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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

For the fiscal year ended December 28, 2004

or

Commission file numbers 33-89818, 33-96568, 333-08041, 333-57107, 333-52612 and 333-110521

CLUBCORP, INC.

(Exact name of registrant as specified in its charter)

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

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 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

As of June 15, 2004, all of the registrant’s common stock was privately held, and there was no public market for the registrant’s common stock nor any publicly available quotations for the registrant’s common stock. As a result, the registrant is unable to calculate the aggregate market value of the registrant’s common stock held by non-affiliates as of June 15, 2004.

The number of shares of the registrant’s common stock outstanding as of March 28, 2005 was 93,379,080.

DOCUMENTS INCORPORATED BY REFERENCE

None.

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Part I

General

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 December 28, 2004, we had more than 190,000 memberships and operated 99 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 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”).

Throughout Item 1 of this document, financial and property information reflects consolidated totals and includes amounts attributable to properties held for sale that are classified as discontinued operations under accounting principles generally accepted in the United States of America. Details of these properties are available in Annex A – “List of Facilities.”

Operations

Background and Philosophy

We were founded in 1957 to develop Brookhaven Country Club in the North Dallas, Texas area. Since that time, we have expanded our operations to 167 facilities. In 1967, we established our first business club on the belief that we could profitably expand our operations by applying our club management skills and member-oriented philosophy to a related line of business. In 1984, we entered the destination resort industry when we capitalized on a turn-around opportunity by acquiring Pinehurst and currently operate three destination resorts. We commenced international operations in 1980 and currently operate nine facilities primarily in Mexico and Australia. In directing our growth since our formation, our management has emphasized quality service and facilities, endeavoring to exceed the expectations of our members and guests.

Mr. Robert H. Dedman, Sr., our founder and former Chairman and CEO, who passed away in August 2002, established ClubCorp on the belief that private clubs represented a significant business opportunity for a company that could combine professional development and management skills with the dedication to personal service necessary to attract and retain members. This commitment to professionalism and personal service is reflected in our member-oriented philosophy: create lasting value for members, guests, employees and financial partners by delivering personalized service and experiences that facilitate life-enhancing relationships, achieve world class results and create pride in belonging.

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Our management and employees recognize that we are in a relationship business where member and guest satisfaction is essential to long-term growth and profitability. Underlying this philosophy are progressive human resource values and goals which we believe have resulted in superior customer service. Management believes that our member-oriented philosophy and culture set us apart from many of our competitors that focus on short-term returns that may jeopardize member satisfaction and long-term profitability. We are committed to maintaining our leadership position in the golf-related and business and sports club segments by creating an environment where members, guests and employees are treated with respect, trust and honesty. Our policy is to not restrict membership in our facilities on the basis of race, religion, gender or other immutable characteristics.

From ClubCorp’s beginning, we have focused on assembling and maintaining an experienced management team. Our executive officers, including the Chairman of the Board, possess a significant amount of hospitality industry experience. We have also attempted to attract and retain qualified, dedicated managers for our clubs and resorts. These managers possess an average of more than ten years of experience with our facilities. Senior management believes that our success depends greatly upon the motivation, training and experience of our employees. We provide an extensive, proprietary system of in-house training and education for all of our employees that is designed to improve the quality of services provided to members and guests. See — “Employees.”

Nature of Operations

We operate country club and golf facilities, business and sports clubs and resorts through sole ownership, partial ownership and management agreements. In addition, we perform various corporate services internally and for managed properties and, to a lesser extent, develop and sell real estate adjacent to our facilities. See — “Other Operations and Services.” With respect to our sole ownership operations, in some cases we own the real property where the facility is operated and in other cases we lease the real property from third parties. See Item 2 – “Properties.” Management believes that our existing club, resort and other facilities and our base of club members represent a significant value to us. For example, certain of our country clubs that were developed many years ago are now located in densely populated areas where land of sufficient size to develop a new facility would be prohibitively expensive.

The success of our business is dependent on our ability to attract new members, retain existing members and maintain or increase levels of club usage by members and guests. Although we devote significant resources to promote our facilities and services, many of the factors affecting club membership and usage are beyond our control. Local and federal government laws, including income tax regulations applicable to us and our club members and guests, can adversely influence membership activity. See — “Government Regulation and Environmental Matters.” Changes in consumer tastes and preferences, local, regional and national economic conditions, including levels of disposable income, weather and demographic trends can also have an adverse impact on club membership and usage. See Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors That May Affect Future Operating Results—Seasonality of Demand; Fluctuations in Quarterly Results.”

Country Club and Golf Facilities

Our portfolio of 99 country club and golf facilities is comprised of 89 private and semi-private country and golf clubs with approximately 82,000 memberships as of December 28, 2004, and ten public golf facilities. Our country club and golf facilities are located in 19 states and two foreign countries, providing us with a geographically diverse revenue base. We have focused our operations in this segment on private and semi-private clubs because of our expertise in managing membership-based facilities, the relative competitive position of such clubs as compared to public courses and the stability of recurring membership dues as a primary revenue source.

Operating revenues for our country club and golf facilities segment consist primarily of membership revenues (comprised primarily of membership dues, and to a lesser extent, recognition of deferred membership fees and deposits), golf revenues and food and beverage sales. In 2004, our country club and golf facilities segment generated operating revenues of $509.6 million, or 53.3% of our total revenues, and segment operating income of $59.8 million. See Note 11 to the Notes to Consolidated Financial Statements.

Country Clubs. Our 72 private country clubs generally provide one or more golf courses and one or more of the following facilities: dining rooms, lounge areas, meeting rooms, grills, ballrooms, tennis courts, swimming pools and pro shops. Our private country clubs include Firestone, host of the World Golf Championships-NEC Invitational for 2003 through 2005 and the 2002 Senior PGA Championship and Mission Hills, home of the LPGA’s annual Kraft-Nabisco Championship. Our current international operations include the Jack Nicklaus Signature Course at Vista Vallarta Club de Golf in Puerto Vallarta, Mexico, site of the 2002 World Golf Championships-EMC World Cup.

Golf Clubs. Our 17 semi-private golf clubs generally offer both private and public play, a driving range and food and beverage concessions. Our semi-private golf clubs include Nags Head Golf Links in North Carolina and Golden Bear Golf Club at Indigo Run in South Carolina.

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Public Golf Facilities. Our ten public golf facilities are daily fee courses that offer a “member for the day” experience and generally provide many of the same amenities, facilities and services as our semi-private golf clubs. Since the beginning of 2002, we have sold 15 public golf facilities as we have focused more on private and semi-private golf clubs rather than public golf facilities. Daily fee facilities include the Bear’s Best courses, which were formed through a joint venture with Jack Nicklaus’ Golden Bear Golf, Inc. Our two Bear’s Best courses in Las Vegas and Atlanta, respectively, feature replicas of some of the most famous Nicklaus-designed golf holes. The Bear’s Best Las Vegas course was one of the three golf courses used for the 2004 Michelin Championship at Las Vegas (formerly known as the Las Vegas Invitational) and will be again in 2005. The tournament marks the first time a replica course has been a part of the PGA Tour.

Resorts

Each of our three destination resorts focus on delivering quality golf resort lifestyle as well as lodging and conference facilities, dining and lounge areas, golf, tennis, recreational facilities, European style spas and other resort amenities. Our three destination resorts are Pinehurst Resort and Country Club, The Homestead Resort and Barton Creek Resort and Country Club. The resorts segment also includes our sports marketing division, Pinehurst Championship Management, which manages the operations of high profile golf tournaments at Pinehurst and other locations. Operating revenues for our resorts segment consist primarily of lodging revenues, food and beverage sales, golf and merchandise revenues, other amenities and recreation revenues and membership fees. In 2004, our resort segment generated operating revenues of $209.9 million, or 21.9% of our total revenues, and segment operating income of $30.2 million. See Note 11 to the Notes to Consolidated Financial Statements.

Pinehurst. Acquired in 1984, Pinehurst is the largest golf resort in the world and is a National Historic Landmark. Pinehurst hosted the 1999 U.S. Open and will be hosting the U.S. Open again in 2005, the shortest interval between hosting at a single facility in the last 50 years. Pinehurst includes eight championship 18-hole golf courses, including the highly acclaimed Pinehurst Course No. 2 (ranked second in Golf Digest’s America’s 100 Greatest Public Courses in 2003-2004), and more than 500 guest rooms and suites in three separate facilities, including 85 managed rooms to which we have access. In addition to a 31,000 square foot spa facility, Pinehurst also has a golf school, 24 tennis courts, two outdoor swimming pools, nine dining venues, seven retail venues and approximately 55,000 square feet of conference space, which enables the resort to accommodate large group functions. The resort has also been selected to host the 2008 U.S. Men’s Amateur Championship. In Golf Digest’s America’s Top 75 Golf Resorts (2004), Pinehurst was ranked sixth. Pinehurst also has a private country club that at December 28, 2004 had 5,018 memberships.

The Homestead. Founded in 1766 and acquired by ClubCorp in 1993, The Homestead is a National Historic Landmark. The Homestead includes over 500 guest rooms and suites, three 18-hole championship golf courses, including the Cascades course (ranked fourth in Golf Digest’s America’s 100 Greatest Public Courses in 2003—2004), a golf school, equestrian center, gun club, six tennis courts, an indoor and an outdoor swimming pool, nine downhill ski runs and over 72,000 square feet of conference space, including a 20,000 square foot grand ballroom facility. The Homestead also has a nationally recognized spa and nine dining facilities. In Golf Digest’s America’s Top 75 Golf Resorts (2004), The Homestead was ranked ninth. At December 28, 2004, the Homestead had 191 memberships.

Barton Creek. Acquired in 1996, Barton Creek is a premier luxury resort in Austin, Texas. Barton Creek has approximately 300 guest rooms and suites, four championship 18-hole golf courses, including Fazio Canyons and Fazio Foothills, the number one and three rated public access courses in Texas by Golfweek magazine in 2004, 11 tennis courts, four dining facilities, more that 30,000 square feet of meeting space, including a ballroom, a 150 seat ampitheater, and a luxurious spa. In Golf Digest’s America’s Top 75 Golf Resorts (2004), Barton Creek was ranked 37^th. Barton Creek also includes a private golf club that at December 28, 2004 had 2,523 memberships.

Business and Sports Clubs

Our portfolio of 65 business and sports clubs is comprised of 47 business clubs, 14 business/sports clubs and four sports clubs, with a combined total of more than 102,000 memberships as of December 28, 2004. These facilities are located in 21 states, Washington D.C. and one foreign country. Each of our business clubs includes dining rooms, bar areas and private meeting rooms. In addition, most of our business clubs are equipped with state-of-the-art media and telecommunications equipment, providing a technologically-enabled work area. Our sports clubs provide an array of facilities which generally include racquetball and squash courts, jogging tracks, exercise areas, weight machines, aerobic studios, swimming pools and, occasionally, tennis and basketball courts. Business/sports clubs combine the ambiance and amenities of our business clubs with the facilities of our premier sports clubs. Our business and sports clubs include The City Club on Bunker Hill in Los Angeles, The Athletic and Swim Club at Equitable Center in New York City, The Metropolitan Club in Chicago, The Citrus Club in Orlando and The Buckhead Club in Atlanta. Operating revenues for business and sports clubs segment consist primarily of monthly membership dues and food and beverage sales. In 2004,

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our the business and sports clubs segment generated operating revenues of $223.5 million, or 23.4% of our total revenues, and segment operating income of $16.1 million. See Note 11 to the Notes to Consolidated Financial Statements.

Other Operations and Services

Real Estate Operations. We sell fractional ownership interests at selected properties through our Owners Club program and develop and sell residential real estate adjacent to our golf facilities. Our principal Owners Club locations are The Homestead in Virginia, Barton Creek in Texas and Hilton Head in South Carolina. Given our strategic initiative to focus on our core businesses, we do not expect to significantly expand our real estate operations in the near future.

Corporate Services. We perform a number of services on a company-wide basis, including certain centralized marketing, accounting, technology support and purchasing functions. We also publish Private Clubs^®, an award winning bi-monthly magazine which showcases our member and guest facilities and strategic partner relationships through feature articles and advertising.

Expansion and Development

Historically, we have expanded our operations through strategic acquisitions and development projects; growing from one country club to an extensive list of 167 facilities that now include business clubs, resorts and athletic clubs both domestically and internationally. However, in the last three years we have re-oriented our strategic focus onto our core businesses and divested various non-strategic assets. Beginning in 2004, we began actively pursuing various strategic opportunities to grow. While we continue to review our core properties and divest any non-strategic assets within our existing group of assets, more focus is being placed on renegotiating or retrading leases as they become due in order to maximize our cash flow. Additionally, we are reviewing current properties with significant upside opportunity and allocating capital to expand properties that will provide a good return on investment.

We are also pursuing multiple new business opportunities around our core competency, which is superior club management. We are investigating opportunities to manage clubs through management agreements, joint ventures and sole ownership. During 2004, we added two managed clubs to our portfolio and have added two more clubs in the first quarter of 2005.

In late 2004, we hired a new Senior Vice President of Strategic Growth, consistent with our emphasis on exploring new growth opportunities. Strategic growth opportunities focus on new products and services that we can offer, as opposed to traditional club management discussed above. Leveraging our member base will be a key strategy for us. We anticipate that some of our growth dollars in 2005 will be generated in this area.

Sales and Marketing

We own and operate a diverse base of country clubs, business and sports clubs and resorts. Based on the specific attributes of each club and its local market, we attempt to position our golf and business clubs, from the premium-end to the entry level of the specific market segments in which they compete, making the club experience available to a variety of target demographics. Our resorts are positioned as “one of a kind” properties with a broad range of activities and services.

As part of our corporate services, we develop and implement national marketing and promotional programs, control trademarks and trademark licensing agreements, engage public relations firms and advertising agencies, coordinate communications with media sources and develop collateral materials. We believe that these coordinated activities provide highly effective, complementary programs to the sales efforts at our individual clubs and resorts.

Our clubs also offer extended member programs. For example, we sponsor the Associate Clubs^® Program, which provides members of clubs owned, leased or managed by us with access to other clubs outside a certain radius of the member’s club. In 2001, we added Signature Gold as a new level of Associate Club membership, providing enhanced privileges at a select group of our properties. In 2003, we offered an enhanced Signature Gold program with expanded benefits (including food and beverage) to those members. In cities where multiple Associate Clubs are located, membership in a Society is often available. Society membership provides privileges in many clubs within the same metropolitan area without any radius restrictions and also provides additional benefits such as concierge services and VIP seating at local events.

We believe there are significant opportunities to increase revenues by marketing our interrelated products and services to our existing customer base. We seek to develop and accentuate the unique aspects of our resorts, like Pinehurst, and country clubs, like

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Firestone, in order to attract repeat customers, encourage group guests to return individually and increase rates charged for our services and amenities.

To promote our facilities, we publish Private Clubs magazine, which reaches the majority of the members at our clubs and resorts in addition to our affiliate clubs and resorts. The magazine’s focus is on golf, travel, food, wine, recreation and other aspects of the “private club experience.” Regular features include unusual destinations and travel tips, profiles of members who are business leaders, club profiles, wine reviews, recipes from club chefs, golf and tennis tips, solutions to health and fitness concerns and humor. The readership of Private Clubs was ranked 21^st in median household income among 92 publications included in the 2003 Mendelsohn Affluent Head of Household Survey, conducted annually by Mendelsohn Media Research, Inc., an independent media research firm. The magazine also has an online edition available at www.privateclubs.com.

We host a number of professional golf tournaments that not only generate additional revenue but also enhance our name recognition and that of our clubs and resorts. During 2004, our facilities hosted several nationally recognized golf tournaments affiliated with, among others, the PGA Tour, the Champions Tour, the LPGA Tour, the Nationwide Tour and the PGA of America. During 2004, some of the most notable tournaments our facilities hosted were the Bob Hope Chrysler Classic at Indian Wells, the Kraft-Nabisco Championship at Mission Hills, the World Golf Championship-NEC Invitational at Firestone Country Club, the Kinko’s Classic of Austin at The Hills Country Club, and the Chick-fil-A Charity Championship at Eagle’s Landing Country Club. Pinehurst will host the 2005 U.S. Open, which will be held at the resort for the second time in seven years. Firestone will also host the 2005 World Golf Championships-NEC Invitational.

We believe we have established strong relationships with numerous professional organizations including the following:

Relationships such as these have enabled us to bring distinctive tournaments and events, such as the U.S. Open and the Senior PGA Championship, as well as numerous other prestigious events, to our clubs and resorts throughout the world. We also host many United States Tennis Association and Intercollegiate Tennis Association events, including the Omni Hotels Intercollegiate Tennis Championships, along with other athletic activities such as swimming, diving, lawn bowling and croquet.

Government Regulation and Environmental Matters

We are subject to a wide range of federal, state and local environmental laws and regulations, including those governing discharges into the air and water, the storage of petroleum substances and chemicals, the handling and disposal of wastes, and the remediation of contamination arising from spills and releases. Our operations are subject to numerous other laws and regulations, including occupational health and safety, labor and alcoholic beverage control laws and laws relating to access for disabled persons. Changes to these laws or regulations could adversely affect us. We have policies in place designed to bring or keep our facilities in compliance, and audit procedures to inspect for compliance with all current federal, state and local environmental laws. We are not aware of, and have not been informed by the Environmental Protection Agency or any state or local governmental authority of, any non-compliance or violation of any environmental laws, ordinances or regulations likely to be material to us, and we believe that we are in substantial compliance with all such laws, ordinances and regulations applicable to our facilities and operations. See Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors That May Affect Future Operating Results.”

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We are subject to the Fair Labor Standards Act and various federal and state laws governing such matters as minimum wage requirements, overtime and other working conditions and citizenship requirements. The salaries of certain of our personnel are based on the federal minimum wage and adopted increases in the minimum wage have historically increased our labor costs. Historically, we have tried to pass these increased labor costs to our customers through price increases. In addition, we are subject to certain state “dram-shop” laws, which provide a person injured by an intoxicated individual the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated individual. We are also subject to the Americans with Disabilities Act of 1990, which, among other things, created federally mandated access and use requirements. We believe we are in substantial compliance with applicable laws and regulations governing our operations.

We have operations in a number of states that regulate the licensing of restaurants and resorts, including liquor license grants, by requiring registration, disclosure statements and compliance with specific standards of conduct. While we believe that we are, and will continue to be, in substantial compliance with these requirements, there can be no assurance that these requirements will not change or that any such change will not adversely affect us.

Competition

We operate in a highly competitive industry and our clubs and resorts compete primarily on the basis of management expertise, reputation, featured facilities, quality and breadth of services and price. With respect to our resorts, we compete on a national and international level with numerous hotel and resort companies. Competition in this part of the industry is intense and there can be no assurance that such competition will not adversely affect revenues, costs or operating income of our resorts. Our country club and golf facilities compete on a local and regional level with other country club and golf facilities and our business and sports clubs compete on a local and regional level with high-end restaurants and other business and sports clubs. The level of competition in these lines of business varies from region to region and is subject to change as existing facilities are renovated or new facilities are developed. An increase in the number or quality of similar clubs and other facilities in a particular region could significantly increase competition, which could have a material adverse effect on our results from that region. Our results of operations also could be affected by a number of additional competitive factors, including the availability of, and demand for, alternative forms of recreation.

We also compete for the operation of golf courses with national and regional golf course management companies, and, less frequently, with individuals and small ventures that typically own one or more golf courses. There are many opportunities for consolidation in the highly fragmented golf course ownership industry in the U.S. and the industry has seen a high level of consolidation in recent years. Though we are not currently focusing on the acquisition of additional facilities, we have made a significant number of acquisitions in the past and we have, and in the future we may, experience increased competition in the acquisition of premier properties. In the acquisition of golf courses, companies compete primarily on the basis of price and their reputation for operating golf courses. Many of our competitors have substantially greater capital resources than we do, sometimes providing them the ability to pay substantially more for the type of facilities consistent with those in our portfolio and strategy.

Throughout the 1990’s and in 2000, there was a substantial increase in the development of public golf facilities in the U.S. Competition in this market has intensified and the increase in availability of daily fee courses has adversely affected demand in portions of the semi-private and private club market. According to the National Golf Foundation, the growth in supply of available golf courses, fueled by the daily fee market, has outpaced growth in the number of golfers in recent years. Although new course construction declined in 2002 and 2003 due to the slowdown in the U.S. economy and the acknowledgement of overbuilding in certain markets, a resurgence in development activity or additional decreases in the average number of golfers per course could adversely affect our business and results of operations. Conversely, this period of overbuilding could eventually benefit us in the long run, as companies with less financial resources and management experience may be forced to sell their properties at discounted values.

In the operation of our facilities, we compete on the basis of our reputation to deliver value through the quality of the facility and quality of services provided to our members and guests. We believe we compete favorably with respect to these factors. Our Associate Clubs Program with tiered membership levels, allows members of a club in one market to utilize our clubs in different markets, thus enhancing the value of club membership. Because of our large number of facilities, members are provided access to a large number of facilities and are able to take advantage of our diverse mix and large number of clubs. We believe this program affords us a competitive advantage over competitors that do not maintain similar programs and over other competitors that have similar programs, but fewer facilities.

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Employees

As of December 28, 2004, we employed approximately 11,000 full-time and 7,500 part-time employees in our operations. The success of our business is dependent in part on our ability to attract and retain experienced management and other employees on economic terms. We believe that our employees represent an important asset; however, we are not dependent upon any single employee, or a small group of employees, whose loss would have a material adverse effect on us. Although we believe that our labor relations are good, increased labor and benefit costs or deterioration in our labor relations could adversely affect our operating results.

Customers

We are not dependent upon a single customer, or a few customers, whose loss would have a material adverse effect on us. In addition, for the fiscal year ended December 28, 2004, there is no customer to which we had sales equal to 10% or more of our consolidated operating revenues.

Intellectual Property

We have registered various service marks, including the names CLUBCORP, CCA, CLUBRESORTS, ASSOCIATE CLUBS, PINEHURST, THE HOMESTEAD, BARTON CREEK, PRIVATE CLUBS and THE SOCIETY with the U.S. Patent and Trademark Office, and have applied with the U.S. Patent and Trademark Office for the registration of various other service marks. In addition, we have registered certain of our service marks in a number of foreign countries. We regard our service marks as valuable assets and intend to protect such service marks vigorously against infringement.

Available Information

We file annual, quarterly and current reports and other information with the Securities and Exchange Commission (the “SEC”). These reports may be viewed and copied at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549 or at the SEC’s internet site www.sec.gov, as soon as practicable after such material is electronically filed with the SEC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Our SEC filings are also available free of charge to the public through the Company – Financial Info section of our internet site www.clubcorp.com. The information contained on or linked to our website does not constitute part of the Form 10-K.

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We owned and/or operated 167 country club and golf facilities, business and sports clubs and resorts as of December 28, 2004, one of which is held for sale and is classified as a discontinued operation. The following table provides a summary of the composition of our portfolio of facilities from December 25, 2001 to December 28, 2004:

Additions, Divestitures and Reclassifications of Facilities (1)

We continually monitor the performance, composition and characteristics of our portfolio of facilities and actively manage our portfolio through expansions, additions (acquisitions and other investments) and dispositions. We divest a facility when it no longer has strategic value or the potential to contribute to our growth, and an appropriate opportunity for divestiture is available.

Facilities divested also include expired or terminated lease arrangements or management agreements that generally have shorter terms than joint venture agreements or other forms of ownership. We generally include a termination clause in our management agreements which impose a financial penalty, paid to us by the managed owner, to discourage early termination of management agreements.

Our properties are located throughout the U.S. and primarily in Australia and Mexico internationally. In the U.S., a significant portion of our properties are located in Texas, California, Florida and the Southeastern U.S. Due to our concentration of golf facilities in these markets, our operating and financial performance is subject to the regional weather patterns and changes in economic conditions in these areas. See Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors That May Affect Future Operating Results – Seasonality of Demand; Fluctuations in Quarterly Results.” For a complete list of our facilities, see Annex A – “List of Facilities.”

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We operate country club and golf facilities, business and sports clubs and resorts through sole ownership, partial ownership and management agreements. With respect to our sole ownership operations, in some cases we own the real property where the facility is operated and in other cases we lease the real property from third parties. The following table summarizes the number of, and reclassifications in, the type of our facilities operated for the periods indicated:

Our various ownership interests in, and other relationships with, the facilities in our portfolio reflect a number of strategic and management considerations. We own the majority of our country club and golf facilities while we lease substantially all of the real property where our business and sports clubs operate. This distinction reflects the fact that a particular piece of real property such as a golf course can be essential to the operation of a golf facility and, therefore, it is generally in our interest to own or have a long-term management or lease contract for such property. A business club facility, on the other hand, generally can be located in any one of a number of locations and moved from one location to another as long as it remains convenient to its members. Therefore, we believe it is generally not necessary for us to have a long-term interest in the properties where our business and sports clubs are located.

For our leased facilities, including our corporate offices in Dallas, Texas, we generally pay a monthly base rent, as well as charges for real estate taxes, common area maintenance and various other items. In some cases, we must also pay a percentage of gross receipts or positive net cash flow. In most instances, we have full authority over the operation of the leased facilities, except in some cases where the owner remains responsible for major structural repairs or for property insurance or real estate taxes.

We are subject to certain pending or threatened litigation and other claims that arise in the ordinary course of business. While the outcome of such legal proceedings and other claims cannot be predicted with certainty, after review and consultation with legal counsel, we believe that any potential liability from these matters would not materially affect our consolidated financial position and results of operations.

During the fourth quarter of 2004, no matter was submitted to a vote of security holders through the solicitation of proxies or otherwise.

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Part II

There is currently no public market or publicly available quotations for our common stock. In connection with the Amended Plan, we have engaged an independent financial advisory firm, Houlihan Lokey Howard and Zukin Financial Advisors, Inc., to render a semi-annual opinion on the fair market value of our common stock at the end of our second quarter and fiscal year. This fair market value is based upon a multiple of our recurring cash flows from operations, with certain exceptions for specific assets, including certain long-term investments valued at the lower of cost or market. Under this arrangement, the stock valuation process is independent of our Board of Directors and management. The most recent appraised value of our common stock was $11.49 per share at June 30, 2004.

At our option, we have historically repurchased stock from shareholders when offered for sale to us on a limited basis. The Stockholder’s Agreement with The Cypress Group L.L.C. (see Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Equity”) limits our stock repurchases, without their prior authorization, to $2.5 million per year from Nancy Dedman, Robert H. Dedman, Jr., Patricia Dedman Dietz, and the Dedman Foundation and related trusts in total, $5.0 million per year from certain charitable and non-profit organizations, and $2.5 million per year from all other shareholder groups.

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. The Redemption Right is not limited by the Stockholder’s Agreement with the Cypress Group L.L.C.

We have never paid cash dividends on our common stock. Management expects to continue its policy of retaining earnings for use in our business, and accordingly, does not expect to pay cash dividends in the foreseeable future. As of March 28, 2005, there were approximately 350 holders of record of our common stock.

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Set forth below are selected consolidated statement of operations and balance sheet data for each of the fiscal years in the five year period ended December 28, 2004 (1). The table presented below should be read in conjunction with Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” Item 7A — “Quantitative and Qualitative Disclosures about Market Risk” and Item 8 — “Financial Statements and Supplementary Data” (dollars in thousands, except membership and lodging data).

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The following discussion and analysis should be read in conjunction with Item 6 — “Selected Financial Data,” Item 7A — “Quantitative and Qualitative Disclosures about Market Risk” and Item 8 — “Financial Statements and Supplementary Data.”

Restatement of Prior Financial Information

Following a review of our accounting policy for amortization of leasehold improvements, we determined that we previously utilized incorrect amortization lives for certain of our leasehold improvements. The primary impact of the restatement was accelerated amortization for leasehold improvements that are subject of our leases. The adjustments did not have a significant impact on our 2002 or 2003 Consolidated Statements of Operations. Accordingly, they have not been adjusted from amounts previously reported, and the accompanying Management’s Discussion and Analysis was not affected for those years. The restatement is discussed in more detail in Note 17 of the Notes to Consolidated Financial Statements.

Overview

General

We are a holding company incorporated under the laws of the State of Delaware that, through our subsidiaries, owns and operates premier golf and business clubs and destination golf resorts. Our operations are organized into three principal business segments: country club and golf facilities, resorts and business and sports clubs. At the beginning of fiscal year 2003, we reclassified our international properties from other operations and services to their functional segments as either country club and golf facilities or business and sports clubs. Segment results for all periods presented have been restated to reflect this reclassification, which is consistent with changes in our internal management and organizational structure. Other operations that are not assigned to a principal business segment include our real estate operations and our corporate services. We operate our properties through sole ownership, partial ownership (including joint venture interests), operating leases and management agreements.

Our Consolidated Financial Statements are presented on a 52/53 week fiscal year, with the first three quarters consisting of 12 weeks each and the fourth quarter consisting of either 16 weeks (2003 and 2004) or 17 weeks (2002).

Our revenues consist primarily of revenues derived from golf operations, food and beverage operations, lodging, membership dues and recognition of deferred membership fees and deposits. All revenue sources are recognized in the period earned, which is generally at the time of sale or when the service is provided. See “Membership Fees and Deposits” below. Operating costs and expenses consist of employee compensation, food and beverage costs and general and administrative costs. All operating costs are expensed as incurred.

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The following table presents our consolidated operating revenues attributable to each of our business segments for fiscal years 2002, 2003 and 2004 (dollars in thousands):

Critical Accounting Policies and Estimates

The process of preparing financial statements in conformity with accounting principles generally accepted in the U.S. requires us to use estimates and assumptions to determine certain of our assets, liabilities, revenues and expenses. We base these estimates and assumptions upon the best information available to us at the time the estimates or assumptions are made. Our estimates and assumptions could change materially as conditions both within and beyond our control change. Accordingly, our actual results could differ materially from our estimates. The most significant estimates made by our management include estimated lives used to amortize membership fees and deposits, impairment of long-lived assets and realization of our deferred income tax assets. The following is a discussion of our critical accounting policies and the related management estimates and assumptions necessary in determining the value of related assets or liabilities. A full description of all of our significant accounting policies is included in Note 1 to our Consolidated Financial Statements. Our management has discussed the development and calculation of the following critical accounting policies and estimates with the audit committee of our board of directors and the audit committee has reviewed our disclosure of them in this section.

Membership Fees and Deposits. At the majority of our private clubs, members are expected to pay an initiation fee or deposit upon their acceptance as a member to the club. These initiation fees and deposits vary in amount based on a variety of factors such as the supply and demand for our services in each particular market, number of golf courses or breadth of amenities available to the members and the prestige of having the right to membership in the club. In general, membership fees are not refundable, but membership deposits are refundable after a number of years.

The majority of membership deposits sold are not refundable until a fixed number of years (generally 30) after the date of acceptance of a member, and are expected to cover our cost of providing services to the member over the course of the individual’s membership. Because of the refundable nature of our deposits and the fact that few of our clubs have membership caps, we believe that revenue related to deposits should be recognized over the average expected life of an active membership. This position is supported by our prior correspondence with the SEC on this matter in 1998. For membership deposits, the difference between the amount paid by the member and the present value of the refund obligation is deferred and recognized as membership fees and deposits revenue on a straight-line basis over the average expected life of an active membership, which is currently six years for golf and resort memberships and five years for business and sports club memberships. The present value of the refund obligation is recorded as a membership deposit liability in our consolidated balance sheet and accretes over the nonrefundable term using the effective interest method with an interest rate defined as our weighted average borrowing rate adjusted to reflect a 30-year time frame. The accretion is included in interest expense. The majority of our membership fees are not refundable and are deferred and recognized over the average expected life of an active membership.

The calculation of the average expected life of an active membership is a critical estimate in the recognition of revenues and expenses associated with membership fees and deposits. Average expected life of an active membership is calculated separately for business and sports clubs and country clubs, golf and resort facilities combined by taking the inverse of the total number of members lost in a particular period divided by the total number of members at the end of the prior period.

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This base-level calculation is performed each fiscal year, and a 10-year rolling average of each year’s data is used to determine the final average expected life of an active membership. Periods in which attrition rates differ significantly from enrollment rates could have a material effect on our Consolidated Financial Statements by decreasing or increasing the average expected life of an active membership, which in turn would affect the length of time over which we recognize revenues and expenses associated with our membership fees and deposits. Because membership fees and deposits generally have minimal direct incremental costs associated with them, a change in our average expected life of an active membership would likely materially affect our operations and EBITDA. Although individual years’ calculations have generated results that deviate from the mean, since the adoption of this policy in fiscal year 1998, the average expected life of an active membership has not changed based on our 10-year rolling average.

For the year ended December 28, 2004, membership fees and deposits of $28.3 million for country club and golf facilities, $6.1 million for resorts, $2.4 million for business and sports clubs and $0.9 million for other operations and services, respectively, were recognized as revenue in our Consolidated Statements of Operations.

Impairment of Long-Lived Assets. In accordance with SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, our long-lived assets to be held and used and to be disposed of are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment charges are recorded as a component of operating income or loss in our Consolidated Statements of Operations.

For assets held for sale, fair value is determined using information on known purchase price commitments from potential buyers, less estimated incremental direct costs to sell the property in question. Changes in purchase prices due to market conditions, a potential buyer’s due diligence process or other factors beyond our control such as the emergence of unanticipated selling costs can materially affect estimates of fair value and the amount of impairment charges recorded in a particular period.

For assets to be held and used, we perform a recoverability test to determine if the future undiscounted cash flows over our expected holding period for the property exceed the carrying amount of the assets of the property in question. If the recoverability test is not met, fair value is determined by comparing the carrying value of the property to its future discounted cash flows using a risk-adjusted discount rate. Future cash flows of each property are determined using management’s projections of the performance of a given property based on its past performance and expected future performance given changes in marketplace, local operations and other factors both within our control and out of our control. Additionally, we review current property appraisals when available to assess recoverability. Actual results that differ from these estimates can generate material differences in impairment charges recorded, and ultimately, net income or loss in our Consolidated Statements of Operations and the carrying value of properties on our Consolidated Balance Sheet.

For the year ended December 28, 2004, impairment charges of $3.1 million for country club and golf facilities, $0.7 million for other operations and services and $0.3 million for business and sports clubs, respectively, were recognized as a component of operating income (loss) in our Consolidated Statements of Operations.

Valuation Allowance for Deferred Income Tax Assets. Our valuation allowance relates to the deferred tax assets arising from our federal income tax net operating loss, or NOL, carryforwards and capital loss carryforwards. Historically, our valuation allowance has been evaluated based on our projections of future taxable income and capital gains over the periods in which the net operating and capital losses will be carried forward combined with tax planning strategies. We have recorded taxable losses in each of the last five fiscal years including the year ended December 28, 2004. In accordance with guidance in SFAS No. 109 and industry practice, because we have a pattern of taxable losses, we can not overcome that pattern and assume that we will have future taxable income. Therefore, we must use more objective evidence in our evaluation, basing our analysis solely on carrybacks and future reversals of existing taxable temporary differences, as well as certain tax planning strategies. In 2003, we recorded a charge to operations of $65 million to write down the value of our NOLs to a balance of $77 million. In 2004, approximately $96 million of our gross NOL balance expired unused. The balance of valuation allowance in 2003 anticipated this expiration and therefore, in 2004, no change was recorded to operations and a corresponding adjustment was made to the valuation allowance. The net realizable value of our NOLs increased to approximately $80 million in 2004 due to taxable losses for the year which generated additional NOLs. See Note 15 to the Consolidated Financial Statements and “Factors That May Affect Future Operating Results – Income Taxes.”

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

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 11 of the 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.

As of our reporting for the 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 recording elimination entries at the consolidated level instead of allocating them to each segment and 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.

Year Ended December 28, 2004 Compared to Year Ended December 30, 2003

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 year at $944.1 million, an improvement of 5%. Country club and golf facilities operating revenue showed a 5% increase over 2003, with the most significant contributions in the food and beverage area. Dues, our steadiest revenue stream, increased as well. These positives were offset by a basically flat performance in golf revenues, somewhat driven by adverse weather conditions. Because our increases were in the food and beverage area, which is a lower margin business than golf revenues, the contribution to operating income from these revenues was only $1.5 million.

Business and sports clubs also reflected positive food and beverage trends with higher revenues and operating margins. The increase in revenue resulted from a combination of increased spending and volume of business and led to a 15% growth rate in operating income contributed from food and beverage. Increased spending contributed to approximately 65% of the increase while increase volume contributed to approximately 35%.

Resorts reflected increases in revenue over prior year driven by improvements in occupancy rates and REVPOR – a measure that reflects revenue generated per occupied room. All revenue categories reflected improvements over the prior year. All three resorts showed improvement at the operating income line as well.

Operating costs and expenses for country club and golf facilities, resorts and business and sports clubs increased consistent with revenue increases previously mentioned. Operating costs and expenses for other operations and services

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improved primarily due to a lack of recurrence of significant vacation and litigation charges that occurred in 2003 as well as reductions in payroll and payroll related costs, general and administrative, other miscellaneous and insurance.

Other items impacting our consolidated net income included losses on disposals and impairment of assets, which was $8.2 million in 2003 and $6.6 million in 2004, as well as fluctuations in depreciation expense, largely due to entities with fully depreciated assets. Additionally, we saw reductions in interest expense which were in line with our refinancing and pay downs of debt. See “Liquidity and Capital Resources.”

Discontinued Operations

The years ended December 30, 2003 and December 28, 2004 include 19 properties divested in 2003, five properties divested in 2004 and one property currently held for sale in discontinued operations. Operating revenues for these properties decreased from $25.5 million in 2003 to $12.5 million in 2004. Operating income (loss) before the impact of disposals and impairment of assets from these properties increased $1.6 million from 2003 to 2004. Gain on disposals of assets was $7.0 million in 2003 and a loss of $1.6 million in 2004. In accordance with SFAS 144, depreciation expense was not recorded beginning with the quarter a property is classified as held for sale.

Segment and Other Information

Country Club and Golf Facilities

The following tables present certain summary financial and membership information for our country club and golf facilities segment for 2003 and 2004 (dollars in thousands):

Continuing Operations. Total operating revenues increased from 2003 to 2004 for same store country club and golf facilities primarily due to increased food and beverage revenues, membership dues and golf operations revenues. Food and beverage revenues for both a la carte and private party increased. A la carte improved $7.3 million or 15.3% as a result of increased activity and a higher check average while a 14.9% increase in private party activity was slightly offset by a decrease in check average resulting in a $3.6 million or 8.4% increase. Membership dues increased $7.3 million or 3.7% as a result of price increases and an increase in Signature Gold activity. Golf operations increased slightly due to higher paid rounds and cart rental fees as a result of the increased activity at our clubs. The impact of numerous hurricanes and heavy rains significantly decreased the number of rounds played in 2004.

Segment operating income increased from 2003 to 2004 for same store country club and golf facilities as a result of increased operating revenues, offset by a related increase in operating costs and expenses. 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. Overall, food and beverage operating profit improved $1.5 million or 21.7% when comparing 2003 to 2004 while golf operating profit decreased $1.6 million or 35.6% due to lower revenue caused by inclement weather and stable costs.

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Discontinued Operations. The years ended December 30, 2003 and December 28, 2004 include 13 properties divested in 2003 and one management property divested in 2004 in discontinued operations. Segment operating income (loss) from these properties decreased from 2003 to 2004 as a result of decreased activity related to the divested entities.

Resorts

The following tables present certain summary financial data and lodging data for our resort segment for 2003 and 2004 (dollars in thousands, except number of facilities and lodging data):

Continuing Operations. Total operating revenues increased from 2003 to 2004 for same store resorts primarily due to increased food and beverage, lodging, other recreation and golf operations. Food and beverage a la carte and private party revenues increased $2.4 million or 5.7% and $2.9 million or 16.0%, respectively, as a result of higher occupancy and spending by social guests during 2004 at all of the resorts. 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 $3.5 million or 6.9% as a result of increased room nights and higher average room rates from the prior year, primarily at Barton Creek. Other recreation revenues increased $3.2 million or 10.0% as a result of increased spa revenues at The Homestead and Pinehurst as well as increased ski revenues at The Homestead. Golf revenues increased $2.2 million or 7.6% primarily due to increased play on the premium courses at Pinehurst.

Segment operating income increased from 2003 to 2004 for same store resorts due to increased revenue discussed above offset by a related increase in operating costs and expenses. Operating costs and expenses increased due to higher food and beverage expenses related to the higher occupancy and spending mentioned above at all of the resorts as well as increased wages at The Homestead due to staffing of temporary employees. Food and beverage operating profit improved $1.0 million or 7.1% comparing 2003 to 2004. Other recreation operating expenses increased primarily due to increased usage at The Homestead related to spa and ski activities. Lodging expenses increased primarily at The Homestead due to increased payroll costs from the staffing of temporary employees. Lodging operating profit improved $2.1 million or 5.6% comparing 2003 to 2004. Golf operations expenses increased due to higher maintenance costs at all of the resorts. Golf operating profit improved $0.9 million or 11.0% comparing 2003 to 2004.

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Business and Sports Clubs

The following tables present certain summary financial and membership information for our business and sports clubs segment for 2003 and 2004 (dollars in thousands):

Continuing Operations. Total operating revenues increased from 2003 to 2004 at same store business and sports clubs primarily due to increased food and beverage revenues and membership dues. Food and beverage a la carte revenues increased $2.3 million or 7.0% due to pricing increases while increases in private party revenues of $3.5 million or 5.8% were more driven by volume. Membership dues increased $2.3 million or 2.4% primarily due to the impact of expanding the Signature Gold program being offered at the business clubs in 2004. Signature Gold dues increased $1.6 million or more than 24% from 2003 to 2004.

Segment operating income decreased at same store business and sports clubs from 2003 to 2004 due to higher depreciation and amortization expense and due to an increase in operating costs and expenses primarily related to higher food and beverage sales. Operating margins were positively impacted by improved food and beverage margins of $2.2 million or 14.5% due to expense controls in purchasing and operations. Rent expense increased $1.3 million due to strong operating results affecting contingent rent payments.

Discontinued Operations. The years ended December 30, 2003 and December 28, 2004 include six properties divested in 2003, 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 2003 to 2004 due to decreased expenses incurred at entities that were held for sale throughout most of 2004.

Other Operations and Services – Continuing Operations

Other operations and services consist primarily of real estate operations and our corporate services. Included in results for other operations and services for the year ended December 28, 2004 are lot sales at one of our real estate operations of $2.3 million. We also recorded a charge of $5.2 million to cover the estimated settlement of an outstanding lawsuit related to one of our former properties (we previously charged $1.0 million related to this lawsuit) as well as established an escrow of $5.7 million. We settled the lawsuit for $5.9 million. The escrow was released and $0.3 million remaining accrual was reversed. We also received a $5.0 million ($3.4 million net of legal costs) recovery of costs in a matter related to this lawsuit that was settled out of court and recorded as a recovery of previously accrued expenses. During the year ended December 30, 2003, we recorded charges totaling $4.1 million related to three lawsuits to cover settlement charges (see Note 14 of the Notes to Consolidated Financial Statements) and $5.9 million to accrue for vacation earned by employees. In 2003 we also recorded a charge of $1.2 million for severance related to downsizing and $1.7 million additional reserves related to health insurance.

Operating loss from other operations and services improved from 2003 to 2004 primarily due to a lack of recurrence of significant vacation and litigation charges that occurred in 2003 as well as decreases in payroll and payroll related costs, general and administrative, depreciation and amortization, other miscellaneous and insurance. Payroll and payroll related costs decreased due to a corporate and regional reorganization that led to reductions in personnel during 2003 and early 2004.

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General and administrative expenses decreased primarily related to the implementation of cost cutting initiatives during 2003 showing positive results in 2004. Fewer sales in our real estate operations led to a reduction of other miscellaneous expenses. Depreciation and amortization decreased as several fixed assets became fully depreciated in 2004 and insurance costs decreased due to a lower number of health claims.

Year Ended December 30, 2003 Compared to Year Ended December 31, 2002

Consolidated Operations – Continuing Operations

Operating revenues decreased from $921.8 million in 2002 to $898.1 million in 2003 as a result of divestitures, continued economic uncertainty and exceptionally rainy weather at several of our golf properties in the Eastern United States. This decrease was comprised of operating revenue decreases of $25.9 million in our other operations and services and $3.7 million at our business and sports clubs, offset by increases of $4.1 million at our country club and golf facilities and $1.8 million at our resorts.

Loss on disposals and impairment of assets was $27.9 million in 2002 as compared to $8.2 million in 2003. In 2002 and 2003, we retired fixed assets or disposed of properties resulting in net losses of $16.5 million and $5.8 million, respectively. Impairment losses of $11.4 million and $2.4 million were recorded in 2002 and 2003, respectively, to write-down the carrying value of certain properties.

Other items impacting our consolidated operating income were a decline in operating costs and expenses of $43.9 million, partially offset by increased depreciation and amortization of $3.5 million and the decline in revenues mentioned above. Operating costs and expenses declined as a result of expense controls in operations and cost cutting initiatives undertaken in our corporate office. Depreciation and amortization increased as a result of the completion of capital expansion and development activity at our existing properties.

Loss from continuing operations before income taxes and minority interest decreased from $74.5 million in 2002 to $51.1 million in 2003. This improvement was primarily due to the increase in operating income mentioned above and decreased loss on disposals and impairments of assets, offset by higher interest expense and financing costs of $74.2 million in 2003 compared to $61.8 million in 2002. The increase in interest expense was due to higher average levels of outstanding debt and a write off of $10.6 million in unamortized financing costs related to our previous credit facility, offset by lower interest rates. See “Liquidity and Capital Resources.”

Discontinued Operations

The years ended December 31, 2002 and December 30, 2003 include 21 properties divested in 2002, 19 properties divested in 2003, five properties divested in 2004 and one property currently held for sale in discontinued operations. Operating revenues for these properties decreased from $69.6 million in 2002 to $25.5 million in 2003 as the majority of our divestitures are over one year old. Operating income (loss) before income taxes improved from a loss of $20.8 million in 2002 to income of $5.1 million in 2003. In 2002, the loss on disposals and impairment of assets was $18.8 million and, in 2003, the gain on disposal of assets was $7.0 million related to divested properties.

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Segment and Other Information

Country Club and Golf Facilities

The following tables present certain summary financial and membership information for our country club and golf facilities segment for 2002 and 2003 (dollars in thousands):