UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 11, 2013.

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

For the transition period from to

Commission File Number 333-173127

ClubCorp Club Operations, Inc.

(Exact name of registrant as specified in its charter)



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

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

(972) 243-6191

(Registrant’s telephone number, including area code)

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

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

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



Large accelerated filer o		Accelerated filer o

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

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

The registrant’s shares of common stock are not traded on an exchange or in any public market. As of June 11, 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 and twenty-four weeks ended June 11, 2013 and June 12, 2012	1
	Unaudited consolidated condensed balance sheets as of June 11, 2013 and December 25, 2012	2
	Unaudited consolidated condensed statements of cash flows for the twenty-four weeks ended June 11, 2013 and June 12, 2012	3
	Unaudited consolidated condensed statements of changes in equity for the twenty-four weeks ended June 11, 2013 and June 12, 2012	4
	Notes to unaudited consolidated condensed financial statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	46

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59
Item 3.	Defaults Upon Senior Securities	59
Item 4.	Mine Safety Disclosures	59
Item 5.	Other Information	59
Item 6.	Exhibits	59

Signatures.		61

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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 and Twenty-Four Weeks Ended June 11, 2013 and June 12, 2012

(In thousands of dollars)



	Twelve Weeks Ended						Twenty-Four Weeks Ended
	June 11, 2013			June 12, 2012			June 11, 2013			June 12, 2012
REVENUES:
Club operations	$	136,871		$	129,858		$	251,209		$	240,735
Food and beverage	57,890			55,404			97,806			93,525
Other revenues	858			794			1,664			1,502
Total revenues	195,619			186,056			350,679			335,762

DIRECT AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Club operating costs exclusive of depreciation	122,656			116,981			226,838			218,004
Cost of food and beverage sales exclusive of depreciation	18,126			17,229			31,994			30,172
Depreciation and amortization	16,312			17,731			32,467			36,334
Provision for doubtful accounts	192			491			902			1,233
Loss on disposals of assets	2,412			1,544			3,631			920
Impairment of assets	1,881			770			1,881			770
Equity in earnings from unconsolidated ventures	(325		)	(291		)	(542		)	(610		)
Selling, general and administrative	10,589			10,096			20,497			20,646
OPERATING INCOME	23,776			21,505			33,011			28,293

Interest and investment income	69			34			144			57
Interest expense	(19,322		)	(19,778		)	(38,657		)	(39,679		)
Other income	—			866			—			1,731
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	4,523			2,627			(5,502		)	(9,598		)
INCOME TAX BENEFIT (EXPENSE)	2,718			(4,353		)	2,427			(1,650		)
INCOME (LOSS) FROM CONTINUING OPERATIONS	7,241			(1,726		)	(3,075		)	(11,248		)
Income (loss) from discontinued clubs, net of income tax benefit (expense) of $4 and $(4) for the twelve weeks ended June 11, 2013 and June 12, 2012, respectively, and $4 and $28 for the twenty-four weeks ended June 11, 2013 and June 12, 2012, respectively	4			56			(1		)	(4		)
NET INCOME (LOSS)	7,245			(1,670		)	(3,076		)	(11,252		)
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	(43		)	(167		)	(2		)	(154		)
NET INCOME (LOSS) ATTRIBUTABLE TO CLUBCORP	$	7,202		$	(1,837	)	$	(3,078	)	$	(11,406	)

NET INCOME (LOSS)	7,245			(1,670		)	(3,076		)	(11,252		)
Foreign currency translation, net of tax	(640		)	(2,925		)	442			(471		)
OTHER COMPREHENSIVE (LOSS) INCOME	(640		)	(2,925		)	442			(471		)
COMPREHENSIVE INCOME (LOSS)	6,605			(4,595		)	(2,634		)	(11,723		)
COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	(43		)	(167		)	(2		)	(154		)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CLUBCORP	$	6,562		$	(4,762	)	$	(2,636	)	$	(11,877	)

See accompanying notes to unaudited consolidated condensed financial statements

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CLUBCORP CLUB OPERATIONS, INC.

UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS

As of June 11, 2013 and December 25, 2012

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



	June 11, 2013			December 25, 2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	40,435		$	81,851
Receivables, net of allowances of $2,676 and $2,626 at June 11, 2013 and December 25, 2012, respectively	77,329			51,580
Inventories	16,832			14,361
Prepaids and other assets	15,060			12,199
Deferred tax assets	8,076			8,076
Total current assets	157,732			168,067
Investments	10,109			11,166
Property and equipment, net (includes $9,674 and $9,870 related to VIEs at June 11, 2013 and December 25, 2012, respectively)	1,232,463			1,223,539
Notes receivable, net of allowances of $608 and $563 at June 11, 2013 and December 25, 2012, respectively	4,086			3,183
Goodwill	258,459			258,459
Intangibles, net	30,641			31,958
Other assets	22,598			23,224
TOTAL ASSETS	$	1,716,088		$	1,719,596

LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	14,498		$	24,988
Membership initiation deposits - current portion	101,965			91,398
Accounts payable	29,136			27,441
Accrued expenses	32,578			35,989
Accrued taxes	10,366			16,637
Other liabilities	77,654			52,915
Total current liabilities	266,197			249,368
Long-term debt (includes $1,454 and $1,571 related to VIEs at June 11, 2013 and December 25, 2012, respectively)	763,013			756,532
Membership initiation deposits	203,105			202,630
Deferred tax liability	212,000			208,993
Other liabilities	136,343			129,009
Total liabilities	1,580,658			1,546,532
Commitments and contingencies (See Note 13)

EQUITY
Common stock of ClubCorp Club Operations, Inc., $1.00 par value, 1,000 shares authorized, issued and outstanding at June 11, 2013 and December 25, 2012	1			1
Additional paid-in capital	178,310			213,310
Accumulated other comprehensive loss	(230		)	(672		)
Retained deficit	(53,218		)	(50,140		)
Total stockholders’ equity	124,863			162,499
Noncontrolling interests in consolidated subsidiaries and variable interest entities	10,567			10,565
Total equity	135,430			173,064
TOTAL LIABILITIES AND EQUITY	$	1,716,088		$	1,719,596

See accompanying notes to unaudited consolidated condensed financial statements

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CLUBCORP CLUB OPERATIONS, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

For the Twenty-Four Weeks Ended June 11, 2013 and June 12, 2012

(In thousands of dollars)



	Twenty-Four Weeks Ended
	June 11, 2013			June 12, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(3,076	)	$	(11,252	)
Adjustments to reconcile net loss to cash flows from operating activities:
Depreciation	31,149			31,985
Amortization	1,318			4,554
Asset impairments	1,881			862
Bad debt expense	909			1,284
Equity in earnings from unconsolidated ventures	(542		)	(610		)
Distribution from investment in unconsolidated ventures	1,545			1,321
Loss on disposals of assets	3,627			1,019
Amortization of debt issuance costs	1,053			922
Accretion of discount on member deposits	9,328			9,251
Amortization of surface rights bonus revenue	—			(1,731		)
Amortization of above and below market rent intangibles	95			117
Net change in deferred tax assets and liabilities	2,285			(4,099		)
Net change in prepaid expenses and other assets	(5,804		)	(4,595		)
Net change in receivables and membership notes	(21,746		)	(15,730		)
Net change in accounts payable and accrued liabilities	(4,537		)	(2,058		)
Net change in other current liabilities	17,640			25,754
Net change in other long-term liabilities	2,640			(1,737		)
Net cash provided by operating activities	37,765			35,257
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(21,321		)	(17,853		)
Acquisitions of clubs	(5,228		)	(3,570		)
Proceeds from dispositions	43			359
Proceeds from insurance	—			1,978
Net change in restricted cash and capital reserve funds	(96		)	202
Return of capital in equity investments	54			—
Net cash used in investing activities	(26,548		)	(18,884		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt	(18,207		)	(7,353		)
Proceeds from new debt borrowings	713			—
Debt issuance and modification costs	(13		)	—
Distribution to owners	(35,000		)	—
Proceeds from new membership initiation deposits	494			414
Repayments of membership initiation deposits	(659		)	(208		)
Net cash used in financing activities	(52,672		)	(7,147		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	39			668
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(41,416		)	9,894
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD	81,851			50,317
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	40,435		$	60,211

See accompanying notes to unaudited consolidated condensed financial statements

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CLUBCORP CLUB OPERATIONS, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY

For the Twenty-Four Weeks Ended June 11, 2013 and June 12, 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) income	(11,252		)	—		—			—			(11,406		)	154
Other comprehensive loss	(471		)	—		—			(471		)	—			—
BALANCE - June 12, 2012	$	186,686		$	1	$	213,310		$	(3,033	)	$	(34,970	)	$	11,378

BALANCE - December 25, 2012	$	173,064		$	1	$	213,310		$	(672	)	$	(50,140	)	$	10,565
Distributions to owners	(35,000		)	—		(35,000		)	—			—			—
Net (loss) income	(3,076		)	—		—			—			(3,078		)	2
Other comprehensive income	442			—		—			442			—			—
BALANCE - June 11, 2013	$	135,430		$	1	$	178,310		$	(230	)	$	(53,218	)	$	10,567

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, together with its subsidiaries, may be referred to as “we,” “us,” “our,” or the “Company.” ClubCorp is a wholly owned subsidiary of CCA Club Operations Holdings, LLC (“Parent”), which is a wholly owned subsidiary of ClubCorp Holdings, Inc. (“Holdings”), which is wholly owned by Fillmore CCA Investment, LLC (“Fillmore”), which is wholly owned by an affiliate of KSL Capital Partners, LLC (“KSL”), a private equity fund that invests primarily in the hospitality and leisure business.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

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

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

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

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

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

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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 and twenty-four weeks ended June 11, 2013 and June 12, 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.

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

3. VARIABLE INTEREST ENTITIES

Consolidated VIEs include three managed golf course properties. We have determined we are the primary beneficiary of these VIEs as we have the obligation to absorb the majority of losses from and direct activities of these operations. One of these VIEs is financed through a loan payable of $1.2 million collateralized by assets of the entity totaling $4.2 million as of

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June 11, 2013. The other VIEs are financed through advances from us. Outstanding advances as of June 11, 2013 total $3.5 million compared to recorded assets of $7.1 million.

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



	June 11, 2013		December 25, 2012
Current assets	$	1,656	$	858
Fixed assets, net	9,674		9,870
Total assets	$	11,330	$	10,728

Current liabilities	$	1,500	$	1,024
Long-term debt	1,454		1,571
Other long-term liabilities	576		594
Noncontrolling interest	6,092		6,260
Company capital	1,708		1,279
Total liabilities and equity	$	11,330	$	10,728

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

4. INVESTMENTS

Equity method investments in golf and business club ventures total $1.4 million and $1.3 million at June 11, 2013 and December 25, 2012, respectively, and include two golf club joint ventures and one business club joint venture. Our share of earnings in the equity investments is included in equity in earnings from unconsolidated ventures in the consolidated condensed statements of operations.

During the twelve and twenty-four weeks ended June 12, 2012, we determined that one of our equity method investments had a decrease in value that was other than temporary. We recognized an impairment loss of $0.7 million during the twelve and twenty-four weeks ended June 12, 2012 to adjust its carrying amount to its fair value. See Note 5.

Additionally, we have one equity method investment of 10.2% in Avendra, LLC, a purchasing cooperative of hospitality companies. The carrying value of the investment was $8.3 million and $9.4 million at June 11, 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 $2.1 million and $2.1 million during the twelve and twenty-four weeks ended June 11, 2013, respectively, and $1.7 million and $1.9 million during the twelve and twenty-four weeks ended June 12, 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 $7.1 million and $8.0 million at June 11, 2013 and December 25, 2012, respectively.

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



	Twelve Weeks Ended						Twenty-Four Weeks Ended
	June 11, 2013			June 12, 2012			June 11, 2013			June 12, 2012
ClubCorp's equity in net income, excluding amortization	$	782		$	771		$	1,487		$	1,554
Amortization	(464		)	(464		)	(927		)	(927		)
ClubCorp's equity in net income	$	318		$	307		$	560		$	627

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5. FAIR VALUE

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

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

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

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

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

Fair Value of Financial Instruments

Debt—We estimate the fair value of our debt obligations, excluding capital lease obligations, as follows, as of June 11, 2013 and December 25, 2012:



	June 11, 2013				December 25, 2012
	Recorded Value		Fair Value		Recorded Value		Fair Value
Level 2	$	706,881	$	742,420	$	719,575	$	765,744
Level 3	42,487		41,592		37,790		37,790
Total	$	749,368	$	784,012	$	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 June 11, 2013 and December 25, 2012.

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

Property and Equipment—We recognized impairment losses to property and equipment of $1.9 million during the twelve and twenty-four weeks ended June 11, 2013, to adjust the carrying amount of certain property and equipment to its fair value of $0.3 million due to continued and projected negative operating results as well as changes in the expected holding period of certain fixed assets. The valuation method used to determine fair value was based on an analysis of discounted future free cash flows using a risk-adjusted discount rate (‘‘Income Approach’’), and based on cost adjusted for economic obsolescence (‘‘Cost Approach’’). The fair value calculations associated with these valuations are classified as Level 3 measurements. See Note 6.

Equity Method Investments—During the twelve and twenty-four weeks ended June 12, 2012, we determined that one of our equity method investments had a decrease in value that was other than temporary. We recognized an impairment loss of $0.7 million during the twelve and twenty-four weeks ended June 12, 2012 to adjust its carrying amount to its fair value. The valuation method used to determine fair value was based on a third party valuation unobservable in the marketplace. This valuation is considered a Level 3 measurement. See Note 4.

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6. PROPERTY AND EQUIPMENT

Property and equipment at cost consists of the following at June 11, 2013 and December 25, 2012:



	June 11, 2013			December 25, 2012
Land and non-depreciable land improvements	$	533,118		$	531,265
Depreciable land improvements	332,197			325,688
Buildings and recreational facilities	406,707			401,607
Machinery and equipment	176,221			164,005
Leasehold improvements	84,806			84,444
Furniture and fixtures	67,936			64,960
Construction in progress	7,783			2,912
	1,608,768			1,574,881
Accumulated depreciation	(376,305		)	(351,342		)
Total	$	1,232,463		$	1,223,539

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

We recognized impairment losses to property and equipment of $0.1 million in the twelve and twenty-four weeks ended June 12, 2012.

7. GOODWILL AND INTANGIBLE ASSETS

Intangible assets consist of the following at June 11, 2013 and December 25, 2012:



		June 11, 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		(17,341		)	1,727		19,068		(16,084		)	2,984
Management Contracts	9 years	598		(453		)	145		598		(421		)	177
Other	7 years	426		(393		)	33		426		(365		)	61
Total		$	48,828	$	(18,187	)	$	30,641	$	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 $1.3 million during the twelve and twenty-four weeks ended June 11, 2013, respectively, and $2.3 million and $4.6 million for the twelve and twenty-four weeks ended June 12, 2012, respectively.

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The following table shows goodwill activity by reporting unit. No impairments have been recorded for either reporting unit during the twelve and twenty-four weeks ended June 11, 2013.



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

8. CURRENT AND LONG-TERM LIABILITIES

Current liabilities consist of the following at June 11, 2013 and December 25, 2012:



	June 11, 2013		December 25, 2012
Accrued compensation	$	18,852	$	24,060
Accrued interest	4,625		4,957
Other accrued expenses	9,101		6,972
Total accrued expenses	$	32,578	$	35,989

Taxes payable other than federal income taxes	$	10,070	$	16,170
Federal income taxes payable to Holdings	296		467
Total accrued taxes	$	10,366	$	16,637

Advance deposits from members	$	22,642	$	12,489
Prepaid dues	26,771		11,916
Deferred membership revenues	16,755		16,519
Insurance reserves	8,333		8,659
Other current liabilities	3,153		3,332
Total other current liabilities	$	77,654	$	52,915

Other long-term liabilities consist of the following at June 11, 2013 and December 25, 2012:



	June 11, 2013		December 25, 2012
Uncertain tax positions	$	54,505	$	52,713
Deferred membership revenues	39,401		41,218
Casualty insurance loss reserves - long term portion	11,554		10,936
Above market lease intangibles	1,729		2,040
Deferred rent	22,396		19,127
Other	6,758		2,975
Total other long-term liabilities	$	136,343	$	129,009

9. DEBT AND CAPITAL LEASES

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

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

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

2010 Secured Credit Facilities—On November 30, 2010 we entered into secured credit facilities (the “Secured Credit

Facilities”). These facilities were originally comprised of (i) a $310.0 million term loan facility and (ii) a revolving credit facility with a maximum borrowing limit of $50.0 million, which includes letter of credit and swing line facilities. The credit agreement includes incremental facilities, whereby 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 the credit agreement. The term loan facility was scheduled to mature on November 30, 2016 and the revolving credit facility was scheduled to expire on November 30, 2015. The interest rate on the Secured Credit Facilities was originally the higher of (i) 6.0% or (ii) an elected LIBOR plus a margin of 4.5%.

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

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

The interest rate on the term loan facility was reduced to the higher of (i) 4.25% or (ii) an elected LIBOR plus a margin of 3.25%, with an additional reduction to the higher of (i) 4.0% or (ii) an elected LIBOR plus a margin of 3.0%, upon successful completion of an initial public offering with proceeds of at least $50.0 million. The term loan facility principal balance was increased to $301.1 million. The maturity date of the term loan facility was extended to July 24, 2020. The capacity available under the incremental facilities was increased to $135.0 million in new revolving credit commitments, plus $75.0 million in new revolving credit and term loan commitments combined, with additional capacity for incremental revolving credit and/or term loan commitments thereafter if certain financial covenants are met.

The total leverage and interest coverage ratio financial covenants were replaced with a new senior secured leverage ratio covenant (the “Senior Secured Leverage Ratio”) that applies to the revolving credit facility. The Senior Secured Leverage Ratio, as defined in the credit agreement, requires ClubCorp and its restricted subsidiaries to maintain a coverage no greater than 4.00:1.00 for each fiscal quarter ended on or after June 30, 2013. If the Senior Secured Leverage Ratio would have been in place as of June 11, 2013 our coverage would have been approximately 2.00:1.00.

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

We are currently evaluating the accounting and financial statement impact of this amendment, which will be recorded during the thirty-six weeks ended September 3, 2013.

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Our long-term borrowings and lease commitments as of June 11, 2013 and December 25, 2012, are summarized below:



	June 11, 2013					December 25, 2012
	Carrying Value			Interest Rate		Carrying Value			Interest Rate		Interest Rate Calculation	Maturity

Senior Notes	$	415,000		10.00	%	$	415,000		10.00	%	Fixed	2018
Secured Credit Facilities
Term Loan	291,881			5.00	%	304,575			5.00	%	Greater of (i) 5.0% or (ii) an elected LIBOR + 3.75%	2016
Revolving Notes ($50,000 capacity)	—			6.00	%	—			6.00	%	Greater of (i) 6.0% or (ii) an elected LIBOR + 4.5%	2015
Mortgage Loans
General Electric Capital Corporation	30,678			6.00	%	30,992			6.00	%	5.00% plus the greater of (i) three month LIBOR or (ii) 1%	2017
Atlantic Capital Bank	3,573			4.50	%	3,653			4.50	%	Greater of (i) 3.0% + 30 day LIBOR or (ii) 4.5%	2015
BancFirst	4,916			4.50	%	—			—		Greater of (i) 4.50% or prime rate	2016
Other indebtedness	3,320			5.75% - 8.00%		3,145			5.75% - 8.00%		Fixed	Various

	749,368					757,365
Capital leases	28,143					24,155
	777,511					781,520
Less current portion	(14,498		)			(24,988		)
	$	763,013				$	756,532

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



Year	Debt		Capital Leases		Total
Remainder of 2013	$	3,274	$	5,283	$	8,557
2014	3,843		9,170		13,013
2015	7,829		7,448		15,277
2016	288,695		4,262		292,957
2017	28,885		1,702		30,587
Thereafter	416,842		278		417,120
Total	$	749,368	$	28,143	$	777,511

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 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 tax expense or benefit recognized in its interim financial statements is determined by multiplying the year-to-date income or loss by the annual effective tax rate, which is an estimate of the expected relationship between tax expense or benefit for the full year to the pre-tax income or loss for the full year (pre-tax income or loss excluding unusual or infrequently occurring discrete items). The Company's effective income tax rate for the twelve and twenty-four weeks ended

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June 11, 2013 was (60.1)% and 44.2%, respectively, compared to 162.5% and (17.2)%, for the twelve and twenty-four weeks ended June 12, 2012, respectively. For the twelve and twenty-four weeks ended June 11, 2013 and June 12, 2012, the effective tax rate differed from the U.S. statutory federal income tax rate of 35% primarily due to state taxes, changes in uncertain tax positions and certain other permanent differences. The relative impact that the preceding items have on the effective tax rate varies based on the amount of pre-tax income forecast for the year as well as whether that pre-tax amount is profit or loss.

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

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

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

11. CLUB ACQUISITIONS, CLUB DISPOSITIONS AND DISCONTINUED OPERATIONS

Club Acquisitions

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

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



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

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



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

Revenues and operating income associated with acquired clubs were as follows for the twelve and twenty-four weeks ended June 11, 2013 and June 12, 2012.



	Twelve Weeks Ended				Twenty-Four Weeks Ended
	June 11, 2013		June 12, 2012		June 11, 2013		June 12, 2012
Revenues	$	1,928	$	916	$	2,688	$	916
Operating income	$	377	$	37	$	264	$	37

The pro forma information related to these acquisitions is not material to our historical results of 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 and twenty-four weeks ended June 11, 2013 or June 12, 2012.

There were no assets held for sale at June 11, 2013 or 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					Twenty-Four Weeks Ended
	June 11, 2013		June 12, 2012			June 11, 2013			June 12, 2012
Revenues	$	—	$	1,318		$	—		$	2,578
Operating expenses, excluding loss on disposals and impairments of assets	—		(1,129		)	(9		)	(2,350		)
(Loss) gain on disposals and impairments of assets	—		(94		)	4			(191		)
Interest expense	—		(35		)	—			(69		)
Income (loss) from discontinued club operations, before taxes	—		60			(5		)	(32		)
Income tax benefit (expense)	4		(4		)	4			28
Net income (loss) from discontinued clubs	$	4	$	56		$	(1	)	$	(4	)

12. SEGMENT INFORMATION

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

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

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

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

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


•	translation gains and losses;


•	proceeds from business interruption insurance;


•	severance payments;


•	expenses related to accruals for unclaimed property settlements;


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


•	acquisition costs;


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


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


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


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


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


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


•	certain other incidental expenses.

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

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The table below shows summarized financial information by segment for continuing operations for the twelve and twenty-four weeks ended June 11, 2013 and June 12, 2012:



	Twelve Weeks Ended						Twenty-Four Weeks Ended
	June 11, 2013			June 12, 2012			June 11, 2013			June 12, 2012
Golf and Country Clubs
Revenues	$	151,711		$	146,109		$	270,370		$	260,287
Segment EBITDA	46,490			43,456			78,460			72,923

Business, Sports and Alumni Clubs
Revenues	$	41,648		$	40,866		$	79,496		$	78,008
Segment EBITDA	8,418			8,423			14,126			14,114

Other
Revenues	$	3,641		$	609		$	3,573		$	543
Segment EBITDA	(8,792		)	(7,862		)	(18,286		)	(15,842		)

Elimination of intersegment revenues	$	(1,381	)	$	(1,528	)	$	(2,760	)	$	(3,076	)

Total
Revenues	$	195,619		$	186,056		$	350,679		$	335,762
Segment EBITDA	46,116			44,017			74,300			71,195

							As of
Total Assets							June 11, 2013			December 25, 2012
Golf and Country Clubs							$	1,263,414		$	1,222,966
Business, Sports and Alumni Clubs							83,155			79,678
Other							369,519			416,952
Consolidated							$	1,716,088		$	1,719,596

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The table below provides a reconciliation of our Segment EBITDA to Income (loss) from continuing operations before income taxes for the twelve and twenty-four weeks ended June 11, 2013 and June 12, 2012:



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

13. COMMITMENTS AND CONTINGENCIES

We routinely enter into contractual obligations to procure assets used in the day to day operations of our business. As of June 11, 2013, we had capital commitments of $19.0 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. See Note 10. We believe the potential for a liability related to the outcome of these audits may exist. However, we believe that the outcome of these audits would not materially affect our consolidated condensed financial statements.

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

We are currently undergoing audits related to unclaimed property. We believe the potential for a liability related to the outcome of these audits is probable and we currently have a $1.8 million estimate included in accrued expenses on the consolidated condensed balance sheet as of June 11, 2013.

Each of our properties is subject to real and personal property taxes. If local taxing authorities reassess the taxable value of certain properties in accordance with local and state regulations, we may be subject to additional property tax assessments, penalties and interest. At June 11, 2013, we have $2.1 million recorded in accrued taxes on the consolidated condensed balance sheet related to certain of these properties. While the outcome of such reassessments cannot be predicted with certainty, we believe that any potential liability from these matters would not materially affect our consolidated condensed financial statements.

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

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

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loans as of June 11, 2013 is $0.3 million. As of June 11, 2013, ClubCorp was indemnified by affiliates of KSL from losses on these guarantees in the event of default. The fair value of the guarantees is immaterial.

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

14. FINANCIAL STATEMENTS OF GUARANTORS

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

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

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

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Consolidating Condensed Statements of Operations and Comprehensive Income (Loss)

For the Twelve Weeks Ended June 11, 2013

(In thousands of dollars)



	ClubCorp			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Eliminations			Consolidated
REVENUES:
Club operations	$	—		$	125,665		$	11,658		$	(452	)	$	136,871
Food and beverage	—			53,832			4,058			—			57,890
Other revenues	—			1,251			—			(393		)	858
Total revenues	—			180,748			15,716			(845		)	195,619

DIRECT AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Club operating costs exclusive of depreciation	—			113,846			9,655			(845		)	122,656
Cost of food and beverage sales exclusive of depreciation	—			16,832			1,294			—			18,126
Depreciation and amortization	—			15,010			1,302			—			16,312
Provision for doubtful accounts	—			180			12			—			192
Loss (gain) on disposals of assets	—			2,464			(52		)	—			2,412
Impairment of assets	—			1,881			—			—			1,881
Equity in earnings from unconsolidated ventures	—			(325		)	—			—			(325		)
Selling, general and administrative	—			10,589			—			—			10,589
OPERATING INCOME	—			20,271			3,505			—			23,776

Interest and investment income	12,834			266			12			(13,043		)	69
Interest expense	(13,747		)	(16,661		)	(1,957		)	13,043			(19,322		)
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(913		)	3,876			1,560			—			4,523
INCOME TAX BENEFIT (EXPENSE)	1,280			1,907			(469		)	—			2,718
INCOME FROM CONTINUING OPERATIONS	367			5,783			1,091			—			7,241
Income from discontinued clubs, net of tax	—			1			3			—			4
Equity in net income of subsidiaries	6,835			—			—			(6,835		)	—
NET INCOME	7,202			5,784			1,094			(6,835		)	7,245
NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—			83			(126		)	—			(43		)
NET INCOME ATTRIBUTABLE TO CLUBCORP	$	7,202		$	5,867		$	968		$	(6,835	)	$	7,202

NET INCOME	7,202			5,784			1,094			(6,835		)	7,245
Foreign currency translation, net of tax	—			—			(640		)	—			(640		)
Equity in other comprehensive loss of subsidiaries	(640		)	—			—			640			—
OTHER COMPREHENSIVE LOSS	(640		)	—			(640		)	640			(640		)
COMPREHENSIVE INCOME	6,562			5,784			454			(6,195		)	6,605
COMPREHENSIVE LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—			83			(126		)	—			(43		)
COMPREHENSIVE INCOME ATTRIBUTABLE TO CLUBCORP	$	6,562		$	5,867		$	328		$	(6,195	)	$	6,562

Table of Contents

Consolidating Condensed Statements of Operations and Comprehensive Income (Loss)

For the Twenty-Four Weeks Ended June 11, 2013

(In thousands of dollars)



	ClubCorp			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Eliminations			Consolidated
REVENUES:
Club operations	$	—		$	230,360		$	21,686		$	(837	)	$	251,209
Food and beverage	—			91,246			6,560			—			97,806
Other revenues	—			2,383			—			(719		)	1,664
Total revenues	—			323,989			28,246			(1,556		)	350,679

DIRECT AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Club operating costs exclusive of depreciation	—			210,483			17,911			(1,556		)	226,838
Cost of food and beverage sales exclusive of depreciation	—			29,759			2,235			—			31,994
Depreciation and amortization	—			29,893			2,574			—			32,467
Provision for doubtful accounts	—			862			40			—			902
Loss on disposals of assets	—			3,427			204			—			3,631
Impairment of assets	—			1,881			—			—			1,881
Equity in earnings from unconsolidated ventures	—			(542		)	—			—			(542		)
Selling, general and administrative	—			20,497			—			—			20,497
OPERATING INCOME	—			27,729			5,282			—			33,011

Interest and investment income	25,667			538			24			(26,085		)	144
Interest expense	(27,608		)	(33,214		)	(3,920		)	26,085			(38,657		)
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(1,941		)	(4,947		)	1,386			—			(5,502		)
INCOME TAX BENEFIT (EXPENSE)	1,381			1,662			(616		)	—			2,427
(LOSS) INCOME FROM CONTINUING OPERATIONS	(560		)	(3,285		)	770			—			(3,075		)
Income (loss) from discontinued clubs, net of tax	—			11			(12		)	—			(1		)
Equity in net loss of subsidiaries	(2,518		)	—			—			2,518			—
NET (LOSS) INCOME	(3,078		)	(3,274		)	758			2,518			(3,076		)
NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—			169			(171		)	—			(2		)
NET (LOSS) INCOME ATTRIBUTABLE TO CLUBCORP	$	(3,078	)	$	(3,105	)	$	587		$	2,518		$	(3,078	)

NET (LOSS) INCOME	(3,078		)	(3,274		)	758			2,518			(3,076		)
Foreign currency translation, net of tax	—			—			442			—			442
Equity in other comprehensive income of subsidiaries	442			—			—			(442		)	—
OTHER COMPREHENSIVE INCOME	442			—			442			(442		)	442
COMPREHENSIVE (LOSS) INCOME	(2,636		)	(3,274		)	1,200			2,076			(2,634		)
COMPREHENSIVE LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—			169			(171		)	—			(2		)
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO CLUBCORP	$	(2,636	)	$	(3,105	)	$	1,029		$	2,076		$	(2,636	)

Table of Contents

Consolidating Condensed Statements of Operations and Comprehensive Income (Loss)

For the Twelve Weeks Ended June 12, 2012

(In thousands of dollars)



	ClubCorp			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Eliminations			Consolidated
REVENUES:
Club operations	$	—		$	119,423		$	10,884		$	(449	)	$	129,858
Food and beverage	—			51,685			3,719			—			55,404
Other revenues	—			1,155			—			(361		)	794
Total revenues	—			172,263			14,603			(810		)	186,056

DIRECT AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Club operating costs exclusive of depreciation	—			108,814			8,977			(810		)	116,981
Cost of food and beverage sales exclusive of depreciation	—			16,029			1,200			—			17,229
Depreciation and amortization	—			16,450			1,281			—			17,731
Provision for doubtful accounts	—			442			49			—			491
Loss on disposals of assets	—			1,511			33			—			1,544
Impairment of assets	—			770			—			—			770
Equity in earnings from unconsolidated ventures	—			(291		)	—			—			(291		)
Selling, general and administrative	—			10,096			—			—			10,096
OPERATING INCOME	—			18,442			3,063			—			21,505

Interest and investment income	12,833			241			3			(13,043		)	34
Interest expense	(14,479		)	(16,607		)	(1,735		)	13,043			(19,778		)
Other income	—			866			—			—			866
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(1,646		)	2,942			1,331			—			2,627
INCOME TAX (EXPENSE) BENEFIT	(996		)	(3,736		)	379			—			(4,353		)
(LOSS) INCOME FROM CONTINUING OPERATIONS	(2,642		)	(794		)	1,710			—			(1,726		)
Income (loss) from discontinued clubs, net of tax	—			57			(1		)	—			56
Equity in net income of subsidiaries	805			—			—			(805		)	—
NET (LOSS) INCOME	(1,837		)	(737		)	1,709			(805		)	(1,670		)
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—			(16		)	(151		)	—			(167		)
NET (LOSS) INCOME ATTRIBUTABLE TO CLUBCORP	$	(1,837	)	$	(753	)	$	1,558		$	(805	)	$	(1,837	)

NET (LOSS) INCOME	(1,837		)	(737		)	1,709			(805		)	(1,670		)
Foreign currency translation, net of tax	—			—			(2,925		)	—			(2,925		)
Equity in other comprehensive loss of subsidiaries	(2,925		)	—			—			2,925			—
OTHER COMPREHENSIVE LOSS	(2,925		)	—			(2,925		)	2,925			(2,925		)
COMPREHENSIVE LOSS	(4,762		)	(737		)	(1,216		)	2,120			(4,595		)
COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—			(16		)	(151		)	—			(167		)
COMPREHENSIVE LOSS ATTRIBUTABLE TO CLUBCORP	$	(4,762	)	$	(753	)	$	(1,367	)	$	2,120		$	(4,762	)

Table of Contents

Consolidating Condensed Statements of Operations and Comprehensive Income (Loss)

For the Twenty-Four Weeks Ended June 12, 2012

(In thousands of dollars)



	ClubCorp			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Eliminations			Consolidated
REVENUES:
Club operations	$	—		$	221,021		$	20,578		$	(864	)	$	240,735
Food and beverage	—			87,522			6,003			—			93,525
Other revenues	—			2,147			—			(645		)	1,502
Total revenues	—			310,690			26,581			(1,509		)	335,762

DIRECT AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Club operating costs exclusive of depreciation	—			202,737			16,776			(1,509		)	218,004
Cost of food and beverage sales exclusive of depreciation	—			28,156			2,016			—			30,172
Depreciation and amortization	—			33,788			2,546			—			36,334
Provision for doubtful accounts	—			1,174			59			—			1,233
Loss on disposals of assets	—			886			34			—			920
Impairment of assets	—			770			—			—			770
Equity in earnings from unconsolidated ventures	—			(610		)	—			—			(610		)
Selling, general and administrative	—			20,646			—			—			20,646
OPERATING INCOME	—			23,143			5,150			—			28,293

Interest and investment income	25,666			470			6			(26,085		)	57
Interest expense	(28,961		)	(33,159		)	(3,644		)	26,085			(39,679		)
Other income	—			1,731			—			—			1,731
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(3,295		)	(7,815		)	1,512			—			(9,598

ClubCorp Club Operations, Inc. 10-Q