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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 JUNE 30, 2002.

|      |  |                                                                                                                                        
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------
|[   ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM              TO

Commission File Number 333-42117

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

|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|DELAWARE                                                       |  | 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                                                                            
|                           | ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                                                  
|                           | ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS                                                
|                           | ITEM 5. OTHER INFORMATION                                                                                
|                           | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                                 
|SIGNATURES                
|EXHIBIT 99.1              



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TRANSWESTERN HOLDINGS L.P.
FORM 10-Q INDEX

|           |  |                                                                                                                                             |  |     
|---------- |  | ------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|           |  |                                                                                                                                             |  | PAGE
|           |  |                                                                                                                                             |  |     
|PART I.    |  | FINANCIAL
          INFORMATION                                                                                                             |  |     
|Item 1.    |  | Financial
          Statements                                                                                                              |  |     
|           |  | Consolidated
          Balance Sheets as of June 30, 2002 (unaudited) and December 31,
          2001                                       |  | 3   
|           |  | Consolidated
          Statements of Operations for the Three and Six Months Ended June 30,
          2002 (unaudited) and 2001 (unaudited) |  | 4   
|           |  | Consolidated
          Statements of Cash Flows for the Six Months Ended June 30, 2002
          (unaudited) and 2001 (unaudited)           |  | 5   
|           |  | Notes
          to Unaudited Consolidated Financial Statements                                                                              |  | 6   
|Item 2.    |  | Managements
          Discussion and Analysis of Financial Condition and Results of Operations                                             |  | 11  
|Item 3.    |  | Quantitative
          and Qualitative Disclosures About Market Risk                                                                        |  | 17  
|PART II.   |  | OTHER
          INFORMATION                                                                                                                 |  |     
|Item 1.    |  | Legal
          Proceedings                                                                                                                 |  | 17  
|Item 2.    |  | Changes
          in Securities                                                                                                             |  | 17  
|Item 3.    |  | Defaults
          upon Senior Securities                                                                                                   |  | 17  
|Item 4.    |  | Submission
          of Matters to a Vote of Security Holders                                                                               |  | 17  
|Item 5.    |  | Other
          Information                                                                                                                 |  | 17  
|Item 6.    |  | Exhibits
          and Reports on Form 8-K                                                                                                  |  | 17  
|SIGNATURES |  |                                                                                                                                             |  | 18  

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TRANSWESTERN HOLDINGS L.P.




CONSOLIDATED BALANCE SHEETS
(in thousands)


|                                          |                                                                                                                         |                               |         |             |          |              |         |          |          |  
|----------------------------------------- | ----------------------------------------------------------------------------------------------------------------------- | ----------------------------- | ------- | ----------- | -------- | ------------ | ------- | -------- | -------- | -
|                                          |                                                                                                                         |                               |         | JUNE 30,    |          | DECEMBER 31,
|                                          |                                                                                                                         |                               |         | 2002        |          | 2001        
|                                          |                                                                                                                         |                               |         |             |          |             
|                                          |                                                                                                                         |                               |         | (UNAUDITED) |          |              |         |         
|ASSETS                                    |                                                                                                                         |                               |         |             |          |              |         |         
|Current assets:                           |                                                                                                                         |                               |         |             |          |              |         |         
|                                          | Cash                                                                                                                    |                               | $       | 25,295      |          |              | $       | 26,913   |         
|                                          | Trade receivable, (net of allowance for doubtful accounts of $20,332
at June 30, 2002 and $19,444 at December 31, 2001) |                               |         | 105,656     |          |              |         | 92,714   |         
|                                          | Deferred directory costs                                                                                                |                               |         | 26,652      |          |              |         | 25,617   |         
|                                          | Other current assets                                                                                                    |                               |         | 2,779       |          |              |         | 2,527    |         
|                                          |                                                                                                                         |                               |         |             |          |              |         |         
|                                          |                                                                                                                         | Total current assets          |         |             | 160,382  |              |         |          | 147,771  |  
|Non-current assets:                       |                                                                                                                         |                               |         |             |          |              |         |         
|                                          | Property, equipment and leasehold improvements, net                                                                     |                               |         | 5,825       |          |              |         | 6,590    |         
|                                          | Acquired intangibles, net                                                                                               |                               |         | 251,687     |          |              |         | 252,403  |         
|                                          | Debt issuance costs, net                                                                                                |                               |         | 12,738      |          |              |         | 13,969   |         
|                                          |                                                                                                                         |                               |         |             |          |              |         |         
|                                          |                                                                                                                         | Total non-current assets      |         |             | 270,250  |              |         |          | 272,962  |  
|                                          |                                                                                                                         |                               |         |             |          |              |         |         
|Total assets                              |                                                                                                                         | $                             | 430,632 |             |          | $            | 420,733 |         
|                                          |                                                                                                                         |                               |         |             |          |              |         |         
|LIABILITIES AND PARTNERSHIP DEFICIT       |                                                                                                                         |                               |         |             |          |              |         |         
|Current liabilities:                      |                                                                                                                         |                               |         |             |          |              |         |         
|                                          | Accounts payable                                                                                                        |                               | $       | 16,765      |          |              | $       | 17,866   |         
|                                          | Salaries and benefits payable                                                                                           |                               |         | 7,085       |          |              |         | 9,883    |         
|                                          | Accrued acquisition costs                                                                                               |                               |         | 4,809       |          |              |         | 7,447    |         
|                                          | Accrued interest                                                                                                        |                               |         | 3,875       |          |              |         | 4,028    |         
|                                          | Other accrued liabilities                                                                                               |                               |         | 1,617       |          |              |         | 2,249    |         
|                                          | Equity trust distribution payable                                                                                       |                               |         | 3,036       |          |              |         | 2,902    |         
|                                          | Customer deposits                                                                                                       |                               |         | 31,855      |          |              |         | 25,420   |         
|                                          | Current portion, long-term debt                                                                                         |                               |         | 6,681       |          |              |         | 5,055    |         
|                                          |                                                                                                                         |                               |         |             |          |              |         |         
|                                          |                                                                                                                         | Total current liabilities     |         |             | 75,723   |              |         |          | 74,850   |  
|Long-term debt:                           |                                                                                                                         |                               |         |             |          |              |         |         
|                                          | Series F Senior Subordinated Notes                                                                                      |                               |         | 215,710     |          |              |         | 215,777  |         
|                                          | Series B Senior Discount Notes, net                                                                                     |                               |         | 55,481      |          |              |         | 52,384   |         
|                                          | Senior credit facility Term A Loan                                                                                      |                               |         | 28,719      |          |              |         | 30,545   |         
|                                          | Senior credit facility Term B Loan                                                                                      |                               |         | 196,000     |          |              |         | 197,000  |         
|                                          | Other long-term liabilities                                                                                             |                               |         | 300         |          |              |         | 300      |         
|                                          |                                                                                                                         |                               |         |             |          |              |         |         
|                                          |                                                                                                                         | Total non-current liabilities |         |             | 496,210  |              |         |          | 496,006  |  
|                                          |                                                                                                                         |                               |         |             |          |              |         |         
|                                          |                                                                                                                         | Total liabilities             |         |             | 571,933  |              |         |          | 570,856  |  
|                                          |                                                                                                                         |                               |         |             |          |              |         |         
|Partnership deficit:                      |                                                                                                                         |                               |         |             |          |              |         |         
|                                          | General partner                                                                                                         |                               |         | (3,916      | )        |              |         | (4,077   | )       
|                                          | Limited partners                                                                                                        |                               |         | (136,737    | )        |              |         | (145,348 | )       
|                                          | Notes receivables from partners                                                                                         |                               |         | (648        | )        |              |         | (698     | )       
|                                          |                                                                                                                         |                               |         |             |          |              |         |         
|                                          |                                                                                                                         | Total partnership deficit     |         |             | (141,301 | )            |         |          | (150,123 | )
|                                          |                                                                                                                         |                               |         |             |          |              |         |         
|Total liabilities and partnership deficit |                                                                                                                         | $                             | 430,632 |             |          | $            | 420,733 |         
|                                          |                                                                                                                         |                               |         |             |          |              |         |         

See accompanying notes.

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TRANSWESTERN HOLDINGS L.P.




CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands)


|                                                     |                                          |   |                    |        |                  |   |         |        |      |   |         |        |  |   |         |        | 
|---------------------------------------------------- | ---------------------------------------- | - | ------------------ | ------ | ---------------- | - | ------- | ------ | ---- | - | ------- | ------ |  | - | ------- | ------ | 
|                                                     |                                          |   | THREE MONTHS ENDED |        | SIX MONTHS ENDED
|                                                     |                                          |   | JUNE 30,           |        | JUNE 30,        
|                                                     |                                          |   |                    |        |                 
|                                                     |                                          |   | 2002               |        | 2001             |   | 2002    |        | 2001
|                                                     |                                          |   |                    |        |                  |   |         |        |     
|Net revenues                                         |                                          | $ | 94,546             |        |                  | $ | 54,453  |        |      | $ | 163,516 |        |  | $ | 95,131  |       
|Cost of revenues                                     |                                          |   | 15,707             |        |                  |   | 11,072  |        |      |   | 28,922  |        |  |   | 19,399  |       
|                                                     |                                          |   |                    |        |                  |   |         |        |      |   |         |        |  |   |         |       
|Gross profit                                         |                                          |   | 78,839             |        |                  |   | 43,381  |        |      |   | 134,594 |        |  |   | 75,732  |       
|Operating expenses:                                  |                                          |   |                    |        |                  |   |         |        |      |   |         |        |  |   |         |       
|                                                     | Sales and marketing                      |   |                    | 40,787 |                  |   |         | 24,853 |      |   |         | 70,927 |  |   |         | 44,316 | 
|                                                     | General and administrative               |   |                    | 17,246 |                  |   |         | 13,875 |      |   |         | 33,094 |  |   |         | 25,697 | 
|                                                     | Recapitalization transaction costs       |   |                    |       |                  |   |         | 15,371 |      |   |         |       |  |   |         | 15,371 | 
|                                                     | Contribution to equity compensation plan |   |                    |       |                  |   |         | 5,189  |      |   |         |       |  |   |         | 5,189  | 
|                                                     |                                          |   |                    |        |                  |   |         |        |      |   |         |        |  |   |         |       
|Total operating expenses                             |                                          |   | 58,033             |        |                  |   | 59,288  |        |      |   | 104,021 |        |  |   | 90,573  |       
|                                                     |                                          |   |                    |        |                  |   |         |        |      |   |         |        |  |   |         |       
|Income (loss) from operations                        |                                          |   | 20,806             |        |                  |   | (15,907 | )      |      |   | 30,573  |        |  |   | (14,841 | )     
|Other income (loss), net                             |                                          |   | (174               | )      |                  |   | (150    | )      |      |   | (132    | )      |  |   | (56     | )     
|Interest expense                                     |                                          |   | (10,306            | )      |                  |   | (8,207  | )      |      |   | (20,406 | )      |  |   | (15,942 | )     
|                                                     |                                          |   |                    |        |                  |   |         |        |      |   |         |        |  |   |         |       
|Net income (loss) before extraordinary items         |                                          | $ | 10,326             |        |                  | $ | (24,264 | )      |      | $ | 10,035  |        |  | $ | (30,839 | )     
|Extraordinary loss                                   |                                          |   |                   |        |                  |   | (3,515  | )      |      |   |        |        |  |   | (3,515  | )     
|                                                     |                                          |   |                    |        |                  |   |         |        |      |   |         |        |  |   |         |       
|Net income (loss)                                    |                                          | $ | 10,326             |        |                  | $ | (27,779 | )      |      | $ | 10,035  |        |  | $ | (34,354 | )     
|                                                     |                                          |   |                    |        |                  |   |         |        |      |   |         |        |  |   |         |       
|Net income (loss) allocated
to General Partner units |                                          | $ | 162                |        |                  | $ | (478    | )      |      | $ | 157     |        |  | $ | (591    | )     
|                                                     |                                          |   |                    |        |                  |   |         |        |      |   |         |        |  |   |         |       
|Net income (loss) allocated
to Limited Partner units |                                          | $ | 10,164             |        |                  | $ | (27,301 | )      |      | $ | 9,878   |        |  | $ | (33,763 | )     
|                                                     |                                          |   |                    |        |                  |   |         |        |      |   |         |        |  |   |         |       
|Net income (loss) per
General Partner unit           |                                          | $ | 16.5               |        |                  | $ | (48.8   | )      |      | $ | 16.0    |        |  | $ | (60.3   | )     
|                                                     |                                          |   |                    |        |                  |   |         |        |      |   |         |        |  |   |         |       
|Net income (loss) per
Limited Partner unit           |                                          | $ | 5.2                |        |                  | $ | (14.3   | )      |      | $ | 5.1     |        |  | $ | (17.7   | )     
|                                                     |                                          |   |                    |        |                  |   |         |        |      |   |         |        |  |   |         |       
|Weighted average General Partner
units outstanding   |                                          |   | 10                 |        |                  |   | 10      |        |      |   | 10      |        |  |   | 10      |       
|                                                     |                                          |   |                    |        |                  |   |         |        |      |   |         |        |  |   |         |       
|Weighted average Limited Partner
units outstanding   |                                          |   | 1,930              |        |                  |   | 1,886   |        |      |   | 1,930   |        |  |   | 1,886   |       
|                                                     |                                          |   |                    |        |                  |   |         |        |      |   |         |        |  |   |         |       

See accompanying notes.

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TRANSWESTERN HOLDINGS L.P.




CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)


|                                                                                            |                                                                                     |                                                   |         |                  |         |      |          |          |        |  
|------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | ------------------------------------------------- | ------- | ---------------- | ------- | ---- | -------- | -------- | ------ | -
|                                                                                            |                                                                                     |                                                   |         | SIX MONTHS ENDED
|                                                                                            |                                                                                     |                                                   |         | JUNE 30,        
|                                                                                            |                                                                                     |                                                   |         |                 
|                                                                                            |                                                                                     |                                                   |         | 2002             |         | 2001
|                                                                                            |                                                                                     |                                                   |         |                  |         |     
|OPERATING ACTIVITIES                                                                        |                                                                                     |                                                   |         |                  |         |      |          |         
|Net income (loss)                                                                           |                                                                                     | $                                                 | 10,035  |                  |         | $    | (34,354  | )       
|Adjustments to reconcile net income (loss) to cash provided (used) by
operating activities: |                                                                                     |                                                   |         |                  |         |      |          |         
|                                                                                            | Loss on early extinguishment of debt                                                |                                                   |         |                 |         |      |          | 3,515    |       
|                                                                                            | Depreciation and amortization                                                       |                                                   |         | 20,172           |         |      |          | 15,349   |       
|                                                                                            | Amortization of deferred debt issuance costs                                        |                                                   |         | 1,210            |         |      |          | 694      |       
|                                                                                            | Amortization of Senior Discount Note                                                |                                                   |         | 3,097            |         |      |          | 2,768    |       
|                                                                                            | Provision for doubtful accounts                                                     |                                                   |         | 18,293           |         |      |          | 10,811   |       
|                                                                                            | Changes in operating assets and liabilities, excluding the
effects of acquisitions: |                                                   |         |                  |         |      |          |          |       
|                                                                                            |                                                                                     | Trade receivables                                 |         |                  | (10,910 | )    |          |          | (4,806 | )
|                                                                                            |                                                                                     | Write-off of doubtful accounts                    |         |                  | (24,456 | )    |          |          | (8,455 | )
|                                                                                            |                                                                                     | Recoveries of doubtful accounts                   |         |                  | 911     |      |          |          | 690    |  
|                                                                                            |                                                                                     | Deferred directory costs                          |         |                  | (1,035  | )    |          |          | (2,747 | )
|                                                                                            |                                                                                     | Other current assets                              |         |                  | (251    | )    |          |          | 1,586  |  
|                                                                                            |                                                                                     | Accounts payable                                  |         |                  | (3,597  | )    |          |          | (3,750 | )
|                                                                                            |                                                                                     | Accrued liabilities and other current liabilities |         |                  | (2,932  | )    |          |          | (5,047 | )
|                                                                                            |                                                                                     | Accrued interest                                  |         |                  | (153    | )    |          |          | 151    |  
|                                                                                            |                                                                                     | Customer deposits                                 |         |                  | 6,435   |      |          |          | 7,375  |  
|                                                                                            |                                                                                     | Equity trust payable                              |         |                  | 134     |      |          |          | 5,189  |  
|                                                                                            |                                                                                     | Other current liabilities                         |         |                  | (272    | )    |          |          |       |  
|                                                                                            |                                                                                     |                                                   |         |                  |         |      |          |         
|Cash provided (used) by operating activities                                                |                                                                                     |                                                   | 16,681  |                  |         |      | (11,031  | )       
|INVESTING ACTIVITIES                                                                        |                                                                                     |                                                   |         |                  |         |      |          |         
|Purchase of property, equipment and leasehold improvements                                  |                                                                                     |                                                   | (341    | )                |         |      | (722     | )       
|Cash paid for acquisition of WorldPages.com, net of cash acquired                           |                                                                                     |                                                   |        |                  |         |      | (140,299 | )       
|Acquisition of other directories                                                            |                                                                                     |                                                   | (14,693 | )                |         |      | (14,748  | )       
|Deferred financing costs and other assets                                                   |                                                                                     |                                                   | (484    | )                |         |      | (7,439   | )       
|                                                                                            |                                                                                     |                                                   |         |                  |         |      |          |         
|Cash used for investing activities                                                          |                                                                                     |                                                   | (15,518 | )                |         |      | (163,208 | )       
|FINANCING ACTIVITIES                                                                        |                                                                                     |                                                   |         |                  |         |      |          |         
|Borrowings under long-term debt agreements:                                                 |                                                                                     |                                                   |         |                  |         |      |          |         
|                                                                                            | Revolving credit facility                                                           |                                                   |         |                 |         |      |          | 61,700   |       
|                                                                                            | Senior term loans                                                                   |                                                   |         |                 |         |      |          | 235,000  |       
|                                                                                            | 9 5/8% Senior Subordinated Notes                                                    |                                                   |         |                 |         |      |          | 74,553   |       
|Repayments of long-term debt:                                                               |                                                                                     |                                                   |         |                  |         |      |          |         
|                                                                                            | Revolving credit facility                                                           |                                                   |         |                 |         |      |          | (84,200  | )     
|                                                                                            | Senior term loans and note payable                                                  |                                                   |         | (1,200           | )       |      |          | (106,020 | )     
|                                                                                            | Repayment of debt assumed in acquisition of WorldPages                              |                                                   |         |                 |         |      |          | (73,414  | )     
|Repayments of debt acquired                                                                 |                                                                                     |                                                   | (367    | )                |         |      |         |         
|Contributions from partners                                                                 |                                                                                     |                                                   |        |                  |         |      | 124,291  |         
|Redemption of partner units                                                                 |                                                                                     |                                                   | (1,264  | )                |         |      | (30,004  | )       
|Payment of Notes Receivables from Partners                                                  |                                                                                     |                                                   | 50      |                  |         |      |         |         
|                                                                                            |                                                                                     |                                                   |         |                  |         |      |          |         
|Cash provided (used) by financing activities                                                |                                                                                     |                                                   | (2,781  | )                |         |      | 201,906  |         
|                                                                                            |                                                                                     |                                                   |         |                  |         |      |          |         
|Net increase in cash                                                                        |                                                                                     |                                                   | (1,618  | )                |         |      | 27,667   |         
|Cash at beginning of period                                                                 |                                                                                     |                                                   | 26,913  |                  |         |      | 1,961    |         
|                                                                                            |                                                                                     |                                                   |         |                  |         |      |          |         
|Cash at end of period                                                                       |                                                                                     | $                                                 | 25,295  |                  |         | $    | 29,628   |         
|                                                                                            |                                                                                     |                                                   |         |                  |         |      |          |         
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                           |                                                                                     |                                                   |         |                  |         |      |          |         
|Cash paid for interest                                                                      |                                                                                     | $                                                 | 16,204  |                  |         | $    | 12,325   |         
|                                                                                            |                                                                                     |                                                   |         |                  |         |      |          |         

See accompanying notes.

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TRANSWESTERN HOLDINGS L.P.




NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)


1. GENERAL

The accompanying unaudited consolidated financial statements include the
accounts of TransWestern Holdings L.P. (Holdings) and its wholly owned
subsidiary, TransWestern Publishing Company, LLC (TransWestern or
Company) and TransWesterns direct and indirect subsidiaries. All significant
inter-company transactions have been eliminated. Holdings only assets consist
of TransWesterns Member Units. 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 Holdings Form 10-K for the fiscal year ended
December 31, 2001. The 10-K is available on the Internet at http://www.sec.gov.

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

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

2. FINANCIAL STATEMENT DETAILS

Property, Equipment and Leasehold Improvements

|                                               |  |          |        |              |  |   |        |  
|---------------------------------------------- |  | -------- | ------ | ------------ |  | - | ------ | -
|                                               |  | JUNE 30, |        | DECEMBER 31,
|                                               |  | 2002     |        | 2001        
|                                               |  |          |        |             
|Land and building                              |  | $        | 68     |              |  | $ | 611    |  
|Computer and office equipment                  |  |          | 10,995 |              |  |   | 10,219 |  
|Furniture and fixtures                         |  |          | 2,693  |              |  |   | 2,492  |  
|Leasehold improvements                         |  |          | 395    |              |  |   | 660    |  
|                                               |  |          |        |              |  |   |        |  
|                                               |  |          | 14,151 |              |  |   | 13,982 |  
|Less accumulated depreciation and amortization |  |          | (8,326 | )            |  |   | (7,392 | )
|                                               |  |          |        |              |  |   |        |  
|                                               |  | $        | 5,825  |              |  | $ | 6,590  |  
|                                               |  |          |        |              |  |   |        |  

Acquired Intangibles

|                              |                           |   |          |         |              |   |          |         | 
|----------------------------- | ------------------------- | - | -------- | ------- | ------------ | - | -------- | ------- | 
|                              |                           |   | JUNE 30, |         | DECEMBER 31,
|                              |                           |   | 2002     |         | 2001        
|                              |                           |   |          |         |             
|Customer base                 |                           | $ | 218,595  |         |              | $ | 209,676  |        
|Goodwill                      |                           |   | 165,261  |         |              |   | 159,689  |        
|Licensing agreements          |                           |   | 1,224    |         |              |   | 1,224    |        
|Non compete and other         |                           |   | 6,546    |         |              |   | 2,621    |        
|                              |                           |   |          |         |              |   |          |        
|                              |                           |   | 391,626  |         |              |   | 373,210  |        
|Less accumulated amortization |                           |   | (139,939 | )       |              |   | (120,807 | )      
|                              |                           |   |          |         |              |   |          |        
|                              | Acquired intangibles, net |   | $        | 251,687 |              |   | $        | 252,403 | 
|                              |                           |   |          |         |              |   |          |        

Debt issuance costs

|                              |                          |   |          |        |              |   |        |        | 
|----------------------------- | ------------------------ | - | -------- | ------ | ------------ | - | ------ | ------ | 
|                              |                          |   | JUNE 30, |        | DECEMBER 31,
|                              |                          |   | 2002     |        | 2001        
|                              |                          |   |          |        |             
|Debt issuance costs           |                          | $ | 18,277   |        |              | $ | 18,277 |       
|Less accumulated amortization |                          |   | (5,539   | )      |              |   | (4,308 | )     
|                              |                          |   |          |        |              |   |        |       
|                              | Debt issuance costs, net |   | $        | 12,738 |              |   | $      | 13,969 | 
|                              |                          |   |          |        |              |   |        |       

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

3. LONG TERM DEBT

As of June 30, 2002 Holdings had total outstanding long term
indebtedness of $496.2 million, including $215.7 million of Series F 9 5/8%
Senior Subordinated Notes due 2007, $55.5 million of Holdings 11 7/8% Senior
Discount Notes due 2008, (Discount Notes), $28.7 million of outstanding
borrowings under the Term A loan, $196.0 million of outstanding borrowings under
the Term B loan, and $0.3 million in acquisition related debt. As of June 30,
2002 TransWestern had no outstanding borrowings under its revolving credit
facility, with total borrowing availability of $65.0 million.

4. DIRECTORY ACQUISITIONS

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

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

Arnold Advertising, Inc. On April 11, 2002, the Company purchased
the outstanding common stock of Arnold Advertising, Inc. for a total of
$7.9 million. The Company acquired three directories in the north
Los Angeles, California area.

Western Directory, Inc. On May 1, 2002, the Company purchased certain
tangible and intangible assets of Western Directory, Inc. for a total of $2.8
million. The Company acquired two directories in northern Oregon.

Pennco Publishing, Inc. On June 5, 2002, the Company purchased certain
tangible and intangible assets of Pennco Publishing, Inc. for a total of $2.6
million. The Company acquired two directories in northwest Oregon.

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

|                                         |  |   |       | 
|---------------------------------------- |  | - | ----- | 
|Goodwill                                 |  | $ | 2,923 | 
|Customer List                            |  |   | 8,920 | 
|Non-compete                              |  |   | 2,325 | 
|Other current and non-current net assets |  |   | 1,400 | 

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

|                  |  |                           |         |      |  |   |         |  
|----------------- |  | ------------------------- | ------- | ---- |  | - | ------- | -
|                  |  | Six months ended June 30,
|                  |  |                          
|                  |  | 2002                      |         | 2001
|                  |  |                           |         |     
|                  |  | (Unaudited)              
|Net revenues      |  | $                         | 166,028 |      |  | $ | 97,643  |  
|Net
income (loss) |  |                           | 10,042  |      |  |   | (35,170 | )

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

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

5. GUARANTEE

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

|                         |  |                             |        |                           |  |      |      |      |  |   |        |  |  |   |       |  
|------------------------ |  | --------------------------- | ------ | ------------------------- |  | ---- | ---- | ---- |  | - | ------ |  |  | - | ----- | -
|                         |  | Three months ended June 30, |        | Six months ended June 30,
|                         |  |                             |        |                          
|                         |  | 2002                        |        | 2001                      |  | 2002 |      | 2001
|                         |  |                             |        |                           |  |      |      |     
|                         |  | (Unaudited)                
|Statement of Operations: |  |                             |        |                           |  |      |      |      |  |   |        |  |  |   |       |  
|Net revenues             |  | $                           | 37,146 |                           |  | $    |     |      |  | $ | 74,402 |  |  | $ | 1,104 |  
|Gross profit             |  |                             | 31,087 |                           |  |      |     |      |  |   | 61,581 |  |  |   | 995   |  
|Operating income (loss)  |  |                             | 9,799  |                           |  |      | (564 | )    |  |   | 21,018 |  |  |   | (433  | )
|Net income (loss)        |  |                             | 6,725  |                           |  |      | (683 | )    |  |   | 15,122 |  |  |   | (668  | )

|                        |  |          |         |              |  |  |         | 
|----------------------- |  | -------- | ------- | ------------ |  |  | ------- | 
|                        |  | June 30, |         | December 31,
|                        |  | 2002     |         | 2001        
|                        |  |          |         |             
|Balance Sheet:          |  |          |         |              |  |  |         | 
|Current assets          |  | $        | 68,465  |              |  |  | 51,811  | 
|Non-current assets      |  |          | 192,720 |              |  |  | 187,227 | 
|Current liabilities     |  |          | 20,050  |              |  |  | 21,920  | 
|Non-current liabilities |  |          | 209,129 |              |  |  | 210,964 | 

6. RESTRUCTURING AND OTHER CHARGES

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

|                        |  |          |       |          |  |             |        |               |  |   |      |            |  |   |     | 
|----------------------- |  | -------- | ----- | -------- |  | ----------- | ------ | ------------- |  | - | ---- | ---------- |  | - | --- | 
|Type of cost:           |  | June 28, |       |          |  |             |        |               |  |   |      | Balance at
|(in thousands)          |  | 2001     |       | Payments |  | Adjustments |        | June 30, 2002
|                        |  |          |       |          |  |             |        |              
|Employee separation     |  | $        | 4,100 |          |  | $           | (3,819 | )             |  |   |     |            |  | $ | 281 | 
|Office lease settlement |  |          | 986   |          |  |             | (656   | )             |  |   | 87   |            |  |   | 417 | 
|Redundant assets        |  |          | 800   |          |  |             |       |               |  |   | (800 | )          |  |   |    | 
|                        |  |          |       |          |  |             |        |               |  |   |      |            |  |   |     | 
|                        |  | $        | 5,886 |          |  | $           | (4,475 | )             |  | $ | (713 | )          |  | $ | 698 | 
|                        |  |          |       |          |  |             |        |               |  |   |      |            |  |   |     | 

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

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

7. LEGAL PROCEEDINGS

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

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

8. NEW ACCOUNTING PRONOUNCEMENTS

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

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

|         |  |            |         |                |  |             |       |               |  |            |   |  |  |   |         | 
|-------- |  | ---------- | ------- | -------------- |  | ----------- | ----- | ------------- |  | ---------- | - |  |  | - | ------- | 
|         |  | January 1, |         | Acquisitions & |  |             |       |               |  | Balance at
|         |  | 2002       |         | Adjustments(1) |  | Impairments |       | June 30, 2002
|         |  |            |         |                |  |             |       |              
|Goodwill |  | $          | 159,689 |                |  | $           | 5,608 |               |  |            |  |  |  | $ | 165,297 | 
|         |  |            |         |                |  |             |       |               |  |            |   |  |  |   |         | 



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

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

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

Overview

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

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

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

|                       |  |             |      |             |  |             |      |             |  |             |      |  |  |   |      |  |  |   |      | 
|---------------------- |  | ----------- | ---- | ----------- |  | ----------- | ---- | ----------- |  | ----------- | ---- |  |  | - | ---- |  |  | - | ---- | 
|                       |  | 2001        |      | 2001        |  | 2001        |      | 2002        |  | 2002       
|                       |  | 2nd Quarter |      | 3rd Quarter |  | 4th Quarter |      | 1st Quarter |  | 2nd Quarter
|                       |  |             |      |             |  |             |      |             |  |            
|Net revenues           |  | $           | 54.5 |             |  | $           | 63.6 |             |  | $           | 83.6 |  |  | $ | 69.0 |  |  | $ | 94.5 | 
|EBITDA(a)              |  | $           | 14.3 |             |  | $           | 12.3 |             |  | $           | 24.9 |  |  | $ | 19.9 |  |  | $ | 31.7 | 
|Bookings(b)            |  | $           | 47.4 |             |  | $           | 69.4 |             |  | $           | 82.0 |  |  | $ | 62.1 |  |  | $ | 72.3 | 
|Advance payments       |  | $           | 25.5 |             |  | $           | 26.1 |             |  | $           | 29.9 |  |  | $ | 29.8 |  |  | $ | 31.7 | 
|Total cash receipts(c) |  | $           | 48.8 |             |  | $           | 68.1 |             |  | $           | 72.7 |  |  | $ | 67.9 |  |  | $ | 75.8 | 



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

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RESULTS OF OPERATIONS

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

|                              |  |                |       |                |  |      |       |      |  |  |       |   |  |  |       |   
|----------------------------- |  | -------------- | ----- | -------------- |  | ---- | ----- | ---- |  |  | ----- | - |  |  | ----- | --
|                              |  | THREE MONTHS   |       | SIX MONTHS    
|                              |  | ENDED JUNE 30, |       | ENDED JUNE 30,
|                              |  |                |       |               
|                              |  | 2002           |       | 2001           |  | 2002 |       | 2001
|                              |  |                |       |                |  |      |       |     
|Net revenues                  |  |                | 100.0 | %              |  |      | 100.0 | %    |  |  | 100.0 | % |  |  | 100.0 | % 
|Cost of revenues              |  |                | 16.6  |                |  |      | 20.3  |      |  |  | 17.7  |   |  |  | 20.4  |   
|                              |  |                |       |                |  |      |       |      |  |  |       |   |  |  |       |   
|Gross profit                  |  |                | 83.4  |                |  |      | 79.7  |      |  |  | 82.3  |   |  |  | 79.6  |   
|Sales and marketing           |  |                | 43.2  |                |  |      | 45.7  |      |  |  | 43.4  |   |  |  | 46.6  |   
|General and administrative    |  |                | 18.2  |                |  |      | 25.5  |      |  |  | 20.2  |   |  |  | 27.0  |   
|Recap. transaction costs      |  |                | 0.0   |                |  |      | 28.2  |      |  |  | 0.0   |   |  |  | 16.2  |   
|Contribution to Equity Plan   |  |                | 0.0   |                |  |      | 9.5   |      |  |  | 0.0   |   |  |  | 5.4   |   
|                              |  |                |       |                |  |      |       |      |  |  |       |   |  |  |       |   
|Income (loss) from operations |  |                | 22.0  | %              |  |      | (29.2 | )%   |  |  | 18.7  | % |  |  | (15.6 | )%
|                              |  |                |       |                |  |      |       |      |  |  |       |   |  |  |       |   
|EBITDA Margin(a),(b)          |  |                | 33.5  | %              |  |      | 26.2  | %    |  |  | 31.5  | % |  |  | 24.3  | % 
|                              |  |                |       |                |  |      |       |      |  |  |       |   |  |  |       |   



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

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

Net revenues increased $40.0 million, or 73.6%, from $54.5 million in the
three months ended June 30, 2001 to $94.5 million in the same period in
2002. The Company published 81 directories in the three months ended June 30, 2002
compared to 67 in the same period in 2001. The net revenue growth was due to
$36.6 million from 13 new directories, $12.7 million from 16 directories
for which the publication date moved into the period and growth in the same 52
directories published during both periods of $3.0 million; offset by $12.3
million of net revenues associated with 15 directories published in the
three months ended June 30, 2001 but not in the same period in 2002.

As a result of a combination of factors, including the addition of new
customers, price increases, increases in the amount of advertising by current
customers and new directory features such as colorization of ads, additional
ad sizes and additional headings, our same book revenue growth for the 52
directories published in both periods was 7.2%.

Cost of revenues increased $4.6 million, or 41.9%, from $11.1 million in
the three months ended June 30, 2001 to $15.7 million in the same period
in 2002. The increase was the result of $6.3 million of costs associated with
13 new directories published in the three months ended June 30, 2002, $2.2
million in costs associated with 16 directories published in the three
months ended June 30, 2002, but not in the same period in 2001; offset by
$1.7 million of lower costs associated with the 52 same directories and $2.6
million of costs associated with 15 directories published during the
three months ended June 30, 2001, but not in the same period in 2002.
Production support costs increased $0.4 million in the three months ended
June 30, 2002 due to the directories acquired over the past twelve months.

As a result of the above, gross profit increased $35.4 million, or
81.7%, from $43.4 million in the three months ended June 30, 2001 to $78.8
million in the same period in 2002. Gross margin increased from 79.7% in the

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three months ended June 30, 2001 to 83.4% in the same period in 2002 as a
result of lower direct costs on the same 52 directories.

Selling and marketing expenses increased $15.9 million, or 64.1%, from
$24.9 million in the three months ended June 30, 2001 to $40.8 million in
the same period in 2002. The increase was attributable to increases of $3.0
million in sales support costs, $8.6 million in direct sales costs and $4.3
million in provision for bad debt (which was 1.7 percentage points higher on
a same book basis compared to the same period in 2001).

Of the increase in sales support costs of $3.0 million, $2.6 million was
due to sales offices acquired since the second quarter of 2001 and $0.4 million
was due to a general increase in costs associated with personnel and other costs
associated with our field sales offices. The increase in direct sales costs of
$8.6 million was as follows: $8.8 million of costs were for the 13 new
directories, $3.1 million for 16 directories moving into the period;
offset by $0.3 million of lower costs associated with the 52 same directories and
$3.0 million of costs associated with 15 directories that published in the three
months ended June 30, 2001 but not in the same period in 2002. Direct sales costs
as a percentage of revenue for the same 52 directories published during both periods
decreased from 23.0% to 20.9% in the three months ended June 30, 2002 compared
to the same period in 2001.

General and administrative expense increased $3.3 million, or 24.3%, from
$13.9 million for the three months ended June 30, 2001 to $17.2 million
for the same period in 2002. The increase is due to: amortization of acquired
customer base and other intangibles of $2.6 million, additional staffing as a
result of acquiring WorldPages of $1.0 million, and general cost increases
primarily in compensation costs and professional fees of $1.2 million; offset by
$1.4 million of management fees incurred in the three months ended June 30, 2001
as a result of the recapitalization of Holdings on June 28, 2001.

Recapitalization transaction costs of zero were incurred in the three
months ended June 30, 2002 as compared to $15.4 million for the three months
ended June 30, 2001 as a result of the recapitalization of Holdings on
June 28, 2001.

Contribution to Equity Compensation Plan of zero was incurred in the three
months ended June 30, 2002 as compared to $5.2 million for the three months
ended June 30, 2001 as a result of a contribution to the Equity Compensation
Plan of $5.2 million made on June 28, 2001 in connection with the
recapitalization.

As a result of the above factors, income from operations increased $36.7
million, from a net loss from operations of $15.9 million in the
three months ended June 30, 2001 to income from operations of $20.8 million
in the same period in 2002. Income from operations as a percentage of net
revenues increased from (29.2%) in the three months ended June 30, 2001 to
22.0% in the same period in 2002.

Interest expense increased $2.1 million, or 25.6%, from $8.2 million in
the three months ended June 30, 2001 to $10.3 million in the same period
in 2002 due to higher levels of debt partially offset by a decrease in the
rates of interest paid as a result of decreases in Prime and LIBOR rates.

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

As a result of the above factors, net income increased $38.1 million,
from a net loss of $27.8 million in the three months ended June 30, 2001 to
net income of $10.3 million in the same period in 2002.

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SIX MONTHS ENDED JUNE 30, 2002 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2001

Net revenues increased $68.4 million, or 71.9%, from $95.1 million in the
six months ended June 30, 2001 to $163.5 million in the same period in
2002. The Company published 139 directories in the six months ended June 30, 2002
compared to 122 in the same period in 2001. The net revenue growth was due to
$72.6 million from 26 new directories, $4.8 million from 10 directories
for which the publication date moved into the period and growth in the same 103
directories published during both periods of $5.8 million; offset by $14.8
million of net revenues associated with 19 directories published in the
six months ended June 30, 2001 but not in the same period in 2002.

As a result of a combination of factors, including the addition of new
customers, price increases, increases in the amount of advertising by current
customers and new directory features such as colorization of ads, additional
ad sizes and additional headings, our same book revenue growth for the 103
directories published in both periods was 7.1%.

Cost of revenues increased $9.5 million, or 49.1%, from $19.4 million in
the six months ended June 30, 2001 to $28.9 million in the same period
in 2002. The increase was the result of $13.5 million of costs associated with
26 new directories published in the six months ended June 30, 2002, $0.9
million in costs associated with 10 directories published in the six
months ended June 30, 2002, but not in the same period in 2001; offset by
$2.8 million of lower costs associated with the 103 same directories and $3.2
million of costs associated with 19 directories published during the
six months ended June 30, 2001, but not in the same period in 2002.
Production support costs increased $1.1 million in the six months ended
June 30, 2002 due to the directories acquired over the past twelve months.

As a result of the above, gross profit increased $58.9 million, or
77.7%, from $75.7 million in the six months ended June 30, 2001 to $134.6
million in the same period in 2002. Gross margin increased from 79.6% in the
six months ended June 30, 2001 to 82.3% in the same period in 2002 as a
result of lower direct costs on the same 103 directories.

Selling and marketing expenses increased $26.6 million, or 60.0%, from
$44.3 million in the six months ended June 30, 2001 to $70.9 million in
the same period in 2002. The increase was attributable to increases of $6.0
million in sales support costs, $13.3 million in direct sales costs and $7.5
million in provision for bad debt (which was 1.4 percentage points higher on
a same book basis compared to the same period in 2001).

Of the increase in sales support costs of $6.0 million, $5.2 million was
due to sales offices acquired since the beginning of 2001 and $0.8 million
was due to a general increase in costs associated with personnel and other costs
associated with our field sales offices. The increase in direct sales costs of
$13.3 million was as follows: $16.8 million of costs were for the 26 new
directories, $1.3 million for 10 directories moving into the period;
offset by $1.1 million of lower costs associated with the 103 same directories and
$3.7 million of costs associated with 19 directories that published in the six
months ended June 30, 2001 but not in the same period in 2002. Direct sales costs
as a percentage of revenue for the same 103 directories published during both periods
decreased from 23.0% to 20.2% in the six months ended June 30, 2002 compared
to the same period in 2001.

General and administrative expense increased $7.4 million, or 28.8%, from
$25.7 million for the six months ended June 30, 2001 to $33.1 million
for the same period in 2002. The increase is due to: amortization of acquired
customer base and other intangibles of $4.8 million, additional staffing as a
result of acquiring WorldPages of $2.0 million, and general cost increases
primarily in compensation costs and professional fees of $2.0 million; offset by
$1.4 million of management fees incurred in the six months ended June 30, 2001
as a result of the recapitalization of Holdings on June 28, 2001.

Recapitalization transaction costs of zero were incurred in the six
months ended June 30, 2002 as compared to $15.4 million for the six months
ended June 30, 2001 as a result of the recapitalization of Holdings on June 28, 2001.

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Contribution to Equity Compensation Plan of zero was incurred in the six
months ended June 30, 2002 as compared to $5.2 million for the six months
ended June 30, 2001 as a result of a contribution to the Equity Compensation
Plan of $5.2 million made on June 28, 2001 in connection with the
recapitalization.

As a result of the above factors, income from operations increased $45.4
million, or 306.0%, from a net loss from operations of $14.8 million in the
six months ended June 30, 2001 to income from operations of $30.6 million in
the same period in 2002. Income from operations as a percentage of net revenues
increased from (15.6%) in the six months ended June 30, 2001 to 18.7% in the
same period in 2002.

Interest expense increased $4.5 million, or 28.0%, from $15.9 million in
the six months ended June 30, 2001 to $20.4 million in the same period
in 2002 due to higher levels of debt partially offset by a decrease in the
rates of interest paid as a result of decreases in Prime and LIBOR rates.

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

As a result of the above factors, net income increased $44.4 million,
from a net loss of $34.4 million in the six months ended June 30, 2001 to
net income of $10.0 million in the same period in 2002.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $16.7 million in the six
months ended June 30, 2002 compared to $11.0 million used in the same
period in 2001. The increase in cash provided by operations was primarily
due to an increase in net income.

Net cash used for investing activities was $15.5 million in the six
months ended June 30, 2002, as compared to $163.2 million in the same period in
2001. Investing activities consist primarily of cash used to acquire
directories. In the six months ended June 30, 2002, $14.7 million was spent
to acquire directories compared to $155.0 million in the same period in the
prior year. Acquisitions made in the six months ended June 30, 2002 are
discussed in note 4 of the financial statements included in this Form 10-Q.

Net cash used by financing activities was $2.8 million in the six months
ended June 30, 2002 as compared to $201.9 million provided in the same period
in 2001. The amounts of cash provided by financing activities for the six months
ended June 30, 2001 were for borrowings for acquisitions. Net cash used by
financing activities decreased in the 2002 period as a result of funding
acquisitions in 2002 from cash on hand rather than borrowings.

In connection with the recapitalization of Holdings in June 2001,
we incurred significant debt. As of June 30, 2002 Holdings had total outstanding
long term indebtedness of $496.2 million, including $215.7 million of Series
F 9 5/8% Senior Subordinated Notes due 2007, $55.5 million of Holdings 11 7/8%
Senior Discount Notes due 2008, (Discount Notes), $28.7 million of outstanding
borrowings under the Term A loan, $196.0 million of outstanding borrowings under
the Term B loan, and $0.3 million in acquisition related debt. As of June 30,
2002 Holdings had no outstanding borrowings under its revolving credit
facility, with total borrowing availability of $65.0 million.

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

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

We believe that the present market prices of Holdings 11 7/8% senior
discount notes represent an opportunity for us to reduce Holdings long-term
debt. Accordingly, we or one or more of our affiliates may purchase Holdings
senior discount notes from time to time in open market purchases or privately
negotiated transactions. We will evaluate any such transactions in light of then
existing market conditions, taking into account our current liquidity position.

FORWARD LOOKING STATEMENTS

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

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to interest rate risk in connection with the term loans and
the revolving loans outstanding under our senior credit facility, which bear
interest at floating rates based on LIBOR or the prime rate plus an applicable
borrowing margin. As of June 30, 2002 there was approximately $32.9 million
outstanding under the term A loan (at an average interest rate of 4.9% at such time),
$198.5 million under the term B loan (at an average interest rate of 4.8% at such time),
and zero outstanding under the revolving loan. Based on such balances, an
immediate increase of one percentage point in the applicable interest rate would
cause an increase in interest expense of approximately $2.3 million on an annual
basis. We do not attempt to mitigate this risk through hedging transactions.
All of our sales are denominated in U.S. dollars, thus we are not subject to any
foreign currency exchange risks.




PART II. OTHER INFORMATION




ITEM 1. LEGAL PROCEEDINGS

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

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




ITEM 2. CHANGES IN SECURITIES

None




ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None




ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

Not applicable




ITEM 5. OTHER INFORMATION

None




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



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

| |      |  |                                                                                                                        
| | ---- |  | -----------------------------------------------------------------------------------------------------------------------
| | 99.1 |  | Certification
Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.



| | (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 August 12, 2002 on its behalf by the undersigned thereunto duly authorized.



| | TRANSWESTERN HOLDINGS L.P.
(Registrant)
| | ---------------------------------------



| | BY: | TransWestern Communications Company, Inc.
(General Partner)
| | --- | -----------------------------------------------------------



| | BY: |        | /s/ Ricardo Puente                                                           
| | --- | ------ | -----------------------------------------------------------------------------
| |     |       
| |     | Name:  | Ricardo Puente                                                               
| |     | Title: | President, Chief Executive Officer
and Director (Principal Executive
Officer)



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

18