UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 25, 2003
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file numbers 33-89818, 33-96568, 333-08041, 333-57107 and 333-52612
CLUBCORP, INC.
(Exact name of registrant as specified in its charter)
| Delaware |
75-2778488 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. employer identification no.) |
| 3030 LBJ Freeway, Suite 700 |
Dallas, Texas 75234 | |
| (Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (972) 243-6191
Former name, former address and former fiscal year,
if changed since last report: NONE
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve 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 9, 2003 was 93,727,191.
INDEX
| Part I. FINANCIAL INFORMATION |
||||
| Item 1. Financial Statements: |
||||
| 1 | ||||
| 2 | ||||
| 3 | ||||
| 4 | ||||
| 5 | ||||
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
12 | |||
| Item 3. Quantitative and Qualitative Disclosures about Market Risk |
20 | |||
| 21 | ||||
| Part II. OTHER INFORMATION |
||||
| 22 | ||||
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 25, 2003, and the related consolidated statements of operations and cash flows for the twelve weeks ended March 25, 2003 and March 19, 2002. These consolidated financial statements are the responsibility of ClubCorp’s management.
We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of ClubCorp as of December 31, 2002, and the related consolidated statements of operations, stockholders’ equity and comprehensive income (loss), and cash flows for the year then ended (not presented herein); and in our report dated April 7, 2003, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2002, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
KPMG LLP
Dallas, Texas
May 7, 2003
1
ClubCorp, Inc.
(Dollars in thousands)
(Unaudited)
| Assets |
December 31, 2002 |
March 25, 2003 |
||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
2,426 |
|
$ |
21,887 |
| ||
| Membership and other receivables, net |
|
91,319 |
|
|
68,270 |
| ||
| Inventories |
|
20,178 |
|
|
21,750 |
| ||
| Other assets |
|
73,166 |
|
|
69,323 |
| ||
| Total current assets |
|
187,089 |
|
|
181,230 |
| ||
| Property and equipment, net |
|
1,210,814 |
|
|
1,201,211 |
| ||
| Other assets |
|
173,374 |
|
|
175,860 |
| ||
| Total assets |
$ |
1,571,277 |
|
$ |
1,558,301 |
| ||
| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable and accrued liabilities |
$ |
71,865 |
|
$ |
63,976 |
| ||
| Long-term debt—current portion |
|
69,483 |
|
|
81,712 |
| ||
| Other liabilities |
|
133,544 |
|
|
143,706 |
| ||
| Total current liabilities |
|
274,892 |
|
|
289,394 |
| ||
| Long-term debt |
|
596,738 |
|
|
586,059 |
| ||
| Other liabilities |
|
148,352 |
|
|
148,152 |
| ||
| Membership deposits |
|
118,665 |
|
|
119,303 |
| ||
| Redemption value of common stock held by benefit plan |
|
38,697 |
|
|
38,683 |
| ||
| Stockholders’ equity: |
||||||||
| Preferred stock, $.01 par value, 150,000,000 shares authorized, none issued or outstanding |
|
— |
|
|
— |
| ||
| Common stock, $.01 par value, 250,000,000 shares authorized, 99,594,408 issued, 93,727,191 outstanding at December 31, 2002 and at March 25, 2003. |
|
996 |
|
|
996 |
| ||
| Additional paid-in capital |
|
161,672 |
|
|
161,672 |
| ||
| Accumulated other comprehensive loss |
|
(8,381 |
) |
|
(8,582 |
) | ||
| Retained earnings |
|
300,080 |
|
|
283,058 |
| ||
| Treasury stock, 5,867,217 shares at December 31, 2002, and at March 25, 2003 |
|
(60,434 |
) |
|
(60,434 |
) | ||
| Total stockholders’ equity |
|
393,933 |
|
|
376,710 |
| ||
| Total liabilities and stockholders’ equity |
$ |
1,571,277 |
|
$ |
1,558,301 |
| ||
2
ClubCorp, Inc.
Consolidated Statement of Operations
(Dollars in thousands, except per share amounts)
(Unaudited)
| Twelve Weeks Ended |
||||||||
| March 19, 2002 |
March 25, 2003 |
|||||||
| Operating revenues |
$ |
180,170 |
|
$ |
178,342 |
| ||
| Operating costs and expenses |
|
151,446 |
|
|
153,189 |
| ||
| Depreciation and amortization |
|
20,656 |
|
|
22,395 |
| ||
| Selling, general and administrative expenses |
|
17,638 |
|
|
14,102 |
| ||
| (Gain) loss on disposals of assets |
|
(2,506 |
) |
|
452 |
| ||
| Operating loss from continuing operations |
|
(7,064 |
) |
|
(11,796 |
) | ||
| Interest and investment income |
|
134 |
|
|
311 |
| ||
| Interest expense |
|
(12,459 |
) |
|
(14,948 |
) | ||
| Loss from continuing operations before income taxes and minority interest |
|
(19,389 |
) |
|
(26,433 |
) | ||
| Income tax benefit |
|
5,839 |
|
|
8,407 |
| ||
| Minority interest |
|
207 |
|
|
75 |
| ||
| Loss from continuing operations |
|
(13,343 |
) |
|
(17,951 |
) | ||
| Discontinued operations: |
||||||||
| Income (loss) from discontinued operations before income taxes |
|
(2,525 |
) |
|
1,379 |
| ||
| Income tax (provision) benefit |
|
800 |
|
|
(464 |
) | ||
| Income (loss) from discontinued operations |
|
(1,725 |
) |
|
915 |
| ||
| Net loss |
$ |
(15,068 |
) |
$ |
(17,036 |
) | ||
| Basic and diluted loss per share on: |
||||||||
| Loss from continuing operations |
$ |
(0.14 |
) |
$ |
(0.19 |
) | ||
| Income (loss) from discontinued operations |
|
(0.02 |
) |
|
0.01 |
| ||
| Basic and diluted loss per share |
$ |
(0.16 |
) |
$ |
(0.18 |
) | ||
3
ClubCorp, Inc.
Consolidated Statement of Cash Flows
(Dollars in thousands)
| Twelve Weeks Ended |
||||||||
| March 19, 2002 |
March 25, 2003 |
|||||||
| Cash flows from operations: |
||||||||
| Loss from continuing operations |
$ |
(13,343 |
) |
$ |
(17,951 |
) | ||
| Adjustments to reconcile loss from continuing operations to cash flows provided from operations: |
||||||||
| Income from discontinued operations |
|
(1,725 |
) |
|
915 |
| ||
| Depreciation and amortization from continuing operations |
|
20,656 |
|
|
22,395 |
| ||
| Depreciation and amortization from discontinued operations |
|
1,287 |
|
|
— |
| ||
| (Gain) loss on disposals of assets from continuing operations |
|
(2,506 |
) |
|
452 |
| ||
| (Gain) loss on disposals of assets from discontinued operations |
|
364 |
|
|
(2,405 |
) | ||
| Minority interest in net loss of subsidiaries |
|
(207 |
) |
|
(75 |
) | ||
| Equity in losses of joint ventures |
|
1,030 |
|
|
90 |
| ||
| Amortization of discount on membership deposits |
|
1,835 |
|
|
2,166 |
| ||
| Deferred income taxes |
|
(7,554 |
) |
|
(8,957 |
) | ||
| Decrease in real estate held for sale |
|
723 |
|
|
327 |
| ||
| Decrease in membership and other receivables, net |
|
22,586 |
|
|
22,807 |
| ||
| Decrease in accounts payable and accrued liabilities |
|
(15,724 |
) |
|
(7,824 |
) | ||
| Increase in deferred income |
|
6,684 |
|
|
6,712 |
| ||
| Increase (decrease) in deferred membership revenues |
|
(2,121 |
) |
|
4,430 |
| ||
| Other |
|
(1,539 |
) |
|
(486 |
) | ||
| Cash flows provided from operations |
|
10,446 |
|
|
22,596 |
| ||
| Cash flows from investing activities: |
||||||||
| Additions to property and equipment |
|
(18,755 |
) |
|
(7,983 |
) | ||
| Development of new facilities |
|
(4,350 |
) |
|
(736 |
) | ||
| Development of real estate ventures |
|
(701 |
) |
|
(107 |
) | ||
| Proceeds from disposition of subsidiaries and assets, net |
|
11,647 |
||||||