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

FORM 10-Q

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

For the quarterly period ended June 11, 2002

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

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

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

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        No   .

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

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CLUBCORP, INC.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INDEPENDENT AUDITORS’ REVIEW REPORT

The Board of Directors and Stockholders
ClubCorp, Inc.:

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

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

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

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

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

KPMG LLP

Dallas, Texas
July 19, 2002

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ClubCorp, Inc.

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

See accompanying condensed notes to consolidated financial statements.

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ClubCorp, Inc.

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

See accompanying condensed notes to consolidated financial statements.

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ClubCorp, Inc.

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

See accompanying condensed notes to consolidated financial statements.

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ClubCorp, Inc.

Condensed Notes to Consolidated Financial Statements (Unaudited)

Note 1. Summary of significant accounting policies
Consolidation
The Consolidated Financial Statements include the accounts of ClubCorp, Inc. and its subsidiaries (collectively ClubCorp). All material intercompany balances and transactions have been eliminated.

Interim presentation
The accompanying Consolidated Financial Statements have been prepared by ClubCorp and are unaudited. Certain information and note disclosures normally included in financial statements presented in accordance with accounting principles generally accepted in the United States of America have been omitted from the accompanying statements. We believe the disclosures made are adequate to make the information presented not misleading. However, the consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and notes thereto of ClubCorp for the year ended December 25, 2001 which are a part of ClubCorp’s Form 10-K.

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

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

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

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

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

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

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

Prior to December 26, 2000, management approved plans to dispose of certain facilities in various segments during 2001 and recorded an impairment loss to write down the carrying value of six of these golf facilities based on the estimated sales values. During the twenty four weeks ended June 12, 2001, we recorded additional impairment losses of $1,627,000 relating to one of these properties and also recovered $1,595,000 in prior recorded impairment losses associated with two properties. The recoveries were associated with estimated purchase price increases due to changes in market conditions.

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

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

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

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

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The income tax benefits for the twelve and twenty four weeks ended June 12, 2001 and June 11, 2002 differ from amounts computed by applying the U.S. Federal tax rate of 35% to income (loss) from operations before income tax benefit (provision) primarily due to foreign and state income taxes, net of Federal benefit, and the effect of consolidated operations of foreign and other entities not consolidated for Federal income tax purposes.

Note 5. Weighted average shares
The following table summarizes the weighted average number of shares used to calculate basic and diluted earnings (loss) per share:

Diluted weighted average shares for the twelve weeks ended June 12, 2001 exclude the assumed conversion of 2,429,800 options, due to their antidilutive effect. Diluted weighted average shares for the twelve weeks ended June 11, 2002 and twenty four weeks ended June 12, 2001 and June 11, 2002 exclude incremental shares from assumed conversion of 665,681, 1,033,382 and 724,697 shares, respectively, due to the net losses for the periods.

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

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

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

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

Introduction

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

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

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

Recent Developments

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

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Results of Operations

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

Consolidated Operations

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

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

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

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

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Segment and Other Information

Country Club and Golf Facilities

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

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

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

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

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Business and Sports Clubs

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

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

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

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

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Resorts

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

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

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

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Other Operations and Services

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

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

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

Consolidated Operations

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

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

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

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

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Segment and Other Information — 24 Weeks

Country Club and Golf Facilities

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