**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

###### **Washington, D.C.  20549**

**FORM 10-Q**

**QuarterlyReport Under Section 13 or 15 (d) ofThe Securities Exchange Act of 1934**

| **For Quarter Ended:** |       | **Commission  File Number** |
|------------------------|------------|-----------------------------|
| **June  30, 2007**     | ** ** | **333-124109**              |

 

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**AFFINITY GROUP HOLDING, INC.**

(Exact name ofregistrant as specified in its charter)

| **Delaware**                              |       | **20-2428068**                        |
|-------------------------------------------|------------|---------------------------------------|
| (State of  incorporation or organization) |       | (I.R.S. Employer  Identification No.) |
|                                      |       |                                  |
| **2575  Vista Del Mar Drive**             | ** ** | **(805) 667-4100**                    |
| **Ventura,  CA   93001**        |       | (Registrant’s  telephone         |
| (Address of  principal executive offices) |       | number,  including area code)         |

 

SECURITIES REGISTEREDPURSUANT TO SECTION 12 (b) OF THE ACT:  **NONE**

SECURITIES REGISTEREDPURSUANT TO SECTION 12 (g) OF THE ACT:

**10-7/8%Senior Notes Due 2012**

Indicate by check markwhether the Registrant (1) has filed all reports required to be filed bySection 13 or 15 (d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the Registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.
| YES   x | ** ** | NO   o |
|------------------------|------------|-----------------------|

 

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

| Large accelerated filer   o | Accelerated filer    o | Non-accelerated  filer   x |
|--------------------------------------------|----------------------------------|-------------------------------------------|

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).
| YES   o | ** ** | NO   x |
|------------------------|------------|-----------------------|

 

Indicate the number ofshares outstanding of each of the issuer’s classes of common stock, as of thelatest practicable date.
|                                                 | ** ** | **Outstanding as of** |
|-------------------------------------------------|------------|-----------------------|
| **Class**                                       | ** ** | **August 13, 2007**   |
| Common  Stock,    $.01 par value |       | 100                   |

 

**DOCUMENTSINCORPORATED BY REFERENCE:  None**

 

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**AFFINITY GROUP HOLDING, INC. AND SUBSIDIARIES**

**INDEX**
| **Part I. **Financial  Information                                                                       |   |   |
|---------------------------------------------------------------------------------------------------------------|--------|--------|
| ** **                                                                                                    |   |   |
| **Item 1:  Financial Statements**                                                                             |   |   |
| ** **                                                                                                    |   |   |
| Consolidated Balance Sheets as of June 30, 2007  (unaudited) and December 31, 2006                            |   |   |
|                                                                                                          |   |   |
| Unaudited Consolidated Statements of Operations for  the three months ended June 30, 2007 and 2006            |   |   |
|                                                                                                          |   |   |
| Unaudited Consolidated Statements of Operations for  the six months ended June 30, 2007 and 2006              |   |   |
|                                                                                                          |   |   |
| Unaudited Consolidated Statements of Cash Flows for  the six months ended June 30, 2007 and 2006              |   |   |
|                                                                                                          |   |   |
| Notes to Unaudited Consolidated Financial Statements                                                          |   |   |
|                                                                                                          |   |   |
| **Item 2:  Management’s Discussion and Analysis of  Financial Condition and Results of Operations** |   |   |
| ** **                                                                                                    |   |   |
| **Item 3:   Quantitative and Qualitative Disclosures about Market Risk**                                 |   |   |
| ** **                                                                                                    |   |   |
| **Item 4:   Controls and Procedures**                                                                    |   |   |
| ** **                                                                                                    |   |   |
| **Part  II.   Other Information**                                                                        |   |   |
| ** **                                                                                                    |   |   |
| **Signatures**                                                                                                |   |   |

 

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AFFINITYGROUP HOLDING, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

June30, 2007 and December 31, 2006

(In thousands except sharesand par value)
| ** **                                                                                      | ** ** | **6/30/2007**   | ** ** | **12/31/2006** | ** ** |
|-------------------------------------------------------------------------------------------------|------------|-----------------|------------|----------------|------------|
| ** **                                                                                      | ** ** | **(Unaudited)** | ** ** | ** **     | ** ** |
| **ASSETS**                                                                                      |       |            |       |           |       |
| CURRENT ASSETS:                                                                                 |       |            |       |           |       |
| Cash and cash  equivalents                                                                      |       | $               | 2,604      |           | $          | 15,238 |   |
| Accounts receivable,  less allowance for doubtful accounts of $1,446 in 2007 and $1,193 in 2006 |       | 25,169          |       | 27,199         |       |
| Inventories                                                                                     |       | 69,064          |       | 52,703         |       |
| Prepaid expenses and  other assets                                                              |       | 17,790          |       | 13,006         |       |
| Deferred tax assets                                                                             |       | 3,279           |       | 3,203          |       |
| Total current assets                                                                            |       | 117,906         |       | 111,349        |       |
|                                                                                            |       |            |       |           |       |
| PROPERTY AND EQUIPMENT,  net                                                                    |       | 41,081          |       | 34,765         |       |
| INVESTMENT IN AFFILIATE                                                                         |       | 81,005          |       | 81,005         |       |
| NOTE FROM AFFILIATE                                                                             |       | 4,669           |       | 4,688          |       |
| INTANGIBLE ASSETS, net                                                                          |       | 30,546          |       | 32,957         |       |
| GOODWILL                                                                                        |       | 144,429         |       | 144,429        |       |
| OTHER ASSETS                                                                                    |       | 1,441           |       | 1,704          |       |
| Total assets                                                                                    |       | $               | 421,077    |           | $          | 410,897 |   |
|                                                                                            |       |            |       |           |       |
| **LIABILITIES AND STOCKHOLDER’S DEFICIT**                                                  |       |            |       |           |       |
| CURRENT LIABILITIES:                                                                            |       |            |       |           |       |
| Accounts payable                                                                                |       | $               | 27,576     |           | $          | 32,577 |   |
| Accrued interest                                                                                |       | 9,736           |       | 5,936          |       |
| Accrued income taxes                                                                            |       | 1,418           |       | 1,736          |       |
| Accrued liabilities                                                                             |       | 35,744          |       | 35,687         |       |
| Deferred revenues and  gains                                                                    |       | 66,533          |       | 62,906         |       |
| Current portion of  long-term debt                                                              |       | 4,698           |       | 7,271          |       |
| Total current  liabilities                                                                      |       | 145,705         |       | 146,113        |       |
|                                                                                            |       |            |       |           |       |
| DEFERRED REVENUES AND  GAINS                                                                    |       | 39,570          |       | 37,183         |       |
| LONG-TERM DEBT, net of  current portion                                                         |       | 390,731         |       | 381,510        |       |
| DEFERRED TAX LIABILITY                                                                          |       | 790             |       | 15,724         |       |
| OTHER LONG-TERM  LIABILITIES                                                                    |       | 17,192          |       | 3,386          |       |
|                                                                                            |       | 593,988         |       | 583,916        |       |
|                                                                                            |       |            |       |           |       |
| COMMITMENTS AND  CONTINGENCIES                                                                  |       |            |       |           |       |
|                                                                                            |       |            |       |           |       |
| STOCKHOLDER’S DEFICIT:                                                                     |       |            |       |           |       |
| Common stock, $.01 par  value, 3,000 shares authorized, 100 shares issued and outstanding       |       | 1               |       | 1              |       |
| Accumulated deficit                                                                             |       | (172,912        | )          | (173,020       | )          |
| Total stockholder’s  deficit                                                               |       | (172,911        | )          | (173,019       | )          |
| Total liabilities and stockholder’s deficit                                                |       | $               | 421,077    |           | $          | 410,897 |   |

 

Seenotes to consolidated financial statements.

1

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AFFINITYGROUP HOLDING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(InThousands)

(Unaudited)
| ** **                                  | ** ** | **THREE MONTHS ENDED** | ** ** |
|---------------------------------------------|------------|----------------------------------|------------|
| ** **                                  | ** ** | **6/30/2007**                    | ** ** | **6/30/2006** | ** ** |
|                                        |       |                             |       |   |   |
| REVENUES:                                   |       |                             |       |   |   |
| Membership  services                        |       | $                                | 38,092     |   | $ | 37,512 |   |
| Publications                                |       | 17,529                           |       | 16,584 |   |
| Retail                                      |       | 98,243                           |       | 84,907 |   |
|                                        |       | 153,864                          |       | 139,003 |   |
|                                        |       |                             |       |   |   |
| COSTS APPLICABLE TO  REVENUES:              |       |                             |       |   |   |
| Membership  services                        |       | 24,294                           |       | 25,007 |   |
| Publications                                |       | 12,263                           |       | 11,638 |   |
| Retail                                      |       | 60,073                           |       | 51,064 |   |
|                                        |       | 96,630                           |       | 87,709 |   |
|                                        |       |                             |       |   |   |
| GROSS PROFIT                                |       | 57,234                           |       | 51,294 |   |
|                                        |       |                             |       |   |   |
| OPERATING EXPENSES:                         |       |                             |       |   |   |
| Selling, general  and administrative        |       | 38,950                           |       | 35,129 |   |
| Depreciation and  amortization              |       | 4,841                            |       | 4,722 |   |
|                                        |       | 43,791                           |       | 39,851 |   |
|                                        |       |                             |       |   |   |
| INCOME FROM OPERATIONS                      |       | 13,443                           |       | 11,443 |   |
|                                        |       |                             |       |   |   |
| NON-OPERATING ITEMS:                        |       |                             |       |   |   |
| Interest income                             |       | 183                              |       | 395 |   |
| Interest expense                            |       | (9,365                           | )          | (9,401 | ) |
| Debt  extinguishment expense                |       | —                           |       | (693 | ) |
| Other  non-operating items, net             |       | 44                               |       | 20 |   |
|                                        |       | (9,138                           | )          | (9,679 | ) |
|                                        |       |                             |       |   |   |
| INCOME FROM OPERATIONS  BEFORE INCOME TAXES |       | 4,305                            |       | 1,764 |   |
|                                        |       |                             |       |   |   |
| INCOME TAX BENEFIT  (EXPENSE)               |       | 85                               |       | (24,442 | ) |
|                                        |       |                             |       |   |   |
| NET INCOME (LOSS)                           |       | $                                | 4,390      |   | $ | (22,678 | ) |

 

Seenotes to consolidated financial statements.

2

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AFFINITYGROUP HOLDING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OFOPERATIONS

(InThousands)

(Unaudited)
| ** **                                  | ** ** | **SIX MONTHS ENDED** | ** ** |
|---------------------------------------------|------------|--------------------------------|------------|
| ** **                                  | ** ** | **6/30/2007**                  | ** ** | **6/30/2006** | ** ** |
|                                        |       |                           |       |   |   |
| REVENUES:                                   |       |                           |       |   |   |
| Membership services                         |       | $                              | 72,153     |   | $ | 70,460 |   |
| Publications                                |       | 42,218                         |       | 39,687 |   |
| Retail                                      |       | 167,300                        |       | 145,726 |   |
|                                        |       | 281,671                        |       | 255,873 |   |
|                                        |       |                           |       |   |   |
| COSTS APPLICABLE  TO REVENUES:              |       |                           |       |   |   |
| Membership services                         |       | 45,961                         |       | 46,123 |   |
| Publications                                |       | 28,040                         |       | 26,213 |   |
| Retail                                      |       | 101,909                        |       | 87,467 |   |
|                                        |       | 175,910                        |       | 159,803 |   |
|                                        |       |                           |       |   |   |
| GROSS PROFIT                                |       | 105,761                        |       | 96,070 |   |
|                                        |       |                           |       |   |   |
| OPERATING  EXPENSES:                        |       |                           |       |   |   |
| Selling, general and administrative         |       | 73,515                         |       | 65,362 |   |
| Depreciation and amortization               |       | 9,744                          |       | 9,372 |   |
|                                        |       | 83,259                         |       | 74,734 |   |
|                                        |       |                           |       |   |   |
| INCOME FROM  OPERATIONS                     |       | 22,502                         |       | 21,336 |   |
|                                        |       |                           |       |   |   |
| NON-OPERATING  ITEMS:                       |       |                           |       |   |   |
| Interest income                             |       | 357                            |       | 724 |   |
| Interest expense                            |       | (18,502                        | )          | (18,668 | ) |
| Debt extinguishment expense                 |       | (775                           | )          | (693 | ) |
| Other non-operating items, net              |       | 93                             |       | 53 |   |
|                                        |       | (18,827                        | )          | (18,584 | ) |
|                                        |       |                           |       |   |   |
| INCOME FROM  OPERATIONS BEFORE INCOME TAXES |       | 3,675                          |       | 2,752 |   |
|                                        |       |                           |       |   |   |
| INCOME TAX  BENEFIT (EXPENSE)               |       | 183                            |       | (24,870 | ) |
|                                        |       |                           |       |   |   |
| NET INCOME (LOSS)                           |       | $                              | 3,858      |   | $ | (22,118 | ) |

 

Seenotes to consolidated financial statements.

3

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AFFINITYGROUP HOLDING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(InThousands)

(Unaudited)
| ** **                                                                                          | ** ** | **SIX MONTHS ENDED** | ** ** |
|-----------------------------------------------------------------------------------------------------|------------|--------------------------------|------------|
| ** **                                                                                          | ** ** | **6/30/2007**                  | ** ** | **6/30/2006** | ** ** |
|                                                                                                |       |                           |       |   |   |
| CASH FLOWS FROM  OPERATING ACTIVITIES:                                                              |       |                           |       |   |   |
| Net (loss) income                                                                                   |       | $                              | 3,858      |   | $ | (22,118 | ) |
| Adjustments to reconcile net income (loss) to net  cash (used in) provided by operating activities: |       |                           |       |   |   |
| Depreciation                                                                                        |       | 4,846                          |       | 5,030 |   |
| Amortization                                                                                        |       | 4,898                          |       | 4,342 |   |
| Provision for losses on accounts receivable                                                         |       | 726                            |       | 431 |   |
| Deferred compensation                                                                               |       | 240                            |       | 140 |   |
| Deferred tax (benefit) expense                                                                      |       | (826                           | )          | 24,432 |   |
| Gain on sale of property and equipment                                                              |       | (5                             | )          | (13 | ) |
| Loss on early extinguishment of debt                                                                |       | 775                            |       | 693 |   |
| Non-cash interest on AGHI Notes                                                                     |       | 1,389                          |       | 5,205 |   |
| Accretion of original issue discount                                                                |       | 173                            |       | 123 |   |
| Changes in operating assets and liabilities                                                         |       |                           |       |   |   |
| Accounts receivable                                                                                 |       | 1,304                          |       | 3,776 |   |
| Inventories                                                                                         |       | (16,361                        | )          | (3,867 | ) |
| Prepaid expenses and other assets                                                                   |       | (4,239                         | )          | (3,438 | ) |
| Accounts payable                                                                                    |       | (5,001                         | )          | 9,902 |   |
| Accrued and other liabilities                                                                       |       | 2,921                          |       | (212 | ) |
| Deferred revenues and gains                                                                         |       | 5,208                          |       | 2,438 |   |
| Net cash (used in) provided by operating activities                                                 |       | (94                            | )          | 26,864 |   |
|                                                                                                |       |                           |       |   |   |
| CASH FLOWS FROM  INVESTING ACTIVITIES:                                                              |       |                           |       |   |   |
| Capital expenditures                                                                                |       | (11,167                        | )          | (7,244 | ) |
| Net proceeds from sale of property and equipment                                                    |       | 10                             |       | 124 |   |
| Additions to intangible assets                                                                      |       | (4                             | )          | (4 | ) |
| Acquisitions, net of cash received                                                                  |       | (304                           | )          | (1,334 | ) |
| Repayment of loans receivable                                                                       |       | 19                             |       | 17 |   |
| Net cash used in investing activities                                                               |       | (11,446                        | )          | (8,441 | ) |
|                                                                                                |       |                           |       |   |   |
| CASH FLOWS FROM  FINANCING ACTIVITIES:                                                              |       |                           |       |   |   |
| Dividends paid                                                                                      |       | (3,750                         | )          | (2,600 | ) |
| Borrowings on long-term debt                                                                        |       | 45,000                         |       | — |   |
| Payment of debt issue costs                                                                         |       | (291                           | )          | — |   |
| Principal payments of long-term debt                                                                |       | (42,053                        | )          | (28,542 | ) |
| Net cash used in financing activities                                                               |       | (1,094                         | )          | (31,142 | ) |
|                                                                                                |       |                           |       |   |   |
| NET CHANGE IN  CASH AND CASH EQUIVALENTS                                                            |       | (12,634                        | )          | (12,719 | ) |
|                                                                                                |       |                           |       |   |   |
| CASH AND CASH  EQUIVALENTS AT BEGINNING OF PERIOD                                                   |       | 15,238                         |       | 25,061 |   |
|                                                                                                |       |                           |       |   |   |
| CASH AND CASH  EQUIVALENTS AT END OF PERIOD                                                         |       | $                              | 2,604      |   | $ | 12,342 |   |

 

See notes to consolidatedfinancial statements.

4

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**AFFINITY GROUP HOLDING, INC. ANDSUBSIDIARIES**

**Notes toConsolidated Financial Statements**

**(Unaudited)**

**(1) BASIS OF PRESENTATION**

*Principles of Consolidation –***The consolidated financial statementsincluded herein include the accounts of Affinity Group Holding, Inc. (“AGHI”),its wholly-owned subsidiary, Affinity Group, Inc. (“AGI”), and AGI’ssubsidiaries (collectively the “Company”), presented in accordance with U.S.generally accepted accounting principles, and pursuant to the rules andregulations of the Securities and Exchange Commission.  The parent company of AGHI is AGI HoldingCorp. (“AGHC”), a privately-owned corporation.

Inthe second quarter of 2006, AGHC received approval from the Internal RevenueService to change its tax status from a Subchapter C corporation to aSubchapter S corporation (“S corporation”) to be effective as of January 1,2006.  The election for change in taxstatus to an S corporation included AGHC and all its subsidiaries with theexception of Camping World, Inc. and its wholly-owned subsidiaries, which areto remain Subchapter C corporations. Pursuant to SFAS 109, “Accounting for Income taxes”, a change in taxstatus resulting from an S corporation election requires that all deferred taxaccounts be revalued upon formal approval of the S corporation status.  Accordingly, all deferred tax accounts ofAGHC and its subsidiaries, excluding Camping World, Inc. and its wholly ownedsubsidiaries, were revalued to account for the tax effect for the change to theS corporation status in the second quarter of 2006.

Theseinterim consolidated financial statements should be read in conjunction withthe Company’s consolidated financial statements and notes in the Company’s 10-Kreport for the year ended December 31, 2006 as filed with the Securities andExchange Commission.  In the opinion ofmanagement of the Company, these consolidated financial statements contain alladjustments of a normal recurring nature necessary to present fairly thefinancial position, results of operations and cash flows of the Company for theinterim periods presented.

**(2) RECENT ACCOUNTINGPRONOUNCEMENTS**

The Company adopted theprovisions of Financial Accounting Standards Board (“FASB”) Interpretation No.48, “Accounting for Uncertainty in Income Taxes,” on January 1, 2007.  At the date of adoption, the Company had$14.2 million of unrecognized tax benefits. Accounting for the unrecognized tax benefits had no affect on currentperiod earnings or retained earnings as the liability had been previouslyrecorded and was reclassified from long-term deferred tax liabilities to otherlong-term liabilities.  There would be noaffect on the effective tax rate if the unrecognized tax benefits wererecognized.  The Company did not have anymaterial increases in unrecognized tax benefits in the current period and doesnot anticipate any material increases over the next twelve months.

5

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**(2) RECENT ACCOUNTINGPRONOUNCEMENTS (continued)**

During the second quarterof 2007 and for the six months ended June 30, 2007, the Company recorded $0.2million and $0.4 million, respectively, of accrued interest and penaltiesrelated to the unrecognized tax benefits. The Company’s policy is to classify interest and penalties as income taxexpense in the financial statements.

The Company and itssubsidiaries file income tax returns in the U.S. and various states.  With few exceptions, the Company is no longersubject to U.S. federal, state, and local income tax examinations by taxauthorities for years before 2002.

In September 2006, theFASB issued SFAS No. 157, Fair Value Measurements.  This standard provides guidance for usingfair value to measure assets and liabilities. The standard also responds to investors’ requests for expandedinformation about the extent to which companies measure assets and liabilitiesat fair value, the information used to measure fair value, and the effect offair value measurements on earnings.  Thestandard applies whenever other standards require (or permit) assets orliabilities to be measured at fair value, but does not expand the use of fairvalue in any new circumstances.  SFAS No.157 is effective for financial statements issued for fiscal years beginningafter November 15, 2007, and interim periods within those fiscal years.  There are numerous previously issuedstatements dealing with fair values that are amended by SFAS No. 157.  We have not evaluated the impact, if any,that the adoption of SFAS No. 157 will have on our consolidated financialstatements.

**(3) DISCLOSURES ABOUT SEGMENTS OFAN ENTERPRISE AND RELATED INFORMATION**

TheCompany’s three principal lines of business are Membership Services, Publications,and Retail.  The Membership Servicessegment includes the operations of the Good Sam Club, Coast to Coast Club,Camping World’s President’s Club and Camp Club USA for recreational vehicle (“RV”)owners, campers and outdoor vacationers, and the Golf Card Club for golfenthusiasts.  The Publications segmentpublishes a variety of publications for selected markets in the recreation andleisure industry, including general circulation periodicals, directories, andRV and powersports industry trade magazines, and produces outdoor recreationalconsumer events.  The Retail segmentsells specialty retail merchandise and services for RV owners primarily throughCamping World retail supercenters, mail order catalogs and its website.  For recent events regarding the Retailsegment, see Note 7 below.  The Companyevaluates performance based on profit or loss from operations before incometaxes.

The reportable segmentsare strategic business units that offer different products and services.  They are managed separately because eachbusiness requires different technology, management expertise and marketingstrategies.

6

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**(3) DISCLOSURES ABOUT SEGMENTS OFAN ENTERPRISE AND RELATED INFORMATION (continued)**

TheCompany does not allocate income taxes or unusual items to segments.  Financial information by reportable businesssegment is summarized as follows (in thousands):
| ** **                             | ** ** | **Membership** | ** ** | ** **       | ** ** | ** ** | ** ** | ** **       | ** ** |
|----------------------------------------|------------|----------------|------------|------------------|------------|------------|------------|------------------|------------|
| ** **                             | ** ** | **Services**   | ** ** | **Publications** | ** ** | **Retail** | ** ** | **Consolidated** | ** ** |
| **THREE  MONTHS ENDED JUNE 30, 2007**  | ** ** | ** **     | ** ** | ** **       | ** ** | ** ** | ** ** | ** **       | ** ** |
| Revenues from external customers       |       | $              | 38,092     |             | $          | 17,529     |       | $                | 98,243     |   | $ | 153,864 |   |
| Depreciation and amortization          |       | 903            |       | 1,309            |       | 1,930      |       | 4,142            |       |
| Gain on sale of property and equipment |       | —         |       | 5                |       | —     |       | 5                |       |
| Interest income                        |       | 2,377          |       | —           |       | 35         |       | 2,412            |       |
| Interest expense                       |       | —         |       | 76               |       | 3,839      |       | 3,915            |       |
| Segment operating profit               |       | 12,793         |       | 2,380            |       | 1,755      |       | 16,928           |       |
|                                   |       |           |       |             |       |       |       |             |       |
| **THREE  MONTHS ENDED JUNE 30, 2006**  | ** ** | ** **     | ** ** | ** **       | ** ** | ** ** | ** ** | ** **       | ** ** |
| Revenues from external customers       |       | 37,512         |       | 16,584           |       | 84,907     |       | 139,003          |       |
| Depreciation and amortization          |       | 889            |       | 1,059            |       | 2,029      |       | 3,977            |       |
| Gain on sale of property and equipment |       | —         |       | —           |       | 2          |       | 2                |       |
| Interest income                        |       | 1,563          |       | —           |       | 1          |       | 1,564            |       |
| Interest expense                       |       | —         |       | 87               |       | 3,483      |       | 3,570            |       |
| Segment  operating profit              |       | 11,215         |       | 2,722            |       | 512        |       | 14,449           |       |
|                                        |            |                |            |                  |            |            |            |                  |            |  |  |  |  |

 
| ** **                             | ** ** | **Membership** | ** ** | ** **       | ** ** | ** ** | ** ** | ** **       | ** ** |
|----------------------------------------|------------|----------------|------------|------------------|------------|------------|------------|------------------|------------|
| ** **                             | ** ** | **Services**   | ** ** | **Publications** | ** ** | **Retail** | ** ** | **Consolidated** | ** ** |
| **SIX  MONTHS ENDED JUNE 30, 2007**    | ** ** | ** **     | ** ** | ** **       | ** ** | ** ** | ** ** | ** **       | ** ** |
| Revenues from external customers       |       | $              | 72,153     |             | $          | 42,218     |       | $                | 167,300    |   | $ | 281,671 |   |
| Depreciation and amortization          |       | 1,797          |       | 2,549            |       | 3,815      |       | 8,161            |       |
| Gain on sale of property and equipment |       | —         |       | 5                |       | —     |       | 5                |       |
| Interest income                        |       | 4,553          |       | —           |       | 67         |       | 4,620            |       |
| Interest expense                       |       | —         |       | 146              |       | 7,410      |       | 7,556            |       |
| Segment operating profit (loss)        |       | 23,944         |       | 8,790            |       | (1,984     | )          | 30,750           |       |
|                                   |       |           |       |             |       |       |       |             |       |
| **SIX  MONTHS ENDED JUNE 30, 2006**    | ** ** | ** **     | ** ** | ** **       | ** ** | ** ** | ** ** | ** **       | ** ** |
| Revenues from external customers       |       | 70,460         |       | 39,687           |       | 145,726    |       | 255,873          |       |
| Depreciation and amortization          |       | 1,799          |       | 2,079            |       | 4,006      |       | 7,884            |       |
| Gain on sale of property and equipment |       | —         |       | 5                |       | 8          |       | 13               |       |
| Interest income                        |       | 2,939          |       | —           |       | 6          |       | 2,945            |       |
| Interest expense                       |       | —         |       | 181              |       | 6,979      |       | 7,160            |       |
| Segment  operating profit (loss)       |       | 21,687         |       | 9,184            |       | (3,807     | )          | 27,064           |       |
|                                        |            |                |            |                  |            |            |            |                  |            |  |  |  |  |

 

7

----

**(3) DISCLOSURES ABOUT SEGMENTS OFAN ENTERPRISE AND RELATED INFORMATION (continued)**

Thefollowing is a reconciliation of income (loss) from operations to the Company’sconsolidated financial statements for the six months ended June 30, (inthousands):
| ** **                                                     | ** ** | **THREE MONTHS ENDED** | ** ** | **SIX MONTHS ENDED** | ** ** |
|----------------------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                                     | ** ** | **6/30/2007**                    | ** ** | **6/30/2006**                  | ** ** | **6/30/2007** | ** ** | **6/30/2006** | ** ** |
| **Income  From Operations Before Taxes**                       | ** ** | ** **                       | ** ** | ** **                     | ** ** | ** ** | ** ** | ** ** | ** ** |
| Total profit for  reportable segments                          |       | $                                | 16,928     |                           | $          | 14,449 |   | $ | 30,750 |   | $ | 27,064 |   |
| Unallocated G  & A expense                                 |       | (4,245                           | )          | (4,247                         | )          | (9,508 | ) | (8,402 | ) |
| Unallocated  depreciation and amortization expense             |       | (699                             | )          | (745                           | )          | (1,583 | ) | (1,488 | ) |
| Unallocated  interest income, net of intercompany elimination  |       | (2,229                           | )          | (1,169                         | )          | (4,263 | ) | (2,221 | ) |
| Unallocated  interest expense, net of intercompany elimination |       | (5,450                           | )          | (5,831                         | )          | (10,946 | ) | (11,508 | ) |
| Unallocated debt  restructure expense                          |       | —                           |       | (693                           | )          | (775 | ) | (693 | ) |
| Income from  operations before taxes                           |       | $                                | 4,305      |                           | $          | 1,764 |   | $ | 3,675 |   | $ | 2,752 |   |

 

Thefollowing is a reconciliation of assets of reportable segments to the Company’sconsolidated financial statements as of June 30, 2007 and December 31, 2006 (inthousands):
|                                                      | ** ** | **6/30/2007** | ** ** | **12/31/2006** | ** ** |
|------------------------------------------------------|------------|---------------|------------|----------------|------------|
| Membership  services segment                         |       | $             | 175,691    |           | $          | 167,837 |   |
| Publications  segment                                |       | 86,459        |       | 87,122         |       |
| Retail segment                                       |       | 250,252       |       | 225,680        |       |
| Total assets for  reportable segments                |       | 512,402       |       | 480,639        |       |
| Capitalized  finance costs not allocated to segments |       | 8,509         |       | 10,836         |       |
| Corporate  unallocated assets                        |       | 6,701         |       | 6,596          |       |
| Elimination of  intersegment receivable              |       | (106,535      | )          | (87,174        | )          |
| Total assets                                         |       | $             | 421,077    |           | $          | 410,897 |   |

 

**(4)STATEMENTS OF CASH FLOWS**

Supplemental disclosuresof cash flow information for the six months ended June 30 (in thousands):
|                                              | ** ** | **2007** | ** ** | **2006** | ** ** |
|----------------------------------------------|------------|----------|------------|----------|------------|
| Cash paid  (received) during the period for: |       |     |       |     |       |
| Interest                                     |       | $        | 13,140     |     | $          | 10,747 |   |
| Income taxes                                 |       | (192     | )          | 1,576    |       |
|                                              |            |          |            |          |            |  |  |

 

In January 2007, theCompany assumed $0.3 million of liabilities in connection with the acquisitionof the Madison Boat Show from MAC Events, LLC.

In February 2007, theCompany assumed $0.6 million of liabilities and issued $1.5 million of debt in connectionwith the acquisition of five RV and Sportsman Shows from IndustrialExpositions, Inc.

8

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**(5)GOODWILL AND INTANGIBLE ASSETS**

The Company reviewsgoodwill and indefinite-lived intangible assets for impairment at leastannually and more often when impairment indicators are present.  The Company performs its annual impairmenttest during the fourth quarter.  Therewere no changes in the Company’s goodwill by business segment for the sixmonths ended June 30, 2007 and 2006 and no indicators of impairment.

The Company completed twoacquisitions in the first quarter of 2007. These acquisitions have been accounted for as a purchase in accordancewith SFAS No. 141, “Business Combinations,” and accordingly, the acquiredassets and liabilities have been recorded at fair value.  The allocations of purchase price to assetsand liabilities include various finite-lived assets and no additionalgoodwill.  The operations of each entityare included in the operations of the Company as of their respectiveacquisition dates.

Finite-lived intangibleassets, related accumulated amortization and weighted average useful lifeconsisted of the following at June 30, 2007 (in thousands, except as noted):
| ** **                                       | ** ** | **Weighted**                  | ** ** | ** ** | ** ** | ** **       | ** ** | ** ** | ** ** |
|--------------------------------------------------|------------|-------------------------------|------------|------------|------------|------------------|------------|------------|------------|
| ** **                                       | ** ** | **Average Useful**       | ** ** | ** ** | ** ** | **Accumulated**  | ** ** | ** ** | ** ** |
| ** **                                       | ** ** | **Life (in years)** | ** ** | **Gross**  | ** ** | **Amortization** | ** ** | **Net**    | ** ** |
|                                             |       |                          |       |       |       |             |       |       |       |
| Membership and  customer lists                   |       | 6                             |       | $          | 31,552     |             | $          | (14,179    | )          | $ | 17,373 |   |
| Resort and golf  course participation agreements |       | 23                            |       | 13,442     |       | (12,946          | )          | 496        |       |
| Non-compete and  deferred consulting agreements  |       | 15                            |       | 18,830     |       | (13,276          | )          | 5,554      |       |
| Deferred  financing costs                        |       | 7                             |       | 13,956     |       | (6,833           | )          | 7,123      |       |
|                                             |       |                          |       |       |       |             |       |       |       |
|                                             |       |                          |       | $          | 77,780     |             | $          | (47,234    | )          | $ | 30,546 |   |

 

**(6) DEBT**

AGHI Notes

On March 24, 2005 in aprivate placement, AGHI issued $88.2 million principal amount of its 10-7/8%senior notes due 2012 (the “AGHI Notes”) at a $3.2 million original issuediscount.  The Company completed aregistered exchange of these AGHI Notes under the Securities Act of 1933 inJune 2005.  The AGHI Notes are unsecuredobligations of AGHI and its subsidiaries have not guaranteed payment ofprincipal or interest on the AGHI Notes. Interest on the AGHI Notes is payable semi-annually on February 15 andAugust 15 commencing August 15, 2005 and the entire $88.2 million principalamount of the AGHI Notes are due in full on February 15, 2012.  For interest payments on and prior toFebruary 15, 2008, AGHI may elect to pay interest on the AGHI Notes in cash orby issuance of additional notes of the same tenor as the AGHI Notes, except thematurity date of the additional notes is March 15, 2010.  The Company elected to issue additional notesin lieu of cash payments.  On August 15,2005, February 15, 2006, August 15, 2006 and February 15, 2007 the Companyissued

9

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**(6) DEBT(continued)**

additional notes in theamount of $3.8 million, $5.0 million, $5.3 million and $5.6 million,respectively.  The Company plans to paythe interest on the notes due August 15, 2008 from the proceeds of acontribution to be made by its parent, AGHC.

Senior Subordinated Notes

In February 2004, AGI issued $200.0 millionof 9% Senior Subordinated Notes (“Senior Subordinated Notes”) due 2012 pursuantto the AGI Indenture.  On June 8, 2006,AGI amended its Amended and Restated Credit Agreement (“Senior Credit Facility”)to permit AGI to purchase up to $30.0 million of the Senior Subordinated Notesfrom time to time as and when AGI determines. AGI purchased and retired $24.8 million, $4.9 million, and $0.2 millionof the Senior Subordinated Notes in June, July and August of 2006, respectively.  On February 27, 2007, AGI amended its SeniorCredit Facility to permit AGI to repurchase up to an additional $50.0 millionof the Senior Subordinated Notes from time to time, as and when AGI determines,through the issuance of additional term loans of up to $50.0 million under the SeniorCredit Facility.  On March 8, 2007, theAGI purchased $17.7 million of the Senior Subordinated Notes.  As of June 30, 2007, $152.4 million of theSenior Subordinated Notes remain outstanding. Interest is payable on the remaining Senior Subordinated Notes twice ayear on February 15 and August 15.  AGI’spresent and future restricted subsidiaries will guarantee the SeniorSubordinated Notes with unconditional guarantees of payment that will rankjunior in right of payment to their existing and future senior debt, but willrank equal in right of payment to their existing and future senior subordinateddebt.

**(7)RECENT EVENTS**

On April 16, 2007, AGIentered into a stock purchase agreement with FreedomRoads Holding Company, LLC(“FreedomRoads”), an entity under common ownership with the Company’s ultimateparent corporation, pursuant to which the Company will, subject to satisfactionof certain conditions described below, sell all of the outstanding stock of itswholly-owned subsidiary Camping World, Inc. (“Camping World”) to FreedomRoadsfor $175.8 million subject to certain adjustments (the “Purchase Price”).  The transaction is expected to close uponsatisfaction of certain conditions stipulated under the Stock PurchaseAgreement dated April 16, 2007.  Theclosing date has not been set but is projected to be on or before October 31,2007.  The Purchase Price (including theportion paid by the assumption and discharge on the closing date byFreedomRoads of the intercompany indebtedness owed by Camping World to AGI)will be paid 75% in immediately available funds at closing and 25% under asubordinated promissory note bearing interest at 11.5% per annum.  AGI intends to use the net cash proceeds fromthe sale of Camping World to repay indebtedness outstanding under AGI’s termnotes issued under the senior secured floating rate note purchase agreementdated June 24, 2003, as amended, and its revolving credit line under the creditagreement dated June 24, 2003, as amended, with senior lenders (collectivelythe “Senior Secured Credit Facility”). As of June 30, 2007, an aggregate of $129.4 million was outstandingunder the term loans and $8.8 million was outstanding (including $7.3 millionin letters of credit) under the revolving credit facility of the Senior SecuredCredit Facility.

10

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**(7)RECENT EVENTS (continued)**

The financial statementsfor Camping World are different from the segment reporting in Footnote 3because the Camping World President’s Club and other related ancillary productsare included as part of the membership services segment in the segmentreporting.

The following unauditedpro forma condensed consolidated balance sheet as of June 30, 2007 and December31, 2006 and the statement of operations for the six months ended June 30, 2007and 2006 reflects the reclassification adjustments associated with the proposeddisposal/sale of Camping World to FreedomRoads. The pro forma adjustments related to the disposal are presented sincethe disposition did not meet the discontinued operations reporting requirementspursuant to SFAS Statement No. 144, “Accounting for the Impairment or Disposalof Long-Lived Assets”, (SFAS 144) as of June 30, 2007, but will meet suchrequirements in 2007 when the transaction is completed.  Since the transaction is a sale to an entityunder common ownership with AGI such long-lived assets are considered disposedof when they are exchanged or distributed in accordance with SFAS 144.  The pro forma adjustments reflect thereclassification of assets and liabilities associated with Camping World tocurrent assets and liabilities to be disposed of in accordance with SFAS 144 asif the reporting requirements had been met at June 30, 2007.  In addition, the historical operating resultshave also been reclassified to reflect discontinued operations.

Corporate Expenses - Theallocation to Camping World of expenses for certain Affinity Group, Inc.corporate functions historically provided to Camping World are done inaccordance with Staff Accounting Bulletin No. 55, “Allocation of Expenses andRelated Disclosures in Subsidiaries’ Financial Statements”, (“SAB 55”).  Such allocations were made on a specificidentification basis to the extent possible and otherwise based on relativepercentages, as compared to the Company’s other businesses, of headcount orother appropriate methods depending on the nature of each item of cost to beallocated.

Interest Expense - Theinterest expense included in discontinued operations below reflects theinterest allocated to Camping World based upon debt required to be repaid uponconsummation of this transaction.

11

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**(7)RECENT EVENTS (continued)**

Unaudited pro formainformation relating to the operations of AGHI excluding Camping World for thesix months ended June 30, 2007 is as follows (in thousands):
| ** **                                                                         | ** ** | **2007**       | ** ** | **Reclassification of** | ** ** | **2007**           | ** ** |
|------------------------------------------------------------------------------------|------------|----------------|------------|------------------------------|------------|--------------------|------------|
| ** **                                                                         | ** ** | **Historical** | ** ** | **Camping World**       | ** ** | **Pro Forma** | ** ** |
|                                                                               |       |           |       |                         |       |               |       |
| REVENUES:                                                                          |       |           |       |                         |       |               |       |
| Membership services                                                                |       | $              | 72,153     |                         | $          | (8,965             | )          | $ | 63,188 |   |
| Publications                                                                       |       | 42,218         |       | —                       |       | 42,218             |       |
| Retail                                                                             |       | 167,300        |       | (167,300                     | )          | —             |       |
|                                                                               |       | 281,671        |       | (176,265                     | )          | 105,406            |       |
|                                                                               |       |           |       |                         |       |               |       |
| COSTS APPLICABLE  TO REVENUES:                                                     |       |           |       |                         |       |               |       |
| Membership services                                                                |       | 45,961         |       | (2,204                       | )          | 43,757             |       |
| Publications                                                                       |       | 28,040         |       | —                       |       | 28,040             |       |
| Retail                                                                             |       | 101,909        |       | (101,909                     | )          | —             |       |
|                                                                               |       | 175,910        |       | (104,113                     | )          | 71,797             |       |
|                                                                               |       |           |       |                         |       |               |       |
| GROSS PROFIT                                                                       |       | 105,761        |       | (72,152                      | )          | 33,609             |       |
|                                                                               |       |           |       |                         |       |               |       |
| OPERATING  EXPENSES:                                                               |       |           |       |                         |       |               |       |
| Selling, general and administrative                                                |       | 73,515         |       | (61,829                      | )          | 11,686             |       |
| Depreciation and amortization                                                      |       | 9,744          |       | (3,815                       | )          | 5,929              |       |
|                                                                               |       | 83,259         |       | (65,644                      | )          | 17,615             |       |
|                                                                               |       |           |       |                         |       |               |       |
| INCOME FROM  OPERATIONS                                                            |       | 22,502         |       | (6,508                       | )          | 15,994             |       |
|                                                                               |       |           |       |                         |       |               |       |
| NON-OPERATING  ITEMS:                                                              |       |           |       |                         |       |               |       |
| Interest income                                                                    |       | 357            |       | (67                          | )          | 290                |       |
| Interest expense                                                                   |       | (18,502        | )          | 5,236                        |       | (13,266            | )          |
| Debt extinguishment expense                                                        |       | (775           | )          | —                       |       | (775               | )          |
| Other non-operating items                                                          |       | 93             |       | —                       |       | 93                 |       |
|                                                                               |       | (18,827        | )          | 5,169                        |       | (13,658            | )          |
|                                                                               |       |           |       |                         |       |               |       |
| INCOME FROM  CONTINUING OPERATIONS BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS |       | 3,675          |       | (1,339                       | )          | 2,336              |       |
|                                                                               |       |           |       |                         |       |               |       |
| INCOME TAX  BENEFIT (EXPENSE)                                                      |       | 183            |       | (420                         | )          | (237               | )          |
|                                                                               |       |           |       |                         |       |               |       |
| INCOME FROM  CONTINUING OPERATIONS                                                 |       | 3,858          |       | (1,759                       | )          | 2,099              |       |
|                                                                               |       |           |       |                         |       |               |       |
| DISCONTINUED  OPERATIONS                                                           |       |           |       |                         |       |               |       |
| Income from operations of discontinued Camping World,  Inc.                        |       | —         |       | 1,339                        |       | 1,339              |       |
| Income tax expense                                                                 |       | —         |       | 420                          |       | 420                |       |
| Income on discontinued operations                                                  |       | —         |       | 1,759                        |       | 1,759              |       |
|                                                                               |       |           |       |                         |       |               |       |
| NET INCOME                                                                         |       | $              | 3,858      |                         | $          | —             |       | $ | 3,858 |   |

 

12

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**(7) RECENT EVENTS (continued)**

Unaudited pro formainformation relating the operations of AGHI excluding Camping World for the sixmonths ended June 30, 2006 is as follows (in thousands):
| ** **                                                | ** ** | **2006**       | ** ** | **Reclassification of** | ** ** | **2006**           | ** ** |
|-----------------------------------------------------------|------------|----------------|------------|------------------------------|------------|--------------------|------------|
| ** **                                                | ** ** | **Historical** | ** ** | **Camping World**       | ** ** | **Pro Forma** | ** ** |
|                                                      |       |           |       |                         |       |               |       |
| REVENUES:                                                 |       |           |       |                         |       |               |       |
| Membership services                                       |       | $              | 70,460     |                         | $          | (7,713             | )          | $ | 62,747 |   |
| Publications                                              |       | 39,687         |       | —                       |       | 39,687             |       |
| Retail                                                    |       | 145,726        |       | (145,726                     | )          | —             |       |
|                                                      |       | 255,873        |       | (153,439                     | )          | 102,434            |       |
|                                                      |       |           |       |                         |       |               |       |
| COSTS APPLICABLE  TO REVENUES:                            |       |           |       |                         |       |               |       |
| Membership services                                       |       | 46,123         |       | (2,219                       | )          | 43,904             |       |
| Publications                                              |       | 26,213         |       | —                       |       | 26,213             |       |
| Retail                                                    |       | 87,467         |       | (87,467                      | )          | —             |       |
|                                                      |       | 159,803        |       | (89,686                      | )          | 70,117             |       |
|                                                      |       |           |       |                         |       |               |       |
| GROSS PROFIT                                              |       | 96,070         |       | (63,753                      | )          | 32,317             |       |
|                                                      |       |           |       |                         |       |               |       |
| OPERATING  EXPENSES:                                      |       |           |       |                         |       |               |       |
| Selling, general and administrative                       |       | 65,362         |       | (56,000                      | )          | 9,362              |       |
| Depreciation and amortization                             |       | 9,372          |       | (4,006                       | )          | 5,366              |       |
|                                                      |       | 74,734         |       | (60,006                      | )          | 14,728             |       |
|                                                      |       |           |       |                         |       |               |       |
| INCOME FROM  OPERATIONS                                   |       | 21,336         |       | (3,747                       | )          | 17,589             |       |
|                                                      |       |           |       |                         |       |               |       |
| NON-OPERATING  ITEMS:                                     |       |           |       |                         |       |               |       |
| Interest income                                           |       | 724            |       | (6                           | )          | 718                |       |
| Interest expense                                          |       | (18,668        | )          | 4,891                        |       | (13,777            | )          |
| Debt extinguishment expense                               |       | (693           | )          | —                       |       | (693               | )          |
| Other non-operating items                                 |       | 53             |       | 8                            |       | 61                 |       |
|                                                      |       | (18,584        | )          | 4,893                        |       | (13,691            | )          |
|                                                      |       |           |       |                         |       |               |       |
| INCOME FROM  CONTINUING OPERATIONS BEFORE                 |       |           |       |                         |       |               |       |
| INCOME TAXES AND DISCONTINUED OPERATIONS                  |       | 2,752          |       | 1,146                        |       | 3,898              |       |
|                                                      |       |           |       |                         |       |               |       |
| INCOME TAX  EXPENSE                                       |       | (24,870        | )          | (672                         | )          | (25,542            | )          |
|                                                      |       |           |       |                         |       |               |       |
| LOSS FROM  CONTINUING OPERATIONS                          |       | (22,118        | )          | 474                          |       | (21,644            | )          |
|                                                      |       |           |       |                         |       |               |       |
| DISCONTINUED  OPERATIONS                                  |       |           |       |                         |       |               |       |
| Loss from operations of discontinued Camping World,  Inc. |       | —         |       | (1,146                       | )          | (1,146             | )          |
| Income tax benefit                                        |       | —         |       | 672                          |       | 672                |       |
| Loss on discontinued operations                           |       | —         |       | (474                         | )          | (474               | )          |
|                                                      |       |           |       |                         |       |               |       |
| NET LOSS                                                  |       | $              | (22,118    | )                            | $          | —             |       | $ | (22,118 | ) |

 

13

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**(7) RECENT EVENTS (continued)**

The unaudited pro formabalance sheet of AGHI excluding Camping World as of June 30, 2007 is as follows(in thousands except shares and par value):
| ** **                                                                                | ** ** | ** **     | ** ** | **Reclassification of** | ** ** | ** **         | ** ** |
|-------------------------------------------------------------------------------------------|------------|----------------|------------|------------------------------|------------|--------------------|------------|
| ** **                                                                                | ** ** | **Historical** | ** ** | **Camping World**       | ** ** | **Pro Forma** | ** ** |
| **ASSETS**                                                                                |       |           |       |                         |       |               |       |
| CURRENT ASSETS:                                                                           |       |           |       |                         |       |               |       |
| Cash and cash equivalents                                                                 |       | $              | 2,604      |                         | $          | (2,604             | )          | $ | — |   |
| Accounts receivable, net                                                                  |       | 25,169         |       | (6,715                       | )          | 18,454             |       |
| Inventories                                                                               |       | 69,064         |       | (68,636                      | )          | 428                |       |
| Prepaid expenses and other assets                                                         |       | 17,790         |       | (2,776                       | )          | 15,014             |       |
| Deferred tax assets, net                                                                  |       | 3,279          |       | (3,279                       | )          | —             |       |
| Assets of discontinued operations                                                         |       | —         |       | 250,252                      |       | 250,252            |       |
| Total current assets                                                                      |       | 117,906        |       | 166,242                      |       | 284,148            |       |
|                                                                                      |       |           |       |                         |       |               |       |
| PROPERTY AND EQUIPMENT, net                                                               |       | 41,081         |       | (31,978                      | )          | 9,103              |       |
| INVESTMENT IN AFFILIATE                                                                   |       | 81,005         |       | (81,005                      | )          | —             |       |
| NOTE FROM AFFILIATE                                                                       |       | 4,669          |       | —                       |       | 4,669              |       |
| INTANGIBLE ASSETS, net                                                                    |       | 30,546         |       | (5,090                       | )          | 25,456             |       |
| GOODWILL                                                                                  |       | 144,429        |       | (47,601                      | )          | 96,828             |       |
| OTHER ASSETS                                                                              |       | 1,441          |       | (529                         | )          | 912                |       |
| Total assets                                                                              |       | $              | 421,077    |                         | $          | 39                 |       | $ | 421,116 |   |
|                                                                                      |       |           |       |                         |       |               |       |
| **LIABILITIES  AND STOCKHOLDER’S DEFICIT**                                           |       |           |       |                         |       |               |       |
| CURRENT LIABILITIES:                                                                      |       |           |       |                         |       |               |       |
| Accounts payable                                                                          |       | $              | 27,576     |                         | $          | (24,623            | )          | $ | 2,953 |   |
| Accrued interest                                                                          |       | 9,736          |       | —                       |       | 9,736              |       |
| Accrued income taxes                                                                      |       | 1,418          |       | (29                          | )          | 1,389              |       |
| Accrued liabilities                                                                       |       | 35,744         |       | (18,830                      | )          | 16,914             |       |
| Deferred revenues and gains                                                               |       | 66,533         |       | (7,558                       | )          | 58,975             |       |
| Current portion of long-term debt                                                         |       | 4,698          |       | —                       |       | 4,698              |       |
| Liabilities of discontinued operations                                                    |       | —         |       | 73,410                       |       | 73,410             |       |
| Total current liabilities                                                                 |       | 145,705        |       | 22,370                       |       | 168,075            |       |
|                                                                                      |       |           |       |                         |       |               |       |
| DEFERRED REVENUES AND GAINS                                                               |       | 39,570         |       | (9,253                       | )          | 30,317             |       |
| LONG-TERM DEBT, net of current portion                                                    |       | 390,731        |       | —                       |       | 390,731            |       |
| DEFERRED TAX LIABILITY                                                                    |       | 790            |       | (790                         | )          | —             |       |
| OTHER LONG-TERM LIABILITIES                                                               |       | 17,192         |       | (12,288                      | )          | 4,904              |       |
|                                                                                      |       | 593,988        |       | 39                           |       | 594,027            |       |
|                                                                                      |       |           |       |                         |       |               |       |
| COMMITMENTS AND CONTINGENCIES                                                             |       |           |       |                         |       |               |       |
|                                                                                      |       |           |       |                         |       |               |       |
| STOCKHOLDER’S DEFICIT :                                                              |       |           |       |                         |       |               |       |
| Common stock, $.01 par value, 3,000 shares  authorized, 100 shares issued and outstanding |       | 1              |       | —                       |       | 1                  |       |
| Accumulated deficit                                                                       |       | (172,912       | )          | —                       |       | (172,912           | )          |
| Total stockholder’s deficit                                                          |       | (172,911       | )          | —                       |       | (172,911           | )          |
| Total liabilities and  stockholder’s deficit                                         |       | $              | 421,077    |                         | $          | 39                 |       | $ | 421,116 |   |

 

14

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**(7) RECENT EVENTS (continued)**

The unaudited pro formabalance sheet of AGHI excluding Camping World as of December 31, 2006 is asfollows (in thousands except shares and par value):
| ** **                                                                                | ** ** | **Historical** | ** ** | **Reclassification of  Camping World** | ** ** | **Pro Forma** | ** ** |
|-------------------------------------------------------------------------------------------|------------|----------------|------------|--------------------------------------------------|------------|--------------------|------------|
| **ASSETS**                                                                                |       |           |       |                                             |       |               |       |
| CURRENT ASSETS:                                                                           |       |           |       |                                             |       |               |       |
| Cash and cash equivalents                                                                 |       | $              | 15,238     |                                             | $          | (3,288             | )          | $ | 11,950 |   |
| Accounts receivable, net                                                                  |       | 27,199         |       | (3,742                                           | )          | 23,457             |       |
| Inventories                                                                               |       | 52,703         |       | (51,736                                          | )          | 967                |       |
| Prepaid expenses and other assets                                                         |       | 13,006         |       | (2,451                                           | )          | 10,555             |       |
| Deferred tax assets, net                                                                  |       | 3,203          |       | (3,203                                           | )          | —             |       |
| Assets of discontinued operations                                                         |       | —         |       | 225,680                                          |       | 225,680            |       |
| Total current assets                                                                      |       | 111,349        |       | 161,260                                          |       | 272,609            |       |
|                                                                                      |       |           |       |                                             |       |               |       |
| PROPERTY AND EQUIPMENT, net                                                               |       | 34,765         |       | (26,341                                          | )          | 8,424              |       |
| INVESTMENT IN AFFILIATE                                                                   |       | 81,005         |       | (81,005                                          | )          | —             |       |
| NOTE FROM AFFILIATE                                                                       |       | 4,688          |       | —                                           |       | 4,688              |       |
| INTANGIBLE ASSETS, net                                                                    |       | 32,957         |       | (5,695                                           | )          | 27,262             |       |
| GOODWILL                                                                                  |       | 144,429        |       | (47,601                                          | )          | 96,828             |       |
| OTHER ASSETS                                                                              |       | 1,704          |       | (618                                             | )          | 1,086              |       |
| Total assets                                                                              |       | $              | 410,897    |                                             | $          | —             |       | $ | 410,897 |   |
|                                                                                      |       |           |       |                                             |       |               |       |
| **LIABILITIES  AND STOCKHOLDER’S DEFICIT**                                           |       |           |       |                                             |       |               |       |
| CURRENT LIABILITIES:                                                                      |       |           |       |                                             |       |               |       |
| Accounts payable                                                                          |       | $              | 32,577     |                                             | $          | (25,129            | )          | $ | 7,448 |   |
| Accrued interest                                                                          |       | 5,936          |       | —                                           |       | 5,936              |       |
| Accrued income taxes                                                                      |       | 1,736          |       | (535                                             | )          | 1,201              |       |
| Accrued liabilities                                                                       |       | 35,687         |       | (17,722                                          | )          | 17,965             |       |
| Deferred revenues and gains                                                               |       | 62,906         |       | (7,030                                           | )          | 55,876             |       |
| Current portion of long-term debt                                                         |       | 7,271          |       | —                                           |       | 7,271              |       |
| Liabilities of discontinued operations                                                    |       | —         |       | 72,557                                           |       | 72,557             |       |
| Total current liabilities                                                                 |       | 146,113        |       | 22,141                                           |       | 168,254            |       |
|                                                                                      |       |           |       |                                             |       |               |       |
| DEFERRED REVENUES AND GAINS                                                               |       | 37,183         |       | (9,071                                           | )          | 28,112             |       |
| LONG-TERM DEBT, net of current portion                                                    |       | 381,510        |       | —                                           |       | 381,510            |       |
| DEFERRED TAX LIABILITY                                                                    |       | 15,724         |       | (12,916                                          | )          | 2,808              |       |
| OTHER LONG-TERM LIABILITIES                                                               |       | 3,386          |       | (154                                             | )          | 3,232              |       |
|                                                                                      |       | 583,916        |       | —                                           |       | 583,916            |       |
|                                                                                      |       |           |       |                                             |       |               |       |
| COMMITMENTS AND CONTINGENCIES                                                             |       |           |       |                                             |       |               |       |
|                                                                                      |       |           |       |                                             |       |               |       |
| STOCKHOLDER’S DEFICIT :                                                              |       |           |       |                                             |       |               |       |
| Common stock, $.01 par value, 3,000 shares authorized,  100 shares issued and outstanding |       | 1              |       | —                                           |       | 1                  |       |
| Accumulated deficit                                                                       |       | (173,020       | )          | —                                           |       | (173,020           | )          |
| Total stockholder’s deficit                                                          |       | (173,019       | )          | —                                           |       | (173,019           | )          |
| Total liabilities and  stockholder’s deficit                                         |       | $              | 410,897    |                                             | $          | —             |       | $ | 410,897 |   |

 

15

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**ITEM 2:**

AFFINITYGROUP HOLDING, INC. AND SUBSIDIARIES

MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL

CONDITIONAND RESULTS OF OPERATIONS

 

The following table isderived from the Company’s Consolidated Statements of Operations and expressesthe results from operations as a percentage of revenues and reflects the netincrease (decrease) between periods:
| ** **                                  | ** ** | **THREE MONTHS ENDED** | ** ** |
|---------------------------------------------|------------|----------------------------------|------------|
| ** **                                  | ** ** | **6/30/2007**                    | ** ** | **6/30/2006** | ** ** | **Inc/(Dec)** | ** ** |
|                                        |       |                             |       |   |   |   |   |
| REVENUES:                                   |       |                             |       |   |   |   |   |
| Membership services                         |       | 24.8                             | %          | 27.0 | % | 1.5 | % |
| Publications                                |       | 11.4                             | %          | 11.9 | % | 5.7 | % |
| Retail                                      |       | 63.8                             | %          | 61.1 | % | 15.7 | % |
|                                        |       | 100.0                            | %          | 100.0 | % | 10.7 | % |
|                                        |       |                             |       |   |   |   |   |
| COSTS APPLICABLE  TO REVENUES:              |       |                             |       |   |   |   |   |
| Membership services                         |       | 15.8                             | %          | 18.0 | % | (2.9 | )% |
| Publications                                |       | 8.0                              | %          | 8.4 | % | 5.4 | % |
| Retail                                      |       | 39.0                             | %          | 36.7 | % | 17.6 | % |
|                                        |       | 62.8                             | %          | 63.1 | % | 10.2 | % |
|                                        |       |                             |       |   |   |   |   |
| GROSS PROFIT                                |       | 37.2                             | %          | 36.9 | % | 11.6 | % |
|                                        |       |                             |       |   |   |   |   |
| OPERATING  EXPENSES:                        |       |                             |       |   |   |   |   |
| Selling, general and administrative         |       | 25.4                             | %          | 25.3 | % | 10.9 | % |
| Depreciation and amortization               |       | 3.1                              | %          | 3.4 | % | 2.5 | % |
|                                        |       | 28.5                             | %          | 28.7 | % | 9.9 | % |
|                                        |       |                             |       |   |   |   |   |
| INCOME FROM  OPERATIONS                     |       | 8.7                              | %          | 8.2 | % | 17.5 | % |
|                                        |       |                             |       |   |   |   |   |
| NON-OPERATING  ITEMS:                       |       |                             |       |   |   |   |   |
| Interest income                             |       | 0.1                              | %          | 0.3 | % | (53.7 | )% |
| Interest expense                            |       | (6.0                             | )%         | (6.7 | )% | (0.4 | )% |
| Debt extinguishment expense                 |       | —                           |       | (0.5 | )% | (100.0 | )% |
| Other non-operating items, net              |       | —                           |       | — |   | 120.0 | % |
|                                        |       | (5.9                             | )%         | (6.9 | )% | (5.6 | )% |
|                                        |       |                             |       |   |   |   |   |
| INCOME FROM  OPERATIONS BEFORE INCOME TAXES |       | 2.8                              | %          | 1.3 | % | 144.0 | % |
|                                        |       |                             |       |   |   |   |   |
| INCOME TAX  BENEFIT (EXPENSE)               |       | 0.1                              | %          | (17.6 | )% | (100.3 | )% |
|                                        |       |                             |       |   |   |   |   |
| NET INCOME (LOSS)                           |       | 2.9                              | %          | (16.3 | )% | 119.4 | % |

 

16

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AFFINITYGROUP HOLDING, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION ANDANALYSIS OF FINANCIAL

CONDITIONAND RESULTS OF OPERATIONS

 

The following table isderived from the Company’s Consolidated Statements of Operations and expressesthe results from operations as a percentage of revenues and reflects the net increase(decrease) between periods:
| ** **                                  | ** ** | **SIX MONTHS ENDED** | ** ** |
|---------------------------------------------|------------|--------------------------------|------------|
| ** **                                  | ** ** | **6/30/2007**                  | ** ** | **6/30/2006** | ** ** | **Inc/(Dec)** | ** ** |
|                                        |       |                           |       |   |   |   |   |
| REVENUES:                                   |       |                           |       |   |   |   |   |
| Membership services                         |       | 25.6                           | %          | 27.5 | % | 2.4 | % |
| Publications                                |       | 15.0                           | %          | 15.5 | % | 6.4 | % |
| Retail                                      |       | 59.4                           | %          | 57.0 | % | 14.8 | % |
|                                        |       | 100.0                          | %          | 100.0 | % | 10.1 | % |
|                                        |       |                           |       |   |   |   |   |
| COSTS APPLICABLE  TO REVENUES:              |       |                           |       |   |   |   |   |
| Membership services                         |       | 16.3                           | %          | 18.0 | % | (0.4 | )% |
| Publications                                |       | 10.0                           | %          | 10.2 | % | 7.0 | % |
| Retail                                      |       | 36.2                           | %          | 34.3 | % | 16.5 | % |
|                                        |       | 62.5                           | %          | 62.5 | % | 10.1 | % |
|                                        |       |                           |       |   |   |   |   |
| GROSS PROFIT                                |       | 37.5                           | %          | 37.5 | % | 10.1 | % |
|                                        |       |                           |       |   |   |   |   |
| OPERATING  EXPENSES:                        |       |                           |       |   |   |   |   |
| Selling, general and administrative         |       | 26.0                           | %          | 25.5 | % | 12.5 | % |
| Depreciation and amortization               |       | 3.5                            | %          | 3.7 | % | 4.0 | % |
|                                        |       | 29.5                           | %          | 29.2 | % | 11.4 | % |
|                                        |       |                           |       |   |   |   |   |
| INCOME FROM  OPERATIONS                     |       | 8.0                            | %          | 8.3 | % | 5.5 | % |
|                                        |       |                           |       |   |   |   |   |
| NON-OPERATING  ITEMS:                       |       |                           |       |   |   |   |   |
| Interest income                             |       | 0.1                            | %          | 0.3 | % | (50.7 | )% |
| Interest expense                            |       | (6.5                           | )%         | (7.2 | )% | (0.9 | )% |
| Debt extinguishment expense                 |       | (0.3                           | )%         | (0.3 | )% | 11.8 | % |
| Other non-operating items, net              |       | —                         |       | — |   | 75.5 | % |
|                                        |       | (6.7                           | )%         | (7.2 | )% | 1.3 | % |
|                                        |       |                           |       |   |   |   |   |
| INCOME FROM  OPERATIONS BEFORE INCOME TAXES |       | 1.3                            | %          | 1.1 | % | 33.5 | % |
|                                        |       |                           |       |   |   |   |   |
| INCOME TAX  BENEFIT (EXPENSE)               |       | 0.1                            | %          | (9.7 | )% | (100.7 | )% |
|                                        |       |                           |       |   |   |   |   |
| NET INCOME (LOSS)                           |       | 1.4                            | %          | (8.6 | )% | 117.4 | % |

 

17

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**RESULTSOF OPERATIONS**

**Three Months Ended June 30, 2007**

**Compared With Three Months EndedJune 30, 2006**

*Revenues*

Revenuesof $153.9 million for the second quarter of 2007 increased by $14.9 million, or10.7%, from the comparable period in 2006.

Membershipservices revenues of $38.1 million for the second quarter of 2007 increased by$0.6 million, or 1.5%, from the comparable period in 2006.  This revenue increase was largelyattributable to a $1.4 million increase in extended vehicle warranty programrevenue due to the continued growth of contracts in force, an $0.8 millionrevenue increase due to increased enrollment in Camping World President’s Cluband Camp Club USA partially offset by enrollment decreases in the Coast toCoast Club and the Golf Club, a $0.3 million revenue increase in emergency roadservice programs due to increased enrollment and a $0.2 million increase indealer program marketing revenue.  Theseincreases were partially offset by a reduction in member events revenue of $1.9million due to timing of the Good Sam Club annual rally, which will occur inthe third quarter of 2007 versus the second quarter of 2006, and a $0.2 millionrevenue reduction due to the elimination of the RV Today television program.

Publicationrevenues of $17.5 million for the second quarter of 2007 increasedapproximately $1.0 million, or 5.7%, from the comparable period in 2006primarily attributable to $1.0 million ofrevenue associated with the acquisition of the publishing assets of AmericanGuide Services, Inc. in August 2006, and $0.5 million of revenue associatedwith consumer shows acquired in the last eighteen months.  These increases were partially offset by a$0.2 million decrease in book revenue and a $0.3 million revenue decrease dueto moving the publication dates of two boating magazine issues and one campingmagazine issue to the third quarter of 2007.

Retail revenues of approximately $98.3million increased approximately $13.3 million, or 15.7%, from the comparableperiod in 2006.  Store merchandise salesincreased approximately $10.3 million over the second quarter of 2006 due to a$13.2 million revenue increase from the addition of 32 new stores over the pasteighteen months, partially offset by a same store sales decrease of $2.9million, or 5.0%, compared to a 7.5% decrease in same store sales for thesecond quarter of 2006.  Same store salecalculations for a given period include only those stores that were open bothat the end of that period and at the beginning of the preceding fiscalyear.  In addition, supplies and othersales increased $1.5 million, installation and service work increased $0.6million, product extended warranty sales increased $0.5 million and mail ordersales increased $0.4 million.

*Costs Applicable to Revenues*

Costsapplicable to revenues totaled $96.6 million for the second quarter of 2007, anincrease of $8.9 million, or 10.2%, from the comparable period in 2006.

18

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Membership services costs and expenses of$24.3 million decreased $0.7 million, or 2.9%, from the comparable period in2006.  This decrease consisted of a $2.1million reduction in member events costs primarily due to timing of the GoodSam Club annual rally, which will occur in the third quarter of 2007 versus thesecond quarter of 2006, and a $0.3 million reduction of costs due to theelimination of the RV Today television program, partially offset by $0.9million of incremental costs associated with increased extended vehiclewarranty program revenue and emergency roads service revenue and $0.8 millionof additional membership services costs associated with increased enrollment inthe Camping World President’s Club and Camp Club USA, in addition to reducedproduction costs for the Good Sam member publication, *HighwaysMagazine* due to reduced paper costs and reduced book sizes.

Publication costs and expenses ofapproximately $12.2 million for the second quarter of 2007 increased $0.6million, or 5.4%, from the comparable period in 2006.  This increase was attributable to $0.9million of additional costs from the recently acquired American Guide Servicesgroup, and $0.2 million of costs associated with the recently acquired consumershows, partially offset by reduced book costs of $0.3 million associated withlower book sales, and a $0.2 million reduction resulting from fewer issues ofcamping and boating group magazines.

Retail costs applicable to revenuesincreased approximately $9.0 million, or 17.6%, to $60.1 million primarily as aresult of 32 new stores opened over the past eighteen months.  The retail gross profit margin of 38.9% forthe second quarter of 2007 decreased from 39.9% for the comparable period in2006 primarily due to a shift in product mix to slightly lower margin products,and margin compression caused by a combination of competitive pricing andhigher unit costs.

*Operating Expenses*

Selling, general and administrativeexpenses of approximately $38.9 million for the second quarter of 2007 increased$3.8 million compared to the second quarter of 2006.  This increase was due to an increase inretail selling and general and administrative expenses of approximately $3.5million consisting of increases in selling, real property and labor expenses primarilydue to new store openings, and $0.3 million of costs associated with therecently acquired consumer shows.

Depreciation and amortization expense of$4.8 million increased approximately $0.1 million over the prior year primarilydue to increased amortization of intangible assets associated with the recentacquisitions.

*Income from Operations*

Incomefrom operations for the second quarter of 2007 totaling $13.4 million increased$2.0 million compared to the second quarter of 2006.  This increase was primarily due to increasedgross profit for retail, membership services and publications operations of$4.3 million, $1.3 million and $0.3 million, respectively, partially offset byincreased operating expenses of $3.9 million.

19

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*Non-Operating Items*

Non-operating items ofapproximately $9.1 million for the second quarter of 2007 decreased $0.5million compared to the same period in 2006. This decrease was primarily due to a $0.7 million decrease in debtextinguishment expense associated with the retirement of Senior SubordinatedNotes in 2006, partially offset by a $0.2 million decrease in interest income.

*Income before Income Taxes*

Income before income taxes for the secondquarter of 2007 was $4.3 million, or $2.5 million higher than the secondquarter of 2006.  This increase wasattributable to the $2.0 million increase in income from operations for thecurrent period and $0.5 million of reduced non-operating items.

*Income Tax Benefit (Expense)*

The Company recorded a $0.1 millionincome tax benefit for the second quarter of 2007, compared to a $24.4 millionincome tax expense for the second quarter of 2006.  This expense decrease was primarily due toAGHC’s S corporation change of tax status election effective for the secondquarter of 2006, which included AGI and all its subsidiaries, with theexception of Camping World, Inc. and its wholly-owned subsidiaries which willremain Subchapter C corporations.  As aresult, all deferred tax assets and liabilities were revalued with theexception of those related to Camping World, Inc. and its wholly-ownedsubsidiaries and other potential built-in gains.

# *NetIncome (Loss)*

Net income in the second quarter of 2007was $4.3 million compared to a net loss of $22.7 million for the same period in2006 mainly due to the reasons discussed above.

*Segment Profit (Loss)*

Segment profit of $16.9million for the second quarter of 2007 (before unallocated depreciation andamortization, general and administrative, interest, and income tax expense)increased $2.5 million, or 17.2%, from the comparable period in 2006.

Membership servicessegment profit of approximately $12.8 million for the second quarter of 2007increased $1.6 million, or 14.1%, from the comparable period in 2006.  This increase was largely attributable to a$1.0 million increase in profit from emergency road service products, a $0.4million increase in profit from the extended vehicle warranty programs, a $0.3million increase in profit from reduced book sizes in *HighwaysMagazine* and $0.2 million increase in profit for Camp Club USA,partially offset by a $0.3 million decrease in profit in the Coast to CoastClub.

Publication segmentprofit of $2.4 million for the second quarter of 2007 decreased $0.3 million,or 12.6%, from the comparable period in 2006. This decrease was largely attributed to a decrease in profit related tothe consumer shows acquired over the last 18 months due to increasedamortization of intangible assets.

20

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Retail segment profitincreased $1.2 million, or 242.8% from the second quarter of 2006 to approximately$1.7 million in the second quarter of 2007. This increase insegment profit resulted primarily from a $5.0 million increase in gross profitmargin, partially offset by a $3.5million increase in selling, general and administrative expenses primarilyrelated to the increase in new stores, and a $0.3 million increase in interestexpense.

**Six Months Ended June 30, 2007**

**Compared With Six Months EndedJune 30, 2006**

*Revenues*

Revenuesof $281.7 million for the first six months of 2007 increased by $25.8 million,or 10.1%, from the comparable period in 2006.

Membershipservices revenues of $72.2 million for the first six months of 2007 increasedby $1.7 million, or 2.4%, from the comparable period in 2006.  This revenue increase was largely attributableto a $1.9 million increase in extended vehicle warranty program revenue due tothe continued growth of contracts in force, a $1.2 million revenue increase inmembership services primarily due to increased enrollment in the Camping WorldPresident’s Club, and increased enrollment in Camp Club USA, partially offsetby reduced enrollment in the Golf Club and Coast to Coast Club, a $0.6 millionrevenue increase in emergency road service programs due to increasedenrollment, and a $0.3 million increase in dealer program marketingrevenue.  These increases were partiallyoffset by a reduction in member events revenue of $1.8 million primarily due totiming of the Good Sam Club annual rally, which will occur in the third quarterof 2007 versus the second quarter of 2006, and a $0.5 million revenue reductiondue to the elimination of the RV Today television program.

Publicationrevenues of $42.2 million for the first six months of 2007 increased $2.5million, or 6.4%, from the comparable period in 2006 primarily attributable to $2.2million of revenue associated with consumer shows acquired in the last eighteenmonths, and $1.6 million from revenue associated with the acquisition of thepublishing assets of American Guide Services, Inc. in August 2006.  These increases were partially offset by a$0.5 million decrease in campground atlas revenue, which is scheduled for itsbi-annual update and reprint in 2008, a $0.6 million revenue decrease due tomoving the publication dates of two boating magazine issues and one campingmagazine issue to the third quarter, and a $0.2 million revenue decrease due tofive fewer issues of *Snow Week*magazines in 2007.

Retail revenues of $167.3 millionincreased approximately $21.6 million, or 14.8%, from the comparable period in2006.  Store merchandise sales for thefirst six months of 2007 increased approximately $17.2 million over thecomparable period in 2006 due to a $20.7 million revenue increase from theaddition of 32 new stores over the past eighteen months, partially offset by asame store sales decrease of $3.5 million, or 3.3%, compared to a 5.1% decreasein same store sales for the first six months of 2006.  Same store sale calculations for a givenperiod include only those stores that were open both at the end of that periodand at the beginning of the preceding fiscal year.  In addition, installation and service workincreased

21

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$1.1 million, supplies and other salesincreased $2.2 million, product extended warranty sales increased $0.8 millionand mail order sales increased $0.3 million.

*Costs Applicable to Revenues*

Costsapplicable to revenues totaled $175.9 million for the first six months of 2007,an increase of $16.1 million, or 10.1%, from the comparable period in 2006.

Membership services costs and expenses of$46.0 million decreased $0.2 million, or 0.4%, from the comparable period in2006.  This decrease was attributable toa $1.9 million reduction in member events costs primarily due to timing of theGood Sam Club annual rally, which will occur in the third quarter of 2007versus the second quarter of 2006, and $0.5 million of reduced costs due to theelimination of the RV Today television program. These decreases were partially offset by $1.7 million of additionalcosts associated with increased extended vehicle warranty program revenue andemergency roads service revenue, $0.3 million of additional dealer programmarketing costs, and $0.2 million of additional membership services costsassociated with increased membership in the Camping World President’s Club andCamp Club USA, partially offset by reduced production costs of *Highways Magazine* due to reduced paper costs and reducedbook sizes.

Publication costs and expenses of $28.0million for the first six months of 2007 increased $1.8 million, or 7.0%, fromthe comparable period in 2006.  Thisincrease was attributable to $1.7 million from the recently acquired AmericanGuide Services group, and $1.4 million of costs associated with the recentlyacquired consumer shows, partially offset by reduced campground atlas costs of$0.4 million resulting from reduced sales, reduced operating costs of $0.3million for the motorcycle magazine group, reduced costs of $0.3 millionassociated with fewer issues of *Snow Week*magazine, and reduced costs of $0.3 million due to moving the publication dateof two boating issues and one camping issue to the third quarter.

Retail costs applicable to revenuesincreased approximately $14.5 million, or 16.5%, to $101.9 million primarily asa result of 32 new stores opened over the past eighteen months.  The retail gross profit margin of 39.1% forthe first six months of 2007 decreased from 40.0% for the comparable period in2006 primarily due to a shift in product mix to slightly lower margin productsand margin compression caused by a combination of competitive pricing andhigher unit costs.

*Operating Expenses*

Selling, general and administrativeexpenses of approximately $73.5 million for the first six months of 2007increased $8.2 million compared to the first six months of 2006.  This increase was due to an increase inretail selling and general and administrative expenses of approximately $6.6million consisting of increases in selling, labor and real property expensesprimarily due to new store openings and other marketing programs, $0.9 millionof arbitration expenses in connection with our asserted claim to a right offirst refusal in connection with the sale of General Motors AcceptanceCorporation, the insurance provider for the RV vehicle insurance offered by ourMembership Services segment, which claim was rejected by the arbitration panel,$0.6 million of costs associated with the recently acquired consumer shows and$0.1 million of other general and administrative expenses.

22

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Depreciation and amortization expense ofapproximately $9.8 million increased approximately $0.4 million over the prioryear primarily due to increased amortization of intangible assets associatedwith the recent acquisitions.

*Income from Operations*

Incomefrom operations for the first six months of 2007 totaling $22.5 millionincreased $1.2 million compared to the first six months of 2006.  This increase was primarily due to increasedgross profit for retail, membership services and publications operations of$7.1 million, $1.9 million and $0.7 million, respectively, partially offset byincreased operating expenses of $8.5 million.

*Non-Operating Items*

Non-operating items ofapproximately $18.8 million for the first six months of 2007 increased $0.2million compared to the same period in 2006. This increase was primarily due to a $0.3 million decrease in interestincome, and a $0.1 million increase in debt extinguishment expense, partiallyoffset by a $0.2 million increase in interest expense.

*Income before Income Taxes*

Income before income taxes for the firstsix months of 2007 was $3.7 million, or approximately $0.9 million higher thanthe first six months of 2006.  Thisincrease was attributable to the $1.2 million increase in income fromoperations for the current period partially offset by approximately $0.2 millionof increased non-operating items.

*Income Tax Benefit (Expense)*

TheCompany recorded a $0.2 million income tax benefit for the first six months of2007, compared to a $24.9 million income tax expense for the first six monthsof 2006.  This expense decrease wasprimarily due to AGHC’s S corporation change of tax status election effectivefor the second quarter of 2006, which included AGI and all its subsidiaries,with the exception of Camping World, Inc. and its wholly-owned subsidiarieswhich will remain Subchapter C corporations. As a result, all deferred tax assets and liabilities were revalued withthe exception of those related to Camping World, Inc. and its wholly-ownedsubsidiaries and other potential built-in gains.

# *NetIncome (Loss)*

Net income in the first six months of2007 was $3.9 million compared to a net loss of $22.1 million for the sameperiod in 2006 mainly due to the reasons discussed above.

*Segment Profit (Loss)*

Segment profit of $30.8million for the first six months of 2007 (before unallocated depreciation andamortization, general and administrative, interest, and income tax expense)increased $3.7 million, or 13.6%, from the comparable period in 2006.

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Membership servicessegment profit of $23.9 million for the first six months of 2007 increased $2.3million, or 10.4%, from the comparable period in 2006.  This increase was largely attributable to a$1.8 million increase in profit from emergency road service products, a $0.3million increase in profit from the extended vehicle warranty programs, and$0.5 million of reduced production costs for *HighwaysMagazine* due to reduced paper costs and reduced book sizes,partially offset by a $0.3 million loss for the Coast to Coast Club.

Publication segmentprofit of $8.8 million for the first six months of 2007 decreased approximately$0.4 million, or 4.4%, from the comparable period in 2006.  This decrease was largely attributed to anincrease in amortization of intangible assets associated with the consumershows acquired over the last 18 months, and a reduction in boating magazineissues published due to timing.

Retail segment lossdecreased $1.8 million, or 47.9% from the first six months of 2006 to a loss ofapproximately $1.9 million in the first six months of 2007.  This decrease in segment loss resulted primarily from an $8.6 millionincrease in gross profit margin, anda $0.2 million decrease in depreciation expenses, partially offset by a $6.6 million increase in selling, general andadministrative expenses primarily related to the increase in new stores and a$0.4 million increase in interest expense.

**LIQUIDITY AND CAPITAL RESOURCES**

The Company has historically operated with a workingcapital deficit.  The working capitaldeficit as of June 30, 2007 and December 31, 2006 was $27.8 million and $34.8million, respectively.  The primaryreason for the working capital deficit is the deferred revenue and gainsreported under current liabilities in the amount of $66.5 million and $62.9million as of June 30, 2007 and December 31, 2006, respectively.  Deferred revenue is primarily comprised ofcash collected for club memberships in advance, which is amortized over thelife of the membership.  The Company usesnet proceeds from this deferred membership revenue to lower its long-termborrowings.  Management believes thatfunds generated by operations together with available borrowings under theCompany’s revolving credit line will be sufficient to meet all of the Company’sdebt service requirements, capital requirements and working capital needs overthe next twelve months.  Further,management believes that the change in the tax status to a Subchapter Scorporation in 2006 for the Company and all its subsidiaries, with theexception of Camping World, Inc. and its wholly-owned subsidiaries, has not limitedthe Company’s ability to issue debt through the capital markets but may limitthe ability of the Company to raise funds in the equity market.

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*Contractual Obligations andCommercial Commitments*

Thefollowing table reflects our contractual obligations and commercial commitmentsat June 30, 2007.  This table includesprincipal and future interest due under our debt agreements based on interestrates as of June 30, 2007 and assumes debt obligations will be held to maturity.
| ** **                          | ** ** | **Payments Due by Period** | ** ** |
|-------------------------------------|------------|-------------------------------------------|------------|
| **(in thousands)**             | ** ** | **Total**                                 | ** ** | **Balance of  2007** | ** ** | **2008 and  2009** | ** ** | **2010 and  2011** | ** ** | **Thereafter** | ** ** |
|                                |       |                                      |       |   |   |   |   |   |   |   |   |
| Long-term debt  and future interest |       | $                                         | 551,668    |   | $ | 20,418 |   | $ | 203,191 |   | $ | 74,086 |   | $ | 253,973 |   |
| Operating lease  obligations        |       | 171,440                                   |       | 8,456 |   | 30,612 |   | 27,644 |   | 104,728 |   |
| Deferred  compensation              |       | 4,255                                     |       | 878 |   | 3,137 |   | 160 |   | 80 |   |
| Standby letters  of credit          |       | 7,254                                     |       | 6,754 |   | 500 |   | — |   | — |   |
| Grand total                         |       | $                                         | 734,617    |   | $ | 36,506 |   | $ | 237,440 |   | $ | 101,890 |   | $ | 358,781 |   |

 

On June 24, 2003, AGIentered into an Amended and Restated Credit Agreement and a Senior SecuredFloating Rate Note Purchase Agreement (as amended, the “AGI Senior CreditFacility”).  The AGI Senior CreditFacility provides for a revolving credit facility of $35.0 million and termloans in the aggregate of $140.0 million. As of June 30, 2007, $129.4 million was outstanding under the term loansand $1.5 million was outstanding under the revolving credit facility.  Reborrowings under the term loans are notpermitted.  The interest on borrowingsunder the AGI Senior Credit Facility is at variable rates based on the ratio oftotal cash flow to outstanding indebtedness (as defined).  Interest rates float with prime and theLondon Interbank Offered Rates, or LIBOR, plus an applicable margin rangingfrom 1.50% to 2.50% over the stated rates. As of June 30, 2007, the average interest rates on the term loans andthe revolving credit facility were 7.84% and 10.00%, respectively, andpermitted borrowings under the undrawn revolving facility were $26.2million.  AGI also pays a commitment feeof 0.5% per annum on the unused amount of the revolving credit facility.  The aggregate quarterly scheduled payments onthe term loans are $0.4 million.  Boththe revolving credit facility and the term loans mature on June 24, 2009.  The funds available under the AGI SeniorCredit Facility may be utilized for borrowings or letters of credit; however, amaximum of $12.5 million may be allocated to such letters of credit.  As of June 30, 2007, AGI had letters ofcredit in the aggregate amount of $7.3 million outstanding.  The AGI Senior Credit Facility is secured byvirtually all of the AGI’s assets and a pledge of AGI’s stock and the stock ofthe AGI’s subsidiaries.

In February 2004, AGIissued $200.0 million aggregate principal amount of 9% Senior SubordinatedNotes due 2012 (“AGI Senior Subordinated Notes”).  AGI completed a registered exchange of theAGI Senior Subordinated Notes under the Securities Act of 1933 in August 2004.

On March 3, 2006, AGIamended its Senior Credit Facility to revise the definition of ConsolidatedFixed Charges Ratio and Permitted Tax Distributions.  This amendment allows the Company todistribute taxes to its ultimate parent based on its stand-alone tax obligationrather than the tax obligation of its parent, AGHI, until such time that AGHIpays interest on its 10 7/8% Senior Notes in cash instead of by the issuance ofadditional notes.  Further, the Companyamended the Senior Credit Facility’s covenant restrictions with affiliates topermit a

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joint venture arrangementbetween Camping World and FreedomRoads, an affiliate of the Company.

On February 27, 2007, AGIamended its Senior Credit Facility to extend the maturity of the revolvingcredit facility from June 24, 2008 to June 24, 2009, increase the consolidatedsenior leverage ratio from 1.9 to 3.5 times EBITDA, as defined, and fix theconsolidated total leverage ratio at 5.0 times EBITDA, as defined.  Further, the amendment permits AGI torepurchase up to an additional $50.0 million of the Senior Subordinated Notesfrom time to time as and when AGI determines through the issuance of additionalterm loans of up to $50.0 million.  Anyloan amounts not used for the repurchase of the Senior Subordinated Notes maybe used for acquisitions or repay revolving credit loans.

On March 8, 2007, the AGIpurchased $17.7 million of the Senior Subordinated Notes.  AGI funded the purchase through the issuanceof the $25.0 million in additional incremental term loans as permitted underthe February 27, 2007 amendment to the Senior Credit Facility.  The balance of the $25.0 million issued wasused to pay down AGI’s revolving credit facility by $6.5 million and to payassociated loan fees and transaction expenses. The terms on the additional incremental loans are consistent with theremaining term loan outstanding under the Senior Credit Facility.  As of June 30, 2007, $152.4 million of SeniorSubordinated Notes remain outstanding.

The AGI Indenture,pursuant to which the AGI Senior Subordinated Notes were issued, and the AGISenior Credit Facility contain certain restrictive covenants relating to, butnot limited to, mergers, changes in the nature of the business, acquisitions,additional indebtedness, sale of assets, investments, and the payment ofdividends subject to certain limitations and minimum operating covenants.  AGI was in compliance with all debt covenantsat June 30, 2007.

On March 24, 2005 in aprivate placement, AGHI issued $88.2 million principal amount of its 10-7/8%senior notes due 2012 (the “AGHI Notes”) at a $3.2 million original issue discount.  The Company completed a registered exchangeof these AGHI Notes under the Securities Act of 1933 in June 2005.  The AGHI Notes are unsecured obligations ofthe Company and its subsidiaries have not guaranteed payment of principal orinterest on the AGHI Notes.  Interest onthe AGHI Notes is payable semi-annually on February 15 and August 15 commencingAugust 15, 2005 and the entire $88.2 million principal amount of the AGHI Notesare due in full on February 15, 2012. For interest payments on and prior to February 15, 2008, AGHI may electto pay interest on the AGHI Notes in cash or by issuance of additional notes ofthe same tenor as the AGHI Notes, except the maturity date is March 15,2010.  AGI has not paid any dividends toAGHI to fund payment of interest on the AGHI Notes and AGHI made the interestpayments due on August 15, 2005, February 15, 2006, August 15, 2006 andFebruary 15, 2007 through issuance of additional notes.  The company plans to pay the interest on thenotes due August 15, 2008 from the proceeds of a contribution to be made byAGHI’s parent, AGHC.  If the source ofthe cash payment of the AGHI Notes is dividends from AGI, its wholly-ownedsubsidiary, there are certain restrictions on the payment of dividends underthe AGI Senior Credit Facility and the AGI Indenture.

The AGHI Indenturecontains certain restrictive covenants relating to, but not limited to,mergers, changes in the nature of the business, acquisitions, additionalindebtedness, sale of

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assets, investments, andthe payment of dividends subject to certain limitations and minimum operatingcovenants.  AGHI was in compliance withall debt covenants at June 30, 2007.

TheCompany contributed the net proceeds from the issuance of the AGHI Notes,approximately $81.0 million, to AGI and in turn, AGI made an equitycontribution to its wholly-owned subsidiary, Camping World.  Camping World then made an equity capitalcontribution in the same amount to its wholly-owned subsidiary, CWI, Inc. (“CWI”).  CWI created a new wholly-owned subsidiarynamed CWFR Capital Corp., a Delaware corporation (“CWFR”) which is an “unrestrictedsubsidiary” under the AGHI Notes, and the AGI Indenture.  Since CWFR is an unrestricted subsidiary, itsoperations are not restricted by either the AGI Indenture or the AGHINotes.  CWI made an equity capitalcontribution to CWFR in an equal amount to the capital contribution that itreceived from Camping World.  CWFR usedthe proceeds from the equity capital contribution to acquire a preferredmembership interest in FreedomRoads, a Minnesota limited liability companyowned 90% by The Stephen Adams Living Trust, which also indirectly owns 97.4%of the outstanding capital stock of AGHC and indirectly AGHI.

In February 2006, AGIProductions, Inc., a subsidiary of Ehlert Publishing, Inc., acquired theconsumer shows and related assets of H & S Productions, LLC for $2.5million.  As part of the purchase, theCompany issued $0.4 million of debt and assumed $1.0 million of liabilities.  In August 2006, TL Enterprises, Inc. acquiredthe consumer park guides and related assets of American Guide Services, Inc.for $1.0 million.  As part of thepurchase, the Company issued $0.1 million of debt and assumed $0.3 million ofliabilities.  In September 2006, AGIProductions, Inc. acquired the consumer shows and related assets of Apple RockAdvertising and Promotions, Inc. for $1.5 million.  As part of the purchase, the Company issued$0.5 million of debt and assumed $0.4 million of liabilities.

In January 2007, AGIProductions, Inc. acquired a consumer show from MAC Events, Inc. for $0.5million.  As part of the purchase, theCompany assumed $0.3 million of liabilities. In February 2007, AGI Productions, Inc. acquired consumer shows fromIndustrial Exposition Inc. for $1.9 million. As part of the purchase, the Company issued $1.5 million of debt andassumed $0.6 million of liabilities.

For the six months endedJune 30, 2007, the Company incurred $0.2 million of deferred executivecompensation expense under the phantom stock agreements and made payments of$2.4 million on the payout provisions of mature phantom stock agreements.  The earned incentives under these agreementsare scheduled to be paid at various times over the next five years.  Phantom stock payments of $0.9 million arescheduled to**be made for the remainder of 2007.

Capital expenditures forthe first six months of 2007 totaling $11.2 million increased $3.9 million fromthe first six months of 2006 primarily due to the addition of thirteen newretail stores.  Additional capitalexpenditures of $5.2 million are anticipated for the balance of 2007 primarilyfor two new retail stores, relocation of one retail store, existing retailstore upgrades, information technology, inventory system replacement, andcomputer hardware and software upgrades and enhancements.

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**CRITICAL ACCOUNTING POLICIES**

*General*

The discussion andanalysis of the Company’s financial condition and results of operations arebased upon the Company’s consolidated financial statements, which have been preparedin accordance with accounting principles generally accepted in the UnitedStates.  The preparation of thesefinancial statements requires the Company to make estimates and judgments thataffect the reported amounts of assets, liabilities, revenues and expenses, andrelated disclosure of contingent assets and liabilities.  On an on-going basis, the Company evaluatesits estimates, including those related to membership programs and incentives,bad debts, inventories, intangible assets, employee health insurance benefits,income taxes, restructuring, contingencies and litigation.  The Company bases its estimates on historicalexperience and on various other assumptions that are believed to be reasonableunder the circumstances, the results of which form the basis for makingjudgments about the carrying values of assets and liabilities that are notreadily apparent from other sources. Actual results may differ from these estimates under differentassumptions or conditions.

The Company believes thefollowing critical accounting policies affect the more significant judgmentsand estimates used in the preparation of the Company’s consolidated financialstatements.

*RevenueRecognition*

Merchandise revenue is recognized whenproducts are sold in the retail stores, shipped for mail and internet orders,or when services are provided to customers. Publication advertising and newsstand sales, net of estimated provisionfor returns, are recorded at time of delivery. Subscription sales of publications are deferred and recognized over thelives of the subscriptions.  Revenuesfrom the emergency road service program (“ERS”) are deferred and recognizedover the life of the membership.  ERSclaim expenses are recognized when incurred. Advances on third party credit card fee revenues are deferred andrecognized based primarily on a percentage of credit card receivables held bythird parties.  Membership revenue isgenerated from annual, multi-year and lifetime memberships.  The revenue and expenses associated withthese memberships are deferred and amortized over the membership period.  For lifetime memberships, an 18-year periodis used, which is the actuarially determined estimated fulfillment period.  Promotional expenses, consisting primarily ofdirect mail advertising, are deferred and expensed over the period of expectedfuture benefit.  Renewal expenses areexpensed at the time related materials are mailed.  Recognized revenues and profit are subject torevisions as the membership progresses to completion.  Revisions to membership period estimateswould change the amount of income and expense amortized in future accountingperiods.

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*AccountsReceivable*

The Company estimates thecollectability of its trade receivables. A considerable amount of judgment is required in assessing the ultimaterealization of these receivables including the current credit-worthiness ofeach customer.  Changes in requiredreserves have been recorded in recent periods and may occur in the future dueto the market environment.

*Inventory*

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

*Long-Lived Assets*

Purchased intangibleassets with finite lives are amortized using the straight-line method over theestimated economic lives of the assets, ranging from one to twenty-three years.

Long-lived assets, suchas property, plant and equipment and purchased intangible assets with finitelives are evaluated for impairment whenever events or changes in circumstancesindicate the carrying value of an asset may not be recoverable in accordancewith SFAS No. 144, “Accounting for the Impairment or Disposal of Long-LivedAssets.”  The Company assesses the fairvalue of the assets based on the future cash flow the assets are expected togenerate and recognize an impairment loss when estimated undiscounted futurecash flow expected to result from the use of the asset plus net proceedsexpected from disposition of the asset (if any) are less than the carryingvalue of the asset.  When an impairmentis identified, the Company reduces the carrying amount of the asset to itsestimated fair value based on a discounted cash flow approach or, whenavailable and appropriate, comparable market values.  The Company determined there were noindicators of impairment of long-lived assets as of December 31, 2006 or June30, 2007.

The Company has evaluatedthe remaining useful lives of its finite-lived purchased intangible assets todetermine if any adjustments to the useful lives were necessary or if any ofthese assets had indefinite lives and were therefore not subject toamortization.  The Company determinedthat no adjustments to the useful lives of its finite-lived purchasedintangible assets were necessary.  Thefinite-lived purchased intangible assets consist of membership customer lists,resort and golf course agreements, non-compete and deferred consultingagreements and deferred financing costs which have weighted average usefullives of approximately 6 years, 23 years, 15 years and 7 years, respectively.

*Indefinite-Lived IntangibleAssets*

The Company evaluatesindefinite-lived intangible assets for impairment at least annually or whenevents indicate that an impairment exists in accordance with SFAS No. 142, “Goodwill

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and Other Intangibles.”  The impairment test for goodwill and otherindefinite-lived intangible assets is calculated annually using fair valuemeasurement techniques.

Determining the fairvalue of a reporting unit and the fair value of individual assets andliabilities of a reporting unit is judgmental in nature and often involves theuse of significant estimates and assumptions. These estimates and assumptions could have a significant impact onwhether or not an impairment charge is recognized and also the extent of suchcharge.  The Company’s estimates of fairvalue utilized in goodwill and other indefinite-lived intangible asset testsmay be based upon a number of factors, including assumptions about theprojected future cash flows, discount rate, growth rate, determination ofmarket comparables, technological change, economic conditions or changes to theCompany’s business operations.  Suchchanges may result in impairment charges recorded in future periods.

The fair value of theCompany’s reporting units is annually determined using a combination of theincome approach and the market approach. Under the income approach, the fair value of a reporting unit iscalculated based on the present value of estimated future cash flows.  Future cash flows are estimated by theCompany under the market approach, fair value is estimated based on marketmultiples of revenue or earnings for comparable companies.

Future goodwillimpairment tests could result in a charge to earnings.  The Company will continue to evaluategoodwill on an annual basis and whenever events and changes in circumstancesindicate that there may be a potential impairment.

*Income Taxes*

Significant judgment is required indetermining the Company’s tax provision and in evaluating its taxpositions.  The Company establishes accruals for certain tax contingencieswhen, despite the belief that the Company’s tax return positions are fullysupported, the Company believes that certain positions may be challenged andthat the Company’s positions may not be fully sustained.  The taxcontingency accruals are adjusted in light of changing facts and circumstances,such as the progress of tax audits, case law and emerging legislation.  The Company’s tax provision includes theimpact of tax contingency accruals and changes to the accruals, includingrelated interest and penalties, as considered appropriate by management.

**ITEM 3:  QUANTITATIVE AND QUALITATIVE DISCLOSURESABOUT MARKET RISK**

We are exposed to market risks relating tofluctuations in interest rates.  Ourobjective of financial risk management is to minimize the negative impact ofinterest rate fluctuations on our earnings and cash flows.  Interest rate risk is managed through the useof a combination of fixed and variable interest debt as well as the periodicuse of interest rate collar contracts.

The following information discusses thesensitivity to our earnings.  The rangeof changes chosen for this analysis reflects our view of changes which arereasonably possible over a one-year period. These forward-looking disclosures are selective in nature and onlyaddress the potential impacts from financial instruments.  They do not include other potential effectswhich could impact our business as a result of these interest ratefluctuations.

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*Interest Rate SensitivityAnalysis*

At June 30, 2007, we had debt totaling $395.4million, comprised of $130.9 million of variable rate debt and $264.5 millionof fixed rate debt.  Holding othervariables constant (such as debt levels), the earnings and cash flow impact ofa one-percentage point increase/ decrease in interest rates would have anunfavorable/ favorable impact of approximately $1.3 million.

*Credit Risk*

We are exposed to credit risk on accountsreceivable.  We provide credit tocustomers in the ordinary course of business and perform ongoing creditevaluations.  Concentrations of creditrisk with respect to trade receivables are limited due to the number ofcustomers comprising our customer base. We currently believe our allowance for doubtful accounts is sufficientto cover customer credit risks.

**ITEM 4:CONTROLS AND PROCEDURES**

Within 90 daysprior to the filing of this Quarterly Report on Form 10-Q, the Company carriedout an evaluation, under the supervision and with the participation of theCompany’s management, including the President and Chief Executive Officer andthe Senior Vice President and Chief Financial Officer, of the effectiveness ofthe design and operation of the Company’s disclosure controls and procedurespursuant to Regulation 13a-14 under the Securities Exchange Act of 1934.  Based upon that evaluation, the President andChief Executive Officer along with the Senior Vice President and ChiefFinancial Officer concluded that the disclosure controls and procedures areeffective in timely alerting them to material information relating to the Company(including its consolidated subsidiaries) required to be included in theperiodic SEC filings.  There have been nosignificant changes in the Company’s internal controls or in other factors thatcould significantly affect these controls subsequent to the date the Companycarried out its evaluation.

**PARTII:  OTHER INFORMATION**

None

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**SIGNATURES:**

Pursuant to therequirements of the Securities Exchange Act of 1934, the Registrants have dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.
|                                   | **AFFINITY GROUP HOLDING, INC.** |
|-----------------------------------|----------------------------------|
| ** **                        | ** **                       |
| ** **                        | ** **                       |
|                              | /s/ Thomas F. Wolfe              |   |
| Date:  August  13, 2007 | Thomas F. Wolfe                  |
|                              | Senior Vice  President and       |
|                              | Chief Financial  Officer         |

 

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