##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q



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

For the quarterly period ended March 20, 2001

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
(State or other jurisdiction
of incorporation or organization)3030 LBJ Freeway, Suite 700
(Address of principal executive offices) |  | 75-2778488
(I.R.S. employer
identification no.)Dallas, Texas 75234
(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 twelve 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.

The number of shares of the Registrants Common Stock outstanding as of April
24, 2001 was 94,086,686.





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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
|Part II. OTHER INFORMATION                                                                   
|Item 6. Exhibits and Reports on Form 8-K                                                     
|EX-15.1 - Letter Re: Unaudited Interim Financials                                            
|EX-24.1 - Power of Attorney                                                                  



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CLUBCORP, INC.

INDEX

|         |  |  |                                                                                       | 
|-------- |  |  | ------------------------------------------------------------------------------------- | 
|Part I.  |  |  | FINANCIAL INFORMATION                                                                 | 
|        
|        
|        
|        
|         | 
|        
|        
|        
|        
|         |  |  |                                                                                       | 
|        
|        
|        
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|        
|        
|        
|        
|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 | 
|        
|        
|        
|        
|         |  |  |                                                                                       | 
|        
|        
|        
|        
|        
|        
|        
|        
|Part II. |  |  | OTHER INFORMATION                                                                     | 
|        
|        
|        
|        
|         |  |  |                                                                                       | 
|        
|        
|        
|        
|        
|        
|        
|        
|Item 6.  |  |  | Exhibits and Reports on Form 8-K                                                      | 





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##### Table of Contents






PART I. FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS




INDEPENDENT AUDITORS REVIEW REPORT

The Board of Directors and Stockholders
ClubCorp, Inc.:

We have reviewed the consolidated balance sheet of ClubCorp, Inc. and
subsidiaries (ClubCorp) as of March 20, 2001, and the related consolidated
statements of operations and cash flows for the twelve weeks ended March 20,
2001 and March 21, 2000. 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,
ClubCorp changed its method of accounting for derivative instruments and
hedging activities on December 27, 2000.

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 26, 2000 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 23,
2001, 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 26, 2000, is fairly stated, in all
material respects, in relation to the consolidated balance sheet from which it
has been derived.

KPMG LLP

Dallas, Texas
April 24, 2001

1



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##### Table of Contents



ClubCorp, Inc.

---




Consolidated Balance Sheet
(Dollars in thousands, except share amounts)
(Unaudited)

|                                                         |                                                                                                                                                                                   |                                      |                            |                              |   |              |           |           |   |         |           | 
|-------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | -------------------------- | ---------------------------- | - | ------------ | --------- | --------- | - | ------- | --------- | 
|                                                         |                                                                                                                                                                                   |                                      |                            |                              |   | December 26, |           | March 20,
|                                                         |                                                                                                                                                                                   |                                      |                            |                              |   |              |           |          
|Assets                                                   |                                                                                                                                                                                   | 2000                                 |                            | 2001                        
|                                                         |                                                                                                                                                                                   |                                      |                            |                              |   |              |           |          
|Current assets:                                         
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Cash and cash equivalents                                                                                                                                                         |                                      | $                          | 24,771                       |   |              | $         | 9,377     |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Membership and other receivables, net                                                                                                                                             |                                      |                            | 122,158                      |   |              |           | 98,399    |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Inventories                                                                                                                                                                       |                                      |                            | 23,369                       |   |              |           | 24,740    |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Other assets                                                                                                                                                                      |                                      |                            | 20,517                       |   |              |           | 17,983    |  
|                                                         |                                                                                                                                                                                   |                                      |                            |                              |   |              |           |          
|                                                         |                                                                                                                                                                                   |                                      | Total current assets       |                              |   | 190,815      |           |           |   | 150,499 |          
|                                                        
|                                                        
|                                                        
|                                                        
|Property and equipment, net                              |                                                                                                                                                                                   |                                      | 1,295,435                  |                              |   |              | 1,303,192 |          
|                                                        
|                                                        
|                                                        
|                                                        
|Other assets                                             |                                                                                                                                                                                   |                                      | 259,331                    |                              |   |              | 253,578   |          
|                                                         |                                                                                                                                                                                   |                                      |                            |                              |   |              |           |          
|                                                         |                                                                                                                                                                                   |                                      |                            | Total assets                 |   | $            | 1,745,581 |           |   | $       | 1,707,269 | 
|                                                         |                                                                                                                                                                                   |                                      |                            |                              |   |              |           |          
|                                                         |                                                                                                                                                                                   | Liabilities and Stockholders Equity
|                                                        
|                                                        
|                                                        
|                                                        
|Current liabilities:                                    
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Accounts payable and accrued liabilities                                                                                                                                          |                                      | $                          | 78,315                       |   |              | $         | 57,733    |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Long-term debt  current portion                                                                                                                                                  |                                      |                            | 49,326                       |   |              |           | 55,322    |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Other liabilities                                                                                                                                                                 |                                      |                            | 116,181                      |   |              |           | 110,066   |  
|                                                         |                                                                                                                                                                                   |                                      |                            |                              |   |              |           |          
|                                                         |                                                                                                                                                                                   |                                      | Total current liabilities  |                              |   | 243,822      |           |           |   | 223,121 |          
|                                                        
|                                                        
|                                                        
|                                                        
|Long-term debt                                           |                                                                                                                                                                                   |                                      | 643,078                    |                              |   |              | 626,823   |          
|                                                        
|                                                        
|                                                        
|                                                        
|Other liabilities                                        |                                                                                                                                                                                   |                                      | 143,284                    |                              |   |              | 164,927   |          
|                                                        
|                                                        
|                                                        
|                                                        
|Membership deposits                                      |                                                                                                                                                                                   |                                      | 104,757                    |                              |   |              | 106,724   |          
|                                                        
|                                                        
|                                                        
|                                                        
|Redemption value of common
stock held by benefit    plan |                                                                                                                                                                                   |                                      | 66,379                     |                              |   |              | 67,870    |          
|                                                        
|                                                        
|                                                        
|                                                        
|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, 94,105,475
   outstanding at December 26, 2000 and 94,086,686
   outstanding at March 20, 2001 |                                      |                            | 996                          |   |              |           | 996       |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Additional paid-in capital                                                                                                                                                        |                                      |                            | 161,684                      |   |              |           | 161,684   |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Accumulated other comprehensive loss                                                                                                                                              |                                      |                            | (4,080                       | ) |              |           | (12,067   | )
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Retained earnings                                                                                                                                                                 |                                      |                            | 439,802                      |   |              |           | 421,633   |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Treasury stock, 5,488,933
shares at December 26,    2000 and 5,507,722 shares at March 20, 2001                                                                                   |                                      |                            | (54,141                      | ) |              |           | (54,442   | )
|                                                         |                                                                                                                                                                                   |                                      |                            |                              |   |              |           |          
|                                                         |                                                                                                                                                                                   |                                      | Total stockholders equity |                              |   | 544,261      |           |           |   | 517,804 |          
|                                                         |                                                                                                                                                                                   |                                      |                            |                              |   |              |           |          
|                                                         |                                                                                                                                                                                   |                                      |                            | Total liabilities and equity |   | $            | 1,745,581 |           |   | $       | 1,707,269 | 
|                                                         |                                                                                                                                                                                   |                                      |                            |                              |   |              |           |          

See accompanying condensed notes to consolidated financial statements.

2



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##### Table of Contents



ClubCorp, Inc.

---




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

|                                               |  |                    |         |           |  |   |         |  
|---------------------------------------------- |  | ------------------ | ------- | --------- |  | - | ------- | -
|                                               |  | Twelve Weeks Ended
|                                               |  |                   
|                                               |  | March 21,          |         | March 20,
|                                               |  | 2000               |         | 2001     
|                                               |  |                    |         |          
|Operating revenues                             |  | $                  | 201,201 |           |  | $ | 199,766 |  
|                                              
|                                              
|                                              
|                                              
|Operating costs and expenses                   |  |                    | 170,280 |           |  |   | 169,477 |  
|                                              
|                                              
|                                              
|                                              
|Depreciation and amortization                  |  |                    | 19,184  |           |  |   | 21,829  |  
|                                              
|                                              
|                                              
|                                              
|Selling, general and administrative expenses   |  |                    | 18,255  |           |  |   | 18,587  |  
|                                               |  |                    |         |           |  |   |         |  
|Operating loss                                 |  |                    | (6,518  | )         |  |   | (10,127 | )
|                                              
|                                              
|                                              
|                                              
|Interest expense                               |  |                    | (11,205 | )         |  |   | (15,999 | )
|                                              
|                                              
|                                              
|                                              
|Other income                                   |  |                    | 607     |           |  |   | 837     |  
|                                               |  |                    |         |           |  |   |         |  
|Loss from operations before income tax benefit |  |                    | (17,116 | )         |  |   | (25,289 | )
|                                              
|                                              
|                                              
|                                              
|Income tax benefit                             |  |                    | 4,986   |           |  |   | 8,611   |  
|                                               |  |                    |         |           |  |   |         |  
|Net loss                                       |  | $                  | (12,130 | )         |  | $ | (16,678 | )
|                                               |  |                    |         |           |  |   |         |  
|Basic and diluted loss per share               |  | $                  | (.13    | )         |  | $ | (.18    | )
|                                               |  |                    |         |           |  |   |         |  

3



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##### Table of Contents



ClubCorp, Inc.

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Consolidated Statement of Cash Flows
(Dollars in thousands)
(Unaudited)



|                                                 |                                                                           |                                                      |                                               |         |                    |         |           |         |         |         |  
|------------------------------------------------ | ------------------------------------------------------------------------- | ---------------------------------------------------- | --------------------------------------------- | ------- | ------------------ | ------- | --------- | ------- | ------- | ------- | -
|                                                 |                                                                           |                                                      |                                               |         | Twelve Weeks Ended
|                                                 |                                                                           |                                                      |                                               |         |                   
|                                                 |                                                                           |                                                      |                                               |         | March 21,          |         | March 20,
|                                                 |                                                                           |                                                      |                                               |         | 2000               |         | 2001     
|                                                 |                                                                           |                                                      |                                               |         |                    |         |          
|Cash flows from operations:                     
|                                                
|                                                
|                                                
|                                                
|                                                 | Net loss                                                                  |                                                      | $                                             | (12,130 | )                  |         | $         | (16,678 | )      
|                                                
|                                                
|                                                
|                                                
|                                                 | Adjustments to reconcile net loss to cash flows provided from operations:
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                           | Depreciation and amortization                        |                                               |         | 19,184             |         |           |         | 21,829  |        
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                           | Amortization of discount on membership deposits      |                                               |         | 2,033              |         |           |         | 2,224   |        
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                           | Write off of investment in joint venture             |                                               |         |                   |         |           |         | 2,916   |        
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                           | Deferred income taxes                                |                                               |         | (5,449             | )       |           |         | (9,330  | )      
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                           | Decrease in real estate held for sale                |                                               |         | 2,156              |         |           |         | 1,016   |        
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                           | Decrease in membership and other receivables, net    |                                               |         | 12,883             |         |           |         | 23,919  |        
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                           | Decrease in accounts payable and accrued liabilities |                                               |         | (12,261            | )       |           |         | (11,613 | )      
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                           | Net change in deferred membership revenues           |                                               |         | 1,149              |         |           |         | 1,482   |        
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                           | Other                                                |                                               |         | 9,837              |         |           |         | (3,753  | )      
|                                                 |                                                                           |                                                      |                                               |         |                    |         |           |        
|                                                 |                                                                           |                                                      | Cash flows provided from operations           |         |                    | 17,402  |           |         |         | 12,012  |  
|                                                
|                                                
|                                                
|                                                
|Cash flows from investing activities:           
|                                                
|                                                
|                                                
|                                                
|                                                 | Additions to property and equipment                                       |                                                      |                                               | (27,948 | )                  |         |           | (30,087 | )      
|                                                
|                                                
|                                                
|                                                
|                                                 | Development of new facilities                                             |                                                      |                                               | (11,964 | )                  |         |           | (9,038  | )      
|                                                
|                                                
|                                                
|                                                
|                                                 | Development of real estate held for sale                                  |                                                      |                                               | (6,386  | )                  |         |           | (1,162  | )      
|                                                
|                                                
|                                                
|                                                
|                                                 | Investment in affiliates                                                  |                                                      |                                               | (1,436  | )                  |         |           |        |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Proceeds from dispositions, net                                           |                                                      |                                               | 697     |                    |         |           | 6,881   |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Other                                                                     |                                                      |                                               | (796    | )                  |         |           | 1,910   |        
|                                                 |                                                                           |                                                      |                                               |         |                    |         |           |        
|                                                 |                                                                           |                                                      | Cash flows used by investing activities       |         |                    | (47,833 | )         |         |         | (31,496 | )
|                                                
|                                                
|                                                
|                                                
|Cash flows from financing activities:           
|                                                
|                                                
|                                                
|                                                
|                                                 | Borrowings of long-term debt                                              |                                                      |                                               | 55,705  |                    |         |           | 13,500  |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Repayments of long-term debt                                              |                                                      |                                               | (2,552  | )                  |         |           | (9,453  | )      
|                                                
|                                                
|                                                
|                                                
|                                                 | Membership deposits received, net                                         |                                                      |                                               | 582     |                    |         |           | 344     |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Treasury stock transactions, net                                          |                                                      |                                               |        |                    |         |           | (301    | )      
|                                                 |                                                                           |                                                      |                                               |         |                    |         |           |        
|                                                 |                                                                           |                                                      | Cash flows provided from financing activities |         |                    | 53,735  |           |         |         | 4,090   |  
|                                                 |                                                                           |                                                      |                                               |         |                    |         |           |        
|Total net cash flows                             |                                                                           |                                                      | 23,304                                        |         |                    |         | (15,394   | )      
|                                                 |                                                                           |                                                      |                                               |         |                    |         |           |        
|Cash and cash equivalents at beginning of period |                                                                           |                                                      | 36,606                                        |         |                    |         | 24,771    |        
|                                                 |                                                                           |                                                      |                                               |         |                    |         |           |        
|Cash and cash equivalents at end of period       |                                                                           | $                                                    | 59,910                                        |         |                    | $       | 9,377     |        
|                                                 |                                                                           |                                                      |                                               |         |                    |         |           |        

4



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##### Table of Contents



ClubCorp, Inc.

---




Condensed Notes to Consolidated Financial Statements

Note 1. Summary of significant accounting policies

Consolidation

The Consolidated Financial Statements include the accounts of ClubCorp, Inc.
(Parent) 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 footnote disclosures
normally included in financial statements presented in accordance with
accounting principles generally accepted in the United States of America have
been omitted from the accompanying statements. ClubCorps management believes
the disclosures made are adequate to make the information presented not
misleading. However, the financial statements should be read in conjunction
with the Consolidated Financial Statements and notes thereto of ClubCorp for
the year ended December 26, 2000 which are a part of ClubCorps Form 10-K.

In the opinion of ClubCorp management, the accompanying unaudited Consolidated
Financial Statements reflect all adjustments necessary (consisting of normal
recurring accruals except for the cumulative effect of the change in
accounting for derivative instruments and hedging activities discussed in Note
2) to present fairly the consolidated financial position of ClubCorp as of March
20, 2001, the consolidated results of operations and cash flows for the twelve
weeks ended March 21, 2000 and March 20, 2001. 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.

Reclassifications

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

Note 2. Derivative instruments

Effective December 27, 2000, ClubCorp adopted Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities, as amended and interpreted. FAS 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 accumulated other
comprehensive loss), depending on whether a derivative instrument qualifies as
a hedge transaction.

In the normal course of business, ClubCorp is exposed to changes in interest
rates. The objective in managing its exposure to interest rates is to decrease
the volatility that changes in interest rates might have on operations and cash
flows. To achieve this objective, ClubCorp uses interest rate swaps to hedge a
portion of total long-term debt that is subject to variable interest rates and
designates these instruments as cash flow hedges. Under these swaps, ClubCorp
agrees to pay fixed rates of interest. These contracts are considered to be a
hedge against changes in the amount of future cash flows associated with the
interest payments on variable-rate debt obligations. Accordingly, the interest
rate swaps are reflected at fair value in the Consolidated Balance Sheet and
the related gains or losses on these contracts, net of related income tax
effect, are recorded as a component of accumulated other comprehensive loss.
ClubCorp does not enter into such contracts for speculative purposes and
currently these are the only derivative instruments held by ClubCorp as of
March 20, 2001. The fair value of interest rate swap contracts are determined
based on the discounted estimated cash flows derived from the forward yield
curve at the inception of the swap versus the forward yield curve at the end of
the reporting period.

5



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##### Table of Contents



ClubCorp, Inc.

---

To the extent that any of these swaps are not completely effective in
offsetting the change in interest cash flows being hedged, the ineffective
portion is immediately recognized in interest expense. Effectiveness is
measured on a quarterly basis using the cash flow method. No other cash
payments are made unless the contract is terminated prior to maturity, in which
case, the amount paid or received in settlement is established by agreement at
the time of termination.

The adoption of FAS 133 at December 27, 2000, resulted in recording $2,119,000,
net of $1,141,000 income tax benefit, in accumulated other comprehensive loss
for the cumulative effect of the accounting change. As of December 27, 2000,
ClubCorp 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 $229.0 million notional amount of indebtedness with
maturity dates ranging from August 2001 through September 2003. These hedges
are highly effective, however, for the cumulative effect of change in
accounting for derivative instruments and hedging activities as of December
27, 2000, ClubCorp recorded $201,000 as interest expense for the ineffective
portion of these instruments because the impact on the Consolidated Statement
of Operations was not significant. The aggregate fair market value of all
interest rate swap contracts was ($3,461,000) on December 27, 2000 and was
included in other liabilities on the Consolidated Balance Sheet.

As of March 20, 2001, ClubCorp 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 $229.0 million notional amount of
indebtedness with maturity dates ranging from August 2001 through September
2003. These hedges are highly effective, however, for the twelve weeks ended
March 20, 2001, ClubCorp recorded $188,000 as interest expense for the
ineffective portion of these instruments. The aggregate fair market value of
all interest rate swap contracts was ($7,978,000) on March 20, 2001 and is
included in other liabilities on the Consolidated Balance Sheet.

Note 3. Operating revenues

ClubCorp recognizes revenues from the following sources:



|                             |                          |   |                    |         |           |   |        |         | 
|---------------------------- | ------------------------ | - | ------------------ | ------- | --------- | - | ------ | ------- | 
|                             |                          |   | Twelve Weeks Ended
|                             |                          |   |                   
|                             |                          |   | March 21,          |         | March 20,
|                             |                          |   | 2000               |         | 2001     
|                             |                          |   |                    |         |          
|Membership fees and deposits |                          | $ | 9,876              |         |           | $ | 9,708  |        
|                            
|                            
|                            
|                            
|Membership dues              |                          |   | 74,994             |         |           |   | 76,691 |        
|                            
|                            
|                            
|                            
|Golf operations revenues     |                          |   | 33,275             |         |           |   | 32,752 |        
|                            
|                            
|                            
|                            
|Food and beverage revenues   |                          |   | 53,546             |         |           |   | 52,925 |        
|                            
|                            
|                            
|                            
|Lodging revenues             |                          |   | 8,659              |         |           |   | 9,507  |        
|                            
|                            
|                            
|                            
|Other revenues               |                          |   | 20,851             |         |           |   | 18,183 |        
|                             |                          |   |                    |         |           |   |        |        
|                             | Total operating revenues |   | $                  | 201,201 |           |   | $      | 199,766 | 
|                             |                          |   |                    |         |           |   |        |        

Note 4. Income tax benefit

The income tax benefits for the twelve weeks ended March 21, 2000 and March 20,
2001 differ from amounts computed by applying the U.S. Federal tax rate of 35%
to loss from operations before income tax benefit 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

Earnings per share is computed using the weighted average number of shares
outstanding of 94,475,974 and 94,090,697 for basic earnings per share
calculations for the twelve weeks ended March 21, 2000 and March 20, 2001,
respectively. The potential common stock equivalents for the assumed
conversion of options and warrants to purchase common stock of 1,329,567 shares
for the twelve weeks ended March 21, 2000 and 1,070,195 shares for the twelve
weeks ended March 20, 2001 are antidilutive due to the net losses for the
quarters.

6



---



##### Table of Contents



ClubCorp, Inc.

---

Note 6. Property and equipment

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

|                                          |  |              |           |           |  |   |           |  
|----------------------------------------- |  | ------------ | --------- | --------- |  | - | --------- | -
|                                          |  | December 26, |           | March 20,
|                                          |  | 2000         |           | 2001     
|                                          |  |              |           |          
|Land and land improvements                |  | $            | 623,516   |           |  | $ | 618,497   |  
|                                         
|                                         
|                                         
|                                         
|Buildings and recreational facilities     |  |              | 432,645   |           |  |   | 428,548   |  
|                                         
|                                         
|                                         
|                                         
|Leasehold improvements                    |  |              | 110,643   |           |  |   | 111,298   |  
|                                         
|                                         
|                                         
|                                         
|Furniture and fixtures                    |  |              | 131,078   |           |  |   | 132,362   |  
|                                         
|                                         
|                                         
|                                         
|Machinery and equipment                   |  |              | 274,440   |           |  |   | 273,208   |  
|                                         
|                                         
|                                         
|                                         
|Construction in progress                  |  |              | 126,981   |           |  |   | 159,690   |  
|                                          |  |              |           |           |  |   |           |  
|                                          |  |              | 1,699,303 |           |  |   | 1,723,603 |  
|                                         
|                                         
|                                         
|                                         
|Accumulated depreciation and amortization |  |              | (403,868  | )         |  |   | (420,411  | )
|                                          |  |              |           |           |  |   |           |  
|                                          |  | $            | 1,295,435 |           |  | $ | 1,303,192 |  
|                                          |  |              |           |           |  |   |           |  

Note 7. Comprehensive loss

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

|                                                                                                                       |  |                    |         |           |  |   |         |  
|---------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | --------- |  | - | ------- | -
|                                                                                                                       |  | Twelve Weeks Ended
|                                                                                                                       |  |                   
|                                                                                                                       |  | March 21,          |         | March 20,
|                                                                                                                       |  | 2000               |         | 2001     
|                                                                                                                       |  |                    |         |          
|Net loss                                                                                                               |  | $                  | (12,130 | )         |  | $ | (16,678 | )
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|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                         |  |                    |        |           |  |   | (2,814  | )
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|Foreign currency translation adjustment                                                                                |  |                    | (723    | )         |  |   | (3,054  | )
|                                                                                                                       |  |                    |         |           |  |   |         |  
|Total comprehensive loss                                                                                               |  | $                  | (12,853 | )         |  | $ | (24,665 | )
|                                                                                                                       |  |                    |         |           |  |   |         |  

Note 8. Segment reporting

ClubCorp 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. Management uses Adjusted
EBITDA to monitor the performance of the Company and its facilities. Adjusted
EBITDA consists of EBITDA, an industry standard calculation of earnings before
interest, taxes, depreciation and amortization, gain (loss) on divestitures and
disposal of assets, adjusted for net membership deposits and fees, and a joint
venture adjustment. Financial information for the segments is as follows
(dollars in thousands):

|                    |                                  |                                                     |                                                       |         |                    |         |           |         |         |         |  
|------------------- | -------------------------------- | --------------------------------------------------- | ----------------------------------------------------- | ------- | ------------------ | ------- | --------- | ------- | ------- | ------- | -
|                    |                                  |                                                     |                                                       |         | Twelve Weeks Ended
|                    |                                  |                                                     |                                                       |         |                   
|                    |                                  |                                                     |                                                       |         | March 21,          |         | March 20,
|                    |                                  |                                                     |                                                       |         | 2000               |         | 2001     
|                    |                                  |                                                     |                                                       |         |                    |         |          
|Operating revenues:
|                   
|                   
|                   
|                   
|                    | Country club and golf facilities |                                                     | $                                                     | 100,254 |                    |         | $         | 100,260 |        
|                   
|                   
|                   
|                   
|                    | Business and sports clubs        |                                                     |                                                       | 58,443  |                    |         |           | 55,626  |        
|                   
|                   
|                   
|                   
|                    | Resorts                          |                                                     |                                                       | 30,320  |                    |         |           | 33,063  |        
|                    |                                  |                                                     |                                                       |         |                    |         |           |        
|                    |                                  | Total operating revenues for
   reportable segments |                                                       |         | 189,017            |         |           |         | 188,949 |        
|                   
|                   
|                   
|                   
|                    | Other operations                 |                                                     |                                                       | 7,931   |                    |         |           | 6,452   |        
|                   
|                   
|                   
|                   
|                    | Corporate services               |                                                     |                                                       | 4,253   |                    |         |           | 4,365   |        
|                    |                                  |                                                     |                                                       |         |                    |         |           |        
|                    |                                  | Consolidated operating revenues                     |                                                       | $       | 201,201            |         |           | $       | 199,766 |        
|                    |                                  |                                                     |                                                       |         |                    |         |           |        
|Adjusted EBITDA:   
|                   
|                   
|                   
|                   
|                    | Country club and golf facilities |                                                     | $                                                     | 22,307  |                    |         | $         | 20,454  |        
|                   
|                   
|                   
|                   
|                    | Business and sports clubs        |                                                     |                                                       | 5,932   |                    |         |           | 5,711   |        
|                   
|                   
|                   
|                   
|                    | Resorts                          |                                                     |                                                       | (4,512  | )                  |         |           | (1,649  | )      
|                    |                                  |                                                     |                                                       |         |                    |         |           |        
|                    |                                  | Total Adjusted EBITDA
   for reportable segments    |                                                       |         | 23,727             |         |           |         | 24,516  |        
|                   
|                   
|                   
|                   
|                    | Other operations                 |                                                     |                                                       | (188    | )                  |         |           | (1,425  | )      
|                   
|                   
|                   
|                   
|                    | Corporate services               |                                                     |                                                       | (8,434  | )                  |         |           | (10,536 | )      
|                    |                                  |                                                     |                                                       |         |                    |         |           |        
|                    |                                  | Consolidated Adjusted EBITDA                        |                                                       |         | 15,105             |         |           |         | 12,555  |        
|                   
|                   
|                   
|                   
|                    |                                  |                                                     | Depreciation and amortization                         |         |                    | (19,184 | )         |         |         | (21,829 | )
|                   
|                   
|                   
|                   
|                    |                                  |                                                     | Gain (loss) on divestitures and
   disposal of assets |         |                    | 249     |           |         |         | (236    | )
|                   
|                   
|                   
|                   
|                    |                                  |                                                     | Net membership deposits and fees                      |         |                    | (1,795  | )         |         |         | (175    | )
|                   
|                   
|                   
|                   
|                    |                                  |                                                     | Joint venture adjustment                              |         |                    | (893    | )         |         |         | (442    | )
|                    |                                  |                                                     |                                                       |         |                    |         |           |        
|                    |                                  | Consolidated operating loss                         |                                                       | $       | (6,518             | )       |           | $       | (10,127 | )      
|                    |                                  |                                                     |                                                       |         |                    |         |           |        

Note 9. Contingencies

ClubCorp is subject to certain pending or threatened litigation and other
claims. Management, after review and consultation with legal counsel, believes
that any potential liability arising from resolution of these matters will not
materially affect ClubCorps consolidated financial position and results of
operations.

7



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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® or the Company) is a
holding company incorporated under the laws of the State of Delaware that,
through its subsidiaries, owns, operates and/or manages country clubs, golf
clubs, public golf courses, business clubs, sports clubs, resorts, and certain
related real estate through sole ownership, partial ownership (including joint
venture interests) and management agreements. The Companys primary sources of
revenue include membership dues, membership fees and deposits, food and
beverage operations, golf operations and lodging. The Company also receives
management fees with respect to facilities that it manages for third parties.

The earliest predecessor corporation of ClubCorp was organized in 1957
under the name Country Clubs, Inc. All historical references herein to
ClubCorp include Country Clubs, Inc. and its successor corporations. For
purposes of this document, unless the context indicates otherwise, references
to the Company include ClubCorp and its subsidiaries. However, each of ClubCorp
and its subsidiaries is careful to maintain its separate legal existence, and
general references to the Company should not be interpreted to reduce in any
way the legal distinctions among the subsidiaries or among ClubCorp and its
subsidiaries.

The following discussion of the Companys financial condition and results
of operations for the twelve weeks ended March 21, 2000 and March 20, 2001
should be read in conjunction with the Companys Annual Report on Form 10-K for
the year ended December 26, 2000, as filed with the Securities and Exchange
Commission.

Results of Operations

Twelve Weeks Ended March 21, 2000 Compared to Twelve Weeks Ended March 20, 2001

Consolidated Operations

Operating revenues decreased to $199.8 million for the twelve weeks ended
March 20, 2001 from $201.2 million for the twelve weeks ended March 21, 2000.
This decrease is primarily due to the divestiture of facilities and adverse
weather conditions that negatively impacted golf rounds at country club and
golf facilities and resorts, offset by increases in membership dues at private
clubs and resorts and increased room nights associated with recent expansions
at Barton Creek.

Operating loss increased to ($10.1) million for the twelve weeks ended
March 20, 2001 from ($6.5) million for the twelve weeks ended March 21, 2000.
This increase is due to the decrease in revenues mentioned above, increased
depreciation and amortization, and gain/loss activity. The increase in
depreciation and amortization is primarily due to recent capital expansions at
existing facilities and increases in technology related assets with shorter
depreciable lives. The Company disposed of six properties in the twelve weeks
ended March 20, 2001, resulting in gains on disposal of approximately $2.3
million, partially offsetting a loss of approximately ($2.5) million on the
write-off of its investment in LifeCast.com.

Loss from operations before income tax benefit increased to ($25.3)
million for the twelve weeks ended March 20, 2001 from ($17.1) million for the
twelve weeks ended March 21, 2000. This increase is primarily due to the
increase in operating loss mentioned above as well as higher interest expense
as a result of increases in the level of outstanding debt. The increase in
outstanding debt is attributable to financing needs for capital expansions at
existing facilities, in addition to the development and expansion of new
facilities.

Management uses Adjusted EBITDA to monitor the performance of the Company
and its facilities. Adjusted EBITDA consists of EBITDA, an industry standard
calculation of earnings before interest, taxes, depreciation and amortization,
gain (loss) on divestitures and disposals of assets, adjusted for net
membership deposits and fees, and a joint venture adjustment. Consolidated
Adjusted EBITDA decreased to $12.6 million for the twelve weeks ended March 20,
2001 from $15.1 million for the twelve weeks ended March 21, 2000, due
primarily to the previously mentioned increase in operating loss and a decrease
in net membership deposits and fees in line with changing economic conditions.

8



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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 data
for the Companys country club and golf facilities segment for the twelve week
periods ended March 21, 2000 and March 20, 2001 (dollars in thousands):

|                     |                               |  |                  |        |                  |  |      |        |      |  |     |         |  |  |     |         | 
|-------------------- | ----------------------------- |  | ---------------- | ------ | ---------------- |  | ---- | ------ | ---- |  | --- | ------- |  |  | --- | ------- | 
|                     |                               |  | Same Store       |        | Total           
|                     |                               |  | Country Club and |        | Country Club and
|                     |                               |  | Golf Facilities  |        | Golf Facilities 
|                     |                               |  |                  |        |                 
|                     |                               |  | 2000             |        | 2001             |  | 2000 |        | 2001
|                     |                               |  |                  |        |                  |  |      |        |     
|Number of facilities |                               |  | 113              |        |                  |  | 113  |        |      |  | 124 |         |  |  | 123 |        
|                    
|                    
|                    
|                    
|                     | Operating revenues            |  | $                | 97,129 |                  |  | $    | 98,108 |      |  | $   | 100,254 |  |  | $   | 100,260 | 
|                    
|                    
|                    
|                    
|                     | Operating costs and expenses  |  |                  | 76,628 |                  |  |      | 78,272 |      |  |     | 80,241  |  |  |     | 80,524  | 
|                    
|                    
|                    
|                    
|                     | Depreciation and amortization |  |                  | 10,904 |                  |  |      | 11,677 |      |  |     | 11,212  |  |  |     | 12,136  | 
|                     |                               |  |                  |        |                  |  |      |        |      |  |     |         |  |  |     |        
|                     | Segment operating income      |  | $                | 9,597  |                  |  | $    | 8,159  |      |  | $   | 8,801   |  |  | $   | 7,600   | 
|                     |                               |  |                  |        |                  |  |      |        |      |  |     |         |  |  |     |        
|                     | Adjusted EBITDA               |  | $                | 22,466 |                  |  | $    | 21,108 |      |  | $   | 22,307  |  |  | $   | 20,454  | 
|                     |                               |  |                  |        |                  |  |      |        |      |  |     |         |  |  |     |        

Operating revenues remained constant for total country club and golf
facilities for the twelve weeks ended March 20, 2001 versus the twelve weeks
ended March 21, 2000. Operating revenues at same store facilities increased
due to increased membership dues and revenues per golf round, despite overall
poor weather conditions that adversely impacted the volume of golf rounds.
This increase is offset by decreases due to divestitures of facilities.

Segment operating income decreased $1.2 million at total country club and
golf facilities for the twelve weeks ended March 20, 2001 versus the twelve
weeks ended March 21, 2000. This decrease is primarily due to an increase in
operating costs and expenses and depreciation and amortization at same store
country club and golf facilities, offsetting a net gain on the disposal of four
facilities.

Adjusted EBITDA decreased $1.9 million at total country club and golf
facilities for the twelve weeks ended March 20, 2001 versus the twelve weeks
ended March 21, 2000. This decrease is primarily due to the increase in
operating costs and expenses mentioned above.

9



---



##### Table of Contents



Business and Sports Clubs

The following table presents certain summary financial data and other data
for the Companys business and sports clubs segment for the twelve week periods
ended March 21, 2000 and March 20, 2001 (dollars in thousands):

|                     |                               |  |                     |        |                  |  |      |        |      |  |    |        |  |  |    |        | 
|-------------------- | ----------------------------- |  | ------------------- | ------ | ---------------- |  | ---- | ------ | ---- |  | -- | ------ |  |  | -- | ------ | 
|                     |                               |  | Same Store Business |        | Total Business  
|                     |                               |  | and Sports Clubs    |        | and Sports Clubs
|                     |                               |  |                     |        |                 
|                     |                               |  | 2000                |        | 2001             |  | 2000 |        | 2001
|                     |                               |  |                     |        |                  |  |      |        |     
|Number of facilities |                               |  | 76                  |        |                  |  | 76   |        |      |  | 82 |        |  |  | 76 |       
|                    
|                    
|                    
|                    
|                     | Operating revenues            |  | $                   | 55,335 |                  |  | $    | 55,349 |      |  | $  | 58,443 |  |  | $  | 55,626 | 
|                    
|                    
|                    
|                    
|                     | Operating costs and expenses  |  |                     | 49,147 |                  |  |      | 49,312 |      |  |    | 52,277 |  |  |    | 49,545 | 
|                    
|                    
|                    
|                    
|                     | Depreciation and amortization |  |                     | 2,841  |                  |  |      | 2,809  |      |  |    | 2,954  |  |  |    | 2,832  | 
|                     |                               |  |                     |        |                  |  |      |        |      |  |    |        |  |  |    |       
|                     | Segment operating income      |  | $                   | 3,347  |                  |  | $    | 3,228  |      |  | $  | 3,212  |  |  | $  | 3,249  | 
|                     |                               |  |                     |        |                  |  |      |        |      |  |    |        |  |  |    |       
|                     | Adjusted EBITDA               |  | $                   | 5,958  |                  |  | $    | 5,665  |      |  | $  | 5,932  |  |  | $  | 5,711  | 
|                     |                               |  |                     |        |                  |  |      |        |      |  |    |        |  |  |    |       

Operating revenues decreased $2.8 million for total business and sports
clubs for the twelve weeks ended March 20, 2001 versus the twelve weeks ended
March 21, 2000. This decrease is primarily due to the divestiture of
facilities occurring after March 21, 2000.

Segment operating income remained constant for total business and sports
clubs for the twelve weeks ended March 20, 2001 versus the twelve weeks ended
March 21, 2000. This is primarily due to the decrease in revenues mentioned
above and the related decrease in operating costs and expenses due to
divestitures.

Adjusted EBITDA decreased slightly at total business and sports clubs for
the twelve weeks ended March 20, 2001 versus the twelve weeks ended March 21,
2000. This decrease is due primarily to decreased net membership deposits and
fees at total business and sports clubs.

10



---



##### Table of Contents



Resorts

The following table presents certain summary financial data and other
operating data for the Companys resorts segment for the twelve week periods
ended March 21, 2000 and March 20, 2001 (dollars in thousands):



|                            |  |                                           |   |                               |         |      |   |        |         |  
|--------------------------- |  | ----------------------------------------- | - | ----------------------------- | ------- | ---- | - | ------ | ------- | -
|                            |  |                                           |   | Same Store and Total
 Resorts
|                            |  |                                           |   |                              
|                            |  |                                           |   | 2000                          |         | 2001
|                            |  |                                           |   |                               |         |     
|Number of facilities        |  |                                           | 5 |                               |         |      | 5 |       
|                           
|                           
|                           
|                           
|                            |  | Operating revenues                        |   | $                             | 30,320  |      |   | $      | 33,063  |  
|                           
|                           
|                           
|                           
|                            |  | Operating costs and expenses              |   |                               | 35,001  |      |   |        | 34,157  |  
|                           
|                           
|                           
|                           
|                            |  | Depreciation and amortization             |   |                               | 2,883   |      |   |        | 3,534   |  
|                            |  |                                           |   |                               |         |      |   |       
|                            |  | Segment operating loss                    | $ | (7,564                        | )       |      | $ | (4,628 | )      
|                            |  |                                           |   |                               |         |      |   |       
|                            |  | Adjusted EBITDA                           |   | $                             | (4,512  | )    |   | $      | (1,649  | )
|                            |  |                                           |   |                               |         |      |   |       
|Lodging data (4 resorts)(1) |  |                                           |  
|                           
|                           
|                           
|                           
|                            |  | Room nights available                     |   |                               | 109,693 |      |   |        | 120,269 |  
|                           
|                           
|                           
|                           
|                            |  | Occupancy rate                            |   |                               | 42.2    | %    |   |        | 39.7    | %
|                           
|                           
|                           
|                           
|                            |  | Average daily room rate per occupied room |   | $                             | 148     |      |   | $      | 166     |  
|                           
|                           
|                           
|                           
|                            |  | Average daily revenue per occupied room   |   | $                             | 649     |      |   | $      | 683     |  



---

|(1) |  | Number of facilities and lodging data is comprised of data from wholly
owned resorts consisting of Pinehurst, The Homestead, Barton Creek and
Daufuskie Island.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

Operating revenues increased $2.7 million for total resorts for the twelve
weeks ended March 20, 2001 versus the twelve weeks ended March 21, 2000. This
increase is primarily due to increases in food and beverage revenues, increased
room nights, and increased membership dues. These increases are primarily
attributable to Barton Creek, which added lodging capacity within the past
year. Room nights and occupancy rates decreased at both Pinehurst and The
Homestead due to cancellations of group visits as a result of changing economic
conditions, partially offset by increases in social room nights. While the
Companys resorts experienced a decrease in occupancy rates, average daily room
rate per occupied room and average daily revenue per occupied room both
increased, reflecting price increases and increased marginal spending by guests
on various resort amenities.

Segment operating loss decreased $2.9 million for total resorts for the
twelve weeks ended March 20, 2001 versus the twelve weeks ended March 21, 2000.
This improvement is due to the increase in revenues noted above in addition to
decreased operating costs and expenses of total resorts. The decrease in
operating costs and expenses is due to the effective management of payroll and
other related expenses, in addition to a prior year inventory write-down of pro
shop merchandise at Pinehurst.

Adjusted EBITDA loss improved $2.9 million for total resorts for the
twelve weeks ended March 20, 2001 versus the twelve weeks ended March 21, 2000,
due to the increase in revenues mentioned above.

Other Operations

Realty operating revenues decreased $1.4 million to $3.8 million in the
twelve weeks ended March 20, 2001 from $5.2 million for the twelve weeks ended
March 21, 2000. This decrease is primarily due to decreased sales of land held
for sale. Revenue from closings of units in the Companys Owners Club program
increased slightly, with increased closings at Puerto Vallarta and Hilton Head
offsetting decreases at The Homestead.

11



---



##### Table of Contents



Seasonality of Demand; Fluctuations in Quarterly Results

The Companys quarterly results fluctuate as a result of a number of
factors. Usage of the Companys 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. The Companys 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 weeks of operations and the first, second and third quarters
consist of twelve weeks. As a result of these factors, the Company usually
generates a disproportionate share of its revenues in the second, third, and
fourth quarters of each year and has lower revenues in the first quarter. The
timing of purchases, sales, leases of facilities, or divestitures, also has
caused and may cause the Companys results of operations to vary significantly
in otherwise comparable periods. In addition, the Companys results can and
have been affected by non-seasonal and severe weather patterns.

Liquidity and Capital Resources

Historically, the Company has financed its operations and cash needs
primarily through cash flows from operations, proceeds from divestitures, and
long-term debt. The Companys primary cash needs consist of capital to finance
future acquisitions and development, capital expansions at existing and new
facilities and working capital. The Company distinguishes capital expenditures
to refurbish and replace existing property and equipment (i.e., capital
replacements) from discretionary capital expenditures such as the expansion of
existing facilities (i.e., capital expansions). 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. Additionally,
the Company has several to be built facilities that are currently being
funded which are projected to begin generating cash flows in 2001 and 2002.
Total capital expenditures for additions to property and equipment and
expansion of new facilities were approximately $275 million in 2000. During
the twelve weeks ended March 20, 2001, total capital expenditures were lower
than in recent periods and the Companys trend of increased capital
expenditures over the last three years is not expected to continue in 2001.

As part of its normal business practices, the Company is currently in the
process of disposing of certain properties. As of April 24, 2001, the Company
has completed the disposal of eight properties for total proceeds of
approximately $6.9 million. Estimated proceeds in the range of $100 to $105
million are expected to be realized on sales of additional properties within
the next year. The Company plans to use a significant portion of these
proceeds to fund its current expansion and development projects, which are
reliant on the completion of these asset sales and receipt of their anticipated
proceeds.

The Companys cash and cash equivalents balance has decreased
significantly in the twelve weeks ended March 20, 2001. This decrease is
primarily attributable to technology upgrades to its cash management system
completed in the prior year, that allow the Company to more accurately and
efficiently sweep and utilize available cash balances and more effectively
manage its level of outstanding debt.

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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 the Company believes that the expectations reflected in
its forward-looking statements are reasonable, it can give no assurance that
such expectations or any of its forward-looking statements will prove to be
correct, and actual results could differ materially from those projected or
assumed in the Companys forward-looking statements. Forward-looking
statements are subject to inherent risks and uncertainties, some of which are
summarized in this section and in the Companys Form 10-K for the year ended
December 26, 2000.

The Companys success depends on its ability to attract and retain members
at its clubs and maintain or increase usage of its facilities. The Company has
experienced varying levels of membership enrollment and attrition rates and, in
certain areas, decreased levels of usage of its facilities during its 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 the Companys 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 the Company 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 the Companys business, operating results, and financial
condition. Other factors that may affect the Companys 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 and
changes in law.

Effective March 31, 2001 the Company entered into a definitive agreement
with four other leaders in the hospitality industry to form Avendra L.L.C.
(referred to as Avendra), which was created for the purpose of negotiating
contracts to provide cost savings on various products and services that the
participants in the venture purchase for use in their day to day operations.
The Company anticipates performing most of its centralized procurement
activities through contracts negotiated by Avendra, which are expected to
provide efficiencies and cost savings by leveraging the purchasing power of the
participants in the venture. Under terms of the agreement, the Company is
committed to purchase certain minimum amounts of goods and services through
Avendra contracts during the next three years.

Recently Adopted Accounting Pronouncements

Effective December 27, 2000, ClubCorp adopted Statement of Financial
Accounting Standards No. 133, Accounting for Derivative Instruments and
Hedging Activities, as amended and interpreted. FAS 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 earnings or shareholders equity (as a component of other comprehensive
income (loss)), depending on whether a derivative instrument qualifies as a
hedge transaction. For further discussion, see Note 2 to the Condensed Notes
to the Companys Consolidated Financial Statements.

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PART II. OTHER INFORMATION




Item 6.     Exhibits and Reports on Form 8-K



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



| |                                                                                 
| | --------------------------------------------------------------------------------
| | 15.1      Letter from KPMG LLP regarding unaudited interim financial statements
|
| | 24.1      Power of Attorney                                                    



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

| |               
| | --------------
| | Not applicable

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SIGNATURES

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

|      |                                                                      |             |  |                |  |                       | 
|----- | -------------------------------------------------------------------- | ----------- |  | -------------- |  | --------------------- | 
|      |                                                                      |             |  | ClubCorp, Inc. | 
|     
|Date: |                                                                      | May 3, 2001 |  | By:            |  | /s/ Charles A. Little | 
|      |                                                                      |             |  |                |  |                       | 
|      | Charles A. Little
Senior Vice President and
Chief Accounting Officer

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EXHIBIT INDEX

|        |  |                                                                       |  |  |  | 
|------- |  | --------------------------------------------------------------------- |  |  |  | 
|EXHIBIT
|NUMBER  |  | DESCRIPTION                                                          
|        |  |                                                                      
|15.1    |  | Letter from KPMG LLP regarding unaudited interim financial statements
|       
|       
|       
|       
|24.1    |  | Power of Attorney