ClubCorp Holdings, Inc. - FORM 10-Q - October 16, 2014

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 10-Q
 
x        Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the quarterly period ended September 9, 2014.
 
or
 
o         Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the transition period from             to            
 
Commission File Number 333-189912
 
ClubCorp Holdings, Inc.
(Exact name of registrant as specified in its charter)
Nevada
 
20-5818205
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
3030 LBJ Freeway, Suite 600
 
 
Dallas, Texas
 
75234
(Address of principal executive offices)
 
(Zip Code)
(972) 243-6191
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes  x No o  
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No o 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. 
Large accelerated filer o
 
Accelerated filer o
 
 
 
Non-accelerated filer x
 
Smaller reporting company o
(Do not check if a smaller reporting company)
 
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No x 

As of October 9, 2014, the registrant had 64,443,332 shares of common stock outstanding, with a par value of $0.01.


 



TABLE OF CONTENTS
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



PART I—FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

CLUBCORP HOLDINGS, INC. 

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

For the Twelve and Thirty-Six Weeks Ended September 9, 2014 and September 3, 2013

(In thousands, except per share amounts)
 
Twelve Weeks Ended
 
Thirty-Six Weeks Ended
 
September 9, 2014
 
September 3, 2013
 
September 9, 2014

September 3, 2013
REVENUES:
 

 
 

 
 


 

Club operations
$
149,373

 
$
143,487

 
$
418,443


$
394,696

Food and beverage
54,684

 
50,809

 
161,045


148,615

Other revenues
418

 
539

 
2,128


2,203

Total revenues
204,475

 
194,835

 
581,616

 
545,514


 
 
 
 





DIRECT AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
 

 
 

 
 


 

Club operating costs exclusive of depreciation
132,774

 
127,741

 
377,204


354,598

Cost of food and beverage sales exclusive of depreciation
18,400

 
17,185

 
53,338


49,179

Depreciation and amortization
17,160

 
17,030

 
50,405


49,497

Provision for doubtful accounts
850

 
1,102

 
996


2,004

Loss on disposals of assets
1,744

 
2,745

 
6,347

 
6,376

Impairment of assets
—

 
24

 
895

 
1,905

Equity in earnings from unconsolidated ventures
(660
)
 
(424
)
 
(1,493
)

(966
)
Selling, general and administrative
13,553

 
11,250

 
40,737


31,747

OPERATING INCOME
20,654

 
18,182

 
53,187


51,174


 
 
 
 





Interest and investment income
1,366

 
80

 
1,535


224

Interest expense
(12,944
)
 
(19,499
)
 
(44,242
)

(58,646
)
Loss on extinguishment of debt
—

 
—

 
(31,498
)
 
—

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
9,076

 
(1,237
)
 
(21,018
)

(7,248
)
INCOME TAX (EXPENSE) BENEFIT
(5,802
)
 
(3,793
)
 
3,028


(1,150
)
INCOME (LOSS) FROM CONTINUING OPERATIONS
3,274

 
(5,030
)
 
(17,990
)

(8,398
)
Loss from discontinued clubs, net of income tax (expense) benefit of $0 and ($2) for the twelve weeks ended September 9, 2014 and September 3, 2013, respectively, and $1 and $2 for the thirty-six weeks ended September 9, 2014 and September 3, 2013, respectively
(1
)
 
(4
)
 
(2
)

(5
)
NET INCOME (LOSS)
3,273

 
(5,034
)
 
(17,992
)

(8,403
)
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
(63
)
 
(129
)
 
(137
)

(131
)
NET INCOME (LOSS) ATTRIBUTABLE TO CLUBCORP
$
3,210

 
$
(5,163
)
 
$
(18,129
)

$
(8,534
)

 
 
 
 





NET INCOME (LOSS)
$
3,273

 
$
(5,034
)
 
$
(17,992
)

$
(8,403
)
Foreign currency translation, net of tax
(140
)
 
(1,430
)
 
7


(988
)
OTHER COMPREHENSIVE (LOSS) INCOME
(140
)
 
(1,430
)
 
7


(988
)
COMPREHENSIVE INCOME (LOSS)
3,133

 
(6,464
)
 
(17,985
)

(9,391
)
COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
(63
)
 
(129
)
 
(137
)

(131
)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CLUBCORP
$
3,070

 
$
(6,593
)
 
$
(18,122
)

$
(9,522
)

 
 
 
 





WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC
63,990

 
50,570

 
63,905


50,570

WEIGHTED AVERAGE SHARES OUTSTANDING, DILUTED
64,357

 
50,570

 
63,905


50,570


 
 
 
 



EARNINGS PER COMMON SHARE, BASIC:
 
 
 
 



Income (loss) from continuing operations attributable to ClubCorp
$
0.05

 
$
(0.10
)
 
$
(0.28
)

$
(0.17
)
Income (loss) from discontinued clubs attributable to ClubCorp
$
—

 
$
—

 
$
—


$
—

Net income (loss) attributable to ClubCorp
$
0.05

 
$
(0.10
)
 
$
(0.28
)

$
(0.17
)

 
 
 
 



EARNINGS PER COMMON SHARE, DILUTED:
 
 
 
 



Income (loss) from continuing operations attributable to ClubCorp
$
0.05

 
$
(0.10
)
 
$
(0.28
)

$
(0.17
)
Income (loss) from discontinued clubs attributable to ClubCorp
$
—

 
$
—

 
$
—


$
—

Net income (loss) attributable to ClubCorp
$
0.05

 
$
(0.10
)
 
$
(0.28
)

$
(0.17
)
 
 
 
 
 
 
 
 
Cash distributions declared per common share
$
0.24

 
$
—

 
$
0.36

 
$
0.69

 
See accompanying notes to unaudited consolidated condensed financial statements

1


CLUBCORP HOLDINGS, INC.

UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS

As of September 9, 2014 and December 31, 2013

(In thousands of dollars, except share and per share amounts)
 
September 9, 2014
 
December 31, 2013
ASSETS
 

 
 

CURRENT ASSETS:
 

 
 

Cash and cash equivalents
$
65,801

 
$
53,781

Receivables, net of allowances of $3,504 and $3,666 at September 9, 2014 and December 31, 2013, respectively
84,339

 
83,161

Inventories
18,173

 
15,819

Prepaids and other assets
14,406

 
13,339

Deferred tax assets, net
7,249

 
10,403

Total current assets
189,968

 
176,503

Investments
6,385

 
8,032

Property and equipment, net (includes $9,572 and $9,347 related to VIEs at September 9, 2014 and December 31, 2013, respectively)
1,271,572

 
1,234,903

Notes receivable, net of allowances of $659 and $724 at September 9, 2014 and December 31, 2013, respectively
5,115

 
4,756

Goodwill
258,459

 
258,459

Intangibles, net
26,932

 
27,234

Other assets
34,886

 
26,330

TOTAL ASSETS
$
1,793,317

 
$
1,736,217

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

CURRENT LIABILITIES:
 

 
 

Current maturities of long-term debt
$
13,571

 
$
11,567

Membership initiation deposits - current portion
129,937

 
112,212

Accounts payable
29,184

 
26,764

Accrued expenses
28,661

 
36,772

Accrued taxes
21,493

 
20,455

Other liabilities
79,667

 
79,300

Total current liabilities
302,513

 
287,070

Long-term debt (includes $13,411 and $13,157 related to VIEs at September 9, 2014 and December 31, 2013, respectively)
720,249

 
638,112

Membership initiation deposits
202,620

 
204,152

Deferred tax liability, net
201,227

 
210,989

Other liabilities (includes $21,949 and $21,233 related to VIEs at September 9, 2014 and December 31, 2013, respectively)
166,893

 
157,944

Total liabilities
1,593,502

 
1,498,267

Commitments and contingencies (See Note 13)


 


 
 
 
 
EQUITY
 

 
 

Common stock of ClubCorp Holdings, Inc., $0.01 par value, 200,000,000 shares authorized; 64,428,380 and 63,789,730 issued and outstanding at September 9, 2014 and December 31, 2013, respectively
644

 
638

Additional paid-in capital
300,118

 
320,274

Accumulated other comprehensive loss
(1,063
)
 
(1,070
)
Retained deficit
(110,798
)
 
(92,669
)
Total stockholders’ equity
188,901

 
227,173

Noncontrolling interests in consolidated subsidiaries and variable interest entities
10,914

 
10,777

Total equity
199,815

 
237,950

TOTAL LIABILITIES AND EQUITY
$
1,793,317

 
$
1,736,217


See accompanying notes to unaudited consolidated condensed financial statements

2


CLUBCORP HOLDINGS, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

For the Thirty-Six Weeks Ended September 9, 2014 and September 3, 2013

(In thousands of dollars)
 
Thirty-Six Weeks Ended
 
September 9, 2014
 
September 3, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
 

 
 

Net loss
$
(17,992
)
 
$
(8,403
)
Adjustments to reconcile net loss to cash flows from operating activities:
 

 
 

Depreciation
50,103

 
47,521

Amortization
302

 
1,977

Asset impairments
895

 
1,905

Bad debt expense
1,012

 
2,014

Equity in earnings from unconsolidated ventures
(1,493
)
 
(966
)
Gain on investment in unconsolidated ventures
(1,276
)
 
—

Distribution from investment in unconsolidated ventures
4,290

 
2,429

Loss on disposals of assets
6,343

 
6,376

Amortization and write-off of debt issuance costs and amortization of term loan discount
5,784

 
1,550

Accretion of discount on member deposits
14,211

 
14,149

Amortization of above and below market rent intangibles
(236
)
 
115

Equity-based compensation
3,037

 
—

Redemption premium payment included in loss on extinguishment of debt
27,452

 
—

Net change in deferred tax assets and liabilities
(8,098
)
 
(3,819
)
Net change in prepaid expenses and other assets
(4,390
)
 
(5,241
)
Net change in receivables and membership notes
3,462

 
(28,659
)
Net change in accounts payable and accrued liabilities
(8,204
)
 
7,104

Net change in other current liabilities
(443
)
 
30,548

Net change in other long-term liabilities
3,594

 
(1,780
)
Net cash provided by operating activities
78,353

 
66,820

CASH FLOWS FROM INVESTING ACTIVITIES:
 

 
 

Purchase of property and equipment
(55,087
)
 
(42,066
)
Acquisitions of clubs
(17,187
)
 
(10,785
)
Acquisition of Sequoia Golf, including escrow deposit
(10,000
)
 
—

Proceeds from dispositions
314

 
90

Net change in restricted cash and capital reserve funds
(287
)
 
34

Return of capital in equity investments
126

 
592

Net cash used in investing activities
(82,121
)
 
(52,135
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 

 
 

Repayments of long-term debt
(278,668
)
 
(21,999
)
Proceeds from new debt borrowings, net of loan discount
348,250

 
10,713

Repayments of revolving credit facility borrowings
(11,200
)
 
—

Proceeds from revolving credit facility borrowings
11,200

 
—

Redemption premium payment
(27,452
)
 
—

Debt issuance and modification costs
(2,930
)
 
(6,684
)
Distribution to owners
(22,980
)
 
(35,000
)
Proceeds from new membership initiation deposits
635

 
760

Repayments of membership initiation deposits
(1,075
)
 
(1,030
)
Net cash provided by (used in) financing activities
15,780

 
(53,240
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
8

 
(110
)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
12,020

 
(38,665
)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD
53,781

 
81,965

CASH AND CASH EQUIVALENTS - END OF PERIOD
$
65,801

 
$
43,300

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 
 
 
Cash paid for interest
$
28,683

 
$
34,648

Cash paid for income taxes
$
1,956

 
$
2,347

Non-cash investing and financing activities are as follows:
 
 
 
Capital lease
$
14,057

 
$
10,075



See accompanying notes to unaudited consolidated condensed financial statements

3


CLUBCORP HOLDINGS, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY

For the Thirty-Six Weeks Ended September 9, 2014 and September 3, 2013

(In thousands of dollars, except share amounts) 
 
Shares of Common Stock
 
Common
Stock
 
Additional
Paid-in
Capital
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Retained 
Deficit
 
Noncontrolling
Interests in
Consolidated
Subsidiaries
 
Total
BALANCE - December 25, 2012
50,569,730

 
$
506

 
$
184,460

 
$
(672
)
 
$
(51,777
)
 
$
10,565

 
$
143,082

Distributions to owners
—

 
—

 
(35,000
)
 
—

 
—

 
—

 
(35,000
)
Net (loss) income
—

 
—

 
—

 
—

 
(8,534
)
 
131

 
(8,403
)
Other comprehensive loss
—

 
—

 
—

 
(988
)
 
—

 
—

 
(988
)
BALANCE - September 3, 2013
50,569,730

 
$
506

 
$
149,460

 
$
(1,660
)
 
$
(60,311
)
 
$
10,696

 
$
98,691

 
 
 
 
 
 
 
 
 
 
 
 
 
 
BALANCE - December 31, 2013
63,789,730

 
$
638

 
$
320,274

 
$
(1,070
)
 
$
(92,669
)
 
$
10,777

 
$
237,950

Issuance of shares related to equity-based compensation
638,650

 
6

 
(6
)
 
—

 
—

 
—

 
—

Distributions to owners declared
—

 
—

 
(23,187
)
 
—

 
—

 
—

 
(23,187
)
Equity-based compensation expense
—

 
—

 
3,037

 
—

 
—

 
—

 
3,037

Net (loss) income
—

 
—

 
—

 
—

 
(18,129
)
 
137

 
(17,992
)
Other comprehensive income
—

 
—

 
—

 
7

 
—

 
—

 
7

BALANCE - September 9, 2014
64,428,380

 
$
644

 
$
300,118

 
$
(1,063
)
 
$
(110,798
)
 
$
10,914

 
$
199,815



See accompanying notes to unaudited consolidated condensed financial statements



4


NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
(dollar amounts in thousands, 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”, together with Holdings and Operations' Parent, “ClubCorp”) were formed on November 10, 2010, as part of a reorganization (“ClubCorp Formation”) of ClubCorp, Inc. (“CCI”), which was effective as of November 30, 2010, for the purpose of operating and managing golf and country clubs, business, sports and alumni clubs. On September 25, 2013, Holdings completed an initial public offering (our “IPO”). As of September 9, 2014, the majority of Holdings' common stock was owned by Fillmore CCA Investment, LLC (“Fillmore”), which is wholly owned by an affiliate of KSL Capital Partners, LLC (“KSL”), a private equity fund that invests primarily in the hospitality and leisure business. ClubCorp, together with its subsidiaries, may be referred to as “we”, “us”, “our” or the “Company”.

Subsequent to September 9, 2014, on September 30, 2014, ClubCorp USA, Inc., a wholly owned subsidiary of Holdings, completed the acquisition of all the equity interests in each of Sequoia Golf Holdings, LLC and Parthenon-Sequoia Ltd. (“Sequoia Golf”). The acquisition was executed through an Equity Purchase Agreement (the “Equity Purchase Agreement”) with Sequoia Golf Holdings, LLC, Parthenon-Sequoia Ltd., Parthenon Investors II, L.P., J&R Founders’ Fund II, L.P., PCIP Investors, and certain individuals named therein. The total purchase price was $265.0 million payable in cash, subject to customary closing adjustments, including net working capital. See Notes 9, 11 and 16 for further description of the acquisition and related financing.

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

The accompanying consolidated condensed financial statements have been prepared by Holdings and are unaudited. Certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP have been omitted from the accompanying financial statements. We believe the disclosures made are adequate to make the information presented not misleading. However, the financial statements should be read in conjunction with the consolidated financial statements and notes thereto of Holdings for the year ended December 31, 2013.

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

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

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

Revenue Recognition—Revenues from club operations, food and beverage and merchandise sales are recognized at the time of sale or when the service is provided and are reported net of sales taxes. Revenues from membership dues are generally billed monthly and recognized in the period earned.
 
At a majority of our private clubs, members are expected to pay an initiation fee or deposit upon their acceptance as a member to the club. In general, initiation fees are not refundable, whereas initiation deposits are not refundable until a fixed number of years (generally 30) after the date of acceptance of a member. We recognize revenue related to membership initiation fees and deposits over the expected life of an active membership. For membership initiation deposits, the difference between the amount paid by the member and the present value of the refund obligation is deferred and recognized within club operations

5


revenue on the consolidated condensed statements of operations over the expected life of an active membership. The present value of the refund obligation is recorded as a membership initiation deposit liability in the consolidated condensed balance sheets and accretes over the nonrefundable term using the effective interest method with an interest rate defined as our incremental borrowing rate adjusted to reflect a 30-year time frame. The accretion is included in interest expense.

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

The expected lives of active memberships are calculated annually, using historical attrition rates to determine the expected lives of active memberships. 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 fiscal year 2013, 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. During fiscal year 2014, 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 fees and deposits recognized within club operations revenue on the consolidated condensed statements of operations were $3.0 million and $9.1 million for the twelve and thirty-six weeks ended September 9, 2014, respectively, and $4.2 million and $12.2 million for the twelve and thirty-six weeks ended September 3, 2013, respectively.

Foreign Currency—The functional currency of our entities located outside the United States is the local currency. Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the current exchange rate in effect at period-end. All foreign income and expenses are translated at the monthly weighted-average exchange rates during the year. Translation gains and losses are reported separately, net of tax of $0.0 million for all periods presented, as a component of comprehensive loss, until realized. No translation gains or losses have been reclassified into earnings for the twelve and thirty-six weeks ended September 9, 2014 or September 3, 2013. Realized foreign currency transaction gains and losses are reflected in the consolidated condensed statements of operations and comprehensive loss in club operating costs.

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

Equity-Based Awards—We measure the cost of employee services rendered in exchange for equity-based compensation based upon the grant date fair market value of the respective equity-based awards. The value is recognized over the requisite service period, which is generally the vesting period. The following table shows total equity-based compensation expense included in the consolidated condensed statements of operations:
 
Twelve Weeks Ended
 
Thirty-Six Weeks Ended
 
September 9, 2014
 
September 3, 2013
 
September 9, 2014
 
September 3, 2013
Club operating costs exclusive of depreciation
$
256

 
$
—

 
$
1,053

 
$
—

Selling, general and administrative
693

 
—

 
1,984

 
—

Pre-tax equity-based compensation expense
949

 
—

 
3,037

 
—

Less: benefit for income taxes
(548
)
 
—

 
(912
)
 
—

Equity-based compensation expense, net of tax
$
401

 
$
—

 
$
2,125

 
$
—


As of September 9, 2014, there was approximately $3.9 million of unrecognized expense, adjusted for estimated forfeitures, related to non-vested, equity-based awards granted to employees, which is expected to be recognized over a weighted average period of approximately 1.6 years.

The ClubCorp Holdings, Inc. 2012 Stock Award Plan, which was amended and restated as of August 14, 2013 (the “Stock Plan”) provides for an aggregate amount of no more than 4.0 million shares of common stock to be available for awards. The Stock Plan provides for the grant of stock options, restricted stock awards, restricted stock units, performance-based awards and other equity-based incentive awards. To date, we have granted restricted stock awards, restricted stock units

6


(“RSUs”), and performance restricted stock units (“PSUs”) under the Stock Plan. As of September 9, 2014, approximately 3.0 million shares of common stock were available for future issuance under the Stock Plan.
On April 1, 2012, Holdings granted RSUs to certain executives under the Stock Plan. The RSUs vest based on satisfaction of both a time condition and a liquidity condition and are converted into shares of our common stock upon vesting. The time condition is satisfied with respect to one-third of the RSUs on each of the first three anniversaries of the grant date, subject to the holder remaining employed by us. The liquidity condition is satisfied upon the earlier of a change of control (as defined in the Stock Plan) or after a period of time following the effective date of an initial public offering by us. On March 15, 2014, the required time period following our IPO was satisfied and the liquidity vesting requirement was met, at which time one third of the RSUs granted were converted into 211,596 shares of our common stock. On April 1, 2014, 211,579 of the RSUs vested and were converted into shares of our common stock. The remaining RSUs will convert into shares of our common stock upon satisfaction of the remaining time vesting requirement. As of September 9, 2014, 190,788 RSUs remain outstanding.

On January 17, 2014, and on February 7, 2014, we granted 103,886 and 111,589 shares of restricted stock, respectively, to certain participants under the Stock Plan. Under the terms of the grants, the restrictions will be removed upon satisfaction of time vesting requirements, subject to the holder remaining employed by us.

On February 7, 2014, we granted 111,610 PSUs to certain participants under the Stock Plan. Under the terms of the grants, the PSUs will convert into shares of our common stock upon satisfaction of (i) time vesting requirements and (ii) the applicable performance based requirements. The number of performance restricted stock units issued under these grants represents the target number of such units that may be earned, based on the Company's total shareholder return over the applicable performance periods compared with a peer group. If more than the target number of performance restricted stock units vest at the end of a performance period because the Company's total shareholder return exceeds certain percentile thresholds of the peer group, additional shares will be issued under the Stock Plan at that time.

Subsequent to September 9, 2014, on September 25, 2014, we granted a total of 14,952 shares of restricted stock to our independent directors, vesting one year from the date of grant. See Note 16.

Prior to our IPO, unit awards were issued under a Management Profits Interest Program (“MPI”) which provided grants of time-vesting non-voting profits interests in Fillmore. In connection with the consummation of our IPO, the MPI participants surrendered all unit awards then held by them in exchange for an aggregate of 2,251,027 shares of Holdings' common stock previously held by Fillmore, 196,267 of which remain subject to time vesting requirements as of September 9, 2014.

Recently Issued Accounting Pronouncements
 
In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2013-11 (“ASU 2013-11”), Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. ASU No. 2013-11 clarifies that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. ASU 2013-11 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Our adoption of ASU 2013-11 at the beginning of fiscal year 2014 did not materially impact on our consolidated condensed financial statements.

In April 2014, the FASB issued Accounting Standards Update No. 2014-8 (“ASU 2014-8”), Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. ASU No. 2014-8 amends guidance for reporting discontinued operations and disposals of components of an entity. The amended guidance requires that a disposal representing a strategic shift that has (or will have) a major effect on an entity's financial results or a business activity classified as held for sale should be reported as discontinued operations. The amended guidance also expands the disclosure requirements for discontinued operations and adds new disclosures for individually significant dispositions that do not qualify as discontinued operations. We adopted ASU 2014-8 during the twelve weeks ended September 9, 2014. The amended guidance was adopted prospectively; thus, no changes were made to dispositions that were classified as discontinued operations prior to this adoption. During the normal course of

7


business, we have closed certain clubs that were underperforming and terminated certain management agreements. We believe the future divestiture of an individual club will not qualify as a discontinued operation as it is unlikely to represent a strategic shift or have a major effect on our financial results. Our adoption of ASU 2014-8 did not have a material impact on our consolidated financial position or results of operations. During the twelve weeks ended September 9, 2014, one management agreement was terminated. This divestiture would have qualified as a discontinued operation prior to our adoption of the amended guidance, but is reported within continuing operations under the amended guidance.

In May 2014, the FASB issued Accounting Standards Update No. 2014-9 (“ASU 2014-9”), Revenue from Contracts with Customers. ASU 2014-9 requires revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also specifies the accounting for some costs to obtain or fulfill a contract with a customer, as well as enhanced disclosure requirements. ASU 2014-9 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning after December 15, 2016. We are still evaluating the impact that our adoption of ASU 2014-9 will have on our consolidated financial position or results of operations.

3. VARIABLE INTEREST ENTITIES
 
Consolidated VIEs include three managed golf course properties and certain realty interests which we define as “Non-Core Development Entities”. We have determined we are the primary beneficiary of these VIEs as we have the obligation to absorb the majority of losses from and direct activities of these operations. One of these managed golf course property VIEs is financed through a loan payable of $1.0 million collateralized by assets of the entity totaling $4.3 million as of September 9, 2014. The other managed golf course property VIEs are financed through advances from us. Outstanding advances as of September 9, 2014 total $3.6 million compared to recorded assets of $6.8 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.
The following summarizes the carrying amount and classification of the VIEs' assets and liabilities in the consolidated condensed balance sheets as of September 9, 2014 and December 31, 2013, net of intercompany amounts:
 
 
September 9, 2014
 
December 31, 2013
Current assets
$
1,652

 
$
1,407

Fixed assets, net
9,572

 
9,347

Other assets
850

 
850

Total assets
$
12,074

 
$
11,604

 
 
 
 
Current liabilities
$
1,546

 
$
1,644

Long-term debt
13,411

 
13,157

Other long-term liabilities
20,528

 
20,060

Noncontrolling interest
5,735

 
5,955

Company capital
(29,146
)
 
(29,212
)
Total liabilities and equity
$
12,074

 
$
11,604

 
Recourse of creditors to these VIEs is limited to the assets of the VIE entities, which total $12.1 million and $11.6 million at September 9, 2014 and December 31, 2013, respectively.
 
4. INVESTMENTS
 
Equity method investments in golf and business club ventures total $1.3 million and $1.4 million at September 9, 2014 and December 31, 2013, respectively, and include two golf club joint ventures and one business club joint venture. Our share of earnings in the equity investments is included in equity in earnings from unconsolidated ventures in the consolidated condensed statements of operations.

Additionally, we have one equity method investment of 10.2% in Avendra, LLC, a purchasing cooperative of hospitality companies, for which we exercise significant influence. The carrying value of the investment was $4.6 million and $6.2 million at September 9, 2014 and December 31, 2013, respectively. Our share of earnings in the equity investment is

8


included in equity in earnings from unconsolidated ventures in the consolidated condensed statements of operations. We have contractual agreements with the joint venture to provide procurement services for our clubs for which we received net volume rebates and allowances totaling $0.3 million and $2.3 million during the twelve and thirty-six weeks ended September 9, 2014, respectively, and $0.0 million and $2.1 million during the twelve and thirty-six weeks ended September 3, 2013, respectively. The difference between the carrying value of the investment and our share of the equity reflected in the joint venture's financial statements at the time of the acquisition of CCI by affiliates of KSL was allocated to intangible assets of the joint venture and is being amortized over approximately 10 years beginning in 2007. The carrying value of these intangible assets was $4.6 million and $6.0 million at September 9, 2014 and December 31, 2013, respectively.
 
Our equity in net income from the investment described in the preceding paragraph is shown below:
 
Twelve Weeks Ended
 
Thirty-Six Weeks Ended
 
September 9, 2014
 
September 3, 2013
 
September 9, 2014
 
September 3, 2013
ClubCorp's equity in net income, excluding amortization
$
1,167

 
$
885

 
$
2,967

 
$
2,372

Amortization
(463
)
 
(463
)
 
(1,390
)
 
(1,390
)
ClubCorp's equity in net income
$
704

 
$
422

 
$
1,577

 
$
982


Additionally, we recognized $1.3 million of return on our equity investment within interest and investment income during the twelve and thirty-six weeks ended September 9, 2014. All cash distributions from our equity investment are reported as distribution from investment in unconsolidated ventures within the operating section of consolidated condensed statements of cash flows.
 
5. FAIR VALUE
 
GAAP establishes a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. The three levels of inputs are defined as follows:
 
Level 1—unadjusted quoted prices for identical assets or liabilities in active markets accessible by the Company;
 
Level 2—inputs that are observable in the marketplace other than those inputs classified as Level 1; and
 
Level 3—inputs that are unobservable in the marketplace and significant to the valuation.
 
We maximize the use of observable inputs and minimize the use of unobservable inputs. If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument is categorized based upon the lowest level of input that is significant to the fair value calculation. We recognize transfers between levels of the fair value hierarchy on the date of the change in circumstances that caused the transfer.

Fair Value of Financial Instruments
Debt—We estimate the fair value of our debt obligations, excluding capital lease obligations, as follows, as of September 9, 2014 and December 31, 2013:
 
 
September 9, 2014
 
December 31, 2013
 
Recorded Value
 
Fair Value
 
Recorded Value
 
Fair Value
Level 2 (1)
$
649,458

 
$
644,595

 
$
570,856

 
$
601,775

Level 3
51,821

 
42,075

 
53,132

 
43,971

Total
$
701,279

 
$
686,670

 
$
623,988

 
$
645,746

______________________

(1)
The recorded value for Level 2 Debt is presented net of the $1.6 million and $0.0 million discount as of September 9, 2014 and December 31, 2013, respectively, on the Secured Credit Facilities, as defined in Note 9.

     All debt obligations are considered Level 3 except for the Secured Credit Facilities, as defined in Note 9, which are considered Level 2. We use quoted prices for identical or similar liabilities to value debt obligations classified as Level 2. We use adjusted quoted prices for similar liabilities to value debt obligations classified as Level 3. Key inputs include: 1) the

9


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.

Derivative Financial Instruments—Derivative financial instruments, which consist of interest rate cap agreements, are measured at fair value on a recurring basis. The impact of these interest rate caps is not material to our consolidated condensed financial statements.

The carrying value of other financial instruments including cash, cash equivalents, receivables, notes receivable, accounts payable and other short-term and long-term assets and liabilities approximate their fair values as of September 9, 2014 and December 31, 2013.

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, goodwill, trade names, liquor licenses, and business combinations. Assets and liabilities from business combinations were recorded on our consolidated condensed balance sheets at fair value at the date of acquisition. The key assumptions used in determining these values are considered Level 3 measurements. See Note 11.

Property and Equipment—We recognized impairment losses to property and equipment of $0.9 million during the thirty-six weeks ended September 9, 2014, of which none was recognized during the twelve weeks ended September 9, 2014, to adjust the carrying amount of certain property and equipment to its fair value of $0.2 million due to continued and projected negative operating results as well as changes in the expected holding period of certain fixed assets. We recognized impairment losses to property and equipment of $1.9 million during the thirty-six weeks ended September 3, 2013, of which none was recognized during the twelve weeks ended September 3, 2013, to adjust the carrying amount of certain property and equipment to its fair value of $0.3 million. The valuation method used to determine fair value was based on an analysis of discounted future cash flows using a risk-adjusted discount rate (‘‘Income Approach’’), and based on cost adjusted for economic obsolescence (‘‘Cost Approach’’). The fair value calculations associated with these valuations are classified as Level 3 measurements. See Note 6.

6. PROPERTY AND EQUIPMENT
 
Property and equipment, including capital lease assets, at cost consists of the following at September 9, 2014 and December 31, 2013:

 
September 9, 2014
 
December 31, 2013
Land and non-depreciable land improvements
$
533,288

 
$
530,212

Depreciable land improvements
358,716

 
339,806

Buildings and recreational facilities
430,263

 
416,259

Machinery and equipment
199,017

 
181,619

Leasehold improvements
103,285

 
95,901

Furniture and fixtures
80,118

 
72,687

Construction in progress
9,911

 
3,513

 
1,714,598

 
1,639,997

Accumulated depreciation
(443,026
)
 
(405,094
)
Total
$
1,271,572

 
$
1,234,903


We evaluate property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through future cash flows. We recognized impairment losses to property and equipment of $0.9 million during the thirty-six weeks ended September 9, 2014, of which none was recognized during the twelve weeks ended September 9, 2014, to adjust the carrying amount of certain property and equipment to its fair value of $0.2 million due to continued and projected negative operating results as well as changes in the expected holding period of certain fixed assets. See Note 5.


10


We recognized impairment losses of $1.9 million during the thirty-six weeks ended September 3, 2013, to adjust the carrying amount of certain property and equipment to its fair value of $0.3 million. We did not recognize any material impairment losses in the twelve weeks ended September 3, 2013.

7. GOODWILL AND INTANGIBLE ASSETS
 
Intangible assets consist of the following at September 9, 2014 and December 31, 2013:
 
 
 
 
September 9, 2014
 
December 31, 2013
Asset
Useful
Life
 
Gross Carrying
Amount
 
Accumulated
Amortization
 
Net Carrying
Amount
 
Gross Carrying
Amount
 
Accumulated
Amortization
 
Net Carrying
Amount
Intangible assets with indefinite lives:
 
 
 

 
 

 
 

 
 

 
 

 
 

Trade names
 
 
$
24,850

 


 
$
24,850

 
$
24,850

 


 
$
24,850

Liquor Licenses
 
 
2,023

 


 
2,023

 
2,023

 


 
2,023

Intangible assets with finite lives:
 
 
 

 
 

 
 

 
 

 
 

 
 

Member Relationships
7 years
 
2,800

 
(2,800
)
 
—

 
2,800

 
(2,547
)
 
253

Management Contracts
9 years
 
598

 
(539
)
 
59

 
598

 
(490
)
 
108

Total
 
 
$
30,271

 
$
(3,339
)
 
$
26,932

 
$
30,271

 
$
(3,037
)
 
$
27,234

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill
 
 
$
258,459

 
 
 
$
258,459

 
$
258,459

 
 
 
$
258,459

 
Intangible Assets—Intangible assets include trade names, liquor licenses and member relationships. Intangible asset amortization expense was $0.1 million and $0.3 million for the twelve and thirty-six weeks ended September 9, 2014, respectively, and $0.7 million and $2.0 million for the twelve and thirty-six weeks ended September 3, 2013, respectively. The future amortization expense related to intangible assets with finite lives will be immaterial.

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 31, 2013
$
113,108

 
$
145,351

 
$
258,459

September 9, 2014
$
113,108

 
$
145,351

 
$
258,459

 

11


8. CURRENT AND LONG-TERM LIABILITIES
 
Current liabilities consist of the following at September 9, 2014 and December 31, 2013:

 
September 9, 2014
 
December 31, 2013
Accrued compensation
$
21,673

 
$
27,933

Accrued interest
1,240

 
2,373

Other accrued expenses
5,748

 
6,466

Total accrued expenses
$
28,661

 
$
36,772

 
 
 
 
Taxes payable other than federal income taxes
$
21,493

 
$
20,000

Federal income taxes payable
—

 
455

Total accrued taxes
$
21,493

 
$
20,455

 
 
 
 
Advance deposits from members
$
22,645

 
$
17,305

Unearned dues
27,454

 
32,438

Deferred membership revenues
10,913

 
10,883

Insurance reserves
8,175

 
8,175

Distributions to owners declared, but unpaid
7,865

 
7,654

Other current liabilities
2,615

 
2,845

Total other current liabilities
$
79,667

 
$
79,300

 
Other long-term liabilities consist of the following at September 9, 2014 and December 31, 2013:

 
September 9, 2014
 
December 31, 2013
Uncertain tax positions
$
58,989

 
$
56,105

Deferred membership revenues
42,702

 
42,773

Casualty insurance loss reserves - long term portion
13,445

 
11,255

Above market lease intangibles
960

 
1,347

Deferred rent
26,655

 
22,716

Accrued interest on notes payable related to Non-Core Development Entities
21,847

 
21,111

Other
2,295

 
2,637

Total other long-term liabilities
$
166,893

 
$
157,944


9. DEBT AND CAPITAL LEASES

Secured Credit Facilities

Secured Credit Facilities—In 2010, Operations entered into the secured credit facilities (the “Secured Credit Facilities”). The Secured Credit Facilities were subsequently amended in 2012, 2013 and 2014. As amended through and as of September 9, 2014, the Secured Credit Facilities were comprised of (i) a $651.1 million term loan facility, and (ii) a revolving credit facility with $111.3 million available for borrowing, after deducting $23.7 million of standby letters of credit outstanding. In addition, as of September 9, 2014 the credit agreement governing the Secured Credit Facilities included an accordion feature which provided, subject to lender participation, for increases in the combined revolving and term loan capacity of the Secured Credit Facilities by incremental amounts of (a) $50.0 million, and, after full utilization of such $50.0 million, (b) an additional amount of incremental term or revolving commitments, so long as the Senior Secured Leverage Ratio (the “Senior Secured Leverage Ratio”) did not exceed 3.75:1.00.
    
As of September 9, 2014, the interest rate on the term loan facility was the higher of (i) 4.0% or (ii) an elected LIBOR plus a margin of 3.0% and the maturity date of the term loan facility is July 24, 2020.


12


As of September 9, 2014, the revolving credit facility had capacity of $135.0 million, which was reduced by $23.7 million of standby letters of credit outstanding, leaving $111.3 million available for borrowing. All remaining revolving credit commitments are related to a tranche which matures on September 30, 2018 and bears interest at a rate of LIBOR plus a margin of 3.0% per annum. Operations is required to pay a commitment fee on all undrawn amounts under the revolving credit facility and a fee on all outstanding letters of credit, payable quarterly in arrears.

The credit agreement, as amended through September 9, 2014, contains a senior secured leverage ratio covenant. The Senior Secured Leverage Ratio, defined in the credit agreement as Consolidated Senior Secured Debt (exclusive of the Senior Notes) to Consolidated EBITDA (Adjusted EBITDA), requires Operations and its restricted subsidiaries to maintain a leverage ratio of no greater than 5.00:1.00 as of the end of each fiscal quarter. As of September 9, 2014, Operations' leverage ratio was 3.66:1.00.
    
The amendments to the Secured Credit Facilities made during 2012, 2013 and 2014 included, among other things, the following key modifications:

On November 16, 2012, Operations entered into the first amendment to the credit agreement governing the Secured Credit Facilities, which reduced the interest rate on the term loan facility to the higher of (i) 5.0% or (ii) an elected LIBOR plus a margin of 3.75%.

On July 24, 2013, Operations entered into a second amendment to the credit agreement governing the Secured Credit Facilities to reduce the interest rate on the term loan facility, increase the principal borrowed under the term loan facility, extend the maturity date of the term loan facility, eliminate the quarterly principal payment requirement under the term loan facility, increase the amount of permissible incremental facilities and modify certain financial covenants and non-financial terms and conditions associated with the credit agreement governing the Secured Credit Facilities. The interest rate on the term loan facility was reduced to the higher of (i) 4.25% or (ii) an elected LIBOR plus a margin of 3.25%, with an additional reduction to the higher of (i) 4.0% or (ii) an elected LIBOR plus a margin of 3.0%, upon successful completion of an initial public offering with proceeds of at least $50.0 million, which condition was satisfied on September 25, 2013, by the receipt by Operations, by way of contribution, of the net proceeds from the completion of our IPO. The term loan facility principal balance was increased to $301.1 million and the maturity date of the term loan facility was extended to July 24, 2020.

On August 30, 2013, Operations entered into a third amendment to the credit agreement governing the Secured Credit Facilities, effective on September 30, 2013, to conditionally secure the $135.0 million incremental revolving credit commitments, which mature on September 30, 2018. Borrowings under such facility bear interest at a rate of LIBOR plus a margin of 3.0% per annum.

On February 21, 2014, Operations entered into a fourth amendment to the credit agreement governing the Secured Credit Facilities which made certain administrative changes to such credit agreement. 

On April 11, 2014, Operations entered into a fifth amendment to the credit agreement governing the Secured Credit Facilities to (i) provide an aggregate of $350.0 million, before a discount of $1.8 million, of additional senior secured term loans under the existing term loan facility, (ii) ease the Senior Secured Leverage Ratio as it relates to (a) payments of excess cash flow and (b) the financial covenant relating to the revolving credit commitments under the credit agreement, (iii) modify the accordion feature under the credit agreement to be calculated as (x) $50.0 million, plus (y) after the full utilization of the amount available under clause (x), an additional amount of incremental term or revolving commitments, so long as the Senior Secured Leverage Ratio does not exceed 3.75:1.00 and (iv) make other administrative changes to the credit agreement. The Senior Secured Leverage Ratio, as amended, requires Operations and its restricted subsidiaries to maintain a Senior Secured Leverage Ratio of no greater than 5.00:1.00. Under the fifth amendment, the additional borrowings under the term loan facility bore interest at the same rate as the existing term loans, which is the higher of (i) 4.0% or (ii) an elected LIBOR plus a margin of 3.0%. The incremental term loan continues to mature on July 24, 2020.

Subsequent to September 9, 2014, on September 30, 2014, Operations entered into a sixth amendment to the credit agreement governing the Secured Credit Facilities to (i) provide an aggregate of $250.0 million, before a debt issuance discount of $1.9 million, of incremental senior secured term loans under the existing term loan facility, (ii) modify the interest rate on the term loan facility to the higher of (a) 4.5% or (b) an elected LIBOR plus a margin of 3.5%, (iii) modify the accordion feature under the credit agreement to provide for, subject to lender participation, additional borrowings in revolving or term loan commitments, so long as the Senior Secured Leverage Ratio does not exceed 3.75:1.00 and (iv) make other administrative changes to the credit agreement. The term loan continues to mature on July 24, 2020. See Note 16.


13


As of October 9, 2014, the Secured Credit Facilities are comprised of (i) a $901.1 million term loan facility and (ii) a revolving credit facility with $111.3 million available for borrowing, after deducting $23.7 million of standby letters of credit outstanding.

Operations incurred debt issuance costs in conjunction with the issuance of the Secured Credit Facilities of $6.8 million. These have been capitalized and are being amortized over the term of the loan. Operations incurred additional debt issuance costs of $0.8 million in conjunction with the amendment entered into on November 16, 2012, $4.4 million in conjunction with the second amendment entered into on July 24, 2013 and $3.4 million in conjunction with the third amendment entered into on August 30, 2013. These have also been capitalized and are being amortized over the remaining term of the loan. In conjunction with the fifth amendment entered into on April 11, 2014, Operations incurred $4.5 million in debt issuance costs; $2.7 million of these costs have been capitalized and are being amortized over the remaining term of the loan, while $1.8 million was expensed in the thirty-six weeks ended September 9, 2014.

Senior Notes

On November 30, 2010, Operations issued $415.0 million in senior unsecured notes (the “Senior Notes”) with registration rights, bearing interest at 10.0% and maturing December 1, 2018. On October 28, 2013, Operations repaid $145.3 million in aggregate principal of Senior Notes at a redemption price of 110.00%, plus accrued and unpaid interest thereon. The redemption premium of $14.5 million and proportional write-off of unamortized debt issuance costs of $2.3 million was accounted for as a loss on extinguishment of debt during the fiscal year ended December 31, 2013.

On April 11, 2014, Operations provided notice to the trustee for the Senior Notes that Operations had elected to redeem all of the remaining outstanding Senior Notes at a redemption price of 110.18%, plus accrued and unpaid interest thereon, on May 11, 2014. Operations irrevocably deposited with the trustee $309.2 million, which is the amount sufficient to fund the redemption and to satisfy and discharge Operations' obligations under the Senior Notes. The redemption premium of $27.5 million and the write-off of remaining unamortized debt issuance costs of $4.0 million was accounted for as loss on extinguishment of debt during the thirty-six weeks ended September 9, 2014.
    
Mortgage Loans

General Electric Capital Corporation (“GECC”)—In July 2008, we entered into a secured mortgage loan with GECC for $32.0 million with an original maturity of July 2011. During the fiscal year ended December 27, 2011, we extended the term of the loan to July 2012. Effective August 1, 2012, we amended the loan agreement with GECC which extended the maturity to November 2015 with two additional twelve month options to extend through November 2017 upon satisfaction of certain conditions of the loan agreement. As of September 9, 2014, we expect to meet the required conditions and currently intend to extend the loan with GECC to November 2017.

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

14



Long-term borrowings and lease commitments of the Company as of September 9, 2014 and December 31, 2013, are summarized below: 
 
September 9, 2014
 
December 31, 2013
 
 
 
 
 
Carrying Value
Interest Rate
 
Carrying Value
Interest Rate
 
Interest Rate Calculation
 
Maturity
 
 
 
 
 
 
 
 
 
 
Senior Notes
$
—

—
%
 
$
269,750

10.00
%
 
Fixed
 
2018
Secured Credit Facilities
 

 
 
 

 
 
 
 
 
Term Loan
651,106

4.00
%
 
301,106

4.00
%
 
Greater of (i) 4.0% or (ii) an elected LIBOR + 3.0%
 
2020
Revolving Credit Borrowings - ($135,000 capacity) (1)
—

3.23
%
 
—

3.25
%
 
LIBOR plus a margin of 3.0%
 
2018
Mortgage Loans
 

 
 
 

 
 
 
 
 
General Electric Capital Corporation
29,895

6.00
%
 
30,313

6.00
%
 
5.00% plus the greater of (i) three month LIBOR or (ii) 1%
 
2017
Notes payable related to certain Non-Core Development Entities
11,837

9.00
%
 
11,837

9.00
%
 
Fixed
 
(2)
Atlantic Capital Bank
3,387

4.50
%
 
3,493

4.50
%
 
Greater of (i) 3.0% + 30 day LIBOR or (ii) 4.5%
 
2015
BancFirst
4,341

4.50
%
 
4,652

4.50
%
 
Greater of (i) 4.5% or prime rate
 
2016
Other indebtedness
2,361

4.75% - 6.00%

 
2,837

4.75% - 8.00%

 
Fixed
 
Various
 
702,927

 
 
623,988

 
 
 
 
 
Capital leases
32,541

 
 
25,691

 
 
 
 
 
 
735,468

 
 
649,679

 
 
 
 
 
Less current portion
(13,571
)
 
 
(11,567
)
 
 
 
 
 
Less discount on the Secured Credit Facilities' Term Loan
(1,648
)
 
 
—

 
 
 
 
 
Long-term debt
$
720,249

 
 
$
638,112

 
 
 
 
 
______________________

(1)
As of September 9, 2014, the revolving credit facility had capacity of $135.0 million, which was reduced by $23.7 million of standby letters of credit outstanding, leaving $111.3 million available for borrowing.

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

The amount of long-term debt maturing in each of the five years subsequent to 2013 and thereafter is as follows. This table reflects the contractual maturity dates as of September 9, 2014.
Year
Debt
 
Capital Leases
 
Total
Remainder of 2014
$
397

 
$
3,841

 
$
4,238

2015
4,730

 
11,444

 
16,174

2016
4,568

 
8,221

 
12,789

2017
28,885

 
5,431

 
34,316

2018
330

 
2,668

 
2,998

Thereafter (1)
664,017

 
936

 
664,953

Total
$
702,927

 
$
32,541

 
$
735,468

______________________

15



(1)
As described above, subsequent to September 9, 2014, on September 30, 2014, Operations entered into a sixth amendment to the credit agreement governing the Secured Credit Facilities to provide an aggregate of $250.0 million of additional senior secured term loans under the existing term loan facility. This amount is not included in the table above. The proceeds were used to fund the Sequoia Golf acquisition. As of October 9, 2014, the term loan facility principal balance was $901.1 million.

10. INCOME TAXES

Holdings files a consolidated federal income tax return. 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 tax expense or benefit recognized in our interim financial statements is determined by multiplying the year-to-date income or loss by the annual effective tax rate, which is an estimate of the expected relationship between tax expense or benefit for the full year to the pre-tax income or loss for the full year (pre-tax income or loss excluding unusual or infrequently occurring discrete items). Our effective income tax rate for the twelve and thirty-six weeks ended September 9, 2014 was 63.9% and 14.4%, respectively, compared to (306.0)% and (15.9)%, for the twelve and thirty-six weeks ended September 3, 2013, respectively. For the twelve and thirty-six weeks ended September 9, 2014 and September 3, 2013, the effective tax rate differed from the statutory federal tax rate of 35.0% primarily due to state taxes, changes in uncertain tax positions and certain other permanent differences. The relative impact these items have on the effective tax rate varies based on the forecasted amount of pre-tax income or loss for the year.

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

As of September 9, 2014 and December 31, 2013, we have recorded $59.0 million and $56.1 million, respectively, of unrecognized tax benefits related to uncertain tax positions, including interest and penalties, which are included in other liabilities in the consolidated condensed balance sheets. The majority of unrecognized tax benefits relates to cancellation of indebtedness income stemming from the 2010 ClubCorp Formation and related debt restructuring transactions. The calculation of the cancellation of indebtedness income recognized in connection with the ClubCorp Formation was complex and involved significant judgments and interpretations on our part, including the valuation of assets held at such time.

We are currently undergoing an Internal Revenue Service (“IRS”) audit of certain components of the tax return for the year ended December 28, 2010, which includes the debt restructuring transactions and related cancellation of indebtedness income amounts recognized in connection with the ClubCorp Formation. The IRS has completed its examination. Subsequent to September 9, 2014, on October 13, 2014, we executed and returned for counter-signature a closing agreement which would close out the audit. Should the closing agreement be finalized in the fourth quarter, we estimate that our total unrecognized tax benefits will be reduced by approximately $48.6 million, of which $11.7 million represents settlements and $36.9 million represents further reductions of prior period unrecognized tax benefits. In addition, we estimate that approximately $13.8 million of accrued interest and penalties will be reversed upon receipt of the counter-signed closing agreement. In total, we estimate that approximately $44.4 million of the above benefits will be recorded in the income statement, including interest and penalties.

In addition, certain of our foreign subsidiaries are under audit in Mexico for the 2008 and 2009 tax years and have received notification of assessments by the Mexican taxing authorities. We have taken the appropriate procedural steps to vigorously contest these assessments through the appropriate Mexican administrative and judicial channels and one of the assessments has been remanded to the original examination team. We have filed litigation on another assessment issued for the 2008 tax year in the amount of $3.0 million, plus penalties and interest. Further, an additional Mexican subsidiary under audit received a notice of assessment for the 2009 tax year in the amount of $6.0 million, plus penalties and interest. We have responded to, and will vigorously challenge, this assessment through the appropriate Mexican administrative and/or judicial channels. As of September 9, 2014, we have not recorded a liability related to these uncertain tax positions as we believe it is more likely than not that we will prevail based on the merits of our positions. We will continue to evaluate the relevant tax issues related to these assessments in future periods.

We believe we are adequately reserved for our uncertain tax positions as of September 9, 2014.


16


11. 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.

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

TPC Piper Glen—On April 29, 2014, we acquired Tournament Players Club (“TPC”) Piper Glen, a private golf club in Charlotte, North Carolina with a purchase price of $3.8 million for net cash consideration of $3.7 million. We recorded the following major categories of assets and liabilities, which are subject to change until our information is finalized, no later than twelve months from the acquisition date:

Land, depreciable land improvements, and property and equipment
$
3,833

Receivables and inventory
210

Other current liabilities and accrued taxes
(115
)
Long-term debt and other liabilities
(197
)
Total
$
3,731


TPC Michigan—On April 29, 2014, we acquired TPC Michigan, a semi-private golf club in Dearborn, Michigan with a purchase price of $3.0 million for net cash consideration of $2.6 million. We recorded the following major categories of assets and liabilities, which are subject to change until our information is finalized, no later than twelve months from the acquisition date:

Land, depreciable land improvements, and property and equipment
$
3,643

Receivables, inventory and prepaid assets
235

Other current liabilities and accrued expenses
(624
)
Long-term debt
(157
)
Deferred tax liability
(175
)
Membership initiation deposits
(370
)
Total
$
2,552


Prestonwood Country Club—On March 3, 2014, we acquired Prestonwood Country Club, a private golf club comprised of two properties, The Creek in Dallas, Texas and The Hills in nearby Plano, Texas, with a purchase price of $11.2 million for net cash consideration of $10.9 million. We recorded the following major categories of assets and liabilities, which are subject to change until our information is finalized, no later than twelve months from the acquisition date:
Land, depreciable land improvements, and property and equipment
$
14,742

Inventory and prepaid assets
97

Other current liabilities and accrued taxes
(362
)
Long-term debt
(280
)
Deferred tax liability
(1,300
)
Membership initiation deposits and other liabilities
(1,994
)
Total
$
10,903

Paragon Club of Hefei—In March 2014, we began managing and operating Paragon Club of Hefei, a private business club in China.


17


Chantilly National Golf & Country Club—On December 17, 2013, we acquired Chantilly National Golf & Country Club, a private country club located in Centreville, Virginia, in exchange for net cash consideration of $4.8 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:
 
Depreciable land improvements, property and equipment
$
5,171

Inventory
103

Other current liabilities
(25
)
Other long-term liabilities
(180
)
Long-term debt
(234
)
Total
$
4,835


Cherry Valley Country Club—On June 18, 2013, we acquired Cherry Valley Country Club, a private country club located in Skillman, New Jersey, in exchange for net cash consideration of $5.6 million. We recorded the following major categories of assets and liabilities:
 
Depreciable land improvements, property and equipment
$
5,976

Prepaid assets
121

Inventory
179

Long-term debt
(311
)
Other liabilities
(408
)
Total
$
5,557


Oak Tree Country Club—On May 22, 2013, we acquired Oak Tree Country Club, a private country club located in Edmond, Oklahoma, in exchange for net cash consideration of $5.2 million. We assumed debt of $5.0 million in connection with the acquisition. We recorded the following major categories of assets and liabilities:
 
Land, property and equipment
$
12,108

Receivables, prepaid assets and other assets
662

Inventory
233

Current maturities of long-term debt
(468
)
Long-term debt
(4,486
)
Deferred tax liability
(722
)
Membership initiation deposits and other liabilities
(2,099
)
Total
$
5,228

     
Revenues and operating income associated with the clubs acquired were not material for the twelve and thirty-six weeks ended September 9, 2014 and September 3, 2013. The pro forma information related to these acquisitions is not material to our historical results of operations.

Subsequent to September 9, 2014, on September 30, 2014, we acquired Sequoia Golf for total cash consideration of $265.0 million, subject to customary closing adjustments, including net working capital. Due to the timing of this acquisition, the purchase price allocation was not yet available for disclosure as of the date these financial statements were available to be issued. See Note 16.


18


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, on a consolidated basis, is appropriate as it provides additional information to investors about our compliance with certain financial covenants and investors and lenders have historically used EBITDA-related measures.

We began managing the business using Adjusted EBITDA, which is the earnings measure historically disclosed on a consolidated basis, as our measure of segment profit and loss at the beginning of fiscal year 2014. Prior to this change, we utilized Segment EBITDA (“Segment EBITDA”) as our measure of segment profit and loss, but we also presented Adjusted EBITDA on a consolidated basis, as certain financial covenants in the credit agreement governing the Secured Credit Facilities utilize this measure of Adjusted EBITDA. These two measurements have not produced materially different results. This change results in alignment of our internal measure of segment profit and loss with the measure used to evaluate our performance on a consolidated basis and the financial covenants under the Credit Agreement, and it reduces the number of non-GAAP measurements we report, thus simplifying our financial reporting. The manner in which we calculate Adjusted EBITDA has not changed. For comparability purposes, amounts for the twelve and thirty-six weeks ended September 3, 2013 have been recast.

EBITDA is defined as net income before interest expense, income taxes, interest and investment income, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA plus or minus impairments, gain or loss on disposition and acquisition of assets, losses from discontinued operations, loss on extinguishment of debt, non-cash and other adjustments, equity-based compensation expense and an acquisition adjustment. The acquisition adjustment to revenues and Adjusted EBITDA within each segment represents estimated deferred revenue using current membership life estimates related to initiation payments that would have been recognized in the applicable period but for the application of purchase accounting in connection with the acquisition of CCI in 2006 by affiliates of KSL. Adjusted EBITDA is based on the definition of Consolidated EBITDA as defined in the credit agreement governing the Secured Credit Facilities and may not be comparable to similarly titled measures reported by other companies. The credit agreement governing the Secured Credit Facilities contains certain financial covenants which require the Company to maintain specified financial ratios in reference to Adjusted EBITDA.

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

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

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


19


The table below shows summarized financial information by segment for the twelve and thirty-six weeks ended September 9, 2014 and September 3, 2013:
 
 
Twelve Weeks Ended
 
Thirty-Six Weeks Ended
 
September 9, 2014
 
September 3, 2013
 
September 9, 2014
 
September 3, 2013
Golf and Country Clubs
 
 
 
 
 

 
 

Revenues
$
164,804

 
$
156,030

 
$
459,766

 
$
427,298

Adjusted EBITDA
46,860

 
43,153

 
133,115

 
122,540

 
 
 
 
 
 
 
 
Business, Sports and Alumni Clubs
 
 
 
 
 

 
 

Revenues
$
38,960

 
$
36,628

 
$
120,066

 
$
116,124

Adjusted EBITDA
5,785

 
4,712

 
20,446

 
18,849

 
 
 
 
 
 
 
 
Other
 
 
 
 
 

 
 

Revenues
$
2,929

 
$
3,209

 
$
7,978

 
$
6,292

Adjusted EBITDA
(7,213
)
 
(6,333
)
 
(26,287
)
 
(24,316
)
 
 
 
 
 
 
 
 
Elimination of intersegment revenues and segment reporting adjustments
$
(2,218
)
 
$
(1,032
)
 
$
(6,194
)
 
$
(4,200
)
 
 
 
 
 
 
 
 
Total
 
 
 
 
 

 
 

Revenues
$
204,475

 
$
194,835

 
$
581,616

 
$
545,514

Adjusted EBITDA
45,432

 
41,532

 
127,274

 
117,073


 
As of
Total Assets
September 9, 2014
 
December 31, 2013
Golf and Country Clubs
1,296,276

 
1,254,988

Business, Sports and Alumni Clubs
95,499

 
90,078

Other
401,542

 
391,151

Consolidated
$
1,793,317

 
$
1,736,217



20


The table below provides a reconciliation of our net income (loss) to Adjusted EBITDA for the twelve and thirty-six weeks ended September 9, 2014 and September 3, 2013:
 
 
Twelve Weeks Ended
 
Thirty-Six Weeks Ended
 
September 9, 2014
 
September 3, 2013
 
September 9, 2014
 
September 3, 2013
Net income (loss)
$
3,273

 
$
(5,034
)
 
$
(17,992
)
 
$
(8,403
)
Interest expense
12,944

 
19,499

 
44,242

 
58,646

Income tax expense (benefit)
5,802

 
3,793

 
(3,028
)
 
1,150

Interest and investment income
(1,366
)
 
(80
)
 
(1,535
)
 
(224
)
Depreciation and amortization
17,160

 
17,030

 
50,405

 
49,497

EBITDA
$
37,813

 
$
35,208

 
$
72,092

 
$
100,666

Impairments, disposition of assets and income (loss) from discontinued operations and divested clubs (1)
1,745

 
2,737

 
7,166

 
8,170

Loss on extinguishment of debt (2)
—

 
—

 
31,498

 
—

Non-cash adjustments (3)
464

 
1,120

 
1,389

 
2,773

Other adjustments (4)
3,506

 
2,248

 
9,064

 
4,266

Equity-based compensation expense (5)
949

 
—

 
3,037

 
—

Acquisition adjustment (6)
955

 
219

 
3,028

 
1,198

Adjusted EBITDA
$
45,432

 
$
41,532

 
$
127,274

 
$
117,073

______________________

(1)
Includes non-cash impairment charges related to property and equipment, loss on disposals of assets and net loss or income from discontinued operations and divested clubs that do not quality as discontinued operations.

(2)
Includes loss on extinguishment of debt calculated 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 and expense recognized for our long-term incentive plan related to fiscal years 2011 through 2013.

(4)
Represents adjustments permitted by the credit agreement governing the Secured Credit Facilities including cash distributions from equity method investments less equity in earnings recognized for said investments, income or loss attributable to non-controlling equity interests of continuing operations, franchise taxes, adjustments to accruals for unclaimed property settlements, acquisition costs, debt amendment costs, equity offering costs, other charges incurred in connection with the ClubCorp Formation and management fees, termination fee and expenses paid to an affiliate of KSL.

(5)
Includes equity-based compensation expense, calculated in accordance with GAAP, related to awards held by certain employees, executives and directors.

(6)
Represents estimated deferred revenue using current membership life estimates related to initiation payments that would have been recognized in the applicable period but for the application of purchase accounting in connection with the acquisition of CCI in 2006.

Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, operating income or net income (as determined in accordance with GAAP) as a measure of our operating results or net cash provided by operating activities (as determined in accordance with GAAP) as a measure of our cash flows or ability to fund our cash needs. Our measurement of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.
13. COMMITMENTS AND CONTINGENCIES
 
We routinely enter into contractual obligations to procure assets used in the day to day operations of our business. As of September 9, 2014, we had capital commitments of $8.2 million at certain of our clubs.
 

21


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

We are currently undergoing an IRS audit of certain components of the tax return for the year ended December 28, 2010, which includes the debt restructuring transactions and related cancellation of indebtedness income amounts recognized in connection with the ClubCorp Formation. The IRS has completed its examination. Subsequent to September 9, 2014, on October 13, 2014, and we executed and returned for counter-signature a closing agreement which would close out the audit. Should the closing agreement be finalized in the fourth quarter, we estimate that our total unrecognized tax benefits will be reduced by approximately $48.6 million, of which $11.7 million represents settlements and $36.9 million represents further reductions of prior period unrecognized tax benefits. In addition, we estimate that approximately $13.8 million of accrued interest and penalties will be reversed upon receipt of the counter-signed closing agreement. In total, we estimate that approximately $44.4 million of the above benefits will be recorded in the income statement, including interest and penalties. See Note 10.

We also have tax audits of certain foreign subsidiaries in progress for which we have received notification of assessments. The Company has taken the appropriate procedural steps to vigorously contest these assessments through the appropriate Mexican administrative and/or judicial channels. It is likely that within the next 12 months our unrecognized tax benefits will be impacted by the resolution of some or all of the matters currently under audit by the Mexican taxing authorities. Should the estimates and judgments used prove to be inaccurate, our financial results could be materially affected. See Note 10.

We are currently undergoing audits related to unclaimed property. We believe the potential for a liability related to the outcome of these audits is probable and we have estimated and recorded an immaterial amount within accrued expenses on the consolidated condensed balance sheet as of September 9, 2014.

Each of our properties is subject to real and personal property taxes. If local taxing authorities reassess the taxable value of certain properties in accordance with local and state regulations, we may be subject to additional property tax assessments, penalties and interest. At September 9, 2014, we have an immaterial amount recorded in accrued taxes on the consolidated condensed balance sheet related to certain of these properties. While the outcome of such reassessments cannot be predicted with certainty, we believe that any potential liability from these matters would not materially affect our consolidated condensed financial statements.

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

14. EARNINGS PER SHARE
Basic earnings per share (“EPS”) excludes dilution and is computed by dividing net (loss) income attributable to Holdings by the weighted average number of shares of common stock outstanding during the period. Diluted EPS reflects the dilutive effect of equity-based awards that may share in the earnings of Holdings when such shares are either issued or vesting restrictions lapse.
Presented below is basic and diluted EPS for the twelve and thirty-six weeks ended September 9, 2014 and September 3, 2013 (in thousands, except per share amounts):
 
Twelve Weeks Ended
 
Thirty-Six Weeks Ended
 
September 9, 2014
 
September 3, 2013
 
September 9, 2014
 
September 3, 2013
 
Basic
 
Diluted
 
Basic
 
Diluted
 
Basic
 
Diluted
 
Basic
 
Diluted
Income (loss) from continuing operations attributable to ClubCorp
$
3,211

 
$
3,211

 
$
(5,159
)
 
$
(5,159
)
 
$
(18,127
)
 
$
(18,127
)
 
$
(8,529
)
 
$
(8,529
)
Weighted-average shares outstanding
63,990

 
63,990

 
50,570

 
50,570

 
63,905

 
63,905

 
50,570

 
50,570

Effect of dilutive equity-based awards
—

 
367

 
—

 
—

 
—

 
—

 
—

 
—

Total Shares
63,990

 
64,357

 
50,570

 
50,570

 
63,905

 
63,905

 
50,570

 
50,570

Income (loss) from continuing operations attributable to ClubCorp per share
$
0.05

 
$
0.05

 
$
(0.10
)
 
$
(0.10
)
 
$
(0.28
)
 
$
(0.28
)
 
$
(0.17
)
 
$
(0.17
)

22


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

The following is a summary of dividends declared or paid during the periods presented:
Declaration Date
 
Dividend Per Share
 
Record Date
 
Total Amount
 
Payment Date
 
 
 
(in thousands)
 
Fiscal Year 2013
 
 
 
 
 
 
December 26, 2012
 
$
0.69

 
December 26, 2012
 
$
35,000

 
December 27, 2012
December 10, 2013
 
$
0.12

 
January 3, 2014
 
$
7,654

 
January 15, 2014
 
 
 
 
 
 
 
 
 
Fiscal Year 2014
 
 
 
 
 
 
March 18, 2014
 
$
0.12

 
April 3, 2014
 
$
7,725

 
April 15, 2014
June 25, 2014