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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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



For the quarterly period ended March 22, 2005



or



|x | 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, 333-52612 and 333-110521



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CLUBCORP, INC.

(Exact name of registrant as specified in its charter)



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



3030 LBJ Freeway,
Suite 600

Dallas, Texas 75234

(Address of principal executive offices, including 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 Act).    Yes ̈No  x



The number of shares of the registrants common stock outstanding as of May 5, 2005 was 93,379,080.



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##### Table of Contents

CLUBCORP, INC.



INDEX



|         |  |                                                                                       |  |   
|-------- |  | ------------------------------------------------------------------------------------- |  | --
|Part I.  |  | FINANCIAL INFORMATION                                                                 |  |   
|         |  |                                                                                      
|Item 1.  |  | Financial Statements (Unaudited):                                                     |  |   
|         |  | Condensed Consolidated Balance Sheets                                                 |  | 1 
|         |  | Condensed Consolidated Statements of Operations                                       |  | 2 
|         |  | Condensed Consolidated Statements of Cash Flows                                       |  | 3 
|         |  | Notes to Condensed Consolidated Financial Statements                                  |  | 4 
|         |  |                                                                                      
|Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 14
|         |  |                                                                                      
|Item 3.  |  | Quantitative and Qualitative Disclosures about Market Risk                            |  | 22
|         |  |                                                                                      
|Item 4.  |  | Controls and Procedures                                                               |  | 22
|         |  |                                                                                      
|Part II. |  | OTHER INFORMATION                                                                     |  |   
|         |  |                                                                                      
|Item 1.  |  | Legal Proceedings                                                                     |  | 22
|         |  |                                                                                      
|Item 6.  |  | Exhibits                                                                              |  | 22















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##### Table of Contents

PART I. FINANCIAL INFORMATION



Item 1. Financial Statements



ClubCorp, Inc.



Condensed Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)



|                                                                                                                                                  |  |                   |           |   |                |   |           |  
|------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | --------- | - | -------------- | - | --------- | -
|                                                                                                                                                  |  | December 28, 2004 |           |   | March 22, 2005 |  
|Assets                                                                                                                                            |  |                   |           |   |                |   |           |  
|                                                                                                                                                  |  |                  
|Current assets:                                                                                                                                   |  |                   |           |   |                |   |           |  
|Cash and cash equivalents                                                                                                                         |  | $                 | 96,180    |   |                | $ | 120,672   |  
|Restricted cash                                                                                                                                   |  |                   | 28,742    |   |                |   | 28,742    |  
|Membership and other receivables, net                                                                                                             |  |                   | 71,372    |   |                |   | 58,315    |  
|Inventories                                                                                                                                       |  |                   | 19,807    |   |                |   | 21,832    |  
|Prepaid expenses and other assets                                                                                                                 |  |                   | 29,387    |   |                |   | 30,614    |  
|                                                                                                                                                  |  |                   |           |   |                |   |           |  
|Total current assets                                                                                                                              |  |                   | 245,488   |   |                |   | 260,175   |  
|                                                                                                                                                  |  |                  
|Property and equipment, net                                                                                                                       |  |                   | 1,141,584 |   |                |   | 1,138,757 |  
|Notes receivable                                                                                                                                  |  |                   | 43,436    |   |                |   | 41,334    |  
|Other assets                                                                                                                                      |  |                   | 87,477    |   |                |   | 83,336    |  
|                                                                                                                                                  |  |                   |           |   |                |   |           |  
|Total assets                                                                                                                                      |  | $                 | 1,517,985 |   |                | $ | 1,523,602 |  
|                                                                                                                                                  |  |                   |           |   |                |   |           |  
|Liabilities and Stockholders Equity                                                                                                              |  |                   |           |   |                |   |           |  
|                                                                                                                                                  |  |                  
|Current liabilities:                                                                                                                              |  |                   |           |   |                |   |           |  
|Accounts payable and accrued liabilities                                                                                                          |  | $                 | 79,847    |   |                | $ | 77,237    |  
|Long-term debt - current portion                                                                                                                  |  |                   | 23,220    |   |                |   | 24,713    |  
|Membership deposits - current portion                                                                                                             |  |                   | 16,940    |   |                |   | 18,417    |  
|Other liabilities                                                                                                                                 |  |                   | 129,907   |   |                |   | 150,855   |  
|                                                                                                                                                  |  |                   |           |   |                |   |           |  
|Total current liabilities                                                                                                                         |  |                   | 249,914   |   |                |   | 271,222   |  
|                                                                                                                                                  |  |                  
|Long-term debt, net of current portion                                                                                                            |  |                   | 684,613   |   |                |   | 679,992   |  
|Other liabilities                                                                                                                                 |  |                   | 139,622   |   |                |   | 138,020   |  
|Membership deposits, net of current portion                                                                                                       |  |                   | 136,776   |   |                |   | 138,961   |  
|                                                                                                                                                  |  |                   |           |   |                |   |           |  
|Total liabilities                                                                                                                                 |  |                   | 1,210,925 |   |                |   | 1,228,195 |  
|                                                                                                                                                  |  |                  
|Redemption value of common stock held by benefit plan                                                                                             |  |                   | 47,180    |   |                |   | 51,327    |  
|                                                                                                                                                  |  |                  
|Commitments and contingencies                                                                                                                     |  |                   |           |   |                |   |           |  
|                                                                                                                                                  |  |                  
|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 and 93,379,080 outstanding at December 28, 2004 and March 22,
2005 |  |                   | 996       |   |                |   | 996       |  
|Additional paid-in capital                                                                                                                        |  |                   | 161,672   |   |                |   | 161,672   |  
|Accumulated other comprehensive loss                                                                                                              |  |                   | (7,013    | ) |                |   | (6,711    | )
|Retained earnings                                                                                                                                 |  |                   | 168,582   |   |                |   | 152,480   |  
|Treasury stock, 6,215,328 shares at December 28, 2004 and March 22, 2005                                                                          |  |                   | (64,357   | ) |                |   | (64,357   | )
|                                                                                                                                                  |  |                   |           |   |                |   |           |  
|Total stockholders equity                                                                                                                        |  |                   | 259,880   |   |                |   | 244,080   |  
|                                                                                                                                                  |  |                   |           |   |                |   |           |  
|Total liabilities and stockholders equity                                                                                                        |  | $                 | 1,517,985 |   |                | $ | 1,523,602 |  
|                                                                                                                                                  |  |                   |           |   |                |   |           |  



See accompanying notes
to condensed consolidated financial statements.



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##### Table of Contents

ClubCorp, Inc.



Condensed Consolidated Statements of Operations

(Dollars in thousands, except per share amounts)

(Unaudited)



|                                                                          |  |                    |         |   |                |   |         |  
|------------------------------------------------------------------------- |  | ------------------ | ------- | - | -------------- | - | ------- | -
|                                                                          |  | Twelve Weeks Ended |        
|                                                                          |  | March 23,2004      |         |   | March 22, 2005 |  
|Operating revenues                                                        |  | $                  | 181,548 |   |                | $ | 190,753 |  
|                                                                          |  |                   
|Operating costs and expenses                                              |  |                    | 147,153 |   |                |   | 153,956 |  
|Depreciation and amortization                                             |  |                    | 20,604  |   |                |   | 19,516  |  
|Selling, general and administrative expenses                              |  |                    | 16,670  |   |                |   | 15,045  |  
|Loss on disposals and impairment of assets                                |  |                    | 788     |   |                |   | 28      |  
|                                                                          |  |                    |         |   |                |   |         |  
|Operating income (loss) from continuing operations                        |  |                    | (3,667  | ) |                |   | 2,208   |  
|                                                                          |  |                   
|Interest and investment income                                            |  |                    | 381     |   |                |   | 771     |  
|Interest expense                                                          |  |                    | (13,941 | ) |                |   | (14,153 | )
|                                                                          |  |                    |         |   |                |   |         |  
|Loss from continuing operations before income taxes and minority interest |  |                    | (17,227 | ) |                |   | (11,174 | )
|                                                                          |  |                   
|Income tax provision                                                      |  |                    | (1,320  | ) |                |   | (632    | )
|Minority interest                                                         |  |                    | (157    | ) |                |   | (150    | )
|                                                                          |  |                    |         |   |                |   |         |  
|Loss from continuing operations                                           |  |                    | (18,704 | ) |                |   | (11,956 | )
|                                                                          |  |                    |         |   |                |   |         |  
|Discontinued operations:                                                  |  |                    |         |   |                |   |         |  
|Income (loss) from discontinued operations before income taxes            |  |                    | (305    | ) |                |   | 10      |  
|Income tax provision                                                      |  |                    | (54     | ) |                |   | (9      | )
|                                                                          |  |                    |         |   |                |   |         |  
|Income (loss) from discontinued operations                                |  |                    | (359    | ) |                |   | 1       |  
|                                                                          |  |                    |         |   |                |   |         |  
|Net loss                                                                  |  | $                  | (19,063 | ) |                | $ | (11,955 | )
|                                                                          |  |                    |         |   |                |   |         |  
|Basic and diluted income (loss) per share from:                           |  |                    |         |   |                |   |         |  
|Continuing operations                                                     |  | $                  | (0.20   | ) |                | $ | (0.13   | )
|Discontinued operations                                                   |  |                    | (0.00   | ) |                |   | 0.00    |  
|                                                                          |  |                    |         |   |                |   |         |  
|Basic and diluted loss per share                                          |  | $                  | (0.20   | ) |                | $ | (0.13   | )
|                                                                          |  |                    |         |   |                |   |         |  



See accompanying notes
to condensed consolidated financial statements.



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ClubCorp, Inc.



Condensed Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)



|                                                                           |  |                    |         |   |               |   |         |  
|-------------------------------------------------------------------------- |  | ------------------ | ------- | - | ------------- | - | ------- | -
|                                                                           |  | Twelve Weeks Ended |        
|                                                                           |  | March 23,2004      |         |   | March 22,2005 |  
|Cash flows from operating activities:                                      |  |                    |         |   |               |   |         |  
|Net loss                                                                   |  | $                  | (19,063 | ) |               | $ | (11,955 | )
|Adjustments to reconcile net loss to cash flows from operating activities: |  |                    |         |   |               |   |         |  
|Depreciation and amortization                                              |  |                    | 20,813  |   |               |   | 19,518  |  
|Loss on disposals and impairment of assets                                 |  |                    | 788     |   |               |   | 42      |  
|Amortization of discount on membership deposits                            |  |                    | 2,693   |   |               |   | 3,285   |  
|Net change in deferred income taxes                                        |  |                    | 655     |   |               |   |        |  
|Net change in real estate held for sale                                    |  |                    | 132     |   |               |   | 184     |  
|Net change in membership and other receivables, net                        |  |                    | 20,853  |   |               |   | 12,879  |  
|Net change in accounts payable and accrued liabilities                     |  |                    | (14,866 | ) |               |   | (5,875  | )
|Net change in deferred income and other liabilities                        |  |                    | 8,449   |   |               |   | 17,846  |  
|Net change in deferred membership revenues                                 |  |                    | 4,332   |   |               |   | 3,309   |  
|Other                                                                      |  |                    | (1,181  | ) |               |   | (243    | )
|                                                                           |  |                    |         |   |               |   |         |  
|Cash flows from operating activities                                       |  |                    | 23,605  |   |               |   | 38,990  |  
|                                                                           |  |                   
|Cash flows from investing activities:                                      |  |                    |         |   |               |   |         |  
|Additions to property and equipment                                        |  |                    | (7,197  | ) |               |   | (8,876  | )
|Acquisition of facilities                                                  |  |                    |        |   |               |   | (1,974  | )
|Development of real estate held for sale                                   |  |                    | (626    | ) |               |   | (1,241  | )
|Net change in notes receivable                                             |  |                    | 560     |   |               |   | 2,100   |  
|Other                                                                      |  |                    | 1,961   |   |               |   | 411     |  
|                                                                           |  |                    |         |   |               |   |         |  
|Cash flows from investing activities                                       |  |                    | (5,302  | ) |               |   | (9,580  | )
|                                                                           |  |                   
|Cash flows from financing activities:                                      |  |                    |         |   |               |   |         |  
|Repayments of long-term debt                                               |  |                    | (11,900 | ) |               |   | (5,295  | )
|Change in membership deposits                                              |  |                    | 425     |   |               |   | 377     |  
|Treasury stock transactions                                                |  |                    | (5      | ) |               |   |        |  
|                                                                           |  |                    |         |   |               |   |         |  
|Cash flows from financing activities                                       |  |                    | (11,480 | ) |               |   | (4,918  | )
|                                                                           |  |                    |         |   |               |   |         |  
|Net change in cash and cash equivalents                                    |  |                    | 6,823   |   |               |   | 24,492  |  
|Cash and cash equivalents at beginning of period                           |  |                    | 67,920  |   |               |   | 96,180  |  
|                                                                           |  |                    |         |   |               |   |         |  
|Cash and cash equivalents at end of period                                 |  | $                  | 74,743  |   |               | $ | 120,672 |  
|                                                                           |  |                    |         |   |               |   |         |  



See accompanying notes
to condensed consolidated financial statements.



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ClubCorp, Inc.



Notes to Condensed Consolidated Financial Statements

(Unaudited)



Note 1. Summary of significant accounting policies



Consolidation



The accompanying Condensed Consolidated Financial Statements include the accounts of ClubCorp, Inc. and its majority-owned subsidiaries that are not considered variable
interest entities (VIEs) and VIEs for which the Company is the primary beneficiary (collectively, ClubCorp). All material intercompany balances and transactions have been eliminated.



Interim presentation



The accompanying Condensed 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 28, 2004, which are a part of ClubCorps
2004 Form 10-K.



In our opinion, the accompanying Condensed Consolidated
Financial Statements reflect all adjustments necessary to present fairly the consolidated financial position of ClubCorp as of March 22, 2005, and the consolidated results of operations and cash flows for the twelve weeks ended March 23, 2004 and
March 22, 2005. 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.



Cash and cash equivalents



For purposes of the Condensed Consolidated Statements of Cash Flows, cash and cash
equivalents include cash on hand and interest bearing deposits in financial institutions, all of which have maturities of 90 days or less.



Restricted cash



There was $28.7 million in restricted cash at December 28, 2004 and March 22, 2005. The balance is comprised of $19.0 million representing collateral related to insurance policies, $6.2 million representing collateral
related to debt covenants (See Note 9), and $3.5 million representing cash in escrow related to a put option on an operating lease at one of our properties. These letters of credit have one-year terms and, therefore, the related restricted cash is
included in current assets.



Recent Pronouncements



In December 2004, the FASB issued SFAS No. 123 (revised 2004),Share-Based
Payment, which replaces SFAS No. 123, Accounting for Stock-Based Compensation, and supercedes APB Opinion No. 25, Accounting for Stock Issued to Employees. SFAS No. 123 (revised 2004) requires compensation costs related
to share-based payment transactions to be recognized in the financial statements. With limited exceptions, the amount of compensation cost will be measured based on fair value on the grant date of the equity or liability instruments issued.
Compensation cost will be recognized over the period that an employee provides service for that award. This new standard will be effective for us beginning in our first quarter of 2006. We are in the process of evaluating the impact of this standard
on our financial statements.



In December 2004, the FASB issued SFAS No. 152,
Accounting for Real Estate Time-Sharing Transactions, which clarifies accounting treatment for timeshare transactions and related costs. SFAS No. 152 is effective for fiscal years beginning after June 15, 2005. We are currently in the
process of evaluating the possible effects of this recently issued accounting pronouncement. We do not believe the adoption of this statement will have a material effect on our Consolidated Financial Statements.



Reclassifications



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



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ClubCorp, Inc.



Stock-based compensation



Stock-based compensation is accounted for using Accounting Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees. 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 No. 148, Accounting for Stock Based Compensation  Transition and Disclosure.



We granted options to purchase 75,000 shares of common stock during the twelve weeks ended March 22, 2005. We did not grant any options to purchase shares of common stock
during the twelve weeks ended March 23, 2004. Stock compensation expense related to options has not been recorded for any of the periods presented. Effective December 29, 2004, we changed certain of our assumptions used to calculate the fair value
of options granted and compensation expense. We now use an expected life of seven years (previously 10 years) and a 3% forfeiture rate (previously zero). We are also calculating compensation expense on a straight-line basis over the applicable
vesting period. Management believes these changes will more accurately reflect the value of our stock options granted and the requisite service period. These changes will be applied on a prospective basis. Had compensation cost for the option plans
been determined based on the fair value at the grant dates for the options consistent with the methodology of SFAS 123, 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 |        
|                                                                                              |  | March 23,2004      |         |   | March 22,2005 |  
|Net loss as reported                                                                          |  | $                  | (19,063 | ) |               | $ | (11,955 | )
|                                                                                              |  |                   
|Less: Total stock-based compensation expense determined under fair value method, net of taxes |  |                    | (2,138  | ) |               |   | (1,736  | )
|                                                                                              |  |                    |         |   |               |   |         |  
|Pro forma net loss                                                                            |  | $                  | (21,201 | ) |               | $ | (13,691 | )
|                                                                                              |  |                    |         |   |               |   |         |  
|Basic and diluted loss per share - Reported                                                   |  | $                  | (0.20   | ) |               | $ | (0.13   | )
|                                                                                              |  |                    |         |   |               |   |         |  
|Basic and diluted loss per share - Pro Forma                                                  |  | $                  | (0.23   | ) |               | $ | (0.15   | )
|                                                                                              |  |                    |         |   |               |   |         |  



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ClubCorp, Inc.



Note 2. Variable interest entities



During 1994, we formed a joint venture with a real estate developer to acquire and develop real estate around a country club. Prior to the adoption of FIN 46R, we
accounted for our investment in the joint venture under the equity method, recording a majority of the ventures operating results. We are the general partner of the joint venture, however, we do not control a majority ownership percentage;
therefore, operating decisions would have to go to arbitration in the event of a split in voting. We recorded 100% of all losses and then participated in earnings proportionally with the other partners.



The joint venture purchases virtually all the support services it requires from us and from
the real estate developer under management service agreements, which expire at the completion of the development. With the adoption of FIN 46R, we consolidated the joint venture beginning with its March 23, 2004 Condensed Consolidated Balance Sheet,
as the joint venture was determined to be a variable interest entity with us as its primary beneficiary. Due to the historical net operating losses of the joint venture in excess of the partners equity interests of the joint venture not owned
by us, no noncontrolling interests are reported in our March 22, 2005 Condensed Consolidated Balance Sheet. The investment was previously carried as a $19.8 million investment liability prior to consolidation.



The joint venture was financed by the assumption of debt of which $12.9 million is currently
outstanding and is included in long-term debt, along with accrued interest of approximately $10.7 million. The majority of the joint ventures debt is payable only out of distributable cash flow, as defined by the agreements. The notes are
subordinated and junior to other liens and are collateralized by the real estate owned by the joint venture. The creditors of the joint venture do not have recourse to our other assets.



Other variable interest entries consolidated by us in conjunction with the implementation of FIN 46R include a managed golf operation and
liquor pool entities associated with certain properties. The Consolidated Balance Sheets and Consolidated Statements of Operations impact of consolidating these entities was not significant.



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ClubCorp, Inc.



Note 3. Operating revenues



We recognized revenues from the following sources:



|                                                      |  |                    |         |               |   |        
|----------------------------------------------------- |  | ------------------ | ------- | ------------- | - | -------
|                                                      |  | Twelve Weeks Ended
|                                                      |  | March 23,2004      |         | March 22,2005
|Revenues from continuing operations:                  |  |                    |         |               |   |        
|Membership fees and deposits                          |  | $                  | 9,206   |               | $ | 8,535  
|Membership dues                                       |  |                    | 74,020  |               |   | 78,108 
|Golf operations revenues                              |  |                    | 27,357  |               |   | 27,061 
|Food and beverage revenues                            |  |                    | 49,037  |               |   | 51,344 
|Lodging revenues                                      |  |                    | 8,137   |               |   | 9,330  
|Other revenues                                        |  |                    | 13,791  |               |   | 16,375 
|                                                      |  |                    |         |               |   |        
|Total operating revenues from continuing operations   |  | $                  | 181,548 |               | $ | 190,753
|                                                      |  |                    |         |               |   |        
|Revenues from discontinued operations:                |  |                    |         |               |   |        
|Membership fees and deposits                          |  | $                  | 33      |               | $ | 24     
|Membership dues                                       |  |                    | 1,963   |               |   | 632    
|Food and beverage revenues                            |  |                    | 621     |               |   | 96     
|Other revenues                                        |  |                    | 802     |               |   | 529    
|                                                      |  |                    |         |               |   |        
|Total operating revenues from discontinued operations |  | $                  | 3,419   |               | $ | 1,281  
|                                                      |  |                    |         |               |   |        
|Total Operating Revenue                               |  | $                  | 184,967 |               | $ | 192,034
|                                                      |  |                    |         |               |   |        



Note 4. Income tax provision



The income tax provision for the twelve weeks ended March 23, 2004 and
March 22, 2005 differ from amounts computed by applying the U.S. Federal tax rate of 35% to income (loss) from operations before income taxes and minority interest primarily due to foreign and state income taxes, net of Federal benefit (provision),
and the effect of consolidated operations of foreign and other entities not consolidated for Federal income tax purposes. In addition, for the twelve weeks ended March 22, 2005, we fully reserved all additional tax benefits from available
carryforwards of net operating losses generated during the period and therefore, recorded no income tax (provision) benefit related to federal income taxes. Therefore, the provisions for 2005 contain only foreign and state income taxes on the
Condensed Consolidated Statement of Operations.



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ClubCorp, Inc.



Note 5. Weighted average shares



The following table summarizes the weighted average number of shares used to calculate basic and diluted earnings (loss) per share:



|                                                      |  |                    |  |              
|----------------------------------------------------- |  | ------------------ |  | -------------
|                                                      |  | Twelve Weeks Ended
|                                                      |  | March 23,2004      |  | March 22,2005
|Weighted average shares outstanding                   |  | 93,708,675         |  | 93,379,080   
|                                                      |  |                   
|Incremental shares from assumed conversion of options |  |                   |  |             
|                                                      |  |                    |  |              
|Diluted weighted average shares                       |  | 93,708,675         |  | 93,379,080   
|                                                      |  |                    |  |              



The diluted weighted average shares
exclude the assumed conversion of options to acquire 92,204 and 1,346,903 shares of common stock for the twelve weeks ended March 23, 2004 and March 22, 2005, respectively, because they would be anti-dilutive due to our net loss in those periods.



Note 6. Property and equipment



Property and equipment consists of the following at year-end (dollars in thousands):



|                                          |  |                  |           |   |               |   |           |  
|----------------------------------------- |  | ---------------- | --------- | - | ------------- | - | --------- | -
|                                          |  | December 28,2004 |           |   | March 22,2005 |  
|Land and land improvements                |  | $                | 735,395   |   |               | $ | 740,338   |  
|Buildings and recreational facilities     |  |                  | 502,126   |   |               |   | 504,774   |  
|Leasehold improvements                    |  |                  | 105,823   |   |               |   | 105,837   |  
|Furniture and fixtures                    |  |                  | 135,191   |   |               |   | 136,663   |  
|Machinery and equipment                   |  |                  | 281,021   |   |               |   | 288,784   |  
|Construction in progress                  |  |                  | 17,570    |   |               |   | 17,464    |  
|                                          |  |                  |           |   |               |   |           |  
|                                          |  |                  | 1,777,126 |   |               |   | 1,793,860 |  
|Accumulated depreciation and amortization |  |                  | (635,542  | ) |               |   | (655,103  | )
|                                          |  |                  |           |   |               |   |           |  
|                                          |  | $                | 1,141,584 |   |               | $ | 1,138,757 |  
|                                          |  |                  |           |   |               |   |           |  





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Note 7. Disposal and impairment of long-lived assets



In accordance with Statement of Financial Accounting Standards No. 144 (SFAS 144), Accounting for the Impairment or Disposal of
Long-Lived Assets, for all periods presented, certain assets and liabilities expected to be sold with the held-for-sale entities have been reclassified to Other Current Assets and Other Current Liabilities, and all income and expense items
have been reclassified as Discontinued Operations.



As of March 22, 2005, we
had one property classified as held for sale. The balance sheet amounts primarily related to this property were reclassified to Other Current Assets and Other Current Liabilities on the Consolidated Balance Sheets and were comprised of the following
(dollars in thousands):



|                                         |  |                  |       |                |   |      
|---------------------------------------- |  | ---------------- | ----- | -------------- | - | -----
|                                         |  | December 28,2004 |       | March 22, 2005
|Membership and other receivables, net    |  | $                | 431   |                | $ | 361  
|Inventories                              |  |                  | 75    |                |   | 77   
|Other current assets                     |  |                  | 29    |                |   | 24   
|Property and equipment, net              |  |                  | 6,451 |                |   | 6,366
|Other assets                             |  |                  | 103   |                |   | 97   
|                                         |  |                  |       |                |   |      
|Total assets                             |  | $                | 7,089 |                | $ | 6,925
|                                         |  |                  |       |                |   |      
|Accounts payable and accrued liabilities |  | $                | 196   |                | $ | 102  
|Other current liabilities                |  |                  | 169   |                |   | 212  
|Long-term debt                           |  |                  | 3,026 |                |   | 2,976
|Other liabilities                        |  |                  | 426   |                |   | 403  
|                                         |  |                  |       |                |   |      
|Total liabilities                        |  | $                | 3,817 |                | $ | 3,693
|                                         |  |                  |       |                |   |      



The property was reclassified to
discontinued operations on the Condensed Consolidated Statement of Operations for all periods presented. See Note 10 for detail of the Statement of Operations impact of discontinued operations by segment and in total.



We recorded an impairment of $0.9 million for the twelve weeks ended March 23, 2004. There
was no impairment recorded during the twelve weeks ended March 22, 2005.



Note 8. Comprehensive Loss



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



|                                        |  |                    |         |   |                |   |         |  
|--------------------------------------- |  | ------------------ | ------- | - | -------------- | - | ------- | -
|                                        |  | Twelve Weeks Ended |        
|                                        |  | March 23, 2004     |         |   | March 22, 2005 |  
|Net loss                                |  | $                  | (19,063 | ) |                | $ | (11,955 | )
|Foreign currency translation adjustment |  |                    | 80      |   |                |   | 302     |  
|                                        |  |                    |         |   |                |   |         |  
|Total comprehensive loss                |  | $                  | (18,983 | ) |                | $ | (11,653 | )
|                                        |  |                    |         |   |                |   |         |  



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ClubCorp, Inc.



Note 9. Long term debt



Under the provisions of certain of our debt agreements with Textron Financial Corporation (Textron), we are required to maintain debt service coverage ratios at both the
portfolio and individual property level. Certain of these individual loans has cross-default provisions; therefore, a default on an individual loan triggers a default on the portfolio. Effective as of June 30, 2004, we obtained an amendment to the
debt agreement clarifying a component of the debt service coverage ratio calculation. We may cure a default by obtaining a letter of credit or prepaying the individual loan.



As of March 22, 2005, the debt service coverage ratio was below the minimum level for three individual properties participating in the loan,
thereby causing the entire loan ($54 million outstanding principal amount as of March 22, 2005) to be in technical default. We cured the noncompliance by obtaining letters of credit totaling $6.2 million. Additionally, we were out of compliance on
two separate promissory notes with Textron related to individual properties with a combined outstanding principal amount of $22 million as of March 22, 2005. Subsequent to March 22, 2005, we paid down $1.9 million related to one note and received a
waiver letter on the other note to bring these properties into compliance. Approximately $3.4 million has been reclassified to the current portion of long-term debt in the Condensed Consolidated Balance Sheet representing the paydown amount required
to bring both of these properties into compliance.



Note 10. 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 which 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 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 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 and intercompany eliminations made in the consolidation between corporate services and other operating segments. Real estate operations are comprised of
residential real estate development and sales, primarily in areas adjacent to golf facilities. A majority of operating revenues is provided from real estate sales.



We evaluate segment performance and allocate resources based on each segments EBITDA. We also 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 continued and discontinued operations.
EBITDA for all periods presented has been calculated using this definition. 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.



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



Condensed Consolidated Statement of Operations:



|                                                                                                                                         |  |                                          |         |   |                |   |         |  
|---------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------- | ------- | - | -------------- | - | ------- | -
|                                                                                                                                         |  | Continuing Operations Twelve Weeks Ended |        
|                                                                                                                                         |  | March 23, 2004                           |         |   | March 22, 2005 |  
|Country Club and Golf Facilities:                                                                                                        |  |                                          |         |   |                |   |         |  
|Operating revenues                                                                                                                       |  | $                                        | 102,526 |   |                | $ | 104,770 |  
|Operating costs and expenses (1)                                                                                                         |  |                                          | 79,894  |   |                |   | 81,642  |  
|Depreciation and amortization                                                                                                            |  |                                          | 11,527  |   |                |   | 11,712  |  
|                                                                                                                                         |  |                                          |         |   |                |   |         |  
|Operating income (2)                                                                                                                     |  | $                                        | 11,105  |   |                | $ | 11,416  |  
|EBITDA                                                                                                                                   |  | $                                        | 22,632  |   |                | $ | 23,128  |  
|                                                                                                                                         |  |                                         
|Resorts:                                                                                                                                 |  |                                          |         |   |                |   |         |  
|Operating revenues                                                                                                                       |  | $                                        | 31,336  |   |                | $ | 35,052  |  
|Operating costs and expenses (1)                                                                                                         |  |                                          | 31,523  |   |                |   | 33,825  |  
|Depreciation and amortization                                                                                                            |  |                                          | 3,865   |   |                |   | 3,751   |  
|                                                                                                                                         |  |                                          |         |   |                |   |         |  
|Operating loss (2)                                                                                                                       |  | $                                        | (4,052  | ) |                | $ | (2,524  | )
|EBITDA                                                                                                                                   |  | $                                        | (187    | ) |                | $ | 1,227   |  
|                                                                                                                                         |  |                                         
|Business and Sports Clubs:                                                                                                               |  |                                          |         |   |                |   |         |  
|Operating revenues                                                                                                                       |  | $                                        | 46,862  |   |                | $ | 48,705  |  
|Operating costs and expenses (1)                                                                                                         |  |                                          | 39,955  |   |                |   | 41,299  |  
|Depreciation and amortization                                                                                                            |  |                                          | 2,361   |   |                |   | 1,994   |  
|                                                                                                                                         |  |                                          |         |   |                |   |         |  
|Operating income (2)                                                                                                                     |  | $                                        | 4,546   |   |                | $ | 5,412   |  
|EBITDA                                                                                                                                   |  | $                                        | 6,907   |   |                | $ | 7,406   |  
|                                                                                                                                         |  |                                         
|Other Operations and Services:                                                                                                           |  |                                          |         |   |                |   |         |  
|Operating revenues                                                                                                                       |  | $                                        | 824     |   |                | $ | 2,226   |  
|Operating costs and expenses (1)                                                                                                         |  |                                          | 12,451  |   |                |   | 12,235  |  
|Depreciation and amortization                                                                                                            |  |                                          | 2,851   |   |                |   | 2,059   |  
|                                                                                                                                         |  |                                          |         |   |                |   |         |  
|Operating loss (2)                                                                                                                       |  | $                                        | (14,478 | ) |                | $ | (12,068 | )
|EBITDA                                                                                                                                   |  | $                                        | (11,627 | ) |                | $ | (10,009 | )
|                                                                                                                                         |  |                                         
|Consolidated Operations:                                                                                                                 |  |                                          |         |   |                |   |         |  
|Operating revenues                                                                                                                       |  | $                                        | 181,548 |   |                | $ | 190,753 |  
|Operating costs and expenses (1)                                                                                                         |  |                                          | 163,823 |   |                |   | 169,001 |  
|Depreciation and amortization                                                                                                            |  |                                          | 20,604  |   |                |   | 19,516  |  
|                                                                                                                                         |  |                                          |         |   |                |   |         |  
|Operating income (loss) (2)                                                                                                              |  | $                                        | (2,879  | ) |                | $ | 2,236   |  
|EBITDA                                                                                                                                   |  | $                                        | 17,725  |   |                | $ | 21,752  |  
|(1)    Includes selling,
general and administrative expenses. (2)    Does not include gain (loss) on disposals and
impairment of assets. |  |                                          |         |   |                |   |         |  
|                                                                                                                                         |  |                                         
|Reconciliation to loss before income taxes and minority interest:                                                                        |  |                                          |         |   |                |   |         |  
|                                                                                                                                         |  |                                         
|EBITDA                                                                                                                                   |  | $                                        | 17,725  |   |                | $ | 21,752  |  
|Depreciation and amortization                                                                                                            |  |                                          | 20,604  |   |                |   | 19,516  |  
|Loss on disposals and impairment of assets                                                                                               |  |                                          | (788    | ) |                |   | (28     | )
|Interest and investment income                                                                                                           |  |                                          | 381     |   |                |   | 771     |  
|Interest expense                                                                                                                         |  |                                          | (13,941 | ) |                |   | (14,153 | )
|                                                                                                                                         |  |                                          |         |   |                |   |         |  
|Loss from operations before income taxes and minority interest                                                                           |  | $                                        | (17,227 | ) |                | $ | (11,174 | )
|                                                                                                                                         |  |                                          |         |   |                |   |         |  



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Condensed Consolidated Statement of Operations:



|                                                                                                                                         |  |                                            |       |   |                |   |       |  
|---------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------ | ----- | - | -------------- | - | ----- | -
|                                                                                                                                         |  | Discontinued Operations Twelve Weeks Ended |      
|                                                                                                                                         |  | March 23, 2004                             |       |   | March 22, 2005 |  
|Country Club and Golf Facilities:                                                                                                        |  |                                            |       |   |                |   |       |  
|Operating revenues                                                                                                                       |  | $                                          |      |   |                | $ |      |  
|Operating costs and expenses (1)                                                                                                         |  |                                            | 6     |   |                |   |      |  
|Depreciation and amortization                                                                                                            |  |                                            |      |   |                |   |      |  
|                                                                                                                                         |  |                                            |       |   |                |   |       |  
|Operating loss (2)                                                                                                                       |  | $                                          | (6    | ) |                | $ |      |  
|EBITDA                                                                                                                                   |  | $                                          | (6    | ) |                | $ |      |  
|                                                                                                                                         |  |                                           
|Resorts:                                                                                                                                 |  |                                            |       |   |                |   |       |  
|Operating revenues                                                                                                                       |  | $                                          |      |   |                | $ |      |  
|Operating costs and expenses (1)                                                                                                         |  |                                            |      |   |                |   |      |  
|Depreciation and amortization                                                                                                            |  |                                            |      |   |                |   |      |  
|                                                                                                                                         |  |                                            |       |   |                |   |       |  
|Operating income (2)                                                                                                                     |  | $                                          |      |   |                | $ |      |  
|EBITDA                                                                                                                                   |  | $                                          |      |   |                | $ |      |  
|                                                                                                                                         |  |                                           
|Business and Sports Clubs:                                                                                                               |  |                                            |       |   |                |   |       |  
|Operating revenues                                                                                                                       |  | $                                          | 3,419 |   |                | $ | 1,281 |  
|Operating costs and expenses (1)                                                                                                         |  |                                            | 3,309 |   |                |   | 1,053 |  
|Depreciation and amortization                                                                                                            |  |                                            | 209   |   |                |   | 2     |  
|                                                                                                                                         |  |                                            |       |   |                |   |       |  
|Operating income (loss) (2)                                                                                                              |  | $                                          | (99   | ) |                | $ | 226   |  
|EBITDA                                                                                                                                   |  | $                                          | 110   |   |                | $ | 228   |  
|                                                                                                                                         |  |                                           
|Other Operations and Services:                                                                                                           |  |                                            |       |   |                |   |       |  
|Operating revenues                                                                                                                       |  | $                                          |      |   |                | $ |      |  
|Operating costs and expenses (1)                                                                                                         |  |                                            | 141   |   |                |   | 26    |  
|Depreciation and amortization                                                                                                            |  |                                            |      |   |                |   |      |  
|                                                                                                                                         |  |                                            |       |   |                |   |       |  
|Operating loss (2)                                                                                                                       |  | $                                          | (141  | ) |                | $ | (26   | )
|EBITDA                                                                                                                                   |  | $                                          | (141  | ) |                | $ | (26   | )
|                                                                                                                                         |  |                                           
|Consolidated Operations:                                                                                                                 |  |                                            |       |   |                |   |       |  
|Operating revenues                                                                                                                       |  | $                                          | 3,419 |   |                | $ | 1,281 |  
|Operating costs and expenses (1)                                                                                                         |  |                                            | 3,456 |   |                |   | 1,079 |  
|Depreciation and amortization                                                                                                            |  |                                            | 209   |   |                |   | 2     |  
|                                                                                                                                         |  |                                            |       |   |                |   |       |  
|Operating income (loss) (2)                                                                                                              |  | $                                          | (246  | ) |                | $ | 200   |  
|EBITDA                                                                                                                                   |  | $                                          | (37   | ) |                | $ | 202   |  
|(1)    Includes selling,
general and administrative expenses. (2)    Does not include gain (loss) on disposals and
impairment of assets. |  |                                            |       |   |                |   |       |  
|                                                                                                                                         |  |                                           
|Reconciliation to income (loss) before income taxes and minority interest:                                                               |  |                                            |       |   |                |   |       |  
|                                                                                                                                         |  |                                           
|EBITDA                                                                                                                                   |  | $                                          | (37   | ) |                | $ | 202   |  
|Depreciation and amortization                                                                                                            |  |                                            | 209   |   |                |   | 2     |  
|Loss on disposals and impairment of assets                                                                                               |  |                                            |      |   |                |   | (14   | )
|Interest and investment income                                                                                                           |  |                                            |      |   |                |   |      |  
|Interest expense                                                                                                                         |  |                                            | (59   | ) |                |   | (176  | )
|                                                                                                                                         |  |                                            |       |   |                |   |       |  
|Income (loss) from operations before income taxes and minority interest                                                                  |  | $                                          | (305  | ) |                | $ | 10    |  
|                                                                                                                                         |  |                                            |       |   |                |   |       |  



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Condensed Consolidated Statement of Operations:



|                                                                                                                                         |  |                                  |         |   |                |   |         |  
|---------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------- | ------- | - | -------------- | - | ------- | -
|                                                                                                                                         |  | Total Company Twelve Weeks Ended |        
|                                                                                                                                         |  | March 23, 2004                   |         |   | March 22, 2005 |  
|Country Club and Golf Facilities:                                                                                                        |  |                                  |         |   |                |   |         |  
|Operating revenues                                                                                                                       |  | $                                | 102,526 |   |                | $ | 104,770 |  
|Operating costs and expenses (1)                                                                                                         |  |                                  | 79,900  |   |                |   | 81,642  |  
|Depreciation and amortization                                                                                                            |  |                                  | 11,527  |   |                |   | 11,712  |  
|                                                                                                                                         |  |                                  |         |   |                |   |         |  
|Operating income (2)                                                                                                                     |  | $                                | 11,099  |   |                | $ | 11,416  |  
|EBITDA                                                                                                                                   |  | $                                | 22,626  |   |                | $ | 23,128  |  
|                                                                                                                                         |  |                                 
|Resorts:                                                                                                                                 |  |                                  |         |   |                |   |         |  
|Operating revenues                                                                                                                       |  | $                                | 31,336  |   |                | $ | 35,052  |  
|Operating costs and expenses (1)                                                                                                         |  |                                  | 31,523  |   |                |   | 33,825  |  
|Depreciation and amortization                                                                                                            |  |                                  | 3,865   |   |                |   | 3,751   |  
|                                                                                                                                         |  |                                  |         |   |                |   |         |  
|Operating loss (2)                                                                                                                       |  | $                                | (4,052  | ) |                | $ | (2,524  | )
|EBITDA                                                                                                                                   |  | $                                | (187    | ) |                | $ | 1,227   |  
|                                                                                                                                         |  |                                 
|Business and Sports Clubs:                                                                                                               |  |                                  |         |   |                |   |         |  
|Operating revenues                                                                                                                       |  | $                                | 50,281  |   |                | $ | 49,986  |  
|Operating costs and expenses (1)                                                                                                         |  |                                  | 43,264  |   |                |   | 42,352  |  
|Depreciation and amortization                                                                                                            |  |                                  | 2,570   |   |                |   | 1,996   |  
|                                                                                                                                         |  |                                  |         |   |                |   |         |  
|Operating income (2)                                                                                                                     |  | $                                | 4,447   |   |                | $ | 5,638   |  
|EBITDA                                                                                                                                   |  | $                                | 7,017   |   |                | $ | 7,634   |  
|                                                                                                                                         |  |                                 
|Other Operations and Services:                                                                                                           |  |                                  |         |   |                |   |         |  
|Operating revenues                                                                                                                       |  | $                                | 824     |   |                | $ | 2,226   |  
|Operating costs and expenses (1)                                                                                                         |  |                                  | 12,592  |   |                |   | 12,261  |  
|Depreciation and amortization                                                                                                            |  |                                  | 2,851   |   |                |   | 2,059   |  
|                                                                                                                                         |  |                                  |         |   |                |   |         |  
|Operating loss (2)                                                                                                                       |  | $                                | (14,619 | ) |                | $ | (12,094 | )
|EBITDA                                                                                                                                   |  | $                                | (11,768 | ) |                | $ | (10,035 | )
|                                                                                                                                         |  |                                 
|Consolidated Operations:                                                                                                                 |  |                                  |         |   |                |   |         |  
|Operating revenues                                                                                                                       |  | $                                | 184,967 |   |                | $ | 192,034 |  
|Operating costs and expenses (1)                                                                                                         |  |                                  | 167,279 |   |                |   | 170,080 |  
|Depreciation and amortization                                                                                                            |  |                                  | 20,813  |   |                |   | 19,518  |  
|                                                                                                                                         |  |                                  |         |   |                |   |         |  
|Operating income (loss) (2)                                                                                                              |  | $                                | (3,125  | ) |                | $ | 2,436   |  
|EBITDA                                                                                                                                   |  | $                                | 17,688  |   |                | $ | 21,954  |  
|(1)    Includes selling,
general and administrative expenses. (2)    Does not include gain (loss) on disposals and
impairment of assets. |  |                                  |         |   |                |   |         |  
|                                                                                                                                         |  |                                 
|Reconciliation to loss before income taxes and minority interest:                                                                        |  |                                  |         |   |                |   |         |  
|                                                                                                                                         |  |                                 
|EBITDA                                                                                                                                   |  | $                                | 17,688  |   |                | $ | 21,954  |  
|Depreciation and amortization                                                                                                            |  |                                  | 20,813  |   |                |   | 19,518  |  
|Loss on disposals and impairment of assets                                                                                               |  |                                  | (788    | ) |                |   | (42     | )
|Interest and investment income                                                                                                           |  |                                  | 381     |   |                |   | 771     |  
|Interest expense                                                                                                                         |  |                                  | (14,000 | ) |                |   | (14,329 | )
|                                                                                                                                         |  |                                  |         |   |                |   |         |  
|Loss from operations before income taxes and minority interest                                                                           |  | $                                | (17,532 | ) |                | $ | (11,164 | )
|                                                                                                                                         |  |                                  |         |   |                |   |         |  



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



Overview



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 March 22, 2005, we operated 101 country clubs, golf clubs and public golf facilities, three destination golf resorts and 65 business, sports and
business/sports clubs in 27 states, Washington D.C. and three foreign countries. Marquee resorts and clubs in our portfolio include Pinehurst® Resort and Country Club in Pinehurst, North Carolina, The Homestead® Resort in Hot Springs, 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, California. Golf Digest, Golf Travel and other golf industry publications have consistently ranked several of our approximately 150 golf courses and destination golf resorts among the best in
the U.S.



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 our 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 references to us also include Country Clubs, Inc. and its
successor corporations. For purposes of this document, unless otherwise indicated, 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 in any way to reduce the legal distinctions and separateness between subsidiaries or between us and our subsidiaries.



There is currently no public market for our common stock. We are subject to the periodic reporting requirements of the Securities Exchange Act
of 1934, as amended, pursuant to Section 15(d) thereof, because we filed a registration statement on Form S-1, which became effective October 24, 1994 pursuant to the Securities Act of 1933, as amended (the Registration Statement). The
Registration Statement registered participation interests in the ClubCorp Stock Investment Plan (the Plan) and our common stock, at $.01 par value per share (the Common Stock), to be sold to the Plan. The Plan was amended and
restated on January 1, 1999, to become the ClubCorp Employee Stock Ownership Plan (the Amended Plan).



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 weeks ended March 23, 2004 and March 22, 2005 should be read in conjunction
with the our Annual Report on Form 10-K for the year ended December 28, 2004, as filed with the Securities and Exchange Commission.



Critical Accounting Policies



For a discussion of our critical accounting policies refer to Item 7. Managements Discussion and Analysis of Financial Condition and Results
of Operations  Overview  Critical Accounting Policies and Estimates in our Annual Report on Form 10-K for the year ended December 28, 2004. There have been no material changes to the critical accounting policies discussed in our
Annual Report on Form 10-K for the year ended December 28, 2004.



Results of
Operations



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



We employ same store analysis techniques for a variety of management purposes. By our definition, facilities are evaluated yearly and considered same store once they have been fully operational for one year.
Developing facilities and divested facilities are not classified as same store; however, facilities held for sale and held and used are considered same store until they are divested. This distinction between developing and same store facilities
allows us to separately analyze the operating results of our established and new facilities. We believe this approach provides an effective analysis tool because it allows us to assess the results of our core operating strategies by tracking the
performance of our same store facilities without



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##### Table of Contents

the distortions that would be caused by the inclusion of developing properties. Facilities divested during a period are
removed from the same store classification for all periods presented. We analyze membership and lodging data on a same store basis as well, as it is not distorted by divestitures and we believe it provides a clearer picture of trends in our
continuing operations.



Operating revenues are comprised mainly
of revenues from dues income, golf, food and beverage and lodging, as well as the revenues recognized from membership deposits and fees. All revenue sources are recognized in the period earned, which is generally at the time of sale or when the
service is provided. Operating expenses include payroll and related expenses, other fees and expenses and rent. All operating costs are expenses as incurred.



We evaluate segment performance and allocate resources based on each segments EBITDA. We also 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 10 of the Notes to Condensed 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.



12 Weeks Ended March 23, 2004 Compared to 12 Weeks Ended March 22, 2005



Consolidated Operations  Continuing Operations



Operating revenues increased in all three operating divisions  country club and golf facilities, resorts and business and sports clubs  ending
the first quarter at $190.8 million, an improvement of 5% over first quarter 2004. Country club and golf facilities operating revenue showed a 2% increase over 2004, with the most significant contributions in the dues income area as annual dues
raises went into effect. These increases were partially offset by decreases in golf revenues, largely weather-related, and membership fees and deposits. Business and sports clubs revenue increased in equal part due to dues income and food and
beverage revenue. Resorts reflected increases in lodging and food and beverage revenue over prior year driven by improvements in occupancy rates and REVPOR  a measure that reflects revenue generated per occupied room, primarily at Pinehurst
and Barton Creek.



Operating costs and expenses for resorts and
business and sports clubs increased consistent with revenue increases previously mentioned leading to overall stable margins. However, operating costs and expenses for country club and golf facilities increased in excess of our revenues generated
due to fixed costs incurred combined with decreased activity.



Other items impacting our consolidated net income included losses on disposals and impairment of assets, which was $0.8 million in 2004 and an insignificant amount in 2005.



Consolidated OperationsDiscontinued Operations



The periods ended March 23, 2004 and March 22, 2005 include five properties divested in 2004 and one property currently held
for sale in discontinued operations. Operating revenues for these properties decreased from $3.4 million in 2004 to $1.3 million in 2005. Operating income (loss) before the impact of disposals and impairment of assets from these properties increased
$0.4 million from 2004 to 2005. In accordance with SFAS 144, depreciation expense is not recorded beginning with the quarter a property is classified as held for sale.



15



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##### Table of Contents

Segment and Other Information  12 Weeks



Country Club and Golf Facilities



The following tables present certain summary financial and membership information for our country club and golf facilities segment for the twelve weeks
ended March 23, 2004 and March 22, 2005 (dollars in thousands):



|                                                               |  |                                             |         |                                        |   |         |  |   |         |   |  |   |        
|-------------------------------------------------------------- |  | ------------------------------------------- | ------- | -------------------------------------- | - | ------- |  | - | ------- | - |  | - | -------
|                                                               |  | Same Store Country Club and Golf Facilities |         | Total Country Club and Golf Facilities
|                                                               |  | 2004                                        |         | 2005                                   |   | 2004    |  |   | 2005   
|Number of facilities at end of period in continuing operations |  |                                             | 95      |                                        |   | 95      |  |   | 97      |   |  |   | 101    
|Operating revenues                                             |  | $                                           | 95,481  |                                        | $ | 96,830  |  | $ | 95,494  |   |  | $ | 98,322 
|Recognition of membership fees and deposits                    |  |                                             | 7,032   |                                        |   | 6,398   |  |   | 7,032   |   |  |   | 6,448  
|                                                               |  |                                             |         |                                        |   |         |  |   |         |   |  |   |        
|Total operating revenues                                       |  | $                                           | 102,513 |                                        | $ | 103,228 |  | $ | 102,526 |   |  | $ | 104,770
|                                                               |  |                                             |         |                                       
|Operating costs and expenses (1)                               |  |                                             | 79,899  |                                        |   | 80,447  |  |   | 79,894  |   |  |   | 81,642 
|Depreciation and amortization                                  |  |                                             | 11,495  |                                        |   | 11,599  |  |   | 11,527  |   |  |   | 11,712 
|                                                               |  |                                             |         |                                        |   |         |  |   |         |   |  |   |        
|Segment operating income from continuing operations            |  | $                                           | 11,119  |                                        | $ | 11,182  |  | $ | 11,105  |   |  | $ | 11,416 
|                                                               |  |                                             |         |                                        |   |         |  |   |         |   |  |   |        
|Segment operating loss from discontinued operations            |  | $                                           |        |                                        | $ |        |  | $ | (6      | ) |  | $ |       
|                                                               |  |                                             |         |                                        |   |         |  |   |         |   |  |   |        
|EBITDA (1)                                                     |  | $                                           | 22,615  |                                        | $ | 22,781  |  | $ | 22,626  |   |  | $ | 23,128 
|                                                               |  |                                             |         |                                        |   |         |  |   |         |   |  |   |        

---

|(1) | Excludes intercompany consulting and support fees of $5.9 million and $6.0 million for Same Store and $5.9 million and $6.2 million for Total in the twelve weeks ended March 23,
2004 and March 22, 2005, respectively.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Continuing Operations. Total operating revenues increased from first quarter 2004 to first quarter 2005 for same store country club and golf facilities primarily due to increased membership dues offset by a decrease in golf
operations. Membership dues increased $2.2 million or 4.7% as a result of a dues price increase and an increased number of members when comparing first quarter 2004 to first quarter 2005. Golf operations decreased due to lower paid rounds and
merchandise sales as a result of the decreased activity at our clubs primarily due to heavy rains on the West coast.



Segment operating income increased slightly from first quarter 2004 to first quarter 2005 for same store country club and golf facilities as a result of
increased operating revenues, partially offset by a related increase in operating costs and expenses. Operating costs and expenses offset the majority of our revenue increases as the clubs had decreased activity in first quarter 2005 but still
incurred fixed costs such as golf course maintenance.



Discontinued Operations. The period ended March 23, 2004 includes one managed property divested in 2004 in discontinued operations.



16



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##### Table of Contents

Resorts



The following tables present certain summary financial data and lodging data for our resort segment for the twelve weeks ended March 23, 2004 and March
22, 2005 (dollars in thousands, except number of facilities and lodging data):



|                                                                   |  |                    |        |   |               |   |        |      |  |   |        |   |  |   |        |  
|------------------------------------------------------------------ |  | ------------------ | ------ | - | ------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                   |  | Same Store Resorts |        |   | Total Resorts |  
|                                                                   |  | 2004               |        |   | 2005          |   |        | 2004 |  |   | 2005   |  
|Number of facilities at end of period in continuing operations (1) |  |                    | 3      |   |               |   | 3      |      |  |   | 3      |   |  |   | 3      |  
|Operating revenues                                                 |  | $                  | 29,918 |   |               | $ | 33,662 |      |  | $ | 29,918 |   |  | $ | 33,662 |  
|Recognition of membership fees and deposits                        |  |                    | 1,418  |   |               |   | 1,390  |      |  |   | 1,418  |   |  |   | 1,390  |  
|                                                                   |  |                    |        |   |               |   |        |      |  |   |        |   |  |   |        |  
|Total operating revenues                                           |  | $                  | 31,336 |   |               | $ | 35,052 |      |  | $ | 31,336 |   |  | $ | 35,052 |  
|                                                                   |  |                    |        |  
|Operating costs and expenses (2)                                   |  |                    | 31,088 |   |               |   | 33,950 |      |  |   | 31,523 |   |  |   | 33,825 |  
|Depreciation and amortization                                      |  |                    | 3,777  |   |               |   | 3,732  |      |  |   | 3,865  |   |  |   | 3,751  |  
|                                                                   |  |                    |        |   |               |   |        |      |  |   |        |   |  |   |        |  
|Segment operating loss from continuing operations                  |  | $                  | (3,529 | ) |               | $ | (2,630 | )    |  | $ | (4,052 | ) |  | $ | (2,524 | )
|                                                                   |  |                    |        |   |               |   |        |      |  |   |        |   |  |   |        |  
|Segment operating income from discontinued operations              |  | $                  |       |   |               | $ |       |      |  | $ |       |   |  | $ |       |  
|                                                                   |  |                    |        |   |               |   |        |      |  |   |        |   |  |   |        |  
|EBITDA (2)                                                         |  | $                  | 249    |   |               | $ | 1,102  |      |  | $ | (187   | ) |  | $ | 1,227  |  
|                                                                   |  |                    |        |   |               |   |        |      |  |   |        |   |  |   |        |  
|Lodging data (3 resorts) (1)                                       |  |                    |        |   |               |   |        |      |  |   |        |   |  |   |        |  
|Room nights available                                              |  |                    | 99,456 |   |               |   | 99,456 |      |  |   |        |   |  |   |        |  
|Room nights sold                                                   |  |                    | 43,996 |   |               |   | 48,797 |      |  |   |        |   |  |   |        |  
|Paid occupancy rate                                                |  |                    | 44.2   | % |               |   | 49.1   | %    |  |   |        |   |  |   |        |  
|Average daily rate (3)                                             |  | $                  | 154    |   |               | $ | 162    |      |  |   |        |   |  |   |        |  
|Revenue per occupied room (4)                                      |  | $                  | 594    |   |               | $ | 609    |      |  |   |        |   |  |   |        |  

---

|(1) | Number of facilities and lodging data is comprised of data from wholly owned resorts consisting of Pinehurst, The Homestead and Barton Creek. Other ancillary resort operations are
included in summary financial data for Total Resorts.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Excludes intercompany consulting and support fees of $2.1 million and $1.3 million for Same Store and Total in the twelve weeks ended March 23, 2004 and March 22, 2005,
respectively.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Average daily rate is based on the average room rate per day for the entire year-to-date.
|--- | -----------------------------------------------------------------------------------------

|(4) | Revenue per occupied room is based on total operating revenues excluding membership dues, recognition of member initiation fees and net managed rooms commissions.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



Continuing Operations. Total operating
revenues increased from first quarter 2004 to first quarter 2005 for same store resorts primarily due to increased food and beverage sales and lodging. Food and beverage a la carte and private party revenues increased $0.6 million or 8.1% and $0.7
million or 22.2%, respectively, as a result of higher occupancy and spending by social guests during first quarter 2005 at Pinehurst and Barton Creek. A la carte revenues were mainly driven by higher occupancy rates while private party revenues had
a significant increase in check average. Lodging revenues increased $1.2 million or 16.5% as a result of increased room nights and higher average room rates from the prior year at Pinehurst and Barton Creek.



Segment operating loss improved from first quarter 2004 to first quarter 2005
for same store resorts due to increased revenue partially offset by a related increase in operating costs and expenses, primarily food and beverage costs. The improvement in operating income was primarily due to lodging operating margins which
contributed a $1.0 million increase to operating income. Lodging expenses are more fixed in nature and so the increased lodging revenues had a direct effect on our net income.



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##### Table of Contents

Business and Sports Clubs



The following tables present certain summary financial and membership information for our business and sports clubs segment
for the twelve weeks ended March 23, 2004 and March 22, 2005 (dollars in thousands):



|                                                               |  |                                      |        |                                 |   |        |  |   |        |   |  |   |       
|-------------------------------------------------------------- |  | ------------------------------------ | ------ | ------------------------------- | - | ------ |  | - | ------ | - |  | - | ------
|                                                               |  | Same Store Business and Sports Clubs |        | Total Business and Sports Clubs
|                                                               |  | 2004                                 |        | 2005                            |   | 2004   |  |   | 2005  
|Number of facilities at end of period in continuing operations |  |                                      | 64     |                                 |   | 64     |  |   | 64     |   |  |   | 64    
|Operating revenues                                             |  | $                                    | 46,342 |                                 | $ | 48,178 |  | $ | 46,342 |   |  | $ | 48,178
|Recognition of membership fees and deposits                    |  |                                      | 520    |                                 |   | 527    |  |   | 520    |   |  |   | 527   
|                                                               |  |                                      |        |                                 |   |        |  |   |        |   |  |   |       
|Total operating revenues                                       |  | $                                    | 46,862 |                                 | $ | 48,705 |  | $ | 46,862 |   |  | $ | 48,705
|                                                               |  |                                      |        |                                
|Operating costs and expenses (1)                               |  |                                      | 39,955 |                                 |   | 41,299 |  |   | 39,955 |   |  |   | 41,299
|Depreciation and amortization                                  |  |                                      | 2,361  |                                 |   | 1,994  |  |   | 2,361  |   |  |   | 1,994 
|                                                               |  |                                      |        |                                 |   |        |  |   |        |   |  |   |       
|Segment operating income from continuing operations            |  | $                                    | 4,546  |                                 | $ | 5,412  |  | $ | 4,546  |   |  | $ | 5,412 
|                                                               |  |                                      |        |                                 |   |        |  |   |        |   |  |   |       
|Segment operating income (loss) from discontinued operations   |  | $                                    | 92     |                                 | $ | 225    |  | $ | (99    | ) |  | $ | 226   
|                                                               |  |                                      |        |                                 |   |        |  |   |        |   |  |   |       
|EBITDA (1)                                                     |  | $                                    | 7,097  |                                 | $ | 7,631  |  | $ | 7,017  |   |  | $ | 7,634 
|                                                               |  |                                      |        |                                 |   |        |  |   |        |   |  |   |       

---

|(1) | Excludes intercompany consulting and support fees of $2.4 million and $3.0 million for Same Store and Total, respectively in the twelve weeks ended March 23, 2004 and March 22,
2005.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Continuing Operations. Total
operating revenues increased from first quarter 2004 to first quarter 2005 at same store business and sports clubs primarily due to increased food and beverage private party revenues and membership dues. Food and beverage private party revenues
increased $0.9 million or 7.5% primarily due to an increase in volume. Membership dues increased $0.9 million or 3.8% primarily due to an increase in members as well as a dues price increase.



Segment operating income increased at same store business and sports clubs
from first quarter 2004 to first quarter 2005 due to increased revenue partially offset by a related increase in operating costs and expenses, primarily food and beverage costs. Food and beverage margins were consistent when comparing first quarter
2004 to first quarter 2005.



Discontinued Operations.
The periods ended March 23, 2004 and March 22, 2005 include four properties divested in 2004 and one property currently held for sale in discontinued operations. Segment operating income (loss) from these properties improved at total business and
sports clubs from first quarter 2004 to first quarter 2005.



Other
Operations and Services  Continuing Operations



Other operations and services consist primarily of real estate operations and our corporate services. The increase in revenues is primarily due to fees we receive from third party developers based on a percentage of their real estate sales.



Operating loss from other operations and services improved
from first quarter 2004 to first quarter 2005 primarily due to revenue increases mentioned above as well as a rebate of previously incurred costs.



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##### Table of Contents

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



Our primary goal as it relates to liquidity and capital resources is to
attain and retain the right level of debt and cash to maintain our core properties, fund expansions at our current properties, and be poised for external growth in the marketplace. During the last few years, our focus has been on strengthening our
cash position and refinancing and reducing our debt in order to support these goals. Our debt has been refinanced and paid down to $705 million as of March 22, 2005. We have paid down approximately $5.3 million since December 28, 2004.



Historically, we have financed our operations and cash needs primarily
through cash flows from operations, debt and, to a lesser extent, proceeds from divestitures. We anticipate using cash flow from operations in 2005 principally to fund planned capital replacement expenditures, to repay debt and to build cash
reserves. We also expect to use our cash flow in 2005 to grow and expand our business through a combination of improvements and expansions of existing facilities, on which we have spent approximately $9 million year-to-date. Based on our current
projections, we believe our current assets and cash flow from operations are sufficient to meet our anticipated working capital and operating needs for the next 12 months as well as support our anticipated capital expenditures.



Debt



The majority of our outstanding debt at March 22, 2005 was obtained as a result of a major refinancing that took place
during 2003. The refinancings resulted in mortgage portfolios which had a combined principal amount of approximately $658 million, including both fixed and variable rate portions as of March 22, 2005. The combined refinancings were comprised of
first mortgages on 40 properties and increased borrowings on two existing mortgage loans (see Note 9 of the Notes to Condensed Consolidated Financial Statements).



Under the provisions of certain of our debt agreements with Textron Financial Corporation (Textron), we are required to
maintain debt service coverage ratios at both the portfolio and individual property level. Certain of these individual loans has cross-default provisions; therefore, a default on an individual loan triggers a default on the portfolio. As of March
22, 2005, the debt service coverage ratio was below the minimum level for three individual properties participating in the loan, thereby causing the entire loan ($54 million outstanding principal amount as of March 22, 2005) to be in technical
default. We cured the noncompliance by obtaining letters of credit totaling $6.2 million. Additionally, we are out of compliance on two separate promissory notes with Textron related to individual properties with a combined outstanding principal
amount of $22 million as of March 22, 2005. Subsequent to March 22, 2005, we paid down $1.9 million related to one note and received a waiver letter on the other note to bring these properties into compliance. Approximately $3.4 million has been
reclassified to the current portion of long-term debt in the Condensed Consolidated Balance Sheet representing the paydown amount required to bring both of these properties into compliance.



Cash and Cash Flow



As a result of our debt refinancing, we no longer have a working line of credit. Consequently, we maintain a higher cash
balance on hand to cover basic working capital requirements. Our cash position was $149 million as of March 22, 2005 as compared to $125 million at December 28, 2004.



Our cash flow from operations was $39.0 million for the quarter ended March 22, 2005, an increase of $15.4 million over
2004. The primary reason for the increase is cash received related to the U.S. Open which we will be hosting in June 2005. In



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addition to our daily operating transactions, a key component of our annual operating cash comes from our membership
programs. Membership deposits and fees represent advance initiation deposits for the right to become a member. Membership deposits are generally not refundable until a fixed number of years (generally 30 years) after the date of acceptance as a
member while membership fees are not refundable. Cash from deposits is used to fund our normal operations. Revenue recognition of these deposits is deferred and amortized. In recent years, we have increasingly allowed new members to defer a portion
of the payment of fees and deposits as an incentive for them to join. Although this practice adversely affects the current amount of cash received for fees and deposits, it is subsequently offset through the receipt of recurring membership dues and
other revenues received from these members.



We utilize cash to
fund operations, maintain our properties, pay down our debt and related interest, and, to a limited extent, buy back company stock. In first quarter 2005, we reduced debt by more than $5 million and increased our cash and cash equivalents by more
than $24 million. For the remainder of 2005, we are considering additional investments in expanding our existing properties or acquiring new properties. We are also considering prepaying portions of our debt without penalties.



Capital Spending



The nature of our business requires us to invest a significant amount of capital in our existing properties to maintain
them. For first quarter 2005, we expended approximately $8 million in maintenance capital, and we anticipate spending approximately $68 million in fiscal 2005 for maintenance capital.



In addition to maintaining our properties, we also spend discretionary capital to expand existing properties and to enter
into new business opportunities. Capital expansion funding totaled more than $1 million for first quarter 2005.



Risks



We believe that we have sufficient and stable funds to allow us to operate our business for the next 12 months as well as evaluate growth opportunities during 2005 and beyond. However, the occurrence of any of the
following events might limit our ability to fund operations or provide adequate capital funding:



| |  | Lack of compliance with debt covenants  currently our defaults on the Textron note are covered by waivers and/or letters of credit. However, should operations cause adverse
results at one or a group of properties, we could be put in a position of having to pay down debt or secure additional financing.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Exercise of the limited put right by our ESOP  As a means of providing liquidity to the trustees of the Amended Plan, we have provided the trustees a limited put right (the
Redemption Right) to cause us to redeem common stock, held in trust on behalf of the Amended Plan, at the most recent appraised fair market value as necessary, in the event the trust does not have adequate resources, to meet the following
requirements: (1) to fund a participants distribution in cash, (2) to diversify a participants account in accordance with Internal Revenue Code Section 401(a)(28), (3) to pay expenses incurred by the trustees, and (4) to comply with
directions from the plan administrator. The Redemption Right has never been exercised by the Amended Plan. We do not expect that the Redemption Right will be exercised to a significant extent in 2005, but if it is, we could be required to repurchase
shares of common stock.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Exercise of the exit strategy by our third party investor  During 1999, we sold 9,375,000 shares of common stock and warrants to acquire 1,012,500 shares of common stock to
The Cypress Group. Beginning in October 2004, we are obligated under certain defined conditions to offer to repurchase a portion of their outstanding shares if we are below a defined leverage ratio. Based on the calculation, we were above the stated
leverage ratio and were not required to offer to repurchase any shares during 2004. Furthermore, based on expected future operations, we do not anticipate falling below the stated leverage ratio level until at least October 2006. However, if our
actual future operating results differ materially from expectations, we could fall below the leverage ratio before October 2006 and could be required to offer to repurchase a portion of their shares of common stock.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Natural disaster or catastrophic events - Events out of our control could cause significant operational implications and/or an inability to obtain financing.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------



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We do not anticipate any of the above situations occurring. Additionally, these risks are somewhat
mitigated due to the fact that a significant portion of our capital expansions and new growth spending is discretionary. However, we cannot ensure you that these events will not occur.



Off-Balance Sheet Arrangements, Contractual Obligations and Commercial Commitments



During the quarter ended March 22, 2005, there were no material changes
outside of the normal course of business to the quantitative and qualitative disclosures about contractual obligations, commitments, contingent liabilities and off-balance sheet arrangements previously reported in the Annual Report on Form 10-K for
the year ended December 28, 2004. See Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations  Off-Balance Sheet Arrangements, Contractual Obligations and Commercial Commitments in the
Form 10-K for December 28, 2004 for a detailed discussion.



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 28, 2004.



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 December 2004, the FASB issued SFAS No. 123 (revised 2004),Share-Based Payment, which replaces SFAS No. 123, Accounting for
Stock-Based Compensation, and supercedes APB Opinion No. 25, Accounting for Stock Issued to Employees. SFAS No. 123 (revised 2004) requires compensation costs related to share-based payment transactions to be recognized in the
financial statements. With limited exceptions, the amount of compensation cost will be measured based on fair value on the grant date of the equity or liability instruments issued. Compensation cost will be recognized over the period that an
employee provides service for that award. This new standard will be effective for us beginning in our first quarter of 2006. We are in the process of evaluating the impact of this standard on our financial statements.



In December 2004, the FASB issued SFAS No. 152, Accounting for Real
Estate Time-Sharing Transactions, which clarifies accounting treatment for timeshare transactions and related costs. SFAS No. 152 is effective for fiscal years beginning



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after June 15, 2005. We are currently in the process of evaluating the possible effects of this recently issued
accounting pronouncement. We do not believe the adoption of this statement will have a material effect on our Consolidated Financial Statements.



Item 3. Quantitative and Qualitative Disclosures about Market Risk



There were no material changes to the disclosure on this matter made in our Annual Report on Form 10-K for the year ended December 28, 2004.



Item 4. Controls and Procedures



Evaluation
of Disclosure Controls and Procedures



Our
management, including our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of
the end of the period covered by this quarterly report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our current disclosure controls and procedures were effective as of the end of the period
covered by this report, in ensuring that all information required to be disclosed in reports we file or submit under the Securities Exchange Act of 1934 has been recorded, processed, summarized and reported within the time periods specified by the
Securities Exchange Commission.



Changes in Internal Controls



There has been no change in our internal control over
financial reporting during the first quarter of 2005 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



PART II. OTHER INFORMATION



Item 1. Legal Proceedings



None.



Item 6. Exhibits



|                                                                                                                                                  
|--------------------------------------------------------------------------------------------------------------------------------------------------
|(a) Exhibits                                                                                                                                      
|                                                                                                                                                  
|10.34  Employment Agreement between ClubCorp, Inc. and Jeffrey P. Mayer                                                                          
|                                                                                                                                                  
|31.1 - Certification by John A. Beckert 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 John A. Beckert 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.





22



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##### Table of Contents

SIGNATURES



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



|                  |  |                |  |                        
|----------------- |  | -------------- |  | -----------------------
|                  |  | ClubCorp, Inc.
|                  |  |               
|Date: May 5, 2005 |  | By:            |  | /s/ Jeffrey P. Mayer   
|                  |  |                |  | Jeffrey P. Mayer       
|                  |  |                |  | Chief Financial Officer