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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 5, 2006

or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

Commission file numbers 33-89818, 33-96568, 333-08041, 333-57107, 333-52612 and 333-110521



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CLUBCORP, INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 75-2778488                          
|(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, including zip
code)

Registrants telephone number, including area code: (972) 243-6191

Former name, former address and former fiscal year, if changed since last report: None



---

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 (the Act) 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 ̈

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 under the Exchange Act.



|                         |  |                    |  |                         
|------------------------ |  | ------------------ |  | ------------------------
|Large accelerated filer ̈ |  | Accelerated filer ̈ |  | Non-accelerated filer  x

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

The number of shares of the registrants common stock outstanding as of October 3, 2006 was 92,791,912.



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CLUBCORP, INC.

INDEX



|         |  |                                                                                       |  |   
|-------- |  | ------------------------------------------------------------------------------------- |  | --
|Part I.  |  | FINANCIAL INFORMATION                                                                 |  |   
|         |  |                                                                                      
|Item 1.  |  | Financial Statements (Unaudited):                                                     |  |   
|         |  | Condensed Consolidated Balance Sheets                                                 |  | 1 
|         |  | Condensed Consolidated Statements of Operations                                       |  | 2 
|         |  | Condensed Consolidated Statements of Cash Flows                                       |  | 3 
|         |  | Notes to Condensed Consolidated Financial Statements                                  |  | 4 
|         |  |                                                                                      
|Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 15
|         |  |                                                                                      
|Item 3.  |  | Quantitative and Qualitative Disclosures about Market Risk                            |  | 27
|         |  |                                                                                      
|Item 4.  |  | Controls and Procedures                                                               |  | 27
|         |  |                                                                                      
|Part II. |  | OTHER INFORMATION                                                                     |  |   
|         |  |                                                                                      
|Item 1.  |  | Legal Proceedings                                                                     |  | 28
|         |  |                                                                                      
|Item 6.  |  | Exhibits                                                                              |  | 28



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ClubCorp, Inc.

Condensed Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)



|                                                                                                                                                                               |  |                  |           |   |                  |   |           |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------- | --------- | - | ---------------- | - | --------- | -
|                                                                                                                                                                               |  | December 27,2005 |           |   | September 5,2006 |  
|Assets                                                                                                                                                                         |  |                  |           |   |                  |   |           |  
|Current assets:                                                                                                                                                                |  |                  |           |   |                  |   |           |  
|Cash and cash equivalents                                                                                                                                                      |  | $                | 188,675   |   |                  | $ | 138,487   |  
|Restricted cash                                                                                                                                                                |  |                  | 21,650    |   |                  |   | 23,650    |  
|Membership and other receivables, net                                                                                                                                          |  |                  | 72,616    |   |                  |   | 82,083    |  
|Inventories                                                                                                                                                                    |  |                  | 19,106    |   |                  |   | 20,518    |  
|Assets held for sale                                                                                                                                                           |  |                  | 6,935     |   |                  |   | 29,532    |  
|Prepaid expenses and other assets                                                                                                                                              |  |                  | 22,126    |   |                  |   | 21,203    |  
|                                                                                                                                                                               |  |                  |           |   |                  |   |           |  
|Total current assets                                                                                                                                                           |  |                  | 331,108   |   |                  |   | 315,473   |  
|                                                                                                                                                                               |  |                 
|Property and equipment, net                                                                                                                                                    |  |                  | 1,124,761 |   |                  |   | 1,115,718 |  
|Notes receivable                                                                                                                                                               |  |                  | 33,256    |   |                  |   | 27,956    |  
|Other assets                                                                                                                                                                   |  |                  | 58,582    |   |                  |   | 54,282    |  
|                                                                                                                                                                               |  |                  |           |   |                  |   |           |  
|Total assets                                                                                                                                                                   |  | $                | 1,547,707 |   |                  | $ | 1,513,429 |  
|                                                                                                                                                                               |  |                  |           |   |                  |   |           |  
|Liabilities and Stockholders Equity                                                                                                                                           |  |                  |           |   |                  |   |           |  
|Current liabilities:                                                                                                                                                           |  |                  |           |   |                  |   |           |  
|Accounts payable and accrued liabilities                                                                                                                                       |  | $                | 87,274    |   |                  | $ | 76,597    |  
|Long-term debt - current portion                                                                                                                                               |  |                  | 75,604    |   |                  |   | 29,208    |  
|Membership deposits - current portion                                                                                                                                          |  |                  | 18,341    |   |                  |   | 19,358    |  
|Liabilities held for sale                                                                                                                                                      |  |                  | 3,264     |   |                  |   | 9,151     |  
|Other liabilities                                                                                                                                                              |  |                  | 117,661   |   |                  |   | 139,984   |  
|                                                                                                                                                                               |  |                  |           |   |                  |   |           |  
|Total current liabilities                                                                                                                                                      |  |                  | 302,144   |   |                  |   | 274,298   |  
|Long-term debt, net of current portion                                                                                                                                         |  |                  | 596,014   |   |                  |   | 581,338   |  
|Other liabilities                                                                                                                                                              |  |                  | 128,385   |   |                  |   | 121,721   |  
|Membership deposits, net of current portion                                                                                                                                    |  |                  | 151,273   |   |                  |   | 159,830   |  
|                                                                                                                                                                               |  |                  |           |   |                  |   |           |  
|Total liabilities                                                                                                                                                              |  |                  | 1,177,816 |   |                  |   | 1,137,187 |  
|                                                                                                                                                                               |  |                 
|Redemption value of common stock held by benefit plan                                                                                                                          |  |                  | 53,026    |   |                  |   | 56,682    |  
|Commitments and contingencies                                                                                                                                                  |  |                  |           |   |                  |   |           |  
|                                                                                                                                                                               |  |                 
|Stockholders equity:                                                                                                                                                          |  |                  |           |   |                  |   |           |  
|Preferred stock, $.01 par value, 150,000,000 shares authorized, none issued or outstanding                                                                                     |  |                  |          |   |                  |   |          |  
|Common stock, $.01 par value, 250,000,000 shares authorized, 99,594,408 issued, 92,821,459 and 92,791,912 outstanding at December 27,
2005 and September 5, 2006, respectively |  |                  | 996       |   |                  |   | 996       |  
|Additional paid-in capital                                                                                                                                                     |  |                  | 161,672   |   |                  |   | 164,088   |  
|Accumulated other comprehensive loss                                                                                                                                           |  |                  | (7,895    | ) |                  |   | (7,078    | )
|Retained earnings                                                                                                                                                              |  |                  | 233,490   |   |                  |   | 233,403   |  
|Treasury stock, 6,772,949 and 6,802,496 shares at December 27, 2005 and September 5, 2006, respectively                                                                        |  |                  | (71,398   | ) |                  |   | (71,849   | )
|                                                                                                                                                                               |  |                  |           |   |                  |   |           |  
|Total stockholders equity                                                                                                                                                     |  |                  | 316,865   |   |                  |   | 319,560   |  
|                                                                                                                                                                               |  |                  |           |   |                  |   |           |  
|Total liabilities and stockholders equity                                                                                                                                     |  | $                | 1,547,707 |   |                  | $ | 1,513,429 |  
|                                                                                                                                                                               |  |                  |           |   |                  |   |           |  

See accompanying notes to condensed consolidated financial statements.



1



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ClubCorp, Inc.

Condensed Consolidated Statements of Operations

(Dollars in thousands, except per share amounts)

(Unaudited)



|                                                                            |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|--------------------------------------------------------------------------- |  | ------------------ | ------- | - | ---------------------- | - | ------- | ---------------- |  | - | ---------------- | - |  | - | ------- | -
|                                                                            |  | Twelve Weeks Ended |         |   | Thirty-six Weeks Ended |  
|                                                                            |  | September 6,2005   |         |   | September 5,2006       |   |         | September 6,2005 |  |   | September 5,2006 |  
|Continuing Operations:                                                      |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Operating revenues                                                          |  | $                  | 270,108 |   |                        | $ | 232,749 |                  |  | $ | 707,337          |   |  | $ | 677,777 |  
|                                                                            |  |                    |         |  
|Operating costs and expenses                                                |  |                    | 203,891 |   |                        |   | 175,860 |                  |  |   | 535,830          |   |  |   | 515,168 |  
|Depreciation and amortization                                               |  |                    | 19,102  |   |                        |   | 19,635  |                  |  |   | 57,031           |   |  |   | 58,558  |  
|Selling, general and administrative expenses                                |  |                    | 15,658  |   |                        |   | 19,143  |                  |  |   | 49,070           |   |  |   | 56,348  |  
|Loss on disposals and impairment of assets                                  |  |                    | 901     |   |                        |   | 843     |                  |  |   | 2,252            |   |  |   | 2,726   |  
|                                                                            |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Operating income from continuing operations                                 |  |                    | 30,556  |   |                        |   | 17,268  |                  |  |   | 63,154           |   |  |   | 44,977  |  
|Interest and investment income                                              |  |                    | 906     |   |                        |   | 1,993   |                  |  |   | 2,525            |   |  |   | 5,289   |  
|Interest expense                                                            |  |                    | (13,763 | ) |                        |   | (13,479 | )                |  |   | (41,712          | ) |  |   | (40,743 | )
|                                                                            |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Income from continuing operations before income taxes and minority interest |  |                    | 17,699  |   |                        |   | 5,782   |                  |  |   | 23,967           |   |  |   | 9,523   |  
|                                                                            |  |                    |         |  
|Income tax provision                                                        |  |                    | (314    | ) |                        |   | (623    | )                |  |   | (2,779           | ) |  |   | (1,382  | )
|Minority interest                                                           |  |                    | (329    | ) |                        |   | (115    | )                |  |   | (543             | ) |  |   | (215    | )
|                                                                            |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Income from continuing operations                                           |  |                    | 17,056  |   |                        |   | 5,044   |                  |  |   | 20,645           |   |  |   | 7,926   |  
|                                                                            |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Discontinued operations:                                                    |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Loss from discontinued operations before income taxes                       |  |                    | (235    | ) |                        |   | (286    | )                |  |   | (2,149           | ) |  |   | (4,200  | )
|Income tax provision                                                        |  |                    | (36     | ) |                        |   | (87     | )                |  |   | (122             | ) |  |   | (157    | )
|                                                                            |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Loss from discontinued operations                                           |  |                    | (271    | ) |                        |   | (373    | )                |  |   | (2,271           | ) |  |   | (4,357  | )
|                                                                            |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Net income                                                                  |  | $                  | 16,785  |   |                        | $ | 4,671   |                  |  | $ | 18,374           |   |  | $ | 3,569   |  
|                                                                            |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Basic earnings (loss) per share from:                                       |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Continuing operations                                                       |  | $                  | 0.18    |   |                        | $ | 0.05    |                  |  | $ | 0.22             |   |  | $ | 0.09    |  
|Discontinued operations                                                     |  |                    | 0.00    |   |                        |   | 0.00    |                  |  |   | (0.02            | ) |  |   | (0.05   | )
|                                                                            |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Basic earnings per share                                                    |  | $                  | 0.18    |   |                        | $ | 0.05    |                  |  | $ | 0.20             |   |  | $ | 0.04    |  
|                                                                            |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Diluted earnings (loss) per share from:                                     |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Continuing operations                                                       |  | $                  | 0.18    |   |                        | $ | 0.05    |                  |  | $ | 0.22             |   |  | $ | 0.08    |  
|Discontinued operations                                                     |  |                    | 0.00    |   |                        |   | 0.00    |                  |  |   | (0.03            | ) |  |   | (0.04   | )
|                                                                            |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Diluted earnings per share                                                  |  | $                  | 0.18    |   |                        | $ | 0.05    |                  |  | $ | 0.19             |   |  | $ | 0.04    |  
|                                                                            |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  

See accompanying notes to condensed consolidated financial statements.



2



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ClubCorp, Inc.

Condensed Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)



|                                                                             |  |                        |         |   |                  |   |         |  
|---------------------------------------------------------------------------- |  | ---------------------- | ------- | - | ---------------- | - | ------- | -
|                                                                             |  | Thirty-six Weeks Ended |        
|                                                                             |  | September 6,2005       |         |   | September 5,2006 |  
|Cash flows from operating activities:                                        |  |                        |         |   |                  |   |         |  
|Net income                                                                   |  | $                      | 18,374  |   |                  | $ | 3,569   |  
|Adjustments to reconcile net income to cash flows from operating activities: |  |                        |         |   |                  |   |         |  
|Depreciation and amortization                                                |  |                        | 58,294  |   |                  |   | 58,898  |  
|Loss on disposals and impairment of assets                                   |  |                        | 1,623   |   |                  |   | 5,123   |  
|Stock-based compensation expense                                             |  |                        |        |   |                  |   | 2,403   |  
|Amortization of discount on membership deposits                              |  |                        | 8,933   |   |                  |   | 9,669   |  
|Net change in real estate held for sale                                      |  |                        | 2,099   |   |                  |   | 847     |  
|Net change in membership and other receivables, net                          |  |                        | (9,875  | ) |                  |   | (8,769  | )
|Net change in prepaid expenses                                               |  |                        | 4,275   |   |                  |   | (1,124  | )
|Net change in accounts payable and accrued liabilities                       |  |                        | (6,591  | ) |                  |   | (9,325  | )
|Net change in deferred income and other liabilities                          |  |                        | (14,653 | ) |                  |   | 7,975   |  
|Net change in deferred membership revenues                                   |  |                        | 11,087  |   |                  |   | 13,279  |  
|Net change in deferred income taxes                                          |  |                        |        |   |                  |   | (360    | )
|Other                                                                        |  |                        | 8,499   |   |                  |   | 4,955   |  
|                                                                             |  |                        |         |   |                  |   |         |  
|Cash flows from operating activities                                         |  |                        | 82,065  |   |                  |   | 87,140  |  
|                                                                             |  |                       
|Cash flows from investing activities:                                        |  |                        |         |   |                  |   |         |  
|Additions to property and equipment                                          |  |                        | (46,906 | ) |                  |   | (71,907 | )
|Acquisition of facilities                                                    |  |                        | (1,974  | ) |                  |   |        |  
|Development of real estate held for sale                                     |  |                        | (5,981  | ) |                  |   | (55     | )
|Net change in notes receivable                                               |  |                        | 7,949   |   |                  |   | 4,652   |  
|Net change in restricted cash                                                |  |                        | 7,092   |   |                  |   | (2,000  | )
|Other                                                                        |  |                        | 436     |   |                  |   | 71      |  
|                                                                             |  |                        |         |   |                  |   |         |  
|Cash flows from investing activities                                         |  |                        | (39,384 | ) |                  |   | (69,239 | )
|                                                                             |  |                       
|Cash flows from financing activities:                                        |  |                        |         |   |                  |   |         |  
|Repayments of long-term debt                                                 |  |                        | (41,801 | ) |                  |   | (67,640 | )
|Net change in membership deposits                                            |  |                        | 600     |   |                  |   | 2       |  
|Treasury stock transactions                                                  |  |                        | (3,301  | ) |                  |   | (451    | )
|                                                                             |  |                        |         |   |                  |   |         |  
|Cash flows from financing activities                                         |  |                        | (44,502 | ) |                  |   | (68,089 | )
|                                                                             |  |                        |         |   |                  |   |         |  
|Net change in cash and cash equivalents                                      |  |                        | (1,821  | ) |                  |   | (50,188 | )
|Cash and cash equivalents at beginning of period                             |  |                        | 96,180  |   |                  |   | 188,675 |  
|                                                                             |  |                        |         |   |                  |   |         |  
|Cash and cash equivalents at end of period                                   |  | $                      | 94,359  |   |                  | $ | 138,487 |  
|                                                                             |  |                        |         |   |                  |   |         |  

See accompanying notes to condensed consolidated financial statements.



3



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ClubCorp, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1. Summary of significant accounting policies

Consolidation

The accompanying Condensed Consolidated Financial Statements include the accounts of ClubCorp, Inc.
and its majority-owned subsidiaries that are not considered variable interest entities (VIEs) and VIEs for which the Company is the primary beneficiary (collectively, ClubCorp). All material intercompany balances and transactions have been
eliminated.

Interim presentation

The accompanying Condensed Consolidated Financial Statements have been prepared by ClubCorp and are unaudited. Certain information and footnote disclosures normally included in financial statements presented in
accordance with accounting principles generally accepted in the United States of America have been omitted from the accompanying statements. We believe the disclosures made are adequate to make the information presented not misleading. However, the
financial statements should be read in conjunction with the Consolidated Financial Statements and notes thereto of ClubCorp for the year ended December 27, 2005, which is a part of ClubCorps 2005 Form 10-K.

In our opinion, the accompanying Condensed Consolidated Financial Statements reflect all adjustments necessary to present fairly the consolidated financial position of
ClubCorp as of December 27, 2005 and September 5, 2006, and the consolidated results of operations for the twelve weeks and thirty-six weeks ended September 6, 2005 and September 5, 2006, and the cash flows for the thirty-six
weeks ended September 6, 2005 and September 5, 2006. 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.

Cash and cash equivalents

For purposes of the Condensed Consolidated Statements of Cash Flows, cash and cash equivalents include cash on hand and interest bearing deposits in financial
institutions, all of which have maturities of 90 days or less.

Restricted Cash

We had $21.7 million and $23.7 million of restricted cash at December 27, 2005 and September 5, 2006, respectively. The balance at September 5, 2006 is
comprised of $19.0 million in collateral related to insurance policies and $4.7 million in collateral related to letters of credit in connection with debt covenants. The letters of credit have one-year terms and, therefore, the related restricted
cash is included in current assets.

Recent Pronouncements

In February 2006, the FASB issued Statement of Financial Accounting Standards No. 155, Accounting for Certain Hybrid Financial Instruments  an amendment
of FASB Statements No. 133 and 140 which is effective for fiscal years beginning after September 15, 2006. The statement was issued to clarify the application of FASB Statement No. 133 to beneficial interests in securitized
financial assets and to improve the consistency of accounting for similar financial instruments, regardless of the form of the instruments. We have evaluated the new statement and have determined that it will not impact our financial results.

In March 2006, the FASB issued Statement of Financial Accounting Standards No. 156, Accounting for Servicing of Financial Assets  an
amendment of FASB Statement No. 140 which is effective for fiscal years beginning after September 15, 2006. This statement was issued to simplify the accounting for servicing rights and to reduce the volatility that results from
using different measurement attributes. We have evaluated the new statement and have determined that it will not impact our financial results.

In July
2006, the FASB issued Financial Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109 which is effective for fiscal years beginning after December 15, 2006.
FIN No. 48 provides guidance regarding the recognition, measurement, presentation and disclosure in the financial statements of tax positions taken or expected to be taken on a tax return, including the decision whether to file or not file in a
particular jurisdiction. The cumulative effect of the changes arising from the initial application of FIN 48 is required to be reported as an adjustment to the opening balance of retained earnings in the period of adoption. We are currently
evaluating the impact, if any, of the adoption of FIN 48 on our financial statements.



4



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ClubCorp, Inc.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This statement clarifies the definition of fair value, establishes a framework for measuring fair value, and expands the disclosures on fair value
measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. We have not determined the effect, if any, the adoption of this statement will have on our results of operations or financial position.

In September 2006, the FASB adopted Statement of Financial Accounting Standards No. 158, Employers Accounting for Defined Benefit Pension and Other
Postretirement Plans, an amendment of FASB Statements No. 87, 106, and 132(R). SFAS No. 158 requires companies to recognize a net liability or asset and an offsetting adjustment to accumulated other comprehensive income to report the
funded status of defined benefit pension and other postretirement benefit plans. Additionally, SFAS No. 158 requires companies to measure plan assets and obligations at their year-end balance sheet date. SFAS No. 158 is effective for
fiscal years ending after December 15, 2006. We are currently evaluating the impact of the adoption of SFAS No. 158 on our financial statements.

Reclassifications

Certain amounts
previously reported have been reclassified to conform to current period presentation.

Note 2. Stock-based compensation

Prior to 2006, we accounted for stock-based compensation under the recognition and measurement provisions of APB Opinion No. 25, Accounting for Stock Issued to
Employees. Under APB 25, the exercise price of the options was equal to the market price at the date of grant and no stock-based compensation cost was reflected in net income. We also adopted the disclosure-only provisions of SFAS
No. 123, Accounting for Stock-based Compensation, as amended by SFAS No. 148, Accounting for Stock Based Compensation  Transition and Disclosure.

Effective December 28, 2005, we adopted SFAS No. 123(R), Share-based Payment, using the modified-prospective method, which requires the measurement and recognition of compensation cost at fair
value for all share-based payments, including stock options. Stock-based compensation for the twelve weeks and thirty-six weeks ended September 5, 2006 includes expense, recognized over the applicable vesting periods for all new options granted
and options granted prior to, but unvested, as of December 28, 2005. In accordance with the modified prospective method of adoption, results for prior periods have not been restated.

We granted options to purchase 671,410 and 655,600 shares of common stock during the thirty-six weeks ended September 6, 2005 and September 5, 2006,
respectively. There were no options to purchase shares of common stock granted during the twelve weeks ended September 6, 2005 or during the twelve weeks ended September 5, 2006.

Effective June 26, 2006, we amended our stock option plan to include a change in control provision if the company is sold in connection with our current agreement
and plan of merger. All outstanding options will become 100% vested upon closing and cash will be paid for the in-the-money value of these options. This provision is only effective if a sale occurs in connection with our current agreement and plan
of merger. No expense has been recorded for this contingency.



5



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ClubCorp, Inc.

The following summarizes compensation cost for the option plans based on the grant date fair value of the options consistent with the methodology prescribed by SFAS No. 123(R) (dollars in thousands, except per share amounts):



|                                                                                              |  |                    |        |   |                        |   |       |                  |  |   |                  |   |  |   |        |  
|--------------------------------------------------------------------------------------------- |  | ------------------ | ------ | - | ---------------------- | - | ----- | ---------------- |  | - | ---------------- | - |  | - | ------ | -
|                                                                                              |  | Twelve Weeks Ended |        |   | Thirty-six Weeks Ended |  
|                                                                                              |  | September 6,2005   |        |   | September 5,2006       |   |       | September 6,2005 |  |   | September 5,2006 |  
|Net income as reported                                                                        |  | $                  | 16,785 |   |                        | $ | 4,671 |                  |  | $ | 18,374           |   |  | $ | 3,569  |  
|Add: Total stock-based compensation expense included in reported net income, net of taxes     |  |                    |       |   |                        |   | 585   |                  |  |   |                 |   |  |   | 1,562  |  
|Less: Total stock-based compensation expense determined under fair value method, net of taxes |  |                    | (705   | ) |                        |   | (585  | )                |  |   | (2,727           | ) |  |   | (1,562 | )
|                                                                                              |  |                    |        |   |                        |   |       |                  |  |   |                  |   |  |   |        |  
|Pro forma net earnings                                                                        |  | $                  | 16,080 |   |                        | $ | 4,671 |                  |  | $ | 15,647           |   |  | $ | 3,569  |  
|                                                                                              |  |                    |        |   |                        |   |       |                  |  |   |                  |   |  |   |        |  
|Basic earnings per share - Reported                                                           |  | $                  | 0.18   |   |                        | $ | 0.05  |                  |  | $ | 0.20             |   |  | $ | 0.04   |  
|                                                                                              |  |                    |        |   |                        |   |       |                  |  |   |                  |   |  |   |        |  
|Basic earnings per share - Pro Forma                                                          |  | $                  | 0.17   |   |                        | $ | 0.05  |                  |  | $ | 0.17             |   |  | $ | 0.04   |  
|                                                                                              |  |                    |        |   |                        |   |       |                  |  |   |                  |   |  |   |        |  
|Diluted earnings per share - Reported                                                         |  | $                  | 0.18   |   |                        | $ | 0.05  |                  |  | $ | 0.19             |   |  | $ | 0.04   |  
|                                                                                              |  |                    |        |   |                        |   |       |                  |  |   |                  |   |  |   |        |  
|Diluted earnings per share - Pro Forma                                                        |  | $                  | 0.17   |   |                        | $ | 0.05  |                  |  | $ | 0.17             |   |  | $ | 0.04   |  
|                                                                                              |  |                    |        |   |                        |   |       |                  |  |   |                  |   |  |   |        |  

In accordance with the requirements of SFAS 123, the fair value of the options granted was estimated using the
Black-Scholes option-pricing model with the following assumptions for the 2005 and 2006 grants: risk-free weighted average interest rates of 4.0% and 5.0% respectively, an expected volatility of 40%, an expected life of seven years, which includes a
3% forfeiture rate, and zero dividend yield. The summary of the status of the options outstanding for the year-ended December 27, 2005 and the changes during the thirty-six weeks ended September 5, 2006 is as follows:



|                                 |  |           |   |  |                               |       |                                                    |     |                                       |   |       
|-------------------------------- |  | --------- | - |  | ----------------------------- | ----- | -------------------------------------------------- | --- | ------------------------------------- | - | ------
|                                 |  | Shares    |   |  | WeightedAverageExercise Price |       | WeightedAverageRemainingContractualLife (in years) |     | AggregateIntrinsicValue(in thousands)
|Summary of Option Activity:      |  |           |   |  |                               |       |                                                    |     |                                       |   |       
|Outstanding at December 27, 2005 |  | 7,652,493 |   |  | $                             | 10.51 |                                                    |     |                                       |   |       
|                                 |  |           |   | 
|Granted                          |  | 655,600   |   |  | $                             | 13.80 |                                                    |     |                                       |   |       
|Forfeited                        |  | (193,562  | ) |  | $                             | 10.46 |                                                    |     |                                       |   |       
|Exercised                        |  | (13,228   | ) |  | $                             | 11.48 |                                                    |     |                                       |   |       
|                                 |  |           |   |  |                               |       |                                                    |     |                                       |   |       
|Outstanding at September 5, 2006 |  | 8,101,303 |   |  | $                             | 10.77 |                                                    | 5.8 |                                       | $ | 24,547
|                                 |  |           |   |  |                               |       |                                                    |     |                                       |   |       
|Exercisable at September 5, 2006 |  | 5,414,263 |   |  | $                             | 10.32 |                                                    | 4.6 |                                       | $ | 18,842
|                                 |  |           |   |  |                               |       |                                                    |     |                                       |   |       

The weighted average grant date fair value of options granted during the year ended December 27, 2005 and the
thirty-six weeks ended September 5, 2006 was $6.18 and $7.02, respectively.



6



---

ClubCorp, Inc.

A summary of the status of nonvested options as of December 27, 2005 and changes during the thirty-six weeks ended September 5, 2006 is as follows:



|                                      |  |           |   |  |                                    |     
|------------------------------------- |  | --------- | - |  | ---------------------------------- | ----
|                                      |  | Shares    |   |  | WeightedAverageGrantDate FairValue
|Summary of Nonvested Option Activity: |  |           |   |  |                                    |     
|Nonvested at December 27, 2005        |  | 2,623,000 |   |  | $                                  | 6.09
|                                      |  |          
|Granted                               |  | 655,600   |   |  | $                                  | 7.02
|Forfeited                             |  | (25,734   | ) |  | $                                  | 6.56
|Vested                                |  | (565,826  | ) |  | $                                  | 6.39
|                                      |  |           |   |  |                                    |     
|Nonvested at September 5, 2006        |  | 2,687,040 |   |  | $                                  | 6.25
|                                      |  |           |   |  |                                    |     

As of September 5, 2006, there was $9.6 million of total unrecognized compensation cost related to nonvested
share-based compensation arrangements. That cost is expected to be recognized over a weighted average period of 3.1 years. The total fair value of shares vested during the thirty-six weeks ended September 5, 2006 was $7.8 million.

Note 3. Operating revenues

We recognized revenues from the following sources (dollars in thousands):



|                                                      |  |                    |         |                        |   |                  |  |                  |         |  |   |        
|----------------------------------------------------- |  | ------------------ | ------- | ---------------------- | - | ---------------- |  | ---------------- | ------- |  | - | -------
|                                                      |  | Twelve Weeks Ended |         | Thirty-six Weeks Ended
|                                                      |  | September 6,2005   |         | September 5,2006       |   | September 6,2005 |  | September 5,2006
|Revenues from continuing operations:                  |  |                    |         |                        |   |                  |  |                  |         |  |   |        
|Membership dues                                       |  | $                  | 76,866  |                        | $ | 81,155           |  | $                | 230,737 |  | $ | 241,467
|Food and beverage revenues                            |  |                    | 59,923  |                        |   | 61,538           |  |                  | 178,881 |  |   | 186,478
|Golf operations revenues (1)                          |  |                    | 74,908  |                        |   | 43,905           |  |                  | 154,690 |  |   | 121,678
|Lodging revenues                                      |  |                    | 15,815  |                        |   | 16,102           |  |                  | 41,402  |  |   | 43,263 
|Membership fees and deposits                          |  |                    | 8,008   |                        |   | 7,219            |  |                  | 24,053  |  |   | 22,294 
|Other revenues (2)                                    |  |                    | 34,588  |                        |   | 22,830           |  |                  | 77,574  |  |   | 62,597 
|                                                      |  |                    |         |                        |   |                  |  |                  |         |  |   |        
|Total operating revenues from continuing operations   |  | $                  | 270,108 |                        | $ | 232,749          |  | $                | 707,337 |  | $ | 677,777
|                                                      |  |                    |         |                        |   |                  |  |                  |         |  |   |        
|Revenues from discontinued operations:                |  |                    |         |                        |   |                  |  |                  |         |  |   |        
|Membership dues                                       |  | $                  | 1,793   |                        | $ | 1,039            |  | $                | 5,437   |  | $ | 3,501  
|Food and beverage revenues                            |  |                    | 1,370   |                        |   | 889              |  |                  | 4,108   |  |   | 2,715  
|Golf operations revenues                              |  |                    | 2,493   |                        |   | 1,208            |  |                  | 7,184   |  |   | 3,325  
|Membership fees and deposits                          |  |                    | 312     |                        |   | 341              |  |                  | 928     |  |   | 1,013  
|Other revenues                                        |  |                    | 686     |                        |   | 558              |  |                  | 2,038   |  |   | 1,694  
|                                                      |  |                    |         |                        |   |                  |  |                  |         |  |   |        
|Total operating revenues from discontinued operations |  | $                  | 6,654   |                        | $ | 4,035            |  | $                | 19,695  |  | $ | 12,248 
|                                                      |  |                    |         |                        |   |                  |  |                  |         |  |   |        
|Total operating revenues                              |  | $                  | 276,762 |                        | $ | 236,784          |  | $                | 727,032 |  | $ | 690,025
|                                                      |  |                    |         |                        |   |                  |  |                  |         |  |   |        

---

|(1) | The amounts include the impact of ticket sales, rental of corporate hospitality tents and concessions of approximately $30.7 million and $36.0 million related to the 2005 U.S. Open
for the twelve and thirty-six weeks ended September 6, 2005, respectively.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The twelve weeks and thirty-six weeks ended September 6, 2005 include the impact of merchandise sales of approximately $10.3 million and $14.5 million related to the 2005 U.S.
Open, respectively.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



7



---

ClubCorp, Inc.

Note 4. Income tax provision

The income tax provision for the twelve weeks and thirty-six weeks ended September 6, 2005 and
September 5, 2006 differs from amounts computed by applying the U.S. Federal tax rate of 35% to income (loss) from operations before income taxes and minority interest primarily due to foreign and state income taxes, net of Federal provision,
and the effect of consolidated operations of foreign and other entities not consolidated for Federal income tax purposes. Based on our estimate for the year, we recorded to current taxes payable an estimated income tax provision of $0.4 million
related to Federal income taxes for the thirty-six weeks ended September 5, 2006.

Note 5. Weighted average shares

The following table summarizes the weighted average number of shares used to calculate basic and diluted income per share:



|                                                      |  |                    |  |                        |  |                   |  |                  
|----------------------------------------------------- |  | ------------------ |  | ---------------------- |  | ----------------- |  | -----------------
|                                                      |  | Twelve Weeks Ended |  | Thirty-six Weeks Ended
|                                                      |  | September 6, 2005  |  | September 5, 2006      |  | September 6, 2005 |  | September 5, 2006
|Weighted average shares outstanding                   |  | 93,115,990         |  | 92,803,780             |  | 93,248,170        |  | 92,814,597       
|Incremental shares from assumed conversion of options |  | 1,317,071          |  | 1,613,355              |  | 1,317,071         |  | 1,512,941        
|                                                      |  |                    |  |                        |  |                   |  |                  
|Diluted weighted average shares                       |  | 94,433,061         |  | 94,417,135             |  | 94,565,241        |  | 94,327,538       
|                                                      |  |                    |  |                        |  |                   |  |                  

Note 6. Property and equipment

Property and equipment consists of the following (dollars in thousands):



|                                          |  |                  |           |   |                  |   |           |  
|----------------------------------------- |  | ---------------- | --------- | - | ---------------- | - | --------- | -
|                                          |  | December 27,2005 |           |   | September 5,2006 |  
|Land and land improvements                |  | $                | 738,558   |   |                  | $ | 728,627   |  
|Buildings and recreational facilities     |  |                  | 509,211   |   |                  |   | 520,095   |  
|Leasehold improvements                    |  |                  | 118,044   |   |                  |   | 118,629   |  
|Furniture and fixtures                    |  |                  | 142,629   |   |                  |   | 147,913   |  
|Machinery and equipment                   |  |                  | 313,279   |   |                  |   | 321,280   |  
|Construction in progress                  |  |                  | 21,413    |   |                  |   | 40,785    |  
|                                          |  |                  |           |   |                  |   |           |  
|                                          |  |                  | 1,843,134 |   |                  |   | 1,877,329 |  
|Accumulated depreciation and amortization |  |                  | (718,373  | ) |                  |   | (761,611  | )
|                                          |  |                  |           |   |                  |   |           |  
|                                          |  | $                | 1,124,761 |   |                  | $ | 1,115,718 |  
|                                          |  |                  |           |   |                  |   |           |  



8



---

ClubCorp, Inc.

Note 7. Disposal and impairment of long-lived assets

In conjunction with Statement of Financial Accounting Standards No. 144
(SFAS No. 144), Accounting for the Impairment or Disposal of Long-Lived Assets, certain assets and liabilities expected to be sold with the held-for-sale entities have been reclassified to Other Current Assets and Other Current
Liabilities, and all income and expense items have been reclassified as Discontinued Operations.

As of December 27, 2005 and September 5, 2006,
we had one and five properties classified as held for sale, respectively. The balance sheet amounts related to the properties were reclassified to Other Current Assets and Other Current Liabilities on the Condensed Consolidated Balance Sheets and
were comprised of the following (dollars in thousands):



|                                         |  |                  |       |                  |   |       
|---------------------------------------- |  | ---------------- | ----- | ---------------- | - | ------
|                                         |  | December 27,2005 |       | September 5,2006
|Membership and other receivables, net    |  | $                | 273   |                  | $ | 976   
|Inventories                              |  |                  | 69    |                  |   | 340   
|Other current assets                     |  |                  | 13    |                  |   | 2,046 
|Property and equipment, net              |  |                  | 6,538 |                  |   | 25,306
|Other assets                             |  |                  | 42    |                  |   | 864   
|                                         |  |                  |       |                  |   |       
|Total assets                             |  | $                | 6,935 |                  | $ | 29,532
|                                         |  |                  |       |                  |   |       
|Accounts payable and accrued liabilities |  | $                | 113   |                  | $ | 1,442 
|Other current liabilities                |  |                  | 144   |                  |   | 4,457 
|Long-term debt                           |  |                  | 2,811 |                  |   |      
|Other liabilities                        |  |                  | 196   |                  |   | 3,252 
|                                         |  |                  |       |                  |   |       
|Total liabilities                        |  | $                | 3,264 |                  | $ | 9,151 
|                                         |  |                  |       |                  |   |       

The properties were reclassified to discontinued operations on the Condensed Consolidated Statements of Operations
for all periods presented. See Note 10 for detail of the Statement of Operations impact of discontinued operations by segment and in total.

There was $0.8
million recorded for impairment of assets during the thirty-six weeks ended September 6, 2005, none of which was recorded during the twelve weeks ended September 6, 2005. We recorded no impairment for the twelve weeks ended
September 5, 2006. We recorded $3.0 million for impairment of assets held for sale in loss from discontinued operations before income taxes on the Condensed Consolidated Statement of Operations for the thirty-six weeks ended September 5,
2006.

Note 8. Comprehensive Income

The
following summarizes the components of comprehensive income (dollars in thousands):



|                                        |  |                    |        |                        |   |                  |  |                  |        |  |   |      
|--------------------------------------- |  | ------------------ | ------ | ---------------------- | - | ---------------- |  | ---------------- | ------ |  | - | -----
|                                        |  | Twelve Weeks Ended |        | Thirty-six Weeks Ended
|                                        |  | September 6,2005   |        | September 5,2006       |   | September 6,2005 |  | September 5,2006
|Net income                              |  | $                  | 16,785 |                        | $ | 4,671            |  | $                | 18,374 |  | $ | 3,569
|Foreign currency translation adjustment |  |                    | 887    |                        |   | 334              |  |                  | 1,253  |  |   | 817  
|                                        |  |                    |        |                        |   |                  |  |                  |        |  |   |      
|Total comprehensive income              |  | $                  | 17,672 |                        | $ | 5,005            |  | $                | 19,627 |  | $ | 4,386
|                                        |  |                    |        |                        |   |                  |  |                  |        |  |   |      



9



---

ClubCorp, Inc.

Note 9. Long term debt

Under the provisions of certain of our debt agreements with Textron Financial Corporation
(Textron), we are required to maintain debt service coverage ratios at both the portfolio and individual property level. Certain of these individual loans have cross-default provisions; therefore, a default on an individual loan triggers
a default on the portfolio. As of September 5, 2006, the debt service coverage ratio was below the minimum level for three individual properties participating in the loan, thereby causing the entire loan ($52 million in principal amount) to be
in technical default. Subsequent to September 5, 2006, we cured the noncompliance by obtaining letters of credit totaling $4.7 million.

In early
2006, we amended a loan agreement with Pacific Life representing approximately $37 million of debt maturing in 2006 and established a secured $50 million line of credit which will mature in 2010. As a result, we paid down approximately $32 million
and transferred the remaining $5 million as an initial draw on the line of credit which remains outstanding as of September 5, 2006.

Note 10.
Segment reporting

Our operations are organized into three principal business segments according to the type of facility or service provided:
country club and golf facilities, business and sports clubs and resorts. We have determined that the operations of these three segments have similar economic characteristics and meet the criteria which permit the operations to be aggregated into
these reportable segments. The primary sources of revenue for all segments are membership revenues, consisting of dues, fees and deposits, and food and beverage sales. Additionally, country club and golf facilities and resorts have significant golf
operations revenue and resorts have significant lodging revenue.

Country club and golf facilities 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 only to members and their guests. Golf clubs provide both private and public golf play and usually
offer fewer other recreational amenities. Public golf facilities are open to the public and generally provide the same services as golf clubs.

Resorts
offer a wide variety of amenities including golf courses, lodging and conference facilities, dining areas and other recreational facilities. Resorts are open to the public and offer optional membership.

Business and sports club operations consist of business clubs, business/sports clubs and sports 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. All amenities offered above are available only to members and
their guests.

Other operations and services consist of real estate operations, corporate overhead and intercompany eliminations made in the consolidation
between corporate services and other operating segments. Real estate operations are comprised of residential real estate development and sales, primarily in areas adjacent to golf facilities. The majority of other operating revenues is provided from
real estate sales.

We evaluate segment performance and allocate resources based on each segments EBITDA. We also use EBITDA to monitor our
property-level and overall performance. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. EBITDA for all periods presented has been calculated using this definition. EBITDA should not be construed as an alternative
to, or a better indicator of, operating income or loss, is not based on accounting principles generally accepted in the United States of America, and is not necessarily a measure of our cash flow or ability to fund our cash needs. Our measurements
of EBITDA may not be comparable to similar titled measures reported by other companies.



10



---

ClubCorp, Inc.

Financial information for the segments is as follows (dollars in thousands):



|                                                                    |  |                       |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|------------------------------------------------------------------- |  | --------------------- | ------- | - | ---------------------- | - | ------- | ---------------- |  | - | ---------------- | - |  | - | ------- | -
|                                                                    |  | Continuing Operations |        
|                                                                    |  | Twelve Weeks Ended    |         |   | Thirty-six Weeks Ended |  
|                                                                    |  | September 6,2005      |         |   | September 5,2006       |   |         | September 6,2005 |  |   | September 5,2006 |  
|Operating revenues                                                  |  |                       |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Country club and golf facilities                                    |  | $                     | 124,622 |   |                        | $ | 128,015 |                  |  | $ | 353,780          |   |  | $ | 366,858 |  
|Resorts (1)                                                         |  |                       | 95,569  |   |                        |   | 54,902  |                  |  |   | 199,417          |   |  |   | 154,856 |  
|Business and sports clubs                                           |  |                       | 44,767  |   |                        |   | 46,206  |                  |  |   | 143,633          |   |  |   | 148,039 |  
|Other operations and services                                       |  |                       | 5,150   |   |                        |   | 3,626   |                  |  |   | 10,507           |   |  |   | 8,024   |  
|                                                                    |  |                       |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Total operating revenues                                            |  | $                     | 270,108 |   |                        | $ | 232,749 |                  |  | $ | 707,337          |   |  | $ | 677,777 |  
|                                                                    |  |                       |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|EBITDA                                                              |  |                       |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Country club and golf facilities                                    |  | $                     | 28,422  |   |                        | $ | 29,242  |                  |  | $ | 86,842           |   |  | $ | 86,533  |  
|Resorts (1)                                                         |  |                       | 27,377  |   |                        |   | 13,992  |                  |  |   | 48,163           |   |  |   | 38,335  |  
|Business and sports clubs                                           |  |                       | 5,229   |   |                        |   | 6,565   |                  |  |   | 21,651           |   |  |   | 24,805  |  
|                                                                    |  |                       |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Reportable segment EBITDA                                           |  | $                     | 61,028  |   |                        | $ | 49,799  |                  |  | $ | 156,656          |   |  | $ | 149,673 |  
|                                                                    |  |                       |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Reconciliation to income before income taxes and minority interest: |  |                       |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Reportable segment EBITDA                                           |  |                       | 61,028  |   |                        | $ | 49,799  |                  |  | $ | 156,656          |   |  | $ | 149,673 |  
|Other operations and services operating revenues                    |  |                       | 5,150   |   |                        |   | 3,626   |                  |  |   | 10,507           |   |  |   | 8,024   |  
|Other operations and services operating costs and expenses          |  |                       | (15,619 | ) |                        |   | (15,679 | )                |  |   | (44,726          | ) |  |   | (51,436 | )
|Depreciation and amortization                                       |  |                       | (19,102 | ) |                        |   | (19,635 | )                |  |   | (57,031          | ) |  |   | (58,558 | )
|Loss on disposals and impairment of assets                          |  |                       | (901    | ) |                        |   | (843    | )                |  |   | (2,252           | ) |  |   | (2,726  | )
|Interest and investment income                                      |  |                       | 906     |   |                        |   | 1,993   |                  |  |   | 2,525            |   |  |   | 5,289   |  
|Interest expense                                                    |  |                       | (13,763 | ) |                        |   | (13,479 | )                |  |   | (41,712          | ) |  |   | (40,743 | )
|                                                                    |  |                       |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Income from operations before income taxes and minority interest    |  | $                     | 17,699  |   |                        | $ | 5,782   |                  |  | $ | 23,967           |   |  | $ | 9,523   |  
|                                                                    |  |                       |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  

---

|(1) | The twelve weeks and thirty-six weeks ended September 6, 2005 include the impact of ticket sales, rental of corporate hospitality tents, concessions, and merchandise sales of
approximately $41.0 million and $50.5 million, respectively, related to the 2005 U.S. Open. This resulted in an increase of approximately $13.8 million and $14.0 million in EBITDA for the twelve weeks and thirty-six weeks ended September 6,
2005, respectively.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



11



---

ClubCorp, Inc.



|                                                                  |  |                         |       |   |                        |   |       |                  |  |   |                  |   |  |   |        |  
|----------------------------------------------------------------- |  | ----------------------- | ----- | - | ---------------------- | - | ----- | ---------------- |  | - | ---------------- | - |  | - | ------ | -
|                                                                  |  | Discontinued Operations |      
|                                                                  |  | Twelve Weeks Ended      |       |   | Thirty-six Weeks Ended |  
|                                                                  |  | September 6,2005        |       |   | September 5,2006       |   |       | September 6,2005 |  |   | September 5,2006 |  
|Operating revenues                                                |  |                         |       |   |                        |   |       |                  |  |   |                  |   |  |   |        |  
|Country club and golf facilities                                  |  | $                       | 5,043 |   |                        | $ | 2,893 |                  |  | $ | 14,600           |   |  | $ | 8,136  |  
|Resorts                                                           |  |                         |      |   |                        |   |      |                  |  |   |                 |   |  |   |       |  
|Business and sports clubs                                         |  |                         | 1,611 |   |                        |   | 1,142 |                  |  |   | 5,095            |   |  |   | 4,112  |  
|Other operations and services                                     |  |                         |      |   |                        |   |      |                  |  |   |                 |   |  |   |       |  
|                                                                  |  |                         |       |   |                        |   |       |                  |  |   |                  |   |  |   |        |  
|Total operating revenues                                          |  | $                       | 6,654 |   |                        | $ | 4,035 |                  |  | $ | 19,695           |   |  | $ | 12,248 |  
|                                                                  |  |                         |       |   |                        |   |       |                  |  |   |                  |   |  |   |        |  
|EBITDA                                                            |  |                         |       |   |                        |   |       |                  |  |   |                  |   |  |   |        |  
|Country club and golf facilities                                  |  | $                       | 31    |   |                        | $ | 115   |                  |  | $ | (387             | ) |  | $ | (209   | )
|Resorts                                                           |  |                         |      |   |                        |   |      |                  |  |   |                 |   |  |   |       |  
|Business and sports clubs                                         |  |                         | 198   |   |                        |   | 159   |                  |  |   | 666              |   |  |   | 538    |  
|                                                                  |  |                         |       |   |                        |   |       |                  |  |   |                  |   |  |   |        |  
|Reportable segment EBITDA                                         |  | $                       | 229   |   |                        | $ | 274   |                  |  | $ | 279              |   |  | $ | 329    |  
|                                                                  |  |                         |       |   |                        |   |       |                  |  |   |                  |   |  |   |        |  
|Reconciliation to loss before income taxes and minority interest: |  |                         |       |   |                        |   |       |                  |  |   |                  |   |  |   |        |  
|Reportable segment EBITDA                                         |  | $                       | 229   |   |                        | $ | 274   |                  |  | $ | 279              |   |  | $ | 329    |  
|Other operations and services operating revenues                  |  |                         |      |   |                        |   |      |                  |  |   |                 |   |  |   |       |  
|Other operations and services operating costs and expenses        |  |                         | (236  | ) |                        |   | (177  | )                |  |   | (700             | ) |  |   | (523   | )
|Depreciation and amortization                                     |  |                         | (387  | ) |                        |   |      |                  |  |   | (1,263           | ) |  |   | (340   | )
|Gain (loss) on disposals and impairment of assets (1)             |  |                         | 569   |   |                        |   | 4     |                  |  |   | 629              |   |  |   | (2,397 | )
|Interest and investment income                                    |  |                         | 21    |   |                        |   | 14    |                  |  |   | 61               |   |  |   | 47     |  
|Interest expense                                                  |  |                         | (431  | ) |                        |   | (401  | )                |  |   | (1,155           | ) |  |   | (1,316 | )
|                                                                  |  |                         |       |   |                        |   |       |                  |  |   |                  |   |  |   |        |  
|Loss from operations before income taxes and minority interest    |  | $                       | (235  | ) |                        | $ | (286  | )                |  | $ | (2,149           | ) |  | $ | (4,200 | )
|                                                                  |  |                         |       |   |                        |   |       |                  |  |   |                  |   |  |   |        |  

---

|(1) | The thirty-six weeks ended September 5, 2006 amounts include an impairment of $3.0 million related to held for sale properties. There was no impairment recorded during the
twelve weeks ended September 5, 2006.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



12



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ClubCorp, Inc.



|                                                                    |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|------------------------------------------------------------------- |  | ------------------ | ------- | - | ---------------------- | - | ------- | ---------------- |  | - | ---------------- | - |  | - | ------- | -
|                                                                    |  | Total Company      |        
|                                                                    |  | Twelve Weeks Ended |         |   | Thirty-six Weeks Ended |  
|                                                                    |  | September 6,2005   |         |   | September 5,2006       |   |         | September 6,2005 |  |   | September 5,2006 |  
|Operating revenues                                                  |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Country club and golf facilities                                    |  | $                  | 129,665 |   |                        | $ | 130,908 |                  |  | $ | 368,380          |   |  | $ | 374,994 |  
|Resorts (1)                                                         |  |                    | 95,569  |   |                        |   | 54,902  |                  |  |   | 199,417          |   |  |   | 154,856 |  
|Business and sports clubs                                           |  |                    | 46,378  |   |                        |   | 47,348  |                  |  |   | 148,728          |   |  |   | 152,151 |  
|Other operations and services                                       |  |                    | 5,150   |   |                        |   | 3,626   |                  |  |   | 10,507           |   |  |   | 8,024   |  
|                                                                    |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Total operating revenues                                            |  | $                  | 276,762 |   |                        | $ | 236,784 |                  |  | $ | 727,032          |   |  | $ | 690,025 |  
|                                                                    |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|EBITDA                                                              |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Country club and golf facilities                                    |  | $                  | 28,453  |   |                        | $ | 29,357  |                  |  | $ | 86,455           |   |  | $ | 86,324  |  
|Resorts (1)                                                         |  |                    | 27,377  |   |                        |   | 13,992  |                  |  |   | 48,163           |   |  |   | 38,335  |  
|Business and sports clubs                                           |  |                    | 5,427   |   |                        |   | 6,724   |                  |  |   | 22,317           |   |  |   | 25,343  |  
|                                                                    |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Reportable segment EBITDA                                           |  | $                  | 61,257  |   |                        | $ | 50,073  |                  |  | $ | 156,935          |   |  | $ | 150,002 |  
|                                                                    |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Reconciliation to income before income taxes and minority interest: |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Reportable segment EBITDA                                           |  | $                  | 61,257  |   |                        | $ | 50,073  |                  |  | $ | 156,935          |   |  | $ | 150,002 |  
|Other operations and services operating revenues                    |  |                    | 5,150   |   |                        |   | 3,626   |                  |  |   | 10,507           |   |  |   | 8,024   |  
|Other operations and services operating costs and expenses          |  |                    | (15,855 | ) |                        |   | (15,856 | )                |  |   | (45,426          | ) |  |   | (51,959 | )
|Depreciation and amortization                                       |  |                    | (19,489 | ) |                        |   | (19,635 | )                |  |   | (58,294          | ) |  |   | (58,898 | )
|Loss on disposals and impairment of assets (2)                      |  |                    | (332    | ) |                        |   | (839    | )                |  |   | (1,623           | ) |  |   | (5,123  | )
|Interest and investment income                                      |  |                    | 927     |   |                        |   | 2,007   |                  |  |   | 2,586            |   |  |   | 5,336   |  
|Interest expense                                                    |  |                    | (14,194 | ) |                        |   | (13,880 | )                |  |   | (42,867          | ) |  |   | (42,059 | )
|                                                                    |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  
|Income from operations before income taxes and minority interest    |  | $                  | 17,464  |   |                        | $ | 5,496   |                  |  | $ | 21,818           |   |  | $ | 5,323   |  
|                                                                    |  |                    |         |   |                        |   |         |                  |  |   |                  |   |  |   |         |  

---

|(1) | The twelve weeks and thirty-six weeks ended September 6, 2005 include the impact of ticket sales, rental of corporate hospitality tents, concessions, and merchandise sales of
approximately $41.0 million and $50.5 million, respectively, related to the 2005 U.S. Open. This resulted in an increase of approximately $13.8 million and $14.0 million in EBITDA for the twelve weeks and thirty-six weeks ended September 6,
2005, respectively.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The thirty-six weeks ended September 5, 2006 amounts include an impairment of $3.0 million related to held for sale properties. There was no impairment recorded during the
twelve weeks ended September 5, 2006.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



13



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ClubCorp, Inc.

Note11. Subsequent Events

On October 10, 2006, the Company announced that it entered into an Agreement and Plan of Merger, or
Merger Agreement, with Fillmore CCA Holdings, Inc., a Delaware corporation, and ClubCorp Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary of Fillmore CCA Holdings. Fillmore CCA Holdings is owned by affiliates of KSL
Capital Partners. Consummation of the merger is not subject to a financing condition, but is subject to various closing conditions, including, among others, the sale of The Pinehurst Resort and Country Club described below, the termination or
expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and any other antitrust laws, and approval of the stockholders of the Company, including the approval of a majority of the minority stockholders of the
Company. The Company expects the merger to be consummated on or prior to December 26, 2006.

In addition, pursuant to an Interest Purchase Agreement,
dated September 12, 2006, as amended by that certain Amendment to Interest Purchase Agreement, dated October 9, 2006, or the Purchase Agreement, by and among the Company, Putterboy, Ltd., a Texas limited partnership, or Putterboy, and The
Pinehurst Company, a Delaware corporation, the Company agreed to sell all of the outstanding equity interests of Pinehurst, Inc., a North Carolina corporation, Pinehurst Championship Management, Inc., a North Carolina corporation, Pinehurst Country
Club, Inc., a North Carolina corporation, ClubCorp Realty East, Inc., a North Carolina corporation, PCC Realty Corp., a North Carolina corporation, Pinehurst Acquisition Corp., a North Carolina corporation, Pinehurst Realty Corp., a Nevada
corporation and Pinehurst No. VII, Inc., a North Carolina corporation, or collectively, the Pinehurst Entities. Putterboy is an affiliate of each of Robert H. Dedman, Jr., the Companys Chairman of the Board, Nancy M. Dedman, a director of
the Company, and Patricia Dedman Dietz, a director of the Company. Collectively, Robert H. Dedman, Jr., Nancy M. Dedman and Patricia Dedman Deitz and their affiliates and associates beneficially own approximately 70% of the Companys
outstanding common stock. In addition to being conditioned on the consummation of the Merger, the sale of the Pinehurst Entities is subject to the approval of the stockholders of the Company and the satisfaction of other closing conditions.



14



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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

Overview

ClubCorp, Inc. (referred to as ClubCorp®, the Company, we, us and our throughout this document) is a holding company incorporated under the laws of the State of Delaware that, through
its subsidiaries, owns and operates premier golf and business clubs and destination golf resorts. As of September 5, 2006, we operated 97 country clubs, golf clubs and public golf facilities, four destination golf resorts and 64 business,
sports and business/sports clubs in 27 states, Washington D.C. and three foreign countries. Marquee resorts and clubs in our portfolio include Pinehurst® Resort and Country Club in Pinehurst, North Carolina, The Homestead® Resort in Hot Springs, Virginia, Barton Creek Resort and Country Club in Austin, Texas, Firestone® Country Club in Akron, Ohio, Mission Hills® Country Club near Palm Springs, California, and The
City Club on Bunker Hill in Los Angeles, California. Golf Digest, Golf Travel and other golf industry publications have consistently ranked several of our approximately 150 golf courses and destination golf resorts among the best in
the United States.

Our operations are organized into three principal business segments: country club and golf facilities, resorts, and
business and sports clubs. Other operations that are not assigned to a principal business segment include our real estate operations and our corporate services. Our primary sources of revenue include membership dues, membership fees and deposits,
food and beverage operations, golf operations and lodging.

Our predecessor corporation was organized in 1957 under the name Country Clubs,
Inc. All references to us also include Country Clubs, Inc. and its successor corporations. For purposes of this document, unless otherwise indicated, references to us also include our various subsidiaries. However, we and each of our subsidiaries
are careful to maintain separate legal existence, and general references to us should not be interpreted in any way to reduce the legal distinctions and separateness between subsidiaries or between us and our subsidiaries.

There is currently no public market for our common stock. We are subject to the periodic reporting requirements of the Securities Exchange Act of 1934,
as amended, pursuant to Section 15(d) thereof, because we filed a registration statement on Form S-1, which became effective October 24, 1994, pursuant to the Securities Act of 1933, as amended (the Registration Statement). The
Registration Statement registered participation interests in the ClubCorp Stock Investment Plan (the Plan) and our common stock, at $.01 par value per share (the Common Stock), to be sold to the Plan. The Plan was amended and
restated on January 1, 1999, to become the ClubCorp Employee Stock Ownership Plan (the Amended Plan).

Our consolidated
financial statements are presented on a 52/53 week fiscal year ending on the last Tuesday of December, with the first three quarters consisting of 12 weeks each and the fourth quarter consisting of 16 or 17 weeks. The following discussion of our
financial condition and results of operations for the twelve and thirty-six weeks ended September 6, 2005 and September 5, 2006 should be read in conjunction with our Annual Report on Form 10-K for the year ended December 27, 2005, as
filed with the Securities and Exchange Commission.

Recent Developments

On October 10, 2006, the Company announced that it entered into an Agreement and Plan of Merger, or Merger Agreement, with Fillmore CCA Holdings,
Inc., a Delaware corporation, and ClubCorp Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary of Fillmore CCA Holdings. Fillmore CCA Holdings is owned by affiliates of KSL Capital Partners. Consummation of the merger is not
subject to a financing condition, but is subject to various closing conditions, including, among others, the sale of The Pinehurst Resort and Country Club described below, the termination or expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and any other antitrust laws, and approval of the stockholders of the Company, including the approval of a majority of the minority stockholders of the Company. The Company expects the merger to
be consummated on or prior to December 26, 2006.

In addition, pursuant to an Interest Purchase Agreement, dated September 12,
2006, as amended by that certain Amendment to Interest Purchase Agreement, dated October 9, 2006, or the Purchase Agreement, by and among the Company, Putterboy, Ltd., a Texas limited partnership, or Putterboy, and The Pinehurst Company, a
Delaware corporation, the Company agreed to sell all of the outstanding equity interests of Pinehurst, Inc., a North Carolina corporation, Pinehurst Championship Management, Inc., a North Carolina corporation, Pinehurst Country Club, Inc., a North
Carolina corporation, ClubCorp Realty East, Inc., a North Carolina corporation, PCC Realty Corp., a North Carolina corporation, Pinehurst Acquisition Corp., a North



15



---

Carolina corporation, Pinehurst Realty Corp., a Nevada corporation and Pinehurst No. VII, Inc., a North Carolina corporation, or collectively, the Pinehurst
Entities. Putterboy is an affiliate of each of Robert H. Dedman, Jr., the Companys Chairman of the Board, Nancy M. Dedman, a director of the Company, and Patricia Dedman Dietz, a director of the Company. Collectively, Robert H. Dedman,
Jr., Nancy M. Dedman and Patricia Dedman Deitz and their affiliates and associates beneficially own approximately 70% of the Companys outstanding common stock. In addition to being conditioned on the consummation of the Merger, the sale of the
Pinehurst Entities is subject to the approval of the stockholders of the Company and the satisfaction of other closing conditions.

Critical Accounting
Policies

For a discussion of our critical accounting policies refer to Item 7. Managements Discussion and Analysis of
Financial Condition and Results of Operations  Overview  Critical Accounting Policies and Estimates in our Annual Report on Form 10-K for the year ended December 27, 2005. There have been no material changes to the critical
accounting policies discussed in our Annual Report on Form 10-K for the year ended December 27, 2005.

Results of Operations

General

We analyze operating results and
manage our business segments using the following concepts and definitions:

We employ same store analysis techniques for a
variety of management purposes. By our definition, facilities are evaluated yearly and considered same store once they have been fully operational for one year. Developing facilities and divested facilities are not classified as same
store; however, facilities held for sale and held and used are considered same store until they are divested. This distinction between developing and same store facilities allows us to separately analyze the operating results of our established and
new facilities. We believe this approach provides an effective analysis tool because it allows us to assess the results of our core operating strategies by tracking the performance of our same store facilities without the distortions that would be
caused by the inclusion of developing properties. Facilities divested during a period are removed from the same store classification for all periods presented. We analyze membership and lodging data on a same store basis as well, so that it is not
distorted by divestitures. We believe this provides a clearer picture of trends in our continuing operations.

Operating revenues are
comprised mainly of revenues from dues income, golf, food and beverage and lodging, as well as the revenues recognized from membership deposits and fees. All revenue sources are recognized in the period earned, which is generally at the time of sale
or when the service is provided. Operating expenses include payroll and related expenses, other fees and expenses and rent. All operating costs are expensed as incurred.

We evaluate segment performance and allocate resources based on each segments EBITDA. We also use EBITDA to monitor our property-level and overall performance. EBITDA is defined as earnings before interest,
taxes, depreciation and amortization. EBITDA should not be construed as an alternative to, or a better indicator of, operating income or loss, is not based on accounting principles generally accepted in the United States of America, and is not
necessarily a measure of our cash flow or ability to fund our cash needs. Our measurement of EBITDA may not be comparable to similarly titled measures reported by other companies. See Note 10 of the Notes to Condensed Consolidated Financial
Statements for a reconciliation of this measure to our consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America.



16



---

12 Weeks Ended September 6, 2005 Compared to 12 Weeks Ended September 5, 2006

Consolidated Operations  Continuing Operations

Results of operations in 2005 include a substantial portion of the revenues and expenses related to hosting the 2005 U.S. Open. The U.S. Open week was seven days long with the last five days falling in our third quarter. Excluding the
impact of the U.S. Open, operating revenues increased in all three operating segments  country club and golf facilities, resorts and business and sports clubs  finishing the twelve weeks ended September 5, 2006 at a consolidated
total of $233.0 million. The following narrative discussion excludes the impact of the 2005 U.S. Open from the twelve weeks ended September 6, 2005, unless otherwise indicated. Country club and golf facilities operating revenue increased 3%
primarily due to increases in dues income. Resorts operating revenue increased slightly with increases in food and beverage and lodging revenues at The Homestead offset by decreased retail revenues at Pinehurst. Business and sports clubs operating
revenue increased 3% primarily due to increased dues income and private party food and beverage revenue.

Operating costs and expenses for
all segments increased primarily as a result of inflation. In addition to these expected increases, resorts operating costs and expenses decreased due to lower retail sales at Pinehurst. Country club and golf facilities operating costs and expenses
increased due to increases in golf course maintenance costs. Business and sports clubs operating costs and expenses were consistent with prior year. Utilities costs increased by 6% for all three operating segments due primarily to higher prices.

Operating income improved in the country club and golf facilities and business and sports clubs segments and decreased slightly in the
resorts segment. Country club and golf facilities reflected improved margins primarily due to controlling payroll and payroll related costs. Business and sports clubs had increased volume and improved margins due to lower payroll and payroll related
as well as cost of sales. Resorts had a slight improvement in food and beverage margins offset by increased costs for golf course maintenance primarily related to payroll and payroll related costs.

Consolidated Operations - Discontinued Operations

The periods ended September 6, 2005 and September 5, 2006 include two properties divested in 2005, three properties divested in 2006 and five
properties currently held for sale in discontinued operations. Operating revenues for these properties decreased from $6.7 million in 2005 to $4.0 million in 2006. Net loss from these properties increased $0.1 million. In accordance with SFAS 144,
depreciation expense is not recorded beginning with the quarter a property is classified as held for sale.



17



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Segment and Other Information  12 Weeks

Country Club and Golf Facilities

The following tables present certain summary financial information for our country club and golf facilities segment for the twelve weeks ended September 6, 2005 and September 5, 2006 (dollars in thousands):



|                                                               |  |                                            |         |                                        |   |         |  |      |         |  |   |        
|-------------------------------------------------------------- |  | ------------------------------------------ | ------- | -------------------------------------- | - | ------- |  | ---- | ------- |  | - | -------
|                                                               |  | Same Store CountryClub and Golf Facilities |         | Total Country Club and Golf Facilities
|                                                               |  | 2005                                       |         | 2006                                   |   | 2005    |  | 2006
|Number of facilities at end of period in continuing operations |  |                                            | 90      |                                        |   | 90      |  |      | 93      |  |   | 93     
|Operating revenues                                             |  | $                                          | 117,693 |                                        | $ | 120,876 |  | $    | 118,637 |  | $ | 122,753
|Recognition of membership fees and deposits                    |  |                                            | 5,959   |                                        |   | 5,236   |  |      | 5,985   |  |   | 5,262  
|                                                               |  |                                            |         |                                        |   |         |  |      |         |  |   |        
|Total operating revenues                                       |  | $                                          | 123,652 |                                        | $ | 126,112 |  | $    | 124,622 |  | $ | 128,015
|                                                               |  |                                            |         |                                       
|Operating costs and expenses (1)                               |  |                                            | 95,575  |                                        |   | 97,493  |  |      | 96,200  |  |   | 98,773 
|                                                               |  |                                            |         |                                        |   |         |  |      |         |  |   |        
|Segment EBITDA from continuing operations (1)                  |  | $                                          | 28,077  |                                        | $ | 28,619  |  | $    | 28,422  |  | $ | 29,242 
|                                                               |  |                                            |         |                                        |   |         |  |      |         |  |   |        
|Segment EBITDA from discontinued operations (1)                |  | $                                          | 49      |                                        | $ | 340     |  | $    | 31      |  | $ | 115    
|                                                               |  |                                            |         |                                        |   |         |  |      |         |  |   |        
|Total Segment EBITDA (1)                                       |  | $                                          | 28,126  |                                        | $ | 28,959  |  | $    | 28,453  |  | $ | 29,357 
|                                                               |  |                                            |         |                                        |   |         |  |      |         |  |   |        

---

|(1) | Excludes intercompany consulting and support fees of $6.1 million and $6.5 million for Same Store and $6.2 million and $6.7 million for Total in the twelve weeks ended
September 6, 2005 and September 5, 2006, respectively.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Continuing Operations. Total operating revenues and
EBITDA increased for same store country club and golf facilities primarily due to increased membership dues and food and beverage revenues.

Membership trends for golf and country clubs historically decline in colder months of the year with positive recovery in the spring as weather becomes more favorable for golf. During 2006, our membership had a positive recovery at a rate
that was slightly higher than in 2005. This trend, coupled with an annual price increase that generally occurs at the beginning of the year, resulted in a 5% overall increase in membership dues.

Golf operations revenues decreased slightly comparing 2006 to 2005. Golf course maintenance expenses increased primarily due to inflation as well as
higher oil and gas costs resulting in overall decreased net profit from golf operations in the current year. Our annual dues price increases, in part, are designed to cover these increased maintenance costs.

Food and beverage revenues increased as a result of increased a la carte spending as well as private party events primarily due to better economic
conditions. An increase in a la carte covers partially offset by a decreased check average for the quarter resulted in a 2% increase in a la carte revenues. In addition, efforts to pre-book private parties were more successful. The outcome was an
increase in the number of events held in 2006. Cost of sales and payroll and related expenses were slightly higher than the prior year quarter resulting in a decreased net profit in food and beverage operations.

Depreciation and amortization increased from $11.4 million in 2005 to $12.0 million in 2006 due to additions during the previous year.

Discontinued Operations. The periods ended September 6, 2005 and September 5, 2006 include two properties divested in 2005, two managed
properties divested in 2006 and four properties currently held for sale in discontinued operations.



18



---

Resorts

The following tables present certain summary financial data and lodging data for our resort segment for the twelve weeks ended September 6, 2005 and September 5, 2006 (dollars in thousands, except lodging
data):



|                                                                   |  |                    |        |   |               |   |        |      |  |      |        |  |   |       
|------------------------------------------------------------------ |  | ------------------ | ------ | - | ------------- | - | ------ | ---- |  | ---- | ------ |  | - | ------
|                                                                   |  | Same Store Resorts |        |   | Total Resorts
|                                                                   |  | 2005               |        |   | 2006          |   |        | 2005 |  | 2006
|Number of facilities at end of period in continuing operations (1) |  |                    | 3      |   |               |   | 3      |      |  |      | 3      |  |   | 4     
|Operating revenues                                                 |  | $                  | 94,207 |   |               | $ | 53,383 |      |  | $    | 94,207 |  | $ | 53,671
|Recognition of membership fees and deposits                        |  |                    | 1,362  |   |               |   | 1,231  |      |  |      | 1,362  |  |   | 1,231 
|                                                                   |  |                    |        |   |               |   |        |      |  |      |        |  |   |       
|Total operating revenues                                           |  | $                  | 95,569 |   |               | $ | 54,614 |      |  | $    | 95,569 |  | $ | 54,902
|                                                                   |  |                    |        |  
|Operating costs and expenses (2)                                   |  |                    | 68,192 |   |               |   | 40,910 |      |  |      | 68,192 |  |   | 40,910
|                                                                   |  |                    |        |   |               |   |        |      |  |      |        |  |   |       
|Segment EBITDA from continuing operations (2)                      |  | $                  | 27,377 |   |               | $ | 13,704 |      |  | $    | 27,377 |  | $ | 13,992
|                                                                   |  |                    |        |   |               |   |        |      |  |      |        |  |   |       
|Segment EBITDA from discontinued operations                        |  | $                  |       |   |               | $ |       |      |  | $    |       |  | $ |      
|                                                                   |  |                    |        |   |               |   |        |      |  |      |        |  |   |       
|Total Segment EBITDA (2)                                           |  | $                  | 27,377 |   |               | $ | 13,704 |      |  | $    | 27,377 |  | $ | 13,992
|                                                                   |  |                    |        |   |               |   |        |      |  |      |        |  |   |       
|Lodging data (3 resorts) (1)                                       |  |                    |        |   |               |   |        |      |  |      |        |  |   |       
|Room nights available                                              |  |                    | 99,204 |   |               |   | 99,204 |      |  |      |        |  |   |       
|Room nights sold                                                   |  |                    | 67,231 |   |               |   | 65,664 |      |  |      |        |  |   |       
|Paid occupancy rate                                                |  |                    | 67.8   | % |               |   | 66.2   | %    |  |      |        |  |   |       
|Average daily rate (3)                                             |  | $                  | 186    |   |               | $ | 192    |      |  |      |        |  |   |       
|Revenue per occupied room (4)                                      |  | $                  | 732    |   |               | $ | 747    |      |  |      |        |  |   |       

---

|(1) | Number of facilities and lodging data is comprised of data from wholly owned resorts consisting of Pinehurst, The Homestead and Barton Creek. In the first quarter of 2006, we signed
an agreement to manage Ocean Edge Resort and Golf Club on Cape Cod. Management fee revenue for the twelve weeks ended September 5, 2006 is included in Total Resorts operating revenues.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Excludes intercompany consulting and support fees of $1.3 million for Same Store and Total in the twelve weeks ended September 6, 2005 and September 5, 2006, respectively.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Average daily rate is based on the average room rate per day for the quarter-to-date.
|--- | -------------------------------------------------------------------------------------

|(4) | Revenue per occupied room is based on total operating revenues excluding membership dues, recognition of member initiation fees and net managed rooms commissions.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

Results of operations in 2005 include a portion of the revenues and expenses related to hosting the 2005 U.S. Open. The U.S.
Open week was seven days long with two of the days falling in our second quarter and the other five days falling in our third quarter. The following table presents certain summary financial data for the U.S. Open for the twelve weeks ended
September 6, 2005 (dollars in thousands):



|                             |  |   |       
|---------------------------- |  | - | ------
|Operating revenues           |  | $ | 40,956
|Operating costs and expenses |  |   | 27,116
|                             |  |   |       
|EBITDA                       |  | $ | 13,840
|                             |  |   |       

Continuing Operations. Excluding the impact of the U.S. Open, total operating revenues and
EBITDA increased for same store resorts primarily due to higher average daily rate and spending at The Homestead.

The Homestead revenues
increased 6% due to an $18 increase in average daily rate and increased spending as well as a slight increase in occupancy. Pinehurst revenues decreased primarily due to decreased merchandise sales in 2006. The 2005 merchandise sales were higher due
to the sale of U.S. Open merchandise that occurred before and after the actual week of the U.S. Open and thus were not included in the summarized U.S. Open results noted above. Barton Creek operating revenues were comparable with an increase in
average daily rate and spending offset by decreased occupancy.

All three resorts were able to effectively manage their variable costs,
particularly in payroll and related areas as well as golf course maintenance. The result was an improvement of 1% in EBITDA generated from these additional revenues.

Depreciation and amortization increased slightly from $3.8 million in 2005 to $4.0 million in 2006.



19



---

Business and Sports Clubs

The following tables present certain summary financial information for our business and sports clubs segment for the twelve weeks ended September 6, 2005 and September 5, 2006 (dollars in thousands):



|                                                               |  |                                     |        |                                 |   |        |  |      |        |  |   |       
|-------------------------------------------------------------- |  | ----------------------------------- | ------ | ------------------------------- | - | ------ |  | ---- | ------ |  | - | ------
|                                                               |  | Same Store Businessand Sports Clubs |        | Total Business and Sports Clubs
|                                                               |  | 2005                                |        | 2006                            |   | 2005   |  | 2006
|Number of facilities at end of period in continuing operations |  |                                     | 62     |                                 |   | 62     |  |      | 62     |  |   | 63    
|Operating revenues                                             |  | $                                   | 44,292 |                                 | $ | 45,673 |  | $    | 44,292 |  | $ | 45,708
|Recognition of membership fees and deposits                    |  |                                     | 475    |                                 |   | 498    |  |      | 475    |  |   | 498   
|                                                               |  |                                     |        |                                 |   |        |  |      |        |  |   |       
|Total operating revenues                                       |  | $                                   | 44,767 |                                 | $ | 46,171 |  | $    | 44,767 |  | $ | 46,206
|                                                               |  |                                     |        |                                
|Operating costs and expenses (1)                               |  |                                     | 39,538 |                                 |   | 39,640 |  |      | 39,538 |  |   | 39,641
|                                                               |  |                                     |        |                                 |   |        |  |      |        |  |   |       
|Segment EBITDA from continuing operations (1)                  |  | $                                   | 5,229  |                                 | $ | 6,531  |  | $    | 5,229  |  | $ | 6,565 
|                                                               |  |                                     |        |                                 |   |        |  |      |        |  |   |       
|Segment EBITDA from discontinued operations (1)                |  | $                                   | 154    |                                 | $ | 159    |  | $    | 198    |  | $ | 159   
|                                                               |  |                                     |        |                                 |   |        |  |      |        |  |   |       
|Total Segment EBITDA (1)                                       |  | $                                   | 5,383  |                                 | $ | 6,690  |  | $    | 5,427  |  | $ | 6,724 
|                                                               |  |                                     |        |                                 |   |        |  |      |        |  |   |       

---

|(1) | Excludes intercompany consulting and support fees of $3.0 million and $3.0 million for Same Store and $3.0 and $3.1 million for Total, respectively in the twelve weeks ended
September 6, 2005 and September 5, 2006.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Continuing Operations.Total operating revenues and EBITDA
increased at same store business and sports clubs primarily due to increased membership dues and food and beverage private party revenues.

Membership trends for business and sports clubs historically decline in the early part of the year with positive recovery in the later part of the year and throughout the holiday season. Although we did see a typical trend of declining
membership for the third quarter of 2006, it was lower than our decline for the third quarter of 2005. This trend, coupled with an annual price increase that generally occurs at the beginning of the year, resulted in a 4% overall increase in
membership dues.

Food and beverage operations increased primarily due to more successful efforts in pre-booking private events resulting
in a 4% increase in private party revenues. During the third quarter of 2006, cost of sales, payroll and other costs associated with the private events were well controlled resulting in a positive profit margin in overall food and beverage
operations comparing 2005 to 2006.

Depreciation and amortization increased slightly from $2.0 million in 2005 to $2.1 million in 2006.

Discontinued Operations.The periods ended September 6, 2005 and September 5, 2006 include one property divested in 2006
and one property currently held for sale in discontinued operations.

Other Operations and Services 
Continuing Operations

Other operations and services consist primarily of real estate operations and corporate services. Revenues
primarily consist of fees we receive from third-party developers based on a percentage of their real estate sales. Revenues decreased from $5.2 million in 2005 to $3.9 million in 2006 primarily due to decreased lot sales in 2006.

Operating loss from other operations and services increased from $10.5 million in 2005 to $12.1 million in 2006 primarily due to the recognition of
approximately $0.9 million in compensation expense related to the expensing of stock options and the expensing of costs related to our potential sale of the company of $0.6 million. Offsetting this were expenses of approximately $1 million incurred
in 2005 in corporate services related to the hosting of the 2005 U.S. Open and decreased lot sales in 2006.



20



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36 Weeks Ended September 6, 2005 Compared to 36 Weeks Ended September 5, 2006

Consolidated Operations  Continuing Operations

Results of operations in 2005 include the revenues and expenses related to hosting the 2005 U.S. Open. Excluding the impact of the U.S. Open, operating revenues increased in all three operating segments  country club and golf
facilities, resorts and business and sports clubs  finishing the thirty-six weeks ended September 5, 2006 at a consolidated total of $678.1 million. The following narrative discussion excludes the impact of the 2005 U.S. Open from the
thirty-six weeks ended September 6, 2005, unless otherwise indicated. Country club and golf facilities operating revenue increased 4% due to increases in dues income, food and beverage and golf operations revenues. Resorts operating revenue
increased primarily related to increases in golf operations at Pinehurst, lodging and food and beverage revenues at all three resorts partially offset by decreases in retail sales at Pinehurst. Business and sports clubs operating revenue increased
3% primarily due to increased dues income and private party food and beverage revenue.

Operating costs and expenses for all segments
increased primarily as a result of inflation. In addition to these expected increases, resorts operating costs and expenses decreased due to management of golf course maintenance costs as well as decreased retail sales. Country club and golf
facilities operating costs and expenses increased due to increases in golf course maintenance and other golf expenses incurred to host a golf tournament that would normally have been covered by a sponsor. Business and sports clubs operating costs
and expenses were negatively impacted by increased utilities costs. Utilities costs increased by $2.2 million or 8% for all three operating segments due primarily to higher pricing.

Operating income improved in the resorts and business and sports clubs segments and decreased in the country club and golf facilities segment. Resorts
reflected improved margins primarily due to controlling payroll and payroll related costs. Business and sports clubs had increased volume and an improved food and beverage margin due to lower cost of sales and management of payroll costs. Country
club and golf facilities had flat margins for cost of goods sold and payroll costs coupled with the increased costs for golf course maintenance and other golf expenses noted above.

Consolidated Operations - Discontinued Operations

The periods ended September 6, 2005 and September 5, 2006 include two properties divested in 2005, three properties divested in 2006 and five
properties currently held for sale in discontinued operations. Operating revenues for these properties decreased from $19.7 million in 2005 to $12.2 million in 2006. Net loss from these properties increased $2.1 million primarily due to a $3.0
million impairment charge taken in 2006. In accordance with SFAS 144, depreciation expense is not recorded beginning with the quarter a property is classified as held for sale.



21



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Segment and Other Information  36 Weeks

Country Club and Golf Facilities

The following tables present certain summary financial information for our country club and golf facilities segment for the thirty-six weeks ended September 6, 2005 and September 5, 2006 (dollars in
thousands):



|                                                               |  |                                            |         |                                        |      |   |         |  |   |         |   |  |   |         |  
|-------------------------------------------------------------- |  | ------------------------------------------ | ------- | -------------------------------------- | ---- | - | ------- |  | - | ------- | - |  | - | ------- | -
|                                                               |  | Same Store CountryClub and Golf Facilities |         | Total Country Club and Golf Facilities |     
|                                                               |  | 2005                                       |         |                                        | 2006 |   | 2005    |  |   | 2006    |  
|Number of facilities at end of period in continuing operations |  |                                            | 90      |                                        |      |   | 90      |  |   | 93      |   |  |   | 93      |  
|Operating revenues                                             |  | $                                          | 333,220 |                                        |      | $ | 345,267 |  | $ | 335,807 |   |  | $ | 350,476 |  
|Recognition of membership fees and deposits                    |  |                                            | 17,889  |                                        |      |   | 16,307  |  |   | 17,973  |   |  |   | 16,382  |  
|                                                               |  |                                            |         |                                        |      |   |         |  |   |         |   |  |   |         |  
|Total operating revenues                                       |  | $                                          | 351,109 |                                        |      | $ | 361,574 |  | $ | 353,780 |   |  | $ | 366,858 |  
|Operating costs and expenses (1)                               |  |                                            | 265,304 |                                        |      |   | 276,797 |  |   | 266,938 |   |  |   | 280,325 |  
|                                                               |  |                                            |         |                                        |      |   |         |  |   |         |   |  |   |         |  
|                                                               |  |                                            |         |                                       
|Segment EBITDA from continuing operations (1)                  |  | $                                          | 85,805  |                                        |      | $ | 84,777  |  | $ | 86,842  |   |  | $ | 86,533  |  
|                                                               |  |                                            |         |                                        |      |   |         |  |   |         |   |  |   |         |  
|Segment EBITDA from discontinued operations (1)                |  | $                                          | (79     | )                                      |      | $ | 433     |  | $ | (387    | ) |  | $ | (209    | )
|                                                               |  |                                            |         |                                        |      |   |         |  |   |         |   |  |   |         |  
|Total Segment EBITDA (1)                                       |  | $                                          | 85,726  |                                        |      | $ | 85,210  |  | $ | 86,455  |   |  | $ | 86,324  |  
|                                                               |  |                                            |         |                                        |      |   |         |  |   |         |   |  |   |         |  

---

|(1) | Excludes intercompany consulting and support fees of $18.4 million and $19.4 million for Same Store and $18.8 million and $19.8 million for Total in the thirty-six weeks ended
September 6, 2005 and September 5, 2006, respectively.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Continuing Operations. Total operating revenues
increased for same store country club and golf facilities primarily due to increased membership dues, golf operations and food and beverage revenues while EBITDA decreased primarily due to increased golf operations expenses.

Membership trends for golf and country clubs historically decline in colder months of the year with positive recovery in the spring as weather becomes
more favorable for golf. Our year-to-date memberships trends have been more positive when comparing 2006 versus 2005. This trend, coupled with an annual price increase that generally occurs at the beginning of the year, resulted in a 5% overall
increase in membership dues.

Golf operations revenue increased primarily due to increased rounds played due to more favorable weather in
2006 as compared to 2005 and increased merchandise sales. Abnormally heavy rains on the West coast in 2005 resulted in lower golf revenues for those clubs in peak season in 2005. Golf course maintenance expenses increased due to inflation as well as
higher oil and gas costs resulting in overall decreased net profit from golf operations in the current year. Our annual dues price increases, in part, are designed to cover these increased maintenance costs. In addition, we incurred costs to host a
tournament that would normally have been covered by a sponsor. We have received a partial reimbursement of these costs in 2006 and are negotiating an additional reimbursement of approximately $1.0 million before year-end.

Food and beverage revenues increased as a result of increased a la carte spending as well as private party events primarily due to better economic
conditions. An increase in a la carte covers and increased check average resulted in a 4% increase in a la carte revenues. In addition, efforts to pre-book private parties were more successful. The outcome was an increase in the number of events
held in 2006 resulting in a 4% increase in revenues. Cost of sales and payroll and related expenses were slightly higher during the current year resulting in a decreased net profit in food and beverage operations.

Depreciation and amortization increased from $33.8 million in 2005 to $35.5 million in 2006 due to additions during the previous year.

Discontinued Operations. The periods ended September 6, 2005 and September 5, 2006 include two properties divested in 2005, two managed
properties divested in 2006 and four properties currently held for sale in discontinued operations.



22



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Resorts

The following tables present certain summary financial data and lodging data for our resort segment for the thirty-six weeks ended September 6, 2005 and September 5, 2006 (dollars in thousands, except
lodging data):



|                                                                   |  |                    |         |   |               |   |         |      |  |      |         |  |   |        
|------------------------------------------------------------------ |  | ------------------ | ------- | - | ------------- | - | ------- | ---- |  | ---- | ------- |  | - | -------
|                                                                   |  | Same Store Resorts |         |   | Total Resorts
|                                                                   |  | 2005               |         |   | 2006          |   |         | 2005 |  | 2006
|Number of facilities at end of period in continuing operations (1) |  |                    | 3       |   |               |   | 3       |      |  |      | 3       |  |   | 4      
|Operating revenues                                                 |  | $                  | 195,325 |   |               | $ | 150,695 |      |  | $    | 195,325 |  | $ | 151,072
|Recognition of membership fees and deposits                        |  |                    | 4,092   |   |               |   | 3,784   |      |  |      | 4,092   |  |   | 3,784  
|                                                                   |  |                    |         |   |               |   |         |      |  |      |         |  |   |        
|Total operating revenues                                           |  | $                  | 199,417 |   |               | $ | 154,479 |      |  | $    | 199,417 |  | $ | 154,856
|Operating costs and expenses (2)                                   |  |                    | 151,254 |   |               |   | 116,521 |      |  |      | 151,254 |  |   | 116,521
|                                                                   |  |                    |         |   |               |   |         |      |  |      |         |  |   |        
|Segment EBITDA from continuing operations (2)                      |  | $                  | 48,163  |   |               | $ | 37,958  |      |  | $    | 48,163  |  | $ | 38,335 
|                                                                   |  |                    |         |   |               |   |         |      |  |      |         |  |   |        
|Segment EBITDA from discontinued operations                        |  | $                  |        |   |               | $ |        |      |  | $    |        |  | $ |       
|                                                                   |  |                    |         |   |               |   |         |      |  |      |         |  |   |        
|Total Segment EBITDA (2)                                           |  | $                  | 48,163  |   |               | $ | 37,958  |      |  | $    | 48,163  |  | $ | 38,335 
|                                                                   |  |                    |         |   |               |   |         |      |  |      |         |  |   |        
|Lodging data (3 resorts) (1)                                       |  |                    |         |   |               |   |         |      |  |      |         |  |   |        
|Room nights available                                              |  |                    | 297,652 |   |               |   | 297,652 |      |  |      |         |  |   |        
|Room nights sold                                                   |  |                    | 179,810 |   |               |   | 180,704 |      |  |      |         |  |   |        
|Paid occupancy rate                                                |  |                    | 60.4    | % |               |   | 60.7    | %    |  |      |         |  |   |        
|Average daily rate (3)                                             |  | $                  | 189     |   |               | $ | 196     |      |  |      |         |  |   |        
|Revenue per occupied room (4)                                      |  | $                  | 738     |   |               | $ | 762     |      |  |      |         |  |   |        

---

|(1) | Number of facilities and lodging data is comprised of data from wholly owned resorts consisting of Pinehurst, The Homestead and Barton Creek. In the first quarter of 2006, we signed
an agreement to manage Ocean Edge Resort and Golf Club on Cape Cod. Management fee revenue for the thirty-six weeks ended September 5, 2006 is included in Total Resorts operating revenues.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Excludes intercompany consulting and support fees of $3.9 million and $4.0 million for Same Store and Total in the thirty-six weeks ended September 6, 2005 and
September 5, 2006, respectively.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Average daily rate is based on the average room rate per day for the year-to-date.
|--- | ----------------------------------------------------------------------------------

|(4) | Revenue per occupied room is based on total operating revenues excluding membership dues, recognition of member initiation fees and net managed rooms commissions.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

Results of operations in 2005 include a portion of the revenues and expenses related to hosting the 2005 U.S. Open. The U.S.
Open week was seven days long with two of the days falling in our second quarter and the other five days falling in our third quarter. The following table presents certain summary financial data for the U.S. Open for the thirty-six weeks ended
September 6, 2005 (dollars in thousands):



|                             |  |   |       
|---------------------------- |  | - | ------
|Operating revenues           |  | $ | 50,467
|Operating costs and expenses |  |   | 36,517
|                             |  |   |       
|EBITDA                       |  | $ | 13,950
|                             |  |   |       

Continuing Operations. Excluding the impact of the U.S. Open, total operating revenues and
EBITDA increased for same store resorts primarily due to higher occupancy at Pinehurst and higher average daily rate and spending at Barton Creek and The Homestead.

Barton Creek revenues increased 7% due to a slight increase in occupancy, a $9 increase in average daily rate and increased spending as Barton Creek carried forward its momentum from 2005 due to strong economic
conditions. Pinehurst revenues increased 3% primarily due to an increase in occupancy. In addition, Pinehurst increased the greens fee prices on several of its courses and increased the total number of rounds played resulting in higher revenue from
golf operations. The Homestead revenues increased 3% due to a $15 increase in average daily rate and increased spending.

All three resorts
were able to effectively manage their variable costs, particularly in payroll and related areas as well as golf course maintenance. The result was an improvement of 2% in EBITDA generated from these additional revenues.

Depreciation and amortization increased slightly from $11.3 million in 2005 to $11.7 million in 2006.



23



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Business and Sports Clubs

The following tables present certain summary financial information for our business and sports clubs segment for the thirty-six weeks ended September 6, 2005 and September 5, 2006 (dollars in thousands):



|                                                               |  |                                     |         |                                 |   |         |  |      |         |  |   |        
|-------------------------------------------------------------- |  | ----------------------------------- | ------- | ------------------------------- | - | ------- |  | ---- | ------- |  | - | -------
|                                                               |  | Same Store Businessand Sports Clubs |         | Total Business and Sports Clubs
|                                                               |  | 2005                                |         | 2006                            |   | 2005    |  | 2006
|Number of facilities at end of period in continuing operations |  |                                     | 62      |                                 |   | 62      |  |      | 62      |  |   | 63     
|Operating revenues                                             |  | $                                   | 142,180 |                                 | $ | 146,455 |  | $    | 142,180 |  | $ | 146,559
|Recognition of membership fees and deposits                    |  |                                     | 1,453   |                                 |   | 1,480   |  |      | 1,453   |  |   | 1,480  
|                                                               |  |                                     |         |                                 |   |         |  |      |         |  |   |        
|Total operating revenues                                       |  | $                                   | 143,633 |                                 | $ | 147,935 |  | $    | 143,633 |  | $ | 148,039
|                                                               |  |                                     |         |                                
|Operating costs and expenses (1)                               |  |                                     | 121,982 |                                 |   | 123,232 |  |      | 121,982 |  |   | 123,234
|                                                               |  |                                     |         |                                 |   |         |  |      |         |  |   |        
|Segment EBITDA from continuing operations (1)                  |  | $                                   | 21,651  |                                 | $ | 24,703  |  | $    | 21,651  |  | $ | 24,805 
|                                                               |  |                                     |         |                                 |   |         |  |      |         |  |   |        
|Segment EBITDA from discontinued operations (1)                |  | $                                   | 549     |                                 | $ | 473     |  | $    | 666     |  | $ | 538    
|                                                               |  |                                     |         |                                 |   |         |  |      |         |  |   |        
|Total Segment EBITDA (1)                                       |  | $                                   | 22,200  |                                 | $ | 25,176  |  | $    | 22,317  |  | $ | 25,343 
|                                                               |  |                                     |         |                                 |   |         |  |      |         |  |   |        

---

|(1) | Excludes intercompany consulting and support fees of $9.0 million and $9.2 million for Same Store and $9.1 and $9.3 million for Total, respectively in the thirty-six weeks ended
September 6, 2005 and September 5, 2006.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Continuing Operations.Total operating revenues and EBITDA
increased at same store business and sports clubs primarily due to increased membership dues and food and beverage private party revenues.

Membership trends for business and sports clubs historically decline in the early part of the year with positive recovery in the later part of the year and throughout the holiday season. Although we did see a typical trend of declining
membership for the first three quarters of 2006, it was lower than our decline for the first three quarters of 2005. This trend, coupled with an annual price increase that generally occurs at the beginning of the year, resulted in a 3% overall
increase in membership dues.

Food and beverage operations increased primarily due to more successful efforts in pre-booking private events
resulting in a 5% increase in private party revenues. During the first three quarters of 2006, cost of sales, payroll and other costs associated with the private events were well controlled resulting in a positive profit margin in overall food and
beverage operations comparing 2005 to 2006.

Depreciation and amortization increased from $6.0 million in 2005 to $6.2 million in 2006.

Discontinued Operations.The periods ended September 6, 2005 and September 5, 2006 include one property divested in 2006
and one property currently held for sale in discontinued operations.

Other Operations and Services 
Continuing Operations

Other operations and services consist primarily of real estate operations and corporate services. Revenues
primarily consist of fees we receive from third-party developers based on a percentage of their real estate sales. Revenues decreased from $10.5 million in 2005 to $8.3 million in 2006 primarily due to decreased lot sales in 2006.

Operating loss from other operations and services increased from $34.2 million in 2005 to $43.4 million in 2006 primarily due to the following:
(a) recognition of approximately $2.4 million in compensation expense related to the expensing of stock options, (b) an increase in payroll and payroll related costs, (c) expensing of costs related to the potential sale of the company
of $0.7 million and (d) decreased lot sales in 2006. The results in 2005 also include approximately $1 million of expenses in corporate services related to the hosting of the 2005 U.S. Open.



24



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Seasonality of Demand; Fluctuations in Quarterly Results

Our quarterly results fluctuate due to a number of factors. Usage of our country club and golf facilities and resorts declines significantly during the
first and fourth quarters, when colder temperatures and shorter days reduce the demand for golf and golf-related activities. Our business facilities generate a disproportionately greater share of their yearly revenues in the fourth quarter, which
includes the holiday and year-end party season. In addition, the fourth quarter consists of 16 or 17 weeks of operations and the first, second and third quarters consist of 12 weeks. As a result of these factors, we usually generate a
disproportionate share of our revenues in the second, third, and fourth quarters of each year and have lower revenues and profits in the first quarter. The timing of purchases, sales, leasing of new facilities, or divestitures, has also caused and
may cause our results of operations to vary significantly in otherwise comparable periods. In addition, our results can be and have been affected by the hosting of special events and non-seasonal and severe weather patterns.

Liquidity and Capital Resources

Our primary goal as
it relates to liquidity and capital resources is to attain and retain the right level of debt and cash to maintain our core properties, fund expansions at our current properties, and be poised for external growth in the marketplace. During the last
few years, our focus has been on strengthening our cash position and refinancing and reducing our debt in order to support these goals.

Our cash position decreased to $138 million as of September 5, 2006 compared to $189 million as of December 27, 2005. The primary reason for the reduction was the paydown of $32 million related to a refinancing of a portion of our
debt with Pacific Life as well as paying down more than $21 million of maturing debt during 2006. Our debt has been paid down to $611 million as of September 5, 2006 representing payments of approximately $68 million since December 27,
2005.

Historically, we have financed our operations and cash needs primarily through cash flows from operations, debt and, to a lesser
extent, proceeds from divestitures. We anticipate using cash flow from operations in 2006 principally to fund planned capital replacement expenditures and repay debt and build cash reserves as well as grow and expand our business through a
combination of improvements and expansions of existing facilities, on which we have spent approximately $72 million year-to-date. Based on our current projections, we believe our current assets and cash flow from operations are sufficient to meet
our anticipated working capital and operating needs for the next twelve months as well as support our anticipated capital expenditures.

Debt

In early 2006, we amended a loan agreement with Pacific Life representing approximately $37
million of debt maturing in 2006 and established a secured $50 million line of credit which will mature in 2010. As a result, we paid down approximately $32 million and transferred the remaining $5 million as an initial draw on the line of credit
which remains outstanding as of September 5, 2006.

Under the provisions of certain of our debt agreements with Textron Financial
Corporation (Textron), we are required to maintain debt service coverage ratios at both the portfolio and individual property level. Certain of these individual loans have cross-default provisions; therefore, a default on an individual
loan triggers a default on the portfolio. As of September 5, 2006, the debt service coverage ratio was below the minimum level for three individual properties participating in the loan, thereby causing the entire loan ($52 million in principal
amount) to be in technical default. Subsequent to September 5, 2006, we cured the noncompliance by obtaining letters of credit totaling $4.7 million.

Cash and Cash Flow

Our cash flow from operations was $87 million for the thirty-six weeks ended September 5, 2006, an increase of $5 million compared to 2005. We utilize cash to fund operations, maintain our properties, pay down our debt and related
interest, and, to a limited extent, buy back company stock. In 2006, we have reduced our debt by nearly $68 million while only decreasing our cash and cash equivalents by $50 million. For 2006, we are considering additional investments in improving
and expanding our existing properties or acquiring new properties.



25



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Capital Spending

The nature of our business requires us to invest a significant amount of capital in our existing properties to maintain them. For the thirty-six weeks
ended September 5, 2006, we have expended approximately $55 million in maintenance capital, and we anticipate spending an additional $13 million for the remainder of fiscal 2006.

In addition to maintaining our properties, we also spend discretionary capital to expand or improve existing properties and to enter into new business
opportunities. Capital expansion funding totaled approximately $17 million for the thirty-six weeks ended September 5, 2006, and we anticipate spending an additional $20 million for the remainder of fiscal 2006 for expansion and improvement
projects on clubs and resorts we feel have a high potential for return on investment.

Risks

We believe that we have sufficient and stable funds to allow us to operate our business for the next twelve months as well as evaluate growth
opportunities during 2006 and beyond. However, the occurrence of any of the following events might limit our ability to fund operations or provide adequate capital funding:



| |  | Lack of compliance with debt covenants  currently our defaults on the Textron note are cured by letters of credit. However, should operations cause adverse results at one or a
group of properties, we could be put in a position of having to pay down debt or secure additional financing.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Exercise of the limited put right by our ESOP  As a means of providing liquidity to the trustees of the Amended Plan, we have provided the trustees a limited put right (the
Redemption Right) to cause us to redeem Common Stock, held in trust on behalf of the Amended Plan, at the most recent appraised fair market value as necessary, in the event the trust does not have adequate resources, to meet the
following requirements: (1) to fund a participants distribution in cash, (2) to diversify a participants account in accordance with Internal Revenue Code Section 401(a)(28), (3) to pay expenses incurred by the
trustees, and (4) to comply with directions from the plan administrator. The Redemption Right has never been exercised by the Amended Plan. We do not expect that the Redemption Right will be exercised to a significant extent in 2006, but if it
is, we could be required to repurchase shares of Common Stock.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Amendment to Omnibus Stock Plan  Effective June 26, 2006, we amended our stock option plan to include a change in control provision if the company is sold in connection
with our current agreement and plan of merger. All outstanding options will become 100% vested upon closing and cash will be paid for the in-the-money value of the options. This provision is only effective if a sale occurs in connection with our
current agreement and plan of merger. The aggregate intrinsic value of our outstanding options as of September 5, 2006 was approximately $25 million (See Note 2 of the Notes to Condensed Consolidated Financial Statements).
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Exercise of certain rights by our third party investor  During 1999, we sold 9,375,000 shares of common stock and warrants to acquire 1,012,500 shares of common stock to The
Cypress Group. Beginning in December 2004, we are obligated under certain defined conditions to offer to repurchase a portion of their outstanding shares if we are below a defined leverage ratio. This calculation is performed annually on
December 1st. Based on the 2005 calculation, we were above the stated leverage ratio and were not required to
offer to repurchase any shares. If our actual future operating results differ materially from expectations, we could fall below the leverage ratio at the next annual calculation date and would be required to offer to repurchase a portion of their
shares of Common Stock. We do not anticipate this occurring in 2006.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Natural disaster or catastrophic events - Events out of our control could cause significant operational implications and/or an inability to obtain financing.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------

With the exception of the possible sale of the company, we do not anticipate any of the above situations occurring.
Additionally, these risks are somewhat mitigated due to the fact that a significant portion of our capital expansions and new growth spending is discretionary. However, we cannot assure you that these events will not occur.



26



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Off-Balance Sheet Arrangements, Contractual Obligations and Commercial Commitments

During the thirty-six weeks ended September 5, 2006, there were no material changes outside of the normal course of business to the quantitative and
qualitative disclosures about contractual obligations, commitments, contingent liabilities and off-balance sheet arrangements previously reported in the Annual Report on Form 10-K for the year ended December 27, 2005. See Item 7.
Managements Discussion and Analysis of Financial Condition and Results of Operations  Off-Balance Sheet Arrangements, Contractual Obligations and Commercial Commitments in the Form 10-K for the year ended December 27,
2005 for a detailed discussion.

Factors That May Affect Future Operating Results and the Accuracy of Our Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act
of 1934, as amended. All statements other than statements of historical fact should be considered forward-looking statements for purposes of these provisions, including statements that include projections of, or expectations about,
earnings, revenues or other financial items, statements about our plans and objectives for future operations, statements concerning proposed new products or services, statements regarding future economic conditions or performance, statements
concerning our expectations regarding the attraction and retention of members and guests, statements about market risk and statements underlying any of the foregoing. In some cases, forward-looking statements can be identified by the use of
terminology such as may, will, expects, plans, anticipates, intends, believes, estimates, potential or continue, or the negative
thereof or other similar words. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we can give no assurance that such expectations or any of our forward-looking statements will prove to be correct.
Actual results and developments are likely to be different from, and may be materially different from, those expressed or implied by our forward-looking statements. Forward-looking statements are subject to inherent risks and uncertainties, some of
which are summarized in this section and in our Form 10-K for the year ended December 27, 2005.

Our success depends on our ability to
attract and retain members at our clubs and maintain or increase usage of our facilities. We have experienced varying levels of membership enrollment and attrition rates and, in certain areas, decreased levels of usage of our facilities during our
operating history. Although management devotes substantial efforts to ensuring that members and guests are satisfied, many of the factors affecting club membership and facility usage are beyond our control, including weather conditions, general
economic conditions, changes in demand for golf and private club services and changes in the Federal tax laws. There can be no assurance that we will be able to maintain or increase membership or facility usage. Significant periods where attrition
rates exceed enrollment rates, or where facilities usage is below historical levels would have a material adverse effect on our business, operating results, and financial condition. Other factors that may affect our operating results include,
but are not limited to, our ability to obtain external financing, the actions of our competitors, changes in labor costs, the timing and success of acquisitions and dispositions, changes in law, future terrorist attacks on U.S. targets, prolonged
U.S. military efforts with Iraq and/or other nations, or other related international geopolitical uncertainties.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There were no material changes to the
disclosure on this matter made in our Annual Report on Form 10-K for the year ended December 27, 2005.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this quarterly report. There are inherent limitations to the effectiveness of any system of disclosure controls
and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that our current disclosure controls and procedures were effective as of the end of the period covered by this report, in ensuring that all information required to be disclosed in reports we file or submit under the Securities Exchange Act
of 1934 has been recorded, processed, summarized and reported within the time periods specified by the SEC.



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Changes in Internal Controls

There has been no change in our internal control over financial reporting during the twelve weeks ended September 5, 2006 that has materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

NONE.

Item 6. Exhibits

(a) Exhibits

31.1 - Certification by John A. Beckert pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.

31.2 - Certification by Jeffrey P. Mayer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.

32.1 - Certification by John A. Beckert pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 - Certification by Jeffrey P. Mayer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



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SIGNATURES

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



|                       |  |                |  |                        
|---------------------- |  | -------------- |  | -----------------------
|                       |  | ClubCorp, Inc.
|                       |  |               
|Date: October 19, 2006 |  | By:            |  | /s/ Jeffrey P. Mayer   
|                       |  |                |  | Jeffrey P. Mayer       
|                       |  |                |  | Chief Financial Officer