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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549


FORM 10-Q

|           |  |                                                                                                                                                            
|---------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|(Mark one) |  |                                                                                                                                                            
|          
|          
|          
|          
|[X]        |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002.                 
|          
|[   ]      |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________ TO _______________

Commission File Number 333-42117

TRANSWESTERN HOLDINGS L.P.
(Exact name of registrant as specified in its charter)

|                                                                        |  |                                                   
|----------------------------------------------------------------------- |  | --------------------------------------------------
|DELAWARE
(State or other jurisdiction of
incorporation or organization) |  | 33-0560667
(I.R.S. Employer
Identification Number)



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|                                                                                              |  |                 
|--------------------------------------------------------------------------------------------- |  | ----------------
|8344 CLAIREMONT MESA BOULEVARD
SAN DIEGO, CALIFORNIA
(Address of principal executive offices) |  | 92111
(Zip Code)

(858) 467-2800
(Registrants telephone number, including area code)

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



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TABLE OF CONTENTS



|                           |                                                                                                                    |                                                      |  |  |  |  |  | 
|-------------------------- | ------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------- |  |  |  |  |  | 
|                           |                                                                                                                    | CONSOLIDATED BALANCE SHEETS                         
|                           |                                                                                                                    | CONSOLIDATED STATEMENTS OF OPERATIONS               
|                           |                                                                                                                    | CONSOLIDATED STATEMENTS OF CASH FLOWS               
|                           |                                                                                                                    | NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
|                           | ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) Overview
|                           | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                
|                           | ITEM 4 CONTROLS AND PROCEDURES                                                                                    
|PART II. OTHER INFORMATION
|                           | ITEM 1. LEGAL PROCEEDINGS                                                                                         
|                           | ITEM 2. CHANGES IN SECURITIES                                                                                     
|                           | ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                                                           
|                           | ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS                                                         
|                           | ITEM 5. OTHER INFORMATION                                                                                         
|                           | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                                          
|SIGNATURES                
|EXHIBIT 10.1              



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TRANSWESTERN HOLDINGS L.P.
FORM 10-Q INDEX

|           |  |                                                                                                                               |  |     
|---------- |  | ----------------------------------------------------------------------------------------------------------------------------- |  | ----
|           |  |                                                                                                                               |  | PAGE
|           |  |                                                                                                                               |  |     
|PART I.    |  | FINANCIAL INFORMATION                                                                                                         |  |     
|          
|Item 1.    |  | Financial Statements                                                                                                          |  |     
|          
|          
|          
|          
|           |  | Consolidated Balance Sheets as of September 30, 2002 (unaudited)
and December 31, 2001                                        |  | 3   
|          
|          
|          
|          
|           |  | Consolidated Statements of Operations for the Three and Nine Months
Ended September 30, 2002 (unaudited) and 2001 (unaudited) |  | 4   
|          
|          
|          
|          
|           |  | Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 2002 (unaudited) and 2001 (unaudited)           |  | 5   
|          
|          
|          
|          
|           |  | Notes to Unaudited Consolidated Financial Statements                                                                          |  | 6   
|          
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and
Results of Operations                                         |  | 12  
|          
|Item 3.    |  | Quantitative and Qualitative Disclosures About Market Risk                                                                    |  | 18  
|          
|Item 4.    |  | Controls and Procedures                                                                                                       |  | 18  
|          
|PART II.   |  | OTHER INFORMATION                                                                                                             |  |     
|          
|Item 1.    |  | Legal Proceedings                                                                                                             |  | 18  
|          
|Item 2.    |  | Changes in Securities                                                                                                         |  | 18  
|          
|Item 3.    |  | Defaults upon Senior Securities                                                                                               |  | 18  
|          
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                                                           |  | 18  
|          
|Item 5.    |  | Other Information                                                                                                             |  | 18  
|          
|Item 6.    |  | Exhibits and Reports on Form 8-K                                                                                              |  | 18  
|          
|SIGNATURES |  | 19                                                                                                                           

2



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TRANSWESTERN HOLDINGS L.P.




CONSOLIDATED BALANCE SHEETS


(in thousands)


|                                          |                                                                                                                              |                               |         |               |          |              |         |          |          |  
|----------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------- | ----------------------------- | ------- | ------------- | -------- | ------------ | ------- | -------- | -------- | -
|                                          |                                                                                                                              |                               |         | SEPTEMBER 30, |          | DECEMBER 31,
|                                          |                                                                                                                              |                               |         | 2002          |          | 2001        
|                                          |                                                                                                                              |                               |         |               |          |             
|                                          |                                                                                                                              |                               |         | (UNAUDITED)   |          |              |         |         
|                                         
|                                         
|                                         
|                                         
|ASSETS                                    |                                                                                                                              |                               |         |               |          |              |         |         
|Current assets:                           |                                                                                                                              |                               |         |               |          |              |         |         
|                                          | Cash                                                                                                                         |                               | $       | 32,482        |          |              | $       | 26,913   |         
|                                          | Trade receivable, (net of allowance for doubtful accounts of $20,721
at September 30, 2002 and $19,444 at December 31, 2001) |                               |         | 103,428       |          |              |         | 92,714   |         
|                                          | Deferred directory costs                                                                                                     |                               |         | 27,173        |          |              |         | 25,617   |         
|                                          | Other current assets                                                                                                         |                               |         | 2,553         |          |              |         | 2,527    |         
|                                          |                                                                                                                              |                               |         |               |          |              |         |         
|                                          |                                                                                                                              | Total current assets          |         |               | 165,636  |              |         |          | 147,771  |  
|Non-current assets:                       |                                                                                                                              |                               |         |               |          |              |         |         
|                                          | Property, equipment and leasehold improvements, net                                                                          |                               |         | 5,660         |          |              |         | 6,590    |         
|                                          | Acquired intangibles, net                                                                                                    |                               |         | 249,836       |          |              |         | 252,403  |         
|                                          | Debt issuance costs, net                                                                                                     |                               |         | 12,266        |          |              |         | 13,969   |         
|                                          |                                                                                                                              |                               |         |               |          |              |         |         
|                                          |                                                                                                                              | Total non-current assets      |         |               | 267,762  |              |         |          | 272,962  |  
|                                          |                                                                                                                              |                               |         |               |          |              |         |         
|Total assets                              |                                                                                                                              | $                             | 433,398 |               |          | $            | 420,733 |         
|                                          |                                                                                                                              |                               |         |               |          |              |         |         
|LIABILITIES AND PARTNERSHIP DEFICIT       |                                                                                                                              |                               |         |               |          |              |         |         
|Current liabilities:                      |                                                                                                                              |                               |         |               |          |              |         |         
|                                          | Accounts payable                                                                                                             |                               | $       | 15,625        |          |              | $       | 17,866   |         
|                                          | Salaries and benefits payable                                                                                                |                               |         | 10,960        |          |              |         | 9,883    |         
|                                          | Accrued acquisition costs                                                                                                    |                               |         | 4,820         |          |              |         | 7,447    |         
|                                          | Accrued interest                                                                                                             |                               |         | 9,015         |          |              |         | 4,028    |         
|                                          | Other accrued liabilities                                                                                                    |                               |         | 2,017         |          |              |         | 2,249    |         
|                                          | Equity trust distribution payable                                                                                            |                               |         |              |          |              |         | 2,902    |         
|                                          | Customer deposits                                                                                                            |                               |         | 36,406        |          |              |         | 25,420   |         
|                                          | Current portion, long-term debt                                                                                              |                               |         | 5,912         |          |              |         | 5,055    |         
|                                          |                                                                                                                              |                               |         |               |          |              |         |         
|                                          |                                                                                                                              | Total current liabilities     |         |               | 84,755   |              |         |          | 74,850   |  
|Long-term debt:                           |                                                                                                                              |                               |         |               |          |              |         |         
|                                          | Series F Senior Subordinated Notes                                                                                           |                               |         | 215,676       |          |              |         | 215,777  |         
|                                          | Series B Senior Discount Notes, net                                                                                          |                               |         | 57,105        |          |              |         | 52,384   |         
|                                          | Senior credit facility Term A Loan                                                                                           |                               |         | 27,388        |          |              |         | 30,545   |         
|                                          | Senior credit facility Term B Loan                                                                                           |                               |         | 195,500       |          |              |         | 197,000  |         
|                                          | Other long-term liabilities                                                                                                  |                               |         | 300           |          |              |         | 300      |         
|                                          |                                                                                                                              |                               |         |               |          |              |         |         
|                                          |                                                                                                                              | Total non-current liabilities |         |               | 495,969  |              |         |          | 496,006  |  
|                                          |                                                                                                                              |                               |         |               |          |              |         |         
|                                          |                                                                                                                              | Total liabilities             |         |               | 580,724  |              |         |          | 570,856  |  
|                                          |                                                                                                                              |                               |         |               |          |              |         |         
|Partnership deficit:                      |                                                                                                                              |                               |         |               |          |              |         |         
|                                          | General partner                                                                                                              |                               |         | (4,008        | )        |              |         | (4,077   | )       
|                                          | Limited partners                                                                                                             |                               |         | (142,710      | )        |              |         | (145,348 | )       
|                                          | Notes receivables from partners                                                                                              |                               |         | (608          | )        |              |         | (698     | )       
|                                          |                                                                                                                              |                               |         |               |          |              |         |         
|                                          |                                                                                                                              | Total partnership deficit     |         |               | (147,326 | )            |         |          | (150,123 | )
|                                          |                                                                                                                              |                               |         |               |          |              |         |         
|Total liabilities and partnership deficit |                                                                                                                              | $                             | 433,398 |               |          | $            | 420,733 |         
|                                          |                                                                                                                              |                               |         |               |          |              |         |         
|                                         
|See accompanying notes.                  

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TRANSWESTERN HOLDINGS L.P.




CONSOLIDATED STATEMENTS OF OPERATIONS


(unaudited, in thousands)


|                                                     |                                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |        | 
|---------------------------------------------------- | ---------------------------------------- | - | ------------------ | ------ | ----------------- | - | ------- | ------ | ---- | - | ------- | ------- |  | - | ------- | ------ | 
|                                                     |                                          |   | THREE MONTHS ENDED |        | NINE MONTHS ENDED
|                                                     |                                          |   | SEPTEMBER 30,      |        | SEPTEMBER 30,    
|                                                     |                                          |   |                    |        |                  
|                                                     |                                          |   | 2002               |        | 2001              |   | 2002    |        | 2001
|                                                     |                                          |   |                    |        |                   |   |         |        |     
|Net revenues                                         |                                          | $ | 75,036             |        |                   | $ | 63,634  |        |      | $ | 238,552 |         |  | $ | 158,765 |       
|Cost of revenues                                     |                                          |   | 14,211             |        |                   |   | 14,949  |        |      |   | 43,132  |         |  |   | 34,348  |       
|                                                     |                                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |       
|Gross profit                                         |                                          |   | 60,825             |        |                   |   | 48,685  |        |      |   | 195,420 |         |  |   | 124,417 |       
|Operating expenses:                                  |                                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |       
|                                                     | Sales and marketing                      |   |                    | 37,080 |                   |   |         | 29,015 |      |   |         | 108,007 |  |   |         | 73,331 | 
|                                                     | General and administrative               |   |                    | 19,226 |                   |   |         | 26,065 |      |   |         | 52,322  |  |   |         | 51,762 | 
|                                                     | Recapitalization transaction costs       |   |                    |       |                   |   |         |       |      |   |         |        |  |   |         | 15,371 | 
|                                                     | Contribution to equity compensation plan |   |                    |       |                   |   |         | 616    |      |   |         |        |  |   |         | 5,805  | 
|                                                     |                                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |       
|Total operating expenses                             |                                          |   | 56,306             |        |                   |   | 55,696  |        |      |   | 160,329 |         |  |   | 146,269 |       
|                                                     |                                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |       
|Income (loss) from operations                        |                                          |   | 4,519              |        |                   |   | (7,011  | )      |      |   | 35,091  |         |  |   | (21,852 | )     
|Other income (loss), net                             |                                          |   | 23                 |        |                   |   | 343     |        |      |   | (109    | )       |  |   | 287     |       
|Interest expense                                     |                                          |   | (10,277            | )      |                   |   | (11,488 | )      |      |   | (30,682 | )       |  |   | (27,429 | )     
|                                                     |                                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |       
|Net income (loss) before extraordinary loss          |                                          | $ | (5,735             | )      |                   | $ | (18,156 | )      |      | $ | 4,300   |         |  | $ | (48,994 | )     
|Extraordinary loss                                   |                                          |   |                   |        |                   |   |        |        |      |   |        |         |  |   | (3,515  | )     
|                                                     |                                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |       
|Net income (loss)                                    |                                          | $ | (5,735             | )      |                   | $ | (18,156 | )      |      | $ | 4,300   |         |  | $ | (52,509 | )     
|                                                     |                                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |       
|Net income (loss) allocated
to General Partner units |                                          | $ | (90                | )      |                   | $ | (312    | )      |      | $ | 67      |         |  | $ | (903    | )     
|                                                     |                                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |       
|Net income (loss) allocated
to Limited Partner units |                                          | $ | (5,645             | )      |                   | $ | (17,844 | )      |      | $ | 4,233   |         |  | $ | (51,606 | )     
|                                                     |                                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |       
|Net income (loss) per
General Partner unit           |                                          | $ | (9.2               | )      |                   | $ | (31.9   | )      |      | $ | 6.9     |         |  | $ | (92.2   | )     
|                                                     |                                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |       
|Net income (loss) per
Limited Partner unit           |                                          | $ | (2.9               | )      |                   | $ | (9.4    | )      |      | $ | 2.2     |         |  | $ | (27.1   | )     
|                                                     |                                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |       
|Weighted average General Partner
units outstanding   |                                          |   | 10                 |        |                   |   | 10      |        |      |   | 10      |         |  |   | 10      |       
|                                                     |                                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |       
|Weighted average Limited Partner
units outstanding   |                                          |   | 1,930              |        |                   |   | 1,886   |        |      |   | 1,930   |         |  |   | 1,886   |       
|                                                     |                                          |   |                    |        |                   |   |         |        |      |   |         |         |  |   |         |       
|                                                    
|See accompanying notes.                             

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TRANSWESTERN HOLDINGS L.P.




CONSOLIDATED STATEMENTS OF CASH FLOWS


(unaudited, in thousands)


|                                                                                            |                                                                                     |                                 |         |                   |         |      |          |          |         |  
|------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | ------------------------------- | ------- | ----------------- | ------- | ---- | -------- | -------- | ------- | -
|                                                                                            |                                                                                     |                                 |         | NINE MONTHS ENDED
|                                                                                            |                                                                                     |                                 |         | SEPTEMBER 30,    
|                                                                                            |                                                                                     |                                 |         |                  
|                                                                                            |                                                                                     |                                 |         | 2002              |         | 2001
|                                                                                            |                                                                                     |                                 |         |                   |         |     
|OPERATING ACTIVITIES                                                                        |                                                                                     |                                 |         |                   |         |      |          |         
|Net income (loss)                                                                           |                                                                                     | $                               | 4,300   |                   |         | $    | (52,509  | )       
|Adjustments to reconcile net income (loss) to cash provided
(used) by operating activities: |                                                                                     |                                 |         |                   |         |      |          |         
|                                                                                            | Loss on early extinguishment of debt                                                |                                 |         |                  |         |      |          | 3,515    |        
|                                                                                            | Write-down of investment in Eversave                                                |                                 |         |                  |         |      |          | 250      |        
|                                                                                            | Loss on write-off of fixed assets                                                   |                                 |         | 606               |         |      |          |         |        
|                                                                                            | Depreciation and amortization                                                       |                                 |         | 30,563            |         |      |          | 33,425   |        
|                                                                                            | Amortization of deferred debt issuance costs                                        |                                 |         | 1,877             |         |      |          | 1,407    |        
|                                                                                            | Amortization of Senior Discount Note                                                |                                 |         | 4,719             |         |      |          | 4,231    |        
|                                                                                            | Provision for doubtful accounts                                                     |                                 |         | 27,536            |         |      |          | 16,742   |        
|                                                                                            | Changes in operating assets and liabilities, excluding the
effects of acquisitions: |                                 |         |                   |         |      |          |          |        
|                                                                                            |                                                                                     | Trade receivables               |         |                   | (10,628 | )    |          |          | (1,350  | )
|                                                                                            |                                                                                     | Write-off of doubtful accounts  |         |                   | (27,695 | )    |          |          | (14,567 | )
|                                                                                            |                                                                                     | Recoveries of doubtful accounts |         |                   | 1,529   |      |          |          | 1,468   |  
|                                                                                            |                                                                                     | Deferred directory costs        |         |                   | (1,291  | )    |          |          | (5,932  | )
|                                                                                            |                                                                                     | Other current assets            |         |                   | (27     | )    |          |          | 330     |  
|                                                                                            |                                                                                     | Accounts payable                |         |                   | (3,194  | )    |          |          | (4,853  | )
|                                                                                            |                                                                                     | Accrued liabilities             |         |                   | (4,664  | )    |          |          | (13,089 | )
|                                                                                            |                                                                                     | Accrued interest                |         |                   | 4,987   |      |          |          | 7,734   |  
|                                                                                            |                                                                                     | Customer deposits               |         |                   | 11,696  |      |          |          | 10,005  |  
|                                                                                            |                                                                                     | Equity trust payable            |         |                   | (2,902  | )    |          |          | 2,902   |  
|                                                                                            |                                                                                     |                                 |         |                   |         |      |          |         
|Cash provided by (used in) operating activities                                             |                                                                                     |                                 | 37,412  |                   |         |      | (10,291  | )       
|                                                                                           
|INVESTING ACTIVITIES                                                                        |                                                                                     |                                 |         |                   |         |      |          |         
|Purchase of property, equipment and leasehold improvements                                  |                                                                                     |                                 | (1,112  | )                 |         |      | (970     | )       
|Cash paid for acquisition of WorldPages.com, net of cash acquired                           |                                                                                     |                                 |        |                   |         |      | (140,299 | )       
|Acquisition of other directories                                                            |                                                                                     |                                 | (24,046 | )                 |         |      | (14,748  | )       
|Deferred financing costs and other assets                                                   |                                                                                     |                                 | (969    | )                 |         |      | (7,440   | )       
|                                                                                            |                                                                                     |                                 |         |                   |         |      |          |         
|Cash used for investing activities                                                          |                                                                                     |                                 | (26,127 | )                 |         |      | (163,457 | )       
|                                                                                           
|FINANCING ACTIVITIES                                                                        |                                                                                     |                                 |         |                   |         |      |          |         
|Borrowings under long-term debt agreements:                                                 |                                                                                     |                                 |         |                   |         |      |          |         
|                                                                                            | Revolving credit facility                                                           |                                 |         |                  |         |      |          | 61,700   |        
|                                                                                            | Senior term loans                                                                   |                                 |         |                  |         |      |          | 235,220  |        
|                                                                                            | 9 5/8% Senior Subordinated Notes                                                    |                                 |         |                  |         |      |          | 74,553   |        
|Repayments of long-term debt:                                                               |                                                                                     |                                 |         |                   |         |      |          |         
|                                                                                            | Revolving credit facility                                                           |                                 |         |                  |         |      |          | (84,200  | )      
|                                                                                            | Senior term loans and note payable                                                  |                                 |         | (3,800            | )       |      |          | (107,395 | )      
|                                                                                            | Repayment of debt assumed in acquisition of WorldPages                              |                                 |         |                  |         |      |          | (73,534  | )      
|Repayments of debt assumed in WorldPages.com acquisition                                    |                                                                                     |                                 | (413    | )                 |         |      |         |         
|Contributions from partners                                                                 |                                                                                     |                                 |        |                   |         |      | 124,291  |         
|Redemption of partner units                                                                 |                                                                                     |                                 | (1,593  | )                 |         |      | (30,004  | )       
|Payment of Notes Receivables from Partners                                                  |                                                                                     |                                 | 90      |                   |         |      |         |         
|                                                                                            |                                                                                     |                                 |         |                   |         |      |          |         
|Cash provided by (used in) financing activities                                             |                                                                                     |                                 | (5,716  | )                 |         |      | 200,631  |         
|                                                                                            |                                                                                     |                                 |         |                   |         |      |          |         
|Net increase in cash                                                                        |                                                                                     |                                 | 5,569   |                   |         |      | 26,883   |         
|Cash at beginning of period                                                                 |                                                                                     |                                 | 26,913  |                   |         |      | 1,961    |         
|                                                                                            |                                                                                     |                                 |         |                   |         |      |          |         
|Cash at end of period                                                                       |                                                                                     | $                               | 32,482  |                   |         | $    | 28,844   |         
|                                                                                            |                                                                                     |                                 |         |                   |         |      |          |         
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                           |                                                                                     |                                 |         |                   |         |      |          |         
|Cash paid for interest                                                                      |                                                                                     | $                               | 19,126  |                   |         | $    | 14,341   |         
|                                                                                            |                                                                                     |                                 |         |                   |         |      |          |         
|                                                                                           
|See accompanying notes.                                                                    

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TRANSWESTERN HOLDINGS L.P.




NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)


1.    GENERAL

The accompanying unaudited consolidated financial statements include the
accounts of TransWestern Holdings L.P. (Holdings) and its wholly owned
subsidiary, TransWestern Publishing Company, LLC (TransWestern or Company)
and TransWesterns direct and indirect subsidiaries. All significant
inter-company transactions have been eliminated. Holdings only assets consist
of TransWesterns Member Units and the shares of TWP Capital Corp.
(Capital). Capital is a wholly-owned
subsidiary of Holdings and TWP Capital Corp. II (Capital II) is a wholly-owned
subsidiary of TransWestern. Neither Capital nor Capital II has any significant
assets or operations. Target Directories of Michigan, Inc. (Target) and
WorldPages, Inc. (WorldPages) and its subsidiaries are subsidiaries of
TransWestern.

These financial statements have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC) and, in the
opinion of management, reflect all adjustments necessary to present fairly the
financial position, results of operations and cash flows for the periods
presented in conformity with accounting principles generally accepted in the
United States. All adjustments were of a normal recurring nature. These
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Holdings Form 10-K for
the fiscal year ended December 31, 2001. The 10-K is available on the Internet
at http://www.sec.gov.

Certain amounts in prior period consolidated financial statements have been
reclassified to conform to the presentation for the three and nine months ended
September 30, 2002.

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TRANSWESTERN HOLDINGS L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

2.    FINANCIAL STATEMENT DETAILS

Property, Equipment and Leasehold Improvements

|                                               |  |               |        |              |  |   |        |  
|---------------------------------------------- |  | ------------- | ------ | ------------ |  | - | ------ | -
|                                               |  | SEPTEMBER 30, |        | DECEMBER 31,
|                                               |  | 2002          |        | 2001        
|                                               |  |               |        |             
|Land and building                              |  | $             |       |              |  | $ | 611    |  
|Computer and office equipment                  |  |               | 11,141 |              |  |   | 10,219 |  
|Furniture and fixtures                         |  |               | 2,764  |              |  |   | 2,492  |  
|Leasehold improvements                         |  |               | 798    |              |  |   | 660    |  
|                                               |  |               |        |              |  |   |        |  
|                                               |  |               | 14,703 |              |  |   | 13,982 |  
|Less accumulated depreciation and amortization |  |               | (9,043 | )            |  |   | (7,392 | )
|                                               |  |               |        |              |  |   |        |  
|                                               |  | $             | 5,660  |              |  | $ | 6,590  |  
|                                               |  |               |        |              |  |   |        |  

Acquired Intangibles

|                              |                           |   |               |         |              |   |          |         | 
|----------------------------- | ------------------------- | - | ------------- | ------- | ------------ | - | -------- | ------- | 
|                              |                           |   | SEPTEMBER 30, |         | DECEMBER 31,
|                              |                           |   | 2002          |         | 2001        
|                              |                           |   |               |         |             
|Customer base                 |                           | $ | 222,962       |         |              | $ | 209,676  |        
|Goodwill                      |                           |   | 168,191       |         |              |   | 159,689  |        
|Licensing agreements          |                           |   | 1,224         |         |              |   | 1,224    |        
|Non compete and other         |                           |   | 7,296         |         |              |   | 2,621    |        
|                              |                           |   |               |         |              |   |          |        
|                              |                           |   | 399,673       |         |              |   | 373,210  |        
|Less accumulated amortization |                           |   | (149,837      | )       |              |   | (120,807 | )      
|                              |                           |   |               |         |              |   |          |        
|                              | Acquired intangibles, net |   | $             | 249,836 |              |   | $        | 252,403 | 
|                              |                           |   |               |         |              |   |          |        

Debt issuance costs

|                              |                          |   |               |        |              |   |        |        | 
|----------------------------- | ------------------------ | - | ------------- | ------ | ------------ | - | ------ | ------ | 
|                              |                          |   | SEPTEMBER 30, |        | DECEMBER 31,
|                              |                          |   | 2002          |        | 2001        
|                              |                          |   |               |        |             
|Debt issuance costs           |                          | $ | 18,450        |        |              | $ | 18,277 |       
|Less accumulated amortization |                          |   | (6,184        | )      |              |   | (4,308 | )     
|                              |                          |   |               |        |              |   |        |       
|                              | Debt issuance costs, net |   | $             | 12,266 |              |   | $      | 13,969 | 
|                              |                          |   |               |        |              |   |        |       

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TRANSWESTERN HOLDINGS L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

3.    LONG TERM DEBT

As of September 30, 2002 Holdings had total outstanding long term
indebtedness of $496.0 million, including $215.7 million of Series F 9 5/8%
Senior Subordinated Notes due 2007, $57.1 million of Holdings 11 7/8% Senior
Discount Notes due 2008, (Discount Notes), $27.4 million of outstanding
borrowings under the Term A loan due 2007, $195.5 million of outstanding
borrowings under the Term B loan due 2008, and $0.3 million in acquisition
related debt. As of September 30, 2002 TransWestern had no outstanding
borrowings under its revolving $65.0 million credit facility.

4.    DIRECTORY ACQUISITIONS

Brazos Valley Telephone Directory Company. On February 26, 2002, the
Company purchased certain tangible and intangible assets of Brazos Valley
Telephone Directory Company for a total of $0.5 million. The Company acquired
one directory in the Mansfield/Kennedale area of Texas.

Phone Directories Company, Inc. On March 22, 2002, the Company purchased certain
tangible and intangible assets of Phone Directories Company, Inc. for a total of $0.8
million. The Company acquired four directories in the Tucson, Arizona area.

Arnold Advertising, Inc. On April 11, 2002, the Company purchased
the outstanding common stock of Arnold Advertising, Inc. for a total of
$8.1 million. The Company acquired three directories in the north
Los Angeles, California area.

Western Directory, Inc. On May 1, 2002, the Company purchased certain
tangible and intangible assets of Western Directory, Inc. for a total of $3.1
million. The Company acquired two directories in northern Oregon.

Pennco Publishing, Inc. On June 5, 2002, the Company purchased certain
tangible and intangible assets of Pennco Publishing, Inc. for a total of $2.5
million. The Company acquired two directories in northwest Oregon.

West Vista Advertising, Inc. On August 15, 2002, the Company purchased
certain tangible and intangible assets of West Vista Advertising, Inc. for a
total of $9.2 million. The Company acquired seven directories located in
Oregon, Arizona, Utah, and Nevada.

The purchase prices for the acquisitions above have been allocated on a
preliminary basis to the tangible and intangible assets acquired based on their
respective fair values at the date of acquisition, as follows (in
thousands):

|                                         |  |   |        | 
|---------------------------------------- |  | - | ------ | 
|Goodwill                                 |  | $ | 5,853  | 
|Customer List                            |  |   | 12,492 | 
|Non-compete                              |  |   | 3,075  | 
|Other current and non-current net assets |  |   | 2,626  | 

Assuming that the above acquisitions had occurred on the first day of
TransWesterns nine month period ended September 30, 2002 and September 30, 2001
the unaudited pro forma results of operations would be as follows:

|                  |  |                                 |         |      |  |   |         |  
|----------------- |  | ------------------------------- | ------- | ---- |  | - | ------- | -
|                  |  | Nine months ended September 30,
|                  |  |                                
|                  |  | 2002                            |         | 2001
|                  |  |                                 |         |     
|                  |  | (Unaudited)                    
|Net revenues      |  | $                               | 246,127 |      |  | $ | 168,282 |  
|Net income (loss) |  |                                 | 5,689   |      |  |   | (52,547 | )

8



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TRANSWESTERN HOLDINGS L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

The above pro forma results give effect to pro forma adjustments for the
revenue and related costs, the amortization of acquired intangibles and interest
expense on borrowings that would have been required to fund the acquisitions.

5.    GUARANTEE

Target Directories of Michigan, Inc., WorldPages, Inc., and TransWesterns
other material wholly-owned subsidiaries, fully and unconditionally guaranteed
TransWesterns outstanding 9 5/8% Series F Senior Subordinated Notes due 2007 on
an unsecured senior subordinated basis. Target and WorldPages, Inc, and its
subsidiaries are the Companys only consolidated operating subsidiaries, other
than an inconsequential subsidiary which is a co-issuer of such notes, and has
no debt senior to the Notes. The following includes summarized financial data
for the Companys unconditional guarantors:

|                         |  |                    |        |                   |  |      |         |      |  |   |        |  |  |   |         |  
|------------------------ |  | ------------------ | ------ | ----------------- |  | ---- | ------- | ---- |  | - | ------ |  |  | - | ------- | -
|                         |  | Three months ended |        | Nine months ended
|                         |  | September 30,      |        | September 30,    
|                         |  |                    |        |                  
|                         |  | 2002               |        | 2001              |  | 2002 |         | 2001
|                         |  |                    |        |                   |  |      |         |     
|                         |  | (Unaudited)        |        | (Unaudited)      
|Statement of Operations: |  |                    |        |                   |  |      |         |      |  |   |        |  |  |   |         |  
|Net revenues             |  | $                  | 19,638 |                   |  | $    | 19,144  |      |  | $ | 93,326 |  |  | $ | 20,248  |  
|Gross profit             |  |                    | 15,383 |                   |  |      | 14,770  |      |  |   | 76,251 |  |  |   | 15,765  |  
|Operating income (loss)  |  |                    | (2,031 | )                 |  |      | (8,879  | )    |  |   | 18,263 |  |  |   | (9,312  | )
|Net income (loss)        |  |                    | (4,922 | )                 |  |      | (12,872 | )    |  |   | 9,486  |  |  |   | (15,071 | )

|                        |  |               |         |              |  |  |         | 
|----------------------- |  | ------------- | ------- | ------------ |  |  | ------- | 
|                        |  | September 30, |         | December 31,
|                        |  | 2002          |         | 2001        
|Balance Sheet:          |  |               |         |             
|                        |  | (Unaudited)  
|Current assets          |  | $             | 66,549  |              |  |  | 51,811  | 
|Non-current assets      |  |               | 189,927 |              |  |  | 187,227 | 
|Current liabilities     |  |               | 21,371  |              |  |  | 21,920  | 
|Non-current liabilities |  |               | 208,020 |              |  |  | 210,964 | 

6.    RESTRUCTURING AND OTHER CHARGES

In connection with the WorldPages acquisition on June 28, 2001, Holdings
approved a plan to restructure the operations of WorldPages and its
subsidiaries. Restructuring costs are composed of committed costs required to
restructure the administrative, production and sales functions into the
Companys operations to achieve beneficial synergies and cost savings.
WorldPages recognized termination costs in accordance with EITF 95-3,
Recognition of Liabilities in Connection with a Business Combination. The
following table displays the liabilities related to the restructuring and other
charges recorded in the net liabilities assumed in the acquisition of
WorldPages:

|                        |  |          |       |          |  |             |        |      |  |   |      |               |  |            |     | 
|----------------------- |  | -------- | ----- | -------- |  | ----------- | ------ | ---- |  | - | ---- | ------------- |  | ---------- | --- | 
|                        |  |          |       |          |  |             |        |      |  |   |      |               |  | Balance at
|Type of cost:           |  | June 28, |       |          |  |             |        |      |  |   |      | September 30,
|(in thousands)          |  | 2001     |       | Payments |  | Adjustments |        | 2002
|                        |  |          |       |          |  |             |        |     
|Employee separation     |  | $        | 4,100 |          |  | $           | (3,873 | )    |  |   |     |               |  | $          | 227 | 
|Office lease settlement |  |          | 986   |          |  |             | (716   | )    |  |   | 87   |               |  |            | 357 | 
|Redundant assets        |  |          | 800   |          |  |             |       |      |  |   | (800 | )             |  |            |    | 
|                        |  |          |       |          |  |             |        |      |  |   |      |               |  |            |     | 
|                        |  | $        | 5,886 |          |  | $           | (4,589 | )    |  | $ | (713 | )             |  | $          | 584 | 
|                        |  |          |       |          |  |             |        |      |  |   |      |               |  |            |     | 

Management believes that the remaining reserves for restructuring are adequate
to complete its plan.

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TRANSWESTERN HOLDINGS L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

7.    LEGAL PROCEEDINGS

On October 24, 2001, TransWesterns wholly-owned subsidiary, WorldPages,
Inc., was sued in the 44th Judicial District Court in Dallas County, Texas by
Ionex Communications, Inc., formerly known as Compass Telecommunications, Inc.
(Ionex). Ionex is claiming that it should be indemnified by WorldPages for
what it alleges are breaches by WorldPages of certain of its representations and
commitments under that certain Stock Purchase Agreement dated as of July 14,
1999. Ionex is seeking approximately $6.0 million plus fees and expenses
relating to (i) indemnification for alleged breaches by WorldPages of its
representations relating to accounts receivable, software licenses, taxes and
litigation and (ii) reimbursement for severance payments that Ionex has made to
former employees of WorldPages. WorldPages intends to vigorously defend against
these claims. In June 2002 the Company increased its accrued liability to $3.0
million related to this matter. The increase in the accrued liability for this
matter has been recorded as an adjustment to goodwill in the accompanying
consolidated balance sheet at September 30, 2002.

Holdings and/or its subsidiaries are parties to various other litigation
matters incidental to the conduct of their business. Management does not believe
that the outcome of any of these matters will have a material adverse effect on
Holdings financial condition or the results of its operations.

8.    NEW ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board (FASB) issued
Statements of Financial Accounting Standards No. 141, Business Combinations, and
No. 142, Goodwill and Other Intangible Assets effective for fiscal years
beginning after December 15, 2001. Under the new rules, goodwill will no longer
be amortized but will be subject to annual impairment tests in accordance with
the Statements. Holdings began applying the new rules on accounting for goodwill
and other intangible assets effective January 1, 2002 and as a result no amounts
were amortized during the three and nine month period ended September 30, 2002.

The following table represents the impact of SFAS 142 on the net loss as if
SFAS 142 had been in effect for all periods presented in the interim
consolidated statements of operations (in thousands):

|                               |  |                    |        |                   |  |      |         |      |  |   |       |  |  |   |         |  
|------------------------------ |  | ------------------ | ------ | ----------------- |  | ---- | ------- | ---- |  | - | ----- |  |  | - | ------- | -
|                               |  | Three months ended |        | Nine months ended
|                               |  | September 30,      |        | September 30,    
|                               |  |                    |        |                  
|                               |  | 2002               |        | 2001              |  | 2002 |         | 2001
|                               |  |                    |        |                   |  |      |         |     
|Net income (loss) as reported |  | $                  | (5,735 | )                 |  | $    | (18,156 | )    |  | $ | 4,300 |  |  | $ | (52,509 | )
|Amortization of goodwill       |  |                    |       |                   |  |      | 7,904   |      |  |   |      |  |  |   | 7,904   |  
|                               |  |                    |        |                   |  |      |         |      |  |   |       |  |  |   |         |  
|Net income (loss) as adjusted |  | $                  | (5,735 | )                 |  | $    | (10,252 | )    |  | $ | 4,300 |  |  | $ | (44,605 | )

A summary of changes in Holdings goodwill for the nine month period ended
September 30, 2002 is as follows:

|         |  |            |         |                |  |             |       |      |  |               |   |  |  |            |         | 
|-------- |  | ---------- | ------- | -------------- |  | ----------- | ----- | ---- |  | ------------- | - |  |  | ---------- | ------- | 
|         |  |            |         |                |  |             |       |      |  |               |   |  |  | Balance at
|         |  | January 1, |         | Acquisitions & |  |             |       |      |  | September 30,
|         |  | 2002       |         | Adjustments(1) |  | Impairments |       | 2002
|         |  |            |         |                |  |             |       |     
|Goodwill |  | $          | 159,689 |                |  | $           | 8,502 |      |  |               |  |  |  | $          | 168,191 | 
|         |  |            |         |                |  |             |       |      |  |               |   |  |  |            |         | 



---

|(1) |  | Adjustments primarily relate to the Companys preliminary purchase price
allocation for several acquisitions. Specifically, the ultimate goodwill
associated with the WorldPages acquisition was adjusted as the value of the
assets and liabilities (including merger liabilities and receivable
valuation) acquired were finalized.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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TRANSWESTERN HOLDINGS L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

In July 2002, the FASB issued statement No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. Statement 146 addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies Emerging Issues Task Force Issue No. 94-3, Liability Recognition
for Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring). Statement 146 requires
that a liability for a cost associated with an exit or disposal activity be
recognized when the liability is incurred. Under Issue 94-3, a liability for an
exit cost as generally defined in Issue 94-3 was recognized at the date of an
entitys commitment to an exit plan. This Statement also establishes that fair
value is the objective for initial measurement of liability. The provisions of
this Statement are effective for exit or disposal activities that are initiated
after December 31, 2002. Management believes the impact on the financial
statements of the Company will be immaterial.

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ITEM
2:    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED)

Overview

As used in this item and throughout this Quarterly Report on Form 10-Q,
we, us, and our each refer to Holdings and TransWestern and their direct
and indirect subsidiaries, collectively.

We recognize net revenues from the sale of advertising placed in each
directory when the completed directory starts distribution. Costs directly
related to sales, production, printing and distribution of each directory are
capitalized as deferred directory costs and then matched against related net
revenues upon distribution. All of our other operating costs are recognized
during the period when incurred. As the number of directories that we publish
increases, the publication schedule is periodically adjusted to accommodate new
books. In addition, changes in distribution dates are affected by market and
competitive conditions and the staffing level required to achieve the individual
directory revenue goals. As a result, our directories may be published in a
month earlier or later than the previous year which may move recognition of
related revenues from one fiscal quarter or year to another. Year to year
results depend on both timing and performance factors.

Notwithstanding significant monthly fluctuations in net revenues which are
recognized based on actual distribution dates of individual directories, our
bookings and cash collection activities generally occur at a relatively steady
pace throughout the year. The table below demonstrates that quarterly bookings,
collection of advance payments and total cash receipts, which includes both
advance payments and collections of accounts receivable, generally vary less on
a percentage basis than our net revenues or EBITDA:

|                        |  |             |      |             |  |             |      |             |  |             |      |  |  |   |      |  |  |   |      | 
|----------------------- |  | ----------- | ---- | ----------- |  | ----------- | ---- | ----------- |  | ----------- | ---- |  |  | - | ---- |  |  | - | ---- | 
|                        |  |            
|                        |  | 2001        |      | 2001        |  | 2002        |      | 2002        |  | 2002       
|                        |  |            
|                        |  | 3rd Quarter |      | 4th Quarter |  | 1st Quarter |      | 2nd Quarter |  | 3rd Quarter
|                        |  |             |      |             |  |             |      |             |  |            
|Net revenues            |  | $           | 63.6 |             |  | $           | 83.6 |             |  | $           | 69.0 |  |  | $ | 94.5 |  |  | $ | 75.0 | 
|EBITDA (a)              |  | $           | 12.3 |             |  | $           | 24.9 |             |  | $           | 19.9 |  |  | $ | 31.7 |  |  | $ | 15.2 | 
|Bookings (b)            |  | $           | 69.4 |             |  | $           | 82.0 |             |  | $           | 62.1 |  |  | $ | 72.3 |  |  | $ | 88.2 | 
|Advance payments        |  | $           | 26.1 |             |  | $           | 29.9 |             |  | $           | 29.8 |  |  | $ | 31.7 |  |  | $ | 34.1 | 
|Total cash receipts (c) |  | $           | 68.1 |             |  | $           | 72.7 |             |  | $           | 67.9 |  |  | $ | 75.8 |  |  | $ | 77.3 | 



---

|(a) |  | EBITDA is defined as income (loss) before extraordinary item,
discretionary contributions to TransWesterns equity compensation plans
(such contributions represent special distributions to TransWesterns equity
compensation plans in connection with refinancing transactions),
non-recurring management bonuses and fees in connection with the June 2001
recapitalization of Holdings, plus interest expense, taxes, and depreciation
and amortization and is consistent with the definition of EBITDA in the
indentures relating to TransWesterns notes and in TransWesterns senior
credit facility. EBITDA is not a measure of performance under accounting
principles generally accepted in the United States (GAAP). EBITDA should not
be considered in isolation or as a substitute for net income (loss), cash
flows from operating activities and other income or cash flow statement data
prepared in accordance with GAAP, or as a measure of profitability or
liquidity. However, management has included EBITDA because it may be used by
certain investors to analyze and compare companies on the basis of operating
performance, leverage and liquidity and to determine a companys ability to
service debt. TransWesterns definition of EBITDA may not be comparable to
that of other companies.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(b) |  | Bookings is defined as the daily advertising orders received from accounts
during a given period and generally occur at a steady pace throughout the
year. Bookings generated by predecessor owners of acquired directories are
excluded.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|   
|   
|   
|(c) |  | Total cash receipts includes both advance payments and collections of
accounts receivable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

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RESULTS OF OPERATIONS

The following table summarizes our results of operations as a percentage of
revenues for the periods indicated:

|                              |  |                     |       |                     |  |      |       |      |  |  |       |   |  |  |       |   
|----------------------------- |  | ------------------- | ----- | ------------------- |  | ---- | ----- | ---- |  |  | ----- | - |  |  | ----- | --
|                              |  | THREE MONTHS        |       | NINE MONTHS        
|                              |  | ENDED SEPTEMBER 30, |       | ENDED SEPTEMBER 30,
|                              |  |                     |       |                    
|                              |  | 2002                |       | 2001                |  | 2002 |       | 2001
|                              |  |                     |       |                     |  |      |       |     
|Net revenues                  |  |                     | 100.0 | %                   |  |      | 100.0 | %    |  |  | 100.0 | % |  |  | 100.0 | % 
|Cost of revenues              |  |                     | 18.9  |                     |  |      | 23.5  |      |  |  | 18.1  |   |  |  | 21.6  |   
|                              |  |                     |       |                     |  |      |       |      |  |  |       |   |  |  |       |   
|Gross profit                  |  |                     | 81.1  |                     |  |      | 76.5  |      |  |  | 81.9  |   |  |  | 78.4  |   
|Sales and marketing           |  |                     | 49.5  |                     |  |      | 45.6  |      |  |  | 45.3  |   |  |  | 46.2  |   
|General and administrative    |  |                     | 25.6  |                     |  |      | 40.9  |      |  |  | 21.9  |   |  |  | 32.6  |   
|Recap. transaction costs      |  |                     | 0.0   |                     |  |      | 0.0   |      |  |  | 0.0   |   |  |  | 9.7   |   
|Contribution to Equity Plan   |  |                     | 0.0   |                     |  |      | 1.0   |      |  |  | 0.0   |   |  |  | 3.7   |   
|                              |  |                     |       |                     |  |      |       |      |  |  |       |   |  |  |       |   
|Income (loss) from operations |  |                     | 6.0   | %                   |  |      | (11.0 | )%   |  |  | 14.7  | % |  |  | (13.8 | )%
|                              |  |                     |       |                     |  |      |       |      |  |  |       |   |  |  |       |   
|EBITDA Margin (a), (b)        |  |                     | 20.3  | %                   |  |      | 19.3  | %    |  |  | 28.0  | % |  |  | 22.3  | % 
|                              |  |                     |       |                     |  |      |       |      |  |  |       |   |  |  |       |   



---

|(a) |  | For a definition of EBITDA see the immediately preceding section.                                                                                                                                                    
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(b) |  | EBITDA Margin is defined as EBITDA as a percentage of net revenues.
Management believes that EBITDA margin provides a valuable indication of
the Companys ability to generate cash flows available for debt service.

THREE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2001

Net revenues increased $11.4 million, or 17.9%, from $63.6 million in the
three months ended September 30, 2001 to $75.0 million in the same period in
2002. The Company published 73 directories in the three months ended September
30, 2002 compared to 71 in the same period in 2001. The net revenue growth was
due to $8.8 million from seven new directories, $12.1 million from 13
directories for which the publication date moved into the period, $2.8 million
from one prototype directory published during both periods, and growth in the
same 52 directories published during both periods of $2.5 million; offset by
$14.8 million of net revenues associated with 18 directories published in the
three months ended September 30, 2001 but not in the same period in 2002. Of the
18 directories moved out, two were published earlier in the year, one was
discontinued, and one will publish in 2003. The remaining 14 directories will
publish in the fourth quarter of 2002.

As a result of a combination of factors, including the addition of new
customers, price increases, increases in the amount of advertising by current
customers and new directory features such as colorization of ads, additional ad
sizes and additional headings, our same book revenue growth for the 52
directories published in both periods was 5.2%.

Cost of revenues decreased $0.7 million, or 4.9%, from $14.9 million in the
three months ended September 30, 2001 to $14.2 million in the same period in
2002. The decrease was the result of $2.7 million of lower costs associated with
the 52 same directories primarily due to a paper price decrease in printing
costs, $0.1 million of lower costs associated with the prototype directory, and
$3.0 million of costs associated with 18 directories published during the three
months ended September 30, 2001, but not in the same period in 2002; offset by
$3.1 million of costs associated with seven new directories published in the
three months ended September 30, 2002, and $2.2 million in costs associated with
13 directories published in the three months ended September 30, 2002, but not
in the same period in 2001. Production support costs decreased $0.2 million in
the three months ended September 30, 2002 compared to the same period in 2001.

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As a result of the above, gross profit increased $12.1 million, or 24.9%,
from $48.7 million in the three months ended September 30, 2001 to $60.8 million
in the same period in 2002. Gross margin increased from 76.5% in the three
months ended September 30, 2001 to 81.1% in the same period in 2002 as a result
of lower direct costs on the same 52 directories.

Selling and marketing expenses increased $8.1 million, or 27.8%, from $29.0
million in the three months ended September 30, 2001 to $37.1 million in the
same period in 2002. The increase was attributable to increases of $4.5 million
in direct sales costs, $3.5 million in provision for bad debt (which was 1.4
percentage points higher on a same book basis compared to the same period in
2001), and $0.1 million in sales support costs. The increase in the provision
for bad debt is the result of higher write-offs due to printing and sales errors
and payment delinquencies. Additional controls have been implemented to reduce
error rates. We vigorously pursue all delinquent customers through third party
collection agencies and appropriate legal channels.

The increase in direct sales costs of $4.5 million was as follows: $4.0
million of costs were for the seven new directories, $3.4 million for 13
directories moving into the period, $0.2 million of higher costs associated with
the 52 same directories and $0.6 million of incremental costs for the one
prototype directory; offset by $3.7 million of costs associated with 18
directories that published in the three months ended September 30, 2001 but not
in the same period in 2002. Direct sales costs as a percentage of revenues for
the same 52 directories published during both periods decreased from 22.1% to
21.4% in the three months ended September 30, 2002 compared to the same period
in 2001.

General and administrative expenses decreased $6.9 million, or 26.2%, from
$26.1 million for the three months ended September 30, 2001 to $19.2 million for
the same period in 2002. The decrease is due to: $7.9 million of amortization
for goodwill in the three months ended September 30, 2001 but not in the same
period in 2002, and $1.6 million of cost eliminations, primarily in compensation
costs, related to the integration of WorldPages; offset by $2.5 million of
higher costs associated with professional fees in connection with unsuccessful
acquisition bids and $0.1 million increase in amortization of acquired customer
base and other intangibles.

There were no contributions to the Equity Compensation Plan in the three
months ended September 30, 2002 as compared to $0.6 million for the three months
ended September 30, 2001 which was associated with the contribution to the
Equity Compensation Plan of $5.2 million made on June 28, 2001 in connection
with the recapitalization.

As a result of the above factors, income from operations increased $11.5
million, from a net loss from operations of $(7.0) million in the three months
ended September 30, 2001 to income from operations of $4.5 million in the same
period in 2002. Income from operations as a percentage of net revenues increased
from (11.0%) in the three months ended September 30, 2001 to 6.0% in the same
period in 2002.

Interest expense decreased $1.2 million, or 10.5%, from $11.5 million in
the three months ended September 30, 2001 to $10.3 million in the same period in
2002 due to a decrease in the rates of interest paid as a result of decreases in
Prime and LIBOR rates.

As a result of the above factors, net loss decreased $12.5 million, from a
net loss of $18.2 million in the three months ended September 30, 2001 to a net
loss of $5.7 million in the same period in 2002.

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NINE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 2001

Net revenues increased $79.8 million, or 50.3%, from $158.8 million in the
nine months ended September 30, 2001 to $238.6 million in the same period in
2002. The Company published 212 directories in the nine months ended September
30, 2002 compared to 193 in the same period in 2001. The net revenue growth was
due to $81.4 million from 33 new directories, $3.3 million from eight
directories for which the publication date moved into the period, $2.8 million
from one prototype directory published during both periods, and growth in the
same 170 directories published during both periods of $8.3 million; offset by
$16.0 million of net revenues associated with 22 directories published in the
nine months ended September 30, 2001 but not in the same period in 2002. Of the
22 directories moved out, one was discontinued, and two will publish in 2003.
The remaining 19 directories will publish in the fourth quarter of 2002.

As a result of a combination of factors, including the addition of new
customers, price increases, increases in the amount of advertising by current
customers and new directory features such as colorization of ads, additional ad
sizes and additional headings, our same book revenue growth for the 170
directories published in both periods was 5.8%.

Cost of revenues increased $8.8 million, or 25.6%, from $34.3 million in
the nine months ended September 30, 2001 to $43.1 million in the same period in
2002. The increase was the result of $16.5 million of costs associated with 33
new directories published in the nine months ended September 30, 2002, $0.7
million in costs associated with eight directories published in the nine months
ended September 30, 2002, but not in the same period in 2001; offset by $5.7
million of lower costs associated with the 170 same directories primarily due to
a paper price decrease in printing costs, $0.1 million of lower costs associated
with the prototype directory and $3.5 million of costs associated with 22
directories published during the nine months ended September 30, 2001, but not
in the same period in 2002. Production support costs increased $0.9 million in
the nine months ended September 30, 2002 due to the additional staffing required
to integrate the acquisition of WorldPages.

As a result of the above, gross profit increased $71.0 million, or 57.1%,
from $124.4 million in the nine months ended September 30, 2001 to $195.4
million in the same period in 2002. Gross margin increased from 78.4% in the
nine months ended September 30, 2001 to 81.9% in the same period in 2002 as a
result of lower direct costs on the same 170 directories.

Selling and marketing expenses increased $34.7 million, or 47.3%, from
$73.3 million in the nine months ended September 30, 2001 to $108.0 million in
the same period in 2002. The increase was attributable to increases of $6.2
million in sales support costs, $17.8 million in direct sales costs and $10.7
million in provision for bad debt (which was 1.1 percentage points higher on a
same book basis compared to the same period in 2001). The increase in the
provision for bad debt is the result of higher write-offs due to printing and
sales errors and payment delinquencies. Additional controls have been
implemented to reduce error rates. We vigorously pursue all delinquent customers
through third party collection agencies and appropriate legal channels.

Of the increase in sales support costs of $6.2 million, $5.2 million was
due to sales offices acquired since the beginning of 2001 and $1.0 million was
due to a general increase in costs associated with personnel and other costs
associated with our field sales offices. The increase in direct sales costs of
$17.8 million was as follows: $20.6 million of costs were for the 33 new
directories, $0.9 million for eight directories moving into the period, and $0.6
million of incremental costs for the one prototype directory; offset by $4.3
million of costs associated with 22 directories that published in the nine
months ended September 30, 2001 but not in the same period in 2002. Direct sales
costs as a percentage of revenues for the same 170 directories published during
both periods decreased from 22.7% to 21.5% in the nine months ended September
30, 2002 compared to the same period in 2001.

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General and administrative expenses increased $0.5 million, or 1.1%, from
$51.8 million for the nine months ended September 30, 2001 to $52.3 million for
the same period in 2002. The increase is due to: amortization of acquired
customer base and other intangibles of $5.0 million, additional staffing as a
result of acquiring WorldPages of $2.0 million, $2.5 million of professional
costs associated with two unsuccessful acquisition bids and $0.3 million of
general cost increases; offset by $7.9 million of amortization for goodwill in
the nine months ended September 30, 2001 but not in the same period in 2002, and
$1.4 million of management fees incurred in the nine months ended September 30,
2001 as a result of the recapitalization of the Partnership on June 28, 2001.

There were no recapitalization transaction costs incurred in the nine
months ended September 30, 2002 as compared to $15.4 million for the nine months
ended September 30, 2001 as a result of the recapitalization of the Partnership
on June 28, 2001.

There were no contributions to Equity Compensation Plan incurred in the nine
months ended September 30, 2002 as compared to $5.8 million for the nine months
ended September 30, 2001 which was associated with the contribution to the
Equity Compensation Plan of $5.2 million made on June 28, 2001 in connection
with the recapitalization.

As a result of the above factors, income from operations increased $57.0
million, from a net loss from operations of $21.9 million in the nine months
ended September 30, 2001 to income from operations of $35.1 million in the same
period in 2002. Income from operations as a percentage of net revenues increased
from (13.8%) in the nine months ended September 30, 2001 to 14.7% in the same
period in 2002.

Interest expense increased $3.3 million, or 11.9%, from $27.4 million in
the nine months ended September 30, 2001 to $30.7 million in the same period in
2002 due to higher levels of debt partially offset by a decrease in the rates of
interest paid as a result of decreases in Prime and LIBOR rates.

Extraordinary loss in the nine months ended September 30, 2002 was zero
compared to $3.5 million in the same period in 2001. Extraordinary losses were
the costs associated with the write-off of debt financing costs upon entering
into a new $300.0 million senior credit facility that was used in part to
pay-off $137.5 million outstanding under the prior credit facility of the
Company and senior term loans and $74.2 million to pay-off the assumed
WorldPages debt and accrued interest after consummation of the acquisition of
WorldPages.

As a result of the above factors, net income increased $56.8 million, from
a net loss of $52.5 million in the nine months ended September 30, 2001 to net
income of $4.3 million in the same period in 2002.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $37.4 million in the nine
months ended September 30, 2002 compared to $10.3 million used in the same
period in 2001. The increase in cash provided by operations was primarily due to
an increase in net income.

Net cash used for investing activities was $26.1 million in the nine months
ended September 30, 2002, as compared to $163.5 million in the same period in
2001. Investing activities consist primarily of cash used to acquire
directories. In the nine months ended September 30, 2002, $24.0 million was
spent to acquire directories compared to $155.0 million in the same period in
the prior year. Acquisitions made in the nine months ended September 30, 2002
are discussed in note 4 of the financial statements included in this Form 10-Q.

Net cash used by financing activities was $5.7 million in the nine months
ended September 30, 2002 as compared to $200.6 million provided in the same
period in 2001. The amounts of cash provided by financing activities for the
nine months ended September 30, 2001 were for borrowings for acquisitions. Net
cash provided by financing activities decreased in the 2002 period as a result
of funding acquisitions in 2002 from cash on hand rather than borrowings.

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In connection with the recapitalization of Holdings in June 2001, we
incurred significant debt. As of September 30, 2002 Holdings had total
outstanding long term indebtedness of $496.0 million, including $215.7 million
of Series F 9 5/8% Senior Subordinated Notes due 2007, $57.1 million of Holdings
11 7/8% Senior Discount Notes due 2008, (Discount Notes), $27.4 million of
outstanding borrowings under the Term A loan due 2007, $195.5 million of
outstanding borrowings under the Term B loan due 2008, and $0.3 million in
acquisition related debt. As of September 30, 2002 TransWestern had no outstanding
borrowings under its revolving credit facility, with total borrowing
availability of $65.0 million.

Our principal sources of funds are cash flows from operating activities and
borrowing availability of $65.0 million under our revolving credit facility. We
believe that these funds will provide us with sufficient liquidity and capital
resources to meet our current and future financial obligations for the next
twelve months, including the payment of principal and interest on our notes, as
well as to provide funds for our working capital, capital expenditures and other
needs. Our future operating performance will be subject to future economic
conditions and to financial, business and other factors, many of which are
beyond our control. There can be no assurance that such sources of funds will be
adequate and that we will not require additional capital from borrowings or
securities offerings to satisfy such requirements. In addition, we may require
additional capital to fund future acquisitions and there can be no assurance
that such capital will be available.

The senior credit facility and the indentures governing TransWesterns
notes significantly restrict the distribution of funds by TransWestern and the
other subsidiaries of Holdings. We cannot assure you that the agreements
governing the indebtedness of Holdings subsidiaries will permit such
subsidiaries to distribute funds to Holdings in amounts sufficient to pay the
accreted value of principal or interest on Holdings Discount Notes when the
same becomes due, whether at maturity, upon acceleration or redemption or
otherwise. Holdings Discount Notes will be effectively subordinated in right of
payment to all existing and future claims of creditors of subsidiaries of
Holdings, including the lenders under the senior credit facility, the holders of
TransWesterns notes and trade creditors.

We believe that the present market prices of Holdings 11 7/8% senior
discount notes represent an opportunity for us to reduce Holdings long-term
debt. Accordingly, Holdings has provided holders of the senior discount notes
with notice that it intends to redeem $29.0 million in aggregate principal
amount of these notes on November 15, 2002. Holdings intends to use cash on hand
to fund this redemption. We or one or more of our affiliates may purchase
additional senior discount notes from time to time in open market purchases or
privately negotiated transactions of Holdings. We will evaluate any such
transactions in light of then existing market conditions, taking into account
our current liquidity position.

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements
which are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are based on the
beliefs of our management as well as on assumptions made by and information
currently available to us at the time such statements were made. When used in
this Quarterly Report on Form 10-Q, the words anticipate, believe,
estimate, expect, intends and similar expressions, as they relate to our
company are intended to identify forward-looking statements. Actual results
could differ materially from those projected in the forward-looking statements.
Important factors that could affect our results include, but are not limited to,
(i) our high level of indebtedness; (ii) the restrictions imposed by the terms
of our indebtedness; (iii) the turnover rate amongst our account executives;
(iv) the variation in our quarterly results; (v) risks related to the fact that
a large portion of our sales are to small, local businesses; (vi) our dependence
on certain key personnel; (vii) risks related to the acquisition and start-up of
directories; (viii) risks related to substantial competition in our markets;
(ix) risks related to changing technology and new product developments; (x) the
effect of fluctuations in paper costs; and (xi) the sensitivity of our business
to general economic conditions. Additional information with respect to these and
other factors that could cause our actual results to differ from those projected
are included in the Risk Factors section of TransWesterns Registration
Statement on Form S-4, Registration No. 333-70470, filed with the SEC on October
19, 2001.

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ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to interest rate risk in connection with the term loans and
the revolving loans outstanding under our senior credit facility, which bear
interest at floating rates based on LIBOR or the prime rate plus an applicable
borrowing margin. As of September 30, 2002 there was approximately $31.3 million
outstanding under the term A loan (at an average interest rate of 4.9% at such
time), $197.5 million under the term B loan (at an average interest rate of 4.9%
at such time), and zero outstanding under the revolving loan. Based on such
balances, an immediate increase of one percentage point in the applicable
interest rate would cause an increase in interest expense of approximately $2.3
million on an annual basis. We do not attempt to mitigate this risk through
hedging transactions. All of our sales are denominated in U.S. dollars, thus we
are not subject to any foreign currency exchange risks.




ITEM 4.    CONTROLS AND PROCEDURES

Based on their most
recent evaluation, which was completed within 90 days of the
filing of this Form 10-Q, the Companys Chief Executive
Officer and Chief Financial Officer believe the Companys
disclosure controls and procedures are effective. There were no
significant changes in internal controls or in other factors that
could significantly affect these controls subsequent to the date of
their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.




PART II.    OTHER INFORMATION




ITEM 1.    LEGAL PROCEEDINGS

On October 24, 2001, TransWesterns wholly-owned subsidiary, WorldPages,
Inc., was sued in the 44th Judicial District Court in Dallas County, Texas by
Ionex Communications, Inc., formerly known as Compass Telecommunications, Inc.
(Ionex). Ionex is claiming that it should be indemnified by WorldPages for
what it alleges are breaches by WorldPages of certain of its representations and
commitments under that certain Stock Purchase Agreement dated as of July 14,
1999. Ionex is seeking approximately $6.0 million plus fees and expenses
relating to (i) indemnification for alleged breaches by WorldPages of its
representations relating to accounts receivable, software licenses, taxes and
litigation and (ii) reimbursement for severance payments that Ionex has made to
former employees of WorldPages. WorldPages intends to vigorously defend against
these claims. In June 2002 TransWestern increased its accrued liability to $3.0
million related to this matter. The increase in the accrued liability for this
matter has been recorded as an adjustment to goodwill in the accompanying
consolidated balance sheet at September 30, 2002.

Holdings and/or its subsidiaries are parties to various other litigation
matters incidental to the conduct of their business. Management does not believe
that the outcome of any of these matters will have a material adverse effect on
Holdings financial condition or the results of its operations.




ITEM 2.    CHANGES IN SECURITIES

| |     
| | ----
| | None




ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

| |     
| | ----
| | None




ITEM 4.    SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

| |               
| | --------------
| | Not applicable




ITEM 5.    OTHER INFORMATION

| |     
| | ----
| | None




ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

| |               
| | --------------
| | (A)  Exhibits.

| |      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10.1 |  | First Amendment, dated as of May
22, 2002, to the Second Amended and Restated Credit Agreement, dated
as of June 28, 2001, among TransWestern Publishing Company, LLC,
WorldPages, Inc., TWP Capital Corp. II, the Lenders from time to time
parties thereto, Canadian Imperial Bank of Commerce, New York Agency,
as administrative agent, Wachovia Bank, National Association, as
syndication agent and Fleet National Bank, as documentation agent.

| |                          
| | -------------------------
| | (B)  Reports on Form 8-K.
|
| | None                     

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on November 12, 2002
on its behalf by the undersigned thereunto duly authorized.

| |     |                                                             |                                                                                                             
| | --- | ----------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------
| |     | TRANSWESTERN HOLDINGS L.P.
(Registrant)                    
|
| | BY: | TransWestern Communications Company, Inc.
(General Partner)
|
| | BY: | /s/                                                         | Ricardo Puente                                                                                              
| |     |                                                            
| |     | Name:                                                       | Ricardo Puente                                                                                              
| |     | Title:                                                      | President, Chief Executive Officer
and Director (Principal Executive Officer)                               
|
| | BY: | /s/                                                         | Joan Fiorito                                                                                                
| |     |                                                            
| |     | Name:                                                       | Joan Fiorito                                                                                                
| |     | Title:                                                      | Vice President, Chief Financial Officer and Assistant Secretary (Principal Financial and Accounting Officer)

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CERTIFICATIONS



|I, Ricardo Puente, President and Chief Executive Officer, certify that:
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|                        |  |  |                                                                     
|----------------------- |  |  | --------------------------------------------------------------------
|Date: November 12, 2002 |  |  | /s/ Ricardo
PuenteRicardo Puente
President & Chief Executive Officer

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CERTIFICATIONS



|I, Joan M. Fiorito, V.P. & Chief Financial Officer, certify that:
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|                        |  |  |                                                                   
|----------------------- |  |  | ------------------------------------------------------------------
|Date: November
12, 2002 |  |  | /s/ Joan M. FioritoJoan M. Fiorito
V. P. - Chief Financial Officer

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CERTIFICATION OF PERIODIC REPORT

We, Ricardo Puente, Chief Executive Officer and Joan M. Fiorito, Chief
Financial Officer of TransWestern Holdings L. P. (the Company), certify,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
1350, that:



|(1) |  | the Quarterly Report on Form 10-Q of the Company for the quarterly period
ended September 30, 2002 (the Report) fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934 (15 U.S.C. 78m or 78o(d)); and
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.                                                                                                  

Dated November 12, 2002

| |                                       
| | --------------------------------------
| | /s/ Ricardo Puente                    
| | Ricardo Puente
Chief Executive Officer

| |                                        
| | ---------------------------------------
| | /s/ Joan M. Fiorito                    
| | Joan M. Fiorito
Chief Financial Officer

22