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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, 2001.

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



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|                                                     |  |           
|---------------------------------------------------- |  | ----------
|8344 CLAIREMONT MESA BOULEVARD
SAN DIEGO, CALIFORNIA |  | 92111     
|(Address of principal executive offices)             |  | (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)
|                           | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                       
|PART II. OTHER INFORMATION
|                           | ITEM 1. LEGAL PROCEEDINGS                                                                                
|                           | ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS                                                        
|                           | 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                



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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, 2001 (unaudited)
and December 31, 2000                          |    | 3  | 
|          
|           | Unaudited Consolidated Statements of Operations for the Three and
Nine Months Ended September 30, 2001 and 2000 |    | 4  | 
|          
|           | Unaudited Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 2001 and 2000           |    | 5  | 
|          
|           | Notes to Unaudited Consolidated Financial Statements                                                            |    | 6  | 
|          
|Item 2.    | Managements Discussion and Analysis of Financial Condition and
Results of Operations                           |    | 13 | 
|          
|Item 3.    | Quantitative and Qualitative Disclosures About Market Risk                                                      |    | 19 | 
|          
|PART II.   | OTHER INFORMATION                                                                                               |    |    | 
|          
|Item 1.    | Legal Proceedings                                                                                               |    | 19 | 
|          
|Item 2.    | Changes in Securities and Use of Proceeds                                                                       |    | 20 | 
|          
|Item 3.    | Defaults upon Senior Securities                                                                                 |    | 20 | 
|          
|Item 4.    | Submission of Matters to a Vote of Security Holders                                                             |    | 20 | 
|          
|Item 5.    | Other Information                                                                                               |    | 20 | 
|          
|Item 6.    | Exhibits and Reports on Form 8-K                                                                                |    | 20 | 
|          
|SIGNATURES |                                                                                                                 | 21



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TRANSWESTERN HOLDINGS L.P.
CONSOLIDATED BALANCE SHEETS
(in thousands)

|                                      |                                                                                                                             |                               |          |               |         |              |          |         |         | 
|------------------------------------- | --------------------------------------------------------------------------------------------------------------------------- | ----------------------------- | -------- | ------------- | ------- | ------------ | -------- | ------- | ------- | 
|                                      |                                                                                                                             |                               |          | SEPTEMBER 30, |         | DECEMBER 31,
|                                      |                                                                                                                             |                               |          | 2001          |         | 2000        
|                                      |                                                                                                                             |                               |          |               |         |             
|                                      |                                                                                                                             |                               |          | (UNAUDITED)   |         |              |          |        
|ASSETS                                |                                                                                                                             |                               |          |               |         |              |          |        
|Current assets:                       |                                                                                                                             |                               |          |               |         |              |          |        
|                                      | Cash                                                                                                                        |                               | $        | 28,844        |         |              | $        | 1,961   |        
|                                      | Trade receivables, (less allowance for doubtful accounts of
$12,594 at September 30, 2001 and $10,419 at December 31, 2000) |                               |          | 94,763        |         |              |          | 48,988  |        
|                                      | Deferred directory costs                                                                                                    |                               |          | 24,084        |         |              |          | 11,848  |        
|                                      | Other current assets                                                                                                        |                               |          | 3,558         |         |              |          | 1,334   |        
|                                      |                                                                                                                             |                               |          |               |         |              |          |        
|                                      |                                                                                                                             | Total current assets          |          |               | 151,249 |              |          |         | 64,131  | 
|Non-current assets:                   |                                                                                                                             |                               |          |               |         |              |          |        
|                                      | Property, equipment and leasehold improvements, net                                                                         |                               |          | 6,856         |         |              |          | 4,238   |        
|                                      | Acquired intangibles, net                                                                                                   |                               |          | 269,906       |         |              |          | 90,033  |        
|                                      | Other assets, primarily debt issuance costs, net                                                                            |                               |          | 14,586        |         |              |          | 8,627   |        
|                                      |                                                                                                                             |                               |          |               |         |              |          |        
|                                      |                                                                                                                             | Total non-current assets      |          |               | 291,348 |              |          |         | 102,898 | 
|                                      |                                                                                                                             |                               |          |               |         |              |          |        
|Total assets                          |                                                                                                                             | $                             | 442,597  |               |         | $            | 167,029  |        
|                                      |                                                                                                                             |                               |          |               |         |              |          |        
|LIABILITIES AND PARTNERSHIP DEFICIT   |                                                                                                                             |                               |          |               |         |              |          |        
|Current liabilities:                  |                                                                                                                             |                               |          |               |         |              |          |        
|                                      | Accounts payable                                                                                                            |                               | $        | 15,981        |         |              | $        | 9,908   |        
|                                      | Salaries and benefits payable                                                                                               |                               |          | 14,646        |         |              |          | 5,378   |        
|                                      | Accrued acquisition costs                                                                                                   |                               |          | 12,269        |         |              |          | 2,095   |        
|                                      | Accrued interest                                                                                                            |                               |          | 10,449        |         |              |          | 2,715   |        
|                                      | Other accrued liabilities                                                                                                   |                               |          | 1,697         |         |              |          | 812     |        
|                                      | Customer deposits                                                                                                           |                               |          | 29,406        |         |              |          | 17,449  |        
|                                      | Current portion, long-term debt                                                                                             |                               |          | 4,844         |         |              |          | 2,041   |        
|                                      | Equity trust distribution payable                                                                                           |                               |          | 2,902         |         |              |          |        |        
|                                      |                                                                                                                             |                               |          |               |         |              |          |        
|                                      |                                                                                                                             | Total current liabilities     |          |               | 92,194  |              |          |         | 40,398  | 
|Long-term debt:                       |                                                                                                                             |                               |          |               |         |              |          |        
|                                      | Series D 9 5/8% Senior Subordinated Notes                                                                                   |                               |          | 141,230       |         |              |          | 141,381 |        
|                                      | Series E 9 5/8% Senior Subordinated Notes                                                                                   |                               |          | 74,580        |         |              |          |        |        
|                                      | Series B 11 7/8% Senior Discount, Notes                                                                                     |                               |          | 50,882        |         |              |          | 46,677  |        
|                                      | Senior credit facility Term A Loan                                                                                          |                               |          | 31,500        |         |              |          | 62,678  |        
|                                      | Senior credit facility Term B Loan                                                                                          |                               |          | 197,500       |         |              |          | 39,700  |        
|                                      | Revolving loan                                                                                                              |                               |          |              |         |              |          | 22,500  |        
|                                      | Other long-term debt and liabilities                                                                                        |                               |          | 800           |         |              |          | 1,595   |        
|                                      |                                                                                                                             |                               |          |               |         |              |          |        
|                                      |                                                                                                                             | Total non-current liabilities |          |               | 496,492 |              |          |         | 314,531 | 
|                                      |                                                                                                                             |                               |          |               |         |              |          |        
|                                      |                                                                                                                             | Total liabilities             |          |               | 588,686 |              |          |         | 354,929 | 
|                                      |                                                                                                                             |                               |          |               |         |              |          |        
|Notes receivable from partners        |                                                                                                                             |                               | (764     | )             |         |              |         |        
|Partnership deficit                   |                                                                                                                             |                               | (145,325 | )             |         |              | (187,900 | )      
|                                      |                                                                                                                             |                               |          |               |         |              |          |        
|Total liabilities and partner deficit |                                                                                                                             | $                             | 442,597  |               |         | $            | 167,029  |        
|                                      |                                                                                                                             |                               |          |               |         |              |          |        

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,    
|                                            |                                          |   |                    |        |                  
|                                            |                                          |   | 2001               |        | 2000              |   | 2001   |        | 2000
|                                            |                                          |   |                    |        |                   |   |        |        |     
|Net revenues                                |                                          | $ | 63,634             |        |                   | $ | 43,117 |        |      | $ | 158,765 |        |  | $ | 116,611 |       
|Cost of revenues                            |                                          |   | 14,949             |        |                   |   | 8,436  |        |      |   | 34,348  |        |  |   | 22,490  |       
|                                            |                                          |   |                    |        |                   |   |        |        |      |   |         |        |  |   |         |       
|Gross profit                                |                                          |   | 48,685             |        |                   |   | 34,681 |        |      |   | 124,417 |        |  |   | 94,121  |       
|Operating expenses:                         |                                          |   |                    |        |                   |   |        |        |      |   |         |        |  |   |         |       
|                                            | Sales and marketing                      |   |                    | 29,015 |                   |   |        | 18,155 |      |   |         | 73,331 |  |   |         | 49,718 | 
|                                            | General and administrative               |   |                    | 26,065 |                   |   |        | 11,428 |      |   |         | 51,762 |  |   |         | 32,100 | 
|                                            | Recapitalization transaction costs       |   |                    |       |                   |   |        |       |      |   |         | 15,371 |  |   |         |       | 
|                                            | Contribution to equity compensation plan |   |                    | 616    |                   |   |        |       |      |   |         | 5,805  |  |   |         |       | 
|                                            |                                          |   |                    |        |                   |   |        |        |      |   |         |        |  |   |         |       
|Total operating expenses                    |                                          |   | 55,696             |        |                   |   | 29,583 |        |      |   | 146,269 |        |  |   | 81,818  |       
|                                            |                                          |   |                    |        |                   |   |        |        |      |   |         |        |  |   |         |       
|Income (loss) from operations               |                                          |   | (7,011             | )      |                   |   | 5,098  |        |      |   | (21,852 | )      |  |   | 12,303  |       
|Other income, net                           |                                          |   | 343                |        |                   |   | 122    |        |      |   | 287     |        |  |   | 288     |       
|Interest expense                            |                                          |   | (11,488            | )      |                   |   | (8,051 | )      |      |   | (27,429 | )      |  |   | (22,945 | )     
|                                            |                                          |   |                    |        |                   |   |        |        |      |   |         |        |  |   |         |       
|Net loss before extraordinary items         |                                          | $ | (18,156            | )      |                   | $ | (2,831 | )      |      | $ | (48,994 | )      |  | $ | (10,354 | )     
|Extraordinary loss                          |                                          |   |                   |        |                   |   |       |        |      |   | (3,515  | )      |  |   |        |       
|                                            |                                          |   |                    |        |                   |   |        |        |      |   |         |        |  |   |         |       
|Net loss                                    |                                          | $ | (18,156            | )      |                   | $ | (2,831 | )      |      | $ | (52,509 | )      |  | $ | (10,354 | )     
|                                            |                                          |   |                    |        |                   |   |        |        |      |   |         |        |  |   |         |       
|Net loss allocated
to General Partner units |                                          | $ | (312               | )      |                   | $ | (49    | )      |      | $ | (903    | )      |  | $ | (178    | )     
|                                            |                                          |   |                    |        |                   |   |        |        |      |   |         |        |  |   |         |       
|Net loss allocated
to Limited Partner units |                                          | $ | (17,844            | )      |                   | $ | (2,782 | )      |      | $ | (51,606 | )      |  | $ | (10,176 | )     
|                                            |                                          |   |                    |        |                   |   |        |        |      |   |         |        |  |   |         |       
|Net loss per
General Partner unit           |                                          | $ | (31.9              | )      |                   | $ | (5.0   | )      |      | $ | (92.2   | )      |  | $ | (18.2   | )     
|                                            |                                          |   |                    |        |                   |   |        |        |      |   |         |        |  |   |         |       
|Net loss per
Limited Partner unit           |                                          | $ | (9.4               | )      |                   | $ | (1.5   | )      |      | $ | (27.1   | )      |  | $ | (5.4    | )     
|                                            |                                          |   |                    |        |                   |   |        |        |      |   |         |        |  |   |         |       

See accompanying notes.



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TRANSWESTERN HOLDINGS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)

|                                                                                   |                                                                                     |                                                   |          |                   |         |      |         |         |         |  
|---------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | ------------------------------------------------- | -------- | ----------------- | ------- | ---- | ------- | ------- | ------- | -
|                                                                                   |                                                                                     |                                                   |          | NINE MONTHS ENDED
|                                                                                   |                                                                                     |                                                   |          | SEPTEMBER 30,    
|                                                                                   |                                                                                     |                                                   |          |                  
|                                                                                   |                                                                                     |                                                   |          | 2001              |         | 2000
|                                                                                   |                                                                                     |                                                   |          |                   |         |     
|OPERATING ACTIVITIES                                                               |                                                                                     |                                                   |          |                   |         |      |         |        
|Net loss                                                                           |                                                                                     | $                                                 | (52,509  | )                 |         | $    | (10,354 | )      
|Adjustments to reconcile net loss to cash provided (used) by
operating activities: |                                                                                     |                                                   |          |                   |         |      |         |        
|                                                                                   | Loss on early extinguishment of debt                                                |                                                   |          | 3,515             |         |      |         |        |        
|                                                                                   | Write-down of investment of Eversave                                                |                                                   |          | 250               |         |      |         |        |        
|                                                                                   | Depreciation and amortization                                                       |                                                   |          | 33,425            |         |      |         | 20,627  |        
|                                                                                   | Amortization of deferred debt issuance costs                                        |                                                   |          | 1,407             |         |      |         | 868     |        
|                                                                                   | Amortization of premium                                                             |                                                   |          |                  |         |      |         | (152    | )      
|                                                                                   | Amortization of Senior Discount Note                                                |                                                   |          | 4,231             |         |      |         | 3,751   |        
|                                                                                   | Provision for doubtful accounts                                                     |                                                   |          | 16,742            |         |      |         | 11,434  |        
|                                                                                   | Changes in operating assets and liabilities, excluding the
effects of acquisitions: |                                                   |          |                   |         |      |         |         |        
|                                                                                   |                                                                                     | Trade receivables                                 |          |                   | (1,350  | )    |         |         | (2,934  | )
|                                                                                   |                                                                                     | Write-off of doubtful accounts                    |          |                   | (14,567 | )    |         |         | (13,402 | )
|                                                                                   |                                                                                     | Recoveries of doubtful accounts                   |          |                   | 1,468   |      |         |         | 888     |  
|                                                                                   |                                                                                     | Deferred directory costs                          |          |                   | (5,932  | )    |         |         | (3,463  | )
|                                                                                   |                                                                                     | Other current assets                              |          |                   | 330     |      |         |         | (102    | )
|                                                                                   |                                                                                     | Accounts payable                                  |          |                   | (4,853  | )    |         |         | (306    | )
|                                                                                   |                                                                                     | Accrued liabilities and other current liabilities |          |                   | (13,089 | )    |         |         | (1,975  | )
|                                                                                   |                                                                                     | Accrued interest                                  |          |                   | 7,734   |      |         |         | 4,030   |  
|                                                                                   |                                                                                     | Customer deposits                                 |          |                   | 10,005  |      |         |         | 5,871   |  
|                                                                                   |                                                                                     | Equity trust payable                              |          |                   | 2,902   |      |         |         |        |  
|                                                                                   |                                                                                     |                                                   |          |                   |         |      |         |        
|Cash provided (used) by operating activities                                       |                                                                                     |                                                   | (10,291  | )                 |         |      | 14,781  |        
|                                                                                  
|INVESTING ACTIVITIES                                                               |                                                                                     |                                                   |          |                   |         |      |         |        
|Purchase of property, equipment and leasehold improvements                         |                                                                                     |                                                   | (970     | )                 |         |      | (1,826  | )      
|Cash paid for acquisition of WorldPages.com net of cash acquired                   |                                                                                     |                                                   | (140,299 | )                 |         |      |        |        
|Acquisition of other directories                                                   |                                                                                     |                                                   | (14,748  | )                 |         |      | (30,626 | )      
|Deferred financing costs and other assets                                          |                                                                                     |                                                   | (7,440   | )                 |         |      | (1,121  | )      
|                                                                                   |                                                                                     |                                                   |          |                   |         |      |         |        
|Cash used for investing activities                                                 |                                                                                     |                                                   | (163,457 | )                 |         |      | (33,573 | )      
|                                                                                  
|FINANCING ACTIVITIES                                                               |                                                                                     |                                                   |          |                   |         |      |         |        
|Borrowings under long-term debt agreements:                                        |                                                                                     |                                                   |          |                   |         |      |         |        
|                                                                                   | Revolving credit facility                                                           |                                                   |          | 61,700            |         |      |         | 49,500  |        
|                                                                                   | Senior term loans                                                                   |                                                   |          | 235,220           |         |      |         | 40,000  |        
|                                                                                   | 9 5/8% Senior Subordinated Notes                                                    |                                                   |          | 74,553            |         |      |         |        |        
|Repayments of long-term debt                                                      
|                                                                                   | Revolving credit facility                                                           |                                                   |          | (84,200           | )       |      |         | (65,400 | )      
|                                                                                   | External debt payments                                                              |                                                   |          |                  |         |      |         | (3,315  | )      
|                                                                                   | Senior term loans and note payable                                                  |                                                   |          | (107,395          | )       |      |         | (1,308  | )      
|                                                                                   | Repayment of debt assumed in acquisition of WorldPages.com                          |                                                   |          | (73,534           | )       |      |         |        |        
|Contributions from partners                                                        |                                                                                     |                                                   | 124,291  |                   |         |      | (37     | )      
|Redemption of partner units                                                        |                                                                                     |                                                   | (30,004  | )                 |         |      |        |        
|                                                                                   |                                                                                     |                                                   |          |                   |         |      |         |        
|Cash provided by financing activities                                              |                                                                                     |                                                   | 200,631  |                   |         |      | 19,440  |        
|                                                                                   |                                                                                     |                                                   |          |                   |         |      |         |        
|Net increase in cash                                                               |                                                                                     |                                                   | 26,883   |                   |         |      | 648     |        
|Cash at beginning of period                                                        |                                                                                     |                                                   | 1,961    |                   |         |      | 1,167   |        
|                                                                                   |                                                                                     |                                                   |          |                   |         |      |         |        
|Cash at end of period                                                              |                                                                                     | $                                                 | 28,844   |                   |         | $    | 1,815   |        
|                                                                                   |                                                                                     |                                                   |          |                   |         |      |         |        
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                  |                                                                                     |                                                   |          |                   |         |      |         |        
|Cash paid for interest                                                             |                                                                                     | $                                                 | 7,763    |                   |         | $    | 14,211  |        
|                                                                                   |                                                                                     |                                                   |          |                   |         |      |         |        

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). All significant inter-company transactions have been eliminated.
Holdings only assets consist of TransWesterns Member Units.
TWP Capital Corp. (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 Companys Form 10-K for the fiscal year ended
December 31, 2000. The 10-K is available on the Internet at http://www.sec.gov.

In June 2001, Holdings completed a recapitalization in which it received
equity and debt proceeds totaling $435,055 (the Recapitalization). In the
Recapitalization, New Investors including Thomas H. Lee Equity Fund V, L.P.
and its affiliates along with other investors, existing limited partners of
Holdings and the Partnerships senior managers invested new and
continuing capital of $125,055 in Holdings. The proceeds of the
equity investment together with approximately $310,000 of Senior Credit
Facility and senior subordinated debt financing were used (i) for $30,004
of consideration paid to redeem a portion of the limited partnership
interests from certain existing limited partners, (ii) to acquire all of the
outstanding stock and stock options of WorldPages for $141,417,
(iii) to repay $137,502 of outstanding debt and accrued interest under
TransWesterns credit facilities, (iv) to repay $74,201 of existing WorldPages,
debt and accrued interest after the consummation of the acquisition,
(v) to pay $28,731 of costs, fees, and expenses associated with the
Recapitalization and acquisition of WorldPages, (vi) to pay $3,250
to senior management for bonuses and deal fees associated with the
Recapitalization of Holdings, (vii) to pay $5,189 to the Equity Trust for
payment to senior and middle management associated with the Recapitalization,
(viii) to pay $2,696 in fees and the discount associated with the issuance of
$75,000 of Series E Senior Subordinated Notes and (ix) $12,065 for
general corporate purposes, including working capital.

The Recapitalization was financed with (i) the $125,055 equity investment,
(ii) borrowings of $235,000 under a $300,000 (maximum) variable interest rate
Senior Credit Facility and (iii) the issuance of $75,000 of Senior
Subordinated Notes. The assets and liabilities of Holdings are stated at
historical cost and were not revalued to fair market value at the date of the
Recapitalization. As a result of the Recapitalization, Thomas H. Lee Equity
Fund V, L.P. and its affiliates collectively own approximately 68% of the
equity of Holdings.



6



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##### Table of Contents



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

2. NEW ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board (FASB) issued
FASB Statement Nos 141 and 142 (FAS 141 and FAS 142), Business Combinations
and Goodwill and Other Intangible Assets. FAS 141 replaces APB 16 and
eliminates pooling-of-interests accounting prospectively. It also provides
guidance on purchase accounting related to the recognition of intangible
assets and accounting for negative goodwill. FAS 142 changes the accounting
for goodwill from an amortization method to an impairment-only approach.
Under FAS 142, goodwill will be tested annually or whenever events or
circumstances occur indicating that goodwill might be impaired. FAS 141 and
FAS 142 are effective for all business combinations completed after June 30,
2001. Upon adoption of FAS 142, amortization of goodwill recorded for
business combinations consummated prior to July 1, 2001 will cease, and
intangible assets acquired prior to July 1, 2001 that do not meet the criteria
for recognition under FAS 141 will be reclassified to goodwill. Companies are
required to adopt FAS 142 for fiscal years beginning after December 15, 2001,
but early adoption is permitted under certain circumstances. In connection
with the adoption of FAS 142, TransWestern will be required to perform a
transitional goodwill impairment assessment. TransWestern has not yet
determined the impact these standards will have on its results of operations
and financial position.



7



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

3. FINANCIAL STATEMENT DETAILS

Property, Equipment and Leasehold Improvements

|                                               |                                        |   |               |       |              |   |        |       | 
|---------------------------------------------- | -------------------------------------- | - | ------------- | ----- | ------------ | - | ------ | ----- | 
|                                               |                                        |   | SEPTEMBER 30, |       | DECEMBER 31,
|                                               |                                        |   | 2001          |       | 2000        
|                                               |                                        |   |               |       |             
|Land and building                              |                                        | $ | 611           |       |              | $ | 183    |      
|Computer and office equipment                  |                                        |   | 10,168        |       |              |   | 7,310  |      
|Furniture and fixtures                         |                                        |   | 2,361         |       |              |   | 1,881  |      
|Leasehold improvements                         |                                        |   | 544           |       |              |   | 458    |      
|                                               |                                        |   |               |       |              |   |        |      
|                                               |                                        |   | 13,684        |       |              |   | 9,832  |      
|Less accumulated depreciation and amortization |                                        |   | (6,828        | )     |              |   | (5,594 | )    
|                                               |                                        |   |               |       |              |   |        |      
|                                               | Net property, equipment, and leasehold |   | $             | 6,856 |              |   | $      | 4,238 | 
|                                               |                                        |   |               |       |              |   |        |      

Acquired Intangibles

|                                       |                           |   |               |         |              |   |         |        | 
|-------------------------------------- | ------------------------- | - | ------------- | ------- | ------------ | - | ------- | ------ | 
|                                       |                           |   | SEPTEMBER 30, |         | DECEMBER 31,
|                                       |                           |   | 2001          |         | 2000        
|                                       |                           |   |               |         |             
|Goodwill                               |                           | $ | 158,089       |         |              | $ |        |       
|Customer base and assembled work force |                           |   | 211,258       |         |              |   | 158,021 |       
|Other                                  |                           |   | 3,845         |         |              |   | 2,984   |       
|                                       |                           |   |               |         |              |   |         |       
|                                       |                           |   | 373,192       |         |              |   | 161,005 |       
|Less accumulated amortization          |                           |   | (103,286      | )       |              |   | (70,972 | )     
|                                       |                           |   |               |         |              |   |         |       
|                                       | Acquired intangibles, net |   | $             | 269,906 |              |   | $       | 90,033 | 
|                                       |                           |   |               |         |              |   |         |       

Other Assets

|                                        |                          |   |               |        |              |   |        |       | 
|--------------------------------------- | ------------------------ | - | ------------- | ------ | ------------ | - | ------ | ----- | 
|                                        |                          |   | SEPTEMBER 30, |        | DECEMBER 31,
|                                        |                          |   | 2001          |        | 2000        
|                                        |                          |   |               |        |             
|Debt issuance costs                     |                          | $ | 18,277        |        |              | $ | 12,893 |      
|Less accumulated amortization           |                          |   | (3,691        | )      |              |   | (4,516 | )    
|                                        |                          |   |               |        |              |   |        |      
|                                        | Debt issuance costs, net |   | $             | 14,586 |              |   | $      | 8,377 | 
|Investment in Eversave, carried at cost |                          |   |              |        |              |   | 250    |      
|                                        |                          |   |               |        |              |   |        |      
|Other assets, net                       |                          | $ | 14,586        |        |              | $ | 8,627  |      
|                                        |                          |   |               |        |              |   |        |      



8



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##### Table of Contents



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

4. LONG TERM DEBT

In connection with the recapitalization of TransWestern in June 2001,
TransWestern entered into a new $300.0 million credit facility and drew
$35.0 million under the Term A Loan and $200.0 million under the Term B Loan.
In addition, in May 2001, TransWestern issued $75.0 million of Series E
9 5/8% Senior Subordinated Notes due 2007, (excluding unamortized discount
of $0.4 million). Also in connection with the Recapitalization and
acquisition of WorldPages, TransWestern re-paid $137.5 million
outstanding under its prior credit facility and $74.2 million of debt it
assumed as part of the WorldPages acquisition.

As of September 30, 2001 Holdings had total outstanding long term
indebtedness
of $496.5 million, including $140.0 million of Series D Senior Subordinated
Notes
due 2007 and $75.0 million of Series E 9 5/8% Senior Subordinated Notes due
2007, (excluding net unamortized premium of discount of $0.8 million), $50.5
million of Holdings 11 7/8% Senior Discount Notes due 2008, (Discount Notes),
$31.5 million of outstanding borrowings under the senior credit facility
Tranche
A Term Loan, $197.5 million outstanding under the senior credit facility
Tranche
B Term Loan, and $0.8 million in acquisition related debt, all of which ranks
senior to the Series D and E notes. As of September 30, 2001 TransWestern had
no
outstanding borrowings under its revolving credit facility, with total
borrowing
availability of $65.0 million.

The following is a summary of the Holdings principal maturities at
September 30,

|           |  |   |         | 
|---------- |  | - | ------- | 
|2002       |  | $ | 4,625   | 
|2003       |  |   | 5,500   | 
|2004       |  |   | 7,250   | 
|2005       |  |   | 8,125   | 
|2006       |  |   | 9,000   | 
|Thereafter |  |   | 466,382 | 
|           |  |   |         | 
|           |  | $ | 500,882 | 
|           |  |   |         | 

5. DIRECTORY ACQUISITIONS

In the nine months ended September 30, 2001 TransWestern completed a number
of purchase acquisitions. The accompanying consolidated financial
statements include the results of operations from the date of acquisition.
The acquisitions are as follows:

BRI Publishing, Inc. On January 22, 2001, TransWestern purchased
certain tangible and intangible assets of BRI Publishing, Inc. for a total
of $0.7 million. TransWestern acquired one directory in the Lafayette,
Louisiana area.

Pacific West Yellow Pages. On February 9, 2001, TransWestern
purchased certain tangible and intangible assets of Pacific West Yellow
Pages for a total of $1.2 million. TransWestern acquired three
directories in the Sacramento, California area.

Silver Pages, Inc. On March 2, 2001, TransWestern purchased certain
tangible and intangible assets of Silver Pages, Inc. for a total of $2.6
million. TransWestern acquired one directory in Northern California and
one directory in Nevada.

Rutter Directories, LLC. On March 30, 2001, TransWestern purchased
certain tangible and intangible assets of Rutter Directories, LLC for a
total of $2.1 million. TransWestern acquired five directories in Indiana.

Alliance Media Group, Inc. On April 9, 2001, TransWestern purchased
certain tangible and intangible assets of Alliance Media Group for a total
of $6.0 million in cash. TransWestern acquired two directories in Kentucky
and six directories in Texas.



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

WorldPages. On June 28, 2001, TransWestern purchased the
outstanding stock and assumed the debt of WorldPages for approximately
$216.0 million. WorldPages is a provider of 42 directories in various
markets throughout the United States.

These acquisitions have been accounted for under the purchase method of
accounting and accordingly the purchase prices have been allocated to the
tangible and intangible assets acquired based on their respective fair
values at the date of acquisition. The allocation of the purchase price of
WorldPages is based on a preliminary allocation and is allocated
as follows:

|                                 |  |            |         |              |  |       |        |   |  |   |         |  
|-------------------------------- |  | ---------- | ------- | ------------ |  | ----- | ------ | - |  | - | ------- | -
|                                 |  |            |         |              |  | Other |        |   |  |  
|                                 |  | WorldPages |         | Acquisitions |  | Total
|                                 |  |            |         |              |  |      
|Net tangible liabilities assumed |  | $          | (45,180 | )            |  | $     | (1,293 | ) |  | $ | (46,473 | )
|Customer list                    |  |            | 36,800  |              |  |       | 13,137 |   |  |   | 49,937  |  
|Goodwill                         |  |            | 158,088 |              |  |       |       |   |  |   | 158,088 |  
|Noncompete                       |  |            | 700     |              |  |       | 161    |   |  |   | 861     |  
|Assembled workforce              |  |            | 1,600   |              |  |       |       |   |  |   | 1,600   |  
|                                 |  |            |         |              |  |       |        |   |  |   |         |  
|Total consideration              |  | $          | 152,008 |              |  | $     | 12,005 |   |  | $ | 164,013 |  
|                                 |  |            |         |              |  |       |        |   |  |   |         |  

Total consideration issued in the purchase acquisitions is as follows:

|                          |  |            |         |              |  |       |        |  |  |   |         | 
|------------------------- |  | ---------- | ------- | ------------ |  | ----- | ------ |  |  | - | ------- | 
|                          |  |            |         |              |  | Other |        |  |  |  
|                          |  | WorldPages |         | Acquisitions |  | Total
|                          |  |            |         |              |  |      
|Cash paid for acquisition |  | $          | 141,417 |              |  | $     | 11,800 |  |  | $ | 153,217 | 
|Merger fees incurred      |  |            | 10,591  |              |  |       | 205    |  |  |   | 10,796  | 
|                          |  |            |         |              |  |       |        |  |  |   |         | 
|                          |  | $          | 152,008 |              |  | $     | 12,005 |  |  | $ | 164,013 | 
|                          |  |            |         |              |  |       |        |  |  |   |         | 

Assuming that the above acquisitions had occurred on the first day of
TransWesterns nine month periods ended September 30, 2001 and September 30,
2000, the unaudited pro forma results of operations would be as follows:

|             |  |                                 |         |      |  |   |         |  
|------------ |  | ------------------------------- | ------- | ---- |  | - | ------- | -
|             |  | Nine months ended September 30,
|             |  |                                
|             |  | 2001                            |         | 2000
|             |  |                                 |         |     
|             |  | (Unaudited)                    
|Net revenues |  | $                               | 237,829 |      |  | $ | 197,094 |  
|Net loss     |  |                                 | (71,963 | )    |  |   | (48,601 | )

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



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

6. GUARANTEE

The following wholly-owned subsidiaries of Holdings, fully and
unconditionally guaranteed TransWesterns outstanding 9 5/8% Series D and
Series E Senior Subordinated Notes due 2007 on an unsecured senior
subordinated basis: Target Directories of Michigan, Inc. (Target),
TWP Companies, Inc., and WorldPages , together with the following wholly
owned subsidiaries of WorldPages: Great Western Directories, Inc.,
YPtel Corporation, YPTel, Inc., Pacific Coast Publishing, Ltd.,
1 + USA V Acquisition Corp, ChoiceContent.com, Inc., ChoiceContent.com, LLC,
ACG Holdings Company, and ACG Exchange Company. Following is
summarized financial information concerning the guarantors as of
September 30, 2001 and 2000, respectively and for the nine months ended
September 30, 2001 and 2000, respectively. Since WorldPages was acquired on
June 28, 2001, only summarized balance sheet data as of September 30, 2001
is presented.

Target:

|                              |  |                                 |       |      |  |   |       | 
|----------------------------- |  | ------------------------------- | ----- | ---- |  | - | ----- | 
|                              |  | NINE MONTHS ENDED SEPTEMBER 30,
|                              |  |                                
|                              |  | (unaudited)                    
|                              |  | 2001                            |       | 2000
|                              |  |                                 |       |     
|Statement of Operations Data: |  |                                 |       |      |  |   |       | 
|Net revenues                  |  | $                               | 3,299 |      |  | $ | 2,919 | 
|Gross profit                  |  |                                 | 3,024 |      |  |   | 2,571 | 
|Operating income              |  |                                 | 445   |      |  |   | 1,202 | 
|Net income                    |  |                                 | 93    |      |  |   | 30    | 

|                        |  |               |               |      |  |   |       | 
|----------------------- |  | ------------- | ------------- | ---- |  | - | ----- | 
|                        |  | SEPTEMBER 30, | SEPTEMBER 30,
|                        |  | 2001          |               | 2000
|                        |  |               |               |     
|Balance Sheet:          |  |               |               |      |  |   |       | 
|Current assets          |  | $             | 1,819         |      |  | $ | 1,682 | 
|Non-current assets      |  |               | 2,230         |      |  |   | 3,503 | 
|Current liabilities     |  |               | 14            |      |  |   | 641   | 
|Non-current liabilities |  |               |              |      |  |   |      | 

WorldPages and its subsidiaries:

|                           |  |               |         | 
|-------------------------- |  | ------------- | ------- | 
|                           |  | SEPTEMBER 30,
|                           |  | 2001         
|                           |  |              
|Balance Sheet:             |  |               |         | 
|Current assets             |  | $             | 55,834  | 
|Non-current assets(1)      |  |               | 196,071 | 
|Current liabilities        |  |               | 19,619  | 
|Non-current liabilities(2) |  |               | 211,900 | 



---

|(1) |  | Includes $203,569 of intangibles related to its acquisition by TransWestern.   
|--- |  | -------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Includes $212,800 of long term debt related to its acquisition by
TransWestern.

7. EQUITY COMPENSATION PLAN

In connection with the 1997 Recapitalization, Holdings established the
TransWestern Holdings, L.P. Equity Compensation Plan (the 97 Plan).
The 97 Plan provides select key full-time employees with deferred compensation
benefits for income tax purposes. Special distributions to the 97 Plan are
recorded as expense in the accompanying statements of operations when
declared by the Board of Directors, generally following a significant
refinancing transaction. In June 2001, the Board of Directors approved a
distribution of $5.2 million net of taxes and benefits.



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

Employees receiving units in the 97 Plan are eligible to receive a ratable
per unit share of cash distributions from the 97 Plan, if and when declared by
the Plan Administrators. Generally, the Plan Administrators intend to
distribute to employee unit holders all assets contributed to the 97 Plan
within
one year of the date of contribution. As of September 30, 2001, undistributed
equity trust proceeds totaled $2.9 million.

In connection with the 2001 recapitalization, Holdings established
the 2001 TransWestern Holdings, L.P. Equity Compensation Plan.

8. RESTRUCTURING AND OTHER CHARGES

In connection with the WorldPages acquisition, Holdings
approved a plan to restructure the operations of WorldPages and its
subsidiaries. Restructuring costs are composed of committed costs required to
integrate the administrative, production and sales functions into the Companys
operations to achieve beneficial synergies and cost savings. WorldPages
will recognize 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:

|                        |  |          |       |          |  |             |        |                    |  |   |   |            |  |   |       | 
|----------------------- |  | -------- | ----- | -------- |  | ----------- | ------ | ------------------ |  | - | - | ---------- |  | - | ----- | 
|Type of cost:           |  | June 28, |       |          |  |             |        |                    |  |   |   | Balance at
|                        |  | 2001     |       | Payments |  | Adjustments |        | September 30, 2001
|                        |  |          |       |          |  |             |        |                   
|Employee separation     |  | $        | 4,100 |          |  | $           | (1,858 | )                  |  | $ | - |            |  | $ | 2,242 | 
|Office lease settlement |  |          | 986   |          |  |             | (112   | )                  |  |   | - |            |  |   | 874   | 
|Redundant assets        |  |          | 800   |          |  |             | -      |                    |  |   | - |            |  |   | 800   | 
|                        |  |          |       |          |  |             |        |                    |  |   |   |            |  |   |       | 
|                        |  | $        | 5,886 |          |  | $           | (1,970 | )                  |  | $ | - |            |  | $ | 3,916 | 

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

9. LEGAL PROCEEDINGS

On October 24, 2001, 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 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. However, at this time, it is not
possible to assess with any degree of accuracy WorldPages likelihood of
prevailing with regard to such claims.



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

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

As used in this item and throughout this Quarterly Report on Form 10-Q,
we, us, and our each refer to Holdings, TransWestern, WorldPages and all
of their respective subsidiaries collectively unless the context requires
otherwise.

Overview

We recognize net revenues from the sale of advertising placed in
each directory when the completed directory is distributed. 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 caused 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 fluctuation in net revenues and EBITDA
which is recognized based on actual distribution dates of individual
directories,
quarterly recognition of bookings, advance payments and total cash receipts
generally occurs at a steadier pace throughout the year than net revenues and
EBITDA. This is primarily the result of the fact that revenues and the
associated EBITDA related to a directory are recognized when a directory is
distributed. Our bookings and cash collection activities generally occur at a
steady pace throughout the year and reflect the growth of our portfolio of
directories and business as we add additional account executives from acquired
companies. The table below demonstrates that quarterly bookings, collection of
advance payments and total cash receipts tend to grow at a steady rate as
compared to net revenues and EBITDA.

|                        |  |             |      |             |  |             |      |             |  |             |      |                |  |   |      |  |  |   |      |  |  |  |      |   
|----------------------- |  | ----------- | ---- | ----------- |  | ----------- | ---- | ----------- |  | ----------- | ---- | -------------- |  | - | ---- |  |  | - | ---- |  |  |  | ---- | --
|                        |  | 2000        |      | 2000        |  | 2001        |      | 2001        |  | 2001        |      | % Change      
|                        |  | 3rd Quarter |      | 4th Quarter |  | 1st Quarter |      | 2nd Quarter |  | 3rd Quarter |      | 3Q-00 to 3Q-01
|                        |  |             |      |             |  |             |      |             |  |             |      |               
|Net revenues            |  | $           | 43.1 |             |  | $           | 60.7 |             |  | $           | 40.7 |                |  | $ | 54.5 |  |  | $ | 63.6 |  |  |  | 47.6 | % 
|EBITDA (a)              |  | $           | 12.8 |             |  | $           | 23.7 |             |  | $           | 8.9  |                |  | $ | 14.3 |  |  | $ | 12.3 |  |  |  | (3.9 | %)
|Bookings (b)            |  | $           | 44.1 |             |  | $           | 44.3 |             |  | $           | 49.7 |                |  | $ | 47.4 |  |  | $ | 69.4 |  |  |  | 57.4 | % 
|Advance payments        |  | $           | 21.4 |             |  | $           | 20.2 |             |  | $           | 19.8 |                |  | $ | 25.5 |  |  | $ | 26.1 |  |  |  | 22.0 | % 
|Total cash receipts (c) |  | $           | 39.8 |             |  | $           | 41.7 |             |  | $           | 41.2 |                |  | $ | 48.8 |  |  | $ | 47.2 |  |  |  | 18.6 | % 



|(a) |  | EBITDA is defined as income (loss) before extraordinary item,
discretionary contributions to Holdings Equity Compensation Plan
(such contributions represent special distributions to Holdings
Equity Compensation Plan in connection with refinancing transactions),
non recurring management bonuses and fees in connection with
refinancing transactions, plus interest expense, 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
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



|    |  | 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, 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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,
|                              |  |                     |       |                    
|                              |  | 2001                |       | 2000                |  | 2001 |       | 2000
|                              |  |                     |       |                     |  |      |       |     
|Net revenues                  |  |                     | 100.0 | %                   |  |      | 100.0 | %    |  |  | 100.0 | %  |  |  | 100.0 | %
|Cost of revenues              |  |                     | 23.5  |                     |  |      | 19.6  |      |  |  | 21.6  |    |  |  | 19.3  |  
|                              |  |                     |       |                     |  |      |       |      |  |  |       |    |  |  |       |  
|Gross profit                  |  |                     | 76.5  |                     |  |      | 80.4  |      |  |  | 78.4  |    |  |  | 80.7  |  
|Sales and marketing           |  |                     | 45.6  |                     |  |      | 42.1  |      |  |  | 46.2  |    |  |  | 42.6  |  
|General and administrative    |  |                     | 40.9  |                     |  |      | 26.5  |      |  |  | 32.6  |    |  |  | 27.5  |  
|Recap. transaction costs      |  |                     | 0.0   |                     |  |      | 0.0   |      |  |  | 9.7   |    |  |  | 0.0   |  
|Contribution to Equity Plan   |  |                     | 1.0   |                     |  |      | 0.0   |      |  |  | 3.7   |    |  |  | 0.0   |  
|                              |  |                     |       |                     |  |      |       |      |  |  |       |    |  |  |       |  
|Income (loss) from operations |  |                     | (11.0 | %)                  |  |      | 11.8  | %    |  |  | (13.8 | %) |  |  | 10.6  | %
|                              |  |                     |       |                     |  |      |       |      |  |  |       |    |  |  |       |  
|EBITDA Margin (a), (b)        |  |                     | 19.3  | %                   |  |      | 29.7  | %    |  |  | 22.3  | %  |  |  | 28.6  | %
|                              |  |                     |       |                     |  |      |       |      |  |  |       |    |  |  |       |  

(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 TransWesterns ability to generate cash flows available for debt
service.

THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2000

Net revenues increased $20.5 million, or 47.6%, from $43.1 million in the
three months ended September 30, 2000 to $63.6 million in the same period in
2001. We published 71 directories in the three months ended September 30, 2001
compared to 58 in the same period in 2000. The net revenue growth was due to
$19.9 million from 19 new directories, $3.0 million from eight directories
for which the publication date moved into the period and growth in the same 44
directories published during both periods of $2.8 million; offset by $5.2
million of net revenues associated with 14 directories published in the
three months ended September 30, 2000 but not in the same period in 2001.



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

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 additional ad sizes and additional
headings, our same book revenue growth for the 44 directories published in both
periods was 7.4%.

Cost of revenues increased $6.5 million, or 77.2%, from $8.4 million in
the three months ended September 30, 2000 to $14.9 million in the same period
in 2001. The increase was the result of $5.7 million of costs associated with
19 new directories published in the three months ended September 30, 2001, and
$0.5 million in costs associated with eight directories published in the three
months ended September 30, 2001, but not in the same period in 2000; offset by
$1.3
million of costs associated with 14 directories published during the three
months ended September 30, 2000, but not in the same period in 2001. Costs for
the
same 44 directories published in both periods increased $0.6 million for the
2001 period compared to the prior year. Production support costs increased
$1.0 million in the three months ended September 30, 2001 due to the
directories
acquired since the third quarter of 2000.

As a result of the above, gross profit increased $14.0 million, or
40.4%, from $34.7 million in the three months ended September 30, 2000 to $48.7
million in the same period in 2001. Gross margin decreased from 80.4% in the
three months ended September 30, 2000 to 76.5% in the same period in 2001 as a
result of higher direct costs on newly acquired directories and slightly lower
margins for the same 44 directories published in both periods.

Sales and marketing expenses increased $10.9 million, or 59.8%, from
$18.1 million in the three months ended September 30, 2000 to $29.0 million in
the same period in 2001. The increase was attributable to increases of $4.5
million in sales support costs, $5.2 million in direct sales costs and $1.2
million in the provision for bad debt (which was consistent with the increase
in net revenues).

The increase in sales support costs of $4.5 million was due to $3.7
million in higher sales costs incurred by offices acquired and established
for new directories since the third quarter of 2000 and $0.8 million due to
increased costs of running existing sales offices. The increase in direct
sales costs of $5.2 million was as follows: $5.1 million of additional costs
related to 19 new directories, $0.8 million related to eight directories
moving into the period, and $0.8 million of higher costs associated with the 44
same directories published in both periods, offset by $1.5 million of costs
associated with seven directories that were published in the three months ended
September 30, 2000 but not in the same period in 2000. Direct sales costs as a
percentage of revenue for the same 44 directories published during both periods
increased from 20.5% to 21.2% for the three months ended September 30, 2001
compared to the same period in 2000.

General and administrative expenses increased $14.7 million, or 128.1%,
from $11.4 million for the three months ended September 30, 2000 to $26.1
million
for the same period in 2001. The increase was due to: amortization of acquired
customer base and other intangibles of $10.8 million, $2.4 million in expenses
related to employees of WorldPages, and other increases in costs totaling
$1.5 million.

Contribution to Equity Compensation Plan of $0.6 million were incurred in
the three months ended September 30, 2001 as compared to zero for the three
months
ended September 30, 2000 as a result of taxes and benefits incurred related to
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 decreased $12.1
million from $5.1 million in the three months ended September 30, 2000
to a loss from operations of ($7.0) million in the same period in 2001. Income
from operations as a percentage of net revenues decreased from 11.8% in the
three months ended September 30, 2000 to (11.0%) in the same period in 2001.



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

Interest expense increased $3.4 million, or 42.7%, from $8.1 million in
the three months ended September 30, 2000 to $11.5 million in the same period
in 2001 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.

As a result of the above factors, net loss increased $15.4 million
from a net loss of ($2.8) million in the three months ended September 30,
2000 to a net loss of ($18.2) million in the same period in 2001.

NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 2000

Net revenues increased $42.2 million, or 36.1%, from $116.6 million in the
nine months ended September 30, 2000 to $158.8 million in the same period in
2001. We published 193 directories in the nine months ended September 30, 2001
compared to 159 in the same period in 2000. The net revenue growth was due to
$34.4 million from 41 new directories, $4.4 million from eight directories
for which the publication date moved into the period and growth in the same 144
directories published during both periods of $9.7 million; offset by $6.3
million of net revenues associated with 15 directories published in the
nine months ended September 30, 2000 but not in the same period in 2001.

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 additional ad sizes and additional
headings, our same book revenue growth for the 144 directories published in
both
periods was 8.7%.

Cost of revenues increased $11.9 million, or 52.7%, from $22.5 million in
the nine months ended September 30, 2000 to $34.4 million in the same period
in 2001. The increase was the result of $10.1 million of costs associated with
41 new directories published in the nine months ended September 30, 2001, and
$0.6 million in costs associated with eight directories published in the nine
months ended September 30, 2001, but not in the same period in 2000; offset by
$1.5
million of costs associated with 15 directories published during the nine
months ended September 30, 2000, but not in the same period in 2001. Costs for
the
same 144 directories published in both periods increased $1.4 million for the
2001 period compared to the prior year. Production support costs increased $1.3
million in the nine months period ended September 30, 2001 due to the
directories
acquired since the third quarter of 2000.

As a result of the above, gross profit increased $30.3 million, or
32.2%, from $94.1 million in the nine months ended September 30, 2000 to $124.4
million in the same period in 2001. Gross margin decreased from 80.7% in the
nine months ended September 30, 2000 to 78.4% in the same period in 2001 as a
result of higher direct costs on newly acquired directories.

Sales and marketing expenses increased $23.6 million, or 47.5%, from
$49.7 million in the nine months ended September 30, 2000 to $73.3 million in
the same period in 2001. The increase was attributable to increases of $6.7
million in sales support costs, $12.2 million in direct sales costs and $4.7
million in the provision for bad debt (which was consistent with the increase
in net revenues).



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

The increase in sales support costs of $6.7 million was due to $4.2
million in higher sales costs incurred by offices acquired since the third
quarter of 2000 and $2.5 million due to increased costs of running existing
sales offices. The increase in direct sales costs of $12.2 million was as
follows: $9.2 million of additional costs were for the 41 new directories,
$1.0 million for eight directories moving into the period, and $3.8
million of higher costs associated with the 144 same directories published in
both periods, offset by $1.8 million of costs associated with 15 directories
that were published in the nine months ended September 30, 2000 but not in the
same
period in 2001. Direct sales costs as a percentage of revenue for the same 144
directories published during both periods increased from 20.6% to 22.1% in the
nine months ended September 30, 2000 compared to the same period in 2001.

General and administrative expenses increased $19.7 million, or 61.3%,
from
$32.1 million for the nine months ended September 30, 2000 to $51.8 million
for the same period in 2001. The increase was due to amortization of acquired
customer base and other intangibles of $14.6 million, $1.7 million for
bonuses associated with the Recapitalization of the Company, $2.4 million in
expenses related to employees of WorldPages, and other increases in costs
totaling $1.0 million.

Recapitalization transaction costs of $15.4 million were incurred in the
nine months ended September 30, 2001 as compared to zero for the same period
in 2000 as a result of the Recapitalization of the Partnership on June 28,
2001.

Contribution to Equity Compensation Plan of $5.8 million were incurred in
the nine months ended September 30, 2001 as compared to zero for the same
period in 2000 as a result of a contribution to the Plan made on
June 28, 2001 in connection with the Recapitalization of the Partnership.

As a result of the above factors, income from operations decreased $34.2
million from $12.3 million in the nine months ended September 30, 2000 to a
loss from operations of ($21.9) million in the same period in 2001.
Income from operations as a percentage of net revenues decreased from 10.6% in
the nine months ended September 30, 2000 to (13.8%) in the same period in 2001.

Interest expense increased $4.5 million, or 19.5%, from $22.9 million in
the nine months ended September 30, 2000 to $27.4 million in the same period
in 2001 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, 2001
was $3.5 million compared to zero in the same period in 2000.
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 loss increased $42.1 million,
from a net loss of ($10.4) million in the nine months ended September 30, 2000
to a net loss of ($52.5) million in the same period in 2001.



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

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided (used) by operating activities was ($10.3) million
in the nine months ended September 30, 2001 compared to $14.8 million in the
same period in 2000. The decrease in cash provided by operations resulted
primarily from increased receivables and increased customer deposits
primarily related to the increased size of our directory portfolio as a
result of acquisitions.

Customer deposits (advance payments) increased $6.0 million in the nine
months ended September 30, 2001 compared to the same period in the prior year.
The increase is primarily related to the increased size of our directory
portfolio as a result of acquisitions.

Net cash used for investing activities was $163.5 million in the nine
months ended September 30, 2001 as compared to $33.6 million in the same period
in 2000. Investing activities consist primarily of cash used to acquire
directories. In the nine months ended September 30, 2001, $155.0 million was
spent
on acquisitions compared to $30.6 million in the same period in the prior year.
The prior years acquisitions are discussed in note 3 of our Quarterly Report
on Form 10-Q for the quarter ended September 30, 2000. Acquisitions made in the
nine months ended September 30, 2001 are discussed in note 5 of the financial
statements included in this Form 10-Q.

Net cash provided by financing activities was $200.6 million in the nine
months ended September 30, 2001 as compared to $19.4 million in the same period
in 2000. These amounts were primarily from borrowings for acquisitions during
the
quarters, and from the Recapitalization on June 28, 2001.

In connection with the recapitalization of Holdings in June 2001,
TransWestern entered into a new $300.0 million credit facility and drew $35.0
million in Term A and $200.0 million in Term B Loans. In addition, in May 2001,
TransWestern issued $75.0 million of Series E 9 5/8% Senior Subordinated Notes
due 2007, (excluding unamortized discount of $0.4 million). Also in
connection with the Recapitalization and acquisition of WorldPages,
TransWestern re-paid $137.5 million under its existing credit facility and
$74.2 million of debt assumed as part of the WorldPages acquisition.

As of September 30, 2001 Holdings had total outstanding long term
indebtedness
of $496.5 million, including $140.0 million of Series D Senior Subordinated
Notes
due 2007, $75.0 million of Series E 9 5/8% Senior Subordinated Notes due
2007, (excluding net unamortized premium of discount of $0.8 million), $50.5
million of Holdings 11 7/8% Senior Discount Notes due 2008, (Discount Notes),
$31.5 million of outstanding borrowings under the senior credit facility
Tranche
A Term Loan, $197.5 million outstanding under the senior credit facility
Tranche
B Term Loan, and $0.8 million in acquisition related debt. As of September 30,
2001
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 available funds under our revolving credit facility. Assuming the
successful implementation of managements business and operating strategy, 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 operating 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.



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

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 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 or 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.

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) risks associated with integrating WorldPages and
its subsidiaries with TransWestern; (iii) the restrictions imposed by the terms
of our indebtedness; (iv) the turnover rate amongst our account executives;
(v) the variation in our quarterly results; (vi) risks related to the fact
that a large portion of our sales are to small, local businesses; (vii) our
dependence on certain key personnel; (viii) risks related to the acquisition
and start-up of directories; (ix) risks related to substantial competition
in our markets; (x) risks related to changing technology and new product
developments; (xi) the effect of fluctuations in paper costs; and (xii) the
sensitivity of our business to general economic conditions. Information with
respect to these and other risk factors is available in TransWesterns most
recent Registration Statement on Form S-4 which is files with the Securities
and Exchange Commission and is available at www.sec.gov.




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to interest rate risk in connection with the term
loan 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, 2001, there was approximately
$34.3 million outstanding under the Term A Loan (under the LIBOR option at an
interest rate of 6.1% at such time) and $199.5 million outstanding under the
Term B Loan (under the LIBOR option at an average interest rate of 6.4% at
such time). 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 $2.4 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.




PART II. OTHER INFORMATION




ITEM 1. LEGAL PROCEEDINGS

On October 24, 2001, 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



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

July 14, 1999. Ionex is seeking approximately $6 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. However, at this time, it is not
possible to assess with any degree of accuracy WorldPages likelihood of
prevailing with regard to such claims.

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 AND USE OF PROCEEDS

(c)  Sale of Unregistered Equity Securities

In June 2001, Holdings completed a private placement pursuant to which
we issued an aggregate of 1,518,779.114 Preferred, Class A Common and Class
B Common limited partnership interests of Holdings to our existing limited
partners and their affiliates, senior managers of TransWestern and certain
other investors in exchange for total value of approximately $182.4 million,
including approximately $125.0 million of cash and then outstanding equity
securities of Holdings valued at approximately $57.4 million.

A total of 967,535.583 Preferred interests were issued for an aggregate
value of approximately $78.4 million. Consideration for the Preferred
interests was paid in the form of approximately $37.8 million in cash, Class
A Common interests valued at approximately $33.3 million and Class B Common
interests valued at approximately $7.3 million. A total of 541,243.531 Class
A Common interests were issued for an aggregate value of approximately $104.0
million. Consideration for the Class A Common interests was paid in the form
of approximately $87.3 million in cash and Class B Common interests valued at
approximately $16.8 million. A total of 10,000.00 Class B Common interests
were issued for $10,000.00 in cash.

The private placement of the limited partnership interests was completed
in reliance upon the exemptions contained in Section 4(2) of the Securities
Act and Rule 506 of Regulation D thereunder.




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

None

(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 14, 2001
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

| |        |                                                                                                              | 
| | ------ | ------------------------------------------------------------------------------------------------------------ | 
| | BY:    | /s/ Joan Fiorito                                                                                            
| |       
| | Name:  | Joan Fiorito                                                                                                
| | Title: | Vice President, Chief Financial
Officer and Assistant Secretary
(Principal Financial and Accounting
Officer)



21