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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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



For the quarterly period ended September 9, 2003



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



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



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CLUBCORP, INC.

(Exact name of registrant as specified in its charter)



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



Registrants
telephone number, including area code: (972) 243-6191



Former name, former address and former fiscal year, if changed since last report: NONE



---



Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes  x    No ̈.



Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes ̈No  x.



The number of shares of the Registrants Common Stock outstanding as of
October 24, 2003 was 93,727,772.



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CLUBCORP, INC.



INDEX



|Part I.  |  | FINANCIAL INFORMATION                                                                 |  |   
|-------- |  | ------------------------------------------------------------------------------------- |  | --
|         |  |                                                                                      
|Item 1.  |  | Financial Statements:                                                                 |  |   
|         |  | Independent Auditors Review Report                                                   |  | 1 
|         |  | Consolidated Balance Sheet                                                            |  | 2 
|         |  | Consolidated Statement of Operations                                                  |  | 3 
|         |  | Consolidated Statement of Cash Flows                                                  |  | 4 
|         |  | Condensed Notes to Consolidated Financial Statements                                  |  | 5 
|         |  |                                                                                      
|Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 13
|         |  |                                                                                      
|Item 3.  |  | Quantitative and Qualitative Disclosures about Market Risk                            |  | 24
|         |  |                                                                                      
|Item 4.  |  | Controls and Procedures                                                               |  | 24
|         |  |                                                                                      
|Part II. |  | OTHER INFORMATION                                                                     |  |   
|         |  |                                                                                      
|Item 6.  |  | Exhibits and Reports on Form 8-K                                                      |  | 26





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PART I. FINANCIAL INFORMATION



|ITEM 1. |  | FINANCIAL STATEMENTS
|------- |  | --------------------



INDEPENDENT AUDITORS REVIEW REPORT



The Board of Directors and Stockholders

ClubCorp, Inc.:





We have reviewed
the consolidated balance sheet of ClubCorp, Inc. and subsidiaries (ClubCorp) as of September 9, 2003, and the related consolidated statement of operations for the twelve weeks and thirty-six weeks ended September 9, 2003 and September 3, 2002, and
the consolidated statement of cash flows for the thirty-six weeks ended September 9, 2003 and September 3, 2002. 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 7 to the accompanying consolidated financial statements, effective
December 26, 2001, ClubCorp changed its method of accounting for the impairment or disposal 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 31, 2002, 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 April 7, 2003, 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 31, 2002, is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.











KPMG LLP



Dallas, Texas

October 23, 2003



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Consolidated Balance Sheet

(Dollars in thousands)

(Unaudited)



|                                                                                                                                                                                   |  | December 31,2002 |           |   | September 9,2003 |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | --------- | - | ---------------- | -
|Assets                                                                                                                                                                             |  |                  |           |   |                  |  
|Current assets:                                                                                                                                                                    |  |                  |           |   |                  |  
|Cash and cash equivalents                                                                                                                                                          |  | $                | 7,649     |   |                  | $
|Membership and other receivables, net                                                                                                                                              |  |                  | 90,895    |   |                  |  
|Inventories                                                                                                                                                                        |  |                  | 20,015    |   |                  |  
|Other assets                                                                                                                                                                       |  |                  | 86,881    |   |                  |  
|                                                                                                                                                                                   |  |                  |           |   |                  |  
|Total current assets                                                                                                                                                               |  |                  | 205,440   |   |                  |  
|Property and equipment, net                                                                                                                                                        |  |                  | 1,197,692 |   |                  |  
|Other assets                                                                                                                                                                       |  |                  | 168,145   |   |                  |  
|                                                                                                                                                                                   |  |                  |           |   |                  |  
|Total assets                                                                                                                                                                       |  | $                | 1,571,277 |   |                  | $
|                                                                                                                                                                                   |  |                  |           |   |                  |  
|Liabilities and Stockholders Equity                                                                                                                                               |  |                  |           |   |                  |  
|Current liabilities:                                                                                                                                                               |  |                  |           |   |                  |  
|Accounts payable and accrued liabilities                                                                                                                                           |  | $                | 71,782    |   |                  | $
|Long-term debt  current portion                                                                                                                                                   |  |                  | 69,483    |   |                  |  
|Other liabilities                                                                                                                                                                  |  |                  | 136,199   |   |                  |  
|                                                                                                                                                                                   |  |                  |           |   |                  |  
|Total current liabilities                                                                                                                                                          |  |                  | 277,464   |   |                  |  
|Long-term debt                                                                                                                                                                     |  |                  | 596,727   |   |                  |  
|Other liabilities                                                                                                                                                                  |  |                  | 148,222   |   |                  |  
|Membership deposits                                                                                                                                                                |  |                  | 116,234   |   |                  |  
|Redemption value of common stock held by benefit plan                                                                                                                              |  |                  | 38,697    |   |                  |  
|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, 93,727,191 and 93,727,772 outstanding at December
31, 2002 and at September 9, 2003, respectively. |  |                  | 996       |   |                  |  
|Additional paid-in capital                                                                                                                                                         |  |                  | 161,672   |   |                  |  
|Accumulated other comprehensive loss                                                                                                                                               |  |                  | (8,381    | ) |                  |  
|Retained earnings                                                                                                                                                                  |  |                  | 300,080   |   |                  |  
|Treasury stock, 5,867,217 and 5,866,636 shares at cost at December 31, 2002, and at September 9, 2003,
respectively.                                                               |  |                  | (60,434   | ) |                  |  
|                                                                                                                                                                                   |  |                  |           |   |                  |  
|Total stockholders equity                                                                                                                                                         |  |                  | 393,933   |   |                  |  
|                                                                                                                                                                                   |  |                  |           |   |                  |  
|Total liabilities and stockholders equity                                                                                                                                         |  | $                | 1,571,277 |   |                  | $
|                                                                                                                                                                                   |  |                  |           |   |                  |  





See accompanying condensed notes to consolidated financial statements.



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Consolidated Statement of Operations

(Dollars in thousands, except per share amounts)

(Unaudited)



|                                                                          |  | Twelve Weeks Ended |         |   | Thirty-Six Weeks Ended |  
|------------------------------------------------------------------------- |  | ------------------ | ------- | - | ---------------------- | -
|                                                                          |  | September 3, 2002  |         |   | September 9, 2003      |  
|Operating revenues                                                        |  | $                  | 218,943 |   |                        | $
|Operating costs and expenses                                              |  |                    | 172,578 |   |                        |  
|Depreciation and amortization                                             |  |                    | 19,701  |   |                        |  
|Selling, general and administrative expenses                              |  |                    | 17,231  |   |                        |  
|(Gain) loss on disposals and impairment of assets                         |  |                    | 3,862   |   |                        |  
|                                                                          |  |                    |         |   |                        |  
|Operating income from continuing operations                               |  |                    | 5,571   |   |                        |  
|Interest and investment income                                            |  |                    | 74      |   |                        |  
|Financing cost on prior debt facility                                     |  |                    |        |   |                        |  
|Interest expense                                                          |  |                    | (14,372 | ) |                        |  
|                                                                          |  |                    |         |   |                        |  
|Loss from continuing operations before income taxes and minority interest |  |                    | (8,727  | ) |                        |  
|Income tax (provision) benefit                                            |  |                    | 1,762   |   |                        |  
|Minority interest                                                         |  |                    | 213     |   |                        |  
|                                                                          |  |                    |         |   |                        |  
|Loss from continuing operations                                           |  |                    | (6,752  | ) |                        |  
|                                                                          |  |                    |         |   |                        |  
|Discontinued operations:                                                  |  |                    |         |   |                        |  
|Income (loss) from discontinued operations before income taxes            |  |                    | (6,050  | ) |                        |  
|Income tax (provision) benefit                                            |  |                    | 1,888   |   |                        |  
|                                                                          |  |                    |         |   |                        |  
|Income (loss) from discontinued operations                                |  |                    | (4,162  | ) |                        |  
|                                                                          |  |                    |         |   |                        |  
|Net loss                                                                  |  | $                  | (10,914 | ) |                        | $
|                                                                          |  |                    |         |   |                        |  
|Basic and diluted loss per share on:                                      |  |                    |         |   |                        |  
|Loss from continuing operations                                           |  | $                  | (0.07   | ) |                        | $
|Income (loss) from discontinued operations                                |  |                    | (0.05   | ) |                        |  
|                                                                          |  |                    |         |   |                        |  
|Basic and diluted loss per share                                          |  | $                  | (0.12   | ) |                        | $
|                                                                          |  |                    |         |   |                        |  



See accompanying
condensed notes to consolidated financial statements.



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Consolidated Statement of Cash Flows

(Dollars in thousands)

(Unaudited)



|                                                                                                 |  | Thirty-Six Weeks Ended |        
|------------------------------------------------------------------------------------------------ |  | ---------------------- | -------
|                                                                                                 |  | September 3,2002       |        
|Cash flows from operations:                                                                      |  |                        |        
|Loss from continuing operations                                                                  |  | $                      | (26,233
|Adjustments to reconcile loss from continuing operations to cash flows provided from operations: |  |                        |        
|Income (loss) from discontinued operations                                                       |  |                        | (4,789 
|Depreciation and amortization from continuing operations                                         |  |                        | 61,513 
|Depreciation and amortization from discontinued operations                                       |  |                        | 3,784  
|Loss on disposals and impairment of assets from continuing operations                            |  |                        | 13,659 
|(Gain) loss on disposals and impairment of assets from                                           |  |                        |        
|discontinued operations                                                                          |  |                        | 1,469  
|Minority interest in net income (loss) of subsidiaries                                           |  |                        | (527   
|Equity in (gains) losses of joint ventures                                                       |  |                        | 1,555  
|Amortization of discount on membership deposits                                                  |  |                        | 6,746  
|Net change in deferred income taxes                                                              |  |                        | (13,177
|Net change in real estate held for sale                                                          |  |                        | 2,846  
|Net change in membership and other receivables, net                                              |  |                        | 1,192  
|Net change in accounts payable and accrued liabilities                                           |  |                        | (2,417 
|Net change in deferred income                                                                    |  |                        | 6,047  
|Net change in deferred membership revenues                                                       |  |                        | (1,619 
|Other                                                                                            |  |                        | 2,548  
|                                                                                                 |  |                        |        
|Cash flows provided from operations                                                              |  |                        | 52,597 
|Cash flows from investing activities:                                                            |  |                        |        
|Additions to property and equipment                                                              |  |                        | (62,935
|Development of new facilities                                                                    |  |                        | (12,666
|Development of real estate held for sale                                                         |  |                        | (3,911 
|Proceeds from dispositions, net                                                                  |  |                        | 14,294 
|Other                                                                                            |  |                        | (108   
|                                                                                                 |  |                        |        
|Cash flows used by investing activities                                                          |  |                        | (65,326
|Cash flows from financing activities:                                                            |  |                        |        
|Borrowings of long-term debt                                                                     |  |                        | 47,680 
|Repayments of long-term debt                                                                     |  |                        | (17,804
|Loan origination and amendment fees                                                              |  |                        | (5,342 
|Membership deposits received, net                                                                |  |                        | 2,015  
|Treasury stock transaction, net                                                                  |  |                        | (53    
|                                                                                                 |  |                        |        
|Cash flows provided from financing activities                                                    |  |                        | 26,496 
|                                                                                                 |  |                        |        
|Net cash flows continuing operations                                                             |  |                        | 13,303 
|Net cash flows from discontinued operations                                                      |  |                        | 464    
|                                                                                                 |  |                        |        
|Total cash flows from continuing and discontinued operations                                     |  |                        | 13,767 
|                                                                                                 |  |                        |        
|Cash and cash equivalents at beginning of period                                                 |  |                        | 3,212  
|                                                                                                 |  |                        |        
|Cash and cash equivalents at end of period                                                       |  | $                      | 16,979 
|                                                                                                 |  |                        |        



See accompanying
condensed notes to consolidated financial statements.



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Condensed Notes to Consolidated Financial Statements

(Unaudited)



Note 1. Summary of significant accounting policies



Consolidation



The Consolidated Financial Statements include the accounts of ClubCorp, Inc. and its
subsidiaries (collectively ClubCorp). All material intercompany balances and transactions have been eliminated.



Interim presentation



The accompanying Consolidated Financial Statements have been prepared by ClubCorp and are unaudited. Certain information and footnote disclosures normally included in
financial statements presented in accordance with accounting principles generally accepted in the United States of America have been omitted from the accompanying statements. We believe the disclosures made are adequate to make the information
presented not misleading. However, the financial statements should be read in conjunction with the Consolidated Financial Statements and notes thereto of ClubCorp for the year ended December 31, 2002 which are a part of ClubCorps Form 10-K.



In our opinion, the accompanying unaudited Consolidated Financial Statements
reflect all adjustments necessary (consisting of normal recurring accruals) to present fairly the consolidated financial position of ClubCorp as of September 9, 2003, and the consolidated results of operations for the twelve weeks and thirty-six
weeks ended September 3, 2002 and September 9, 2003, and cash flows for the thirty-six weeks ended September 3, 2002 and September 9, 2003. Interim results are not necessarily indicative of fiscal year performance because of the impact of seasonal
and short-term variations and other factors such as timing of acquisitions and dispositions of facilities.



Recent Pronouncements



In April 2002, the Financial Accounting Standards Board (FASB) issued SFAS No. 145 (SFAS 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. SFAS 145 was effective for fiscal years beginning after
May 15, 2002. The adoption of SFAS No. 145 affected our presentation of the write off of unamortized financing costs in our Consolidated Statement of Operations.



In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. The main
provisions of this statement address the recognition of liabilities associated with exit or disposal activities and is effective for exit or disposal activities initiated after December 31, 2002. Implementation of this statement had no impact on our
Consolidated Financial Statements.



In November 2002, the FASB issued FASB
Interpretation No. 45 (FIN 45), Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an interpretation of FASB Statements No. 5, 57, and 107 and rescission of FASB
Interpretation No. 34. FIN 45 redefines the recognition and disclosures to be made by the guarantor in its interim and annual financial statements regarding obligations under certain guarantees issued. The provisions of the disclosure
requirements are effective for financial statements of interim or annual reports ending after December 15, 2002. Implementation of this statement had no impact on our Consolidated Financial Statements.



In January 2003, the FASB issued FASB Interpretation No. 46, (FIN 46) Consolidation of
Variable Interest Entities which changes the criteria by which one company includes another entity in its consolidated financial statements. FIN 46 requires a variable interest entity to be consolidated by a company if that company is subject
to a majority of the risk of loss from the variable interest entitys activities or entitled to receive a majority of the entitys residual returns or both. The effective date for applying the provisions of FIN 46 have been deferred for
interests held by public entities in variable interest entities or potential variable interest entities created before February 1, 2003. The impact of the initial consolidation of the variable interest entities to which the deferral applies will be
on the balance sheet for the first interim or annual period ending after December 15, 2003. We are currently evaluating the impact this statement will have on our Consolidated Financial Statements. We believe that this statement may cause us to
consolidate a joint venture that would add net assets of $1.8 million including debt of $14.9 million to our Consolidated Balance Sheet. This investment is carried as an equity investment at September 9, 2003.





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In December 2002, the FASB issued SFAS No. 148 (SFAS 148), Accounting for Stock-Based
Compensation  Transition and Disclosure, an amendment of FASB Statement No. 123. SFAS 148 amends the disclosure requirements in SFAS 123 for stock-based compensation for annual periods ending after December 15, 2002 and for interim
periods beginning after December 15, 2002. The disclosure requirements apply to all companies, including those that continue to recognize stock-based compensation under Accounting Principles Board Opinion No. 25 (APB 25), Accounting for Stock
Issued to Employees. SFAS 148 also provides three alternative transition methods for companies that choose to adopt the fair value measurement provisions of SFAS 123. We have not chosen to adopt the fair value measurement provisions of SFAS
123; however, we are in compliance with the disclosure requirements as shown below in the Stock-based compensation disclosure.



In April 2003, the FASB issued SFAS No. 149 (SFAS 149), Amendment of Statement 133 on Derivative Instruments and Hedging Activities. This statement amends and
clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under FASB Statement No. 133. SFAS 149 is effective for fiscal quarters that
began prior to June 15, 2003 and for hedging relationships designated after June 30, 2003. Implementation of this statement will have no impact to our Consolidated Financial Statements.



In May 2003, the FASB issued SFAS No. 150 (SFAS 150), Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity. This statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial
instrument that is within its scope as a liability. SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003, and is otherwise effective at the beginning of the first interim period beginning after June 15, 2003.
Implementation of this statement had no impact to our Consolidated Financial Statements.



Reclassifications



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



Cash and cash equivalents



Our policy is to invest cash in excess of operating requirements in income producing investments. For purposes of the Consolidated Statement
of Cash Flows, cash and cash equivalents include cash on hand and interest-bearing deposits in financial institutions, all of which have maturities of 180 days or less. Also contained in cash and cash equivalents is restricted cash which mainly
consists of $21.9 million used to collateralize line of credit. These letters of credit have one year terms and therefore, are included in current assets



Stock-based compensation



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



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In accordance with the requirements of SFAS 123, the fair value of the options granted were
estimated using the Black-Scholes option-pricing model with the following assumptions for the twelve and thirty-six weeks ended September 3, 2002 and September 9, 2003: risk-free weighted average interest rates of 3.6%, an expected volatility of
40%, an expected life of ten years and zero dividend yield. Had compensation cost for the option plans been determined based on the fair value at the grant dates for the options, our net loss and net loss per share would have been changed to the
following pro forma amounts (dollars in thousands, except per share amounts):



|                                                                                                       |  | Twelve Weeks Ended |         |   | Thirty-Six Weeks Ended |  
|------------------------------------------------------------------------------------------------------ |  | ------------------ | ------- | - | ---------------------- | -
|                                                                                                       |  | September 3, 2002  |         |   | September 9, 2003      |  
|Net Loss as reported                                                                                   |  | $                  | (10,914 | ) |                        | $
|Add: Total Stock-Based Compensation Benefit (Expense) determined under fair value method, net of taxes |  |                    | 2,423   |   |                        |  
|                                                                                                       |  |                    |         |   |                        |  
|Pro Forma Net loss                                                                                     |  | $                  | (8,491  | ) |                        | $
|                                                                                                       |  |                    |         |   |                        |  
|Loss per share  Reported                                                                              |  | $                  | (0.12   | ) |                        | $
|                                                                                                       |  |                    |         |   |                        |  
|Loss per share  Pro Forma                                                                             |  | $                  | (0.09   | ) |                        | $
|                                                                                                       |  |                    |         |   |                        |  



During twelve weeks ended September 3,
2002, we had employee forfeitures that resulted in a credit to compensation expense.



Effective March 15, 2003, employees forfeited 3,778,986 options valued at $18,872,000, net of taxes. During November 2003, an equal number of options will be issued to these employees with an exercise price of current market value. In
accordance with APB 25, no additional compensation costs will be recorded.



Note 2. Derivative instruments



Variable interest rates on our newly refinanced mortgage debt are based on the 30 day LIBOR rate plus an incremental margin (between 275 and 375 basis points) and the US Prime rate plus an incremental margin of 100 basis points. Interest
payments on approximately 72% of the floating portion of these notes are protected by interest rate cap agreements that limit our exposure to rises in interest rates over certain amounts. During the twelve weeks ended September 9, 2003, we
recognized a reduction to interest expense of $264,000 to record the change in fair value of these instruments.



During the twelve weeks ended September 9, 2003 we had certain interest rate swap contacts related to our bank financing that matured. The impact of this hedge activity
was recorded at the time the bank debt was refinanced and, as such, had no impact on the Consolidated Financial Statements for the twelve weeks ended September 9, 2003.





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Note 3. Operating revenues



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



|                                                      |  | Twelve Weeks Ended |         | Thirty-Six Weeks Ended
|----------------------------------------------------- |  | ------------------ | ------- | ----------------------
|                                                      |  | September 3, 2002  |         | September 9, 2003     
|Revenues from continuing operations:                  |  |                    |         |                       
|Membership fees and deposits                          |  | $                  | 8,957   |                       
|Membership dues                                       |  |                    | 74,122  |                       
|Golf operations revenues                              |  |                    | 42,262  |                       
|Food and beverage revenues                            |  |                    | 53,719  |                       
|Lodging revenues                                      |  |                    | 13,896  |                       
|Other revenues                                        |  |                    | 25,987  |                       
|                                                      |  |                    |         |                       
|Total operating revenues from continuing operations   |  | $                  | 218,943 |                       
|                                                      |  |                    |         |                       
|Revenues from discontinued operations:                |  |                    |         |                       
|Membership fees and deposits                          |  | $                  | 387     |                       
|Membership dues                                       |  |                    | 3,479   |                       
|Golf operations revenues                              |  |                    | 5,469   |                       
|Food and beverage revenues                            |  |                    | 3,572   |                       
|Lodging revenues                                      |  |                    | 9       |                       
|Other revenues                                        |  |                    | 271     |                       
|                                                      |  |                    |         |                       
|Total operating revenues from discontinued operations |  | $                  | 13,187  |                       
|                                                      |  |                    |         |                       



Note 4. Income tax benefit
(provision)



The income tax (provision) benefits for the twelve weeks
and thirty-six weeks ended September 3, 2002 and September 9, 2003 differ from amounts computed by applying the U.S. Federal tax rate of 35% to loss from operations before income tax benefit primarily due to our decision to not book additional
benefit of $1.4 million related to our third quarter loss. We are currently in the process of assessing tax planning strategies to support our ability to continue to utilize our net operating loss carry forwards in the future and adjustments to our
net asset position will be based on these assessments. Additional differences arise 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



Loss per share is computed using the weighted average number of shares outstanding of
93,740,461 and 93,727,772 for basic loss per share calculations for the twelve weeks ended September 3, 2002 and September 9, 2003, respectively. The weighted average number of shares outstanding for the thirty-six weeks ended September 3, 2002 and
September 9, 2003 was 93,742,020 and 93,727,449, respectively. Diluted weighted average shares for the twelve weeks ended September 3, 2002 and September 9, 2003 exclude incremental shares from assumed conversion of 559,349 and 52,331 shares,
respectively, due to the net losses for the periods. Diluted weighted average shares for the thirty-six weeks ended September 3, 2002 and September 9, 2003 excluded incremental shares from assumed conversion of 484,584 and 26,165 shares,
respectively.



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Note 6. Property and equipment



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



|                                          |  | December 31, 2002 |           |   | September 9, 2003 |  
|----------------------------------------- |  | ----------------- | --------- | - | ----------------- | -
|Land and land improvements                |  | $                 | 671,886   |   |                   | $
|Buildings and recreational facilities     |  |                   | 491,866   |   |                   |  
|Leasehold improvements                    |  |                   | 110,623   |   |                   |  
|Furniture and fixtures                    |  |                   | 136,477   |   |                   |  
|Machinery and equipment                   |  |                   | 264,411   |   |                   |  
|Construction in progress                  |  |                   | 13,311    |   |                   |  
|                                          |  |                   |           |   |                   |  
|                                          |  |                   | 1,688,574 |   |                   |  
|Accumulated depreciation and amortization |  |                   | (490,882  | ) |                   |  
|                                          |  |                   |           |   |                   |  
|                                          |  | $                 | 1,197,692 |   |                   | $
|                                          |  |                   |           |   |                   |  



Note 7. Disposal and Impairment
of Long- Lived Assets



On December 26, 2001, we adopted Statement of
Financial Accounting Standards No. 144 (SFAS 144), Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS 144 supercedes SFAS 121 and the portion of Accounting Principles Board Opinion No. 30 that deals with the disposal of
a business segment. In conjunction with this statement, for all periods presented, certain assets and liabilities expected to be sold with the held-for-sale entities have been included in Other current Assets and Other Current Liabilities, and all
income and expense items have been reclassified as Discontinued Operations.



As
of September 9, 2003, we had three properties classified as held for sale. One of these properties held for sale was recorded under SFAS 121 as part of continuing operations. The remaining two properties were reported as held for sale under the
guidance of SFAS 144. The balance sheet amounts related to these two properties are included in Other Current Assets and Other Current Liabilities on the Consolidated Balance Sheet and are comprised of the following (dollars in thousands):



|                                         |  | December 31, 2002 |        | September 9, 2003
|---------------------------------------- |  | ----------------- | ------ | -----------------
|Membership and other receivables, net    |  | $                 | 1,427  |                  
|Inventories                              |  |                   | 705    |                  
|Other current assets                     |  |                   | 3,362  |                  
|Property and equipment, net              |  |                   | 26,596 |                  
|Other assets                             |  |                   | 12     |                  
|                                         |  |                   |        |                  
|Total assets                             |  | $                 | 32,102 |                  
|                                         |  |                   |        |                  
|Accounts payable and accrued liabilities |  | $                 | 728    |                  
|Other current liabilities                |  |                   | 1,513  |                  
|Long-term debt                           |  |                   | 7,013  |                  
|Other liabilities                        |  |                   | 762    |                  
|Membership deposits                      |  |                   | 9,409  |                  
|                                         |  |                   |        |                  
|Total liabilities                        |  | $                 | 19,425 |                  
|                                         |  |                   |        |                  



The two properties as well as all
properties that were divested during the twelve weeks ended September 9, 2003 were also reclassified to Discontinued Operations on the Consolidated Statement of Operations for all periods presented. See Note 9 for detail of the Statement of
Operations impact of Discontinued Operations by segment and in total.





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ClubCorp, Inc.

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Note 8. Comprehensive (loss)



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



|                                                                                            |  | Twelve Weeks Ended |         |   | Thirty-Six Weeks Ended |  
|------------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | ---------------------- | -
|                                                                                            |  | September 3, 2002  |         |   | September 9, 2003      |  
|Net Loss                                                                                    |  | $                  | (10,914 | ) |                        | $
|Changes in fair value of derivative instruments and hedging activities, net of income taxes |  |                    | 365     |   |                        |  
|Foreign currency translation adjustment                                                     |  |                    | (1,032  | ) |                        |  
|                                                                                            |  |                    |         |   |                        |  
|Total comprehensive loss                                                                    |  | $                  | (11,581 | ) |                        | $
|                                                                                            |  |                    |         |   |                        |  



Note 9. Segment reporting



Our operations are organized into three principal business segments
according to the type of facility or service provided: country club and golf facilities, business and sports clubs and resorts. We have determined that the operations of these three segments have similar economic characteristics and meet the
criteria that permit the operations to be aggregated into these reportable segments. The primary sources of revenue for all segments are membership revenues, consisting of dues, fees and deposits, and food and beverage sales. Additionally, country
club and golf facilities and resorts have significant golf operations revenue and resorts have significant lodging revenue.



Country club and golf facilities operations consist of domestic private country clubs, golf clubs and public golf facilities. Private country clubs provide at least one
18-hole golf course and various other recreational amenities that are open only to members and their guests. Golf clubs provide both private and public golf play and usually offer fewer other recreational amenities. Public golf facilities are open
to the public and generally provide the same services as golf clubs.



Business
and sports club operations consist of domestic business clubs, business/sports clubs and sports clubs. Business clubs provide a setting for dining, business or social entertainment. Sports clubs provide a variety of recreational facilities and
business/sports clubs provide a combination of the amenities available at business clubs and sports clubs. All amenities offered above are available only to members and their guests.



Resorts offer a wide variety of amenities including golf courses, lodging and conference facilities, dining areas and other recreational
facilities. Resorts are open to the public and offer optional membership.



Other operations and services consist of real estate operations, corporate overhead, intercompany eliminations made in the consolidation between corporate services and other operating segments and reclassifications made to conform with
generally accepted accounting principles. Realty operations are comprised of residential real estate development and sales, primarily in areas adjacent to golf facilities. A majority of operating revenues are provided from real estate sales. As of
January 1, 2003, we reclassified our international properties from other operations and services to their functional segments as either country club and golf facilities or business and sports clubs. Segment results for all periods presented have
been restated to reflect this reclassification, which is consistent with changes in our internal management and organizational structure.



EBITDA is defined as earnings before interest, taxes, depreciation and amortization, extraordinary items and gains and losses on disposals and impairment of assets and
includes both continuing and discontinued operations. EBITDA should not be construed as an alternative to, or a better indicator of, operating income or loss, is not based on accounting principles generally accepted in the United States of America,
and is not necessarily a measure of our cash flow or ability to fund our cash needs. Our measurements of EBITDA may not be comparable to similar titled measures reported by other companies.



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



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ClubCorp, Inc.

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



|Consolidated Statement of Operations:                                                             |  | Continuing Operations |        
|------------------------------------------------------------------------------------------------- |  | --------------------- | -------
|                                                                                                  |  | Twelve Weeks Ended    |        
|                                                                                                  |  | September 3,2002      |        
|Country Club and Golf Facilities:                                                                 |  |                       |        
|Operating revenues                                                                                |  | $                     | 119,514
|Operating costs and expenses (1)                                                                  |  |                       | 97,181 
|Depreciation and amortization                                                                     |  |                       | 10,357 
|                                                                                                  |  |                       |        
|Operating income                                                                                  |  | $                     | 11,976 
|EBITDA                                                                                            |  | $                     | 22,333 
|Business and sports clubs:                                                                        |  |                       |        
|Operating revenues                                                                                |  | $                     | 47,688 
|Operating costs and expenses (1)                                                                  |  |                       | 45,213 
|Depreciation and amortization                                                                     |  |                       | 2,815  
|                                                                                                  |  |                       |        
|Operating income (loss)                                                                           |  | $                     | (340   
|EBITDA                                                                                            |  | $                     | 2,475  
|Resorts:                                                                                          |  |                       |        
|Operating revenues                                                                                |  | $                     | 47,499 
|Operating costs and expenses (1)                                                                  |  |                       | 38,038 
|Depreciation and amortization                                                                     |  |                       | 3,907  
|                                                                                                  |  |                       |        
|Operating income                                                                                  |  | $                     | 5,554  
|EBITDA                                                                                            |  | $                     | 9,461  
|Other operations and services:                                                                    |  |                       |        
|Operating revenues                                                                                |  | $                     | 4,242  
|Operating costs and expenses (1)                                                                  |  |                       | 9,377  
|Depreciation and amortization                                                                     |  |                       | 2,622  
|                                                                                                  |  |                       |        
|Operating loss                                                                                    |  | $                     | (7,757 
|EBITDA                                                                                            |  | $                     | (5,135 
|Consolidated Operations:                                                                          |  |                       |        
|Operating revenues                                                                                |  | $                     | 218,943
|Operating costs and expenses (1)                                                                  |  |                       | 189,809
|Depreciation and amortization                                                                     |  |                       | 19,701 
|                                                                                                  |  |                       |        
|Operating income (2)                                                                              |  | $                     | 9,433  
|EBITDA                                                                                            |  | $                     | 29,134 
|                                                                                                 
|(1)Includes operating costs and expenses as well as selling, general and administrative expenses.
|                                                                                                 
|(2)Reconciliation to Income (loss) from operations before income taxes and minority interest:    
|                                                                                                  |  |                       |        
|Operating income                                                                                  |  | $                     | 9,433  
|Gain (Loss) on disposals and impairment of assets                                                 |  |                       | (3,862 
|Interest and investment income                                                                    |  |                       | 74     
|Interest expense and financing costs                                                              |  |                       | (14,372
|                                                                                                  |  |                       |        
|Loss from operations before income taxes and minority interest                                    |  | $                     | (8,727 
|                                                                                                  |  |                       |        



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ClubCorp, Inc.

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|Consolidated Statement of Operations:                                                             |  | Discontinued Operations |       
|------------------------------------------------------------------------------------------------- |  | ----------------------- | ------
|                                                                                                  |  | Twelve Weeks Ended      |       
|                                                                                                  |  | September 3,2002        |       
|Country Club and Golf Facilities:                                                                 |  |                         |       
|Operating revenues                                                                                |  | $                       | 10,404
|Operating costs and expenses (1)                                                                  |  |                         | 9,527 
|Depreciation and amortization                                                                     |  |                         | 290   
|                                                                                                  |  |                         |       
|Operating income (loss)                                                                           |  | $                       | 587   
|EBITDA                                                                                            |  | $                       | 877   
|Business and sports clubs:                                                                        |  |                         |       
|Operating revenues                                                                                |  | $                       | 1,541 
|Operating costs and expenses (1)                                                                  |  |                         | 1,990 
|Depreciation and amortization                                                                     |  |                         | 32    
|                                                                                                  |  |                         |       
|Operating loss                                                                                    |  | $                       | (481  
|EBITDA                                                                                            |  | $                       | (449  
|Resorts:                                                                                          |  |                         |       
|Operating revenues                                                                                |  | $                       | 16    
|Operating costs and expenses (1)                                                                  |  |                         | 9     
|Depreciation and amortization                                                                     |  |                         |      
|                                                                                                  |  |                         |       
|Operating income                                                                                  |  | $                       | 7     
|EBITDA                                                                                            |  | $                       | 7     
|Other operations and services:                                                                    |  |                         |       
|Operating revenues                                                                                |  | $                       | 1,226 
|Operating costs and expenses (1)                                                                  |  |                         | 3,272 
|Depreciation and amortization                                                                     |  |                         | 803   
|                                                                                                  |  |                         |       
|Operating income (loss)                                                                           |  | $                       | (2,849
|EBITDA                                                                                            |  | $                       | (2,046
|Consolidated Operations:                                                                          |  |                         |       
|Operating revenues                                                                                |  | $                       | 13,187
|Operating costs and expenses (1)                                                                  |  |                         | 14,798
|Depreciation and amortization                                                                     |  |                         | 1,125 
|                                                                                                  |  |                         |       
|Operating income (loss) (2)                                                                       |  | $                       | (2,736
|EBITDA                                                                                            |  | $                       | (1,611
|                                                                                                 
|(1)Includes operating costs and expenses as well as selling, general and administrative expenses.
|                                                                                                 
|(2)Reconciliation to loss from operations before income taxes and minority interest:             
|                                                                                                  |  |                         |       
|Operating income (loss)                                                                           |  | $                       | (2,736
|Gain (loss) on disposals and impairment of assets                                                 |  |                         | (3,211
|Interest and investment income                                                                    |  |                         |      
|Interest expense                                                                                  |  |                         | (103  
|                                                                                                  |  |                         |       
|Income (loss) from operations before income taxes and minority interest                           |  | $                       | (6,050
|                                                                                                  |  |                         |       



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



Introduction



ClubCorp, Inc. (referred to as ClubCorp®, the Company, we, us and our throughout this document) is a holding company incorporated under the laws of the State of Delaware that, through its
subsidiaries, owns and operates premier golf and business clubs and destination golf resorts. As of September 9, 2003, we operated 100 country clubs, golf clubs and public golf facilities, three destination golf resorts and 70 business, sports and
business/sports clubs in 29 states and three foreign countries. Marquee resorts and clubs in our portfolio include Pinehurst® Resort and Country Club in North Carolina, The Homestead® Resort in Virginia, Barton Creek Resort and Country Club in Austin, Texas, Firestone® Country Club in Akron, Ohio, Mission Hills® Country Club near Palm Springs, California, and The City Club on Bunker Hill in Los
Angeles.



Our operations are organized into three principal
business segments: country club and golf facilities, resorts, and business and sports clubs. Other operations that are not assigned to a principal business segment include our real estate operations and corporate services. Our primary sources of
revenue include membership dues, membership fees and deposits, food and beverage operations, golf operations and lodging.



Our predecessor corporation was organized in 1957 under the name Country Clubs, Inc. All historical references herein to us shall also include Country
Clubs, Inc. and its successor corporations. For purposes of this document, unless the context indicates otherwise, these references to us also include our various subsidiaries. However, we and each of our subsidiaries are careful to maintain
separate legal existence, and general references to us should not be interpreted to reduce the legal distinctions between subsidiaries or between us and our subsidiaries.



Our consolidated financial statements are presented on a 52/53 week fiscal year ending on the last Tuesday of December, with
the first three quarters consisting of 12 weeks each and the fourth quarter consisting of 16 or 17 weeks. The following discussion of our financial condition and results of operations for the 12 and 36 weeks ended September 3, 2002 and September 9,
2003 should be read in conjunction with the our Annual Report on Form 10-K for the year ended December 31, 2002, as filed with the Securities and Exchange Commission.



Results of Operations



We analyze operating results and manage our business segments using the following concepts and definitions:



Operating revenues are comprised mainly of revenues from dues income, golf,
food and beverage and lodging, as well as the revenues recognized from initiation deposits and fees. Operating expenses include payroll and related expenses, other fees and expenses, rent and membership commissions amortized.



We use EBITDA to monitor our property-level and overall performance. EBITDA
is defined as earnings before interest, taxes, depreciation and amortization, extraordinary items and gains and losses on disposals and impairment of assets and includes both continuing and discontinued operations. EBITDA should not be construed as
an alternative to, or a better indicator of, operating income or loss, is not based on accounting principles generally accepted in the United States of America, and is not necessarily a measure of our cash flow or ability to fund our cash needs. Our
measurement of EBITDA may not be comparable to similarly titled measures reported by other companies. See Note 9 to our Consolidated Financial Statements for a reconciliation of this measure to our consolidated financial statements prepared in
accordance with accounting principles generally accepted in the United States of America.



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



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##### Table of Contents

12 Weeks Ended September 3, 2002 Compared to 12 Weeks Ended September 9, 2003



Consolidated Operations  Continuing Operations



Operating revenues increased from $218.9 million for third quarter 2002 to
$221.4 million for third quarter 2003. This increase was comprised primarily of operating revenue increases of $3.0 million in our other operations and services and $1.0 million at our resorts, partially offset by decreases of $1.7 million at our
business and sports clubs. Included in these segment variances are divestitures of facilities that accounted for $0.6 million of the net revenue decrease mentioned above.



Gain (loss) on disposals and impairment of assets was ($3.9) million for third quarter 2002 as compared to $37,000 for third
quarter 2003. Included in these figures are impairment losses of $0.7 million recorded in the 12 weeks ended September 3, 2002 to write down the carrying value of certain properties classified as held for sale under SFAS 121.



Excluding the impact of disposals and impairment of assets, operating income
increased from $9.4 million for third quarter 2002 to $10.9 million for third quarter 2003. This increase was primarily due to decrease operating costs and expenses of $1.1 million and the increase in revenues mentioned above, partially offset by
increased depreciation and amortization of $2.1 million. Operating expenses declined as a result of expense controls in operations and lower cost of goods sold due to the decline in business volume. Depreciation and amortization increased as a
result of capital expansion and development activity at our existing properties. Loss from operations before income taxes and minority interest decreased from of $8.7 million for third quarter 2002 to $3.6 million for third quarter 2003 as a result
of the increase in operating income mentioned above. Interest expense remained relatively constant.



Discontinued Operations



At September 9, 2003, the operations of 30 divested properties and two properties currently held for sale were included in discontinued operations. Operating revenues for these properties decreased from $13.2 million for third quarter 2002
to $1.7 million for third quarter 2003. Segment operating income before the impact of disposals and impairment of assets from these properties increased $3.1 million from third quarter 2002 to third quarter 2003 primarily as a result of the
divestiture of underperforming facilities. We divested one property in the 12 weeks ended September 3, 2002 and 3 properties in the 12 weeks ended September 9, 2003. Gain (loss) on disposals and impairment of assets was ($3.2) million and ($4.0)
million for the twelve weeks ended September 3, 2002 and September 9, 2003, respectively. The main component of gain (loss) was impairment losses of $4.5 million and $2.0 million that were recorded during the 12 weeks ended September 3, 2002 and
September 9, 2003, respectively, to write down the carrying value of certain properties to be disposed.



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##### Table of Contents

Segment and Other Information  12 weeks



Country Club and Golf Facilities



The following table presents certain summary financial and other operating data for our country club and golf facilities segment for the third quarters
ended September 3, 2002 and September 9, 2003 (dollars in thousands):



|                                                      |  | Same Store Country Club and Golf Facilities |         | Total Country Club and Golf Facilities
|----------------------------------------------------- |  | ------------------------------------------- | ------- | --------------------------------------
|                                                      |  | 2002                                        |         | 2003                                  
|Number of facilities at end of period                 |  |                                             | 94      |                                       
|Operating revenues                                    |  | $                                           | 110,037 |                                       
|Recognition of membership fees and deposits           |  |                                             | 7,941   |                                       
|                                                      |  |                                             |         |                                       
|Total operating revenues                              |  | $                                           | 117,977 |                                       
|                                                      |  |                                             |         |                                       
|Operating costs and expenses                          |  |                                             | 94,594  |                                       
|Depreciation and amortization                         |  |                                             | 10,547  |                                       
|                                                      |  |                                             |         |                                       
|Segment operating income from continuing operations   |  | $                                           | 12,836  |                                       
|                                                      |  |                                             |         |                                       
|Segment operating income from discontinued operations |  | $                                           | 50      |                                       
|                                                      |  |                                             |         |                                       
|EBITDA                                                |  | $                                           | 23,510  |                                       
|                                                      |  |                                             |         |                                       



Continuing
Operations. Total operating revenues decreased $0.9 million from third quarter 2002 to third quarter 2003 for same store country club and golf facilities. This decrease was primarily due to decreased golf operations revenues of $0.9 million,
decreased food and beverage sales of $0.5 million and decreased recognition of membership fees and deposits of $0.5 million, partially offset by increased membership dues of $0.7 million, and increased other recreation revenue of $0.3 million. Golf
operations revenue decreased due to decreased demand which resulted in lower rounds, merchandise sales and other ancillary golf revenues. Food and beverage revenues declined as a result of lower activity at our clubs. Recognition of membership fees
and deposits declined due to decreased amortization as a result of less membership additions. Membership dues increased as a result of price increases and a slight reversal in negative membership trends. The dues volume has increased since the
beginning of the year showing favorable results for the first time in over two years. Other recreation revenue increased due to higher usage of tennis, athletics and other amenities offered at our private country clubs.



Segment operating income decreased $0.7 million at same store country club
and golf facilities from third quarter 2002 to third quarter 2003 as a result of the decrease in revenues mentioned above and a $0.8 million increase in depreciation and amortization, partially offset by decreased operating costs and expenses of
$0.9 million. Operating costs and expenses decreased as a result of savings in golf and food and beverage operations due to expense controls implemented due to the decline in volume in these areas. Depreciation and amortization increased due to
recent expansion projects completed at our properties.



Discontinued Operations.The operations of 21 divested country club and golf facilities and two clubs currently held for sale were included in discontinued operations. Segment operating income for these properties decreased $0.6
million from third quarter 2002 to third quarter 2003 as a result of divestitures.



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##### Table of Contents

Resorts



The following table presents certain summary financial and other operating data for our resorts segment for the third quarters ended September 3, 2002 and
September 9, 2003 (dollars in thousands):



|                                                      |  | Same Store Resorts |        |   | Total Resorts
|----------------------------------------------------- |  | ------------------ | ------ | - | -------------
|                                                      |  | 2002               |        |   | 2003         
|Number of facilities at end of period                 |  |                    | 3      |   |              
|Operating revenues                                    |  | $                  | 45,952 |   |              
|Recognition of membership fees and deposits           |  |                    | 1,377  |   |              
|                                                      |  |                    |        |   |              
|Total operating revenues                              |  | $                  | 47,329 |   |              
|                                                      |  |                    |        |   |              
|Operating costs and expenses                          |  |                    | 38,621 |   |              
|Depreciation and amortization                         |  |                    | 3,771  |   |              
|                                                      |  |                    |        |   |              
|Segment operating income from continuing operations   |  | $                  | 4,937  |   |              
|                                                      |  |                    |        |   |              
|Segment operating income from discontinued operations |  | $                  |       |   |              
|                                                      |  |                    |        |   |              
|EBITDA                                                |  | $                  | 8,708  |   |              
|                                                      |  |                    |        |   |              
|Lodging data: (3 resorts)                             |  |                    |        |   |              
|Room nights available                                 |  |                    | 99,708 |   |              
|Room nights sold                                      |  |                    | 55,477 |   |              
|Paid occupancy rate                                   |  |                    | 55.6   | % |              
|Average daily revenue per occupied room (1)           |  | $                  | 754    |   |              
|Average daily revenue per available room (1)          |  | $                  | 420    |   |              

---

|(1) | Average daily revenue per occupied room and average daily revenue per available room are based on total operating revenues excluding membership dues, recognition of member
initiation fees, and net managed rooms commissions.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes results of our resorts possessive overhead entity in addition to our 3 same store resorts.
|--- | ---------------------------------------------------------------------------------------------------



Continuing Operations.Total operating revenues increased $1.1 million from third quarter 2002 to third quarter 2003
for same store resorts. This increase was primarily due to increased food and beverage sales of $1.2 million and increased lodging and spa revenues of $0.3 million each, partially offset by lower golf operations revenue of $0.6 million. Food and
beverage sales increased as a result of higher occupancy and spending by social guests during the quarter. Lodging revenues increased as a result of increased room nights, although promotions and discounted pricing strategies reduced average room
rates from the prior year. Spa revenues increased as a result of price increases at The Homestead. Golf operations revenues declined as a result of an 8.4% decrease in greens fees per round due to the extension of discounted pricing strategies to
our resorts golf operations.



Segment operating income
increased $2.0 million from third quarter 2002 to third quarter 2003 for same store resorts. This increase was due to a $1.0 million decrease in operating costs and expenses in addition to the increase in revenues mentioned above. Operating costs
and expenses decreased due to reduced intercompany consulting fees that were not billed in 2003 as well as of the elimination of a large portion of our resorts offsite overhead structure. The elimination of the consulting fee billings had no
net impact on Total Resorts operating expenses as Total Resorts includes the offsetting overhead revenue. Other operating expenses increased $0.6 million as a result of increased occupancy resulting from our discounted pricing strategies.



Discontinued Operations. Discontinued operations were
comprised of the management fees of one divested resort property. The management agreement for this property was terminated in 2002.



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##### Table of Contents

Business and Sports Clubs



The following table presents certain summary financial and other operating data for our business and sports clubs segment
for the third quarters ended September 3, 2002 and September 9, 2003 (dollars in thousands):



|                                                    |  | Same Store Businessand Sports Clubs |        |   | Total Business andSports Clubs |  
|--------------------------------------------------- |  | ----------------------------------- | ------ | - | ------------------------------ | -
|                                                    |  | 2002                                |        |   | 2003                           |  
|Number of facilities at end of period               |  |                                     | 70     |   |                                |  
|Operating revenues                                  |  | $                                   | 46,266 |   |                                | $
|Recognition of membership fees and deposits         |  |                                     | 885    |   |                                |  
|                                                    |  |                                     |        |   |                                |  
|Total operating revenues                            |  | $                                   | 47,151 |   |                                | $
|                                                    |  |                                     |        |   |                                |  
|Operating costs and expenses                        |  |                                     | 44,732 |   |                                |  
|Depreciation and amortization                       |  |                                     | 2,795  |   |                                |  
|                                                    |  |                                     |        |   |                                |  
|Segment operating loss from continuing operations   |  | $                                   | (376   | ) |                                | $
|                                                    |  |                                     |        |   |                                |  
|Segment operating loss from discontinued operations |  | $                                   |       |   |                                | $
|                                                    |  |                                     |        |   |                                |  
|EBITDA                                              |  | $                                   | 2,418  |   |                                | $
|                                                    |  |                                     |        |   |                                |  



Continuing
Operations.Total operating revenues decreased $1.1 million from third quarter 2002 to third quarter 2003 at same store business and sports clubs. This decrease was primarily comprised of a $0.9 million decrease in food and beverage sales, a
$0.3 million decrease in recognition of membership fees and deposits, and a $0.2 million decline in membership dues, partially offset by a $0.3 million increase in other revenue. Although membership retention levels have improved from those
experienced in the last two fiscal years, we continue to experience slight attrition in member counts due to continued economic uncertainty. These trends have resulted in decreased membership dues and decreased recognition of membership deposits and
fees. Food and beverage revenues decreased primarily as a result of decreases in private parties stemming from lower membership and activity at our clubs. Other revenue increased as a result of increased usage of tennis, athletics and spa
facilities, in addition to improved results from non-wholly-owned facilities.



Segment operating loss increased $0.2 million from third quarter 2002 to third quarter 2003 at same store business and sports clubs due to the decrease in revenues mentioned above, partially offset by decreased
operating costs and expenses of $0.9 million. Operating margins were positively impacted by improved food and beverage margins due to expense controls in purchasing and operations, in addition to a decline in rent expense of $0.2 million. Rent
expense has declined due to the renegotiation of certain of our facilities lease agreements with their respective landlords, in addition to a decline in contingent rent payments.



Discontinued Operations. The operations of eight divested business and sports clubs were included in discontinued
operations. Segment operating loss from these properties decreased $0.4 million from third quarter 2002 to third quarter 2003 as a result of the divestiture of underperforming clubs.



Other Operations and Services  Continuing Operations



Operating income for our real estate operations improved by $0.3 million from third quarter 2003 to third quarter 2002. This
increase was primarily due to cost cutting initiatives in the administrative and sales and marketing functions of our real estate operations. Operationally, we experienced increased real estate sales of $0.6 million as a result of the sale of all 13
ownership interests of a unit at Owners ClubHomestead.



Included in third quarter 2003 results is a charge of $1.3 million to accrue for vacation earned by employees. This is in addition to the reserve of $2.8 million that was previously established, $1.1 million of which was recorded in the
first and second quarters of 2003.



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36 Weeks Ended September 3, 2002 Compared to 36 Weeks Ended September 9, 2003



Consolidated Operations  Continuing Operations



Operating revenues decreased from $637.6 million for the 36 weeks ended
September 3, 2002 to $630.4 million for the 36 weeks ended September 9, 2003 as a result of i) divestitures, ii) continued economic uncertainty and iii) poor weather conditions at several of our properties. This decrease was comprised of operating
revenue decreases of $3.9 million at our business and sports clubs, $2.8 million in our other operations and services, and $2.9 million at our resorts, partially offset by an increase of $2.4 million at our country club and golf facilities. Included
in these segment variances are divestitures of facilities that accounted for $4.4 million of the net revenue decrease mentioned above.



Loss on disposals and impairment of assets was $13.7 million in the 36 weeks ended September 3, 2002 as compared to $0.3 million in the 36 weeks ended
September 9, 2003. We disposed of four properties in the 36 weeks ended September 3, 2002 and one property in addition to those mentioned below in the 36 weeks ended September 9, 2003. Included in these figures are impairment losses of $0.7 million
recorded in the 36 weeks ended September 3, 2002 to write down the carrying value of certain properties classified as held for sale under SFAS 121.



Excluding the impact of disposals and impairment of assets, operating income increased to $19.9 million for the 36 weeks ended September 9, 2003 from
$18.6 million for the 36 weeks ended September 3, 2002. This increase was due to a decline in operating costs and expenses of $12.0 million, partially offset by increased depreciation and amortization of $3.5 million, and the decline in revenues
mentioned above. Operating costs and expenses declined as a result of expense controls in operations, in addition to being impacted in the prior year by a litigation accrual of $3.2 million relating to an arbitration decision at one of our country
clubs. Depreciation and amortization increased as a result of capital expansion and development activity at our existing properties.



Loss from operations before income taxes and minority interests decreased to $36.7 million for the 36 weeks ended September 9, 2003 from $35.8 million for
the 36 weeks ended September 3, 2002. This decrease was primarily due to the improvement in operating income mentioned above, offset by increased interest expense of $5.4 million as a result of higher levels of outstanding debt and higher loan fee
amortization in the first two quarters of 2002 due to amendments to our previous credit facility. On June 4, 2003, we completed a major refinancing of our outstanding bank debt. As a result of these transactions, we wrote off $10.6 million in
unamortized financing costs related to our previous credit facility in second quarter 2003.



Discontinued Operations



At September 9, 2003, the operations of 30 divested properties and two properties currently held for sale were included in discontinued operations. Operating revenues for these properties decreased from $36.4 million for the 36 weeks ended
September 3, 2002 to $7.9 million for the 36 weeks ended September 9, 2003. Segment operating loss from these properties decreased $4.6 million for the 36 weeks ended September 9, 2003 from the 36 weeks ended September 3, 2002. This change was
primarily a result of the divestiture of underperforming facilities. We divested six properties in the 36 weeks ended September 3, 2002 and 15 properties in the 36 weeks ended September 9, 2003. Impairment losses of $6.3 million and $2.0 million
were recorded during the 36 weeks ended September 3, 2002 and September 9, 2003, respectively, to write down the carrying value of certain properties to be disposed.



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Segment and Other Information - 36 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 36 week periods
ended September 3, 2002 and September 9, 2003 (dollars in thousands):



|                                                             |  | Same Store Country Club and Golf Facilities |         | Total Country Club and Golf Facilities |  
|------------------------------------------------------------ |  | ------------------------------------------- | ------- | -------------------------------------- | -
|                                                             |  | 2002                                        |         | 2003                                   |  
|Number of facilities at end of period                        |  |                                             | 94      |                                        |  
|Operating revenues                                           |  | $                                           | 308,478 |                                        | $
|Recognition of membership fees and deposits                  |  |                                             | 23,814  |                                        |  
|                                                             |  |                                             |         |                                        |  
|Total operating revenues                                     |  | $                                           | 332,292 |                                        | $
|                                                             |  |                                             |         |                                        |  
|Operating costs and expenses                                 |  |                                             | 266,329 |                                        |  
|Depreciation and amortization                                |  |                                             | 31,615  |                                        |  
|                                                             |  |                                             |         |                                        |  
|Segment operating income from continuing operations          |  | $                                           | 34,348  |                                        | $
|                                                             |  |                                             |         |                                        |  
|Segment operating income (loss) from discontinued operations |  | $                                           | 184     |                                        | $
|                                                             |  |                                             |         |                                        |  
|EBITDA                                                       |  | $                                           | 66,378  |                                        | $
|                                                             |  |                                             |         |                                        |  



Continuing
Operations.Total operating revenues increased $0.8 million at same store country club and golf facilities for the 36 weeks ended September 9, 2003 as compared to the 36 weeks ended September 3, 2002. This increase was primarily attributable to
increased membership dues of $1.7 million and increased other recreation revenue of $1.1 million, partially offset by decreased recognition of membership deposits and fees of $1.9 million. Membership dues increased as a result of price increases and
a slight reversal in negative membership trends. The dues volume has increased since the beginning of the year showing favorable results for the first time in over two years. Other recreation revenue increased due to higher usage of tennis,
athletics and other amenities offered at our private country clubs. Recognition of membership fees and deposits declined due to decreased amortization as a result of less membership additions. The additional $1.6 million increase in operating
revenues at total country club and golf facilities was primarily due to the ramping up of developing properties.



Segment operating income increased $3.3 million at same store country club and golf facilities for the 36 weeks ended September 9, 2003 from the 36 weeks
ended September 3, 2002 as a result of decreased operating costs and expenses of $3.3 million and the increase in revenues mentioned above, partially offset by a $0.8 million increase in depreciation and amortization. Operating costs and expenses
were impacted in the prior year by a litigation accrual of $3.2 million relating to an arbitration decision at one of our country clubs. Depreciation and amortization increased due to recent expansion projects completed at our properties. The
additional $1.9 million increase in segment operating income for total country club and golf facilities was primarily due to the second quarter 2002 divestiture of Daufuskie Island Club and Resort, one of our former resorts that was reclassified to
our country club and golf facilities segment at the outset of fiscal year 2002 due to the reduction in services offered at the property in anticipation of its sale.



Discontinued Operations. The operations of 21 divested country club and golf facilities and two clubs currently held
for sale were included in discontinued operations. Segment operating income from these properties increased $0.7 million for total country club and golf facilities for the 36 weeks ended September 9, 2003 from the 36 weeks ended September 3, 2002
primarily as a result of the divestiture of underperforming properties.



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Resorts



The following table presents certain summary financial and other operating data for our resort segment for the 36 week periods ended September 3, 2002 and
September 9, 2003 (dollars in thousands):



|                                                      |  | Same Store Resorts |         |   | Total Resorts (2)
|----------------------------------------------------- |  | ------------------ | ------- | - | -----------------
|                                                      |  | 2002               |         |   | 2003             
|Number of facilities at end of period                 |  |                    | 3       |   |                  
|Operating revenues                                    |  | $                  | 128,813 |   |                  
|Recognition of membership fees and deposits           |  |                    | 4,050   |   |                  
|                                                      |  |                    |         |   |                  
|Total operating revenues                              |  | $                  | 132,863 |   |                  
|                                                      |  |                    |         |   |                  
|Operating costs and expenses                          |  |                    | 108,542 |   |                  
|Depreciation and amortization                         |  |                    | 11,174  |   |                  
|                                                      |  |                    |         |   |                  
|Segment operating income from continuing operations   |  | $                  | 13,147  |   |                  
|                                                      |  |                    |         |   |                  
|Segment operating income from discontinued operations |  | $                  |        |   |                  
|                                                      |  |                    |         |   |                  
|EBITDA                                                |  | $                  | 24,321  |   |                  
|                                                      |  |                    |         |   |                  
|Lodging data: (3 resorts)                             |  |                    |         |   |                  
|Room nights available                                 |  |                    | 299,124 |   |                  
|Room nights sold                                      |  |                    | 154,041 |   |                  
|Paid occupancy rate                                   |  |                    | 51.5    | % |                  
|Average daily revenue per occupied room (1)           |  | $                  | 753     |   |                  
|Average daily revenue per available room (1)          |  | $                  | 388     |   |                  

---



|(1) | 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.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes results of our resorts possessive overhead entity in addition to our 3 same store resorts.
|--- | ---------------------------------------------------------------------------------------------------



Continuing Operations.Total operating revenues decreased $2.8 million for same store resorts for the 36 weeks ended
September 9, 2003 from the 36 weeks ended September 3, 2002. This decrease was primarily due to decreased golf operations revenue of $2.5 million and lower lodging revenues of $1.2 million, in addition to other income of $0.9 million. Partially
offsetting these decreases were increases in spa revenue of $1.0 million and increased recognition of membership fees of $0.7 million. Golf operations revenues declined primarily due to a 6.7% decrease in rounds and a 2.8% decrease in greens fee per
round as a result of poor weather and reduced spending by resort guests. In addition, golf instruction revenues declined due to the termination of an agreement with a golf teaching center. Although paid occupancy rates increased slightly in 2003,
lodging revenues were impacted by lower rates that our resorts offered in order to improve business volume. The Homestead was affected by extremely poor weather conditions and the timing of our prior fiscal year end, which resulted in the revenues
from the year-end holiday season being recorded at the end of fiscal year 2002 as opposed to at the beginning of fiscal year 2003. In addition, general economic uncertainty and the war in Iraq combined to affect operating performance at Pinehurst
during the first and second quarters of 2003. These factors combined to result in the 6.2% decrease in average daily revenue per occupied room for the 36 weeks ended September 9, 2003 compared to the 36 weeks ended September 3, 2002. Other income
declined as a result of promotional discounts offered by our resorts to increase occupancy. Spa revenue increased due to the opening of The Spa at Pinehurst in second quarter 2002 and price increases at The Homestead. Recognition of membership fees
increased as a result of the amortization of membership fees and positive membership trends at Pinehurst.



Segment operating income increased $1.8 million for same store resorts for the 36 weeks ended September 9, 2003 from the 36 weeks ended September 3, 2002.
This increase was primarily due to a decline in operating costs and expenses of $5.5 million, partially offset by the decrease in revenues mentioned above and increased depreciation and amortization of $0.9 million. Operating costs and expenses
declined as a result of expense controls in operations in response to the decline in revenues, as well as overhead reductions resulting from cost cutting initiatives implemented in the second half of 2002 and into 2003. As part of this
reorganization, intercompany consulting fees were not billed in 2003. The elimination of the consulting fee billings had no net impact on Total Resorts operating expenses as Total Resorts includes the offsetting overhead revenue. Depreciation and
amortization increased due to recent expansion projects completed at our resorts. The



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$1.7 million decrease in segment operating income at total resorts reflects the elimination of the consulting fee at the
total resort level.



Discontinued Operations.
Discontinued operations were comprised of the management fees of one divested resort property. The management agreement for this property was terminated in 2002.



Business and Sports Clubs



The following table presents certain summary financial and other operating data for our business and sports club segment for the 36 week periods ended
September 3, 2002 and September 9, 2003 (dollars in thousands):



|                                                    |  | Same Store Businessand Sports Clubs |         | Total Business andSports Clubs |  
|--------------------------------------------------- |  | ----------------------------------- | ------- | ------------------------------ | -
|                                                    |  | 2002                                |         | 2003                           |  
|Number of facilities at end of period               |  |                                     | 70      |                                |  
|Operating revenues                                  |  | $                                   | 146,339 |                                | $
|Recognition of membership fees and deposits         |  |                                     | 2,813   |                                |  
|                                                    |  |                                     |         |                                |  
|Total operating revenues                            |  | $                                   | 149,152 |                                | $
|                                                    |  |                                     |         |                                |  
|Operating costs and expenses                        |  |                                     | 137,761 |                                |  
|Depreciation and amortization                       |  |                                     | 8,622   |                                |  
|                                                    |  |                                     |         |                                |  
|Segment operating income from continuing operations |  | $                                   | 2,769   |                                | $
|                                                    |  |                                     |         |                                |  
|Segment operating loss from discontinued operations |  | $                                   |        |                                | $
|                                                    |  |                                     |         |                                |  
|EBITDA                                              |  | $                                   | 11,390  |                                | $
|                                                    |  |                                     |         |                                |  



Continuing
Operations. Total operating revenues decreased $2.3 million at same store business and sports clubs for the 36 weeks ended September 9, 2003 from the 36 weeks ended September 3, 2002. This decrease was primarily due to a $1.0 million decline in
membership dues, a decline in food and beverage revenues of $1.0 million, and decreased recognition of membership deposits and fees of $0.9 million. Partially offsetting these decreases was an increase in other revenue of $0.6 million. Although
membership retention levels have improved from those experienced in the last two fiscal years, we continue to experience slight attrition in member counts due to continued economic uncertainty. These trends have resulted in decreased membership dues
and decreased recognition of membership deposits and fees. Food and beverage revenues decreased primarily as a result of decreases in private parties stemming from lower membership and activity at our clubs. Other revenue increased as a result of
increased usage of tennis, athletics and spa facilities, in addition to improved results from non-wholly-owned facilities.



Segment operating income increased $0.8 million at same store business and sports clubs for the 36 weeks ended September 9, 2003 from the 36 weeks ended
September 3, 2002. This increase was primarily due to decreased operating costs and expenses of $2.7 million, partially offset by the decrease in revenues mentioned above. Operating margins were positively impacted by improved food and beverage
margins due to expense controls in purchasing and operations, in addition to a decline in rent expense of $1.1 million. Rent expense has declined due to the renegotiation of certain of our facilities lease agreements with their respective
landlords, in addition to a decline in contingent rent payments. Depreciation and amortization declined due to lower recent levels of capital spending at our business and sports clubs.



Discontinued Operations.The operations of eight divested business and sports clubs were included in discontinued
operations. Segment operating loss from these properties decreased $1.1 million for the 36 weeks ended September 9, 2003 from the 36 weeks ended September 3, 2002 as a result of the divestiture of underperforming facilities.



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Other Operations and Services  Continuing Operations



Operating income for our real estate operations improved to $0.2 million in
the 36 weeks ended September 9, 2003 from a loss of ($3.8) million for the 36 weeks ended September 3, 2002. This increase was primarily due to cost cutting initiatives in the administrative and sales and marketing functions of our real estate
operations. Operationally, we experienced decreased real estate sales of $1.8 million as a result of lower sales of units in our Owners Club program. Partially offsetting this decrease in real estate sales was a $2.0 million increase in our equity
in earnings of a non-consolidated real estate joint venture due to increased realty sales.



Included in results for other operations and services for the 36 weeks ended September 9, 2003 is a charge of $1.5 million recorded to cover the costs of a settlement reached in a lawsuit related to one of our former
properties. This amount is in addition to the $1.0 million reserve established during the fourth quarter of 2002 for this matter. We also recognized a charge of $2.4 million in the 36 weeks ended September 9, 2003 to accrue for vacation earned by
employees. This amount is in addition to the $1.7 million reserve established during the fourth quarter of 2002.



During the 36 weeks ended September 9, 2003 we recorded a charge of $1.0 million to cover incurred litigation fees and settlement charges related to one
component of an outstanding lawsuit related to one of our former properties. Parties to this lawsuit are also claiming damages in the maximum amount of $5.5 million for which we have not set up any accrual as the actual settlement is not estimable
at this time as the amount is still subject to significant reduction. In accordance with legal requirements, we are currently holding $4.5 million in escrow pertaining to this matter until the lawsuit is resolved.



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 2003 and the immediate future thereafter consist of capital to finance working
capital needs, capital replacements at existing facilities, limited capital expansion and development projects, and debt service. 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 (i.e., capital expansions) and investments in joint ventures. Capital replacements are planned expenditures made each year to maintain high quality
standards of facilities for the purpose of meeting existing members expectations and to attract new members. Capital expansions are discretionary expenditures that create new amenities or enhance existing amenities at existing facilities. The
company plans to invest the vast majority of its capital expenditures in 2003 and 2004 into capital replacements. The limited amounts planned for capital expansions will be invested in our existing properties where a return can be achieved through
growth in the assets cash flows rather than by acquiring or investing in new facilities. Total capital expenditures are expected to be approximately $54 million in 2003 and $60 million in 2004. Net cash flows used by investing activities were
$11.7 million for the 36 weeks ended September 9, 2003 as compared to $65.3 million for the 36 weeks ended September 3, 2002.



Net cash flows from financing activities were $48.7 million for the 36 weeks ended September 9, 2003 as compared to $26.5 million for the 36 weeks ended
September 3, 2002. In June, 2003, we refinanced the majority of our bank credit facility with mortgage loan financing totaling $617.6 million. Additionally, we closed on 3 additional mortgage loans during the twelve weeks ended September 9, 2003
totaling $40 million of which $23 million was utilized to settle an existing loan



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and contingent purchase price. Overall, our cash flow situation has improved as the refinancing provided us with
additional working capital and liquidity, favorable interest rates and less restrictive debt covenants.



Net cash flows provided from by operations decreased to $38.8 million in the 36 weeks ended September 9, 2003 from $52.6 million in the 36 weeks ended
September 3, 2002 as a result of lower revenues and reductions of accounts payable. We anticipate that the company will be able to generate cash flows from operating activities in an amount greater than our obligations for scheduled principal
payments and expected capital expenditures. In the event that this is not the case, the company could use its existing cash reserve to meet its obligations or delay or cancel certain capital repair or expansion projects. As a result of our
refinancing transactions mentioned above, we believe we have adequate capital resources to fund our operations. As of October 24, 2003, we have also completed the divestiture of 16 properties and certain other holdings in the current year for net
cash proceeds of approximately $30.6 million.



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



This Quarterly Report on Form 10-Q may contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of
historical fact should be considered forward-looking statements for purposes of these provisions, including statements that include projections of, or expectations about, earnings, revenues or other financial items, statements about our
plans and objectives for future operations, statements concerning proposed new products or services, statements regarding future economic conditions or performance, statements concerning our expectations regarding the attraction and retention of
members and guests, statements about market risk and statements underlying any of the foregoing. In some cases, forward-looking statements can be identified by the use of terminology such as may, will, expects,
plans, anticipates, intends, believes, estimates, potential or continue, or the negative thereof or other similar words. Although we believe that the expectations
reflected in our forward-looking statements are reasonable, we can give no assurance that such expectations or any of our forward-looking statements will prove to be correct. Actual results and developments are likely to be different from, and may
be materially different from, those expressed or implied by our forward-looking statements. Forward-looking statements are subject to inherent risks and uncertainties, some of which are summarized in this section and in our Form 10-K for the year
ended December 31, 2002.



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



Recently Issued Accounting Pronouncements



In April 2002, the Financial Accounting Standards Board (FASB) issued SFAS No. 145 (SFAS 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. SFAS 145 was effective for fiscal years beginning after
May 15, 2002. The adoption of SFAS No. 145 affected our presentation of the write off of unamortized financing costs in our Consolidated Statement of Operations.



In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. The main
provisions of this statement address the recognition of liabilities associated with exit or disposal activities and is effective for exit or disposal activities initiated after December 31, 2002. Implementation of this statement had no impact on our
consolidated financial statements.



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In November 2002, the FASB issued FASB Interpretation No. 45 (FIN 45), Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an interpretation of FASB Statements No. 5, 57, and 107 and rescission of FASB Interpretation No. 34. FIN 45 redefines the recognition and disclosures to be
made by the guarantor in its interim and annual financial statements regarding obligations under certain guarantees issued. The provisions of the disclosure requirements are effective for financial statements of interim or annual reports ending
after December 15, 2002. Implementation of this statement had no impact on our consolidated financial statements.



In January 2003, the FASB issued FASB Interpretation No. 46, (FIN 46) Consolidation of Variable Interest Entities which changes the criteria by which one
company includes another entity in its consolidated financial statements. FIN 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest
entitys activities or entitled to receive a majority of the entitys residual returns or both. The effective date for applying the provisions of FIN 46 have been deferred for interests held by public entities in variable interest entities
or potential variable interest entities created before February 1, 2003. The impact of the initial consolidation of the variable interest entities to which the deferral applies will be on the balance sheet for the first interim or annual period
ending after December 15, 2003. We are currently evaluating the impact this statement will have on our Consolidated Financial Statements. We believe that this statement may cause us to consolidate a joint venture that would add net assets of $1.8
million including debt of $14.9 million to our Consolidated Balance Sheet. This investment is carried as an equity investment at September 9, 2003.



In December 2002, the FASB issued SFAS No. 148 (SFAS 148), Accounting for Stock-Based Compensation  Transition and Disclosure, an amendment of FASB Statement
No. 123. SFAS 148 amends the disclosure requirements in SFAS 123 for stock-based compensation for annual periods ending after December 15, 2002 and for interim periods beginning after December 15, 2002. The disclosure requirements apply to all
companies, including those that continue to recognize stock-based compensation under Accounting Principles Board Opinion No. 25 (APB 25), Accounting for Stock Issued to Employees. SFAS 148 also provides three alternative transition
methods for companies that choose to adopt the fair value measurement provisions of SFAS 123. We have not chosen to adopt the fair value measurement provisions of SFAS 123; however, we are in compliance with the disclosure requirements as shown
below in the Stock-based compensation disclosure.



In April 2003, the FASB
issued SFAS No. 149 (SFAS 149), Amendment of Statement 133 on Derivative Instruments and Hedging Activities. This statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities under FASB Statement No. 133. SFAS 149 is effective for fiscal quarters that began prior to June 15, 2003 and for hedging relationships designated after June 30, 2003. Implementation
of this statement had no impact to our Consolidated Financial Statements.



In
May 2003, the FASB issued SFAS No. 150 (SFAS 150), Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. This statement establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability. SFAS 150 is effective for financial instruments entered into or modified
after May 31, 2003, and is otherwise effective at the beginning of the first interim period beginning after June 15, 2003. Implementation of this statement had no impact to our Consolidated Financial Statements.



|Item 3. |  | Quantitative and Qualitative Disclosures about Market Risk
|------- |  | ----------------------------------------------------------



We have no material changes to the disclosure on this matter made in our report on Form 10-Q for the quarter ended June 17, 2003.



|Item 4. |  | Controls and Procedures
|------- |  | -----------------------



An evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 9, 2003 pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures were effective, in all material respects, to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is



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recorded, processed, summarized and reported as and when required. There have been no significant changes in our internal
controls or in other factors that could significantly affect internal controls subject to the date of managements evaluation.



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Part II. OTHER INFORMATION



|Item 6. |  | Exhibits and Reports on Form 8-K
|------- |  | --------------------------------



(a) Exhibits

10.1Second Amendment to
the ClubCorp, Inc. Omnibus Stock Plan

10.2First Amendment to the ClubCorp, Inc. Executive Stock Option Plan

15.1Letter from KPMG LLP regarding unaudited interim financial statements

31.1Certification by Robert H. Dedman, Jr. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2Certification by Jeffrey P. Mayer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.

32.1Certification by Robert H. Dedman, Jr. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

32.2Certification by Jeffrey P. Mayer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.



(b) Reports on Form 8-K

Not applicable





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SIGNATURES



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



|                       |  |  |  | ClubCorp, Inc.
|---------------------- |  |  |  | --------------
|                       |  |  | 
|Date: October 24, 2003 |  |  |  | By:           
|                       |  |  |  |               
|                       |  |  |  |               



27