UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
| | x | | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE |
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
or
| | ¨ | | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF |
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Numbers 33-89818, 33-96568, 333-08041, 333-57107 and 333-52612
CLUBCORP EMPLOYEE STOCK OWNERSHIP PLAN
(Full title of the plan)
CLUBCORP, INC.
(Exact name of issuer of the securities held pursuant to the plan)
3030 LBJ Freeway, Suite 700, Dallas, Texas 75234
(Address of principal executive office)
(972) 243-6191
(Issuer’s telephone number; including area code)
CLUBCORP EMPLOYEE STOCK OWNERSHIP PLAN
Table of Contents
Independent Auditors’ Report
The Board of Trustees
ClubCorp Employee Stock Ownership Plan:
We have audited the accompanying statements of net assets available for benefits of ClubCorp Employee Stock Ownership Plan as of December 31, 2002 and 2001, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of ClubCorp Employee Stock Ownership Plan as of December 31, 2002 and 2001, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules, schedule H, line 4i – schedule of assets (held at end of year) and schedule H, line 4j – schedule of reportable transactions, are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan’s management. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.
The schedule H, line 4i – schedule of assets (held at end of year) that accompanies the Plan’s financial statements does not disclose the historical cost of certain plan assets held. Disclosure of this information is required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974.
KPMG LLP
Dallas, Texas
June 27, 2003
CLUBCORP EMPLOYEE STOCK OWNERSHIP PLAN
Statements of Net Assets Available for Benefits
December 31, 2002 and 2001
| | | 2002
| | 2001
|
Assets: | | | | | |
Cash | | $ | 175,693 | | 46,512 |
Investments: | | | | | |
ClubCorp, Inc. common stock, at estimated fair value | | | 35,328,241 | | 49,719,783 |
Short-term investments, at fair value | | | 1,678,040 | | 1,050,981 |
| | |
|
| |
|
| | | | 37,006,281 | | 50,770,764 |
| | |
|
| |
|
| | |
Receivables: | | | | | |
Employer contributions | | | 258,113 | | 315,606 |
Employee contributions | | | 63,073 | | 335,876 |
| | |
|
| |
|
| | | | 321,186 | | 651,482 |
| | |
|
| |
|
Total assets | | | 37,503,160 | | 51,468,758 |
| | |
|
| |
|
| | |
Liabilities: | | | | | |
Miscellaneous payables | | | 5,500 | | — |
| | |
|
| |
|
Net assets available for benefits | | $ | 37,497,660 | | 51,468,758 |
| | |
|
| |
|
See accompanying notes to financial statements.
2
CLUBCORP EMPLOYEE STOCK OWNERSHIP PLAN
Statements of Changes in Net Assets Available for Benefits
Years ended December 31, 2002 and 2001
| | | 2002
| | | 2001
| |
Additions to net assets attributed to: | | | | | | | |
Employer contributions | | $ | 1,197,369 | | | 1,415,988 | |
Employee contributions | | | 5,914,104 | | | 7,124,553 | |
Investment income | | | 19,129 | | | 30,662 | |
Other | | | 8,880 | | | — | |
| | |
|
|
| |
|
|
| | | | 7,139,482 | | | 8,571,203 | |
| | |
|
|
| |
|
|
| | |
Deductions from net assets attributed to: | | | | | | | |
Net depreciation in fair value of investments: | | | | | | | |
ClubCorp, Inc. common stock | | | 14,391,542 | | | 18,422,579 | |
Benefits paid and withdrawals | | | 6,626,822 | | | 7,490,615 | |
Administrative expenses | | | 92,216 | | | 156,001 | |
| | |
|
|
| |
|
|
| | | | 21,110,580 | | | 26,069,195 | |
| | |
|
|
| |
|
|
Net decrease in net assets available for benefits | | | (13,971,098 | ) | | (17,497,992 | ) |
| | |
Net assets available for benefits: | | | | | | | |
Beginning of year | | | 51,468,758 | | | 68,966,750 | |
| | |
|
|
| |
|
|
End of year | | $ | 37,497,660 | | | 51,468,758 | |
| | |
|
|
| |
|
|
See accompanying notes to financial statements.
3
CLUBCORP EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2002 and 2001
The ClubCorp Employee Stock Ownership Plan (Plan) is a defined contribution plan covering employees of ClubCorp, Inc.’s participating subsidiaries (ClubCorp or the Employer) who have completed one year of service and worked at least 1,000 hours during their eligibility year of service. The sponsoring employer of the Plan is ClubCorp. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Participants should refer to the Plan document for more complete information.
| | (a) | | Basis of Presentation |
The accompanying financial statements have been prepared on an accrual basis.
Participating employees may elect to contribute up to 6% of their eligible compensation to the Plan. Contributions to the Plan are primarily invested in ClubCorp common stock. Participants may elect to diversify a portion of their account assets upon meeting certain age and participation requirements. The Employer matches 20% of the employee contributions and may, at its discretion, match up to an additional 30% of employee contributions. For the years ended December 31, 2002 and 2001, ClubCorp made no discretionary contributions.
The maximum amount which may be added to any participant’s account in any year is the lesser of $40,000 or 100% of their compensation for that year for all ClubCorp defined contribution plans. This maximum amount includes the participant’s share of ClubCorp’s contributions.
Each participant’s account is credited with the allocation of ClubCorp’s contributions based on the participant’s contributions to the Plan. Earnings and losses from investments are allocated to the participants’ accounts based on their individual quarter-end balances. Forfeitures of terminated participants’ nonvested accounts are used to cover direct administrative expenses of the Plan (see note l(g)).
Participants are gradually vested in ClubCorp’s contributions as determined by years of credited service. Prior to January 1, 2002, full vesting was attained after seven years of credited service. Effective January 1, 2002, full vesting is attained after six years of credited service. Participants are always 100% vested in the account value of their voluntary contributions and earnings thereon.
Benefits are paid to participants upon retirement, permanent disability, termination, or to beneficiaries upon death of the participant. The participant or beneficiary may elect, subject to the terms of the Plan, to receive his or her benefits in a lump sum cash distribution, in installments over a fixed period, or through transfer to another retirement plan in an amount equal to the value of the participant’s account. The participant or beneficiary may also elect to receive ClubCorp common stock in lieu of cash.
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CLUBCORP EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2002 and 2001
Diversification of a participant’s account is allowed when the participant has reached the age of 55 and has completed ten or more years of participation in the Plan. Those Participants who meet the eligibility requirements can elect to transfer 25% of eligible assets to the ClubCorp Individual Investment Plan, a separate plan. Such an election is permitted each year as a distribution and amounted to $710,822 and $1,485,374 in 2002 and 2001, respectively.
| | (g) | | Administrative Expenses |
Forfeitures are used by the Plan to pay direct administrative expenses, which amounted to $92,216 and $156,001 in 2002 and 2001, respectively. Indirect expenses and any direct expenses not covered by forfeitures are paid by ClubCorp. Indirect administrative expenses of $386,181 and $256,874 were paid by ClubCorp on behalf of the Plan in 2002 and 2001, respectively.
Although it has not expressed any intent to do so, ClubCorp has the right to terminate the Plan at any time subject to the provisions of ERISA. If the Plan were to terminate, participants would automatically become fully vested regardless of years of service and the net assets would be distributed to Plan participants based on each participant’s account balance.
| | (i) | | Form 5500 Reconciliation |
The net assets available for benefits recorded in the Plan’s Form 5500 as of December 31, 2002 and 2001 are less than the corresponding amounts reported in the accompanying financial statements by $13,412 and $11,885, respectively. These differences relate to benefits payable at year end for terminations.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of additions and deductions during the reporting period. Actual results could differ from those estimates.
5
CLUBCORP EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2002 and 2001
The following table presents the fair value of investments at December 31, 2002 and 2001.
| | | 2002
| | 2001
|
| | | Units/shares
| | Fair value
| | Units/shares
| | Fair value
|
Investment at estimated fair value: | | | | | | | | | | |
ClubCorp common stock | | 4,107,935 | | $ | 35,328,241 | | 4,109,073 | | $ | 49,719,783 |
Investment at quoted market value: | | | | | | | | | | |
Schwab Institutional Advantage
Money Fund (Third Party
Administrator) | | 1,678,040 | | | 1,678,040 | | 1,050,981 | | | 1,050,981 |
| | | | |
|
| | | |
|
|
| | | | | $ | 37,006,281 | | | | $ | 50,770,764 |
| | | | |
|
| | | |
|
|
If available, quoted market prices are used to value investments of the Plan. Because there is no public market for the common stock of ClubCorp, a financial advisor has been engaged by ClubCorp to render an opinion on the fair market value of the common stock, which was $8.60 and $12.10 at December 31, 2002 and 2001, respectively. All purchases of common stock by the Plan were made on or shortly after an appraisal date at the fair market value. Purchases of common stock by the Plan are made from ClubCorp and its shareholders.
| (3) | | Employer Contributions Receivable |
Matching contributions are allocated to employees’ accounts at the end of each quarter; therefore, the accompanying financial statements reflect a receivable for the fourth quarter’s Employer match credited to employees’ accounts but not received by year-end.
The Plan obtained its latest tax determination letter on October 1, 2001, in which the Internal Revenue Service stated that the Plan was in compliance with the applicable requirements of the Internal Revenue Code (IRC). The Plan Administrator believes that the Plan is currently being operated in compliance with the applicable requirements of the IRC.
| (5) | | Financial Instruments |
The carrying values of financial instruments such as cash and receivables approximate their fair values because of the nature and short maturity of these instruments. ClubCorp common stock and short-term investments are carried at estimated fair value and fair value, respectively.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
| | | | | | | CLUBCORP EMPLOYEE STOCK OWNERSHIP PLAN |
| | | | |
Date: | | July 15, 2003
| | | | By: | | /s/Jeffrey P. Mayer
|
| | | | | | | | | Jeffrey P. Mayer |
| | | | | | | | | Chief Financial Officer |
| | | | | | | | | ClubCorp, Inc. |
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CLUBCORP EMPLOYEE STOCK OWNERSHIP PLAN
Schedule H, Line 4i – Schedule of Assets (Held at End of Year)
December 31, 2002
Identity of issue
| | Description of
investment
| | Cost
| | Current value
|
Common stock – ClubCorp, Inc.* | | 4,107,935 shares | | $ | ** | | $ | 35,328,241 |
| | | |
Schwab Institutional Advantage Money
Fund – Short-Term Investment Fund *
(Third Party Administrator) | | 1,678,040 units | | | 1,678,040 | | | 1,678,040 |
| | | | | | | |
|
|
| | | | | | | | $ | 37,006,281 |
| | | | | | | |
|
|
* Party-in-interest
** Historical cost information not available for this investment.
See accompanying independent auditors’ report.
8
CLUBCORP EMPLOYEE STOCK OWNERSHIP PLAN
Schedule H, Line 4j – Schedule of Reportable Transactions
Year ended December 31, 2002
Identity of party involved
| | Description of asset
| | Aggregate
number of
transactions
| | Purchase
price
| | Selling
price
| | Lease
rental
| | Expense
incurred
with
transaction
| | Cost of
asset
| | Current
value of
asset on
transaction
date
| | Net
gain
(loss)
|
Purchases: | | | | | | | | | | | | | | | | | | | |
Schwab Institutional Advantage Money Fund | | Money market fund | | 196 | | $ | 7,551,255 | | — | | — | | — | | 7,551,255 | | 7,551,255 | | — |
Sales: | | | | | | | | | | | | | | | | | | | |
Schwab Institutional Advantage Money Fund | | Money market fund | | 358 | | | — | | 6,924,196 | | — | | — | | 6,924,196 | | 6,924,196 | | — |
See accompanying independent auditors’ report.
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Index to Exhibits
Exhibit No.
| | Description
|
| |
| 23.1 | | Independent Auditors’ Consent |
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