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

FORM 10-Q



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

For the quarterly period ended June 11, 2002

(EMPTY BOX)   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   (BOX WITH X)     No   (EMPTY BOX).

The number of shares of the Registrants Common Stock outstanding as of July
26, 2002 was 93,740,461.





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CLUBCORP, INC.

INDEX

|         |  |                                                                                       |  |  |    |  |  | 
|-------- |  | ------------------------------------------------------------------------------------- |  |  | -- |  |  | 
|Part I.  |  | FINANCIAL INFORMATION                                                                 |  |  |    | 
|Item 1.  |  | Financial Statements:                                                                 |  |  |    | 
|         |  | Independent Auditors' Review Report                                                   |  |  | 1  | 
|         |  | Consolidated Balance Sheet                                                            |  |  | 2  | 
|         |  | Consolidated Statement of Operations                                                  |  |  | 3  | 
|         |  | Consolidated Statement of Cash Flows                                                  |  |  | 4  | 
|         |  | Condensed Notes to Consolidated Financial Statements                                  |  |  | 5  | 
|Item 2.  |  | Management's Discussion and Analysis of Financial Condition and Results of Operations |  |  | 10 | 
|Part II. |  | OTHER INFORMATION                                                                     |  |  |    | 
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                   |  |  | 22 | 
|Item 6.  |  | Exhibits and Reports on Form 8-K                                                      |  |  | 22 | 





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|                                                                                              |                                      |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- | ------------------------------------ |  |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                                                                
|ITEM 1. FINANCIAL STATEMENTS                                                                 
|                                                                                              | INDEPENDENT AUDITORS REVIEW REPORT 
|                                                                                              | Consolidated Balance Sheet          
|                                                                                              | Consolidated Statement of Operations
|                                                                                              | Consolidated Statement of Cash Flows
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|PART II. OTHER INFORMATION                                                                   
|Item 4. Submission of Matters to a Vote of Security Holders                                  
|Item 6. Exhibits and Reports on Form 8-K                                                     
|EX-15.1 Letter from KPMG LLP                                                                 
|EX-24.1 Power of Attorney                                                                    



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PART I. FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS




INDEPENDENT AUDITORS REVIEW REPORT

The Board of Directors and Stockholders
ClubCorp, Inc.:

We have reviewed the consolidated balance sheet of ClubCorp, Inc. and
subsidiaries (ClubCorp) as of June 11, 2002, and the related consolidated
statements of operations and cash flows for the twelve weeks and twenty four
weeks ended June 11, 2002 and June 12, 2001. These consolidated financial
statements are the responsibility of ClubCorps management.

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

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

As discussed in Note 2 to the accompanying consolidated financial statements,
in accordance with Statement of Financial Accounting Standards (SFAS) No. 133,
Accounting for Derivative Instruments and Hedging Activities as amended and
interpreted, ClubCorp changed its method of accounting for derivative
instruments and hedging activities on December 27, 2000. Also, as discussed in
Note 1 to the accompanying consolidated financial statements, effective
December 26, 2001, ClubCorp adopted the provisions of SFAS No. 144, Accounting
for the Disposal or Impairment of Long-Lived Assets.

We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet of
ClubCorp as of December 25, 2001 and the related consolidated statements of
operations, stockholders equity and comprehensive income (loss), and cash
flows for the year then ended (not presented herein); and in our report dated
February 22, 2002, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying consolidated balance sheet as of December 25, 2001, is fairly
stated, in all material respects, in relation to the consolidated balance sheet
from which it has been derived.



| | KPMG LLP
| | --------

Dallas, Texas
July 19, 2002

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ClubCorp, Inc.




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

|                                                      |                                                                                                                                                                         |                            |                                      |                                            |         |              |           |          |         |             |           | 
|----------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------------------------------------ | ------------------------------------------ | ------- | ------------ | --------- | -------- | ------- | ----------- | --------- | 
|                                                      |                                                                                                                                                                         |                            |                                      |                                            |         | December 25, |           | June 11,
|                                                      |                                                                                                                                                                         |                            |                                      |                                            |         | 2001         |           | 2002    
|                                                      |                                                                                                                                                                         |                            |                                      |                                            |         |              |           |         
|                                                      |                                                                                                                                                                         |                            |                                      |                                            |         |              |           |          |         | (Unaudited)
|                                                      |                                                                                                                                                                         |                            |                                      | Assets                                     |         |              |           |          |         |             |           | 
|Current assets:                                       |                                                                                                                                                                         |                            |                                      |                                            |         |              |           |         
|                                                      | Cash and cash equivalents                                                                                                                                               |                            | $                                    | 3,212                                      |         |              | $         | 16,979   |        
|                                                      | Membership and other receivables, net                                                                                                                                   |                            |                                      | 97,362                                     |         |              |           | 96,631   |        
|                                                      | Inventories                                                                                                                                                             |                            |                                      | 21,666                                     |         |              |           | 22,474   |        
|                                                      | Other assets                                                                                                                                                            |                            |                                      | 16,837                                     |         |              |           | 13,713   |        
|                                                      |                                                                                                                                                                         |                            |                                      |                                            |         |              |           |          |        
|                                                      |                                                                                                                                                                         | Total current assets       |                                      |                                            | 139,077 |              |           |          | 149,797 |            
|Property and equipment, net                           |                                                                                                                                                                         |                            | 1,356,590                            |                                            |         |              | 1,329,921 |         
|Other assets                                          |                                                                                                                                                                         |                            | 115,362                              |                                            |         |              | 135,900   |         
|                                                      |                                                                                                                                                                         |                            |                                      |                                            |         |              |           |          |        
|                                                      |                                                                                                                                                                         |                            |                                      | Total assets                               |         | $            | 1,611,029 |          |         | $           | 1,615,618 | 
|                                                      |                                                                                                                                                                         |                            |                                      |                                            |         |              |           |          |        
|                                                      |                                                                                                                                                                         |                            | Liabilities and Stockholders Equity |                                            |         |              |           |          |         |             |          
|Current liabilities:                                  |                                                                                                                                                                         |                            |                                      |                                            |         |              |           |         
|                                                      | Accounts payable and accrued liabilities                                                                                                                                |                            | $                                    | 80,018                                     |         |              | $         | 73,000   |        
|                                                      | Long-term debt  current portion                                                                                                                                        |                            |                                      | 50,378                                     |         |              |           | 48,447   |        
|                                                      | Other liabilities                                                                                                                                                       |                            |                                      | 103,741                                    |         |              |           | 118,011  |        
|                                                      |                                                                                                                                                                         |                            |                                      |                                            |         |              |           |          |        
|                                                      |                                                                                                                                                                         | Total current liabilities  |                                      |                                            | 234,137 |              |           |          | 239,458 |            
|Long-term debt                                        |                                                                                                                                                                         |                            | 597,460                              |                                            |         |              | 624,439   |         
|Other liabilities                                     |                                                                                                                                                                         |                            | 168,960                              |                                            |         |              | 156,516   |         
|Membership deposits                                   |                                                                                                                                                                         |                            | 115,550                              |                                            |         |              | 120,644   |         
|Redemption value of common stock held by benefit plan |                                                                                                                                                                         |                            | 62,746                               |                                            |         |              | 49,720    |         
|Stockholders equity:                                 |                                                                                                                                                                         |                            |                                      |                                            |         |              |           |         
|                                                      | Preferred stock, $.01 par value, 150,000,000 shares
authorized, none issued or outstanding                                                                              |                            |                                      |                                           |         |              |           |         |        
|                                                      | Common stock, $.01 par value, 250,000,000 shares
authorized, 99,594,408 issued, 93,742,901
outstanding at December 25, 2001 and
93,740,461 outstanding at June 11, 2002 |                            |                                      | 996                                        |         |              |           | 996      |        
|                                                      | Additional paid-in capital                                                                                                                                              |                            |                                      | 161,674                                    |         |              |           | 161,672  |        
|                                                      | Accumulated other comprehensive loss                                                                                                                                    |                            |                                      | (7,821                                     | )       |              |           | (8,021   | )      
|                                                      | Retained earnings                                                                                                                                                       |                            |                                      | 337,585                                    |         |              |           | 330,503  |        
|                                                      | Treasury stock, 5,851,507 shares at December 25, 2001
and 5,853,947 shares at June 11, 2002                                                                             |                            |                                      | (60,258                                    | )       |              |           | (60,309  | )      
|                                                      |                                                                                                                                                                         |                            |                                      |                                            |         |              |           |          |        
|                                                      |                                                                                                                                                                         | Total stockholders equity |                                      |                                            | 432,176 |              |           |          | 424,841 |            
|                                                      |                                                                                                                                                                         |                            |                                      |                                            |         |              |           |          |        
|                                                      |                                                                                                                                                                         |                            |                                      | Total liabilities and stockholders equity |         | $            | 1,611,029 |          |         | $           | 1,615,618 | 
|                                                      |                                                                                                                                                                         |                            |                                      |                                            |         |              |           |          |        

See accompanying condensed notes to consolidated financial statements.

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ClubCorp, Inc.




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

|                                                                        |  |                |         |                |  |          |         |          |  |   |         |   |  |   |         |  
|----------------------------------------------------------------------- |  | -------------- | ------- | -------------- |  | -------- | ------- | -------- |  | - | ------- | - |  | - | ------- | -
|                                                                        |  | 12 Weeks Ended |         | 24 Weeks Ended
|                                                                        |  |                |         |               
|                                                                        |  | June 12,       |         | June 11,       |  | June 12, |         | June 11,
|                                                                        |  | 2001           |         | 2002           |  | 2001     |         | 2002    
|                                                                        |  |                |         |                |  |          |         |         
|Operating revenues                                                      |  | $              | 265,205 |                |  | $        | 252,747 |          |  | $ | 466,349 |   |  | $ | 444,244 |  
|Operating costs and expenses                                            |  |                | 200,356 |                |  |          | 195,483 |          |  |   | 370,945 |   |  |   | 358,977 |  
|Depreciation and amortization                                           |  |                | 21,855  |                |  |          | 22,528  |          |  |   | 43,684  |   |  |   | 44,471  |  
|Selling, general and administrative expenses                            |  |                | 19,723  |                |  |          | 16,283  |          |  |   | 38,310  |   |  |   | 33,924  |  
|Loss on disposals and impairments of assets                             |  |                | 74      |                |  |          | 10,197  |          |  |   | 340     |   |  |   | 8,055   |  
|                                                                        |  |                |         |                |  |          |         |          |  |   |         |   |  |   |         |  
|Operating income (loss)                                                 |  |                | 23,197  |                |  |          | 8,256   |          |  |   | 13,070  |   |  |   | (1,183  | )
|Interest and investment income                                          |  |                | 925     |                |  |          | 275     |          |  |   | 1,645   |   |  |   | 412     |  
|Interest expense                                                        |  |                | (13,872 | )              |  |          | (14,482 | )        |  |   | (29,871 | ) |  |   | (27,094 | )
|                                                                        |  |                |         |                |  |          |         |          |  |   |         |   |  |   |         |  
|Income (loss) from operations before income taxes
and minority interest |  |                | 10,250  |                |  |          | (5,951  | )        |  |   | (15,156 | ) |  |   | (27,865 | )
|Income tax benefit (provision)                                          |  |                | (4,242  | )              |  |          | 804     |          |  |   | 4,369   |   |  |   | 7,443   |  
|Minority interest                                                       |  |                | (307    | )              |  |          | 107     |          |  |   | (190    | ) |  |   | 314     |  
|                                                                        |  |                |         |                |  |          |         |          |  |   |         |   |  |   |         |  
|Net income (loss)                                                       |  | $              | 5,701   |                |  | $        | (5,040  | )        |  | $ | (10,977 | ) |  | $ | (20,108 | )
|                                                                        |  |                |         |                |  |          |         |          |  |   |         |   |  |   |         |  
|Basic and diluted earnings (loss) per share                             |  | $              | .06     |                |  | $        | (.05    | )        |  | $ | (.12    | ) |  | $ | (.21    | )
|                                                                        |  |                |         |                |  |          |         |          |  |   |         |   |  |   |         |  

See accompanying condensed notes to consolidated financial statements.

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ClubCorp, Inc.




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

|                                                 |                                                                           |                                                      |                                               |         |                |         |          |         |        |         |  
|------------------------------------------------ | ------------------------------------------------------------------------- | ---------------------------------------------------- | --------------------------------------------- | ------- | -------------- | ------- | -------- | ------- | ------ | ------- | -
|                                                 |                                                                           |                                                      |                                               |         | 24 Weeks Ended
|                                                 |                                                                           |                                                      |                                               |         |               
|                                                 |                                                                           |                                                      |                                               |         | June 12,       |         | June 11,
|                                                 |                                                                           |                                                      |                                               |         | 2001           |         | 2002    
|                                                 |                                                                           |                                                      |                                               |         |                |         |         
|Cash flows from operations:                      |                                                                           |                                                      |                                               |         |                |         |          |        
|                                                 | Net loss                                                                  |                                                      | $                                             | (10,977 | )              |         | $        | (20,108 | )     
|                                                 | Adjustments to reconcile net loss to cash flows provided from operations: |                                                      |                                               |         |                |         |          |         |       
|                                                 |                                                                           | Depreciation and amortization                        |                                               |         | 43,684         |         |          |         | 44,471 |        
|                                                 |                                                                           | Amortization of discount on membership deposits      |                                               |         | 4,181          |         |          |         | 4,463  |        
|                                                 |                                                                           | Loss on disposals and impairments of assets          |                                               |         | 340            |         |          |         | 8,055  |        
|                                                 |                                                                           | Deferred income taxes                                |                                               |         | (5,715         | )       |          |         | (8,606 | )      
|                                                 |                                                                           | Decrease in real estate held for sale                |                                               |         | 4,239          |         |          |         | 1,887  |        
|                                                 |                                                                           | Decrease in membership and other receivables, net    |                                               |         | 3,484          |         |          |         | 3,189  |        
|                                                 |                                                                           | Decrease in accounts payable and accrued liabilities |                                               |         | (7,101         | )       |          |         | (7,139 | )      
|                                                 |                                                                           | Net change in deferred membership revenues           |                                               |         | 3,760          |         |          |         | (1,920 | )      
|                                                 |                                                                           | Other                                                |                                               |         | 2,111          |         |          |         | 8,312  |        
|                                                 |                                                                           |                                                      |                                               |         |                |         |          |         |       
|                                                 |                                                                           |                                                      | Cash flows provided from operations           |         |                | 38,006  |          |         |        | 32,604  |  
|Cash flows from investing activities:            |                                                                           |                                                      |                                               |         |                |         |          |        
|                                                 | Additions to property and equipment                                       |                                                      |                                               | (60,431 | )              |         |          | (41,751 | )     
|                                                 | Development of new facilities                                             |                                                      |                                               | (25,465 | )              |         |          | (12,522 | )     
|                                                 | Development of real estate held for sale                                  |                                                      |                                               | (2,214  | )              |         |          | (2,901  | )     
|                                                 | Proceeds from dispositions, net                                           |                                                      |                                               | 20,730  |                |         |          | 14,492  |       
|                                                 | Other                                                                     |                                                      |                                               | 2,193   |                |         |          | (196    | )     
|                                                 |                                                                           |                                                      |                                               |         |                |         |          |         |       
|                                                 |                                                                           |                                                      | Cash flows used by investing activities       |         |                | (65,187 | )        |         |        | (42,878 | )
|Cash flows from financing activities:            |                                                                           |                                                      |                                               |         |                |         |          |        
|                                                 | Borrowings of long-term debt                                              |                                                      |                                               | 31,100  |                |         |          | 40,350  |       
|                                                 | Repayments of long-term debt                                              |                                                      |                                               | (17,270 | )              |         |          | (12,559 | )     
|                                                 | Loan origination and amendment fees                                       |                                                      |                                               | (197    | )              |         |          | (4,102  | )     
|                                                 | Membership deposits received, net                                         |                                                      |                                               | 995     |                |         |          | 405     |       
|                                                 | Treasury stock transactions, net                                          |                                                      |                                               | (3,065  | )              |         |          | (53     | )     
|                                                 |                                                                           |                                                      |                                               |         |                |         |          |         |       
|                                                 |                                                                           |                                                      | Cash flows provided from financing activities |         |                | 11,563  |          |         |        | 24,041  |  
|                                                 |                                                                           |                                                      |                                               |         |                |         |          |         |       
|Total net cash flows                             |                                                                           |                                                      | (15,618                                       | )       |                |         | 13,767   |        
|                                                 |                                                                           |                                                      |                                               |         |                |         |          |         |       
|Cash and cash equivalents at beginning of period |                                                                           |                                                      | 24,771                                        |         |                |         | 3,212    |        
|                                                 |                                                                           |                                                      |                                               |         |                |         |          |         |       
|Cash and cash equivalents at end of period       |                                                                           | $                                                    | 9,153                                         |         |                | $       | 16,979   |        
|                                                 |                                                                           |                                                      |                                               |         |                |         |          |         |       

See accompanying condensed notes to consolidated financial statements.

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ClubCorp, Inc.

Condensed Notes to Consolidated Financial Statements (Unaudited)

Note 1. Summary of significant accounting policiesConsolidationThe Consolidated Financial Statements include the accounts of ClubCorp, Inc.
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 note disclosures normally
included in financial statements presented in accordance with accounting
principles generally accepted in the United States of America have been omitted
from the accompanying statements. We believe the disclosures made are adequate
to make the information presented not misleading. However, the consolidated
financial statements should be read in conjunction with the Consolidated
Financial Statements and notes thereto of ClubCorp for the year ended December
25, 2001 which are a part of ClubCorps Form 10-K.

In our opinion, the accompanying unaudited Consolidated Financial Statements
reflect all adjustments necessary (consisting of normal recurring accruals) to
present fairly the consolidated financial position of ClubCorp as of June 11,
2002 and the consolidated results of operations for the twelve weeks and twenty
four weeks ended June 12, 2001 and June 11, 2002 and the consolidated cash
flows for the twenty four weeks ended June 12, 2001 and June 11, 2002. Interim
results are not necessarily indicative of fiscal year performance because of
the impact of seasonal and short-term variations and other factors such as
timing of acquisitions and dispositions of facilities.

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

In August 2001, the FASB issued Statement of Financial Accounting Standards No.
144, Accounting for the Disposal or Impairment of Long-Lived Assets. SFAS
144 supercedes SFAS 121 and the portion of Accounting Principles Board Opinion
No. 30 that deals with the disposal of a business segment. On December 26,
2001, we adopted SFAS 144 and evaluated its impact on our consolidated
financial statements. On this date, we had eight properties classified as held
for sale; however, under the guidelines of SFAS 144, the operations of these
properties did not have to be reclassified and recorded in discontinued
operations, as the properties were classified as held for sale before the date
of implementation. During the twenty four weeks ended June 11, 2002, we
classified an additional 19 properties as held for sale. We will continue to
be involved in the daily management of 13 of these properties that were
classified as held for sale after the pending sale transaction. Therefore,
under the guidelines of SFAS 144, we did not reclassify or record the operations
of these properties in discontinued operations and prior year amounts have not
been restated. The remaining properties operations are also not reclassified
and recorded in discontinued operations and the prior year amounts have not
been restated due to the insignificant impact to the consolidated financial
statements.

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

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

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ClubCorp, Inc.

Impairment of long-lived assetsLong-lived assets and certain identifiable intangibles to be held and used and
to be disposed of by ClubCorp are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable.

We assess the recoverability of long-lived assets to be held and used by
determining whether the recorded balance can be recovered over its remaining
life through estimated future cash flows. If it is determined that impairment
exists, the fair value for purposes of calculating the impairment is measured
based on discounted future operating cash flows using a risk-adjusted discount
rate.

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 six of these golf facilities based on the
estimated sales values. During the twenty four weeks ended June 12, 2001, we
recorded additional impairment losses of $1,627,000 relating to one of these
properties and also recovered $1,595,000 in prior recorded impairment losses
associated with two properties. The recoveries were associated with estimated
purchase price increases due to changes in market conditions.

During the twelve weeks ended June 11, 2002, we transferred six golf properties
to held for sale and recorded an impairment loss of $1,865,000 to write down
the carrying value of those properties. We assessed the impairment of the
disposal group based on the expected sales price less estimated cost of
disposal. Impaired assets identified were property and equipment including
buildings and land improvements.

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

As of June 11, 2002, we had interest rate swap contracts to pay fixed rates of
interest (ranging from 5.25% to 7.21%) and receive variable rates of interest
based on LIBOR on an aggregate of $225.0 million notional amount of
indebtedness with maturity dates ranging from June 2003 through September 2003.
These hedges are highly effective, however, for the twenty four weeks ended
June 11, 2002, we recorded $27,000 as a reduction of interest expense for the
ineffective portion of these instruments. The aggregate fair market value of
all interest rate swap contracts was ($9,419,000) on June 11, 2002 and is
included in other liabilities on the Consolidated Balance Sheet.

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

|                             |                          |   |                |         |                |   |          |         |          |   |         |         |  |   |         |         | 
|---------------------------- | ------------------------ | - | -------------- | ------- | -------------- | - | -------- | ------- | -------- | - | ------- | ------- |  | - | ------- | ------- | 
|                             |                          |   | 12 Weeks Ended |         | 24 Weeks Ended
|                             |                          |   |                |         |               
|                             |                          |   | June 12,       |         | June 11,       |   | June 12, |         | June 11,
|                             |                          |   | 2001           |         | 2002           |   | 2001     |         | 2002    
|                             |                          |   |                |         |                |   |          |         |         
|Membership fees and deposits |                          | $ | 8,841          |         |                | $ | 9,747    |         |          | $ | 18,550  |         |  | $ | 19,493  |        
|Membership dues              |                          |   | 77,129         |         |                |   | 77,600   |         |          |   | 153,820 |         |  |   | 154,936 |        
|Golf operations revenues     |                          |   | 63,109         |         |                |   | 59,618   |         |          |   | 95,861  |         |  |   | 91,701  |        
|Food and beverage revenues   |                          |   | 68,837         |         |                |   | 66,640   |         |          |   | 121,762 |         |  |   | 113,803 |        
|Lodging revenues             |                          |   | 17,588         |         |                |   | 16,633   |         |          |   | 27,095  |         |  |   | 25,059  |        
|Other revenues               |                          |   | 29,701         |         |                |   | 22,509   |         |          |   | 49,261  |         |  |   | 39,252  |        
|                             |                          |   |                |         |                |   |          |         |          |   |         |         |  |   |         |        
|                             | Total operating revenues |   | $              | 265,205 |                |   | $        | 252,747 |          |   | $       | 466,349 |  |   | $       | 444,244 | 
|                             |                          |   |                |         |                |   |          |         |          |   |         |         |  |   |         |        

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ClubCorp, Inc.Note 4. Income tax benefit (provision)

The income tax benefits for the twelve and twenty four weeks ended June 12,
2001 and June 11, 2002 differ 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 shares
The following table summarizes the weighted average number of shares used to
calculate basic and diluted earnings (loss) per share:

|                                             |          |  |                |           |                |  |            |   |          |  |            |   |  |  |            |   | 
|-------------------------------------------- | -------- |  | -------------- | --------- | -------------- |  | ---------- | - | -------- |  | ---------- | - |  |  | ---------- | - | 
|                                             |          |  | 12 Weeks Ended |           | 24 Weeks Ended
|                                             |          |  |                |           |               
|                                             |          |  | June 12,       |           | June 11,       |  | June 12,   |   | June 11,
|                                             |          |  | 2001           |           | 2002           |  | 2001       |   | 2002    
|                                             |          |  |                |           |                |  |            |   |         
|Weighted average shares outstanding          |          |  | 94,070,736     |           |                |  | 93,742,698 |   |          |  | 94,081,500 |   |  |  | 93,742,799 |  
|Incremental shares from assumed conversions: |          |  |                |           |                |  |            |   |          |  |            |   |  |  |            |  
|                                             | Options  |  |                | 1,048,292 |                |  |            |  |          |  |            |  |  |  |            |  | 
|                                             | Warrants |  |                |          |                |  |            |  |          |  |            |  |  |  |            |  | 
|                                             |          |  |                |           |                |  |            |   |          |  |            |   |  |  |            |  
|Diluted weighted average shares              |          |  | 95,119,028     |           |                |  | 93,742,698 |   |          |  | 94,081,500 |   |  |  | 93,742,799 |  
|                                             |          |  |                |           |                |  |            |   |          |  |            |   |  |  |            |  

Diluted weighted average shares for the twelve weeks ended June 12, 2001
exclude the assumed conversion of 2,429,800 options, due to their antidilutive
effect. Diluted weighted average shares for the twelve weeks ended June 11,
2002 and twenty four weeks ended June 12, 2001 and June 11, 2002 exclude
incremental shares from assumed conversion of 665,681, 1,033,382 and 724,697
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 25, |           | June 11,
|                                          |  | 2001         |           | 2002    
|                                          |  |              |           |         
|Land and land improvements                |  | $            | 711,920   |          |  | $ | 721,192   |  
|Buildings and recreational facilities     |  |              | 486,840   |          |  |   | 500,538   |  
|Leasehold improvements                    |  |              | 118,483   |          |  |   | 118,329   |  
|Furniture and fixtures                    |  |              | 138,682   |          |  |   | 140,024   |  
|Machinery and equipment                   |  |              | 274,335   |          |  |   | 273,194   |  
|Construction in progress                  |  |              | 84,335    |          |  |   | 60,665    |  
|                                          |  |              |           |          |  |   |           |  
|                                          |  |              | 1,814,595 |          |  |   | 1,813,942 |  
|Accumulated depreciation and amortization |  |              | (458,005  | )        |  |   | (484,021  | )
|                                          |  |              |           |          |  |   |           |  
|                                          |  | $            | 1,356,590 |          |  | $ | 1,329,921 |  
|                                          |  |              |           |          |  |   |           |  

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ClubCorp, Inc.

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

|                                                                                                                 |                                   |   |                |       |                |   |          |        |          |   |         |         |   |   |         |         |  
|---------------------------------------------------------------------------------------------------------------- | --------------------------------- | - | -------------- | ----- | -------------- | - | -------- | ------ | -------- | - | ------- | ------- | - | - | ------- | ------- | -
|                                                                                                                 |                                   |   | 12 Weeks Ended |       | 24 Weeks Ended
|                                                                                                                 |                                   |   |                |       |               
|                                                                                                                 |                                   |   | June 12,       |       | June 11,       |   | June 12, |        | June 11,
|                                                                                                                 |                                   |   | 2001           |       | 2002           |   | 2001     |        | 2002    
|                                                                                                                 |                                   |   |                |       |                |   |          |        |         
|Net income (loss)                                                                                                |                                   | $ | 5,701          |       |                | $ | (5,040   | )      |          | $ | (10,977 | )       |   | $ | (20,108 | )      
|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                      |                                   |   | (285           | )     |                |   | 46       |        |          |   | (3,099  | )       |   |   | 1,655   |        
|Foreign currency translation adjustment                                                                          |                                   |   | 1,895          |       |                |   | (2,183   | )      |          |   | (1,159  | )       |   |   | (1,855  | )      
|                                                                                                                 |                                   |   |                |       |                |   |          |        |          |   |         |         |   |   |         |        
|                                                                                                                 | Total comprehensive income (loss) |   | $              | 7,311 |                |   | $        | (7,177 | )        |   | $       | (17,354 | ) |   | $       | (20,308 | )
|                                                                                                                 |                                   |   |                |       |                |   |          |        |          |   |         |         |   |   |         |        

Note 8. Segment reportingOur operations are organized into three principal business segments according
to the type of facility or service provided: country club and golf facilities,
business and sports clubs and resorts. Prior to June, 2002, our management
relied primarily on an adjusted EBITDA generated from our properties within the
three reportable segments for purposes of making decisions about allocating
resources and assessing segment performance. Beginning in June 2002, our
management altered the definition of EBITDA to be utilized in management
reporting. EBITDA is now defined as earnings before interest, taxes,
depreciation and amortization, extraordinary items and gains and losses on
disposals and impairment of assets. EBITDA for all periods presented has been
adjusted to reflect this definition. Adjusted EBITDA previously included an
adjustment for net membership deposits and fees and a joint venture adjustment.
Financial information for the segments is as follows (dollars in thousands):

|                    |                                  |                                                  |                                            |         |                |         |                |         |          |         |          |         |         |         |   |         |         |         |  
|------------------- | -------------------------------- | ------------------------------------------------ | ------------------------------------------ | ------- | -------------- | ------- | -------------- | ------- | -------- | ------- | -------- | ------- | ------- | ------- | - | ------- | ------- | ------- | -
|                    |                                  |                                                  |                                            |         | 12 Weeks Ended |         | 24 Weeks Ended
|                    |                                  |                                                  |                                            |         |                |         |               
|                    |                                  |                                                  |                                            |         | June 12,       |         | June 11,       |         | June 12, |         | June 11,
|                    |                                  |                                                  |                                            |         | 2001           |         | 2002           |         | 2001     |         | 2002    
|                    |                                  |                                                  |                                            |         |                |         |                |         |          |         |         
|Operating revenues: |                                  |                                                  |                                            |         |                |         |                |         |          |         |          |         |         |         |   |        
|                    | Country club and golf facilities |                                                  | $                                          | 134,201 |                |         | $              | 129,571 |          |         | $        | 237,235 |         |         | $ | 229,802 |        
|                    | Business and sports clubs        |                                                  |                                            | 59,314  |                |         |                | 55,887  |          |         |          | 116,900 |         |         |   | 108,514 |        
|                    | Resorts                          |                                                  |                                            | 55,454  |                |         |                | 56,538  |          |         |          | 86,389  |         |         |   | 86,530  |        
|                    |                                  |                                                  |                                            |         |                |         |                |         |          |         |          |         |         |         |   |         |        
|                    |                                  | Total operating revenues for
reportable segments |                                            |         | 248,969        |         |                |         | 241,996  |         |          |         | 440,524 |         |   |         | 424,846 |        
|                    | Other operations                 |                                                  |                                            | 13,164  |                |         |                | 6,576   |          |         |          | 18,904  |         |         |   | 10,966  |        
|                    | Corporate services               |                                                  |                                            | 3,072   |                |         |                | 4,175   |          |         |          | 6,921   |         |         |   | 8,432   |        
|                    |                                  |                                                  |                                            |         |                |         |                |         |          |         |          |         |         |         |   |         |        
|                    |                                  | Consolidated operating revenues                  |                                            | $       | 265,205        |         |                | $       | 252,747  |         |          | $       | 466,349 |         |   | $       | 444,244 |        
|                    |                                  |                                                  |                                            |         |                |         |                |         |          |         |          |         |         |         |   |         |        
|EBITDA:             |                                  |                                                  |                                            |         |                |         |                |         |          |         |          |         |         |         |   |        
|                    | Country club and golf facilities |                                                  | $                                          | 32,464  |                |         | $              | 27,806  |          |         | $        | 49,852  |         |         | $ | 43,375  |        
|                    | Business and sports clubs        |                                                  |                                            | 7,764   |                |         |                | 4,439   |          |         |          | 13,846  |         |         |   | 8,398   |        
|                    | Resorts                          |                                                  |                                            | 17,271  |                |         |                | 16,933  |          |         |          | 17,881  |         |         |   | 17,678  |        
|                    |                                  |                                                  |                                            |         |                |         |                |         |          |         |          |         |         |         |   |         |        
|                    |                                  | Total EBITDA for reportable segments             |                                            |         | 57,499         |         |                |         | 49,178   |         |          |         | 81,579  |         |   |         | 69,451  |        
|                    | Other operations                 |                                                  |                                            | 871     |                |         |                | (1,165  | )        |         |          | (684    | )       |         |   | (2,718  | )      
|                    | Corporate services               |                                                  |                                            | (13,244 | )              |         |                | (7,032  | )        |         |          | (23,801 | )       |         |   | (15,390 | )      
|                    |                                  |                                                  |                                            |         |                |         |                |         |          |         |          |         |         |         |   |         |        
|                    |                                  | Consolidated EBITDA                              |                                            |         | 45,126         |         |                |         | 40,981   |         |          |         | 57,094  |         |   |         | 51,343  |        
|                    |                                  |                                                  | Depreciation and amortization              |         |                | (21,855 | )              |         |          | (22,528 | )        |         |         | (43,684 | ) |         |         | (44,471 | )
|                    |                                  |                                                  | Loss on disposals and impairment of assets |         |                | (74     | )              |         |          | (10,197 | )        |         |         | (340    | ) |         |         | (8,055  | )
|                    |                                  |                                                  |                                            |         |                |         |                |         |          |         |          |         |         |         |   |         |        
|                    |                                  | Consolidated operating income (loss)             |                                            | $       | 23,197         |         |                | $       | 8,256    |         |          | $       | 13,070  |         |   | $       | (1,183  | )      
|                    |                                  |                                                  |                                            |         |                |         |                |         |          |         |          |         |         |         |   |         |        

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ClubCorp, Inc.Note 9. Contingencies
We are subject to certain pending or threatened litigation and other claims.
We believe that any potential liability arising from resolution of these
matters will not materially affect our consolidated financial position and
results of operations.

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

Introduction

ClubCorp, Inc. (referred to as ClubCorp ®, the Company, we, us and
our throughout this document) is the largest owner and operator of premier
golf and business clubs and destination resorts. As of June 11, 2002, we had
over 217,000 memberships and operated 120 country clubs, golf clubs and public
golf facilities, three destination golf resorts and 77 business, sports and
business/sports clubs in 30 states and five foreign countries. Marquee resorts
and clubs in our portfolio include Pinehurst Resort and Country Club, The
Homestead Resort, Barton Creek Resort and Country Club, Firestone Country Club,
Mission Hills Country Club and the City Club on Bunker Hill.

Our consolidated financial statements are presented on a 52/53 week fiscal
year ending on the last Tuesday of December, with the first three quarters
consisting of 12 weeks each and the fourth quarter consisting of 16 or 17
weeks. Our operations are organized into three principal business segments:
country club and golf facilities, resorts, and business and sports clubs.
Other operations that are not assigned to a principal business segment include
our real estate and international operations.

The following discussion of our financial condition and results of
operations for the 12 and 24 weeks ended June 12, 2001 and June 11, 2002 should
be read in conjunction with the our Annual Report on Form 10-K for the year
ended December 25, 2001, as filed with the Securities and Exchange Commission.

Recent Developments

James M. Hinckley, Chief Operating Officer and member of our Board of
Directors and related committees, resigned his positions with us effective July
23, 2002. His duties were transitioned immediately, which required certain
temporary organizational changes until a permanent replacement is appointed.

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Results of Operations

12 Weeks Ended June 12, 2001 Compared to 12 Weeks Ended June 11, 2002

Consolidated Operations

Operating revenues decreased from $265.2 million for the 12 weeks ended
June 12, 2001 to $252.7 million for the 12 weeks ended June 11, 2002. This
decrease was comprised of operating revenue decreases of $4.6 million at our
country club and golf facilities, $3.4 million at our business and sports
clubs, and $5.5 million in our other operations and services, partially offset
by an increase of $1.1 million at our resorts.

Loss on disposals and impairment of assets was $10.2 million for the 12
weeks ended June 11, 2002. The combined divestiture of four properties and the
disposal of certain other assets during the 12 weeks ended June 11, 2002
resulted in net losses on disposal of $8.3 million. Included in this amount is
the sale of Daufuskie Island Club and Resort (referred to as Daufuskie), one of
our former resorts that was reclassified to our country club and golf
facilities segment at the outset of fiscal year 2002 due to the reduction in
services offered at the property in anticipation of its divestiture. The sale
of Daufuskie generated consideration of $12.8 million, including $18.0 million
in buyers notes, which we have valued at $10.0 million. Additionally,
impairment losses of $1.9 million were recorded during the 12 weeks ended June
11, 2002 to write down the carrying value of certain properties to be disposed.

Excluding the impact of disposals and impairment of assets, operating
income decreased to $18.5 million for the 12 weeks ended June 11, 2002 from
$23.3 million for the 12 weeks ended June 12, 2001. This decrease was due to
the decline in revenues mentioned above, partially offset by decreased
operating costs and expenses of $4.9 million and selling, general and
administrative expenses of $3.4 million. The decrease in operating costs and
expenses was primarily attributable to expense controls and lower cost of goods
sold due to the decline in revenues, in addition to cost savings realized
through centralized procurement contracts negotiated by Avendra. The decrease
in selling, general and administrative expenses was primarily due to cost
cutting initiatives that we have undertaken in our corporate office and other
offsite functions.

Loss from operations before income taxes and minority interest decreased
to a $10.3 million loss for the 12 weeks ended June 11, 2002 from $10.3 million
in income for the 12 weeks ended June 12, 2001. This decrease was primarily
due to the decreases in operating income and net losses on impairment and
disposal of assets mentioned above.

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Segment and Other Information

Country Club and Golf Facilities

The following table presents certain summary financial and other operating
data for our country club and golf facilities segment for the 12 week periods
ended June 12, 2001 and June 11, 2002 (dollars in thousands):

|                                      |                                                   |  |                  |         |                  |  |      |         |      |  |     |         |  |  |     |         |  
|------------------------------------- | ------------------------------------------------- |  | ---------------- | ------- | ---------------- |  | ---- | ------- | ---- |  | --- | ------- |  |  | --- | ------- | -
|                                      |                                                   |  | Same Store       |         | Total           
|                                      |                                                   |  | Country Club and |         | Country Club and
|                                      |                                                   |  | Golf Facilities  |         | Golf Facilities 
|                                      |                                                   |  |                  |         |                 
|                                      |                                                   |  | 2001             |         | 2002             |  | 2001 |         | 2002
|                                      |                                                   |  |                  |         |                  |  |      |         |     
|Number of facilities at end of period |                                                   |  | 103              |         |                  |  | 103  |         |      |  | 121 |         |  |  | 111 |        
|                                      | Operating revenues                                |  | $                | 121,310 |                  |  | $    | 119,381 |      |  | $   | 134,201 |  |  | $   | 129,571 |  
|                                      | Operating costs and expenses                      |  |                  | 89,632  |                  |  |      | 92,649  |      |  |     | 101,737 |  |  |     | 101,765 |  
|                                      | Depreciation and amortization                     |  |                  | 11,258  |                  |  |      | 10,646  |      |  |     | 12,266  |  |  |     | 11,581  |  
|                                      | Gain (loss) on disposals and impairment of assets |  |                  | 174     |                  |  |      | (2,288  | )    |  |     | 1,490   |  |  |     | (13,861 | )
|                                      |                                                   |  |                  |         |                  |  |      |         |      |  |     |         |  |  |     |        
|                                      | Segment operating income                          |  | $                | 20,594  |                  |  | $    | 13,798  |      |  | $   | 21,688  |  |  | $   | 2,364   |  
|                                      |                                                   |  |                  |         |                  |  |      |         |      |  |     |         |  |  |     |        
|                                      | EBITDA                                            |  | $                | 31,678  |                  |  | $    | 26,732  |      |  | $   | 32,464  |  |  | $   | 27,806  |  
|                                      |                                                   |  |                  |         |                  |  |      |         |      |  |     |         |  |  |     |        

Operating revenues decreased $1.9 million for same store country club and
golf facilities for the 12 weeks ended June 11, 2002 from the 12 weeks ended
June 12, 2001, primarily due to decreased golf operations revenue of $2.6
million partially offset by increased membership dues of $1.1 million. Despite
increased rounds at our public and semi-private golf facilities, golf
operations revenues decreased due to greens fee decreases at these facilities
attributable to price competition in the markets in which we operate. We
increased membership dues through price increases and the rollout of Signature
Gold in the second fiscal quarter of 2001, which more than offset decreased
membership levels at same store country club and golf facilities. The
additional $2.7 million decrease in revenues at total country club and golf
facilities was primarily due to divestitures of non-strategic properties as
discussed below.

Excluding the impact of disposals and impairment of assets, segment
operating income decreased $4.3 million at same store country club and golf
facilities for the 12 weeks ended June 11, 2002 from the 12 weeks ended June
12, 2001. Lower profit margins were earned in golf operations due to the
decline in greens fees mentioned above. Additionally, other operating expenses
increased due to a litigation accrual of $3.2 million relating to a preliminary
arbitration decision at one of our country clubs.

Loss on disposals and impairment of assets for total country club and golf
facilities was $13.9 million for the 12 weeks ended June 11, 2002. This amount
was comprised of net losses of $12.0 million recognized on the divestiture of
two country club and golf facilities and the disposal of other assets.
Included in this amount is the sale of Daufuskie, one of our former resorts
that was reclassified to our country club and golf facilities segment at the
outset of fiscal year 2002 due to the reduction in services offered at the
property in anticipation of its divestiture. The sale of Daufuskie generated
consideration of $12.8 million, including $18.0 million in buyers notes, which
we have valued at $10.0 million. Impairment losses of $1.9 million were
recorded to write down the carrying value of certain properties to be disposed.

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Business and Sports Clubs

The following table presents certain summary financial and other operating
data for our business and sports clubs segment for the 12 week periods ended
June 12, 2001 and June 11, 2002 (dollars in thousands):

|                                      |                                            |  |                     |        |                  |  |      |        |      |  |    |        |  |  |    |        |  
|------------------------------------- | ------------------------------------------ |  | ------------------- | ------ | ---------------- |  | ---- | ------ | ---- |  | -- | ------ |  |  | -- | ------ | -
|                                      |                                            |  | Same Store Business |        | Total Business  
|                                      |                                            |  | and Sports Clubs    |        | and Sports Clubs
|                                      |                                            |  |                     |        |                 
|                                      |                                            |  | 2001                |        | 2002             |  | 2001 |        | 2002
|                                      |                                            |  |                     |        |                  |  |      |        |     
|Number of facilities at end of period |                                            |  | 75                  |        |                  |  | 75   |        |      |  | 76 |        |  |  | 75 |       
|                                      | Operating revenues                         |  | $                   | 57,902 |                  |  | $    | 55,575 |      |  | $  | 59,314 |  |  | $  | 55,887 |  
|                                      | Operating costs and expenses               |  |                     | 50,297 |                  |  |      | 50,909 |      |  |    | 51,551 |  |  |    | 51,448 |  
|                                      | Depreciation and amortization              |  |                     | 2,522  |                  |  |      | 2,939  |      |  |    | 2,635  |  |  |    | 2,994  |  
|                                      | Loss on disposals and impairment of assets |  |                     |       |                  |  |      | (1,497 | )    |  |    |       |  |  |    | (1,473 | )
|                                      |                                            |  |                     |        |                  |  |      |        |      |  |    |        |  |  |    |       
|                                      | Segment operating income                   |  | $                   | 5,083  |                  |  | $    | 230    |      |  | $  | 5,128  |  |  | $  | (28    | )
|                                      |                                            |  |                     |        |                  |  |      |        |      |  |    |        |  |  |    |       
|                                      | EBITDA                                     |  | $                   | 7,605  |                  |  | $    | 4,666  |      |  | $  | 7,764  |  |  | $  | 4,439  |  
|                                      |                                            |  |                     |        |                  |  |      |        |      |  |    |        |  |  |    |       

Operating revenues decreased $2.3 million for same store business and
sports clubs for the 12 weeks ended June 11, 2002 from the 12 weeks ended June
12, 2001. This decrease was primarily due to a $1.3 million decline in food
and beverage sales, the majority of which was a result of decreased private
parties attributable to lower membership and lower usage by existing members.
Membership dues declined $0.8 million due to net attrition in membership since
the second fiscal quarter of 2001. Club membership and usage have been
adversely impacted by decreased corporate and consumer spending due to the
effects of continued economic uncertainty.

Excluding the impact of disposals and impairment of assets, segment
operating income decreased $3.4 million at same store business and sports clubs
for the 12 weeks ended June 11, 2002 from the 12 weeks ended June 12, 2001.
This decrease was primarily due to a decrease in operating profit margins
attributable to the decrease in private parties, which typically have higher
margins than a la carte sales. Additionally, the business clubs began a new
dining program aimed at increasing volume through packaged menu items that are
priced below our traditional selections. The decrease in operating profit
margin was partially offset by cost savings in operations realized through
centralized procurement contracts negotiated by Avendra.

Loss on disposals and impairment of assets for total business and sports
clubs was $1.5 million for the 12 weeks ended June 11, 2002. This amount was
comprised of net losses recognized on the divestiture of one business and
sports club and the disposal of other assets.

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Resorts

The following table presents certain summary financial and other operating
data for our resorts segment for the 12 week periods ended June 12, 2001 and
June 11, 2002 (dollars in thousands):

|                                      |                                              |  |                |         |               |  |      |         |      |  |   |        |  |  |   |        |  
|------------------------------------- | -------------------------------------------- |  | -------------- | ------- | ------------- |  | ---- | ------- | ---- |  | - | ------ |  |  | - | ------ | -
|                                      |                                              |  | Same Store and |         |               |  |      |         |      |  |  
|                                      |                                              |  | Total Resorts  |         | Total Resorts
|                                      |                                              |  |                |         |              
|                                      |                                              |  | 2001           |         | 2002          |  | 2001 |         | 2002
|                                      |                                              |  |                |         |               |  |      |         |     
|Number of facilities at end of period |                                              |  | 3              |         |               |  | 3    |         |      |  | 4 |        |  |  | 3 |       
|                                      | Operating revenues                           |  | $              | 55,177  |               |  | $    | 56,123  |      |  | $ | 55,454 |  |  | $ | 56,538 |  
|                                      | Operating costs and expenses                 |  |                | 37,903  |               |  |      | 39,338  |      |  |   | 38,184 |  |  |   | 39,605 |  
|                                      | Depreciation and amortization                |  |                | 3,129   |               |  |      | 3,762   |      |  |   | 3,196  |  |  |   | 3,764  |  
|                                      | Loss on disposals and impairment of assets   |  |                |        |               |  |      | (81     | )    |  |   |       |  |  |   | (81    | )
|                                      |                                              |  |                |         |               |  |      |         |      |  |   |        |  |  |   |       
|                                      | Segment operating income                     |  | $              | 14,145  |               |  | $    | 12,942  |      |  | $ | 14,074 |  |  | $ | 13,088 |  
|                                      |                                              |  |                |         |               |  |      |         |      |  |   |        |  |  |   |       
|                                      | EBITDA                                       |  | $              | 17,274  |               |  | $    | 16,785  |      |  | $ | 17,271 |  |  | $ | 16,933 |  
|                                      |                                              |  |                |         |               |  |      |         |      |  |   |        |  |  |   |       
|Lodging data: (3 resorts) (1)         |                                              |  |                |         |               |  |      |         |      |  |   |        |  |  |   |       
|                                      | Room nights available                        |  |                | 109,284 |               |  |      | 109,284 |      |  |   |        |  |  |   |        |  
|                                      | Room nights occupied                         |  |                | 63,638  |               |  |      | 62,149  |      |  |   |        |  |  |   |        |  
|                                      | Occupancy rate                               |  |                | 58.2    | %             |  |      | 56.9    | %    |  |   |        |  |  |   |        |  
|                                      | Average daily revenue per occupied room (2)  |  | $              | 783     |               |  | $    | 807     |      |  |   |        |  |  |   |        |  
|                                      | Average daily revenue per available room (2) |  | $              | 456     |               |  | $    | 459     |      |  |   |        |  |  |   |        |  



---

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

Operating revenues increased $0.9 million for same store resorts for the
12 weeks ended June 11, 2002 from the 12 weeks ended June 12, 2001. This
increase was primarily due to increased membership dues of $1.0 million and
other amenities revenue of $0.9 million, partially offset by decreased golf
operations revenue of $0.5 million. Membership dues increased as a result of
price increases in monthly dues at Pinehurst. Other amenities revenues were
up as a result of the recent opening of The Spa at Pinehurst, a 31,000 square
foot spa facility. Occupancy rates were down at Barton Creek and Pinehurst as
a result of lower business associated with declines in group spending due to
continued economic weakness. Non-lodging revenue lines were also deeply
impacted by lower occupancies, particularly at Barton Creek, where both golf
and food and beverage operations declined. Despite Barton Creeks declines,
average daily revenue per occupied room increased due to strong group and
social spending at The Homestead and Pinehurst, respectively.

Segment operating income decreased $1.2 million for same store resorts for
the 12 weeks ended June 11, 2002 from the 12 weeks ended June 12, 2001. This
decrease was primarily due to increased depreciation and amortization of $0.6
million and operating costs and expenses of $1.4 million. Depreciation and
amortization increased due to recent expansion projects completed at same store
resorts. Operating costs and expenses increased due to higher marketing
expenses resulting from increased sales efforts aimed at drawing and retaining
customers.

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##### Table of Contents



Other Operations and Services

Excluding the impact of disposals and impairment of assets, operating
income or loss for our real estate operations decreased to a loss of $0.3
million in the 12 weeks ended June 11, 2002 from income of $0.2 million for the
12 weeks ended June 12, 2001. This decrease was primarily due to decreased
closings of units in our Owners Club program and decreased sales of land held
for sale. Sales of Owners Club units were lower because we have sold the
majority of our available interests at two locations and due to continued
weakness in the nations economy.

Excluding the impact of disposals and impairment of assets, operating
income or loss for our international operations decreased to a loss of $1.7
million in the 12 weeks ended June 11, 2002 from income of $0.1 million for the
12 weeks ended June 12, 2001. This decrease was primarily due to decreased
tourism and guest traffic at our properties in Mexico.

24 Weeks Ended June 12, 2001 Compared to 24 Weeks Ended June 11, 2002

Consolidated Operations

Operating revenues decreased from $466.3 million for the 24 weeks ended
June 12, 2001 to $444.2 million for the 24 weeks ended June 11, 2002. This
decrease was comprised of operating revenue decreases of $8.4 million at our
business and sports clubs, $7.4 million at our country club and golf
facilities, and $6.4 million in our other operations and services.

Loss on disposals and impairment of assets was $8.1 million for the 24
weeks ended June 11, 2002, as compared to $0.3 million for the 24 weeks ended
June 12, 2001. The combined divestiture of nine properties and the disposal of
certain other assets during the 24 weeks ended June 11, 2002 resulted in losses
on disposals of $6.2 million. Additionally, impairment losses of $1.9 million
were recorded during the 24 weeks ended June 11, 2002 to write down the
carrying value of certain properties to be disposed.

Excluding the impact of disposals and impairment of assets, operating
income decreased to $6.9 million for the 24 weeks ended June 11, 2002 from
$13.4 million for the 24 weeks ended June 12, 2001. This decrease was due to
the decline in revenues mentioned above, partially offset by decreased
operating costs and expenses of $12.0 million and decreased selling, general
and administrative expenses of $4.4 million. The decrease in operating costs
and expenses was primarily attributable to expense controls and lower cost of
goods sold due to the decline in revenues, in addition to cost savings realized
through centralized procurement contracts negotiated by Avendra. The decrease
in selling, general and administrative expenses was primarily due to cost
cutting initiatives that we have undertaken in our corporate office and other
offsite functions.

Loss from operations before income taxes and minority interest increased
to $27.9 million for the 24 weeks ended June 11, 2002 from $15.2 million for
the 24 weeks ended June 12, 2001. This increase was primarily due to losses on
disposals and impairment of assets and the decrease in operating income
mentioned above, partially offset by lower interest expense of $2.8 million.
The decrease in interest expense was due to a decline in variable interest
rates and lower average outstanding debt balances in the current year.

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##### Table of Contents



Segment and Other Information   24 Weeks

Country Club and Golf Facilities

The following table presents certain summary financial and other operating
data for our country club and golf facility segment for the 24 week periods
ended June 12, 2001 and June 11, 2002 (dollars in thousands):

|                                      |                                                   |  |                  |         |                  |  |      |         |      |  |     |         |  |  |     |         |  
|------------------------------------- | ------------------------------------------------- |  | ---------------- | ------- | ---------------- |  | ---- | ------- | ---- |  | --- | ------- |  |  | --- | ------- | -
|                                      |                                                   |  | Same Store       |         | Total           
|                                      |                                                   |  | Country Club and |         | Country Club and
|                                      |                                                   |  | Golf Facilities  |         | Golf Facilities 
|                                      |                                                   |  |                  |         |                 
|                                      |                                                   |  | 2001             |         | 2002             |  | 2001 |         | 2002
|                                      |                                                   |  |                  |         |                  |  |      |         |     
|Number of facilities at end of period |                                                   |  | 103              |         |                  |  | 103  |         |      |  | 121 |         |  |  | 111 |        
|                                      | Operating revenues                                |  | $                | 213,428 |                  |  | $    | 213,316 |      |  | $   | 237,235 |  |  | $   | 229,802 |  
|                                      | Operating costs and expenses                      |  |                  | 163,772 |                  |  |      | 169,606 |      |  |     | 187,383 |  |  |     | 186,427 |  
|                                      | Depreciation and amortization                     |  |                  | 22,576  |                  |  |      | 21,298  |      |  |     | 24,694  |  |  |     | 22,812  |  
|                                      | Gain (loss) on disposals and impairment of assets |  |                  | (153    | )                |  |      | (2,668  | )    |  |     | 2,262   |  |  |     | (11,308 | )
|                                      |                                                   |  |                  |         |                  |  |      |         |      |  |     |         |  |  |     |        
|                                      | Segment operating income                          |  | $                | 26,927  |                  |  | $    | 19,744  |      |  | $   | 27,420  |  |  | $   | 9,255   |  
|                                      |                                                   |  |                  |         |                  |  |      |         |      |  |     |         |  |  |     |        
|                                      | EBITDA                                            |  | $                | 49,656  |                  |  | $    | 43,710  |      |  | $   | 49,852  |  |  | $   | 43,375  |  
|                                      |                                                   |  |                  |         |                  |  |      |         |      |  |     |         |  |  |     |        

Operating revenues remained relatively stable at same store country club
and golf facilities for the 24 weeks ended June 11, 2002 from the 24 weeks
ended June 12, 2001, primarily due to increased membership dues of $3.3 million
offset by decreased golf operations revenues of $2.6 million. We increased
membership dues through price increases and the rollout of Signature Gold in
the second fiscal quarter of 2001, which more than offset decreased membership
levels at same store country club and golf facilities. Despite increased
rounds at our facilities, golf operations revenues decreased due to greens fee
decreases at semi-private and public golf facilities attributable to price
competition in the markets in which we operate. The $7.4 million decrease in
operating revenues at total country club and golf facilities was primarily due
to divestitures of non-strategic properties.

Excluding the impact of disposals and impairment of assets, segment
operating income decreased $4.7 million at same store country club and golf
facilities for the 24 weeks ended June 11, 2002 from the 24 weeks ended June
12, 2001. Lower profit margins were earned in golf operations due to the
decline in greens fees mentioned above, in addition to increased golf course
maintenance expenses. Other operating expenses increased due to a litigation
accrual of $3.2 million relating to a preliminary arbitration decision at one of our
country clubs.

Loss on disposals and impairment of assets for total country club and golf
facilities was $11.3 million for the 24 weeks ended June 11, 2002. This amount
was comprised of net losses of $9.4 million recognized on the divestiture of
seven country club and golf facilities and the disposal of other assets.
Included in this amount is the sale of Daufuskie, one of our former resorts
that was reclassified to our country club and golf facilities segment at the
outset of fiscal year 2002 due to the reduction in services offered at the
property in anticipation of its divestiture. The sale of Daufuskie generated
consideration of $12.8 million, including $18.0 million in buyers notes, which
we have valued at $10.0 million. Impairment losses of $1.9 million were
recorded during the 24 weeks ended June 11, 2002 to write down the carrying
value of certain properties to be disposed.

16



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##### Table of Contents



Business and Sports Clubs

The following table presents certain summary financial and other operating
data for our business and sports club segment for the 24 week periods ended
June 12, 2001 and June 11, 2002 (dollars in thousands):

|                                      |                                            |  |                     |         |                  |  |      |         |      |  |    |         |  |  |    |         |  
|------------------------------------- | ------------------------------------------ |  | ------------------- | ------- | ---------------- |  | ---- | ------- | ---- |  | -- | ------- |  |  | -- | ------- | -
|                                      |                                            |  | Same Store Business |         | Total Business  
|                                      |                                            |  | and Sports Clubs    |         | and Sports Clubs
|                                      |                                            |  |                     |         |                 
|                                      |                                            |  | 2001                |         | 2002             |  | 2001 |         | 2002
|                                      |                                            |  |                     |         |                  |  |      |         |     
|Number of facilities at end of period |                                            |  | 75                  |         |                  |  | 75   |         |      |  | 76 |         |  |  | 75 |        
|                                      | Operating revenues                         |  | $                   | 115,221 |                  |  | $    | 107,575 |      |  | $  | 116,900 |  |  | $  | 108,514 |  
|                                      | Operating costs and expenses               |  |                     | 101,578 |                  |  |      | 98,933  |      |  |    | 103,054 |  |  |    | 100,116 |  
|                                      | Depreciation and amortization              |  |                     | 5,331   |                  |  |      | 5,941   |      |  |    | 5,467   |  |  |    | 6,052   |  
|                                      | Loss on disposals and impairment of assets |  |                     |        |                  |  |      | (1,878  | )    |  |    |        |  |  |    | (1,854  | )
|                                      |                                            |  |                     |         |                  |  |      |         |      |  |    |         |  |  |    |        
|                                      | Segment operating income                   |  | $                   | 8,312   |                  |  | $    | 823     |      |  | $  | 8,379   |  |  | $  | 492     |  
|                                      |                                            |  |                     |         |                  |  |      |         |      |  |    |         |  |  |    |        
|                                      | EBITDA                                     |  | $                   | 13,643  |                  |  | $    | 8,642   |      |  | $  | 13,846  |  |  | $  | 8,398   |  
|                                      |                                            |  |                     |         |                  |  |      |         |      |  |    |         |  |  |    |        

Operating revenues decreased $7.6 million at same store business and
sports clubs for the 24 weeks ended June 11, 2002 from the 24 weeks ended June
12, 2001. This decrease was primarily due to a $5.3 decline in food and
beverage sales, the majority of which was a result of decreased private
parties attributable to lower membership and lower usage by existing members.
Membership dues declined $1.9 million due to net attrition in membership since
the second fiscal quarter of 2001. Club membership and usage have been
adversely impacted by decreased corporate and consumer spending due to the
effects of continued economic uncertainty.

Excluding the impact of disposals and impairment of assets, segment
operating income decreased $5.6 million at same store business and sports clubs
for the 24 weeks ended June 11, 2002 from the 24 weeks ended June 12, 2001.
This decrease was primarily due to the decrease in revenues mentioned above,
partially offset by a decline in operating expenses of $2.6 million resulting
from the decrease in food and beverage sales. Operating profit margins
declined due to the decrease in private parties, which typically have higher
margins than a la carte sales, as well as the marketing of a new dining program
aimed at increasing volume through packaged menu items that are priced below
our traditional selections.

Loss on disposals and impairment of assets for total business and sports
clubs was $1.9 million for the 24 weeks ended June 11, 2002. This amount was
comprised of net losses recognized on the divestiture of one business and
sports club and the disposal of other assets.

17



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##### Table of Contents



Resorts

The following table presents certain summary financial and other operating
data for our resort segment for the 24 week period ended June 12, 2001 and June
11, 2002 (dollars in thousands):

|                                      |                                              |  |                |         |               |  |      |         |      |  |   |        |  |  |   |        |  
|------------------------------------- | -------------------------------------------- |  | -------------- | ------- | ------------- |  | ---- | ------- | ---- |  | - | ------ |  |  | - | ------ | -
|                                      |                                              |  | Same Store and |         |               |  |      |         |      |  |  
|                                      |                                              |  | Total Resorts  |         | Total Resorts
|                                      |                                              |  |                |         |              
|                                      |                                              |  | 2001           |         | 2002          |  | 2001 |         | 2002
|                                      |                                              |  |                |         |               |  |      |         |     
|Number of facilities at end of period |                                              |  | 3              |         |               |  | 3    |         |      |  | 4 |        |  |  | 3 |       
|                                      | Operating revenues                           |  | $              | 85,563  |               |  | $    | 85,699  |      |  | $ | 86,389 |  |  | $ | 86,530 |  
|                                      | Operating costs and expenses                 |  |                | 67,835  |               |  |      | 68,274  |      |  |   | 68,508 |  |  |   | 68,852 |  
|                                      | Depreciation and amortization                |  |                | 6,325   |               |  |      | 7,399   |      |  |   | 6,438  |  |  |   | 7,402  |  
|                                      | Loss on disposals and impairment of assets   |  |                |        |               |  |      | (81     | )    |  |   |       |  |  |   | (81    | )
|                                      |                                              |  |                |         |               |  |      |         |      |  |   |        |  |  |   |       
|                                      | Segment operating income                     |  | $              | 11,403  |               |  | $    | 9,945   |      |  | $ | 11,443 |  |  | $ | 10,195 |  
|                                      |                                              |  |                |         |               |  |      |         |      |  |   |        |  |  |   |       
|                                      | EBITDA                                       |  | $              | 17,728  |               |  | $    | 17,425  |      |  | $ | 17,881 |  |  | $ | 17,678 |  
|                                      |                                              |  |                |         |               |  |      |         |      |  |   |        |  |  |   |       
|Lodging data: (3 resorts) (1)         |                                              |  |                |         |               |  |      |         |      |  |   |        |  |  |   |       
|                                      | Room nights available                        |  |                | 219,434 |               |  |      | 219,434 |      |  |   |        |  |  |   |        |  
|                                      | Room nights occupied                         |  |                | 106,699 |               |  |      | 103,653 |      |  |   |        |  |  |   |        |  
|                                      | Occupancy rate                               |  |                | 48.6    | %             |  |      | 47.2    | %    |  |   |        |  |  |   |        |  
|                                      | Average daily revenue per occupied room (2)  |  | $              | 703     |               |  | $    | 715     |      |  |   |        |  |  |   |        |  
|                                      | Average daily revenue per available room (2) |  | $              | 342     |               |  | $    | 338     |      |  |   |        |  |  |   |        |  



---

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

Operating revenues remained relatively stable for same store resorts for
the 24 weeks ended June 11, 2002 from the 24 weeks ended June 12, 2001,
primarily due to an increase in membership dues of $1.4 million and other
amenities revenue of $1.0 million offset by decreased golf and lodging
revenues of $1.0 million. Membership dues increased as a result of price
increases in monthly dues at Pinehurst. Other amenities revenues were up as a
result of the recent opening of The Spa at Pinehurst, a 31,000 square foot spa
facility. Lodging revenues decreased due to lower occupancy rates at Barton
Creek and Pinehurst as a result of lower business associated with declines in
group and social spending due to continued economic weakness. Non-lodging
revenue lines were also deeply impacted by lower occupancies, particularly at
Barton Creek, where both golf and food and beverage operations declined.
Despite Barton Creeks declines, average daily revenue per occupied room
increased primarily due to strong group spending at The Homestead.

Segment operating income decreased $1.5 million for same store resorts for
the 24 weeks ended June 11, 2002 from the 24 weeks ended June 12, 2001. This
decrease was primarily due to increased depreciation and amortization of $1.1
million and operating costs and expenses of $0.4 million. Depreciation and
amortization increased due to recent expansion projects completed at same store
resorts. Operating costs and expenses increased due to higher marketing
expenses resulting from increased sales efforts aimed at drawing and retaining
customers.

18



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##### Table of Contents



Other Operations and Services

Excluding the impact of disposals and impairment of assets, operating loss
for our real estate operations increased to $2.3 million in the 24 weeks ended
June 11, 2002 from $1.6 million for the 24 weeks ended June 12, 2001. This
decrease was primarily due to decreased closings of units in our Owners Club
program and decreased sales of land held for sale. Sales of Owners Club units
were lower because we have sold the majority of our available interests at two
locations and due to continued weakness in the nations economy.

Excluding the impact of disposals and impairment of assets, operating
income or loss for our international operations decreased to a loss of $1.9
million in the 24 weeks ended June 11, 2002 from income of $0.2 million for the
24 weeks ended June 12, 2001. This decrease was primarily due to decreased
tourism and guest traffic at our properties in Mexico.

Seasonality of Demand; Fluctuations in Quarterly Results

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

Liquidity and Capital Resources

Historically, we have financed our operations and cash needs primarily
through cash flows from operations, borrowings under credit facilities, and to
a lesser extent, proceeds from divestitures. Our primary cash needs for the
remainder of 2002 consist of capital to finance working capital needs, capital
replacements at existing facilities, and a limited amount of existing capital
expansion and development projects. We distinguish capital expenditures to
refurbish and replace existing property and equipment (i.e., capital
replacements) from discretionary capital expenditures such as the expansion of
existing facilities, acquisitions or developments of new facilities and
investments in joint ventures (i.e., capital expansions). Most capital
expenditures other than certain 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.

Net cash provided by operations decreased from $38.0 million to $32.6
million for the 24 weeks ended June 12, 2001 and June 11, 2002, respectively,
primarily due to decreases in operating revenues in all segments except
resorts. Supplementing reduced cash flows from operations were proceeds from
disposals of several non-strategic assets. As of July 24, 2002, we have
completed the divestiture of nine properties in the current year for total
consideration of $28.2 million, including $18.0 million in buyers notes that
we have valued at $10.0 million, and the assumption of $3.8 million in debt.

We are currently in the process of completing certain expansion and
development projects that we have undertaken in the last two years. As of July
24, 2002, we have finalized mortgage financing with an external lender that has
provided approximately $20.1 million in funding for these projects. Upon
completion of these projects, we do not expect to take on any significant
capital expenditures for the remainder of 2002. As such, our trend of
increased capital expenditures over the last three years are not likely to
continue in 2002.

In addition to the mortgage financing referenced above, we currently have
plans to take advantage of favorable market conditions in the high-yield
corporate bond market by issuing $200 million in senior subordinated bonds, of
which $192 million will be used to repay a portion of the indebtedness
outstanding, net of related debt issuance costs, under our of our primary
long-term credit facility. In addition, we plan to amend our senior credit
facility to revise certain financial

19



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##### Table of Contents



covenants. Subsequent to this issuance, if completed, we believe that the
proceeds will provide us with increased flexibility that would not otherwise be
available to us with our current capital structure. In addition, we believe
that this issuance would strengthen our liquidity and provide necessary
insulation against a further or sustained downturn in the economy or another
catastrophic event similar to the September 11, 2001 terrorist attacks. Should
this additional financing not be secured, we will be limited from a liquidity
standpoint and would be at a higher risk level with regard to continued poor
economic conditions or future catastrophic events. In this event, we may be
required to divest assets in order to meet future cash requirements.

Certain Relationships and Related Transactions

Robert H. Dedman, our founder and Chairman of the Board, is a guarantor of
a mortgage loan in the amount of $6.0 million obtained by one of our
wholly-owned subsidiaries, pursuant to the terms of a Guaranty Agreement, dated
June 17, 2002. Mr. Dedman has agreed to absolutely and unconditionally
guarantee the full amount of the loan in return for compensation consisting of
a single payment of $270,000, plus a monthly fee of .375% of the outstanding
principal of the note evidencing the loan, as well as a second lien on the
property to support his guaranty. This loan was not included in our long-term
debt balance at June 11, 2002 as the agreement was not finalized until after
the balance sheet date. Following the offering of the senior subordinated
bonds mentioned above, we expect to make arrangements to eliminate Mr. Dedmans
guarantee.

In an agreement effective September 4, 2001, we sold the stock of a
wholly owned subsidiary, The Owners Club at Telluride, Inc., which owned a
majority interest in Telluride Club Mountain Village, LLC, (collectively
referred to as Telluride), for nominal consideration to Telluride Holdings 2001
LLC, a limited liability company which is owned in approximate one-third
interests by Jeffrey P. Mayer, our Chief Financial Officer, James M. Hinckley,
our Chief Operating Officer and Director at the time, and Rudy Anderson, Senior
Vice President of ClubCorp USA, Inc. The sale resulted in the transfer of
ownership of Telluride, with assets of $23.7 million and liabilities of $22.2
million, and a net loss on divestiture of assets of approximately $3.8 million.
The purpose of this transaction was to dispose of an underperforming property
and to remove the associated non-recourse liability owed by Telluride to a
third-party lender from our consolidated balance sheet. When combined with
other key asset sales completed in the third quarter of fiscal year 2001, this
allowed us to meet the leverage ratio required by our senior credit facility,
thus allowing us to comply with applicable debt covenants for the fiscal
quarter ended September 4, 2001. We continued to provide management services
to Telluride under an existing management agreement until June 28, 2002, at
which time we discontinued our management agreements with Telluride and
recorded a bad debt expense of approximately $350,000, representing expenses
incurred under the management agreement.

Telluride was put under receivership in May of 2002. In June of 2002,
Tellurides third party lender sued Telluride, as well as certain ClubCorp
entities and officers, alleging among other things, unauthorized transfer of
certain bank collateral and intentional misuse of funds. We negotiated a
settlement, pending court approval, among the various parties of the lawsuit.
In order to induce Telluride 2001 Holdings LLC on behalf of Telluride, to enter
into the settlement agreement, we agreed to indemnify Mr. Mayer, Mr. Hinckley
and Mr. Anderson for liability that might arise from their participation in the
settlement as principals of Telluride. We believe that the incremental
exposure related to this indemnity is not significant.

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

Certain information in this Quarterly Report on Form 10-Q may contain
forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical fact are forward-looking statements for purposes of
these provisions, including projections of earnings, revenues or other
financial items, statements of the plans and objectives of management for
future operations, statements concerning proposed new services, statements
regarding future economic conditions or performance, statements about market
risk and statements of assumptions underlying any of the foregoing. In some
cases, forward-looking statements can be identified by the use of terminology
such as may, will, expects, plans, anticipates, estimates,
potential or continue, or the negative thereof or other comparable
terminology. Although we believe that the expectations reflected in our
forward-looking statements are reasonable, we can give no assurance that such
expectations or any of our forward-looking statements will prove to be correct,
and actual results could differ materially from those projected or assumed in
our forward-looking statements. Forward-looking statements are subject to
inherent risks and uncertainties, some of which are summarized in this section
and in our Form 10-K for the year ended December 25, 2001.

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Our success depends on our ability to attract and retain members at our
clubs and maintain or increase usage of our facilities. We have experienced
varying levels of membership enrollment and attrition rates and, in certain
areas, decreased levels of usage of our facilities during our operating
history. Although management devotes substantial efforts to ensuring that
members and guests are satisfied, many of the factors affecting club membership
and facility usage are beyond our control, including weather conditions,
general economic conditions, changes in demand for golf and private club
services and changes in the federal tax laws. There can be no assurance that
we will be able to maintain or increase membership or facility usage.
Significant periods where attrition rates exceed enrollment rates, or where
facilities usage is below historical levels would have a material adverse
effect on our business, operating results, and financial condition. Other
factors that may affect our operating results include, but are not limited to,
the actions of our competitors, changes in labor costs, the timing and success
of acquisitions and dispositions, changes in law, and the possibility of future
terrorist attacks on the United States similar to those that occurred on
September 11, 2001.

Recently Issued Accounting Pronouncements

Effective December 26, 2001, we adopted Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets. SFAS 142 requires
that the cost of certain of our intangible assets will no longer be subject to
amortization. SFAS 142 did not have a significant impact on our consolidated
financial position or results of operations as we have virtually no goodwill in
our consolidated financial statements as substantially all of our purchase
price allocations on acquisitions have been recorded as property and
equipment.

In August 2001, the FASB issued Statement of Financial Accounting
Standards No. 144, Accounting for the Disposal or Impairment of Long-Lived
Assets. SFAS 144 supercedes SFAS 121 and the portion of Accounting Principles
Board Opinion No. 30 that deals with the disposal of a business segment. On
December 26, 2001, we adopted SFAS 144 and evaluated its impact on our
consolidated financial statements. On this date, we had eight properties
classified as held for sale; however, under the guidelines of SFAS 144, the
operations of these properties did not have to be reclassified and recorded in
discontinued operations, as the properties were classified as held for sale
before the date of implementation. During the 24 weeks ended June 11, 2002,
we classified an additional 19 properties as held for sale. We will continue
to be involved in the daily management of 13 of these properties that were
classified as held for sale after the pending sale transaction. Therefore,
under the guidelines of SFAS 144, we did not reclassify or record the
operations of these properties in discontinued operations and prior year
amounts have not been restated. The remaining properties operations are also
not reclassified and recorded in discontinued operations and the prior year
amounts have not been restated due to the insignificant impact to the
consolidated financial statements.

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

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PART II. OTHER INFORMATION




Item 4. Submission of Matters to a Vote of Security Holders

On May 8, 2002, the shareholders of ClubCorp, Inc., held their annual
meeting to elect directors. The following directors were elected:

Robert H. Dedman, Sr., Robert H. Dedman, Jr., Patricia Dedman Dietz, James M.
Hinckley, James L. Singleton and Bahram Shirazi.

There were no other matters submitted to a vote of stockholders at the meeting.




Item 6. Exhibits and Reports on Form 8-K

| |  |     |  |                                                                                       
| |  | --- |  | --------------------------------------------------------------------------------------
| |  | (a) |  | Exhibits                                                                              
| |  |     |  | 15.1            Letter from KPMG LLP regarding unaudited interim financial statements
| |  |     |  | 24.1            Power of Attorney                                                    
| |  | (b) |  | Reports on Form 8-K                                                                   
| |  |     |  | Not applicable                                                                        

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SIGNATURES

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

|                    |  |                |  |                                                                  
|------------------- |  | -------------- |  | -----------------------------------------------------------------
|                    |  | ClubCorp, Inc.
|                    |  |                |  |                                                                  
|                    |  |                |  |                                                                  
|Date: July 24, 2002 |  | By:            |  | /s/ JOHN D. BAILEY                                               
|                    |  |                |  |                                                                  
|                    |  |                |  | John D. Bailey
Senior Vice President and
Chief Accounting Officer

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EXHIBIT INDEX



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