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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended March 23, 2004

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  x    No  ¨.

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

The number of shares of the Registrant’s Common Stock outstanding as of May 6, 2004 was 93,708,140.

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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 March 23, 2004, and the related consolidated statements of operations and cash flows for the twelve weeks ended March 23, 2004 and March 25, 2003. 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 Notes 1 and 2 to the accompanying consolidated financial statements, effective March 23, 2004, the Company changed the method of accounting for its investment in a variable interest entity.

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 30, 2003, and the related consolidated statements of operations, stockholders’ equity and comprehensive loss, and cash flows for the year then ended (not presented herein); and in our report dated March 29, 2004, 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 30, 2003, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

KPMG LLP

Dallas, Texas

May 6, 2004

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ClubCorp, Inc.

Consolidated Balance Sheet

(Dollars in thousands)

(Unaudited)

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)

See accompanying Notes 2, 9, and 11 for supplemental disclosures of non-cash activities

See accompanying condensed notes to consolidated financial statements.

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Condensed Notes to Consolidated Financial Statements

(Unaudited)

Note 1. Summary of significant accounting policies

Consolidation

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

Interim presentation

The accompanying Consolidated Financial Statements have been prepared by ClubCorp and are unaudited. Certain information and footnote disclosures normally included in financial statements presented in accordance with accounting principles generally accepted in the United States of America have been omitted from the accompanying statements. We believe the disclosures made are adequate to make the information presented not misleading. However, the financial statements should be read in conjunction with the Consolidated Financial Statements and notes thereto of ClubCorp for the year ended December 30, 2003 which are a part of ClubCorp’s 2003 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 March 23, 2004 and the consolidated results of operations and cash flows for the twelve weeks ended March 25, 2003 and March 23, 2004. 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 Consolidated Statement of Cash Flows, cash and cash equivalents include cash on hand and interest-bearing deposits in financial institutions, all of which have maturities of 180 days or less. Also contained in cash and cash equivalents is restricted cash of $22.4 million as of March 23, 2004. These agreements were entered into in during 2003, and are primarily used to collateralize letters of credit. These letters of credit have one-year terms and therefore, are included in current assets.

Recent Pronouncements

In January 2003, the FASB issued and then revised in December 2003, FASB Interpretation No. 46, (FIN 46R) “Consolidation of Variable Interest Entities” which changes the criteria by which one company includes another entity in its consolidated financial statements. FIN 46R requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or entitled to receive a majority of the entity’s residual returns or both. The assets, liabilities and noncontrolling interests of the newly consolidated variable interest entities were initially recorded at the amounts at which they would have been carried in the consolidated financial statements if FIN 46R had been effective when we first met the conditions to be the primary beneficiary of the variable interest entity. The difference between the net amount added to our Consolidated Statement of Operations and the amount of any previously recognized interest in the newly consolidated entity was not material and therefore was not recognized as a cumulative effect of an accounting change as of March 23, 2004. The adoption of FIN 46R has resulted in an increase in net assets of $1.1 million, including debt of $13.7 million to our Consolidated Balance Sheet. Prior periods were not restated. (See Note 2)

In April 2003, the FASB issued SFAS No. 149 (SFAS 149), “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” This statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under FASB Statement No. 133. Adoption of this statement had no impact on our consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150 (SFAS 150), “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability. Adoption of this statement had no impact on our consolidated financial statements.

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In December 2003, the FASB issued SFAS No. 132R (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits”. This statement improves financial statement disclosures for defined benefit plans. We have not adopted these expanded disclosures as our pension plan is not a material component of our overall consolidated financial statements.

Reclassifications

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

Stock-based compensation

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

There were no options granted for the twelve weeks ended March 25, 2003 and March 23, 2004. Had compensation cost for the option plans been determined based on the fair value at the grant dates for the options, our net loss and net loss per share would have been changed to the following pro forma amounts (dollars in thousands, except per share amounts):

Note 2. Variable Interest Entity

During 1994, ClubCorp formed a joint venture with a real estate developer to acquire undeveloped real estate and develop such real estate in Colorado around a country club.

Prior to the adoption of FIN 46R, ClubCorp accounted for its investment in the joint venture under the equity method, recording a majority of the venture’s operating results. ClubCorp is the general partner of the joint venture, however ClubCorp does not control a majority percentage; therefore, operating decisions would have to go to arbitration in the event of a split in voting. ClubCorp records 100% of all losses and then participates in earnings proportionally with the other partners.

The joint venture purchases virtually all the support services it requires from both ClubCorp and from the real estate developer under management service agreements, which expire at the completion of the development.

With the adoption of FIN 46R, ClubCorp has consolidated the joint venture in its March 23, 2004 Consolidated Balance Sheet, as the joint venture was determined to be a variable interest entity with ClubCorp as its primary beneficiary. Due to the historical net operating losses of the joint venture in excess of the equity interests of the joint venture not owned by ClubCorp, no noncontrolling interests are reporting in ClubCorp’s March 23, 2004 Consolidated Balance Sheet. The investment was carried as a $19.8 million liability on the December 28, 2003 Consolidated Balance Sheet.

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The joint venture was financed by the assumption of debt of approximately $20.0 million, of which $13.7 million is currently outstanding and is included in long-term debt, and accrued interest of approximately $10.0 million on the March 23, 2004 Consolidated Balance Sheet. The majority of the joint venture’s debt is payable only out of distributable cash flow, as defined by the agreements. If there is no distributable cash flow, then the joint venture is not obligated to pay the parties subject to the loan 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 other assets of ClubCorp.

Note 3. Operating revenues

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

Note 4. Income tax benefit (provision)

The income tax benefit (provision) for the twelve weeks ended March 25, 2003 and March 23, 2004 differ from amounts computed by applying the U.S. Federal tax rate of 35% to 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. We fully reserved all additional tax benefits from available carryforwards of net operating losses generated and recorded an income tax provision only to the extent that existing timing differences reversed.

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Note 5. Weighted average shares

Loss per share is computed using the weighted average number of shares outstanding of 93,742,191 and 93,708,675 for basic loss per share calculations for the twelve weeks ended March 25, 2003 and March 23, 2004, respectively. The potential common stock equivalents for the assumed conversion of options and warrants to purchase common stock of 92,204 shares for the twelve weeks ended March 23, 2004 are antidilutive due to the net loss for the quarter. There were no such common stock equivalents for the twelve weeks ended March 25, 2003.

Note 6. Property and equipment

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

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Note 7. Disposal and Impairment of Long- Lived Assets

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

As of March 23, 2004, we had two properties classified as held for sale. The balance sheet amounts related to these two properties are classified in Other Current Assets and Other Current Liabilities on the Consolidated Balance Sheet and are comprised of the following (dollars in thousands):

The two properties were reclassified to Discontinued Operations on the 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.

Note 8. Comprehensive loss

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

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Note 9. Long term debt

During the quarter ended March 23, 2004, our overall debt balance increased by $3.6 million comprised of $13.7 million from the consolidation of one of our entities in accordance with FIN 46R (see note 2), partially offset by repayments of $11.9 million.

Under the provisions of our debt agreement with Textron Financial Corporation (Textron), we are required to maintain certain debt service ratios at both the portfolio and individual property level. Each of the individual loans have cross-default provisions; therefore, a default on an individual loan triggers a default on the portfolio. As of March 23, 2004, it came to our attention that the debt service ratio (as defined in the agreement) was below the minimum level for certain properties participating in the loan, thereby causing the entire loan ($56 million) to be in technical default. We have obtained a waiver dated May 4, 2004, in which the lender waived its right to exercise its rights and remedies under the loan through September 30, 2005 for named properties in noncompliance occurring at or before September 7, 2004. We may cure any default without a waiver, if necessary, by paying down a portion of the debt to regain compliance, provide an asset replacement pursuant to the loan agreement or provide the lender with additional collateral, subject to their review and approval. This prepayment amount is currently approximately $4.4 million and included in the current portion of long-term debt in the Consolidated Balance Sheet as of March 23, 2004.

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 that permit the operations to be aggregated into these reportable segments. The primary sources of revenue for all segments are membership revenues, consisting of dues, fees and deposits, and food and beverage sales. Additionally, country club and golf facilities and resorts have significant golf operations revenue and resorts have significant lodging revenue.

Country club and golf facilities operations consist of 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. Realty 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.

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 adjusted to reflect 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):

Consolidated Statement of Operations:

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Note 11. Contingencies

During 2003, we recorded charges totaling $4.1 million related to three lawsuits to cover incurred litigation fees and estimated settlement charges. Two of the three lawsuits have settled during the quarter ended March 23, 2004 at amounts approximating our accrual. It is probable that we will incur additional charges related to the third lawsuit; however, at this time, we have not set up an additional accrual as we believe the actual settlement is not estimable at this time. An escrow of $4.5 million has been established pertaining to this matter until the lawsuit is resolved. Alleged claims in this suit relate to a disagreement with union employees and subsequent settlement for potential lost wages and benefits over a period of time from 1997 – 2002. The maximum damages alleged by the arbitration board total $5 million before penalty, interest and legal fees; however, we believe that there is still significant discovery to be done in this area.

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

Introduction

ClubCorp, Inc. (referred to as ClubCorp^®, the Company, we, us and our throughout this document) is a holding company incorporated under the laws of the State of Delaware that, through its subsidiaries, owns and operates premier golf and business clubs and destination golf resorts. As of March 23, 2004, we operated 98 country clubs, golf clubs and public golf facilities, three destination golf resorts and 69 business, sports and business/sports clubs in 29 states and three foreign countries. Marquee resorts and clubs in our portfolio include Pinehurst^® Resort and Country Club in North Carolina, The Homestead^® Resort in Virginia, Barton Creek Resort and Country Club in Austin, Texas, Firestone^® Country Club in Akron, Ohio, Mission Hills^® Country Club near Palm Springs, California, and The City Club on Bunker Hill in Los Angeles.

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

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

Our consolidated financial statements are presented on a 52/53 week fiscal year ending on the last Tuesday of December, with the first three quarters consisting of 12 weeks each and the fourth quarter consisting of 16 or 17 weeks. The following discussion of our financial condition and results of operations for the 12 weeks ended March 25, 2003 and March 23, 2004 should be read in conjunction with the our Annual Report on Form 10-K for the year ended December 30, 2003, as filed with the Securities and Exchange Commission.

Results of Operations

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

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 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 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 initiation deposits and fees. Operating expenses include payroll and related expenses, other fees and expenses and rent.

We use EBITDA to monitor our property-level and overall performance. EBITDA is defined as earnings before interest, taxes, depreciation and amortization, extraordinary items and gains and losses on disposals and impairment of assets and includes both continuing and discontinued operations. EBITDA should not be construed as an alternative to, or a better indicator of, operating income or loss, is not based on accounting principles generally accepted in the United States of America, and is not necessarily a measure of our cash flow or ability to fund our cash needs. Our measurement of EBITDA may not be comparable to similarly titled measures reported by other companies. See Note 10 to our Condensed Notes to 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.

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

12 Weeks Ended March 25, 2003 Compared to 12 Weeks Ended March 23, 2004

Consolidated Operations – Continuing Operations

Operating revenues increased from $176.4 million for first quarter 2003 to $183.9 million for first quarter 2004. This increase was comprised primarily of operating revenue increases of $4.6 million at our country club and golf facilities, $2.6 million at our resorts and $1.3 million at our business and sports clubs, partially offset by a decrease of $1.0 million in our other operations and services.

Gain on disposals and impairment of assets was $1.5 million for first quarter 2003 as compared to a loss of $0.8 million for first quarter 2004. Included in these figures are impairment losses of $0.9 million recorded in the 12 weeks ended March 23, 2004 to write down the carrying value of certain properties.

Excluding the impact of disposals and impairment of assets, operating loss improved from $11.3 million for first quarter 2003 to $3.0 million for first quarter 2004. This improvement was primarily due to the increase in revenues mentioned above, decreased selling, general and administrative expenses of $3.7 million and decreased depreciation and amortization of $1.2 million, partially offset by increased operating costs and expenses of $4.2 million. Selling, general and administrative expenses declined as a result of expense controls in offsite and field operations. Depreciation and amortization decreased as a result of several fully depreciated assets at our existing properties. Operating costs and expenses increased due to higher usage primarily at country club and golf facilities as well as at the resorts. Loss from operations before income taxes and minority interest improved from $24.4 million for first quarter 2003 to $17.3 million for first quarter 2004 primarily as a result of the increase in operating income mentioned above. Interest expense decreased by $1.1 million primarily related to discount amortization.

Discontinued Operations

At March 23, 2004, the operations of 36 divested properties and two properties currently held for sale were included in discontinued operations. Operating revenues for these properties decreased from $5.0 million for first quarter 2003 to $1.1 million for first quarter 2004. Segment operating loss before the impact of disposals and impairment of assets from these properties improved $0.9 million from first quarter 2003 to first quarter 2004 primarily as only two held for sale entities had activity in 2004. Gain on disposals of assets was $0.5 million for the twelve weeks ended March 25, 2003. There were no disposals for the twelve weeks ended March 23, 2004. In accordance with SFAS 144, depreciation expense was not recorded in the current quarter for these properties classified as held for sale.

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Segment and Other Information – 12 weeks

Country Club and Golf Facilities

The following table presents certain summary financial and other operating data for our country club and golf facilities segment for the first quarters ended March 25, 2003 and March 23, 2004 (dollars in thousands):

Continuing Operations. Total operating revenues increased $4.6 million from first quarter 2003 to first quarter 2004 for same store country club and golf facilities. This increase was primarily due to increased food and beverage sales of $2.5 million, golf operations revenues of $1.6 million and membership dues of $1.6 million, partially offset by decreased recognition of membership fees and deposits of $1.2 million. Food and beverage revenues increased as a result of increased activity at our clubs. Golf operations revenue increased due to higher rounds as a result of the increased activity at our clubs. Membership dues increased as a result of positive membership trends when comparing first quarter 2003 to first quarter 2004 as well as price increases. Recognition of membership fees and deposits decreased primarily due to a change in the allocation procedures of revenue over 13 periods versus equal amounts in each of our four quarters.

Segment operating income decreased $1.0 million at same store country club and golf facilities from first quarter 2003 to first quarter 2004 as a result of the increase in revenues mentioned above, offset by increased operating costs and expenses of $5.1 million. Operating costs and expenses increased primarily due to the increased usage at our clubs which resulted in increased food and beverage and golf operations expenses of $2.4 million and $1.2 million, respectively. Overall, both food and beverage and golf operating margins improved when comparing first quarter 2003 to first quarter 2004.

Discontinued Operations. The operations of 25 divested country club and golf facilities were included in discontinued operations. Segment operating income for these properties improved $0.5 million from first quarter 2003 to first quarter 2004 as a result of decreased activity related to the divested entities.

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Resorts

The following table presents certain summary financial and other operating data for our resorts segment for the first quarters ended March 25, 2003 and March 23, 2004 (dollars in thousands):