mycc fy16 q3 earnings presentation

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1 FISCAL 2016 Q3 PERFORMANCE October 13, 2016

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Page 1: Mycc fy16 q3 earnings presentation

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FISCAL 2016 Q3 PERFORMANCEOctober 13, 2016

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CAUTIONARY STATEMENTS

Forward-Looking StatementsCertain statements in this presentation may be considered forward-looking statements. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expect”, “intend”, “will”, “estimate”, “anticipate”, “believe”, “predict”, “potential” or “continue”, or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward looking statements.

These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by the Company and its management, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations, include, but are not limited to, various factors beyond management's control adversely affecting discretionary spending, membership count and facility usage and other risks, uncertainties and factors set forth in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2015 and its Quarterly Report on Form 10-Q for the period ended September 6, 2016.

Nothing in this presentation should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. The Company undertakes no duty to update these forward-looking statements.

Non-GAAP Financial MeasuresIn our presentation, we may refer to certain non-GAAP financial measures. To the extent we disclose non-GAAP financial measures, please refer to footnotes where presented on each page of this presentation or to the appendix found at the end of this presentation for a reconciliation of these measures to what we believe are the most directly comparable measure evaluated in accordance with generally accepted accounting principles in the U.S. (“GAAP”). The Company has not reconciled Adjusted EBITDA guidance included in this presentation to the most directly comparable GAAP measure because this cannot be done without unreasonable effort due to the high variability, complexity and low visibility with respect to impairments and disposition of assets, income taxes and centralization and transformation costs which are excluded from Adjusted EBITDA. We expect the variability of these charges to have a potentially unpredictable, and potentially significant, impact on our future GAAP financial results.

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COMPANY OVERVIEW

(1) As of September 6, 2016

(2) Adjusted EBITDA is not calculated in accordance with accounting principles generally accepted in the U.S. (GAAP). See Appendix for a reconciliation

to the most comparable financial measure calculated in accordance with GAAP

(3) Levered Free Cash Flow is a non-GAAP measure. See appendix for a reconciliation of Levered FCF to the most comparable financial measure calculated in accordance with GAAP

Golf & Country

Clubs (GCC)

Business, Sports &

Alumni Clubs (BSA)

» Founded in 1957, ClubCorp has

grown from one club to a leading

owner-operator of private clubs

» 208 owned or operated locations

across 26 states, Washington

D.C., Mexico and China(1)

» ~200 18-hole equivalents(1)

» ~186,000 memberships, serving

over 430,000 members(1)

» LTM 3Q16 Results(1)

─ Revenue: $1,075 million

─ Adj. EBITDA: $244 million(2)

─ Levered Free Cash Flow: $106

million(3)

3

47%

16%

Dues

Food & Beverage28%

9%

Dues

Food & Beverage

48

160

$1.1Billion

LTM 3Q16

Revenue Mix(1)

Total Clubs(1)

208Clubs

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WHY INVEST IN CLUBCORP?

4

Predictable Dues-Based

Membership Business

High Barriers to Entry

Mass Affluent Consumer

Economically Stable

Neighborhoods

Multi-faceted

Family Friendly ClubsScope, Scale & Expertise

Proven Growth Strategy Generate Significant FCF

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EXECUTING OUR GROWTH STRATEGYThree-pronged growth strategy focused on increasing long-term shareholder value

Organic

Growth

Sticky membership product creates highly stable, highly resilient revenue base

Our Optimal Network Experiences (O.N.E.) offering provides numerous home club,

community and worldwide benefits, amenities and reciprocity programs

54%(1) of ClubCorp members are enrolled in O.N.E. or a different upgrade program

Reinvention

Highly fragmented competitive landscape with abundance of member-owned and

individually-owned golf courses at compelling valuations

ClubCorp is one of the largest owners and managers of private golf clubs – only three

companies own/operate > 25 private golf and country clubs in the U.S.

12 new clubs added in 2015 and 2016(2)

Acquisitions

(1) Member penetration of O.N.E. and other upgrade products as of September 6, 2016

(2) Includes Legacy Country Club that was subsequently divested

Opportunities to deploy discretionary expansion capital to reinvent, modernize and add new

and relevant amenities to existing portfolio of clubs

Value created through operational scale that is passed along to our members in the form of

professional management, lower costs and greater amenities

Reinvention on Sequoia clubs and clubs acquired in 2014 and 2015 substantially complete

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3Q16 PERFORMANCEContinued to execute our three-pronged growth strategy

• Delivered 10th consecutive quarter of growth:

» Q3 revenue up 1.6% year-over-year (y/y) to $259.3 million

» Q3 adjusted EBITDA(1) up 7.5% y/y to $59.0 million

» Q3 membership, excluding managed clubs, up 1.2% y/y to ~177k

• Same-store revenue grew 0.5% y/y, while adjusted EBITDA was up 2.7%. Same-store adjusted EBITDA margins improved 50 bps

• Approximately 54% of our members were enrolled in O.N.E. or similar upgrade offerings; O.N.E. is now available at 154 clubs

• In 2016, we have completed three acquisitions and added one golf and country club management agreement.

• 9 reinvention projects completed, 7 still in progress in 2016; Planned ROI capital on 2014 & 2015 acquired clubs substantially complete

• Anticipate de-levering balance sheet below 4x over next 12-18 months based on continued adjusted EBITDA growth, reduced ROI capital spend, and continued strong free cash flow generation that will be used to pay down debt

• We own or operate(2) 160 golf & country clubs (GCC) and 48 business, sports & alumni clubs (BSA)

6(1) Adjusted EBITDA is a non-GAAP measure. See Appendix for reconciliation to the most comparable financial measure calculated in accordance with GAAP.

(2) As of September 6, 2016

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THE WORLD LEADER IN PRIVATE CLUBSClub concentration in key growth markets, yet broad geographic diversification

7

TM

GCC BSA

Texas 36 10

Georgia 33 3

California 20 4

Florida 12 5

North Carolina 10 3

Virginia 6 2

Total ClubCorp 160 48

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THE VALUE OF THE CLUBCORP NETWORKOur O.N.E. offering is unparalleled in the industry

Increased adoption of the O.N.E. offering … generates favorable economics

» Introduced O.N.E. in 2010 and rolling out at new and recently acquired clubs

» O.N.E. is offered at 154 clubs(1)

» O.N.E. increases revenue without increasing fixed costs

» O.N.E. drives increased club utilization

» Food and beverage revenues increased 41% from 2010 to 2015(2)

8

35%

43%46%

39%

50% 51% 52% 54%

2010 2013 2014pre-Sequoia

2014post-Sequoia

2015 1Q2016 2Q2016 3Q2016

(1) As of September 6, 2016

(2) Excluding Sequoia clubs

Member Penetration of O.N.E. and Other Upgrade Products

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REINVENTION

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ACQUISITIONS

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2015 & 2016 ACQUISITIONS Twelve new properties added since 2015, more than 3x our next closest competitor

Bernardo Heights Country Club, San Diego, CA

Marsh Creek Country Club, St. Augustine, FL

2016 Acquisitions

» Heritage Golf Club, Hilliard, Ohio (Columbus MSA) – 18-hole, private

» Santa Rosa Country Club, Santa Rosa, California – 18-hole, private

» Marsh Creek Country Club, St. Augustine, Florida – 18-hole, private

2015 Acquisitions

» Bernardo Heights Country Club, San Diego, California – 18-hole, private

» Bermuda Run Country Club, Bermuda Run, North Carolina – 36-holes, private

» Brookfield Country Club, Roswell, Georgia – 18-hole, private

» Firethorne Country Club, Marvin, North Carolina – 18-hole, private

» Ford's Colony Country Club, Williamsburg, Virginia – 54-holes, semi-private

» Legacy Golf Club at Lakewood Ranch, Bradenton, Florida – 18-hole, public

(subsequently divested)

» Temple Hills Country Club, Franklin, Tennessee – 27-holes, private

» Rolling Green Country Club, Arlington Heights, Illinois – 18-hole, private

» Ravinia Green Country Club, Riverwoods, Illinois – 18-hole, private

Santa Rosa Country Club, Santa Rosa, CA

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FINANCIAL OVERVIEW

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CLUBCORP CONSOLIDATED RESULTSDelivering results consistent with our key growth objectives

$688 $720 $755 $815$884

$1,053 $1,075

2010 2011 2012 2013(53wks)

2014 2015 3Q16LTM

$149 $156 $165 $176$196

$233 $24421.7% 21.7% 21.8%21.6%

22.2% 22.2%

22.7%

2010 2011 2012 2013(53wks)

2014 2015 3Q16LTM

18

Adj. EBITDA(1) $59.0M+7.5% y/y

Reinvention(2) 9 club completed,

7 still in progress

Revenue $259.3M

+1.6% y/y

Objective3Q2016Results

Acquisitions(3) 3 Single Clubs

(1) Adjusted EBITDA is a non-GAAP measure. See Appendix for reconciliation to the most comparable financial measure calculated in accordance with GAAP.

(2) Reinventions completed and still in progress in 2016.

(3) Acquisitions YTD through 3Q2016.

Revenue$ millions

CAGR +8.1%

Adj. EBITDA(1)

$ millions

CAGR +8.9%

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GOLF & COUNTRY CLUBS (GCC)Continued revenue and adjusted EBITDA growth with increasing operating leverage

80,035 80,916 83,528

111,458116,303

121,906

2011Total

2012Total

2013Total

2014Total

2015Total

YTD3Q16

47% Dues

22% F&B

24% Golf Ops

7% Other

3Q16

$215.5M

Revenue Mix

Memberships(2)

2.9%

(1) Adjusted EBITDA is a non-GAAP measure. See Appendix for a reconciliation to the most comparable financial measure calculated in accordance with GAAP.

(2) Total memberships includes same-store, and new and acquired clubs, but excludes managed clubs.

$532 $556 $586 $628$695

$842 $868

2010 2011 2012 2013(53wks)

2014 2015 3Q16LTM

GCC Revenue$ millions

$151 $156 $168 $180$203

$246 $25728.4%28.1%

28.7% 28.7%29.2% 29.2%

29.7%

2010 2011 2012 2013(53wks)

2014 2015 3Q16LTM

GCC Adj. EBITDA(1)

$ millions

CAGR +9.7%

CAGR +8.9% Key operating metrics (y/y %)

• Total GCC Results:

» Revenue $215.5M, 2.3%

» Adj. EBITDA $59.9M, 3.1%

» Adj. EBITDA 27.8%, 20 bps

• Same-store GCC Results:

» Revenue $201.8M, 0.5%

» Adj. EBITDA $58.2M, 1.6%

» Adj. EBITDA 28.8%, 30 bps

• Same-store Revenue Growth by Revenue Type:

» Dues 3.0%

» Food & Beverage 0.3%

» Golf Ops -3.0%

• New or Acquired GCC Results:

» Revenue $13.7M

» Adj. EBITDA $1.7M

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3Q16 & 2016 YTD GCC RESULTSSame-store golf ops revenue impacted by lower rounds and increased rainfall yoy

0.5%1.6% 1.8%

5.1%

Q3 Same-StoreRevenue

Q3 Same-storeAdj. EBITDA (2)

YTD Same-StoreRevenue

YTD Same-storeAdj. EBITDA (2)

Same-store GCC Growth(1)

Year-over-year %

(1) See our quarterly report on Form 10-Q for the period ended September 6, 2016 at “Basis of Presentation – Same Store Analysis” for more information on how we measure same store results.

(2) Adjusted EBITDA is a non-GAAP measure. See Appendix for reconciliation to the most comparable financial measure calculated in accordance with GAAP.

3.0%

0.3% (3.0%)

3.6%2.2%

(1.1%)

Q3 Same-Store Dues

Q3 Same-Store F&B

Q3 Same-Store Golf

Ops

YTD Same-Store Dues

YTD Same-Store F&B

YTD Same-Store Golf

Ops

Same-store GCC Revenue Growth

by Revenue Type(1)

Year-over-year %

20

2.3%3.1%

4.4%

7.0%

Q3 TotalRevenue

Q3 TotalAdj. EBITDA (2)

YTD TotalRevenue

YTD TotalAdj. EBITDA (2)

Total GCC GrowthYear-over-year %

5.0%2.3%

(1.5%)

6.7%4.5%

0.8%

Q3 TotalDues

Q3 TotalF&B

Q3 TotalGolf Ops

YTD TotalDues

YTD TotalF&B

YTD TotalGolf Ops

Total GCC Revenue Growth

by Revenue TypeYear-over-year %

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BUSINESS, SPORTS & ALUMNI CLUBS (BSA)Continued revenue and adjusted EBITDA growth with increasing operating leverage

55,144

54,29053,954

56,013 56,130

54,859

2011Total

2012Total

2013Total

2014Total

2015Total

3Q16YTD

47% Dues

46% F&B

7% Other

3Q16

$40.3M

Revenue Mix

Memberships(2)

(2.2%)

(1) Adjusted EBITDA is a non-GAAP measure. See Appendix for a reconciliation to the most comparable financial measure calculated in accordance with GAAP.

(2) Total memberships excludes managed clubs.

$165 $168 $171 $177 $181 $193 $195

2010 2011 2012 2013(53wks)

2014 2015 3Q16LTM

BSA Revenue$ millions

$29 $32 $33 $34 $35$40 $4217.9%

18.8%19.4% 18.9% 19.1%

20.5%21.3%

2010 2011 2012 2013(53wks)

2014 2015 3Q16LTM

BSA Adj. EBITDA(1)

$ millions

CAGR +3.0%

CAGR +6.2%

Key operating metrics (y/y%)

• Total BSA Results:

» Revenue $40.3M, 0.5%

» Adj. EBITDA $6.8M, 14.0%

» Adj. EBITDA 16.8%, 200 bps

• Same-store Revenue Growth by Revenue Type:

» Dues 0.8%

» Food & Beverage 0.8%

» Other - 5.3%

• No material contribution from new

clubs

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3Q16 & 2016 YTD BSA RESULTSContinued strong Adj. EBITDA growth driven by lower operating expenses

(1) See our quarterly report on Form 10-Q for the period ended September 6, 2016 at “Basis of Presentation – Same Store Analysis” for more information on how we measure same store results.

(2) Adjusted EBITDA is a non-GAAP measure. See Appendix for reconciliation to the most comparable financial measure calculated in accordance with GAAP.

0.4%

13.4%

1.5%

8.4%

Q3 Same-StoreRevenue

Q3 Same-StoreAdj. EBITDA (2)

YTD Same-StoreRevenue

YTD Same-StoreAdj. EBITDA (2)

Same-store BSA Growth(1)

Year-over-year %

22

0.8% 0.8%2.3%

1.3%

Q3 Same-StoreDues

Q3 Same-StoreF&B

YTD Same-StoreDues

YTD Same-StoreF&B

Same-store BSA Revenue Growth

by Revenue Type(1)

Year-over-year %

0.5%

14.0%

1.6%

8.8%

Q3 TotalRevenue

Q3 TotalAdj. EBITDA (2)

YTD TotalRevenue

YTD TotalAdj. EBITDA (2)

Total BSA GrowthYear-over-year %

0.8% 0.8%2.3%

1.3%

Q3 Total Dues Q3 Total F&B YTD Total Dues YTD Total F&B

Total BSA Revenue Growth

by Revenue TypeYear-over-year %

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MAINTENANCE VS. ROI EXPANSION CAPEXROI Capex and reinvention of clubs acquired in 2014 & 2015 substantially complete

24.9 25.116.7

23.829.1

53.1

38.1

18.0 22.8

37.5 35.743.6

52.2

31.0

3.6% 3.5%

2.2%

2.9%3.3%

5.0% 5.1%

2.6%3.2%

5.0%

4.4%

4.9%

5.0% 4.2%

2010 2011 2012 2013 2014 2015 YTD 2016

Maintenance vs. ROI Capex (2010 – YTD 2016)Capex in $ millions, Capex as % of Revenue

Maintenance Capex ROI Capex Maintenance (% of Revenue) ROI (% of Revenue)

FY16 Maintenance Capex

• FY16 anticipate spending $59.5 million in maintenance capex, net of insurance proceeds

» In 2016, we will invest $16.6 million on IT projects related to the centralization of administrative processes

• YTD 2016 maintenance capex was $38.1 million, net of insurance proceeds

FY16 ROI Expansion Capital

• FY16 anticipate investing $43.8 million on ROI expansion capital

• YTD 2016 ROI expansion capital was $31.0 million

FY16 Acquisition Capital

• YTD acquisition capital was $9.8 million

» $4.1 million to purchase Marsh Creek

» $2.5 million to purchase Santa Rosa

» $3.2 million to purchase Heritage Golf

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3Q16 LEVERED FREE CASH FLOWAttractive FCF generation … lowered future cash interest expense by ~$2.5M annually

$110.4 $112.3$108.1 $104.6 $101.1 $102.9 $105.6

1Q15LTM

2Q15LTM

3Q15LTM

4Q15LTM

1Q16LTM

2Q16LTM

3Q16LTM

Levered Free Cash Flow

• (2.4%) y/y decrease in LTM levered FCF

• 3Q16 LTM cash interest expense(2) was $56.3 million

• 3Q16 LTM cash tax expense was $10.1 million

• 3Q16 LTM paid $33.9 million in dividends; the Company currently pays annual dividends of $0.52/share

Liquidity & Capital Structure

• As of September 6, 2016, cash and cash equivalents of $92.1 million and total liquidity of $237.1 million

• As of October 7, 2016, ClubCorp Term B loans of $675 million were repriced at L+300 basis points with a 1% LIBOR floor

• ClubCorp Unsecured Senior Notes of $350 million are priced at 8.25%

• As of September 6, 2016, Sr. Secured Leverage Ratio was 2.93x

• No material near term maturities (Term B loans mature 2022, Senior Notes mature 2023)

Levered FCF(1)

$ millions

(1) Levered Free Cash Flow is not calculated in accordance with GAAP. A reconciliation of Levered Free Cash Flow to Adjusted EBITDA can be found in the appendix of this presentation.

(2) Interest on long-term debt excludes accretion of discount on member initiation deposits, amortization of debt issuance costs, amortization of term loan discount and interest on notes

payable related to certain realty interests which we define as “Non-Core Development Entities”.

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CAPITAL STRUCTUREStrong balance sheet … anticipate de-levering below 4x over the next 12-18 months

35

675

350

2016 2017 2018 2019 2020 2021 2022 2023

Debt Maturities(5)

$ millions

Senior

Notes

Mortgage

Loan

Term

Loan

766 767 764 604

939 1,058 1,059 1,060 1,067

5.03 4.854.59

3.41

4.28 4.50 4.45 4.41 4.36

2010 2011 2012 2013 2014 2015 1Q16 2Q16 3Q16

Historical Debt & Liquidity Profile$ millions

Adjusted Net Debt Total Leverage Ratio

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2016 OUTLOOKBased on year-to-date results, for fiscal year 2016 the Company is reducing its revenue outlook

and narrowing its adjusted EBITDA outlook accordingly

26

Keys to achieving 2016 outlook …

» Solid Same-store growth and operational execution

» Strong revenue growth across all three primary revenue streams: dues, F&B and golf

operations

» Economy continues to grow, with no significant macroeconomic event

» Acceptance of our O.N.E. offering continues to climb

» Reinvention continues to drive dues revenue, member usage and ancillary spend

» Continued execution of our cost and revenue synergies at newly acquired clubs

$1,080M -

$1,090M

Revenue

$245M -

$249M

Adj. EBITDA

~$44M

ROI Capital

Annualized

$0.52 / share(~3.7% yield)

Dividend

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APPENDIX

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3Q2016 CONSOLIDATED RESULTSCombined Same-store clubs and combined new or acquired clubs performance

28

(1) Change compares third quarter ended September 6, 2016 (12 weeks) to third quarter ended September 8, 2015 (12 weeks)

(2) Change compares YTD third quarter ended September 6, 2016 (36 weeks) to YTD third quarter ended September 8, 2015 (36 weeks)

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

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3Q2016 GOLF & COUNTRY CLUBS (GCC)GCC Same-store clubs and GCC new or acquired clubs performance

29

(1) Change compares third quarter ended September 6, 2016 (12 weeks) to third quarter ended September 8, 2015 (12 weeks)

(2) Change compares YTD third quarter ended September 6, 2016 (36 weeks) to YTD third quarter ended September 8, 2015 (36 weeks)

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3Q2016 BUSINESS, SPORTS & ALUMNI CLUBS (BSA)BSA Same-store clubs and BSA new or acquired clubs performance

30

(1) Change compares third quarter ended September 6, 2016 (12 weeks) to third quarter ended September 8, 2015 (12 weeks)

(2) Change compares YTD third quarter ended September 6, 2016 (36 weeks) to YTD third quarter ended September 8, 2015 (36 weeks)

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RECONCILIATION OF NON-GAAP MEASURES TO CLOSEST GAAP MEASURESNET INCOME TO ADJUSTED EBITDA

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RECONCILIATION OF NON-GAAP MEASURES TO CLOSEST GAAP MEASURESNET CASH PROVIDED BY OPERATING ACTIVITIES TO ADJUSTED EBITDA

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The following footnotes relate to the three proceeding tables:(1) Includes non-cash impairment charges related to property and equipment and intangible assets and loss on disposals of assets

(including property and equipment disposed of in connection with renovations).

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

GAAP.

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

(4) Includes loss on extinguishment of debt calculated in accordance with GAAP.

(5) Includes non-cash items related to purchase accounting associated with the acquisition of ClubCorp, Inc. ("CCI") in 2006 by affiliates

of KSL Capital Partners, LLC ("KSL") and expense recognized for our long-term incentive plan related to fiscal years 2011 through

2013.

(6) Represents legal and professional fees related to the acquisition of clubs, including the acquisition of Sequoia Golf on September 30,

2014.

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

costs and other charges incurred in connection with the reorganization of CCI, which was effective as of November 30, 2010

("ClubCorp Formation.")

(8) Includes fees and expenses associated with initial compliance with Section 404(b) of the Sarbanes-Oxley Act, 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.

(9) Represents adjustments permitted by the credit agreement governing the Secured Credit Facilities including cash distributions from

equity method investments less equity in earnings recognized for said investments, income or loss attributable to non-controlling equity

interests of continuing operations and management fees, termination fee and expenses paid to an affiliate of KSL.

(10) Includes equity-based compensation expense, calculated in accordance with GAAP, related to awards held by certain employees,

executives and directors.

(11) 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.

(12) Includes the following adjustments to reconcile net loss to net cash provided by operating activities from our Unaudited Consolidated

Condensed Statements of Cash Flows: Net change in prepaid expenses and other assets, net change in receivables and membership

notes, net change in accounts payable and accrued liabilities, net change in other current liabilities, bad debt expense, equity in loss

(earnings) from unconsolidated ventures, gain on investment in unconsolidated ventures, distribution from investment in

unconsolidated ventures, debt issuance costs and term loan discount, accretion of discount on member deposits, net change in

deferred tax assets and liabilities and net change in other long-term liabilities. Certain other adjustments to reconcile net income (loss)

to net cash provided by operating activities are not included as they are excluded from both net cash provided by operating activities

and Adjusted EBITDA.

(13) 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.

RECONCILIATION OF NON-GAAP MEASURES TO CLOSEST GAAP MEASURESSEGMENT ADJUSTED EBITDA TO INCOME (LOSS) FROM CONTINUING OPERATIONS

BEFORE INCOME TAX

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CALCULATION OF LEVERED FREE CASH FLOWRECONCILIATION OF LEVERED FREE CASH FLOW TO ADJUSTED EBITDA

(1) See the Adjusted EBITDA reconciliation in the preceding "Reconciliation of Non-GAAP Measures to Closest GAAP Measures" tables.

(2) Interest on long-term debt excludes accretion of discount on member deposits, amortization of debt issuance costs, amortization of term loan discount and

interest on notes payable related to certain realty interests which we define as “Non-Core Development Entities”.

(3) Maintenance capital expenditures are net of insurance proceeds and include investments to upgrade information technology systems.

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