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EX-10.34 - EXHIBIT 10.34 - ClubCorp Holdings, Inc.cch-20151229xex1034.htm
EX-23.1 - EXHIBIT 23.1 - ClubCorp Holdings, Inc.cch-20151229xex231.htm
EX-10.35 - EXHIBIT 10.35 - ClubCorp Holdings, Inc.cch-20151229xex1035.htm
EX-32.2 - EXHIBIT 32.2 - ClubCorp Holdings, Inc.cch-20151229xex322.htm
EX-31.1 - EXHIBIT 31.1 - ClubCorp Holdings, Inc.cch-20151229xex311.htm
EX-31.2 - EXHIBIT 31.2 - ClubCorp Holdings, Inc.cch-20151229xex312.htm
EX-32.1 - EXHIBIT 32.1 - ClubCorp Holdings, Inc.cch-20151229xex321.htm
EX-21 - EXHIBIT 21 - ClubCorp Holdings, Inc.cch-20151229xex21.htm


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 10-K
 
x        Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the fiscal year ended December 29, 2015.
 
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 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)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Name of each exchange on which registered
Common Stock, $0.01 par value
 
New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x 
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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 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 x
 
Accelerated filer o
 
 
 
Non-accelerated filer o
 
Smaller reporting company o
(Do not check if a smaller reporting company)
 
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No x 
The aggregate market value of the voting common equity held by non-affiliates of the registrant, based on the closing price of $23.64 per share as reported on June 16, 2015 (the last business day of the registrant’s most recently completed second fiscal quarter) was $1,039,723,940.
As of February 19, 2016, the registrant had 65,248,354 shares of common stock outstanding, with a par value of $0.01.

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive Proxy Statement for its 2016 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days of December 29, 2015 are incorporated by reference herein into Part III, Items 10 through 14, of this Annual Report.
 




TABLE OF CONTENTS
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




PART I

ITEM 1.    BUSINESS

Throughout this annual report on Form 10-K (“Form 10-K”), we refer to ClubCorp Holdings, Inc., together with its subsidiaries, as “we”, “us”, “our”, “ClubCorp” or the “Company”. Our fiscal year consists of a 52/53 week period ending on the last Tuesday of December. References to fiscal years 2015, 2014, and 2013 relate to the 52-week fiscal years ended December 29, 2015 and December 30, 2014, and the 53-week fiscal year ended December 31, 2013, respectively.

Summary

We are a membership-based leisure business and a leading owner-operator of private golf and country clubs and business, sports and alumni clubs in North America. As of December 29, 2015, our portfolio of 207 owned or operated clubs, with over 183,000 memberships, served over 430,000 individual members. Our facilities are located in 26 states, the District of Columbia and two foreign countries. ClubCorp began with one country club in Dallas, Texas with the premise of providing a first-class club membership experience. We later expanded to encompass multiple locations, making us one of the first companies to enter into the business of professional ownership and operation of private golf and country clubs. In 1966, we established our first business club with the belief that we could profitably apply our principle of delivering quality service and member satisfaction in a related line of business. In December 2006, we were acquired by affiliates of KSL Capital Partners, LLC (“KSL”), a private equity firm specializing in travel and leisure businesses. In September 2013, ClubCorp became a public equity filer on the New York Stock Exchange (the “NYSE”) under the stock symbol “MYCC”.

ClubCorp’s Diverse Portfolio of Owned and Operated Clubs


Our operations are organized into two principal business segments: (1) golf and country clubs and (2) business, sports and alumni clubs. For fiscal year 2015, golf and country clubs accounted for 81% of our total club revenue and business, sports and alumni clubs accounted for 19% of our total club revenue.

Our golf and country club segment includes a broad variety of clubs designed to appeal to a diverse group of individuals and families who lead an active lifestyle and seek a nearby outlet for golf, tennis, swimming and other activities. We are the largest owner of private golf and country clubs in the United States and own the underlying real estate for 124 of our 158 golf and country clubs (consisting of over 29 thousand acres of real estate). We own, lease or operate through joint ventures 148 golf and country clubs and manage 10 golf and country clubs. Our golf and country clubs include 133 private country clubs, 16 semi-private clubs and nine public golf courses. 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 club segment is designed to provide our members with private upscale locations where they can work, network and socialize. We own, lease or operate through a joint venture 46 business, sports and alumni clubs and manage three business, sports and alumni clubs. Our business, sports and alumni clubs include 30 business clubs, 11

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business and sports clubs, six alumni clubs, and two sports clubs. Our business clubs are generally located in office towers or business complexes and cater to business executives, professionals and entrepreneurs with a desire to entertain clients, expand their business networks, work and socialize. Our sports clubs include a variety of fitness and racquet facilities. Our alumni clubs are associated with universities with large alumni networks, and are designed to provide a connection between the university and its alumni and faculty. For example, the Baylor Club, which opened during fiscal year 2014, is located in the recently constructed football stadium of Baylor University and serves as a gathering spot for alumni, faculty and staff, along with the Waco, Texas professional, civic and social community.

For fiscal years 2010 to 2015, total revenue and adjusted EBITDA increased by 8.9% and 9.3%, respectively, on a compounded annual basis. We execute three primary growth strategies: (1) organic growth, (2) reinvention and (3) acquisitions.

Organic growth. As the largest owner-operator of private golf and country clubs in the United States, we believe that our expansive portfolio of clubs allows us to drive membership growth by providing a compelling value proposition through product variety. In 1999, we began leveraging the breadth and geographic diversity of our clubs by offering our members various upgrade offerings to take advantage of our portfolio of clubs and variety of amenities. We have created membership programming, such as our Optimal Network Experience (“O.N.E.”) product which provides members access to benefits and special offerings in their local community, network-wide and beyond, in addition to benefits at their home club. We offer our members privileges throughout our 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. As of December 29, 2015, approximately 50% of our memberships were enrolled in one or more of our upgrade programs, and associated incremental dues revenue, on a consolidated basis, relating to our upgrade programs accounted for approximately $49.5 million of our total dues revenue for fiscal year 2015.

Reinvention. Through a combination of consumer research, experimentation, capital investment and relevant programming, we have sought to “reinvent” the modern club experience to promote greater usage of our facilities. We believe that higher usage results in additional ancillary spend, such as food and beverage purchases, and improved member retention. For fiscal years 2007 through 2015, we have invested more than $586.0 million of capital to better position and maintain our clubs in their respective markets. This represents an investment of approximately 8.2% of our total revenues, for such period, to reinvent, upgrade, maintain, replace and build new and existing facilities and amenities focused on enhancing our members’ experience. From 2007 through 2015, we “reinvented” 52 golf and country clubs and 23 business, sports and alumni clubs through capital investment. In fiscal year 2016, we plan to invest approximately $20.6 million on major reinvention projects across our same-store clubs. Additionally, we plan to invest approximately $20.3 million to reinvent certain recently acquired clubs. These planned renovations will bring a mixture of contemporary, indoor and outdoor dining, resort-style pool amenities, enhanced private event space and improved golf practice and fitness facilities designed to improve our members’ experience.

Acquisitions. We believe the ability to offer access to our collection of clubs provides us a significant competitive advantage in pursuing acquisitions and 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. On September 30, 2014, we completed the acquisition of Sequoia Golf (“Sequoia Golf”) for a purchase price of $260.0 million, net of cash acquired and after customary closing adjustments. On the date of acquisition, Sequoia Golf was comprised of 30 owned golf and country clubs and 20 leased or managed clubs. Following the acquisition, our network of private clubs increased, expanding the geographic cluster model and solidifying market penetration in Atlanta, Georgia and Houston, Texas. In addition, from fiscal year 2010 through 2015, we have spent approximately $128.0 million to acquire 23 other golf and country clubs and over $6.5 million to develop two new alumni clubs, further expanding our portfolio of clubs and broadening the reach of our network. We believe there are many attractive acquisition opportunities available and we continually evaluate and selectively pursue these opportunities to expand our business.


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As shown in the following charts, for fiscal year 2015, golf and country clubs accounted for 81% of our total club revenue and business, sports and alumni clubs accounted for 19% of our total club revenue. The following charts provide a breakdown of total revenues for fiscal year 2015. Membership dues totaled $492.6 million, representing 47.0% of our total revenues.
Club Revenue by Segment
Total Revenue by Type

General

Membership-Based Leisure Business with Significant Recurring Revenue. We operate with the central purpose of building relationships and enriching the lives of our members. We focus on creating a dynamic and exciting setting for our members by providing them an environment in which they can engage in a variety of leisure, recreational, social and networking activities. We believe our clubs have become an integral part of many of our members’ lives and, as a result, the vast majority of our members retain their memberships each year, even during the recession that primarily impacted us during 2008-2010 (the “recession”).

Our large base of memberships creates a stable recurring revenue stream. As of December 29, 2015, our owned and operated clubs had over 183,000 memberships, including over 430,000 individual members. For fiscal year 2015, membership dues totaled $492.6 million, representing 47.0% of our total revenues. During the same time period, our membership retention was 83.0% in golf and country clubs and 76.9% in business, sports and alumni clubs for a blended retention rate of 80.9%. The following charts present our membership counts and annualized retention rates for our two business segments for the past 10 years:


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Membership Counts and Annualized Retention Rates
The proven strength and resiliency of our mass affluent membership base from peak to trough is an attractive attribute of our business. We believe that if our members remain satisfied with their club experience, they will remain loyal and frequent users of our clubs, reducing our sensitivity to adverse economic conditions and providing us with operating leverage in favorable economic conditions.

Further, according to our fiscal year 2015 data, the average number of visits per same store membership at one of our clubs is 33 visits per year with an average spend of $4,648 per year, including dues. The average number of visits per same store golf membership at one of our clubs is 58 visits per year with an average spend of $8,360 per year, including dues. Revenue per average membership has steadily increased over the past five years growing 5.4% on a compounded basis and totaling $5,014, $5,237, $5,591, $5,692 and $5,837 for fiscal years 2011, 2012, 2013, 2014 and 2015, respectively. For all fiscal years presented, we calculate average membership using the same store membership count at the beginning and end of the relevant fiscal year which excludes clubs acquired through the Sequoia Golf acquisition on September 30, 2014.

We believe that the demographics of our mass affluent membership base are also an important attribute of our business. According to data provided by Buxton, a database and mapping service, based on the addresses of our members, an analysis of our golf and country club members, excluding certain managed clubs acquired in the Sequoia Golf acquisition, indicates that they have an average annual household income of $180,000 to $200,000 and a primary home value of $520,000 to $610,000. An analysis from the same database of our business, sports and alumni club members indicates that they have an average annual household income of $150,000 to $175,000 and a primary home value of $435,000 to $540,000. We believe that these demographic profiles are more resilient during economic downturns than the general population.

Nationally-Recognized and Award-Winning Clubs. Our golf and country clubs, with approximately 198 18-hole course equivalents as of December 29, 2015, represent the core assets of our company and are strategically concentrated in sunbelt markets and other major metropolitan areas. We believe that our clubs are among the top private golf clubs within their respective markets based on the quality of our facilities, breadth of amenities and number of relevant programs and events. These clubs are anchored by our golf courses, of which approximately one third are designed by some of the world’s best-known golf course architects, including Jack Nicklaus, Arnold Palmer, Tom Fazio, Pete Dye, Arthur Hills, Gary Player, Robert

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von Hagge, Bruce Devlin and Robert Trent Jones. Likewise, a number of our clubs have won national and local awards and have appeared on national and local “best of” lists for golf, tennis and dining including:

Firestone Country Club in Akron, Ohio—“Top 50 Private Clubs” (2010‑2011 Golf World)

LPGA International in Daytona Beach, Florida—“America’s Top 50 Courses for Women” (2013 Golf Digest)

Aspen Glen Club in Carbondale, Colorado, Southern Trace Country Club in Shreveport, Louisiana, The Hills Country Club at Lakeway in Austin, Texas, Firestone Country Club in Akron, Ohio, Diamante Country Club in Hot Springs Village, Arkansas and Oak Tree Country Club in Edmond, Oklahoma—each named in their respective states “Best-in-State” (2014 Golf Digest)

Brookhaven Country Club in Dallas, Texas—“Best Overall Family Club” in Dallas/Fort Worth and “The Best in Private Clubs” List (2014 Avid Golfer Magazine)

Vista Vallarta Club de Golf in Puerto Vallarta, Mexico—“Best Caribbean and Mexico Courses” (2014 Golfweek)

The operations and maintenance of our golf courses and facilities have led to our selection as host of several high-profile events, leading to local and national media recognition as well as event revenue, club utilization and membership sales. In the past year, the following events were played at our courses:

The World Golf Championships—Bridgestone Invitational at Firestone Country Club in Akron, Ohio

The Insperity Invitational (Champions Tour)—The Woodlands Country Club Tournament Course in The Woodlands, Texas

The LPGA ANA Inspiration (formerly the Kraft Nabisco Championship)—Mission Hills Country Club in Rancho Mirage, California

The LPGA Volunteers of America North Texas Shootout—Las Colinas Country Club in Irving, Texas

The Web.com Midwest Classic Presented by Cadillac at Nicklaus Golf Club—LionsGate in Overland Park, Kansas

Outside of our golf offering, our clubs provide a variety of additional amenities and services that we believe appeal to the whole family, such as well-appointed clubhouses, a variety of dining venues, event and meeting spaces, tennis facilities, exercise studios, personal training, spa services, resort-style pools and water features and outdoor gathering spaces. We offer over 800 tennis courts across 90 clubs, and our Brookhaven Country Club features a nationally-recognized private tennis facility.

Many of our 49 business, sports and alumni clubs are located in the heart of the nation’s influential business districts, with locations in 15 of the top 25 metropolitan statistical areas, and offer an urban location for professionals to network with colleagues, conduct business and socialize with friends. We believe our business clubs are choice locations for regional and local business and civic receptions with business amenities to support these events. These clubs also host numerous upscale private events, such as weddings, bar and bat mitzvahs and holiday parties. These events generate traffic flow through our clubs, helping to drive membership sales and club utilization. In addition, the six alumni clubs we operate offer a unique setting for alumni and faculty to share common heritage and experiences.

Expansive Portfolio of Clubs and Alliances Providing Scale. As the largest owner-operator of private golf and country clubs in the United States, we believe that our expansive portfolio of clubs allows us to drive membership growth by providing a compelling value proposition through product variety. By clustering our clubs, many of our members have local access to both urban business-focused clubs as well as suburban family-oriented clubs. For an incremental monthly charge, our reciprocal access program gives our members access to our owned and operated clubs, as well as the facilities of others with which we have an alliance relationship, both domestically and internationally. For example, a member of one of our Dallas-Fort Worth area clubs who participates in the O.N.E. offering could travel to Palm Springs, California and play at the Dinah Shore Tournament Course at our Mission Hills Country Club. As of December 29, 2015, approximately 50% of our memberships were enrolled in one or more of our upgrade programs, as compared to approximately 39% of memberships as of the end of the prior fiscal year. Further, at the 152 clubs that offer O.N.E., approximately 71% of our golf memberships were enrolled in one or more of our upgrade programs. Incremental dues revenue, on a consolidated basis, relating to our upgrade programs accounted for approximately $49.5 million of our total dues revenue for fiscal year 2015, compared to approximately $37.6 million for fiscal year 2014. By providing members with numerous services and amenities that extend beyond their home clubs

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to all of the clubs we own and operate and the clubs with which we have alliances, we believe we can drive membership growth and create a key market differentiator which would be difficult for our competitors to replicate. We believe we have an opportunity to increase our revenue related to upgrade programs as we continue to introduce these products to our clubs, including recently acquired clubs.

Our established alliances feature leisure-oriented businesses including hotels such as The Ritz-Carlton, Hotel Del Coronado, Mandarin Oriental, and Omni Hotels and Resorts including La Costa Resort and Spa, and Barton Creek Resort & Spa; ski resorts such as Squaw Valley, Vail and Whistler Blackcomb; and restaurants such as Emeril Lagasse and The Capital Grille, as well as numerous other venues worldwide that provide discounts, upgrades and complimentary items or services. For example, our members receive 10% or more off best-available rates at select hotels and resorts, as well as special access and VIP packages to events such as The Masters and the U.S. Open Golf and Tennis Championships.

We believe the size of our portfolio of clubs provides us with significant economies of scale, creating operational synergies across our clubs and enabling us to consolidate our human resources, sales and marketing, accounting and technology departments. We also benefit from centralized purchasing to receive preferred pricing on supplies, equipment and insurance.

Diversification. As a result of our size and geographic diversity, our operating revenues and cash flows are not reliant on any one club or geographic region. Our 10 largest clubs by revenue accounted for 19.2% of our club revenues for fiscal year 2015, as shown in the following chart:

Club
 
Location
 
Revenue
(in thousands)
 
% of Club
Revenue
Firestone Country Club
 
Ohio
 
$
25,981

 
2.5
%
The Clubs of Kingwood at Kingwood
 
Texas
 
22,644

 
2.2
%
Coto De Caza Golf & Racquet Club
 
California
 
22,111

 
2.1
%
Mission Hills Country Club
 
California
 
21,763

 
2.1
%
Gleneagles Country Club
 
Texas
 
21,543

 
2.1
%
Stonebriar Country Club
 
Texas
 
20,310

 
2.0
%
The Woodlands Country Club Palmer Course & Tennis Center
 
Texas
 
18,164

 
1.7
%
Brookhaven Country Club
 
Texas
 
17,577

 
1.7
%
The Hills Country Club at Lakeway
 
Texas
 
14,787

 
1.4
%
Braemar Country Club
 
California
 
14,415

 
1.4
%
 
 
 
 
$
199,295

 
19.2
%

We have strategic concentrations of golf and country clubs in Texas, California and Georgia, representing 31.0%, 17.8% and 10.5%, respectively, of total club revenue for fiscal year 2015. While we have greater presence in these states where climates are typically conducive to year-round play, we believe that the broad geographic distribution of our portfolio of clubs helps mitigate the impact of adverse regional weather patterns and fluctuations in regional economic conditions. To allow for maximization of golf rounds, we employ a corporate director of agronomy and regional golf superintendents who oversee our strong agronomic practices, helping to extend golf play throughout the climate zones in which we operate.

Ownership and Control of Golf and Country Clubs. We own the underlying real estate of 124 of our 158 golf and country clubs and believe we have an advantage over other clubs as we retain the ability to maximize the value of our clubs and business. By owning the real estate underlying our clubs, we have been able to implement capital plans that inure to our benefit and generate positive returns on our investments. Owning many of our assets also gives us the flexibility to recycle our capital by selling underperforming clubs or non-essential tracts of land.

Seasoned Management Team. We have a highly experienced professional management team. Our seven current executive officers had a combined 198 years of related career experience, including on average 23 years of hospitality and club specific experience through the end of fiscal year 2015. Eric Affeldt has served as President and Chief Executive Officer for ClubCorp since December 2006 and has over 25 years of experience leading golf and resort companies, including as president and chief executive officer of KSL Fairways Golf Corporation, as well as general manager for Doral Golf Resort & Spa in Miami and PGA West and La Quinta Resort & Club in California. Curt McClellan, our Chief Financial Officer and Treasurer, has been with our company since November 2008 and is responsible for leading the corporate finance and accounting teams. Our Chief Operating Officer, Mark Burnett, has over 27 years of experience managing golf and country clubs and leading golf and resort companies, including serving as chief operating officer for American Golf Corporation and president and chief executive officer and chief operating officer of KSL Fairways Golf Corporation.

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We have also attracted and retained qualified general managers for our clubs. Our club general managers average approximately 10 years of service with us. These managers are tasked with the day-to-day responsibility of running the clubs and executing the strategic direction of senior management.

Our management team continues to drive new membership sales, mitigate attrition and generate cash flows by delivering value to our members through modernization and enhancement of our clubs and upgrade programs, improving operating efficiencies and expanding our portfolio through acquisitions.

Business Strategy

Attracting and retaining members while increasing member usage by providing the highest quality club experience are the biggest drivers of our revenue growth. We execute three primary growth strategies: (1) organic growth, (2) reinvention and (3) acquisitions.

Organic growth. Our organic growth strategy is focused on employing an experienced membership sales force, leveraging our portfolio and alliance offerings and developing new and relevant programming.

Employ Experienced Membership Sales Force—We employ approximately 200 club-based, professional sales personnel who are further supported by an array of regional and corporate sales and marketing teams. Our sales team receives comprehensive initial and ongoing sales training through our internally developed “Bell Notes” training program that we believe addresses all elements of the sales process from member prospecting to closing the sale and onboarding the new member. Our sales efforts are driven at an individual club, regional and national level. Club level membership sales are targeted to individual households in the local community and bolstered by referrals from existing members, real estate brokers and developers. Regional sales management ensures sales plan execution and identifies additional prospecting opportunities that match the demographic data of existing club members such as household income or the propensity to play golf. Our national sales and marketing teams are led by four corporate professionals who each have more than 20 years of tenure and collectively have over 100 years of experience with us. Their efforts include creating core and strategic membership offerings and corporate rate memberships.

We periodically obtain feedback from our membership base to effectively understand current membership demographics and preferences to better target member prospects. For example, in 2012, with the improving macro-economic environment, we launched a national family legacy program that allows members to invite extended family to join any of our clubs with promotional pricing. As of December 29, 2015, we had approximately 1,700 memberships enrolled in this program. In April 2009, we implemented regional young executive programs, primarily in our Dallas and Houston clubs, with special pricing that feature multi-club access and professional networking events. As of December 29, 2015, we had over 2,300 memberships enrolled in the young executive programs. We believe our well-trained and incentivized sales team will continue to drive membership growth, and we believe we are well-positioned to capitalize on improving economic conditions.

Leverage Our Portfolio and Alliance Offerings—We offer a variety of products, services and amenities through upgrade offerings that provide members access to our portfolio of clubs and leverage our alliances with other clubs, resorts and facilities both domestically and internationally.

In fiscal year 2010, we strategically introduced our O.N.E. product and have continued to market it aggressively across most of our golf and country clubs. O.N.E. is a 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 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. These programs are designed to increase our recurring monthly revenues while providing a value proposition to our members that helps drive increased usage of our facilities. 152 of our clubs offer O.N.E. to their members. Over 55% of our new members have joined under our O.N.E. offering at clubs where it is offered as compared to 35% of new members who purchased upgraded product offerings prior to the introduction of the O.N.E. offering. Further, approximately 75% of our new golf members joined under our O.N.E. offering at clubs where it is offered. For fiscal years 2010 to 2015, use of our facilities by members outside of their home club increased by 59%, excluding clubs acquired under the Sequoia Golf acquisition, as a result of the introduction of the O.N.E. offering. Food and beverage revenues increased 41% from fiscal years 2010 to 2015, excluding clubs acquired under the Sequoia Golf acquisition, which we largely attribute to our enhanced dining venues and offerings, including the O.N.E. product, the recovering economy and greater consumer spend. We continue to evaluate opportunities for further expansion of the O.N.E. product into additional geographic areas and acquired clubs.


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We have established alliances with other leisure-oriented businesses, whereby members of our clubs have usage privileges or receive special pricing at such properties. We target alliances with recognized brands that appeal to our members. According to the 2013 U.S. Affluent Travel and Leisure report by Resonance, the Ritz-Carlton, with whom we have an alliance, is ranked in the top five preferred brands for affluent households and is the premier brand for high net worth households. Other leading brand alliances include but are not limited to La Costa Resort and Spa, Barton Creek Resort & Spa and other Omni hotels and resorts, Pinehurst Resort, hotels such as Hotel Del Coronado and Mandarin Oriental, ski resorts such as Squaw Valley, Vail and Whistler-Blackcomb, and restaurants such as Emeril Lagasse and The Capital Grille, as well as numerous other alliances that provide discounts, complimentary upgrades, services or items. The benefits offered are generally paid for by our members at the time of use. We have revenue sharing arrangements with some of these properties, and we do not incur any fees or additional costs to enter into such alliances.

We market and promote our member benefits through our in-house marketing tools, including member e-newsletters and e-communications, our internally developed online Benefits Finder, other social media applications and our quarterly-distributed proprietary Private Clubs magazine. Our strategic alliance partners also support our marketing efforts with targeted advertisement, including direct mail. We make reservations convenient for members by providing an in-house concierge (ClubLine), and by offering access to an inventory of VIP tickets through our own web portal (TicketLine). Members may also directly access discounted hotel rates of up to 40% off retail rates at thousands of hotels worldwide through an online tool (Find Hotels) connecting members to a wholesale travel company with whom we have an alliance arrangement. We continually seek additional reciprocal arrangements and alliances with other hospitality-oriented businesses that can further enhance our members’ variety of choices extending beyond their home club.

Develop New and Relevant Programming—Members who frequently utilize our facilities typically tend to spend more at our clubs and remain members longer. As a result, we believe that there are significant opportunities to increase operating revenues by making our clubs more relevant to our members. We use a reporting tool we refer to as the “Member Dashboard” to analyze and drive member activity and club utilization. The Member Dashboard identifies members’ visits and allows us to personally engage with our members and encourage them to use their club and its amenities. We capture a member’s interest profile when the member joins a club and we study member usage patterns and obtain feedback from our members periodically to keep our offerings relevant to members’ changing lifestyles. Our goal is to provide numerous opportunities for all members and their families to utilize our facilities.

Key elements of our strategy have included making our golf and country clubs more family friendly and accessible. To make it more convenient for members to learn the game of golf, we have expanded practice facilities, enhanced teaching programs and created “Fastee Courses” where tees are placed forward to shorten the yardage of each hole to ease play and reduce the time commitment. We have also added family-oriented water recreation facilities in our pool areas, refitted fitness centers and redesigned our food and beverage outlets to be more contemporary and casual allowing for anytime usage. Many of our golf and country clubs offer summer camps and other youth programming, including junior golf leagues and swim teams. We believe these program offerings have been well received by both new and existing members, with an increase in ancillary revenue, excluding clubs acquired through the Sequoia Golf acquisition, of 3.5% for fiscal year 2015 compared to fiscal year 2014 and 2.6% for fiscal year 2014 compared to fiscal year 2013.

Many of our facilities contain significant banquet and catering facilities for use by both members and non-members alike. We host events ranging from weddings, to bar and bat mitzvahs, to business meetings, to civic organization gatherings, which often serve as the first introduction of our clubs to prospective members. Our extensive portfolio of business, sports and alumni clubs also provides our members access to a network of other civic and business leaders, and our clubs endeavor to host high profile social and civic events in order to become central to the community in which we operate.

Members also participate in clubs within their club, whereby members with similar interests come together for recreational, educational, charitable, social and business-oriented purposes. We believe this reinforces the club becoming integral to the lives of our members. Our individual clubs also benefit from member participation on their board of governors and numerous committees providing us valuable feedback and recommendations for further improvements to our program offerings. We will continue to promote activities and events occurring at members’ home clubs, and believe we can further tailor our programming to address members’ particular preferences and interests.

Reinvention. We believe our ability to conceptualize, fund and execute club reinventions gives us a significant competitive advantage over member-owned and individual privately-owned clubs, which may have difficulty gaining member consensus and financial backing to execute such improvements. In 2007, we embarked on the “reinvention” of our clubs through strategic capital investment projects designed to drive membership sales, facility usage and member retention. We believe this strategy results in increased member visits during various parts of the day for both business and pleasure, allowing our clubs to serve multiple purposes depending on the individual needs of our members. Additionally, our investments have enabled us to make appropriate price adjustments.

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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.

From fiscal years 2007 to 2015, we invested more than $586.0 million, or approximately 8.2% of total revenue, to reinvent, upgrade, maintain, replace and build new and existing facilities and amenities. Much of our invested capital included adding reinvention elements to many of our clubs, including the construction or remodeling of approximately 21 fitness facilities and 94 dining venues, the addition of seven family-oriented outdoor water related amenities and improvements to approximately 1,700 holes of golf. As of December 29, 2015, 75 of our clubs, including 52 golf and country clubs and 23 business, sports and alumni clubs, were considered “major reinvention” clubs and received significant reinvention capital. We define “major reinvention” clubs as those clubs receiving $750,000 or more gross capital spend on a project basis.

Examples of major reinvention clubs include but are not limited to:

Firestone Country Club in Akron, Ohio

Gleneagles Country Club in Dallas, Texas

Coto De Caza Golf & Racquet Club in Coto De Caza, California

Cardinal Club in Raleigh, North Carolina

The University of Texas Club in Austin, Texas

The Houston Club in Houston, Texas

The City Club Los Angeles in Los Angeles, California

The Woodlands Country Club Palmer Course & Tennis Center in Houston, Texas

Prestonwood Country Club - The Creek in Dallas, Texas

Prestonwood Country Club - The Hills in Dallas, Texas

We believe the benefits of reinvention include an increase in revenue as a result of an increase in member usage, increase in member spend per visit, and an increase in new memberships. For instance, the recent renovation at Canyon Creek Country Club near Dallas, Texas is an example of how we profit from major renovation projects. From 2013 through 2014, we invested approximately $1.6 million to renovate the club as part of our reinvention strategy. We believe this investment contributed to a 16.1% and 3.8% increase in revenue and membership count, respectively, for fiscal year 2015, compared to pre-construction revenue and membership count for fiscal year 2013. Additionally, we believe the reinvention contributed to a 28.3% improvement in adjusted EIBTDA for fiscal year 2015, compared to adjusted EBITDA for fiscal year 2013.

At our business clubs, we have benefited from landlord contributions towards the cost of our business club reinvention. Landlords often see our clubs as amenities that improve the building’s overall appeal for its tenants and, as such, are willing to help fund improvements. From fiscal years 2007 through 2015, we received landlord contributions at 21 of our 23 reinvented business, sports and alumni clubs totaling approximately $29.4 million, representing approximately 38% of the total reinvention investment in our business, sports and alumni clubs. Additionally, we expect approximately $3.3 million in tenant improvement allowances attributable to reinvention projects occurring during fiscal year 2016 under the terms of the respective lease agreements. We believe that these leasehold improvements also favorably position us to capitalize on the improving economy.

The reinvention capital investments made at The University of Texas Club in Austin, Texas, further demonstrate how we profited from such projects. From 2013 through 2014, we invested approximately $3.1 million to reinvent the club. We believe this investment contributed to a 6.6% and 29.2% increase in revenue and adjusted EBITDA, respectively, for fiscal year 2015, compared to pre-construction revenue and adjusted EBITDA for fiscal year 2013.

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Our reinvention concept is based on consumer research, through which we analyzed how members were using our facilities, why members joined and why some subsequently resigned. This research was utilized to develop physical and programming changes to better suit our members’ preferences and needs. Based on visits per average membership, in fiscal year 2015, our members visited our same store reinvented golf and country clubs an average of 29.1% more frequently than members of non-reinvented clubs and members visited our same store reinvented business, sports and alumni clubs an average of 15.8% more frequently than non-reinvented clubs.

During fiscal years 2015 and 2014, we spent $32.7 million and $32.1 million, respectively, of capital on major reinvention projects. We believe these additional major reinvention projects represent opportunities to increase revenues and generate a positive return on our investment, although we cannot guarantee such returns. In 2016, we plan to invest approximately $20.6 million on major reinvention projects across our same-store clubs. Additionally, we plan to invest approximately $20.3 million to reinvent certain recently acquired clubs. We will continue to identify and prioritize capital projects for fiscal years 2016 and beyond to add reinvention elements.

Acquisitions. Acquisitions allow us to expand our portfolio and network offerings. We believe the ability to offer access to our collection of clubs provides us a significant competitive advantage in pursuing acquisitions. Newly acquired clubs may also generally benefit from additional capital and implementation of our reinvention strategy. We believe that the unique benefits that we have to offer, such as a policy which does not assess members for capital improvements as well as our ability to consummate acquisitions and improve operations, provide us a unique competitive advantage in pursuing potential transactions. We believe there are many attractive acquisition opportunities available and we continually evaluate and selectively pursue these opportunities to expand our business. We actively communicate with other club operators, their lenders and boards of directors who may seek to dispose of their club properties or combine membership rosters at a single club location. 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. When we do make strategic acquisitions, we do so only after an evaluation to satisfy ourselves that we can add value given our external growth experience, facility assessment capabilities, operational expertise and economies of scale. For example, in the second fiscal quarter of 2013, we acquired Oak Tree Golf & Country Club, a private country club located in Edmond, Oklahoma, for approximately $10.2 million, including $5.0 million of assumed debt, and subsequently invested $3.4 million in reinvention elements. Revenues increased approximately 31.9% for fiscal year 2015 compared to fiscal year 2012, the last complete fiscal year prior to our acquisition. Additionally, the club's membership count increased 42.4% from the second quarter of 2013 to December 29, 2015. During fiscal year 2015, the club contributed $3.4 million in adjusted EBITDA.


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From fiscal years 2010 through 2015, we have spent approximately $128.0 million to acquire the 23 golf and country clubs shown in the table below.
Year
 
Club
 
Location
 
Number of Clubs
 
Number of Holes
2010
 
Country Club of the South
 
Georgia
 
1
 
18
2011
 
The Hamlet Golf & Country Club
Willow Creek Golf & Country Club
Wind Watch Golf & Country Club
 
New York
 
3
 
54
 
 
Canterwood Golf & Country Club
 
Washington
 
1
 
18
2012
 
Hartefeld National Golf Club
 
Pennsylvania
 
1
 
18
2013
 
Oak Tree Country Club
 
Oklahoma
 
1
 
36
 
 
Cherry Valley Country Club
 
New Jersey
 
1
 
18
 
 
Chantilly National Golf & Country Club
 
Virginia
 
1
 
18
2014
 
Prestonwood Country Club - The Creek
Prestonwood Country Club - The Hills
 
Texas
 
2
 
36
 
 
TPC Piper Glen
 
North Carolina
 
1
 
18
 
 
TPC Michigan
 
Michigan
 
1
 
18
 
 
Oro Valley Country Club
 
Arizona
 
1
 
18
2015
 
Ravinia Green Country Club
 
Illinois
 
1
 
18
 
 
Rolling Green Country Club
 
Illinois
 
1
 
18
 
 
Bermuda Run Country Club
 
North Carolina
 
1
 
36
 
 
Brookfield Country Club
 
Georgia
 
1
 
18
 
 
Firethorne Country Club
 
North Carolina
 
1
 
18
 
 
Ford's Colony Country Club
 
Virginia
 
1
 
54
 
 
Legacy Golf Club at Lakewood Ranch (subsequently divested)
 
Florida
 
1
 
18
 
 
Temple Hills Country Club
 
Tennessee
 
1
 
27
 
 
Bernardo Heights Country Club
 
California
 
1
 
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Additionally, from fiscal years 2010 through 2015, we spent over $6.5 million to develop two new alumni clubs. Subsequent to December 29, 2015, on February 2, 2016, we purchased Marsh Creek Country Club, a private golf club in St. Augustine, Florida.

In addition to the acquisitions shown above, on September 30, 2014, we completed the acquisition of Sequoia Golf for a purchase price of $260.0 million, net of $5.6 million of cash acquired and after customary closing adjustments including net working capital. On the date of acquisition, Sequoia Golf was comprised of 30 owned golf and country clubs and 20 clubs which were leased or managed. The acquisition increased our network of private clubs, expanded the geographic cluster model, and solidified market penetration in Atlanta, Georgia and Houston, Texas.

In addition to our domestic initiatives, we believe there is a market to extend our private club expertise through international management arrangements. As of December 29, 2015, we managed two business clubs in China; one in Beijing and one in Hangzhou. Going forward, we will consider selectively expanding our international operations.


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Industry and Market Opportunity

Our company is a membership-based leisure business closely tied to consumer discretionary spending. We believe that we compete for these discretionary consumer dollars against such businesses as amusement parks, spectator sports, ski and mountain resorts, fitness and recreational sports centers, gaming and casinos, hotels and restaurants. We believe that we will benefit from the recovery taking place in the leisure industry as evidenced by recent trends in gross domestic product (“GDP”) growth within our industry. According to the latest Bureau of Economic Analysis (“BEA”) data, from 2013 to 2014, leisure and hospitality industry’s GDP growth increased by 3.0%.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
______________________
 
Source: Bureau of Economic Analysis.
 
 

(1)
Leisure represents the BEA defined industry of arts, entertainment, recreation, accommodation and food services.

(2)
GDP represents value added; according to the BEA, value added by industry is a measure of the contribution of each industry to the nation’s GDP.

Favorable Macro-Economic Trends. We believe that our industry and business are generally affected by macro-economic conditions and trends. Evidence of those trends from calendar year 2008 to 2015 include the S&P 500 increasing 167%, home sales volume (including new home and existing home sales) increasing from 9.8 million to 11.5 million, according to the Bureau of the Census and the National Association of Realtors, median home prices of existing homes increasing from $175,000 in 2008 to $224,100 at the end of December 2015, according to the National Association of Realtors, and the consumer discretionary spend increasing from $10.0 trillion to $12.4 trillion, as reported by the BEA. We believe that as the economy continues to recover from the recession lows, our industry will continue to benefit. For most of the past two years, the consumer sentiment index has remained above its five year average, according to Thomson Reuters/University of Michigan. We believe that as consumer confidence and disposable income increase, our clubs will benefit from increased leisure and discretionary dollars spent as individuals and families look to expand recreational activities and social interactions.


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______________________
______________________
Source: Thomson Reuters and University of Michigan.
Source: Bureau of Economic Analysis.
    
Improving Real Estate Conditions. We believe improving economic conditions and improvements in local housing markets reinforce the foundation for membership growth. Although some of the metropolitan areas where we operate clubs were disproportionately affected by the recession, related to the decline in home prices and increase in foreclosure rates, our membership base remained resilient, which we believe can be attributed to our favorable membership demographics. Economic indicators, such as increased consumer confidence, discretionary spending and home sales and construction, support an environment where we believe prospective members will choose to join our clubs.

Membership growth is, in part, driven by sales of homes in neighborhoods where our clubs are located as those who purchase homes in those areas are more likely to join the neighboring country club. For example, membership at Trophy Club Country Club, near Dallas, Texas, increased 22% from 2010 to 2015, during which time the local municipality approved more than 1,300 new home construction permits for neighborhoods located within a 20 mile radius of the club.

In our business, sports and alumni clubs segment, improvements in the commercial leasing market support the attraction of new members. For example, in 2011, occupancy in the Urban Centre Towers in Tampa Bay, Florida, where our Centre Club is located, was 77.7%. As of December 30, 2014, occupancy had increased to 88.4%, and our membership count at the Centre Club increased 13.3% over the same period. We believe our alumni clubs are less impacted by local economic conditions as the membership tends to draw from a larger geographical area.

Affluent Demographic. According to data provided by Buxton, a database and mapping service, our members reside in locations where the average household income is in excess of $150,000. According to the Resonance Report for 2013, which relies on estimates from the Bureau of Labor Statistics, households with income of $150,000 or greater account for 36% of all consumer spending on social, recreation and health club memberships. We believe this mass affluent demographic’s share of discretionary spending is beneficial to our business.

Golf Industry Overview

The operational and financial performance of our clubs has been, and we believe will continue to be, influenced by local, regional and national U.S. macro-economic trends. We primarily own and operate private golf and country clubs for which we believe demand is generally more resilient to economic cycles than public golf facilities and other hospitality assets, which we believe can be attributed to our favorable membership demographics.

Golf Industry Trends. We believe that golf industry trends are favorable to our private club membership model. The golf industry is characterized by varied ownership structures, including properties owned by corporations, member equity owners, developers, municipalities and others. Reports prepared by the National Golf Foundation (“NGF”) show that during the 1990’s and early 2000’s, the industry suffered an overbuilding of public golf facilities. Over 3,160 public golf facilities opened from 1990 through 2000, increasing the supply of public golf by 39%. Golfer growth could not keep pace with the new supply generated during this time period. NGF also reports that 2015 represented the tenth consecutive year in which total facility closures outnumbered openings, with a net reduction of 160 18-hole equivalent courses in 2015. Based on the latest count by NGF, 2015 year-end U.S. golf supply totaled 15,204 facilities comprised of 11,388 public facilities and 3,816 private golf clubs.


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Golf Facilities in The U.S.
Net Change in Total Golf Course Supply
______________________
______________________
Source: National Golf Foundation
Source: National Golf Foundation

Golfer Trends. According to NGF estimates, core and avid golfers represent more than 55% of total golfers and represented approximately 94.0% of the $26.3 billion spent on golf in 2012. We believe that core and avid golfers are the most likely golfers to become private club members and according to private club trends last reported by NGF, private golf clubs have an average golfer spend of approximately $2,000 per year versus public courses that have an average golfer spend of approximately $650 per year. Further, NGF has reported that the typical private club member is 55 years old with an annual household income of approximately $125,000 whereas the typical public golfer is 47 years old with an annual household income of approximately $95,000.

According to publications by NGF, the private golf club industry captures a more affluent segment of baby boomers than the industry as a whole, and we believe baby boomers will play a significant role in the future of the golf industry. Further, NGF believes that there is a pipeline of qualified member prospects with similar characteristics as our current members and almost half of total golfers are under the age of 40.

Spend per Golfer
Golfers by Age
______________________
______________________
Source: National Golf Foundation
Source: National Golf Foundation

Business Club Industry Overview

While there is no specific industry designation for our business, sports and alumni clubs, we believe utilization of our clubs is comparable to the restaurant and hospitality industries. Our business clubs are located in 15 of the top 25 Metropolitan

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Statistical Areas ranked by population. Our business clubs include dining rooms, bar areas and private meeting rooms which allow members to entertain clients, conduct business and host social and corporate events.

We believe that a favorable economic backdrop increases business activity (as measured by corporate profits and the success of the capital markets) and will positively affect the demand for our business clubs. According to the BEA, corporate profits from current production (also known as operating or economic profits) increased 1.7% in 2014 and 2.0% in 2013. Similarly, the S&P 500 Index, a proxy for the performance of the broader public equity capital markets, has recently witnessed significant returns. On a total return basis, the S&P 500 is up 55% over the past three years.
______________________
Source: Bureau of Economic Analysis.

We anticipate that a continued influx of jobs into our key markets of operations will drive increased demand for our food and beverage and hospitality amenities and offerings. We believe the locations of our business clubs, which also serve as anchors to commercial towers and business centers, position us to capture increased spend from the growing work force that is recovering from the recession. Additionally, as business activity increases for working professionals, we believe private corporate sponsored events are likely to become more sought after.

Competition

While our principal direct competitors are other golf, country or business clubs with similar facilities, we also compete for discretionary leisure spending with other types of recreational facilities and forms of entertainment including restaurants, sports attractions, hotels and vacation travel.

We are the largest owner-operator of private golf and country clubs in the United States, with more than twice as many private golf and country clubs as the closest competitor, according to NGF. Overall, the golf industry is a highly fragmented competitive landscape with approximately 3,800 private golf clubs in the United States, of which approximately 16% were under corporate management according to NGF’s 2015 year-end data. The data further concludes that the top 10 golf management companies, including ClubCorp, owned or managed over 300 golf clubs, or about 9% of the total private golf club market at the end of calendar year 2015. In fact, according to NGF, at the end of 2015 only three other companies owned or operated 25 or more private golf clubs in the United States with Troon Golf LLC, Century Golf Partners and U.S. Air Force Services Agency reporting a total of 62, 26, and 25, respectively.

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

Competition for our business, sports and alumni clubs is dependent on the individual market, and the needs of the individual member. For members looking for a private dining experience, nearby restaurants are our primary competition. For members looking for places to conduct business, our competition includes other facilities that provide meeting space such as hotels and convention centers as well as places such as fast casual restaurants and coffee bars, where people can conveniently meet and conduct informal meetings and access the internet. For people looking for a place to hold a private party such as a wedding, our competition includes other catering facilities such as hotels and resort facilities.


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Seasonality

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

Sales and Marketing

We promote our clubs through extensive marketing and sales programs that are designed to appeal to our existing members, prospective members or underrepresented demographic groups. For example, we responded to the younger age of prospective members in the industry with targeted membership programs for young executives. We have also designed programming and events geared toward women and invested in family amenities that broaden the appeal of our clubs. Additionally, we advertise through social media and print advertisements in a variety of national, regional and local magazines and newspapers. We also showcase our facilities, products and services through our award-winning quarterly lifestyle magazine, Private Clubs. Private Clubs has won or been recognized as a finalist for the MAGGIE Award for Best Magazine in the Associations/Trade & Consumer Division each year since 2009. We distribute our magazine to our member households, clubs and strategic alliance partners who subscribe, in order to showcase our facilities, products and services and other content relevant to our current and prospective members. Recent technology advancements include the mobile edition of our Private Clubs magazine, mobile tee times and electronic billing.

In 2015, our clubs served as the site of several national and regional golf events and received national awards and recognition. Three clubs received national television coverage while serving as the site of high-profile golf events, including: Firestone Country Club, site of the World Golf Championships - Bridgestone Invitational; Mission Hills Country Club, site of the LPGA ANA Inspiration (one of the four major tournaments on the LPGA Tour); and Las Colinas Country Club, site of the LPGA Volunteers of America North Texas Shootout. Other significant golf events held at our clubs included the Web.com Midwest Classic at Nicklaus Golf Club at Lionsgate and the Insperity Invitational (Champions Tour) at The Woodlands Country Club Tournament Course.

Regulation

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

In addition, in order to improve, upgrade or expand some of our golf and country clubs, we may be subject to environmental review under the National Environmental Policy Act and, for projects in California, the California Environmental Quality Act. Both acts require that a specified government agency study any proposal for potential

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environmental impacts and include in its analysis various alternatives. Our improvement proposals may not be approved or may be approved with modifications that substantially increase the cost or decrease the desirability of implementing the project.

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

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

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

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

Employees

As of February 19, 2016, we had approximately 17,800 employees, of which 14,350 are located at our golf and country clubs, 3,000 are located at our business, sports and alumni clubs and 450 are part of our corporate and regional staff. Other than golf course maintenance staff at two of our clubs, all of our employees are non-union. We believe we have a good working relationship with our employees and have yet to experience an interruption of business as a result of labor disputes.

Insurance

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

Intellectual Property

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

Geographic Information

Financial information about geographic area is set forth in Note 14 of the Notes to Consolidated Financial Statements under Part II, Item 8: “Financial Statements” of this annual report on Form 10-K.


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Available Information

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

ITEM 1A.    RISK FACTORS

Risks Relating to Our Business
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 2015, 47.0% of our total revenues came from recurring membership dues. For the same period, 23.1% of our business, sports and alumni club memberships (approximately 14,300 memberships) and 17.0% of our golf and country club memberships (approximately 19,600 memberships) were resigned. After the addition of new memberships, on a same store basis, our business, sports and alumni clubs experienced a (1.2)% net loss in memberships, excluding managed clubs and a (1.2)% net loss in memberships for managed clubs. Our golf and country clubs, also on a same store basis, experienced a 0.4% net gain in memberships, excluding managed clubs and a 3.3% net gain in memberships for managed clubs. If we cannot attract new members or retain our existing members, our business, financial condition and results of operations could be harmed.

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

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

depressed housing prices;

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

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

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

outbreaks of pandemic or contagious diseases;

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

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


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volatility in energy prices and the impact on consumers employed within energy-related industries.

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

Economic recessions or downturns could negatively affect our business, financial condition and results of operations.

A substantial portion of our revenue is derived from discretionary or leisure spending by our members and guests and such spending can be particularly sensitive to changes in general economic conditions. The recession led to slower economic activity, increased unemployment, concerns about inflation and energy costs, decreased business and consumer confidence, reduced corporate profits and capital spending, adverse business conditions and lower levels of liquidity in many financial markets, which negatively affected our business, financial condition and results of operations. For example, for fiscal years 2015, 2014, 2013, 2012 and 2011, we experienced annualized attrition (i.e., members who resign) in membership count of 17.0%, 16.3%, 16.3%, 16.4% and 15.9%, respectively, in our golf and country clubs (excluding the impact of Sequoia Golf memberships in fiscal year 2014) and 23.1%, 22.7%, 22.8%, 22.9% and 23.5%, respectively, in our business, sports and alumni clubs. A renewed economic downturn in the United States, or in geographic areas in which we have strategic concentrations of clubs, may lead to increases in unemployment and loss of consumer confidence which may translate into resignations of existing members, a decrease in the rate of new memberships and reduced spending by our members. As a result, our business, financial condition and results of operations may be materially adversely affected by a renewed economic downturn.

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

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

Our operations and results are susceptible to non-seasonal and severe weather patterns. Extreme weather events or patterns in a given region, such as heavy rains, prolonged snow accumulations, extended heat waves and high winds, could reduce our revenues for that region by interrupting activities at affected properties which could negatively impact our business and results of operations. One factor that specifically affects our real estate investments in golf courses is the availability of
water. Turf grass conditions must be satisfactory to attract play on our golf courses, which requires significant amounts of water. Our ability to irrigate a golf course could be adversely impacted by a drought or other cause of water shortage, such as the recent drought affecting the southern and western United States and associated government imposed water restrictions. A severe drought of extensive duration experienced in regard to a large number of properties could adversely affect our business and results of operations. We also have a high concentration of golf clubs in Texas, Georgia and California, which can experience periods of unusually hot, cold, dry or rainy weather due to a variety of periodic and quasi-periodic global climate phenomena, such as the El Niño/La Niña-Southern Oscillation. For example, during fiscal year 2015, certain regions of Texas experienced periods of significant rain fall, which we believe resulted in lower revenue growth at our same store Texas clubs. Texas same store clubs experienced revenue growth of 2.0% in fiscal year 2015, as compared to fiscal year 2014, while our non-Texas same store clubs experienced revenue growth of 2.7% for the same period. If these phenomena and their impacts on weather patterns persist for extended periods of time, our business 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.

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. Initiation fees, which are more typical for our business clubs and mid-market golf and country clubs, are

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generally nonrefundable. In contrast to initiation fees, initiation deposits, which are typical in our more prestigious golf and country clubs, paid by members upon joining one of our clubs are fully refundable after a fixed number of years, typically 30 years, and upon the occurrence of other contract-specific conditions. Historically, only a small percentage of initiation deposits eligible to be refunded have been requested by members. As of December 29, 2015, the amount of initiation deposits that are eligible to be refunded currently within the next 12 months is $153.0 million on a gross basis. When refunds are made, we must fund the payment of such amounts from our available cash. If the number of refunds dramatically increases in the future, our financial condition could suffer and the funding requirement for such refunds could strain our cash on hand or otherwise force us to reduce or delay capital expenditures, reduce or eliminate planned dividend payments, sell assets or operations or seek additional capital in order to raise the cash necessary to make such refunds. As of December 29, 2015, the discounted value of initiation deposits that may be refunded in future years (not including the next 12 months) is $204.3 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”.

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

In addition, most of the states in which we conduct business have hired 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, if we are ultimately unsuccessful in arguing our right to continue holding such amounts, we may be forced to pay such amounts to the claiming states. While we believe we have strong arguments against claims for the escheatment of unclaimed initiation deposits made under state escheatment laws, if a material portion of the initiation deposits otherwise eligible to be refunded were awarded or remitted to any state(s), our financial condition could be materially and adversely affected and we may be required to reduce or delay capital expenditures, reduce or eliminate planned dividend payments, sell assets or operations or seek additional capital in order to raise the corresponding cash required to satisfy such amounts. 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.

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

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

economic downturns in a particular area;

competition from nearby recreational or entertainment venues;

changing demographics in a particular market or area;

changing lifestyle choices of consumers in a particular market; and

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


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Changes in areas around our club locations could render such locations unsuitable and cause memberships at such clubs to decline, which would harm our results of operations.

We have significant operations concentrated in certain geographic areas, and any disruption in the operations of our clubs in any of these areas could harm our results of operations.
    
As of December 29, 2015, we operated multiple clubs in several metropolitan areas, including 33 in the greater Atlanta, Georgia region, 19 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.

Seasonality may adversely affect our business and results of operations.

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

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

We operate in a highly competitive industry, and compete primarily on the basis of reputation, featured facilities, location, quality and breadth of member product offerings and price. As a result, competition for market share in the industry in which we compete is significant. In order to succeed, we must take market share from local and regional competitors and sustain our membership base in the face of increasing recreational alternatives available to our existing and prospective members. Our business clubs compete on a local and regional level with restaurants and other business and social clubs. The number and variety of competitors in this business varies based on the location and setting of each facility, with some situated in intensely competitive upscale urban areas characterized by frequent innovations in the products and services offered by competing restaurants and other business, dining and social clubs. In addition, in most regions, these businesses are in constant flux as new restaurants and other social and meeting venues open or expand their amenities. As a result of these characteristics, the supply in a given region often exceeds the demand for such facilities, and any increase in the number or quality of restaurants and other social and meeting venues, or the products and services they provide, in a given region could significantly impact the ability of our clubs to attract and retain members, which could harm our business and results of operations.

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

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

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

The loss of the services of our senior management could make it more difficult to successfully operate our business and achieve our business goals. We also may be unable to retain existing management and key employees, including club

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managers, membership sales and support personnel, which could result in harm to our member and employee relationships, loss of expertise or know-how and unanticipated recruitment and training costs. In addition, we have not obtained key man life insurance policies for any of our senior management team. As a result, it may be difficult to cover the financial loss if we were to lose the services of any members of our senior management team. The loss of members of our senior management team or key employees could have an adverse effect on our business and results of operations.

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

Labor is our primary property-level operating expense. As of December 29, 2015, we employed approximately 18,300 hourly-wage and salaried employees at our clubs and corporate offices. For fiscal year 2015, labor-related expense accounted for 47.3% 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.

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

Increases in operating costs due to inflation and other factors may not be directly offset by increased revenue. Our most significant operating costs, other than labor, are our cost of goods, water, utilities, rent and property taxes. Many, and in some cases all, of the factors affecting these costs are beyond our control. Our cost of goods such as food and beverage costs account for a significant portion of our total property-level operating expense. Cost of goods represented 14.5% of our total club operating costs and expenses for fiscal year 2015. While we have not experienced material increases in the cost of goods, if our cost of goods increased significantly and we are not able to pass along those increased costs to our members in the form of higher prices or otherwise, our operating margins would suffer, which would have an adverse effect on our business, financial condition and results of operations.
    
In addition, rent accounts for a significant portion of our property-level operating expense. Rent expense represented 3.7% of our total club operating costs and expenses for fiscal year 2015. Significant increases in our rent costs would increase our operating expense and our business, financial condition and results of operations may suffer. Utility costs, including water, represented 4.8% of our total club operating costs and expenses for fiscal year 2015. The prices of utilities are volatile, and shortages sometimes occur. In particular, municipalities are increasingly placing restrictions on the use of water for golf course irrigation and increasing the cost of water. Significant increases in the cost of our utilities, or any shortages, could interrupt or curtail our operations and lower our operating margins, which could have a negative impact on our business, financial condition and results of operations.

Each of our properties is subject to real and personal property taxes. During fiscal year 2015, we paid approximately $18.1 million in property taxes. The real and personal property taxes on our properties may increase or decrease as tax rates change and as our clubs are assessed or reassessed by taxing authorities. If real and personal property taxes increase, our financial condition and results of operations may suffer.


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

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

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

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

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

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

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

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

obtaining zoning, occupancy and other required permits or authorizations;

governmental restrictions on the size or kind of development;

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

design defects that could increase costs; and

environmental concerns which may create delays or increase costs.

These projects create an ongoing need for cash, which if not generated by operations or otherwise obtained is subject to the availability of credit in the capital markets. Our ability to spend the money necessary to maintain the quality of our properties is significantly impacted by the cost and availability of capital, over which we have little control. The timing of capital improvements can affect property performance, including membership sales, retention and usage, particularly if we need to close golf courses or a significant number of other facilities, such as ballrooms, meeting spaces or dining areas. Moreover, the investments that we make may fail to improve the performance of the properties in the manner that we expect. If we are not able to begin operating properties as scheduled, or if investments harm or fail to improve our performance, our ability to compete effectively would be diminished and our business and results of operations could be adversely affected.


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We may seek to expand through acquisitions of and investments in other businesses and properties, or through alliances, which could disrupt our ongoing business, divert our management and adversely affect our results of operations.

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

spending cash, incurring debt, or issuing equity;

assuming contingent liabilities;

creating additional expenses; or

diversion of management’s time and attention.

We cannot assure you that we will be able to identify opportunities or complete transactions on commercially reasonable terms or at all, or that we will actually realize any anticipated benefits from such acquisitions, investments or alliances. Similarly, we cannot assure you that we will be able to obtain financing for acquisitions or investments on attractive terms or at all, or that the ability to obtain financing will not be restricted by the terms of the secured credit facilities entered into by our subsidiary ClubCorp Club Operations, Inc. (“Operations”) on November 30, 2010, as amended (the “Secured Credit Facilities”), the indenture that governs the senior notes entered into on December 15, 2015 and maturing on December 15, 2023 (the “2015 Senior Notes”) or other indebtedness we may incur.
    
The success of any such acquisitions or investments will also depend, in part, on our ability to integrate the acquisition or investment with our existing operations. We may experience difficulty with integrating acquired businesses, properties or other assets into our operations as planned, including difficulties relating to:

diversion of management time and focus from operating our business to integration challenges;

geographic diversity;

integrating information technology and other systems and personnel;

retaining members; and

unanticipated liabilities or litigation.

Our inability to address these difficulties or other risks encountered in connection with any acquisitions and investments, including our acquisition of Sequoia Golf, could cause us to fail to realize the anticipated synergies and benefits of such acquisitions or investments, and materially harm our business, financial condition and results of operations.

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

As of December 29, 2015, we owned or operated eight properties or businesses in partnership with other entities, including joint ventures relating to six of our golf facilities, one of our business clubs and certain realty interests which we define as ‘‘Non-Core Development Entities.’’ We may in the future enter into further joint ventures or other collaborative arrangements related to additional properties. Our investments in these joint ventures may, under certain circumstances, involve risks not otherwise present in our business, including the risk that our partner may become bankrupt, the risk that we may
not be able to sell or dispose of our interest as a result of buy/sell rights that may be imposed by the joint venture agreement, the risk that our partner may have economic or other interests or goals that are inconsistent with our interests and goals and the risk that our partner may be able to veto actions which may be in our best interests. Consequently, actions by a partner might subject clubs owned by the joint venture to additional risk. Additionally, we may be unable to take action without the approval of our partners, or our partners could take actions binding on the joint venture without our consent. Any of the foregoing could have a negative impact on the joint venture or its results of operations, and subsequently on our business or results of operations.

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


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We maintain insurance of the type and in amounts that we believe are commercially reasonable and that are available to businesses in our industry. We carry commercial liability, fire, flood, earthquake, catastrophic wind and extended insurance coverage, as applicable, from solvent insurance carriers on all of our properties. We believe that the policy specifications and insured limits are adequate for foreseeable losses with terms and conditions that are reasonable and customary for similar properties and that all of our existing golf and business clubs are insured within industry standards. Nevertheless, market forces beyond our control could limit the scope of the insurance coverage that we can obtain in the future or restrict our ability to buy insurance coverage at reasonable rates. We cannot predict the level of the premiums that we may be required to pay for subsequent insurance coverage, the level of any deductible and/or self-insurance retention applicable thereto, the level of aggregate coverage available or the availability of coverage for specific risks.

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

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

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

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

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

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

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

Our business is subject to extensive federal, state and local government regulation in the various jurisdictions in which our clubs are located, including regulations relating to alcoholic beverage control, public health and safety, environmental hazards and food safety. Alcoholic beverage control regulations require each of our clubs to obtain licenses and permits to sell alcoholic beverages on the premises. The failure of a club to obtain or retain its licenses and permits would adversely affect that club’s operations and profitability. We may also be subject to dram shop statutes in certain states, which generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person. Even though we are covered by general liability insurance, a settlement or judgment against us under a dram shop lawsuit in excess of liability coverage could have a material adverse effect on our operations.


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

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

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

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

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

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

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

A failure in our systems or infrastructure which maintain our internal and customer data, or those of our third-party service providers, including as a result of cyber attacks, could result in faulty business decisions or harm to our reputation or subject us to costs, fines or lawsuits.

Certain information relating to our members and guests, including personally identifiable information and credit card numbers, is collected and maintained by us, or by third-parties with which we do business or which facilitate our business activities. This information is maintained for a period of time for various business purposes, including maintaining records of member preferences to enhance our customer service and for billing, marketing and promotional purposes. We also maintain personally identifiable information about our employees. The integrity and protection of our customer, employee and company data is critical to our business. Our members and our employees expect that we will adequately protect their personal information, and the regulations applicable to security and privacy are increasingly demanding, both in the United States and in other jurisdictions where we operate. Privacy regulation is an evolving area in which different jurisdictions (within or outside the United States) may subject us to inconsistent compliance requirements. Compliance with applicable privacy regulations

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may increase our operating costs or adversely impact our ability to service our members and guests and market our properties and services to our members and guests.

To date we have not experienced any material losses relating to cyber attacks, computer viruses or other systems or infrastructure failures. While we have cyber security procedures in place, given the evolving nature of these threats, there can be no assurance that we will not suffer material losses in the future due to cyber attacks or other systems or infrastructure failures. A theft, loss, misappropriation, fraudulent or unlawful use of customer, employee or company data, including in connection with one or more cyber attacks on us or one of our third-party providers, could harm our reputation, result in loss of members or business disruption or result in remedial and other costs, fines or lawsuits. In addition, non-compliance with applicable privacy regulations by us (or in some circumstances non-compliance by third-parties engaged by us) could result in fines or restrictions on our use or transfer of data. Any of these matters could adversely affect our business, financial condition or results of operations.

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

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

We may be required to write-off a portion of our intangible assets with finite lives, indefinite-lived intangible assets, goodwill, and/or long-lived asset balances as a result of declines in our business, results of operations, or a prolonged and severe economic recession.

We classify intangible assets into three categories: (1) intangible assets with finite lives subject to amortization, (2) intangible assets with indefinite lives not subject to amortization and (3) goodwill. Under accounting principles generally accepted in the United States (“GAAP”), we are required to review goodwill and indefinite-lived intangible assets for impairment annually or whenever events or changes in circumstances indicate that their carrying amount may not be fully recoverable. GAAP also requires that we test long-lived assets and definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that their carrying amount may not be fully recoverable. Declines in our business, results of operations, or a severe prolonged economic downturn could result in impairment charges related to our intangible assets with finite lives, indefinite-lived intangible assets, goodwill, and/or long-lived assets, which would negatively impact our results of operations.

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

We are subject to ongoing tax examinations of our tax returns by the IRS and other tax authorities in various jurisdictions and may be subject to similar examinations in the future. We regularly assess the likelihood of adverse outcomes resulting from ongoing tax examinations to determine the adequacy of our provision for uncertain tax positions. These assessments can require considerable estimates and judgments; for example intercompany transactions associated with provision of services and cost sharing arrangements are complex and affect our tax liabilities. We are currently under audit by state income tax authorities. We have received two assessments for our state income tax audits, for a total of $2.5 million which has been recognized within our state income tax payable.


Certain of our Mexican subsidiaries are under audit by the Mexican taxing authorities for the 2008 and 2009 tax years. We have 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 vigorously contest

30



these assessments through the appropriate Mexican judicial channels. 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. 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 $4.7 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.

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. A difference in the ultimate resolution of tax uncertainties from what is currently estimated could have a material adverse effect on our operating results and financial condition.

Risks Relating to Our Capital Structure
Our stock price may experience significant volatility, and you may not be able to resell shares of our common stock at or above the price you paid, or at all, and you could lose all or part of your investment as a result.

The trading price of our common stock may be volatile. The stock market experiences significant volatility from time to time. This volatility often has been unrelated or disproportionate to the operating performance of particular companies. You may not be able to resell your shares at or above the price you paid due to a number of factors including the following:

results of operations that vary from the expectations of securities analysts and investors;

results of operations that vary from those of our competitors;

changes in expectations as to our future financial performance and corporate structure, including financial estimates and investment recommendations by securities analysts and investors;

declines in the market prices of stocks generally;

strategic actions by us or our competitors;

announcements by us or our competitors of significant contracts, new products, acquisitions, joint marketing relationships, joint ventures, other strategic relationships or capital commitments;

changes in general economic or market conditions or trends in our industry or markets;

changes in business or regulatory conditions;

future sales of our common stock or other securities;

investor perceptions of the investment opportunity associated with our common stock relative to other investment alternatives;

the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC;

announcements relating to litigation or regulatory investigations or actions;

guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance;

the sustainability of an active trading market for our stock;

changes in accounting principles; and

other events or factors, including those resulting from natural disasters, war, acts of terrorism or responses to these events.


31



These broad market and industry fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance. In addition, price volatility may be greater if the trading volume of our common stock is low.

In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If we were involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation.

We cannot assure you that we will continue to declare and pay dividends on our common stock, and our indebtedness could limit our ability to pay dividends on our common stock.

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. The payment of such quarterly dividends and any other future dividends will be at the discretion of our Board of Directors and is subject to our compliance with applicable law, and depends on, among other things, our results of operations, financial condition, level of indebtedness, capital requirements, contractual restrictions, restrictions in our debt agreements and in any preferred stock, business prospects and other factors that our Board of Directors may deem relevant. There can be no assurance that we will continue to pay any dividend in the future. If we do not pay dividends, the price of our common stock must appreciate for investors to realize a gain on their investment in ClubCorp. Regardless of whether we pay dividends, this appreciation may not occur and our stock may in fact depreciate in value.

If securities analysts do not publish research or reports about our business or if they downgrade our stock or our industry, our stock price and trading volume could decline.

The trading market for our common stock relies in part on the research and reports that industry or financial analysts publish about us or our business or industry. We do not control these analysts. Furthermore, if one or more of the analysts who do cover us downgrade our stock or our industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our business, the price of our stock could decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline.

Our amended and restated articles of incorporation designate the Eighth Judicial District Court of Clark County, Nevada, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, and therefore limit our stockholders’ ability to choose a forum for disputes with us or our directors, officers, employees or agents.

Our amended and restated articles of incorporation provide that, to the fullest extent permitted by law, and unless we consent to the selection of an alternative forum, the Eighth Judicial District Court of Clark County, Nevada shall be the sole and exclusive forum for any (i) derivative action or proceeding brought in the name or right of the corporation or on its behalf, (ii) action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to the corporation or any of our stockholders, (iii) any action arising or asserting a claim arising pursuant to any provision of Chapters 78 or 92A of the Nevada Revised Statutes (“NRS”) or any provision of our articles of incorporation or bylaws, (iv) any action to interpret, apply, enforce or determine the validity of our articles of incorporation or bylaws or (v) any action asserting a claim governed by the internal affairs doctrine. Our amended and restated articles of incorporation further provide that any person purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed, to the fullest extent permitted by law, to have notice of and consented to the foregoing provision.

We believe the choice-of-forum provision in our amended and restated articles of incorporation will help provide for the orderly, efficient and cost-effective resolution of Nevada-law issues affecting us by designating courts located in the State of Nevada (our state of incorporation) as the exclusive forum for cases involving such issues. However, this provision may limit a stockholder’s ability to bring a claim in a judicial forum that it believes to be favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and our directors, officers, employees and agents. While there is no Nevada case law addressing the enforceability of this type of provision, Nevada courts have on prior occasion found persuasive authority in Delaware case law in the absence of Nevada statutory or case law specifically addressing an issue of corporate law. The Court of Chancery of the State of Delaware ruled in June 2013 that choice-of-forum provisions of a type similar to those included in our amended and restated articles of incorporation are not facially invalid under corporate law and constitute valid and enforceable contractual forum selection clauses. However, if a court were to find the choice-of-forum provision in our amended and restated articles of incorporation inapplicable to, or unenforceable in respect of, one or more of

32



the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations.

Anti-takeover provisions in our organizational documents could delay or prevent a change of control.

Certain provisions of our amended and restated articles of incorporation and amended and restated bylaws may have an anti-takeover effect and may delay, defer or prevent a merger, acquisition, tender offer, takeover attempt or other change of control transaction that a stockholder might consider to be in its best interest, including attempts that might result in a premium over the market price for the shares held by our stockholders. These provisions provide, among other things:

a classified Board of Directors with staggered three-year terms;

the ability of our Board of Directors to issue one or more series of preferred stock with voting or other rights or preferences that could have the effect of impeding the success of an attempt to acquire us or otherwise effect a change of control;

advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at stockholder meetings; and

certain limitations on convening special stockholder meetings and stockholder action by written consent.

These anti-takeover provisions could make it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain a premium for their shares.

Our business could be negatively affected because of actions of activist stockholders.

Publicly traded companies have increasingly become subject to campaigns by investors seeking to increase stockholder value by advocating corporate actions such as corporate restructuring, increased borrowing, special dividends, stock repurchases, and the sale of assets. We have experienced activist investors taking ownership positions in our common stock and initiating communications with us. Notwithstanding our current stockholder composition and other factors, it is possible that activist stockholders may attempt to influence the Company to take such corporate actions or may take other measures such as seeking to gain representation on our Board of Directors. Responding to such campaigns could be costly and time-consuming, disrupt our operations, and divert the attention of management and our employees from executing our business plan. Our business could be negatively affected because of the actions of activist stockholders, and such activism could impact the trading value and volatility of our securities.

We will continue to incur significant increased costs as a result of operating as a public company, and our management team is required to devote substantial time to comply with the laws and regulations affecting public companies.

As a public company, we will continue to incur significant legal, accounting and other expenses, including costs associated with public company reporting and corporate governance requirements, in order to comply with the rules and regulations imposed by the Sarbanes-Oxley Act, as well as rules implemented by the SEC and NYSE. Our management and other personnel devote a substantial amount of time to these compliance initiatives and our legal and accounting compliance costs have increased since becoming a public equity filer. We also expect that these rules and regulations may make it more difficult and expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our Board of Directors or as executive officers.

For example, the Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls over financial reporting and disclosure controls and procedures. In particular, as a public company, we are required to perform system and process evaluations and testing of our internal control over financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Our testing, or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses. Our compliance with Section 404 has resulted in and may continue to require that we incur substantial accounting expense and that management expend time on compliance-related issues. Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, we could lose investor

33



confidence in the accuracy and completeness of our financial reports, which could cause the price of our stock and our securities to decline.
    
Risks Related to our Indebtedness

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

As of December 29, 2015, we were significantly leveraged and our total indebtedness was approximately $1,113 million. Our substantial degree of leverage could have important consequences for our investors, including the following:

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

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

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

certain of our borrowings, including borrowings under our Secured Credit Facilities, are at variable rates of interest, exposing us to the risk of increased interest rates;

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

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

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

Our ability to make scheduled payments or to refinance our debt obligations depends on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We cannot assure you that we will maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness. If our cash flows and capital resources
are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, including reinventions, sell assets or operations, seek additional capital or restructure or refinance our indebtedness. 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 our scheduled debt service obligations or that these actions would be permitted under the terms of our existing or future debt agreements. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. Our Secured Credit Facilities and the indenture that governs the 2015 Senior Notes restricts our ability to dispose of assets and use of the proceeds from the disposition. We may not be able to consummate those dispositions or obtain the proceeds which we could realize from them, and these proceeds may not be adequate to meet any debt service obligations then due.

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

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

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

we could be forced into bankruptcy or liquidation.

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


34



We and our subsidiaries may be able to incur substantial additional indebtedness in the future. The terms of the indenture governing the 2015 Senior Notes do not fully prohibit us or our subsidiaries from doing so. Additionally, our Secured Credit Facilities include a $175.0 million revolving credit facility, under which we may borrow from time to time. If new debt is added to our current debt levels, the related risks that we and our subsidiaries now face could intensify. The subsidiaries that guarantee the 2015 Senior Notes also guarantee our Secured Credit Facilities.

Restrictive covenants may adversely affect our operations.

Our Secured Credit Facilities and the indenture governing the 2015 Senior Notes contain various covenants that limit our ability to, among other things:

incur or guarantee additional indebtedness;

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

make investments;

pay dividends or other amounts;

sell stock of our subsidiaries;

transfer or sell assets;

create liens;

enter into transactions with affiliates; and

enter into mergers or consolidations.

In addition, the restrictive covenants in our Secured Credit Facilities and in the indenture governing the 2015 Senior Notes require us to maintain specified financial ratios and satisfy other financial condition tests. Our ability to meet those financial ratios and tests can be affected by events beyond our control, and we cannot assure you that we will meet them. A breach of any of these covenants could result in a default under our Secured Credit Facilities or the indenture governing the 2015 Senior Notes. Upon the occurrence of an event of default under our Secured Credit Facilities, the lenders could elect to declare all amounts outstanding thereunder to be immediately due and payable and terminate all commitments to extend further credit. If we were unable to repay those amounts, the lenders under our Secured Credit Facilities could proceed against the collateral granted to them to secure that indebtedness. We and our guarantor subsidiaries have pledged substantially all of our assets as collateral under our Secured Credit Facilities. If the lenders under our Secured Credit Facilities accelerate the repayment of borrowings, we cannot assure you that we and our guarantor subsidiaries will have sufficient assets to repay our Secured Credit Facilities and our other indebtedness, including the 2015 Senior Notes, or borrow sufficient funds to refinance such indebtedness. Even if we are able to obtain new financing, it may not be on commercially reasonable terms, or terms that are acceptable to us.

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

Certain of our borrowings, primarily borrowings under our Secured Credit Facilities, are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our interest expense would increase. A hypothetical 0.50% increase in LIBOR rates applicable to borrowings under our variable rate debt instruments would result in an estimated increase of $1.7 million per year of interest expense related to such debt, assuming the term and revolving credit facilities are fully borrowed under our Secured Credit Facilities.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. The words “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 are used in this Form 10-K to identify forward-looking statements. Except for historical information contained herein, the matters addressed in this Form 10-K are forward-looking statements. These statements relate to analyses and other information based

35



on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to our future prospects, developments and business strategies.

These forward-looking statements are made based on our management’s expectations and beliefs concerning future events affecting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. These uncertainties and factors could cause our actual results to differ materially from those matters expressed in or implied by these forward-looking statements.

The following factors are among those, but are not only those, that may cause actual results to differ materially from the forward-looking statements:

adverse conditions affecting the United States economy;

our ability to attract and retain club members;

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

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;

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;

our variable rate indebtedness, which could cause our debt service obligations to increase significantly;

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

unsuccessful or burdensome acquisitions;

complications integrating acquired businesses and properties into our operations;


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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;

risks related to tax examinations by the IRS and state jurisdictions in which we operate;

future sales of our common stock, which could cause the market price to decline;

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;

significant changes in our stock price;

our ability to declare and pay dividends;

information published by securities analysts that negatively impacts our stock price and trading volume;

anti-takeover provisions that 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; and

the other factors described elsewhere in this Form 10-K, included under the headings “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” and “Quantitative and Qualitative Disclosures About Market Risk” or as described in other documents and reports we file with the SEC.

Forward-looking statements speak only of the date the statements are made. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. Additional information concerning these and other risks and uncertainties is contained in our other periodic filings with the SEC.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

None.

ITEM 2.    PROPERTIES

As of February 19, 2016, our portfolio consists of 206 clubs located in 26 states, the District of Columbia and two foreign countries. Our golf and country clubs include 133 private country clubs, 16 semi-private clubs and nine public golf

37



courses. Our business, sports and alumni clubs include 30 business clubs, 10 business and sports clubs, six alumni clubs and two sports clubs. We own, lease or operate through joint ventures 149 and manage nine golf and country clubs. We lease or operate through a joint venture 45 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 125 of our golf and country clubs (consisting of over 29 thousand acres of real estate).

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

The following tables illustrate our clubs by segment, location, type of club, and size either in terms of golf holes for golf and country clubs or approximate square footage for business, sports and alumni clubs, as of February 19, 2016. Subject to certain exceptions, the obligations under the Secured Credit Facilities are secured by mortgages on material fee-owned clubs.
Golf and Country Clubs Segment by
Region
Type of Club (1)
Market
State
Golf
Holes
California Region
 
 
 
 
Airways Golf Club
Public Golf
Fresno
CA
18
Aliso Viejo Golf Club
Private Country Club
Los Angeles
CA
18
Bernardo Heights Country Club
Private Country Club
San Diego
CA
18
Braemar Country Club
Private Country Club
Los Angeles
CA
27
Canyon Crest Country Club
Private Country Club
Los Angeles
CA
18
Coto De Caza Golf & Racquet Club
Private Country Club
Los Angeles
CA
36
Crow Canyon Country Club
Private Country Club
San Francisco
CA
18
Desert Falls Country Club
Private Country Club
Palm Springs
CA
18
Empire Ranch Golf Club
Public Golf
Sacramento
CA
18
Granite Bay Golf Club
Private Country Club
Sacramento
CA
18
Indian Wells Country Club
Private Country Club
Palm Springs
CA
36
Mission Hills Country Club
Private Country Club
Palm Springs
CA
54
Morgan Run Club & Resort
Private Country Club
Santa Fe
CA
27
Old Ranch Country Club
Private Country Club
Los Angeles
CA
18
Porter Valley Country Club
Private Country Club
Los Angeles
CA
18
Shadow Ridge Country Club
Private Country Club
San Diego
CA
18
Spring Valley Lake Country Club
Private Country Club
Los Angeles
CA
18
Teal Bend Golf Club
Public Golf
Sacramento
CA
18
Turkey Creek Golf Club
Public Golf
Sacramento
CA
18
Georgia Region
 
 
 
 
Atlanta National Golf Club
Private Country Club
Atlanta
GA
18
Bear's Best Atlanta
Public Golf
Atlanta
GA
18
Bentwater Golf Club
Private Country Club
Atlanta
GA
18
Braelinn Golf Club
Private Country Club
Atlanta
GA
18
Brookfield Country Club
Private Country Club
Atlanta
GA
18
Canongate I Golf Club
Private Country Club
Atlanta
GA
36
Cateechee Golf Club
Public Golf
Atlanta
GA
18
Chapel Hills Golf Club
Private Country Club
Atlanta
GA
18
Country Club of Gwinnett
Semi-Private Golf Club
Atlanta
GA
18
Country Club of the South
Private Country Club
Atlanta
GA
18
Eagle Watch Golf Club
Private Country Club
Atlanta
GA
18
Eagles Landing Country Club
Private Country Club
Atlanta
GA
27
Flat Creek Country Club
Private Country Club
Atlanta
GA
27
Georgia National Golf Club
Private Country Club
Atlanta
GA
18
Hamilton Mill Golf Club
Private Country Club
Atlanta
GA
18
Healy Point Country Club
Private Country Club
Macon
GA
18
Heron Bay Golf Club
Private Country Club
Atlanta
GA
18

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Golf and Country Clubs Segment by
Region
Type of Club (1)
Market
State
Golf
Holes
Laurel Springs Golf Club
Private Country Club
Atlanta
GA
18
Mirror Lake Golf Club
Private Country Club
Atlanta
GA
36
Northwood Country Club
Private Country Club
Atlanta
GA
18
Olde Atlanta Golf Club
Private Country Club
Atlanta
GA
18
Planterra Ridge Golf Club
Private Country Club
Atlanta
GA
18
Polo Golf and Country Club
Private Country Club
Atlanta
GA
18
River Forest Country Club
Private Country Club
Forsyth
GA
18
Sun City Peachtree Golf Club
Private Country Club
Atlanta
GA
18
The Frog
Public Golf
Atlanta
GA
18
The Manor Golf and Country Club
Private Country Club
Atlanta
GA
18
Traditions of Braselton
Private Country Club
Atlanta
GA
18
White Columns Country Club
Private Country Club
Atlanta
GA
18
White Oak Golf Club
Private Country Club
Atlanta
GA
36
Whitewater Creek Country Club
Private Country Club
Atlanta
GA
18
Windermere Golf Club
Private Country Club
Atlanta
GA
18
Texas Region
 
 
 
 
April Sound Country Club
Private Country Club
Houston
TX
27
Bay Oaks Country Club
Private Country Club
Houston
TX
18
Brookhaven Country Club
Private Country Club
Dallas
TX
54
Canongate Lake Windcrest
Private Country Club
Houston
TX
18
Canongate Magnolia Creek
Private Country Club
Houston
TX
27
Canongate South Shore Harbour
Private Country Club
Houston
TX
27
Canongate The Oaks and Panther Trail
Private Country Club
Houston
TX
36
Canyon Creek Country Club
Private Country Club
Dallas
TX
18
Fair Oaks Ranch Golf & Country Club
Private Country Club
San Antonio
TX
36
Flintrock Golf Club at Lakeway
Private Country Club
Austin
TX
18
Gleneagles Country Club
Private Country Club
Dallas
TX
36
Hackberry Creek Country Club
Private Country Club
Dallas
TX
18
Hearthstone Country Club
Private Country Club
Houston
TX
27
Lakeway Country Club
Private Country Club
Austin
TX
36
Las Colinas Country Club
Private Country Club
Dallas
TX
18
Lost Creek Country Club
Private Country Club
Austin
TX
18
Oakmont Country Club
Private Country Club
Dallas
TX
18
Prestonwood Country Club - The Creek
Private Country Club
Dallas
TX
18
Prestonwood Country Club - The Hills
Private Country Club
Dallas
TX
18
Shady Valley Golf Club
Private Country Club
Dallas
TX
18
Stonebriar Country Club
Private Country Club
Dallas
TX
36
Stonebridge Country Club
Private Country Club
Dallas
TX
18
The Club at Cimarron
Private Country Club
Mission
TX
18
The Club at Falcon Point
Private Country Club
Houston
TX
18
The Clubs of Kingwood at Deerwood
Private Country Club
Houston
TX
18
The Clubs of Kingwood at Kingwood
Private Country Club
Houston
TX
72
The Hills Country Club at Lakeway
Private Country Club
Austin
TX
18
The Ranch Country Club at Stonebridge
Private Country Club
Dallas
TX
27
The Woodlands Country Club Palmer Course & Tennis Center
Private Country Club
Houston
TX
27
The Woodlands Country Club Player Course
Private Country Club
Houston
TX
18
The Woodlands Country Club Tournament Course
Private Country Club
Houston
TX
18
Timarron Country Club
Private Country Club
Dallas
TX
18

39



Golf and Country Clubs Segment by
Region
Type of Club (1)
Market
State
Golf
Holes
Trophy Club Country Club
Private Country Club
Dallas
TX
36
Walnut Creek Country Club
Private Country Club
Dallas
TX
36
Wildflower Country Club
Private Country Club
Temple
TX
18
Willow Creek Golf Club
Private Country Club
Houston
TX
18
West Region
 
 
 
 
Anthem Golf & Country Club
Private Country Club
Phoenix
AZ
18
Aspen Glen Club
Private Country Club
Rocky Mountain
CO
18
Bear's Best Las Vegas
Public Golf
Las Vegas
NV
18
Black Bear Golf Club
Private Country Club
Denver
CO
18
Blackstone Country Club
Private Country Club
Denver
CO
18
Canterwood Golf & Country Club
Private Country Club
Seattle
WA
18
Canyon Gate Country Club
Private Country Club
Las Vegas
NV
18
Fort Collins Country Club
Private Country Club
Denver
CO
18
Gainey Ranch Golf Club
Private Country Club
Phoenix
AZ
27
Ironwood Club at Anthem
Private Country Club
Phoenix
AZ
18
Mill Creek Country Club
Private Country Club
Seattle
WA
18
Oro Valley Country Club
Private Country Club
Tuscon
AZ
18
Seville Golf & Country Club
Private Country Club
Phoenix
AZ
18
Midwest Region
 
 
 
 
Firestone Country Club
Private Country Club
Akron
OH
63
Knollwood Country Club
Private Country Club
South Bend
IN
36
Nicklaus Golf Club at LionsGate
Private Country Club
Kansas City
KS
18
Oak Pointe Country Club
Private Country Club
Detroit
MI
36
Quail Hollow Country Club
Private Country Club
Cleveland
OH
36
Ravinia Green Country Club
Private Country Club
Chicago
IL
18
Rolling Green Country Club
Private Country Club
Chicago
IL
18
Silver Lake Country Club
Private Country Club
Akron
OH
18
TPC Michigan
Semi-Private Golf Club
Detroit
MI
18
Mid-Atlantic Region
 
 
 
 
Bermuda Run Country Club
Private Country Club
Charlotte
NC
36
Bluegrass Yacht & Country Club
Private Country Club
Nashville
TN
18
Chantilly National Golf and Country Club
Private Country Club
Centreville
VA
18
Devils Ridge Golf Club
Private Country Club
Raleigh/Durham
NC
18
Firethorne Country Club
Private Country Club
Charlotte
NC
18
Ford's Colony Country Club
Semi-Private Golf Club
Richmond
VA
54
Greenbrier Country Club
Private Country Club
Norfolk
VA
18
Lochmere Golf Club
Semi-Private Golf Club
Raleigh/Durham
NC
18
Nags Head Golf Club
Semi-Private Golf Club
Outer Banks
NC
18
Neuse Golf Club
Semi-Private Golf Club
Raleigh/Durham
NC
18
Piedmont Club
Private Country Club
Washington, DC
VA
18
River Creek Club
Private Country Club
Washington, DC
VA
18
River Run Golf & Country Club
Private Country Club
Charlotte
NC
18
Sequoyah National
Semi-Private Golf Club
Whittier
NC
18
Stonehenge Golf & Country Club
Private Country Club
Richmond
VA
18
Temple Hills Country Club
Private Country Club
Nashville
TN
27
The Currituck Golf Club
Semi-Private Golf Club
Outer Banks
NC
18
TPC Piper Glen
Private Country Club
Charlotte
NC
18
Northeast Region
 
 
 
 
Cherry Valley Country Club
Private Country Club
Skillman
NJ
18
Diamond Run Golf Club
Private Country Club
Pittsburgh
PA
18

40



Golf and Country Clubs Segment by
Region
Type of Club (1)
Market
State
Golf
Holes
Hamlet Golf & Country Club
Private Country Club
Long Island
NY
18
Hartefeld National Golf Club
Private Country Club
Avondale
PA
18
Ipswich Country Club
Private Country Club
Boston
MA
18
Treesdale Golf & Country Club
Private Country Club
Pittsburgh
PA
27
Willow Creek Golf & Country Club
Public Golf
Long Island
NY
18
Wind Watch Golf & Country Club
Semi-Private Golf Club
Long Island
NY
18
Southeast Region
 
 
 
 
Canebrake Country Club
Private Country Club
Hattiesburg
MS
18
Country Club Of Hilton Head
Private Country Club
Hilton Head
SC
18
Countryside Country Club
Private Country Club
Clearwater
FL
27
Debary Golf & Country Club
Semi-Private Golf Club
Orlando
FL
18
Deercreek Country Club
Private Country Club
Jacksonville
FL
18
Diamante Golf Club
Private Country Club
Hot Springs Village
AR
18
East Lake Woodlands Country Club
Private Country Club
Oldsmar
FL
36
Golden Bear Golf Club at Indigo Run
Semi-Private Golf Club
Hilton Head
SC
18
Haile Plantation Golf & Country Club
Private Country Club
Gainesville
FL
18
Hunter's Green Country Club
Private Country Club
Tampa
FL
18
LPGA International
Semi-Private Golf Club
Daytona Beach
FL
36
Marsh Creek Country Club
Private Country Club
Jacksonville
FL
18
Monarch Country Club
Private Country Club
Palm Beaches
FL
18
Oak Tree Country Club
Private Country Club
Edmond
OK
36
Queens Harbour Yacht & Country Club
Semi-Private Golf Club
Jacksonville
FL
18
Santa Rosa Golf & Beach Club
Private Country Club
Santa Rosa Beach
FL
18
Southern Trace Country Club
Private Country Club
Shreveport
LA
18
Tampa Palms Golf & Country Club
Private Country Club
Tampa
FL
18
The Golf Club at Indigo Run
Private Country Club
Hilton Head
SC
18
Woodside Plantation Country Club
Private Country Club
Aiken
SC
45
International Region
 
 
 
 
Cozumel Country Club
Semi-Private Golf Club
Cozumel
Mexico
18
Marina Vallarta Club de Golf
Semi-Private Golf Club
Puerto Vallarta
Mexico
18
Vista Vallarta Club de Golf
Semi-Private Golf Club
Puerto Vallarta
Mexico
36
Total Golf & Country Clubs
 
 
 
3,564
_________________________

(1)
Public golf courses are open to the general public. Semi-private golf clubs offer memberships in addition to limited public play.

Business, Sports and Alumni Clubs
Segment by Region
Business Type
Market
State
Square
Footage (1)
California Region
 
 
 
 
Center Club
Business Club
Los Angeles
CA
22,000
City Club Los Angeles
Business Club
Los Angeles
CA
27,000
Silicon Valley Capital Club
Business/Sports Club
San Jose
CA
14,000
University Club atop Symphony Towers
Business Club
San Diego
CA
18,000
Georgia Region
 
 
 
 
Buckhead Club
Business Club
Atlanta
GA
18,000
Peachtree City Tennis
Sports Club
Atlanta
GA
9,000
The Commerce Club
Business Club
Atlanta
GA
26,000

41



Business, Sports and Alumni Clubs
Segment by Region
Business Type
Market
State
Square
Footage (1)
Texas Region
 
 
 
 
Baylor Club
Alumni Club
Waco
TX
18,000
Houston City Club
Business/Sports Club
Houston
TX
130,000
La Cima Club
Business Club
Dallas
TX
15,000
Plaza Club
Business Club
San Antonio
TX
19,000
Texas Tech University Club
Alumni Club
Lubbock
TX
20,000
The Downtown Club at Houston Center
Business/Sports Club
Houston
TX
55,000
The Downtown Club at Met
Business/Sports Club
Houston
TX
110,000
The Houston Club
Business Club
Houston
TX
16,000
The University of Texas Club
Alumni Club
Austin
TX
34,000
Tower Club
Business Club
Dallas
TX
29,000
West Region
 
 
 
 
Columbia Tower Club
Business Club
Seattle
WA
29,000
Midwest Region
 
 
 
 
Dayton Racquet Club
Business/Sports Club
Dayton
OH
28,000
Metropolitan Club
Business/Sports Club
Chicago
IL
60,000
Mid-America Club
Business Club
Chicago
IL
34,000
Skyline Club
Business Club
Detroit
MI
20,000
Skyline Club
Business Club
Indianapolis
IN
16,000
The Club at Key Center
Business/Sports Club
Cleveland
OH
34,000
Mid-Atlantic Region
 
 
 
 
Cardinal Club
Business Club
Raleigh/Durham
NC
24,000
Carolina Club
Alumni Club
Chapel Hill
NC
15,000
City Club of Washington
Business Club
Washington, DC
DC
17,000
Club Le Conte
Business Club
Knoxville
TN
18,000
Crescent Club
Business Club
Memphis
TN
14,000
Piedmont Club
Business Club
Winston-Salem
NC
14,000
Tower Club Tysons Corner
Business Club
Vienna
VA
23,000
Town Point Club
Business Club
Norfolk
VA
18,000
Northeast Region
 
 
 
 
Boston College Club
Alumni Club
Boston
MA
17,000
Pyramid Club
Business Club
Philadelphia
PA
21,000
Rivers Club
Business/Sports Club
Pittsburgh
PA
69,000
The Athletic & Swim Club at Equitable Center
Sports Club
New York City
NY
25,000
Southeast Region
 
 
 
 
Capital City Club
Business Club
Columbia
SC
21,000
Capital City Club
Business Club
Montgomery
AL
24,000
Centre Club
Business Club
Tampa
FL
14,000
Citrus Club
Business/Sports Club
Orlando
FL
27,000
Commerce Club
Business Club
Greenville
SC
16,000
Harbour Club
Business Club
Charleston
SC
18,000
The Summit Club
Business Club
Birmingham
AL
19,000
Tower Club
Business Club
Ft. Lauderdale
FL
11,000
University Center Club at Florida State
Alumni Club
Tallahassee
FL
64,000
University Club
Business/Sports Club
Jacksonville
FL
28,000
International Region
 
 
 
 
Capital Club
Business Club
Beijing
China
60,000
West Lake Mansion at Meilu Legend Hotel (2)
Business Club
Hangzhou
China
175,000
Total Business, Sports and Alumni Clubs
 
 
 
1,553,000

42



_________________________

(1)
Business, sports and alumni club size is represented in approximate square footage.
(2)
We manage the Meilu Legend Hotel and the 5,500 square foot West Lake Mansion, a private business club located within the Meilu Legend Hotel.

ITEM 3.    LEGAL PROCEEDINGS

From time to time, we are involved in litigation that we believe is of the type common to companies engaged in our line of business, including commercial disputes, disputes with members regarding their membership agreements, employment issues and claims relating to personal injury and property damage. 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 4.  MINE SAFETY DISCLOSURES
 
Not applicable.

PART II

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

Market Information
    
Our common stock has traded on the NYSE under the symbol “MYCC” since September 20, 2013. Prior to that time, there was no public market for our common stock. As of February 19, 2016, 65,248,354 shares of common stock were outstanding, held by approximately 100 holders of record which does not reflect holders who beneficially own our common stock held in nominee or street name.
    
The following table sets forth, for the quarterly reporting periods indicated, the high and low intraday sales prices per share for our common stock, as reported by the NYSE:

 
Common Stock Market Price
 
High
 
Low
Fiscal Year 2014
 
 
 
First Quarter
$
19.76

 
$
16.81

Second Quarter
19.40

 
17.14

Third Quarter
18.99

 
16.36

Fourth Quarter
20.10

 
16.75

Fiscal Year 2015
 
 
 
First Quarter
$
19.48

 
$
16.84

Second Quarter
23.87

 
17.49

Third Quarter
24.95

 
21.05

Fourth Quarter
23.87

 
17.21



43



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 indicated annual dividend of $0.52 per share of common stock.

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 2014
 
 
 
 
 
 
March 18, 2014
 
$
0.12

 
April 3, 2014
 
$
7,725

 
April 15, 2014
June 25, 2014
 
$
0.12

 
July 7, 2014
 
$
7,731

 
July 15, 2014
September 9, 2014
 
$
0.12

 
October 3, 2014
 
$
7,731

 
October 15, 2014
December 3, 2014
 
$
0.13

 
January 2, 2015
 
$
8,377

 
January 15, 2015
 
 
 
 
 
 
 
 
 
Fiscal Year 2015
 
 
 
 
 
 
March 20, 2015
 
$
0.13

 
April 2, 2015
 
$
8,399

 
April 15, 2015
June 25, 2015
 
$
0.13

 
July 6, 2015
 
$
8,417

 
July 15, 2015
September 3, 2015
 
$
0.13

 
October 1, 2015
 
$
8,416

 
October 15, 2015
December 9, 2015
 
$
0.13

 
January 4, 2016
 
$
8,416

 
January 15, 2016
 
 
 
 
 
 
 
 
 
Fiscal Year 2016
 
 
 
 
 
 
February 18, 2016
 
$
0.13

 
April 5, 2016
 
$
8,482

 
April 15, 2016

Our ability to pay dividends depends 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.

Issuer Purchases of Equity Securities

During the sixteen weeks ended December 29, 2015, we did not purchase any of our equity securities that are registered under Section 12(b) of the Exchange Act.

On February 18, 2016, our Board of Directors authorized a repurchase of up to $50 million of our common stock. The repurchase program is expected to be executed over two years, and is expected to 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 Exchange Act.


44



Securities Authorized for Issuance Under Equity Compensation Plans

Set forth below is certain information, as of December 29, 2015, about the Company’s common stock authorized for issuance under the Company's equity compensation plan.

 
 
Number of securities to be
issued upon exercise of outstanding options, warrants and rights
 
Weighted-average exercise price of outstanding options, warrants and rights
 
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
 
Plan Category
 
(a)
 
(b)
 
(c)
 
Equity compensation plans approved by security holders
 
1,281,361

 (1)
$

(2)
2,718,640

(3)
Equity compensation plans not approved by security holders
 

 
$

 

 
Total
 
1,281,361

 

 
2,718,640

 

(1)
Represents shares reserved for issuance related to outstanding restricted stock awards and performance-based awards, net of forfeitures. The number of performance-based awards under these grants represents the target number of such awards and may increase or decrease depending upon actual performance.

(2)
All shares reserved for issuance under the Stock Plan have no exercise price.

(3)
Represents shares reserved for issuance under the Stock Plan other than shares reserved for issuance related to existing awards. This figure may increase or decrease depending upon actual performance under the terms of the outstanding performance-based awards.


45



Stock Performance Graph

The total return graph below is presented for the period from September 20, 2013, the day our common stock began trading on the New York Stock Exchange, through December 29, 2015. The comparison assumes that $100 was invested at the market close on September 20, 2013 in: 1) our common stock (“MYCC”), 2) The Russell 2000, 3) The Standard & Poor’s 500 Stock Index and 4) the S&P Leisure Time Select Industry Index. We included the S&P Leisure Time Select Industry Index as we believe we compete in the leisure industry. The total return graph assumes that all dividends were reinvested on the day of payment.

Total Return Stock Performance Graph
This performance graph is not deemed filed with the SEC and is not to be incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, unless such filings specifically incorporate the performance graph by reference therein.
    
ITEM 6.    SELECTED FINANCIAL DATA

The following table sets forth our selected financial data for the periods presented. Our fiscal year consists of a 52/53 week period ending on the last Tuesday of December. For 2015, 2014, 2012 and 2011, our fiscal years were comprised of the 52 weeks ended December 29, 2015, December 30, 2014, December 25, 2012, and December 27, 2011, respectively. For 2013, our fiscal year was comprised of the 53 weeks ended December 31, 2013.

The statements of operations data set forth below for fiscal years 2015, 2014 and 2013 and the balance sheet data as of December 29, 2015 and December 30, 2014, are derived from our audited consolidated financial statements that are included elsewhere herein. The statements of operations data set forth below for fiscal years 2012 and 2011 and the balance sheet data as of December 31, 2013, December 25, 2012 and December 27, 2011, are derived from our consolidated financial statements that are not included elsewhere herein.


46



The timing of our acquisition of clubs may affect the comparability of the selected financial data across periods. This selected financial data should be read in conjunction with “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations” and our audited financial statements and the related notes included elsewhere herein.
 
Fiscal Years Ended
 
December 29, 2015
 
December 30, 2014
 
December 31, 2013
 
December 25, 2012
 
December 27, 2011
 
(dollars in thousands, except per share amounts)
Statements of Operations Data:
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
Club operations
$
757,472

 
$
629,180

 
$
579,751

 
$
535,274

 
$
513,282

Food and beverage
291,582

 
251,838

 
231,673

 
216,269

 
203,508

Other revenues
3,813

 
3,137

 
3,656

 
3,401

 
3,172

Total revenues
1,052,867

 
884,155

 
815,080

 
754,944

 
719,962

Club operating costs exclusive of depreciation
681,989

 
568,171

 
527,787

 
483,653

 
468,577

Cost of food and beverage sales exclusive of depreciation
96,103

 
81,165

 
74,607

 
68,735

 
64,256

Depreciation and amortization
103,944

 
80,792

 
72,073

 
78,286

 
93,035

Provision for doubtful accounts
2,551

 
2,733

 
3,483

 
2,765

 
3,350

Loss on disposals of assets
19,402

 
10,518

 
8,122

 
10,904

 
9,599

Impairment of assets
5,144

 
2,325

 
6,380

 
4,783

 
1,173

Equity in earnings from unconsolidated ventures
1,308

 
(1,404
)
 
(2,638
)
 
(1,947
)
 
(1,487
)
Selling, general and administrative
82,616

 
73,870

 
64,073

 
45,343

 
52,382

Operating income
59,810

 
65,985

 
61,193

 
62,422

 
29,077

Interest and investment income
5,519

 
2,585

 
345

 
1,212

 
138

Interest expense
(70,672
)
 
(65,209
)
 
(83,669
)
 
(89,369
)
 
(84,746
)
Loss on extinguishment of debt
(2,599
)
 
(31,498
)
 
(16,856
)
 

 

Other income

 

 

 
2,132

 
3,746

Loss from continuing operations before income taxes
(7,942
)
 
(28,137
)
 
(38,987
)
 
(23,603
)
 
(51,785
)
Income tax (expense) benefit
(1,629
)
 
41,469

 
(1,681
)
 
7,528

 
16,421

(Loss) income from continuing operations
$
(9,571
)
 
$
13,332

 
$
(40,668
)
 
$
(16,075
)
 
$
(35,364
)
Loss from discontinued clubs, net of tax
(2
)
 
(3
)
 
(12
)
 
(10,917
)
 
(258
)
Net (loss) income
$
(9,573
)
 
$
13,329

 
$
(40,680
)
 
$
(26,992
)
 
$
(35,622
)
Net loss (income) attributable to noncontrolling interests
61

 
(103
)
 
(212
)
 
(283
)
 
(575
)
Net (loss) income attributable to ClubCorp
$
(9,512
)
 
$
13,226

 
$
(40,892
)
 
$
(27,275
)
 
$
(36,197
)
Per share data:
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding, basic
64,364

 
63,941

 
54,172

 
50,570

 
50,570

Weighted average shares outstanding, diluted
64,364

 
64,318

 
54,603

 
50,570

 
50,570

 
 
 
 
 
 
 
 
 
 
Earnings per common share, basic:
 
 
 
 
 
 
 
 
 
(Loss) income from continuing operations attributable to ClubCorp
$
(0.15
)
 
$
0.21

 
$
(0.75
)
 
$
(0.32
)
 
$
(0.71
)
 
 
 
 
 
 
 
 
 
 
Earnings per common share, diluted:
 
 
 
 
 
 
 
 
 
(Loss) income from continuing operations attributable to ClubCorp
$
(0.15
)
 
$
0.21

 
$
(0.75
)
 
$
(0.32
)
 
$
(0.71
)
 
 
 
 
 
 
 
 
 
 
Cash distributions declared per common share
$
0.52

 
$
0.49

 
$
0.79

 
$

 
$

 
 
 
 
 
 
 
 
 
 
Balance Sheet Data:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
116,347

 
$
75,047

 
$
53,781

 
$
81,965

 
$
50,480

Land and non-depreciable land improvements
600,819

 
589,975

 
530,212

 
531,265

 
512,260

Total assets
2,170,862

 
2,065,071

 
1,736,217

 
1,720,547

 
1,733,474

Long-term debt (net of current portion)
1,092,320

 
965,187

 
638,112

 
768,369

 
784,109

Total long-term liabilities
1,657,077

 
1,532,779

 
1,211,197

 
1,327,827

 
1,354,286

Total equity
$
178,782

 
$
220,859

 
$
237,950

 
$
143,082

 
$
169,126



47



ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read together with the audited consolidated financial statements and related notes included in Item 8. Financial Statements and Supplementary Dataof this report. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Item 1A. Risk Factors” or in other sections of this report.

ClubCorp Formation

ClubCorp 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 (“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 and business, sports and alumni clubs.
As a result of the ClubCorp Formation in November 2010, our taxpayer status has changed due to taxable gains and certain tax attribute reductions triggered by the ClubCorp Formation that utilized our net operating loss carryforwards.

Overview
We are a leading owner-operator of private golf and country clubs and business, sports and alumni clubs in North America. As of December 29, 2015, our portfolio of 207 owned or operated clubs, with approximately 183,000 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 148 golf and country clubs and manage 10 golf and country clubs. Likewise, we own, lease or operate through a joint venture 46 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