AFFINITY GROUP HOLDING INC - 10-K Annual Report

AFFINITY GROUP HOLDING, INC.
(Exact name of registrant as specified in its charter)

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

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /x/ No / /

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class		Outstanding as of March 15, 2001
Common stock, $.01 par value		100

Except where the context indicates otherwise, the term "Company", or "AGHI" means Affinity Group Holding, Inc. and its predecessors and subsidiaries but excludes the operations of Affinity Insurance Group ("AINS"), and Affinity Bank ("AB"), which are classified as discontinued operations.

The Company is a member-based direct marketing organization with complimentary retail outlets across the country. The Company's club members form a receptive audience to which it sells products, services, merchandise and publications targeted to the recreational interests of club members. The Company's three principal lines of business are (i) club memberships and related products, services and club magazines, (ii) specialty retail merchandise distributed primarily through retail supercenters, mail order catalogs and the internet, and (iii) subscription magazines and other publications including directories. The Company's affinity groups are principally comprised of recreational vehicle owners, campers, outdoor recreationists and, to a lesser extent, golfers. See Footnote 12 in the Notes to Consolidated Financial Statements for financial information about the Company's segments.

At December 31, 2000, there were approximately 1.8 million dues paying members enrolled in the Company's clubs, remaining level with 1999. The paid circulation per issue of the Company's general circulation magazines is estimated at approximately 847,000 with an aggregate readership estimated at 5.6 million at December 31, 2000. The Company believes its club members have favorable demographic characteristics and comparatively high renewal rates. Total revenues of the Company were $405.1 million for the year ended December 31, 2000, compared to $386.7 million for the year ended December 31, 1999, representing a 4.8% increase.

The Company's business strategy is to increase (i) the enrollment of its clubs through internal growth and acquisitions, (ii) the sales of its products and services to club members through improving its distribution channels and by developing and enhancing its product and service offerings, and (iii) the circulation of its publications by introducing new magazines and acquiring publications which are complementary to the Company's recreational market niche. The Company also seeks to realize operational efficiencies through the integration of acquired businesses.

The Company seeks to increase the number of its club members through maximizing renewals by establishing an optimal mix of channels for soliciting new members and re-acquiring inactive members including, but not limited to, our internet presence through RV.Net. Management believes that the participation levels and renewal rates of club members reflect the benefits derived from membership. In order to maintain high participation rates in its clubs, the Company continuously evaluates member satisfaction and actively responds to changing member preferences through the enhancement or introduction of new membership benefits including products and services. The Company also uses alternative channels for acquiring club members. This is achieved through the use of two separate call centers, promotion in the publication titles it owns, through the national network of Camping World Supercenters, mail order catalogs and the internet.

The Company believes that the experience it has accumulated in managing its existing recreational affinity groups is applicable to the management of other recreational interest organizations. As a result,

the Company conducts ongoing evaluations for developing or acquiring affinity groups for which it can build membership enrollment and to which it can market products and services.

The Company seeks to increase the sale of its products and services due to their profitability and the favorable impact such programs have on club membership growth and retention. Management believes that a substantial opportunity exists to market its products and services through the national network of Camping World supercenters and mail order catalogs. A significant percentage of Good Sam Club members currently subscribe to one or more of its products and services, such as the emergency road service program and the extended vehicle warranty program. Management also believes that the Good Sam Club members who are not currently President's Club members represent a focused group of customers to which it will market Camping World's RV accessory merchandise. The Company regularly studies the feasibility of introducing new products and services.

The Company seeks to achieve operating efficiencies by selectively acquiring and developing recreational affinity groups which enable the Company to increase membership enrollment and to realize cost savings. The Company also seeks to enhance its importance with third party providers of products and services by maintaining high membership enrollment levels in such programs, thereby increasing the fees it receives from such vendors.

The Company seeks to expand its presence as a dominant publisher in select recreational niches through the introduction of new magazine formats and the acquisition of other publications in its market or in complementary recreational market niches. Publications in complementary niches may also provide the Company with the opportunity to launch new membership clubs, to market its products and services to members of new clubs and to develop other products and services which meet the special needs of such members. The Company believes overall circulation of its magazines is an important factor in determining the amount of revenues it can obtain from advertisers.

The use of recreational vehicles ("RVs") and the demand for club memberships and related products and services may be influenced by a number of factors including general economic conditions, the availability and price of propane and gasoline, and the total number of RVs. The Company believes that both the installed base of RVs and the type of RV owned (full service vehicles excluding van conversions) are the most important factors affecting the demand for its membership clubs, merchandise, products and services. Based on the most recent survey conducted in 1997 by the National Survey of the RV Consumer of the University of Michigan (the "Survey"), the number of households owning RVs is projected to increase from 8.4 million in 1995 to approximately 9.0 million in 2000. The Survey also indicates that the percentage of households owning RVs during this period will rise slightly from 9.7% to 9.9%.

According to the Survey, the average RV owner is 49 years old. RV ownership also increases with age reaching its highest percentage level among those 55 to 64 years old. Households in this age group are projected to increase from 12.3 million in 1995 to 20.7 million in 2010. RV ownership also is concentrated in the western United States, an area in which the population growth rate is expected to be greater than the national average through 2005. The Survey also indicates that RV ownership is associated with higher than average annual household income which among RV owners was approximately $47,000 per annum as compared to the national average of $37,000 per annum.

The average age and annual household income of the Company's club members in 2000 were 57 years and $53,200, respectively, based on member survey data compiled by the Company. The Company believes that the demographic profile of its typical club member, coupled with a demographic trend towards an aging population will have a favorable impact on RV ownership and the demand for club memberships and related products and services.

The Company 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. The membership clubs form a receptive audience to which the Company markets its products and services.

The following table sets forth the number of members at December 31, 2000, annual membership dues and average annual renewal rates during the period of 1996 to 2000 for each club:

Membership Club	Number of Members at December 31, 2000(1)	Annual Fee(2)	Average Renewal Rate(3)
Good Sam Club	949,600	$12-$25	72	%
Coast to Coast Club	178,200	$80-$90	76	%
President's Club	581,700	$15-$20	68	%
Golf Card Club	93,900	$65-$75	62	%

In addition to regular memberships, the Company also sells multi-year memberships. Management believes that multi-year memberships provide several advantages, including the up-front receipt of dues in cash, reduced membership costs and a strengthened member commitment.

Beginning in 1992, the Company began selling lifetime memberships for the Good Sam Club. As of December 31, 2000, the average price for a lifetime membership was $330 with 114,825 members registered. Based on an actuarial analysis of the lifetime members, the Company expects the average length of a lifetime membership to be 18 years.

The Good Sam Club, founded in 1966, is a membership organization for owners of recreation vehicles. The Good Sam Club is the largest RV club in North America with approximately 950,000 member families and over 1,900 local chapters as of December 31, 2000. The average renewal rate for Good Sam Club members was approximately 72% during the period 1996 through 2000. The Company has focused on selling higher margin multi-year memberships which, among other advantages, reduces the cost of membership renewal. At December 31, 2000, the average length of time for participation in the Good Sam Club was over 6 years with most club members purchasing annual memberships.

Membership fees range from $12 to $25, subject to the term and type (acquisition or renewal). The benefits of club memberships include: discounts for overnight stays at over 1,700 participating RV parks and campgrounds; discounts on the purchase of supplies and accessories for recreation vehicles at over 100 RV service centers; a free annual subscription to Highways, the club's regular news magazine; discounts on other Company publications; trip routing and mail-forwarding; and access to products and services developed for club members. Based on typical usage patterns, the Company estimates that Good Sam Club members realize estimated annual savings from discounts of $157.

The Good Sam Club establishes quality standards for RV parks and campgrounds participating in its discount program. Campgrounds and parks participating in the Good Sam program benefit from increased occupancy and sales of camping related products. The Company believes it has established considerable penetration of those for-profit RV parks and campgrounds which meet its quality standards for participation in the discount program.

The following table lists the number of club members and RV parks and campgrounds from 1996 through 2000 at which discounts for members were available at December 31st of the respective year:

	Year Ended December 31
	2000	1999	1998	1997	1996
Number of Good Sam Members(1)	949,600	970,100	936,200	927,000	911,400
Lifetime members included above	114,800	109,900	102,800	82,900	68,500
Number of RV campgrounds offering discounts to Good Sam members	1,747	1,775	1,682	1,697	1,682

The Coast to Coast Club operates the largest reciprocal use network of private RV resorts in North America. The Company offers a series of membership benefits depending upon pricing and program type under the Coast to Coast name. Members of Coast to Coast belong to a private RV resort owned and operated by parties unrelated to the Company. Club members may use most of the participating resorts in the Coast to Coast network subject to availability. At December 31, 2000, there were approximately 178,000 member families in the Coast to Coast club. Approximately 400 private RV resorts nationwide participated in the Coast to Coast reciprocal use programs, representing approximately 75% of those resorts in the US. These private resorts are designed primarily for RV owners, but typically provide camping or lodging facilities, comprised of RVs, cabins and condominiums. For an initial membership fee plus annual maintenance fees, both paid by the customer to the resort, the private resorts provide an RV site with water, sanitary and electrical hook-ups and recreational amenities, such as swimming, tennis or fishing, or proximity to theme parks or other recreational activities. The Company has established quality criteria for resorts to join and remain in the Coast to Coast networks.

For standard annual renewal dues from $79.95 for a single year membership to $159.95 for a multiple-year membership, Coast to Coast Club members receive the following benefits: discounts for overnight stays at participating resorts, hotels and campgrounds; an annual subscription to Coast to Coast Magazine; the Coast to Coast Directory providing information on the participating resorts; discounts on other Company publications, access to discount travel services; trip routing; and access to products and services developed for club members. Coast to Coast Resort Club members also have the right to use, subject to availability, the lodging facilities at 360 participating resorts at a discounted rate.

The Company believes that resorts participating in the Coast to Coast networks view access to reciprocating member resorts as an incentive for their customers to join their resort. Because a majority of members of Coast to Coast clubs own RVs, access to participating resorts throughout North America can be an important complement to local resort membership. During 2000, Coast to Coast members utilized approximately 700,000 nightly stays under the reciprocal use program. Based on typical use patterns, the Company estimates that Coast to Coast members realize estimated annual savings from these discounts of over $200 from discounted overnight stay accommodations at participating resorts. The average annual renewal rate for members of the Coast to Coast clubs after the initial one-year membership (which is generally paid by the member resort not the club member) was approximately 76% during the period 1996 through 2000.

The following table sets forth the number of members in Coast to Coast Club and resorts participating in the reciprocal use program at December 31st of the respective year:

	Year Ended December 31
	2000	1999	1998	1997	1996
Number of member families in Coast to Coast Club	178,100	194,600	229,900	241,500	257,200
Number of resorts	360	400	369	387	461

Membership in the Coast to Coast Club declined 8.5% from 1999 to 2000, and 31% from 1996 to 2000. The decreasing trend in membership is due to the high cost of marketing which curtails initial membership sales at participating resorts, and an aging member base. Three major resort systems that either experienced bankruptcy or left the Coast system in the past four years have directly impacted the Coast to Coast membership enrollment.

Camping World's President's Club program, which was established in 1986, has grown to 581,700 members. President's Club memberships may initially be obtained for one, two or three years at a cost of $20, $35 or $50, respectively. The average life (including renewals) of club membership is three years and approximately 80% of club members are enrolled for one year. President's Club members receive a 10% discount on the purchase of all of Camping World's merchandise and installation fees and also receive special mailings, including newsletters and flyers offering selected products and services at special prices.

The following table lists the number of President's Club members and number of retail stores at year end for 1996 through 2000 for the respective year:

	Year Ended December 31
	2000	1999	1998	1997	1996
Camping World's President's Club Members	581,700	560,200	524,300	510,900	465,200
Number of stores(1)	30	30	29	27	27

The Golf Card Club, founded in 1974, had approximately 93,900 members at December 31, 2000. The major attraction for membership is the financial savings which members receive when playing at one of approximately 3,300 participating golf courses located throughout the US and Canada. The annual membership fee varies with the length and type (single or double) of membership. The Company believes that the participating golf courses providing playing privileges to club members represent the largest number of golf courses participating in a discount program in North America. None of the participating golf courses are owned or operated by the Company.

Members of the Golf Card Club receive the following benefits: (i) two rounds annually of free or discounted golf at approximately 3,300 affiliated golf courses, (ii) discounted vacation packages at over 250 "Stay and Play" resorts, (iii) one-year National Car Rental Emerald Club membership, (iv) annual subscription to Golf Traveler magazine, published six times per year, and (v) Annual Directory of Affiliated Courses and Resorts, (vi) One-year Great American Traveler membership (hotel discount card), (vii) access to 130 local Grasshopper Clubs for fun tournament and social activities, (viii) opportunity to play in one of 35 Member-Guest Tournaments, and (ix) chance to test (and keep) select golf products.

Daily-fee, semi-private and privately-owned golf courses participate in the Golf Card program. The program is attractive to participating courses because it builds traffic and fills empty tee times during off-peak hours. Members also purchase other merchandise or services when exercising their playing privileges. In this manner, the Golf Card members tend to provide incremental revenue to the golf courses. Based on surveys conducted by the Company, members realize savings on green fees, ranging from $150 to $250 annually, which significantly exceed the cost of membership.

The standard annual membership fee is $75 for a single membership and $110 for a double membership. Multi-year memberships range from a single two-year for $129 to a five-year double of $479. The average renewal rate for Golf Card Club members at December 31, 2000 was approximately 62% for the period 1996 to 2000, with a renewal rate of 67% for 2000, unchanged from 1999.

The following table lists the number of Golf Card members, participating golf courses and "Stay and Play" resorts at December 31st of each year in this period:

	Year Ended December 31
	2000	1999	1998	1997	1996
Number of Members in the Golf Card Club(1)	93,900	93,600	111,000	134,400	136,200
Number of Participating Golf Courses	3,300	3,300	3,400	3,500	3,100
Number of "Stay and Play" Golf Resorts	251	264	300	305	310

The decline in membership reflects increased competition and abandonment of the Partner-Free acquisition strategy. A complete market repositioning of the club within the last two years included a new marketing strategy, new benefits, and staff and cost restructuring, all expected to address competitive challenges and stabilize the membership file.

The Company's 1.8 million club members form a receptive audience to which it sells products and services targeted to the recreational interests of its club members. The Company promotes products and services which either address special needs arising in the activities of the club members or appeal generally to persons with the demographic characteristics of club members. The two most established products are the emergency road service and the vehicle insurance program. Most of the Company's products and services are provided by third parties who pay the Company a marketing fee, except for emergency road service ("ERS") and extended warranty programs where the Company pays third party administrators to administer the programs.

The Company promotes various road service products to its existing membership programs, as well as to non-club members. The ERS products provide towing and roadside assistance for an annual subscriber dues range from $69.95 to $99.95. The Company developed the ERS program initially for Good Sam Club members in 1984 as an enhancement to their club membership. Currently 24% of the general Good Sam Club membership is enrolled in the Good Sam ERS program, up 1% from the prior year. The Company believes it is important to target the diversified market niches with identifiable products that offer a range of benefits. The Company currently markets these products through direct mail, advertising in publications, campground directories, space ads, internet and telemarketing. The

table below sets forth the total enrollment in the various ERS programs as of December 31, for each year indicated:

		Year Ended December 31
		2000		1999		1998		1997		1996
ERS Enrollment		341,600		331,700		329,900		315,200		224,000

For the third year in a row, enrollment in the various ERS programs has grown through promotional and marketing efforts which have attracted new members and improved renewal rates. Combined enrollment in the programs has increased 9,900 members or approximately 3% over 1999. The Company acquired the RRR RV ERS program from a competitor in August 1997 and acquired Camping World's RoadCare program in conjunction with the acquisition of Camping World.

The Company has two vehicle insurance programs, Vehicle Insurance Program ("VIP") and Motor Vehicle Program ("MVP"), to facilitate the availability of cost-effective vehicle insurance suitable to the demographic characteristics and vehicle usage patterns of its various club members. At December 31, 2000, the VIP program had approximately 189,600 members which represented a 16.7% and 3.0% penetration, respectively, of the Good Sam Club and Coast to Coast clubs. During the period 1996 to 2000, the average annual renewal rate of members participating in the VIP program was approximately 91.0%.

The Company acquired the Motor Vehicle Program ("MVP") in conjunction with the acquisition of Camping World. This program, marketed to President's Club members, had 43,651 policies outstanding as of December 31, 2000. The MVP policies generated $54.0 million of written premiums during 2000 from which the company recognized $2.5 million of marketing fee revenue.

The Company's marketing fee is based on the amount of written premiums and the profitability of the program. The insurance providers assume all claim risks.

The table below sets forth the number of policies in force for the VIP and MVP programs, the dollar amount of written premiums by the insurance providers, and the marketing fees generated as of December 31 of each year indicated:

	Year Ended December 31
	2000		1999		1998	1997		1996
VIP and MVP policies in force		231,200			235,100		246,500			258,600		215,100
Written premiums by the insurance providers under the VIP and MVP programs (millions)	$	231.3		$	236.3	$	252.9		$	249.5	$	208.7
Marketing fees generated (millions)	$	19.2		$	20.8	$	16.5		$	22.6	$	17.2

Management believes the recent declines in policies in force and premiums written are due to several factors. The RV industry and auto insurance markets have become increasingly competitive and has led to comparison shopping by consumers and lower rates by competitors. In addition, beginning in 1998 VIP's underwriter restricted the policy renewals for many New Jersey residents due to unfavorable claims experience.

Other products and services marketed to club members include credit cards, vehicle financing, supplemental health and life insurance, financial services and extended vehicle warranties. Most of these services are provided to club members by third parties who pay the Company a marketing fee.

The RV financing program is administered by Ganis Credit Corporation ("Ganis"). The number of Ganis RV loans to the Company's club members decreased by 43.3% from 1999 to 2000 primarily due to an unfavorable increase in interest rates.

During 1996, the Company introduced its extended vehicle warranty program. The Company earned marketing fees of approximately $5.7 million in 2000, a 2.4% increase over 1999. This increase is attributable to the renewal of annual contracts first sold in 1999. This program, which had 19,383 policies in force as of December 31, 2000, promotes the product through direct mail marketing channels, Company magazine print ads and retail kiosks in Camping World stores.

In addition, the Company is evaluating other products and services that club members may find attractive. When introducing new products and services, the Company concentrates on products and services provided by third parties, which it can market without significant capital investment by the Company, and for which it receives a marketing fee from the service provider based on sales volume. The Company seeks to utilize the purchasing power of its club members to obtain products and services at attractive prices.

The Company produces and distributes a variety of publications for select markets in the recreation and leisure industry, including general circulation periodicals, club magazines, directories, and RV industry trade magazines. Revenues are recognized from the sale of advertising, subscriptions and direct sales of some of the publications. The Company believes that the focused audience of each publication is an important factor in attracting advertisers.

The following chart sets forth the circulation and frequency of the Company's publications:

American Rider, introduced in November 1993, is targeted to owners and operators of Harley-Davidson motorcycles.

ATV Sport was introduced May 1998 and targets recreational and racing sport quad riders.

Bowhunting World is the archery equipment authority which provides information on new equipment reviews and maintenance techniques, and features articles which discuss ethical hunting, hunting rights, and pertinent legislative issues.

MotorHome is a monthly periodical for owners and prospective buyers of motorhomes which has been published since 1968 with a paid circulation of approximately 147,000 in 2000. MotorHome features articles on subjects such as product tests, travel and tourist attractions.

Rider is a monthly magazine for motorcycle touring enthusiasts and has been published since 1974. Each issue focuses on motorcycles, personalities, technical subjects, travel notes and other features of interest to this recreational affinity group.

Snow Week is the central source of information for the competition and high-performance snowmobiling market segment. The publication provides timely, year-round stories on racing, performance enhancing products, technical assistance, new product introductions, and industry general information.

SnowGoer is designed for the sport's highly active participants and provides detailed equipment and product critiques and maintenance tips.

Trailer Life, initially published in 1941, is the leading consumer magazine for the RV industry with a paid circulation of approximately 281,000 in 2000. Trailer Life features articles on subjects including product tests, travel and tourist attractions.

Watercraft World is targeted to avid personal watercraft enthusiasts and provides detailed critiques of watercraft, in-depth gear and accessory evaluations, technical tips and racing information.

Archery Business is the leading trade publication for archery dealers and presents a mix of industry news and trends, product reviews and sales tips designed to improve financial performance of archery product dealers.

Campground Management is the leading trade magazine for the campground industry.

Power Sports Business is an industry trade magazine introduced in January 1998 which combines previously issued Snowmobile Business and Watercraft Business with a motorcycle and ATV business section. Distribution is to dealers servicing these industries, which in numerous cases have combined operations to service more than one of these segments.

RV Business is the leading trade magazine covering industry news and trends for RV dealers, manufacturers, suppliers, associations and others.

ATV Magazine's first issue was published in October 1995. The publication is designed to reach large numbers of active ATV owners with comprehensive product information during the peak periods when equipment is purchased. ATV Sport magazine debuted in 1998.

Cruising Rider was introduced in March 1998 and targets cruiser motorcycle owners and buyers.

PWC Magazine is the complete guide for the personal watercraft owner and provides reviews of personal watercraft, gear and accessories as well as information on maintenance procedures, safety tips and travel destinations. PWC Magazine was first published in January 1995.

Snowmobile magazine delivers broad-based editorial and snowmobile-related information to its audience of active snowmobile enthusiasts. The publication includes reviews of new machines, clothing and accessories, and articles on responsible riding practices, snowmobiling vacation destinations and special events, and serves as the front-end medium for all snowmobile-related product promotions.

Trailer Life Campground/ RV Park & Services Directory, initially published in 1972, is an annually updated directory which provides information on and ratings for approximately 12,250 public and private campgrounds, and 1,330 RV service centers, including over 900 tourist attractions in North America along with color maps of the areas covered. In 2000, approximately 304,000 directories were distributed. The publication features Good Sam Parks that offer discounts on overnight camping fees for the Company's club members. This directory is sold by direct mail to Good Sam Club members, at RV dealerships and in bookstores. In 2000, the Company began issuing a version of the directory on cd-rom.

Woodall Campground Directory, initially published in 1948, is an annual consumer directory offered in both national and regional editions. In 2000, approximately 336,000 directories were distributed. The Woodall directory is primarily distributed through book stores.

Woodall Tenting Directory is an annual directory providing information on both government and privately-owned campgrounds and the outdoor activities and attractions that are available near them. In 2000, approximately 43,000 directories were distributed, primarily through newsstands.

Woodall Go & Rent... Rent & Go is an annual catalog providing information on where to find on-site lodging and cabin rentals at RV Parks & Campgrounds and "Over-the-Road" RV Rentals, as well as fully equipped campsites throughout the U.S.A. and Canada. This book features "turn-key" camping experiences for those who want to try camping, rent a cabin, or a fully-equipped campsite. In 2000, approximately 93,000 catalogs were distributed.

Each of the Company's membership clubs has its own publication which provides information on club activities and events, feature stories and other articles. The Company publishes Highways for the Good Sam Club, Coast to Coast Magazine for the Coast to Coast clubs, The Golf Traveler for the Golf Card Club, and RV View for Camping World's President's Club. The Company also periodically publishes books targeted for its club membership which address the RV lifestyle.

Camping World is a national specialty retailer of merchandise and services for RV owners. The 29 Camping World retail supercenters, which are located in 18 states, accounted for approximately 64% of the merchandise revenues for the year ended December 31, 2000 while approximately 22% were derived from catalog and internet sales and approximately 14% were derived from fees or non-merchandise revenues.

The Company believes that Camping World's leading position in the RV accessory industry results from a high level of name recognition, an effective triple channel distribution strategy and a commitment to offer a broad selection of specialized RV products and services at competitive prices combined with technical assistance and on-site installation. Camping World's supercenters offer over 8,000 SKUs, approximately 80% of which are not regularly available in general merchandise stores. In

addition, general merchandise stores do not provide installation or repair services for RV products, which are available at Camping World's supercenters. Products sold by Camping World include specialty-sized refrigerators, housewares and other appliances, bedding and furniture, generators and hydraulic leveling systems, awnings, folding boats, chairs, ladders, cleaning and maintenance, bicycles, hitch-towing, sanitation, automotive electronics and lifestyle products. Further, kiosks have been installed at numerous locations to market such products and services as vehicle insurance, extended warranty and emergency road service. In March 2000, the Company began selling recreational vehicles through the establishment of Camping World RV Sales, Inc. ("CWRV"), which acquired the assets of a RV dealership in San Antonio, Texas. This dealership was subsequently relocated to the Camping World retail location in New Braunfels, Texas. Camping World supercenters are strategically located in areas where many RV owners live or in proximity to destinations frequented by RV users. Camping World's supercenters are designed to provide one-stop shopping by combining broad product selection, technical assistance and on-site installation services.

Camping World sources its products from approximately 800 vendors. Camping World attends regional, national and international trade shows to determine the products it will offer. The purchasing activities of Camping World are focused on RV parts and accessories, electronics, housewares, hardware, automotive, crafts, clothing, home furnishings, gifts, camping and sporting goods. Camping World has developed an automated "plan-o-gram" system to provide merchandising plans to each supercenter and a minimum/maximum inventory system for its operations to improve fulfillment rates on key items. Camping World believes that the volume of merchandise it purchases and its ability to buy direct from manufacturers together with the utilization of its transportation fleet and contract carriers enables Camping World to obtain merchandise at costs which compare favorably to local RV dealers and retailers. Camping World does not enter into material long-term contracts or commitments with its vendors.

Camping World initiated its mail order operations in 1967. Camping World currently has a proprietary mailing list of approximately 2.5 million RV owners, all of whom have made a purchase or requested a catalog from Camping World within the prior 60 months. Camping World maintains a database of these names, which includes information such as order frequency, size of order, date of most recent order and type of merchandise purchased. Camping World analyzes its database to determine those customers most likely to order from Camping World's catalogs. As a result, Camping World is able to target catalog mailings more effectively than direct marketers of catalogs offering general merchandise. Camping World continually expands its proprietary mailing list through in-store subscriptions and requests for catalogs in response to advertisements in regional publications directed to RV owners. In addition, Camping World rents mailing lists of RV owners from third parties.

During 2000, Camping World distributed 13.3 million catalogs, of which 11.4 million were mailed in 14 separate mailings, and the remaining 1.9 million catalogs were distributed in supercenters, at campgrounds, and as package inserts. In 2000, Camping World processed approximately 497,000 catalog orders at an average net order size of $95, excluding postage and handling charges. The average net order size increased 5.1% from the prior year. Camping World distributes eight high-quality, full-color catalogs each year: the master, a spring, fall, holiday, two sale editions and two prospecting catalogs. Camping World also distributes specialty catalogs directed to targeted customers in order to develop market niches.

The Company maintains twenty-six internet web sites, which are accessible through "RV.net," and are experiencing significant growth. In 2000, the Company's club operations commenced a low-cost marketing strategy, e-mail membership acquisition campaigns. Members added under these new programs represented approximately 5.4% of all new members. E-mail acquisition campaigns and internet online revenues total approximately $6.5 million in 2000.

Marketing of club memberships and related products and services is through direct mail, e-mail, inserts, ride-alongs, space advertisements, promotional events and telemarketing. Direct response marketing efforts account for approximately 62% of new enrollments with the remaining 38% derived from other sources. The Company uses a variety of commercially available mailing lists of RV owners in its direct mail efforts. Currently, the most widely used list databases are provided by three commercial list compilers, and direct response lists are from RV industry participants, RV consumer surveys, and proprietary in-house lists.

The Publications segment solicits advertisements through its internal sales force and by paying commissions to advertising agencies and independent contractors who place advertisements. Many advertisers are repeat customers with whom the Company has long standing relationships.

The Merchandise segment solicits customers through mail order catalogs, direct mail retail flyers, advertisements in national and regional industry publications, vendor co-op advertising programs, promotional events, President's Club direct mailings and personal solicitations and referrals. Camping World's principal marketing strategy is to capitalize on its broad name recognition among RV owners.

The Internet is proving to be a significant, low-cost source for new club members, subscriptions and other ancillary product sales. The Company's twenty-six web pages, which are accessible through "RV.net," are experiencing tremendous growth, and are currently averaging 480,000 hits daily, including 20,000 unique visitors per day.

The Company's member service operations are located in Denver, Colorado and Bowling Green, Kentucky. The primary focus of member services is to handle information requests from club members through the Company's toll-free telephone number. Member service representatives take orders and market products and services to existing and potential club members in response to telephone inquiries. The Company expects to increase sales through better management of its member service operations coupled with greater efficiency in its telemarketing efforts. Camping World's mail order operations, located at its headquarters in Bowling Green, Kentucky, offer toll-free customer service seven days a week, 24 hours a day. Camping World has established a sales training program for its customer service personnel and also provides experienced technical advisors to answer specific questions by telephone. Orders are usually processed and shipped within 24 hours of receipt. On average, these member service operations process approximately 7,250 telephone calls daily.

Fulfillment operations involve the processing of orders and checks principally received by mail. Certain fulfillment operations are performed by third parties. The Company's publication operations develop the layout for publications and outsource printing to third parties.

Camping World's supercenters generally range in size from approximately 12,000 to 59,000 square feet. Approximately 40% of each supercenter is devoted to a retail sales floor, a customer service area, and a technical information counter; 40% is comprised of the installation facility which contains 4 to 16 drive-through installation bays; and 20% is allocated to office and warehouse space. Large parking areas provide sufficient space and facilitate maneuvering of RVs. By combining broad product selection, technical assistance and installation and repair services, Camping World's supercenters provide one-stop shopping for RV owners. Camping World maintains toll-free telephone numbers for customers to schedule installation and repair appointments. All supercenters are open seven days a week.

Camping World intends to continue the controlled, limited expansion of its supercenter store network. Camping World's expansion strategy is based on a comprehensive process that analyzes the sales trends and travel patterns of existing and potential customers as well as the sales patterns of RV vehicles. Camping World researches the travel routes used by RV owners and the location of camping areas in order to ensure the convenient location of its supercenters. Sales of new RVs together with analysis of demographic data derived from its customer database and mail order shipments and RV ownership lists from other sources are used to identify high concentrations of RV owners. Once an area has been identified, Camping World surveys its customers to select specific locations for a new supercenter. Camping World credits this detailed analytical approach to the fact that it has closed only one store since inception.

The Company utilizes integrated computer systems to support its membership club and publishing operations. Comprehensive information on each member, including a profile of the purchasing activities of members, is available to customer service representatives when responding to member requests, and when sales representatives market the Company's products and services. The Company employs publishing software for publication makeup and content and for advertising to support its publications operations. An area-wide network facilitates communication within and between the Company's offices. The Company also utilizes information technology, including list segmentation and merge and purge programs, to select prospects for direct mail solicitations and other direct marketing efforts.

Camping World's management information systems and electronic data processing systems consist of an extensive range of retail, mail order, financial and merchandising systems, including purchasing, inventory distribution and control, sales reporting, accounts payable and merchandise management. Camping World's management information system includes point-of-sale registers that are equipped with bar code readers in each supercenter. These registers are polled nightly by a central computer. With this point-of-sale information and the information from Camping World's on-line distribution centers, Camping World compiles comprehensive data, including detailed sales volume and inventory information by product, merchandise transfers and receipts, special orders, supply orders and returns of product purchases to vendors. In conjunction with its nightly polling, Camping World's central computer sends price changes to registers at the point of sale. The registers capture President's Club member numbers and associated sales and references to specific promotional campaigns. Management monitors the performance of each supercenter and mail order operation to evaluate inventory levels, determine markdowns and analyze gross profit margins by product.

Camping World's catalog operations also utilize a computerized management system allowing on-line desktop access to information which previously required manual retrieval. Screen prompts which provide product, promotional, and revenue potential information have allowed Camping World to maintain high service levels during seasonal sales peaks. The installation of an automatic call distribution switch with scheduling software has facilitated more effective management of customer inquiries and reduced set-up time for call processing.

The Company's operations are subject to varying degrees of federal, state and local regulation. Specifically, the Company's outbound telemarketing, direct mail, and emergency road service programs, as well as certain services provided by third parties, including insurance, RV Financing, and extended warranty, are currently subject to certain regulation and may be subjected to increased scrutiny in the future. The Company does not believe that such federal, state and local regulations currently have a material impact on its operations. However, new regulatory efforts impacting the Company's operations may be proposed from time to time in the future at the federal, state and local level. There can be no

assurance that such regulatory efforts will not have a material adverse effect on the Company's ability to operate its businesses or on its results of operations.

In general, the Company's membership clubs, retail and catalog operations and publications compete with numerous organizations in the recreation industry for disposable income spent on leisure activities. By offering significant membership benefits at a reasonable cost and actively marketing to club members, the Company believes that it has been able to maintain a loyal following for its membership organizations as evidenced by such clubs' high renewal rates. The products and services marketed by the Company compete with similar products and services offered by other providers. However, management believes that it is able to use the large volume of purchases by its club members to secure attractive pricing for the products and services marketed by the Company.

As of December 31, 2000, the Company had 1,437 full-time and 171 part-time or seasonal employees, including 7 executives, 967 employees in retail operations, 384 employees in administrative and club operations, 200 employees in publishing and advertising sales, 11 employees in resort services and 39 employees in marketing. No employees are covered by a collective bargaining agreement. The Company believes that its employee relations are good.

The Company owns a variety of registered trademarks and service marks for the names of its clubs, magazines and other publications. The Company also owns the copyrights to certain articles in its publications. The Company believes that its trademark and copyrights have significant value and are important to its marketing efforts.

The table below sets forth certain information concerning the Company's properties. The leased properties generally provide for fixed monthly rentals with annual escalation clauses.

The Company also leases a research facility of approximately 8,000 square feet on 60 acres in Wisconsin, a body shop of 10,500 square feet on approximately 0.7 acres in Denver, Colorado, and other miscellaneous office equipment. In addition, the Company acquired 12.439 acres of unimproved land adjacent to the New Braunfels, Texas Camping World Supercenter in 2000.

From time to time, the Company is involved in litigation arising in the normal course of business operations. None of such current litigation is expected, individually or in the aggregate, to have a material adverse effect on the Company.

In January 1998, certain of the Company's subsidiaries were sued in California state court in connection with the termination by Camp Coast to Coast, Inc. of the participation by the plaintiffs in the Camp Coast to Coast reciprocal use program for RV resorts. In October 2000, the trial court entered judgment in favor of the Company's subsidiaries and subsequently awarded them a total of $3.88 million for their legal fees and costs. The plaintiffs have appealed the judgment in favor of the Company's subsidiaries as well as the award of attorney fees. Both appeals are currently pending.

		Square Feet	Acres	Owned/ Leased	Lease Expiration
Corporate Headquarters:
	Ventura, CA	74,100		Owned	—
Other Office Facilities:
	Denver, Colorado (for its customer service, warehousing fulfillment, and information system functions).	60,000		Owned	—
	Bowling Green, Kentucky (for its retail administrative headquarters and mail order operations).	26,000		Owned	—
	Bowling Green Headquarters Annex	4,100		Leased	2003
	Seattle, Washington	912		Leased	2002
	Elkhart, Indiana	4,076		Leased	2001
	Maple Grove, Minnesota	17,496		Leased	2005
Distribution Centers:
	Bowling Green, Kentucky	104,000	6.780	Leased	2010
	Bakersfield, California (includes an 1,800 square foot retail showroom)	81,500	8.430	Owned	—
Camping World Supercenter Locations:
	Tucson, AZ	12,145	2.000	Leased	2018
	Mesa, AZ	27,500	3.140	Leased	2010
	La Mirada, CA	30,647	4.450	Owned	—
	San Marcos, CA	25,522	2.212	Leased	2027
	Fairfield, CA	43,434	3.780	Leased	2020
	Rocklin, CA	29,085	4.647	Leased	2037
	San Bernardino, CA	18,126	1.665	Leased	2012
	San Martin, CA	29,486	5.000	Leased	2023
	Valencia, CA	58,800	9.310	Owned	—
	Denver, CO	27,085	4.132	Leased	2037
	Ft. Myers, FL	22,886	4.217	Leased	2012
	Kissimmee, FL	56,850	6.043	Owned	—
	Tampa, FL	40,334	3.711	Leased	2026
	Bolingbrook, IL	25,126	5.299	Leased	2035
	Bowling Green, KY	38,368	2.895	Owned	—
	Belleville, MI	44,197	8.790	Owned	—
	Rogers, MN	24,700	6.303	Leased	2025
	Bridgeport, NJ	24,581	6.920	Leased	2031
	Henderson, NV	25,850	4.400	Leased	2025
	Brunswick, OH	23,233	4.087	Leased	2038
	Wilsonville, OR	32,850	4,653	Leased	2016
	Myrtle Beach, SC	38,935	5.690	Owned	—
	Nashville, TN	30,000	3.238	Owned	—
	Denton, TX	22,984	6.887	Leased	2037
	New Braunfels, TX	43,397	19.100	Leased	2035
	Mission, TX	23,094	3.430	Leased	2015
	Draper, UT	27,675	8.031	Leased	2026
	Manassas, VA	16,348	1.880	Leased	2018
	Fife, WA	35,659	5,840	Leased	2032

Publication		2000 Circulation		Number of Issues Published Each Year
GENERAL CIRCULATION MAGAZINES:
	American Rider	61,102	(1)	8
	ATV Sport	53,854	(1)	6
	Bowhunting World	84,819	(1)	9
	MotorHome	147,062	(1)	12
	Rider	103,835	(1)	12
	Snow Week	16,921	(1)	18
	SnowGoer	70,551	(1)	6
	Trailer Life	280,957	(1)	12
	Watercraft World	27,601	(1)	9
CONTROLLED CIRCULATION—Business:
	Archery Business	11,000	(3)	7
	Campground Management	10,000	(3)	12
	PowerSports Business	10,918	(3)	18
	RV Business	21,290	(3)	12
CONTROLLED CIRCULATION—Consumer:
	ATV Magazine	231,350	(3)	4
	Cruising Rider	148,105	(3)	5
	PWC Magazine	293,082	(2)	4
	Snowmobile	557,830	(3)	4
	Thunder Press—East	31,726	(2)	12
	Thunder Press—West	45,742	(2)	12
	Women Rider	43,801	(2)	2
	Woodall Specials	103,267	(4)	1
	Woodall's Regional News Tabloids	178,260	(2)	12
ANNUALS:
	Roads to Adventure	372,826	(2)(5)	1
	Trailer Life Campground/RV Park & Services Directory	303,589	(1)	1
	Trailer Life's RV Buyers Guide	60,000	(2)	1
	Woodall Buyer's Guide	57,000	(2)	1
	Woodall Campground Directory	335,649	(1)	1
	Woodall Tenting Directory	43,361	(2)	1
	Woodall Go & Rent Rent & Go	93,000	(2)	1
CLUB MAGAZINES:
	Coast to Coast Magazine	188,375	(6)	8
	Golf Traveler	97,333	(6)(7)	6
	Highways	959,202	(6)	11
	RV View	581,977	(6)	5