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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q



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|       |                                                                                          |  |  |                                                 
|------ | ---------------------------------------------------------------------------------------- |  |  | ------------------------------------------------
|[ X ]  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|       |                                                                                          |  |  |                                                 
|       |                                                                                          |  |  | For the quarterly period ended September 3, 2002
|       |                                                                                          |  |  |                                                 
|[    ] | 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

CLUBCORP, INC.

(Exact name of registrant as specified in its charter)


|                                         |  |                    
|---------------------------------------- |  | -------------------
|Delaware                                 |  | 75-2778488         
|(State or other jurisdiction             |  | (I.R.S. employer   
|of incorporation or organization)        |  | 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. YesX No.

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes No Not yet
applicableX.

The number of shares of the Registrants Common Stock outstanding as of October
16, 2002 was 93,740,645.





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TABLE OF CONTENTS



|                                                   |                                                                                               |                                                      |  |  |  |  |  | 
|-------------------------------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                     
|                                                   | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                                                   |                                                                                               | INDEPENDENT AUDITORS REVIEW REPORT                 
|                                                   |                                                                                               | Consolidated Balance Sheet                          
|                                                   |                                                                                               | Consolidated Statement of Operations                
|                                                   |                                                                                               | Consolidated Statement of Cash Flows                
|                                                   |                                                                                               | Condensed Notes to Consolidated Financial Statements
|                                                   | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                   | Item 3. Quantitative and Qualitative Disclosures about Market Risk                           
|                                                   | Item 4. Controls and Procedures                                                              
|PART II. OTHER INFORMATION                        
|                                                   | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                        
|EX-10.1 5th Amendment to Credit Agreement         
|EX-15.1 Unaudited Interim Financial Statements    
|EX-99.1 Management's Certifications to Section 906



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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 |                                                      |  | 11 |  
|Item 3. Quantitative and Qualitative Disclosures about Market Risk                            |                                                      |  | 23 |  
|Item 4. Controls and Procedures                                                               |                                                      |  | 24 |  
|Part II. OTHER INFORMATION                                                                    |                                                      |  |    |  
|Item 6. Exhibits and Reports on Form 8-K                                                      |                                                      |  | 25 |  





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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 September 3, 2002, and the related consolidated
statement of operations for the twelve weeks and thirty-six weeks ended
September 3, 2002 and September 4, 2001 and the consolidated statement of cash
flows for the thirty-six weeks ended September 3, 2002 and September 4, 2001.
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 Note 2 to the accompanying consolidated financial statements,
in accordance with Statement of Financial Accounting Standards (SFAS) No. 133,
Accounting for Derivative Instruments and Hedging Activities as amended and
interpreted, ClubCorp changed its method of accounting for derivative
instruments and hedging activities on December 27, 2000. Also, as discussed in
Note 7 to the accompanying consolidated financial statements, effective
December 26, 2001, ClubCorp adopted the provisions of SFAS No. 144, Accounting
for the Disposal or Impairment of Long-Lived Assets.

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 25, 2001 and the related consolidated statements of
operations, stockholders equity and comprehensive income (loss), and cash
flows for the year then ended (not presented herein); and in our report dated
February 22, 2002, 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 25, 2001, is fairly
stated, in all material respects, in relation to the consolidated balance sheet
from which it has been derived.

KPMG LLP

Dallas, Texas
October 14, 2002

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ClubCorp, Inc.Consolidated Balance Sheet
(Dollars in thousands)

|                                                      |                                                                                                                                                                             |                            |                                      |                                            |         |              |           |              |         |             |           | 
|----------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------------------------------------ | ------------------------------------------ | ------- | ------------ | --------- | ------------ | ------- | ----------- | --------- | 
|                                                      |                                                                                                                                                                             |                            |                                      |                                            |         | December 25, |           | September 3,
|                                                      |                                                                                                                                                                             |                            |                                      |                                            |         | 2001         |           | 2002        
|                                                      |                                                                                                                                                                             |                            |                                      |                                            |         |              |           |             
|                                                      |                                                                                                                                                                             |                            |                                      |                                            |         |              |           |              |         | (Unaudited)
|                                                      |                                                                                                                                                                             |                            |                                      | Assets                                     |         |              |           |              |         |             |           | 
|Current assets:                                       |                                                                                                                                                                             |                            |                                      |                                            |         |              |           |             
|                                                      | Cash and cash equivalents                                                                                                                                                   |                            | $                                    | 1,789                                      |         |              | $         | 16,611       |        
|                                                      | Membership and other receivables, net                                                                                                                                       |                            |                                      | 96,375                                     |         |              |           | 97,212       |        
|                                                      | Inventories                                                                                                                                                                 |                            |                                      | 20,963                                     |         |              |           | 22,069       |        
|                                                      | Other current assets                                                                                                                                                        |                            |                                      | 115,747                                    |         |              |           | 105,425      |        
|                                                      |                                                                                                                                                                             |                            |                                      |                                            |         |              |           |              |        
|                                                      |                                                                                                                                                                             | Total current assets       |                                      |                                            | 234,874 |              |           |              | 241,317 |            
|Property and equipment, net                           |                                                                                                                                                                             |                            | 1,263,354                            |                                            |         |              | 1,234,394 |             
|Other assets                                          |                                                                                                                                                                             |                            | 112,801                              |                                            |         |              | 137,041   |             
|                                                      |                                                                                                                                                                             |                            |                                      |                                            |         |              |           |              |        
|                                                      |                                                                                                                                                                             |                            |                                      | Total assets                               |         | $            | 1,611,029 |              |         | $           | 1,612,752 | 
|                                                      |                                                                                                                                                                             |                            |                                      |                                            |         |              |           |              |        
|                                                      |                                                                                                                                                                             |                            | Liabilities and Stockholders Equity |                                            |         |              |           |              |         |             |          
|Current liabilities:                                  |                                                                                                                                                                             |                            |                                      |                                            |         |              |           |             
|                                                      | Accounts payable and accrued liabilities                                                                                                                                    |                            | $                                    | 78,929                                     |         |              | $         | 77,698       |        
|                                                      | Long-term debt  current portion                                                                                                                                            |                            |                                      | 50,378                                     |         |              |           | 48,358       |        
|                                                      | Other current liabilities                                                                                                                                                   |                            |                                      | 112,128                                    |         |              |           | 131,455      |        
|                                                      |                                                                                                                                                                             |                            |                                      |                                            |         |              |           |              |        
|                                                      |                                                                                                                                                                             | Total current liabilities  |                                      |                                            | 241,435 |              |           |              | 257,511 |            
|Long-term debt                                        |                                                                                                                                                                             |                            | 596,858                              |                                            |         |              | 625,848   |             
|Other liabilities                                     |                                                                                                                                                                             |                            | 167,971                              |                                            |         |              | 148,443   |             
|Membership deposits                                   |                                                                                                                                                                             |                            | 109,843                              |                                            |         |              | 117,970   |             
|Redemption value of common stock held by benefit plan |                                                                                                                                                                             |                            | 62,746                               |                                            |         |              | 49,720    |             
|Stockholders equity:                                 |                                                                                                                                                                             |                            |                                      |                                            |         |              |           |             
|                                                      | Preferred stock, $.01 par value, 150,000,000 shares
authorized, none issued or outstanding                                                                                  |                            |                                      |                                           |         |              |           |             |        
|                                                      | Common stock, $.01 par value, 250,000,000 shares
authorized, 99,594,408 issued, 93,742,901
outstanding at December 25, 2001 and
93,740,645 outstanding at September 3, 2002 |                            |                                      | 996                                        |         |              |           | 996          |        
|                                                      | Additional paid-in capital                                                                                                                                                  |                            |                                      | 161,674                                    |         |              |           | 161,672      |        
|                                                      | Accumulated other comprehensive loss                                                                                                                                        |                            |                                      | (7,821                                     | )       |              |           | (8,688       | )      
|                                                      | Retained earnings                                                                                                                                                           |                            |                                      | 337,585                                    |         |              |           | 319,589      |        
|                                                      | Treasury stock, 5,851,507 shares at December 25, 2001
and 5,853,763 shares at September 3, 2002                                                                             |                            |                                      | (60,258                                    | )       |              |           | (60,309      | )      
|                                                      |                                                                                                                                                                             |                            |                                      |                                            |         |              |           |              |        
|                                                      |                                                                                                                                                                             | Total stockholders equity |                                      |                                            | 432,176 |              |           |              | 413,260 |            
|                                                      |                                                                                                                                                                             |                            |                                      |                                            |         |              |           |              |        
|                                                      |                                                                                                                                                                             |                            |                                      | Total liabilities and stockholders equity |         | $            | 1,611,029 |              |         | $           | 1,612,752 | 
|                                                      |                                                                                                                                                                             |                            |                                      |                                            |         |              |           |              |        

See accompanying condensed notes to consolidated financial statements.

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ClubCorp, Inc.Consolidated Statement of Operations
(Dollars in thousands, except per share amounts)
(Unaudited)

|                                                                          |                                 |   |                |       |                |   |              |       |              |   |         |       |   |   |         |       |  
|------------------------------------------------------------------------- | ------------------------------- | - | -------------- | ----- | -------------- | - | ------------ | ----- | ------------ | - | ------- | ----- | - | - | ------- | ----- | -
|                                                                          |                                 |   | 12 Weeks Ended |       | 36 Weeks Ended
|                                                                          |                                 |   |                |       |               
|                                                                          |                                 |   | September 4,   |       | September 3,   |   | September 4, |       | September 3,
|                                                                          |                                 |   | 2001           |       | 2002           |   | 2001         |       | 2002        
|                                                                          |                                 |   |                |       |                |   |              |       |             
|Operating revenues                                                        |                                 | $ | 235,402        |       |                | $ | 226,630      |       |              | $ | 689,485 |       |   | $ | 658,870 |      
|Operating costs and expenses                                              |                                 |   | 180,864        |       |                |   | 178,303      |       |              |   | 540,353 |       |   |   | 527,997 |      
|Depreciation and amortization                                             |                                 |   | 22,145         |       |                |   | 20,769       |       |              |   | 64,376  |       |   |   | 64,159  |      
|Selling, general and administrative expenses                              |                                 |   | 17,100         |       |                |   | 19,603       |       |              |   | 55,410  |       |   |   | 53,508  |      
|Loss on disposals and impairments of assets                               |                                 |   | 31,363         |       |                |   | 2,674        |       |              |   | 31,703  |       |   |   | 8,886   |      
|                                                                          |                                 |   |                |       |                |   |              |       |              |   |         |       |   |   |         |      
|Operating income (loss) from continuing operations                        |                                 |   | (16,070        | )     |                |   | 5,281        |       |              |   | (2,357  | )     |   |   | 4,320   |      
|Interest and investment income                                            |                                 |   | 591            |       |                |   | 74           |       |              |   | 2,231   |       |   |   | 485     |      
|Interest expense                                                          |                                 |   | (13,842        | )     |                |   | (14,471      | )     |              |   | (43,638 | )     |   |   | (41,560 | )    
|                                                                          |                                 |   |                |       |                |   |              |       |              |   |         |       |   |   |         |      
|Loss from continuing operations before income
taxes and minority interest |                                 |   | (29,321        | )     |                |   | (9,116       | )     |              |   | (43,764 | )     |   |   | (36,755 | )    
|Income tax benefit                                                        |                                 |   | 8,842          |       |                |   | 1,876        |       |              |   | 12,948  |       |   |   | 9,252   |      
|Minority interest                                                         |                                 |   | (21            | )     |                |   | 213          |       |              |   | (212    | )     |   |   | 527     |      
|                                                                          |                                 |   |                |       |                |   |              |       |              |   |         |       |   |   |         |      
|Loss from continuing operations                                           |                                 |   | (20,500        | )     |                |   | (7,027       | )     |              |   | (31,028 | )     |   |   | (26,976 | )    
|Discontinued operations:                                                  |                                 |   |                |       |                |   |              |       |              |   |         |       |   |   |         |      
|Income (loss) from discontinued operations before
income taxes            |                                 |   | 406            |       |                |   | (5,662       | )     |              |   | (307    | )     |   |   | (5,887  | )    
|Income tax benefit (provision)                                            |                                 |   | (185           | )     |                |   | 1,775        |       |              |   | 79      |       |   |   | 1,841   |      
|                                                                          |                                 |   |                |       |                |   |              |       |              |   |         |       |   |   |         |      
|Income (loss) from discontinued operations                                |                                 | $ | 221            |       |                | $ | (3,887       | )     |              | $ | (228    | )     |   | $ | (4,046  | )    
|                                                                          |                                 |   |                |       |                |   |              |       |              |   |         |       |   |   |         |      
|Net loss                                                                  |                                 | $ | (20,279        | )     |                | $ | (10,914      | )     |              | $ | (31,256 | )     |   | $ | (31,022 | )    
|                                                                          |                                 |   |                |       |                |   |              |       |              |   |         |       |   |   |         |      
|Basic and diluted loss per share on:                                      |                                 |   |                |       |                |   |              |       |              |   |         |       |   |   |         |      
|                                                                          | Loss from continuing operations |   | $              | (0.22 | )              |   | $            | (0.08 | )            |   | $       | (0.33 | ) |   | $       | (0.29 | )
|                                                                          | Discontinued operations         |   |                |      |                |   |              | (0.04 | )            |   |         |      |   |   |         | (0.04 | )
|                                                                          |                                 |   |                |       |                |   |              |       |              |   |         |       |   |   |         |      
|                                                                          | Net loss                        |   | $              | (0.22 | )              |   | $            | (0.12 | )            |   | $       | (0.33 | ) |   | $       | (0.33 | )
|                                                                          |                                 |   |                |       |                |   |              |       |              |   |         |       |   |   |         |      

See accompanying condensed notes to consolidated financial statements.

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ClubCorp, Inc.Consolidated Statement of Cash Flows
(Dollars in thousands)
(Unaudited)

|                                                             |                                                                                                  |                                                                          |                                                         |         |                |         |              |         |         |         |  
|------------------------------------------------------------ | ------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------ | ------------------------------------------------------- | ------- | -------------- | ------- | ------------ | ------- | ------- | ------- | -
|                                                             |                                                                                                  |                                                                          |                                                         |         | 36 Weeks Ended
|                                                             |                                                                                                  |                                                                          |                                                         |         |               
|                                                             |                                                                                                  |                                                                          |                                                         |         | September 4,   |         | September 3,
|                                                             |                                                                                                  |                                                                          |                                                         |         | 2001           |         | 2002        
|                                                             |                                                                                                  |                                                                          |                                                         |         |                |         |             
|Cash flows from operations:                                  |                                                                                                  |                                                                          |                                                         |         |                |         |              |        
|                                                             | Loss from continuing operations                                                                  |                                                                          | $                                                       | (31,028 | )              |         | $            | (26,976 | )      
|                                                             | Adjustments to reconcile loss from continuing operations to cash flows
provided from operations: |                                                                          |                                                         |         |                |         |              |         |        
|                                                             |                                                                                                  | Loss from discontinued operations                                        |                                                         |         | (228           | )       |              |         | (4,046  | )      
|                                                             |                                                                                                  | Depreciation and amortization from continuing operations                 |                                                         |         | 64,376         |         |              |         | 64,159  |        
|                                                             |                                                                                                  | Depreciation and amortization from discontinued operations               |                                                         |         | 2,187          |         |              |         | 1,138   |        
|                                                             |                                                                                                  | Loss on disposals and impairments of assets from continuing operations   |                                                         |         | 31,703         |         |              |         | 8,886   |        
|                                                             |                                                                                                  | Loss on disposals and impairments of assets from discontinued operations |                                                         |         |               |         |              |         | 6,242   |        
|                                                             |                                                                                                  | Amortization of discount on membership deposits                          |                                                         |         | 6,450          |         |              |         | 6,746   |        
|                                                             |                                                                                                  | Deferred income taxes                                                    |                                                         |         | (15,103        | )       |              |         | (13,177 | )      
|                                                             |                                                                                                  | Decrease in real estate held for sale                                    |                                                         |         | 6,962          |         |              |         | 2,846   |        
|                                                             |                                                                                                  | Decrease in membership and other receivables, net                        |                                                         |         | 5,703          |         |              |         | 1,192   |        
|                                                             |                                                                                                  | Decrease in accounts payable and accrued liabilities                     |                                                         |         | (483           | )       |              |         | (2,417  | )      
|                                                             |                                                                                                  | Net change in deferred income                                            |                                                         |         | 6,458          |         |              |         | 6,047   |        
|                                                             |                                                                                                  | Net change in deferred membership revenues                               |                                                         |         | 5,838          |         |              |         | (1,619  | )      
|                                                             |                                                                                                  | Other                                                                    |                                                         |         | (906           | )       |              |         | 4,631   |        
|                                                             |                                                                                                  |                                                                          |                                                         |         |                |         |              |         |        
|                                                             |                                                                                                  |                                                                          | Cash flows provided from operations                     |         |                | 81,929  |              |         |         | 53,652  |  
|Cash flows from investing activities:                        |                                                                                                  |                                                                          |                                                         |         |                |         |              |        
|                                                             | Additions to property and equipment                                                              |                                                                          |                                                         | (85,827 | )              |         |              | (62,935 | )      
|                                                             | Development of new facilities                                                                    |                                                                          |                                                         | (34,534 | )              |         |              | (12,666 | )      
|                                                             | Development of real estate held for sale                                                         |                                                                          |                                                         | (4,040  | )              |         |              | (3,911  | )      
|                                                             | Proceeds from dispositions, net                                                                  |                                                                          |                                                         | 51,110  |                |         |              | 14,294  |        
|                                                             | Other                                                                                            |                                                                          |                                                         | 3,264   |                |         |              | (108    | )      
|                                                             |                                                                                                  |                                                                          |                                                         |         |                |         |              |         |        
|                                                             |                                                                                                  |                                                                          | Cash flows used by investing activities                 |         |                | (70,027 | )            |         |         | (65,326 | )
|Cash flows from financing activities:                        |                                                                                                  |                                                                          |                                                         |         |                |         |              |        
|                                                             | Borrowings of long-term debt                                                                     |                                                                          |                                                         |        |                |         |              | 47,680  |        
|                                                             | Repayments of long-term debt                                                                     |                                                                          |                                                         | (25,720 | )              |         |              | (17,804 | )      
|                                                             | Loan origination and amendment fees                                                              |                                                                          |                                                         | (197    | )              |         |              | (5,342  | )      
|                                                             | Membership deposits received, net                                                                |                                                                          |                                                         | 1,364   |                |         |              | 2,015   |        
|                                                             | Treasury stock transactions, net                                                                 |                                                                          |                                                         | (3,650  | )              |         |              | (53     | )      
|                                                             |                                                                                                  |                                                                          |                                                         |         |                |         |              |         |        
|                                                             |                                                                                                  |                                                                          | Cash flows provided from (used by) financing activities |         |                | (28,203 | )            |         |         | 26,496  |  
|                                                             |                                                                                                  |                                                                          |                                                         |         |                |         |              |         |        
|Net cash flows from continuing operations                    |                                                                                                  |                                                                          | (14,662                                                 | )       |                |         | 15,946       |        
|Net cash flows from discontinued operations                  |                                                                                                  |                                                                          | (1,639                                                  | )       |                |         | (1,124       | )      
|                                                             |                                                                                                  |                                                                          |                                                         |         |                |         |              |         |        
|Total cash flows from continuing and discontinued operations |                                                                                                  |                                                                          | (16,301                                                 | )       |                |         | 14,822       |        
|                                                             |                                                                                                  |                                                                          |                                                         |         |                |         |              |         |        
|Cash and cash equivalents at beginning of period             |                                                                                                  |                                                                          | 24,771                                                  |         |                |         | 1,789        |        
|                                                             |                                                                                                  |                                                                          |                                                         |         |                |         |              |         |        
|Cash and cash equivalents at end of period                   |                                                                                                  | $                                                                        | 8,470                                                   |         |                | $       | 16,611       |        
|                                                             |                                                                                                  |                                                                          |                                                         |         |                |         |              |         |        

See accompanying condensed notes to consolidated financial statements.

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ClubCorp, Inc.

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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 subsidiaries (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 note 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 consolidated
financial statements should be read in conjunction with the Consolidated
Financial Statements and notes thereto of ClubCorp for the year ended December
25, 2001 which are a part of ClubCorps 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 September
3, 2002 and the consolidated results of operations for the twelve weeks and
thirty-six weeks ended September 4, 2001 and September 3, 2002 and the
consolidated cash flows for the thirty-six weeks ended September 4, 2001 and
September 3, 2002. 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.

Recent Pronouncements
Effective December 26, 2001, we adopted Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets. The adoption of
SFAS 142 did not have a significant impact on our consolidated financial
position or results of operations as we have virtually no goodwill in our
consolidated financial statements. Substantially all of our purchase price
related to our acquisitions is allocated to property and equipment.

Effective April 30, 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44 and 62, Amendment of FASB Statement No. 13, and Technical
Corrections. The main provisions of this statement address classification of
debt extinguishments and accounting for certain lease transactions.
Implementation of this statement is not expected to have a material impact on
our consolidated financial statements.

Effective July 30, 2002, the FASB issued SFAS No. 146, Accounting for Cost
Associated with Exit or Disposal Activities. The main provisions of this
statement address the recognition of liabilities associated with an exit or
disposal activity. Implementation of this statement is not expected to have a
material impact on our consolidated financial statements.

Reclassifications
Certain amounts previously reported have been reclassified to conform with the
current period presentation. See note 7.

Note 2. Derivative instruments
Effective December 27, 2000, we adopted Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities, as amended and interpreted. SFAS 133 requires that all derivative
instruments, such as interest rate swap contracts, be recognized in the
financial statements and measured at their fair market value. Changes in the
fair market value of derivative instruments are recognized each period in
current operations or stockholders equity (as a component of other
comprehensive loss), depending on whether a derivative is designated as part of
a hedge transaction and the type of hedge transaction. The adoption of SFAS
133 resulted in recording approximately $2,119,000, net of $1,141,000 income
tax benefit, in other comprehensive loss for the cumulative effect of the
accounting change.

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ClubCorp, Inc.

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As of September 3, 2002, we had interest rate swap contracts to pay fixed rates
of interest (ranging from 5.25% to 7.21%) and receive variable rates of
interest based on LIBOR on an aggregate of $225.0 million notional amount of
indebtedness with maturity dates ranging from June 2003 through September 2003.
These hedges are highly effective, however, for the
thirty-six weeks ended September 3, 2002, we recorded $39,000 as a reduction of
interest expense for the ineffective portion of these instruments. The
aggregate fair market value of all interest rate swap contracts was
($8,846,000) on September 3, 2002 and is included in other liabilities on the
Consolidated Balance Sheet.

Note 3. Operating revenues
ClubCorp recognizes revenues from the following sources (dollars in thousands):

|                                                     |                          |   |                |         |                |   |              |         |              |   |         |         |  |   |         |         | 
|---------------------------------------------------- | ------------------------ | - | -------------- | ------- | -------------- | - | ------------ | ------- | ------------ | - | ------- | ------- |  | - | ------- | ------- | 
|                                                     |                          |   | 12 Weeks Ended |         | 36 Weeks Ended
|                                                     |                          |   |                |         |               
|                                                     |                          |   | September 4,   |         | September 3,   |   | September 4, |         | September 3,
|                                                     |                          |   | 2001           |         | 2002           |   | 2001         |         | 2002        
|                                                     |                          |   |                |         |                |   |              |         |             
|Membership fees and deposits                         |                          | $ | 9,384          |         |                | $ | 9,343        |         |              | $ | 27,933  |         |  | $ | 28,836  |        
|Membership dues                                      |                          |   | 76,441         |         |                |   | 77,602       |         |              |   | 230,261 |         |  |   | 232,537 |        
|Golf operations revenues                             |                          |   | 53,670         |         |                |   | 53,732       |         |              |   | 149,531 |         |  |   | 145,432 |        
|Food and beverage revenues                           |                          |   | 58,381         |         |                |   | 57,291       |         |              |   | 180,143 |         |  |   | 171,095 |        
|Lodging revenues                                     |                          |   | 15,617         |         |                |   | 13,905       |         |              |   | 42,711  |         |  |   | 38,964  |        
|Other revenues                                       |                          |   | 28,827         |         |                |   | 21,419       |         |              |   | 78,091  |         |  |   | 60,672  |        
|                                                     |                          |   |                |         |                |   |              |         |              |   |         |         |  |   |         |        
|                                                     | Total operating revenues |   |                | 242,320 |                |   |              | 233,292 |              |   |         | 708,670 |  |   |         | 677,536 | 
|                                                     |                          |   |                |         |                |   |              |         |              |   |         |         |  |   |         |        
|Less:                                                |                          |   |                |         |                |   |              |         |              |   |         |         |  |   |         |        
|Revenues from discontinued
  operations (See Note 7) |                          |   | 6,918          |         |                |   | 6,662        |         |              |   | 19,185  |         |  |   | 18,666  |        
|                                                     |                          |   |                |         |                |   |              |         |              |   |         |         |  |   |         |        
|Net operating revenues                               |                          | $ | 235,402        |         |                | $ | 226,630      |         |              | $ | 689,485 |         |  | $ | 658,870 |        
|                                                     |                          |   |                |         |                |   |              |         |              |   |         |         |  |   |         |        

Note 4. Income tax benefit
The income tax benefits for the twelve and thirty-six weeks ended September 4,
2001 and September 3, 2002 differ from amounts computed by applying the U.S.
Federal tax rate of 35% to loss from continuing operations before income tax
benefit and minority interest primarily due to foreign and state income taxes,
net of Federal benefit, and the effect of consolidated operations of foreign
and other entities not consolidated for Federal income tax purposes.

Note 5. Weighted average shares
The following table summarizes the weighted average number of shares used to
calculate basic and diluted loss per share:

|                                             |          |  |                |   |                |  |              |   |              |  |            |   |  |  |            |   | 
|-------------------------------------------- | -------- |  | -------------- | - | -------------- |  | ------------ | - | ------------ |  | ---------- | - |  |  | ---------- | - | 
|                                             |          |  | 12 Weeks Ended |   | 36 Weeks Ended
|                                             |          |  |                |   |               
|                                             |          |  | September 4,   |   | September 3,   |  | September 4, |   | September 3,
|                                             |          |  | 2001           |   | 2002           |  | 2001         |   | 2002        
|                                             |          |  |                |   |                |  |              |   |             
|Weighted average shares outstanding          |          |  | 93,898,092     |   |                |  | 93,740,645   |   |              |  | 94,020,364 |   |  |  | 93,742,013 |  
|Incremental shares from assumed conversions: |          |  |                |   |                |  |              |   |              |  |            |   |  |  |            |  
|                                             | Options  |  |                |  |                |  |              |  |              |  |            |  |  |  |            |  | 
|                                             | Warrants |  |                |  |                |  |              |  |              |  |            |  |  |  |            |  | 
|                                             |          |  |                |   |                |  |              |   |              |  |            |   |  |  |            |  
|Diluted weighted average shares              |          |  | 93,898,092     |   |                |  | 93,740,645   |   |              |  | 94,020,364 |   |  |  | 93,742,013 |  
|                                             |          |  |                |   |                |  |              |   |              |  |            |   |  |  |            |  

Diluted weighted average shares for the twelve weeks ended September 4, 2001
and September 3, 2002 and thirty-six weeks ended September 4, 2001 and
September 3, 2002 exclude incremental shares from assumed conversion of
933,307, 559,349, 965,313, and 521,944 shares, respectively, due to the net
losses for the periods.

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ClubCorp, Inc.

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Note 6. Property and equipment
Property and equipment consists of the following (dollars in thousands):

|                                          |  |              |           |              |  |   |           |  
|----------------------------------------- |  | ------------ | --------- | ------------ |  | - | --------- | -
|                                          |  | December 25, |           | September 3,
|                                          |  | 2001         |           | 2002        
|                                          |  |              |           |             
|Land and land improvements                |  | $            | 639,242   |              |  | $ | 674,006   |  
|Buildings and recreational facilities     |  |              | 469,840   |              |  |   | 485,528   |  
|Leasehold improvements                    |  |              | 116,697   |              |  |   | 117,142   |  
|Furniture and fixtures                    |  |              | 135,822   |              |  |   | 138,678   |  
|Machinery and equipment                   |  |              | 262,929   |              |  |   | 265,118   |  
|Construction in progress                  |  |              | 83,554    |              |  |   | 38,346    |  
|                                          |  |              |           |              |  |   |           |  
|                                          |  |              | 1,708,084 |              |  |   | 1,718,818 |  
|Accumulated depreciation and amortization |  |              | (444,730  | )            |  |   | (484,424  | )
|                                          |  |              |           |              |  |   |           |  
|                                          |  | $            | 1,263,354 |              |  | $ | 1,234,394 |  
|                                          |  |              |           |              |  |   |           |  

Note 7. Disposal and Impairment of Long- Lived Assets
On December 26, 2001, we adopted Statement of Financial Accounting Standards
No. 144, Accounting for the Disposal or Impairment 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, all assets and
liabilities related to held-for-sale entities are reclassified to Other Current
Assets and Other Current Liabilities, and all income and expense items are
reclassified as Discontinued Operations.

As of September 3, 2002, we had sixteen properties classified as held for sale.
Four of these properties were held for sale as of December 25, 2001 and were
recorded under SFAS 121. The remaining twelve properties were classified as
held for sale in the current year and, therefore, were recorded under the
guidance of SFAS 144. The balance sheet amounts related to these twelve
properties were reclassified to Other Current Assets and Other Current
Liabilities on the Consolidated Balance Sheet and were comprised of the
following (dollars in thousands):

|                                         |                   |   |              |        |              |   |        |        | 
|---------------------------------------- | ----------------- | - | ------------ | ------ | ------------ | - | ------ | ------ | 
|                                         |                   |   | December 25, |        | September 3,
|                                         |                   |   | 2001         |        | 2002        
|                                         |                   |   |              |        |             
|Cash and cash equivalents                |                   | $ | 1,423        |        |              | $ | 299    |       
|Membership and other receivables, net    |                   |   | 987          |        |              |   | 814    |       
|Inventories                              |                   |   | 703          |        |              |   | 662    |       
|Other current assets                     |                   |   | 53           |        |              |   | 118    |       
|Property and equipment, net              |                   |   | 45,737       |        |              |   | 40,224 |       
|Other assets                             |                   |   | 2,561        |        |              |   | 2,279  |       
|                                         |                   |   |              |        |              |   |        |       
|                                         | Total assets      |   | $            | 51,464 |              |   | $      | 44,396 | 
|                                         |                   |   |              |        |              |   |        |       
|Accounts payable and accrued liabilities |                   | $ | 1,090        |        |              | $ | 1,125  |       
|Other current liabilities                |                   |   | 2,448        |        |              |   | 2,659  |       
|Long-term debt                           |                   |   | 603          |        |              |   | 325    |       
|Other liabilities                        |                   |   | 989          |        |              |   | 883    |       
|Membership deposits                      |                   |   | 5,706        |        |              |   | 5,731  |       
|                                         |                   |   |              |        |              |   |        |       
|                                         | Total liabilities |   | $            | 10,836 |              |   | $      | 10,723 | 
|                                         |                   |   |              |        |              |   |        |       

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ClubCorp, Inc.

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The twelve properties were also reclassified to Discontinued Operations on the
Consolidated Statement of Operations. Also included is one property that was
divested during the twelve weeks and thirty-six weeks ended September 3, 2002.
The Income (Loss) from operations of discontinued operations is comprised of
the following (dollars in thousands):

|                                             |                                   |   |                |     |                |   |              |        |              |   |        |      |   |   |        |        |  
|-------------------------------------------- | --------------------------------- | - | -------------- | --- | -------------- | - | ------------ | ------ | ------------ | - | ------ | ---- | - | - | ------ | ------ | -
|                                             |                                   |   | 12 weeks ended |     | 36 weeks ended
|                                             |                                   |   |                |     |               
|                                             |                                   |   | September 4,   |     | September 3,   |   | September 4, |        | September 3,
|                                             |                                   |   | 2001           |     | 2002           |   | 2001         |        | 2002        
|                                             |                                   |   |                |     |                |   |              |        |             
|Operating Revenues                           |                                   | $ | 6,918          |     |                | $ | 6,662        |        |              | $ | 19,185 |      |   | $ | 18,666 |       
|Operating Costs and Expenses                 |                                   |   | 5,746          |     |                |   | 7,839        |        |              |   | 17,203 |      |   |   | 17,120 |       
|Depreciation and amortization                |                                   |   | 734            |     |                |   | 56           |        |              |   | 2,187  |      |   |   | 1,138  |       
|Selling, general and administrative expenses |                                   |   | 1              |     |                |   | 25           |        |              |   | 1      |      |   |   | 45     |       
|Loss on disposals and impairments of assets  |                                   |   |               |     |                |   | 4,399        |        |              |   |       |      |   |   | 6,242  |       
|                                             |                                   |   |                |     |                |   |              |        |              |   |        |      |   |   |        |       
|                                             | Operating income (loss)           |   |                | 437 |                |   |              | (5,657 | )            |   |        | (206 | ) |   |        | (5,879 | )
|Interest and investment income               |                                   |   |               |     |                |   |             |        |              |   | 4      |      |   |   | 2      |       
|Interest expense                             |                                   |   | (31            | )   |                |   | (5           | )      |              |   | (105   | )    |   |   | (10    | )     
|                                             |                                   |   |                |     |                |   |              |        |              |   |        |      |   |   |        |       
|                                             | Income (loss) before income taxes |   | $              | 406 |                |   | $            | (5,662 | )            |   | $      | (307 | ) |   | $      | (5,887 | )
|                                             |                                   |   |                |     |                |   |              |        |              |   |        |      |   |   |        |       

Additionally, as of September 3, 2002, we had thirteen properties held for sale
with a carrying amount totaling $94,000,000 that were not classified in
discontinued operations or reclassified on the Consolidated Balance Sheet as we
will continue to be involved in the daily management of the properties after
they are sold.

We reviewed all properties held for sale for impairment. We evaluate assets for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable through future cash flows.
We use a discounted future operating cash flow with a risk-adjusted discount
rate in determining the fair value of the asset and its related impairment.
For the twelve and thirty-six weeks ended September 3, 2002, we recorded
impairment of $4,458,000 and $6,323,000 related to the twelve properties
recorded under SFAS 144.

Note 8. Comprehensive loss
The following summarizes the components of comprehensive loss (dollars in
thousands):

|                                                                                                                 |                          |   |                |         |                |   |              |         |              |   |         |         |   |   |         |         |  
|---------------------------------------------------------------------------------------------------------------- | ------------------------ | - | -------------- | ------- | -------------- | - | ------------ | ------- | ------------ | - | ------- | ------- | - | - | ------- | ------- | -
|                                                                                                                 |                          |   | 12 Weeks Ended |         | 36 Weeks Ended
|                                                                                                                 |                          |   |                |         |               
|                                                                                                                 |                          |   | September 4,   |         | September 3,   |   | September 4, |         | September 3,
|                                                                                                                 |                          |   | 2001           |         | 2002           |   | 2001         |         | 2002        
|                                                                                                                 |                          |   |                |         |                |   |              |         |             
|Net loss                                                                                                         |                          | $ | (20,279        | )       |                | $ | (10,914      | )       |              | $ | (31,256 | )       |   | $ | (31,022 | )      
|Cumulative effect of change in accounting for derivative
instruments and hedging activities, net of income taxes |                          |   |               |         |                |   |             |         |              |   | (2,119  | )       |   |   |        |        
|Changes in fair value of derivative instruments and hedging
activities, net of income taxes                      |                          |   | (535           | )       |                |   | 365          |         |              |   | (3,634  | )       |   |   | 2,020   |        
|Foreign currency translation adjustment                                                                          |                          |   | 4,455          |         |                |   | (1,032       | )       |              |   | 3,296   |         |   |   | (2,887  | )      
|                                                                                                                 |                          |   |                |         |                |   |              |         |              |   |         |         |   |   |         |        
|                                                                                                                 | Total comprehensive loss |   | $              | (16,359 | )              |   | $            | (11,581 | )            |   | $       | (33,713 | ) |   | $       | (31,889 | )
|                                                                                                                 |                          |   |                |         |                |   |              |         |              |   |         |         |   |   |         |        

Note 9. 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. Prior to June, 2002, our management
relied primarily on an adjusted EBITDA generated from our properties within the
three reportable segments for purposes of making decisions about allocating
resources and assessing segment performance. Beginning in June 2002, our
management altered the definition of EBITDA to be utilized in management
reporting. EBITDA is now defined as earnings before interest, taxes,
depreciation and amortization, extraordinary items and gains and losses on
disposals and impairment of assets and

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ClubCorp, Inc.

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includes both continued and discontinued operations (See Note 7). EBITDA for all
periods presented has been adjusted to reflect this definition. Adjusted EBITDA
previously included an adjustment for net membership deposits and fees and a joint
venture adjustment. 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
similarly titled measures reported by other companies. Financial information
for the segments is as follows (dollars in thousands):

|                        |                                                      |                                                  |                                            |         |                |         |                |         |              |         |              |         |         |         |   |         |         |         |  
|----------------------- | ---------------------------------------------------- | ------------------------------------------------ | ------------------------------------------ | ------- | -------------- | ------- | -------------- | ------- | ------------ | ------- | ------------ | ------- | ------- | ------- | - | ------- | ------- | ------- | -
|                        |                                                      |                                                  |                                            |         | 12 Weeks Ended |         | 36 Weeks Ended
|                        |                                                      |                                                  |                                            |         |                |         |               
|                        |                                                      |                                                  |                                            |         | September 4,   |         | September 3,   |         | September 4, |         | September 3,
|                        |                                                      |                                                  |                                            |         | 2001           |         | 2002           |         | 2001         |         | 2002        
|                        |                                                      |                                                  |                                            |         |                |         |                |         |              |         |             
|Operating revenues: (1) |                                                      |                                                  |                                            |         |                |         |                |         |              |         |              |         |         |         |   |        
|                        | Country club and golf facilities                     |                                                  | $                                          | 122,279 |                |         | $              | 120,748 |              |         | $            | 350,161 |         |         | $ | 341,089 |        
|                        | Business and sports clubs                            |                                                  |                                            | 50,870  |                |         |                | 49,490  |              |         |              | 165,422 |         |         |   | 156,202 |        
|                        | Resorts                                              |                                                  |                                            | 46,059  |                |         |                | 47,032  |              |         |              | 132,449 |         |         |   | 133,562 |        
|                        |                                                      |                                                  |                                            |         |                |         |                |         |              |         |              |         |         |         |   |         |        
|                        |                                                      | Total operating revenues for
reportable segments |                                            |         | 219,208        |         |                |         | 217,270      |         |              |         | 648,032 |         |   |         | 630,853 |        
|                        | Other operations and services                        |                                                  |                                            | 16,194  |                |         |                | 9,360   |              |         |              | 41,453  |         |         |   | 28,017  |        
|                        |                                                      |                                                  |                                            |         |                |         |                |         |              |         |              |         |         |         |   |         |        
|                        |                                                      | Consolidated operating revenues                  |                                            | $       | 235,402        |         |                | $       | 226,630      |         |              | $       | 689,485 |         |   | $       | 658,870 |        
|                        |                                                      |                                                  |                                            |         |                |         |                |         |              |         |              |         |         |         |   |         |        
|EBITDA: (2)             |                                                      |                                                  |                                            |         |                |         |                |         |              |         |              |         |         |         |   |        
|                        | Country club and golf facilities                     |                                                  | $                                          | 27,719  |                |         | $              | 21,555  |              |         | $            | 77,571  |         |         | $ | 64,930  |        
|                        | Business and sports clubs                            |                                                  |                                            | 5,184   |                |         |                | 2,291   |              |         |              | 19,031  |         |         |   | 10,689  |        
|                        | Resorts                                              |                                                  |                                            | 9,950   |                |         |                | 9,138   |              |         |              | 27,831  |         |         |   | 26,817  |        
|                        |                                                      |                                                  |                                            |         |                |         |                |         |              |         |              |         |         |         |   |         |        
|                        |                                                      | Total EBITDA for reportable segments             |                                            |         | 42,853         |         |                |         | 32,984       |         |              |         | 124,433 |         |   |         | 102,436 |        
|                        | Other operations and services                        |                                                  |                                            | (4,244  | )              |         |                | (5,462  | )            |         |              | (28,730 | )       |         |   | (23,570 | )      
|                        |                                                      |                                                  |                                            |         |                |         |                |         |              |         |              |         |         |         |   |         |        
|                        |                                                      | Consolidated EBITDA                              |                                            |         | 38,609         |         |                |         | 27,522       |         |              |         | 95,703  |         |   |         | 78,866  |        
|                        |                                                      |                                                  | Depreciation and amortization              |         |                | (22,879 | )              |         |              | (20,825 | )            |         |         | (66,563 | ) |         |         | (65,297 | )
|                        |                                                      |                                                  | Loss on disposals and impairment of assets |         |                | (31,363 | )              |         |              | (7,073  | )            |         |         | (31,703 | ) |         |         | (15,128 | )
|                        | Operating (income) loss from discontinued
operations |                                                  |                                            | (437    | )              |         |                | 5,657   |              |         |              | 206     |         |         |   | 5,879   |        
|                        |                                                      |                                                  |                                            |         |                |         |                |         |              |         |              |         |         |         |   |         |        
|                        | Operating income (loss) from continuing
operations   |                                                  | $                                          | (16,070 | )              |         | $              | 5,281   |              |         | $            | (2,357  | )       |         | $ | 4,320   |        
|                        |                                                      |                                                  |                                            |         |                |         |                |         |              |         |              |         |         |         |   |         |        

(1) Excludes revenues from discontinued operations of the following:

|                                 |       |   |                |       |                |   |              |       |              |   |        |        |  |   |        |        | 
|-------------------------------- | ----- | - | -------------- | ----- | -------------- | - | ------------ | ----- | ------------ | - | ------ | ------ |  | - | ------ | ------ | 
|                                 |       |   | 12 Weeks Ended |       | 36 Weeks Ended
|                                 |       |   |                |       |               
|                                 |       |   | September 3,   |       | September 4,   |   | September 3, |       | September 4,
|                                 |       |   | 2001           |       | 2002           |   | 2001         |       | 2002        
|                                 |       |   |                |       |                |   |              |       |             
|Country club and golf facilities |       | $ | 5,623          |       |                | $ | 5,608        |       |              | $ | 14,976 |        |  | $ | 15,069 |       
|Business and sports clubs        |       |   | 807            |       |                |   | 363          |       |              |   | 3,155  |        |  |   | 2,165  |       
|Resorts                          |       |   |               |       |                |   |             |       |              |   |       |        |  |   |       |       
|Other                            |       |   | 488            |       |                |   | 691          |       |              |   | 1,054  |        |  |   | 1,432  |       
|                                 |       |   |                |       |                |   |              |       |              |   |        |        |  |   |        |       
|                                 | Total |   | $              | 6,918 |                |   | $            | 6,662 |              |   | $      | 19,185 |  |   | $      | 18,666 | 
|                                 |       |   |                |       |                |   |              |       |              |   |        |        |  |   |        |       

(2) Includes both continued and discontinued
operations. See Note 7 for details of discontinued operations balances.

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ClubCorp, Inc.

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Note 10. Commitments and Contingencies
We are subject to certain pending or threatened litigation and other claims.
We believe that any potential liability arising from resolution of these
matters will not materially affect our consolidated financial position and
results of operations.

Debt covenants related to the senior secured credit facility are calculated
using various ratios that measure overall leverage, debt service coverage and
tangible net worth all as defined by terms of the credit facility. For the
quarter ended September 3, 2002, we were in compliance with all covenant
requirements. However, under our current amendment, the covenants become
increasingly more restrictive in the fourth quarter of 2002. We cannot
estimate at this time whether or not we will be in compliance with these
covenants as of fiscal year-end 2002 or in future quarters. These restrictions
will likely limit our access to funds under the credit facility and, in
addition to our reduced cash flows, may cause us to decrease capital spending
and restrict other disbursements going into the fourth quarter of 2002 and
fiscal year 2003. We are currently pursuing various avenues to increase our
liquidity as well as the likelihood of compliance with our covenants. We
believe that we will be able to obtain additional financing or, a waiver or
amendment from our creditors should we be in violation of such covenants.
However, there can be no assurance that we will be able to obtain any of these
resolutions.

10



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##### Table of Contents






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 the largest owner and operator of
premier golf and business clubs and destination golf resorts. As of September
3, 2002, we operated 119 country clubs, golf clubs and public golf facilities,
three destination golf resorts and 77 business, sports and business/sports
clubs in 30 states and five foreign countries. Marquee resorts and clubs in
our portfolio include Pinehurst Resort and Country Club, The Homestead Resort,
Barton Creek Resort and Country Club, Firestone Country Club, Mission Hills
Country Club and the City Club on Bunker Hill.

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. 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 and international operations.

The following discussion of our financial condition and results of
operations for the 12 and 36 weeks ended September 4, 2001 and September 3,
2002 should be read in conjunction with our Annual Report on Form 10-K for the
year ended December 25, 2001, as filed with the Securities and Exchange
Commission.

Recent Developments

Robert H. Dedman, Sr., who was the Chairman of our board of directors and
our principal stockholder, passed away on August 20, 2002 at the age of 76.
Following his death, his son Robert H. Dedman, Jr., our current Chief Executive
Officer, was named Chairman of the Board. Mr. Dedmans widow, Nancy M. Dedman,
was also elected to the board of directors. At the time of his death, Mr.
Dedman owned 43,113,993 shares of common stock (or approximately 46.0% of our
outstanding common stock) as community property with Mrs. Dedman. Pursuant to
Texas law, Robert H. Dedman, Jr. and Mrs. Dedman will be qualified as executors
of Mr. Dedmans estate upon issuance of Letters Testamentary. Pending
administration and distribution of Mr. Dedmans estate, Robert H. Dedman. Jr.
and Mrs. Dedman, as the executors of Mr. Dedmans estate, may be deemed to have
shared voting power with respect to the shares beneficially owned by Mr.
Dedmans estate. Mrs. Dedman has sole voting and investment power over the
21,504,516 shares of our common stock that comprise her community property
interest in the shares owned by Mr. Dedman at his death. In his Last Will and
Testament, Mr. Dedman gifted the remaining common stock (or approximately 22%
of our common stock) to Nancy M. Dedman Trust and approximately 1% of our
common stock to various other beneficiaries. Mrs. Dedman and Robert H. Dedman,
Jr. will be trustees under the trust and will have shared voting power over the
common stock held in the trust.

On August 27, 2002, we named John A. Beckert to our senior management team
as President and Chief Operating Officer. Mr. Beckert, who has 21 years of
experience in the hospitality industry, has also joined our board of directors.
From 2000 to 2002, Mr. Beckert was a partner in Seneca Advisors LLP, a
consulting and private investment firm. Prior to 2000, Mr. Beckert served 19
years at Bristol Hotels and Resorts, most recently as President and Chief
Operating Officer.

11



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##### Table of Contents



Critical Accounting Policies

Operating revenues consist primarily of revenues derived from monthly
membership dues and recognition of deferred membership fees and deposits, golf
operations, food and beverage operations, and lodging. Membership fees and
deposits represent advance initiation deposits paid by members and are
generally not refundable until a fixed number of years (generally 30) after the
date of acceptance as a member. The difference between the amount of the
membership deposit and the present value of the obligation is deferred and
recognized as revenue on a straight-line basis over the average expected life
of an active membership (currently six years for golf and resort memberships
and five years for business and sport club memberships). Nonrefundable
initiation fees and related incremental direct selling costs of membership
initiation deposits and fees (primarily commissions) are recorded in the same
manner. The present value of the membership deposit obligation is recorded as
a liability in our consolidated balance sheet and accretes over the
nonrefundable term using the effective interest method and is included in
interest expense. All other operating revenues are recognized in the period
earned.

Operating expenses consist primarily of employee compensation, food and
beverage costs and general and administrative costs. All operating costs are
expensed as incurred.

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. 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. To provide a clearer picture of trends in our continuing
operations, we analyze membership and lodging data on a same store basis as
well, as it is not distorted by divestitures.

Long-lived assets to be held and used and to be disposed of by an entity
are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Impairment charges are recorded as a component of operating income or loss in
our Consolidated Statement of Operations. If it is determined that impairment
exists, the fair value for purposes of calculating the impairment is measured
based on discounted future operating cash flows using a risk-adjusted discount
rate.

Our valuation allowance relates to the deferred tax assets arising from
our federal income tax net operating loss carryforwards and capital loss
carryforwards. The valuation allowance is recorded based on our projections of
future taxable income and capital gains over the periods in which the net
operating losses will be carried forward. We periodically review our
projections of future taxable income and capital gains and expirations of net
operating loss and capital loss carryforwards to determine if an adjustment to
the valuation allowance is necessary. An adjustment to the valuation allowance
is recorded if it is more likely than not that some portion of the deferred
tax assets will not be realized and changes in the valuation allowance are
recorded as a component of income tax benefit or provision in our Consolidated
Statement of Operations.

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 should not be construed as an alternative to, or a better indicator of,
operating income or loss, is not based on generally accepted accounting
principles, 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.

Results of Operations

12 Weeks Ended September 4, 2001 Compared to 12 Weeks Ended September 3, 2002

Consolidated Operations  Continuing Operations

Operating revenues decreased from $235.4 million for the 12 weeks ended
September 4, 2001 to $226.6 million for the 12 weeks ended September 3, 2002.
This decrease was comprised of operating revenue decreases of $1.5 million at
our country club and golf facilities, $1.4 million at our business and sports
clubs, and $6.9 million in our other operations and services, partially offset
by an increase of $1.0 million at our resorts.

12



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##### Table of Contents



Loss on disposals and impairment of assets was $2.7 million for the 12
weeks ended September 3, 2002, as compared to $31.4 million for the 12 weeks
ended September 4, 2001. The retirement and disposal of assets during the 12
weeks ended September 3, 2002 resulted in net losses on disposal of $2.0
million. Additionally, we recorded impairment losses of $0.7 million during
the 12 weeks ended September 3, 2002 to write down the carrying value of
certain properties held for sale. Losses on disposals and impairment of
assets were $29.0 million and $2.4 million, respectively, for the 12 weeks
ended September 4, 2001, primarily due to disposals of significant equity
investments in the prior year.

Excluding the impact of disposals and impairment of assets, operating
income decreased to $8.0 million for the 12 weeks ended September 3, 2002 from
$15.3 million for the 12 weeks ended September 4, 2001. This decrease was due
to the decline in revenues mentioned above and increased selling, general and
administrative expenses of $2.5 million, partially offset by decreased
depreciation and amortization of $1.4 million. The increase in selling,
general and administrative expenses was partially due to a $1.1 million charge
for severance expenses. Depreciation and amortization decreased due to
divestitures, recent reductions in capital spending and asset retirements.

Loss from operations before income taxes and minority interest decreased
to $9.1 million for the 12 weeks ended September 3, 2002 from $29.3 million for
the 12 weeks ended September 4, 2001. This decline was primarily due to
decreased losses on disposals and impairment of assets, partially offset by
lower operating income as mentioned above.

Discontinued Operations

The operations of one divested property as well as nine country club and
golf facilities, two business and sports clubs, and one international property
currently held for sale are included in discontinued operations. Operating
income from these properties decreased $6.1 million for the 12 weeks ended
September 3, 2002 from the 12 weeks ended September 4, 2001, primarily due to
impairment of assets for these properties of $4.4 million as well as negative
operating results.

13



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##### Table of Contents



Segment and Other Information

Country Club and Golf Facilities

The following table presents certain summary financial data and other
operating data for our country club and golf facilities segment for the 12
weeks ended September 4, 2001 and September 3, 2002 (dollars in thousands):

|                     |                                                              |  |                  |         |                  |  |      |         |      |  |     |         |   |  |     |         |  
|-------------------- | ------------------------------------------------------------ |  | ---------------- | ------- | ---------------- |  | ---- | ------- | ---- |  | --- | ------- | - |  | --- | ------- | -
|                     |                                                              |  | Same Store       |         | Total           
|                     |                                                              |  | Country Club and |         | Country Club and
|                     |                                                              |  | Golf Facilities  |         | Golf Facilities 
|                     |                                                              |  |                  |         |                 
|                     |                                                              |  | 2001             |         | 2002             |  | 2001 |         | 2002
|                     |                                                              |  |                  |         |                  |  |      |         |     
|Number of facilities |                                                              |  | 95               |         |                  |  | 95   |         |      |  | 110 |         |   |  | 101 |        
|                    
|                    
|                    
|                    
|                     | Operating revenues                                           |  | $                | 113,599 |                  |  | $    | 112,444 |      |  | $   | 122,279 |   |  | $   | 120,748 |  
|                    
|                    
|                    
|                    
|                     | Operating costs and expenses                                 |  |                  | 87,126  |                  |  |      | 90,066  |      |  |     | 96,098  |   |  |     | 98,266  |  
|                    
|                    
|                    
|                    
|                     | Depreciation and amortization                                |  |                  | 10,561  |                  |  |      | 10,501  |      |  |     | 11,449  |   |  |     | 10,913  |  
|                    
|                    
|                    
|                    
|                     | Loss on disposals and impairment of assets                   |  |                  | (505    | )                |  |      | (1,999  | )    |  |     | (2,836  | ) |  |     | (2,146  | )
|                     |                                                              |  |                  |         |                  |  |      |         |      |  |     |         |   |  |     |        
|                     | Segment operating income from continuing operations          |  | $                | 15,407  |                  |  | $    | 9,878   |      |  | $   | 11,896  |   |  | $   | 9,423   |  
|                     |                                                              |  |                  |         |                  |  |      |         |      |  |     |         |   |  |     |        
|                     | Segment operating income (loss) from discontinued operations |  | $                | 872     |                  |  | $    | (4,360  | )    |  | $   | 921     |   |  | $   | (4,748  | )
|                     |                                                              |  |                  |         |                  |  |      |         |      |  |     |         |   |  |     |        
|                     | EBITDA                                                       |  | $                | 27,897  |                  |  | $    | 21,470  |      |  | $   | 27,719  |   |  | $   | 21,555  |  
|                     |                                                              |  |                  |         |                  |  |      |         |      |  |     |         |   |  |     |        

Continuing Operations

Operating revenues decreased $1.2 million for same store country club and
golf facilities for the 12 weeks ended September 3, 2002 from the 12 weeks
ended September 4, 2001, primarily due to decreased golf operations revenue of
$2.1 million partially offset by increased membership dues of $0.8 million.
Golf operations revenues decreased due to a reduction in greens fees at our
public and semi-private golf facilities as a result of price competition in the
markets in which we operate. Additionally, golf rounds from guests and outings
decreased, reflecting continued economic uncertainty. We increased membership
dues through price increases, which offset decreased membership levels at same
store country club and golf facilities.

Excluding the impact of disposals and impairment of assets, operating
income decreased $4.0 million at same store country club and golf facilities
for the 12 weeks ended September 3, 2002 from the 12 weeks ended September 4,
2001. Lower profit margins were earned due to the decline in golf revenues
mentioned above as well as increased payroll and other operating expenses.
Pricing and marketing strategies identified early in the year were not executed
in time to impact third quarter results. Additionally, there was not enough
management focus on variable cost controls, leading to across the board
negative variances in expenses compared to the prior year.

Loss on disposals and impairment of assets for total country club and golf
facilities was $2.1 million for the 12 weeks ended September 3, 2002. This
amount was comprised of net losses of $1.4 million recognized on the retirement
and disposal of assets and impairment losses of $0.7 million to write down the
carrying value of certain properties held for sale. Loss on disposals and
impairment of assets was $2.3 million and $0.5 million, respectively, for the
12 weeks ended September 4, 2001.

Discontinued Operations

The operations of one divested property and nine country club and golf
facilities currently held for sale are included in discontinued operations.
Segment operating income from these properties decreased $5.7 million at total
country club and golf facilities for the 12 weeks ended September 3, 2002 from
the 12 weeks ended September 4, 2001, primarily due to impairment of assets of
$4.1 million as well as negative operating results.

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##### Table of Contents



Business and Sports Clubs

The following table presents certain summary financial data and other
operating data for our business and sports clubs segment for the 12 weeks ended
September 4, 2001 and September 3, 2002 (dollars in thousands):

|                     |                                                            |  |                     |        |                  |  |      |        |      |  |    |        |   |  |    |        |  
|-------------------- | ---------------------------------------------------------- |  | ------------------- | ------ | ---------------- |  | ---- | ------ | ---- |  | -- | ------ | - |  | -- | ------ | -
|                     |                                                            |  | Same Store Business |        | Total Business  
|                     |                                                            |  | and Sports Clubs    |        | and Sports Clubs
|                     |                                                            |  |                     |        |                 
|                     |                                                            |  | 2001                |        | 2002             |  | 2001 |        | 2002
|                     |                                                            |  |                     |        |                  |  |      |        |     
|Number of facilities |                                                            |  | 74                  |        |                  |  | 74   |        |      |  | 74 |        |   |  | 74 |       
|                    
|                    
|                    
|                    
|                     | Operating revenues                                         |  | $                   | 50,870 |                  |  | $    | 49,490 |      |  | $  | 50,870 |   |  | $  | 49,490 |  
|                    
|                    
|                    
|                    
|                     | Operating costs and expenses                               |  |                     | 45,548 |                  |  |      | 47,111 |      |  |    | 45,548 |   |  |    | 47,111 |  
|                    
|                    
|                    
|                    
|                     | Depreciation and amortization                              |  |                     | 3,187  |                  |  |      | 2,836  |      |  |    | 3,187  |   |  |    | 2,836  |  
|                    
|                    
|                    
|                    
|                     | Loss on disposals and impairment of assets                 |  |                     |       |                  |  |      | (482   | )    |  |    |       |   |  |    | (482   | )
|                     |                                                            |  |                     |        |                  |  |      |        |      |  |    |        |   |  |    |       
|                     | Segment operating income (loss) from continuing operations |  | $                   | 2,135  |                  |  | $    | (939   | )    |  | $  | 2,135  |   |  | $  | (939   | )
|                     |                                                            |  |                     |        |                  |  |      |        |      |  |    |        |   |  |    |       
|                     | Segment operating loss from discontinued operations        |  | $                   | (46    | )                |  | $    | (440   | )    |  | $  | (209   | ) |  | $  | (558   | )
|                     |                                                            |  |                     |        |                  |  |      |        |      |  |    |        |   |  |    |       
|                     | EBITDA                                                     |  | $                   | 5,273  |                  |  | $    | 2,358  |      |  | $  | 5,184  |   |  | $  | 2,291  |  
|                     |                                                            |  |                     |        |                  |  |      |        |      |  |    |        |   |  |    |       

Continuing Operations

Operating revenues decreased $1.4 million for same store business and
sports clubs for the 12 weeks ended September 3, 2002 from the 12 weeks ended
September 4, 2001. This decrease was primarily due to a $0.7 million decline
in food and beverage sales, the majority of which was a result of decreased
private parties attributable to lower membership and lower usage by existing
members. Additionally, membership dues declined $0.7 million due to net
attrition in membership since the third fiscal quarter of 2001. Club
membership and usage have been adversely impacted by decreased corporate and
consumer spending due to the effects of continued economic uncertainty.

Excluding the impact of disposals and impairment of assets, segment
operating income decreased $2.6 million at same store business and sports clubs
for the 12 weeks ended September 3, 2002 from the 12 weeks ended September 4,
2001. This decrease was primarily due to a decrease in operating profit
margins resulting from the decline in revenues mentioned above, which decreased
our ability to leverage fixed operating expenses. Operating profit margins
also declined due to the decrease in private parties, which typically have
higher margins than a la carte sales.

Loss on disposals and impairment of assets for total business and sports
clubs was $0.5 million for the 12 weeks ended September 3, 2002. This amount
was comprised of net losses recognized on the retirement and disposal of
assets.

Discontinued Operations

The operations of two business and sports clubs currently held for sale
are included in discontinued operations. Segment operating loss from these
properties increased $0.3 million at total business and sports clubs for the 12
weeks ended September 3, 2002 from the 12 weeks ended September 4, 2001
primarily due to losses on disposals and impairment of assets of $0.4 million
for the 12 weeks ended September 3, 2002.

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##### Table of Contents



Resorts

The following table presents certain summary financial data and other
operating data for our resorts segment for the 12 weeks ended September 4, 2001
and September 3, 2002 (dollars in thousands):

|                              |                                              |  |                    |        |               |  |      |        |      |  |   |        |  |  |   |        | 
|----------------------------- | -------------------------------------------- |  | ------------------ | ------ | ------------- |  | ---- | ------ | ---- |  | - | ------ |  |  | - | ------ | 
|                              |                                              |  | Same Store Resorts |        | Total Resorts
|                              |                                              |  |                    |        |              
|                              |                                              |  | 2001               |        | 2002          |  | 2001 |        | 2002
|                              |                                              |  |                    |        |               |  |      |        |     
|Number of facilities          |                                              |  | 3                  |        |               |  | 3    |        |      |  | 4 |        |  |  | 3 |       
|                             
|                             
|                             
|                             
|                              | Operating revenues                           |  | $                  | 45,707 |               |  | $    | 46,966 |      |  | $ | 46,059 |  |  | $ | 47,032 | 
|                             
|                             
|                             
|                             
|                              | Operating costs and expenses                 |  |                    | 35,958 |               |  |      | 37,746 |      |  |   | 36,109 |  |  |   | 37,894 | 
|                             
|                             
|                             
|                             
|                              | Depreciation and amortization                |  |                    | 3,485  |               |  |      | 3,769  |      |  |   | 3,474  |  |  |   | 3,771  | 
|                              |                                              |  |                    |        |               |  |      |        |      |  |   |        |  |  |   |       
|                              | Segment operating income                     |  | $                  | 6,264  |               |  | $    | 5,451  |      |  | $ | 6,476  |  |  | $ | 5,367  | 
|                              |                                              |  |                    |        |               |  |      |        |      |  |   |        |  |  |   |       
|                              | EBITDA                                       |  | $                  | 9,749  |               |  | $    | 9,220  |      |  | $ | 9,950  |  |  | $ | 9,138  | 
|                              |                                              |  |                    |        |               |  |      |        |      |  |   |        |  |  |   |       
|Lodging
data: (3 resorts) (1) |                                              |  |                    |        |               |  |      |        |      |  |   |        |  |  |   |       
|                             
|                             
|                             
|                             
|                              | Room nights available                        |  |                    | 99,568 |               |  |      | 99,568 |      |  |   |        |  |  |   |        | 
|                             
|                             
|                             
|                             
|                              | Room nights occupied                         |  |                    | 59,842 |               |  |      | 62,140 |      |  |   |        |  |  |   |        | 
|                             
|                             
|                             
|                             
|                              | Occupancy rate                               |  |                    | 60.1   | %             |  |      | 62.4   | %    |  |   |        |  |  |   |        | 
|                             
|                             
|                             
|                             
|                              | Average daily revenue per occupied room (2)  |  | $                  | 674    |               |  | $    | 666    |      |  |   |        |  |  |   |        | 
|                             
|                             
|                             
|                             
|                              | Average daily revenue per available room (2) |  | $                  | 405    |               |  | $    | 416    |      |  |   |        |  |  |   |        | 



---

|(1) |  | Number of facilities and lodging data is comprised of data from
wholly owned resorts consisting of Pinehurst, The Homestead and Barton
Creek.                                                 
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Average daily revenue per occupied room and average daily revenue per
available room is based on total operating revenues excluding membership
dues and recognition of member initiation fees.

Continuing Operations

Operating revenues increased $1.3 million for same store resorts for the
12 weeks ended September 3, 2002 from the 12 weeks ended September 4, 2001.
This increase was primarily due to increased other amenities revenue of $0.9
million and increased membership dues of $0.4 million. Other amenities
revenues increased as a result of the March 2002 opening of The Spa at
Pinehurst, a 31,000 square foot spa facility. Membership dues increased as a
result of price increases in monthly dues at Pinehurst. Although room nights
occupied increased from the prior year, lodging revenues were flat as a result
of discounting of average daily rates.

Segment operating income decreased $0.8 million for same store resorts for
the 12 weeks ended September 3, 2002 from the 12 weeks ended September 4, 2001.
This decrease was primarily due to higher expenses associated with The Spa at
Pinehurst, increased golf course maintenance expenses and property taxes, as
well as higher marketing expenses resulting from increased sales efforts aimed
at drawing and retaining customers, partially offset by increased revenues
mentioned above.

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##### Table of Contents



Other Operations and Services  Continuing Operations

Excluding the impact of disposals and impairment of assets, operating
income or loss for our real estate operations decreased to a loss of $0.1
million in the 12 weeks ended September 3, 2002 from income of $1.5 million for
the 12 weeks ended September 4, 2001. This decrease was primarily due to
decreased closings of units in our Owners Club program and decreased sales of
land held for sale. Sales of Owners Club units were lower because of continued
weakness in the nations economy and the fact that we have sold the majority of
our available interests at two locations.

Excluding the impact of disposals and impairment of assets, operating loss
for our international operations increased to $1.4 million in the 12 weeks
ended September 3, 2002 from $0.1 million for the 12 weeks ended September 4,
2001. This additional loss was primarily due to decreased tourism and guest
traffic at our properties in Mexico, as well as the divestiture of
non-strategic properties.

36 Weeks Ended September 4, 2001 Compared to 36 Weeks Ended September 3, 2002

Consolidated Operations   Continuing Operations

Operating revenues decreased from $689.5 million for the 36 weeks ended
September 4, 2001 to $658.9 million for the 12 weeks ended September 3, 2002.
This decrease was comprised of operating revenue decreases of $9.2 million at
our business and sports clubs, $9.1 million at our country club and golf
facilities, and $13.4 million in our other operations and services, partially
offset by an increase of $1.1 million at our resorts.

Loss on disposals and impairment of assets was $8.9 million for the 36
weeks ended September 3, 2002, as compared to $31.7 million for the 36 weeks
ended September 4, 2001. The combined divestiture of eight properties and the
retirement and disposal of other assets during the 36 weeks ended September 3,
2002 resulted in net losses on disposal of $8.2 million. Additionally, we
recorded impairment losses of $0.7 million during the 36 weeks ended September
3, 2002 to write down the carrying value of certain properties held for sale.
Losses on disposals and impairment of assets were $29.3 million and $2.4
million, respectively, for the 36 weeks ended September 4, 2001, primarily due
to disposals of significant equity investments in the prior year.

Excluding the impact of disposals and impairment of assets, operating
income decreased to $13.2 million for the 36 weeks ended September 3, 2002 from
$29.3 million for the 36 weeks ended September 4, 2001. This decrease was due
to the decline in revenues mentioned above, partially offset by decreased
operating costs and expenses of $12.4 million and selling, general and
administrative expenses of $1.9 million. The decrease in operating costs and
expenses was primarily attributable to expense controls and lower cost of goods
sold due to the decline in revenues, in addition to cost savings realized
through centralized procurement contracts negotiated by Avendra. The decrease
in selling, general and administrative expenses was primarily due to cost
cutting initiatives undertaken in our corporate office and other administrative
functions during 2001.

Loss from operations before income taxes and minority interest decreased
to $36.8 million for the 36 weeks ended September 3, 2002 from $43.8 million
for the 36 weeks ended September 4, 2001. This decrease was primarily due to
the decrease in operating income and losses on disposals and impairment of
assets mentioned above, partially offset by a decrease in interest expense of
$2.1 million. The decrease in interest expense was due to a decline in
variable interest rates on our outstanding debt in the current year.

Discontinued Operations

The operations of one divested property as well as nine country club and
golf facilities, two business and sports clubs, and one international property
currently held for sale are included in discontinued operations. Operating
income from these properties decreased $5.6 million for the 36 weeks ended
September 3, 2002 from the 36 weeks ended September 4, 2001, primarily due to
loss on disposals and impairment of $6.2 million as well as negative operating
results.

17



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##### Table of Contents



Segment and Other Information   36 Weeks

Country Club and Golf Facilities

The following table presents certain summary financial data and other
operating data for our country club and golf facilities segment for the 36
weeks ended September 4, 2001 and September 3, 2002 (dollars in thousands):

|                     |                                                              |  |                  |         |                  |  |      |         |      |  |     |         |   |  |     |         |  
|-------------------- | ------------------------------------------------------------ |  | ---------------- | ------- | ---------------- |  | ---- | ------- | ---- |  | --- | ------- | - |  | --- | ------- | -
|                     |                                                              |  | Same
Store       |         | Total           
|                     |                                                              |  | Country Club
and |         | Country Club
and
|                     |                                                              |  | Golf
Facilities  |         | Golf
Facilities 
|                     |                                                              |  |                  |         |                 
|                     |                                                              |  | 2001             |         | 2002             |  | 2001 |         | 2002
|                     |                                                              |  |                  |         |                  |  |      |         |     
|Number of facilities |                                                              |  | 95               |         |                  |  | 95   |         |      |  | 110 |         |   |  | 101 |        
|                    
|                    
|                    
|                    
|                     | Operating revenues                                           |  | $                | 319,017 |                  |  | $    | 316,320 |      |  | $   | 350,161 |   |  | $   | 341,089 |  
|                    
|                    
|                    
|                    
|                     | Operating costs and expenses                                 |  |                  | 244,445 |                  |  |      | 253,669 |      |  |     | 275,665 |   |  |     | 278,633 |  
|                    
|                    
|                    
|                    
|                     | Depreciation and amortization                                |  |                  | 32,036  |                  |  |      | 31,018  |      |  |     | 34,911  |   |  |     | 32,943  |  
|                    
|                    
|                    
|                    
|                     | Loss on disposals and impairment of assets                   |  |                  | (833    | )                |  |      | (2,786  | )    |  |     | (749    | ) |  |     | (11,573 | )
|                     |                                                              |  |                  |         |                  |  |      |         |      |  |     |         |   |  |     |        
|                     | Segment operating income from continuing operations          |  | $                | 41,703  |                  |  | $    | 28,847  |      |  | $   | 38,836  |   |  | $   | 17,940  |  
|                     |                                                              |  |                  |         |                  |  |      |         |      |  |     |         |   |  |     |        
|                     | Segment operating income (loss) from discontinued operations |  | $                | 1,327   |                  |  | $    | (3,583  | )    |  | $   | 1,225   |   |  | $   | (4,010  | )
|                     |                                                              |  |                  |         |                  |  |      |         |      |  |     |         |   |  |     |        
|                     | EBITDA                                                       |  | $                | 77,553  |                  |  | $    | 65,056  |      |  | $   | 77,571  |   |  | $   | 64,930  |  
|                     |                                                              |  |                  |         |                  |  |      |         |      |  |     |         |   |  |     |        

Continuing Operations

Operating revenues decreased $2.7 million at same store country club and
golf facilities for the 36 weeks ended September 3, 2002 from the 36 weeks
ended September 4, 2001. This decrease was primarily due to lower golf
operations revenues of $5.0 million, partially offset by increased membership
dues of $3.2 million. Despite increased rounds at our facilities, golf
operations revenues decreased due to a reduction in greens fees at semi-private
and public golf facilities as a result of price competition in the markets in
which we operate. We increased membership dues through price increases and the
rollout of Signature Gold in the second fiscal quarter of 2001, which more than
offset decreased membership levels at same store country club and golf
facilities. The additional $6.4 million decrease in operating revenues at
total country club and golf facilities was primarily due to divestitures of
non-strategic properties.

Excluding the impact of disposals and impairment of assets, segment
operating income decreased $10.9 million at same store country club and golf
facilities for the 36 weeks ended September 3, 2002 from the 36 weeks ended
September 4, 2001. Lower profit margins were earned in golf operations due to
the decline in revenues mentioned above, in addition to increased maintenance
and other golf operations expenses. Pricing and marketing strategies
identified early in the year were not executed in time to impact third quarter
results. Additionally, there was not enough management focus on variable cost
controls, leading to across the board negative variances in expenses compared
to the prior year. Other operating expenses increased due to a litigation
accrual of $3.2 million relating to an arbitration decision at one of our
country clubs in 2002. Depreciation and amortization decreased due to recent
reductions in capital spending and asset retirements at same store country club
and golf facilities.

Loss on disposals and impairment of assets for total country club and golf
facilities was $11.6 million for the 36 weeks ended September 3, 2002. This
amount was comprised of net losses of $10.9 million recognized on the
divestiture of seven country club and golf facilities and the disposal of other
assets. Included in this amount is the sale of Daufuskie Island Club and
Resort, one of our former resorts that was reclassified to our country club and
golf facilities segment at the outset of fiscal year 2002 due to the reduction
in services offered at the property in anticipation of its divestiture. The
sale of Daufuskie generated consideration of $12.8 million, including $18.0
million in buyers notes, which we have valued at $10.0 million. Impairment
losses of $0.7 million and $0.8 million were recorded during the 36 weeks ended
September 3, 2002 and the 36 weeks ended September 4, 2001, respectively, to
write down the carrying value of certain properties held for sale.

Discontinued Operations

The operations of one divested property and nine country club and golf
facilities currently held for sale are included in discontinued operations.
Segment operating income from these properties decreased $5.2 million at total
country club and golf facilities for the 36 weeks ended September 3, 2002 from
the 36 weeks ended September 4, 2001, primarily due to loss on disposals and
impairment of $5.9 million.

18



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##### Table of Contents



Business and Sports Clubs

The following table presents certain summary financial data and other
operating data for our business and sports clubs segment for the 36 weeks ended
September 4, 2001 and September 3, 2002 (dollars in thousands):

|                     |                                                            |  |                     |         |                  |  |      |         |      |  |    |         |   |  |    |         |  
|-------------------- | ---------------------------------------------------------- |  | ------------------- | ------- | ---------------- |  | ---- | ------- | ---- |  | -- | ------- | - |  | -- | ------- | -
|                     |                                                            |  | Same
Store Business |         | Total
Business  
|                     |                                                            |  | and
Sports Clubs    |         | and
Sports Clubs
|                     |                                                            |  |                     |         |                 
|                     |                                                            |  | 2001                |         | 2002             |  | 2001 |         | 2002
|                     |                                                            |  |                     |         |                  |  |      |         |     
|Number of facilities |                                                            |  | 74                  |         |                  |  | 74   |         |      |  | 74 |         |   |  | 74 |        
|                    
|                    
|                    
|                    
|                     | Operating revenues                                         |  | $                   | 165,155 |                  |  | $    | 156,202 |      |  | $  | 165,422 |   |  | $  | 156,202 |  
|                    
|                    
|                    
|                    
|                     | Operating costs and expenses                               |  |                     | 146,180 |                  |  |      | 145,159 |      |  |    | 146,255 |   |  |    | 145,159 |  
|                    
|                    
|                    
|                    
|                     | Depreciation and amortization                              |  |                     | 8,490   |                  |  |      | 8,751   |      |  |    | 8,513   |   |  |    | 8,751   |  
|                    
|                    
|                    
|                    
|                     | Gain (loss) on disposals and impairment of assets          |  |                     |        |                  |  |      | (2,374  | )    |  |    | 195     |   |  |    | (2,374  | )
|                     |                                                            |  |                     |         |                  |  |      |         |      |  |    |         |   |  |    |        
|                     | Segment operating income (loss) from continuing operations |  | $                   | 10,485  |                  |  | $    | (82     | )    |  | $  | 10,849  |   |  | $  | (82     | )
|                     |                                                            |  |                     |         |                  |  |      |         |      |  |    |         |   |  |    |        
|                     | Segment operating loss from discontinued operations        |  | $                   | (103    | )                |  | $    | (489    | )    |  | $  | (348    | ) |  | $  | (924    | )
|                     |                                                            |  |                     |         |                  |  |      |         |      |  |    |         |   |  |    |        
|                     | EBITDA                                                     |  | $                   | 18,916  |                  |  | $    | 11,000  |      |  | $  | 19,031  |   |  | $  | 10,689  |  
|                     |                                                            |  |                     |         |                  |  |      |         |      |  |    |         |   |  |    |        

Continuing Operations

Operating revenues decreased $9.0 million at same store business and
sports clubs for the 36 weeks ended September 3, 2002 from the 36 weeks ended
September 4, 2001. This decrease was primarily due to a $5.9 million decline
in food and beverage sales, the majority of which was a result of decreased
private parties attributable to lower membership and lower usage by existing
members. Membership dues declined $2.6 million due to net attrition in
membership since the third fiscal quarter of 2001. Club membership and usage
have been adversely impacted by decreased corporate and consumer spending due
to the effects of continued economic uncertainty.

Excluding the impact of disposals and impairment of assets, segment
operating income decreased $8.2 million at same store business and sports clubs
for the 36 weeks ended September 3, 2002 from the 36 weeks ended September 4,
2001. This decrease was primarily due to a decrease in operating profit
margins resulting from the decline in revenues mentioned above, which decreased
our ability to leverage fixed operating expenses. Operating profit margins
also declined due to the decrease in private parties, which typically have
higher margins than a la carte sales.

Loss on disposals and impairment of assets for total business and sports
clubs was $2.4 million for the 36 weeks ended September 3, 2002. This amount
was comprised of net losses recognized on the retirement and disposal of
assets.

Discontinued Operations

The operations of two business and sports clubs currently held for sale
are included in discontinued operations. Segment operating loss from these
properties increased $0.6 million at total business and sports clubs for the 36
weeks ended September 3, 2002 from the 36 weeks ended September 4, 2001,
primarily due to loss on disposals and impairment of $0.4 million.

19



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##### Table of Contents



Resorts

The following table presents certain summary financial data and other
operating data for our resorts segment for the 36 weeks ended September 4, 2001
and September 3, 2002 (dollars in thousands):

|                                                    |                                              |  |                    |         |               |  |         |         |      |  |   |         |  |  |   |         |  
|--------------------------------------------------- | -------------------------------------------- |  | ------------------ | ------- | ------------- |  | ------- | ------- | ---- |  | - | ------- |  |  | - | ------- | -
|                                                    |                                              |  | Same
Store Resorts |         | Total
Resorts
|                                                    |                                              |  |                    |         |              
|                                                    |                                              |  | 2001               |         | 2002          |  | 2001    |         | 2002
|                                                    |                                              |  |                    |         |               |  |         |         |     
|Number of facilities                                |                                              |  | 3                  |         |               |  | 3       |         |      |  | 4 |         |  |  | 3 |        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Operating revenues                           |  | $                  | 131,270 |               |  | $       | 132,666 |      |  | $ | 132,449 |  |  | $ | 133,562 |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Operating costs and expenses                 |  |                    | 103,793 |               |  |         | 106,027 |      |  |   | 104,618 |  |  |   | 106,745 |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Depreciation and amortization                |  |                    | 9,810   |               |  |         | 11,168  |      |  |   | 9,912   |  |  |   | 11,173  |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Loss on disposals and impairment of assets   |  |                    |        |               |  |         | (75     | )    |  |   |        |  |  |   | (75     | )
|                                                    |                                              |  |                    |         |               |  |         |         |      |  |   |         |  |  |   |        
|                                                    | Segment operating income                     |  | $                  | 17,667  |               |  | $       | 15,396  |      |  | $ | 17,919  |  |  | $ | 15,569  |  
|                                                    |                                              |  |                    |         |               |  |         |         |      |  |   |         |  |  |   |        
|                                                    | EBITDA                                       |  | $                  | 27,477  |               |  | $       | 26,639  |      |  | $ | 27,831  |  |  | $ | 26,817  |  
|                                                    |                                              |  |                    |         |               |  |         |         |      |  |   |         |  |  |   |        
|Lodging
data: (3 resorts) (1)
Room nights available |                                              |  | 299,150            |         |               |  | 299,150 |         |      |  |   |         |  |  |   |        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Room nights occupied                         |  |                    | 166,541 |               |  |         | 165,793 |      |  |   |         |  |  |   |         |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Occupancy rate                               |  |                    | 55.7    | %             |  |         | 55.4    | %    |  |   |         |  |  |   |         |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Average daily revenue per occupied room (2)  |  | $                  | 693     |               |  | $       | 696     |      |  |   |         |  |  |   |         |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Average daily revenue per available room (2) |  | $                  | 386     |               |  | $       | 386     |      |  |   |         |  |  |   |         |  



---

|(1) |  | Number of facilities and lodging data is comprised of data from
wholly owned resorts consisting of Pinehurst, The Homestead and Barton
Creek.                                                 
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Average daily revenue per occupied room and average daily revenue per
available room is based on total operating revenues excluding membership
dues and recognition of member initiation fees.

Continuing Operations

Operating revenues increased $1.4 million for same store resorts for the
36 weeks ended September 3, 2002 from the 36 weeks ended September 4, 2001.
This increase was primarily due to increased membership dues of $1.9 million
and other amenities revenue of $1.9 million offset by decreased golf and
lodging revenues of $1.1 million. Membership dues increased as a result of
price increases in monthly dues at Pinehurst. Other amenities revenues were
up as a result of the March 2002 opening of The Spa at Pinehurst, a 31,000
square foot spa facility. Lodging revenues decreased due to lower occupancy
rates at Barton Creek associated with declines in group and social spending due
to continued economic weakness. Non-lodging revenue lines were also deeply
impacted by lower occupancies, particularly at Barton Creek, where both golf
and food and beverage operations declined. Despite Barton Creeks declines,
average daily revenue per occupied room increased primarily due to strong group
spending at The Homestead.

Segment operating income decreased $2.2 million for same store resorts for
the 36 weeks ended September 3, 2002 from the 36 weeks ended September 4, 2001.
This decrease was primarily due to increased depreciation and amortization of
$1.4 million and operating costs and expenses of $2.2 million, offset by the
increase in revenue mentioned above. Depreciation and amortization increased
due to recent expansion projects completed at same store resorts. Operating
costs and expenses increased due to higher expenses associated with The Spa at
Pinehurst, as well as higher marketing expenses resulting from increased sales
efforts aimed at drawing and retaining customers.

20



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##### Table of Contents



Other Operations and Services  Continuing Operations

Excluding the impact of disposals and impairment of assets, operating loss
for our real estate operations increased to $2.4 million in the 36 weeks ended
September 3, 2002 from $0.1 million for the 36 weeks ended September 4, 2001.
This additional loss was primarily due to decreased closings of units in our
Owners Club program and decreased sales of land held for sale. Sales of
Owners Club units were lower because of continued weakness in the nations
economy and the fact that we have sold the majority of our available interests
at two locations.

Excluding the impact of disposals and impairment of assets, operating
income or loss for our international operations decreased to a loss of $2.8
million in the 36 weeks ended September 3, 2002 from income of $0.6 million for
the 36 weeks ended September 4, 2001. This additional loss was primarily due
to decreased tourism and guest traffic at our properties in Mexico, as well as
the divestiture of non-strategic properties.

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 as well as downturns in the economy.

Liquidity and Capital Resources

Historically, we have financed our operations and capital expenditures
primarily through cash flows from operations, borrowings under credit
facilities, and to a lesser extent, proceeds from divestitures. Our primary
cash needs for the remainder of 2002 and for fiscal year 2003 consist of
capital to finance working capital needs and capital replacements at existing
facilities. We distinguish 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, acquisitions
or developments of new facilities and investments in joint ventures (i.e.,
capital expansions). Most capital expenditures other than capital replacements
are considered discretionary and could be curtailed in periods of low
liquidity. 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 discretionary expenditures, which create new amenities or enhance existing
amenities at existing facilities.

We have recently completed the majority of the expansion and development
projects that we have undertaken in the last two years. As of October 18,
2002, we have finalized mortgage financing with an external lender that has
provided approximately $25 million in funding for these projects. We do not
expect to take on any significant discretionary capital expenditures for the
remainder of the year and anticipate capital spending to be approximately $95
million to $100 million for fiscal year 2002. Further reductions in expansion
and development expenditures are expected for fiscal year 2003.

Net cash provided by operations decreased from $81.9 million to $53.7
million for the 36 weeks ended September 4, 2001 and September 3, 2002,
respectively, primarily due to decreases in operating revenues in all segments
except resorts. Proceeds from disposals of several non-strategic assets helped
to supplement these reduced cash flows. As of October 16, 2002, we have
completed the divestiture of 10 properties in the current year for total
consideration of $30.8 million, including $18.0 million in buyers notes that
we have valued at $10.0 million, and the assumption of $3.8 million in debt.

Our senior secured credit facility is comprised of a combined $650 million
refinancing agreement consisting of a $350 million revolving credit facility
and a $100 million Facility A term loan which mature in September 2004, and a
$200 million Facility B term loan which matures in March 2007. The interest
rate is determined using a LIBOR-based pricing matrix plus an incremental
margin as defined in the agreement. Due to the fact that we are near our
maximum commitment

21



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##### Table of Contents



under our revolving line of credit, our ability to access funds from the senior
secured credit facility will likely be limited in the near future. These
limitations, in addition to our reduced cash flows, may cause us to decrease
capital spending and restrict other disbursements going into the fourth quarter
of 2002 and fiscal year 2003. We are currently pursuing various avenues to
increase our liquidity as well as the likelihood of future compliance with our
covenants.

Debt covenants related to the senior secured credit facility are
calculated using various ratios that measure overall leverage, debt service
coverage and tangible net worth all as defined by terms of the credit facility.
For the quarter ended September 3, 2002, we were in compliance with all
covenant requirements. However, under our current amendment, the covenants
become increasingly more restrictive in the fourth quarter of 2002. We cannot
estimate at this time whether or not we will be in compliance with these
covenants as of fiscal year-end 2002 or in future quarters. We believe that we
will be able to obtain additional financing, a waiver or amendment from our
creditors should we be in violation of such covenants. However, there can be
no assurance that we will be able to obtain one of these resolutions.

Certain Relationships and Related Transactions

James M. Hinckley, our former Chief Operating Officer and member of our
board of directors and related committees, resigned his positions with us
effective July 23, 2002. We recorded a $1.1 million charge in the 12 weeks
ended September 3, 2002 related to severance for Mr. Hinckley.

22



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##### Table of Contents



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

Certain information in 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 are forward-looking statements for purposes of
these provisions, including projections of earnings, revenues or other
financial items, statements of the plans and objectives of management for
future operations, statements concerning proposed new services, statements
regarding future economic conditions or performance, statements about market
risk and statements of assumptions 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, estimates,
potential or continue, or the negative thereof or other comparable
terminology. 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,
and actual results could differ materially from those projected or assumed in
the our forward-looking statements. Forward-looking statements are subject to
inherent risks and uncertainties, some of which are summarized in this section
and our Form 10-K for the year ended December 25, 2001.

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,
the actions of our competitors, changes in labor costs, the timing and success
of acquisitions and dispositions, changes in law, and the possibility of future
terrorist attacks on the United States similar to those that occurred on
September 11, 2001.

Recently Issued Accounting Pronouncements

On December 26, 2001, we adopted Statement of Financial Accounting
Standards No. 144, Accounting for the Disposal or Impairment 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, all assets and
liabilities related to held-for-sale entities are reclassified to other assets
and other liabilities, and all income and expense items are reclassified as
discontinued operations. As of September 3, 2002, we had twelve properties
classified as held for sale that are reclassified as discontinued operations,
four properties were held for sale prior to the implementation of SFAS 144 and,
as such, remain in continuing operations, and 13 properties that remain in
continuing operations as we will continue to be involved in the daily
management of the properties after they are sold.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44 and 62, Amendment of FASB Statement No. 13, and Technical
Corrections. The main provisions of this statement address classification of
debt extinguishments and accounting for certain lease transactions.
Implementation of this statement is not expected to have a material impact on
our consolidated financial statements.

Effective July 30, 2002, the FASB issued SFAS No. 146, Accounting for
Cost Associated with Exit or Disposal Activities. The main provisions of this
statement address the recognition of liabilities associated with an exit of
disposal activity. Implementation of this statement is not expected to have a
material impact on our consolidated financial statements.




Item 3. Quantitative and Qualitative Disclosures about Market Risk

We have no material changes to the disclosure on this matter made in our
report on Form 10-K for the fiscal year ended December 25, 2001.

23



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##### Table of Contents






Item 4. Controls and Procedures

Evaluation of Disclosure Controls 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 240.13a-14(c) and 15d-14(c)) as of a date within
90 days before the filing date of 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.

24



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##### Table of Contents






PART II. OTHER INFORMATION




Item 6. Exhibits and Reports on Form 8-K



| | (a) |  | Exhibits
| | --- |  | --------

|     |  |                                                                                                                                  
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------
|10.1 |  | Fifth Amendment to First Amended and Restated Credit Agreement among ClubCorp, Inc. and certain
lenders dated September 20, 2002
|    
|    
|    
|    
|15.1 |  | Letter from KPMG LLP regarding unaudited interim financial statements                                                           
|    
|    
|    
|    
|99.1 |  | Managements certifications required pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002.                                    



| | (b) |  | Reports on Form 8-K
| | --- |  | -------------------

On
September 3, 2002, ClubCorp filed a Current Report on Form 8-K, reporting, under Item 1  Changes in
Control of Registrant, and Item 5  Other Events, the death of founder and Chairman Robert H. Dedman, Sr.,
and the hiring of Chief Operating Officer and President John A. Beckert, respectively.

On September 24, 2002, ClubCorp filed a Current Report on Form 8-K, reporting, under Item 5  Other Events
and Regulation FD Disclosure, its preliminary operating results for the quarter ended September 3, 2002.

25



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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: October 16, 2002 |  | By:            |  | /s/ JOHN D. BAILEY                                             
|                       |  |                |  |                                                                
|                       |  |                |  | John D. Bailey
Senior Vice President
& Chief Accounting Officer

26



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##### Table of Contents



CERTIFICATIONS

I, Robert H. Dedman, Jr., certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of ClubCorp, Inc.;                                                                                                                                                                                                                                                         
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | Our other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                                   



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including our
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of our disclosure controls and procedures
as of a date within 90 days prior to the filing date of this quarterly
report (the Evaluation Date); and                                                                                                               
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | Our other certifying officer and I have disclosed, based on our most
recent evaluation, to our auditors and the audit committee of registrants
board of directors (or persons performing the equivalent function):
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect our ability to record, process,
summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in our internal controls; and                                                                                                                                        



|6. |  | Our other certifying officer and I have indicated in this quarterly
report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       |  |     |  |                                                                        
|---------------------- |  | --- |  | -----------------------------------------------------------------------
|Date: October 16, 2002 |  | By: |  | /s/ ROBERT H. DEDMAN, JR.                                              
|                       |  |     |  |                                                                        
|                       |  |     |  | Robert H. Dedman, Jr.
Chairman of the Board and
Chief Executive Officer

27



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##### Table of Contents



I, Jeffrey P. Mayer, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of ClubCorp, Inc.;                                                                                                                                                                                                                                                         
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | Our other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                                   



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including our
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of our disclosure controls and procedures
as of a date within 90 days prior to the filing date of this quarterly
report (the Evaluation Date); and                                                                                                               
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | Our other certifying officer and I have disclosed, based on our most
recent evaluation, to our auditors and the audit committee of registrants
board of directors (or persons performing the equivalent function):
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect our ability to record, process,
summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in our internal controls; and                                                                                                                                        



|6. |  | Our other certifying officer and I have indicated in this quarterly
report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|      |  |                  |  |     |  |                                         
|----- |  | ---------------- |  | --- |  | ----------------------------------------
|Date: |  | October 16, 2002 |  | By: |  | /s/ JEFFREY P. MAYER                    
|      |  |                  |  |     |  |                                         
|      |  |                  |  |     |  | Jeffrey P. Mayer
Chief Financial Officer

28



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##### Table of Contents



INDEX TO EXHIBITS

|            |   |                                                                                                                                 
|----------- | - | --------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |   | Description                                                                                                                     
|            |   |                                                                                                                                 
|10.1        |  | Fifth Amendment to First Amended and Restated Credit Agreement among ClubCorp, Inc. and certain
lenders dated September 20, 2002
|15.1        |  | Letter from KPMG LLP regarding unaudited interim financial statements                                                           
|99.1        |  | Managements certifications required pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002.