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 ~~March~~June 2113, 2017.

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 001-36074

ClubCorp Holdings, Inc.

(Exact name of registrant as specified in its charter)



Nevada		20-5818205
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

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

(972) 243-6191

(Registrant’s telephone number, including area code)

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

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

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



Large accelerated filer x		Accelerated filer o

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

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act o

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

As of ~~April~~July 2012, 2017, the registrant had 65,~~731~~754,~~717~~547 shares of common stock outstanding, with a par value of $0.01.

TABLE OF CONTENTS

		Page
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Unaudited consolidated condensed statements of operations for the twelve weeks ended March 21, 2017 and March 22, 2016	3
	Unaudited consolidated condensed statements of operations for the twelve and twenty-four weeks ended June 13, 2017 and June 14, 2016	3
	Unaudited consolidated condensed statements of comprehensive loss for the twelve weeks ended March 21, 2017 and March 22, 2016	4
	Unaudited consolidated condensed statements of comprehensive income (loss) for the twelve and twenty-four weeks ended June 13, 2017 and June 14, 2016	4
	Unaudited consolidated condensed balance sheets as of March 21, 2017 and December 27, 2016	5
	Unaudited consolidated condensed balance sheets as of June 13, 2017 and December 27, 2016	5
	Unaudited consolidated condensed statements of cash flows for the twelve weeks ended March 21, 2017 and March 22, 2016	6
	Unaudited consolidated condensed statements of cash flows for the twenty-four weeks ended June 13, 2017 and June 14, 2016	6
	Unaudited consolidated condensed statements of changes in equity for the twelve weeks ended March 21, 2017 and March 22, 2016	7
	Unaudited consolidated condensed statements of changes in equity for the twenty-four weeks ended June 13, 2017 and June 14, 2016	7
	Notes to unaudited consolidated condensed financial statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2628
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4454
Item 4.	Controls and Procedures	4555
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	4556
Item 1A.	Risk Factors	4556
Item 2.	Unregistered Sales of Equity Securities	4559
Item 3.	Defaults Upon Senior Securities	4659
Item 4.	Mine Safety Procedures	4660
Item 5.	Other Information	4660
Item 6.	Exhibits	4760
Signatures.		4861

PART I

ITEM 1. FINANCIAL STATEMENTS

CLUBCORP HOLDINGS, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

For the Twelve and Twenty-Four Weeks Ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016

(In thousands, except per share amounts)

	Twelve Weeks Ended						Twenty-Four Weeks Ended
	March 21, 2017			March 22, 2016
	June 13, 2017			June 14, 2016			June 13, 2017			June 14, 2016
REVENUES:
Club operations	$	~~166~~194,~~161~~780		$	~~160~~189,~~689~~203		$	360,941		$	349,892
Food and beverage	5480,~~061~~366			5278,~~856~~941			134,427			131,797
Other revenues	1,~~056~~207			~~1,328~~830			2,263			2,158
Total revenues	~~221~~276,~~278~~353			~~214~~268,~~873~~974			497,631			483,847
DIRECT AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Club operating costs exclusive of depreciation	~~146~~175,~~297~~953			~~142~~170,~~354~~157			322,250			312,511
Cost of food and beverage sales exclusive of depreciation	1926,~~661~~480			1825,~~840~~498			46,141			44,338
Depreciation and amortization	2425,~~996~~384			24,~~214~~355			50,380			48,569
Provision for doubtful accounts	~~909~~806			~~380~~704			1,715			1,084
Loss on disposals of assets	21,~~934~~957			2,~~917~~738			4,891			5,655
Equity in (earnings) loss from unconsolidated ventures	(2,181		)	15
Impairment of assets	4,176			500			4,176			500
Selling, general and administrative	21,296			19,709
Equity in earnings from unconsolidated ventures	(1,448		)	(2,118		)	(3,629		)	(2,103		)
OPERATING INCOME	7,366			6,444
Selling, general and administrative	24,674			17,501			45,970			37,210
Interest and investment income	165			126
OPERATING INCOME	18,371			29,639			25,737			36,083
Interest expense	(19,550		)	(20,420		)
Interest and investment income	155			127			320			253
LOSS BEFORE INCOME TAXES	(12,019		)	(13,850		)
Interest expense	(19,234		)	(19,938		)	(38,784		)	(40,358		)
INCOME TAX BENEFIT	4,513			5,537
(LOSS) INCOME BEFORE INCOME TAXES	(708		)	9,828			(12,727		)	(4,022		)
NET LOSS	(7,506		)	(8,313		)
INCOME TAX BENEFIT (EXPENSE)	1,499			(4,078		)	6,012			1,459
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	(17		)	(101		)
NET INCOME (LOSS)	791			5,750			(6,715		)	(2,563		)
NET LOSS ATTRIBUTABLE TO CLUBCORP	$	(7,523	)	$	(8,414	)
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	(123		)	(171		)	(140		)	(272		)
WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC	64,442			64,474
NET INCOME (LOSS) ATTRIBUTABLE TO CLUBCORP	$	668		$	5,579		$	(6,855	)	$	(2,835	)
WEIGHTED AVERAGE SHARES OUTSTANDING, DILUTED	64,442			64,474
WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC	64,555			64,518			64,498			64,496
LOSS PER COMMON SHARE:
WEIGHTED AVERAGE SHARES OUTSTANDING, DILUTED	64,555			64,556			64,498			64,496
Net loss attributable to ClubCorp, Basic	$	(0.12	)	$	(0.13	)
EARNINGS PER COMMON SHARE:
Net loss attributable to ClubCorp, Diluted	$	(0.12	)	$	(0.13	)
Net income (loss) attributable to ClubCorp, Basic	$	0.01		$	0.08		$	(0.11	)	$	(0.05	)
Cash dividends declared per common share	$	0.13		$	0.13
Net income (loss) attributable to ClubCorp, Diluted	$	0.01		$	0.08		$	(0.11	)	$	(0.05	)
Cash dividends declared per common share	$	—		$	0.13		$	0.13		$	0.26

See accompanying notes to unaudited consolidated condensed financial statements

CLUBCORP HOLDINGS, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the Twelve and Twenty-Four Weeks Ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016

(In thousands of dollars)

	Twelve Weeks Ended						Twenty-Four Weeks Ended
	March 21, 2017			March 22, 2016
	June 13, 2017			June 14, 2016			June 13, 2017			June 14, 2016
NET LOSS	$	(7,506	)	$	(8,313	)
NET INCOME (LOSS)	$	791		$	5,750		$	(6,715	)	$	(2,563	)
Foreign currency translation	~~894~~681			(81779		)	1,575			(860		)
OTHER COMPREHENSIVE INCOME (LOSS)	~~894~~681			(81779		)	1,575			(860		)
COMPREHENSIVE LOSS	(6,612		)	(8,394		)
COMPREHENSIVE INCOME (LOSS)	1,472			4,971			(5,140		)	(3,423		)
COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	(17123		)	(~~101~~171		)	(140		)	(272		)
COMPREHENSIVE LOSS ATTRIBUTABLE TO CLUBCORP	$	(6,629	)	$	(8,495	)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CLUBCORP	$	1,349		$	4,800		$	(5,280	)	$	(3,695	)

See accompanying notes to unaudited consolidated condensed financial statements

CLUBCORP HOLDINGS, INC.

UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS

As of ~~March~~June 2113, 2017 and December 27, 2016

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

	March 21, 2017			December 27, 2016
	June 13, 2017			December 27, 2016
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	5352,~~888~~020		$	84,601
Receivables, net of allowances of $5,004 and $5,111 at March 21, 2017 and December 27, 2016, respectively	84,931			79,115
Receivables, net of allowances of $4,946 and $5,111 at June 13, 2017 and December 27, 2016, respectively	110,175			79,115
Inventories	2526,~~437~~388			22,743
Prepaids and other assets	2319,~~614~~754			16,116
Total current assets	~~187~~208,~~870~~337			202,575
Investments	3,~~750~~877			1,569
Property and equipment, net (includes $9,427 and $9,489 related to VIEs at March 21, 2017 and December 27, 2016, respectively)	1,564,379			1,553,382
Property and equipment, net (includes $9,818 and $9,489 related to VIEs at June 13, 2017 and December 27, 2016, respectively)	1,570,689			1,553,382
Notes receivable, net of allowances of $553 and $618 at March 21, 2017 and December 27, 2016, respectively	8,258			8,161
Notes receivable, net of allowances of $594 and $618 at June 13, 2017 and December 27, 2016, respectively	8,255			8,161
Goodwill	312,811			312,811
Intangibles, net	2928,~~187~~793			29,348
Other assets	16,~~591~~509			16,615
Long-term deferred tax asset	4,253			4,253
TOTAL ASSETS	$	2,~~127~~153,~~099~~524		$	2,128,714
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	1920,~~811~~079		$	19,422
Membership initiation deposits - current portion	~~173~~178,~~597~~086			170,355
Accounts payable	2736,~~811~~736			39,260
Accrued expenses	4752,~~667~~124			42,539
Accrued taxes	1318,~~769~~045			19,256
Other liabilities	9392,~~925~~897			71,092
Total current liabilities	~~376~~397,~~580~~967			361,924
Long-term debt (includes $12,921 and $13,035 related to VIEs at March 21, 2017 and December 27, 2016, respectively)	1,067,612			1,067,071
Long-term debt (includes $12,829 and $13,035 related to VIEs at June 13, 2017 and December 27, 2016, respectively)	1,068,190			1,067,071
Membership initiation deposits	205,~~848~~837			205,076
Deferred tax liability, net	~~205~~204,~~088~~717			209,347
Other liabilities (includes $24,593 and $24,351 related to VIEs at March 21, 2017 and December 27, 2016, respectively)	134,022			132,909
Other liabilities (includes $24,837 and $24,351 related to VIEs at June 13, 2017 and December 27, 2016, respectively)	135,633			132,909
Total liabilities	12,~~989~~012,~~150~~344			1,976,327
Commitments and contingencies (See Note 15)
EQUITY
Common stock, $0.01 par value, 200,000,000 shares authorized; 65,752,114 and 65,498,897 issued and outstanding at March 21, 2017 and December 27, 2016, respectively	658			655
Common stock, $0.01 par value, 200,000,000 shares authorized; 65,721,817 and 65,498,897 issued and outstanding at June 13, 2017 and December 27, 2016, respectively	657			655
Additional paid-in capital	~~228~~230,~~042~~176			235,871
Accumulated other comprehensive loss	(8,~~744~~063		)	(9,638		)
Accumulated deficit	(89,~~783~~115		)	(82,260		)
Treasury stock, at cost (192,989 shares at March 21, 2017 and December 27, 2016)	(2,258		)	(2,258		)
Treasury stock, at cost (192,989 shares at June 13, 2017 and December 27, 2016)	(2,258		)	(2,258		)
Total stockholders’ equity	~~127~~131,~~915~~397			142,370
Noncontrolling interests in consolidated subsidiaries and variable interest entities	109,~~034~~783			10,017
Total equity	~~137~~141,~~949~~180			152,387
TOTAL LIABILITIES AND EQUITY	$	2,~~127~~153,~~099~~524		$	2,128,714

See accompanying notes to unaudited consolidated condensed financial statements

CLUBCORP HOLDINGS, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

For the ~~Twelve~~Twenty-Four Weeks Ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016

(In thousands of dollars)

	Twelve Weeks Ended
	Twenty-Four Weeks Ended
	March 21, 2017			March 22, 2016
	June 13, 2017			June 14, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(76,~~506~~715	)	$	(82,~~313~~563	)
Adjustments to reconcile net loss to cash flows from operating activities:
Depreciation	2450,~~834~~069			2347,~~674~~490
Amortization	~~161~~311			~~540~~1,079
Bad debt expense	909			421
Asset impairments	4,176			500
Equity in (earnings) loss from unconsolidated ventures	(2,181		)	15
Bad debt expense	1,715			1,084
Loss on disposals of assets	2,934			2,917
Equity in earnings from unconsolidated ventures	(3,629		)	(2,103		)
Debt issuance costs and term loan discount	907			1,843
Distribution from investment in unconsolidated ventures	1,321			1,524
Accretion of discount on member deposits	4,566			4,512
Loss on disposals of assets, net	4,891			5,655
Equity-based compensation	1,939			1,170
Debt issuance costs and term loan discount	2,400			2,620
Net change in deferred tax assets and liabilities	(4,259		)	(4,844		)
Accretion of discount on member deposits	9,208			9,127
Net change in prepaid expenses and other assets	(10,095		)	(3,898		)
Equity-based compensation	4,077			3,000
Net change in receivables and membership notes	(5,886		)	(6,443		)
Net change in deferred tax assets and liabilities	(4,630		)	(1,544		)
Net change in accounts payable and accrued liabilities	(5,957		)	(4,420		)
Net change in prepaid expenses and other assets	(7,182		)	(6,975		)
Net change in other current liabilities	16,871			15,512
Net change in receivables and membership notes	(30,099		)	(26,010		)
Net change in other long-term liabilities	470			(375		)
Net change in accounts payable and accrued liabilities	7,496			13,824
Net cash provided by operating activities	17,707			22,311
Net change in other current liabilities	28,176			25,198
Net change in other long-term liabilities	801			(1,670		)
Net cash provided by operating activities	62,386			70,236
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(2352,~~432~~487		)	(2047,~~309~~031		)
Acquisition of clubs	(915,~~299~~265		)	(6,600		)
Proceeds from dispositions	316			824
Proceeds from insurance	602,862			—471
Net change in restricted cash and capital reserve funds	79(41		)	88(180		)
Net cash used in investing activities	(3264,~~589~~915		)	(2653,~~813~~316		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt	(58,~~104~~915		)	(48,~~709~~755		)
Debt issuance and modification costs	(25795		)	(~~920~~1,093		)
Dividends to owners	(817,~~568~~089		)	(816,~~466~~979		)
Share repurchases for tax withholdings related to certain equity-based awards	(1,257		)	(226		)
Repurchases of common stock	—			(1,235		)
Proceeds from new membership initiation deposits	31			52
Share repurchases for tax withholdings related to certain equity-based awards	(1,264		)	(226		)
Repayments of membership initiation deposits	(447		)	(384		)
Distributions to noncontrolling interest	(374		)	—
Net cash used in financing activities	(15,370		)	(14,653		)
Proceeds from new membership initiation deposits	57			72
EFFECT OF EXCHANGE RATE CHANGES ON CASH	(461		)	81
Repayments of membership initiation deposits	(861		)	(1,013		)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(30,713		)	(19,074		)
Net cash used in financing activities	(29,241		)	(29,229		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	(811		)	569
NET DECREASE IN CASH AND CASH EQUIVALENTS	(32,581		)	(11,740		)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD	84,601			116,347
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	5352,~~888~~020		$	97104,~~273~~607
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	$	718,~~763~~948		$	210,~~359~~700
Cash paid for income taxes	$	1,~~026~~348		$	~~407~~3,046

See accompanying notes to unaudited consolidated condensed financial statements

CLUBCORP HOLDINGS, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY

For the ~~Twelve~~Twenty-Four Weeks Ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016

(In thousands of dollars, except share amounts)

	Common Stock			AdditionalPaid-inCapital			AccumulatedOtherComprehensive(Loss) Income			Accumulated Deficit			Treasury Stock					NoncontrollingInterests inConsolidatedSubsidiaries			Total
	Shares	Amount											Shares		Amount
BALANCE - December 29, 2015	64,740,736	$	647	$	263,921		$	(7,249	)	$	(88,955	)	—		$	—		$	10,418		$	178,782
Cumulative effect adjustment from adoption of accounting guidance	—	—		(803		)	—			3,118			—		—			—			2,315
Issuance of shares related to equity-based compensation, net of forfeitures and shares withheld for taxes	~~801~~826,~~186~~559	8		(234		)	—			—			—		—			—			(226		)
Dividends to owners declared	—	—		(817,~~520~~026		)	—			—			—		—			—			(817,~~520~~026		)
Equity-based compensation expense	—	—		13,~~170~~000			—			—			—		—			—			13,~~170~~000
Net (loss) income	—	—		—			—			(82,~~414~~835		)	—		—			~~101~~272			(82,~~313~~563		)
Other comprehensive loss	—	—		—			(81860		)	—			—		—			—			(81860		)
BALANCE - March 22, 2016	65,541,922	$	655	$	255,534		$	(7,330	)	$	(94,251	)	—		$	—		$	10,519		$	165,127
Repurchase of common stock	—	—		—			—			—			(104,325	)	(1,235		)	—			(1,235		)
BALANCE - June 14, 2016	65,567,295	$	655	$	248,858		$	(8,109	)	$	(88,672	)	(104,325	)	$	(1,235	)	$	10,690		$	162,187
BALANCE - December 27, 2016	65,498,897	$	655	$	235,871		$	(9,638	)	$	(82,260	)	(192,989	)	$	(2,258	)	$	10,017		$	152,387
Issuance of shares related to equity-based compensation, net of forfeitures and shares withheld for taxes	~~253~~222,~~217~~920	32		(1,~~260~~266		)	—			—			—		—			—			(1,~~257~~264		)
Dividends to owners declared	—	—		(8,~~508~~506		)	—			—			—		—			—			(8,~~508~~506		)
Equity-based compensation expense	—	—		14,~~939~~077			—			—			—		—			—			14,~~939~~077
Net (loss) income	—	—		—			—			(76,~~523~~855		)	—		—			17140			(76,~~506~~715		)
Other comprehensive income	—	—		—			~~894~~1,575			—			—		—			—			~~894~~1,575
BALANCE - March 21, 2017	65,752,114	$	658	$	228,042		$	(8,744	)	$	(89,783	)	(192,989	)	$	(2,258	)	$	10,034		$	137,949
Distributions to noncontrolling interest	—	—		—			—			—			—		—			(374		)	(374		)
BALANCE - June 13, 2017	65,721,817	$	657	$	230,176		$	(8,063	)	$	(89,115	)	(192,989	)	$	(2,258	)	$	9,783		$	141,180

See accompanying notes to unaudited consolidated condensed financial statements

NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

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

1. ORGANIZATION AND DESCRIPTION OF THE BUSINESS

ClubCorp Holdings, Inc. (“Holdings”) and its wholly owned subsidiaries CCA Club Operations Holdings, LLC (“Operations’ Parent”) and ClubCorp Club Operations, Inc. (“Operations” and, together with Holdings and Operations’ Parent, “ClubCorp”) were formed on November 10, 2010, as part of a reorganization of ClubCorp, Inc. (“CCI”), which was effective as of November 30, 2010, for the purpose of operating and managing golf and country clubs and business, sports and alumni clubs. ClubCorp, together with its subsidiaries, may be referred to as “we”, “us”, “our” or the “Company”.

As of ~~March~~June 2113, 2017, we own, lease or operate through joint ventures ~~153~~152 golf and country clubs and manage ~~nine~~eight golf and country clubs. Likewise, we lease or operate through a joint venture 4241 business, sports and alumni clubs and manage three business, sports and alumni clubs. Our facilities are located in 27 states, the District of Columbia and two foreign countries.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Investments in certain unconsolidated affiliates are accounted for by the equity method. See Note 4.

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

The accompanying consolidated condensed financial statements are unaudited. Certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP have been omitted from the accompanying financial statements. We believe the disclosures made are adequate to make the information presented not misleading. However, the financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 27, 2016.

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

We have two reportable segments: (1) golf and country clubs and (2) business, sports and alumni clubs. These segments are managed separately and discrete financial information, including Adjusted EBITDA (“Adjusted EBITDA”), a key financial measurement of segment profit and loss, is reviewed regularly by our chief operating decision maker to evaluate performance and allocate resources. See Note 12.

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

Revenue Recognition—Revenues from club operations, food and beverage and merchandise sales are recognized at the time of sale or when the service is provided and are reported net of sales taxes. Revenues from membership dues are generally billed monthly and recognized in the period earned.

At a majority of our private clubs, members are expected to pay an initiation fee or deposit upon their acceptance as a member to the club. In general, initiation fees are not refundable, whereas initiation deposits are not refundable until a fixed number of years (generally 30) after the date of acceptance of a member. We recognize revenue related to membership initiation fees and deposits over the expected life of an active membership.

For membership initiation deposits, the difference between the amount paid by the member and the present value of the refund obligation is deferred and recognized within club operations revenue over the expected life of an active membership. The present value of the refund obligation is recorded as a membership initiation deposit liability and accretes over the non-refundable term using the effective interest method with an interest rate defined as our incremental borrowing rate adjusted to reflect a 30-year time frame. The accretion is included in interest expense.

The majority of membership initiation fees received are not refundable and are deferred and recognized within club operations revenue on the consolidated condensed statements of operations over the expected life of an active membership.

The expected lives of active memberships are calculated annually using historical attrition rates. Periods in which attrition rates differ significantly from enrollment rates could have a material effect on our consolidated condensed financial statements by decreasing or increasing the expected lives of active memberships, which in turn would affect the length of time over which we recognize initiation fee and deposit revenues. During the ~~twelve~~twenty-four weeks ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016, our estimated expected lives ranged from one to 20 years; the weighted-average expected life of a golf and country club membership was approximately seven years and the expected life of a business, sports and alumni club membership was approximately three years.

Membership initiation payments recognized within club operations revenue on the consolidated condensed statements of operations were $3.32 million and $3.32 million for the twelve weeks ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016, respectively, and $6.5 million and $6.6 million for the twenty-four weeks ended June 13, 2017 and June 14, 2016, respectively.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-9 (“ASU 2014-9”), Revenue from Contracts with Customers. ASU 2014-9 requires revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also specifies the accounting for some costs to obtain or fulfill a contract with a customer, as well as enhanced disclosure requirements. In August 2015, the FASB issued Accounting Standards Update No. 2015-14 which deferred the effective date of ASU 2014-9 to fiscal years, and interim reporting periods within those fiscal years, beginning after December 15, 2017. We plan to adopt the ASU, as amended, in Q1 2018. In March 2016, the FASB issued Accounting Standards Update No. 2016-8 (“ASU 2016-8”) which clarified the revenue recognition implementation guidance on principal versus agent considerations and is effective during the same period as ASU 2014-9. In April 2016, the FASB issued Accounting Standards Update No. 2016-10 (“ASU 2016-10”) which clarified the revenue recognition guidance regarding the identification of performance obligations and the licensing implementation and is effective during the same period as ASU 2014-9. In May 2016, the FASB issued Accounting Standards Update No. 2016-12 (“ASU 2016-12”) which narrowly amended the revenue recognition guidance regarding collectability, noncash consideration, presentation of sales tax and transition. ASU 2016-12 is effective during the same period as ASU 2014-9.

The FASB allows two adoption methods under ASU 2014-9. Under one method, a company will apply the rules to contracts in all reporting periods presented, subject to certain allowable exceptions. Under the other method, a company will apply the rules to all contracts existing as of the first day of Q1 2018, recognizing in beginning retained earnings an adjustment for the cumulative effect of the change and providing additional disclosures comparing results to previous rules (“modified retrospective method”). We anticipate adopting the standard under the modified retrospective method.

Although we are continuing to evaluate, upon initial qualitative evaluation, we believe the key changes in the standard that impact our revenue recognition relate to the allocation of contract revenues between various components of the contract which may constitute a performance obligation. These components include initiation payments to join one of our clubs and dues which provide for continued access to our clubs as well as charges for food and beverage, merchandise sales and other club services. We may discount any of these components as a promotion for new members. The revenues for these components may be recognized over varying time periods. Membership initiation payments recognized within club operations revenue on the consolidated statements of operations were $3.3 million for the twelve weeks ended March 21, 2017, or approximately 1% of our consolidated total revenue on the consolidated statements of operations. We are still in the process of evaluating the quantitative impact of these changes; however, we cannot currently estimate the impact of change upon adoption, as the amount is dependent on the structure of our membership pricing structure and our employee incentive plans, which we frequently evaluate and adjust to respond to current market conditions. We also believe the requirement to defer incremental contract acquisition costs and recognize them over the contract period or expected membership life will result in the recognition of a deferred charge on our balance sheets, but cannot currently estimate the impact for the same reasons described above.

Although we are continuing to evaluate, upon initial qualitative evaluation, we believe the key changes in the standard that impact our revenue recognition relate to contracts for new members which include an initiation payment. The standard requires that we allocate the amount paid by the new member between various components of the contract which may constitute a performance obligation. These components include initiation payments to join one of our clubs, dues which provide for continued access to our clubs as well as charges for food and beverage, merchandise sales and other club services. We may discount any of these components as a promotion for new members. The revenues for these components may be recognized over varying time periods. Membership initiation payments recognized within club operations revenue on the consolidated statements of operations were $6.5 million for the twenty-four weeks ended June 13, 2017, or approximately 1% of our consolidated total revenue on the consolidated statements of operations. We are still in the process of evaluating the quantitative impact of these changes; however, we cannot currently estimate the impact of change upon adoption, as the amount is dependent on the structure of our membership pricing structure and our employee incentive plans, which we frequently evaluate and adjust to respond to current market conditions. Additionally, we believe the requirement to defer incremental contract acquisition costs and recognize them as an expense over the contract period may apply to certain of our employee commission plans and to discounts or incentives provided to existing members who sponsor a new member. We expect to recognize a deferred charge on our balance sheet, which we will recognize into expense over the expected life of an active membership. We cannot currently estimate the impact of the change in accounting treatment for contract acquisition costs for the same reasons described above.

In February 2016, the FASB issued Accounting Standards Update No. 2016-2 (“ASU 2016-2”), Leases (Topic 842). ASU 2016-2 requires the recognition of lease assets and lease liabilities by lessees for leases classified as operating leases under previous GAAP; however, ASU 2016-2 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous leases guidance. The result of retaining a distinction between finance leases and operating leases is that the effect of leases in the statement of operations and the statement of cash flows is largely unchanged from previous GAAP. ASU 2016-2 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning after December 15, 2018. We plan to adopt ASU 2016-2 in Q1 2019.

Although we are continuing to evaluate, upon initial qualitative evaluation, a key change upon adoption will be the balance sheet recognition of all leased assets and liabilities. Currently we lease many of our business clubs and a few of our golf and country clubs through operating leases which are not recognized on the balance sheet. We anticipate a right to use asset and a related lease liability will be recognized for these leases and potentially other contracts which qualify as leases.

In June 2016, the FASB issued Accounting Standards Update No. 2016-13 (“ASU 2016-13”), Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis. The income statement reflects the measurement of credit losses for newly recognized financial assets, as well as the expected credit losses during the period. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU 2016-13 will become effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company does not anticipate the adoption will have a material impact of the guidance on its consolidated financial position and results of operations.

In January 2017, the FASB issued Accounting Standards Update No. 2017-1 (“ASU 2017-1”), Business Combinations (Topic 805): Clarifying the Definition of a Business. Under ASC Topic 805, there are three elements of a business: inputs, processes, and outputs, which must be evaluated to determine if an asset or group of assets is a business. ASU 2017-1 provides a screen to determine when a set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. ASU 2017-1 will become effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are still in the process of evaluating the quantitative impact of ASU 2017-1.

In January 2017, the FASB issued Accounting Standards Update No. 2017-4 (“ASU 2017-4”), Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-4 eliminates Step 2 from the goodwill impairment test. Step 2 required an entity to determine the fair value at the impairment testing date of its assets and liabilities following the procedure that would be required in a business combination. Instead, an entity should perform its goodwill impairment test and recognize an impairment charge by comparing the fair value of a reporting unit with its carrying amount. ASU 2017-4 will become effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Our goodwill impairment tests have not proceeded to Step 2 in any fiscal year presented and the estimated fair values of our golf and country clubs and business, sports and alumni clubs reporting units both exceeded their carrying values by a significant amount as of the date the analysis was last performed during fiscal year 2016.

3. VARIABLE INTEREST ENTITIES

Consolidated VIEs include three managed golf course properties and certain realty interests which we define as “Non-Core Development Entities”. We have determined we are the primary beneficiary of these VIEs as we have the obligation to absorb the majority of losses from and direct activities of these operations. One of these managed golf course property VIEs is financed through a loan payable of $0.65 million collateralized by assets of the entity totaling $34.92 million as of ~~March~~June 2113, 2017. The other managed golf course property VIEs are financed through advances from us. Outstanding advances as of ~~March~~June 2113, 2017 total $5.24 million compared to recorded assets of $6.7.4 million. The VIE related to the Non-Core Development Entities is financed through notes which are payable through cash proceeds related to the sale of certain real estate held by the Non-Core Development Entities. Recourse of creditors to these VIEs is limited to the assets of the VIE entities, which total $1112.45 million and $11.4 million at ~~March~~June 2113, 2017 and December 27, 2016, respectively.

The following summarizes the carrying amount and classification of the VIEs’ assets and liabilities in the consolidated balance sheets as of ~~March~~June 2113, 2017 and December 27, 2016, net of intercompany amounts:

	March 21, 2017			December 27, 2016
	June 13, 2017			December 27, 2016
Current assets	$	1,~~149~~785		$	1,041
Fixed assets, net	9,~~427~~818			9,489
Other assets	~~848~~847			846
Total assets	$	1112,~~424~~450		$	11,376
Current liabilities	$	1,~~318~~806		$	1,125
Long-term debt	12,~~921~~829			13,035
Other long-term liabilities	25,~~160~~417			24,906
Noncontrolling interest	5,~~319~~237			5,401
Company capital	(3332,~~294~~839		)	(33,091		)
Total liabilities and equity	$	1112,~~424~~450		$	11,376

4. INVESTMENTS

We have an equity method investment in one active golf and country club joint venture with a carrying value of $0.43 million and $0.4 million at ~~March~~June 2113, 2017 and December 27, 2016, respectively. Our share of earnings in the equity investment is included in equity in (earnings) ~~loss~~ from unconsolidated ventures in the consolidated condensed statements of operations.

We also have an equity method investment of 10.2% in Avendra, LLC, a purchasing cooperative of hospitality companies. The carrying value of the investment was $3.45 million and $1.1 million at ~~March~~June 2113, 2017 and December 27, 2016, respectively. Our share of earnings in the equity investment is included in equity in (earnings) ~~loss~~ from unconsolidated ventures in the consolidated condensed statements of operations. All cash distributions from our equity investment are reported as distribution from investment in unconsolidated ventures within the operating section of our consolidated condensed statements of cash flows.

We also have contractual agreements with the Avendra, LLC joint venture to provide procurement services for our ~~clubs. We received no net volume rebates and allowances during the twelve weeks ended March 21, 2017 and March 22, 2016.~~

clubs. We received net volume rebates and allowances totaling $4.4 million during the twelve and twenty-four weeks ended June 13, 2017 and $2.9 million during the twelve and twenty-four weeks ended June 14, 2016.

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 and loan origination fees, as follows, as of ~~March~~June 2113, 2017 and December 27, 2016:

	March 21, 2017				December 27, 2016
	June 13, 2017				December 27, 2016
	Recorded Value		Fair Value		Recorded Value		Fair Value
Level 2 (1)	$	996,~~363~~528	$	1,~~036~~035,~~070~~694	$	996,199	$	1,026,323
Level 3	51,~~784~~495		42,~~898~~547		50,274		41,467
Total	$	1,048,~~147~~023	$	1,078,~~968~~241	$	1,046,473	$	1,067,790

______________________

(1) The recorded value for Level 2 debt obligations is presented net of the $4.65 million and $4.8 million discount as of ~~March~~June 2113, 2017 and December 27, 2016, respectively, on the Secured Credit Facilities, as defined in Note 9.

The 2015 Senior Notes and borrowings under the Secured Credit Facilities, as both are defined in Note 9, are considered Level 2. We use quoted prices for identical or similar liabilities to value debt obligations classified as Level 2. All other debt obligations are considered Level 3. We use adjusted quoted prices for similar liabilities to value debt obligations classified as Level 3. Key inputs include: (1) the determination that certain other debt obligations are similar, (2) nonperformance risk, and (3) interest rates. Changes or fluctuations in these assumptions and valuations will result in different estimates of value. The use of different techniques to determine the fair value of these debt obligations could result in different estimates of fair value at the reporting date.

The carrying value of financial instruments including cash, cash equivalents, receivables, notes receivable, accounts payable and other short-term and long-term assets and liabilities approximate their fair values as of ~~March~~June 2113, 2017 and December 27, 2016.

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

Our assets and liabilities measured at fair value on a non-recurring basis include equity method investments, property and equipment, mineral rights, goodwill, trade names, liquor licenses, management contracts and other assets and liabilities recorded during business combinations. ~~During the twelve weeks ended March 21, 2017 and March 22, 2016, there were no impairments recorded.~~ Assets and liabilities from business combinations were recorded on our consolidated condensed balance sheets at fair value at the date of acquisition. The key assumptions used in determining these values are considered Level 3 measurements. See Note 11.

Property and Equipment—We recognized impairment losses of $3.9 million during the twelve and twenty-four weeks ended June 13, 2017, to adjust the carrying amount of certain property and equipment to its fair value of $1.5 million due primarily to changes in the expected holding period of certain fixed assets, including assets at two golf and country clubs which were divested during the twelve weeks ended June 13, 2017. We recognized no impairment losses during the twelve and twenty-four weeks ended June 14, 2016. The valuation methods used to determine fair value included an evaluation of the sales price of comparable real estate properties, a sales comparison approach, an analysis of discounted future cash flows using a risk-adjusted discount rate, an income approach, and consideration of historical cost adjusted for economic obsolescence, a cost approach. The fair value calculations associated with these valuations were based on the expected sales price of the clubs and are classified as Level 3 measurements.

Management Contracts—We evaluate these assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through future cash flows. During the twelve and twenty-four weeks ended June 13, 2017, we recognized impairment losses of $0.2 million to adjust the carrying value of a management contract to its fair value of zero, due to the termination of the related contract. The valuations are classified as a Level 3 measurement and are based on expected future cash flows.

Investments and Other Assets—We evaluate our other assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through future cash flows. There were no impairments recorded during the twelve and twenty-four weeks ended June 13, 2017. We recognized impairment losses to investments and other assets of $0.5 million during the twelve and twenty-four weeks ended June 14, 2016, to adjust the carrying amount of the investment to its fair value of zero.

6. PROPERTY AND EQUIPMENT

Property and equipment, including capital lease assets, at cost consists of the following at ~~March~~June 2113, 2017 and December 27, 2016:

	March 21, 2017			December 27, 2016
	June 13, 2017			December 27, 2016
Land and non-depreciable land improvements	$	603,~~674~~854		$	600,402
Depreciable land improvements	~~501~~503,~~132~~600			495,520
Buildings and recreational facilities	~~541~~545,~~539~~783			534,944
Machinery and equipment	~~306~~310,~~647~~211			299,900
Leasehold improvements	~~112~~107,~~281~~039			111,755
Furniture and fixtures	~~106~~107,~~103~~841			105,195
Construction in progress	2436,~~966~~060			18,434
	2,196,342			2,166,150
	2,214,388			2,166,150
Accumulated depreciation	(~~631~~643,~~963~~699		)	(612,768		)
Total	$	1,~~564~~570,~~379~~689		$	1,553,382

We evaluate property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through future cash flows. See Note 5.

7. GOODWILL AND INTANGIBLE ASSETS

Goodwill and other intangible assets consist of the following at March 21, 2017 and December 27, 2016:

		March 21, 2017							December 27, 2016
Asset	UsefulLife	Gross CarryingAmount		AccumulatedAmortization			Net CarryingAmount		Gross CarryingAmount		AccumulatedAmortization			Net CarryingAmount
Intangible assets with indefinite lives:
Trade names		$	24,790				$	24,790	$	24,790				$	24,790
Liquor Licenses		2,152					2,152		2,152					2,152
Intangible assets with finite lives:
Member Relationships	2-5 years	2,166		$	(1,893	)	273		2,866		$	(2,553	)	313
Management Contracts	5-10 years	3,580		(1,608		)	1,972		3,580		(1,487		)	2,093
Total		$	32,688	$	(3,501	)	$	29,187	$	33,388	$	(4,040	)	$	29,348
Goodwill		$	312,811				$	312,811	$	312,811				$	312,811

Intangible Assets—Intangible asset amortization expense was $0.2 million and $0.5 million for the twelve weeks ended March 21, 2017 and March 22, 2016, respectively. There were no impairments recorded during the twelve weeks ended March 21, 2017 and March 22, 2016. We retired fully amortized member relationship intangible assets and the related accumulated amortization of $0.7 million during the twelve weeks ended March 21, 2017. There were no retirements during the twelve weeks ended March 22, 2016.

Goodwill—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 27, 2016	$	167,460	$	145,351	$	312,811
March 21, 2017	$	167,460	$	145,351	$	312,811

7. GOODWILL AND INTANGIBLE ASSETS

Goodwill and other intangible assets consist of the following at June 13, 2017 and December 27, 2016:



		June 13, 2017							December 27, 2016
Asset	Useful Life	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Intangible assets with indefinite lives:
Trade names		$	24,790				$	24,790	$	24,790				$	24,790
Liquor Licenses		2,152					2,152		2,152					2,152
Intangible assets with finite lives:
Member Relationships	2-5 years	2,166		$	(1,934	)	232		2,866		$	(2,553	)	313
Management Contracts	5-10 years	3,180		(1,561		)	1,619		3,580		(1,487		)	2,093
Total		$	32,288	$	(3,495	)	$	28,793	$	33,388	$	(4,040	)	$	29,348

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

Intangible Assets—Intangible asset amortization expense was $0.1 million and $0.5 million for the twelve weeks ended June 13, 2017 and June 14, 2016, respectively, and $0.3 million and $1.1 million for the twenty-four weeks ended June 13, 2017 and June 14, 2016, respectively. We recognized impairment losses for net intangible assets of $0.2 million during the twelve and twenty-four weeks ended June 13, 2017. There were no impairments recorded during the twelve and twenty-four weeks ended June 14, 2016. We retired fully amortized member relationship intangible assets and the related accumulated amortization of $0.7 million during the twenty-four weeks ended June 13, 2017. There were no retirements during the twelve weeks ended June 13, 2017. We retired fully amortized trade name intangible assets and the related amortization of $1.1 million during the twelve and twenty-four weeks ended June 14, 2016.

Goodwill—The following table shows goodwill activity by reporting unit. There are no accumulated impairments for either reporting unit.



	Golf & Country Clubs		Business, Sports & Alumni Clubs		Total
December 27, 2016	$	167,460	$	145,351	$	312,811
June 13, 2017	$	167,460	$	145,351	$	312,811

8. CURRENT AND LONG-TERM LIABILITIES

Current liabilities consist of the following at ~~March~~June 2113, 2017 and December 27, 2016:

	March 21, 2017		December 27, 2016
	June 13, 2017		December 27, 2016
Accrued compensation	$	2126,~~775~~643	$	25,367
Accrued interest	1416,~~052~~491		7,978
Other accrued expenses	118,~~840~~990		9,194
Total accrued expenses	$	4752,~~667~~124	$	42,539
Taxes payable other than federal income taxes (1)	$	1318,~~769~~045	$	19,256
Total accrued taxes	$	1318,~~769~~045	$	19,256
Advance event and other deposits	$	3334,~~656~~253	$	20,051
Unearned dues	2633,~~298~~373		16,795
Deferred membership revenues	11,~~788~~872		12,083
Insurance reserves	9,~~985~~872		9,704
Dividends to owners declared, but unpaid	~~8,522~~—		8,582
Other current liabilities	3,~~676~~527		3,877
Total other current liabilities	$	9392,~~925~~897	$	71,092

______________________

(1) We had no federal income taxes payable as of ~~March~~June 2113, 2017 and December 27, 2016.

Other long-term liabilities consist of the following at ~~March~~June 2113, 2017 and December 27, 2016:

	March 21, 2017		December 27, 2016
	June 13, 2017		December 27, 2016
Uncertain tax positions	$	78,~~840~~553	$	7,049
Deferred membership revenues	45,~~505~~556		46,089
Casualty insurance loss reserves - long-term portion	2122,~~058~~184		19,851
Above market lease intangibles	~~230~~209		251
Deferred rent	31,~~835~~442		32,316
Accrued interest on notes payable related to Non-Core Development Entities	24,~~544~~789		24,298
Other	32,~~010~~900		3,055
Total other long-term liabilities	$	~~134~~135,~~022~~633	$	132,909

1415

9. DEBT AND CAPITAL LEASES

Secured Credit Facilities

Secured Credit Facilities—In 2010, Operations entered into the credit agreement governing the secured credit facilities (the “Secured Credit Facilities”). The credit agreement governing the Secured Credit Facilities was subsequently amended in 2012, 2013, 2014, 2015, 2016 and ~~2016~~2017. As of ~~March~~June 2113, 2017, the Secured Credit Facilities are comprised of (i) a $651.0 million term loan facility, and (ii) a revolving credit facility with capacity of $175.0 million with $~~145~~144.02 million available for borrowing, after deducting $30.08 million of standby letters of credit outstanding. In addition, the credit agreement governing the Secured Credit Facilities includes capacity which provides, subject to lender participation, for additional borrowings in revolving or term loan commitments of $125.0 million, and additional borrowings thereafter so long as a senior secured leverage ratio (the “Senior Secured Leverage Ratio”) does not exceed 3.50:1.00.

As of ~~March~~June 2113, 2017, the interest rate on the term loan facility is a variable rate calculated as the higher of (i) 43.075% or (ii) an elected LIBOR plus a margin of 32.075% and the maturity date of the term loan facility is December 15, 2022.

As of ~~March~~June 2113, 2017, the revolving credit commitments mature on January 25, 2021 and borrowings thereunder bear interest at a rate of LIBOR plus a margin of 3.0% per annum. We are required to pay a commitment fee on all undrawn amounts under the revolving credit facility and a fee on all outstanding letters of credit, payable quarterly in arrears.

As long as commitments are outstanding under the revolving credit facility, we are subject to limitations on the Senior Secured Leverage Ratio and a total leverage ratio (the “Total Leverage Ratio”). The Senior Secured Leverage Ratio is defined as the ratio of Operations’ Consolidated Senior Secured Debt (exclusive of the 2015 Senior Notes (as defined below)) to Consolidated EBITDA (disclosed as Adjusted EBITDA and defined in Note 12) and is calculated on a pro forma basis, giving effect to current period acquisitions as though they had been consummated on the first day of the period presented. The Total Leverage Ratio is defined as the ratio of Operations’ Consolidated Total Debt (including the 2015 Senior Notes) to Consolidated EBITDA and is also calculated on a pro forma basis. The credit agreement governing the Secured Credit Facilities requires us to maintain a Senior Secured Leverage Ratio no greater than 4.50:1.00 and a Total Leverage Ratio of no greater than 5.75:1.00 as of the end of each fiscal quarter. As of ~~March~~June 2113, 2017, Operations’ Senior Secured Leverage Ratio was 2.8889:1.00 and the Total Leverage ratio was 4.2728:1.00.

On May 19, 2017, Operations entered into an eleventh amendment to the credit agreement governing the Secured Credit Facilities to decrease the interest rate on the term loan facility to a variable rate calculated as the higher of (a) 3.75% or (b) an elected LIBOR plus a margin of 2.75%.

All obligations under the Secured Credit Facilities are guaranteed by Operations’ Parent and each existing and all subsequently acquired or organized direct and indirect restricted subsidiaries of Operations, other than certain excluded subsidiaries (collectively, the “Guarantors”). The Secured Credit Facilities are secured, subject to permitted liens and other exceptions, by a first-priority perfected security interest in substantially all the assets of Operations, and the Guarantors, including, but not limited to (1) a perfected pledge of all the domestic capital stock owned by Operations and the Guarantors, and (2) perfected security interests in and mortgages on substantially all tangible and intangible personal property and material fee-owned property of Operations and the Guarantors, subject to certain exclusions.

2015 Senior Notes

On December 15, 2015, Operations issued $350.0 million of senior notes (the “2015 Senior Notes”), maturing December 15, 2023. Interest on the 2015 Senior Notes accrues at a fixed rate of 8.25% per annum and is payable semiannually in arrears on June 15 and December 15. The 2015 Senior Notes are guaranteed on a full and unconditional basis by each Guarantor (other than Operations’ Parent) that guarantees our obligations under the credit agreement governing the Secured Credit Facilities.

Notes payable related to certain Non-Core Development Entities

In 1994 and 1995, we issued notes payable to finance a VIE related to our Non-Core Development Entities. The notes and accrued interest are payable through the cash proceeds related to the sale of certain real estate held by these Non-Core Development Entities. As of ~~March~~June 2113, 2017, the notes have a principal amount of $11.8 million.

1516

Wells Fargo Mortgage Loan

On August 9, 2016, we entered into a secured mortgage loan which was guaranteed by ClubCorp USA, Inc., a wholly owned subsidiary of Operations, (the “Wells Fargo Mortgage Loan”) for $37.0 million with a maturity date of May 31, 2019. As of ~~March~~June 2113, 2017, the note has a principal amount of $36.64 million and accrues interest at a variable rate calculated as 2.90% plus the greater of (i) one month LIBOR or (ii) 0.25%. The proceeds of the Wells Fargo Mortgage Loan were primarily used to repay outstanding balances on previously existing mortgage loan agreements. There is an option to extend the maturity through August 9, 2020 and a second option to extend the maturity through August 9, 2021 upon satisfaction of certain conditions in the loan agreement.

Long-term borrowings and lease commitments as of ~~March~~June 2113, 2017 and December 27, 2016, are summarized below:

	March 21, 2017					December 27, 2016
	June 13, 2017					December 27, 2016
	Carrying Value			Interest Rate		Carrying Value			Interest Rate		Interest Rate Calculation	Maturity
Secured Credit Facilities
Term Loan, gross of discount	651,000			43.0078	%	651,000			4.00	%	~~Greater~~As of June 13, 2017, greater of (i) 3.75% or (ii) an elected LIBOR + 2.75%; as of December 27, 2016, greater of (i) 4.0% or (ii) an elected LIBOR + 3.0%	2022
Revolving Credit Borrowings - ($175,000 capacity) (1)	—			34.9816	%	—			3.77	%	LIBOR plus a margin of 3.0%	2021
2015 Senior Notes	350,000			8.25	%	350,000			8.25	%	Fixed	2023
Wells Fargo Mortgage Loan	36,~~622~~433			3.6895	%	36,811			3.67	%	2.90% plus the greater of (i) one month LIBOR or (ii) 0.25%	2019
Notes payable related to certain Non-Core Development Entities	11,837			9.00	%	11,837			9.00	%	Fixed	(2)
Other indebtedness	3,~~326~~225			3.71% - 6.00%		1,626			4.75% - 6.00%		Fixed	Various
	1,052,785					1,051,274
	1,052,495					1,051,274
Capital leases	5051,~~887~~457					52,207
Total obligation	1,103,~~672~~952					1,103,481
Less net loan origination fees included in long-term debt	(11,~~611~~211		)			(12,187		)
Less current portion	(1920,~~811~~079		)			(19,422		)
Less discount on the Secured Credit Facilities’ Term Loan	(4,~~638~~472		)			(4,801		)
Long-term debt	$	1,~~067~~068,~~612~~190				$	1,067,071

______________________

(1) As of ~~March~~June 2113, 2017, the revolving credit facility had capacity of $175.0 million, which was reduced by the $30.08 million of standby letters of credit outstanding, leaving $~~145~~144.02 million available for borrowing.


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

1617

The amount of long-term debt maturing in each of the five years subsequent to 2016 and thereafter is as follows. This table reflects the contractual maturity dates as of ~~March~~June 2113, 2017.

Year	Debt		Capital Leases		Total
Remainder of 2017	$	~~803~~536	$	1411,~~387~~146	$	1511,~~190~~682
2018	1,086		1617,~~241~~249		1718,~~327~~335
2019	35,565		1112,~~438~~553		4748,~~003~~118
2020	197		67,~~333~~372		67,~~530~~569
2021	136		23,~~484~~001		23,~~620~~137
Thereafter	1,014,~~998~~975		4136		1,015,~~002~~111
Total	$	1,052,~~785~~495	$	5051,~~887~~457	$	1,103,~~672~~952

10. INCOME TAXES

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

Our annual effective income tax rate is determined by the level and composition of pre-tax income and the mix of income subject to varying foreign, state and local taxes. Our tax expense or benefit recognized in our interim financial statements is determined by multiplying the year-to-date income or loss by the annual effective tax rate, which is an estimate of the expected relationship between tax expense or benefit for the full year to the pre-tax income or loss for the full year (pre-tax income or loss excluding unusual or infrequently occurring discrete items). Our effective income tax rate for the twelve and twenty-four weeks ended ~~March~~June 2113, 2017 was 37211.57% and 47.2%, respectively, compared to 4041.05% and 36.3% for the twelve and twenty-four weeks ended ~~March~~June 2214, 2016, respectively. For the twelve and twenty-four weeks ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016, the effective tax rate differed from the statutory federal rate of 35.0% primarily due to state taxes and certain other permanent differences. The relative impact these items have on the effective tax rate varies based on the forecasted amount of pre-tax income or loss for the year.

We are currently under audit by state income tax authorities., Webut do not have ~~received~~any ~~multiple~~current assessments related to such audits ~~and~~at ~~have~~this ~~an immaterial amount recorded within our state income tax payable as of March 21, 2017~~time.

As of ~~March~~June 2113, 2017, tax years 2011 - 2016 remain open under statute for U.S. federal and most state tax jurisdictions. In Mexico, the statute of limitations is generally five years from the date of the filing of the tax return for any particular year, including amended returns. Accordingly, in general, tax years 2008 through 2016 remain open under statute; although certain prior years are also open as a result of the tax proceedings described below.

Certain of our Mexican subsidiaries are under audit by the Mexican taxing authorities for the 2008 and 2009 tax years. In 2013, we received two assessments, for approximately $3.0 million each, exclusive of penalties and interest, for two of our Mexican subsidiaries under audit for the 2008 tax year. We have taken the appropriate procedural steps to contest these assessments through the appropriate Mexican judicial channels. In March 2017, we received notice of a favorable ruling from the Mexican court presiding over one of the matters such that one of these two assessments was dismissed and is non-appealable by the Mexican taxing authorities. There is no impact to the financial statements from the dismissal as no liability had previously been recorded. We have not recorded a liability related to the remaining 2008 open uncertain tax position as we believe it is more likely than not that we will prevail based on the merits of our position. In 2014, we received an audit assessment for the 2009 tax year for another Mexican subsidiary. We have taken the appropriate procedural steps to contest the assessment through the appropriate Mexican judicial channels. We have recorded a liability related to an unrecognized tax benefit for $4.36 million, exclusive of penalties and interest, related to this audit. The unrecognized tax benefit has been recorded due to the technical nature of the tax filing position taken by our Mexican subsidiary and uncertainty around the ultimate outcome of this assessment, which we intend to continue to contest.

As of ~~March~~June 2113, 2017 and December 27, 2016, we have recorded a total of $7.8.6 million and $7.0 million, respectively, of unrecognized tax benefits related to uncertain tax positions, including interest and penalties of $3.38 million and $2.9 million, respectively, which are included in other liabilities in the consolidated condensed balance sheets. If we were to prevail on all uncertain tax positions recorded as of ~~March~~June 2113, 2017, the net effect would be an income tax benefit of approximately $4.58 million, exclusive of any benefits related to interest and penalties.

1718

Management believes it is unlikely that our unrecognized tax benefits will significantly change within the next 12 months given the current status in particular of the matters currently under examination by the Mexican tax authorities. However, as audit outcomes and the timing of related resolutions are subject to significant uncertainties, we will continue to evaluate the tax issues related to these assessments in future periods. In summary, we believe we are adequately reserved for our uncertain tax positions as of ~~March~~June 2113, 2017.

11. NEW AND ACQUIRED CLUBS AND CLUB DIVESTITURES

New and Acquired Clubs

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

~~Norbeck~~Oakhurst Golf and Country Club—On ~~March~~April 1411, 2017, we purchased ~~Norbeck~~Oakhurst Golf and Country Club, a private ~~golf~~country club in ~~Rockville~~Clarkston, ~~Maryland~~Michigan, for net cash consideration of $6.80 million. We recorded the following major categories of assets and liabilities, which are subject to change until our information is finalized, no later than twelve months from the acquisition date:



	April 11, 2017
Land, depreciable land improvements and property and equipment	$	5,996
Inventory and prepaid assets	73
Other current liabilities	(102		)
Total	$	5,967

Norbeck Country Club—On March 14, 2017, we purchased Norbeck Country Club, a private country club in Rockville, Maryland, for net cash consideration of $6.8 million. We recorded the following major categories of assets and liabilities, which are subject to change until our information is finalized, no later than twelve months from the acquisition date:



	March 14, 2017
Land, depreciable land improvements and property and equipment	$	7,177
Inventory and prepaid assets	63
Other current liabilities	(174		)
Long-term debt (obligation related to capital leases)	(283		)
Total	$	6,783

North Hills Country Club—On February 21, 2017, we purchased North Hills Country Club, a private ~~golf~~country club in Glenside, Pennsylvania, for net cash consideration of $2.5 million. We recorded the following major categories of assets and liabilities, which are subject to change until our information is finalized, no later than twelve months from the acquisition date:



	February 21, 2017
Land, depreciable land improvements and property and equipment	$	2,737
Inventory and prepaid assets	140
Other current liabilities	(61		)
Long-term debt (obligation related to capital leases)	(301		)
Total	$	2,515

Eagle’s Nest Country Club—On February 7, 2017, we purchased Eagle’s Nest Country Club, a private ~~golf~~country club in Phoenix, Maryland, for a contractual purchase price of $2.5 million, which was satisfied by our assumption of an interest-free loan of $2.5 million with Eagle’s Nest Funding, LLC with a maturity of October 6, 2031. As of the date of acquisition, the note had a fair value of $1.8 million and an effective interest rate of 3.71%. 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:



	February 7, 2017
Land, depreciable land improvements and property and equipment	$	2,066
Inventory and prepaid assets	83
Other current liabilities	(76		)
Long-term debt (includes interest free loan and obligation related to capital leases)	(2,072		)
Total	$	1

18Heritage Golf Club—On August 30, 2016, we purchased Heritage Golf Club, a private country club in Hilliard, Ohio, for a purchase price and net cash consideration of $3.2 million. We recorded the following major categories of assets and liabilities:

Heritage Golf Club—On August 30, 2016, we purchased Heritage Golf Club, a private golf club in Hilliard, Ohio, for a purchase price and net cash consideration of $3.2 million. We recorded the following major categories of assets and liabilities:



	August 30, 2016
Land, depreciable land improvements and property and equipment	$	3,407
Receivables, net of allowances of $6	202
Inventory and prepaid assets	156
Other current liabilities and accrued taxes	(271		)
Long-term debt (obligation related to capital leases)	(301		)
Total	$	3,193

Santa Rosa Golf and Country Club—On March 15, 2016, we purchased Santa Rosa Golf and Country Club, a private ~~golf~~country club in Santa Rosa, California, for a purchase price and net cash consideration of $2.5 million. We recorded the following major categories of assets and liabilities:



	March 15, 2016
Land, depreciable land improvements and property and equipment	$	2,558
Inventory and prepaid assets	267
Other current liabilities	(153		)
Long-term debt (obligation related to capital leases)	(178		)
Total	$	2,494

Marsh Creek Country Club—On February 2, 2016, we purchased Marsh Creek Country Club, a private ~~golf~~country club in St. Augustine, Florida, for a purchase price of $4.5 million and net cash consideration of $4.1 million. We recorded the following major categories of assets and liabilities:



	February 2, 2016
Land, depreciable land improvements and property and equipment	$	4,491
Receivables and inventory	92
Other current liabilities and accrued taxes	(477		)
Total	$	4,106

Club Dispositions and Management Agreement Terminations

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

During the ~~twelve~~twenty-four weeks ended ~~March~~June 2113, 2017, we ceased operating ~~two~~three clubs: The Club at Key Center, a leased business club in Cleveland, Ohio, ~~and~~ Piedmont Club, a leased business and sports club in Winston-Salem, North Carolina and Houston City Club, a leased business and sports club in Houston, Texas. Additionally, the management agreement with Cateechee Golf Club, a public golf facility located in Hartwell, Georgia was terminated. No material gain or loss on divestiture was recorded. These divestitures did not qualify as discontinued operations. On June 13, 2017, we sold Heron Bay Golf Club, a private country club in Locust Grove, Georgia, and Georgia National Golf Club, a private country club in McDonough, Georgia. During the twelve weeks ended June 13, 2017, we recognized an impairment loss of $3.3 million related to the fixed

During the fiscal year ended December 27, 2016, the management agreements with Jefferson Lakeside Country Club, a private country club located in Richmond, Virginia and with Mill Creek Country Club, a private country club located in Mill Creek, Washington were terminated. We closed Greenspoint Club, an owned business and sports club located in Houston, Texas and University Club, a leased business and sports club located in Jacksonville, Florida. Additionally, the lease of Airways Golf Club, a leased public golf course in Fresno, California, was terminated. No material gain or loss on divestiture was recorded. These divestitures did not qualify as discontinued operations.20

19assets at these two clubs, which is included in impairment of assets in the consolidated condensed statements of operations, and a gain of $0.1 million on the sale, which is included in loss on disposals of assets in the consolidated condensed statements of operations. These divestitures did not qualify as discontinued operations.

During the fiscal year ended December 27, 2016, the management agreements with Jefferson Lakeside Country Club, a private country club located in Richmond, Virginia and with Mill Creek Country Club, a private country club located in Mill Creek, Washington were terminated. We closed Greenspoint Club, an owned business and sports club located in Houston, Texas and University Club, a leased business and sports club located in Jacksonville, Florida. Additionally, the lease of Airways Golf Club, a leased public golf facility in Fresno, California, was terminated. No material gain or loss on divestiture was recorded. These divestitures did not qualify as discontinued operations.

12. SEGMENT INFORMATION

We currently have two reportable segments: (1) golf and country clubs and (2) business, sports and alumni clubs. These segments are managed separately and discrete financial information, including Adjusted EBITDA, our financial measure of segment profit and loss, is reviewed regularly by our chief operating decision maker to evaluate performance and allocate resources. Our chief operating decision maker is our Chief Executive Officer. We also use Adjusted EBITDA, on a consolidated basis, to assess our ability to service our debt, incur additional debt and meet our capital expenditure requirements. We believe that the presentation of Adjusted EBITDA is appropriate as it provides additional information to investors about our performance and investors and lenders have historically used EBITDA-related measures.

EBITDA is defined as net income before interest expense, income taxes, interest and investment income, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA plus or minus impairments, gain or loss on disposition and acquisition of assets, income or loss from divested clubs, loss on extinguishment of debt, non-cash and other adjustments, equity-based compensation expense and a deferred revenue adjustment. The deferred revenue adjustment to revenues and Adjusted EBITDA within each segment represents estimated deferred revenue using current membership life estimates related to initiation payments that would have been recognized in the applicable period but for the application of purchase accounting. Adjusted EBITDA is based on the definition of Consolidated EBITDA as defined in the credit agreement governing the Secured Credit Facilities and may not be comparable to similarly titled measures reported by other companies. The credit agreement governing the Secured Credit Facilities and the indenture governing the 2015 Senior Notes contain certain covenants which are based upon specified financial ratios in reference to Adjusted EBITDA, after giving effect to the pro forma impact of acquisitions. Adjusted EBITDA as reported is identical to the computation of Consolidated EBITDA as defined in the credit agreement governing our Secured Credit Facilities, except that for purposes of certain covenants in the credit agreement, a pro forma adjustment is made to Consolidated EBITDA in order to give effect to current period acquisitions as though they had been consummated on the first day of the four quarter period presented. The pro forma impact gives effect to all acquisitions in the four quarters ended ~~March~~June 2113, 2017 as though they had been consummated on the first day of the ~~second~~third quarter of fiscal year 2016.

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

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

We also disclose corporate expenses and other operations, 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 operations also includes corporate assets such as cash, goodwill, intangible assets, and loan origination fees. While corporate expenses and other operations is not a segment, disclosing corporate expenses and other operations facilitates the reconciliation from segment results to consolidated results.

2021

The table below shows summarized financial information by segment for the twelve and twenty-four weeks ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016:

	Twelve Weeks Ended						Twenty-Four Weeks Ended
	March 21, 2017			March 22, 2016
	June 13, 2017			June 14, 2016			June 13, 2017			June 14, 2016
Revenues
Golf and Country Clubs (1)	$	~~179~~227,~~915~~859		$	~~172~~218,~~602~~919		$	407,172		$	391,020
Business, Sports and Alumni Clubs (1)	3942,~~891~~883			3943,~~642~~158			81,123			81,140
Other operations	36,~~959~~285			34,~~516~~736			9,939			7,980
Elimination of intersegment revenues and segment reporting adjustments	(2,~~894~~859		)	(3,~~098~~066		)	(5,752		)	(6,160		)
Revenues relating to divested clubs (2)	~~407~~2,185			25,~~211~~227			5,149			9,867
Total consolidated revenues	$	~~221~~276,~~278~~353		$	~~214~~268,~~873~~974		$	497,631		$	483,847
Golf and Country Clubs Adjusted EBITDA	$	5266,~~822~~062		$	5066,~~123~~067		$	118,752		$	116,112
Business, Sports and Alumni Clubs Adjusted EBITDA	$	69,~~664~~723		$	710,~~274~~194		$	16,207		$	17,115

______________________


(1)	Includes segment reporting adjustments representing estimated deferred revenue, calculated using current membership life estimates, related to initiation payments that would have been recognized in the applicable period but for the application of purchase accounting in connection with the acquisition of CCI in 2006 and the acquisition of Sequoia Golf (“Sequoia Golf”) on September 30, 2014.


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

	As of
Total Assets	~~March~~June 2113, 2017		December 27, 2016
Golf and Country Clubs	$	1,~~586~~616,~~163~~414	$	1,557,489
Business, Sports and Alumni Clubs	8485,~~095~~224		88,967
Other operations	~~456~~451,~~841~~886		482,258
Consolidated	$	2,~~127~~153,~~099~~524	$	2,128,714

The following table presents revenue by product type:

	Twelve Weeks Ended				Twenty-Four Weeks Ended
	March 21, 2017		March 22, 2016
	June 13, 2017		June 14, 2016		June 13, 2017		June 14, 2016
Revenues by Type
Dues	$	~~119~~123,~~867~~649	$	~~116~~120,~~118~~053	$	243,516	$	236,171
Food and beverage	5480,~~061~~366		5278,~~856~~941		134,427		131,797
Golf	2749,~~498~~852		2648,~~274~~650		77,350		74,924
Other	1922,~~852~~486		1921,~~625~~330		42,338		40,955
Total	$	~~221~~276,~~278~~353	$	~~214~~268,~~873~~974	$	497,631	$	483,847

2122

The table below provides a reconciliation of Golf and Country Clubs Adjusted EBITDA and Business, Sports and Alumni Adjusted EBITDA to (loss) income before income taxes for the twelve and twenty-four weeks ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016:

	Twelve Weeks Ended						Twenty-Four Weeks Ended
	March 21, 2017			March 22, 2016
	June 13, 2017			June 14, 2016			June 13, 2017			June 14, 2016
Golf and Country Clubs Adjusted EBITDA	$	5266,~~822~~062		$	5066,~~123~~067		$	118,752		$	116,112
Business, Sports and Alumni Clubs Adjusted EBITDA	69,~~664~~723			710,~~274~~194			16,207			17,115
Interest expense	(19,~~550~~234		)	(2019,~~420~~938		)	(38,784		)	(40,358		)
Interest and investment income	~~165~~155			~~126~~127			320			253
Depreciation and amortization	(2425,~~996~~384		)	(24,~~214~~355		)	(50,380		)	(48,569		)
Impairments and disposition of assets (1)	(26,~~934~~133		)	(23,~~917~~238		)	(9,067		)	(6,155		)
Loss from divested clubs (2)	(217		)	(458		)
Income from divested clubs (2)	71			373			166			342
Non-cash adjustments (3)	—			~~(463~~842		)	—			379
Acquisition related costs (4)	(~~595~~1,213		)	(~~686~~257		)	(1,808		)	(943		)
Capital structure costs (5)	—(770		)	(~~742~~208		)	(770		)	(950		)
Centralization and transformation costs (6)	(26,~~398~~646		)	(2,~~418~~061		)	(9,044		)	(4,479		)
Other adjustments (7)	(21,~~230~~308		)	(1,~~086~~184		)	(3,538		)	(2,270		)
Equity-based compensation expense (8)	(12,~~939~~138		)	(1,~~170~~830		)	(4,077		)	(3,000		)
Deferred revenue adjustment (9)	(1,~~066~~000		)	(1,~~392~~302		)	(2,066		)	(2,690		)
Corporate expenses and other operations (10)	(1512,~~745~~893		)	(1513,~~407~~402		)	(28,638		)	(28,809		)
Loss before income taxes	$	(12,019	)	$	(13,850	)
(Loss) income before income taxes	$	(708	)	$	9,828		$	(12,727	)	$	(4,022	)

______________________


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

(2) Net ~~loss or~~ income from divested clubs that do not qualify as discontinued operations in accordance with GAAP.


(3)	Includes non-cash items related to purchase accounting associated with the acquisition of CCI in 2006 by affiliates of KSL Capital Partners, LLC (“KSL”).


(4)	Represents legal and professional fees related to the acquisition of clubs.


(5)	Represents legal and professional fees related to our capital structure, including debt issuance and amendment costs and equity offering costs.


(6)	Includes fees and expenses associated with initial compliance with Section 404(b) of the Sarbanes-Oxley Act (‘‘SOX 404(b)’’), which were primarily incurred in fiscal year 2015 and the twelve weeks ended March 22, 2016, and related centralization and transformation of administrative processes, finance processes and related IT systems.

(7) Represents adjustments permitted by the credit agreement governing the Secured Credit Facilities including cash distributions from equity method investments less equity in earnings recognized for said investments, professional and legal fees associated with our strategic alternatives review, income or loss attributable to non-controlling equity interests, expenses paid to an affiliate of KSL and legal settlements.


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


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

2223


(10)	Includes other business activities including ancillary revenues related to alliance arrangements, a portion of the revenue associated with upgrade offerings, costs of operations at managed clubs, corporate overhead expenses and shared services expenses.

13. EARNINGS PER SHARE

GAAP requires that earnings per share (“EPS”) calculations treat unvested share-based payment awards that have non-forfeitable rights to dividends or dividend equivalents as a separate class of securities (participating securities) and that basic EPS be calculated using the two-class method. We have granted RSAs (as defined below) that contain non-forfeitable rights to dividends. Such awards are considered participating securities. The two-class method of computing EPS is an earnings allocation formula that determines EPS for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. We have also granted RSAs that contain forfeitable rights to dividends. These awards are not considered participating securities and are excluded from the basic weighted-average shares outstanding calculation.

Basic EPS is computed utilizing the two-class method and is calculated on weighted-average number of common shares outstanding during the periods presented.

Diluted EPS reflects the dilutive effect of equity based awards (potential common shares) that may share in the earnings of ClubCorp when such shares are either issued or vesting restrictions lapse. Diluted EPS is computed using the weighted-average number of common shares and potential common shares outstanding during the periods presented, utilizing the two-class method for unvested equity-based awards.

Presented below is basic and diluted EPS for the twelve and twenty-four weeks ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016 (in thousands, except per share amounts):

	Twelve Weeks Ended												Twenty-Four Weeks Ended
	March 21, 2017						March 22, 2016
	June 13, 2017						June 14, 2016						June 13, 2017						June 14, 2016
	Basic			Diluted			Basic			Diluted			Basic			Diluted			Basic			Diluted
Numerator for earnings per share	$	~~(7,654~~658	)	$	~~(7,654~~658	)	$	(85,~~540~~450	)	$	(85,~~540~~450	)	$	(6,977	)	$	(6,977	)	$	(3,093	)	$	(3,093	)
Weighted-average shares outstanding	64,~~442~~555			64,~~442~~555			64,~~474~~518			64,~~474~~518			64,498			64,498			64,496			64,496
Effect of dilutive equity-based awards	—			—			—			—38			—			—			—			—
Total Shares	64,~~442~~555			64,~~442~~555			64,~~474~~518			64,~~474~~556			64,498			64,498			64,496			64,496
Net loss attributable to ClubCorp per share	$	(0.12	)	$	(0.12	)	$	(0.13	)	$	(0.13	)
Net income (loss) attributable to ClubCorp per share	$	0.01		$	0.01		$	0.08		$	0.08		$	(0.11	)	$	(0.11	)	$	(0.05	)	$	(0.05	)

The basis for the numerator for earnings per share is net income (loss) attributable to ClubCorp. The numerator was adjusted by $0.0 million and $0.1 million for the ~~dividends~~twelve ~~allocated~~and totwenty-four ~~participating~~weeks ~~securities~~ended ~~during~~June 13, 2017, respectively, and $0.1 million and $0.3 million for the twelve and twenty-four weeks ended ~~March~~June 2114, ~~2017~~2016, respectively, for dividends and ~~March 22,~~undistributed ~~2016~~earnings allocated to participating securities.

Potential common shares are excluded from the calculation of diluted EPS when the effect of their inclusion would reduce our net loss per share and would be anti-dilutive. ~~For~~There were no potential common shares excluded from the calculation for the twelve and twenty-four weeks ended ~~March~~June 2113, 2017. ~~and~~For ~~March~~the twenty-four weeks ended June 2214, 2016 there ~~are~~were ~~0.2~~less ~~million~~than ~~and~~ 0.1 million potential common shares excluded from the calculation of diluted EPS~~, respectively~~.

14. EQUITY

Equity-Based Awards—We have granted equity-based awards to employees and non-employee directors in the form of restricted stock awards (“RSAs”), which restrictions will be removed upon satisfaction of time-based vesting requirements, subject to the holder remaining in continued service with us. We have also granted performance restricted stock units (“PSUs”) and “Adjusted EBITDA-Based PSUs”, both of which will convert into shares of our common stock upon satisfaction of (i) time-based vesting requirements and (ii) the applicable performance-based requirements subject to the holder remaining in continued service with us. The number of awards under the PSU and Adjusted EBITDA-Based PSU grants represents the target number of such units that may be earned. The PSU awards performance-based requirements are measured based on Holdings’ total shareholder return over the applicable performance periods compared with a peer group. The Adjusted EBITDA-Based PSU awards vest upon the achievement by the 2017 Same Store Clubs (as defined in the form of award), on a consolidated basis, of a specified level of Adjusted EBITDA for fiscal year 2018. We measure the cost of services rendered in exchange for equity-based awards based upon the grant date fair market value of the respective equity-based awards. The value is recognized

2324

basis, of a specified level of Adjusted EBITDA for fiscal year 2018. We measure the cost of services rendered in exchange for equity-based awards based upon the grant date fair market value of the respective equity-based awards. The value is recognized over the requisite service period, which is generally the vesting period. The Adjusted EBITDA-Based PSU awards include performance conditions and expense is accrued when achievement of the performance conditions is considered probable. No expense has been recognized for these awards.

The fair market value of each RSA was estimated using Holdings’ closing share price on the date of grant. The fair market value of each PSU was estimated on the date of grant using a Monte Carlo simulation analysis which generates a distribution of possible future stock prices for Holdings and the peer group from the grant date to the end of the applicable performance period. The fair market value of each Adjusted EBITDA-Based PSU was estimated using Holdings’ closing share price on the date of grant.

The following table shows total equity-based compensation expense included in the consolidated condensed statements of operations:

	Twelve Weeks Ended						Twenty-Four Weeks Ended
	March 21, 2017			March 22, 2016
	June 13, 2017			June 14, 2016			June 13, 2017			June 14, 2016
Club operating costs exclusive of depreciation	$	~~763~~949		$	~~370~~897		$	1,712		$	1,267
Selling, general and administrative	1,~~176~~189			~~800~~933			2,365			1,733
Pre-tax equity-based compensation expense	12,~~939~~138			1,~~170~~830			4,077			3,000
Less: benefit for income taxes	(~~736~~76		)	(~~437~~683		)	(813		)	(1,120		)
Equity-based compensation expense, net of tax	$	12,~~203~~062		$	~~733~~1,147		$	3,264		$	1,880

As of ~~March~~June 2113, 2017, there was approximately $2219.4 million of unrecognized expense related to non-vested, equity-based awards granted to employees, which is expected to be recognized over a weighted average period of approximately 21.08 years.

The Amended and Restated ClubCorp Holdings, Inc. 2012 Stock Award Plan (the “Stock Plan”) provides for an aggregate amount of no more than 4.0 million shares of common stock to be available for awards. The Stock Plan provides for the grant of stock options, restricted stock awards, restricted stock units, performance-based awards and other equity-based incentive awards. To date, we have granted RSAs, PSUs, Adjusted EBITDA-Based PSUs and restricted stock units (“RSUs”) under the Stock Plan. As of ~~March~~June 2113, 2017, approximately 0.78 million shares of common stock were available for future issuance under the Stock Plan. Treasury stock may be used to settle awards under the Stock Plan.

The following table summarizes RSA, PSU and Adjusted EBITDA-Based PSU activity for the twenty-four weeks ended June 13, 2017:

	Restricted stock awards				Performance-based awards (1)
	Shares		Weighted Average Grant Date Fair Value		Target shares		Weighted Average Grant Date Fair Value
Non-vested balance at December 27, 2016	957,950		$	12.73	871,370		$	11.58
Granted	360,869		$	16.80	296,765		$	19.50
Vested	(~~204~~242,~~431~~753)		$	13.6873	—		$	—
Forfeited	(3464,~~869~~642)		$	13.6976	(6189,~~172~~743	)	$	1615.8890
Canceled	(7273,~~783~~307	)	$	12.5758	—		$	—
Non-vested balance at March 21, 2017	1,006,736		$	13.97	1,106,963		$	13.41
Non-vested balance at June 13, 2017	938,117		$	14.00	1,078,392		$	14.07

______________________

(1) Includes PSUs and Adjusted EBITDA-Based PSUs.

2425

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



Declaration Date	Dividend Per Share		Record Date	Total Amount (in thousands)		Payment Date
Fiscal Year 2016
February 18, 2016	$	0.13	April 5, 2016	$	8,520	April 15, 2016
June 10, 2016	$	0.13	July 1, 2016	$	8,508	July 15, 2016
September 29, 2016	$	0.13	October 10, 2016	$	8,500	October 17, 2016
December 7, 2016	$	0.13	January 6, 2017	$	8,490	January 17, 2017

Fiscal Year 2017
February 9, 2017	$	0.13	April 5, 2017	$	8,522	April 17, 2017

Share Repurchase Plan—On February 24, 2016, we announced that our Board of Directors authorized a repurchase of up to $50.0 million of our common stock with an expiration date of December 31, 2017. The repurchase program may be executed from time to time, subject to general business and market conditions and other investment opportunities, through open market or privately negotiated transactions, including through plans designed under Rule 10b5-1 of the Securities Exchange Act of 1934. During the twelve and twenty-four weeks ended ~~March~~June 2113, 2017, we did not purchase any shares under the share repurchase plan. During the twelve and ~~March~~twenty-four weeks ended June 2214, 2016, we ~~did~~purchased ~~not~~104,325 ~~purchase any~~ shares under the share repurchase plan. As of ~~March~~June 2113, 2017, approximately $47.7 million remained authorized under the share repurchase plan.

15. COMMITMENTS AND CONTINGENCIES

We routinely enter into contractual obligations to procure assets used in the day to day operations of our business and to invest in our information technology systems. As of ~~March~~June 2113, 2017, we had capital commitments of $2923.1 million.

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

We are 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.

16. RELATED PARTY TRANSACTIONS

We had receivables of $0.12 million and $0.2 million, as of ~~March~~June 2113, 2017 and December 27, 2016, respectively, for outstanding advances from a golf club joint venture in which we have an equity method investment. We recorded $0.1 million and $0.1 million in management fees from this venture, in the twenty-four weeks ended June 13, 2017 and June 14, 2016, respectively. There were no material management fees recorded for the twelve weeks ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016. As of ~~March~~June 2113, 2017 and December 27, 2016, we had a receivable of $42.76 million and $3.5 million, respectively, for volume rebates from Avendra, LLC, the supplier firm in which we have an equity method investment. See Note 4.

17. SUBSEQUENT EVENTS

On ~~February~~June 920, 2017, ~~our~~we ~~board~~purchased ofMedina ~~directors~~Golf ~~declared~~and Country Club, a ~~cash~~private ~~dividend~~country club in Medina, Minnesota, for a purchase price of $84.57 million,. orDue ~~$0.13~~to ~~per~~the ~~share~~timing of ~~common~~this ~~stock~~acquisition, the topurchase ~~all~~price ~~common~~allocation ~~stockholders~~was ofnot ~~record~~yet atavailable ~~the~~for ~~close~~disclosure as of ~~business~~the ondate ~~April 5,~~these ~~2017.~~financial ~~This~~statements ~~dividend~~were ~~was~~available ~~paid~~to ~~on April~~be ~~17, 2017~~issued.

On ~~April~~June 1120, 2017, we ~~purchased~~borrowed ~~Oakhurst Country Club, a private golf club in Clarkston, Michigan, for a purchase price of~~ $620.0 million. ~~Due~~on to the ~~timing~~revolving ofcredit ~~this acquisition, the purchase price allocation was not yet available for disclosure as of the date these financial statements were available to be issued~~facility.

On July 9, 2017, our board of directors declared a cash dividend of $8.5 million, or $0.13 per share of common stock, to all common stockholders of record at the close of business on July 21, 2017. This dividend is expected to be paid on July 28, 2017.

On July 9, 2017, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among Constellation Club Parent, Inc., a Delaware corporation (“Parent”), Constellation Merger Sub Inc., a Nevada corporation and a wholly-owned subsidiary of Parent (“Merger Sub”), and Holdings. Parent and Merger Sub are affiliates of certain funds (the “Apollo Funds”) managed by affiliates of Apollo Global Management, LLC (together with its consolidated subsidiaries, “Apollo”). The Merger Agreement provides for the merger of Merger Sub with and into the Company, on the terms and subject to the conditions set forth in the Merger Agreement (the “Merger”), with the Company continuing as the surviving corporation in the Merger.

Pursuant to the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of our common stock issued and outstanding immediately prior to the Effective Time (other than certain shares owned by us, Parent or any of our or Parent’s direct or indirect wholly owned subsidiaries) will be converted into the right to receive $17.12 per share in cash, without interest and subject to tax withholding (the “Merger Consideration”).

The Merger Agreement contains representations, warranties and covenants of Holdings, including a covenant which obligates us to generally conduct our business in the ordinary course of business in all material respects consistent with past practice from the date of the Merger Agreement through the Effective Time and restricts our ability to take certain actions, including our ability to declare and/or pay dividends (other than the one-time quarterly dividend of $0.13 per share declared on July 9, 2017) and to repurchase shares of our common stock under our share repurchase program.

The Merger Agreement also provides for certain termination rights for both us and Parent. We are obligated to pay Parent a termination fee of $34.2 million in certain circumstances, including (a) if our board of directors changes its recommendation and Parent terminates the Merger Agreement, (b) if, among other things, our stockholders do not approve the Merger Agreement at the stockholder meeting or the Merger is not consummated by the Outside Date (as such term is defined in the Merger Agreement) and we enter into a definitive agreement with respect to a Superior Proposal (as defined in the Merger Agreement) within 12 months after such termination, or (c) if we terminate the Merger Agreement in accordance with certain procedures set forth in the Merger Agreement in order to enter into a definitive agreement with a third party with respect to a Superior Proposal. The Merger Agreement also provides that Parent will be required to pay us a reverse termination fee of $74.2 million if (x) the conditions to our closing obligation are satisfied, (y) Parent and Merger Sub fail to consummate the closing when required and (z) we terminate the Merger Agreement after notifying Parent that we are irrevocably ready, willing and able to consummate the closing. In addition, we will be required to reimburse all fees and expenses that Parent incurred in connection with the Merger Agreement and the transactions contemplated thereby, up to $6.25 million, if the Merger Agreement is terminated by Parent due to a material breach by us of our obligations under the Merger Agreement or if the Merger Agreement is terminated by either Parent or us due to a failure to obtain our stockholders’ approval of the Merger Agreement.

The Merger has been unanimously approved by our board of directors. Closing of the transaction is subject to the approval of our stockholders, regulatory approvals and customary conditions and is expected to close in the fourth quarter of 2017.

The Wells Fargo Mortgage Loan contains language whereby we would be in default upon a change in control. Effective on July 9, 2017, we obtained a waiver to this change in control event of default as it relates to The Merger.

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

The following discussion of our financial condition and results of operations should be read together with the consolidated condensed financial statements and related notes included in “Item 1. Financial Statements” of this quarterly report and in conjunction with the audited consolidated financial statements, related notes and Management's Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 27, 2016 contained in our annual report on Form 10-K, as amended by the Form 10-K/A filed on March 27, 2017 and the Form 10-K/A filed on April 26, 2017 (“2016 Annual Report”).

Forward-Looking Statements

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


•	our ability to attract and retain club members;


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


•	adverse conditions affecting the United States economy;


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


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


•	impairments to the suitability of our club locations;


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


•	seasonality of demand for our services and facilities usage;


•	increases in the level of competition we face;


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


•	increases in the cost of labor;


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


•	decreasing values of our investments;


•	illiquidity of real estate holdings;


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


•	unsuccessful or burdensome acquisitions, including complications in integrating acquired businesses and properties into our operations;


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


•	insufficient insurance coverage and uninsured losses;


•	accidents or injuries which occur at our properties;


•	adverse judgments or settlements;


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


•	future environmental regulation, expenditures and liabilities;


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


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


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


•	write-offs of goodwill or other assets;


•	risks related to tax examinations by the IRS and other tax authorities in jurisdictions in which we operate;


•	significant changes in our stock price, including those caused by future sales of our common stock;


•	our ability to declare and pay dividends;


•	information published by securities analysts or other market participants that negatively impacts our stock price and trading volume;


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


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


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


•	increased costs and substantial increased time of our management team required as a result of operating as a public company;


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


•	our need to generate cash to service our indebtedness;


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


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

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

• ~~our~~the ~~variable~~occurrence ~~rate~~of ~~indebtedness~~any event, change or other circumstances that could ~~cause~~give ~~our~~rise ~~debt~~to ~~service~~the ~~obligations~~termination of the Merger Agreement, the inability to ~~increase~~complete ~~significantly;~~the ~~and~~Merger due to the failure to obtain stockholder approval for the Merger or the failure to satisfy other conditions to completion of the Merger, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the transaction;


•	risks related to disruption of management’s attention from our ongoing business operations due to the Merger;


•	the effect of the announcement of the Merger on our relationships with our members, operating results and business generally;


•	the risk that certain approvals or consents will not be received in a timely manner or that the Merger will not be consummated in a timely manner; and


•	other factors described herein and in our 2016 Annual Report filed with the Securities and Exchange Commission (“SEC”).

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

Overview

We are a leading owner-operator of private golf and country clubs and business, sports and alumni clubs in North America. As of ~~March~~June 2113, 2017, our portfolio of ~~207~~204 owned or operated clubs, with over 184,000 memberships, served over 430,000 individual members. Our operations are organized into two principal business segments: (1) golf and country clubs and (2) business, sports and alumni clubs. We own, lease or operate through joint ventures ~~153~~152 golf and country clubs and manage ~~nine~~eight golf and country clubs. Likewise, we lease or operate through a joint venture 4241 business, sports and alumni clubs and manage three business, sports and alumni clubs. We are the largest owner of private golf and country clubs in the United States and own the underlying real estate for ~~130~~129 of our ~~162~~160 golf and country clubs. Our golf and country clubs include ~~138~~137 private country clubs, 16 semi-private clubs and ~~eight~~seven public golf courses. Our business, sports and alumni clubs include 29 business clubs, 87 business and sports clubs, six alumni clubs, and two sports clubs. Our facilities are located in 27 states, the District of Columbia and two foreign countries.

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

Recent Developments

On July 9, 2017, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with affiliates of certain funds (the “Apollo Funds”) managed by affiliates of Apollo Global Management, LLC pursuant to which affiliates of the Apollo Funds will acquire us for $17.12 per share in an all-cash transaction. The transaction has been unanimously approved by our board of directors. Closing of the transaction is subject to the approval of our stockholders, regulatory approvals and customary conditions and is expected to close in the fourth quarter of 2017. As a result of the transaction, we will become a wholly-owned subsidiary of affiliates of the Apollo Funds and our shares of common stock will be delisted from the New York Stock Exchange and deregistered under the Securities Exchange Act of 1934, as amended.

For additional information regarding this transaction, see Note 17 to the consolidated condensed financial statements within Item 1 of this report on Form 10-Q.

Factors Affecting our Business

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

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

Enrollment and Retention of Members

Our success depends on our ability to attract and retain members at our clubs and maintain or increase usage of our facilities. Historically, we have experienced varying levels of membership enrollment and attrition rates and, in certain areas, decreased levels of usage of our facilities. We devote substantial efforts to maintaining member and guest satisfaction, although many of the factors affecting club membership and facility usage are beyond our control.

28We offer various programs at our clubs designed to minimize future attrition rates by increasing member satisfaction and usage. These include programs that are designed to engage current and newly enrolled members in activities and groups that go beyond their home club. Additionally, these programs may grant our members discounts on meals and other items in order to increase their familiarity with and usage of their club’s amenities. One such program is our Optimal Network Experiences program (“O.N.E.”), an upgrade product that combines what we refer to as “comprehensive club, community and world benefits”. With this offering, members typically receive 50% off a la carte dining at their home club; preferential offerings to clubs in their community (including those owned by us), as well as at local spas, restaurants and other venues; and complimentary privileges currently to more than 300 golf and country, business, sporting and athletic clubs when traveling outside of their community with additional offerings and discounts to more than 1,000 renowned hotels, resorts, restaurants and entertainment venues. As of June 13, 2017 and December 27, 2016, approximately 56% and 54% of our memberships were enrolled in one or more of our upgrade programs, respectively. As of June 13, 2017, 156 of our clubs offered O.N.E., compared to 153 as of December 27, 2016.

We offer various programs at our clubs designed to minimize future attrition rates by increasing member satisfaction and usage. These include programs that are designed to engage current and newly enrolled members in activities and groups that go beyond their home club. Additionally, these programs may grant our members discounts on meals and other items in order to increase their familiarity with and usage of their club’s amenities. One such program is our Optimal Network Experiences program (“O.N.E.”), an upgrade product that combines what we refer to as “comprehensive club, community and world benefits”. With this offering, members typically receive 50% off a la carte dining at their home club; preferential offerings to clubs in their community (including those owned by us), as well as at local spas, restaurants and other venues; and complimentary privileges currently to more than 300 golf and country, business, sporting and athletic clubs when traveling outside of their community with additional offerings and discounts to more than 1,000 renowned hotels, resorts, restaurants and entertainment venues. As of March 21, 2017 and December 27, 2016, approximately 54% of our memberships were enrolled in one or more of our upgrade programs. As of March 21, 2017, 156 of our clubs offered O.N.E., compared to 153 as of December 27, 2016.

The following table presents our membership counts for clubs which we own, lease or operate through a joint venture, excluding managed clubs, at the end of the periods indicated.

March 21, 2017

December 27, 2016

Change

% Change

June 13, 2017

December 27, 2016

Change

% Change

Golf and Country Clubs (1)

~~122~~124,~~117~~028

120,~~804~~076

13,~~313~~952

13.13

Business, Sports and Alumni Clubs (1)

5150,~~893~~320

5250,~~244~~149

~~(351~~171

)

(0.73

Total memberships at end of period (1)

174,~~010~~348

~~173~~170,~~048~~225

~~962~~4,123

02.64

_______________________

(1) Membership counts exclude memberships at managed clubs. As of ~~March~~June 2113, 2017, we had 109,~~395~~692 memberships at managed clubs, including 4,~~985~~314 memberships at golf and country clubs and 5,~~410~~378 memberships at business, sports and alumni clubs, excluding certain international club memberships.

Seasonality of Demand and Fluctuations in Quarterly Results

The first, second and third fiscal quarters each consist of twelve weeks, whereas, the fourth quarter consists of sixteen or seventeen weeks of operations. Our business clubs typically generate a greater share of their yearly revenues in the fourth fiscal quarter, which includes the holiday and year-end party season. Usage of our golf and country club facilities typically declines significantly during the first and fourth fiscal quarters, when colder temperatures and shorter days reduce the demand for golf and golf-related activities. As a result of these factors, we usually generate a disproportionate share of our revenues and cash flows in the second, third and fourth fiscal quarters of each year and have lower revenues and cash flows in the first quarter. In addition, the timing of purchases, sales, leasing of facilities or divestitures, has caused and may cause our results of operations to vary significantly in otherwise comparable periods. To clarify variations caused by newly acquired or divested operations, we employ a same store analysis for year-over-year comparability purposes. See “Basis of Presentation—Same Store Analysis”.

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

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

Further, the timing of distributions from our equity method investments, including Avendra, LLC, a purchasing cooperative of hospitality companies, varies due to factors outside of our control. Adjusted EBITDA, as defined in Note 12 of our consolidated condensed financial statements included elsewhere herein, is impacted when cash distributions from equity method investments vary from the equity in earnings recognized for the related investments.

Reinvention Capital Investments

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

Club Acquisitions and Dispositions

We continually explore opportunities to expand our business through select acquisitions of attractive properties. We also evaluate joint ventures and management opportunities that allow us to expand our operations and increase our recurring revenue base without substantial capital outlay. We believe that the fragmented nature of the private club industry presents significant opportunities for us to expand our portfolio by leveraging our operational expertise and by taking advantage of market conditions.

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

	Golf & Country Clubs									Business, Sports & Alumni Clubs
Acquisitions / (Dispositions)	OwnedClubs		LeasedClubs		Managed		JointVenture	Total		OwnedClubs		LeasedClubs		Managed	JointVenture	Total
December 29, 2015	124		18		10		6	158		1		44		3	1	49
First Quarter 2016 (1)	2		—		(1	)	—	1		(1	)	—		—	—	(1	)
Second Quarter 2016 (2)	—		—		1		—	1		—		—		—	—	—
Third Quarter 2016 (3)	1		—		(1	)	—	—		—		—		—	—	—
Fourth Quarter 2016 (4)	—		(1	)	—		—	(1	)	—		(1	)	—	—	(1	)
December 27, 2016	127		17		9		6	159		—		43		3	1	47
First Quarter 2017 (5)	3		—		—		—	3		—		(2	)	—	—	(2	)
March 21, 2017	130		17		9		6	162		—		41		3	1	45
Second Quarter 2017 (6)	(1	)	—		(1	)	—	(2	)	—		(1	)	—	—	(1	)
June 13, 2017	129		17		8		6	160		—		40		3	1	44

_______________________


(1)	In December 2015, during the twelve weeks ended March 22, 2016, the management agreement with Jefferson

Lakeside Country Club, a private country club located in Richmond, Virginia was terminated. Additionally, in

December 2015, during the twelve weeks ended March 22, 2016, we closed Greenspoint Club, an owned business and sports club located in Houston, Texas. In February 2016, we purchased Marsh Creek Country Club, a private country club in St. Augustine, Florida. In March 2016, we purchased Santa Rosa Golf and Country Club, a private country club in Santa Rosa, California.


(2)	In June 2016, we entered into a management agreement with Country Club of Columbus, a private country club located in Columbus, Georgia.


(3)	In July 2016, the management agreement with Mill Creek Country Club, a private country club located in Mill Creek,

Washington was terminated. In August 2016, we purchased Heritage Golf Club, a private country club in Hilliard,

Ohio.

(4) In September 2016, the lease of Airways Golf Club, a leased public golf course in Fresno, California, was terminated.

Additionally, in December 2016, we closed University Club, a leased business and sports club located in Jacksonville,

Florida.

(5) In January 2017, we ceased operating The Club at Key Center, a leased business club in Cleveland, Ohio. In February 2017, we purchased Eagle’s Nest Country Club, a private ~~golf~~country club in Phoenix, Maryland, and North Hills Country Club, a private country club in Glenside, Pennsylvania. In March 2017, we purchased Norbeck Country Club, a private country club in Rockville, Maryland. Additionally, in March 2017, we ceased operating Piedmont Club, a leased business and sports club in Winston-Salem, North Carolina.

30(6) In April 2017, we purchased Oakhurst Golf and Country Club, a private country club in Clarkston, Michigan, and terminated the management agreement with Cateechee Golf Club, a public golf facility located in Hartwell, Georgia. In June 2017, we ceased operating Houston City Club, a leased business and sports club in Houston, Texas. Additionally, in June 2017, we sold Heron Bay Golf Club, a private country club in Locust Grove, Georgia, and Georgia National Golf Club, a private country club in McDonough, Georgia.

~~Club,~~Subsequent ato ~~private~~June 13, ~~golf~~2017, ~~club~~on ~~in Glenside~~June 20, ~~Pennsylvania. In March~~ 2017, we purchased ~~Norbeck~~Medina Golf and Country Club, a private ~~golf~~country club in ~~Rockville~~Medina, ~~Maryland~~Minnesota. ~~Additionally, in March 2017, we ceased operating Piedmont Club, a leased business and sports club in Winston-Salem, North Carolina.~~

Subsequent to March 21, 2017, on April 11, 2017, we purchased Oakhurst Golf and Country Club, a private golf club in Clarkston, Michigan.

Critical Accounting Policies and Estimates

The process of preparing financial statements in conformity with GAAP requires us to use estimates and assumptions that affect the amounts reported in the consolidated condensed financial statements and accompanying notes included elsewhere in this report. We base these estimates and assumptions upon the best information available to us at the time the estimates or assumptions are made. Accordingly, our actual results could differ materially from our estimates. The most significant estimates made by management include the expected life of an active membership over which we amortize initiation fees and deposits, our incremental borrowing rate which is used to accrete membership initiation deposit liabilities, assumptions and judgments used in estimating unrecognized tax benefits relating to uncertain tax positions and inputs for impairment testing of goodwill, intangible assets and long-lived assets.

For additional information about our critical accounting policies and estimates, see the disclosure included in our 2016 Annual Report.

Basis of Presentation

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

We also disclose corporate expenses and other operations, 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. Corporate expenses and other operations also includes corporate assets such as cash, goodwill, intangible assets, and loan origination fees.

EBITDA and Adjusted EBITDA

Adjusted EBITDA is a key financial measure used by our management to (1) internally measure our operating performance, (2) evaluate segment performance and allocate resources and support certain valuation analyses and (3) assess our ability to service our debt, incur additional debt, make acquisitions, pay dividends and make capital expenditures. We believe that Adjusted EBITDA is useful to investors and lenders as a performance measure because it adjusts our operating results to be reflective of our core, ongoing, operating performance. As such, Adjusted EBITDA provides relevant information about trends for the periods presented and adjusts for the impact of certain items on a consistent basis from period to period. We believe this measure allows investors and lenders to evaluate performance using the same metrics that management uses to evaluate performance and plan annual budgets. We also believe Adjusted EBITDA is useful as a liquidity measure because it demonstrates our ability to service our debt, incur additional debt, make acquisitions, pay dividends and make capital expenditures. See Note 12 of our consolidated condensed financial statements included elsewhere herein for the definition of Adjusted EBITDA.

3134

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

	Twelve Weeks Ended						Twenty-Four ~~Quarters~~Weeks Ended						Four Quarters Ended
	March 21, 2017			March 22, 2016			March 21, 2017
	June 13, 2017			June 14, 2016			June 13, 2017			June 14, 2016			June 13, 2017
	(dollars in thousands)
	(in thousands)
Net (loss) income	$	(7,506	)	$	(8,313	)	$	4,832
Net income (loss)	$	791		$	5,750		$	(6,715	)	$	(2,563	)	$	(127	)
Interest expense	19,~~550~~234			2019,~~420~~938			8638,~~318~~784			40,358			85,614
Income tax (benefit) expense	(41,~~513~~499		)	(54,~~537~~078		)	2(6,~~372~~012		)	(1,459		)	(3,205		)
Interest and investment income	(~~165~~155		)	(~~126~~127		)	(~~647~~320		)	(253		)	(675		)
Depreciation and amortization	2425,~~996~~384			24,~~214~~355			~~107~~50,~~982~~380			48,569			109,011
EBITDA	$	3243,~~362~~755		$	3053,~~658~~994		$	~~200~~76,~~857~~117		$	84,652		$	190,618
Impairments and disposition of assets (1)	26,~~934~~133			23,~~917~~238			169,~~991~~067			6,155			19,886
Loss from divested clubs (2)	217			458			379
Income from divested clubs (2)	(71		)	(373		)	(166		)	(342		)	(694		)
Non-cash adjustments (3)	—			~~463~~(842		)	~~(208~~—		)	(379		)	634
Acquisition related costs (4)	~~595~~1,213			~~686~~257			1,~~318~~808			943			2,274
Capital structure costs (5)	—770			~~742~~208			~~1,098~~770			950			1,660
Centralization and transformation costs (6)	26,~~398~~646			2,~~418~~061			9,~~786~~044			4,479			14,371
Other adjustments (7)	21,~~230~~308			1,~~086~~184			63,~~220~~538			2,270			6,343
Equity-based compensation expense (8)	12,~~939~~138			1,~~170~~830			74,~~774~~077			3,000			8,082
Deferred revenue adjustment (9)	1,~~066~~000			1,~~392~~302			52,~~093~~066			2,690			4,780
Adjusted EBITDA	$	4362,~~741~~892		$	4162,~~990~~859		$	~~249~~106,~~308~~321		$	104,418		$	247,954

The following table provides a reconciliation of net cash provided by operating activities to Adjusted EBITDA for the periods indicated:

	Twelve Weeks Ended						Twenty-Four ~~Quarters~~Weeks Ended						Four Quarters Ended
	March 21, 2017			March 22, 2016			March 21, 2017
	June 13, 2017			June 14, 2016			June 13, 2017			June 14, 2016			June 13, 2017
	(dollars in thousands)
	(in thousands)
Net cash provided by operating activities	$	1744,~~707~~679		$	2247,~~311~~925		$	~~153~~62,~~050~~386		$	70,236		$	149,804
Interest expense	19,~~550~~234			2019,~~420~~938			8638,~~318~~784			40,358			85,614
Income tax (benefit) expense	(41,~~513~~499		)	(54,~~537~~078		)	2(6,~~372~~012		)	(1,459		)	(3,205		)
Interest and investment income	(~~165~~155		)	(~~126~~127		)	(~~647~~320		)	(253		)	(675		)
Loss from divested clubs (2)	217			458			379
Income from divested clubs (2)	(71		)	(373		)	(166		)	(342		)	(694		)
Non-cash adjustments (3)	—			~~463~~(842		)	~~(208~~—		)	(379		)	634
Acquisition related costs (4)	~~595~~1,213			~~686~~257			1,~~318~~808			943			2,274
Capital structure costs (5)	—770			~~742~~208			~~1,098~~770			950			1,660
Centralization and transformation costs (6)	26,~~398~~646			2,~~418~~061			9,~~786~~044			4,479			14,371
Other adjustments (7)	21,~~230~~308			1,~~086~~184			63,~~220~~538			2,270			6,343
Deferred revenue adjustment (9)	1,~~066~~000			1,~~392~~302			52,~~093~~066			2,690			4,780
Certain adjustments to reconcile net (loss) income to operating cash flows (10)	4,656			(2,323		)	(15,471		)
Certain adjustments to reconcile net income (loss) to operating cash flows (10)	(10,233		)	(12,752		)	(5,577		)	(15,075		)	(12,952		)
Adjusted EBITDA	$	4362,~~741~~892		$	4162,~~990~~859		$	~~249~~106,~~308~~321		$	104,418		$	247,954

______________________

The following footnotes relate to the two preceding tables.


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

(2) Net ~~loss or~~ income from divested clubs that do not qualify as discontinued operations in accordance with GAAP.


(3)	Includes non-cash items related to purchase accounting associated with the acquisition of CCI in 2006 by affiliates of KSL.


(4)	Represents legal and professional fees related to the acquisition of clubs.


(5)	Represents legal and professional fees related to our capital structure, including debt issuance and amendment costs and equity offering costs.


(6)	Includes fees and expenses associated with initial compliance with SOX 404(b), which were primarily incurred in fiscal year 2015 and the twelve weeks ended March 22, 2016, and related centralization and transformation of administrative processes, finance processes and related IT systems.


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


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

(10) Includes the following adjustments to reconcile net income (loss) to net cash provided by operating activities from our consolidated condensed statements of cash flows: Net change in prepaid expenses and other assets, net change in receivables and membership notes, net change in accounts payable and accrued liabilities, net change in other current liabilities, bad debt expense, equity in loss (earnings) from unconsolidated ventures, gain on investment in unconsolidated ventures, distribution from investment in unconsolidated ventures, debt issuance costs and term loan discount, accretion of discount on member deposits, net change in deferred tax assets and liabilities and net change in other long-term liabilities. Certain other adjustments to reconcile net income (loss) to net cash provided by operating activities are not included as they are excluded from both net cash provided by operating activities and Adjusted EBITDA.

Same Store Analysis

We employ “same store” analysis techniques for a variety of management purposes. By our definition, clubs are evaluated at the beginning of each year and considered same store once they have been fully operational for one fiscal year. Newly acquired or opened clubs, clubs added under management agreements and divested clubs are not classified as same store; however, clubs held for sale are considered same store until they are divested. Once a club has been divested, it is removed from the same store classification for all periods presented. See summarized financial information by segment in Note 12 of our consolidated condensed financial statements included elsewhere herein. For same store year-over-year comparisons, clubs must be open the entire year for both years in the comparison to be considered same store, therefore, same store facility counts and operating results may vary depending on the years of comparison. We believe this approach provides for a more effective analysis tool because it allows us to assess the results of our core operating strategies by tracking the performance of our established same store clubs without the inclusion of divested clubs and newly acquired or opened clubs.

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

3336

Results of Operations

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

	Twelve Weeks Ended										Twenty-Four Weeks Ended
	March 21, 2017			% of Revenue		March 22, 2016			% of Revenue
	June 13, 2017			% of Revenue		June 14, 2016			% of Revenue		June 13, 2017			% of Revenue		June 14, 2016			% of Revenue
	(in thousands, except per share amounts)
Revenues:
Club operations	$	~~166~~194,~~161~~780		7570.15	%	$	~~160~~189,~~689~~203		7470.83	%	$	360,941		72.5	%	$	349,892		72.3	%
Food and beverage	5480,~~061~~366			2429.41	%	5278,~~856~~941			2429.63	%	134,427			27.0	%	131,797			27.2	%
Other revenues	1,~~056~~207			0.54	%	~~1,328~~830			0.63	%	2,263			0.5	%	2,158			0.4	%
Total revenues	~~221~~276,~~278~~353					~~214~~268,~~873~~974					497,631					483,847
Direct and selling, general and administrative expenses:
Club operating costs exclusive of depreciation	~~146~~175,~~297~~953			6663.17	%	~~142~~170,~~354~~157			6663.3	%	322,250			64.8	%	312,511			64.6	%
Cost of food and beverage sales exclusive of depreciation	1926,~~661~~480			8.9.6	%	1825,~~840~~498			89.85	%	46,141			9.3	%	44,338			9.2	%
Depreciation and amortization	2425,~~996~~384			119.32	%	24,~~214~~355			119.31	%	50,380			10.1	%	48,569			10.0	%
Provision for doubtful accounts	~~909~~806			0.43	%	~~380~~704			0.23	%	1,715			0.3	%	1,084			0.2	%
Loss on disposals of assets	21,~~934~~957			10.37	%	2,~~917~~738			1.40	%	4,891			1.0	%	5,655			1.2	%
Equity in (earnings) loss from unconsolidated ventures	(2,181		)	(1.0	)%	15			—	%
Impairment of assets	4,176			1.5	%	500			0.2	%	4,176			0.8	%	500			0.1	%
Selling, general and administrative	21,296			9.6	%	19,709			9.2	%
Equity in earnings from unconsolidated ventures	(1,448		)	(0.5	)%	(2,118		)	(0.8	)%	(3,629		)	(0.7	)%	(2,103		)	(0.4	)%
Operating income	7,366			3.3	%	6,444			3.0	%
Selling, general and administrative	24,674			8.9	%	17,501			6.5	%	45,970			9.2	%	37,210			7.7	%
Interest and investment income	165			0.1	%	126			0.1	%
Operating income	18,371			6.6	%	29,639			11.0	%	25,737			5.2	%	36,083			7.5	%
Interest expense	(19,550		)	(8.8	)%	(20,420		)	(9.5	)%
Interest and investment income	155			0.1	%	127			—	%	320			0.1	%	253			0.1	%
Loss before income taxes	(12,019		)	(5.4	)%	(13,850		)	(6.4	)%
Interest expense	(19,234		)	(7.0	)%	(19,938		)	(7.4	)%	(38,784		)	(7.8	)%	(40,358		)	(8.3	)%
Income tax benefit	4,513			2.0	%	5,537			2.6	%
(Loss) income before income taxes	(708		)	(0.3	)%	9,828			3.7	%	(12,727		)	(2.6	)%	(4,022		)	(0.8	)%
NET LOSS	(7,506		)	(3.4	)%	(8,313		)	(3.9	)%
Income tax benefit (expense)	1,499			0.5	%	(4,078		)	(1.5	)%	6,012			1.2	%	1,459			0.3	%
Net income attributable to noncontrolling interests	(17		)	—	%	(101		)	—	%
NET INCOME (LOSS)	791			0.3	%	5,750			2.1	%	(6,715		)	(1.3	)%	(2,563		)	(0.5	)%
Net loss attributable to ClubCorp	$	(7,523	)	(3.4	)%	$	(8,414	)	(3.9	)%
Net income attributable to noncontrolling interests	(123		)	—	%	(171		)	(0.1	)%	(140		)	—	%	(272		)	(0.1	)%
WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC	64,442					64,474
Net income (loss) attributable to ClubCorp	$	668		0.2	%	$	5,579		2.1	%	$	(6,855	)	(1.4	)%	$	(2,835	)	(0.6	)%
WEIGHTED AVERAGE SHARES OUTSTANDING, DILUTED	64,442					64,474
WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC	64,555					64,518					64,498					64,496
LOSS PER COMMON SHARE:
WEIGHTED AVERAGE SHARES OUTSTANDING, DILUTED	64,555					64,556					64,498					64,496
Net loss attributable to ClubCorp, Basic	$	(0.12	)			$	(0.13	)
EARNINGS PER COMMON SHARE:
Net loss attributable to ClubCorp, Diluted	$	(0.12	)			$	(0.13	)
Net income (loss) attributable to ClubCorp, Basic	$	0.01				$	0.08				$	(0.11	)			$	(0.05	)
Net income (loss) attributable to ClubCorp, Diluted	$	0.01				$	0.08				$	(0.11	)			$	(0.05	)

3437

Comparison of the Twelve Weeks Ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016

The following table presents key financial information derived from our consolidated condensed statements of operations for the twelve weeks ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016.

	Twelve Weeks Ended
	March 21, 2017			March 22, 2016			Change			% Change
	June 13, 2017			June 14, 2016			Change			% Change
	(dollars in thousands)
Total revenues	$	~~221~~276,~~278~~353		$	~~214~~268,~~873~~974		$	67,~~405~~379		32.07	%
Club operating costs and expenses exclusive of depreciation (1)	~~166~~203,~~867~~239			~~161~~196,~~574~~359			56,~~293~~880			3.35	%
Depreciation and amortization	2425,~~996~~384			24,~~214~~355			~~782~~1,029			34.2	%
Loss on disposals of assets	21,~~934~~957			2,~~917~~738			17(781		)	0(28.65	)%
Equity in (earnings) loss from unconsolidated ventures	(2,181		)	15			(2,196		)	(14,640.0	)%
Impairment of assets	4,176			500			3,676			735.2	%
Selling, general and administrative	21,296			19,709			1,587			8.1	%
Equity in earnings from unconsolidated ventures	(1,448		)	(2,118		)	670			31.6	%
Operating income	7,366			6,444			922			14.3	%
Selling, general and administrative	24,674			17,501			7,173			41.0	%
Interest and investment income	165			126			39			31.0	%
Operating income	18,371			29,639			(11,268		)	(38.0	)%
Interest expense	(19,550		)	(20,420		)	870			4.3	%
Interest and investment income	155			127			28			22.0	%
Loss before income taxes	(12,019		)	(13,850		)	1,831			13.2	%
Interest expense	(19,234		)	(19,938		)	704			3.5	%
Income tax benefit	4,513			5,537			(1,024		)	(18.5	)%
(Loss) income before income taxes	(708		)	9,828			(10,536		)	(107.2	)%
Net loss	$	(7,506	)	$	(8,313	)	$	807		9.7	%
Income tax benefit (expense)	1,499			(4,078		)	5,577			136.8	%
Net income	$	791		$	5,750		$	(4,959	)	(86.2	)%

__________________________


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

Total revenues of $~~221~~276.34 million for the twelve weeks ended ~~March~~June 2113, 2017 increased $67.4 million, or 32.07%, over the twelve weeks ended ~~March~~June 2214, 2016. Same store golf and country club revenue increased by $53.28 million driven primarily by increases in same store dues, ~~golf~~food ~~operations~~and beverage revenue and ~~food~~golf ~~and~~operations ~~beverage~~ revenue. These factors are discussed below under “Segment Operations—Golf and Country Clubs”. In addition, our same store business, sports and alumni club segment revenue ~~increased~~decreased $0.23 million primarily due to ~~increases~~decreases in food and beverage revenue offset by aincreases ~~decrease~~ in other revenue and same store dues. These factors are discussed below under “Segment Operations—Business, Sports and Alumni Clubs”. Additionally, total revenue attributable to golf and country club ~~revenue attributable to club~~ properties added in 2016 and 2017 increased $25.1 million. ~~The~~Revenue ~~remaining~~from ~~change~~other ~~includes~~operations aincreased $01.45 million, ~~increase~~including $0.7 million in ~~revenues~~reimbursements ~~from~~for ~~other~~certain ~~operations~~operating ~~offset~~costs ~~primarily~~at bysame ~~decreases~~store inmanaged ~~revenue~~clubs. Revenue related to divested clubs, ~~including~~decreased $13.50 million, inincluding ~~revenues from previously owned and leased clubs and~~ $0.36 million in reimbursements for certain operating costs at divested managed clubs. The reimbursements for operating costs at managed clubs do not include a markup and have no net impact on operating income, as such costs are included within club operating costs and expenses.

Club operating costs and expenses totaling $~~166~~203.92 million for the twelve weeks ended ~~March~~June 2113, 2017 increased $56.39 million, or 3.35%, compared to the twelve weeks ended ~~March~~June 2214, 2016. The increase is largely due to $2.5.6 million of club operating costs and expenses from club properties added in 2016 and 2017, a $1.94 million increase in variable labor costs, food and beverage cost of goods sold and retail cost of goods sold associated with higher revenues, a $10.8 million increase in ~~insurance expense related to higher claims, a $0.7 million increase in~~ service fees and a $0.45 million increase in ~~equity-based~~rent ~~compensation~~ offset by a $12.71 million decrease in costs related to divested clubs. ~~and~~Additionally, acertain ~~decrease~~operating ofcosts increased $0.37 million inat ~~certain~~same ~~operating~~store ~~costs~~managed clubs and decreased $0.6 million at divested managed clubs,. ~~which~~These operating costs at managed clubs are offset by reimbursements recorded within revenue, resulting in no net impact on operating income. The remaining change is primarily comprised of an increase in other expenses.

Depreciation and amortization expense increased $01.80 million, or 34.2%, during the twelve weeks ended ~~March~~June 2113, 2017 compared to the twelve weeks ended ~~March~~June 2214, 2016. Depreciation expense increased $1.24 million due to our increased fixed asset balances primarily related to club acquisitions, along with the related impact of reinvention and expansion capital spend. Amortization expense decreased $0.4 million largely due to trade names and member relationships that were fully amortized during fiscal year 2016. During the twelve weeks ended ~~March~~June 2113, 2017, depreciation and amortization for Golf and Country Clubs and Business, Sports and Alumni Clubs was $20.37 million and $2.54 million, respectively. During the twelve weeks ended ~~March~~June 2214, 2016, depreciation and amortization for Golf and Country Clubs and Business, Sports and Alumni clubs was $19.89 million and $2.7 million, respectively. These expenses were primarily ~~made~~comprised up of depreciation on our property and equipment and amortization of intangibles related to management contracts.

3538

Loss on disposal of assets for the twelve weeks ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016 of $2.90 million and $2.97 million, respectively, were largely comprised of losses on asset retirements during the normal course of business, including property and equipment disposed of in connection with our increased capital spend on reinventions and renovations. Our losses for the twelve weeks ended June 13, 2017 and June 14, 2016 were offset by $2.8 million and $0.5 million, respectively, of insurance proceeds received primarily related to rain and flooding events, that occurred during fiscal year 2016. During the twelve weeks ended ~~March~~June 2113, 2017, loss on disposal of assets for Golf and Country Clubs and Business, Sports and Alumni Clubs was $21.97 million and $0.12 million, respectively. During the twelve weeks ended ~~March~~June 2214, 2016, loss on disposal of assets for Golf and Country Clubs and Business, Sports and Alumni clubs was $2.67 million and $0.21 million, respectively. These expenses related primarily to asset retirements associated with our club reinventions and in the ordinary course of business offset by insurance proceeds received primarily related to rain and flooding events, that occurred during fiscal year 2016.

WeImpairment ~~recognize~~of assets of $4.2 million and $0.5 million for the ~~earnings~~twelve ofweeks ~~one~~ended ofJune 13, ~~our~~2017 ~~unconsolidated~~and ~~ventures~~June 14, ~~Avendra~~2016, ~~LLC~~respectively, ~~within~~were ~~equity~~largely incomprised ~~earnings~~of orimpairment ~~within~~losses ~~interest~~to property and ~~investment~~equipment ~~income,~~at ~~depending~~certain onof our clubs to adjust the ~~timing~~carrying amount of ~~cash~~certain ~~distributions~~property and equipment to its fair value, including assets at two golf and country clubs which were divested during the ~~investment~~twelve ~~balance~~weeks ended June 13, 2017, and impairment losses to management contract intangible assets. ~~Equity~~During inthe ~~earnings~~twelve ~~from~~weeks ~~unconsolidated~~ended ~~ventures~~June 13, 2017 and June 14, 2016, impairment of assets for Golf and Country Clubs was $23.25 million and anzero, ~~immaterial~~respectively. ~~loss~~During ~~for~~ the twelve weeks ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016, impairment of assets for Business, Sports and Alumni Clubs was $0.7 million and $0.5 million, respectively.

~~Selling~~We recognize the earnings of one of our unconsolidated ventures, ~~general~~Avendra, LLC, within equity in earnings or within interest and ~~administrative~~investment ~~expenses~~income, depending on the timing of ~~$21.3~~cash ~~million~~distributions ~~for~~and the ~~twelve~~investment ~~weeks~~balance. ~~ended~~Equity ~~March 21,~~in ~~2017~~earnings ~~increased~~from unconsolidated ventures was $1.64 million, orand 8$2.1%, ~~compared~~million tofor the twelve weeks ended ~~March~~June 2213, ~~2016.~~2017 ~~The~~and ~~major~~June 14, ~~components of selling~~2016, ~~general and administrative expenses are shown in the table below~~respectively.

	Twelve Weeks Ended
Components of selling, general and administrative expense (1)	March 21, 2017		March 22, 2016		Change			% Change
	(dollars in thousands)
Selling, general and administrative expense, excluding equity-based compensation and capital structure costs	$	20,120	$	18,167	$	1,953		10.8	%
Capital structure costs	—		742		(742		)	(100.0	)%
Equity-based compensation	1,176		800		376			47.0	%
Selling, general and administrative	$	21,296	$	19,709	$	1,587		8.1	%

Selling, general and administrative expenses of $24.7 million for the twelve weeks ended June 13, 2017 increased $7.2 million, or 41.0%, compared to the twelve weeks ended June 14, 2016. The major components of selling, general and administrative expenses are shown in the table below.



	Twelve Weeks Ended
Components of selling, general and administrative expense (1)	June 13, 2017		June 14, 2016		Change		% Change
	(dollars in thousands)
Selling, general and administrative expense, excluding equity-based compensation and capital structure costs	$	22,715	$	16,361	$	6,354	38.8	%
Capital structure costs	770		207		563		272.0	%
Equity-based compensation	1,189		933		256		27.4	%
Selling, general and administrative	$	24,674	$	17,501	$	7,173	41.0	%

______________________


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

Selling, general and administrative expenses, excluding equity-based compensation and capital structure costs, were $2022.17 million for the twelve weeks ended ~~March~~June 2113, 2017, an increase of $26.04 million, or 1038.8%, compared to the twelve weeks ended ~~March~~June 2214, 2016. This included ~~an increase of $3.0 million in legal settlement expenses and~~ increased costs of $14.84 million related to the design and implementation phase of our centralization and transformation of administrative processes, finance processes and related IT systems., ~~These~~an ~~increases~~increase ~~were~~of ~~offset by~~ $1.60 million ofin ~~lower~~professional ~~costs~~and ~~related~~legal tofees ~~our~~associated ~~initial compliance~~ with ~~SOX~~our ~~404(b),~~strategic aalternatives ~~$0.4~~review ~~million~~and ~~decrease~~an inincrease ~~severance~~of ~~expense and a~~ $0.45 million ~~decrease~~ in acquisition costs. WeThe ~~also~~remaining ~~had~~change ais ~~$0.4~~comprised ~~million~~of ~~decrease~~an increase in ~~ongoing~~general ~~support costs, including payroll, costs related to software agreements~~ and ~~service fees as part of our centralization and transformation of~~ administrative ~~processes, finance processes and related IT systems~~expenses.

Capital structure costs included within selling, general and administrative expenses of $0.78 million and $0.2 million during the twelve weeks ended ~~March~~June 2213, 2017 and June 14, 2016, respectively, were comprised of costs related to amendments to the credit agreement governing the Secured Credit Facilities.

Interest expense totaled $19.6 million and $20.4 million for the twelve weeks ended March 21, 2017 and March 22, 2016, respectively. The $0.9 million decrease in interest expense is primarily comprised of a $0.6 million decrease in interest on the term loan facility due primarily to a lower principal balance outstanding and a lower interest rate during the twelve weeks ended March 21, 2017 compared to the twelve weeks ended March 22, 2016 and a $0.2 million decrease in interest on our mortgage loans due primarily to a lower interest rate during the twelve weeks ended March 21, 2017 compared to the twelve weeks ended March 22, 2016. During the twelve weeks ended March 21, 2017, interest expense for Golf and Country Clubs and Business, Sports and Alumni Clubs was $4.4 million and $0.8 million, respectively. During the twelve weeks ended March 22, 2016, interest expense for Golf and Country Clubs and Business, Sports and Alumni clubs was $4.7 million and $1.1 million, respectively. The interest expense for Golf and Country Clubs was primarily driven by accretion expense related to membership initiation payments along with interest expense related to capital leases. The interest expense for Business, Sports and Alumni Clubs was primarily driven by accretion expense related to membership initiation payments. 39

36Interest expense totaled $19.2 million and $19.9 million for the twelve weeks ended June 13, 2017 and June 14, 2016, respectively. The $0.7 million decrease in interest expense is primarily comprised of a $0.7 million decrease in interest on the term loan facility due primarily to a lower principal balance outstanding and a lower interest rate during the twelve weeks ended June 13, 2017 compared to the twelve weeks ended June 14, 2016. During the twelve weeks ended June 13, 2017, interest expense for Golf and Country Clubs and Business, Sports and Alumni Clubs was $4.4 million and $0.9 million, respectively. During the twelve weeks ended June 14, 2016, interest expense for Golf and Country Clubs and Business, Sports and Alumni clubs was $4.7 million and $1.0 million, respectively. The interest expense for Golf and Country Clubs was primarily driven by accretion expense related to membership initiation payments along with interest expense related to capital leases. The interest expense for Business, Sports and Alumni Clubs was primarily driven by accretion expense related to membership initiation payments.

Income tax benefit for the twelve weeks ended ~~March~~June 2113, 2017 ~~decreased~~increased $15.06 million compared to the twelve weeks ended ~~March~~June 2214, 2016, and the effective tax rates were 37211.57% and 4041.05% for the twelve weeks ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016, respectively. The amount of tax expense or benefit recognized in interim financial statements is determined by multiplying the year-to-date pre-tax income or loss by the annual effective tax rate, which is an estimate of the expected relationship between tax expense or benefit for the full year to the pre-tax income or loss for the full year (pre-tax income or loss excluding unusual or infrequently occurring discrete items). For the twelve weeks ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016, the effective tax rate differed from the statutory federal rate of 35.0% primarily due to state taxes and certain other permanent differences. The relative impact these items have on the effective tax rate varies based on the forecasted amount of pre-tax income or loss for the year.

Segment Operations

The following table presents key financial information for our segments and Adjusted EBITDA for the twelve weeks ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016:

	Twelve Weeks Ended
Consolidated Summary	~~March~~June 2113, 2017			~~March~~June 2214, 2016			Change			% Change
	(dollars in thousands)
Total Revenue	$	~~221~~276,~~278~~353		$	~~214~~268,~~873~~974		$	67,~~405~~379		32.07	%
Golf and Country Clubs Adjusted EBITDA (1)	$	5266,~~822~~062		$	5066,~~123~~067		$	~~2,699~~(5	)	~~5.4~~—	%
Business, Sports and Alumni Clubs Adjusted EBITDA (1)	69,~~664~~723			710,~~274~~194			(~~610~~471		)	(8.4.6	)%
Corporate expenses and other operations	(1512,~~745~~893		)	(1513,~~407~~402		)	~~(338~~509		)	(23.28	)%
Adjusted EBITDA	$	4362,~~741~~892		$	4162,~~990~~859		$	~~1,751~~33		40.21	%

_______________________________

(1) See Note 12 of our consolidated condensed financial statements included elsewhere herein for the definition of Adjusted EBITDA and for a reconciliation of Golf and Country Clubs Adjusted EBITDA and Business, Sports and Alumni Clubs Adjusted EBITDA to (loss) income before income taxes.

3740

Golf and Country Clubs

The following table presents key financial information for our golf and country clubs for the twelve weeks ended ~~March~~June 2113, 2017 and the twelve weeks ended ~~March~~June 2214, 2016. Divested clubs are excluded from segment reporting for all periods presented. References to percentage changes that are not meaningful, as new or acquired clubs include different clubs for each period, are denoted by ‘‘NM’’.

	Twelve Weeks Ended
Golf and Country Club Segment	~~March~~June 2113, 2017			~~March~~June 2214, 2016			Change			%Change
	(dollars in thousands)
Same Store Clubs
Revenue
Dues	$	98100,~~511~~750		$	9598,~~220~~468		$	32,~~291~~282		32.53	%
Food and Beverage	3454,~~457~~563			3353,~~805~~479			$	~~652~~1,084		12.90	%
Golf Operations	3151,~~459~~612			3051,~~045~~146			$	~~1,414~~466		40.79	%
Other	1213,~~786~~623			1213,~~903~~639			$	(~~117~~16	)	(0.91	)%
Revenue	$	~~177~~220,~~213~~548		$	~~171~~216,~~973~~732		$	53,~~240~~816		31.08	%
Club operating costs and expenses exclusive of depreciation	$	~~124~~154,~~633~~770		$	~~121~~150,~~924~~995		$	23,~~709~~775		2.25	%
Adjusted EBITDA	$	5265,~~580~~778		$	5065,~~049~~737		$	~~2,531~~41		50.1	%
Adjusted EBITDA Margin	29.78		%	2930.13		%	60(50) bps			2.(1.7	)%
New or Acquired Clubs
Revenue	$	27,~~702~~311		$	~~629~~2,187		$	25,~~073~~124		NM
Club operating costs and expenses exclusive of depreciation	$	27,~~460~~027		$	~~555~~1,857		$	15,~~905~~170		NM
Adjusted EBITDA	$	~~242~~284		$	74330		$	~~168~~(46	)	NM
Total Golf and Country Clubs
Revenue	$	~~179~~227,~~915~~859		$	~~172~~218,~~602~~919		$	78,~~313~~940		4.21	%
Club operating costs and expenses exclusive of depreciation	$	~~127~~161,~~093~~797		$	~~122~~152,~~479~~852		$	48,~~614~~945		35.89	%
Adjusted EBITDA	$	5266,~~822~~062		$	5066,~~123~~067		$	~~2,699~~(5	)	~~5.4~~—	%
Adjusted EBITDA Margin	29.40		%	2930.02		%	40(120) bps			1.(4.0	)%
Total memberships, excluding managed club memberships	~~122~~124,~~117~~028			~~117~~119,~~602~~703			4,~~515~~325			3.86	%

Total revenue for same store golf and country clubs increased $53.28 million, or 31.08%, for the twelve weeks ended ~~March~~June 2113, 2017 compared to the twelve weeks ended ~~March~~June 2214, 2016 due primarily to increases in same store dues, ~~golf~~food ~~operations~~and beverage revenue and ~~food~~golf ~~and~~operations ~~beverage~~ revenue. Same store dues revenue increased $32.3 million, or 32.53%, due primarily to an increase in same store memberships, and greater club participation in the O.N.E. program. Food and beverage revenue increased $1.1 million, or 2.0%, due primarily to a ~~rate~~2.3% increase in ~~dues~~a ~~per~~la ~~same~~carte ~~store average membership~~revenue. Golf operations revenue increased $10.45 million, or 40.79%, due largely to higher cart fee and greens fee revenue as a result of favorable weather leading to more golf rounds and an increase in retail sales. ~~Food and beverage revenue increased $0.7 million, or 1.9%, due primarily to a 2.7% increase in a la carte revenue.~~

Club operating costs and expenses include costs such as payroll and payroll related expenses, costs of food and beverage sales, costs of retail sales, golf operations and golf course maintenance expenses, utilities and property taxes. Club operating costs and expenses, excluding costs of food and beverage sales, for same store golf and country clubs increased $23.02 million, or 12.95%, for the twelve weeks ended ~~March~~June 2113, 2017 compared to the twelve weeks ended ~~March~~June 2214, 2016. The increase is primarily related to higher payroll expense, higher administrative expenses and higher retail cost of sales due primarily to increases in retail sales~~, higher property tax expense and higher insurance expense, partially offset by a decrease in incentive compensation~~. These operating costs, as a percentage of total same store club revenue, were 6261.5% and 6361.21% for the same periods, respectively.

3841

Costs of food and beverage sales for same store golf and country clubs increased $0.75 million, or 52.38%, for the twelve weeks ended ~~March~~June 2113, 2017 compared to the twelve weeks ended ~~March~~June 2214, 2016, due primarily to increases in food and beverage sales primarily driven by increased usage of the O.N.E. program. These costs, as a percentage of food and beverage revenues, were 4035.21% and 3834.98% for the same periods, respectively.

Adjusted EBITDA for same store golf and country clubs ~~increased~~remained ~~$2.5~~flat ~~million, or 5.1%,~~ for the twelve weeks ended ~~March~~June 2113, 2017 compared to the twelve weeks ended ~~March~~June 2214, 2016, largely due to an increase in higher margin dues revenue primarily driven by an increase in same store ~~memberships~~membership, ~~and~~offset by an increase in ~~golf~~club ~~operations revenue combined with well controlled variable~~ operating costs ~~and expenses~~. As a result, same store Adjusted EBITDA margin for the twelve weeks ended ~~March~~June 2113, 2017 ~~increased~~decreased 6050 basis points over the twelve weeks ended ~~March~~June 2214, 2016.

Business, Sports and Alumni Clubs

The following table presents key financial information for our business, sports and alumni clubs for the twelve weeks ended ~~March~~June 2113, 2017 and the twelve weeks ended ~~March~~June 2214, 2016. Divested clubs are excluded from segment reporting for all periods presented. References to percentage changes that are not meaningful, as new or acquired clubs include different clubs for each period, are denoted by ‘‘NM’’.

	Twelve Weeks Ended
Business, Sports and Alumni Club Segment	~~March~~June 2113, 2017			~~March~~June 2214, 2016			Change			%Change
	(dollars in thousands)
Same Store Clubs
Revenue
Dues	$	1817,~~504~~469		$	1817,~~561~~342		$	~~(57~~127	)	(0.37	)%
Food and Beverage	1823,~~852~~142			1823,~~441~~792			~~411~~(650		)	(2.27	)%
Other	2,~~535~~272			2,~~640~~024			~~(105~~248		)	(412.03	)%
Revenue	$	3942,~~891~~883		$	3943,~~642~~158		$	~~249~~(275	)	(0.6	)%
Club operating costs and expenses exclusive of depreciation	$	33,~~227~~156		$	32,~~365~~953		$	~~862~~203		20.76	%
Adjusted EBITDA	$	69,~~664~~727		$	710,~~277~~205		$	(~~613~~478	)	(8.4.7	)%
Adjusted EBITDA Margin	1622.7		%	1823.46		%	(~~170~~90) bps			(93.28	)%
New or Acquired Clubs
Revenue	$	—		$	—		$	—		NM
Club operating costs and expenses exclusive of depreciation	$	—4		$	311		$	(37	)	NM
Adjusted EBITDA	$	—(4	)	$	(311	)	$	37		NM
Total Business, Sports and Alumni Clubs
Revenue	$	3942,~~891~~883		$	3943,~~642~~158		$	~~249~~(275	)	(0.6	)%
Club operating costs and expenses exclusive of depreciation	$	33,~~227~~160		$	32,~~368~~964		$	~~859~~196		20.76	%
Adjusted EBITDA	$	69,~~664~~723		$	710,~~274~~194		$	(~~610~~471	)	(8.4.6	)%
Adjusted EBITDA Margin	1622.7		%	1823.36		%	(~~160~~90) bps			(83.78	)%
Total memberships, excluding managed club memberships	5150,~~893~~320			5350,~~027~~335			(~~1,134~~15		)	~~(2.1~~—	)%

Total revenues for same store business, sports and alumni clubs ~~increased~~decreased $0.23 million, or 0.6%, for the twelve weeks ended ~~March~~June 2113, 2017 compared to the twelve weeks ended ~~March~~June 2214, 2016 primarily due to ana ~~increase~~decrease in food and beverage revenue, partially offset by aan ~~decrease~~increase in other revenue and same store dues. Food and beverage revenue ~~increased~~decreased $0.47 million, or 2.27%, due primarily to ana ~~increase~~decrease in private party revenue and a la carte revenue. Dues revenue ~~decreased~~increased $0.1 million, or 0.37%, due to ~~a decline in same store memberships partially offset by~~ an increase in upgrade dues related to the O.N.E program. partially offset by a decline in same store social memberships.

3942

Club operating costs and expenses include costs such as payroll and payroll related expenses, costs of food and beverage sales and rent. Club operating costs and expenses, excluding costs of food and beverage sales, for same store business, sports and alumni clubs increased $0.72 million, or 20.76%, for the twelve weeks ended ~~March~~June 2113, 2017 compared to the twelve weeks ended ~~March~~June 2214, 2016. The increase is largely due to an increase in ~~payroll expense and an increase in fixed costs, primarily~~ rent expense. These operating costs, as a percentage of total same store club revenue, were 6962.58% and 6862.10% for the same periods, respectively.

Costs of food and beverage sales for same store business, sports and alumni clubs ~~increased~~remained ~~$0.1~~flat ~~million, or 2.4%,~~ for the twelve weeks ended ~~March~~June 2113, 2017 compared to the twelve weeks ended ~~March~~June 2214, 2016~~, due primarily to increases in food and beverage sales~~. These costs, as a percentage of food and beverage revenues, were 2926.19% and 2926.0% for the same periods, respectively.

Adjusted EBITDA for same store business, sports and alumni clubs decreased $0.65 million, or 8.4.7%, for the twelve weeks ended ~~March~~June 2113, 2017 compared to the twelve weeks ended ~~March~~June 2214, 2016, largely due to an increase in club operating costs and a decline in same store social memberships. Same store Adjusted EBITDA margin for the twelve weeks ended ~~March~~June 2113, 2017 decreased ~~170~~90 basis points compared to the twelve weeks ended ~~March~~June 2214, 2016.

Corporate expenses and other operations

The following table presents financial information for corporate expenses and other operations, which is comprised primarily of activities not related to our two business segments, for the twelve weeks ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016.

Twelve Weeks Ended

March 21, 2017

March 22, 2016

Change

%Change

June 13, 2017

June 14, 2016

Change

%Change

(dollars in thousands)

Corporate expenses and other operations

(1512,~~745~~893

)

(1513,~~407~~402

)

~~(338~~509

)

(23.28

Corporate expenses and other operations ~~increased~~decreased $0.35 million, or 23.28%, for the twelve weeks ended ~~March~~June 2113, 2017 compared to the twelve weeks ended ~~March~~June 2214, 2016 largely due to a $10.16 million ~~increase~~decrease in insurance expense ~~related to higher claims~~. This ~~increase~~decrease was partially offset by aan ~~decrease~~increase of $0.41 million in ongoing support costs, including payroll, costs related to software agreements and service fees as part of our centralization and transformation of administrative processes, finance processes and related IT systems and a $0.4 million decrease in other corporate expenses.

Comparison of the Twenty-Four Weeks Ended June 13, 2017 and June 14, 2016

The following table presents key financial information derived from our consolidated condensed statements of operations for the twenty-four weeks ended June 13, 2017 and June 14, 2016.



	Twenty-Four Weeks Ended
	June 13, 2017			June 14, 2016			Change			% Change
	(dollars in thousands)
Total revenues	$	497,631		$	483,847		$	13,784		2.8	%
Club operating costs and expenses exclusive of depreciation (1)	370,106			357,933			12,173			3.4	%
Depreciation and amortization	50,380			48,569			1,811			3.7	%
Loss on disposals of assets	4,891			5,655			(764		)	(13.5	)%
Impairment of assets	4,176			500			3,676			735.2	%
Equity in earnings from unconsolidated ventures	(3,629		)	(2,103		)	(1,526		)	(72.6	)%
Selling, general and administrative	45,970			37,210			8,760			23.5	%
Operating income	25,737			36,083			(10,346		)	(28.7	)%
Interest and investment income	320			253			67			26.5	%
Interest expense	(38,784		)	(40,358		)	1,574			3.9	%
Loss before income taxes	(12,727		)	(4,022		)	(8,705		)	(216.4	)%
Income tax benefit	6,012			1,459			4,553			312.1	%
Net loss	$	(6,715	)	$	(2,563	)	$	(4,152	)	(162.0	)%

__________________________


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

Total revenues of $497.6 million for the twenty-four weeks ended June 13, 2017 increased $13.8 million, or 2.8%, over the twenty-four weeks ended June 14, 2016. Same store golf and country club revenue increased by $9.0 million driven primarily by increases in same store dues, golf operations revenue and food and beverage revenue. These factors are discussed below under “Segment Operations—Golf and Country Clubs”. In addition, our same store business, sports and alumni club segment revenue remained flat primarily due to a decrease in food and beverage revenue offset by increases in other revenue and same store dues. These factors are discussed below under “Segment Operations—Business, Sports and Alumni Clubs”. Additionally, total revenue attributable to golf and country club properties added in 2016 and 2017 increased $7.2 million. Revenue from other operations increased $2.0 million, including $1.1 million in reimbursements for certain operating costs at same store managed clubs. Revenue related to divested clubs decreased $4.7 million, including $0.9 million in reimbursements for certain operating costs at divested managed clubs. The reimbursements for operating costs at managed clubs do not include a markup and have no net impact on operating income, as such costs are included within club operating costs and expenses.

Club operating costs and expenses totaling $370.1 million for the twenty-four weeks ended June 13, 2017 increased $12.2 million, or 3.4%, compared to the twenty-four weeks ended June 14, 2016. The increase is largely due to $8.2 million of club operating costs and expenses from club properties added in 2016 and 2017, a $2.8 million increase in variable labor costs, food and beverage cost of goods sold and retail cost of goods sold associated with higher revenues, a $1.9 million increase in insurance expense related to higher claims, a $1.5 million increase in service fees, a $0.6 million increase in rent, a $0.5 million increase in equity-based compensation offset by a $3.7 million decrease in costs related to divested clubs. Additionally, certain operating costs at managed clubs increased $1.1 million at same store clubs and decreased $0.9 million at divested clubs. These operating costs at managed clubs are offset by reimbursements recorded within revenue, resulting in no net impact on operating income. The remaining change is primarily comprised of an increase in other expenses.

Depreciation and amortization expense increased $1.8 million, or 3.7%, during the twenty-four weeks ended June 13, 2017 compared to the twenty-four weeks ended June 14, 2016. Depreciation expense increased $2.6 million due to our increased fixed asset balances primarily related to club acquisitions, along with the related impact of reinvention and expansion capital spend. Amortization expense decreased $0.8 million largely due to trade names and member relationships that were fully amortized during fiscal year 2016. During the twenty-four weeks ended June 13, 2017, depreciation and amortization for Golf and Country Clubs and Business, Sports and Alumni Clubs was $41.1 million and $4.9 million, respectively. During the twenty-four weeks ended June 14, 2016, depreciation and amortization for Golf and Country Clubs and Business, Sports and Alumni

clubs was $39.7 million and $5.4 million, respectively. These expenses were primarily comprised of depreciation on our property and equipment and amortization of intangibles related to management contracts.

Loss on disposal of assets for the twenty-four weeks ended June 13, 2017 and June 14, 2016 of $4.9 million and $5.7 million, respectively, were largely comprised of losses on asset retirements during the normal course of business, including property and equipment disposed of in connection with our increased capital spend on reinventions and renovations. Our losses for the twenty-four weeks ended June 13, 2017 and June 14, 2016 were offset by $2.9 million and $0.5 million, respectively, of insurance proceeds received primarily related to rain and flooding events, that occurred during fiscal year 2016. During the twenty-four weeks ended June 13, 2017, loss on disposal of assets for Golf and Country Clubs and Business, Sports and Alumni Clubs was $4.6 million and $0.3 million, respectively. During the twenty-four weeks ended June 14, 2016, loss on disposal of assets for Golf and Country Clubs and Business, Sports and Alumni clubs was $5.2 million and $0.3 million, respectively. These expenses related primarily to asset retirements associated with our club reinventions and in the ordinary course of business offset by insurance proceeds received primarily related to rain and flooding events, that occurred during fiscal year 2016.

Impairment of assets of $4.2 million and $0.5 million for the twenty-four weeks ended June 13, 2017 and June 14, 2016, respectively, were largely comprised of impairment losses to property and equipment at certain of our clubs to adjust the carrying amount of certain property and equipment to its fair value, including assets at two golf and country clubs which were divested during the twelve weeks ended June 13, 2017 and impairment losses to management contract intangible assets. During the twenty-four weeks ended June 13, 2017 and June 14, 2016, impairment of assets for Golf and Country Clubs was $3.5 million and zero, respectively. During the twenty-four weeks ended June 13, 2017 and June 14, 2016, impairment of assets for Business, Sports and Alumni Clubs was $0.7 million and $0.5 million, respectively.

We recognize the earnings of one of our unconsolidated ventures, Avendra, LLC, within equity in earnings or within interest and investment income, depending on the timing of cash distributions and the investment balance. Equity in earnings from unconsolidated ventures was $3.6 million and $2.1 million for the twenty-four weeks ended June 13, 2017 and June 14, 2016, respectively.

Selling, general and administrative expenses of $46.0 million for the twenty-four weeks ended June 13, 2017 increased $8.8 million, or 23.5%, compared to the twenty-four weeks ended June 14, 2016. The major components of selling, general and administrative expenses are shown in the table below.



	Twenty-Four Weeks Ended
Components of selling, general and administrative expense (1)	June 13, 2017		June 14, 2016		Change			% Change
	(dollars in thousands)
Selling, general and administrative expense, excluding equity-based compensation and capital structure costs	$	42,833	$	34,527	$	8,306		24.1	%
Capital structure costs	772		950		(178		)	(18.7	)%
Equity-based compensation	2,365		1,733		632			36.5	%
Selling, general and administrative	$	45,970	$	37,210	$	8,760		23.5	%

______________________


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

Selling, general and administrative expenses, excluding equity-based compensation and capital structure costs, were $42.8 million for the twenty-four weeks ended June 13, 2017, an increase of $8.3 million, or 24.1%, compared to the twenty-four weeks ended June 14, 2016. This included increased costs of $6.2 million related to the design and implementation phase of our centralization and transformation of administrative processes, finance processes and related IT systems, an increase of $3.0 million in legal settlement expenses and an increase of $1.3 million in professional and legal fees associated with our strategic alternatives review. These increases were offset by $1.9 million of lower costs related to our initial compliance with SOX 404(b) and a $0.7 million decrease in severance expense. We also had a $0.4 million decrease in ongoing support costs, including payroll, costs related to software agreements and service fees as part of our centralization and transformation of administrative processes, finance processes and related IT systems. The remaining change is comprised of an increase in general and administrative expenses.

Capital structure costs included within selling, general and administrative expenses of $0.8 million and $1.0 million during the twenty-four weeks ended June 13, 2017 and June 14, 2016, respectively, were comprised of costs related to amendments to the credit agreement governing the Secured Credit Facilities.

Interest expense totaled $38.8 million and $40.4 million for the twenty-four weeks ended June 13, 2017 and June 14, 2016, respectively. The $1.6 million decrease in interest expense is primarily comprised of a $1.3 million decrease in interest on the term loan facility due primarily to a lower principal balance outstanding and a lower interest rate during the twenty-four weeks ended June 13, 2017 compared to the twenty-four weeks ended June 14, 2016 and a $0.3 million decrease in interest on our mortgage loans due primarily to a lower interest rate during the twenty-four weeks ended June 13, 2017 compared to the twenty-four weeks ended June 14, 2016. During the twenty-four weeks ended June 13, 2017, interest expense for Golf and Country Clubs and Business, Sports and Alumni Clubs was $8.8 million and $1.7 million, respectively. During the twenty-four weeks ended June 14, 2016, interest expense for Golf and Country Clubs and Business, Sports and Alumni clubs was $9.3 million and $2.1 million, respectively. The interest expense for Golf and Country Clubs was primarily driven by accretion expense related to membership initiation payments along with interest expense related to capital leases. The interest expense for Business, Sports and Alumni Clubs was primarily driven by accretion expense related to membership initiation payments.

Income tax benefit for the twenty-four weeks ended June 13, 2017 increased $4.6 million compared to the twenty-four weeks ended June 14, 2016, and the effective tax rates were 47.2% and 36.3% for the twenty-four weeks ended June 13, 2017 and June 14, 2016, respectively. The amount of tax expense or benefit recognized in interim financial statements is determined by multiplying the year-to-date pre-tax income or loss by the annual effective tax rate, which is an estimate of the expected relationship between tax expense or benefit for the full year to the pre-tax income or loss for the full year (pre-tax income or loss excluding unusual or infrequently occurring discrete items). For the twenty-four weeks ended June 13, 2017 and June 14, 2016, the effective tax rate differed from the statutory federal rate of 35.0% primarily due to state taxes and certain other permanent differences. The relative impact these items have on the effective tax rate varies based on the forecasted amount of pre-tax income or loss for the year.

Segment Operations

The following table presents key financial information for our segments and Adjusted EBITDA for the twenty-four weeks ended June 13, 2017 and June 14, 2016:



	Twenty-Four Weeks Ended
Consolidated Summary	June 13, 2017			June 14, 2016			Change			% Change
	(dollars in thousands)
Total Revenue	$	497,631		$	483,847		$	13,784		2.8	%

Golf and Country Clubs Adjusted EBITDA (1)	$	118,752		$	116,112		$	2,640		2.3	%
Business, Sports and Alumni Clubs Adjusted EBITDA (1)	16,207			17,115			(908		)	(5.3	)%
Corporate expenses and other operations	(28,638		)	(28,809		)	171			0.6	%
Adjusted EBITDA	$	106,321		$	104,418		$	1,903		1.8	%

_______________________________


(1)	See Note 12 of our consolidated condensed financial statements included elsewhere herein for the definition of Adjusted EBITDA and for a reconciliation of Golf and Country Clubs Adjusted EBITDA and Business, Sports and Alumni Clubs Adjusted EBITDA to income (loss) before income taxes.

Golf and Country Clubs

The following table presents key financial information for our golf and country clubs for the twenty-four weeks ended June 13, 2017 and the twenty-four weeks ended June 14, 2016. Divested clubs are excluded from segment reporting for all periods presented. References to percentage changes that are not meaningful, as new or acquired clubs include different clubs for each period, are denoted by ‘‘NM’’.



	Twenty-Four Weeks Ended
Golf and Country Club Segment	June 13, 2017			June 14, 2016			Change			% Change
	(dollars in thousands)
Same Store Clubs
Revenue
Dues	$	198,941		$	193,413		$	5,528		2.9	%
Food and Beverage	88,926			87,216			$	1,710		2.0	%
Golf Operations	82,939			81,086			$	1,853		2.3	%
Other	26,353			26,489			$	(136	)	(0.5	)%
Revenue	$	397,159		$	388,204		$	8,955		2.3	%
Club operating costs and expenses exclusive of depreciation	$	278,933		$	272,496		$	6,437		2.4	%
Adjusted EBITDA	$	118,226		$	115,708		$	2,518		2.2	%
Adjusted EBITDA Margin	29.8		%	29.8		%	0 bps			—	%

New or Acquired Clubs
Revenue	$	10,013		$	2,816		$	7,197		NM
Club operating costs and expenses exclusive of depreciation	$	9,487		$	2,412		$	7,075		NM
Adjusted EBITDA	$	526		$	404		$	122		NM

Total Golf and Country Clubs
Revenue	$	407,172		$	391,020		$	16,152		4.1	%
Club operating costs and expenses exclusive of depreciation	$	288,420		$	274,908		$	13,512		4.9	%
Adjusted EBITDA	$	118,752		$	116,112		$	2,640		2.3	%
Adjusted EBITDA Margin	29.2		%	29.7		%	(50) bps			(1.7	)%

Total memberships, excluding managed club memberships	124,028			119,703			4,325			3.6	%

Total revenue for same store golf and country clubs increased $9.0 million, or 2.3%, for the twenty-four weeks ended June 13, 2017 compared to the twenty-four weeks ended June 14, 2016 due primarily to increases in same store dues, golf operations revenue and food and beverage revenue. Same store dues revenue increased $5.5 million, or 2.9%, due primarily to an increase in same store memberships and greater club participation in the O.N.E. program. Golf operations revenue increased $1.9 million, or 2.3%, due largely to higher cart fee and greens fee revenue as a result of favorable weather leading to more golf rounds and an increase in retail sales. Food and beverage revenue increased $1.7 million, or 2.0%, due primarily to a 2.4% increase in a la carte revenue.

Club operating costs and expenses include costs such as payroll and payroll related expenses, costs of food and beverage sales, costs of retail sales, golf operations and golf course maintenance expenses, utilities and property taxes. Club operating costs and expenses, excluding costs of food and beverage sales, for same store golf and country clubs increased $5.2 million, or 2.2%, for the twenty-four weeks ended June 13, 2017 compared to the twenty-four weeks ended June 14, 2016. The increase is primarily related to higher payroll expense, higher administrative expenses and higher retail cost of sales due primarily to increases in retail sales. These operating costs, as a percentage of total same store club revenue, were 61.9% and 62.0% for the same periods, respectively.

Costs of food and beverage sales for same store golf and country clubs increased $1.2 million, or 3.8%, for the twenty-four weeks ended June 13, 2017 compared to the twenty-four weeks ended June 14, 2016, due primarily to increases in food and beverage sales primarily driven by increased usage of the O.N.E. program. These costs, as a percentage of food and beverage revenues, were 37.1% and 36.4% for the same periods, respectively.

Adjusted EBITDA for same store golf and country clubs increased $2.5 million, or 2.2%, for the twenty-four weeks ended June 13, 2017 compared to the twenty-four weeks ended June 14, 2016, largely due to an increase in higher margin dues revenue primarily driven by an increase in same store memberships and an increase in golf operations revenue combined with well controlled variable operating costs and expenses. As a result, same store Adjusted EBITDA margin for the twenty-four weeks ended June 13, 2017 remained flat compared to the twenty-four weeks ended June 14, 2016.

Business, Sports and Alumni Clubs

The following table presents key financial information for our business, sports and alumni clubs for the twenty-four weeks ended June 13, 2017 and the twenty-four weeks ended June 14, 2016. Divested clubs are excluded from segment reporting for all periods presented. References to percentage changes that are not meaningful, as new or acquired clubs include different clubs for each period, are denoted by ‘‘NM’’.



	Twenty-Four Weeks Ended
Business, Sports and Alumni Club Segment	June 13, 2017			June 14, 2016			Change			% Change
	(dollars in thousands)
Same Store Clubs
Revenue
Dues	$	34,995		$	34,886		$	109		0.3	%
Food and Beverage	41,641			41,923			(282		)	(0.7	)%
Other	4,487			4,331			156			3.6	%
Revenue	$	81,123		$	81,140		$	(17	)	—	%
Club operating costs and expenses exclusive of depreciation	$	64,912		$	64,011		$	901		1.4	%
Adjusted EBITDA	$	16,211		$	17,129		$	(918	)	(5.4	)%
Adjusted EBITDA Margin	20.0		%	21.1		%	(110) bps			(5.2	)%

New or Acquired Clubs
Revenue	$	—		$	—		$	—		NM
Club operating costs and expenses exclusive of depreciation	$	4		$	14		$	(10	)	NM
Adjusted EBITDA	$	(4	)	$	(14	)	$	10		NM

Total Business, Sports and Alumni Clubs
Revenue	$	81,123		$	81,140		$	(17	)	—	%
Club operating costs and expenses exclusive of depreciation	$	64,916		$	64,025		$	891		1.4	%
Adjusted EBITDA	$	16,207		$	17,115		$	(908	)	(5.3	)%
Adjusted EBITDA Margin	20.0		%	21.1		%	(110) bps			(5.2	)%

Total memberships, excluding managed club memberships	50,320			50,335			(15		)	—	%

Total revenues for same store business, sports and alumni clubs remained flat, for the twenty-four weeks ended June 13, 2017 compared to the twenty-four weeks ended June 14, 2016 primarily due to a decrease in food and beverage revenue, partially offset by an increase in other revenue and same store dues. Food and beverage revenue decreased $0.3 million, or 0.7%, due primarily to a decrease in private party and a la carte revenue. Dues revenue increased $0.1 million, or 0.3%, due to an increase in upgrade dues related to the O.N.E program partially offset by a decline in same store social memberships.

Club operating costs and expenses include costs such as payroll and payroll related expenses, costs of food and beverage sales and rent. Club operating costs and expenses, excluding costs of food and beverage sales, for same store business, sports and alumni clubs increased $0.7 million, or 1.4%, for the twenty-four weeks ended June 13, 2017 compared to the twenty-four weeks ended June 14, 2016. The increase is largely due to an increase in rent expense. These operating costs, as a percentage of total same store club revenue, were 65.7% and 64.8% for the same periods, respectively.

Costs of food and beverage sales for same store business, sports and alumni clubs increased $0.2 million, or 1.5%, for the twenty-four weeks ended June 13, 2017 compared to the twenty-four weeks ended June 14, 2016. These costs, as a percentage of food and beverage revenues, were 27.8% and 27.3% for the same periods, respectively.

Adjusted EBITDA for same store business, sports and alumni clubs decreased $0.9 million, or 5.4%, for the twenty-four weeks ended June 13, 2017 compared to the twenty-four weeks ended June 14, 2016, largely due to an increase in club operating costs and a decline in same store social memberships. Same store Adjusted EBITDA margin for the twenty-four weeks ended June 13, 2017 decreased 110 basis points compared to the twenty-four weeks ended June 14, 2016.

Corporate expenses and other operations

The following table presents financial information for corporate expenses and other operations, which is comprised primarily of activities not related to our two business segments, for the twenty-four weeks ended June 13, 2017 and June 14, 2016.



	Twenty-Four Weeks Ended
	June 13, 2017			June 14, 2016			Change		% Change
	(dollars in thousands)
Corporate expenses and other operations	$	(28,638	)	$	(28,809	)	$	171	0.6	%

Corporate expenses and other operations decreased $0.2 million, or 0.6%, for the twenty-four weeks ended June 13, 2017 compared to the twenty-four weeks ended June 14, 2016 largely due to a $0.5 million increase in insurance expense related to higher claims, a decrease of $0.4 million in ongoing support costs, including payroll, costs related to software agreements and service fees as part of our centralization and transformation of administrative processes, finance processes and related IT systems and a $0.2 million decrease in other corporate expenses.

Liquidity and Capital Resources

We operate through our subsidiaries and have no material assets other than the stock of our subsidiaries. Our ability to pay dividends is dependent on our receipt of dividends or other distributions from our subsidiaries and borrowings under the Secured Credit Facilities, the 2015 Senior Notes and other debt instruments.

Our primary goal as it relates to liquidity and capital resources is to attain and retain the right level of debt and cash to execute strategic objectives, maintain and fund expansions, replacement projects and other capital investments at our clubs, be poised for external growth and pay declared dividends to our stockholders. Historically, we have financed our business through cash flows from operations and debt.

We anticipate that cash flows from operations will be our primary source of cash over the next twelve months. We believe current assets and cash generated from operations will be sufficient to meet anticipated working capital needs, capital expenditures, and debt service obligations,. ~~payment~~Prior ofto aour ~~quarterly~~entry ~~cash~~into ~~dividend~~the ~~pursuant~~Merger toAgreement, our ~~dividend~~board ~~policy~~declared ~~and~~the ~~stock repurchases. The~~ payment of ~~such~~ quarterly dividends ~~will~~pursuant beto ~~at the discretion of~~ our ~~Board~~dividend ~~of Directors~~policy. In the first quarter of fiscal year 2016, our Board of Directors authorized a repurchase of up to $50 million of our common stock with an expiration date of December 31, 2017. ~~The~~Prior to our entry into the Merger Agreement, the repurchase program ~~may~~was be executed from time to time, subject to general business and market conditions and other investment opportunities, through open market or privately negotiated transactions, including through plans designed under Rule 10b5-1 of the Securities Exchange Act of 1934. We may also, from time to time in our sole discretion, purchase, redeem or retire our 2015 Senior Notes, through tender offers, in privately negotiated or open market transactions or otherwise. We plan to use excess cash reserves, our revolving credit facility, proceeds from the issuance of debt or equity, or a combination thereof to expand the business through capital improvement and expansion projects and strategically selected club acquisitions.

4049

AsPursuant to the terms of ~~March 21~~the Merger Agreement, ~~2017~~as of July 9, ~~cash~~2017 ~~and~~we ~~cash~~are ~~equivalents~~prohibited ~~totaled~~from, ~~$53.9~~among ~~million~~other ~~and~~things, weissuing ~~had~~equity ~~$145.0~~securities ~~million~~to ~~available~~raise ~~for~~capital, ~~borrowing~~declaring ~~under~~and ~~the~~paying ~~revolving~~dividends ~~credit~~on ~~facility~~our ofcommon ~~the~~stock ~~Secured~~(other ~~Credit~~than ~~Facilities~~the ~~for~~one-time ~~total~~quarterly ~~liquidity~~dividend of $~~198~~0.913 ~~million.~~per Asshare ofdeclared ~~April 20~~on July 9, 2017,) weand ~~had~~repurchasing ~~$145.0~~shares ~~million~~of ~~available~~our ~~for~~common ~~borrowing~~stock under our share repurchase program. In addition, the ~~revolving~~Merger ~~credit~~Agreement ~~facility~~limits, among other things, our ability to incur additional indebtedness.

As of June 13, 2017, cash and cash equivalents totaled $52.0 million and we had $144.2 million available for borrowing under the revolving credit facility of the Secured Credit Facilities for total liquidity of $196.2 million. Subsequent to

the twenty-four weeks ended June 13, 2017, on June 20, 2017, we borrowed $20.0 million on the revolving credit facility.

As of July 12, 2017, we had $124.2 million available for borrowing under the revolving credit facility.

Cash Flows from Operating Activities

Cash flows from operations totaled $1762.74 million and $2270.32 million for the ~~twelve~~twenty-four weeks ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016, respectively. The $47.68 million decrease in operating cash flows is due largely to a $57.86 million decrease due to changes in working capital primarily driven by timing of certain trade payables and member billing cycles, a $02.85 million increase due to the change in other long-term liabilities and a $03.61 million ~~increase~~decrease due to the change in deferred tax assets and liabilities.

Cash Flows used in Investing Activities

Cash flows used in investing activities totaled $3264.69 million and $2653.83 million for the ~~twelve~~twenty-four weeks ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016, respectively. The $511.86 million increase in cash used in investing activities is primarily due to the $28.7 million increase in cash used for the acquisition of clubs and a $35.15 million increase in capital spent to maintain, renovate and reinvent our existing properties offset by a $2.4 million increase of insurance proceeds received during the twenty-four weeks ended June 13, 2017, primarily related to rain and flooding events, that occurred during fiscal year 2016.

Cash Flows used in Financing Activities

Cash flows used in financing activities totaled $1529.42 million and $1429.72 million for the ~~twelve~~twenty-four weeks ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016, respectively. ~~The~~Cash ~~$0.7 million increase in cash~~ used in financing activities isremained constant primarily due to a $1.0 million increase in share repurchases for tax withholdings related to certain equity-based awards, a $0.4 million increase due to distribution to one our noncontrolling interests and a $0.42 million increase in scheduled debt repayments offset by a $1.2 million decrease due to the repurchase of 104,325 shares of common stock during the twenty-four weeks ended June 14, 2016 and a decrease in debt issuance and modification costs of $0.93 million related to amendments to the credit agreement governing the Secured Credit Facilities.

Capital Spending

The nature of our business requires us to invest capital to maintain our existing properties and invest in our information technology systems. For the ~~twelve~~twenty-four weeks ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016, we spent approximately $2036.1 million (net of insurance proceeds of $02.19 million) and $1124.8 million (net of insurance proceeds of $0.5 million), respectively, in capitalized costs to maintain our existing properties and invest in our information technology systems. During the ~~twelve~~twenty-four weeks ended ~~March~~June 2113, 2017, this spending included $1121.91 million, net of insurance proceeds, to maintain our existing properties and $01.96 million to maintain our existing information technology systems. Additionally, we invested $713.34 million on information technology projects related to the centralization of administrative processes. During the remainder of fiscal year 2017, we anticipate spending approximately $40.0 million in maintenance capital, net of insurance proceeds, including $33.1 million, net of insurance proceeds, to maintain our existing facilities and $3.1 million to maintain our existing information technology systems. Additionally, we anticipate investing $3.8 million on information technology projects related to the centralization and transformation of administrative processes, finance processes and related IT systems.

In addition to maintaining our properties, we also spend discretionary capital to expand and improve existing properties, including major reinventions, and expand our business through acquisitions. Capital expansion funding totaled approximately $1228.68 million and $1528.4 million for the ~~twelve~~twenty-four weeks ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016, respectively, including acquisitions of $915.3 million and $6.6 million, respectively. We anticipate spending approximately $40.3 million on reinvention and expansion projects during the remainder of fiscal year 2017, including capital associated with recently acquired clubs, but excluding Oakhurst Golf and Country Club, any potential future acquisitions and reinvention and expansion projects related to such acquisitions.

Subsequent to ~~March~~June 2113, 2017, on ~~April 11~~June 20, 2017, we purchased ~~Oakhurst~~Medina Golf and Country Club, a private ~~golf~~country club in ~~Clarkston~~Medina, ~~Michigan~~Minnesota, for a purchase price of $64.07 million. We anticipate spending approximately $2.05 million in reinvention project capital at this property.

Future discretionary capital spending amounts may increase or decrease as a result of a variety of factors, including but not limited to those described in Item 1A. Risk Factors of our 2016 Annual Report, such as the identification of additional acquisitions or expansion opportunities that fit our strategy to expand the business.50

41The Merger Agreement limits our ability to, among other things, invest capital for other than maintenance purposes after July 9, 2017 and our ability to invest capital on reinventions which did not commence prior to July 9, 2017. As a result, for the remainder of fiscal year 2017 we anticipate spending approximately $20.9 million in maintenance capital, net of insurance proceeds, to maintain our existing facilities, $1.4 million to maintain our existing information technology systems, $1.9 million on information technology projects related to the centralization and transformation of administrative processes and $35.3 million on reinvention projects which commenced prior to July 9, 2017, including the reinvention project capital at Medina Golf and Country Club.

Debt

Secured Credit Facilities—In 2010, Operations entered into the credit agreement governing the Secured Credit Facilities. The credit agreement governing the Secured Credit Facilities was subsequently amended in 2012, 2013, 2014, 2015, 2016 and ~~2016~~2017. On May 19, 2017, Operations entered into an eleventh amendment to the credit agreement governing the Secured Credit Facilities to decrease the interest rate on the term loan facility to a variable rate calculated as the higher of (i) 3.75% or (ii) an elected LIBOR plus a margin of 2.75%. As of ~~April~~July 2012, 2017, the Secured Credit Facilities are comprised of (i) a $651.0 million term loan facility and (ii) a revolving credit facility with capacity of $175.0 million with $~~145~~124.02 million available for borrowing after deducting $30.08 million of standby letters of credit and $20.0 million of borrowings outstanding. In addition, the credit agreement governing the Secured Credit Facilities includes capacity which provides, subject to lender participation, for additional borrowings in revolving or term loan commitments of $125.0 million, and additional borrowings thereafter so long as the Senior Secured Leverage Ratio does not exceed 3.50:1.00.

As of ~~April~~July 2012, 2017, the interest rate on the term loan facility is a variable rate calculated as the higher of (i) 43.075% or (ii) an elected LIBOR plus a margin of 32.075% and the maturity date of the term loan facility is December 15, 2022.

As of ~~April~~July 2012, 2017, the revolving credit commitments mature on January 25, 2021 and borrowings thereunder bear interest at a rate of LIBOR plus a margin of 3.0% per annum. We are required to pay a commitment fee on all undrawn amounts under the revolving credit facility and a fee on all outstanding letters of credit, payable quarterly in arrears.

As long as commitments are outstanding under the revolving credit facility, we are subject to the Senior Secured Leverage Ratio and the Total Leverage Ratio. The Senior Secured Leverage Ratio is defined as the ratio of Operations’ Consolidated Senior Secured Debt (exclusive of the 2015 Senior Notes) to Consolidated EBITDA (disclosed as Adjusted EBITDA and defined in Note 12 of our consolidated condensed financial statements included elsewhere herein) and is calculated on a pro forma basis, giving effect to current period acquisitions as though they had been consummated on the first day of the period presented. The Total Leverage Ratio is defined as the ratio of Operations’ Consolidated Total Debt (including the 2015 Senior Notes) to Consolidated EBITDA and is also calculated on a pro forma basis. The credit agreement governing the Secured Credit Facilities requires us to maintain the Total Leverage Ratio of no greater than 5.75:1.00 and the Senior Secured Leverage Ratio no greater than 4.50:1.00 as of the end of each fiscal quarter.

We may be required to prepay the outstanding term loan facility by a percentage of excess cash flows, as defined by the credit agreement governing the Secured Credit Facilities, each fiscal year end after our annual consolidated financial statements are delivered, which percentage may decrease or be eliminated depending on the results of the Senior Secured Leverage Ratio test at the end of each fiscal year. No such prepayment was required with respect to fiscal year 2016. We may voluntarily prepay outstanding loans under the Secured Credit Facilities in whole or in part upon prior notice without premium or penalty, other than certain fees incurred in connection with a repricing transaction.

As of March 21, 2017, Operations was in compliance with all covenant restrictions under the credit agreement governing the Secured Credit Facilities. The following tables present the Total Leverage Ratio and the Senior Secured Leverage Ratio on a rolling four quarter basis through March 21, 2017:51

	Four Quarters Ended
	March 21, 2017
	(dollars in thousands)
Pro Forma Adjusted EBITDA (1)	$	251,110
Pro Forma Consolidated Total Debt (2)	1,073,276
Pro Forma Consolidated Senior Secured Debt (2)	723,276
Total Leverage Ratio	4.27		x
Senior Secured Leverage Ratio	2.88		x

As of June 13, 2017, Operations was in compliance with all covenant restrictions under the credit agreement governing the Secured Credit Facilities. The following tables present the Total Leverage Ratio and the Senior Secured Leverage Ratio on a rolling four quarter basis through June 13, 2017:



	Four Quarters Ended
	June 13, 2017
	(dollars in thousands)
Pro Forma Adjusted EBITDA (1)	$	251,003
Pro Forma Consolidated Total Debt (2)	1,074,608
Pro Forma Consolidated Senior Secured Debt (2)	724,608

Total Leverage Ratio	4.28		x
Senior Secured Leverage Ratio	2.89		x

_______________________

42(1) The following table presents a reconciliation of Adjusted EBITDA to Pro Forma Adjusted EBITDA for the four quarters ended June 13, 2017:

(1) The following table presents a reconciliation of Adjusted EBITDA to Pro Forma Adjusted EBITDA for the four quarters ended March 21, 2017:



	Four Quarters Ended
	June 13, 2017
	(dollars in thousands)
Adjusted EBITDA (a)	$	247,954
Pro forma adjustment - acquisitions (b)	3,049
Pro Forma Adjusted EBITDA	$	251,003

	Four Quarters Ended
	March 21, 2017
	(dollars in thousands)
Adjusted EBITDA (a)	$	249,308
Pro forma adjustment - acquisitions (b)	1,802
Pro Forma Adjusted EBITDA	$	251,110


(a)	See Note 12 of our consolidated condensed financial statements included elsewhere herein for the definition of Adjusted EBITDA and “Basis of Presentation—EBITDA and Adjusted EBITDA” for a reconciliation of net income (loss) to Adjusted EBITDA.

(ab) ~~See~~The ~~Note~~pro 12forma ofadjustment ~~our~~gives ~~consolidated~~effect ~~condensed~~to ~~financial~~all ~~statements~~acquisitions ~~included~~in ~~elsewhere~~the ~~herein~~four ~~for~~quarters ~~the~~ended ~~definition~~June of13, ~~Adjusted~~2017 ~~EBITDA~~as ~~and~~though ~~“Basis~~they ofhad ~~Presentation—EBITDA~~been ~~and~~consummated ~~Adjusted~~on ~~EBITDA”~~the ~~for~~first aday ~~reconciliation~~ of ~~net~~the ~~(loss)~~third ~~income~~quarter toof ~~Adjusted~~fiscal ~~EBITDA~~year 2016.

(b) The pro forma adjustment gives effect to all acquisitions in the four quarters ended March 21, 2017 as though they had been consummated on the first day of the second quarter of fiscal year 2016.


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

	As of March 21, 2017
	As of June 13, 2017
	(dollars in thousands)
Total debt (excluding loan discount and loan origination fees)	$	1,103,~~672~~952
Outstanding letters of credit	30,~~046~~842
Uncollateralized surety bonds	53,~~277~~665
Less:
Notes payable related to Non-Core Development Entities	(11,837		)
Adjustment per credit agreement (a)	(5352,~~882~~014		)
Pro Forma Consolidated Total Debt	$	1,~~073~~074,~~276~~608
Unsecured 2015 Senior Notes (excluding loan origination fees)	(350,000		)
Pro Forma Consolidated Senior Secured Debt	$	~~723~~724,~~276~~608

_______________________


(a)	Represents an adjustment reducing total debt by the lesser of Operations’ unrestricted cash or $85.0 million.

2015 Senior Notes—On December 15, 2015, Operations issued $350.0 million of 2015 Senior Notes, maturing December 15, 2023. Interest on the 2015 Senior Notes accrues at the rate of 8.25% per annum and is payable semiannually in arrears on June 15 and December 15.

The 2015 Senior Notes are guaranteed on a full and unconditional basis by each Guarantor (other than Operations’ Parent) that guarantees our obligations under the credit agreement governing the Secured Credit Facilities. As of ~~March~~June 2113, 2017, Operations and the Guarantors accounted for approximately 93% of Holdings’ combined total assets, excluding intercompany items, and accounted for approximately 9290% of outstanding total liabilities, including trade payables, all of which are structurally senior to the 2015 Senior Notes. For the ~~twelve~~twenty-four weeks ended ~~March~~June 2113, 2017, Operations and the Guarantors accounted for approximately 93% of Holdings’ revenues and approximately 9489% of Holdings’ operating income, excluding selling, general and administrative expenses.

Mortgage Loan—On August 9, 2016, we entered into the Wells Fargo Mortgage Loan for $37.0 million with a maturity date of May 31, 2019 with two options to extend through August 9, 2021. As of ~~March~~June 2113, 2017, the note has a principal amount of $36.64 million and accrues interest at a variable interest rate calculated as 2.90% plus the greater of (i) one month LIBOR or (ii) 0.25%. The proceeds of the Wells Fargo Mortgage Loan were primarily used to repay outstanding balances on previously existing mortgage loan agreements.

43Other Debt—As of June 13, 2017, other debt and capital leases totaled $66.5 million, including $11.8 million of notes payable related to certain Non-Core Development Entities and $51.5 million in capital leases.

~~Other~~The ~~Debt—As~~following oftable ~~March 21,~~summarizes ~~2017,~~the ~~other~~components ~~debt and capital leases totaled $66.1 million, including $11.8 million~~ of ~~notes~~our ~~payable~~interest ~~related~~expense tofor ~~certain~~the ~~Non-Core~~twelve ~~Development Entities~~ and ~~$50.9~~twenty-four ~~million~~weeks inended ~~capital~~June 13, ~~leases.~~2017:

The following table summarizes the components of our interest expense for the twelve weeks ended March 21, 2017:



	Twelve Weeks Ended		Twenty-Four Weeks Ended
	June 13, 2017		June 13, 2017
	(dollars in thousands)
Interest expense related to:
Interest related to funded debt (1)	$	13,319	$	26,715
Capital leases and other indebtedness (2)	305		747
Amortization of debt issuance costs and term loan discount	723		1,624
Notes payable related to certain Non-Core Development Entities	245		490
Accretion of discount on member deposits	4,642		9,208
Total interest expense	$	19,234	$	38,784

	Twelve Weeks Ended
	March 21, 2017
	(dollars in thousands)
Interest expense related to:
Interest related to funded debt (1)	$	13,396
Capital leases and other indebtedness (2)	442
Amortization of debt issuance costs and term loan discount	901
Notes payable related to certain Non-Core Development Entities	245
Accretion of discount on member deposits	4,566
Total interest expense	$	19,550

_______________________


(1)	Interest expense related to funded debt includes interest on the facilities and borrowings under the Secured Credit Facilities, the 2015 Senior Notes and the Wells Fargo Mortgage Loan.


(2)	Includes interest expense on capital leases and other indebtedness, offset by capitalized interest.

Off-Balance Sheet Arrangements, Contractual Obligations and Commercial Commitments

We are not aware of any off-balance sheet arrangements as of ~~March~~June 2113, 2017. There have been no material changes outside the normal course of business to our contractual obligations or commercial commitments from those previously disclosed in our 2016 Annual Report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our indebtedness consists of both fixed and variable rate debt facilities. As of ~~April~~July 2012, 2017, the interest rate on the term loan facility under the Secured Credit Facilities was a variable rate calculated as the higher of (i) a 43.075% “Floor” or (ii) an elected LIBOR plus a margin of 32.075%. Therefore, the term loan facility is effectively subject to a 43.075% Floor ~~until~~when LIBOR ~~exceeds~~is below 1.0%. Additionally, as of ~~April~~July 2012, 2017, the Wells Fargo Mortgage Loan accrues interest at a variable rate calculated as 2.90% plus the greater of (i) one month LIBOR or (ii) 0.25%.

As of ~~April~~July 2012, 2017, the one month and three month LIBOR was 01.9922% and 1.1530%, respectively. A hypothetical 0.50% increase in LIBOR would result in a $3.4 million increase in annual interest expense.

Foreign Currency Exchange Risk

Our interests in foreign economies include three golf properties in Mexico and two managed business clubs in China. We translate foreign currency denominated amounts into U.S. dollars and we report our consolidated condensed financial results of operations in U.S. dollars. Because the value of the U.S. dollar fluctuates relative to other currencies, revenues that we generate or expenses that we incur in other currencies could increase or decrease our revenues or expenses as reported in U.S. dollars. Total foreign currency denominated revenues and expenses comprised less than 1.0% of our consolidated revenues and expenses, respectively, for the ~~twelve~~twenty-four weeks ended ~~March~~June 2113, 2017.

Fluctuations in the value of the U.S. dollar relative to other currencies could also increase or decrease foreign currency transaction gains and losses which are reflected as a component of club operating costs. Total foreign currency transaction gains and losses for the ~~twelve~~twenty-four weeks ended ~~March~~June 2113, 2017 totaled less than $0.1 million.

4454

ITEM 4. CONTROLS AND PROCEDURES

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

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer, with the assistance of senior management personnel, have conducted an evaluation of the effectiveness of our disclosure controls and procedures at the reasonable assurance level (as defined in Rule 15d-15(e) of the Exchange Act) as of ~~March~~June 2113, 2017. We perform this evaluation on a quarterly basis so that the conclusions concerning the effectiveness of our disclosure controls and procedures can be reported in our annual and quarterly reports filed under the Exchange Act. Based on this evaluation, and subject to the limitations described below, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of ~~March~~June 2113, 2017.

Change in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended ~~March~~June 2113, 2017 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls

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

PART II

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

There have been no material changes to our risk factors that we believe are material to our business, results of operations and financial condition, from the risk factors previously disclosed in our 2016 Annual Report filed with the SEC on February 27, 2017, which is accessible on the SEC’s website at www.sec.gov, except for the following.

There are a number of risks and uncertainties associated with the proposed merger.


•	uncertainties as to the timing of the Merger;


•	the risk that the Merger may not be completed in a timely manner or at all;


•	uncertainties as to whether our stockholders will approve the Merger;


•	the possibility that competing offers or acquisition proposals will be made;


•	the possibility that any or all of the various conditions to the consummation of the Merger may not be satisfied or waived, including the failure to receive any required regulatory approvals from any applicable governmental entities (or any conditions, limitations or restrictions placed on such approvals);


•	the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement, including in circumstances which would require us to pay a termination fee or other expenses;


•	risks regarding the failure to obtain the necessary financing to complete the transactions contemplated by the Merger Agreement;


•	the effect of the announcement or pendency of the transactions contemplated by the Merger Agreement on our ability to retain and hire key personnel, our ability to maintain relationships with our members, suppliers and others with whom we do business, or our operating results and business generally;


•	risks related to diverting management’s attention from our ongoing business operations; and


•	the risk that stockholder litigation in connection with the transactions contemplated by the Merger Agreement may result in significant costs of defense, indemnification and liability.

If the Merger is not consummated for any reason, our stockholders will not receive the consideration that Parent has agreed to pay upon the consummation of the Merger, and the price of our common stock may decline to the extent that its current market price reflects an assumption that the Merger will be consummated. Such decline may be significant.

In addition, pursuant to the terms of the Merger Agreement, we are prohibited from, among other things, issuing equity securities to raise capital, declaring and paying dividends on our common stock (other than the one-time quarterly dividend of $0.13 per share declared on July 9, 2017) and repurchasing shares of our common stock under our share repurchase program. Further, the Merger Agreement limits our ability to, among other things, incur additional indebtedness, make capital

expenditures and acquire and divest clubs. These limitations and restrictions may prevent us from taking actions or pursuing otherwise attractive business opportunities that we consider advantageous.

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

Our success depends on our ability to attract and retain members at our clubs and maintain or increase usage of our facilities. Changes in consumer tastes and preferences, particularly those affecting the popularity of golf and private dining, and other social and demographic trends could adversely affect our business. Historically, we have experienced varying levels of membership enrollment and attrition rates and, in certain areas, decreased levels of usage of our facilities. Significant periods where attrition rates exceed enrollment rates or where facilities usage is below historical levels would have a material adverse effect on our business, results of operations and financial condition. For fiscal year 2016 and the twenty-four weeks ended June 13, 2017, 47.6% and 48.9%, respectively, of our total revenues came from recurring membership dues. For fiscal year 2016, 24.3% of our business, sports and alumni club memberships (approximately 14,600 memberships) and 17.3% of our golf and country club memberships (approximately 20,800 memberships) were resigned. After the addition of new memberships, our business, sports and alumni clubs experienced a 2.6% net loss in memberships during fiscal year 2016, excluding managed clubs. Our golf and country clubs experienced a 3.9% net gain in memberships during fiscal year 2016, excluding managed clubs. If we cannot attract new members or retain our existing members, our business, financial condition and results of operations could be harmed.

We could be required to make material cash outlays in future periods if the number of initiation deposit refund requests we receive materially increases or if we are required to surrender unclaimed initiation deposits to state authorities under applicable escheatment laws, either of which could have an adverse effect on our business, results of operations and financial condition.

At a majority of our private clubs, members are expected to pay an initiation fee or an initiation deposit upon their acceptance as a member to the club. Initiation fees, which are more typical for our business clubs and mid-market golf and country clubs, are generally nonrefundable. In contrast to initiation fees, initiation deposits, which are typical in our more prestigious golf and country clubs, are paid by members upon joining one of our clubs and are fully refundable after a fixed number of years, typically 30 years, and upon any other applicable contractual provisions being satisfied. Historically, only a small percentage of initiation deposits eligible to be refunded have been requested by members. As of June 13, 2017, the amount of initiation deposits that are eligible to be refunded currently and within the next 12 months is $178.1 million on a gross basis. As of June 13, 2017, the discounted value of initiation deposits that may be refunded in future years (not including the next 12 months) is $205.8 million. For more information on our initiation deposit amounts, see “Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources”.

We may be subject to various states’ escheatment laws with respect to initiation deposits that have not been refunded to members. All states and the District of Columbia have escheatment laws and generally require companies to remit to the state cash in an amount equal to unclaimed and abandoned property after a specified period of dormancy, which is typically 3 to 5 years. We currently do not remit to states any amounts relating to initiation deposits that are eligible to be refunded to members. The analysis of the potential application of escheatment laws to our initiation deposits is complex, involving an analysis of legal, contractual and factual issues. While it has been our position that initiation deposits are not required to be escheated, we may be forced to remit such amounts if we are challenged and fail to prevail in our position.

To our knowledge, 26 states have hired third-party auditors to conduct unclaimed and abandoned property audits of our operations. Certain categories of property, such as uncashed payroll checks or uncashed vendor payments, are escheatable in the ordinary course of business and we have entered into closing agreements with the majority of the states regarding the escheatment of cash amounts for such categories and have remitted these amounts to the respective states; however, the audits have not been terminated. We have been in ongoing communication with several states represented by such auditors, who are demanding additional and detailed information and records related to initiation deposits. We expect to vigorously defend ourselves in any legal proceedings under applicable state laws seeking to have us remit initiation deposits eligible to be refunded to any of our members that have not been previously refunded to such members during the applicable state’s dormancy period. However, our position as to why initiation deposits are not required to be escheated may not be correct and there is a risk that one or more state courts could determine that respective state unclaimed property laws do apply. As a result, we may be required to pay all or a portion of the unclaimed amounts of initiation deposits to one or more of the states. In certain of the states, we could also be subject to penalties and be required to pay interest on the amounts owed to the states. Moreover, we may be required to escheat some or all of the initiation deposits that become eligible for refund in the future that remain unclaimed.

Any refund of initiation deposits to our members or payments to states as a result of escheatment laws or settlements would need to be funded by our available cash, or we may be required to take actions to make cash available. These funding requirements could strain our cash on hand or otherwise require us to borrow funds, force us to reduce or delay capital expenditures, sell assets or operations or seek additional capital. These actions could have a material and adverse impact on our business, results of operations or financial condition. We cannot assure you that we would be able to take any of these actions, that these actions would be successful and permit us to meet such obligations or that these actions would be permitted under the terms of our existing or future debt agreements.

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

As of June 13, 2017, we operated multiple clubs in several metropolitan areas, including 30 in the greater Atlanta, Georgia region, 17 near Houston, Texas, 17 in and around Dallas, Texas and 9 in the greater Los Angeles, California region. As a result, any prolonged disruption in the operations of our clubs in any of these markets, whether due to technical difficulties, power failures or destruction or damage to the clubs as a result of a natural disaster, fire or any other reason, could harm our results of operations or may result in club closures. In addition, some of the metropolitan areas where we operate clubs could be disproportionately affected by regional economic conditions, such as declining home prices and rising unemployment. Concentration in these markets increases our exposure to adverse developments related to competition, as well as economic and demographic changes in these areas.

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

Labor is our primary property-level operating expense. As of June 13, 2017, we employed approximately 21,800 hourly-wage and salaried employees at our clubs and corporate offices. For fiscal year 2016, labor-related expense accounted for 47.1% of our total club operating costs and expenses. We may face labor shortages or increased labor costs because of increased competition for employees, higher employee turnover rates, or increases in the federal or state minimum wage or other employee benefit costs. For example, if the federal minimum wage were increased significantly, we would have to assess the financial impact on our operations as we have a large population of hourly employees. If labor-related expenses increase, our operating expense could increase and our business, financial condition and results of operations could be harmed.

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

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

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

Unregistered Sales of Equity Securities

None.

Use of Proceeds

Not applicable.

Issuer Purchases of Equity Securities

On February 24, 2016, we announced that our Board of Directors authorized a repurchase of up to $50 million of our common stock with an expiration date of December 31, 2017. The repurchase program may be executed from time to time, subject to general business and market conditions and other investment opportunities, through open market or privately negotiated transactions, including through plans designed under Rule 10b5-1 of the Securities Exchange Act of 1934. During the ~~twelve~~twenty-four weeks ended ~~March~~June 2113, 2017, we did not purchase any shares under the share repurchase plan.

The following table contains information about our purchases of equity securities registered under Section 12(b) of the Exchange Act during the ~~twelve~~twenty-four weeks ended ~~March~~June 2113, 2017.

	(a) Total Number of Shares Purchased (1)	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Program	(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
December 28, 2016 - January 24, 2017	6,926	$	16.50	—	$	47,741,518
March 22, 2017 - April 18, 2017	—	$	—	—	$	47,741,518
January 25, 2017 - February 21, 2017	65,857	17.35		—	$	47,741,518
April 19, 2017 - May 16, 2017	—	—		—	$	47,741,518
February 22, 2017 - March 21, 2017	—	$	—	—	$	47,741,518
May 17, 2017 - June 13, 2017	524	$	13.40	—	$	47,741,518
Total	~~72,783~~524			—

______________________


(1)	Represents shares purchased from employees to satisfy their tax withholding obligations in connection with the vesting of restricted stock awards.

Dividend Policy and Limitations

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

Our ability to pay dividends ~~depends~~has depended in part on our receipt of cash distributions from our operating subsidiaries, which may be restricted from distributing us cash as a result of the laws of their jurisdiction of organization, agreements of our subsidiaries or covenants under any existing and future outstanding indebtedness we or our subsidiaries incur. In particular, the ability of our subsidiaries to distribute cash to us is limited by covenants in the credit agreement governing the Secured Credit Facilities and the indenture governing the 2015 Senior Notes. ~~The payment of such quarterly dividends and any future dividends will be at the discretion of our Board of Directors.~~

Pursuant to the terms of the Merger Agreement, as of July 9, 2017 we are prohibited from, among other things, declaring and paying dividends on our common stock (other than the one-time quarterly dividend of $0.13 per share declared on July 9, 2017).

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

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

Exhibit No.		Description of Exhibit
2.1		Agreement and Plan of Merger, dated as of July 9, 2017, by and among ClubCorp Holdings, Inc., Constellation Club Parent, Inc. and Constellation Merger Sub Inc. (Incorporated by reference to Exhibit 2.1 to the Form 8-K filed by ClubCorp Holdings, Inc. on July 10, 2017)
3.1 (a)		Form of Amended and Restated Articles of Incorporation of ClubCorp Holdings, Inc. (Incorporated by reference to Exhibit 3.1(a) to Amendment No. 1 to the Form S-1 filed by ClubCorp Holdings, Inc. on August 6, 2013)
3.1 (b)		Form of Amended and Restated Bylaws of ClubCorp Holdings, Inc. (Incorporated by reference to Exhibit 3.1(b) to Amendment No. 1 to the Form S-1 filed by ClubCorp Holdings, Inc. on August 6, 2013)
10.1	†	~~Change in Control Severance Agreement, dated as of January 24,~~ 2017, ~~between~~Short ~~Eric~~Term L.Incentive ~~Affeldt~~Plan ~~and ClubCorp Holdings, Inc.~~ (Incorporated by reference to Exhibit 10.383 on Form 10-K/A filed by ClubCorp Holdings, Inc. on ~~February~~March 27, 2017)
10.2	†	~~Change~~Amendment inNo. ~~Control Severance Agreement~~11, dated as of ~~January~~May 2419, 2017, ~~between~~to ~~Curtis~~the D.Credit ~~McClellan~~Agreement ~~and~~dated ~~ClubCorp~~as of November 30, 2010 among CCA Club Operations Holdings, LLC, ClubCorp Club Operations, Inc. ~~(Incorporated~~as byBorrower, ~~reference~~Citicorp toNorth ~~Exhibit~~America, 10Inc.39 onas ~~Form~~Administrative ~~10-K~~Agent, ~~filed~~Swing byLine ~~ClubCorp~~Lender ~~Holdings~~and L/C Issuer, the other lenders party thereto and Citigroup Global Markets Inc. onas ~~February~~Sole ~~27,~~Arranger ~~2017)~~and Sole Bookrunner.
10.3	†	~~Change~~ClubCorp ~~in Control Severance Agreement~~USA, ~~dated~~Inc. asChange of ~~January~~Control ~~24,~~Severance ~~2017, between Mark A~~Plan. ~~Burnett and ClubCorp Holdings, Inc.~~ (Incorporated by reference to Exhibit 10.401 onto the Form 108-K filed by ClubCorp Holdings, Inc. on ~~February~~July 2710, 2017)
10.4	†	Change in Control Severance Agreement, dated as of January 24, 2017, between Ingrid J. Keiser and ClubCorp Holdings, Inc. (Incorporated by reference to Exhibit 10.41 on Form 10-K filed by ClubCorp Holdings, Inc. on February 27, 2017)
10.5	†	Form of Performance Restricted Stock Unit Agreement under ClubCorp Holdings, Inc. 2012 Stock Award Plan (Incorporated by reference to Exhibit 10.1 on Form 8-K filed by ClubCorp Holdings, Inc. on February 10, 2017)
10.6	†	2017 Short Term Incentive Plan (Incorporated by reference to Exhibit 10.3 on Form 10-K/A filed by ClubCorp Holdings, Inc. on March 27, 2017)
11		Statement of Computation of Per Share Earnings (Included in Part I, Item 1: “Financial Statements” of this quarterly report on Form 10-Q.)
31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002
32.1		Certifications of Chief Executive Officer pursuant to 18 U.S.C. §1350*
32.2		Certifications of Chief Financial Officer pursuant to 18 U.S.C. §1350*
101		The following information from the Company’s quarterly report on Form 10-Q for the quarter ended ~~March~~June 2113, 2017 formatted in eXtensible Business Reporting Language: (i) Consolidated condensed statements of operations for the twelve and twenty-four weeks ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016; (ii) Consolidated condensed statements of comprehensive income (loss) for the twelve and twenty-four weeks ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016; (iii) Consolidated condensed balance sheets as of ~~March~~June 2113, 2017 and December 27, 2016; (iv) Consolidated condensed statements of cash flows for the twelve and twenty-four weeks ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016; (v) Consolidated condensed statements of changes in equity for the ~~twelve~~twenty-four weeks ended ~~March~~June 2113, 2017 and ~~March~~June 2214, 2016 and (vi) Notes to the consolidated condensed financial statements.

______________________________


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


†	Indicates management contract or compensatory plan or arrangement.

4760

SIGNATURES

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

Date:	~~April~~July 2619, 2017	/s/ Curtis D. McClellan
		Curtis D. McClellan
		Chief Financial Officer and Treasurer (Principal Financial Officer)

Date:	~~April~~July 2619, 2017	/s/ Todd M. Dupuis
		Todd M. Dupuis
		Chief Accounting Officer (Principal Accounting Officer)

4861

Filing Compare · ClubCorp Holdings, Inc.