corporation	30,835			6.00	%	30,992			6.00	%	5.00% plus the greater of (i) three month LIBOR or (ii) 1%	2017
Atlantic Capital Bank	3,613			4.50	%	3,653			4.50	%	Greater of (i) 3.0% + 30 day LIBOR or (ii) 4.5%	2015
Other notes	2,873			5.75% - 8.00%		3,145			5.75% - 8.00%		Fixed	Various

	756,121					757,365
Capital leases	23,711					24,155
	779,832					781,520
Less current portion	(24,171		)			(24,988		)
	$	755,661				$	756,532

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



Year	Debt		Capital Leases		Total
Remainder of 2013	$	15,225	$	6,674	$	21,899
2014	3,374		7,644		11,018
2015	7,338		5,805		13,143
2016	284,966		2,836		287,802
2017	28,885		746		29,631
Thereafter	416,333		6		416,339
Total	$	756,121	$	23,711	$	779,832

10. INCOME TAXES

The Company joins in the filing of a consolidated federal income tax return with Holdings, the Company's indirect parent. The Company records income taxes based on the separate return method determined as if the Company was not included in a consolidated return. Income taxes recorded by the Company are further adjusted to the extent losses or other deductions cannot be utilized in the consolidated federal income tax return. The Company files state tax returns on a separate company basis

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or unitary basis as required by law. Additionally, certain subsidiaries of the Company owned through lower tier joint ventures file separate tax returns for federal and state purposes.

The Company's effective income tax rate for the twelve weeks ended March 19, 2013 and March 20, 2012 was (2.9)% and 22.1%, respectively. For the twelve weeks ended March 19, 2013, the effective tax rate differed from the U.S. statutory federal income tax rate of 35% primarily due to changes in uncertain tax positions, state taxes and foreign taxes.

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

The Company is currently undergoing an Internal Revenue Service audit of certain components of the tax return for the year ended December 28, 2010, which includes the consummation of the ClubCorp Formation. In addition, the Company is under audit in Mexico for the 2008 and 2009 tax years.

As of March 19, 2013 and December 25, 2012, the Company has recorded $53.8 million and $52.7 million, respectively, of unrecognized tax benefits related to uncertain tax positions, which are included in other liabilities in the consolidated condensed balance sheets.

11. CLUB DISPOSITIONS AND DISCONTINUED OPERATIONS

Club Dispositions

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

We did not discontinue any clubs in the twelve weeks ended March 19, 2013 nor March 20, 2012.

There were no assets held for sale at March 19, 2013 nor December 25, 2012.

Discontinued Club Operations

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



	Twelve Weeks Ended
	March 19, 2013			March 20, 2012
Revenues	$	—		$	1,260
Operating expenses, excluding loss on disposals and impairments of assets	(9		)	(1,221		)
Gain (loss) on disposals and impairments of assets	4			(97		)
Interest expense	—			(34		)
Loss from discontinued club operations, before taxes	(5		)	(92		)
Income tax benefit	—			32
Net loss from discontinued clubs	$	(5	)	$	(60	)

12. SEGMENT INFORMATION

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

Golf and country club operations consist of private country clubs, golf clubs and public golf facilities. Private country clubs provide at least one 18-hole golf course and various other recreational amenities that are open to members and their

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guests. Golf clubs provide both private and public golf play and usually offer fewer other recreational amenities. Public golf facilities are open to the public and generally provide the same services as golf clubs.

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

Included within other are revenues from leasing of mineral rights and revenues and expenses on corporate overhead and shared services which are not material enough to warrant a separate segment.

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


•	translation gains and losses are excluded;


•	proceeds from business interruption insurance are excluded;


•	severance payments are excluded;


•	expenses related to accruals for unclaimed property settlements are excluded;


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


•	acquisition costs are excluded;


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


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


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


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


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


•	expenses accrued under our long-term incentive plan are excluded;


•	certain other incidental expenses are excluded.

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

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The table below shows summarized financial information by segment for continuing operations for the twelve weeks ended March 19, 2013 and March 20, 2012:



	Twelve Weeks Ended
	March 19, 2013			March 20, 2012
Golf and Country Clubs
Revenues	$	118,659		$	114,178
Segment EBITDA	31,970			29,467

Business, Sports and Alumni Clubs
Revenues	$	37,848		$	37,142
Segment EBITDA	5,708			5,691

Other
Revenues	$	(68	)	$	(66	)
Segment EBITDA	(9,494		)	(7,980		)

Elimination of intersegment revenues	$	(1,379	)	$	(1,548	)

Total
Revenues	$	155,060		$	149,706
Segment EBITDA	28,184			27,178

	As of
Total Assets	March 19, 2013			December 25, 2012
Golf and Country Clubs	$	1,228,856		$	1,222,966
Business, Sports and Alumni Clubs	77,807			79,678
Other	387,930			416,952
Consolidated	$	1,694,593		$	1,719,596

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The table below provides a reconciliation of our Segment EBITDA to net (loss) income before income taxes and discontinued operations for the twelve weeks ended March 19, 2013 and March 20, 2012:



	Twelve Weeks Ended
	March 19, 2013			March 20, 2012
Total Segment EBITDA	$	28,184		$	27,178
Interest and investment income	75			23
Interest expense	(19,335		)	(19,901		)
(Loss) gain on disposals	(1,219		)	624
Depreciation and amortization	(16,155		)	(18,603		)
Foreign currency transaction loss	(75		)	(135		)
Severance payments	(21		)	(128		)
Management fees and expenses paid to an affiliate of KSL	(252		)	(263		)
Acquisition costs	(52		)	(12		)
Amortization of step-up in certain equity method investments	(463		)	(473		)
ClubCorp Formation costs	—			(74		)
Long term incentive plan	(347		)	(383		)
Other	(365		)	(78		)
Loss from continuing operations before income taxes	$	(10,025	)	$	(12,225	)

13. COMMITMENTS AND CONTINGENCIES

We routinely enter into contractual obligations to procure assets used in the day to day operations of our business. As of March 19, 2013, we had capital commitments of $12.1 million at certain of our clubs.

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

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

We are currently undergoing audits related to unclaimed property. We believe the potential for a liability related to the outcome of these audits is probable and we currently have a $1.9 million estimate included in accrued expenses on the consolidated condensed balance sheet as of March 19, 2013.

Each of our properties is subject to real and personal property taxes. If local taxing authorities reassess the taxable value of certain properties in accordance with local and state regulations, we may be subject to additional property tax assessments, penalties and interest. At March 19, 2013, we have $2.2 million recorded in accrued taxes on the consolidated condensed balance sheet related to certain of these properties. While the outcome of such reassessments cannot be predicted with certainty, we believe that any potential liability from these matters would not materially affect our consolidated condensed financial statements.

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

We guarantee principal amounts on loans made by a third party to purchasers of certain real estate interests in case of default. These loans have remaining terms of approximately one to two years. The total principal amount outstanding on these loans as of March 19, 2013 is $0.3 million. ClubCorp is indemnified by affiliates of KSL from losses on these guarantees in the event of default. The fair value of the guarantees is immaterial.

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We are joint and severally liable for certain pension funding liabilities associated with one of the resorts we sold in connection with the ClubCorp Formation. We have not accrued a liability, as we do not believe it is probable that claims will be made against ClubCorp. As of March 19, 2013, the unfunded obligation for such plan was approximately $10.3 million and no claims have been made against ClubCorp for funding. We have not agreed to pay, nor do we expect to pay, any amounts related to this plan.

14. FINANCIAL STATEMENTS OF GUARANTORS

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

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

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

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Consolidating Condensed Statements of Operations and Comprehensive Income (Loss)

For the Twelve Weeks Ended March 19, 2013

(In thousands of dollars)



	ClubCorp			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Eliminations			Consolidated
REVENUES:
Club operations	$	—		$	104,695		$	10,028		$	(385	)	$	114,338
Food and beverage	—			37,414			2,502			—			39,916
Other revenues	—			1,132			—			(326		)	806
Total revenues	—			143,241			12,530			(711		)	155,060

DIRECT AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Club operating costs exclusive of depreciation	—			96,637			8,256			(711		)	104,182
Cost of food and beverage sales exclusive of depreciation	—			12,927			941			—			13,868
Depreciation and amortization	—			14,883			1,272			—			16,155
Provision for doubtful accounts	—			682			28			—			710
Loss on disposals of assets	—			963			256			—			1,219
Equity in earnings from unconsolidated ventures	—			(217		)	—			—			(217		)
Selling, general and administrative	—			9,908			—			—			9,908
OPERATING INCOME	—			7,458			1,777			—			9,235

Interest and investment income	12,833			272			12			(13,042		)	75
Interest expense	(13,861		)	(16,553		)	(1,963		)	13,042			(19,335		)
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(1,028		)	(8,823		)	(174		)	—			(10,025		)
INCOME TAX BENEFIT (EXPENSE)	101			(245		)	(147		)	—			(291		)
LOSS FROM CONTINUING OPERATIONS	(927		)	(9,068		)	(321		)	—			(10,316		)
Income (loss) from discontinued clubs, net of tax	—			10			(15		)	—			(5		)
Equity in net loss of subsidiaries	(9,353		)	—			—			9,353			—
NET LOSS	(10,280		)	(9,058		)	(336		)	9,353			(10,321		)
NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—			86			(45		)	—			41
NET LOSS ATTRIBUTABLE TO CLUBCORP	$	(10,280	)	$	(8,972	)	$	(381	)	$	9,353		$	(10,280	)

NET LOSS	(10,280		)	(9,058		)	(336		)	9,353			(10,321		)
Foreign currency translation, net of tax	—			—			1,082			—			1,082
Equity in other comprehensive income of subsidiaries	1,082			—			—			(1,082		)	—
OTHER COMPREHENSIVE INCOME	1,082			—			1,082			(1,082		)	1,082
COMPREHENSIVE (LOSS) INCOME	(9,198		)	(9,058		)	746			8,271			(9,239		)
COMPREHENSIVE LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—			86			(45		)	—			41
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO CLUBCORP	$	(9,198	)	$	(8,972	)	$	701		$	8,271		$	(9,198	)

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Consolidating Condensed Statements of Operations and Comprehensive Income (Loss)

For the Twelve Weeks Ended March 20, 2012

(In thousands of dollars)



	ClubCorp			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Eliminations			Consolidated
REVENUES:
Club operations	$	—		$	101,598		$	9,694		$	(415	)	$	110,877
Food and beverage	—			35,837			2,284			—			38,121
Other revenues	—			992			—			(284		)	708
Total revenues	—			138,427			11,978			(699		)	149,706

DIRECT AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Club operating costs exclusive of depreciation	—			93,923			7,799			(699		)	101,023
Cost of food and beverage sales exclusive of depreciation	—			12,127			816			—			12,943
Depreciation and amortization	—			17,338			1,265			—			18,603
Provision for doubtful accounts	—			732			10			—			742
(Gain) loss on disposals of assets	—			(625		)	1			—			(624		)
Equity in earnings from unconsolidated ventures	—			(319		)	—			—			(319		)
Selling, general and administrative	—			10,550			—			—			10,550
OPERATING INCOME	—			4,701			2,087			—			6,788

Interest and investment income	12,833			229			3			(13,042		)	23
Interest expense	(14,482		)	(16,552		)	(1,909		)	13,042			(19,901		)
Other income	—			865			—			—			865
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(1,649		)	(10,757		)	181			—			(12,225		)
INCOME TAX BENEFIT (EXPENSE)	493			2,408			(198		)	—			2,703
LOSS FROM CONTINUING OPERATIONS	(1,156		)	(8,349		)	(17		)	—			(9,522		)
Loss from discontinued clubs, net of tax	—			(59		)	(1		)	—			(60		)
Equity in net loss of subsidiaries	(8,413		)	—			—			8,413			—
NET LOSS	(9,569		)	(8,408		)	(18		)	8,413			(9,582		)
NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—			80			(67		)	—			13
NET LOSS ATTRIBUTABLE TO CLUBCORP	$	(9,569	)	$	(8,328	)	$	(85	)	$	8,413		$	(9,569	)

NET LOSS	(9,569		)	(8,408		)	(18		)	8,413			(9,582		)
Foreign currency translation, net of tax	—			—			2,454			—			2,454
Equity in other comprehensive income of subsidiaries	2,454			—			—			(2,454		)	—
OTHER COMPREHENSIVE INCOME	2,454			—			2,454			(2,454		)	2,454
COMPREHENSIVE (LOSS) INCOME	(7,115		)	(8,408		)	2,436			5,959			(7,128		)
COMPREHENSIVE LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—			80			(67		)	—			13
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO CLUBCORP	$	(7,115	)	$	(8,328	)	$	2,369		$	5,959		$	(7,115	)

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Consolidating Condensed Balance Sheet

As of March 19, 2013

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



	ClubCorp			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Eliminations			Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—		$	53,934		$	6,151		$	—		$	60,085
Receivables, net of allowances	2,613			51,076			3,061			(2,613		)	54,137
Inventories	—			13,971			1,632			—			15,603
Prepaids and other assets	—			8,609			3,805			—			12,414
Deferred tax assets	—			8,031			45			—			8,076
Total current assets	2,613			135,621			14,694			(2,613		)	150,315
Investments	—			9,861			—			—			9,861
Property and equipment, net	—			1,091,838			126,348			—			1,218,186
Notes receivable, net of allowances	—			3,080			437			—			3,517
Goodwill	—			258,459			—			—			258,459
Intangibles, net	—			30,662			637			—			31,299
Investment in subsidiaries	157,947			—			—			(157,947		)	—
Intercompany receivables	677,179			—			56,128			(733,307		)	—
Other assets	12,409			10,161			386			—			22,956
Long-term deferred tax asset	1,166			—			8,451			(9,617		)	—
TOTAL ASSETS	$	851,314		$	1,539,682		$	207,081		$	(903,484	)	$	1,694,593

LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	14,244		$	7,976		$	1,951		$	—		$	24,171
Membership initiation deposits - current portion	—			52,870			44,034			—			96,904
Accounts payable	—			21,162			789			—			21,951
Accrued expenses	13,488			28,425			639			—			42,552
Accrued taxes	585			18,739			5,587			(2,613		)	22,298
Other liabilities	140			64,338			5,929			—			70,407
Total current liabilities	28,457			193,510			58,929			(2,613		)	278,283
Intercompany payables	—			686,673			46,634			(733,307		)	—
Long-term debt	704,556			15,820			35,285			—			755,661
Membership initiation deposits	—			155,173			46,295			—			201,468
Deferred tax liability	—			211,328			—			(9,617		)	201,711
Other liabilities	—			123,051			5,594			—			128,645
Total liabilities	733,013			1,385,555			192,737			(745,537		)	1,565,768

EQUITY
Common stock of ClubCorp Club Operations, Inc., $1.00 par value, 1,000 shares authorized, issued and outstanding	1			—			—			—			1
Additional paid-in capital	178,310			161,156			17,154			(178,310		)	178,310
Accumulated other comprehensive income (loss)	410			(21		)	431			(410		)	410
Retained deficit	(60,420		)	(13,180		)	(7,593		)	20,773			(60,420		)
Total stockholders’ equity	118,301			147,955			9,992			(157,947		)	118,301
Noncontrolling interests in consolidated subsidiaries and variable interest entities	—			6,172			4,352			—			10,524
Total equity	118,301			154,127			14,344			(157,947		)	128,825
TOTAL LIABILITIES AND EQUITY	$	851,314		$	1,539,682		$	207,081		$	(903,484	)	$	1,694,593

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Consolidating Condensed Balance Sheet

As of December 25, 2012

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



	ClubCorp			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Eliminations			Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—		$	77,844		$	4,007		$	—		$	81,851
Receivables, net of allowances	2,613			48,448			3,132			(2,613		)	51,580
Inventories	—			12,911			1,450			—			14,361
Prepaids and other assets	—			8,169			4,030			—			12,199
Deferred tax assets	—			8,031			45			—			8,076
Total current assets	2,613			155,403			12,664			(2,613		)	168,067
Investments	—			11,166			—			—			11,166
Property and equipment, net	—			1,097,558			125,981			—			1,223,539
Notes receivable, net of allowances	—			2,771			412			—			3,183
Goodwill	—			258,459			—			—			258,459
Intangibles, net	—			31,228			730			—			31,958
Investment in subsidiaries	201,218			—			—			(201,218		)	—
Intercompany receivables	669,772			—			56,192			(725,964		)	—
Other assets	12,917			9,903			404			—			23,224
Long-term deferred tax asset	480			—			7,384			(7,864		)	—
TOTAL ASSETS	$	887,000		$	1,566,488		$	203,767		$	(937,659	)	$	1,719,596

LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	15,080		$	7,960		$	1,948		$	—		$	24,988
Membership initiation deposits - current portion	—			50,757			40,641			—			91,398
Accounts payable	—			26,394			1,047			—			27,441
Accrued expenses	4,786			30,594			609			—			35,989
Accrued taxes	—			13,901			5,349			(2,613		)	16,637
Other liabilities	140			48,656			4,119			—			52,915
Total current liabilities	20,006			178,262			53,713			(2,613		)	249,368
Intercompany payables	—			678,509			47,455			(725,964		)	—
Long-term debt	704,495			16,563			35,474			—			756,532
Membership initiation deposits	—			154,007			48,623			—			202,630
Deferred tax liability	—			216,857			—			(7,864		)	208,993
Other liabilities	—			123,287			5,722			—			129,009
Total liabilities	724,501			1,367,485			190,987			(736,441		)	1,546,532

EQUITY
Common stock of ClubCorp Club Operations, Inc., $1.00 par value, 1,000 shares authorized, issued and outstanding	1			—			—			—			1
Additional paid-in capital	213,310			196,156			17,154			(213,310		)	213,310
Accumulated other comprehensive loss	(672		)	(21		)	(651		)	672			(672		)
Retained deficit	(50,140		)	(3,390		)	(8,030		)	11,420			(50,140		)
Total stockholders’ equity:	162,499			192,745			8,473			(201,218		)	162,499
Noncontrolling interests in consolidated subsidiaries and variable interest entities	—			6,258			4,307			—			10,565
Total equity	162,499			199,003			12,780			(201,218		)	173,064
TOTAL LIABILITIES AND EQUITY	$	887,000		$	1,566,488		$	203,767		$	(937,659	)	$	1,719,596

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Consolidating Condensed Statements of Cash Flows

For the Twelve Weeks Ended March 19, 2013

(In thousands of dollars)



	ClubCorp			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Eliminations			Consolidated Condensed
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities	$	8,182		12,726			$	3,012		$	—		23,920
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	—			(7,389		)	(473		)	—			(7,862		)
Proceeds from dispositions	—			32			—			—			32
Net change in restricted cash and capital reserve funds	—			(43		)	—			—			(43		)
Return of capital in equity investments	—			760			—			—			760
Net intercompany transactions	27,593			—			—			(27,593		)	—
Net cash provided by (used in) investing activities	27,593			(6,640		)	(473		)	(27,593		)	(7,113		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt	(775		)	(2,243		)	(506		)	—			(3,524		)
Distribution to owners	(35,000		)	—			—			—			(35,000		)
Proceeds from new membership initiation deposits	—			78			16			—			94
Repayments of membership initiation deposits	—			(177		)	(79		)	—			(256		)
Net intercompany transactions	—			(27,654		)	61			27,593			—
Net cash used in financing activities	(35,775		)	(29,996		)	(508		)	27,593			(38,686		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			113			—			113
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	—			(23,910		)	2,144			—			(21,766		)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD	—			77,844			4,007			—			81,851
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	—		$	53,934		$	6,151		$	—		$	60,085

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Consolidating Condensed Statements of Cash Flows

For the Twelve Weeks Ended March 20, 2012

(In thousands of dollars)



	ClubCorp			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Eliminations			Consolidated Condensed
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities	$	7,876		14,917			$	3,877		$	—		26,670
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	—			(6,138		)	(368		)	—			(6,506		)
Proceeds from dispositions	—			7			—			—			7
Proceeds from insurance	—			1,978			—			—			1,978
Net change in restricted cash and capital reserve funds	—			(105		)	—			—			(105		)
Net intercompany transactions	(7,101		)	—			—			7,101			—
Net cash used in investing activities	(7,101		)	(4,258		)	(368		)	7,101			(4,626		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt	(775		)	(2,511		)	(584		)	—			(3,870		)
Proceeds from new membership initiation deposits	—			226			17			—			243
Repayments of membership initiation deposits	—			(33		)	(64		)	—			(97		)
Net intercompany transactions	—			8,460			(1,359		)	(7,101		)	—
Net cash (used in) provided by financing activities	(775		)	6,142			(1,990		)	(7,101		)	(3,724		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—			—			103			—			103
NET INCREASE IN CASH AND CASH EQUIVALENTS	—			16,801			1,622			—			18,423
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD	—			43,751			6,566			—			50,317
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	—		$	60,552		$	8,188		$	—		$	68,740

15. RELATED PARTY TRANSACTIONS

We have entered into a management agreement with an affiliate of KSL, pursuant to which we are provided financial and management consulting services in exchange for an annual fee of $1.0 million. In the event of a future financing, refinancing or direct or indirect sale of all or substantially all of our equity or assets, the management company may also be entitled to receive a fee equal to 1% of the lenders’ maximum commitments, in the case of a financing or refinancing, or 1% of the total consideration paid, in the case of a sale. In addition, we have agreed to reimburse the management company for all of its reasonable out-of-pocket costs and expenses incurred in providing management services to us and certain of our affiliates. During the twelve weeks ended March 19, 2013 and March 20, 2012 we paid the affiliate of KSL approximately $0.3 million and $0.3 million, respectively, in management fees.

During the twelve weeks ended March 19, 2013, we made a distribution to our owners of $35.0 million.

During the twelve weeks ended March 19, 2013 and March 20, 2012 we paid $0.1 million and $0.2 million, respectively, to affiliates of KSL for private party events. In addition, during the twelve weeks ended March 20, 2012 we received $0.1 million from an affiliate of KSL for taxes paid on their behalf.

As of March 19, 2013 we had receivables of $0.2 million and payables of $0.5 million and as of December 25, 2012, we had receivables of $0.2 million and payables of $0.2 million, for outstanding advances from golf and business club ventures in which we have an equity method investment. We recorded $0.1 million and $0.1 million in the twelve weeks ended March 19, 2013 and March 20, 2012, respectively, in management fees from these ventures. As of March 19, 2013 and December 25, 2012, we had a receivable of $2.5 million and $1.9 million, respectively, for volume rebates from Avendra, LLC, the supplier firm in which we have an equity method investment. See Note 4.

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We have entered into arrangements whereby members of certain resorts and clubs owned by affiliates of KSL can pay an upgrade charge to have access to our clubs and facilities. We have revenue sharing arrangements with such resorts and clubs whereby we agree to split the amount of the upgrade charges respectively with such entities. During the twelve weeks ended March 19, 2013 and March 20, 2012, revenue associated with these arrangements was not material.

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

16. SUBSEQUENT EVENTS

On March 28, 2013, we made a required principal prepayment of $11.1 million on our term loan facility based on the excess cash flow requirements of our secured credit facilities (“Secured Credit Facilities”).

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

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

Forward-Looking Statements

All statements (other than statements of historical facts) in this quarterly report on Form 10-Q regarding the prospects of the industry and our prospects, plans, financial position and business strategy may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified by the use of terminology such as “may,” “should,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “plan,”, “predict,” “project,” “potential,” “continue” and other similar expressions or the negatives of such expressions. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that these expectations will prove to be correct. Such statements reflect the current views of our management with respect to our operations, results of operations and future financial performance. The following factors are among those that may cause actual results to differ materially from the forward-looking statements:


•	adverse conditions affecting the United States economy;


•	our ability to attract and retain club members;


•	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;


•	unsuccessful or burdensome acquisitions or divestitures;


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


•	insufficient insurance coverage and uninsured losses;

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•	accidents or injuries which occur at our properties;


•	adverse judgments or settlements;


•	pension plan liabilities;


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


•	future environmental regulation, expenditures and liabilities;


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


•

ClubCorp Club Operations, Inc. 10-Q