UNITED ~~STATES~~STATESSECURITIES AND EXCHANGE COMMISSION

~~SECURITIES~~Washington, ~~AND EXCHANGE COMMISSION~~D.C. 20549

~~Washington,~~FORM ~~D.C. 20549~~10-Q

~~FORM~~Quarterly ~~10-Q~~Report Under Section 13 or 15 (d) of The Securities Exchange Act of 1934

Quarterly Report Under Section 13 or 15 (d) of The Securities Exchange Act of 1934

For Quarter Ended:		Commission File Number
September 30, 2002		333-26389

For Quarter Ended:		Commission File Number
AFFINITY GROUP HOLDING, INC.
June 30, 2002		333-26389
(Exact name of registrant as specified in its charter)
Delaware		59-2922099
(State of incorporation or organization)		(I.R.S. Employer Identification No.)
64 Inverness Drive East Englewood, CO 80112		(303) 792-7284
(Address of principal executive offices)		(Registrant’s telephone number, including area code)

~~AFFINITY~~SECURITIES ~~GROUP~~REGISTERED ~~HOLDING,~~PURSUANT ~~INC.~~TO SECTION 12 (b) OF THE ACT: NONE

~~(Exact~~SECURITIES ~~name of registrant~~REGISTERED asPURSUANT ~~specified~~TO inSECTION ~~its~~12 ~~charter~~(g) OF THE ACT:

Delaware		59-2922099
(State of incorporation or organization)		(I.R.S. Employer Identification No.)
64 Inverness Drive East		(303) 792-7284
Englewood, CO 80112		(Registrant’s telephone
(Address of principal executive offices)		number, including area code)

11% Senior Notes Due 2007

~~SECURITIES~~Indicate by check mark ~~REGISTERED~~whether ~~PURSUANT~~the TORegistrant ~~SECTION~~(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 (bor for such shorter period that the Registrant was required to file such reports), OFand ~~THE~~(2) ~~ACT: NONE~~has been subject to such filing requirements for the past 90 days.

~~SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT:~~YES ý NO o

~~11%~~Indicate ~~Senior~~the ~~Notes~~number ~~Due~~of shares ~~2007~~outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

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.

Class		Outstanding as of November 6, 2002
Common Stock, $.01 par value		100

~~YES~~DOCUMENTS INCORPORATED BY REFERENCE: ~~ý NO o~~None

~~Indicate the number of~~AFFINITY ~~shares~~GROUP ~~outstanding of each of the issuer’s classes of common stock~~HOLDING, asINC. ofAND ~~the latest practicable date.~~SUBSIDIARIES

		Outstanding as of
Class		August 9, 2002
Common Stock, $.01 par value		100

INDEX

DOCUMENTS INCORPORATED BY REFERENCE: None

Part I. Financial Information

Item 1: Financial Statements

	Consolidated Balance Sheets As of September 30, 2002 and December 31, 2001

	Consolidated Statements of Operations For the three months ended September 30, 2002 and 2001

	Consolidated Statements of Operations For the nine months ended September 30, 2002 and 2001

	Consolidated Statements of Cash Flows For the nine months ended September 30, 2002 and 2001

	Notes to Consolidated Financial Statements

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

Part II. Other Information

Signatures

AFFINITY GROUP HOLDING, INC. AND SUBSIDIARIES

~~INDEX~~CONSOLIDATED BALANCE SHEETS

~~Part~~SEPTEMBER ~~I. Financial Information Item 1: Financial Statements Consolidated Balance Sheets As of June~~ 30, 2002 ~~and~~AND ~~December~~DECEMBER 31, 2001 Consolidated Statements of Operations For the three months ended June 30, 2002 and 2001 Consolidated Statements of Operations For the six months ended June 30, 2002 and 2001 Consolidated Statements of Cash Flows For the six months ended June 30, 2002 and 2001 Notes to Consolidated Financial Statements Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations Part II. Other Information Signatures

~~AFFINITY~~(In ~~GROUP HOLDING, INC. AND SUBSIDIARIES~~Thousands)

CONSOLIDATED BALANCE SHEETS

	9/30/02			12/31/01
	(unaudited)			(audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	961		$	3,180
Accounts receivable, less allowance for doubtful accounts of $1,765 in 2002 and $1,587 in 2001	20,890			20,636
Inventories	32,364			32,065
Prepaid expenses and other assets	16,696			10,281
Deferred tax asset	4,985			4,985
Total current assets	75,896			71,147

PROPERTY AND EQUIPMENT, net	18,499			18,277
NOTES FROM AFFILIATES	18,685			30,128
INTANGIBLE ASSETS, net	31,626			34,382
GOODWILL	140,511			142,253
DEFERRED TAX ASSET	19,568			18,703
OTHER ASSETS	3,896			3,750
	$	308,681		$	318,640
LIABILITIES AND STOCKHOLDER’S DEFICIT
CURRENT LIABILITIES:
Accounts payable	$	18,130		$	17,554
Accrued interest	7,782			4,565
Accrued income taxes	4,223			2,212
Accrued liabilities	31,211			30,059
Deferred revenues and gains	63,759			54,872
Deferred tax liability	1,281			1,281
Current portion of long-term debt	7,578			16,189
Total current liabilities	133,964			126,732

DEFERRED REVENUES AND GAINS	40,194			41,290
LONG-TERM DEBT, net of current portion	199,370			212,127
DEFERRED TAX LIABILITY	11,737			11,737
OTHER LONG-TERM LIABILITIES	4,262			3,103
	389,527			394,989

COMMITMENTS AND CONTINGENCIES	—			—

STOCKHOLDER’S DEFICIT:
Common stock, $.01 par value, 1,000 shares authorized, 100 shares issued and outstanding	1			1
Additional paid-in capital	2,021			12,021
Accumulated deficit	(82,868		)	(88,371		)
Total stockholder’s deficit	(80,846		)	(76,349		)
	$	308,681		$	318,640

~~JUNE 30,~~See ~~2002~~notes ~~AND~~to ~~DECEMBER~~consolidated ~~31,~~financial ~~2001~~statements.

~~(In Thousands)~~1

	6/30/02			12/31/01
	(unaudited)			(audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,482		$	3,180
Accounts receivable, less allowance for doubtful accounts of $964 in 2002 and $1,587 in 2001	20,252			20,636
Inventories	34,214			32,065
Prepaid expenses and other assets	13,927			10,281
Deferred tax asset	4,985			4,985
Total current assets	74,860			71,147
PROPERTY AND EQUIPMENT, net	17,762			18,277
NOTES FROM AFFILIATES	21,317			30,128
INTANGIBLE ASSETS, net	32,548			34,382
GOODWILL	140,511			142,253
DEFERRED TAX ASSET	18,709			18,703
OTHER ASSETS	3,874			3,750
	$	309,581		$	318,640
LIABILITIES AND STOCKHOLDER’S DEFICIT
CURRENT LIABILITIES:
Accounts payable	$	23,636		$	17,554
Accrued interest	4,297			4,565
Accrued income taxes	3,251			2,212
Accrued liabilities	28,261			30,059
Deferred revenues and gains	60,193			54,872
Deferred tax liability	1,281			1,281
Current portion of long-term debt	7,110			16,189
Total current liabilities	128,029			126,732
DEFERRED REVENUES AND GAINS	41,321			41,290
LONG-TERM DEBT, net of current portion	204,291			212,127
DEFERRED TAX LIABILITY	11,737			11,737
OTHER LONG-TERM LIABILITIES	4,423			3,103
	389,801			394,989
COMMITMENTS AND CONTINGENCIES	—			—
STOCKHOLDER’S DEFICIT:
Common stock, $.01 par value, 1,000 shares authorized, 100 shares issued and outstanding	1			1
Additional paid-in capital	2,021			12,021
Accumulated deficit	(82,242		)	(88,371		)
Total stockholder’s deficit	(80,220		)	(76,349		)
	$	309,581		$	318,640

AFFINITY GROUP HOLDING, INC. AND SUBSIDIARIES

~~See~~CONSOLIDATED STATEMENTS ~~notes~~OF ~~to consolidated financial statements.~~OPERATIONS

1(In Thousands)

~~AFFINITY GROUP HOLDING, INC. AND SUBSIDIARIES~~(Unaudited)

CONSOLIDATED STATEMENTS OF OPERATIONS

	THREE MONTHS ENDED
	9/30/02			9/30/01
REVENUES:
Membership services	$	31,318		$	29,902
Publications	12,744			12,118
Retail	68,240			61,582
	112,302			103,602

COSTS APPLICABLE TO REVENUES:
Membership services	19,520			18,974
Publications	8,439			8,485
Retail	45,359			42,279
	73,318			69,738

GROSS PROFIT	38,984			33,864

OPERATING EXPENSES:
Selling, general and administrative	27,706			20,990
Restructuring charge	600			—
Depreciation and amortization	2,427			4,100
	30,733			25,090

INCOME FROM OPERATIONS	8,251			8,774

NON-OPERATING ITEMS:
Interest expense, net	(4,153		)	(6,096		)
Other non-operating income, net	61			65
	(4,092		)	(6,031		)
INCOME BEFORE INCOME TAXES	4,159			2,743

INCOME TAX EXPENSE	(1,785		)	(1,398		)

NET INCOME	$	2,374		$	1,345

~~(In~~See notes ~~Thousands)~~to consolidated financial statements.

~~(Unaudited)~~2

	THREE MONTHS ENDED
	6/30/2002			6/30/2001
REVENUES:
Membership services	$	33,815		$	31,351
Publications	13,110			12,654
Retail	74,827			67,171
	121,752			111,176
COSTS APPLICABLE TO REVENUES:
Membership services	20,592			19,740
Publications	9,132			9,401
Retail	50,240			45,072
	79,964			74,213
GROSS PROFIT	41,788			36,963
OPERATING EXPENSES:
Selling, general and administrative	26,660			22,527
Restructuring charge	952			—
Depreciation and amortization	2,473			4,196
	30,085			26,723
INCOME FROM OPERATIONS	11,703			10,240
NON-OPERATING ITEMS:
Interest expense, net	(4,162		)	(6,495		)
Other non-operating income, net	72			48
	(4,090		)	(6,447		)
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE	7,613			3,793
INCOME TAX EXPENSE	(2,560		)	(2,022		)
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE	5,053			1,771
CUMULATIVE EFFECT OF ACCOUNTING CHANGE	—			—
NET INCOME	$	5,053		$	1,771

AFFINITY GROUP HOLDING, INC. AND SUBSIDIARIES

~~See~~CONSOLIDATED STATEMENTS ~~notes~~OF ~~to consolidated financial statements.~~OPERATIONS

2(In Thousands)

~~AFFINITY GROUP HOLDING, INC. AND SUBSIDIARIES~~(Unaudited)

CONSOLIDATED STATEMENTS OF OPERATIONS

	NINE MONTHS ENDED
	9/30/2002			9/30/2001
REVENUES:
Membership services	$	93,955		$	91,027
Publications	40,610			39,541
Retail	196,349			177,209
	330,914			307,777
COSTS APPLICABLE TO REVENUES:
Membership services	56,592			55,147
Publications	28,530			28,939
Retail	130,691			120,000
	215,813			204,086

GROSS PROFIT	115,101			103,691

OPERATING EXPENSES:
Selling, general and administrative	77,359			65,260
Restructuring charge	1,552			—
Depreciation and amortization	7,431			12,421
	86,342			77,681

INCOME FROM OPERATIONS	28,759			26,010

NON-OPERATING ITEMS:
Interest expense, net	(12,618		)	(19,091		)
Other non-operating income, net	247			174
	(12,371		)	(18,917		)

INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE	16,388			7,093

INCOME TAX EXPENSE	(6,143		)	(3,713		)

INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE	10,245			3,380

CUMULATIVE EFFECT OF ACCOUNTING CHANGE	(1,742		)	—

NET INCOME	$	8,503		$	3,380

~~(In~~See notes ~~Thousands)~~to consolidated financial statements.

~~(Unaudited)~~3

	SIX MONTHS ENDED
	6/30/2002			6/30/2001
REVENUES:
Membership services	$	62,637		$	61,125
Publications	27,866			27,423
Retail	128,109			115,627
	218,612			204,175
COSTS APPLICABLE TO REVENUES:
Membership services	37,072			36,173
Publications	20,091			20,454
Retail	85,332			77,721
	142,495			134,348
GROSS PROFIT	76,117			69,827
OPERATING EXPENSES:
Selling, general and administrative	49,653			44,270
Restructuring charge	952			—
Depreciation and amortization	5,004			8,321
	55,609			52,591
INCOME FROM OPERATIONS	20,508			17,236
NON-OPERATING ITEMS:
Interest expense, net	(8,465		)	(12,995		)
Other non-operating income, net	186			109
	(8,279		)	(12,886		)
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE	12,229			4,350
INCOME TAX EXPENSE	(4,358		)	(2,315		)
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE	7,871			2,035
CUMULATIVE EFFECT OF ACCOUNTING CHANGE	(1,742		)	—
NET INCOME	$	6,129		$	2,035

AFFINITY GROUP HOLDING, INC. AND SUBSIDIARIES

~~See~~CONSOLIDATED ~~notes~~STATEMENTS toOF CASH ~~consolidated financial statements.~~FLOWS

3(In Thousands)

~~AFFINITY GROUP HOLDING, INC. AND SUBSIDIARIES~~(Unaudited)

CONSOLIDATED STATEMENTS OF CASH FLOWS

	NINE MONTHS ENDED
	9/30/2002			9/30/2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	8,503		$	3,380
Adjustments to reconcile net income to net cash provided by operating activities:
Cumulative effect of accounting change	1,742			—
Deferred tax benefit	(865		)	(3		)
Depreciation and amortization	7,431			12,421
Provision for losses on accounts receivable	1,369			1,400
Deferred compensation	4,500			—
(Gain) Loss on disposal of property and equipment	(4		)	8
Changes in operating assets and liabilities:
Accounts receivable	(1,623		)	2,565
Inventories	(299		)	1,696
Prepaid expenses and other assets	(6,561		)	(4,596		)
Accounts payable	576			6,588
Accrued and other liabilities	3,039			(425		)
Deferred revenues	7,791			4,205
Net cash provided by operating activities	25,599			27,239

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(4,761		)	(3,191		)
Proceeds from sale of property and equipment	4			3
Net changes in intangible assets	(136		)	(877		)
Loans receivable	(1,557		)	(1,685		)
Net cash used in investing activities	(6,450		)	(5,750		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on long-term debt	82,830			57,160
Principal payments of long-term debt	(104,198		)	(79,427		)
Net cash used in financing activities	(21,368		)	(22,267		)

NET DECREASE IN CASH AND CASH EQUIVALENTS	(2,219		)	(778		)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	3,180			3,456

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	961		$	2,678

~~(In~~See ~~Thousands)~~notes to consolidated financial statements.

~~(Unaudited)~~4

	SIX MONTHS ENDED
	6/30/2002			6/30/2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	6,129		$	2,035
Adjustments to reconcile net income to net cash provided by operating activities:
Cumulative effect of accounting change	1,742			—
Deferred tax benefit	(6		)	(362		)
Depreciation and amortization	5,004			8,321
Provision for losses on accounts receivable	964			1,050
Deferred compensation	2,000			—
Gain on disposal of property and equipment	(4		)	(1		)
Changes in operating assets and liabilities (net of purchased businesses):
Accounts receivable	(580		)	3,247
Inventories	(2,149		)	(603		)
Prepaid expenses and other assets	(3,770		)	(2,680		)
Accounts payable	6,082			9,396
Accrued and other liabilities	(1,707		)	(4,031		)
Deferred revenues	5,352			991
Net cash provided by operating activities	19,057			17,363
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(2,551		)	(2,248		)
Proceeds from sale of property and equipment	4			—
Net changes in intangible assets	(104		)	(572		)
Loans receivable	(1,189		)	(1,131		)
Net cash used in investing activities	(3,840		)	(3,951		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on long-term debt	61,560			45,270
Principal payments of long-term debt	(78,475		)	(55,653		)
Net cash used in financing activities	(16,915		)	(10,383		)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(1,698		)	3,029
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	3,180			3,456
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	1,482		$	6,485

AFFINITY GROUP HOLDING, INC. AND SUBSIDIARIES

~~See~~Notes ~~notes~~ to ~~consolidated~~Consolidated ~~financial~~Financial ~~statements.~~Statements

4(Unaudited)

~~AFFINITY~~(1) BASIS OF ~~GROUP HOLDING, INC. AND SUBSIDIARIES~~PRESENTATION

~~Notes~~The financial statements included herein include the accounts of Affinity Group Holding, Inc. (“AGHI”), its wholly-owned subsidiary, Affinity Group, Inc. (“AGI”), and AGI’s subsidiaries (collectively the “Company”) without audit, in accordance with accounting principles generally accepted in the United States, and pursuant to the ~~Consolidated~~rules ~~Financial~~and ~~Statements~~regulations of the Securities and Exchange Commission. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes in the Company’s 10-K report for the year ended December 31, 2001 as filed with the Securities and Exchange Commission. In the opinion of management of the Company, these consolidated financial statements contain all adjustments of a normal recurring nature necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented.

(~~Unaudited~~2) RECENT ACCOUNTING PRONOUNCEMENTS

Business Combinations and Goodwill – Statement of Financial Accounting Standards (1“SFAS”) BASIS OFNo. PRESENTATION141, Business Combinations, and No. 142, Goodwill and Other Intangible Assets were adopted by the Company effective January 1, 2002. The statements, among other things, require the use of purchase accounting for business combinations, discontinues amortization of Goodwill, and requires an annual assessment of goodwill for impairment. Discontinuance of goodwill amortization commenced January 1, 2002. See Note 5.

~~The~~Accounting ~~financial~~for ~~statements~~Asset Retirement Obligations ~~included~~– SFAS ~~herein~~No. ~~include~~143 ~~the~~was ~~accounts~~issued ofin ~~Affinity~~June ~~Group Holding, Inc~~2001. ~~(“AGHI”),~~ ~~its~~SFAS ~~wholly-owned subsidiary, Affinity Group, Inc~~No. ~~(“AGI”),~~143 ~~and~~establishes ~~AGI’s subsidiaries~~accounting ~~(collectively~~standards ~~the~~for ~~“Company”)~~recognition ~~without audit, in accordance with~~and ~~accounting~~measurement ~~principles~~of ~~generally~~a ~~accepted~~liability infor ~~the~~an ~~United~~asset ~~States,~~retirement obligation and ~~pursuant to~~the ~~the~~associated ~~rules~~asset ~~and~~retirement ~~regulations of the Securities and Exchange Commission~~cost. ~~These interim consolidated financial~~This ~~statements~~statement ~~should~~is beeffective ~~read~~for ~~in conjunction with the consolidated~~ financial statements ~~and~~ ~~notes~~issued ~~in the Company’s 10-K report~~ for ~~the~~fiscal ~~year~~years beginning ~~ended~~after ~~December~~June 3115, ~~2001~~2002. The asCompany ~~filed~~plans ~~with~~to ~~the~~adopt ~~Securities~~this ~~and~~standard ~~Exchange~~on ~~Commission~~January 1, 2003. InAs the ~~opinion~~Company ofcurrently ~~management~~does ofnot ~~the~~have ~~Company,~~any ~~these~~legal ~~consolidated~~obligations ~~financial~~associated ~~statements~~with ~~contain~~the ~~all~~retirement ~~adjustments~~ of along-lived ~~normal~~assets ~~recurring~~within ~~nature necessary~~the toscope ~~present~~of ~~fairly~~SFAS No. ~~the financial position~~143, ~~results~~the ofpotential ~~operations~~future ~~and cash~~impact ~~flows~~ of ~~the~~this ~~Company~~statement ~~for~~is ~~the~~not ~~interim~~expected ~~periods~~to ~~presented~~be significant.

~~(2)~~Accounting ~~RECENT~~for ~~ACCOUNTING~~the ~~PRONOUNCEMENTS~~Impairment or Disposal of Long-Lived Assets – SFAS No. 144 was issued in August 2001. This statement addresses financial accounting and reporting of long-lived assets and for long-lived assets to be disposed of. The provisions of this

Business Combinations and Goodwill — Statement of Financial Accounting Standards (“SFAS”) No. 141, Business Combinations, and No. 142, Goodwill and Other Intangible Assets were adopted by the Company effective January 1, 2002. The statements, among other things, require the use of purchase accounting for business combinations, discontinues amortization of Goodwill, and requires an annual assessment of goodwill for impairment. Discontinuance of goodwill amortization commenced January 1, 2002. See Note 5.

~~Accounting~~statement ~~for~~are ~~Asset Retirement Obligations — SFAS No. 143 was issued in June~~effective ~~2001. SFAS~~for ~~No.~~financial ~~143~~statements ~~establishes accounting~~issued ~~standards~~ for ~~recognition~~fiscal ~~and~~years ~~measurement~~beginning ofafter aDecember ~~liability for an~~15, ~~asset~~2001, ~~retirement obligation~~ and ~~the~~interim ~~associated~~periods ~~asset~~within ~~retirement~~those ~~cost. This statement is effective for financial statements issued for~~ fiscal years ~~beginning after June 15, 2002~~. ~~The~~SFAS ~~Company~~No. ~~plans~~144 towas ~~adopt~~adopted ~~this standard~~ on January 1, ~~2003~~2002. AsThe ~~the~~adoption ~~Company currently does not have any legal obligations associated with the retirement~~ of ~~long-lived~~ ~~assets within the scope of~~ SFAS No. ~~143,~~144 ~~the~~had ~~potential future impact~~no ofsignificant ~~this~~impact ~~statement~~on isthe ~~not~~Company’s ~~expected~~financial ~~to be significant~~statement.

~~Accounting~~(3) DISCLOSURES ~~for the Impairment or Disposal of Long-Lived~~ABOUT ~~Assets — SFAS~~SEGMENTS ~~No.~~OF ~~144~~AN ~~was~~ENTERPRISE ~~issued~~AND inRELATED ~~August 2001. This statement addresses financial accounting and reporting of long-lived assets and for long-lived assets to be disposed of. The provisions of this~~INFORMATION

5The Company’s three principal lines of business are Membership Services, Publications, and Retail. The Membership Services segment operates the Good Sam Club, Coast to Coast Club, and Camping World’s President’s Club for RV owners, campers and outdoor vacationers, and the Golf Card Club for golf enthusiasts. These membership clubs form a receptive audience to which the Company markets its products and services. The Publications segment publishes a variety of publications for selected markets in the recreation and leisure industry, including general circulation periodicals, club magazines, directories and RV industry trade magazines. The Retail segment sells recreational vehicles and specialty retail merchandise and services for RV enthusiasts primarily through retail supercenters, mail order catalogs, and websites. The Company evaluates performance based on profit or loss from operations before interest, income taxes, depreciation and amortization.

~~statement~~The ~~are~~reportable ~~effective~~segments ~~for~~are ~~financial~~strategic ~~statements~~business ~~issued~~units ~~for~~that ~~fiscal~~offer ~~years~~different ~~beginning~~products ~~after December 15, 2001,~~ and ~~interim periods within those fiscal years~~services. ~~SFAS~~They ~~No.~~are ~~144~~managed ~~was~~separately ~~adopted~~because oneach business ~~January~~requires 1different technology, ~~2002. The~~management ~~adoption~~expertise ofand ~~SFAS No. 144 had no~~marketing ~~significant impact on the Company’s financial statement~~strategies.

~~(3)~~The ~~DISCLOSURES~~Company ~~ABOUT~~does ~~SEGMENTS~~not allocate OFdepreciation, ANamortization, ~~ENTERPRISE~~interest, ~~AND~~income ~~RELATED~~taxes or unusual items to ~~INFORMATION~~segments. Financial information by reportable business segment is summarized as follows (in thousands):

The Company’s three principal lines of business are Membership Services, Publications, and Retail. The Membership Services segment operates the Good Sam Club, Coast to Coast Club, and Camping World’s President’s Club for RV owners, campers and outdoor vacationers, and the Golf Card Club for golf enthusiasts. These membership clubs form a receptive audience to which the Company markets its products and services. The Publications segment publishes a variety of publications for selected markets in the recreation and leisure industry, including general circulation periodicals, club magazines, directories and RV industry trade magazines. The Retail segment sells specialty retail merchandise and services for RV enthusiasts primarily through retail supercenters, mail order catalogs, and websites. The Company evaluates performance based on profit or loss from operations before interest, income taxes, depreciation and amortization.

	Membership Services			Publications		Retail		Consolidated
QUARTER ENDED SEPTEMBER 30, 2002
Revenues from external customers	$		31,318	$	12,744	$	68,240	$	112,302
Segment operating profit	9,980			3,911		3,967		17,858

QUARTER ENDED SEPTEMBER 30, 2001
Revenues from external customers	$	29,902		$	12,118	$	61,582	$	103,602
Segment operating profit	8,642			3,278		5,272		17,192

The reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology, management expertise and marketing strategies. Most of the businesses were acquired as a unit, and the management at the time of acquisition was retained.6

The Company does not allocate depreciation, amortization, interest, income taxes or unusual items to segments. Financial information by reportable business segment is summarized as follows (in thousands):

	Membership Services			Publications		Retail		Consolidated
NINE MONTHS ENDED SEPTEMBER 30, 2002
Revenues from external customers	$		93,955	$	40,610	$	196,349	$	330,914
Segment operating profit	30,980			10,917		12,631		54,528

NINE MONTHS ENDED SEPTEMBER 2001
Revenues from external customers	$	91,027		$	39,541	$	177,209	$	307,777
Segment operating profit	29,544			9,417		12,637		51,598

	Membership Services		Publications		Retail		Consolidated
QUARTER ENDED JUNE 30, 2002
Revenues from external customers	$	33,815	$	13,110	$	74,827	$	121,752
Segment operating profit	10,825		3,599		6,151		20,575
QUARTER ENDED JUNE 30, 2001
Revenues from external customers	$	31,351	$	12,654	$	67,171	$	111,176
Segment operating profit	9,622		2,847		6,600		19,069

The following is a summary of the reportable segment reconciliations to the Company’s consolidated financial statements for the three and nine months ended September 30, 2002 and 2001 (in thousands):

	THREE MONTHS ENDED						NINE MONTHS ENDED
	9/30/02			9/30/01			9/30/02			9/30/01
Income From Operations Before Depreciation and Amortization
Total profit for reportable segments	$	17,858		$	17,192		$	54,528		$	51,598
Unallocated G & A expense	(7,180		)	(4,318		)	(18,338		)	(13,167		)

Income from operations before depreciation and amortization	$	10,678		$	12,874		$	36,190		$	38,431

	Membership Services		Publications		Retail		Consolidated
SIX MONTHS ENDED JUNE 30, 2002
Revenues from external customers	$	62,637	$	27,866	$	128,109	$	218,612
Segment operating profit	21,000		7,006		8,664		36,670
SIX MONTHS ENDED JUNE 30, 2001
Revenues from external customers	$	61,125	$	27,423	$	115,627	$	204,175
Segment operating profit	20,902		6,139		7,365		34,406

(4) STATEMENTS OF CASH FLOWS

~~The~~Supplemental ~~following~~disclosures ~~is a summary~~ of ~~the~~cash ~~reportable~~flow ~~segment~~information ~~reconciliations to~~ the ~~Company’s~~ ~~consolidated~~nine ~~financial statements for the three and six~~ months ended ~~June~~ September 30, ~~2002 and 2001~~ (in thousands):

	THREE MONTHS ENDED						SIX MONTHS ENDED
	2002			2001
	6/30/02			6/30/01			6/30/02			6/30/01
Cash paid during the period for:
Income From Operations Before Depreciation and Amortization
Interest	$	11,433		$	17,533
Total profit for reportable segments	$	20,575		$	19,069		$	36,670		$	34,406
Income taxes	6,493			5,129
Unallocated G & A expense	(6,399		)	(4,633		)	(11,158		)	(8,849		)
Income from operations before depreciation and amortization	$	14,176		$	14,436		$	25,512		$	25,557

Non-cash activities – On June 27, 2002, Affinity Group Thrift Holding Corp., (4“AGTHC”), ~~STATEMENTS~~an OF“unrestricted” ~~CASH~~or ~~FLOWS~~non-guarantying subsidiary of the Company under the terms of the Company’s Senior Notes, paid a $10,000,000 non-cash dividend through the Company to its parent, AGI Holding Corp., (“AGHC”). Furthermore, on September 30, 2002, AGTHC paid a $3,000,000 non-cash dividend through the Company to its parent, AGHC. These dividends were comprised of the net ABH capital note and participations of the AGRP capital note with net book values of $7,123,000 and $5,877,000, respectively. In accordance with the terms of the Indenture (as defined below), the Board of Directors approved the fair market value of the notes.

~~Supplemental disclosures of cash flow information the six months ended June 30 (in thousands):~~7

	2002		2001
Cash paid during the period for:
Interest	$	10,252	$	14,677
Income taxes	3,415		3,121

(5) GOODWILL AND INTANGIBLE ASSETS

~~Non-cash activities~~As —discussed Onin ~~June~~Note 272, in January 2002, Affinity Group ~~Thrift~~ Holding, ~~Corp~~Inc. adopted SFAS No. 142, anwhich ~~“unrestricted”~~requires orcompanies ~~non-guarantying~~to ~~subsidiary~~stop ofamortizing ~~the~~goodwill ~~Company~~and ~~under~~certain ~~the~~intangible ~~terms of~~assets ~~the~~with ~~Company’s~~an ~~Senior~~indefinite ~~Notes,~~useful ~~paid a $10~~life. Instead,~~000,000~~ ~~non-cash~~SFAS ~~dividend~~No. ~~through~~142 ~~the Company~~requires tothat ~~its~~goodwill ~~parent,~~and ~~AGI~~intangible ~~Holding Corp.~~ assets ~~This~~deemed ~~dividend~~to ~~was~~have ~~comprised~~an ofindefinite ~~the~~useful ~~net~~life ~~ABH~~be ~~capital~~reviewed ~~note~~for ~~and~~impairment aupon ~~participation~~adoption of ~~the~~SFAS ~~AGRP~~No. ~~capital~~142 ~~note~~(January ~~having~~1, a2002) ~~net~~and ~~book~~annually ~~value~~thereafter. The ofCompany ~~$7,123,000 and~~will ~~$2,874,000,~~perform ~~respectively. In~~its annual ~~accordance~~impairment ~~with~~review during the ~~terms~~fourth quarter of ~~the~~each ~~Indenture~~year, ~~the~~commencing ~~Board~~in ~~of Directors approved~~ the ~~fair~~fourth ~~market~~quarter ~~value~~ of ~~the notes~~2002.

7Under SFAS No. 142, goodwill impairment is deemed to exist if the net book value of a reporting unit exceeds its estimated fair value. The Company’s reporting units are generally consistent with the operating segments underlying the segments identified in Note 3- Segment Information. This methodology differs from Affinity Group Holding, Inc.’s previous policy, as permitted under accounting standards existing at that time, of using undiscounted cash flows on an enterprise-wide basis to determine if goodwill is recoverable.

~~(5)~~In accordance with the ~~GOODWILL~~transition ~~AND~~provisions ~~INTANGIBLE~~of ~~ASSETS~~SFAS No. 142, Goodwill and Other Intangible Assets, Affinity Group Holding, Inc. recorded a one-time, non-cash charge of approximately $1.7 million to reduce the carrying value of its goodwill. The SFAS No. 142 goodwill impairment is associated solely with goodwill of our Golf Card Club, which is included in our Membership Services segment. Such charge is non-operational in nature and is reflected as a cumulative effect of an accounting change in the accompanying consolidated statement of operations. In calculating the impairment charge, the fair value of the impaired reporting units underlying the segments were estimated using either a discounted cash flow methodology or recent comparable transactions.

AsThe ~~discussed~~2001 inresults ~~Note~~on 2,a inhistorical ~~January~~basis ~~2002,~~do ~~Affinity~~not ~~Group~~reflect ~~Holding,~~the ~~Inc.~~provisions ~~adopted~~of SFAS No. 142,. Had ~~which requires~~Affinity ~~companies~~Group ~~to stop amortizing goodwill and certain intangible assets with an indefinite useful life. Instead~~Holding, ~~SFAS~~ NoInc. ~~142 requires that goodwill and intangible assets deemed to have an~~adopted ~~indefinite useful life be reviewed for impairment upon adoption of~~ SFAS No. 142 ( on January 1, ~~2002)~~2001, ~~and~~the ~~annually~~historical ~~thereafter. The~~net ~~Company~~income ~~will~~would ~~perform~~have ~~its annual impairment review during the fourth~~been ~~quarter~~changed ofto ~~each year, commencing in~~ the ~~fourth~~adjusted ~~quarter~~amounts ofindicated ~~2002.~~below:

Under SFAS No. 142, goodwill impairment is deemed to exist if the net book value of a reporting unit exceeds its estimated fair value. The Company’s reporting units are generally consistent with the operating segments underlying the segments identified in Note 3- Segment Information. This methodology differs from Affinity Group Holding, Inc.’s previous policy, as permitted under accounting standards existing at that time, of using undiscounted cash flows on an enterprise-wide basis to determine if goodwill is recoverable.

	Three Months Ended 9/30/01		Nine Months Ended 9/30/01

Net Income - As reported	$	1,345	$	3,380
Add back: Goodwill amortization	1,194		3,581
Adjusted Net Income	$	2,539	$	6,961

In accordance with the transition provisions of SFAS No. 142, Goodwill and Other Intangible Assets, Affinity Group Holding, Inc. recorded a one-time, non-cash charge of approximately $1.7 million to reduce the carrying value of its goodwill. The SFAS No. 142 goodwill impairment is associated solely with goodwill of our Golf Card Club, which is included in our Membership Services segment. Such charge is non-operational in nature and is reflected as a cumulative effect of an accounting change in the accompanying consolidated statement of operations. In calculating the impairment charge, the fair value of the impaired reporting units underlying the segments were estimated using either a discounted cash flow methodology or recent comparable transactions.8

~~The~~As ~~2001 results on a historical basis do not reflect the provisions~~ of ~~SFAS~~September ~~No. 142. Had Affinity Group Holding~~30, ~~Inc. adopted~~2002, ~~SFAS~~the ~~No.~~Company’s ~~142~~intangible onassets ~~January~~and 1,related ~~2001,~~accumulated ~~the~~amortization ~~historical net income would have been~~consisted ~~changed~~of to the ~~adjusted~~following ~~amounts~~(in ~~indicated below~~thousands):

	Three Months Ended 6/30/2001		Six Months Ended 6/30/2001
	Gross		Accumulated Amortization			Net
Net Income — As reported	$	1,771	$	2,035
Goodwill	$	185,830	$	(45,319	)	$	140,511
Add back: Goodwill amortization	1,194		2,387
Membership and Customer Lists	4,048		(1,794		)	2,254
Adjusted Net Income	$	2,965	$	4,422
Resort and Golf Course Participation Agreements	13,541		(8,736		)	4,805
Non Compete and deferred consulting agreements	27,805		(9,268		)	18,537
Deferred financing and organization costs	11,834		(5,804		)	6,030
	$	243,058	$	(70,921	)	$	172,137

8All intangible assets have a determinable useful life and are being amortized except for Goodwill.

AsNo ofchanges ~~June~~were ~~30,~~made ~~2002, the~~in the Company’s ~~intangible~~goodwill ~~assets~~during ~~and~~the ~~related~~third ~~accumulated~~quarter ~~amortization~~of ~~consisted~~2002. A summary of changes in the Company’s goodwill for the ~~following~~nine months ended September 30, 2002, by business segment, is as follows (in thousands):

	Gross			Accumulated Amortization			Net
	Membership Services			Publications			Retail		Consolidated
Goodwill	$	185,830		$	(45,319	)	$	140,511
Balance as of January 1, 2002	$	55,007		$	47,318		$	39,928	$	142,253
Membership and Customer Lists	4,048			(1,703		)	2,345
Impairments	(1,742		)	—			—		(1,742		)
Resort and Golf Course Participation Agreements	13,552			(8,606		)	4,946
Balance as of September 30, 2002	$	53,265		$	47,318		$	39,928	$	140,511
Non Compete and deferred consulting agreements	27,805			(8,945		)	18,860
Deferred financing and organization costs	11,816			(5,419		)	6,397
	$	243,051		$	(69,992	)	$	173,059

~~All intangible assets~~(6) ~~have~~CONTINGENCIES- aRECENT ~~determinable useful life and are being amortized except for Goodwill.~~EVENTS

AThe ~~summary~~Insurance Commissioner of ~~changes~~the instate of California, by order dated April 23, 2002, directed GSS Enterprises, Inc. (“GSS”), one of the Company’s subsidiaries, ~~goodwill~~to ~~during~~cease and desist from engaging in certain insurance and motor club services without requisite licensing, advising such subsidiary that the Commissioner ~~quarter~~may impose certain fines if GSS fails to be licensed. The order provides GSS the right to a hearing on the matter. The order issued by the Insurance Commissioner of the state of California applies only to operations of GSS within the state of California. If sustained, ~~and~~the ~~total~~order could materially limit certain activities ~~assets~~of atGSS ~~June~~within 30the state of California. GSS operates in all 50 states, ~~2002~~a majority of which have regulations comparable to those of the state of California. To the Company’s knowledge, there is no similar pending investigation by ~~business~~any ~~segment~~other state. The isCompany asbelieves ~~follows~~that (the operations of GSS are in ~~thousands):~~compliance with the laws of the state of California and intends to vigorously defend the action.

	Membership Services			Publications		Retail		Consolidated
Balance as of January 1, 2002	$	55,007		$	47,318	$	39,928	$	142,253
Impairments	(1,742		)	—		—		(1,742		)
Balance as of June 30, 2002	$	53,265		$	47,318	$	39,928	$	140,511

~~(6)~~AFFINITY ~~CONTINGENCIES-~~GROUP ~~RECENT~~HOLDING, ~~EVENTS~~INC. AND SUBSIDIARIES

~~The Insurance Commissioner of the state of California, by order dated April 23, 2002, directed GSS Enterprises, Inc. (“GSS”), one of the Company~~MANAGEMENT’~~s subsidiaries,~~S toDISCUSSION ~~cease~~AND ~~and~~ANALYSIS ~~desist~~OF ~~from engaging in certain insurance and motor~~FINANCIAL ~~club~~CONDITION ~~services~~AND ~~without~~RESULTS ~~requisite~~OF licensing, advising such subsidiary that the Commissioner may impose certain fines if GSS fails to be licensed. The order provides GSS the right to a hearing on the matter. The order issued by the Insurance Commissioner of the state of California applies only to operations of GSS within the state of California. If sustained, the order could materially limit certain activities of GSS within the state of California. GSS operates in all 50 states, a majority of which have regulations comparable to those of the state of California. To the Company’s knowledge, there is no similar pending investigation by any other state. The Company believes that the operations of GSS are in compliance with the laws of the state of California and intends to vigorously defend the action.OPERATIONS

9ITEM 2:

~~AFFINITY~~The ~~GROUP~~following table is derived from the Company’s ~~HOLDING,~~Consolidated ~~INC.~~Statements ~~AND~~of ~~SUBSIDIARIES~~Operations and

~~MANAGEMENT’S~~expresses the results from operations as a ~~DISCUSSION~~percentage ~~AND~~of ~~ANALYSIS~~revenues OFand ~~FINANCIAL~~reflects the net increase (decrease) between periods:

CONDITION AND RESULTS OF OPERATIONS

	THREE MONTHS ENDED
	9/30/02		9/30/01		Inc/(Dec)
REVENUES:
Membership services	27.9	%	28.9	%	4.7	%
Publications	11.3	%	11.7	%	5.2	%
Retail	60.8	%	59.4	%	10.8	%
	100.0	%	100.0	%	8.4	%

COSTS APPLICABLE TO REVENUES:
Membership services	17.4	%	18.3	%	2.9	%
Publications	7.5	%	8.2	%	(0.5	)%
Retail	40.4	%	40.8	%	7.3	%
	65.3	%	67.3	%	5.1	%

GROSS PROFIT	34.7	%	32.7	%	15.1	%

OPERATING EXPENSES:
Selling, general and administrative	24.7	%	20.2	%	32.0	%
Restructuring charge	0.5	%	—		—
Depreciation and amortization	2.2	%	4.0	%	(40.8	)%
	27.4	%	24.2	%	22.5	%

INCOME FROM OPERATIONS	7.3	%	8.5	%	(6.0	)%

NON-OPERATING ITEMS:
Interest expense, net	(3.7	)%	(6.0	)%	(31.9	)%
Other non-operating income, net	0.1	%	0.1	%	(6.2	)%
	(3.6	)%	(5.9	)%	(32.2	)%

INCOME BEFORE INCOME TAXES	3.7	%	2.6	%	51.6	%

INCOME TAX EXPENSE	(1.6	)%	(1.3	)%	27.7	%

NET INCOME	2.1	%	1.3	%	76.5	%

~~ITEM 2:~~10

The following table is derived from the Company’s Consolidated Statements of Operations and expresses the results from operations as a percentage of revenues and reflects the net increase (decrease) between periods:

expresses the results from operations as a percentage of revenues and reflects the net increase

	NINE MONTHS ENDED
	9/30/2002		9/30/2001		Inc/(Dec)
REVENUES:
Membership services	28.4	%	29.6	%	3.2	%
Publications	12.3	%	12.8	%	2.7	%
Retail	59.3	%	57.6	%	10.8	%
	100.0	%	100.0	%	7.5	%

COSTS APPLICABLE TO REVENUES:
Membership services	17.1	%	17.9	%	2.6	%
Publications	8.6	%	9.4	%	(1.4	)%
Retail	39.5	%	39.0	%	8.9	%
	65.2	%	66.3	%	5.7	%

GROSS PROFIT	34.8	%	33.7	%	11.0	%

OPERATING EXPENSES:
Selling, general and administrative	23.4	%	21.2	%	18.5	%
Restructuring charge	0.5	%	—		—
Depreciation and amortization	2.2	%	4.0	%	(40.2	)%
	26.1	%	25.2	%	11.1	%

INCOME FROM OPERATIONS	8.7	%	8.5	%	10.6	%

NON-OPERATING ITEMS:
Interest expense, net	(3.8	)%	(6.3	)%	(33.9	)%
Other non-operating income, net	0.1	%	0.1	%	42.0	%
	(3.7	)%	(6.2	)%	(34.6	)%

INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE	5.0	%	2.3	%	131.0	%

INCOME TAX EXPENSE	(1.9	)%	(1.2	)%	65.4	%

INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE	3.1	%	1.1	%	203.1	%

CUMULATIVE EFFECT OF ACCOUNTING CHANGE	(0.5	)%	—		—

NET INCOME	2.6	%	1.1	%	151.6	%

~~(decrease) between periods:~~11

	THREE MONTHS ENDED
	6/30/2002		6/30/2001		Inc/(Dec)
REVENUES:
Membership services	27.8	%	28.2	%	7.9	%
Publications	10.8	%	11.4	%	3.6	%
Retail	61.4	%	60.4	%	11.4	%
	100.0	%	100.0	%	9.5	%
COSTS APPLICABLE TO REVENUES:
Membership services	16.9	%	17.8	%	4.3	%
Publications	7.5	%	8.5	%	(2.9	)%
Retail	41.3	%	40.5	%	11.5	%
	65.7	%	66.8	%	7.7	%
GROSS PROFIT	34.3	%	33.2	%	13.1	%
OPERATING EXPENSES:
Selling, general and administrative	21.9	%	20.2	%	18.3	%
Restructuring charge	0.8	%	—		—
Depreciation and amortization	2.0	%	3.8	%	(41.1	)%
	24.7	%	24.0	%	12.6	%
INCOME FROM OPERATIONS	9.6	%	9.2	%	14.3	%
NON-OPERATING ITEMS:
Interest expense, net	(3.4	)%	(5.8	)%	(35.9	)%
Other non-operating income, net	0.1	%	—		50.0	%
	(3.3	)%	(5.8	)%	(36.6	)%
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE	6.3	%	3.4	%	100.7	%
INCOME TAX EXPENSE	(2.1	)%	(1.8	)%	26.6	%
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE	4.2	%	1.6	%	185.3	%
CUMULATIVE EFFECT OF ACCOUNTING CHANGE	—		—		—
NET INCOME	4.2	%	1.6	%	185.3	%

RESULTS OF OPERATIONS

10Three Months Ended September 30, 2002

~~AFFINITY~~Compared ~~GROUP HOLDING,~~With ~~INC.~~Three ~~AND~~Months ~~SUBSIDIARIES~~Ended September 30, 2001

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL~~Revenues

~~CONDITION~~Revenues ~~AND~~of $112.3 ~~RESULTS~~million OFfor ~~OPERATIONS~~the third quarter of 2002 increased by approximately $8.7 million, or 8.4%, from the comparable period in 2001.

~~The~~Membership ~~following table~~services isrevenues ~~derived~~of ~~from~~$31.3 ~~the~~million ~~Company’s~~for ~~Consolidated~~the ~~Statements~~third quarter of ~~Operations~~2002 ~~and~~increased by ~~expresses~~approximately ~~the~~$1.4 ~~results~~million, or 4.7%, from ~~operations~~the ascomparable period in 2001. This revenue increase was largely attributable to a ~~percentage~~$1.1 ofmillion ~~revenues~~increase in extended vehicle warranty program revenue due to an increased renewal rate on existing contracts and ~~reflects~~continued sales of the ~~net~~one-year warranty products and a $0.3 million increase ~~(decrease)~~in marketing ~~between~~fee ~~periods:~~income recognized on sales of vehicle insurance products.

	SIX MONTHS ENDED
	6/30/2002		6/30/2001		Inc/(Dec)
REVENUES:
Membership services	28.7	%	29.9	%	2.5	%
Publications	12.7	%	13.4	%	1.6	%
Retail	58.6	%	56.7	%	10.8	%
	100.0	%	100.0	%	7.1	%
COSTS APPLICABLE TO REVENUES:
Membership services	17.0	%	17.7	%	2.5	%
Publications	9.2	%	10.0	%	(1.8	)
Retail	39.0	%	38.1	%	9.8	%
	65.2	%	65.8	%	6.1	%
GROSS PROFIT	34.8	%	34.2	%	9.0	%
OPERATING EXPENSES:
Selling, general and administrative	22.7	%	21.7	%	12.2	%
Restructuring charge	0.4	%	—		—
Depreciation and amortization	2.3	%	4.1	%	(39.9	)%
	25.4	%	25.8	%	5.7	%
INCOME FROM OPERATIONS	9.4	%	8.4	%	19.0	%
NON-OPERATING ITEMS:
Interest expense, net	(3.9	)%	(6.4	)%	(34.9	)%
Other non-operating income, net	0.1	%	0.1	%	70.6	%
	(3.8	)%	(6.3	)%	(35.8	)%
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE	5.6	%	2.1	%	181.1	%
INCOME TAX EXPENSE	(2.0	)%	(1.1	%)	88.3	%
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE	3.6	%	1.0	%	286.8	%
CUMULATIVE EFFECT OF ACCOUNTING CHANGE	(0.8	)%	—		—
NET INCOME	2.8	%	1.0	%	201.2	%

Publication revenues of $12.7 million for the third quarter of 2002 increased $0.6 million, or 5.2%, from the comparable period in 2001 primarily due to the release of the September/October issue of Cruising Rider in the third quarter of 2002 versus the second quarter of 2001, one additional issue of an all-terrain vehicles title, and additional book sales.

Retail revenues of $68.2 million increased $6.7 million, or 10.8%, over the third quarter of 2001. This variance consisted of a $6.5 million increase in Camping World merchandise sales and a $0.2 million increase in recreational vehicle sales. The increase in merchandise sales primarily resulted from a same store sales increase of 11.6%, or an aggregate $4.4 million increase in store merchandise sales. The remaining increase in merchandise sales was attributable to a $1.2 million increase in mail order sales and a $0.9 million increase in installation fees and other supplies and services revenue.

~~RESULTS~~Costs OFApplicable ~~OPERATIONS~~to Revenues

~~Three~~Costs ~~Months~~applicable ~~Ended~~to revenues ~~June~~totaled ~~30,~~$73.3 million for the third quarter of 2002, an increase of $3.6 million, or 5.1%, from the comparable period in 2001.

~~Compared~~Membership services ~~With~~costs ~~Three~~and ~~Months~~expenses ~~Ended~~of ~~June~~$19.5 ~~30,~~million increased $0.5 million from the third quarter of 2001. This increase consisted of $0.5 million in costs from increased extended vehicle warranty program revenue, and $0.3 million increase in emergency road service costs, primarily from increased claims, partially offset by reduced production and media costs of $0.3 million for RVtoday, the Company’s television program.

~~Revenues~~Publication costs and expenses of $8.4 million for the third quarter of 2002 remained consistent with the comparable period in 2001 due to reduced expenses for annual

~~Revenues of $121.8 million for the second quarter of 2002 increased by approximately $10.6 million, or 9.5%, from the comparable period in 2001.~~12

~~Membership services~~publications ~~revenues~~offset ~~of $33.8 million for the second quarter of 2002 increased~~ by ~~approximately~~ $2.5 million, or 7.9%, from the comparable period in 2001. This revenue increase was largely attributable to a $1.3 million increase in member events revenue due to the timing of the annual Great North American RV Rally, which occurred during the first quarter of 2001, a $0.9 million increase in extended vehicle warranty program revenue due to an increased ~~renewal~~costs ~~rate~~associated onwith ~~existing contracts and continued sales of~~ the ~~one-year~~motorcycle ~~warranty products,~~ and ~~a $0.3 million increase~~all-terrain invehicle ~~emergency road service revenue as a result of increased enrollment~~titles.

~~Publication revenue of~~Retail ~~$13.1~~costs ~~million~~applicable ~~for~~to ~~the~~revenues ~~second quarter of 2002~~ increased $03.51 million, or 37.63%, to $45.4 million ~~from~~primarily due to the ~~comparable~~11.6% ~~period~~increase in ~~2001~~merchandise ~~primarily~~sales. The ~~due~~retail togross ~~additional~~profit ~~advertising~~margin of 33.5% for ~~revenue~~the third quarter in 2002 increased from 31.3% from the ~~water~~comparable ~~titles~~period ~~and~~in 2001 ~~one~~due ~~additional~~to ~~issue~~higher ofnet anlabor ~~all-terrain~~rates ~~vehicles~~charged on installation sales and a shift to ~~title~~higher margin products.

~~Retail revenue~~Operating of $74.8 million increased $7.7 million, or 11.4%, over the second quarter of 2001. This variance consisted of a $7.5 million increase in Camping World merchandise sales and a $0.2 million increase in recreational vehicle sales. This increase in merchandise sales resulted from a same store sales increase of 12.8%, or an aggregate $5.2 million increase in store merchandise sales. The remaining variance was attributable to a $1.6 million increase in mail order sales and a $0.7 million increase in installation fees and other supplies and services revenue.Expenses

~~Costs~~Selling, general ~~Applicable~~and administrative expenses of $27.7 million for the third quarter of 2002 increased $6.7 million compared to ~~Revenues~~the third quarter of 2001 primarily due to an $0.8 million increase in lease expense as a result of the sale-leaseback transactions that occurred in December 2001, a $3.4 million increase in retail labor and other retail selling, general and administrative expenses and a $2.5 million increase in deferred executive compensation. Depreciation and amortization expenses of $2.4 million decreased $1.7 million from the prior year due to the sale-leaseback transactions, and the discontinuance of goodwill amortization per SFAS No. 142 “Goodwill and Other Intangible Assets” implemented January 1, 2002. The Company incurred a $0.6 million restructuring charge which is primarily attributable to a management change in the retail segment. This restructuring charge is scheduled to be paid in the fourth quarter of 2002.

~~Costs~~Income ~~applicable to revenues totaled $80.0 million for the second quarter of 2002, an increase of $5.8 million, or 7.7%,~~ from ~~the comparable period in 2001.~~Operations

~~Membership~~Income from operations ~~services~~for ~~costs~~the ~~and~~third ~~expenses~~quarter of ~~$20.6~~2002 ~~million~~decreased ~~increased~~ $0.95 million, ~~from~~or ~~the second~~6.0%, ~~quarter~~to ~~of 2001~~$8. ~~This~~3 ~~increase~~million ~~consisted~~compared ofto $18.38 million infor ~~costs attributable to~~ the ~~timing~~third quarter of ~~the Great North American RV Rally, and $0~~2001.5 This ~~million~~decrease inwas ~~costs~~due ~~from~~to increased ~~extended~~operating ~~vehicle~~expenses ~~warranty~~of ~~program~~$5.6 ~~revenue,~~million partially offset ~~reduced~~by ~~expenses~~increased ~~for~~gross ~~RVtoday,~~profit from the ~~the~~retail, ~~Company’s~~membership ~~television~~services ~~program,~~ and ~~the~~publications ~~RVSEARCH~~operations ~~website~~of in$3.5 ~~the~~million, ~~amount of~~ $0.5 9 million and $0.47 million, respectively.

12Non-Operating Items

~~Publication~~Non-operating ~~costs and~~ expenses ofwere $94.1 million for the ~~second~~third quarter of 2002, ~~decreased~~compared to $06.30 million, orfor ~~2.9%, from~~ the ~~comparable~~same period in 2001 primarily due to reduced ~~production~~interest expense ~~expenses~~as ~~for~~a ~~annual~~result ~~publications~~of ~~resulting~~lower ~~from~~interest arates ~~reduced~~applied ~~number~~to ofa ~~units~~lower ~~sold~~average outstanding debt balance.

~~Retail costs~~Income ~~applicable~~before toIncome revenues increased $5.2 million, or 11.5%, to $50.2 million due to a 11.7% increase in merchandise sales. The retail gross profit margin of 32.9% for the second quarter in 2002 remained unchanged from the comparable period in 2001.Taxes

~~Operating~~Income before ~~Expenses~~income taxes for the third quarter of 2002 was $4.2 million, or 51.6% over the third quarter of 2001. This $1.4 million increase from the prior period was principally due to the $1.9 million decrease in interest expense that was partially offset by the $0.5 million decrease in income from operations.

Selling, general and administrative expenses of $26.7 million for the second quarter of 2002 increased $4.1 million compared to the second quarter of 2001 primarily due to an $0.8 million increase in lease expense as a result of the sale-leaseback transactions that occurred December 2001, a $1.8 million increase in retail selling expenses and a $1.5 million increase in deferred executive compensation. Depreciation and amortization expenses of $2.5 million decreased $1.7 million from the prior year due to the sale-leaseback transactions, and the discontinuance of goodwill amortization per SFAS No. 142 “Goodwill and Other Intangible Assets” implemented January 1, 2002. The Company incurred a one-time $1.0 million restructuring charge which is primarily attributable to a management change in the retail segment. As of June 30, 2002, approximately $0.2 million was unpaid.13

Income ~~from~~Tax ~~Operations~~Expense

~~Income~~The ~~from~~Company ~~operations~~recognized ~~for~~approximately ~~the~~$1.8 ~~second~~million ~~quarter~~ of ~~2002~~tax ~~increased~~expense ~~$1.5~~for ~~million,~~the orthird ~~14.3%,~~quarter toof ~~$11.7~~2002 versus ~~million compared to~~ $101.24 million for the ~~second~~third quarter of 2001. ~~This increase was due to increased gross~~ ~~profit~~The ~~from~~effective ~~the~~tax ~~retail,~~rate ~~membership~~in ~~services~~2001 ~~and~~is ~~publications~~higher ~~operations~~than ofstatutory ~~$2.5 million,~~rates ~~$1.6~~due ~~million and $0.7 million, respectively, partially offset by~~primarily ~~increased~~to ~~operating~~the ~~expenses~~amortization of ~~$3.3~~non-deductible ~~million~~goodwill.

Non-Operating Items

Non-operating expenses were $4.1 million for the second quarter of 2002, compared to $6.4 million for the same period in 2001 primarily due to reduced interest expense as a result of lower interest rates applied to a lower average outstanding debt balance.

Income before Income Taxes

Income before income taxes for the second quarter of 2002 was $7.6 million, or 100.7% over the second quarter of 2001. This $3.8 million increase from the prior period was principally due to the $1.5 million increase in income from operations, combined with the $2.3 million decrease in interest expense, as noted above.

Income Tax Expense

The Company recognized approximately $2.6 million of tax expense for the second quarter of 2002 versus $2.0 million for the second quarter of 2001.

Net Income

The net income in the ~~second~~third quarter of 2002 was $52.14 million compared to $1.83 million for the same period in 2001.

~~Six~~Nine Months Ended ~~June~~September 30, 2002 Compared With Nine Months Ended September 30, 2001

Compared With Six Months Ended June 30, 2001

Revenues

Revenues of $~~218~~330.69 million for the ~~six~~nine months of 2002 increased by approximately $1423.41 million, or or 7.15%, from the comparable period in 2001.

Membership services revenues of $6294.60 million for the first ~~half~~nine months of 2002 increased by ~~approximately~~ approximately $12.59 million, or 23.52%, from the comparable period in 2001. This revenue increase was largely attributable to increased extended vehicle warranty program revenue of $2.7 million due to an increased renewal rate on existing contracts and continued sales of the one-year warranty products, $0.7 million of additional revenue from emergency road service products and $0.5 million of marketing fee income recognized on sales of vehicle insurance products partially offset by a $1.0 million decrease in marketing fee income from the sale of recreational vehicle financing products.

Publication ~~revenue~~revenues of $2740.96 million for the first ~~half~~nine months of 2002 increased $01.41 million from the comparable period in 2001. This revenue increase was largely attributable to a $1.16 million increase in ~~revenue~~ad ~~for REV,~~and acirculation ~~new~~revenue for the all-terrain vehicle ~~title,~~ and ~~increased~~motorcycle adtitles, ~~revenue~~and ~~for~~ the addition ~~other~~of REV, ~~motorcycle~~a ~~titles~~new all-terrain vehicle title, partially offset by $0.43 million ofreduction ~~reduced~~ in sales of the Trailer Life Campground Directory cdCD-~~rom~~ROM and atlas, products and ~~reduced~~a $2.0 million reduction in advertising and circulation revenue ofdue ~~$0.3~~to ~~million~~the consolidation ~~for~~of ~~Motorhome~~two ~~and~~personal ~~Trailer~~watercraft ~~Life Magazines~~titles.

Retail ~~revenue~~revenues of $~~128~~196.13 million increased $1219.51 million, or 10.8%, over the first ~~half~~nine months of 2001. This variance ~~consisted~~ consisted of ana $1117.49 million increase in Camping World merchandise sales and a $1.1 2 million increase in recreational vehicles sales. This increase in merchandise sales resulted from a same store sales increase of 12.21%, or an aggregate $813.82 million increase in store merchandise sales. The remaining variance was attributable to a $12.13 million increase in mail order sales, and a $12.54 million increase in installation fees and other supplies and services revenue.

Costs Applicable to Revenues

Costs applicable to revenues totaled $~~142~~215.58 million for the first ~~half~~nine months of 2002, an increase of $811.1 7 million, or 65.17%, from the comparable period in 2001.

Membership services costs and expenses of $3756.16 million increased $01.94 million from the first ~~half~~nine months of 2001. This increase was primarily associated with $1.32 million of ~~prior~~increased ~~period~~expenses ~~legal defense insurance~~for ~~reimbursements~~the ~~which~~extended ~~were~~vehicle ~~recovered~~warranty inprograms ~~the~~as ~~first~~a ~~half~~result of ~~2001~~increased revenue, and ~~increased~~ ~~expenses of~~ $01.71 million ~~for~~of ~~the~~Coast ~~extended~~to ~~vehicle~~Coast ~~warranty~~club ~~programs~~expense asprimarily aassociated ~~result~~with prior ofperiod ~~increased~~legal ~~revenue~~defense insurance reimbursements which were recovered in the first half of 2001. These increases were ~~were~~ partially offset by ana $0.89 million decrease in costs for the RVSEARCH ~~website~~ ~~and a $0~~website.~~3 million expense reduction for member events.~~

Publication costs and expenses of $2028.15 million for the first ~~half~~nine months of 2002 decreased $0.4 million from the comparable period in 2001 due to a $10.17 million ~~reduction~~of reduced production costs in the RV titles, $0.4 million of decreased wages and website ~~marketing~~development costs, and ~~production~~$0.3 million of reduced costs associated with the consolidation ~~publications~~of two personal watercraft titles, partially offset by $01.7 0 million ~~from~~of increased production costs associated with the all-terrain vehicle ~~vehicle~~ and motorcycle titles.

Retail costs applicable to revenues increased $710.67 million, or 9.8.9%, to $85130.~~3 million~~7 million due to a $710.1 million increase in retail costs which was primarily ~~attributable~~ attributable to a 1012.50% increase in Camping World merchandise sales, and a $0.5 6 million increase associated with increased sales of recreational vehicles. The retail gross profit margin increased to 33.4% for the first ~~half~~nine inmonths of 2002 from 32.83% for the same period in 2001 primarily due tohigher anet ~~slight~~labor ~~shift~~rates incharged ~~product~~on ~~mix~~installation sales and a shift to higher margin products.

Operating Expenses

Selling, general and administrative expenses of $4977.74 million for the first ~~half~~nine months of 2002 increased $512.41 million compared to the first ~~half~~nine months of 2001 primarily due to a $12.6 million increase in lease expense as a result of the sale-leaseback transactions that occurred December 2001, a $15.80 million increase in retail labor and other retail selling, general and administrative expenses, and a $24.05 million increase in deferred executive compensation. Depreciation and amortization expenses of $57.04 million decreased $35.30 million from the prior year due to the sale-leaseback transactions, and the discontinuance of goodwill amortization ~~amortization~~ per SFAS No. 142 “Goodwill and Other Intangible Assets” implemented January 1, 2002. The Company incurred a ~~one-time~~ $1.06 million restructuring charge which is primarily attributable to a management change in the retail segment. As of ~~June~~September 30, 2002, approximately $0.2 8 million was unpaid.

Income from Operations

Income from operations for the first half of 2002 increased $3.3 million, or 19.0%, to $20.5 million compared to $17.2 million for the first half of 2001. This increase was due to increased gross profit from the retail, publications operations and membership services of $4.9 million, $0.8 million and $0.6 million, respectively, which were partially offset by operating expenses of $3.0 million.

Income from Operations

Income from operations for the first nine months of 2002 increased $2.7 million, or 10.6%, to $28.8 million compared to $26.0 million for the first nine months of 2001. This increase was due to increased gross profit from the retail, publications, and membership services operations of $8.4 million, $1.5 million and $1.5 million, respectively, which were partially offset by operating expense increases of $8.7 million.

Non-Operating Items

Non-operating expenses were $812.34 million for the first ~~half~~nine months of 2002, compared to $1218.9 million for the same period in 2001 primarily due to reduced interest ~~expense~~ expense as a result of lower interest rates applied to a lower average outstanding debt balance.

Income before Income Taxes and Cumulative Accounting Change

Income before income taxes and cumulative accounting change in the first ~~half~~nine months of 2002 was $1216.24 million, or ~~181~~131.10% over the first ~~half~~nine months of 2001. This $7.9.3 million increase from the prior period was principally due to the $32.37 million increase in income from operations, combined with ~~the~~a $4.6.5 million decrease in interest expense, asand a ~~noted~~$0.1 ~~above~~million increase in other non-operating income.

Income Tax Expense

The Company recognized approximately $46.41 million of tax expense for the first ~~half~~nine months of 2002 ~~versus~~ versus $2.3.7 million for the first ~~half~~nine months of 2001. The effective tax rate in 2001 is higher than statutory rates due primarily to the amortization of non-deductible goodwill.

Cumulative Effect of Accounting Change

In accordance with the transition provisions of SFAS No. 142, Goodwill and Other Intangible Assets, the Company recorded a one-time non-cash charge of approximately $1.7 million to reduce the carrying value of its goodwill. This charge is non-operational in nature and is reflected as a cumulative effect of an accounting change in the accompanying Consolidated Statement of Operations.

Net Income

The net income in the first ~~half~~nine months of 2002 was $68.15 million compared to $23.~~0 million~~4 million for the same period in 2001.

LIQUIDITY AND CAPITAL RESOURCES

AGHI is a holding company whose primary assets are the capital stock of AGI and Affinity Group Thrift Holding Corporation (“AGTHC”). AGI, and its subsidiaries, provide the operating cash flow necessary to service its debt as well as that of AGHI.

The Company has historically operated with a working capital deficit. The working capital deficit as of ~~June 30,~~September 30, 2002 and December 31, 2001 was $5358.21 million and $55.6 million, respectively. The primary reason for the working capital deficit is the deferred revenue and gains reported under current liabilities in the amount of $6063.28 million and $54.9 million at ~~June~~ September 30, 2002 and December 31, 2001, respectively. Deferred revenue is primarily comprised of cash collected for club memberships in advance, which is deferred over the life of the memberships. The Company uses this advance membership cash to lower its revolver borrowings. The Company generated $1925.16 million and $1727.42 million in net cash from operations for the first nine months of 2002 and 2001, respectively. Management believes that net cash generated by operations together with available borrowings under its revolving credit line will be sufficient to meet all of its debt service requirements and capital requirements over the next twelve months.

16The Company has two primary debt obligations. On April 2, 1997, AGHI issued a total of $130.0 million of 11.0% senior notes under an indenture dated April 2, 1997 (the “Indenture”) maturing on April 1, 2007 (“AGHI Senior Notes”). On November 13, 1998, AGI entered into a $200.0 million revolving credit and term loan facility (“AGI Credit Facility”) consisting of two term loans (“Term A” and “Term B”) aggregating $130.0 million and a revolving credit facility of $70.0 million. The revolving credit facility was amended to $74.5 million on December 5, 2001. The interest on borrowings under the AGI Credit Facility is at variable rates based on the ratio of total cash flow to outstanding indebtedness (as defined). Interest rates float with prime and the London Interbank Offered Rates (“LIBOR”), plus an applicable margin ranging from 2.25% to 4.125% over the stated rates. As of September 30, 2002, the average interest rates on the term loans and revolving credit facility were 5.56% and 4.89%, respectively, and permitted borrowings under the undrawn revolving line were $30.2 million. AGI also pays a commitment fee of 0.5% per annum on the unused amount of the revolving credit line. As of September 30, 2002, $12.5 million and $23.0 million were outstanding under the Term A and B loans, respectively. Re-borrowings under the Term Loans are not permitted. The term loans have aggregate quarterly scheduled payments of $1.46 million in 2002. The aggregate quarterly scheduled payments on the term loans are $1.94 million and $2.53 million for 2003 and 2004, respectively. The revolving credit facility matures on December 31, 2004, and the Term A and Term B loans mature on June 30, 2004 and September 31, 2005, respectively. The funds available under the AGI Revolving Credit line may be utilized for borrowings or letters of credit; however, a maximum of $5.0 million may be allocated to such letters of credit. As of September 30, 2002, the Company had letters of credit in the amount of $3.2 million outstanding. The AGI Credit Facility is secured by virtually all the assets and a pledge of the stock of AGI.

net cash from operations for the first half of 2002 and 2001, respectively. Management believes that net cash generated by operations together with available borrowings under its revolving credit line will be sufficient to meet all of its debt service requirements and capital requirements over the next twelve months.17

The Company has two primary debt obligations. On April 2, 1997, AGHI issued a total of $130.0 million of 11.0% senior notes maturing on April 1, 2007 (“AGHI Senior Notes”). On November 13, 1998, AGI entered into a $200.0 million revolving credit and term loan facility (“AGI Credit Facility”) consisting of two term loans (“Term A” and “Term B”) aggregating $130.0 million and a revolving credit facility of $70.0 million. The revolving credit facility was amended to $74.5 million on December 5, 2001. The interest on borrowings under the AGI Credit Facility is at variable rates based on the ratio of total cash flow to outstanding indebtedness (as defined). Interest rates float with prime and the London Interbank Offered Rates (“LIBOR”), plus an applicable margin ranging from 2.25% to 4.125% over the stated rates. As of June 30, 2002, the average interest rates on the term loans and revolving credit facility were 5.72% and 5.17%, respectively, and permitted borrowings under the undrawn revolving line were $27.8 million. AGI also pays a commitment fee of 0.5% per annum on the unused amount of the revolving credit line. As of June 30, 2002, $13.8 million and $23.2 million were outstanding under the Term A and B loans, respectively. Re-borrowings under the Term Loans are not permitted. The term loans have aggregate quarterly scheduled payments of $1.46 million in 2002. The revolving credit facility matures on December 31, 2004, and the Term A and Term B loans mature on June 30, 2004 and June 30, 2005, respectively. The funds available under the AGI Revolving Credit line may be utilized for borrowings or letters of credit; however, a maximum of $5.0 million may be allocated to such letters of credit. As of June 30, 2002, the Company had letters of credit in the amount of $2.6 million outstanding. The AGI Credit Facility is secured by virtually all the assets and a pledge of the stock of AGI.

On December 5, 2001, the Company sold eleven real estate properties to eleven separate wholly-owned subsidiaries of AGRP Holding Corp., a wholly-owned subsidiary of the Company’s parent, AGI Holding Corp. for $52.3 million in cash and a note receivable. The properties have been leased back to the Company or its subsidiaries on a triple net basis. The cash proceeds of $47.5 million were used to payoff $2.1 million of existing mortgage financing and the balance, $45.4 million, paid down the AGI Credit Facility Term A and B loans by $19.4 million and $26.0 million, respectively. The balance of the purchase price, $4.8 million, is represented by a note receivable yielding 11% per annum, with monthly payments of $46,000 and a ten-year balloon.

Concurrent with the above real estate transaction, the Company amended the AGI Credit Facility to allow for the release of the above real estate, increase the revolving credit commitment from $70.0 million to $74.5 million, adjust the amortization of the Term A loans, amend the pricing schedule and re-set certain financial covenants.

The AGI Credit Facility allows for, among other things, the distribution of payments by AGI to AGHI to service the semi-annual interest due on the AGHI Senior Notes. Such distributions are subject to AGI’s compliance with certain restrictive covenants, including, but not limited to, an interest coverage ratio, fixed charge coverage ratio, minimum operating cash flow and limitations on capital expenditures and total indebtedness. In addition, the ~~annual~~AGI Credit Facility prohibits the distribution by its wholly-owned subsidiary, AGI, of any excess cash flow, as defined, until total leverage is less than 4.75 to 1.

amounts due under the Camping World Management Incentive Agreements. Such distributions are subject to AGI’s compliance with certain restrictive covenants, including, but not limited to, an interest coverage ratio, fixed charge coverage ratio, minimum operating cash flow and limitations on capital expenditures and total indebtedness. In addition, the AGI Credit Facility prohibits the distribution by its wholly-owned subsidiary, AGI, of any excess cash flow, as defined, until total leverage is less than 4.75 to 1.

In connection with the December 2001 sale-leaseback transactions, Affinity Group Thrift Holding Corporation (“AGTHC”), a wholly-owned subsidiary of the Company and an “unrestricted” subsidiary under the terms of the indenture governing the AGHI Senior Notes, sold a $15.0 million participation in the Affinity Bank Holdings, Inc. Capital Note held by AGTHC to an affiliate of Mr. Adams, the Company’s Chairman. AGTHC used the net proceeds of this sale to purchase a $14.5 million Capital Note of AGRP Corp. The Capital Note accrues interest at the rate of 11% per annum until maturity on December 5, 2011. Interest is payable from time to time as declared by the board of directors of AGRP Holding Corp. Interest not paid will accumulate and will be compounded annually until paid.

On June 27, 2002, AGTHC paid a $10,000,000 non-cash dividend through the Company to AGHC. This dividend was comprised of the net balance of the Affinity Bank Holdings, Inc. Capital Note and a participation in the AGRP Capital Note, which had a net book value of amount of $7,123,000 and $2,877,000, respectively. In accordance with the terms of the Indenture, the Board of Directors approved the fair market value of the notes.

~~The~~On ~~AGHI~~September ~~indenture~~30, 2002, ~~pursuant~~AGTHC topaid ~~which~~a ~~the~~$3.0 ~~AGHI~~million ~~Senior~~non-cash ~~Notes~~dividend ~~were~~through ~~issued~~the ~~contains~~Company ~~certain restrictive covenants relating~~ to, ~~but~~AGHC. This ~~not~~dividend ~~limited~~was ~~to,~~comprised ~~mergers,~~of ~~changes in the~~a ~~nature~~participation ofin the ~~business,~~AGRP ~~acquisitions,~~Capital ~~additional indebtedness~~Note, ~~sale~~which ofhad ~~assets, investments,~~a ~~and~~net ~~the~~book ~~payment~~value of ~~dividends~~$3.0 million. In ~~subject~~accordance towith ~~certain~~the ~~limitations and~~terms ~~minimum~~of ~~operating~~the ~~covenants. The Company~~Indenture, ~~was~~the inBoard ~~compliance~~of ~~with~~Directors ~~all~~approved ~~debt~~the ~~covenants~~fair atmarket ~~June~~value ~~30,~~on ~~2002~~the notes.

~~During~~The ~~the~~AGHI ~~first half of~~indenture ~~2002,~~pursuant ~~payments~~to ~~under~~which the ~~terms~~AGHI ofSenior ~~several~~Notes ~~phantom~~were ~~stock~~issued ~~agreements~~contains ~~totaled $0.9~~certain ~~million. Additional~~restrictive ~~phantom~~covenants ~~stock payments~~relating ofto, ~~$0.6~~but ~~million~~not ~~are~~limited ~~scheduled~~ to be, ~~made~~mergers, ~~over~~changes ~~the~~in ~~remainder of~~ the ~~calendar year.~~nature

Capital expenditures for the first half of 2002 totaling $2.6 million increased $0.4 million from the first half of 2001. Additional capital expenditures of $2.9 million are anticipated for the balance of 2002, primarily for a Camping World supercenter point of sale equipment, continued enhancements to membership marketing databases, computer hardware upgrades and replacements, and computer software upgrades and enhancements.18

of the business, acquisitions, additional indebtedness, sale of assets, investments, and the payment of dividends subject to certain limitations and minimum operating covenants. The Company was in compliance with all debt covenants at September 30, 2002.

For the three and nine months ended September 30, 2002, the Company incurred deferred executive compensation expense of $2.5 million and $4.5 million, respectively, under the phantom stock agreements. The earned incentives under these agreements are scheduled to be paid at various times over the next five years. During the first nine months of 2002, payments under the terms of several phantom stock agreements totaled $1.4 million. No additional phantom stock payments are scheduled to be made over the remainder of the calendar year.

Capital expenditures for the first nine months of 2002 totaling $4.8 million increased $1.6 million from the first nine months of 2001. Additional capital expenditures of $4.2 million are anticipated for the balance of 2002, primarily for a Camping World supercenter point of sale equipment, continued enhancements to membership marketing databases, computer hardware upgrades and replacements, and computer software upgrades and enhancements.

CRITICAL ACCOUNTING POLICIES

General

The Company’s discussion and analysis of its financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to membership programs and incentives, bad debts, inventories, intangible assets, employee health insurance benefits, income taxes, restructuring, and contingencies and litigation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

Revenue Recognition

Some of the membership revenue is generated from lifetime memberships. The revenue and expense associated with these memberships are deferred and amortized over an 18-year period, which is the actuarially determined estimated fulfillment period. Recognized revenues and profit are subject to revisions as the membership progresses to completion. Revisions to membership period estimates would change the amount of income and expense amortized in future accounting periods.

Accounts Receivable

The Company estimates the collectibility of its trade receivables. A considerable amount of judgment is required in assessing the ultimate realization of these receivables including the current credit-worthiness of each customer. Changes in required reserves have been recorded in recent periods and may occur in the future due to the market environment.

Inventory

The Company is required to state inventories at the lower of cost or market. In assessing the ultimate realization of inventories, the Company is required to make judgments as to future demand requirements and compare that with the current or committed inventory levels. The Company has recorded changes in required reserves in recent periods due to changes in strategic direction, such as discontinuances of product lines as well as changes in market conditions due to changes in demand requirements. It is possible that changes in required inventory reserves may continue to occur in the future due to the market conditions.

Restructuring

During the nine months ended September 30, 2002, the Company recorded reserves in connection with the restructuring program within the retail segment of the Company. These reserves include estimates pertaining to employee separation costs and the settlements of contractual obligations resulting from our actions. Although the Company does not anticipate significant changes, the actual costs may differ from these estimates.

PART II: OTHER INFORMATION

None

1821

SIGNATURES:

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	AFFINITY GROUP HOLDING, INC.	~~AFFINITY GROUP HOLDING, INC.~~
	/s/ Mark J. Boggess	~~/s/ Mark J. Boggess~~
Date: August 9, 2002		Mark J. Boggess
Date: November 6, 2002	Mark J. Boggess
		Senior Vice President
	Senior Vice President Chief Financial Officer
		Chief Financial Officer

1922

Filing Compare · AFFINITY GROUP HOLDING INC