ClubCorp Holdings, Inc. - FORM 10-Q - July 19, 2017

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 10-Q
 
x        Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the quarterly period ended June 13, 2017.
 
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)

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

As of July 12, 2017, the registrant had 65,754,547 shares of common stock outstanding, with a par value of $0.01.
 



TABLE OF CONTENTS
 
 
 
Page
 
 
 
 
 
 

 
 
 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



PART I

ITEM 1. FINANCIAL STATEMENTS

CLUBCORP HOLDINGS, INC. 

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

For the Twelve and Twenty-Four Weeks Ended June 13, 2017 and June 14, 2016

(In thousands, except per share amounts)
 
Twelve Weeks Ended
 
Twenty-Four Weeks Ended
 
June 13, 2017
 
June 14, 2016
 
June 13, 2017
 
June 14, 2016
REVENUES:
 
 
 
 
 
 
 
Club operations
$
194,780

 
$
189,203

 
$
360,941

 
$
349,892

Food and beverage
80,366

 
78,941

 
134,427

 
131,797

Other revenues
1,207

 
830

 
2,263

 
2,158

Total revenues
276,353

 
268,974

 
497,631

 
483,847


 
 
 
 
 
 
 
DIRECT AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
 
 
 
 
 
 
 
Club operating costs exclusive of depreciation
175,953

 
170,157

 
322,250

 
312,511

Cost of food and beverage sales exclusive of depreciation
26,480

 
25,498

 
46,141

 
44,338

Depreciation and amortization
25,384

 
24,355

 
50,380

 
48,569

Provision for doubtful accounts
806

 
704

 
1,715

 
1,084

Loss on disposals of assets
1,957

 
2,738

 
4,891

 
5,655

Impairment of assets
4,176

 
500

 
4,176

 
500

Equity in earnings from unconsolidated ventures
(1,448
)
 
(2,118
)
 
(3,629
)
 
(2,103
)
Selling, general and administrative
24,674

 
17,501

 
45,970

 
37,210

OPERATING INCOME
18,371

 
29,639

 
25,737

 
36,083


 
 
 
 
 
 
 
Interest and investment income
155

 
127

 
320

 
253

Interest expense
(19,234
)
 
(19,938
)
 
(38,784
)
 
(40,358
)
(LOSS) INCOME BEFORE INCOME TAXES
(708
)
 
9,828

 
(12,727
)
 
(4,022
)
INCOME TAX BENEFIT (EXPENSE)
1,499

 
(4,078
)
 
6,012

 
1,459

NET INCOME (LOSS)
791

 
5,750

 
(6,715
)
 
(2,563
)
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
(123
)
 
(171
)
 
(140
)
 
(272
)
NET INCOME (LOSS) ATTRIBUTABLE TO CLUBCORP
$
668

 
$
5,579

 
$
(6,855
)
 
$
(2,835
)

 
 
 
 
 
 
 
WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC
64,555

 
64,518

 
64,498

 
64,496

WEIGHTED AVERAGE SHARES OUTSTANDING, DILUTED
64,555

 
64,556

 
64,498

 
64,496


 
 
 
 
 
 
 
EARNINGS PER COMMON SHARE:
 
 
 
 
 
 
 
Net income (loss) attributable to ClubCorp, Basic
$
0.01

 
$
0.08

 
$
(0.11
)
 
$
(0.05
)
Net income (loss) attributable to ClubCorp, Diluted
$
0.01

 
$
0.08

 
$
(0.11
)
 
$
(0.05
)
 
 
 
 
 
 
 
 
Cash dividends declared per common share
$
—

 
$
0.13

 
$
0.13

 
$
0.26

 

See accompanying notes to unaudited consolidated condensed financial statements

3


CLUBCORP HOLDINGS, INC. 

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the Twelve and Twenty-Four Weeks Ended June 13, 2017 and June 14, 2016

(In thousands of dollars)
 
Twelve Weeks Ended
 
Twenty-Four Weeks Ended
 
June 13, 2017
 
June 14, 2016
 
June 13, 2017
 
June 14, 2016
NET INCOME (LOSS)
$
791

 
$
5,750

 
$
(6,715
)
 
$
(2,563
)
Foreign currency translation
681

 
(779
)
 
1,575

 
(860
)
OTHER COMPREHENSIVE INCOME (LOSS)
681

 
(779
)
 
1,575

 
(860
)
COMPREHENSIVE INCOME (LOSS)
1,472

 
4,971

 
(5,140
)
 
(3,423
)
COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
(123
)
 
(171
)
 
(140
)
 
(272
)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CLUBCORP
$
1,349

 
$
4,800

 
$
(5,280
)
 
$
(3,695
)
 

See accompanying notes to unaudited consolidated condensed financial statements


4


CLUBCORP HOLDINGS, INC.

UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS

As of June 13, 2017 and December 27, 2016

(In thousands of dollars, except share and per share amounts)
 
June 13, 2017
 
December 27, 2016
ASSETS
 

 
 

CURRENT ASSETS:
 

 
 

Cash and cash equivalents
$
52,020

 
$
84,601

Receivables, net of allowances of $4,946 and $5,111 at June 13, 2017 and December 27, 2016, respectively
110,175

 
79,115

Inventories
26,388

 
22,743

Prepaids and other assets
19,754

 
16,116

Total current assets
208,337

 
202,575

Investments
3,877

 
1,569

Property and equipment, net (includes $9,818 and $9,489 related to VIEs at June 13, 2017 and December 27, 2016, respectively)
1,570,689

 
1,553,382

Notes receivable, net of allowances of $594 and $618 at June 13, 2017 and December 27, 2016, respectively
8,255

 
8,161

Goodwill
312,811

 
312,811

Intangibles, net
28,793

 
29,348

Other assets
16,509

 
16,615

Long-term deferred tax asset
4,253

 
4,253

TOTAL ASSETS
$
2,153,524

 
$
2,128,714

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

CURRENT LIABILITIES:
 

 
 

Current maturities of long-term debt
$
20,079

 
$
19,422

Membership initiation deposits - current portion
178,086

 
170,355

Accounts payable
36,736

 
39,260

Accrued expenses
52,124

 
42,539

Accrued taxes
18,045

 
19,256

Other liabilities
92,897

 
71,092

Total current liabilities
397,967

 
361,924

Long-term debt (includes $12,829 and $13,035 related to VIEs at June 13, 2017 and December 27, 2016, respectively)
1,068,190

 
1,067,071

Membership initiation deposits
205,837

 
205,076

Deferred tax liability, net
204,717

 
209,347

Other liabilities (includes $24,837 and $24,351 related to VIEs at June 13, 2017 and December 27, 2016, respectively)
135,633

 
132,909

Total liabilities
2,012,344

 
1,976,327

Commitments and contingencies (See Note 15)


 


 
 
 
 
EQUITY
 

 
 

Common stock, $0.01 par value, 200,000,000 shares authorized; 65,721,817 and 65,498,897 issued and outstanding at June 13, 2017 and December 27, 2016, respectively
657

 
655

Additional paid-in capital
230,176

 
235,871

Accumulated other comprehensive loss
(8,063
)
 
(9,638
)
Accumulated deficit
(89,115
)
 
(82,260
)
Treasury stock, at cost (192,989 shares at June 13, 2017 and December 27, 2016)
(2,258
)
 
(2,258
)
Total stockholders’ equity
131,397

 
142,370

Noncontrolling interests in consolidated subsidiaries and variable interest entities
9,783

 
10,017

Total equity
141,180

 
152,387

TOTAL LIABILITIES AND EQUITY
$
2,153,524

 
$
2,128,714


See accompanying notes to unaudited consolidated condensed financial statements

5


CLUBCORP HOLDINGS, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

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

(In thousands of dollars)
 
Twenty-Four Weeks Ended
 
June 13, 2017
 
June 14, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
 

 
 

Net loss
$
(6,715
)
 
$
(2,563
)
Adjustments to reconcile net loss to cash flows from operating activities:
 

 
 

Depreciation
50,069

 
47,490

Amortization
311

 
1,079

Asset impairments
4,176

 
500

Bad debt expense
1,715

 
1,084

Equity in earnings from unconsolidated ventures
(3,629
)
 
(2,103
)
Distribution from investment in unconsolidated ventures
1,321

 
1,524

Loss on disposals of assets, net
4,891

 
5,655

Debt issuance costs and term loan discount
2,400

 
2,620

Accretion of discount on member deposits
9,208

 
9,127

Equity-based compensation
4,077

 
3,000

Net change in deferred tax assets and liabilities
(4,630
)
 
(1,544
)
Net change in prepaid expenses and other assets
(7,182
)
 
(6,975
)
Net change in receivables and membership notes
(30,099
)
 
(26,010
)
Net change in accounts payable and accrued liabilities
7,496

 
13,824

Net change in other current liabilities
28,176

 
25,198

Net change in other long-term liabilities
801

 
(1,670
)
Net cash provided by operating activities
62,386

 
70,236

CASH FLOWS FROM INVESTING ACTIVITIES:
 

 
 

Purchase of property and equipment
(52,487
)
 
(47,031
)
Acquisition of clubs
(15,265
)
 
(6,600
)
Proceeds from dispositions
16

 
24

Proceeds from insurance
2,862

 
471

Net change in restricted cash and capital reserve funds
(41
)
 
(180
)
Net cash used in investing activities
(64,915
)
 
(53,316
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 

 
 

Repayments of long-term debt
(8,915
)
 
(8,755
)
Debt issuance and modification costs
(795
)
 
(1,093
)
Dividends to owners
(17,089
)
 
(16,979
)
Repurchases of common stock
—

 
(1,235
)
Share repurchases for tax withholdings related to certain equity-based awards
(1,264
)
 
(226
)
Distributions to noncontrolling interest
(374
)
 
—

Proceeds from new membership initiation deposits
57

 
72

Repayments of membership initiation deposits
(861
)
 
(1,013
)
Net cash used in financing activities
(29,241
)
 
(29,229
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
(811
)
 
569

NET DECREASE IN CASH AND CASH EQUIVALENTS
(32,581
)
 
(11,740
)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD
84,601

 
116,347

CASH AND CASH EQUIVALENTS - END OF PERIOD
$
52,020

 
$
104,607

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 
 
 
Cash paid for interest
$
18,948

 
$
10,700

Cash paid for income taxes
$
1,348

 
$
3,046


See accompanying notes to unaudited consolidated condensed financial statements

6


CLUBCORP HOLDINGS, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY

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

(In thousands of dollars, except share amounts)
 
Common Stock
 
Additional
Paid-in
Capital
 
Accumulated
Other
Comprehensive
(Loss) Income
 
Accumulated Deficit
 
Treasury Stock
 
Noncontrolling
Interests in
Consolidated
Subsidiaries
 
Total
 
Shares
 
Amount
 
 
 
 
Shares
 
Amount
 
 
BALANCE - December 29, 2015
64,740,736

 
$
647

 
$
263,921

 
$
(7,249
)
 
$
(88,955
)
 
—

 
$
—

 
$
10,418

 
$
178,782

Cumulative effect adjustment from adoption of accounting guidance
—

 
—

 
(803
)
 
—

 
3,118

 
—

 
—

 
—

 
2,315

Issuance of shares related to equity-based compensation, net of forfeitures and shares withheld for taxes
826,559

 
8

 
(234
)
 
—

 
—

 
—

 
—

 
—

 
(226
)
Dividends to owners declared
—

 
—

 
(17,026
)
 
—

 
—

 
—

 
—

 
—

 
(17,026
)
Equity-based compensation expense
—

 
—

 
3,000

 
—

 
—

 
—

 
—

 
—

 
3,000

Net (loss) income
—

 
—

 
—

 
—

 
(2,835
)
 
—

 
—

 
272

 
(2,563
)
Other comprehensive loss
—

 
—

 
—

 
(860
)
 
—

 
—

 
—

 
—

 
(860
)
Repurchase of common stock
—

 
—

 
—

 
—

 
—

 
(104,325
)
 
(1,235
)
 
—

 
(1,235
)
BALANCE - June 14, 2016
65,567,295

 
$
655

 
$
248,858

 
$
(8,109
)
 
$
(88,672
)
 
(104,325
)
 
$
(1,235
)
 
$
10,690

 
$
162,187

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BALANCE - December 27, 2016
65,498,897

 
$
655

 
$
235,871

 
$
(9,638
)
 
$
(82,260
)
 
(192,989
)
 
$
(2,258
)
 
$
10,017

 
$
152,387

Issuance of shares related to equity-based compensation, net of forfeitures and shares withheld for taxes
222,920

 
2

 
(1,266
)
 
—

 
—

 
—

 
—

 
—

 
(1,264
)
Dividends to owners declared
—

 
—

 
(8,506
)
 
—

 
—

 
—

 
—

 
—

 
(8,506
)
Equity-based compensation expense
—

 
—

 
4,077

 
—

 
—

 
—

 
—

 
—

 
4,077

Net (loss) income
—

 
—

 
—

 
—

 
(6,855
)
 
—

 
—

 
140

 
(6,715
)
Other comprehensive income
—

 
—

 
—

 
1,575

 
—

 
—

 
—

 
—

 
1,575

Distributions to noncontrolling interest
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(374
)
 
(374
)
BALANCE - June 13, 2017
65,721,817

 
$
657

 
$
230,176

 
$
(8,063
)
 
$
(89,115
)
 
(192,989
)
 
$
(2,258
)
 
$
9,783

 
$
141,180



See accompanying notes to unaudited consolidated condensed financial statements

7


NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
(dollar amounts in thousands, except per share amounts or unless otherwise indicated)
 
1. ORGANIZATION AND DESCRIPTION OF THE BUSINESS
 
ClubCorp Holdings, Inc. (“Holdings”) and its wholly owned subsidiaries CCA Club Operations Holdings, LLC (“Operations’ Parent”) and ClubCorp Club Operations, Inc. (“Operations” and, together with Holdings and Operations’ Parent, “ClubCorp”) were formed on November 10, 2010, as part of a reorganization of ClubCorp, Inc. (“CCI”), which was effective as of November 30, 2010, for the purpose of operating and managing golf and country clubs and business, sports and alumni clubs. ClubCorp, together with its subsidiaries, may be referred to as “we”, “us”, “our” or the “Company”.

As of June 13, 2017, we own, lease or operate through joint ventures 152 golf and country clubs and manage eight golf and country clubs. Likewise, we lease or operate through a joint venture 41 business, sports and alumni clubs and manage three business, sports and alumni clubs. Our facilities are located in 27 states, the District of Columbia and two foreign countries.

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

Investments in certain unconsolidated affiliates are accounted for by the equity method. See Note 4.
We have entered into agreements with third-party owners of clubs to act as a managing agent and provide certain services to the third party club owner in exchange for a management fee. The operations of managed clubs are not consolidated. We recognize the contractual management fees as revenue when earned. Additionally, we recognize reimbursements for certain costs of operations at certain managed clubs as revenue.
The accompanying consolidated condensed financial statements are unaudited. Certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP have been omitted from the accompanying financial statements. We believe the disclosures made are adequate to make the information presented not misleading. However, the financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 27, 2016.

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

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

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

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

8



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

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

The expected lives of active memberships are calculated annually using historical attrition rates. Periods in which attrition rates differ significantly from enrollment rates could have a material effect on our consolidated condensed financial statements by decreasing or increasing the expected lives of active memberships, which in turn would affect the length of time over which we recognize initiation fee and deposit revenues. During the twenty-four weeks ended June 13, 2017 and June 14, 2016, our estimated expected lives ranged from one to 20 years; the weighted-average expected life of a golf and country club membership was approximately seven years and the expected life of a business, sports and alumni club membership was approximately three years.

Membership initiation payments recognized within club operations revenue on the consolidated condensed statements of operations were $3.2 million and $3.2 million for the twelve weeks ended June 13, 2017 and June 14, 2016, respectively, and $6.5 million and $6.6 million for the twenty-four weeks ended June 13, 2017 and June 14, 2016, respectively.

Recently Issued Accounting Pronouncements

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

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


9


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

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

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

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

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


10


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

3. VARIABLE INTEREST ENTITIES
 
Consolidated VIEs include three managed golf course properties and certain realty interests which we define as “Non-Core Development Entities”. We have determined we are the primary beneficiary of these VIEs as we have the obligation to absorb the majority of losses from and direct activities of these operations. One of these managed golf course property VIEs is financed through a loan payable of $0.5 million collateralized by assets of the entity totaling $4.2 million as of June 13, 2017. The other managed golf course property VIEs are financed through advances from us. Outstanding advances as of June 13, 2017 total $5.4 million compared to recorded assets of $7.4 million. The VIE related to the Non-Core Development Entities is financed through notes which are payable through cash proceeds related to the sale of certain real estate held by the Non-Core Development Entities. Recourse of creditors to these VIEs is limited to the assets of the VIE entities, which total $12.5 million and $11.4 million at June 13, 2017 and December 27, 2016, respectively.

The following summarizes the carrying amount and classification of the VIEs’ assets and liabilities in the consolidated balance sheets as of June 13, 2017 and December 27, 2016, net of intercompany amounts:
 
 
June 13, 2017
 
December 27, 2016
Current assets
$
1,785

 
$
1,041

Fixed assets, net
9,818

 
9,489

Other assets
847

 
846

Total assets
$
12,450

 
$
11,376

 
 
 
 
Current liabilities
$
1,806

 
$
1,125

Long-term debt
12,829

 
13,035

Other long-term liabilities
25,417

 
24,906

Noncontrolling interest
5,237

 
5,401

Company capital
(32,839
)
 
(33,091
)
Total liabilities and equity
$
12,450

 
$
11,376

  
4. INVESTMENTS
 
We have an equity method investment in one active golf and country club joint venture with a carrying value of $0.3 million and $0.4 million at June 13, 2017 and December 27, 2016, respectively. Our share of earnings in the equity investment is included in equity in earnings from unconsolidated ventures in the consolidated condensed statements of operations.

We also have an equity method investment of 10.2% in Avendra, LLC, a purchasing cooperative of hospitality companies. The carrying value of the investment was $3.5 million and $1.1 million at June 13, 2017 and December 27, 2016, respectively. Our share of earnings in the equity investment is included in equity in earnings from unconsolidated ventures in the consolidated condensed statements of operations. All cash distributions from our equity investment are reported as distribution from investment in unconsolidated ventures within the operating section of our consolidated condensed statements of cash flows.

We also have contractual agreements with the Avendra, LLC joint venture to provide procurement services for our
clubs. We received net volume rebates and allowances totaling $4.4 million during the twelve and twenty-four weeks ended June 13, 2017 and $2.9 million during the twelve and twenty-four weeks ended June 14, 2016.


11


5. FAIR VALUE
 
GAAP establishes a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. The three levels of inputs are defined as follows:
 
Level 1—unadjusted quoted prices for identical assets or liabilities in active markets accessible by the Company;
 
Level 2—inputs that are observable in the marketplace other than those inputs classified as Level 1; and
 
Level 3—inputs that are unobservable in the marketplace and significant to the valuation.
 
We maximize the use of observable inputs and minimize the use of unobservable inputs. If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument is categorized based upon the lowest level of input that is significant to the fair value calculation. We recognize transfers between levels of the fair value hierarchy on the date of the change in circumstances that caused the transfer.

Fair Value of Financial Instruments
Debt—We estimate the fair value of our debt obligations, excluding capital lease obligations and loan origination fees, as follows, as of June 13, 2017 and December 27, 2016:
 
 
June 13, 2017
 
December 27, 2016
 
Recorded Value
 
Fair Value
 
Recorded Value
 
Fair Value
Level 2 (1)
$
996,528

 
$
1,035,694

 
$
996,199

 
$
1,026,323

Level 3
51,495

 
42,547

 
50,274

 
41,467

Total
$
1,048,023

 
$
1,078,241

 
$
1,046,473

 
$
1,067,790

______________________

(1)
The recorded value for Level 2 debt obligations is presented net of the $4.5 million and $4.8 million discount as of June 13, 2017 and December 27, 2016, respectively, on the Secured Credit Facilities, as defined in Note 9.

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

The carrying value of financial instruments including cash, cash equivalents, receivables, notes receivable, accounts payable and other short-term and long-term assets and liabilities approximate their fair values as of June 13, 2017 and December 27, 2016.

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

Our assets and liabilities measured at fair value on a non-recurring basis include equity method investments, property and equipment, mineral rights, goodwill, trade names, liquor licenses, management contracts and other assets and liabilities recorded during business combinations. Assets and liabilities from business combinations were recorded on our consolidated condensed balance sheets at fair value at the date of acquisition. The key assumptions used in determining these values are considered Level 3 measurements. See Note 11.


12


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

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

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

6. PROPERTY AND EQUIPMENT
 
Property and equipment, including capital lease assets, at cost consists of the following at June 13, 2017 and December 27, 2016:

 
June 13, 2017
 
December 27, 2016
Land and non-depreciable land improvements
$
603,854

 
$
600,402

Depreciable land improvements
503,600

 
495,520

Buildings and recreational facilities
545,783

 
534,944

Machinery and equipment
310,211

 
299,900

Leasehold improvements
107,039

 
111,755

Furniture and fixtures
107,841

 
105,195

Construction in progress
36,060

 
18,434

 
2,214,388

 
2,166,150

Accumulated depreciation
(643,699
)
 
(612,768
)
Total
$
1,570,689

 
$
1,553,382


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


13


7. GOODWILL AND INTANGIBLE ASSETS
 
Goodwill and other intangible assets consist of the following at June 13, 2017 and December 27, 2016:
 
 
 
 
June 13, 2017
 
December 27, 2016
Asset
Useful
Life
 
Gross Carrying
Amount
 
Accumulated
Amortization
 
Net Carrying
Amount
 
Gross Carrying
Amount
 
Accumulated
Amortization
 
Net Carrying
Amount
Intangible assets with indefinite lives:
 
 
 

 
 

 
 

 
 

 
 

 
 

Trade names
 
 
$
24,790

 


 
$
24,790

 
$
24,790

 


 
$
24,790

Liquor Licenses
 
 
2,152

 


 
2,152

 
2,152

 


 
2,152

Intangible assets with finite lives:
 
 
 

 
 

 
 

 
 

 
 

 
 

Member Relationships
2-5 years
 
2,166

 
$
(1,934
)
 
232

 
2,866

 
$
(2,553
)
 
313

Management Contracts
5-10 years
 
3,180

 
(1,561
)
 
1,619

 
3,580

 
(1,487
)
 
2,093

Total
 
 
$
32,288

 
$
(3,495
)
 
$
28,793

 
$
33,388

 
$
(4,040
)
 
$
29,348

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill
 
 
$
312,811

 
 
 
$
312,811

 
$
312,811

 
 
 
$
312,811

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

Goodwill—The following table shows goodwill activity by reporting unit. There are no accumulated impairments for either reporting unit.
 
Golf & Country Clubs
 
Business, Sports & Alumni Clubs
 
Total
December 27, 2016
$
167,460

 
$
145,351

 
$
312,811

June 13, 2017
$
167,460

 
$
145,351

 
$
312,811



14


8. CURRENT AND LONG-TERM LIABILITIES
 
Current liabilities consist of the following at June 13, 2017 and December 27, 2016:

 
June 13, 2017
 
December 27, 2016
Accrued compensation
$
26,643

 
$
25,367

Accrued interest
16,491

 
7,978

Other accrued expenses
8,990

 
9,194

Total accrued expenses
$
52,124

 
$
42,539

 
 
 
 
Taxes payable other than federal income taxes (1)
$
18,045

 
$
19,256

Total accrued taxes
$
18,045

 
$
19,256

 
 
 
 
Advance event and other deposits
$
34,253

 
$
20,051

Unearned dues
33,373

 
16,795

Deferred membership revenues
11,872

 
12,083

Insurance reserves
9,872

 
9,704

Dividends to owners declared, but unpaid
—

 
8,582

Other current liabilities
3,527

 
3,877

Total other current liabilities
$
92,897

 
$
71,092

______________________

(1)
We had no federal income taxes payable as of June 13, 2017 and December 27, 2016.

Other long-term liabilities consist of the following at June 13, 2017 and December 27, 2016:

 
June 13, 2017
 
December 27, 2016
Uncertain tax positions
$
8,553

 
$
7,049

Deferred membership revenues
45,556

 
46,089

Casualty insurance loss reserves - long-term portion
22,184

 
19,851

Above market lease intangibles
209

 
251

Deferred rent
31,442

 
32,316

Accrued interest on notes payable related to Non-Core Development Entities
24,789

 
24,298

Other
2,900

 
3,055

Total other long-term liabilities
$
135,633

 
$
132,909



15


9. DEBT AND CAPITAL LEASES

Secured Credit Facilities

Secured Credit Facilities—In 2010, Operations entered into the credit agreement governing the secured credit facilities (the “Secured Credit Facilities”). The credit agreement governing the Secured Credit Facilities was subsequently amended in 2012, 2013, 2014, 2015, 2016 and 2017. As of June 13, 2017, the Secured Credit Facilities are comprised of (i) a $651.0 million term loan facility, and (ii) a revolving credit facility with capacity of $175.0 million with $144.2 million available for borrowing, after deducting $30.8 million of standby letters of credit outstanding. In addition, the credit agreement governing the Secured Credit Facilities includes capacity which provides, subject to lender participation, for additional borrowings in revolving or term loan commitments of $125.0 million, and additional borrowings thereafter so long as a senior secured leverage ratio (the “Senior Secured Leverage Ratio”) does not exceed 3.50:1.00.
    
As of June 13, 2017, the interest rate on the term loan facility is a variable rate calculated as the higher of (i) 3.75% or (ii) an elected LIBOR plus a margin of 2.75% and the maturity date of the term loan facility is December 15, 2022.

As of June 13, 2017, the revolving credit commitments mature on January 25, 2021 and borrowings thereunder bear interest at a rate of LIBOR plus a margin of 3.0% per annum. We are required to pay a commitment fee on all undrawn amounts under the revolving credit facility and a fee on all outstanding letters of credit, payable quarterly in arrears.

As long as commitments are outstanding under the revolving credit facility, we are subject to limitations on the Senior Secured Leverage Ratio and a total leverage ratio (the “Total Leverage Ratio”). The Senior Secured Leverage Ratio is defined as the ratio of Operations’ Consolidated Senior Secured Debt (exclusive of the 2015 Senior Notes (as defined below)) to Consolidated EBITDA (disclosed as Adjusted EBITDA and defined in Note 12) and is calculated on a pro forma basis, giving effect to current period acquisitions as though they had been consummated on the first day of the period presented. The Total Leverage Ratio is defined as the ratio of Operations’ Consolidated Total Debt (including the 2015 Senior Notes) to Consolidated EBITDA and is also calculated on a pro forma basis. The credit agreement governing the Secured Credit Facilities requires us to maintain a Senior Secured Leverage Ratio no greater than 4.50:1.00 and a Total Leverage Ratio of no greater than 5.75:1.00 as of the end of each fiscal quarter. As of June 13, 2017, Operations’ Senior Secured Leverage Ratio was 2.89:1.00 and the Total Leverage ratio was 4.28:1.00.

On May 19, 2017, Operations entered into an eleventh amendment to the credit agreement governing the Secured Credit Facilities to decrease the interest rate on the term loan facility to a variable rate calculated as the higher of (a) 3.75% or (b) an elected LIBOR plus a margin of 2.75%.
 
All obligations under the Secured Credit Facilities are guaranteed by Operations’ Parent and each existing and all subsequently acquired or organized direct and indirect restricted subsidiaries of Operations, other than certain excluded subsidiaries (collectively, the “Guarantors”). The Secured Credit Facilities are secured, subject to permitted liens and other exceptions, by a first-priority perfected security interest in substantially all the assets of Operations, and the Guarantors, including, but not limited to (1) a perfected pledge of all the domestic capital stock owned by Operations and the Guarantors, and (2) perfected security interests in and mortgages on substantially all tangible and intangible personal property and material fee-owned property of Operations and the Guarantors, subject to certain exclusions.
    
2015 Senior Notes

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

In 1994 and 1995, we issued notes payable to finance a VIE related to our Non-Core Development Entities. The notes and accrued interest are payable through the cash proceeds related to the sale of certain real estate held by these Non-Core Development Entities. As of June 13, 2017, the notes have a principal amount of $11.8 million.

16



Wells Fargo Mortgage Loan

On August 9, 2016, we entered into a secured mortgage loan which was guaranteed by ClubCorp USA, Inc., a wholly owned subsidiary of Operations, (the “Wells Fargo Mortgage Loan”) for $37.0 million with a maturity date of May 31, 2019. As of June 13, 2017, the note has a principal amount of $36.4 million and accrues interest at a variable rate calculated as 2.90% plus the greater of (i) one month LIBOR or (ii) 0.25%. The proceeds of the Wells Fargo Mortgage Loan were primarily used to repay outstanding balances on previously existing mortgage loan agreements. There is an option to extend the maturity through August 9, 2020 and a second option to extend the maturity through August 9, 2021 upon satisfaction of certain conditions in the loan agreement.

Long-term borrowings and lease commitments as of June 13, 2017 and December 27, 2016, are summarized below: 
 
June 13, 2017
 
December 27, 2016
 
 
 
 
 
Carrying Value
Interest Rate
 
Carrying Value
Interest Rate
 
Interest Rate Calculation
 
Maturity
 
 
 
 
 
 
 
 
 
 
Secured Credit Facilities
 

 
 
 

 
 
 
 
 
Term Loan, gross of discount
651,000

3.78
%
 
651,000

4.00
%
 
As of June 13, 2017, greater of (i) 3.75% or (ii) an elected LIBOR + 2.75%; as of December 27, 2016, greater of (i) 4.0% or (ii) an elected LIBOR + 3.0%
 
2022
Revolving Credit Borrowings - ($175,000 capacity) (1)
—

4.16
%
 
—

3.77
%
 
LIBOR plus a margin of 3.0%
 
2021
2015 Senior Notes
350,000

8.25
%
 
350,000

8.25
%
 
Fixed
 
2023
Wells Fargo Mortgage Loan
36,433

3.95
%
 
36,811

3.67
%
 
2.90% plus the greater of (i) one month LIBOR or (ii) 0.25%
 
2019
Notes payable related to certain Non-Core Development Entities
11,837

9.00
%
 
11,837

9.00
%
 
Fixed
 
(2)
Other indebtedness
3,225

3.71% - 6.00%

 
1,626

4.75% - 6.00%

 
Fixed
 
Various
 
1,052,495

 
 
1,051,274

 
 
 
 
 
Capital leases
51,457

 
 
52,207

 
 
 
 
 
Total obligation
1,103,952

 
 
1,103,481

 
 
 
 
 
Less net loan origination fees included in long-term debt
(11,211
)
 
 
(12,187
)
 
 
 
 
 
Less current portion
(20,079
)
 
 
(19,422
)
 
 
 
 
 
Less discount on the Secured Credit Facilities’ Term Loan
(4,472
)
 
 
(4,801
)
 
 
 
 
 
Long-term debt
$
1,068,190

 
 
$
1,067,071

 
 
 
 
 
______________________

(1)
As of June 13, 2017, the revolving credit facility had capacity of $175.0 million, which was reduced by the $30.8 million of standby letters of credit outstanding, leaving $144.2 million available for borrowing.

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


17


The amount of long-term debt maturing in each of the five years subsequent to 2016 and thereafter is as follows. This table reflects the contractual maturity dates as of June 13, 2017.
Year
Debt
 
Capital Leases
 
Total
Remainder of 2017
$
536

 
$
11,146

 
$
11,682

2018
1,086

 
17,249

 
18,335

2019
35,565

 
12,553

 
48,118

2020
197

 
7,372

 
7,569

2021
136

 
3,001

 
3,137

Thereafter
1,014,975

 
136

 
1,015,111

Total
$
1,052,495

 
$
51,457

 
$
1,103,952


10. INCOME TAXES

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

Our annual effective income tax rate is determined by the level and composition of pre-tax income and the mix of income subject to varying foreign, state and local taxes. Our tax expense or benefit recognized in our interim financial statements is determined by multiplying the year-to-date income or loss by the annual effective tax rate, which is an estimate of the expected relationship between tax expense or benefit for the full year to the pre-tax income or loss for the full year (pre-tax income or loss excluding unusual or infrequently occurring discrete items). Our effective income tax rate for the twelve and twenty-four weeks ended June 13, 2017 was 211.7% and 47.2%, respectively, compared to 41.5% and 36.3% for the twelve and twenty-four weeks ended June 14, 2016, respectively. For the twelve and twenty-four weeks ended June 13, 2017 and June 14, 2016, the effective tax rate differed from the statutory federal rate of 35.0% primarily due to state taxes and certain other permanent differences. The relative impact these items have on the effective tax rate varies based on the forecasted amount of pre-tax income or loss for the year.

We are currently under audit by state income tax authorities, but do not have any current assessments related to such audits at this time.

As of June 13, 2017, tax years 2011 - 2016 remain open under statute for U.S. federal and most state tax jurisdictions. In Mexico, the statute of limitations is generally five years from the date of the filing of the tax return for any particular year, including amended returns. Accordingly, in general, tax years 2008 through 2016 remain open under statute; although certain prior years are also open as a result of the tax proceedings described below.

Certain of our Mexican subsidiaries are under audit by the Mexican taxing authorities for the 2008 and 2009 tax years. In 2013, we received two assessments, for approximately $3.0 million each, exclusive of penalties and interest, for two of our Mexican subsidiaries under audit for the 2008 tax year. We have taken the appropriate procedural steps to contest these assessments through the appropriate Mexican judicial channels. In March 2017, we received notice of a favorable ruling from the Mexican court presiding over one of the matters such that one of these two assessments was dismissed and is non-appealable by the Mexican taxing authorities. There is no impact to the financial statements from the dismissal as no liability had previously been recorded. We have not recorded a liability related to the remaining 2008 open uncertain tax position as we believe it is more likely than not that we will prevail based on the merits of our position. In 2014, we received an audit assessment for the 2009 tax year for another Mexican subsidiary. We have taken the appropriate procedural steps to contest the assessment through the appropriate Mexican judicial channels. We have recorded a liability related to an unrecognized tax benefit for $4.6 million, exclusive of penalties and interest, related to this audit. The unrecognized tax benefit has been recorded due to the technical nature of the tax filing position taken by our Mexican subsidiary and uncertainty around the ultimate outcome of this assessment, which we intend to continue to contest.

As of June 13, 2017 and December 27, 2016, we have recorded a total of $8.6 million and $7.0 million, respectively, of unrecognized tax benefits related to uncertain tax positions, including interest and penalties of $3.8 million and $2.9 million, respectively, which are included in other liabilities in the consolidated condensed balance sheets. If we were to prevail on all uncertain tax positions recorded as of June 13, 2017, the net effect would be an income tax benefit of approximately $4.8 million, exclusive of any benefits related to interest and penalties.

18



Management believes it is unlikely that our unrecognized tax benefits will significantly change within the next 12 months given the current status in particular of the matters currently under examination by the Mexican tax authorities. However, as audit outcomes and the timing of related resolutions are subject to significant uncertainties, we will continue to evaluate the tax issues related to these assessments in future periods. In summary, we believe we are adequately reserved for our uncertain tax positions as of June 13, 2017.

11. NEW AND ACQUIRED CLUBS AND CLUB DIVESTITURES

New and Acquired Clubs

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

Oakhurst Golf and Country Club—On April 11, 2017, we purchased Oakhurst Golf and Country Club, a private country club in Clarkston, Michigan, for net cash consideration of $6.0 million. We recorded the following major categories of assets and liabilities, which are subject to change until our information is finalized, no later than twelve months from the acquisition date:
 
April 11, 2017

Land, depreciable land improvements and property and equipment
$
5,996

Inventory and prepaid assets
73

Other current liabilities
(102
)
Total
$
5,967


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

Land, depreciable land improvements and property and equipment
$
7,177

Inventory and prepaid assets
63

Other current liabilities
(174
)
Long-term debt (obligation related to capital leases)
(283
)
Total
$
6,783


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

Land, depreciable land improvements and property and equipment
$
2,737

Inventory and prepaid assets
140

Other current liabilities
(61
)
Long-term debt (obligation related to capital leases)
(301
)
Total
$
2,515


Eagle’s Nest Country Club—On February 7, 2017, we purchased Eagle’s Nest Country Club, a private country club in Phoenix, Maryland, for a contractual purchase price of $2.5 million, which was satisfied by our assumption of an interest-free loan of $2.5 million with Eagle’s Nest Funding, LLC with a maturity of October 6, 2031. As of the date of acquisition, the note had a fair value of $1.8 million and an effective interest rate of 3.71%. We recorded the following major categories of assets and liabilities, which are subject to change until our information is finalized, no later than twelve months from the acquisition date:

19


 
February 7, 2017

Land, depreciable land improvements and property and equipment
$
2,066

Inventory and prepaid assets
83

Other current liabilities
(76
)
Long-term debt (includes interest free loan and obligation related to capital leases)
(2,072
)
Total
$
1


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

Land, depreciable land improvements and property and equipment
$
3,407

Receivables, net of allowances of $6
202

Inventory and prepaid assets
156

Other current liabilities and accrued taxes
(271
)
Long-term debt (obligation related to capital leases)
(301
)
Total
$
3,193


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

Land, depreciable land improvements and property and equipment
$
2,558

Inventory and prepaid assets
267

Other current liabilities
(153
)
Long-term debt (obligation related to capital leases)
(178
)
Total
$
2,494


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

Land, depreciable land improvements and property and equipment
$
4,491

Receivables and inventory
92

Other current liabilities and accrued taxes
(477
)
Total
$
4,106


Club Dispositions and Management Agreement Terminations

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

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

20


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

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

12. SEGMENT INFORMATION
 
We currently have two reportable segments: (1) golf and country clubs and (2) business, sports and alumni clubs. These segments are managed separately and discrete financial information, including Adjusted EBITDA, our financial measure of segment profit and loss, is reviewed regularly by our chief operating decision maker to evaluate performance and allocate resources. Our chief operating decision maker is our Chief Executive Officer. We also use Adjusted EBITDA, on a consolidated basis, to assess our ability to service our debt, incur additional debt and meet our capital expenditure requirements. We believe that the presentation of Adjusted EBITDA is appropriate as it provides additional information to investors about our performance and investors and lenders have historically used EBITDA-related measures.
 
EBITDA is defined as net income before interest expense, income taxes, interest and investment income, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA plus or minus impairments, gain or loss on disposition and acquisition of assets, income or loss from divested clubs, loss on extinguishment of debt, non-cash and other adjustments, equity-based compensation expense and a deferred revenue adjustment. The deferred revenue adjustment to revenues and Adjusted EBITDA within each segment represents estimated deferred revenue using current membership life estimates related to initiation payments that would have been recognized in the applicable period but for the application of purchase accounting. Adjusted EBITDA is based on the definition of Consolidated EBITDA as defined in the credit agreement governing the Secured Credit Facilities and may not be comparable to similarly titled measures reported by other companies. The credit agreement governing the Secured Credit Facilities and the indenture governing the 2015 Senior Notes contain certain covenants which are based upon specified financial ratios in reference to Adjusted EBITDA, after giving effect to the pro forma impact of acquisitions. Adjusted EBITDA as reported is identical to the computation of Consolidated EBITDA as defined in the credit agreement governing our Secured Credit Facilities, except that for purposes of certain covenants in the credit agreement, a pro forma adjustment is made to Consolidated EBITDA in order to give effect to current period acquisitions as though they had been consummated on the first day of the four quarter period presented. The pro forma impact gives effect to all acquisitions in the four quarters ended June 13, 2017 as though they had been consummated on the first day of the third quarter of fiscal year 2016.

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

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

We also disclose corporate expenses and other operations, which consists of other business activities including ancillary revenues related to alliance arrangements, a portion of the revenue associated with upgrade offerings, reimbursements for certain costs of operations at managed clubs, corporate overhead expenses and shared services. Other operations also includes corporate assets such as cash, goodwill, intangible assets, and loan origination fees. While corporate expenses and other operations is not a segment, disclosing corporate expenses and other operations facilitates the reconciliation from segment results to consolidated results.


21


The table below shows summarized financial information by segment for the twelve and twenty-four weeks ended June 13, 2017 and June 14, 2016:
 
 
Twelve Weeks Ended
 
Twenty-Four Weeks Ended
 
June 13, 2017
 
June 14, 2016
 
June 13, 2017
 
June 14, 2016
Revenues
 
 
 
 
 

 
 

Golf and Country Clubs (1)
$
227,859

 
$
218,919

 
$
407,172

 
$
391,020

Business, Sports and Alumni Clubs (1)
42,883

 
43,158

 
81,123

 
81,140

Other operations
6,285

 
4,736

 
9,939

 
7,980

Elimination of intersegment revenues and segment reporting adjustments
(2,859
)
 
(3,066
)
 
(5,752
)
 
(6,160
)
Revenues relating to divested clubs (2)
2,185

 
5,227

 
5,149

 
9,867

Total consolidated revenues
$
276,353

 
$
268,974

 
$
497,631

 
$
483,847

 
 
 
 
 
 
 
 
Golf and Country Clubs Adjusted EBITDA
$
66,062

 
$
66,067

 
$
118,752

 
$
116,112

Business, Sports and Alumni Clubs Adjusted EBITDA
$
9,723

 
$
10,194

 
$
16,207

 
$
17,115

______________________

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

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

 
As of
Total Assets
June 13, 2017
 
December 27, 2016
Golf and Country Clubs
$
1,616,414

 
$
1,557,489

Business, Sports and Alumni Clubs
85,224

 
88,967

Other operations
451,886

 
482,258

Consolidated
$
2,153,524

 
$
2,128,714

    
The following table presents revenue by product type:
 
Twelve Weeks Ended
 
Twenty-Four Weeks Ended
 
June 13, 2017
 
June 14, 2016
 
June 13, 2017
 
June 14, 2016
Revenues by Type
 
 
 
 
 
 
 
Dues
$
123,649

 
$
120,053

 
$
243,516

 
$
236,171

Food and beverage
80,366

 
78,941

 
134,427

 
131,797

Golf
49,852

 
48,650

 
77,350

 
74,924

Other
22,486

 
21,330

 
42,338

 
40,955

Total
$
276,353

 
$
268,974

 
$
497,631

 
$
483,847



22


The table below provides a reconciliation of Golf and Country Clubs Adjusted EBITDA and Business, Sports and Alumni Adjusted EBITDA to (loss) income before income taxes for the twelve and twenty-four weeks ended June 13, 2017 and June 14, 2016:
 
 
Twelve Weeks Ended
 
Twenty-Four Weeks Ended
 
June 13, 2017
 
June 14, 2016
 
June 13, 2017
 
June 14, 2016
Golf and Country Clubs Adjusted EBITDA
$
66,062

 
$
66,067

 
$
118,752

 
$
116,112

Business, Sports and Alumni Clubs Adjusted EBITDA
9,723

 
10,194

 
16,207

 
17,115

Interest expense
(19,234
)
 
(19,938
)
 
(38,784
)
 
(40,358
)
Interest and investment income
155

 
127

 
320

 
253

Depreciation and amortization
(25,384
)
 
(24,355
)
 
(50,380
)
 
(48,569
)
Impairments and disposition of assets (1)
(6,133
)
 
(3,238
)
 
(9,067
)
 
(6,155
)
Income from divested clubs (2)
71

 
373

 
166

 
342

Non-cash adjustments (3)
—

 
842

 
—

 
379

Acquisition related costs (4)
(1,213
)
 
(257
)
 
(1,808
)
 
(943
)
Capital structure costs (5)
(770
)
 
(208
)
 
(770
)
 
(950
)
Centralization and transformation costs (6)
(6,646
)
 
(2,061
)
 
(9,044
)
 
(4,479
)
Other adjustments (7)
(1,308
)
 
(1,184
)
 
(3,538
)
 
(2,270
)
Equity-based compensation expense (8)
(2,138
)
 
(1,830
)
 
(4,077
)
 
(3,000
)
Deferred revenue adjustment (9)
(1,000
)
 
(1,302
)
 
(2,066
)
 
(2,690
)
Corporate expenses and other operations (10)
(12,893
)
 
(13,402
)
 
(28,638
)
 
(28,809
)
(Loss) income before income taxes
$
(708
)
 
$
9,828

 
$
(12,727
)
 
$
(4,022
)
______________________

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

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

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

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

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

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

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

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

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


23


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

13. EARNINGS PER SHARE
GAAP requires that earnings per share (“EPS”) calculations treat unvested share-based payment awards that have non-forfeitable rights to dividends or dividend equivalents as a separate class of securities (participating securities) and that basic EPS be calculated using the two-class method. We have granted RSAs (as defined below) that contain non-forfeitable rights to dividends. Such awards are considered participating securities. The two-class method of computing EPS is an earnings allocation formula that determines EPS for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. We have also granted RSAs that contain forfeitable rights to dividends. These awards are not considered participating securities and are excluded from the basic weighted-average shares outstanding calculation.
Basic EPS is computed utilizing the two-class method and is calculated on weighted-average number of common shares outstanding during the periods presented.
Diluted EPS reflects the dilutive effect of equity based awards (potential common shares) that may share in the earnings of ClubCorp when such shares are either issued or vesting restrictions lapse. Diluted EPS is computed using the weighted-average number of common shares and potential common shares outstanding during the periods presented, utilizing the two-class method for unvested equity-based awards.
Presented below is basic and diluted EPS for the twelve and twenty-four weeks ended June 13, 2017 and June 14, 2016 (in thousands, except per share amounts):
 
Twelve Weeks Ended
 
Twenty-Four Weeks Ended
 
June 13, 2017
 
June 14, 2016
 
June 13, 2017
 
June 14, 2016
 
Basic
 
Diluted
 
Basic
 
Diluted
 
Basic
 
Diluted
 
Basic
 
Diluted
Numerator for earnings per share
$
658

 
$
658

 
$
5,450

 
$
5,450

 
$
(6,977
)
 
$
(6,977
)
 
$
(3,093
)
 
$
(3,093
)
Weighted-average shares outstanding
64,555

 
64,555

 
64,518

 
64,518

 
64,498

 
64,498

 
64,496

 
64,496

Effect of dilutive equity-based awards
—

 
—

 
—

 
38

 
—

 
—

 
—

 
—

Total Shares
64,555

 
64,555

 
64,518

 
64,556

 
64,498

 
64,498

 
64,496

 
64,496

Net income (loss) attributable to ClubCorp per share
$
0.01

 
$
0.01

 
$
0.08

 
$
0.08

 
$
(0.11
)
 
$
(0.11
)
 
$
(0.05
)
 
$
(0.05
)
The basis for the numerator for earnings per share is net income (loss) attributable to ClubCorp. The numerator was adjusted by $0.0 million and $0.1 million for the twelve and twenty-four weeks ended June 13, 2017, respectively, and $0.1 million and $0.3 million for the twelve and twenty-four weeks ended June 14, 2016, respectively, for dividends and undistributed earnings allocated to participating securities.

Potential common shares are excluded from the calculation of diluted EPS when the effect of their inclusion would reduce our net loss per share and would be anti-dilutive. There were no potential common shares excluded from the calculation for the twelve and twenty-four weeks ended June 13, 2017. For the twenty-four weeks ended June 14, 2016 there were less than 0.1 million potential common shares excluded from the calculation of diluted EPS.

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

24


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

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

The following table shows total equity-based compensation expense included in the consolidated condensed statements of operations:
 
Twelve Weeks Ended
 
Twenty-Four Weeks Ended
 
June 13, 2017
 
June 14, 2016
 
June 13, 2017
 
June 14, 2016
Club operating costs exclusive of depreciation
$
949

 
$
897

 
$
1,712

 
$
1,267

Selling, general and administrative
1,189

 
933

 
2,365

 
1,733

Pre-tax equity-based compensation expense
2,138

 
1,830

 
4,077

 
3,000

Less: benefit for income taxes
(76
)
 
(683
)
 
(813
)
 
(1,120
)
Equity-based compensation expense, net of tax
$
2,062

 
$
1,147

 
$
3,264

 
$
1,880


As of June 13, 2017, there was approximately $19.4 million of unrecognized expense related to non-vested, equity-based awards granted to employees, which is expected to be recognized over a weighted average period of approximately 1.8 years.

The Amended and Restated ClubCorp Holdings, Inc. 2012 Stock Award Plan (the “Stock Plan”) provides for an aggregate amount of no more than 4.0 million shares of common stock to be available for awards. The Stock Plan provides for the grant of stock options, restricted stock awards, restricted stock units, performance-based awards and other equity-based incentive awards. To date, we have granted RSAs, PSUs, Adjusted EBITDA-Based PSUs and restricted stock units (“RSUs”) under the Stock Plan. As of June 13, 2017, approximately 0.8 million shares of common stock were available for future issuance under the Stock Plan. Treasury stock may be used to settle awards under the Stock Plan.

The following table summarizes RSA, PSU and Adjusted EBITDA-Based PSU activity for the twenty-four weeks ended June 13, 2017:
 
Restricted stock awards
 
Performance-based awards (1)
 
Shares
 
Weighted Average Grant Date Fair Value
 
Target shares
 
Weighted Average Grant Date Fair Value
Non-vested balance at December 27, 2016
957,950

 
$
12.73

 
871,370

 
$
11.58

Granted
360,869

 
$
16.80

 
296,765

 
$
19.50

Vested
(242,753)

 
$
13.73

 
—

 
$
—

Forfeited
(64,642)

 
$
13.76

 
(89,743
)
 
$
15.90

Canceled
(73,307
)
 
$
12.58

 
—

 
$
—

Non-vested balance at June 13, 2017
938,117

 
$
14.00

 
1,078,392