##### Table of Contents



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

FORM 10-Q



---



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

For the quarterly period ended September 4, 2001

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

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

CLUBCORP, INC.(Exact
  name of registrant as specified in its charter)

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

|                                                                             |  |                                       
|---------------------------------------------------------------------------- |  | --------------------------------------
|3030 LBJ Freeway,
        Suite 700
(Address of principal executive offices) |  | 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 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .

The number of shares of the Registrants Common Stock outstanding as of October
16, 2001 was 93,889,798.





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TABLE OF CONTENTS



|                                    |                                                                                               |                                                      |  |  |  |  |  | 
|----------------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION      
|                                    | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                                    |                                                                                               | INDEPENDENT ACCOUNTANTS 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-10.1 Executive Stock Option Plan
|EX-10.2 Omnibus Stock Plan         
|Letter from KPMG LLP               
|Power of Attorney                  



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##### Table of Contents



CLUBCORP, INC.

INDEX

|        |  |                                                                                       |  |   
|------- |  | ------------------------------------------------------------------------------------- |  | --
|Part I. |  | FINANCIAL INFORMATION                                                                 |  |   
|       
|       
|       
|       
|Item 1. |  | Financial Statements:                                                                 |  |   
|       
|       
|       
|       
|        |  | Independent Accountants Review Report                                                |  | 1 
|       
|       
|       
|       
|        |  | Consolidated Balance Sheet                                                            |  | 2 
|       
|       
|       
|       
|        |  | Consolidated Statement of Operations                                                  |  | 3 
|       
|       
|       
|       
|        |  | Consolidated Statement of Cash Flows                                                  |  | 4 
|       
|       
|       
|       
|        |  | Condensed Notes to Consolidated Financial Statements                                  |  | 5 
|       
|       
|       
|       
|Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 9 
|       
|       
|       
|       
|Part II |  | OTHER INFORMATION                                                                     |  |   
|       
|       
|       
|       
|Item 6. |  | Exhibits and Reports on Form 8-K                                                      |  | 19





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##### Table of Contents






PART I. FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS




INDEPENDENT ACCOUNTANTS REVIEW REPORT

The Board of Directors and Stockholders
ClubCorp, Inc.:

We have reviewed the consolidated balance sheet of ClubCorp, Inc. and
subsidiaries (ClubCorp) as of September 4, 2001, and the related consolidated
statements of operations for the twelve weeks and thirty six weeks ended
September 4, 2001 and September 5, 2000 and cash flows for the thirty six weeks
ended September 4, 2001 and September 5, 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
October 9, 2001





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##### Table of Contents



ClubCorp, Inc.

---




|                                                                |                                                                                                                                                                                                           |                                        |           |              |           |   |              |         |           | 
|--------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------- | --------- | ------------ | --------- | - | ------------ | ------- | --------- | 
|                                                                |                                                                                                                                                                                                           |                                        |           | December 26, |           |   | September 4, |        
|                                                                |                                                                                                                                                                                                           |                                        |           | 2000         |           |   | 2001         |        
|                                                                |                                                                                                                                                                                                           |                                        |           |              |           |   |              |        
|Assets                                                          |                                                                                                                                                                                                           |                                        |           |              |           |   |              |        
|                                                               
|                                                               
|                                                               
|                                                               
|Current
          assets:                                       |                                                                                                                                                                                                           |                                        |           |              |           |   |              |        
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Cash and
          cash equivalents                                                                                                                                                                       |                                        | $         | 24,771       |           |   | $            | 8,470   |          
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Membership
          and other receivables, net                                                                                                                                                           |                                        |           | 122,158      |           |   |              | 116,378 |          
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Inventories                                                                                                                                                                                               |                                        |           | 23,369       |           |   |              | 23,670  |          
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Other
          assets                                                                                                                                                                                    |                                        |           | 20,517       |           |   |              | 22,364  |          
|                                                                |                                                                                                                                                                                                           |                                        |           |              |           |  
|                                                                |                                                                                                                                                                                                           | Total
          current assets         |           |              | 190,815   |   |              |         | 170,882   | 
|                                                               
|                                                               
|                                                               
|                                                               
|Property
          and equipment, net                           |                                                                                                                                                                                                           |                                        | 1,295,435 |              |           |   | 1,323,897    |        
|                                                               
|                                                               
|                                                               
|                                                               
|Other
          assets                                          |                                                                                                                                                                                                           |                                        | 259,331   |              |           |   | 174,287      |        
|                                                                |                                                                                                                                                                                                           |                                        |           |              |           |  
|Total
          assets                                          |                                                                                                                                                                                                           | $                                      | 1,745,581 |              |           | $ | 1,669,066    |        
|                                                                |                                                                                                                                                                                                           |                                        |           |              |           |  
|Liabilities
          and Stockholders Equity                  |                                                                                                                                                                                                           |                                        |           |              |           |   |              |        
|                                                               
|                                                               
|                                                               
|                                                               
|Current
          liabilities:                                  |                                                                                                                                                                                                           |                                        |           |              |           |   |              |        
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Accounts
          payable and accrued liabilities                                                                                                                                                        |                                        | $         | 78,315       |           |   | $            | 71,194  |          
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Long-term
          debt  current portion                                                                                                                                                                |                                        |           | 49,326       |           |   |              | 54,772  |          
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Other
          liabilities                                                                                                                                                                               |                                        |           | 116,181      |           |   |              | 123,270 |          
|                                                                |                                                                                                                                                                                                           |                                        |           |              |           |  
|                                                                |                                                                                                                                                                                                           | Total
          current liabilities    |           |              | 243,822   |   |              |         | 249,236   | 
|                                                               
|                                                               
|                                                               
|                                                               
|Long-term
          debt                                        |                                                                                                                                                                                                           |                                        | 643,078   |              |           |   | 571,452      |        
|                                                               
|                                                               
|                                                               
|                                                               
|Other
          liabilities                                     |                                                                                                                                                                                                           |                                        | 143,284   |              |           |   | 163,602      |        
|                                                               
|                                                               
|                                                               
|                                                               
|Membership
          deposits                                   |                                                                                                                                                                                                           |                                        | 104,757   |              |           |   | 111,732      |        
|                                                               
|                                                               
|                                                               
|                                                               
|Redemption
          value of common stock held by benefit plan |                                                                                                                                                                                                           |                                        | 66,379    |              |           |   | 63,259       |        
|                                                               
|                                                               
|                                                               
|                                                               
|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 93,889,798 outstanding
          at September 4, 2001 |                                        |           | 996          |           |   |              | 996     |          
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Additional
          paid-in capital                                                                                                                                                                      |                                        |           | 161,684      |           |   |              | 161,674 |          
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Accumulated
          other comprehensive loss                                                                                                                                                            |                                        |           | (4,080       | )         |   |              | (6,537  | )        
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Retained
          earnings                                                                                                                                                                               |                                        |           | 439,802      |           |   |              | 411,666 |          
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Treasury
          stock, 5,488,933 shares at December 26, 2000 and 5,704,610 shares
          at September 4, 2001                                                                                       |                                        |           | (54,141      | )         |   |              | (58,014 | )        
|                                                                |                                                                                                                                                                                                           |                                        |           |              |           |  
|                                                                |                                                                                                                                                                                                           | Total
          stockholders equity   |           |              | 544,261   |   |              |         | 509,785   | 
|                                                                |                                                                                                                                                                                                           |                                        |           |              |           |  
|                                                                |                                                                                                                                                                                                           | Total
          liabilities and equity |           | $            | 1,745,581 |   |              | $       | 1,669,066 | 
|                                                                |                                                                                                                                                                                                           |                                        |           |              |           |  

See accompanying condensed notes to consolidated financial statements.

2



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##### Table of Contents






ClubCorp, Inc.

---

|                                                                              |  |                |         |   |                |   |         |              |  |   |              |   |  |   |         |  
|----------------------------------------------------------------------------- |  | -------------- | ------- | - | -------------- | - | ------- | ------------ |  | - | ------------ | - |  | - | ------- | -
|                                                                              |  | 12 Weeks Ended |         |   | 36 Weeks Ended |  
|                                                                              |  |                |         |   |                |  
|                                                                              |  | September 5,   |         |   | September 4,   |   |         | September 5, |  |   | September 4, |  
|                                                                              |  | 2000           |         |   | 2001           |   |         | 2000         |  |   | 2001         |  
|                                                                              |  |                |         |   |                |   |         |              |  |   |              |  
|Operating
          revenues                                                  |  | $              | 253,242 |   |                | $ | 241,162 |              |  | $ | 717,899      |   |  | $ | 704,663 |  
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Operating
          costs and expenses                                        |  |                | 195,494 |   |                |   | 185,452 |              |  |   | 567,315      |   |  |   | 553,549 |  
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Depreciation
          and amortization                                       |  |                | 21,732  |   |                |   | 22,879  |              |  |   | 60,772       |   |  |   | 66,563  |  
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Selling,
          general and administrative expenses                        |  |                | 18,993  |   |                |   | 17,100  |              |  |   | 57,914       |   |  |   | 55,410  |  
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Gain (loss) on
          divestitures and impairment of assets                |  |                | 118     |   |                |   | (31,364 | )            |  |   | 134          |   |  |   | (31,704 | )
|                                                                              |  |                |         |   |                |   |         |              |  |   |              |  
|Operating
          income (loss)                                             |  |                | 17,141  |   |                |   | (15,633 | )            |  |   | 32,032       |   |  |   | (2,563  | )
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Interest
          expense                                                    |  |                | (13,615 | ) |                |   | (13,873 | )            |  |   | (36,265      | ) |  |   | (43,744 | )
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Other
          income                                                        |  |                | 666     |   |                |   | 591     |              |  |   | 1,959        |   |  |   | 2,236   |  
|                                                                              |  |                |         |   |                |   |         |              |  |   |              |  
|Income
          (loss) from operations before income tax benefit (provision) |  |                | 4,192   |   |                |   | (28,915 | )            |  |   | (2,274       | ) |  |   | (44,071 | )
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Income
          tax benefit (provision)                                      |  |                | (3,060  | ) |                |   | 8,658   |              |  |   | (3,421       | ) |  |   | 13,027  |  
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Minority
          interest                                                   |  |                | 189     |   |                |   | (22     | )            |  |   | 1,188        |   |  |   | (212    | )
|                                                                              |  |                |         |   |                |   |         |              |  |   |              |  
|Net income
          (loss)                                                   |  |                | 1,321   |   |                |   | (20,279 | )            |  | $ | (4,507       | ) |  | $ | (31,256 | )
|                                                                              |  |                |         |   |                |   |         |              |  |   |              |  
|Basic
          and diluted income (loss) per share                           |  | $              | .01     |   |                | $ | (.21    | )            |  | $ | (.05         | ) |  | $ | (.33    | )
|                                                                              |  |                |         |   |                |   |         |              |  |   |              |  

See accompanying condensed notes to consolidated financial statements.

3



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##### Table of Contents






ClubCorp, Inc.

---

|                                                           |                                                                                     |                                                                        |                                               |          |                |        |         |              |         |        | 
|---------------------------------------------------------- | ----------------------------------------------------------------------------------- | ---------------------------------------------------------------------- | --------------------------------------------- | -------- | -------------- | ------ | ------- | ------------ | ------- | ------ | 
|                                                           |                                                                                     |                                                                        |                                               |          | 36 Weeks Ended |       
|                                                           |                                                                                     |                                                                        |                                               |          |                |       
|                                                           |                                                                                     |                                                                        |                                               |          | September 5,   |        |         | September 4, |        
|                                                           |                                                                                     |                                                                        |                                               |          | 2000           |        |         | 2001         |        
|                                                           |                                                                                     |                                                                        |                                               |          |                |        |         |              |        
|Cash flows
          from operations:                      |                                                                                     |                                                                        |                                               |          |                |        |         |             
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Net loss                                                                            |                                                                        | $                                             | (4,507   | )              |        | $       | (31,256      | )      
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Adjustments
          to reconcile net loss to cash flows provided from operations: |                                                                        |                                               |          |                |        |         |              |        
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                                     | Depreciation
          and amortization                                |                                               |          | 60,772         |        |         |              | 66,563  |       
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                                     | (Gain)
          loss on divestitures and impairment of assets         |                                               |          | (134           | )      |         |              | 31,704  |       
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                                     | Amortization
          of discount on membership deposits              |                                               |          | 6,787          |        |         |              | 6,450   |       
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                                     | Deferred
          income taxes                                        |                                               |          | 1,299          |        |         |              | (15,103 | )     
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                                     | Decrease
          in real estate held for sale                        |                                               |          | 10,536         |        |         |              | 6,962   |       
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                                     | Decrease
          (increase) in membership and other receivables, net |                                               |          | (13,774        | )      |         |              | 5,703   |       
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                                     | Decrease
          in accounts payable and accrued liabilities         |                                               |          | (2,922         | )      |         |              | (483    | )     
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                                     | Net change
          in deferred membership revenues                   |                                               |          | 11,118         |        |         |              | 5,838   |       
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                                     | Other                                                                  |                                               |          | 10,163         |        |         |              | 5,354   |       
|                                                           |                                                                                     |                                                                        |                                               |          |                |       
|                                                           |                                                                                     |                                                                        | Cash flows
          provided from operations |          |                | 79,338 |         |              |         | 81,732 | 
|                                                          
|                                                          
|                                                          
|                                                          
|Cash flows
          from investing activities:            |                                                                                     |                                                                        |                                               |          |                |        |         |             
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Additions
          to property and equipment                                       |                                                                        |                                               | (113,815 | )              |        |         | (85,827      | )      
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Development
          of new facilities                                             |                                                                        |                                               | (35,225  | )              |        |         | (34,534      | )      
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Development
          of real estate held for sale                                  |                                                                        |                                               | (20,989  | )              |        |         | (4,040       | )      
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Acquisition
          of facilities                                                 |                                                                        |                                               | (32,598  | )              |        |         |             |        
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Investment
          in affiliates                                                  |                                                                        |                                               | (5,272   | )              |        |         |             |        
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Proceeds
          from dispositions and sales of assets, net                       |                                                                        |                                               | 10,303   |                |        |         | 51,110       |        
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Other                                                                               |                                                                        |                                               | (1,478   | )              |        |         | 3,264        |        
|                                                           |                                                                                     |                                                                        |                                               |          |                |       
|                                                           |                                                                                     | Cash flows
          used by investing activities                      |                                               |          | (199,074       | )      |         |              | (70,027 | )     
|                                                          
|                                                          
|                                                          
|                                                          
|Cash flows
          from financing activities:            |                                                                                     |                                                                        |                                               |          |                |        |         |             
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Borrowings
          of long-term debt                                              |                                                                        |                                               | 133,695  |                |        |         |             |        
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Repayments
          of long-term debt                                              |                                                                        |                                               | (16,131  | )              |        |         | (25,720      | )      
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Membership
          deposits received, net                                         |                                                                        |                                               | 1,632    |                |        |         | 1,364        |        
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Treasury
          stock transactions, net                                          |                                                                        |                                               | (4,825   | )              |        |         | (3,650       | )      
|                                                           |                                                                                     |                                                                        |                                               |          |                |       
|                                                           |                                                                                     | Cash flows
          provided from financing activities                |                                               |          | 114,371        |        |         |              | (28,006 | )     
|                                                           |                                                                                     |                                                                        |                                               |          |                |       
|Total
          net cash flows                             |                                                                                     |                                                                        | (5,365                                        | )        |                |        | (16,301 | )           
|                                                           |                                                                                     |                                                                        |                                               |          |                |       
|Cash and
          cash equivalents at beginning of period |                                                                                     |                                                                        | 36,606                                        |          |                |        | 24,771  |             
|                                                           |                                                                                     |                                                                        |                                               |          |                |       
|Cash and
          cash equivalents at end of period       |                                                                                     | $                                                                      | 31,241                                        |          |                | $      | 8,470   |             
|                                                           |                                                                                     |                                                                        |                                               |          |                |       

See accompanying condensed notes to consolidated financial statements.

4



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##### Table of Contents



ClubCorp, Inc.

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Note 1. Summary of significant accounting
  policies ConsolidationThe 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 presentationThe 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) to present fairly the consolidated financial position of
ClubCorp as of September 4, 2001, the consolidated results of operations for
the 12 and 36 weeks ended September 5, 2000 and September 4, 2001 and cash
flows for the 36 weeks ended September 5, 2000 and September 4, 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.

Impairment of long-lived assetsLong-lived
  assets to be held and used and to be disposed of by an entity are reviewed for
  impairment whenever events or changes in circumstances indicate that the carrying
  amount of an asset may not be recoverable. Any impairments are included in gain
  (loss) on divestitures and impairment of assets in the Consolidated Statement
  of Operations.

Prior to December 26, 2000, management approved plans to dispose of certain
facilities in various segments during 2001 and recorded an impairment loss to
write down the carrying value of these facilities for the year ended December
26, 2000. Due to changes in estimates of sales price for several of these
facilities, an adjustment to reduce the carrying value of these assets of
$505,000 and $536,000 was recorded in the 12 and 36 weeks ended September 4,
2001, respectively.

During the 12 weeks ended September 4, 2001, the majority of an investment in
an affiliate accounted for on the equity method was sold to a third party at a
substantially lower price than its carrying value resulting in a loss of
$21,555,000. Subsequent to this, an impairment loss of $1,887,000 was recorded
on the portion of the investment retained to reflect its fair value. Both
losses are reflected in gain (loss) on divestitures and impairment of assets in
the Consolidated Statement of Operations. The Company had planned to hold this
investment on a long term basis prior to its change in investment strategy and
had determined that no impairment existed on a long term basis.

Recent pronouncementOn July 20,
  2001, the FASB issued Statement of Financial Accounting Standards No. 142
  Goodwill and Other Intangible Assets. This statement will be effective
  for fiscal years beginning after December 15, 2001. Under the provisions
  of FAS 142, the cost of certain of the Companys intangible assets will
  no longer be subject to amortization. While management has not made a final
  determination as to the impact of this new pronouncement on its Consolidated
  Balance Sheet or Consolidated Statement of Operations, management does not believe
  such implementation will have a significant impact.

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

5



---



##### Table of Contents





ClubCorp, Inc.

---

Note 2.    Derivative instrumentsEffective December 27, 2000, ClubCorp adopted Statement
  of Financial Accounting Standards No. 133, Accounting for Derivative
  Instruments and Hedging Activities, as amended and interpreted. The adoption
  of FAS 133 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 also recorded $201,000 as interest
  expense for the cumulative ineffective portion of these instruments because
  the impact on the Consolidated Statement of Operations was not significant.

As of September 4, 2001, ClubCorp had interest rate swap contracts to pay fixed
rates of interest (ranging from 5.20% to 7.21%) and receive variable rates of
interest based on LIBOR on an aggregate of $225,000,000 notional amount of
indebtedness with swap maturity dates ranging from June 2003 through September
2003. These hedges are considered highly effective, however, for the 12 and 36
weeks ended September 4, 2001, ClubCorp recorded $17,000 and $213,000,
respectively, as interest expense for the ineffective portion of these
instruments. The aggregate fair market value of all interest rate swap
contracts was ($9,265,000) on September 4, 2001 and is included in other
liabilities on the Consolidated Balance Sheet.

Note 3.    Operating revenuesClubCorp
  recognizes revenues from the following sources:

|                                       |                                    |   |                |         |  |                |        |         |              |   |         |              |  |   |         |         | 
|-------------------------------------- | ---------------------------------- | - | -------------- | ------- |  | -------------- | ------ | ------- | ------------ | - | ------- | ------------ |  | - | ------- | ------- | 
|                                       |                                    |   | 12 Weeks Ended |         |  | 36 Weeks Ended |       
|                                       |                                    |   |                |         |  |                |       
|                                       |                                    |   | September 5,   |         |  | September 4,   |        |         | September 5, |   |         | September 4, | 
|                                       |                                    |   | 2000           |         |  | 2001           |        |         | 2000         |   |         | 2001         | 
|                                       |                                    |   |                |         |  |                |        |         |              |   |         |              | 
|Membership
          fees and deposits |                                    | $ | 10,100         |         |  | $              | 9,385  |         |              | $ | 30,808  |              |  | $ | 27,934  |        
|                                      
|                                      
|                                      
|                                      
|Membership
          dues              |                                    |   | 75,060         |         |  |                | 76,441 |         |              |   | 224,139 |              |  |   | 230,261 |        
|                                      
|                                      
|                                      
|                                      
|Golf operations
          revenues     |                                    |   | 55,029         |         |  |                | 53,670 |         |              |   | 150,580 |              |  |   | 149,531 |        
|                                      
|                                      
|                                      
|                                      
|Food and
          beverage revenues   |                                    |   | 62,463         |         |  |                | 58,381 |         |              |   | 187,187 |              |  |   | 180,143 |        
|                                      
|                                      
|                                      
|                                      
|Lodging
          revenues             |                                    |   | 17,682         |         |  |                | 15,616 |         |              |   | 45,627  |              |  |   | 42,711  |        
|                                      
|                                      
|                                      
|                                      
|Other
          revenues               |                                    |   | 32,908         |         |  |                | 27,669 |         |              |   | 79,558  |              |  |   | 74,083  |        
|                                       |                                    |   |                |         |  |                |        |         |              |   |         |             
|                                       | Total
          operating revenues |   | $              | 253,242 |  |                | $      | 241,162 |              |   | $       | 717,899      |  |   | $       | 704,663 | 
|                                       |                                    |   |                |         |  |                |        |         |              |   |         |             

Note 4.    Income tax benefit (provision)The income tax benefit (provision) for the 12 and
  36 weeks ended September 5, 2000 and September 4, 2001 differs
  from amounts computed by applying the U.S. Federal tax rate of 35% to income
  (loss) from operations before income tax benefit (provision) 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 sharesThe following table summarizes the weighted average number
  of shares used to calculate basic and diluted earnings per share:

|                                                       |          |  |                |           |  |                |            |   |              |  |            |              |  |  |            |   | 
|------------------------------------------------------ | -------- |  | -------------- | --------- |  | -------------- | ---------- | - | ------------ |  | ---------- | ------------ |  |  | ---------- | - | 
|                                                       |          |  | 12 Weeks Ended |           |  | 36 Weeks Ended |           
|                                                       |          |  |                |           |  |                |           
|                                                       |          |  | September 5,   |           |  | September 4,   |            |   | September 5, |  |            | September 4, | 
|                                                       |          |  | 2000           |           |  | 2001           |            |   | 2000         |  |            | 2001         | 
|                                                       |          |  |                |           |  |                |            |   |              |  |            |              | 
|Weighted
          average shares outstanding          |          |  | 94,216,333     |           |  |                | 93,898,092 |   |              |  | 94,339,198 |              |  |  | 94,020,364 |  
|                                                      
|                                                      
|                                                      
|                                                      
|Incremental
          shares from assumed conversions: |          |  |                |           |  |                |            |   |              |  |            |              |  |  |            |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Options  |  |                | 1,259,205 |  |                |            |  |              |  |            |             |  |  |            |  | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Warrants |  |                | 7,096     |  |                |            |  |              |  |            |             |  |  |            |  | 
|                                                       |          |  |                |           |  |                |            |   |              |  |            |             
|Diluted
          weighted average shares              |          |  | 95,482,634     |           |  |                | 93,898,092 |   |              |  | 94,339,198 |              |  |  | 94,020,364 |  
|                                                       |          |  |                |           |  |                |            |   |              |  |            |             

6



---



##### Table of Contents





ClubCorp, Inc.

---

(Note 5 continued)

Diluted weighted average shares for the 12 weeks ended September 4, 2001
excludes incremental shares from assumed conversion of 933,307 shares due to
the net losses for the period. Diluted weighted average shares for the 36
weeks ended September 5, 2000 and September 4, 2001 excludes incremental shares
from assumed conversion of 1,284,079 and 965,313 shares, respectively, due to
the net losses for the periods.

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

|                                                    |  |              |           |   |              |   |           |  
|--------------------------------------------------- |  | ------------ | --------- | - | ------------ | - | --------- | -
|                                                    |  | December 26, |           |   | September 4, |  
|                                                    |  | 2000         |           |   | 2001         |  
|                                                    |  |              |           |   |              |  
|Land and
          land improvements                |  | $            | 623,516   |   |              | $ | 643,237   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Buildings
          and recreational facilities     |  |              | 432,645   |   |              |   | 442,460   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Leasehold
          improvements                    |  |              | 110,643   |   |              |   | 123,754   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Furniture
          and fixtures                    |  |              | 131,078   |   |              |   | 136,669   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Machinery
          and equipment                   |  |              | 274,440   |   |              |   | 280,002   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Construction
          in progress                  |  |              | 126,981   |   |              |   | 153,467   |  
|                                                    |  |              |           |   |              |  
|                                                    |  |              | 1,699,303 |   |              |   | 1,779,589 |  
|                                                   
|                                                   
|                                                   
|                                                   
|Accumulated
          depreciation and amortization |  |              | (403,868  | ) |              |   | (455,692  | )
|                                                    |  |              |           |   |              |  
|                                                    |  | $            | 1,295,435 |   |              | $ | 1,323,897 |  
|                                                    |  |              |           |   |              |  

Note 7.    Comprehensive income (loss)The following summarizes the components of comprehensive
  income (loss) (dollars in thousands):

|                                                                                                                                     |  |                |       |   |                |   |         |              |  |   |              |   |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------ |  | -------------- | ----- | - | -------------- | - | ------- | ------------ |  | - | ------------ | - |  | - | ------- | -
|                                                                                                                                     |  | 12 Weeks Ended |       |   | 36 Weeks Ended |  
|                                                                                                                                     |  |                |       |   |                |  
|                                                                                                                                     |  | September 5,   |       |   | September 4,   |   |         | September 5, |  |   | September 4, |  
|                                                                                                                                     |  | 2000           |       |   | 2001           |   |         | 2000         |  |   | 2001         |  
|                                                                                                                                     |  |                |       |   |                |   |         |              |  |   |              |  
|Net income
          (loss)                                                                                                          |  | $              | 1,321 |   |                | $ | (20,279 | )            |  | $ | (4,507       | ) |  | $ | (31,256 | )
|                                                                                                                                    
|                                                                                                                                    
|                                                                                                                                    
|                                                                                                                                    
|Cumulative
          effect of change in accounting for derivative instruments and hedging
          activities, net of income taxes |  |                |      |   |                |   |        |              |  |   |             |   |  |   | (2,119  | )
|                                                                                                                                    
|                                                                                                                                    
|                                                                                                                                    
|                                                                                                                                    
|Changes
          in fair value of derivative instruments and hedging activities, net
          of income taxes                      |  |                |      |   |                |   | (535    | )            |  |   |             |   |  |   | (3,634  | )
|                                                                                                                                    
|                                                                                                                                    
|                                                                                                                                    
|                                                                                                                                    
|Foreign
          currency translation adjustment                                                                                    |  |                | (730  | ) |                |   | 4,455   |              |  |   | (2,747       | ) |  |   | 3,296   |  
|                                                                                                                                     |  |                |       |   |                |   |         |              |  |   |              |  
|Total
          comprehensive income (loss)                                                                                          |  | $              | 591   |   |                | $ | (16,359 | )            |  | $ | (7,254       | ) |  | $ | (33,713 | )
|                                                                                                                                     |  |                |       |   |                |   |         |              |  |   |              |  

7



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##### Table of Contents



ClubCorp, Inc.

---

Note 8.    Segment reportingClubCorp 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, or earnings before interest, taxes, depreciation
  and amortization, gain (loss) on divestitures and impairment 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):

|                              |                                                |                                                                       |   |                |         |   |                |         |         |              |   |         |              |   |   |         |         |  
|----------------------------- | ---------------------------------------------- | --------------------------------------------------------------------- | - | -------------- | ------- | - | -------------- | ------- | ------- | ------------ | - | ------- | ------------ | - | - | ------- | ------- | -
|                              |                                                |                                                                       |   | 12 Weeks Ended |         |   | 36 Weeks Ended |        
|                              |                                                |                                                                       |   |                |         |   |                |        
|                              |                                                |                                                                       |   | September 5,   |         |   | September 4,   |         |         | September 5, |   |         | September 4, |  
|                              |                                                |                                                                       |   | 2000           |         |   | 2001           |         |         | 2000         |   |         | 2001         |  
|                              |                                                |                                                                       |   |                |         |   |                |         |         |              |   |         |              |  
|Operating
          revenues: |                                                |                                                                       |   |                |         |   |                |         |         |              |   |         |              |   |   |        
|                             
|                             
|                             
|                             
|                              | Country
          club and golf facilities     |                                                                       | $ | 125,107        |         |   | $              | 123,734 |         |              | $ | 350,429 |              |   | $ | 354,077 |        
|                             
|                             
|                             
|                             
|                              | Business
          and sports clubs            |                                                                       |   | 51,567         |         |   |                | 50,943  |         |              |   | 167,884 |              |   |   | 165,004 |        
|                             
|                             
|                             
|                             
|                              | Resorts                                        |                                                                       |   | 53,653         |         |   |                | 50,693  |         |              |   | 145,229 |              |   |   | 143,969 |        
|                              |                                                |                                                                       |   |                |         |   |                |         |         |              |   |        
|                              |                                                | Total
          operating revenues for reportable segments            |   |                | 230,327 |   |                |         | 225,370 |              |   |         | 663,542      |   |   |         | 663,050 |  
|                             
|                             
|                             
|                             
|                              | Other
          operations                     |                                                                       |   | 21,609         |         |   |                | 13,486  |         |              |   | 43,551  |              |   |   | 32,389  |        
|                             
|                             
|                             
|                             
|                              | Corporate
          services                   |                                                                       |   | 1,306          |         |   |                | 2,306   |         |              |   | 10,806  |              |   |   | 9,224   |        
|                              |                                                |                                                                       |   |                |         |   |                |         |         |              |   |        
|                              |                                                | Consolidated
          operating revenues                             |   | $              | 253,242 |   |                | $       | 241,162 |              |   | $       | 717,899      |   |   | $       | 704,663 |  
|                              |                                                |                                                                       |   |                |         |   |                |         |         |              |   |        
|Adjusted
          EBITDA:    |                                                |                                                                       |   |                |         |   |                |         |         |              |   |         |              |   |   |        
|                             
|                             
|                             
|                             
|                              | Country
          club and golf facilities     |                                                                       | $ | 30,947         |         |   | $              | 31,218  |         |              | $ | 88,585  |              |   | $ | 88,789  |        
|                             
|                             
|                             
|                             
|                              | Business
          and sports clubs            |                                                                       |   | 4,040          |         |   |                | 4,934   |         |              |   | 17,647  |              |   |   | 18,271  |        
|                             
|                             
|                             
|                             
|                              | Resorts                                        |                                                                       |   | 10,871         |         |   |                | 9,020   |         |              |   | 25,669  |              |   |   | 23,610  |        
|                              |                                                |                                                                       |   |                |         |   |                |         |         |              |   |        
|                              |                                                | Total
          Adjusted EBITDA for reportable segments               |   |                | 45,858  |   |                |         | 45,172  |              |   |         | 131,901      |   |   |         | 130,670 |  
|                             
|                             
|                             
|                             
|                              | Other
          operations                     |                                                                       |   | 6,272          |         |   |                | 1,920   |         |              |   | 3,478   |              |   |   | 3,396   |        
|                             
|                             
|                             
|                             
|                              | Corporate
          services                   |                                                                       |   | (7,744         | )       |   |                | (6,050  | )       |              |   | (29,501 | )            |   |   | (29,306 | )      
|                              |                                                |                                                                       |   |                |         |   |                |         |         |              |   |        
|                              |                                                | Consolidated
          Adjusted EBITDA                                |   |                | 44,386  |   |                |         | 41,042  |              |   |         | 105,878      |   |   |         | 104,760 |  
|                             
|                             
|                             
|                             
|                              |                                                | Depreciation
          and amortization                               |   |                | (21,732 | ) |                |         | (22,879 | )            |   |         | (60,772      | ) |   |         | (66,563 | )
|                             
|                             
|                             
|                             
|                              |                                                | Gain (loss) on
          divestitures, sales and impairment of assets |   |                | 118     |   |                |         | (31,363 | )            |   |         | 134          |   |   |         | (31,704 | )
|                             
|                             
|                             
|                             
|                              |                                                | Net membership
          deposits and fees                            |   |                | (4,931  | ) |                |         | (2,732  | )            |   |         | (12,317      | ) |   |         | (7,658  | )
|                             
|                             
|                             
|                             
|                              |                                                | Joint
          venture adjustment                                    |   |                | (700    | ) |                |         | 299     |              |   |         | (891         | ) |   |         | (1,398  | )
|                              |                                                |                                                                       |   |                |         |   |                |         |         |              |   |        
|                              | Consolidated
          operating income (loss) |                                                                       | $ | 17,141         |         |   | $              | (15,633 | )       |              | $ | 32,032  |              |   | $ | (2,563  | )      
|                              |                                                |                                                                       |   |                |         |   |                |         |         |              |   |        

Note 9.    Related Party TransactionsOn September 4, 2001, ClubCorp sold its stock of
  a wholly owned subsidiary, The Owners Club at Telluride, which owned a majority
  interest in Telluride Club Mountain Village, LLC. to a group of three executive
  officers for assumption of $22,200,000 of liabilities in a stock purchase agreement
  resulting in a net loss on divestiture of assets of $3,800,000. ClubCorp continues
  to provide management services under an existing management agreement.

Note 10.    ContingenciesClubCorp 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.

8



---



##### 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 12 and 36 weeks ended September 5, 2000 and September 4,
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

12 Weeks Ended September 5, 2000 Compared
  to 12 Weeks Ended September 4, 2001

Consolidated Operations

Operating revenues decreased to $241.2 million for the 12 weeks ended
September 4, 2001 from $253.2 million for the 12 weeks ended September 5, 2000.
This decrease is primarily due to decreases in food and beverage sales, golf
operations revenue, room nights, and sales of ownership units in the Companys
Owners Club program as a result of the Companys continued divestiture of
non-strategic assets and the nations slowing economy. Revenues and room
nights at the Companys clubs and resorts have been impacted by decreased
member and guest usage and reductions in corporate spending, while real estate
sales have been affected by the general slowdown in the vacation housing
market. These decreases are partially offset by an increase in membership dues
at the Companys private clubs as a result of price increases and the
introduction of a new level of Associate Club benefit, Signature Gold, which
provides enhanced privileges at a select group of the Companys properties.

Excluding the impact of net gains (losses) on divestitures and impairment
of assets, operating income decreased to $15.7 million for the 12 weeks ended
September 4, 2001 from $17.0 million for the 12 weeks ended September 5, 2000.
This decrease is due to the decrease in revenues mentioned above, partially
offset by lower operating costs and expenses and selling, general and
administrative expenses attributable to expense controls implemented in
response to declining revenues.

Net loss on divestitures and impairment of assets was $31.4 million for
the 12 weeks ended September 4, 2001, primarily due to the Companys sale of a
25.0% interest in ClubLink Corporation (ClubLink), a publicly traded company
that owns and operates golf facilities and resorts in Canada. The Company
planned to hold this investment on a long-term basis prior to its change in
investment strategy and had determined that no impairment existed on a
long-term basis. The sale generated a loss of approximately $21.6 million on
proceeds of $16.0 million, as well as a related $1.9 million impairment loss on
the Companys remaining investment in ClubLink. Additionally, the Company
continued its disposition of assets, selling its interest in PGA European Tour
Courses, PLC (ETC) for $13.9 million with a loss of $2.0 million, as well as
divesting four properties for a net loss of $5.4 million, including a $3.8
million loss on a sale to a related party. See Note 9 to the Condensed Notes
to the Companys Consolidated Financial Statements.

Management uses Adjusted EBITDA to monitor the performance of the Company
and its properties. Adjusted EBITDA consists of EBITDA, or earnings before
interest, taxes, depreciation and amortization, gain (loss) on divestitures and
impairment of assets, adjusted for net membership deposits and fees, and a
joint venture adjustment. Consolidated
9Table of Contents

Adjusted EBITDA decreased to $41.0 million for the 12 weeks ended September 4,
2001 from $44.4 million for the 12 weeks ended September 5, 2000. This
decrease is primarily due to the decrease in operating income mentioned above
and decreases in net membership deposits and fees at same store facilities, as
initiation deposits for full golf memberships at the Companys high deposit
clubs have decreased along with the slowdown in the economy.

Segment and Other Information

Country Club and Golf Facilities

The following table presents certain summary financial data and other
operating data for the Companys country club and golf facilities segment for
the 12 weeks ended September 5, 2000 and September 4, 2001 (dollars in
thousands):

|                     |                                                      |  |                  |         |  |                  |     |         |      |  |     |         |  |  |     |         |  
|-------------------- | ---------------------------------------------------- |  | ---------------- | ------- |  | ---------------- | --- | ------- | ---- |  | --- | ------- |  |  | --- | ------- | -
|                     |                                                      |  | Same Store       |         |  | Total            |    
|                     |                                                      |  | Country Club and |         |  | Country Club and |    
|                     |                                                      |  | Golf Facilities  |         |  | Golf Facilities  |    
|                     |                                                      |  |                  |         |  |                  |    
|                     |                                                      |  | 2000             |         |  | 2001             |     |         | 2000 |  |     | 2001    | 
|                     |                                                      |  |                  |         |  |                  |     |         |      |  |     |         | 
|Number of facilities |                                                      |  | 108              |         |  |                  | 108 |         |      |  | 127 |         |  |  | 118 |        
|                    
|                    
|                    
|                    
|                     | Operating revenues                                   |  | $                | 115,992 |  |                  | $   | 120,130 |      |  | $   | 125,107 |  |  | $   | 123,734 |  
|                    
|                    
|                    
|                    
|                     | Operating costs and expenses                         |  |                  | 88,726  |  |                  |     | 91,986  |      |  |     | 97,731  |  |  |     | 96,040  |  
|                    
|                    
|                    
|                    
|                     | Depreciation and amortization                        |  |                  | 11,105  |  |                  |     | 11,208  |      |  |     | 11,929  |  |  |     | 11,711  |  
|                    
|                    
|                    
|                    
|                     | Gain (loss) on divestitures and impairment of assets |  |                  |        |  |                  |     | (505    | )    |  |     | 1,113   |  |  |     | (2,836  | )
|                     |                                                      |  |                  |         |  |                  |     |         |      |  |     |        
|                     | Segment operating income                             |  | $                | 16,161  |  |                  | $   | 16,431  |      |  | $   | 16,560  |  |  | $   | 13,147  |  
|                     |                                                      |  |                  |         |  |                  |     |         |      |  |     |        
|                     | Adjusted EBITDA                                      |  | $                | 29,454  |  |                  | $   | 29,277  |      |  | $   | 30,947  |  |  | $   | 31,218  |  
|                     |                                                      |  |                  |         |  |                  |     |         |      |  |     |        

Operating revenues decreased $1.4 million for total country club and golf
facilities for the 12 weeks ended September 4, 2001 versus the 12 weeks ended
September 5, 2000. This decrease is primarily due to a decrease in food and
beverage revenues partially offset by an increase in membership dues. The
decrease in food and beverage sales is due to the divestiture of 12 clubs since
September 5, 2000 (offset by the addition of three in-development properties),
and lower member and guest spending due to the slowdown of the nations
economy. The increase in membership dues is a result of price increases. The
increase in revenues at same store country club and golf facilities is due to
price increases in membership dues and golf operations.

Excluding the impact of net gains (losses) on divestitures and impairment
of assets, operating income increased to $16.0 million for the 12 weeks ended
September 4, 2001 from $15.4 million for the 12 weeks ended September 5, 2000.
This increase is primarily due to a reduction in operating costs and expenses
due to expense controls implemented in response to the decrease in revenues at
these facilities. The Company divested two country club and golf facilities in
the 12 weeks ended September 4, 2001, generating net losses of $2.3 million.
In addition, an impairment loss of $0.5 million was recorded to write-down the
carrying value a property to be disposed based on its estimated sales value
less costs of disposal.

Adjusted EBITDA increased slightly for total country club and golf
facilities for the 12 weeks ended September 4, 2001 versus the 12 weeks ended
September 5, 2000. This increase is primarily due to an increase in net
membership deposits and fees related to the opening of one country club and
golf facility. Net membership deposits and fees at same store country club and
golf facilities have decreased as initiation deposits for full golf memberships
at the Companys high deposit clubs have decreased along with the slowdown in
the economy.

10



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##### Table of Contents



Business and Sports Clubs

The following table presents certain summary financial data and other
operating data for the Companys business and sports clubs segment for the 12
weeks ended September 5, 2000 and September 4, 2001 (dollars in thousands):

|                     |                                                      |  |                     |        |  |                  |    |        |      |  |    |        |   |  |    |        | 
|-------------------- | ---------------------------------------------------- |  | ------------------- | ------ |  | ---------------- | -- | ------ | ---- |  | -- | ------ | - |  | -- | ------ | 
|                     |                                                      |  | Same Store Business |        |  | Total Business   |   
|                     |                                                      |  | and Sports Clubs    |        |  | and Sports Clubs |   
|                     |                                                      |  |                     |        |  |                  |   
|                     |                                                      |  | 2000                |        |  | 2001             |    |        | 2000 |  |    | 2001   |  
|                     |                                                      |  |                     |        |  |                  |    |        |      |  |    |        |  
|Number of facilities |                                                      |  | 76                  |        |  |                  | 76 |        |      |  | 80 |        |   |  | 76 |       
|                    
|                    
|                    
|                    
|                     | Operating revenues                                   |  | $                   | 49,648 |  |                  | $  | 50,944 |      |  | $  | 51,567 |   |  | $  | 50,943 | 
|                    
|                    
|                    
|                    
|                     | Operating costs and expenses                         |  |                     | 44,948 |  |                  |    | 45,759 |      |  |    | 47,283 |   |  |    | 45,760 | 
|                    
|                    
|                    
|                    
|                     | Depreciation and amortization                        |  |                     | 2,777  |  |                  |    | 3,258  |      |  |    | 2,868  |   |  |    | 3,258  | 
|                    
|                    
|                    
|                    
|                     | Gain (loss) on divestitures and impairment of assets |  |                     |       |  |                  |    |       |      |  |    | (186   | ) |  |    |       | 
|                     |                                                      |  |                     |        |  |                  |    |        |      |  |    |       
|                     | Segment operating income                             |  | $                   | 1,923  |  |                  | $  | 1,927  |      |  | $  | 1,230  |   |  | $  | 1,925  | 
|                     |                                                      |  |                     |        |  |                  |    |        |      |  |    |       
|                     | Adjusted EBITDA                                      |  | $                   | 4,457  |  |                  | $  | 4,937  |      |  | $  | 4,040  |   |  | $  | 4,934  | 
|                     |                                                      |  |                     |        |  |                  |    |        |      |  |    |       

Operating revenues decreased $0.6 million for total business and sports
clubs for the 12 weeks ended September 4, 2001 versus the 12 weeks ended
September 5, 2000. This decrease is primarily due to a decline in food and
beverage sales due to the divestiture of four clubs since September 5, 2000 and
a decline in membership at same store clubs. This decrease is partially offset
by increases in membership dues as a result of price increases and the
introduction of the Signature Gold benefit.

Segment operating income increased $0.7 million for total business and
sports clubs for the 12 weeks ended September 4, 2001 versus the 12 weeks ended
September 5, 2000. This increase is primarily due to the divestiture of
underperforming facilities and the effective management of food and beverage
payroll and other operating expenses at same store clubs.

Adjusted EBITDA increased $0.9 million for total business and sports clubs
for the 12 weeks ended September 4, 2001 versus the 12 weeks ended September 5,
2000. This increase is primarily due to the increase in operating income
mentioned above.

11



---



##### Table of Contents



Resorts

The following table presents certain summary financial data and other
operating data for the Companys resorts segment for the 12 weeks ended
September 5, 2000 and September 4, 2001 (dollars in thousands):

|                              |                                           |                 |   |                |        |  |      |         |       | 
|----------------------------- | ----------------------------------------- | --------------- | - | -------------- | ------ |  | ---- | ------- | ----- | 
|                              |                                           |                 |   | Same Store and |       
|                              |                                           |                 |   | Total Resorts  |       
|                              |                                           |                 |   |                |       
|                              |                                           |                 |   | 2000           |        |  | 2001 |        
|                              |                                           |                 |   |                |        |  |      |        
|Number of facilities          |                                           |                 | 5 |                |        |  | 5    |        
|                             
|                             
|                             
|                             
|                              | Operating revenues                        |                 | $ | 53,653         |        |  | $    | 50,693  |      
|                             
|                             
|                             
|                             
|                              | Operating costs and expenses              |                 |   | 43,131         |        |  |      | 40,945  |      
|                             
|                             
|                             
|                             
|                              | Depreciation and amortization             |                 |   | 3,684          |        |  |      | 3,830   |      
|                              |                                           |                 |   |                |        | 
|                              | Segment operating income                  |                 | $ | 6,838          |        |  | $    | 5,918   |      
|                              |                                           |                 |   |                |        | 
|                              |                                           | Adjusted EBITDA |   | $              | 10,871 |  |      | $       | 9,020 | 
|                              |                                           |                 |   |                |        | 
|Lodging data: (4 resorts) (1) |                                           |                 |   |                |        |  |      |        
|                              | Room nights available                     |                 |   | 122,695        |        |  |      | 124,333 |      
|                             
|                             
|                             
|                             
|                              | Room nights occupied                      |                 |   | 78,682         |        |  |      | 70,731  |      
|                             
|                             
|                             
|                             
|                              | Occupancy rate                            |                 |   | 64.1           | %      |  |      | 56.9    | %    
|                             
|                             
|                             
|                             
|                              | Average daily room rate per occupied room |                 | $ | 184            |        |  | $    | 182     |      
|                             
|                             
|                             
|                             
|                              | Average daily revenue per occupied room   |                 | $ | 680            |        |  | $    | 712     |      



---

Operating revenues decreased $3.0 million for total resorts for the 12
weeks ended September 4, 2001 versus the 12 weeks ended September 5, 2000.
This decrease is primarily due to significant declines in group business as a
result of changing economic conditions. With the exception of Barton Creek,
which added capacity within the past year, room nights were down at each of the
Companys resorts. The average daily room rate per occupied room decreased
from the prior year due primarily to discounted rates and promotions that were
implemented to attract resort guests during the quarter. While revenues and
most operating statistics declined, average daily revenue per occupied room
increased due to higher spending associated with the increased percentage of
social resort guests.

Segment operating income decreased $0.9 million for total resorts for the
12 weeks ended September 4, 2001 versus the 12 weeks ended September 5, 2000.
This decrease is primarily due to the decrease in revenues mentioned above,
offset by the effective management of payroll and other operating costs and
expenses in response to reduced guest volume.

Adjusted EBITDA at total resorts decreased $1.9 million for the 12 weeks
ended September 4, 2001 versus the 12 weeks ended September 5, 2000. This
decrease is primarily due to the decrease in operating income mentioned above
and a decrease in membership fees at Barton Creek, which generated
significantly higher fees in the 12 weeks ended September 5, 2000 related to
the opening of a new golf course.

12



---



##### Table of Contents



Other Operations

Realty operating revenues decreased $6.7 million to $9.5 million in the 12
weeks ended September 4, 2001 from $16.2 million for the 12 weeks ended
September 5, 2000. This decrease is primarily due to decreased closings of
units in the Companys Owners Club program. Effective September 4, 2001, the
Company sold the stock of its wholly owned subsidiary, The Owners Club at
Telluride, which owned an interest in Telluride Club Mountain Village LLC, to a
related party. Upon completion of this transaction, the Company recorded a
loss of approximately $3.8 million. See Note 9 to the Condensed Notes to the
Companys Consolidated Financial Statements.

International operating revenues decreased $1.4 million to $4.0 million in
the 12 weeks ended September 4, 2001 from $5.4 million for the 12 weeks ended
September 5, 2000. This decrease is primarily due to the divestiture of three
international properties since September 5, 2000, partially offset by the
acquisition of one country club and golf facility and the opening of three
in-development properties. In addition to the international property
divestitures mentioned above, the Company further reduced its international
holdings in the 12 weeks ended September 4, 2001 by selling publicly traded
equity investments in ClubLink and ETC.

36 Weeks Ended September 5, 2000 Compared to 36 Weeks Ended September 4, 2001

Consolidated Operations

Operating revenues decreased to $704.7 million for the 36 weeks ended
September 4, 2001 from $717.9 million for the 36 weeks ended September 5, 2000.
This decrease is primarily due to decreases in food and beverage sales, golf
operations revenue, room nights, and sales of ownership units in the Companys
Owners Club program as a result of the Companys continued divestiture of
non-strategic assets and the nations slowing economy. Revenues and room
nights at the Companys clubs and resorts have been impacted by decreased
member and guest usage and reductions in corporate spending, while real estate
sales have been affected by the general slowdown in the vacation housing
market. These decreases are offset by an increase in membership dues at the
Companys private clubs as a result of price increases and the introduction of
the Signature Gold benefit.

Excluding the impact of net gains (losses) on divestitures and impairment
of assets, operating income decreased to $29.1 million for the 36 weeks ended
September 4, 2001 from $31.9 million for the 36 weeks ended September 5, 2000.
This decrease is due to the decline in revenues mentioned above and increased
depreciation and amortization, partially offset by decreased operating costs
and expenses and selling, general and administrative expenses. The increase in
depreciation and amortization is primarily due to recent capital expansions
completed at existing facilities and increased usage of technology related
assets with shorter useful lives. The decrease in operating costs and expenses
is primarily due to expense controls in response to declining revenues. The
decrease in selling, general and administrative expenses is primarily due to
cost cutting initiatives that the Company has undertaken in its corporate and
other administrative functions.

Net loss on divestitures and impairment of assets was $31.7 million for
the 36 weeks ended September 4, 2001. The Company has disposed of certain
significant equity investments, including ETC, ClubLink, and Lifecast.com,
recording losses of $26.1 million on the divestiture of these investments. In
addition, the Company disposed of 15 properties in the 36 weeks ended September
4, 2001, resulting in net losses of $3.2 million. Impairment losses of $2.4
million were recorded to write-down the remaining investment in ClubLink and
the carrying value of certain properties to be disposed.

Income (loss) from operations before income tax benefit decreased to
($44.1) million for the 36 weeks ended September 4, 2001 from ($2.3) million
for the 36 weeks ended September 5, 2000. This decrease is primarily due to
the decrease in operating income mentioned above as well as higher interest
expense. The increase in interest expense is due to higher levels of
outstanding debt attributable to financing needs for capital expansion and
development projects, partially offset by a decrease in variable interest
rates.

Consolidated Adjusted
EBITDA decreased to $104.8 million for the 36 weeks ended September 4,
2001 from $105.9 million for the 36 weeks ended September 5, 2000,
due primarily to the decrease in operating income mentioned
13Table of Contentsabove and a decrease in net membership deposits and fees, as
  initiation deposits for full golf memberships at the Companys high deposit
  clubs have decreased along with the slowdown in the economy.Segment and Other Information  36 WeeksCountry Club and Golf FacilitiesThe following
  table presents certain summary financial data and other operating data for the
  Companys country club and golf facilities segment for the 36 weeks
  ended September 5, 2000 and September 4, 2001 (dollars in thousands):

|                               |                                                                |  |                  |         |  |                  |     |         |      |  |     |         |  |  |     |         |  
|------------------------------ | -------------------------------------------------------------- |  | ---------------- | ------- |  | ---------------- | --- | ------- | ---- |  | --- | ------- |  |  | --- | ------- | -
|                               |                                                                |  | Same Store       |         |  | Total            |    
|                               |                                                                |  | Country Club and |         |  | Country Club and |    
|                               |                                                                |  | Golf Facilities  |         |  | Golf Facilities  |    
|                               |                                                                |  |                  |         |  |                  |    
|                               |                                                                |  | 2000             |         |  | 2001             |     |         | 2000 |  |     | 2001    | 
|                               |                                                                |  |                  |         |  |                  |     |         |      |  |     |         | 
|Number
          of facilities |                                                                |  | 108              |         |  |                  | 108 |         |      |  | 127 |         |  |  | 118 |        
|                              
|                              
|                              
|                              
|                               | Operating
          revenues                                   |  | $                | 328,736 |  |                  | $   | 339,317 |      |  | $   | 350,429 |  |  | $   | 354,077 |  
|                              
|                              
|                              
|                              
|                               | Operating
          costs and expenses                         |  |                  | 250,442 |  |                  |     | 258,887 |      |  |     | 272,053 |  |  |     | 274,659 |  
|                              
|                              
|                              
|                              
|                               | Depreciation
          and amortization                        |  |                  | 32,714  |  |                  |     | 34,058  |      |  |     | 34,526  |  |  |     | 35,814  |  
|                              
|                              
|                              
|                              
|                               | Gain (loss) on
          divestitures and impairment of assets |  |                  |        |  |                  |     | (833    | )    |  |     | 1,682   |  |  |     | (750    | )
|                               |                                                                |  |                  |         |  |                  |     |         |      |  |     |        
|                               | Segment
          operating income                             |  | $                | 45,580  |  |                  | $   | 45,539  |      |  | $   | 45,532  |  |  | $   | 42,854  |  
|                               |                                                                |  |                  |         |  |                  |     |         |      |  |     |        
|                               | Adjusted
          EBITDA                                      |  | $                | 86,170  |  |                  | $   | 85,684  |      |  | $   | 88,585  |  |  | $   | 88,789  |  
|                               |                                                                |  |                  |         |  |                  |     |         |      |  |     |        

Operating revenues
  increased $3.6 million at total country club and golf facilities for the
  36 weeks ended September 4, 2001 versus the 36 weeks ended September 5,
  2000. This increase is primarily due to an increase in membership dues, offset
  by decreased food and beverage sales. The increase in membership dues is a result
  of price increases and the introduction of the Signature Gold benefit. Food
  and beverage revenues have decreased due to divestitures and lower member and
  guest spending due to the slowdown of the economy.

Excluding the
  impact of net losses on divestitures and impairment of assets, operating income
  decreased slightly to $43.6 million for the 12 weeks ended September 4,
  2001 from $43.8 million for the 12 weeks ended September 5, 2000.
  This decrease is primarily due to increased depreciation and amortization due
  to recent capital expansions completed at existing facilities and increased
  usage of technology related assets with shorter useful lives. An impairment
  loss of $0.8 million was recorded to write-down the carrying value of certain
  properties to be disposed based on their estimated sales values less costs of
  disposal.

Adjusted EBITDA
  increased slightly at total country club and golf facilities for the 36 weeks
  ended September 4, 2001 versus the 36 weeks ended September 5,
  2000. This increase is primarily due to an increase in net membership deposits
  and fees related to the opening of one country club and golf facility. Net membership
  deposits and fees at same store country club and golf facilities have decreased
  as initiation deposits for full golf memberships at the Companys high
  deposit clubs have decreased along with the slowdown in the economy.

14



---



##### Table of Contents



Business and Sports Clubs

The following
  table presents certain summary financial data and other operating data for the
  Companys business and sports clubs segment for the 36 weeks ended September 5,
  2000 and September 4, 2001 (dollars in thousands):

|                               |                                                                |  |                     |         |  |                  |    |         |      |  |    |         |   |  |    |         | 
|------------------------------ | -------------------------------------------------------------- |  | ------------------- | ------- |  | ---------------- | -- | ------- | ---- |  | -- | ------- | - |  | -- | ------- | 
|                               |                                                                |  | Same Store Business |         |  | Total Business   |   
|                               |                                                                |  | and Sports Clubs    |         |  | and Sports Clubs |   
|                               |                                                                |  |                     |         |  |                  |   
|                               |                                                                |  | 2000                |         |  | 2001             |    |         | 2000 |  |    | 2001    |  
|                               |                                                                |  |                     |         |  |                  |    |         |      |  |    |         |  
|Number
          of facilities |                                                                |  | 76                  |         |  |                  | 76 |         |      |  | 80 |         |   |  | 76 |        
|                              
|                              
|                              
|                              
|                               | Operating
          revenues                                   |  | $                   | 159,930 |  |                  | $  | 164,734 |      |  | $  | 167,884 |   |  | $  | 165,004 | 
|                              
|                              
|                              
|                              
|                               | Operating
          costs and expenses                         |  |                     | 140,915 |  |                  |    | 145,880 |      |  |    | 149,423 |   |  |    | 145,974 | 
|                              
|                              
|                              
|                              
|                               | Depreciation
          and amortization                        |  |                     | 8,416   |  |                  |    | 8,702   |      |  |    | 8,717   |   |  |    | 8,725   | 
|                              
|                              
|                              
|                              
|                               | Gain (loss) on
          divestitures and impairment of assets |  |                     |        |  |                  |    |        |      |  |    | (371    | ) |  |    | 195     | 
|                               |                                                                |  |                     |         |  |                  |    |         |      |  |    |        
|                               | Segment
          operating income                             |  | $                   | 10,599  |  |                  | $  | 10,152  |      |  | $  | 9,373   |   |  | $  | 10,500  | 
|                               |                                                                |  |                     |         |  |                  |    |         |      |  |    |        
|                               | Adjusted
          EBITDA                                      |  | $                   | 18,205  |  |                  | $  | 18,095  |      |  | $  | 17,647  |   |  | $  | 18,271  | 
|                               |                                                                |  |                     |         |  |                  |    |         |      |  |    |        

Operating revenues
  decreased $2.9 million at total business and sports clubs for the 36 weeks
  ended September 4, 2001 versus the 36 weeks ended September 5,
  2000. This decrease is primarily due to the divestiture of four business and
  sports clubs since September 5, 2000. In addition, a decline in membership
  has resulted in a decrease in food and beverage revenues at same store clubs,
  offset by increases in membership dues as a result of price increases and the
  introduction of the Signature Gold benefit.

Segment operating
  income increased $1.1 million at total business and sports clubs for the
  36 weeks ended September 4, 2001 versus the 36 weeks ended September 5,
  2000. This increase is primarily due to the divestiture of underperforming facilities
  and the effective management of food and beverage payroll and other operating
  expenses at same store clubs.

Adjusted EBITDA
  increased $0.6 million at total business and sports clubs for the 36 weeks
  ended September 4, 2001 versus the 36 weeks ended September 5,
  2000. This increase is primarily due to the increase in operating income mentioned
  above.

15



---



##### Table of Contents



Resorts

The following
  table presents certain summary financial data and other operating data for the
  Companys resorts segment for the 36 weeks ended September 5,
  2000 and September 4, 2001 (dollars in thousands):

|                                                              |                                                     |  |                |         |   |      |         |         |  
|------------------------------------------------------------- | --------------------------------------------------- |  | -------------- | ------- | - | ---- | ------- | ------- | -
|                                                              |                                                     |  | Same Store and |        
|                                                              |                                                     |  | Total Resorts  |        
|                                                              |                                                     |  |                |        
|                                                              |                                                     |  | 2000           |         |   | 2001 |        
|                                                              |                                                     |  |                |         |   |      |        
|Number
          of facilities                                |                                                     |  | 5              |         |   |      | 5       |        
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Operating
          revenues                        |  | $              | 145,229 |   |      |         | 143,969 |  
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Operating
          costs and expenses              |  |                | 121,866 |   |      |         | 118,410 |  
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Depreciation
          and amortization             |  |                | 9,716   |   |      |         | 10,858  |  
|                                                              |                                                     |  |                |         |   |     
|                                                              | Segment
          operating income                  |  | $              | 13,647  |   |      | $       | 14,701  |  
|                                                              |                                                     |  |                |         |   |     
|                                                              | Adjusted
          EBITDA                           |  | $              | 25,669  |   |      | $       | 23,610  |  
|                                                              |                                                     |  |                |         |   |     
|Lodging
          data: (4 resorts) (1) Room nights available |                                                     |  | 346,278        |         |   |      | 368,230 |        
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Room nights
          occupied                      |  |                | 202,538 |   |      |         | 190,496 |  
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Occupancy
          rate                            |  |                | 58.5    | % |      |         | 51.7    | %
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Average
          daily room rate per occupied room |  | $              | 185     |   |      | $       | 191     |  
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Average
          daily revenue per occupied room   |  | $              | 714     |   |      | $       | 749     |  



---

Operating revenues decreased $1.3 million for total resorts for the 36
weeks ended September 4, 2001 versus the 36 weeks ended September 5, 2000.
This decrease is primarily due to decreased revenues attributable to lower
group business associated with the slowdown in the nations economy, offset by
an increase in membership dues. Room nights were down at each of the Companys
resort properties, with the exception of Barton Creek, which added lodging
capacity within the past year. Greens fees and food and beverage sales are
down due to the decrease in guest occupancy levels at the resorts. Pinehurst
sold a significant amount of excess pro shop inventory in the prior year,
resulting in a decline in current year golf merchandise sales. Membership dues
increased due to an increase in transfer fees at Pinehurst and price increases
in dues at all of the Companys resorts. Average daily room rate per occupied
room has increased as a result of a higher percentage of social resort guests.
Average daily revenue per occupied room has increased due to higher spending by
resort guests.

Segment operating income increased $1.1 million for total resorts for the
36 weeks ended September 4, 2001 versus the 36 weeks ended September 5, 2000.
This improvement is due to effective management of payroll and other operating
costs and expenses in response to reduced guest volume, in addition to a prior
year inventory write-down of pro shop merchandise at Pinehurst.

Adjusted EBITDA decreased $2.1 million for total resorts for the 36 weeks
ended September 4, 2001 versus the 36 weeks ended September 5, 2000. This
decrease is primarily due to a decrease in membership fees at Barton Creek,
which generated significantly higher fees in the 36 weeks ended September 5,
2000 related to the opening of a new golf course.

16



---



##### Table of Contents



Other Operations

Realty operating revenues decreased $9.9 million to $22.3 million in the
36 weeks ended September 4, 2001 from $32.2 million for the 36 weeks ended
September 5, 2000. This decrease is primarily due to decreased closings of
units in the Companys Owners Club program.

International operating revenues decreased $1.3 million to $10.1 million
in the 36 weeks ended September 4, 2001 from $11.4 million for the 36 weeks
ended September 5, 2000. This decrease is primarily due to the divestiture of
three international properties since September 5, 2000, partially offset by the
acquisition of one country club and golf facility and the opening of three
in-development properties. In addition to the international property
divestitures mentioned above, the Company further reduced its international
holdings in the 12 weeks ended September 4, 2001 by selling publicly traded
equity investments in ClubLink and ETC.

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 12 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, or leases of facilities 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 be affected by
non-seasonal and severe weather patterns as well as downturns in the economy.

Liquidity and Capital Resources

Historically, the Company has financed its operations and capital
expenditures 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. The
Company has several to be built facilities that are currently being funded
and are projected to begin generating cash flows in the remainder of 2001 and
in 2002. Although total capital expenditures for additions to property and
equipment and expansion of new facilities exceeded $170 million for the 36
weeks ended September 5, 2000, capital expenditures for the 36 weeks ended
September 4, 2001 were below $125 million and lower than in recent fiscal
years. Thus, the Companys trend of increased capital expenditures over the
last two years is not expected to continue in 2001 or the immediate future.

As part of its normal business practices, the Company is currently in the
process of disposing certain properties. Year to date, the Company has
completed the disposal of 15 properties for total proceeds of approximately
$21.2 million. In addition, the Company completed the sales of equity
investments in ETC and ClubLink, receiving proceeds of $13.9 million and $16.0
million, respectively. These funds were used to reduce the balance of the
Companys primary long-term credit facility, which in turn provides flexibility
to fund current expansion and development projects. Estimated proceeds in the
range of $75 to $80 million are expected to be realized on sales of additional
properties within the next year. The completion of these asset sales and
subsequent reductions of debt represent a high priority for the Company, as
future cash availability from the Companys primary long-term credit facility
will be limited by covenants that became more restrictive in the third quarter
of 2001 and will tighten further at year-end 2001. The Company believes that
without the successful completion of these asset sales or a waiver of certain
covenants by the lenders, there is no assurance that it will be in compliance
with its debt covenants at year-end 2001 or in the immediate future thereafter.

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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.

The recent terrorist attacks on the U.S. have created additional
uncertainty in the state of the overall U.S. economy. As a result of the
uncertainty caused by these events, the Companys operating performance was
immediately impacted as room nights and other revenues decreased significantly.
Although trends appear to be improving, there can be no assurance that the
economic and political climate will fully recover in the near future, and the
longer-term and indirect consequences from this catastrophic event are not yet
known. If the slow business conditions in the economy continue or become more
severe, ClubCorps future revenues and operating results will be negatively
impacted.

Recently Issued Accounting Pronouncements

On July 20, 2001, the FASB issued Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets. This statement will
be effective for fiscal years beginning after December 15, 2001. Under the
provisions of FAS 142, the cost of certain of the Companys intangible assets
will no longer be subject to amortization. While management has not made a
final determination as to the impact of this new pronouncement on its
Consolidated Balance Sheet or Consolidated Statement of Operations, management
does not believe such implementation will have a significant impact.

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PART II. OTHER INFORMATION




Item 6. Exhibits and Reports on Form 8-K



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

|       |  |                                                                      
|------ |  | ---------------------------------------------------------------------
|10.1 - |  | Restated ClubCorp, Inc. Executive Stock Option Plan                  
|      
|      
|      
|      
|10.2 - |  | Restated ClubCorp, Inc. Omnibus Stock Plan                           
|      
|      
|      
|      
|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: |  | October 16, 2001 |  | By: /s/ Charles A. Little                         
|     
|      |  |                  |  | Charles A. Little
        Chief Accounting Officer

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INDEX TO EXHIBITS

|        |  |                                                                      
|------- |  | ---------------------------------------------------------------------
|EXHIBIT |  |                                                                      
|NUMBER  |  | DESCRIPTION                                                          
|        |  |                                                                      
|10.1 -  |  | Restated ClubCorp, Inc. Executive Stock Option Plan                  
|       
|       
|       
|       
|10.2 -  |  | Restated ClubCorp, Inc. Omnibus Stock Plan                           
|       
|       
|       
|       
|15.1 -  |  | Letter from KPMG LLP regarding unaudited interim financial statements
|       
|       
|       
|       
|24.1 -  |  | Power of Attorney