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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 March 23, 2004



| ̈ | 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 and 333-52612



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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 700 Dallas, Texas                      |  | 75234                               
|(Address of principal executive offices)                       |  | (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 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 an accelerated filer (as defined in Rule 12b-2 of the Exchange
Act).    Yes ̈No  x.



The number of shares of the Registrants Common Stock outstanding as of May 6, 2004 was
93,708,140.



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CLUBCORP, INC.



INDEX



|         |  |                                                                                       |  |   
|-------- |  | ------------------------------------------------------------------------------------- |  | --
|Part I.  |  | FINANCIAL INFORMATION                                                                 |  |   
|         |  |                                                                                      
|Item 1.  |  | Financial Statements:                                                                 |  |   
|         |  | Independent Auditors Review Report                                                   |  | 1 
|         |  | Consolidated Balance Sheet                                                            |  | 2 
|         |  | Consolidated Statement of Operations                                                  |  | 3 
|         |  | Consolidated Statement of Cash Flows                                                  |  | 4 
|         |  | Condensed Notes to Consolidated Financial Statements                                  |  | 5 
|         |  |                                                                                      
|Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 13
|         |  |                                                                                      
|Item 3.  |  | Quantitative and Qualitative Disclosures about Market Risk                            |  | 20
|         |  |                                                                                      
|Item 4.  |  | Controls and Procedures                                                               |  | 20
|         |  |                                                                                      
|Part II. |  | OTHER INFORMATION                                                                     |  |   
|         |  |                                                                                      
|Item 6.  |  | Exhibits and Reports on Form 8-K                                                      |  | 21



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PART I. FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS



INDEPENDENT AUDITORS REVIEW REPORT



The Board of Directors and Stockholders

ClubCorp, Inc.:



We have reviewed the consolidated balance sheet of ClubCorp, Inc. and subsidiaries
(ClubCorp) as of March 23, 2004, and the related consolidated statements of operations and cash flows for the twelve weeks ended March 23, 2004 and March 25, 2003. These consolidated financial statements are the responsibility of ClubCorps
management.



We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.



Based on our
review, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.



As discussed in Notes 1 and 2 to the accompanying consolidated financial
statements, effective March 23, 2004, the Company changed the method of accounting for its investment in a variable interest entity.



We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of ClubCorp as of
December 30, 2003, and the related consolidated statements of operations, stockholders equity and comprehensive loss, and cash flows for the year then ended (not presented herein); and in our report dated March 29, 2004, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 30, 2003, is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.



KPMG LLP



Dallas, Texas

May 6, 2004



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ClubCorp, Inc.

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Consolidated Balance Sheet

(Dollars in thousands)

(Unaudited)



|                                                                                                                                                   |  |                  |           |   |                |   |           |  
|-------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | --------- | - | -------------- | - | --------- | -
|                                                                                                                                                   |  | December 30,2003 |           |   | March 23, 2004 |  
|Assets                                                                                                                                             |  |                  |           |   |                |   |           |  
|Current assets:                                                                                                                                    |  |                  |           |   |                |   |           |  
|Cash and cash equivalents                                                                                                                          |  | $                | 90,195    |   |                | $ | 97,161    |  
|Membership and other receivables, net                                                                                                              |  |                  | 84,703    |   |                |   | 63,723    |  
|Inventories                                                                                                                                        |  |                  | 18,892    |   |                |   | 20,534    |  
|Other assets                                                                                                                                       |  |                  | 23,567    |   |                |   | 18,644    |  
|                                                                                                                                                   |  |                  |           |   |                |   |           |  
|Total current assets                                                                                                                               |  |                  | 217,357   |   |                |   | 200,062   |  
|                                                                                                                                                   |  |                 
|Property and equipment, net                                                                                                                        |  |                  | 1,189,017 |   |                |   | 1,182,213 |  
|Other assets                                                                                                                                       |  |                  | 140,014   |   |                |   | 141,518   |  
|                                                                                                                                                   |  |                  |           |   |                |   |           |  
|Total assets                                                                                                                                       |  | $                | 1,546,388 |   |                | $ | 1,523,793 |  
|                                                                                                                                                   |  |                  |           |   |                |   |           |  
|Liabilities and Stockholders Equity                                                                                                               |  |                  |           |   |                |   |           |  
|Current liabilities:                                                                                                                               |  |                  |           |   |                |   |           |  
|Accounts payable and accrued liabilities                                                                                                           |  | $                | 72,767    |   |                | $ | 71,395    |  
|Long-term debt - current portion                                                                                                                   |  |                  | 32,589    |   |                |   | 29,028    |  
|Other liabilities                                                                                                                                  |  |                  | 99,673    |   |                |   | 109,309   |  
|                                                                                                                                                   |  |                  |           |   |                |   |           |  
|Total current liabilities                                                                                                                          |  |                  | 205,029   |   |                |   | 209,732   |  
|                                                                                                                                                   |  |                 
|Long-term debt                                                                                                                                     |  |                  | 691,480   |   |                |   | 698,654   |  
|Other liabilities                                                                                                                                  |  |                  | 187,626   |   |                |   | 169,623   |  
|Membership deposits                                                                                                                                |  |                  | 132,926   |   |                |   | 135,445   |  
|                                                                                                                                                   |  |                 
|Redemption value of common stock held by benefit plan                                                                                              |  |                  | 38,190    |   |                |   | 38,190    |  
|                                                                                                                                                   |  |                 
|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, 93,708,720 issued, 93,708,140 outstanding at December 30, 2003 and at March 23,
2004. |  |                  | 996       |   |                |   | 996       |  
|Additional paid-in capital                                                                                                                         |  |                  | 161,672   |   |                |   | 161,672   |  
|Accumulated other comprehensive loss                                                                                                               |  |                  | (6,266    | ) |                |   | (6,186    | )
|Retained earnings                                                                                                                                  |  |                  | 195,341   |   |                |   | 176,278   |  
|Treasury stock, 5,885,688 shares at December 30, 2003, and 5,886,268 at March 23, 2004                                                             |  |                  | (60,606   | ) |                |   | (60,611   | )
|                                                                                                                                                   |  |                  |           |   |                |   |           |  
|Total stockholders equity                                                                                                                         |  |                  | 291,137   |   |                |   | 272,149   |  
|                                                                                                                                                   |  |                  |           |   |                |   |           |  
|Total liabilities and stockholders equity                                                                                                         |  | $                | 1,546,388 |   |                | $ | 1,523,793 |  
|                                                                                                                                                   |  |                  |           |   |                |   |           |  



See accompanying
condensed notes to consolidated financial statements.



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ClubCorp, Inc.

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Consolidated Statement of Operations

(Dollars in thousands, except per share amounts)

(Unaudited)



|                                                                          |  |                    |         |   |               |   |         |  
|------------------------------------------------------------------------- |  | ------------------ | ------- | - | ------------- | - | ------- | -
|                                                                          |  | Twelve Weeks Ended |        
|                                                                          |  | March 25,2003      |         |   | March 23,2004 |  
|Operating revenues                                                        |  | $                  | 176,372 |   |               | $ | 183,860 |  
|Operating costs and expenses                                              |  |                    | 145,203 |   |               |   | 149,379 |  
|Depreciation and amortization                                             |  |                    | 22,026  |   |               |   | 20,802  |  
|Selling, general and administrative expenses                              |  |                    | 20,417  |   |               |   | 16,670  |  
|Gain (loss) on disposals of assets                                        |  |                    | 1,500   |   |               |   | (788    | )
|                                                                          |  |                    |         |   |               |   |         |  
|Operating loss from continuing operations                                 |  |                    | (9,774  | ) |               |   | (3,779  | )
|                                                                          |  |                   
|Interest and investment income                                            |  |                    | 311     |   |               |   | 381     |  
|Interest expense                                                          |  |                    | (14,975 | ) |               |   | (13,912 | )
|                                                                          |  |                    |         |   |               |   |         |  
|Loss from continuing operations before income taxes and minority interest |  |                    | (24,438 | ) |               |   | (17,310 | )
|                                                                          |  |                   
|Income tax benefit (provision)                                            |  |                    | 7,741   |   |               |   | (1,362  | )
|Minority interest                                                         |  |                    | 75      |   |               |   | (157    | )
|                                                                          |  |                    |         |   |               |   |         |  
|Loss from continuing operations                                           |  |                    | (16,622 | ) |               |   | (18,829 | )
|                                                                          |  |                    |         |   |               |   |         |  
|Discontinued operations:                                                  |  |                    |         |   |               |   |         |  
|Loss from discontinued operations before income taxes                     |  |                    | (616    | ) |               |   | (221    | )
|Income tax benefit (provision)                                            |  |                    | 202     |   |               |   | (13     | )
|                                                                          |  |                    |         |   |               |   |         |  
|Loss from discontinued operations                                         |  |                    | (414    | ) |               |   | (234    | )
|                                                                          |  |                    |         |   |               |   |         |  
|Net loss                                                                  |  | $                  | (17,036 | ) |               | $ | (19,063 | )
|                                                                          |  |                    |         |   |               |   |         |  
|Basic and diluted loss per share on:                                      |  |                    |         |   |               |   |         |  
|Loss from continuing operations                                           |  | $                  | (0.18   | ) |               | $ | (0.20   | )
|Loss from discontinued operations                                         |  |                    | (0.00   | ) |               |   | (0.00   | )
|                                                                          |  |                    |         |   |               |   |         |  
|Basic and diluted loss per share                                          |  | $                  | (0.18   | ) |               | $ | (0.20   | )
|                                                                          |  |                    |         |   |               |   |         |  



See accompanying
condensed notes to consolidated financial statements.



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ClubCorp, Inc.

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Consolidated Statement of Cash Flows

(Dollars in thousands)



|                                                                                                 |  |                    |         |   |               |   |         |  
|------------------------------------------------------------------------------------------------ |  | ------------------ | ------- | - | ------------- | - | ------- | -
|                                                                                                 |  | Twelve Weeks Ended |        
|                                                                                                 |  | March 25,2003      |         |   | March 23,2004 |  
|Cash flows from operations:                                                                      |  |                    |         |   |               |   |         |  
|Loss from continuing operations                                                                  |  | $                  | (16,622 | ) |               | $ | (18,829 | )
|Adjustments to reconcile loss from continuing operations to cash flows provided from operations: |  |                    |         |   |               |   |         |  
|Loss from discontinued operations                                                                |  |                    | (414    | ) |               |   | (234    | )
|Depreciation and amortization from continuing operations                                         |  |                    | 22,026  |   |               |   | 20,802  |  
|Depreciation and amortization from discontinued operations                                       |  |                    | 263     |   |               |   | 9       |  
|(Gain) loss on disposals of assets from continuing operations                                    |  |                    | (1,500  | ) |               |   | 788     |  
|Gain on disposals of assets from discontinued operations                                         |  |                    | (453    | ) |               |   |        |  
|Amortization of discount on membership deposits                                                  |  |                    | 2,166   |   |               |   | 2,693   |  
|Deferred income taxes                                                                            |  |                    | (8,957  | ) |               |   | 655     |  
|Decrease in real estate held for sale                                                            |  |                    | 327     |   |               |   | 132     |  
|Decrease in membership and other receivables, net                                                |  |                    | 22,807  |   |               |   | 20,853  |  
|Decrease in accounts payable and accrued liabilities                                             |  |                    | (7,824  | ) |               |   | (14,866 | )
|Increase in deferred income                                                                      |  |                    | 6,712   |   |               |   | 8,449   |  
|Increase in deferred membership revenues                                                         |  |                    | 4,430   |   |               |   | 4,332   |  
|Other                                                                                            |  |                    | (365    | ) |               |   | (1,036  | )
|                                                                                                 |  |                    |         |   |               |   |         |  
|Cash flows provided from operations                                                              |  |                    | 22,596  |   |               |   | 23,748  |  
|                                                                                                 |  |                   
|Cash flows from investing activities:                                                            |  |                    |         |   |               |   |         |  
|Additions to property and equipment                                                              |  |                    | (7,983  | ) |               |   | (7,197  | )
|Development of new facilities                                                                    |  |                    | (736    | ) |               |   |        |  
|Development of real estate ventures                                                              |  |                    | (107    | ) |               |   | (626    | )
|Proceeds from disposition of subsidiaries and assets, net                                        |  |                    | 5,163   |   |               |   |        |  
|Other                                                                                            |  |                    | 220     |   |               |   | 2,521   |  
|                                                                                                 |  |                    |         |   |               |   |         |  
|Cash flows used by investing activities                                                          |  |                    | (3,443  | ) |               |   | (5,302  | )
|                                                                                                 |  |                   
|Cash flows from financing activities:                                                            |  |                    |         |   |               |   |         |  
|Borrowings of long-term debt                                                                     |  |                    | 8,218   |   |               |   |        |  
|Repayments of long-term debt                                                                     |  |                    | (7,017  | ) |               |   | (11,900 | )
|Change in membership deposits                                                                    |  |                    | (893    | ) |               |   | 425     |  
|Other                                                                                            |  |                    |        |   |               |   | (5      | )
|                                                                                                 |  |                    |         |   |               |   |         |  
|Cash flows provided from (used by) financing activities                                          |  |                    | 308     |   |               |   | (11,480 | )
|                                                                                                 |  |                   
|Net cash flows from continuing operations                                                        |  |                    | 20,065  |   |               |   | 7,191   |  
|Net cash flows from discontinued operations                                                      |  |                    | (604    | ) |               |   | (225    | )
|                                                                                                 |  |                    |         |   |               |   |         |  
|Total cash flows from all operations                                                             |  |                    | 19,461  |   |               |   | 6,966   |  
|                                                                                                 |  |                    |         |   |               |   |         |  
|Cash and cash equivalents at beginning of period                                                 |  |                    | 2,426   |   |               |   | 90,195  |  
|                                                                                                 |  |                    |         |   |               |   |         |  
|Cash and cash equivalents at end of period                                                       |  | $                  | 21,887  |   |               | $ | 97,161  |  
|                                                                                                 |  |                    |         |   |               |   |         |  



See accompanying Notes
2, 9, and 11 for supplemental disclosures of non-cash activities

See accompanying condensed notes to consolidated financial statements.



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Condensed Notes to Consolidated Financial Statements

(Unaudited)



Note 1. Summary of significant accounting policies



Consolidation



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



Interim presentation



The accompanying 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 30, 2003 which are a part of ClubCorps 2003 Form 10-K.



In our opinion, the accompanying unaudited Consolidated Financial Statements reflect all adjustments necessary (consisting of normal recurring accruals) to present fairly the consolidated financial position of ClubCorp as of March 23, 2004
and the consolidated results of operations and cash flows for the twelve weeks ended March 25, 2003 and March 23, 2004. 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 Consolidated Statement of Cash Flows, cash and cash equivalents include cash on hand and interest-bearing deposits in financial institutions, all of
which have maturities of 180 days or less. Also contained in cash and cash equivalents is restricted cash of $22.4 million as of March 23, 2004. These agreements were entered into in during 2003, and are primarily used to collateralize letters of
credit. These letters of credit have one-year terms and therefore, are included in current assets.



Recent Pronouncements



In January 2003, the FASB issued and then revised in December 2003, FASB Interpretation No. 46, (FIN 46R) Consolidation of Variable Interest Entities which
changes the criteria by which one company includes another entity in its consolidated financial statements. FIN 46R requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from
the variable interest entitys activities or entitled to receive a majority of the entitys residual returns or both. The assets, liabilities and noncontrolling interests of the newly consolidated variable interest entities were initially
recorded at the amounts at which they would have been carried in the consolidated financial statements if FIN 46R had been effective when we first met the conditions to be the primary beneficiary of the variable interest entity. The difference
between the net amount added to our Consolidated Statement of Operations and the amount of any previously recognized interest in the newly consolidated entity was not material and therefore was not recognized as a cumulative effect of an accounting
change as of March 23, 2004. The adoption of FIN 46R has resulted in an increase in net assets of $1.1 million, including debt of $13.7 million to our Consolidated Balance Sheet. Prior periods were not restated. (See Note 2)



In April 2003, the FASB issued SFAS No. 149 (SFAS 149), Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. This statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities
under FASB Statement No. 133. Adoption of this statement had no impact on our consolidated financial statements.



In May 2003, the FASB issued SFAS No. 150 (SFAS 150), Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. This
statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a
liability. Adoption of this statement had no impact on our consolidated financial statements.



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In December 2003, the FASB issued SFAS No. 132R (revised 2003), Employers Disclosures about Pensions and
Other Postretirement Benefits. This statement improves financial statement disclosures for defined benefit plans. We have not adopted these expanded disclosures as our pension plan is not a material component of our overall consolidated
financial statements.



Reclassifications



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



Stock-based compensation



Stock-based
compensation is accounted for using APB 25 and related interpretations. Under APB 25, if the exercise price of the options is greater than or equal to the market price at the date of grant, no compensation expense is recorded. We have also adopted
the disclosure-only provisions of SFAS 123, Accounting for Stock-based Compensation for options issued, as amended by SFAS 148.



There were no options granted for the twelve weeks ended March 25, 2003 and March 23, 2004. Had compensation cost for the option plans been determined based on the fair
value at the grant dates for the options, our net loss and net loss per share would have been changed to the following pro forma amounts (dollars in thousands, except per share amounts):



|                                                                                             |  |                    |         |   |                |   |         |  
|-------------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | -------------- | - | ------- | -
|                                                                                             |  | Twelve Weeks Ended |        
|                                                                                             |  | March 25,2003      |         |   | March 23, 2004 |  
|Net Loss as reported                                                                         |  | $                  | (17,036 | ) |                | $ | (19,063 | )
|Add: Total Stock-Based Compensation Expense determined under fair value method, net of taxes |  |                    |        |   |                |   | (304    | )
|                                                                                             |  |                    |         |   |                |   |         |  
|Pro Forma Net Income (loss)                                                                  |  | $                  | (17,036 | ) |                | $ | (19,367 | )
|                                                                                             |  |                    |         |   |                |   |         |  
|Loss per share - Reported                                                                    |  | $                  | (0.18   | ) |                | $ | (0.20   | )
|                                                                                             |  |                    |         |   |                |   |         |  
|Loss per share - Pro Forma                                                                   |  | $                  | (0.18   | ) |                | $ | (0.21   | )
|                                                                                             |  |                    |         |   |                |   |         |  



Note 2. Variable Interest
Entity



During 1994, ClubCorp formed a joint venture with a real
estate developer to acquire undeveloped real estate and develop such real estate in Colorado around a country club.



Prior to the adoption of FIN 46R, ClubCorp accounted for its investment in the joint venture under the equity method, recording a majority of the ventures operating
results. ClubCorp is the general partner of the joint venture, however ClubCorp does not control a majority percentage; therefore, operating decisions would have to go to arbitration in the event of a split in voting. ClubCorp records 100% of all
losses and then participates in earnings proportionally with the other partners.



The joint venture purchases virtually all the support services it requires from both ClubCorp and from the real estate developer under management service agreements, which expire at the completion of the development.



With the adoption of FIN 46R, ClubCorp has consolidated the joint venture in its March 23,
2004 Consolidated Balance Sheet, as the joint venture was determined to be a variable interest entity with ClubCorp as its primary beneficiary. Due to the historical net operating losses of the joint venture in excess of the equity interests of the
joint venture not owned by ClubCorp, no noncontrolling interests are reporting in ClubCorps March 23, 2004 Consolidated Balance Sheet. The investment was carried as a $19.8 million liability on the December 28, 2003 Consolidated Balance Sheet.



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The joint venture was financed by the assumption of debt of approximately $20.0 million, of which $13.7 million is
currently outstanding and is included in long-term debt, and accrued interest of approximately $10.0 million on the March 23, 2004 Consolidated Balance Sheet. The majority of the joint ventures debt is payable only out of distributable cash
flow, as defined by the agreements. If there is no distributable cash flow, then the joint venture is not obligated to pay the parties subject to the loan agreements. The notes are subordinated and junior to other liens and are collateralized by the
real estate owned by the joint venture. The creditors of the joint venture do not have recourse to other assets of ClubCorp.



Note 3. Operating revenues



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



|                                                      |  |                    |         |               |   |        
|----------------------------------------------------- |  | ------------------ | ------- | ------------- | - | -------
|                                                      |  | Twelve Weeks Ended
|                                                      |  | March 25,2003      |         | March 23,2004
|Revenues from continuing operations:                  |  |                    |         |               |   |        
|Membership dues                                       |  | $                  | 71,994  |               | $ | 75,348 
|Membership fees and deposits recognized               |  |                    | 8,916   |               |   | 9,237  
|Food and beverage revenues                            |  |                    | 44,699  |               |   | 49,318 
|Golf operations revenues                              |  |                    | 28,468  |               |   | 27,357 
|Lodging revenues                                      |  |                    | 7,491   |               |   | 8,137  
|Other revenues                                        |  |                    | 14,804  |               |   | 14,463 
|                                                      |  |                    |         |               |   |        
|Total operating revenues from continuing operations   |  | $                  | 176,372 |               | $ | 183,860
|                                                      |  |                    |         |               |   |        
|Revenues from discontinued operations:                |  |                    |         |               |   |        
|Membership dues                                       |  | $                  | 2,267   |               | $ | 636    
|Membership fees and deposits recognized               |  |                    | 178     |               |   | 1      
|Food and beverage revenues                            |  |                    | 1,387   |               |   | 340    
|Golf operations revenues                              |  |                    | 828     |               |   |       
|Lodging revenues                                      |  |                    |        |               |   |       
|Other revenues                                        |  |                    | 372     |               |   | 130    
|                                                      |  |                    |         |               |   |        
|Total operating revenues from discontinued operations |  | $                  | 5,032   |               | $ | 1,107  
|                                                      |  |                    |         |               |   |        
|Total operating revenue                               |  | $                  | 181,404 |               | $ | 184,967
|                                                      |  |                    |         |               |   |        



Note 4. Income tax benefit
(provision)



The income tax benefit (provision) for the twelve weeks
ended March 25, 2003 and March 23, 2004 differ from amounts computed by applying the U.S. Federal tax rate of 35% to loss from operations before income taxes and minority interest primarily due to foreign and state income taxes, net of Federal
benefit (provision), and the effect of consolidated operations of foreign and other entities not consolidated for Federal income tax purposes. We fully reserved all additional tax benefits from available carryforwards of net operating losses
generated and recorded an income tax provision only to the extent that existing timing differences reversed.



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Note 5. Weighted average shares



Loss per share is computed using the weighted average number of shares outstanding of 93,742,191 and 93,708,675 for basic loss per share
calculations for the twelve weeks ended March 25, 2003 and March 23, 2004, respectively. The potential common stock equivalents for the assumed conversion of options and warrants to purchase common stock of 92,204 shares for the twelve weeks ended
March 23, 2004 are antidilutive due to the net loss for the quarter. There were no such common stock equivalents for the twelve weeks ended March 25, 2003.



Note 6. Property and equipment



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



|                                          |  |                  |           |   |               |   |           |  
|----------------------------------------- |  | ---------------- | --------- | - | ------------- | - | --------- | -
|                                          |  | December 30,2003 |           |   | March 23,2004 |  
|Land and land improvements                |  | $                | 724,903   |   |               | $ | 726,479   |  
|Buildings and recreational facilities     |  |                  | 501,210   |   |               |   | 503,410   |  
|Leasehold improvements                    |  |                  | 105,708   |   |               |   | 105,864   |  
|Furniture and fixtures                    |  |                  | 132,067   |   |               |   | 132,371   |  
|Machinery and equipment                   |  |                  | 264,864   |   |               |   | 267,425   |  
|Construction in progress                  |  |                  | 9,888     |   |               |   | 12,277    |  
|                                          |  |                  |           |   |               |   |           |  
|                                          |  |                  | 1,738,640 |   |               |   | 1,747,826 |  
|Accumulated depreciation and amortization |  |                  | (549,623  | ) |               |   | (565,613  | )
|                                          |  |                  |           |   |               |   |           |  
|                                          |  | $                | 1,189,017 |   |               | $ | 1,182,213 |  
|                                          |  |                  |           |   |               |   |           |  



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Note 7. Disposal and Impairment of Long- Lived Assets



On December 26, 2001, we adopted Statement of Financial Accounting Standards No. 144 (SFAS
144), Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS 144 supercedes SFAS 121 and the portion of Accounting Principles Board Opinion No. 30 that deals with the disposal of a business segment. In conjunction with this
statement, for all periods presented, 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 March 23, 2004, we had two
properties classified as held for sale. The balance sheet amounts related to these two properties are classified in Other Current Assets and Other Current Liabilities on the Consolidated Balance Sheet and are comprised of the following (dollars in
thousands):



|                                         |  |                  |       |               |   |      
|---------------------------------------- |  | ---------------- | ----- | ------------- | - | -----
|                                         |  | December 30,2003 |       | March 23,2004
|Membership and other receivables, net    |  | $                | 481   |               | $ | 426  
|Inventories                              |  |                  | 60    |               |   | 51   
|Other current assets                     |  |                  | 406   |               |   | 20   
|Property and equipment, net              |  |                  | 13    |               |   | 144  
|Other assets                             |  |                  | 30    |               |   | 29   
|                                         |  |                  |       |               |   |      
|Total assets                             |  | $                | 990   |               | $ | 670  
|                                         |  |                  |       |               |   |      
|Accounts payable and accrued liabilities |  | $                | 184   |               | $ | 269  
|Other current liabilities                |  |                  | 1,003 |               |   | 229  
|Long-term debt                           |  |                  | 14    |               |   | 12   
|Other liabilities                        |  |                  | 220   |               |   | 250  
|Membership deposits                      |  |                  | 1,492 |               |   | 1,515
|                                         |  |                  |       |               |   |      
|Total liabilities                        |  | $                | 2,913 |               | $ | 2,275
|                                         |  |                  |       |               |   |      



The two properties were reclassified
to Discontinued Operations on the Consolidated Statement 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.



Note 8. Comprehensive loss



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



|                                                                                            |  |                    |         |   |               |   |         |  
|------------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | ------------- | - | ------- | -
|                                                                                            |  | Twelve Weeks Ended |        
|                                                                                            |  | March 25,2003      |         |   | March 23,2004 |  
|Net Loss                                                                                    |  | $                  | (17,036 | ) |               | $ | (19,063 | )
|Changes in fair value of derivative instruments and hedging activities, net of income taxes |  |                    | 1,295   |   |               |   |        |  
|Foreign currency translation adjustment                                                     |  |                    | (1,496  | ) |               |   | 80      |  
|                                                                                            |  |                    |         |   |               |   |         |  
|Total comprehensive loss                                                                    |  | $                  | (17,237 | ) |               | $ | (18,983 | )
|                                                                                            |  |                    |         |   |               |   |         |  



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Note 9. Long term debt



During the quarter ended March 23, 2004, our overall debt balance increased by $3.6 million comprised of $13.7 million from the
consolidation of one of our entities in accordance with FIN 46R (see note 2), partially offset by repayments of $11.9 million.



Under the provisions of our debt agreement with Textron Financial Corporation (Textron), we are required to maintain certain debt service ratios at both the portfolio and
individual property level. Each of the individual loans have cross-default provisions; therefore, a default on an individual loan triggers a default on the portfolio. As of March 23, 2004, it came to our attention that the debt service ratio (as
defined in the agreement) was below the minimum level for certain properties participating in the loan, thereby causing the entire loan ($56 million) to be in technical default. We have obtained a waiver dated May 4, 2004, in which the lender waived
its right to exercise its rights and remedies under the loan through September 30, 2005 for named properties in noncompliance occurring at or before September 7, 2004. We may cure any default without a waiver, if necessary, by paying down a portion
of the debt to regain compliance, provide an asset replacement pursuant to the loan agreement or provide the lender with additional collateral, subject to their review and approval. This prepayment amount is currently approximately $4.4 million and
included in the current portion of long-term debt in the Consolidated Balance Sheet as of March 23, 2004.



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 that 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.



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.



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.



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. Realty operations are comprised of residential real estate development and sales, primarily in areas adjacent to golf facilities. A majority of operating revenues is provided from real estate
sales.



EBITDA is defined as earnings before interest, taxes, depreciation and
amortization, extraordinary items and gains and losses on disposals and impairment of assets and includes both continued and discontinued operations. EBITDA for all periods presented has been adjusted to reflect 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.



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



Consolidated Statement of Operations:



|                                                                                                      |  |                                         |         |   |                                           |   |         |               |  |   |                |   |  |   |       |  
|----------------------------------------------------------------------------------------------------- |  | --------------------------------------- | ------- | - | ----------------------------------------- | - | ------- | ------------- |  | - | -------------- | - |  | - | ----- | -
|                                                                                                      |  | Continuing OperationsTwelve Weeks Ended |         |   | Discontinued OperationsTwelve Weeks Ended |  
|                                                                                                      |  | March 25,2003                           |         |   | March 23,2004                             |   |         | March 25,2003 |  |   | March 23, 2004 |  
|Country Club and Golf Facilities:                                                                     |  |                                         |         |   |                                           |   |         |               |  |   |                |   |  |   |       |  
|Operating revenues                                                                                    |  | $                                       | 97,964  |   |                                           | $ | 102,522 |               |  | $ | 2,532          |   |  | $ |      |  
|Operating costs and expenses (1)                                                                      |  |                                         | 76,887  |   |                                           |   | 81,900  |               |  |   | 2,841          |   |  |   | 2     |  
|Depreciation and amortization                                                                         |  |                                         | 10,996  |   |                                           |   | 11,527  |               |  |   | 173            |   |  |   |      |  
|                                                                                                      |  |                                         |         |   |                                           |   |         |               |  |   |                |   |  |   |       |  
|Operating income (loss)                                                                               |  | $                                       | 10,081  |   |                                           | $ | 9,095   |               |  | $ | (482           | ) |  | $ | (2    | )
|                                                                                                      |  |                                         |         |  
|EBITDA                                                                                                |  | $                                       | 21,077  |   |                                           | $ | 20,622  |               |  | $ | (309           | ) |  | $ | (2    | )
|                                                                                                      |  |                                         |         |  
|Business and sports clubs:                                                                            |  |                                         |         |   |                                           |   |         |               |  |   |                |   |  |   |       |  
|Operating revenues                                                                                    |  | $                                       | 47,846  |   |                                           | $ | 49,173  |               |  | $ | 2,500          |   |  | $ | 1,107 |  
|Operating costs and expenses (1)                                                                      |  |                                         | 42,864  |   |                                           |   | 43,360  |               |  |   | 2,830          |   |  |   | 1,213 |  
|Depreciation and amortization                                                                         |  |                                         | 2,676   |   |                                           |   | 2,560   |               |  |   | 88             |   |  |   | 9     |  
|                                                                                                      |  |                                         |         |   |                                           |   |         |               |  |   |                |   |  |   |       |  
|Operating income (loss)                                                                               |  | $                                       | 2,306   |   |                                           | $ | 3,253   |               |  | $ | (418           | ) |  | $ | (115  | )
|                                                                                                      |  |                                         |         |  
|EBITDA                                                                                                |  | $                                       | 4,982   |   |                                           | $ | 5,813   |               |  | $ | (330           | ) |  | $ | (106  | )
|                                                                                                      |  |                                         |         |  
|Resorts:                                                                                              |  |                                         |         |   |                                           |   |         |               |  |   |                |   |  |   |       |  
|Operating revenues                                                                                    |  | $                                       | 28,753  |   |                                           | $ | 31,336  |               |  | $ |               |   |  | $ |      |  
|Operating costs and expenses (1)                                                                      |  |                                         | 29,292  |   |                                           |   | 31,671  |               |  |   |               |   |  |   |      |  
|Depreciation and amortization                                                                         |  |                                         | 4,584   |   |                                           |   | 3,865   |               |  |   |               |   |  |   |      |  
|                                                                                                      |  |                                         |         |   |                                           |   |         |               |  |   |                |   |  |   |       |  
|Operating loss                                                                                        |  | $                                       | (5,123  | ) |                                           | $ | (4,200  | )             |  | $ |               |   |  | $ |      |  
|                                                                                                      |  |                                         |         |  
|EBITDA                                                                                                |  | $                                       | (539    | ) |                                           | $ | (335    | )             |  | $ |               |   |  | $ |      |  
|                                                                                                      |  |                                         |         |  
|Other operations and services:                                                                        |  |                                         |         |   |                                           |   |         |               |  |   |                |   |  |   |       |  
|Operating revenues                                                                                    |  | $                                       | 1,809   |   |                                           | $ | 829     |               |  | $ |               |   |  | $ |      |  
|Operating costs and expenses (1)                                                                      |  |                                         | 16,577  |   |                                           |   | 9,118   |               |  |   | 157            |   |  |   | 16    |  
|Depreciation and amortization                                                                         |  |                                         | 3,770   |   |                                           |   | 2,850   |               |  |   |               |   |  |   |      |  
|                                                                                                      |  |                                         |         |   |                                           |   |         |               |  |   |                |   |  |   |       |  
|Operating loss                                                                                        |  | $                                       | (18,538 | ) |                                           | $ | (11,139 | )             |  | $ | (157           | ) |  | $ | (16   | )
|                                                                                                      |  |                                         |         |  
|EBITDA                                                                                                |  | $                                       | (14,768 | ) |                                           | $ | (8,289  | )             |  | $ | (157           | ) |  | $ | (16   | )
|                                                                                                      |  |                                         |         |  
|Consolidated Operations:                                                                              |  |                                         |         |   |                                           |   |         |               |  |   |                |   |  |   |       |  
|Operating revenues                                                                                    |  | $                                       | 176,372 |   |                                           | $ | 183,860 |               |  | $ | 5,032          |   |  | $ | 1,107 |  
|Operating costs and expenses (1)                                                                      |  |                                         | 165,620 |   |                                           |   | 166,049 |               |  |   | 5,828          |   |  |   | 1,231 |  
|Depreciation and amortization                                                                         |  |                                         | 22,026  |   |                                           |   | 20,802  |               |  |   | 261            |   |  |   | 9     |  
|                                                                                                      |  |                                         |         |   |                                           |   |         |               |  |   |                |   |  |   |       |  
|Operating loss                                                                                        |  | $                                       | (11,274 | ) |                                           | $ | (2,991  | )             |  | $ | (1,057         | ) |  | $ | (133  | )
|                                                                                                      |  |                                         |         |  
|EBITDA                                                                                                |  | $                                       | 10,752  |   |                                           | $ | 17,811  |               |  | $ | (796           | ) |  | $ | (124  | )
|                                                                                                      |  |                                         |         |   |                                           |   |         |               |  |   |                |   |  |   |       |  
|(1)    Includes operating costs and expenses as well as selling, general and administrative
expenses. | 
|(2)    Reconciliation to loss from operations before income taxes and minority interest:              | 
|                                                                                                      |  |                                         |         |  
|Operating loss                                                                                        |  | $                                       | (11,274 | ) |                                           | $ | (2,991  | )             |  | $ | (1,057         | ) |  | $ | (133  | )
|Gain (loss) on disposals and impairment of assets                                                     |  |                                         | 1,500   |   |                                           |   | (788    | )             |  |   | 453            |   |  |   |      |  
|Interest and investment income                                                                        |  |                                         | 311     |   |                                           |   | 381     |               |  |   |               |   |  |   |      |  
|Interest expense                                                                                      |  |                                         | (14,975 | ) |                                           |   | (13,912 | )             |  |   | (12            | ) |  |   | (88   | )
|                                                                                                      |  |                                         |         |   |                                           |   |         |               |  |   |                |   |  |   |       |  
|Loss from operations before income taxes and minority interest                                        |  | $                                       | (24,438 | ) |                                           | $ | (17,310 | )             |  | $ | (616           | ) |  | $ | (221  | )
|                                                                                                      |  |                                         |         |   |                                           |   |         |               |  |   |                |   |  |   |       |  



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Note 11. Contingencies



During 2003, we recorded charges totaling $4.1 million related to three lawsuits to cover incurred litigation fees and estimated settlement
charges. Two of the three lawsuits have settled during the quarter ended March 23, 2004 at amounts approximating our accrual. It is probable that we will incur additional charges related to the third lawsuit; however, at this time, we have not set
up an additional accrual as we believe the actual settlement is not estimable at this time. An escrow of $4.5 million has been established pertaining to this matter until the lawsuit is resolved. Alleged claims in this suit relate to a disagreement
with union employees and subsequent settlement for potential lost wages and benefits over a period of time from 1997  2002. The maximum damages alleged by the arbitration board total $5 million before penalty, interest and legal fees; however,
we believe that there is still significant discovery to be done in this area.



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



Introduction



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 March 23, 2004, we operated 98 country clubs, golf clubs and public golf facilities, three destination golf resorts and 69 business, sports and
business/sports clubs in 29 states and three foreign countries. Marquee resorts and clubs in our portfolio include Pinehurst® Resort and Country Club in North Carolina, The Homestead® Resort in 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.



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 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 historical references herein to us shall also include Country
Clubs, Inc. and its successor corporations. For purposes of this document, unless the context indicates otherwise, these 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 to reduce the legal distinctions between subsidiaries or between us and our subsidiaries.



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 12 weeks ended March 25, 2003 and March 23, 2004 should
be read in conjunction with the our Annual Report on Form 10-K for the year ended December 30, 2003, as filed with the Securities and Exchange Commission.



Results of Operations



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 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, as it is not distorted by
divestitures and we believe it 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
initiation deposits and fees. Operating expenses include payroll and related expenses, other fees and expenses and rent.



We use EBITDA to monitor our property-level and overall performance. EBITDA is defined as earnings before interest, taxes, depreciation and amortization,
extraordinary items and gains and losses on disposals and impairment of assets and includes both continuing and discontinued operations. 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 to our Condensed Notes to 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.



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As of our reporting period ended September 9, 2003, we adjusted our segment information to be more in
line with our internal reporting. The two key components that were changed were (1) recording elimination entries at the consolidated level instead of allocating them to each segment and (2) reviewing gain/loss from disposal and impairment of assets
at the consolidated level. The remaining numbers by segment (operating revenues, operating expenses, depreciation and amortization, and EBITDA) then reflect the numbers that help drive our business decisions. Reclassifications have been made for all
periods presented in accordance with generally accepted accounting principles.



12 Weeks Ended March 25, 2003 Compared to 12 Weeks Ended March 23, 2004



Consolidated Operations  Continuing Operations



Operating revenues increased from $176.4 million for first quarter 2003 to $183.9 million for first quarter 2004. This increase was comprised primarily of
operating revenue increases of $4.6 million at our country club and golf facilities, $2.6 million at our resorts and $1.3 million at our business and sports clubs, partially offset by a decrease of $1.0 million in our other operations and services.



Gain on disposals and impairment of assets was $1.5 million
for first quarter 2003 as compared to a loss of $0.8 million for first quarter 2004. Included in these figures are impairment losses of $0.9 million recorded in the 12 weeks ended March 23, 2004 to write down the carrying value of certain
properties.



Excluding the impact of disposals and impairment
of assets, operating loss improved from $11.3 million for first quarter 2003 to $3.0 million for first quarter 2004. This improvement was primarily due to the increase in revenues mentioned above, decreased selling, general and administrative
expenses of $3.7 million and decreased depreciation and amortization of $1.2 million, partially offset by increased operating costs and expenses of $4.2 million. Selling, general and administrative expenses declined as a result of expense controls
in offsite and field operations. Depreciation and amortization decreased as a result of several fully depreciated assets at our existing properties. Operating costs and expenses increased due to higher usage primarily at country club and golf
facilities as well as at the resorts. Loss from operations before income taxes and minority interest improved from $24.4 million for first quarter 2003 to $17.3 million for first quarter 2004 primarily as a result of the increase in operating income
mentioned above. Interest expense decreased by $1.1 million primarily related to discount amortization.



Discontinued Operations



At March 23, 2004, the operations of 36 divested properties and two properties currently held for sale were included in discontinued operations. Operating revenues for these properties decreased from $5.0 million for first quarter 2003 to
$1.1 million for first quarter 2004. Segment operating loss before the impact of disposals and impairment of assets from these properties improved $0.9 million from first quarter 2003 to first quarter 2004 primarily as only two held for sale
entities had activity in 2004. Gain on disposals of assets was $0.5 million for the twelve weeks ended March 25, 2003. There were no disposals for the twelve weeks ended March 23, 2004. In accordance with SFAS 144, depreciation expense was not
recorded in the current quarter for these properties classified as held for sale.



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Segment and Other Information  12 weeks



Country Club and Golf Facilities



The following table presents certain summary financial and other operating data for our country club and golf facilities segment for the first quarters
ended March 25, 2003 and March 23, 2004 (dollars in thousands):



|                                                      |  |                                             |        |                                        |   |         |  |   |        |   |  |   |         |  
|----------------------------------------------------- |  | ------------------------------------------- | ------ | -------------------------------------- | - | ------- |  | - | ------ | - |  | - | ------- | -
|                                                      |  | Same Store Country Club and Golf Facilities |        | Total Country Club and Golf Facilities |  
|                                                      |  | 2003                                        |        | 2004                                   |   | 2003    |  |   | 2004   |  
|Number of facilities at end of period                 |  |                                             | 98     |                                        |   | 98      |  |   | 98     |   |  |   | 98      |  
|Operating revenues                                    |  | $                                           | 89,606 |                                        | $ | 95,490  |  | $ | 89,692 |   |  | $ | 95,490  |  
|Recognition of membership fees and deposits           |  |                                             | 8,272  |                                        |   | 7,032   |  |   | 8,272  |   |  |   | 7,032   |  
|                                                      |  |                                             |        |                                        |   |         |  |   |        |   |  |   |         |  
|Total operating revenues                              |  | $                                           | 97,878 |                                        | $ | 102,522 |  | $ | 97,964 |   |  | $ | 102,522 |  
|                                                      |  |                                             |        |                                        |   |         |  |   |        |   |  |   |         |  
|Operating costs and expenses (1)                      |  |                                             | 76,773 |                                        |   | 81,900  |  |   | 76,887 |   |  |   | 81,900  |  
|Depreciation and amortization                         |  |                                             | 10,996 |                                        |   | 11,527  |  |   | 10,996 |   |  |   | 11,527  |  
|                                                      |  |                                             |        |                                        |   |         |  |   |        |   |  |   |         |  
|Segment operating income from continuing operations   |  | $                                           | 10,109 |                                        | $ | 9,095   |  | $ | 10,081 |   |  | $ | 9,095   |  
|                                                      |  |                                             |        |                                        |   |         |  |   |        |   |  |   |         |  
|Segment operating income from discontinued operations |  | $                                           |       |                                        | $ |        |  | $ | (482   | ) |  | $ | (2      | )
|                                                      |  |                                             |        |                                        |   |         |  |   |        |   |  |   |         |  
|EBITDA                                                |  | $                                           | 21,105 |                                        | $ | 20,622  |  | $ | 20,768 |   |  | $ | 20,620  |  
|                                                      |  |                                             |        |                                        |   |         |  |   |        |   |  |   |         |  

---

|(1) | Excludes intercompany consulting fees of $2.2 million and $3.9 million for Same Store and Total in 2003 and 2004, respectively. Fees increased in 2004 in conjunction with the terms
of our new debt facility.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Continuing
Operations. Total operating revenues increased $4.6 million from first quarter 2003 to first quarter 2004 for same store country club and golf facilities. This increase was primarily due to increased food and beverage sales of $2.5 million, golf
operations revenues of $1.6 million and membership dues of $1.6 million, partially offset by decreased recognition of membership fees and deposits of $1.2 million. Food and beverage revenues increased as a result of increased activity at our clubs.
Golf operations revenue increased due to higher rounds as a result of the increased activity at our clubs. Membership dues increased as a result of positive membership trends when comparing first quarter 2003 to first quarter 2004 as well as price
increases. Recognition of membership fees and deposits decreased primarily due to a change in the allocation procedures of revenue over 13 periods versus equal amounts in each of our four quarters.



Segment operating income decreased $1.0 million at same store country club
and golf facilities from first quarter 2003 to first quarter 2004 as a result of the increase in revenues mentioned above, offset by increased operating costs and expenses of $5.1 million. Operating costs and expenses increased primarily due to the
increased usage at our clubs which resulted in increased food and beverage and golf operations expenses of $2.4 million and $1.2 million, respectively. Overall, both food and beverage and golf operating margins improved when comparing first quarter
2003 to first quarter 2004.



Discontinued Operations.The operations of 25 divested country club and golf facilities were included in discontinued operations. Segment operating income for these properties improved $0.5 million from first quarter 2003 to first quarter 2004 as a result of decreased
activity related to the divested entities.



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##### Table of Contents

Resorts



The following table presents certain summary financial and other operating data for our resorts segment for the first quarters ended March 25, 2003 and
March 23, 2004 (dollars in thousands):



|                                                      |  |                    |        |   |               |   |        |      |  |   |        |   |  |   |        |  
|----------------------------------------------------- |  | ------------------ | ------ | - | ------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                      |  | Same Store Resorts |        |   | Total Resorts |  
|                                                      |  | 2003               |        |   | 2004          |   |        | 2003 |  |   | 2004   |  
|Number of facilities at end of period (1)             |  |                    | 3      |   |               |   | 3      |      |  |   | 3      |   |  |   | 3      |  
|Operating revenues                                    |  | $                  | 27,166 |   |               | $ | 29,885 |      |  | $ | 27,204 |   |  | $ | 29,918 |  
|Recognition of membership fees and deposits           |  |                    | 1,549  |   |               |   | 1,418  |      |  |   | 1,549  |   |  |   | 1,418  |  
|                                                      |  |                    |        |   |               |   |        |      |  |   |        |   |  |   |        |  
|Total operating revenues                              |  | $                  | 28,715 |   |               | $ | 31,303 |      |  | $ | 28,753 |   |  | $ | 31,336 |  
|                                                      |  |                    |        |   |               |   |        |      |  |   |        |   |  |   |        |  
|Operating costs and expenses (2)                      |  |                    | 29,241 |   |               |   | 31,195 |      |  |   | 29,292 |   |  |   | 31,671 |  
|Depreciation and amortization                         |  |                    | 4,473  |   |               |   | 3,774  |      |  |   | 4,584  |   |  |   | 3,865  |  
|                                                      |  |                    |        |   |               |   |        |      |  |   |        |   |  |   |        |  
|Segment operating loss from continuing operations     |  | $                  | (4,999 | ) |               | $ | (3,666 | )    |  | $ | (5,123 | ) |  | $ | (4,200 | )
|                                                      |  |                    |        |   |               |   |        |      |  |   |        |   |  |   |        |  
|Segment operating income from discontinued operations |  | $                  |       |   |               | $ |       |      |  | $ |       |   |  | $ |       |  
|                                                      |  |                    |        |   |               |   |        |      |  |   |        |   |  |   |        |  
|EBITDA                                                |  | $                  | (526   | ) |               | $ | 108    |      |  | $ | (539   | ) |  | $ | (335   | )
|                                                      |  |                    |        |   |               |   |        |      |  |   |        |   |  |   |        |  
|Lodging data: (3 resorts) (1)                         |  |                    |        |   |               |   |        |      |  |   |        |   |  |   |        |  
|Room nights available                                 |  |                    | 99,792 |   |               |   | 99,792 |      |  |   |        |   |  |   |        |  
|Room nights sold                                      |  |                    | 42,473 |   |               |   | 43,996 |      |  |   |        |   |  |   |        |  
|Paid occupancy rate                                   |  |                    | 42.6   | % |               |   | 44.1   | %    |  |   |        |   |  |   |        |  
|Average daily revenue per occupied room (3)           |  | $                  | 551    |   |               | $ | 593    |      |  |   |        |   |  |   |        |  
|Average daily revenue per available room (3)          |  | $                  | 235    |   |               | $ | 261    |      |  |   |        |   |  |   |        |  

---

|(1) | Number of facilities and lodging data is comprised is comprised of data from wholly owned resorts consisting of Pinehurst, The Homestead and Barton Creek. Other ancillary resort
operations are included in summary financial data for Total Resorts.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Excludes intercompany consulting fees of $1.9 million in 2004 for Same Store and Total. There were no intercompany consulting fees in 2003.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Average daily revenue per occupied room and average daily revenue per available room are based on total operating revenues excluding membership dues, recognition of member
initiation fees, and net managed rooms commissions.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Continuing Operations.Total operating revenues increased $2.6 million from first quarter 2003 to first quarter 2004 for same store resorts. This increase was primarily due to increased food and beverage sales of $1.2 million,
lodging revenues of $0.8 and other recreation revenues of $0.7 million. Food and beverage sales increased as a result of higher occupancy and spending by social guests during the quarter at The Homestead and Barton Creek. Lodging revenues increased
as a result of increased room nights and higher average room rates from the prior year, primarily at The Homestead. Other recreation revenues increased as a result of increased ski revenues at The Homestead.



Segment operating loss decreased $1.3 million from first quarter 2003 to
first quarter 2004 for same store resorts. This improvement was due to by the increase in revenues mentioned above and decreased depreciation and amortization of $0.7 million, partially offset by a $2.0 million increase in operating costs and
expenses. Depreciation and amortization decreased $0.7 million at Barton Creek due to fixed assets written-off in the prior year and several fully depreciated assets. Operating costs and expenses increased due to higher food and beverage expenses of
$1.1 million related to the higher occupancy and spending mentioned above at The Homestead and Barton Creek. Food and beverage operating margins improved when comparing first quarter 2003 to first quarter 2004. Other recreation operating expenses
increased $0.7 million from increased usage at The Homestead, primarily related to ski expenses.



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##### Table of Contents

Business and Sports Clubs



The following table presents certain summary financial and other operating data for our business and sports clubs segment
for the first quarters ended March 25, 2003 and March 23, 2004 (dollars in thousands):



|                                                    |  |                                     |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|--------------------------------------------------- |  | ----------------------------------- | ------ | - | ------------------------------ | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                    |  | Same Store Businessand Sports Clubs |        |   | Total Business andSports Clubs |  
|                                                    |  | 2003                                |        |   | 2004                           |   |        | 2003 |  |   | 2004   |  
|Number of facilities at end of period               |  |                                     | 67     |   |                                |   | 67     |      |  |   | 67     |   |  |   | 67     |  
|Operating revenues                                  |  | $                                   | 47,199 |   |                                | $ | 48,623 |      |  | $ | 47,199 |   |  | $ | 48,623 |  
|Recognition of membership fees and deposits         |  |                                     | 646    |   |                                |   | 550    |      |  |   | 647    |   |  |   | 550    |  
|                                                    |  |                                     |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Total operating revenues                            |  | $                                   | 47,845 |   |                                | $ | 49,173 |      |  | $ | 47,846 |   |  | $ | 49,173 |  
|                                                    |  |                                     |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Operating costs and expenses (1)                    |  |                                     | 42,863 |   |                                |   | 43,360 |      |  |   | 42,864 |   |  |   | 43,360 |  
|Depreciation and amortization                       |  |                                     | 2,676  |   |                                |   | 2,560  |      |  |   | 2,676  |   |  |   | 2,560  |  
|                                                    |  |                                     |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Segment operating income from continuing operations |  | $                                   | 2,306  |   |                                | $ | 3,253  |      |  | $ | 2,306  |   |  | $ | 3,253  |  
|                                                    |  |                                     |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Segment operating loss from discontinued operations |  | $                                   | (209   | ) |                                | $ | (118   | )    |  | $ | (418   | ) |  | $ | (115   | )
|                                                    |  |                                     |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|EBITDA                                              |  | $                                   | 4,827  |   |                                | $ | 5,709  |      |  | $ | 4,652  |   |  | $ | 5,707  |  
|                                                    |  |                                     |        |   |                                |   |        |      |  |   |        |   |  |   |        |  

---

|(1) | Excludes intercompany consulting fees of $1.2 million and $1.3 million for Same Store and Total, respectively, in 2003 and 2004.
|--- | --------------------------------------------------------------------------------------------------------------------------------



Continuing Operations.Total operating revenues increased $1.3 million
from first quarter 2003 to first quarter 2004 at same store business and sports clubs. This increase was primarily comprised of a $1.0 million increase in food and beverage sales and a $0.4 million increase in membership dues. Food and beverage
revenues increased primarily as a result of increased spending in ala carte and other revenue. Most clubs had a higher per check average in 2004. Membership dues increased due to the impact of the Signature Gold program.



Segment operating income increased $0.9 million from first quarter 2003 to
first quarter 2004 at same store business and sports clubs due to the increase in revenues mentioned above, partially offset by a related increase in operating costs and expenses of $0.5 million. Operating margins were positively impacted by
improved food and beverage margins due to expense controls in purchasing and operations.



Discontinued Operations. The operations of nine divested and two currently held for sale business and sports clubs were included in discontinued operations. Segment operating loss from these properties improved
$0.3 million from first quarter 2003 to first quarter 2004.



Other
Operations and Services  Continuing Operations



Operating loss from other operations and services improved by $7.4 million from first quarter 2003 to first quarter 2004 primarily due to improvements in general and administrative expenses as well as a charge of $1.0 million recorded in
2003 to cover settlements of lawsuits related to one of our former properties. General and administrative expenses decreased primarily related to cost cutting initiatives during the first quarter of 2003. Additionally, depreciation and amortization
has decreased by $0.9 million as several fixed assets have become fully depreciated.



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##### Table of Contents

Seasonality of Demand; Fluctuations in Quarterly Results



Our quarterly results fluctuate as a result of 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, leases of 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 non-seasonal and severe weather
patterns.



Liquidity and Capital Resources



Historically, we have financed our operations and cash needs primarily
through cash flows from operations, borrowings under credit facilities, and to a lesser extent, proceeds from divestitures. We anticipate using cash flow from operations for the remainder of 2004 and the immediate future thereafter principally to
fund planned capital replacement expenditures, to repay debt and to build cash reserves. It is anticipated that beginning in 2005, we will also use our cash flow to grow and expand our business through a combination of improvements and expansions of
existing facilities and acquisitions of additional properties. We believe any unit growth in the remainder of 2004 will be undertaken by entering into management contracts or lease agreements, while in 2005 and beyond, growth could take the form of
both ownership and management opportunities, principally in the golf and resort segments.



We distinguish uses of cash for capital expenditures to refurbish and replace existing property and equipment (i.e., capital replacements) from discretionary capital expenditures such as the expansion of existing
facilities (i.e., capital expansions) and investments in joint ventures. Capital replacements are planned expenditures made each year to maintain high quality standards of facilities for the purpose of meeting existing members expectations and
to attract new members. Capital expansions are strategic expansions of existing and newly acquired facilities and resorts that we believe will provide opportunities to expand our membership base and room nights and positively affect long-term cash
flows. Historically, capital expansions have been funded by operating cash flows and external debt. We expect to spend approximately $7 million in 2004 on capital expansions and improvements to existing facilities of which $1.0 million has already
been spent. Total capital expenditures are expected to be approximately $60 million in 2004 of which $7.2 million has already been spent. Net cash flows used by investing activities were $5.3 million for the 12 weeks ended March 23, 2004 as compared
to $3.4 million for the 12 weeks ended March 25, 2003.



Net
cash flows from financing activities were a use of $11.5 million for the 12 weeks ended March 23, 2004 as compared to cash provided of $0.3 million for the 12 weeks ended March 25, 2003 due to increased repayments of debt in 2004 and no new
borrowings. Under the provisions of our debt agreement with Textron Financial Corporation (Textron), we are required to maintain certain debt service ratios at both the portfolio and individual property level. Each of the individual loans have
cross-default provisions; therefore, a default on an individual loan triggers a default on the portfolio. As of March 23, 2004, it came to our attention that the debt service ratio (as defined in the agreement) was below the minimum level for
certain properties participating in the loan, thereby causing the entire loan ($56 million) to be in technical default. We have obtained a waiver dated May 4, 2004, in which the lender waived its right to exercise its rights and remedies under the
loan through September 30, 2005 for named properties in noncompliance occurring at or before September 7, 2004. We may cure any default without a waiver, if necessary, by paying down a portion of the debt to regain compliance, provide an asset
replacement pursuant to the loan agreement or provide the lender with additional collateral, subject to their review and approval. This prepayment amount is currently approximately $4.4 million and included in the current portion of long-term debt
in the Consolidated Balance Sheet as of March 23, 2004. Overall, our cash flow situation has improved as the refinancing in June 2003 provided us with additional working capital and liquidity, as well as favorable interest rates.



Net cash flows provided from by operations increased to $23.7 million in the
12 weeks ended March 23, 2004 from $22.6 million in the 12 weeks ended March 25, 2003 primarily due to working capital needs. We believe we have adequate capital resources to fund our operations and strategy for the immediate future. In the event
that this is not the case, the company could use its existing cash reserves to meet its obligations or delay or cancel certain capital repair or expansion projects.



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##### Table of Contents

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



This Quarterly Report on Form 10-Q may contain 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 30, 2003.



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.



Recently Issued Accounting
Pronouncements



In January 2003, the FASB issued and then
revised in December 2003, FASB Interpretation No. 46, (FIN 46R) Consolidation of Variable Interest Entities which changes the criteria by which one company includes another entity in its consolidated financial statements. FIN 46R
requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entitys activities or entitled to receive a majority of the entitys residual
returns or both. The assets, liabilities and noncontrolling interests of the newly consolidated variable interest entities were initially recorded at the amounts at which they would have been carried in the Consolidated Financial Statements if FIN
46R had been effective when we first met the conditions to be the primary beneficiary of the variable interest entity. The difference between the net amount added to our Consolidated Statement of Operations and the amount of any previously
recognized interest in the newly consolidated entity was not material and therefore was not recognized as a cumulative effect of an accounting change as of March 23, 2004. The adoption of FIN 46R has resulted in an increase in net assets of $1.1
million, including debt of $13.7 million to our Consolidated Balance Sheet. Prior periods were not restated.



In April 2003, the FASB issued SFAS No. 149 (SFAS 149), Amendment of Statement 133 on Derivative Instruments and Hedging Activities. This
statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under FASB Statement No. 133. Adoption of this statement
had no impact to our Consolidated Financial Statements.



In May
2003, the FASB issued SFAS No. 150 (SFAS 150), Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. This statement establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability. Adoption of this statement had no impact to our Consolidated Financial
Statements.



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##### Table of Contents

In December 2003, the FASB issued SFAS No. 132R (revised 2003), Employers Disclosures about
Pensions and Other Postretirement Benefits. This statement improves financial statement disclosures for defined benefit plans. We have not adopted these expanded disclosures as our pension plan is not a material component of our Consolidated
Financial Statements.



Item 3. Quantitative and Qualitative Disclosures about Market Risk



There were no material changes to the disclosure on this matter made in our report on Form 10-K for the fiscal year ended December 30, 2003.



Item 4. Controls and Procedures



Evaluation
of Disclosure and Procedures



Our Chief Executive
Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this quarterly report.
Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our current disclosure controls and procedures are effective and timely, providing them with material information relating to us required to be
disclosed in the reports we file or submit under the Exchange Act.



Changes in Internal Controls



There
have not been any significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. We are not aware of any significant deficiencies or material weaknesses;
therefore no corrective actions were taken.



20



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##### Table of Contents

PART II. OTHER INFORMATION



Item 6. Exhibits and Reports on Form 8-K



|   |   |  |                                                                                                                                                        
|-- | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------
|(a | ) |  | Exhibits                                                                                                                                               
|   |  
|   |   |  | 15.1 - Letter from KPMG LLP regarding unaudited interim financial statements                                                                           
|   |  
|   |   |  | 31.1 - Certification by Robert H. Dedman, Jr. 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 Robert H. Dedman, Jr. 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.     
|   |  
|(b | ) |  | Reports on Form 8-K                                                                                                                                    
|   |  
|   |   |  | Not applicable                                                                                                                                         







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##### Table of Contents

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: May 6, 2004 |  | By:            |  | /s/Jeffrey P. Mayer    
|                  |  |                |  | Jeffrey P. Mayer       
|                  |  |                |  | Chief Financial Officer



22