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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

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| |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2002

OR

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|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period of ________ to ________

Commission File Number 1-14645

THOUSAND TRAILS, INC.




(Exact Name of Registrant as Specified in Its Charter)


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|Delaware                                                       |  | 75-2138671                       
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|(State or other Jurisdiction of
Incorporation or Organization) |  | (IRS Employer Identification No.)
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|3801 Parkwood Boulevard,
Suite 100, Frisco, Texas              |  | 75034                            
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|(Address of Principal
Executive Office)                        |  | (Zip Code)                       
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|Registrants Telephone Number,
Including Area Code:            |  | (214) 618-7200                   
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Securities registered pursuant to Section 12(b) of the Act:

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|                                                            |  | Name of exchange on    
|Title of each class                                         |  | which registered       
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|Common Stock, par value
$.01 per share                      |  | American Stock Exchange
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|Securities registered pursuant
to Section 12(g) of the Act: |  | None                   





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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes      No  o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation
S-K is not contained herein, and will not be contained, to the best of
registrants knowledge,
in definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K.  o

At September 26, 2002, the latest practicable date, the aggregate market value
of voting common stock of the Registrant held by nonaffiliates was $16.2
million.

At September 26, 2002, there were 6,923,017 shares of Common Stock, $.01 par
value, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The information required by Part III (Items 10-13) is incorporated by reference
from the Registrants definitive Proxy Statement for the Registrants 2002
Annual Meeting of Shareholders, which will be filed with the Securities and
Exchange Commission (the SEC) pursuant to Regulation 14A.

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TABLE OF CONTENTS



|                                               |                                                                                                         |  |  |  |  |  |  | 
|---------------------------------------------- | ------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|Part I                                        
|                                               | Item 1. Business                                                                                       
|                                               | Item 2. Properties                                                                                     
|                                               | Item 3. Legal Proceedings                                                                              
|                                               | Item 4. Submission of Matters to a Vote of Security Holders                                            
|Part II                                       
|                                               | Item 5. Market for Registrants Common Equity and Related Stockholder Matters                          
|                                               | Item 6. Selected Financial Data                                                                        
|                                               | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations          
|                                               | Item 7A. Quantitative and Qualitative Disclosures About Market Risk                                    
|                                               | Item 8. Financial Statements and Supplementary Data                                                    
|                                               | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure           
|Part III                                      
|                                               | Item 10. Directors and Executive Officers of the Registrant                                            
|                                               | Item 11. Executive Compensation                                                                        
|                                               | Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|                                               | Item 13. Certain Relationships and Related Transactions                                                
|                                               | Item 14. Controls and Procedures                                                                       
|Part IV                                       
|                                               | Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K                              
|SIGNATURES                                    
|CERTIFICATIONS                                
|EX-10.26 Indemnification Agreement            
|EX-10.28 Adoption Agreement dated July 1, 2002
|EX-10.35 Sample of current Membership Contract
|EX-11.1 Statement Re: Computation of Earnings 
|EX-23.1 Consent of Grant Thornton LLP         



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INDEX TO
ANNUAL REPORT ON FORM 10-K

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|Part I        
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|Item 1.        |  | Business                                                                                       |  | 4   
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|Item 2.        |  | Properties                                                                                     |  | 11  
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|Item 3.        |  | Legal Proceedings                                                                              |  | 15  
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|Item 4.        |  | Submission of Matters to a Vote of Security Holders                                            |  | 15  
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|Part II       
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|Item 5.        |  | Market for Registrants Common Equity and Related Stockholder Matters                          |  | 16  
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|Item 6.        |  | Selected Financial Data                                                                        |  | 17  
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|Item 7.        |  | Managements Discussion and Analysis of Financial
Condition and Results of Operations          |  | 18  
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|Item 7A        |  | Quantitative and Qualitative Disclosures About Market Risk                                     |  | 33  
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|Item 8.        |  | Financial Statements and Supplementary Data                                                    |  | 34  
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|Item 9.        |  | Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure           |  | 64  
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|Part III      
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|Item 10.       |  | Directors and Executive Officers of the Registrant                                             |  | 65  
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|Item 11.       |  | Executive Compensation                                                                         |  | 65  
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|Item 12.       |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |  | 65  
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|Item 13.       |  | Certain Relationships and Related Transactions                                                 |  | 65  
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|Item 14.       |  | Controls and Procedures                                                                        |  | 65  
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|Part IV       
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|Item 15.       |  | Exhibits, Financial Statement Schedules and Reports on Form 8-K                                |  | 66  
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|Signatures     |  |                                                                                                |  | 72  
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|Certifications |  |                                                                                                |  | 73  

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Part I




Item 1. Business

OVERVIEW

Thousand Trails, Inc., a Delaware corporation, and its subsidiaries (the
Company) own and operate a system of 59 membership-based campgrounds located
in 17 states and British Columbia, Canada, serving 112,000 members as of June
30, 2002. Through its subsidiaries, the Company also provides a reciprocal use
program for members of approximately 280 recreational facilities and manages
240 public campgrounds for the United States Forest Service and other entities.
The Companys principal executive office is located at 3801 Parkwood
Boulevard, Suite 100, PO Box 2529, Frisco, Texas 75034; its telephone number is
(214) 618-7200, and its home page on the Internet is www.thousandtrails.com.

The Company entered the membership campground business in 1991 with the
acquisition of 100% of the capital stock of National American Corporation, a
Nevada corporation (collectively with its subsidiaries, NACO) and 69% of the
capital stock of Thousand Trails, Inc., a Washington corporation (Trails).
The Company subsequently increased its ownership in Trails to 100% and merged
Trails into the Company. In December 1999, the Company acquired 100% of the
capital stock of Leisure Time Resorts of America, Inc., a Washington
corporation (Leisure Time). The Company and Leisure Time were incorporated
in 1984, NACO was incorporated in 1967, and Trails was incorporated in 1969.

CAMPGROUND OPERATIONS

Campgrounds.The Company and its subsidiaries own and operate a network of 59
membership-based campgrounds located in 17 states and British Columbia, Canada.
The Company owns and operates a network of 32 of these campgrounds under the
Thousand Trails logo, NACO owns and operates a network of 20 of these
campgrounds under the NACO logo, and Leisure Time owns and operates a network
of 7 of these campgrounds under the Leisure Time logo. The 59 campgrounds
contain a total of approximately 9,900 acres and 17,900 campsites.

Members using the campgrounds may bring their own recreational vehicles
(RVs), tents or other sleeping equipment, rent travel trailers or cabins
located at the campgrounds or visit for the day. As of June 30, 2002, there
were 70,000 campground members in the Thousand Trails system, 29,000 campground
members in the NACO system, and 13,000 campground members in the Leisure Time
system. Approximately 44% of the NACO members and approximately 70% of the
Thousand Trails members possess the right to use the campgrounds in both
networks. Similarly, approximately 22% of the Leisure Time members possess the
right to use the campgrounds in either the Thousand Trails or NACO system. The
largest percentage of campground members resides in California (approximately
32%). Large numbers of campground members also reside in Washington and Oregon
(approximately 27%), and Texas (approximately 10%).

Memberships provide the members family access to the Companys network of
campgrounds, but do not convey a deeded interest in the campgrounds with the
exception of six campgrounds in which members received deeded undivided
interests in the campground. A member also does

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not possess the right to use a
specific campsite, trailer or cabin, or the right to control further
development or operation of a campground.

In the six campgrounds in which members have received deeded undivided
interests, the Company retains the entire fee interest in the common amenities,
such as the lodge, recreational facilities and other buildings, and an
undivided interest in the campsites to the extent the interest has not been
sold to the members.

Depending upon member usage, the campgrounds are open year-round or on a
seasonal basis. The campgrounds feature campsites with electrical, water and,
in some cases, sewer connections for RVs, restroom and shower facilities,
rental trailers or cabins and other recreation amenities. At each campground,
a manager and staff provide security, maintenance and recreational programs
that vary by location.

The Company derives other campground revenue from renting campsites to members
for extended vacations and from renting trailers, cabins and sports equipment
to members. The Company also sells food and other items to members from
convenience stores located at the campgrounds, provides members access to
laundry facilities and game machines and charges members a fee for storing RVs
and providing food service.

Existing Membership.At June 30, 2002, the Company had 112,000 campground
members. The majority of these members have been members for over 10 years.
The Companys membership base has declined over the past decade, although the
Company has been successful in slowing the rate of this attrition. While the
acquisition of Leisure Time increased the size of the membership base, the
Company expects that, notwithstanding new sales, the membership base will
continue to decline at the rate of approximately 4% per year. The Company
attributes this attrition principally to its aging membership base, of whom
approximately 46% are senior citizens. Moreover, the Company estimates that
the memberships sold in recent fiscal years will have an expected life that is
shorter than the expected life of the memberships previously sold by the
Company. To stop the continuing decline in its membership base, the Company
must increase its campground membership sales over current levels or acquire
members through the purchase of other membership campground organizations, such
as the acquisition of Leisure Time.

Membership Sales.The Companys membership sales declined significantly in the
early 1990s when the Company decreased its sales and marketing efforts as a
result of increasing marketing costs and other factors. Over the past several
years, the Company has been rebuilding its sales and marketing organization
with a view to stopping the decline in its membership base. In an effort to
improve its membership sales, the Company has been working to increase the
number of prospects that attend its sales presentations. In this regard, the
Company entered into a joint marketing arrangement with Fleetwood Industries,
Inc. (Fleetwood), the largest manufacturer of RVs. Under the current
marketing arrangement, purchasers of Fleetwood RVs are invited to visit one of
the Companys campgrounds for a three day/two night stay. Purchasers of new
Fleetwood RVs accounted for approximately 7% of new sales in fiscal 2002,
approximately 12% of new sales in fiscal 2001, and
approximately 10% of new sales in fiscal 2000. The Company has entered into a
similar marketing arrangement with a major RV insurance company. In addition,
the Company has entered into a marketing arrangement with a large RV dealer in
Florida, under which purchasers of RVs receive a temporary membership and are
invited to visit one of the Companys campgrounds. The Company has also
entered into sales agreements with several other companies in an effort to
increase sales.

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The Companys current membership products offer the consumer a choice of
membership options that depend principally on the number of campgrounds the
purchaser is able to use. The average membership sales price was $3,342 in
fiscal 2002, $2,815 in fiscal 2001 and $2,435 in fiscal 2000. The Company
requires a down payment of at least $495 and will finance the balance for
periods of up to 48 months. In addition to the sales price, the memberships
require payment of annual dues, which for fiscal 2002 averaged $400 on new
sales. In fiscal 2002 and 2001, the Company originated 3,900 new membership
contracts, compared with 3,600 new membership contracts in fiscal 2000. In
fiscal 2002, the Company also originated 1,100 new membership contracts through
sales agreements with other companies, compared with 700 and 100 contracts in
fiscal 2001 and 2000, respectively. The average sales price was $357 in fiscal
2002, $408 in fiscal 2001 and $295 in fiscal 2000.

In addition to the sale of new memberships discussed above, since fiscal 2000,
the Company has also marketed membership upgrades to its existing members,
which has provided a short-term increase in membership sales revenues. In
fiscal 2002, the Company originated contracts totaling $12.9 million in
membership upgrades, compared with $9.0 million and $5.1 million in fiscal 2001
and 2000, respectively. In fiscal 2002, the Company originated 4,300
membership upgrades, compared with 3,000 and 1,700 membership upgrades in
fiscal 2001 and 2000, respectively. The average price of the membership
upgrade was $2,995 in all three years. During fiscal 2001, the Company also
began offering existing Thousand Trails and NACO members access to Leisure Time
campgrounds for a fee. In fiscal 2002, the Company originated 700 contracts at
an average price of $244, compared with 6,800 contracts at an average price of
$235 in fiscal 2001. During the last quarter of fiscal 2001, the Company began
offering existing Leisure Time members access to Thousand Trails and NACO
campgrounds for a fee, which resulted in 2,000 contracts at an average price of
$337 in fiscal 2002, and 300 contracts at an average price of $1,999 in fiscal
2001.

The Company has the capacity to sell approximately 67,000 additional new
campground memberships in the future, assuming the sale of ten memberships for
each existing campsite.

Most memberships are transferable with payment of a transfer fee to the
Company. The membership contracts, however, prohibit the sale of a membership
for a profit.

Marketing.The Company believes that camping is a popular and growing activity
in the United States. The Company believes this is reflected in sales of RVs
and camping equipment as well as campground use. Moreover, the Company
believes the aging of the baby boomers will have a positive effect on sales of
RVs and camping equipment, and lead to more family camping.

While most campers use national or state parks, the Company believes it has a
significant opportunity to compete for campers interested in higher quality
facilities and a higher level of service than is typically available at public
campgrounds or competing private campgrounds. The Company believes that many
campers are amenity campers, whose needs match the benefits provided by the
Companys campgrounds, such as pools, lodges, sport courts and recreational
activities. The Company believes that the needs of amenity campers are not
being met by under-funded national and state campgrounds. In addition, the
Company believes that it can differentiate its campgrounds and services from
other campgrounds by emphasizing the quality of its facilities and the benefits
and services available at its campgrounds.

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Dues.The Companys campground members, including members who own a deeded
undivided interest in a campground, pay annual dues ranging generally from
approximately $50 to $800. The annual dues collected from campground members
constitute general revenue of the Company. The Company uses the dues to fund
its operating expenses, including corporate expenses and the maintenance and
operation of the campgrounds. However, the membership agreements do not
require the Company to use the dues for any specific purpose.

The average annual dues paid by the Companys campground members were $369 for
fiscal 2002, $360 for fiscal 2001 and $355 for fiscal 2000. The increase in
average annual dues resulted primarily from the annual increase in dues
implemented by the Company in accordance with the terms of the membership
agreements. In addition, the Companys new members generally pay annual dues
at a higher level than the older members retiring from the system.

The membership agreements generally permit the Company to increase annually the
amount of each members dues by either (i) the percentage increase in the
consumer price index (CPI) or (ii) the greater of 10% or the percentage
increase in the CPI. The Company, however, may not increase the dues on
existing contracts of senior citizens and disabled members who notify the
Company of their age or disability and request that their dues be frozen. At
the present time, approximately 36% of the members have requested that their
dues be frozen because of their age or disability. The Company estimates that
approximately 46% of the campground members are senior citizens eligible to
request that their dues be frozen. The Company is unable to estimate when or
if a significant number of these members will request that their dues be frozen
in the future.

Maintenance and Improvements.The Company makes annual capital and maintenance
expenditures to maintain and improve the campgrounds. During fiscal 2002, the
Company spent $5.7 million on major maintenance, repairs and capital
improvements at the campgrounds and anticipates that it will spend an
additional $5.2 million on such items in fiscal 2003. The Company may be
required to spend greater amounts on such items in future years as the
facilities age.

In addition to capital improvements at the campgrounds, during fiscal 2002, the
Company spent approximately $3.6 million to upgrade its computer, communication
and reservation systems. The Company anticipates spending an additional $1.5
million in fiscal 2003 to complete these improvements.

Resort Parks International.Members whose membership includes use of a Leisure
Time or NACO campground may join a reciprocal program operated by Resort Parks
International, Inc. (RPI), a wholly owned subsidiary of the Company. The RPI
program offers members reciprocal use of approximately 280 participating
recreational facilities. Members of these participating facilities pay a fee
to RPI that entitles them to use any of the participating facilities, subject
to the limitation that they cannot use an RPI facility located within 125 miles
of their home facility. As of June 30, 2002, there were approximately 64,000
RPI members, of which approximately 42,000 were members of campgrounds not
affiliated with the Company.

Campground Management.Thousand Trails Management Services, Inc. (Trails
Management), a wholly owned subsidiary of the Company, manages 240 public
campgrounds for the United States Forest Service and other entities containing
a total of approximately 6,100 campsites. Pursuant to its management
contracts, Trails Management incurs the expenses of

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operating the campgrounds
and receives the related revenues, net of a fee paid to the U.S. Forest Service
or other entity. These management contracts typically have five-year terms.

SEGMENT FINANCIAL INFORMATION

Segment financial information for the campground, reciprocal use and campground
management operations is set forth in Note 16 to the consolidated financial
statements included in Item 8.

ASSET SALES

During fiscal 2002, 2001 and 2000, the Company sold certain of its real estate
assets and received proceeds of $1.6 million, $1.7 million and $74,000,
respectively. In each of fiscal 2002 and 2001, the primary asset sold was a
campground not related to the Companys current campground operations. Over
the next several years, the Company intends to dispose of the remaining assets
that it holds for sale, the campgrounds that were closed following the
acquisition of Leisure Time, any campgrounds that are closed in the future and
other undeveloped, excess acreage associated with the campgrounds. The sale of
campgrounds requires addressing the rights of members associated with such
campgrounds. The impact of these rights is uncertain and could adversely
affect the availability or timing of sale opportunities or the ability of the
Company to realize recoveries from asset sales. In addition, although the
Company has successfully sold assets during the past several years, no
assurance exists that the Company will be able to locate a buyer for any of the
remaining assets or that sales on acceptable terms can be effected.

CONTRACTS RECEIVABLE

The Company sells campground memberships on the installment basis creating
contracts receivable. Interest accrues on the unpaid balance of the contracts
receivable at fixed rates, which vary depending upon the size of the down
payment and the length of the contract. The contracts
receivable bear interest at rates ranging generally from 5% to 19.5%, with a
weighted average stated interest rate of 14% as of June 30, 2002. Monthly
installment payments range generally from $49 to $156 over the term of the
contracts receivable, which can be up to 48 months. As of June 30, 2002, the
Companys portfolio of contracts receivable had an aggregate principal balance
of $11.8 million and an average remaining term of 31 months.

The Companys portfolio of contracts receivable increased by $1.9 million in
fiscal 2002 and $2.2 million in fiscal 2001 due primarily to an increase in the
number of financed sales, and by $4.3 million in fiscal 2000 due primarily to
the acquisition of Leisure Time. During fiscal 2002 and 2001, the Company
financed the sale of approximately 32% and 33%, respectively, of new campground
memberships. The portfolio of contracts receivable may grow in the future if
sales volume continues to increase and new members elect to finance their
purchase; otherwise, the portfolio of contracts receivable will decline as
collections are made.

At June 30, 2002, 95% of the campground members had paid for their memberships
in full, compared with 96% at June 30, 2001.

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SEASONALITY

The Company experiences its most significant demand for working capital between
May and October of each year, which coincides with the highest level of
operating expenses. During the summer, operating expenses increase
significantly because the peak usage of the campgrounds requires seasonal
workers and increased maintenance and operating expenses. In addition, the
majority of the Companys sales and marketing efforts occur during the spring
and summer. On the other hand, most dues collection activity for campground
members occurs during the months of November through April, which is a period
of relatively lower expenses.

GOVERNMENT REGULATION

To operate its campgrounds, the Company must comply with zoning ordinances,
master plans for shoreline use and environmental statutes. The Company has
complied in all material respects with the discretionary permits and approvals
regulating its existing operations.

In addition, to construct improvements at its campgrounds, the Company has
usually been required to obtain permits that are typically non-discretionary
and routinely issued such as building and sanitary sewage permits. The Company
has generally resolved problems concerning the issuance of such permits through
design, operating or engineering solutions negotiated with local government
officials.

The Companys campgrounds are also subject to a variety of federal and state
environmental statutes and regulations. Environmental issues may exist at some
of the campgrounds concerning underground storage tanks, sewage treatment
plants and septic systems and waste disposal. Management believes that these
issues will not have a material adverse impact on the Companys operations or
financial position, as the Company has conducted environmental testing to
identify and correct a number of these problems, and has removed substantially
all underground storage tanks. The Company does not possess insurance or
indemnification agreements with respect to any environmental liability that it
may incur.

Most of the states in which the Company does business have laws regulating
campground membership sales. These laws generally require comprehensive
disclosure to prospective purchasers, and give purchasers the right to rescind
their purchase for three-to-five days after the date of sale. Some states have
laws requiring the Company to register with a state agency and obtain a permit
to market. The Company is subject to changes, from time to time, in the
application or interpretation of such laws that can affect its business or the
rights of its members.

In some states, including California, Oregon and Washington, laws place
limitations on the ability of the owner of a campground to close the campground
unless the members at the campground receive access to a comparable campground.
In these states, members from campgrounds that have been closed by the Company
were reassigned to other campgrounds located in the same general area as the
closed campgrounds. The
impact of the rights of members under these laws is uncertain and could
adversely affect the availability or timing of sale opportunities or the
ability of the Company to realize recoveries from asset sales.

The government authorities regulating the Companys activities have broad
discretionary power to enforce and interpret the statutes and regulations that
they administer, including the power to

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enjoin or suspend sales activities,
require or restrict construction of additional facilities and revoke licenses
and permits relating to business activities. The Company monitors its sales
and marketing programs and debt collection activities to control practices that
might violate consumer protection laws and regulations or give rise to consumer
complaints. The Company believes that it has complied in all material respects
with these laws.

Certain consumer rights and defenses that vary from jurisdiction to
jurisdiction may affect the Companys portfolio of contracts receivable.
Examples of such laws include state and federal consumer credit and
truth-in-lending laws requiring the disclosure of finance charges, and usury
and retail installment sales laws regulating permissible finance charges. The
Company believes that it has complied in all material respects with these laws.

In certain states, as a result of government regulations and provisions in
certain of the membership agreements, the Company is prohibited from selling
more than 10 memberships per campsite. At the present time, these restrictions
do not preclude the Company from selling memberships in any state. However,
these restrictions may limit the Companys ability to downsize by closing
campgrounds and reassigning members to other campgrounds. In addition,
membership agreements or understandings, or governmental interpretations
thereof, may limit the Companys ability to expand or modify the type of
business activities conducted at the campgrounds.

COMPETITION

Based on an internally conducted analysis, the Company estimates that there are
approximately 15,000 privately owned campgrounds in the United States today, of
which approximately 500 are membership campgrounds. The balance of the
campgrounds are generally open to the public and usually charge fees based on
the length of stay. The 500 membership campgrounds have approximately 400,000
members, of which 112,000 are the Companys members. This information was
derived from a review of publicly available directories of campgrounds,
including those of the Companys competitors. During this analysis, the
Company identified duplicative directory entries and compiled an estimate of
the total number of campgrounds and members.

Several companies compete directly with the Companys campground operations.
For example, Resorts USA, Inc., which does business as Outdoor World, sells
memberships to its system of 14 campgrounds, Travel America, Inc. sells
memberships to its system of 38 campgrounds and Western Horizons RV Resorts,
Inc. sells memberships to its system of 18 campgrounds. Other companies or
individuals operate the balance
of the membership campgrounds. The Companys direct competitors generally
offer their members reciprocal use of other campgrounds through affiliations,
such as RPI, Coast to Coast Resorts or Resorts of Distinction.

The vast majority of the campgrounds in the United States are operated for the
public by federal, state and local governments. Although these public
campgrounds are used by most campers, in recent years, many of the public
campgrounds have experienced overcrowding and increased user fees. The
Companys campgrounds also compete indirectly with timeshare resorts and other
types of recreational land developments that do not involve camping.

The Companys campground operations compete on the basis of location and the
quality of facilities and services offered at the campgrounds. The Company
believes it has a significant

Page 10



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##### Table of Contents



opportunity to compete for campers interested in
higher quality facilities and a higher level of service than is typically
available at public campgrounds or competing private campgrounds (see
Marketing).

Trails Management competes directly with approximately five other companies in
bidding for contracts to manage public campgrounds for the U.S. Forest Service
and other entities. Trails Management currently has contracts to manage 240 of
the approximately 3,000 campgrounds operated for the U.S. Forest Service and
other entities by private companies. The contracts are awarded through a
public bidding process, and the successful bidder is generally selected on the
basis of price and past performance on other contracts.

RPIs primary competitors are Coast to Coast Resorts and Resorts of
Distinction. Coast to Coast Resorts, the largest reciprocal use system, has
approximately 360 affiliated campgrounds and approximately 178,000 members.
Resorts of Distinction, a reciprocal use system owned by its affiliated
campgrounds, has approximately 50 affiliated campgrounds and approximately
25,000 members. Both RPI and Coast to Coast Resorts operate vacation clubs
offering travel and lodging discounts and services to their members. RPI
competes for affiliated campgrounds and members on the basis of the number,
location and quality of the campgrounds in its reciprocal system.

EMPLOYEES

As of June 30, 2002, the Company had 852 full-time employees, 179 part-time
employees and 1,362 seasonal employees. Due to the seasonal nature of the
Companys business, the Company has a greater number of employees during the
summer months. The Company does not have any collective bargaining agreements
with its employees and considers its relations with employees to be
satisfactory.




Item 2. Properties

Offices.The Company leases office space at 3801 Parkwood Boulevard, Suite
100, Frisco, Texas 75034. NACO leases office space at 2325 Highway 90,
Gautier, Mississippi 39553. RPI leases office space at 2901 Cherry Avenue,
Signal Hill, California 90755.

Campgrounds.The Company currently operates 59 campgrounds in 17 states and
British Columbia, Canada. The locations of these campgrounds are shown on the
map on page 12. The amenities presently available at each campground are
listed on the chart beginning on page 13. The Company owns 58 of these
campgrounds and leases the LaConner campground and portions of the Lake
Tawakoni and Snowflower campgrounds. The Company owns the campgrounds free and
clear of any monetary liens or encumbrances. The Company has sold undivided
interests to members at six of the campgrounds. Of the 59 campgrounds, 36
operate all year, 11 operate year-round but provide only limited services
during the off-season, and 11 operate seasonally only. One campground is
temporarily closed due to flood damage.

Page 11



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##### Table of Contents



Thousand Trails, Inc.

CAMPGROUND RESORTS

(Map>

w Thousand Trails

«NACO

© Leisure Time

|                 |  |                       |  |                   |  |                    
|---------------- |  | --------------------- |  | ----------------- |  | -------------------
|British Columbia |  | California            |  | Texas             |  | North Carolina     
|                 |  |                       |  |                   |  |                    
|w Cultus Lake    |  | w Lake of the Springs |  | w Medina Lake     |  | w Forest Lake      
|                
|                
|                
|                
|                 |  | w Morgan Hill         |  | w Lake Conroe     |  |                    
|                
|                
|                
|                
|Washington       |  | w San Benito          |  | w Colorado River  |  | New Jersey         
|                 |  |                       |  |                   |  |                    
|w LaConner       |  | w Soledad Canyon      |  | w Lake Whitney    |  | « Chestnut Lakes   
|                
|                
|                
|                
|w Mount Vernon   |  | w Idyllwild           |  | w Lake Texoma     |  |                    
|                
|                
|                
|                
|w Chehalis       |  | w Pio Pico            |  | w Lake Tawakoni   |  | Mississippi        
|                 |  |                       |  |                   |  |                    
|w Leavenworth    |  | w Oakzanita Springs   |  | « Bay Landing*    |  | « Indian Point     
|                
|                
|                
|                
|« Birch Bay      |  | w Palm Springs        |  |                   |  |                    
|                
|                
|                
|                
|« Little Diamond |  | « Lake Minden         |  | Michigan          |  | South Carolina     
|                 |  |                       |  |                   |  |                    
|« Long Beach     |  | « Russian River       |  | w Saint Clair     |  | « Carolina Landing*
|                
|                
|                
|                
|© Thunderbird    |  | « Snowflower          |  |                   |  |                    
|                
|                
|                
|                
|© Cascade        |  | « Turtle Beach        |  | Indiana           |  | Tennessee          
|                 |  |                       |  |                   |  |                    
|© Oceana         |  | « Yosemite Lakes      |  | w Horseshoe Lakes |  | « Natchez Trace*   
|                
|                
|                
|                
|© Crescent Bar   |  | « Windsor             |  | « Indian Lakes*   |  | « Cherokee Landing*
|                
|                
|                
|                
|© Paradise       |  | « Rancho Oso          |  |                   |  |                    
|                
|                
|                
|                
|                 |  | « Wilderness Lakes    |  | Ohio              |  | Virginia           
|                 |  |                       |  |                   |  |                    
|Oregon           |  |                       |  | w Wilmington      |  | wLynchburg         
|w Bend           |  | Nevada                |  | w Kenissee Lake   |  | w Chesapeake Bay   
|                 |  |                       |  |                   |  |                    
|w Pacific City   |  | w Las Vegas           |  |                   |  | « Virginia Landing*
|                
|                
|                
|                
|« South Jetty    |  |                       |  | Pennsylvania      |  |                    
|                 |  |                       |  |                   |  |                    
|© Seaside        |  | Arizona               |  | w Hershey         |  | Florida            
|                 |  |                       |  |                   |  |                    
|© Whalers Rest  |  | w Verde Valley        |  |                   |  | w Orlando          



---

|* |  | Some members of these six campgrounds own a deeded, undivided interest in campsites at their campground.
|- |  | --------------------------------------------------------------------------------------------------------

Page 12



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##### Table of Contents





|                    |  |         |     |          |  |            |     |             |  |          |    |      |  |              |   |                |  |                 |   |  |  |  |   |  |  |  |   |  |  |  |   |  |  |  |   | 
|------------------- |  | ------- | --- | -------- |  | ---------- | --- | ----------- |  | -------- | -- | ---- |  | ------------ | - | -------------- |  | --------------- | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - | 
|Campground          |  |         |     |          |  |            |     |             |  |          |    |      |  |              |   |                |  |                 |   |  |  |  |   |  |  |  |   |  |  |  |   |  |  |  |   | 
|Facilities and      |  |         |     |          |  |            |     |             |  |          |    |      |  |              |   |                |  | Family Center/  |   |  |  |  |   |  |  |  |   |  |  |  |   |  |  | 
|Amenities           |  | Acreage |     | RV Sites |  | Tent Sites |     | Adult Lodge |  | Pavilion |    | Pool |  | Tennis Court |   | Athletic Court |  | Vehicle Storage
|                    |  |         |     |          |  |            |     |             |  |          |    |      |  |              |   |                |  |                
|Thousand Trails    
|                   
|                   
|                   
|                   
|Bend                |  |         | 93  |          |  |            | 300 |             |  |          | 10 |      |  |              | 1 |                |  |                 | 1 |  |  |  | 2 |  |  |  | 2 |  |  |  | 1 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Chehalis            |  |         | 306 |          |  |            | 278 |             |  |          |    |      |  |              | 1 |                |  |                 | 1 |  |  |  | 2 |  |  |  | 2 |  |  |  | 2 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Chesapeake Bay      |  |         | 280 |          |  |            | 373 |             |  |          | 19 |      |  |              | 1 |                |  |                 | 1 |  |  |  | 2 |  |  |  | 1 |  |  |  | 1 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Colorado River      |  |         | 217 |          |  |            | 128 |             |  |          |    |      |  |              | 1 |                |  |                 | 1 |  |  |  | 1 |  |  |  | 1 |  |  |  | 5 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Cultus Lake         |  |         | 14  |          |  |            | 185 |             |  |          | 12 |      |  |              | 1 |                |  |                 | 1 |  |  |  | 1 |  |  |  | 2 |  |  |  | 2 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Forest Lake         |  |         | 305 |          |  |            | 294 |             |  |          | 12 |      |  |              | 1 |                |  |                 | 1 |  |  |  | 2 |  |  |  | 2 |  |  |  | 1 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Hershey             |  |         | 196 |          |  |            | 301 |             |  |          |    |      |  |              | 1 |                |  |                 | 1 |  |  |  | 1 |  |  |  | 1 |  |  |  | 1 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Horseshoe Lakes     |  |         | 202 |          |  |            | 118 |             |  |          |    |      |  |              |   |                |  |                 | 1 |  |  |  | 1 |  |  |  | 2 |  |  |  | 1 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Idyllwild           |  |         | 181 |          |  |            | 287 |             |  |          | 38 |      |  |              | 1 |                |  |                 | 1 |  |  |  | 1 |  |  |  |   |  |  |  | 3 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Kenisee Lake        |  |         | 179 |          |  |            | 110 |             |  |          | 18 |      |  |              |   |                |  |                 | 1 |  |  |  | 1 |  |  |  |   |  |  |  | 1 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|LaConner            |  |         | 106 |          |  |            | 313 |             |  |          |    |      |  |              | 1 |                |  |                 | 1 |  |  |  |   |  |  |  |   |  |  |  | 2 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Lake Conroe         |  |         | 130 |          |  |            | 353 |             |  |          |    |      |  |              | 1 |                |  |                 | 1 |  |  |  | 1 |  |  |  | 2 |  |  |  | 2 |  |  |  | 2 | 
|                   
|                   
|                   
|                   
|Lake Of The Springs |  |         | 176 |          |  |            | 541 |             |  |          | 12 |      |  |              | 1 |                |  |                 | 1 |  |  |  | 1 |  |  |  | 1 |  |  |  | 2 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Lake Tawakoni       |  |         | 300 |          |  |            | 318 |             |  |          | 1  |      |  |              | 1 |                |  |                 | 1 |  |  |  | 2 |  |  |  |   |  |  |  | 1 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Lake Texoma         |  |         | 198 |          |  |            | 264 |             |  |          | 2  |      |  |              | 1 |                |  |                 | 1 |  |  |  | 2 |  |  |  |   |  |  |  | 2 |  |  |  | 2 | 
|                   
|                   
|                   
|                   
|Lake Whitney        |  |         | 253 |          |  |            | 244 |             |  |          | 3  |      |  |              | 1 |                |  |                 | 1 |  |  |  | 2 |  |  |  | 1 |  |  |  | 1 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Las Vegas           |  |         | 11  |          |  |            | 217 |             |  |          | 2  |      |  |              |   |                |  |                 | 1 |  |  |  | 1 |  |  |  |   |  |  |  | 2 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Leavenworth         |  |         | 279 |          |  |            | 275 |             |  |          |    |      |  |              | 1 |                |  |                 | 1 |  |  |  | 1 |  |  |  | 4 |  |  |  | 2 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Lynchburg           |  |         | 150 |          |  |            | 223 |             |  |          |    |      |  |              | 1 |                |  |                 | 1 |  |  |  | 1 |  |  |  | 2 |  |  |  | 6 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Medina Lake         |  |         | 260 |          |  |            | 387 |             |  |          |    |      |  |              | 1 |                |  |                 | 1 |  |  |  | 1 |  |  |  |   |  |  |  | 1 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Morgan Hill         |  |         | 62  |          |  |            | 317 |             |  |          | 28 |      |  |              | 1 |                |  |                 | 1 |  |  |  | 1 |  |  |  | 1 |  |  |  | 1 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Mount Vernon        |  |         | 185 |          |  |            | 248 |             |  |          | 3  |      |  |              | 1 |                |  |                 | 1 |  |  |  | 1 |  |  |  |   |  |  |  | 1 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Oakzanita Springs   |  |         | 118 |          |  |            | 121 |             |  |          | 30 |      |  |              | 1 |                |  |                 | 1 |  |  |  | 1 |  |  |  |   |  |  |  | 1 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Orlando             |  |         | 269 |          |  |            | 697 |             |  |          |    |      |  |              | 1 |                |  |                 | 1 |  |  |  | 2 |  |  |  | 2 |  |  |  |   |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Pacific City        |  |         | 105 |          |  |            | 305 |             |  |          | 1  |      |  |              | 1 |                |  |                 | 1 |  |  |  | 1 |  |  |  |   |  |  |  | 2 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Palm Springs        |  |         | 28  |          |  |            | 392 |             |  |          |    |      |  |              | 1 |                |  |                 | 1 |  |  |  | 1 |  |  |  |   |  |  |  | 1 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Pio Pico            |  |         | 182 |          |  |            | 453 |             |  |          | 12 |      |  |              | 1 |                |  |                 | 1 |  |  |  | 2 |  |  |  |   |  |  |  | 5 |  |  |  | 3 | 
|                   
|                   
|                   
|                   
|San Benito          |  |         | 200 |          |  |            | 517 |             |  |          | 51 |      |  |              | 1 |                |  |                 | 1 |  |  |  | 2 |  |  |  |   |  |  |  | 1 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Soledad Canyon      |  |         | 230 |          |  |            | 809 |             |  |          | 9  |      |  |              | 1 |                |  |                 | 1 |  |  |  | 2 |  |  |  | 2 |  |  |  | 3 |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Saint Clair         |  |         | 110 |          |  |            | 110 |             |  |          | 8  |      |  |              | 1 |                |  |                 | 1 |  |  |  | 1 |  |  |  |   |  |  |  |   |  |  |  | 1 | 
|                   
|                   
|                   
|                   
|Verde Valley        |  |         | 300 |          |  |            | 333 |             |  |          | 6  |      |  |              |   |                |  |                 | 2 |  |  |  | 1 |  |  |  |   |  |  |  | 1 |  |  |  | 2 | 
|                   
|                   
|                   
|                   
|Wilmington          |  |         | 109 |          |  |            | 125 |             |  |          |    |      |  |              | 1 |                |  |                 | 1 |  |  |  | 1 |  |  |  | 1 |  |  |  | 2 |  |  |  | 1 | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                    |  |            |    |                    |  |                      |    |              |  |                |    |     |  |        |   |                  |  |         |   |  |  |              |   |  |  |  |   |         |  |  |   |  |  |  |    | 
|------------------- |  | ---------- | -- | ------------------ |  | -------------------- | -- | ------------ |  | -------------- | -- | --- |  | ------ | - | ---------------- |  | ------- | - |  |  | ------------ | - |  |  |  | - | ------- |  |  | - |  |  |  | -- | 
|Campground          |  |            |    |                    |  |                      |    |              |  |                |    |     |  |        |   |                  |  |         |   |  |  |              |   |  |  |  |   |         |  |  |   |  |  |  |    | 
|Facilities and      |  | Restrooms/ |    | Trailers (Seasonal |  |                      |    |              |  |                |    |     |  |        |   |                  |  |         |   |  |  | Boat Launch/ |   |  |  |  |   | Cabins/
|Amenities           |  | Showers    |    | Availability)      |  | Childrens Play Area |    | Trading Post |  | Miniature Golf |    | Spa |  | Marina |   | Laundry Facility |  | Lodging
|                    |  |            |    |                    |  |                      |    |              |  |                |    |     |  |        |   |                  |  |        
|Thousand Trails    
|                   
|                   
|                   
|                   
|Bend                |  |            | 6  |                    |  |                      | 17 |              |  |                | 2  |     |  |        | 1 |                  |  |         | 1 |  |  |              |   |  |  |  |   |         |  |  | 1 |  |  |  | 7  | 
|                   
|                   
|                   
|                   
|Chehalis            |  |            | 8  |                    |  |                      | 9  |              |  |                | 1  |     |  |        | 1 |                  |  |         | 1 |  |  |              | 1 |  |  |  |   |         |  |  | 1 |  |  |  | 1  | 
|                   
|                   
|                   
|                   
|Chesapeake Bay      |  |            | 4  |                    |  |                      | 18 |              |  |                | 3  |     |  |        | 1 |                  |  |         | 1 |  |  |              | 1 |  |  |  | 1 |         |  |  | 1 |  |  |  | 18 | 
|                   
|                   
|                   
|                   
|Colorado River      |  |            | 2  |                    |  |                      | 8  |              |  |                | 2  |     |  |        | 1 |                  |  |         | 1 |  |  |              | 1 |  |  |  | 1 |         |  |  | 1 |  |  |  |    | 
|                   
|                   
|                   
|                   
|Cultus Lake         |  |            | 4  |                    |  |                      | 4  |              |  |                | 2  |     |  |        | 1 |                  |  |         |   |  |  |              |   |  |  |  |   |         |  |  | 1 |  |  |  |    | 
|                   
|                   
|                   
|                   
|Forest Lake         |  |            | 3  |                    |  |                      |    |              |  |                | 2  |     |  |        | 1 |                  |  |         | 1 |  |  |              | 2 |  |  |  |   |         |  |  | 2 |  |  |  | 18 | 
|                   
|                   
|                   
|                   
|Hershey             |  |            | 3  |                    |  |                      | 24 |              |  |                | 2  |     |  |        |   |                  |  |         | 1 |  |  |              | 1 |  |  |  |   |         |  |  | 2 |  |  |  |    | 
|                   
|                   
|                   
|                   
|Horseshoe Lakes     |  |            | 2  |                    |  |                      | 10 |              |  |                | 10 |     |  |        |   |                  |  |         | 1 |  |  |              |   |  |  |  |   |         |  |  | 1 |  |  |  |    | 
|                   
|                   
|                   
|                   
|Idyllwild           |  |            | 6  |                    |  |                      | 28 |              |  |                | 3  |     |  |        | 1 |                  |  |         | 1 |  |  |              |   |  |  |  |   |         |  |  | 3 |  |  |  | 2  | 
|                   
|                   
|                   
|                   
|Kenisee Lake        |  |            | 2  |                    |  |                      | 4  |              |  |                | 2  |     |  |        |   |                  |  |         | 1 |  |  |              | 1 |  |  |  |   |         |  |  | 1 |  |  |  |    | 
|                   
|                   
|                   
|                   
|LaConner            |  |            | 6  |                    |  |                      | 13 |              |  |                | 3  |     |  |        | 1 |                  |  |         | 1 |  |  |              | 1 |  |  |  | 1 |         |  |  | 1 |  |  |  | 17 | 
|                   
|                   
|                   
|                   
|Lake Conroe         |  |            | 5  |                    |  |                      | 23 |              |  |                | 1  |     |  |        | 1 |                  |  |         | 1 |  |  |              | 1 |  |  |  | 1 |         |  |  | 2 |  |  |  |    | 
|                   
|                   
|                   
|                   
|Lake Of The Springs |  |            | 12 |                    |  |                      | 36 |              |  |                | 3  |     |  |        | 1 |                  |  |         | 1 |  |  |              |   |  |  |  | 1 |         |  |  | 1 |  |  |  | 6  | 
|                   
|                   
|                   
|                   
|Lake Tawakoni       |  |            | 5  |                    |  |                      | 19 |              |  |                | 2  |     |  |        | 1 |                  |  |         | 1 |  |  |              | 2 |  |  |  | 1 |         |  |  | 1 |  |  |  |    | 
|                   
|                   
|                   
|                   
|Lake Texoma         |  |            | 6  |                    |  |                      | 5  |              |  |                | 2  |     |  |        | 1 |                  |  |         | 1 |  |  |              | 2 |  |  |  | 1 |         |  |  | 1 |  |  |  | 18 | 
|                   
|                   
|                   
|                   
|Lake Whitney        |  |            | 5  |                    |  |                      | 14 |              |  |                | 2  |     |  |        | 1 |                  |  |         | 1 |  |  |              | 1 |  |  |  |   |         |  |  | 1 |  |  |  |    | 
|                   
|                   
|                   
|                   
|Las Vegas           |  |            | 3  |                    |  |                      | 11 |              |  |                | 1  |     |  |        | 1 |                  |  |         |   |  |  |              | 1 |  |  |  |   |         |  |  | 3 |  |  |  |    | 
|                   
|                   
|                   
|                   
|Leavenworth         |  |            | 8  |                    |  |                      | 4  |              |  |                | 2  |     |  |        | 1 |                  |  |         | 1 |  |  |              |   |  |  |  |   |         |  |  | 2 |  |  |  | 8  | 
|                   
|                   
|                   
|                   
|Lynchburg           |  |            | 5  |                    |  |                      | 5  |              |  |                | 2  |     |  |        | 1 |                  |  |         | 1 |  |  |              | 1 |  |  |  |   |         |  |  | 1 |  |  |  |    | 
|                   
|                   
|                   
|                   
|Medina Lake         |  |            | 4  |                    |  |                      | 34 |              |  |                | 3  |     |  |        | 1 |                  |  |         | 1 |  |  |              | 1 |  |  |  | 1 |         |  |  | 1 |  |  |  |    | 
|                   
|                   
|                   
|                   
|Morgan Hill         |  |            | 7  |                    |  |                      | 23 |              |  |                | 3  |     |  |        | 1 |                  |  |         | 1 |  |  |              |   |  |  |  |   |         |  |  | 1 |  |  |  |    | 
|                   
|                   
|                   
|                   
|Mount Vernon        |  |            | 6  |                    |  |                      | 6  |              |  |                | 2  |     |  |        | 1 |                  |  |         | 1 |  |  |              | 1 |  |  |  |   |         |  |  | 1 |  |  |  | 3  | 
|                   
|                   
|                   
|                   
|Oakzanita Springs   |  |            | 2  |                    |  |                      | 11 |              |  |                | 3  |     |  |        | 1 |                  |  |         | 1 |  |  |              | 1 |  |  |  |   |         |  |  | 1 |  |  |  |    | 
|                   
|                   
|                   
|                   
|Orlando             |  |            | 7  |                    |  |                      | 22 |              |  |                | 2  |     |  |        | 1 |                  |  |         | 1 |  |  |              | 1 |  |  |  | 1 |         |  |  | 5 |  |  |  | 4  | 
|                   
|                   
|                   
|                   
|Pacific City        |  |            | 5  |                    |  |                      | 18 |              |  |                | 2  |     |  |        | 1 |                  |  |         | 1 |  |  |              |   |  |  |  |   |         |  |  | 1 |  |  |  | 4  | 
|                   
|                   
|                   
|                   
|Palm Springs        |  |            | 4  |                    |  |                      | 19 |              |  |                |    |     |  |        | 1 |                  |  |         |   |  |  |              | 1 |  |  |  |   |         |  |  | 3 |  |  |  | 5  | 
|                   
|                   
|                   
|                   
|Pio Pico            |  |            | 8  |                    |  |                      | 22 |              |  |                | 3  |     |  |        | 1 |                  |  |         | 1 |  |  |              | 2 |  |  |  |   |         |  |  | 2 |  |  |  |    | 
|                   
|                   
|                   
|                   
|San Benito          |  |            | 7  |                    |  |                      | 24 |              |  |                | 4  |     |  |        | 1 |                  |  |         | 1 |  |  |              | 1 |  |  |  |   |         |  |  | 1 |  |  |  |    | 
|                   
|                   
|                   
|                   
|Soledad Canyon      |  |            | 14 |                    |  |                      | 53 |              |  |                | 7  |     |  |        | 1 |                  |  |         | 1 |  |  |              | 1 |  |  |  |   |         |  |  | 2 |  |  |  |    | 
|                   
|                   
|                   
|                   
|Saint Clair         |  |            | 3  |                    |  |                      | 13 |              |  |                | 2  |     |  |        | 1 |                  |  |         | 1 |  |  |              |   |  |  |  |   |         |  |  | 1 |  |  |  | 2  | 
|                   
|                   
|                   
|                   
|Verde Valley        |  |            | 3  |                    |  |                      | 16 |              |  |                | 3  |     |  |        | 1 |                  |  |         | 1 |  |  |              | 1 |  |  |  |   |         |  |  | 1 |  |  |  |    | 
|                   
|                   
|                   
|                   
|Wilmington          |  |            | 2  |                    |  |                      | 3  |              |  |                | 1  |     |  |        | 1 |                  |  |         | 1 |  |  |              | 1 |  |  |  |   |         |  |  | 1 |  |  |  |    | 

Page 13



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##### Table of Contents





|                                     |  |         |     |          |  |            |      |             |  |          |     |      |  |              |   |                |  |                 |   |  |  |  |   |  |  |  |   |  |  |  |   |  |  |  |   | 
|------------------------------------ |  | ------- | --- | -------- |  | ---------- | ---- | ----------- |  | -------- | --- | ---- |  | ------------ | - | -------------- |  | --------------- | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - | 
|Campground                           |  |         |     |          |  |            |      |             |  |          |     |      |  |              |   |                |  |                 |   |  |  |  |   |  |  |  |   |  |  |  |   |  |  |  |   | 
|Facilities and                       |  |         |     |          |  |            |      |             |  |          |     |      |  |              |   |                |  | Family Center/  |   |  |  |  |   |  |  |  |   |  |  |  |   |  |  | 
|Amenities                            |  | Acreage |     | RV Sites |  | Tent Sites |      | Adult Lodge |  | Pavilion |     | Pool |  | Tennis Court |   | Athletic Court |  | Vehicle Storage
|                                     |  |         |     |          |  |            |      |             |  |          |     |      |  |              |   |                |  |                
|National American Corporation (NACO)
|                                    
|                                    
|                                    
|                                    
|Bay Landing                          |  |         | 305 |          |  |            | 257  |             |  |          | 30  |      |  |              | 1 |                |  |                 | 2 |  |  |  | 1 |  |  |  |   |  |  |  | 1 |  |  |  | 1 | 
|                                    
|                                    
|                                    
|                                    
|Birch Bay                            |  |         | 30  |          |  |            | 215  |             |  |          | 8   |      |  |              | 1 |                |  |                 | 1 |  |  |  | 1 |  |  |  |   |  |  |  |   |  |  |  |   | 
|                                    
|                                    
|                                    
|                                    
|Carolina Landing                     |  |         | 119 |          |  |            | 193  |             |  |          | 7   |      |  |              |   |                |  |                 | 1 |  |  |  | 2 |  |  |  | 2 |  |  |  | 1 |  |  |  | 1 | 
|                                    
|                                    
|                                    
|                                    
|Cherokee Landing                     |  |         | 55  |          |  |            | 294  |             |  |          |     |      |  |              |   |                |  |                 | 1 |  |  |  | 1 |  |  |  | 1 |  |  |  | 1 |  |  |  | 1 | 
|                                    
|                                    
|                                    
|                                    
|Chestnut Lake                        |  |         | 31  |          |  |            | 179  |             |  |          |     |      |  |              | 1 |                |  |                 | 1 |  |  |  | 1 |  |  |  |   |  |  |  |   |  |  |  | 1 | 
|                                    
|                                    
|                                    
|                                    
|Indian Lakes                         |  |         | 545 |          |  |            | 1202 |             |  |          |     |      |  |              | 1 |                |  |                 | 1 |  |  |  | 1 |  |  |  | 2 |  |  |  | 1 |  |  |  | 1 | 
|                                    
|                                    
|                                    
|                                    
|Indian Point                         |  |         | 11  |          |  |            | 157  |             |  |          |     |      |  |              | 1 |                |  |                 | 1 |  |  |  | 2 |  |  |  |   |  |  |  |   |  |  |  | 1 | 
|                                    
|                                    
|                                    
|                                    
|Lake Minden                          |  |         | 97  |          |  |            | 162  |             |  |          | 161 |      |  |              |   |                |  |                 | 1 |  |  |  |   |  |  |  |   |  |  |  | 1 |  |  |  | 1 | 
|                                    
|                                    
|                                    
|                                    
|Little Diamond                       |  |         | 200 |          |  |            | 541  |             |  |          | 100 |      |  |              | 1 |                |  |                 | 4 |  |  |  | 1 |  |  |  |   |  |  |  | 1 |  |  |  | 1 | 
|                                    
|                                    
|                                    
|                                    
|Long Beach                           |  |         | 17  |          |  |            | 120  |             |  |          | 20  |      |  |              |   |                |  |                 | 1 |  |  |  | 1 |  |  |  |   |  |  |  |   |  |  |  | 1 | 
|                                    
|                                    
|                                    
|                                    
|Natchez Trace                        |  |         | 623 |          |  |            | 521  |             |  |          |     |      |  |              |   |                |  |                 | 1 |  |  |  | 2 |  |  |  | 1 |  |  |  | 1 |  |  |  | 1 | 
|                                    
|                                    
|                                    
|                                    
|Rancho Oso                           |  |         | 310 |          |  |            | 118  |             |  |          | 50  |      |  |              | 1 |                |  |                 | 1 |  |  |  | 2 |  |  |  | 1 |  |  |  |   |  |  |  | 1 | 
|                                    
|                                    
|                                    
|                                    
|Russian River                        |  |         | 42  |          |  |            | 125  |             |  |          | 30  |      |  |              |   |                |  |                 | 1 |  |  |  |   |  |  |  |   |  |  |  |   |  |  |  |   | 
|                                    
|                                    
|                                    
|                                    
|Snowflower                           |  |         | 720 |          |  |            | 248  |             |  |          | 10  |      |  |              |   |                |  |                 | 1 |  |  |  | 1 |  |  |  |   |  |  |  | 1 |  |  |  | 1 | 
|                                    
|                                    
|                                    
|                                    
|South Jetty                          |  |         | 60  |          |  |            | 162  |             |  |          | 10  |      |  |              | 1 |                |  |                 | 1 |  |  |  | 1 |  |  |  |   |  |  |  |   |  |  |  | 1 | 
|                                    
|                                    
|                                    
|                                    
|Turtle Beach                         |  |         | 39  |          |  |            | 72   |             |  |          |     |      |  |              |   |                |  |                 |   |  |  |  |   |  |  |  |   |  |  |  |   |  |  |  | 1 | 
|                                    
|                                    
|                                    
|                                    
|Virginia Landing                     |  |         | 839 |          |  |            | 210  |             |  |          |     |      |  |              | 1 |                |  |                 | 1 |  |  |  | 1 |  |  |  |   |  |  |  |   |  |  |  | 1 | 
|                                    
|                                    
|                                    
|                                    
|Wilderness Lakes                     |  |         | 74  |          |  |            | 523  |             |  |          | 5   |      |  |              | 1 |                |  |                 | 1 |  |  |  | 2 |  |  |  | 1 |  |  |  | 1 |  |  |  | 1 | 
|                                    
|                                    
|                                    
|                                    
|Windsor                              |  |         | 17  |          |  |            | 95   |             |  |          | 25  |      |  |              |   |                |  |                 | 1 |  |  |  | 1 |  |  |  |   |  |  |  |   |  |  |  | 1 | 
|                                    
|                                    
|                                    
|                                    
|Yosemite Lakes                       |  |         | 387 |          |  |            | 379  |             |  |          | 131 |      |  |              | 1 |                |  |                 | 1 |  |  |  |   |  |  |  |   |  |  |  | 1 |  |  |  | 1 | 
|                                    
|                                    
|                                    
|                                    
|Leisure Time Resorts                
|                                    
|                                    
|                                    
|                                    
|Cascade                              |  |         | 20  |          |  |            | 164  |             |  |          | 24  |      |  |              | 1 |                |  |                 | 1 |  |  |  | 3 |  |  |  | 1 |  |  |  | 2 |  |  |  | 1 | 
|                                    
|                                    
|                                    
|                                    
|Crescent Bar                         |  |         | 24  |          |  |            | 110  |             |  |          | 15  |      |  |              |   |                |  |                 | 1 |  |  |  | 1 |  |  |  | 1 |  |  |  | 1 |  |  |  | 1 | 
|                                    
|                                    
|                                    
|                                    
|Oceana                               |  |         | 28  |          |  |            | 100  |             |  |          |     |      |  |              |   |                |  |                 | 1 |  |  |  |   |  |  |  |   |  |  |  |   |  |  |  |   | 
|                                    
|                                    
|                                    
|                                    
|Paradise                             |  |         | 60  |          |  |            | 208  |             |  |          | 149 |      |  |              |   |                |  |                 | 2 |  |  |  | 3 |  |  |  | 1 |  |  |  | 1 |  |  |  |   | 
|                                    
|                                    
|                                    
|                                    
|Seaside                              |  |         | 90  |          |  |            | 252  |             |  |          |     |      |  |              |   |                |  |                 | 2 |  |  |  | 1 |  |  |  | 1 |  |  |  | 1 |  |  |  | 1 | 
|                                    
|                                    
|                                    
|                                    
|Thunderbird                          |  |         | 35  |          |  |            | 98   |             |  |          | 27  |      |  |              |   |                |  |                 | 1 |  |  |  | 3 |  |  |  |   |  |  |  |   |  |  |  |   | 
|                                    
|                                    
|                                    
|                                    
|Whalers Rest                        |  |         | 23  |          |  |            | 179  |             |  |          | 4   |      |  |              |   |                |  |                 | 2 |  |  |  | 1 |  |  |  | 1 |  |  |  | 1 |  |  |  |   | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                     |  |            |    |                    |  |                      |    |              |  |                |   |     |  |        |   |                  |  |         |   |  |  |              |   |  |  |  |   |         |  |  |   |  |  |  |    | 
|------------------------------------ |  | ---------- | -- | ------------------ |  | -------------------- | -- | ------------ |  | -------------- | - | --- |  | ------ | - | ---------------- |  | ------- | - |  |  | ------------ | - |  |  |  | - | ------- |  |  | - |  |  |  | -- | 
|Campground                           |  |            |    |                    |  |                      |    |              |  |                |   |     |  |        |   |                  |  |         |   |  |  |              |   |  |  |  |   |         |  |  |   |  |  |  |    | 
|Facilities and                       |  | Restrooms/ |    | Trailers (Seasonal |  |                      |    |              |  |                |   |     |  |        |   |                  |  |         |   |  |  | Boat Launch/ |   |  |  |  |   | Cabins/
|Amenities                            |  | Showers    |    | Availability)      |  | Childrens Play Area |    | Trading Post |  | Miniature Golf |   | Spa |  | Marina |   | Laundry Facility |  | Lodging
|                                     |  |            |    |                    |  |                      |    |              |  |                |   |     |  |        |   |                  |  |        
|National American Corporation (NACO)
|                                    
|                                    
|                                    
|                                    
|Bay Landing                          |  |            | 2  |                    |  |                      |    |              |  |                | 1 |     |  |        | 1 |                  |  |         | 1 |  |  |              | 1 |  |  |  | 1 |         |  |  | 1 |  |  |  | 34 | 
|                                    
|                                    
|                                    
|                                    
|Birch Bay                            |  |            | 3  |                    |  |                      | 11 |              |  |                | 1 |     |  |        | 1 |                  |  |         |   |  |  |              |   |  |  |  |   |         |  |  | 1 |  |  |  |    | 
|                                    
|                                    
|                                    
|                                    
|Carolina Landing                     |  |            | 4  |                    |  |                      |    |              |  |                | 1 |     |  |        | 1 |                  |  |         | 1 |  |  |              |   |  |  |  |   |         |  |  | 1 |  |  |  | 18 | 
|                                    
|                                    
|                                    
|                                    
|Cherokee Landing                     |  |            | 2  |                    |  |                      |    |              |  |                | 1 |     |  |        | 1 |                  |  |         | 1 |  |  |              |   |  |  |  |   |         |  |  | 1 |  |  |  | 20 | 
|                                    
|                                    
|                                    
|                                    
|Chestnut Lake                        |  |            | 1  |                    |  |                      | 10 |              |  |                | 1 |     |  |        | 1 |                  |  |         | 1 |  |  |              |   |  |  |  |   |         |  |  | 1 |  |  |  |    | 
|                                    
|                                    
|                                    
|                                    
|Indian Lakes                         |  |            | 4  |                    |  |                      |    |              |  |                | 3 |     |  |        | 1 |                  |  |         | 1 |  |  |              |   |  |  |  | 1 |         |  |  | 3 |  |  |  | 54 | 
|                                    
|                                    
|                                    
|                                    
|Indian Point                         |  |            | 2  |                    |  |                      | 3  |              |  |                | 1 |     |  |        | 1 |                  |  |         | 1 |  |  |              |   |  |  |  | 1 |         |  |  | 1 |  |  |  | 16 | 
|                                    
|                                    
|                                    
|                                    
|Lake Minden                          |  |            | 3  |                    |  |                      | 13 |              |  |                | 1 |     |  |        | 1 |                  |  |         |   |  |  |              |   |  |  |  |   |         |  |  | 1 |  |  |  |    | 
|                                    
|                                    
|                                    
|                                    
|Little Diamond                       |  |            | 5  |                    |  |                      | 4  |              |  |                | 3 |     |  |        | 1 |                  |  |         |   |  |  |              | 2 |  |  |  | 1 |         |  |  | 1 |  |  |  | 1  | 
|                                    
|                                    
|                                    
|                                    
|Long Beach                           |  |            | 2  |                    |  |                      | 6  |              |  |                | 2 |     |  |        | 1 |                  |  |         |   |  |  |              | 1 |  |  |  |   |         |  |  | 1 |  |  |  |    | 
|                                    
|                                    
|                                    
|                                    
|Natchez Trace                        |  |            | 4  |                    |  |                      |    |              |  |                | 3 |     |  |        | 1 |                  |  |         | 1 |  |  |              |   |  |  |  | 1 |         |  |  | 2 |  |  |  | 58 | 
|                                    
|                                    
|                                    
|                                    
|Rancho Oso                           |  |            | 3  |                    |  |                      | 23 |              |  |                | 1 |     |  |        | 1 |                  |  |         |   |  |  |              | 1 |  |  |  |   |         |  |  | 2 |  |  |  | 15 | 
|                                    
|                                    
|                                    
|                                    
|Russian River                        |  |            | 4  |                    |  |                      | 10 |              |  |                | 1 |     |  |        | 1 |                  |  |         |   |  |  |              |   |  |  |  |   |         |  |  | 1 |  |  |  |    | 
|                                    
|                                    
|                                    
|                                    
|Snowflower                           |  |            | 11 |                    |  |                      | 14 |              |  |                |   |     |  |        |   |                  |  |         |   |  |  |              |   |  |  |  |   |         |  |  | 1 |  |  |  | 4  | 
|                                    
|                                    
|                                    
|                                    
|South Jetty                          |  |            | 5  |                    |  |                      | 15 |              |  |                | 1 |     |  |        | 1 |                  |  |         |   |  |  |              | 2 |  |  |  |   |         |  |  | 1 |  |  |  | 3  | 
|                                    
|                                    
|                                    
|                                    
|Turtle Beach                         |  |            | 2  |                    |  |                      |    |              |  |                | 1 |     |  |        | 1 |                  |  |         |   |  |  |              |   |  |  |  | 1 |         |  |  | 1 |  |  |  |    | 
|                                    
|                                    
|                                    
|                                    
|Virginia Landing                     |  |            | 3  |                    |  |                      |    |              |  |                | 2 |     |  |        | 1 |                  |  |         | 1 |  |  |              |   |  |  |  | 1 |         |  |  | 1 |  |  |  | 19 | 
|                                    
|                                    
|                                    
|                                    
|Wilderness Lakes                     |  |            | 8  |                    |  |                      | 34 |              |  |                | 2 |     |  |        | 1 |                  |  |         | 1 |  |  |              | 3 |  |  |  |   |         |  |  | 4 |  |  |  |    | 
|                                    
|                                    
|                                    
|                                    
|Windsor                              |  |            | 1  |                    |  |                      | 7  |              |  |                | 1 |     |  |        |   |                  |  |         |   |  |  |              |   |  |  |  |   |         |  |  | 1 |  |  |  |    | 
|                                    
|                                    
|                                    
|                                    
|Yosemite Lakes                       |  |            | 8  |                    |  |                      | 16 |              |  |                | 1 |     |  |        | 1 |                  |  |         | 1 |  |  |              | 1 |  |  |  |   |         |  |  | 2 |  |  |  | 44 | 
|                                    
|                                    
|                                    
|                                    
|Leisure Time Resorts                
|                                    
|                                    
|                                    
|                                    
|Cascade                              |  |            | 2  |                    |  |                      | 14 |              |  |                | 1 |     |  |        | 1 |                  |  |         | 1 |  |  |              | 1 |  |  |  |   |         |  |  |   |  |  |  |    | 
|                                    
|                                    
|                                    
|                                    
|Crescent Bar                         |  |            | 1  |                    |  |                      | 9  |              |  |                | 1 |     |  |        |   |                  |  |         | 2 |  |  |              | 1 |  |  |  | 1 |         |  |  | 1 |  |  |  |    | 
|                                    
|                                    
|                                    
|                                    
|Oceana                               |  |            | 2  |                    |  |                      | 14 |              |  |                | 1 |     |  |        |   |                  |  |         |   |  |  |              |   |  |  |  |   |         |  |  |   |  |  |  |    | 
|                                    
|                                    
|                                    
|                                    
|Paradise                             |  |            | 2  |                    |  |                      | 32 |              |  |                | 1 |     |  |        | 1 |                  |  |         | 1 |  |  |              | 1 |  |  |  |   |         |  |  |   |  |  |  |    | 
|                                    
|                                    
|                                    
|                                    
|Seaside                              |  |            | 4  |                    |  |                      | 32 |              |  |                | 1 |     |  |        | 1 |                  |  |         |   |  |  |              |   |  |  |  |   |         |  |  | 1 |  |  |  |    | 
|                                    
|                                    
|                                    
|                                    
|Thunderbird                          |  |            | 2  |                    |  |                      | 4  |              |  |                | 1 |     |  |        | 1 |                  |  |         | 1 |  |  |              | 1 |  |  |  | 1 |         |  |  |   |  |  |  |    | 
|                                    
|                                    
|                                    
|                                    
|Whalers Rest                        |  |            | 3  |                    |  |                      | 16 |              |  |                | 1 |     |  |        | 1 |                  |  |         |   |  |  |              | 1 |  |  |  |   |         |  |  | 1 |  |  |  |    | 

Page 14



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##### Table of Contents






Item 3. Legal Proceedings

The Company is involved in certain claims and litigation arising in the normal
course of business. Management believes that the eventual outcome of these
claims and litigation will not have a material adverse impact on the Companys
financial position, operations or cash flows.




Item 4. Submission of Matters to a Vote of Security Holders

None.

Page 15



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##### Table of Contents






Part II




Item 5. Market for Registrants Common Equity and Related Stockholder Matters

Market and Trading. The Companys common stock (the Common Stock) is
publicly traded on the American Stock Exchange under the symbol TRV.
Historically, the Common Stock has not traded every day and the trading volume
has often been small. The following table sets forth, for the fiscal periods
indicated, the high and low sales prices as reported on the American Stock
Exchange.

(Line Graph)

|               |  |      |        |      |  |      |       |     |  |  |       |  |  |  |       | 
|-------------- |  | ---- | ------ | ---- |  | ---- | ----- | --- |  |  | ----- |  |  |  | ----- | 
|               |  | 2002 |        | 2001
|               |  |      |        |     
|               |  | High |        | Low  |  | High |       | Low
|               |  |      |        |      |  |      |       |    
|First Quarter  |  |      | 6.300  |      |  |      | 5.240 |     |  |  | 4.875 |  |  |  | 4.500 | 
|              
|              
|              
|              
|Second Quarter |  |      | 7.200  |      |  |      | 5.200 |     |  |  | 5.125 |  |  |  | 4.625 | 
|              
|              
|              
|              
|Third Quarter  |  |      | 10.990 |      |  |      | 6.600 |     |  |  | 6.100 |  |  |  | 4.800 | 
|              
|              
|              
|              
|Fourth Quarter |  |      | 11.700 |      |  |      | 7.520 |     |  |  | 6.300 |  |  |  | 5.100 | 

As of September 26, 2002, the Companys Common Stock was held by 34 holders of
record. Moreover, security position listings available to the Company listed
approximately 425 beneficial holders of Common Stock.

Absence of Dividends.Since inception, the Company has not paid any dividends
and, at the present time, it has no plans to pay dividends.

Tender Offer.On May 30, 2002, the Company completed a tender offer and
purchased 1,144,876 shares of Common Stock for $8.41 per share. The Company
funded the repurchase with existing cash and short-term investments. The
purchased shares are held as Treasury stock.

Page 16



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##### Table of Contents






Item 6. Selected Financial Data

(dollars in thousands, except per share amounts and statistical data)

|                                     |                                       |                                   |   |                             |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |         |        | 
|------------------------------------ | ------------------------------------- | --------------------------------- | - | --------------------------- | ------ | ---- | - | ------- | ------ | ---- | - | ------- | ------ |  | - | ------- | ------ |  | - | ------- | ------ | 
|                                     |                                       |                                   |   | For the year ended June 30,
|                                     |                                       |                                   |   |                            
|                                     |                                       |                                   |   | 2002                        |        | 2001 |   | 2000(1) |        | 1999 |   | 1998   
|                                     |                                       |                                   |   |                             |        |      |   |         |        |      |   |        
|Statement of Operations Data         |                                       |                                   |   |                             |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Total revenue                         |                                   | $ | 89,185                      |        |      | $ | 79,396  |        |      | $ | 70,771  |        |  | $ | 67,925  |        |  | $ | 75,509  |       
|                                    
|                                    
|                                    
|                                    
|                                     | Membership dues                       |                                   |   | 39,856                      |        |      |   | 40,080  |        |      |   | 37,495  |        |  |   | 36,455  |        |  |   | 37,330  |       
|                                    
|                                    
|                                    
|                                    
|                                     | Other campground revenue              |                                   |   | 18,505                      |        |      |   | 17,849  |        |      |   | 16,731  |        |  |   | 15,585  |        |  |   | 14,204  |       
|                                    
|                                    
|                                    
|                                    
|                                     | Membership contracts originated       |                                   |   | 27,434                      |        |      |   | 22,903  |        |      |   | 13,912  |        |  |   | 5,480   |        |  |   | 3,867   |       
|                                    
|                                    
|                                    
|                                    
|                                     | Membership sales revenue              |                                   |   | 16,616                      |        |      |   | 9,540   |        |      |   | 5,564   |        |  |   | 3,959   |        |  |   | 3,227   |       
|                                    
|                                    
|                                    
|                                    
|                                     | Interest income                       |                                   |   | 2,383                       |        |      |   | 1,951   |        |      |   | 1,509   |        |  |   | 2,008   |        |  |   | 2,635   |       
|                                    
|                                    
|                                    
|                                    
|                                     | Interest expense and amortization     |                                   |   | 32                          |        |      |   | 1,013   |        |      |   | 1,427   |        |  |   | 2,957   |        |  |   | 4,599   |       
|                                    
|                                    
|                                    
|                                    
|                                     | Income from operations before taxes   |                                   |   | 13,145                      |        |      |   | 6,429   |        |      |   | 5,458   |        |  |   | 7,915   |        |  |   | 15,716  |       
|                                    
|                                    
|                                    
|                                    
|                                     | Net income                            |                                   |   | 8,326                       |        |      |   | 4,276   |        |      |   | 9,249   |        |  |   | 5,571   |        |  |   | 24,879  |       
|                                    
|                                    
|                                    
|                                    
|                                     | Dividends paid (2)                    |                                   |   |                            |        |      |   |        |        |      |   |        |        |  |   |        |        |  |   |        |       
|                                    
|                                    
|                                    
|                                    
|                                     | Dividends per common share (2)        |                                   |   |                            |        |      |   |        |        |      |   |        |        |  |   |        |        |  |   |        |       
|                                    
|                                    
|                                    
|                                    
|                                     | Income per share  basic:             |                                   |   |                             |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |         |       
|                                    
|                                    
|                                    
|                                    
|                                     |                                       | Net income                        |   |                             | 1.04   |      |   |         | .52    |      |   |         | 1.16   |  |   |         | .73    |  |   |         | 3.36   | 
|                                    
|                                    
|                                    
|                                    
|                                     |                                       | Weighted average number of shares |   |                             | 8,012  |      |   |         | 8,107  |      |   |         | 7,981  |  |   |         | 7,630  |  |   |         | 7,407  | 
|                                    
|                                    
|                                    
|                                    
|                                     | Income per share  diluted:           |                                   |   |                             |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |         |       
|                                    
|                                    
|                                    
|                                    
|                                     |                                       | Net income                        |   |                             | .97    |      |   |         | .50    |      |   |         | 1.08   |  |   |         | .66    |  |   |         | 2.96   | 
|                                    
|                                    
|                                    
|                                    
|                                     |                                       | Weighted average number of shares |   |                             | 8,585  |      |   |         | 8,598  |      |   |         | 8,594  |  |   |         | 8,475  |  |   |         | 8,398  | 
|                                    
|                                    
|                                    
|                                    
|Balance Sheet Data (at end of year): |                                       |                                   |   |                             |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Cash and cash equivalents             |                                   |   | 4,180                       |        |      |   | 9,016   |        |      |   | 2,420   |        |  |   | 2,197   |        |  |   | 13,631  |       
|                                    
|                                    
|                                    
|                                    
|                                     | Marketable securities                 |                                   |   | 5,343                       |        |      |   |        |        |      |   |        |        |  |   |        |        |  |   |        |       
|                                    
|                                    
|                                    
|                                    
|                                     | Receivables, net                      |                                   |   | 9,638                       |        |      |   | 7,588   |        |      |   | 5,775   |        |  |   | 2,184   |        |  |   | 4,181   |       
|                                    
|                                    
|                                    
|                                    
|                                     | Campground properties                 |                                   |   | 48,640                      |        |      |   | 47,191  |        |      |   | 48,150  |        |  |   | 36,941  |        |  |   | 37,991  |       
|                                    
|                                    
|                                    
|                                    
|                                     | Properties at unrelated resorts       |                                   |   |                            |        |      |   | 70      |        |      |   | 70      |        |  |   | 75      |        |  |   | 1,092   |       
|                                    
|                                    
|                                    
|                                    
|                                     |                                       | Total assets                      |   |                             | 92,240 |      |   |         | 83,949 |      |   |         | 74,515 |  |   |         | 56,804 |  |   |         | 74,262 | 
|                                    
|                                    
|                                    
|                                    
|                                     | PIK Notes, including deferred gain(3) |                                   |   |                            |        |      |   |        |        |      |   |        |        |  |   |        |        |  |   | 32,973  |       
|                                    
|                                    
|                                    
|                                    
|                                     | Borrowings under Credit Agreement(3)  |                                   |   |                            |        |      |   |        |        |      |   | 9,614   |        |  |   | 10,887  |        |  |   |        |       
|                                    
|                                    
|                                    
|                                    
|                                     | Long-term debt(3)                     |                                   |   |                            |        |      |   |        |        |      |   | 7,043   |        |  |   | 8,787   |        |  |   | 32,973  |       
|                                    
|                                    
|                                    
|                                    
|                                     |                                       | Shareholders equity              |   |                             | 20,663 |      |   |         | 22,435 |      |   |         | 18,109 |  |   |         | 9,648  |  |   |         | 2,754  | 
|                                    
|                                    
|                                    
|                                    
|Statistical Data (at end of year):   |                                       |                                   |   |                             |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Number of operating campgrounds       |                                   |   | 59                          |        |      |   | 59      |        |      |   | 63      |        |  |   | 53      |        |  |   | 53      |       
|                                    
|                                    
|                                    
|                                    
|                                     | Number of campsites                   |                                   |   | 17,900                      |        |      |   | 18,100  |        |      |   | 19,000  |        |  |   | 17,700  |        |  |   | 17,700  |       
|                                    
|                                    
|                                    
|                                    
|                                     | Number of members                     |                                   |   | 112,000                     |        |      |   | 117,000 |        |      |   | 119,000 |        |  |   | 106,000 |        |  |   | 111,000 |       
|                                    
|                                    
|                                    
|                                    
|                                     | Average annual dues per member        |                                   | $ | 369                         |        |      | $ | 360     |        |      | $ | 355     |        |  | $ | 357     |        |  | $ | 351     |       
|                                    
|                                    
|                                    
|                                    
|                                     | Average cost per camper night         |                                   | $ | 20.41                       |        |      | $ | 19.33   |        |      | $ | 18.72   |        |  | $ | 17.62   |        |  | $ | 18.23   |       



---

|(1) |  | The historical Selected Financial Data for fiscal 2000 includes the
operating results of Leisure Time from December 16, 1999, the date of
acquisition.                                 
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Since inception, the Company has not paid any dividends and, at the
present time, it has no plans to pay dividends.                                                                    
|   
|   
|   
|   
|(3) |  | Long-term debt includes only the long-term portions of the 12% Senior
Subordinated Pay-In-Kind Notes Due 2003 (PIK Notes) and the Credit
Agreement with Foothill Capital Corporation.

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Item 7. Managements Discussion and Analysis of Financial Condition and
Results of Operations

In this Managements Discussion and Analysis of Financial Condition and Results
of Operations, and elsewhere in this report, the Company makes certain
statements as to its expected financial condition, results of operations, cash
flows and business strategies, plans and conditions for periods after June 30,
2002. All of these statements are forward-looking statements made pursuant to
the safe harbor provisions of Section 21 (E) of the Securities Exchange Act of
1934, as amended. These statements are not historical and involve risks and
uncertainties. The Companys actual financial condition, results of
operations, cash flows and business strategies, plans and conditions for future
periods may differ materially due to several factors, including but not limited
to the Companys ability to control costs, campground market conditions and
other factors affecting the Companys sales and marketing plan, the actual rate
of decline in the campground membership base, the actual use of the campgrounds
by members and guests, the Companys success in collecting its contracts
receivable and selling assets, the Companys success in acquiring members
through the purchase of other membership campground operations and the other
factors affecting the Companys operations described in this report.

LIQUIDITY AND CAPITAL RESOURCES

Current Business Strategy.The Companys current business strategy is to
improve its campground operations and stabilize its campground membership base
through increased sales and marketing efforts and the acquisition of members
through the purchase of other membership campground operations. The Company
believes there is a viable market for campground memberships and that it has a
significant opportunity to compete for campers interested in higher quality
facilities and a higher level of service than is typically available at public
campgrounds or competing private campgrounds.

Over the past decade, the Companys membership base has been declining,
although the Company has been successful in slowing the rate of this decline.
In response to this attrition, the Company has downsized its business by
closing and disposing of campgrounds and decreasing campground operating costs
and general and administrative expenses. The Company intends to continue to
keep the size of its campground system in an appropriate relation to the size
of its membership base. In this regard, if the membership base continues to
decline, or other opportunities arise consistent with the needs of the members,
the Company may close and dispose of additional campgrounds and it will seek to
decrease other expenses. At the same time, the Company has expanded its sales
and marketing efforts with a view to stopping the membership decline. The
Company has also acquired members through the purchase of Leisure Time, and it
intends to explore the possible acquisition of additional members through the
purchase of other membership campground organizations. However, at this time,
the Company has not identified any realistic acquisition candidates. The
Company believes that the ultimate size of its campground system and the
amounts realized from future asset sales will depend principally upon the
degree to which the Company can successfully implement this strategy.

Tender Offer. In April 2002, the Company made a tender offer to all of its
stockholders for up to 1,500,000 shares of Common Stock at a purchase price of
$8.41 per share, payable in cash. In June 2002, the Company purchased
1,144,876 shares of Common Stock, which represented all of the shares tendered,
for a total purchase price of $9.6 million. The Company funded the stock

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repurchases with its existing cash and short-term investments. The purchased
shares are held as Treasury stock.

Cash.On June 30, 2002, the Company had $4.2 million of cash and cash
equivalents, a decrease of $4.8 million during fiscal 2002. The decrease
resulted primarily from the Companys decision to invest cash in marketable
securities to increase the amount of interest earned on the invested funds.

During the year ended June 30, 2002, the Companys operating activities
provided $14.1 million of cash, its investing activities used $8.4 million of
cash and its financing activities used $10.6 million of cash. The Companys
investing activities consisted of net purchases of $5.3 million of marketable
securities, expenditures of $3.6 million to upgrade the Companys computer,
communication and reservation systems, and capital expenditures of $1.1 million
at the campgrounds, partially offset by $1.6 million in proceeds from the sale
of assets. The Companys financing activities consisted primarily of $88,000
of proceeds from the exercise of employee stock options, payments of $10.6
million for the purchase of 1,277,376 shares of Common Stock, primarily in
connection with the tender offer described above, and $78,000 in payments on
notes payable, which are included in other liabilities in the accompanying
financial statements.

With respect to the Companys operating activities, for fiscal 2002, the
principal sources of operating cash were $66.2 million from operations, $7.0
million in principal and interest collections on contracts receivable and
invested cash and $2.7 million from sales of campground memberships. Principal
uses of operating cash for fiscal 2002 were $43.5 million in operating
expenses, $17.7 million in membership origination costs and marketing expenses,
$11.7 million in administrative expenses (including general and administrative
expenses and corporate member services costs), $2.3 million in insurance
premiums and $2.8 million in income taxes.

During the year ended June 30, 2001, the Companys operating activities
provided $17.7 million of cash, its investing activities used $1.5 million of
cash and its financing activities used $9.6 million of cash. During the year
ended June 30, 2000, the Companys operating activities provided $14.1 million
of cash, its investing activities used $9.0 million of cash, and its financing
activities used $4.9 million of cash. In fiscal 2001 and 2000, the Companys
material investing and financing activities related primarily to capital
expenditures at the campgrounds, the acquisition of Leisure Time and repayment
of debt.

The Company expects that its capital expenditures will be lower in fiscal 2003,
compared with fiscal 2002, because the Company spent a total of $3.6 million in
fiscal 2002 to upgrade its computer, communication and reservation systems.
The Company anticipates spending $1.5 million in fiscal 2003 to complete these
improvements.

During the year ended June 30, 2002 and through the date of this report, the
Company had no outstanding borrowings under its Line of Credit with Union
Bank. At its current level of operations, the Company believes its cash
reserves will increase during fiscal 2003. The amount of cash the Company is
able to accumulate will depend on a number of factors including its ability to
control costs, its success in collecting its contracts receivable and selling
assets and the other factors affecting the Companys operations described in
this report. Based upon its current business plan, the Company believes that
future cash flows provided from operations, asset sales

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and borrowings
available under the Line of Credit will be adequate for the Companys operating
and other cash requirements.

Contracts Receivable.As of June 30, 2002, the Company on a consolidated basis
owned
$11.8 million of contracts receivable related to the sale of campground
memberships (see Contracts Receivable in Item 1).

Allowance for Doubtful Accounts
The Companys allowance for doubtful accounts was 19% of gross contracts
receivable at June 30, 2002, compared with 23% and 25% of gross contracts
receivable at June 30, 2001 and 2000, respectively. The cancellation rate as a
percentage of average contracts receivable was 6% for fiscal 2002, compared
with 5% for fiscal 2001 and 2000. In fiscal 2002, the Company reduced the
allowance for doubtful accounts on its contracts receivable by $400,000 because
the Company experienced lower contract losses than anticipated. In fiscal
2000, the Company reduced the allowance for doubtful accounts by $435,000 on
contracts receivable generated from membership sales at Thousand Trails and
NACO campgrounds because the Company experienced lower contract losses than
anticipated on these contracts. However, in fiscal 2000, the Company increased
the allowance for doubtful accounts by $184,000 on contracts receivable
generated from membership sales at Leisure Times campgrounds because the
collection history for these contracts receivable was uncertain at that time.

The allowance for doubtful accounts is an estimate of the contracts receivable
that will cancel in the future and is determined based on historical
cancellation rates and other factors deemed relevant to the analysis. In
fiscal 2002, the Companys cancellation rate was 6%, compared with 5% in fiscal
2001 and 2000, an increase the Company did not consider material. In contrast,
the 5% cancellation rate in fiscal 2000 was a significant decrease from the 8%
rate in fiscal 1999. As a result, in fiscal 2000, the Company reduced the
allowance for doubtful accounts. In making this reduction, the Company applied
the cancellation rate at year-end to the maturities of the then-outstanding
portfolio and considered the uncertainties associated with its business. Using
the same methodology and considering the same factors deemed relevant to the
analysis, the Company reduced the allowance to 23% of the portfolio in fiscal
2001 and 19% in fiscal 2002. The reduction in fiscal 2002 reflects the
continuing benefit of the lower cancellation rates.

The Company believes the allowance for doubtful accounts is adequate. However,
the allowance and the rate at which the Company provides for future losses on
its contracts receivable could be increased or decreased in the future based on
the Companys actual collection experience.

Change in Receivables
The net balance of contracts receivable increased by approximately $1.9 million
during fiscal 2002, primarily as a result of an increase in financed sales,
partially offset by $4.6 million in cash collections.

Campground Properties.The Companys campground properties consist of land,
buildings and other equipment used in administration and operations as well as
assets held for sale. Campground properties increased by $1.5 million in
fiscal 2002 due primarily to $4.7 million of capital expenditures, partially
offset by the sale of one campground and $3.0 million of depreciation on
property and equipment.

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##### Table of Contents



In fiscal 2001, the Company closed four campgrounds in connection with the
consolidation of Leisure Times operations and reclassified $2.6 million from
campground land and buildings and equipment to assets held for sale.

The Company makes annual capital and maintenance expenditures to maintain and
improve the campgrounds. During fiscal 2002, the Company spent $5.7 million on
major maintenance, repairs and improvements at the campgrounds. The Company
anticipates that it will spend an additional $5.2 million on such items in
fiscal 2003, which will be funded by existing cash and cash provided by
operations. The Company may be required to spend greater amounts in future
years as the facilities age.

During the periods presented, the Company also owned lot inventory, buildings
and equipment and land held for sale at certain resorts not related to the
campground operations. Over the past several years, the Company has sold
substantially all of the assets it owns at these resorts.

At June 30, 2001, the Company had a recorded liability of $1.9 million for
amounts necessary to complete improvements at a resort not related to the
campground operations in accordance with disclosures made to lot purchasers at
the resort pursuant to a registration with the U.S. Department of Housing and
Urban Development (HUD). In fiscal 2002, the Company sold the remaining
lots, roadways and related areas at the resort associated with such liability
and withdrew its HUD registration. As a result, the Company reduced the $1.9
million liability for accrued construction costs to $500,000 and reclassified
the remaining liability as a reserve for the contingent liability. The
decrease in the liability was classified as a reduction of general and
administrative expenses.

Other Assets.Other current assets increased by $2.1 million during fiscal
2002, due primarily to a $2.2 million increase in accounts receivable,
partially offset by a $63,000 decrease in inventory. Accounts receivable
increased primarily because, at June 30, 2002, the Company had not received the
proceeds from an asset sale that closed during June 2002.

Borrowings.

Line of Credit with Union Bank
On July 1, 2001, the Company established a $15.0 million Line of Credit with
Union Bank. Borrowings under the Line of Credit carry an interest rate of
prime minus 0.75%. The Company may borrow, repay and reborrow under the Line
of Credit from time to time, provided, however, that for at least one day
during each twelve-month period, the principal amount outstanding under the
Line of Credit must be not more than $5.0 million. All borrowings under the
Line of Credit will mature on July 1, 2003. The Company anticipates using the
Line of Credit for general working capital purposes, although it is permitted
under the terms of the Line of Credit to use up to $5.0 million for
acquisitions from time to time. The Company currently has no borrowings
outstanding under the Line of Credit.

The Companys ability to borrow under the Line of Credit for working capital
purposes is subject to continued compliance by the Company with the financial
covenants and other requirements of the Line of Credit, including certain
covenants respecting minimum tangible net worth, minimum adjusted EBITDA (as
defined) and minimum total debt to adjusted EBITDA. The Line of Credit
prohibits the Company from borrowing from other sources.

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##### Table of Contents



The Company has granted liens on substantially all of its assets, other than
its real estate, to secure its obligations under the Line of Credit. In
addition, the Companys principal subsidiaries have guaranteed the Companys
obligations under the Line of Credit and have granted liens on substantially
all of their assets, other than their real estate, to secure their guarantees.

Credit Agreement with Foothill
Through the normal course of operations, in March 2001, the Company repaid all
outstanding borrowings under its Credit Agreement with Foothill Capital
Corporation, and it terminated the Credit Agreement on June 30, 2001. During
the periods presented, borrowings under this Credit Agreement accrued interest
at prime plus .25% per annum, subject to a minimum interest rate of 7% per
annum.

Deferred Revenues and Expenses.Deferred revenues of $59.2 million and $47.8
million at June 30, 2002 and 2001, respectively, include $15.4 million and
$15.5 million, respectively, of membership dues collections relating to future
periods, $41.4 million and $30.2 million, respectively, of campground
membership sales revenues to be recognized in future periods, and $2.4 million
and $2.2 million, respectively, of other deferred revenues related primarily to
RPIs and Trails Managements operations, and deferred subscription revenue
from the Companys member magazine. Deferred membership selling expenses of
$12.4 million and $8.9 million at June 30, 2002 and 2001, respectively,
represent incremental direct selling costs to be recognized in future periods.

General Liability Insurance.From July 1, 1998 through June 30, 2002, the
Company had insurance covering general liability losses up to an annual limit
of $27.0 million, with no self-insured deductible. Prior to this date, the
Companys insurance program covered general liability losses up to an annual
limit of $26.8 million, but required the Company to pay the first $250,000 per
occurrence, with an annual aggregate exposure of $2.0 million. The Company has
provided a liability for estimated claims related to uninsured general
liability risks based on actuarial
estimates. At June 30, 2002 and 2001, the Companys recorded liability for
estimated losses related to uninsured general liability claims totaled $567,000
and $577,000, respectively.

The Companys insurance renews on an annual basis, effective July 1 each year.
On July 1, 2002, to reduce the impact of rising insurance costs, the Company
obtained insurance covering general liability losses up to an annual limit of $27.0 million,
which requires the Company to pay the first $250,000 per
occurrence, with an annual aggregate exposure of $2.8 million. With the
revised insurance coverage, the Company expects to experience greater uninsured
general liability losses in fiscal 2003 than it recorded in prior years.

Employee Health Insurance.The Company provides medical and dental benefits
for its employees under employee benefit plans (collectively, the Plans) that
are funded primarily through employer and employee contributions. The Company
has purchased stop loss insurance that protects the Plans against claims in
excess of set policy amounts. The Company has provided a liability for
estimated uninsured claims of $558,000 and $709,000 at June 30, 2002 and 2001,
respectively. This liability is based on actuarial estimates of amounts needed
to fund expected uninsured claims, as well as premium payments and
administrative costs of the Plans.

Workers Compensation Insurance.From July 1, 1998 through June 30, 2002, the
Company had insurance covering workers compensation claims with no
self-insured deductible. Prior to this date, the Companys insurance program
required the Company to pay up to $250,000 per

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##### Table of Contents



occurrence and to deposit funds
with the insurance company to pay claims in excess of the estimated claims that
were covered by the amounts originally paid by the Company. These deposits
were generally expensed in the years the deposits were made because the Company
anticipated that the deposits would be used to cover claims. In fiscal 2001,
the Company increased its reserves for workers' compensation claims by $160,000
because the Company estimated that it would be required to pay additional
amounts in future periods to cover claims not covered by the deposits
originally made by the Company.

The Companys insurance renews on an annual basis, effective July 1 each year.
On July 1, 2002, to reduce the impact of rising insurance costs, the Company
obtained insurance covering workers compensation claims which requires the
Company to pay the first $250,000 per occurrence and to deposit funds with the
insurance company to pay claims in excess of the estimated claims that are
covered by the amounts originally paid by the Company. With the revised
insurance coverage, the Company expects to experience greater uninsured
workers compensation claims in fiscal 2003 than it recorded in prior years.

Recently Issued Accounting Pronouncements.The Financial Accounting Standards
Board has issued SFAS No. 141 and SFAS No. 142, Business Combinations and
Goodwill and Other Intangible Assets, respectively. SFAS 141 supersedes
Accounting Principles Board Opinion No. 16 and eliminates pooling-of-interests
accounting on a prospective basis. It also provides guidance on purchase
accounting related to the recognition of intangible assets and accounting for
negative goodwill. SFAS No. 142 changes the accounting for goodwill from an
amortization method to an impairment-only method. SFAS No. 141 and SFAS No.
142 are effective for all business combinations completed
after June 30, 2001. Companies are required to adopt SFAS No. 142 for fiscal
years beginning after December 15, 2001. The Company believes the adoption of
SFAS No. 141 and SFAS No. 142 will not have a material effect on its results of
operations or financial position in fiscal 2003.

The Financial Accounting Standards Board has also issued SFAS No. 144,
Accounting for the Impairment of Long-Lived Assets, which requires a single
accounting model to be used for long-lived assets to be sold and broadens the
presentation of discontinued operations to include a component of an entity
rather than a segment of a business. A component of an entity comprises
operations and cash flows that can be clearly distinguished, operationally and
for financial reporting purposes. The Company believes the adoption of SFAS
No. 144 on July 1, 2002 will not have a material effect on its results of
operations or financial position.

Market Risk.Item 305 of Regulation S-K requires disclosure of material risks,
as defined in Item 305, related to market risk sensitive financial instruments.
As defined, the Company currently has market risk sensitive instruments
related to interest rates.

The Company has exposure to changing interest rates on its marketable
securities, which consist of shares in a mutual fund that invests a majority of
its assets in adjustable rate mortgage securities issued or guaranteed by the
U.S. government, with the remaining assets invested in U.S. government
obligations. At June 30, 2002, the Companys investment in marketable
securities totaled $5.3 million. The Company does not have significant
exposure to changing interest rates on invested cash because the Company
invests available cash in certificates of deposit and investment grade
commercial paper that have maturities of three months or less. The interest
rate market risk implicit in these investments at any given time is low, as the
investments mature within three months.

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##### Table of Contents



The Company had $11.8 million of contracts receivable at June 30, 2002, which
have a weighted average stated interest rate of 14% and an average remaining
term of 31 months. The Company does not have significant exposure to changing
interest rates related to the contracts receivable because the interest rate on
the contracts receivable are fixed.

The Company has not undertaken any actions to cover interest rate market risk
and is not a party to any interest rate market risk management activities.

The Company also receives revenues from its Canadian subsidiary and exchanges
them into U.S. Dollars at exchange rates that fluctuate with market conditions;
however, such revenues are not material to the Companys operations.

Interest Rate Sensitivity.A hypothetical ten percent change in market
interest rates over the next year would not materially impact the Companys
earnings or cash flow. A hypothetical ten percent change in market interest
rates would not have a material effect on the fair value of the Companys
contracts receivable or its short-term cash investments.

The Company currently has no outstanding borrowing under its Line of Credit
with Union Bank. If, however, it becomes necessary for the Company to borrow
under its Line of Credit, the Companys sensitivity to changes in interest
rates would increase because borrowings under the Line of Credit bear interest
at prime minus .75%.

RESULTS OF OPERATIONS

The following discussion and analysis are based on the historical results of
operations of the Company for the years ended June 30, 2002, 2001 and 2000.
The financial information set forth below should be read in conjunction with
the Companys consolidated financial statements included in Item 8.

Net Income.The Company reported net income of $8.3 million or $.97 per
diluted share on revenues of $88.8 million for the year ended June 30, 2002.
This compares with net income of $4.3 million or $.50 per diluted share on
revenues of $79.4 million for the year ended June 30, 2001, and net income of
$9.2 million or $1.08 per diluted share on revenues of $70.8 million for the
year ended June 30, 2000.

Income before taxes was $13.1 million for fiscal 2002, compared with $6.4
million for fiscal 2001, an increase of $6.8 million. The increase in the
current period was due primarily to a $699,000 contribution from the Companys
sales operations in fiscal 2002, compared with a loss of $2.3 million in fiscal
2001, a net increase of $3.4 million. The Companys interest expense also
decreased $981,000 in fiscal 2002, compared with fiscal 2001, as a result of
the repayment of borrowings under the Credit Agreement with Foothill. In
addition, gains on asset sales increased $886,000 during fiscal 2002, compared
with fiscal 2001, and general and administrative expenses decreased $934,000 in
fiscal 2002, compared with fiscal 2001, primarily as a result of the
non-recurring adjustments described below (see General and Administrative
Expenses).Income before taxes was $5.5 million in fiscal 2000 and included a net deferred income tax benefit of $5.8 million,
partially offset by a $1.4 million tax provision, resulting from the
elimination of the valuation allowance for the Companys net deferred tax
assets.

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The Companys revenues increased by $9.4 million in fiscal 2002, compared with
fiscal 2001, due primarily to increases in membership sales revenue, fees from
campgrounds managed by Trails Management, the Companys property management
subsidiary, and asset sales. Membership sales revenue was higher because the
Company sold a similar number of new memberships at a higher average sales
price and a greater number of membership upgrades to its existing members.
Increases in campground operating costs, selling and marketing expenses and
Trails Management expenses during fiscal 2002 were partially offset by lower
general and administrative costs and interest expense as discussed above.

The Companys revenues increased by $8.6 million in fiscal 2001, compared with
fiscal 2000, due primarily to increases in membership sales revenue, dues
revenue and other campground revenue, partially offset by a decrease in other
income. Increases in campground operating costs and selling and marketing
expenses during fiscal 2001 were partially offset by a decrease in interest
expense, as a result of decreased debt levels.

The table on the following page shows separately the results of the campground
operations, Trails Managements operations and RPIs operations, without any
allocation of corporate expenses, as well as corporate expenses and other
revenues and expenses in the aggregate, for the years ended June 30, 2002, 2001
and 2000.

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Thousand Trails, Inc. and Subsidiaries
Summary of Operating Results
(Dollars in thousands)

|                                                                         |                                              |   |                     |         |      |   |        |         |   |   |        |         |  
|------------------------------------------------------------------------ | -------------------------------------------- | - | ------------------- | ------- | ---- | - | ------ | ------- | - | - | ------ | ------- | -
|                                                                         |                                              |   | Year ended June 30,
|                                                                         |                                              |   |                    
|                                                                         |                                              |   | 2002                |         | 2001 |   | 2000  
|                                                                         |                                              |   |                     |         |      |   |       
|Campground Operations                                                    |                                              |   |                     |         |      |   |        |         |   |   |        |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Membership dues                              |   | $                   | 39,856  |      |   | $      | 40,080  |   |   | $      | 37,495  |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Campground revenues                          |   |                     | 18,505  |      |   |        | 17,849  |   |   |        | 16,731  |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Cost of campground revenues                  |   |                     | (7,958  | )    |   |        | (8,793  | ) |   |        | (8,095  | )
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Operating expenses                           |   |                     | (36,102 | )    |   |        | (35,184 | ) |   |        | (32,158 | )
|                                                                         |                                              |   |                     |         |      |   |        |         |   |   |        |        
|Contribution from campground operations                                  |                                              |   | 14,301              |         |      |   | 13,952 |         |   |   | 13,973 |        
|                                                                         |                                              |   |                     |         |      |   |        |         |   |   |        |        
|Sales                                                                    |                                              |   |                     |         |      |   |        |         |   |   |        |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Membership contracts originated              |   |                     | 27,434  |      |   |        | 22,903  |   |   |        | 13,912  |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Change in deferred revenue                   |   |                     | (11,218 | )    |   |        | (13,363 | ) |   |        | (8,348  | )
|                                                                         |                                              |   |                     |         |      |   |        |         |   |   |        |        
|                                                                         | Membership sales revenue                     |   |                     | 16,216  |      |   |        | 9,540   |   |   |        | 5,564   |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Membership origination costs                 |   |                     | (13,024 | )    |   |        | (9,905  | ) |   |        | (7,614  | )
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Change in deferred origination costs         |   |                     | 3,434   |      |   |        | 3,739   |   |   |        | 3,112   |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Marketing expenses                           |   |                     | (5,927  | )    |   |        | (5,650  | ) |   |        | (4,026  | )
|                                                                         |                                              |   |                     |         |      |   |        |         |   |   |        |        
|Contribution (loss) on sales                                             |                                              |   | 699                 |         |      |   | (2,276 | )       |   |   | (2,964 | )      
|                                                                         |                                              |   |                     |         |      |   |        |         |   |   |        |        
|Trails Management                                                        |                                              |   |                     |         |      |   |        |         |   |   |        |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Revenues                                     |   |                     | 4,419   |      |   |        | 3,082   |   |   |        | 2,508   |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Expenses                                     |   |                     | (4,482  | )    |   |        | (3,332  | ) |   |        | (2,545  | )
|                                                                         |                                              |   |                     |         |      |   |        |         |   |   |        |        
|Loss from Trails Management                                              |                                              |   | (63                 | )       |      |   | (250   | )       |   |   | (37    | )      
|                                                                         |                                              |   |                     |         |      |   |        |         |   |   |        |        
|Resort Parks International                                               |                                              |   |                     |         |      |   |        |         |   |   |        |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Revenues                                     |   |                     | 3,584   |      |   |        | 3,713   |   |   |        | 3,706   |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Expenses                                     |   |                     | (1,729  | )    |   |        | (1,820  | ) |   |        | (1,844  | )
|                                                                         |                                              |   |                     |         |      |   |        |         |   |   |        |        
|Contribution from RPI                                                    |                                              |   | 1,855               |         |      |   | 1,893  |         |   |   | 1,862  |        
|                                                                         |                                              |   |                     |         |      |   |        |         |   |   |        |        
|                                                                         | Other income                                 |   |                     | 2,442   |      |   |        | 2,616   |   |   |        | 2,880   |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Corporate member services                    |   |                     | (1,378  | )    |   |        | (1,233  | ) |   |        | (1,333  | )
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | General and administrative expense           |   |                     | (8,842  | )    |   |        | (9,776  | ) |   |        | (9,634  | )
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Other                                        |   |                     | 97      |      |   |        | 168     |   |   |        | 374     |  
|                                                                         |                                              |   |                     |         |      |   |        |         |   |   |        |        
|                                                                         |                                              |   | (7,681              | )       |      |   | (8,225 | )       |   |   | (7,713 | )      
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Income before interest income and expense,
gain on asset sales and taxes |                                              |   | 9,111               |         |      |   | 5,094  |         |   |   | 5,121  |        
|                                                                         |                                              |   |                     |         |      |   |        |         |   |   |        |        
|                                                                         | Interest income                              |   |                     | 2,383   |      |   |        | 1,951   |   |   |        | 1,509   |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Interest expense                             |   |                     | (32     | )    |   |        | (1,013  | ) |   |        | (1,427  | )
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Gain on asset sales                          |   |                     | 1,283   |      |   |        | 397     |   |   |        | 4       |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Reduction in allowance for doubtful accounts |   |                     | 400     |      |   |        |        |   |   |        | 251     |  
|                                                                         |                                              |   |                     |         |      |   |        |         |   |   |        |        
|Income before taxes                                                      |                                              | $ | 13,145              |         |      | $ | 6,429  |         |   | $ | 5,458  |        
|                                                                         |                                              |   |                     |         |      |   |        |         |   |   |        |        

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Operating Income.For the year ended June 30, 2002, the Companys contribution
from operations was $9.1 million, compared with $5.1 million for the years
ended June 30, 2001 and 2000. In fiscal 2002, the increase in operating income
resulted primarily from increases in the contribution from the Companys sales
and campground operations and a decrease in general and administrative
expenses. In fiscal 2001, operating income remained stable despite a decrease
in the contributions from campground operations, Trails Management and other
income, because of the decrease in the loss from the Companys sales
operations. For this purpose, the contribution from operations is defined as
income before interest income and expense, gain on asset sales, reduction in
the allowance for doubtful accounts, nonrecurring income and expenses and
taxes. See the table on the previous page for the elements of the contribution
from operations and the Companys income before taxes for the historical
periods presented.

Campground Operations.The Companys operations are highly seasonal. The
Company receives the majority of the dues revenue from its members during the
winter, which are recognized as income ratably during the year. However, the
Company incurs a higher level of operating expenses during the summer. In
addition, a majority of the Companys sales and marketing efforts occur during
the summer.

The operating results of Leisure Time are included in the operating results of
the Company for the entire fiscal 2002 and 2001, compared with only six and
one-half months (from December 16, 1999) for fiscal 2000.

Campground dues revenue was $39.9 million for the year ended June 30, 2002,
compared with $40.1 million and $37.5 million for the years ended June 30, 2001
and 2000, respectively. Campground dues decreased by $224,000 in fiscal 2002
because the effect of the annual dues increase only partially offset the loss
of campground members during the year. Campground dues increased by $2.6
million in fiscal 2001 due primarily to the addition of $4.7 million in dues
paid by the members of Leisure Time, compared with $1.9 million in fiscal 2000,
and the effect of the annual dues increase, partially offset by the loss of
campground members during the year.

Other campground revenues were $18.5 million for the year ended June 30, 2002,
compared with $17.8 million and $16.7 million for the years ended June 30, 2001
and 2000, respectively. The $656,000 (4%) increase in other campground
revenues in fiscal 2002 resulted primarily from an increase in usage and
extended stay fees, RV storage fees and merchandise sales. The
$1.1 million (7%) increase in other campground revenues in fiscal 2001 resulted
primarily from $860,000 of revenue from Leisure Times campgrounds, compared
with $290,000 in fiscal 2000, and a greater emphasis on ancillary revenue at
all campgrounds. The related expenses were
$8.0 million, $8.8 million and $8.1 million for fiscal 2002, 2001 and 2000,
respectively. The decline in related expenses in fiscal 2002 was due primarily
to a decrease in the cost of operating the Companys trailers, and lower
maintenance and labor costs. The increase in related expenses in fiscal 2001
was due primarily to $379,000 in expenses related to Leisure Times
campgrounds, compared with $176,000 in the prior year, and increases in the
cost of labor and operating supplies.

Campground operating expenses were $36.1 million for the year ended June 30,
2002, compared with $35.2 million and $32.2 million for the years ended June
30, 2001 and 2000, respectively. The increase in campground operating expenses
in fiscal 2002 was due primarily to increases in depreciation and the cost of
utilities. The $3.0 million (9%) increase in campground operating expenses in
fiscal 2001 was due in part to operating expenses of $3.4 million relating to
Leisure

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Times campgrounds, compared with $1.5 million in the prior year. The increase
in fiscal 2001 was also due in part to a $693,000 (12%) increase in utility
costs at the Companys other campgrounds, principally in Southern California
where such costs increased $379,000, which accounts for 55% of the total
increase in utility costs. Labor costs at the Companys other campgrounds
increased $255,000 during fiscal 2001, primarily due to wage increases.

In February 2001, the Company completed its consolidation of Leisure Times
operations and closed four campgrounds. The Company intends to continue to
keep the size of its campground system in an appropriate relation to the size
of its membership base. In this regard, if the membership base continues to
decline, or other opportunities arise consistent with the needs of the members,
the Company may close and dispose of additional campgrounds and it will seek to
decrease other expenses. Although the Company believes that the anticipated
changes should result in lower future operating expenses, no assurance can be
given that such changes will not reduce revenues by an amount in excess of the
expense reductions.

For the year ended June 30, 2002, the Company originated membership contracts
of
$27.4 million, compared with $22.9 million and $13.9 million for the years
ended June 30, 2001 and 2000, respectively. In fiscal 2002, the Company sold
approximately the same number of new memberships at a higher average price and
a greater number of membership upgrades to its existing members, compared with
the prior year. In fiscal 2001, the Company sold a greater number of new
memberships at a higher average price and a greater number of membership
upgrades to its existing members, compared with fiscal 2000.

In fiscal 2002, the Company originated 3,900 new membership contracts at an
average price of $3,342, compared with 3,900 new membership contracts at an
average price of $2,815, and 3,600 new membership contracts at an average price
of $2,435 in fiscal 2001 and 2000, respectively. In fiscal 2002, the Company
also originated 1,100 new membership contracts through sales agreements with
other companies, compared with 700 and 100 contracts in fiscal 2001 and 2000,
respectively.

The Company also originated 4,300 upgrade contracts in fiscal 2002, compared
with 3,000 upgrade contracts in fiscal 2001 and 1,700 upgrade contracts in
fiscal 2000. The average price of the membership upgrade was $2,995 in all
three fiscal years. In February 2001, the Company began offering existing
Thousand Trails and NACO members access to the Leisure Time campgrounds for a
fee. In fiscal 2002, the Company originated 730 contracts at an average price
of $244, compared with 6,800 contracts at an average price of $235 in fiscal
2001. In April 2001, the Company began offering existing Leisure Time members
access to the Thousand Trails and NACO campgrounds for a fee, which resulted in
2,000 contracts at an average price of $337 and 300 contracts at an average
price of $1,999 in fiscal 2002 and 2001, respectively.

The Company recognizes revenue from the sale of campground memberships that do
not convey a deeded interest in real estate, net of any related allowances, on
a straight-line basis over the expected life of the memberships sold. For the
years ended June 30, 2002, 2001 and 2000, the Company recognized campground
membership sales revenue of $16.2 million, $9.5 million and $5.6 million,
respectively. Membership sales revenue includes revenues of $13.4 million,
$7.2 million and $3.9 million, respectively, that were deferred in prior
periods. Moreover, for fiscal 2002, 2001 and 2000, the Company deferred
revenues of $24.5 million, $20.6 million and $12.3 million, respectively, which
will be recognized in future periods. In fiscal 2002, the Company

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recognized $1.5 million in sales revenue related to Leisure Time, compared with
$2.2 million and $619,000 in fiscal 2001 and 2000, respectively.

Selling expenses directly related to the sale of campground memberships,
substantially all of which are sales commissions, are deferred and recognized
as expenses on a straight-line basis over the expected life of the memberships
sold. All other selling and marketing costs are recognized as expenses in the
period incurred. For the years ended June 30, 2002, 2001 and 2000, the Company
recognized selling expenses of $9.6 million, $6.2 million and $4.5 million,
respectively. These amounts include expenses of $4.2 million, $2.1 million and
$998,000, respectively, that were deferred in prior periods. Moreover, for
fiscal 2002, 2001 and 2000, the Company deferred expenses of $7.7 million, $5.9
million and $4.1 million, respectively, which will be recognized in future
periods. In fiscal 2002, the Company recognized selling and marketing expenses
of $591,000 related to Leisure Time, compared with $983,000 and $865,000 in
fiscal 2001 and 2000, respectively.

In fiscal 2002, sales revenues exceeded selling and marketing expenses by
$699,000, compared with fiscal 2001 and 2000, when selling and marketing
expenses exceeded sales revenues by $2.3 million and $3.0 million,
respectively. During fiscal 2002, the percentage of revenue deferred from new
membership sales decreased, compared with the prior years, because the Company
originated a greater number of membership contracts with a shorter expected
life due to the sale of a greater number of upgrades. In fiscal 2001 and 2000,
selling and marketing expenses exceeded sale revenues primarily because the
Company deferred more sales revenues than selling expenses.

The Company incurs significant selling and marketing expenses to originate new
membership contracts, and the majority of these expenses must be expensed in
the current period, while the related sales revenues are generally deferred and
recognized on a straight-line basis over the expected life of the memberships
sold. As a result, the Company generally incurs a loss from the sale of new
membership contracts. In contrast, the Company incurs substantially less
selling and marketing expenses to originate upgrade contracts, and these
expenses (substantially all of which are sales commissions) are generally
deferred and recognized on a straight-line basis over the expected life of the
memberships sold, as are the related sales revenue. As a result, the Company
generally has a positive contribution from the sale of upgrade contracts, which
offsets the loss from the sale of new membership contracts. Consequently, the
Company expects that sales revenue will continue to exceed selling and
marketing expenses in fiscal 2003, and until the positive impact from the sale
of upgrade contracts decreases.

The Companys selling and marketing efforts during the past three fiscal years
have not produced the level of sales needed to stop the continuing decline in
the Companys membership base, although the Company has been successful in
slowing the rate of this decline. If the Company is not able to increase its
campground membership sales over current levels or acquire members through the
purchase of other membership campground operations similar to the acquisition
of Leisure Time, the membership base will continue to decline, which will
decrease the Companys revenues. Decreases in revenues that are not offset by
sufficient expense reductions could have a material adverse impact on the
Companys business and results of operations.

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Trails Management.Trails Management, a wholly owned subsidiary of the
Company, manages 240 public campgrounds for the U.S. Forest Service and other
entities. For the year ended
June 30, 2002, these operations produced a net loss of $63,000 on revenues of
$4.4 million. This compares with a net loss of $250,000 on revenues of $3.1
million for the year ended June 30, 2001, and a net loss of $37,000 on revenues
of $2.5 million for the year ended June 30, 2000. The increase in revenues in
fiscal 2002 was due primarily to a full years revenue from new contracts
entered into during the second quarter of fiscal 2001, which increased by 72
the number of campgrounds managed. The increase in revenues in fiscal 2001 was
due primarily to higher usage of the campgrounds, in addition to the new
contract entered into during the second quarter. However, increases in
expenses, principally start up costs associated with the new contracts, labor
and utilities, more than offset the increases in revenues, resulting in losses
in the years presented. The Company is working to reduce these expenses and
achieve a positive contribution from the operations of Trails Management.

Resort Parks International.RPI, a wholly owned subsidiary of the Company,
charges its members a fee for a membership that entitles them to use any of the
recreational facilities participating in RPIs reciprocal use system, subject
to certain limitations. For the year ended June 30, 2002, RPIs operations
produced a net contribution of $1.9 million on revenues of
$3.6 million, compared with a net contribution of $1.9 million on revenues of
$3.7 million for the years ended June 30, 2001 and 2000.

In fiscal 2002, total revenues decreased primarily as a result of decreases in
new membership sales and membership renewals, which were partially offset by
increases in revenue from the sale of directories. At the same time,
communication and marketing expenses decreased, partially offsetting the
decrease in revenues, and keeping net income constant between fiscal 2002 and
2001. In fiscal 2001, revenue from new membership sales and the sale of
directories increased, compared with the prior year, but these increases were
offset by decreases in revenue from membership renewals, while expenses
remained constant between fiscal 2001 and 2000.

Other Income.Other income generally consists of transfer fees received when
existing memberships are transferred in the secondary market without assistance
from the Company, collections of writtenoff contracts and delinquent dues,
subscription fees received from members who subscribe to the Companys member
magazine, fees charged to members for making more than five operator-assisted
reservations in a given year and fees received from third parties for billing
and collection services.

Other income was $2.4 million for the year ended June 30, 2002, compared with
$2.6 million for the year ended June 30, 2001, and $2.9 million for the year
ended June 30, 2000. The decrease in other income in fiscal 2002 was due
primarily to a $154,000 decrease in the collection of writtenoff contracts and
delinquent dues, partially offset by an increase in subscription revenue from
the Companys member magazine. The decrease in other income in fiscal 2001 was
due primarily to a $312,000 decrease in fees received from third parties for
billing and collection services after a primary customer terminated its
contract with the Company in September 2000, and a $408,000 decrease in other
miscellaneous income, which in fiscal 2000 included $183,000 from the
settlement of a property insurance claim. These decreases were partially
offset by an increase in the collection of delinquent dues. Leisure Time
contributed $193,000 in other income in fiscal 2002, compared with $248,000 and
$86,000 in fiscal 2001 and 2000, respectively.

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General and Administrative Expenses.General and administrative expenses were
$9.0 million for the year ended June 30, 2002, compared with $9.8 million for
the year ended June 30, 2001, and $9.6 million for the year ended June 30,
2000. In fiscal 2002, general and administrative expenses decreased by
$934,000, compared with fiscal 2001, due primarily to several non-recurring
adjustments, and despite increases in labor costs, computer software
maintenance costs and credit card discount fees. Without the non-recurring
adjustments, general and administrative expenses would have been approximately
$500,000 higher in fiscal 2002 than the previous year.

In fiscal 2002, the Company reduced a $1.9 million liability for accrued
construction costs at a resort not related to the campground operations to
$500,000 and reclassified the remaining liability as a reserve for the
contingent liability. The decrease in the liability was classified as a
reduction of general and administrative expenses (see Liquidity and Capital
Resources  Campground Properties). In addition, in fiscal 2002, the Company
reduced by $376,000 a liability established in prior years for benefits payable
under a retirement plan because the Company determined that the liability
exceeded the estimated future payments. The decrease in the liability was
classified as a reduction of general and administrative expenses. In fiscal
2002, the Company also expensed $500,000 of software implementation costs which
did not qualify for capitalization under Statement of Position No. 98-1
Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use. Because of these non-recurring adjustments in fiscal 2002, the
Company expects general and administrative expenses to increase in fiscal 2003
to a level higher than the prior two years.

In fiscal 2001, general and administrative expenses increased, compared with
fiscal 2000, due primarily to increases in labor costs and credit card
processing fees, partially offset by decreases in third-party legal fees.
General and administrative expenses directly related to Leisure Time were
$48,000 in fiscal 2002, compared with $127,000 and $268,000 in fiscal 2001 and
2000, respectively.

General and administrative expenses include costs related to collecting the
contracts receivable and membership dues of $2.1 million, $2.3 million and $2.2
million for the years ended June 30, 2002, 2001 and 2000, respectively. In
fiscal 2002, these collection costs decreased as a result of decreases in labor
costs and maintenance and communications expenses. In fiscal 2000, these
collection costs were reduced by $98,000 as a result of the amortization of the
allowance for collection costs related to the contracts receivable. This
allowance was fully amortized at June 30, 2000. Collection costs related to
Leisure Times contracts receivable were $252,000 in fiscal 2002, compared with
$287,000 and $139,000 in fiscal 2001 and 2000, respectively.

The Companys insurance renews on an annual basis, effective July 1 each year.
On July 1, 2002, to reduce the impact of rising insurance costs, the Company
obtained insurance covering general liability losses, auto liability losses and
workers compensation claims which requires the Company to pay the first
$250,000 per occurrence. With the revised insurance program, the Company
expects to experience greater uninsured general liability losses, auto
liability losses and workers compensation claims in fiscal 2003 than it
recorded in prior years.

Corporate Member Services.Corporate member services include the reservation
and member support services, as well as the costs incurred to produce the
Companys member magazine. These costs were $1.4 million for the year ended
June 30, 2002, compared with $1.2 million for the year ended June 30, 2001, and
$1.3 million for the year ended June 30, 2000. The increase in expenses in
fiscal 2002 was due primarily to higher labor costs, partially offset by a
decrease in

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communication expenses. The decrease in expenses in fiscal 2001 was due
primarily to a decrease in labor and communications expenses, partially offset
by an increase in production and postage costs for the Companys member
magazine.

Interest Income and Expense.Interest income increased to $2.4 million for the
year ended
June 30, 2002, compared with $2.0 million for the year ended June 30, 2001, and
$1.5 million for the year ended June 30, 2000. The increases in fiscal 2002
and 2001 were due primarily to increases in interest earned on the Companys
growing portfolio of contracts receivable and invested cash. Interest income
for fiscal 2000 includes amortization of the interest discount and valuation
allowances related to the contracts receivable of $229,000. The interest
discount and valuation allowances were fully amortized at June 30, 2000. The
Companys portfolio of contracts receivable increased with the acquisition of
Leisure Time, and has continued to grow as a result of the increase in
membership sales, approximately 32% of which were sold on an installment basis
in fiscal 2002. The Company expects the interest earned on its portfolio of
contracts receivable and invested cash to increase in fiscal 2003, compared
with historical levels, as the portfolio continues to grow and the Company
accumulates cash.

Interest expense decreased to $32,000 for the year ended June 30, 2002, from
$1.0 million for the year ended June 30, 2001, and $1.4 million for the year
ended June 30, 2000. The decreases in interest expense in fiscal 2002 and 2001
were due primarily to repayments, in March 2001, of the Companys borrowings
under its Credit Agreement with Foothill. Interest expense for fiscal 2001
includes a $150,000 fee resulting from early termination of the Companys
Credit Agreement with Foothill.

The Company reduced its outstanding debt by $9.6 million during fiscal 2001,
and by $1.3 million during fiscal 2000. At June 30, 2002, the Company had no
outstanding borrowings. Interest expense is expected to remain minimal in the
future as the Company funds its day-to-day activities with cash from
operations.

Gains on Asset Sales.During the years ended June 30, 2002, 2001 and 2000, the
Company sold certain of its real estate assets and recognized related gains of
$1.3 million, $397,000 and $4,000, respectively. In fiscal 2002, the Company
sold a campground not related to its current operations for proceeds of $1.4
million, and recorded a gain of $1.1 million on the sale. In fiscal 2001, the
Company sold a campground not related to its current operations for proceeds of
$1.4 million, and recorded a gain of $250,000 on the sale. Over the next
several years, the Company intends to dispose of the remaining assets that it
holds for sale, the campgrounds that were closed following the acquisition of
Leisure Time, any campgrounds that are closed in the future and other
undeveloped, excess acreage associated with the campgrounds.

Reduction in the Allowance for Doubtful Accounts.In fiscal 2002 and 2000, the
Company reduced the allowance for doubtful accounts on the contracts receivable
by $400,000 and $251,000, respectively. These adjustments were made because
the Company experienced lower contract losses than anticipated in these years
(see Liquidity and Capital Resources  Contracts Receivable).

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Income Taxes.The Company accounts for income taxes in accordance with SFAS No.
109, Accounting for Income Taxes. This standard requires, among other things,
recognition of future tax benefits, measured by enacted tax rates, attributable
to deductible temporary differences between financial statement and income tax
bases of assets and liabilities and to tax net operating loss carryforwards
(NOLs), to the extent that realization of such benefits is more likely than
not.

The Companys current provision for income taxes was $3.1 million, $891,000 and
$621,000 for the years ended June 30, 2002, 2001 and 2000, respectively. The
provisions include amounts for regular federal corporation income tax and
alternative minimum tax as well as state income taxes in the various states
where the Company conducts its business. For the years ended June 30, 2001 and
2000, with the exception of the alternative minimum tax amounts, the Company
did not have federal income taxes payable on a consolidated basis due to its
NOLs, which totaled $7.9 million at June 30, 2001. For the year ended June 30,
2002, the NOL carryfoward was fully utilized and regular corporate income tax
was paid on the excess taxable income. Prior to net operating loss deductions,
the Company had taxable income of $15.8 million in fiscal 2002, $13.0 million
in fiscal 2001 and $7.0 million in fiscal 2000.

The tax provisions for the years ended June 30, 2002 and 2001 also include a
net deferred tax provision of $1.7 million and $1.3 million, respectively. The
tax provision for the year ended June 30, 2000 includes a $5.8 million deferred
income tax benefit resulting from the reversal of the valuation allowance for
the Companys net deferred tax assets and a net deferred tax provision of $1.4
million. The reversal of the valuation allowance had no effect on income tax payments, but did result in higher tax provisions in fiscal 2001 and
2002 when the related deferred tax assets were realized. The Company
eliminated the valuation allowance in fiscal 2000 because it expected to
generate sufficient taxable income during the carryforward period to realize
the net deferred tax assets. In fiscal 2001 and 2002, the Company generated
sufficient taxable income to fully realize these tax benefits.

Inflation.During the past three fiscal years, the Companys results have not
been affected materially by inflation. However, should the rate of inflation
increase in the future, or should utility costs or insurance related costs
increase significantly, the Companys expenses are likely to increase at a
greater rate than it can increase the annual dues paid by campground members
because the Company can not increase the dues on existing contracts of senior
citizens and disabled members who notify the Company of their age or disability
and request that their dues be frozen. At the present time, approximately 36%
of the members have requested that their dues be frozen because of their age or
disability.




Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The Company does not currently have any derivative financial instruments, which
include futures, forwards, interest rate swaps, option contracts and other
financial instruments with similar characteristics. However, the Company does
have other financial instruments containing market risk. Management believes
that the market risk associated with the Companys financial instruments as of
June 30, 2002 is not significant. The information required by Item 305 of
Regulation S-K is contained in Item 7  Managements Discussion and Analysis
of Financial Condition and Results of Operations under the headings Market
Risk and Interest Rate Sensitivity.

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Item 8. Financial Statements and Supplementary Data

Consolidated Financial Statements Index

|                                                                                                 |                                                 |  |    |    | 
|------------------------------------------------------------------------------------------------ | ----------------------------------------------- |  | -- | -- | 
|Reports of Independent Certified Public Accountants                                              |                                                 |  | 35 |   
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Consolidated Balance Sheets  June 30, 2002 and 2001                                             |                                                 |  | 38 |   
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Consolidated Statements of Operations for the years ended
June 30, 2002, 2001 and 2000           |                                                 |  | 39 |   
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Consolidated Statements of Shareholders Equity for the years
ended June 30, 2002, 2001 and 2000 |                                                 |  | 40 |   
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Consolidated Statements of Cash Flows for the years ended
June 30, 2002, 2001 and 2000           |                                                 |  | 41 |   
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Notes to Consolidated Financial Statements                                                       |                                                 |  | 43 |   
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Financial Statement Schedule:                                                                    |                                                 |  |    |   
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                 | Schedule II  Valuation and Qualifying Accounts |  |    | 63 | 

All other schedules are omitted because they are not applicable or the required
information is shown in the consolidated financial statements or notes hereto.

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

Shareholders and Board of Directors
Thousand Trails, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of Thousand Trails,
Inc. and Subsidiaries as of June 30, 2002, and the related consolidated
statements of operations, shareholders equity, and cash flows for the year
then ended. These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial
statements based on our audit. The financial statements of Thousand Trails,
Inc. and Subsidiaries as of June 30, 2001 and for each of the two years in the
period ended June 30, 2001, were audited by other auditors who ceased
operations and whose report dated September 5, 2001, expressed an unqualified
opinion on those statements.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Thousand Trails,
Inc. and Subsidiaries as of June 30, 2002, and the results of their operations
and their cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States of America.

GRANT THORNTON LLP

Dallas, Texas
September 5, 2002

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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Shareholders and Board of Directors
Thousand Trails, Inc. and Subsidiaries

In connection with our audit of the consolidated financial statements of
Thousand Trails, Inc. and Subsidiaries referred to in our report dated
September 5, 2002, which is included in Part IV of this Form 10-K, we have also
audited Schedule II for the period ended June 30, 2002. The periods ended June
30, 2001 and 2000 were audited by other auditors who ceased operations and
whose report dated September 5, 2001, expressed an unqualified opinion on this
schedule. In our opinion, this schedule presents fairly, in all material
respects, the information required to be set forth therein.

GRANT THORNTON LLP

Dallas, Texas
September 5, 2002

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This is a copy of the audit report previously issued by Arthur Andersen LLP in
connection with Thousand Trails, Inc.s Annual Report on Form 10-K for the year
ended June 30, 2001. This audit report has not been reissued by Arthur
Andersen LLP in connection with this filing on Form 10-K. The consolidated
balance sheet as of June 30, 2000, the consolidated statements of operations,
stockholders equity and cash flows for the year ended June 30, 1999 and the
information in the schedule for 1999 referred to in this report have not been
included in the accompanying financial statements or schedule.

To the Shareholders of
Thousand Trails, Inc. and Subsidiaries:

We have audited the accompanying consolidated balance sheets of Thousand
Trails, Inc. (a Delaware corporation) and subsidiaries (the Company) as of
June 30, 2001 and 2000, and the related consolidated statements of operations,
shareholders equity and cash flows for each of the three years in the period
ended June 30, 2001. These financial statements and the schedule referred to
below are the responsibility of the Companys management. Our responsibility
is to express an opinion on these financial statements and schedule based on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Thousand Trails, Inc. and
subsidiaries as of June 30, 2001 and 2000, and the results of their operations
and their cash flows for each of the three years in the period ended June 30,
2001, in conformity with accounting principles generally accepted in the United
States.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index of
financial statements is presented for purposes of complying with the Securities
and Exchange Commissions rules and is not a part of the basic financial
statements. This schedule has been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion,
fairly states in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a whole.

/s/ Arthur Andersen LLP
Dallas, Texas,
September 5, 2001

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Thousand Trails, Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands)

|                                                   |                                                                                                                                                                                                                          |                            |                                      |         |          |   |        |        |        |  |  |  |  |  |  |  |  |  | 
|-------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------- | ------------------------------------ | ------- | -------- | - | ------ | ------ | ------ |  |  |  |  |  |  |  |  |  | 
|                                                   |                                                                                                                                                                                                                          |                            |                                      |         | June 30, |   |        |        |        |  |  |  | 
|                                                   |                                                                                                                                                                                                                          |                            |                                      |         |          |   |        |        |        |  |  |  | 
|Assets                                             |                                                                                                                                                                                                                          | 2002                       |                                      | 2001    |          |   |        |        |        |  |  | 
|                                                   |                                                                                                                                                                                                                          |                            |                                      |         |          |   |        |        |        |  |  | 
|Current Assets                                     |                                                                                                                                                                                                                          |                            |                                      |         |          |   |        |        |        |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Cash and cash equivalents                                                                                                                                                                                                |                            | $                                    | 4,180   |          |   | $      | 9,016  |        |  |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Marketable securities  available for sale                                                                                                                                                                               |                            |                                      | 5,343   |          |   |        |       |        |  |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Current portion of receivables, net of allowance of $1.0 million                                                                                                                                                         |                            |                                      | 1,230   |          |   |        | 2,096  |        |  |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Current portion of deferred membership origination costs                                                                                                                                                                 |                            |                                      | 5,013   |          |   |        | 2,886  |        |  |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Current portion of net deferred tax assets                                                                                                                                                                               |                            |                                      | 6,106   |          |   |        | 6,885  |        |  |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Inventories                                                                                                                                                                                                              |                            |                                      | 1,158   |          |   |        | 1,221  |        |  |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Other current assets                                                                                                                                                                                                     |                            |                                      | 2,889   |          |   |        | 765    |        |  |  |  |  |  |  |  | 
|                                                   |                                                                                                                                                                                                                          |                            |                                      |         |          |   |        |        |        |  |  |  |  |  |  | 
|                                                   |                                                                                                                                                                                                                          | Total Current Assets       |                                      |         | 25,919   |   |        |        | 22,869 |  |  |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Restricted cash                                                                                                                                                                                                          |                            |                                      | 646     |          |   |        | 646    |        |  |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Receivables, net of allowances of $1.6 million and $1.3
million, respectively                                                                                                                                            |                            |                                      | 8,408   |          |   |        | 5,492  |        |  |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Campground land                                                                                                                                                                                                          |                            |                                      | 20,696  |          |   |        | 20,696 |        |  |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Buildings and equipment, net of accumulated depreciation of
$24.5 million and $21.8 million, respectively                                                                                                                |                            |                                      | 22,781  |          |   |        | 21,256 |        |  |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Assets held for sale                                                                                                                                                                                                     |                            |                                      | 5,402   |          |   |        | 5,600  |        |  |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Deferred membership origination costs, less current portion                                                                                                                                                              |                            |                                      | 7,337   |          |   |        | 6,030  |        |  |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Net deferred tax assets                                                                                                                                                                                                  |                            |                                      | 296     |          |   |        | 995    |        |  |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Other assets                                                                                                                                                                                                             |                            |                                      | 755     |          |   |        | 365    |        |  |  |  |  |  |  |  | 
|                                                   |                                                                                                                                                                                                                          |                            |                                      |         |          |   |        |        |        |  |  |  |  |  |  | 
|Total Assets                                       |                                                                                                                                                                                                                          | $                          | 92,240                               |         |          | $ | 83,949 |        |        |  |  |  |  |  |  | 
|                                                   |                                                                                                                                                                                                                          |                            |                                      |         |          |   |        |        |        |  |  |  |  |  |  | 
|                                                   |                                                                                                                                                                                                                          |                            | Liabilities and Shareholders Equity |         |          |   |        |        |        |  |  |  |  |  |  |  |  |  | 
|                                                   |                                                                                                                                                                                                                          |                            |                                      |         |          |   |        |        |        |  |  |  |  |  |  |  |  |  | 
|Current Liabilities                                |                                                                                                                                                                                                                          |                            |                                      |         |          |   |        |        |        |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Accounts payable                                                                                                                                                                                                         |                            | $                                    | 2,665   |          |   | $      | 2,775  |        |  |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Other accrued liabilities                                                                                                                                                                                                |                            |                                      | 8,108   |          |   |        | 8,021  |        |  |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Accrued construction cost                                                                                                                                                                                                |                            |                                      |        |          |   |        | 1,888  |        |  |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Current portion of deferred revenue                                                                                                                                                                                      |                            |                                      | 34,212  |          |   |        | 27,668 |        |  |  |  |  |  |  |  | 
|                                                   |                                                                                                                                                                                                                          |                            |                                      |         |          |   |        |        |        |  |  |  |  |  |  | 
|                                                   |                                                                                                                                                                                                                          | Total Current Liabilities  |                                      |         | 44,985   |   |        |        | 40,352 |  |  |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Deferred revenue, less current portion                                                                                                                                                                                   |                            |                                      | 24,984  |          |   |        | 20,158 |        |  |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Other liabilities                                                                                                                                                                                                        |                            |                                      | 1,608   |          |   |        | 1,004  |        |  |  |  |  |  |  |  | 
|                                                   |                                                                                                                                                                                                                          |                            |                                      |         |          |   |        |        |        |  |  |  |  |  |  | 
|                                                   |                                                                                                                                                                                                                          | Total Liabilities          |                                      |         | 71,577   |   |        |        | 61,514 |  |  |  |  |  |  |  |  | 
|                                                   |                                                                                                                                                                                                                          |                            |                                      |         |          |   |        |        |        |  |  |  |  |  |  | 
|Commitments and Contingencies
Shareholders Equity |                                                                                                                                                                                                                          |                            |                                      |         |          |   |        |        |        |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Preferred stock, $.01 par value, 1,500,000 shares authorized,
none issued or outstanding
Common stock, $.01 par value, 15,000,000 shares authorized,
8,401,697 and 8,373,828 shares issued and outstanding, respectively |                            |                                      | 84      |          |   |        | 84     |        |  |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Additional paid-in capital                                                                                                                                                                                               |                            |                                      | 22,596  |          |   |        | 22,112 |        |  |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Retained earnings                                                                                                                                                                                                        |                            |                                      | 9,688   |          |   |        | 1,362  |        |  |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Accumulated other comprehensive loss                                                                                                                                                                                     |                            |                                      | (132    | )        |   |        | (141   | )      |  |  |  |  |  |  |  | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Treasury stock, 1,484,081 and 206,705 shares, respectively                                                                                                                                                               |                            |                                      | (11,573 | )        |   |        | (982   | )      |  |  |  |  |  |  |  | 
|                                                   |                                                                                                                                                                                                                          |                            |                                      |         |          |   |        |        |        |  |  |  |  |  |  | 
|                                                   |                                                                                                                                                                                                                          | Total Shareholders Equity |                                      |         | 20,663   |   |        |        | 22,435 |  |  |  |  |  |  |  |  | 
|                                                   |                                                                                                                                                                                                                          |                            |                                      |         |          |   |        |        |        |  |  |  |  |  |  | 
|Total Liabilities and Shareholders Equity         |                                                                                                                                                                                                                          | $                          | 92,240                               |         |          | $ | 83,949 |        |        |  |  |  |  |  |  | 
|                                                   |                                                                                                                                                                                                                          |                            |                                      |         |          |   |        |        |        |  |  |  |  |  |  | 

The accompanying notes are an integral part of these consolidated financial statements.

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Thousand Trails, Inc. and Subsidiaries
Consolidated Statements of Operations
(Dollars and shares in thousands, except per share amounts)

|                                               |                                           |   |                              |        |      |   |         |        |   |   |        |        |  
|---------------------------------------------- | ----------------------------------------- | - | ---------------------------- | ------ | ---- | - | ------- | ------ | - | - | ------ | ------ | -
|                                               |                                           |   | For the years ended June 30,
|                                               |                                           |   |                             
|                                               |                                           |   | 2002                         |        | 2001 |   | 2000   
|                                               |                                           |   |                              |        |      |   |        
|Revenues                                       |                                           |   |                              |        |      |   |         |        |   |   |        |       
|                                              
|                                              
|                                              
|                                              
|Membership contracts originated                |                                           | $ | 27,434                       |        |      | $ | 22,903  |        |   | $ | 13,912 |       
|                                              
|                                              
|                                              
|                                              
|Increase in deferred revenue                   |                                           |   | (11,218                      | )      |      |   | (13,363 | )      |   |   | (8,348 | )     
|                                               |                                           |   |                              |        |      |   |         |        |   |   |        |       
|                                               | Membership sales revenue                  |   |                              | 16,216 |      |   |         | 9,540  |   |   |        | 5,564  |  
|                                              
|                                              
|                                              
|                                              
|Membership dues                                |                                           |   | 39,856                       |        |      |   | 40,080  |        |   |   | 37,495 |       
|                                              
|                                              
|                                              
|                                              
|Other campground revenue                       |                                           |   | 18,505                       |        |      |   | 17,849  |        |   |   | 16,731 |       
|                                              
|                                              
|                                              
|                                              
|Trails Management revenue                      |                                           |   | 4,419                        |        |      |   | 3,082   |        |   |   | 2,508  |       
|                                              
|                                              
|                                              
|                                              
|RPI membership fees                            |                                           |   | 3,584                        |        |      |   | 3,713   |        |   |   | 3,706  |       
|                                              
|                                              
|                                              
|                                              
|Interest income                                |                                           |   | 2,383                        |        |      |   | 1,951   |        |   |   | 1,509  |       
|                                              
|                                              
|                                              
|                                              
|Gain on asset sales                            |                                           |   | 1,283                        |        |      |   | 397     |        |   |   | 4      |       
|                                              
|                                              
|                                              
|                                              
|Other income                                   |                                           |   | 2,539                        |        |      |   | 2,784   |        |   |   | 3,254  |       
|                                               |                                           |   |                              |        |      |   |         |        |   |   |        |       
|                                               | Total Revenues                            |   |                              | 88,785 |      |   |         | 79,396 |   |   |        | 70,771 |  
|                                               |                                           |   |                              |        |      |   |         |        |   |   |        |       
|Expenses                                       |                                           |   |                              |        |      |   |         |        |   |   |        |       
|                                              
|                                              
|                                              
|                                              
|Campground operating expenses                  |                                           |   | 44,060                       |        |      |   | 43,977  |        |   |   | 40,253 |       
|                                              
|                                              
|                                              
|                                              
|Membership origination costs                   |                                           |   | 13,024                       |        |      |   | 9,905   |        |   |   | 7,614  |       
|                                              
|                                              
|                                              
|                                              
|Change in deferred origination costs           |                                           |   | (3,434                       | )      |      |   | (3,739  | )      |   |   | (3,112 | )     
|                                              
|                                              
|                                              
|                                              
|Marketing expenses                             |                                           |   | 5,927                        |        |      |   | 5,650   |        |   |   | 4,026  |       
|                                              
|                                              
|                                              
|                                              
|Trails Management expenses                     |                                           |   | 4,482                        |        |      |   | 3,332   |        |   |   | 2,545  |       
|                                              
|                                              
|                                              
|                                              
|RPI membership expenses                        |                                           |   | 1,729                        |        |      |   | 1,820   |        |   |   | 1,844  |       
|                                              
|                                              
|                                              
|                                              
|Corporate member services                      |                                           |   | 1,378                        |        |      |   | 1,233   |        |   |   | 1,333  |       
|                                              
|                                              
|                                              
|                                              
|Interest expense and amortization              |                                           |   | 32                           |        |      |   | 1,013   |        |   |   | 1,427  |       
|                                              
|                                              
|                                              
|                                              
|General and administrative expenses            |                                           |   | 8,842                        |        |      |   | 9,776   |        |   |   | 9,634  |       
|                                              
|                                              
|                                              
|                                              
|Reduction in allowance for doubtful accounts   |                                           |   | (400                         | )      |      |   |        |        |   |   | (251   | )     
|                                               |                                           |   |                              |        |      |   |         |        |   |   |        |       
|                                               | Total Expenses                            |   |                              | 75,640 |      |   |         | 72,967 |   |   |        | 65,313 |  
|                                               |                                           |   |                              |        |      |   |         |        |   |   |        |       
|Income Before Income Taxes                     |                                           |   | 13,145                       |        |      |   | 6,429   |        |   |   | 5,458  |       
|                                              
|                                              
|                                              
|                                              
|Income Taxes                                  |                                           |   |                              |        |      |   |         |        |   |   |        |       
|                                              
|                                              
|                                              
|                                              
|                                               | Income tax provision  current            |   |                              | (3,102 | )    |   |         | (891   | ) |   |        | (621   | )
|                                              
|                                              
|                                              
|                                              
|                                               | Income tax (provision) benefit  deferred |   |                              | (1,717 | )    |   |         | (1,262 | ) |   |        | 4,412  |  
|                                               |                                           |   |                              |        |      |   |         |        |   |   |        |       
|Net Income                                     |                                           | $ | 8,326                        |        |      | $ | 4,276   |        |   | $ | 9,249  |       
|                                               |                                           |   |                              |        |      |   |         |        |   |   |        |       
|Net Income per Share  Basic                   |                                           | $ | 1.04                         |        |      | $ | .52     |        |   | $ | 1.16   |       
|                                               |                                           |   |                              |        |      |   |         |        |   |   |        |       
|Net Income per Share  Diluted                 |                                           | $ | .97                          |        |      | $ | .50     |        |   | $ | 1.08   |       
|                                               |                                           |   |                              |        |      |   |         |        |   |   |        |       
|Shares Used to Calculate Net Income Per Share: |                                           |   |                              |        |      |   |         |        |   |   |        |       
|                                              
|                                              
|                                              
|                                              
|                                               | Basic                                     |   |                              | 8,012  |      |   |         | 8,107  |   |   |        | 7,981  |  
|                                               |                                           |   |                              |        |      |   |         |        |   |   |        |       
|                                               | Diluted                                   |   |                              | 8,585  |      |   |         | 8,598  |   |   |        | 8,594  |  
|                                               |                                           |   |                              |        |      |   |         |        |   |   |        |       

The accompanying notes are an integral part of these consolidated financial statements.

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##### Table of Contents



Thousand Trails, Inc. and Subsidiaries
Consolidated Statements of Shareholders Equity
(Dollars in thousands)

|                                       |  |              |            |            |  |          |    |          |  |              |        |               |  |          |          |   |  |  |       |   |  |  |          |   |  |   |         |  
|-------------------------------------- |  | ------------ | ---------- | ---------- |  | -------- | -- | -------- |  | ------------ | ------ | ------------- |  | -------- | -------- | - |  |  | ----- | - |  |  | -------- | - |  | - | ------- | -
|                                       |  | Common Stock |            |            |  |          |    | Retained |  | Accumulated  |        |               |  |          |          |   |  | 
|                                       |  |              |            | Additional |  | Earnings |    | Other    |  |              |        |               |  |          |          |  
|                                       |  | Number of    |            |            |  |          |    | Paid-In  |  | (Accumulated |        | Comprehensive |  | Treasury |          |   |  | 
|                                       |  | Shares       |            | Amount     |  | Capital  |    | Deficit) |  | Loss         |        | Stock         |  | Total   
|                                       |  |              |            |            |  |          |    |          |  |              |        |               |  |         
|Balance, July 1, 1999                  |  |              | 8,096,128  |            |  | $        | 81 |          |  | $            | 21,883 |               |  |          | ($12,163 | ) |  |  | ($139 | ) |  |  | ($14     | ) |  | $ | 9,648   |  
|Issuance of common shares              |  |              | 74,364     |            |  |          | 1  |          |  |              | 61     |               |  |          |         |   |  |  |      |   |  |  |          |   |  |   | 62      |  
|Purchase of treasury stock             |  |              | (189,900   | )          |  |          |   |          |  |              |       |               |  |          |         |   |  |  |      |   |  |  | (852     | ) |  |   | (852    | )
|Other comprehensive income             |  |              |           |            |  |          |   |          |  |              |       |               |  |          |         |   |  |  | 2     |   |  |  |         |   |  |   | 2       |  
|Net income                             |  |              |           |            |  |          |   |          |  |              |       |               |  |          | 9,249    |   |  |  |      |   |  |  |         |   |  |   | 9,249   |  
|Comprehensive income                   |  |              |           |            |  |          |   |          |  |              |       |               |  |          |         |   |  |  |      |   |  |  |         |   |  |   | 9,251   |  
|                                       |  |              |            |            |  |          |    |          |  |              |        |               |  |          |          |   |  |  |       |   |  |  |          |   |  |   |         |  
|Balance, June 30, 2000                 |  |              | 7,980,592  |            |  |          | 82 |          |  |              | 21,944 |               |  |          | (2,914   | ) |  |  | (137  | ) |  |  | (866     | ) |  |   | 18,109  |  
|Issuance of common shares              |  |              | 210,031    |            |  |          | 2  |          |  |              | 168    |               |  |          |         |   |  |  |      |   |  |  |         |   |  |   | 170     |  
|Purchase of treasury stock             |  |              | (23,500    | )          |  |          |   |          |  |              |       |               |  |          |         |   |  |  |      |   |  |  | (116     | ) |  |   | (116    | )
|Other comprehensive loss               |  |              |           |            |  |          |   |          |  |              |       |               |  |          |         |   |  |  | (4    | ) |  |  |         |   |  |   | (4      | )
|Net income                             |  |              |           |            |  |          |   |          |  |              |       |               |  |          | 4,276    |   |  |  |      |   |  |  |         |   |  |   | 4,276   |  
|Comprehensive income                   |  |              |           |            |  |          |   |          |  |              |       |               |  |          |         |   |  |  |      |   |  |  |         |   |  |   | 4,272   |  
|                                       |  |              |            |            |  |          |    |          |  |              |        |               |  |          |          |   |  |  |       |   |  |  |          |   |  |   |         |  
|Balance, June 30, 2001                 |  |              | 8,167,123  |            |  |          | 84 |          |  |              | 22,112 |               |  |          | 1,362    |   |  |  | (141  | ) |  |  | (982     | ) |  |   | 22,435  |  
|Issuance of common shares              |  |              | 27,869     |            |  |          |   |          |  |              | 88     |               |  |          |         |   |  |  |      |   |  |  |         |   |  |   | 88      |  
|Purchase of treasury stock             |  |              | (1,277,376 | )          |  |          |   |          |  |              |       |               |  |          |         |   |  |  |      |   |  |  | (10,591  | ) |  |   | (10,591 | )
|Tax benefit of stock
options exercised |  |              |           |            |  |          |   |          |  |              | 396    |               |  |          |         |   |  |  |      |   |  |  |         |   |  |   | 396     |  
|Other comprehensive income             |  |              |           |            |  |          |   |          |  |              |       |               |  |          |         |   |  |  | 9     |   |  |  |         |   |  |   | 9       |  
|Net income                             |  |              |           |            |  |          |   |          |  |              |       |               |  |          | 8,326    |   |  |  |      |   |  |  |         |   |  |   | 8,326   |  
|Comprehensive income                   |  |              |           |            |  |          |   |          |  |              |       |               |  |          |         |   |  |  |      |   |  |  |         |   |  |   | 8,335   |  
|                                       |  |              |            |            |  |          |    |          |  |              |        |               |  |          |          |   |  |  |       |   |  |  |          |   |  |   |         |  
|Balance, June 30, 2002                 |  |              | 6,917,616  |            |  | $        | 84 |          |  | $            | 22,596 |               |  | $        | 9,688    |   |  |  | ($132 | ) |  |  | ($11,573 | ) |  | $ | 20,663  |  
|                                       |  |              |            |            |  |          |    |          |  |              |        |               |  |          |          |   |  |  |       |   |  |  |          |   |  |   |         |  

The accompanying notes are an integral part of these consolidated financial statements.

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##### Table of Contents



Thousand Trails, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in thousands)

|                                                 |                                                                |  |                              |         |      |  |       |         |   |  |     |         |  
|------------------------------------------------ | -------------------------------------------------------------- |  | ---------------------------- | ------- | ---- |  | ----- | ------- | - |  | --- | ------- | -
|                                                 |                                                                |  | For the years ended June 30,
|                                                 |                                                                |  |                             
|                                                 |                                                                |  | 2002                         |         | 2001 |  | 2000 
|                                                 |                                                                |  |                              |         |      |  |      
|                                                 | CASH FLOWS FROM OPERATING ACTIVITIES:                          |  |                              |         |      |  |       |         |   |  |     |         |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Collections of principal on receivables                        |  | $                            | 4,605   |      |  | $     | 4,508   |   |  | $   | 3,562   |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Interest received                                              |  |                              | 2,383   |      |  |       | 1,951   |   |  |     | 1,387   |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Interest paid                                                  |  |                              | (32     | )    |  |       | (1,013  | ) |  |     | (1,427  | )
|                                                
|                                                
|                                                
|                                                
|                                                 | General and administrative and corporate member services costs |  |                              | (11,711 | )    |  |       | (11,631 | ) |  |     | (11,640 | )
|                                                
|                                                
|                                                
|                                                
|                                                 | Cash collected from operations, including deferred revenue     |  |                              | 66,239  |      |  |       | 69,761  |   |  |     | 65,502  |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Cash from sales of memberships                                 |  |                              | 18,577  |      |  |       | 15,902  |   |  |     | 10,747  |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Expenditures for campground operations                         |  |                              | (43,510 | )    |  |       | (44,338 | ) |  |     | (41,387 | )
|                                                
|                                                
|                                                
|                                                
|                                                 | Expenditures for sales and marketing                           |  |                              | (17,714 | )    |  |       | (14,430 | ) |  |     | (10,661 | )
|                                                
|                                                
|                                                
|                                                
|                                                 | Expenditures for insurance premiums                            |  |                              | (2,267  | )    |  |       | (3,013  | ) |  |     | (2,083  | )
|                                                
|                                                
|                                                
|                                                
|                                                 | Payment of income taxes                                        |  |                              | (2,836  | )    |  |       | (622    | ) |  |     | (212    | )
|                                                
|                                                
|                                                
|                                                
|                                                 | Tax benefit of stock option deduction                          |  |                              | 396     |      |  |       |        |   |  |     |        |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Other, net                                                     |  |                              |        |      |  |       | 674     |   |  |     | 265     |  
|                                                 |                                                                |  |                              |         |      |  |       |         |   |  |     |        
|                                                 | Net cash provided by operating activities                      |  |                              | 14,130  |      |  |       | 17,749  |   |  |     | 14,053  |  
|                                                 |                                                                |  |                              |         |      |  |       |         |   |  |     |        
|                                                 | CASH FLOWS FROM INVESTING ACTIVITIES:                          |  |                              |         |      |  |       |         |   |  |     |         |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Capital expenditures                                           |  |                              | (4,653  | )    |  |       | (3,253  | ) |  |     | (1,322  | )
|                                                
|                                                
|                                                
|                                                
|                                                 | Acquisition of Leisure Time                                    |  |                              |        |      |  |       |        |   |  |     | (7,727  | )
|                                                
|                                                
|                                                
|                                                
|                                                 | Net purchase of marketable securities                          |  |                              | (5,343  | )    |  |       |        |   |  |     |        |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Proceeds from asset sales                                      |  |                              | 1,611   |      |  |       | 1,738   |   |  |     | 74      |  
|                                                 |                                                                |  |                              |         |      |  |       |         |   |  |     |        
|                                                 | Net cash used in investing activities                          |  |                              | (8,385  | )    |  |       | (1,515  | ) |  |     | (8,975  | )
|                                                 |                                                                |  |                              |         |      |  |       |         |   |  |     |        
|                                                 | CASH FLOWS FROM FINANCING ACTIVITIES:                          |  |                              |         |      |  |       |         |   |  |     |         |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Net repayments under Credit Agreement                          |  |                              |        |      |  |       | (9,614  | ) |  |     | (1,273  | )
|                                                
|                                                
|                                                
|                                                
|                                                 | Payment of notes                                               |  |                              | (78     | )    |  |       | (78     | ) |  |     | (2,792  | )
|                                                
|                                                
|                                                
|                                                
|                                                 | Purchase of treasury stock                                     |  |                              | (10,591 | )    |  |       | (116    | ) |  |     | (852    | )
|                                                
|                                                
|                                                
|                                                
|                                                 | Issuance of common stock                                       |  |                              | 88      |      |  |       | 170     |   |  |     | 62      |  
|                                                 |                                                                |  |                              |         |      |  |       |         |   |  |     |        
|                                                 | Net cash used in financing activities                          |  |                              | (10,581 | )    |  |       | (9,638  | ) |  |     | (4,855  | )
|                                                 |                                                                |  |                              |         |      |  |       |         |   |  |     |        
|INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |                                                                |  | (4,836                       | )       |      |  | 6,596 |         |   |  | 223 |        
|                                                
|                                                
|                                                
|                                                
|                                                 | CASH AND CASH EQUIVALENTS                                      |  |                              |         |      |  |       |         |   |  |     |         |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Beginning of period                                            |  |                              | 9,016   |      |  |       | 2,420   |   |  |     | 2,197   |  
|                                                 |                                                                |  |                              |         |      |  |       |         |   |  |     |        
|                                                 | End of period                                                  |  | $                            | 4,180   |      |  | $     | 9,016   |   |  | $   | 2,420   |  
|                                                 |                                                                |  |                              |         |      |  |       |         |   |  |     |        

continued 

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##### Table of Contents



Thousand Trails, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (continued)
(Dollars in thousands)

|                                                                                   |                                                                          |  |                              |        |      |  |      |        |   |  |   |        |  
|---------------------------------------------------------------------------------- | ------------------------------------------------------------------------ |  | ---------------------------- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                                                                   |                                                                          |  | For the years ended June 30,
|                                                                                   |                                                                          |  |                             
|                                                                                   |                                                                          |  | 2002                         |        | 2001 |  | 2000
|                                                                                   |                                                                          |  |                              |        |      |  |     
|Reconciliation of net income to net cash provided by
operating activities:         |                                                                          |  |                              |        |      |  |      |        |   |  |   |       
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Net Income                                                               |  | $                            | 8,326  |      |  | $    | 4,276  |   |  | $ | 9,249  |  
|                                                                                   |                                                                          |  |                              |        |      |  |      |        |   |  |   |       
|Adjustments to reconcile net income to net cash
provided by operating activities  |                                                                          |  |                              |        |      |  |      |        |   |  |   |       
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Depreciation                                                             |  |                              | 2,997  |      |  |      | 2,703  |   |  |   | 2,662  |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Bad debt provision                                                       |  |                              | 967    |      |  |      | 933    |   |  |   | 904    |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Amortization of interest yield, collection costs and
valuation allowance |  |                              |       |      |  |      |       |   |  |   | (229   | )
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Increase in deferred sales revenue                                       |  |                              | 11,218 |      |  |      | 13,364 |   |  |   | 8,348  |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Increase in deferred membership origination costs                        |  |                              | (3,433 | )    |  |      | (3,739 | ) |  |   | (3,112 | )
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Gain on asset sales                                                      |  |                              | (1,282 | )    |  |      | (397   | ) |  |   | (3     | )
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Reduction of bad debt allowance, net                                     |  |                              | (400   | )    |  |      |       |   |  |   | (251   | )
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Reduction of deferred tax valuation allowance                            |  |                              |       |      |  |      |       |   |  |   | (5,807 | )
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Increase in deferred income tax provision                                |  |                              | 1,478  |      |  |      | 1,262  |   |  |   | 1,394  |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Decrease in restricted cash                                              |  |                              |       |      |  |      | 674    |   |  |   | 265    |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Increase in receivables                                                  |  |                              | (2,617 | )    |  |      | (2,745 | ) |  |   | (1,283 | )
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | (Increase) decrease in other assets                                      |  |                              | (2,451 | )    |  |      | (13    | ) |  |   | 2,182  |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Increase (decrease) in accounts payable                                  |  |                              | (110   | )    |  |      | 871    |   |  |   | (194   | )
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Decrease in accrued interest                                             |  |                              |       |      |  |      | (103   | ) |  |   | (7     | )
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Increase (decrease) in other liabilities                                 |  |                              | (968   | )    |  |      | 668    |   |  |   | (66    | )
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Other, net                                                               |  |                              | 405    |      |  |      | (5     | ) |  |   | 1      |  
|                                                                                   |                                                                          |  |                              |        |      |  |      |        |   |  |   |       
|                                                                                   | Total adjustments                                                        |  |                              | 5,804  |      |  |      | 13,473 |   |  |   | 4,804  |  
|                                                                                   |                                                                          |  |                              |        |      |  |      |        |   |  |   |       
|                                                                                   | Net cash provided by operating activities                                |  | $                            | 14,130 |      |  | $    | 17,749 |   |  | $ | 14,053 |  
|                                                                                   |                                                                          |  |                              |        |      |  |      |        |   |  |   |       

The accompanying notes are an integral part of these consolidated financial statements.

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##### Table of Contents



Thousand Trails, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
June 30, 2002

NOTE 1  NATURE OF OPERATIONS

Thousand Trails, Inc., a Delaware corporation, and its subsidiaries
(collectively, the Company) own and operate 59 membership-based campgrounds
located in 17 states and British Columbia, Canada. In addition, the Company
provides a reciprocal use program for members of approximately 280 recreational
facilities and manages 240 public campgrounds for the U.S. Forest Service and
other entities. Operating revenues consist primarily of membership sales,
membership dues received from campground members, fee revenue from members of
the reciprocal use program, management fees from the campground management
operations and guest fees and revenues received from the campground and other
operations.

The accompanying consolidated financial statements include the accounts of
Thousand Trails, Inc. and the following wholly owned subsidiaries: Coast
Financial Services, Inc., National American Corporation and its subsidiaries
(NACO), Resort Parks International, Inc. (RPI), Thousand Trails (Canada),
Inc., Thousand Trails Management Services, Inc. (Trails Management) and,
commencing December 16, 1999, Leisure Time Resorts of America, Inc. (Leisure
Time). See Note 3  Business Combination.

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

The Company sells campground memberships pursuant to membership contracts that
give purchasers the right to use one or more of the Companys campgrounds, but
do not convey a deeded interest in the campgrounds. A membership requires the
payment of an upfront membership fee and permits the members family to use one
or more of the Companys campgrounds for an initial period, subject to renewal
each year upon payment of annual dues. Upfront membership fees are deferred
and recognized on a straight-line basis over the expected lives of the
memberships, which range from four to seven years. Costs directly related to
the sale of such memberships are deferred and recognized as selling expenses on
a straight-line basis over the expected lives of the memberships.

The Company offers financing on campground memberships for a period of up to 48
months with a down payment of at least $495, regardless of sales price.
However, during the periods presented, the majority of the Companys campground
memberships were not financed for more than three years.

Until 1990, the Company also sold campground memberships that gave purchasers
an undivided fractional interest in one of six campgrounds. In addition, in
prior years, the Company sold residential lots at certain resorts not related
to the campground operations. Sales revenue from the sale of lots and
campground memberships that convey a deeded interest in real estate is
recognized upon execution of a sales contract and receipt of a down payment of
at least 10% of the sales price.

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The annual dues paid by campground members are used to fund the Companys
operating expenses, including corporate expenses and the maintenance and
operation of the campgrounds. Annual dues are deferred and recognized as
revenue ratably over the period services are provided.

Trails Management manages public campgrounds for the U.S. Forest Service and
other entities. Pursuant to its management contracts, Trails Management incurs
the expenses of operating the campgrounds and receives the related revenues,
net of a fee paid to the U.S. Forest Service or other entity. Revenues
primarily consist of fees paid by visitors to the campgrounds. Fees paid in
advance are deferred as unearned revenue.

RPI offers its members reciprocal use of approximately 280 participating
recreational facilities. Members of these participating facilities pay a fee to
RPI that entitles them to use any of the participating facilities, subject to
certain limitations. RPI provides the member a directory of participating
facilities and a membership card. Participating facilities allow RPI members
access for an additional fee, which is not shared with RPI. RPI membership
fees are recognized as revenue when the directory and membership card are sent
to the member. Fees paid in advance for multiple-year memberships are deferred
as unearned revenue.

Cash and Cash Equivalents

The Company considers demand accounts and short-term investments with
maturities of three months or less when purchased to be cash equivalents.

Marketable Securities

Marketable securities, which are classified as available for sale, consist of
shares of a mutual fund that invests a majority of its assets in adjustable
rate mortgage securities issued or guaranteed by the U.S. government, with the
remaining assets invested in U.S. government obligations. Unrealized gains and
losses are included in other comprehensive income.

Restricted Cash

Restricted cash generally consists of deposits to collateralize performance
bonds and letters of credit in the ordinary course of business.

Receivables

Before the Company acquired certain subsidiaries in 1991, the Company purchased
contracts receivable from them and recorded the contracts receivables at the
selling companys carrying value. In connection with the Companys acquisition
of these subsidiaries, the Company recorded the contracts receivable then owned
by the subsidiaries at their fair value, which was net of an allowance for
interest discount to increase the weighted average yield on the contracts to
14.75%, the current market yield at the time of acquisition. The allowance for
interest discount was amortized using the effective interest method over the
respective terms of the contracts, and was fully amortized at June 30, 2000.
In addition, the Company recorded an allowance for future collection costs
associated with the collection of the contracts receivable portfolio. This
allowance was amortized as a reduction of general and administrative expense
based on cash collected on the related portfolio, and was fully amortized at
June 30, 2000. The Company also recorded a valuation allowance in connection
with purchases of contracts receivable from third parties, to record the
contracts receivable at the purchase price. The

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valuation allowance was amortized over the respective terms of the contracts as
an increase to interest income, and was fully amortized at June 30, 2000.

Allowance for Doubtful Accounts

The Company provides an allowance for doubtful contracts receivable. The
allowance is based on managements estimate of contract cancellations
considering the Companys historical cancellation rates as well as other
factors deemed relevant to the analysis. The allowance is reviewed on a
periodic basis with changes in managements estimates recognized in the period
known. The Company presently believes that the allowance for doubtful accounts
is adequate. However, if cancellations occur at a different rate than is
presently anticipated, it may be necessary for the Company to revise its
estimates and increase or decrease the allowance, which would affect the
Companys operating results and financial condition.

Campground Land and Assets Held for Sale

Campground land and assets held for sale are recorded at the lower of cost or
estimated net realizable value. The Company classifies assets as held for sale
at the time a determination is made to dispose of the campground, the related
land and other fixed assets. Assets held for sale are no longer depreciated.

Buildings, Equipment and Depreciation

Buildings and equipment are recorded at cost. The costs of betterments and
improvements which extend the useful life of the asset are capitalized whereas
the costs of maintenance and repairs which do not extend the useful life of the
asset are expensed in the period incurred. Depreciation is recorded using the
straight-line method over the estimated useful lives of the assets which range
from three to thirty years.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and
all of its subsidiaries. All significant intercompany transactions and
balances have been eliminated.

Stock-Based Compensation

The Company accounts for stock-based compensation to employees using the
intrinsic value method. Accordingly, compensation cost for employee stock
options is measured as the excess, if any, of the quoted market price of the
Companys common stock at date of grant over the exercise price.

Earnings Per Share

The Company computes basic earnings per share based on the weighted average
number of common shares outstanding. The Company computes diluted earnings per
share based on the weighted average number of shares outstanding, plus the
number of additional common shares that would have been outstanding if dilutive
potential common shares had been issued.

Valuation of Long-Lived Assets

The Company periodically evaluates the carrying value of long-lived assets
whenever events or changes in circumstances indicate that the carrying amount
may not be fully recoverable. If the total of the expected future cash flows
is less than the carrying amount of the asset, a loss is recognized based on
the amount by which the carrying value exceeds the assets fair market value.

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Use of Estimates

The accompanying consolidated financial statements were prepared in conformity
with accounting principles generally accepted in the United States (GAAP).
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
these estimates.

Recently Issued Accounting Pronouncements

The Financial Accounting Standards Board has issued SFAS No. 141, Business
Combinations, which supercedes Accounting Principles Board Opinion No. 16 and
eliminates pooling-of-interests accounting on a prospective basis. It also
provides guidance on purchase accounting related to the recognition of
intangible assets and accounting for negative goodwill. In June 2001, the
Financial Accounting Standards Board issued SFAS No. 142, Goodwill and Other
Intangible Assets. SFAS No.142 changes the accounting for goodwill from an
amortization method to an impairment-only method. Companies are required to
adopt SFAS No. 142 for fiscal years beginning after December 15, 2001. The
Company believes the adoption of SFAS No. 141 and SFAS No. 142 will not have a
material effect on its results of operations or financial position in fiscal
2003.

The Financial Accounting Standards Board has also issued SFAS No. 144,
Accounting for the Impairment of Long-Lived Assets, which requires a single
accounting model to be used for long-lived assets to be sold and broadens the
presentation of discontinued operations to include a component of an entity
rather than a segment of a business. A component of an entity comprises
operations and cash flows that can be clearly distinguished, operationally and
for financial reporting purposes. The Company believes the adoption of SFAS
No. 144 on July 1, 2002 will not have a material effect on its results of
operations or financial position.

Reclassifications

Certain reclassifications have been made to prior period information to conform
to the current period presentation.

NOTE 3  BUSINESS COMBINATION

On December 16, 1999, the Company acquired all of the outstanding capital stock
of Leisure Time for $7.7 million in cash. In addition, the Company paid in
full all of the outstanding real estate debt on Leisure Times campgrounds,
which totaled approximately $2.3 million.

The acquisition of Leisure Time was accounted for as a purchase transaction;
accordingly, operating results for Leisure Time are reported from the date of
acquisition. No goodwill was recorded on the acquisition because the purchase
price did not exceed the estimated values of the identifiable assets received
less liabilities assumed.

Leisure Time currently owns and operates seven membership campgrounds in
Washington and Oregon serving approximately 13,000 members. The Company closed
three Leisure Time campgrounds in February 2001. Leisure Time operates a
separate system of campgrounds from the Companys other membership-based
campground systems.

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NOTE 4  COMPREHENSIVE INCOME

Comprehensive income includes all changes in equity during a period except
those resulting from investments by owners and distributions to owners, as well
as net income reported on the income statement. The Company lists items of
other comprehensive income by their nature in its financial statements and
presents the accumulated balance of such items separately from retained
earnings and additional paid-in capital in the equity section of its
consolidated balance sheet.

Currently, the Companys items of other comprehensive income consist of its
foreign currency translation and unrealized gains on marketable securities held
as available for sale. The Company translates the balance sheet of its
Canadian subsidiary into U.S. dollars at exchange rates in effect at the
balance sheet date. Profit and loss accounts are translated monthly at
exchange rates in effect at that time. At June 30, 2002 and 2001, the
Companys foreign currency translation was $142,000 and $141,000, respectively.
Unrealized gains on marketable securities are calculated as the difference
between the carrying amount and the fair market value of the Companys
marketable securities. At June 30, 2002, the Companys unrealized gains on
marketable securities totaled $10,000. The Company did not have marketable
securities available for sale at June 30, 2001.

The following table provides statements of comprehensive income for the years
ended June 30, 2002 and 2001 (dollars in thousands):

|                            |                                          |   |                             |    |      |   |       |    |  
|--------------------------- | ---------------------------------------- | - | --------------------------- | -- | ---- | - | ----- | -- | -
|                            |                                          |   | For the year ended June 30,
|                            |                                          |   |                            
|                            |                                          |   | 2002                        |    | 2001
|                            |                                          |   |                             |    |     
|Net Income                  |                                          | $ | 8,326                       |    |      | $ | 4,276 |   
|                           
|                           
|                           
|                           
|Other Comprehensive Income: |                                          |   |                             |    |      |   |       |   
|                           
|                           
|                           
|                           
|                            | Foreign Currency Translation
Adjustment  |   |                             | (1 | )    |   |       | (4 | )
|                           
|                           
|                           
|                           
|                            | Unrealized Gain on Marketable
Securities |   |                             | 10 |      |   |       |   |  
|                            |                                          |   |                             |    |      |   |       |   
|Comprehensive Income        |                                          | $ | 8,335                       |    |      | $ | 4,272 |   
|                            |                                          |   |                             |    |      |   |       |   

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NOTE 5  NET INCOME PER SHARE

The table below sets forth the information necessary to compute basic and
diluted net income per share for the years ended June 30, 2002, 2001 and 2000,
including a summary of the components of the numerators and denominators of the
basic and diluted net income per share computations for the periods presented
(dollars and shares in thousands, except per share amounts):

|                                            |  |                             |       |      |  |      |       |  |  |   |       | 
|------------------------------------------- |  | --------------------------- | ----- | ---- |  | ---- | ----- |  |  | - | ----- | 
|                                            |  | For the year ended June 30,
|                                            |  |                            
|                                            |  | 2002                        |       | 2001 |  | 2000
|                                            |  |                             |       |      |  |     
|Net Income                                  |  | $                           | 8,326 |      |  | $    | 4,276 |  |  | $ | 9,249 | 
|                                            |  |                             |       |      |  |      |       |  |  |   |       | 
|Weighted Average Number of
Shares  Basic   |  |                             | 8,012 |      |  |      | 8,107 |  |  |   | 7,981 | 
|                                           
|                                           
|                                           
|                                           
|Dilutive Options                            |  |                             | 573   |      |  |      | 491   |  |  |   | 613   | 
|                                            |  |                             |       |      |  |      |       |  |  |   |       | 
|Weighted Average Number of
Shares  Diluted |  |                             | 8,585 |      |  |      | 8,598 |  |  |   | 8,594 | 
|                                            |  |                             |       |      |  |      |       |  |  |   |       | 
|Net Income Per Share  Basic                |  | $                           | 1.04  |      |  | $    | .52   |  |  | $ | 1.16  | 
|                                            |  |                             |       |      |  |      |       |  |  |   |       | 
|Net Income Per Share  Diluted              |  | $                           | .97   |      |  | $    | .50   |  |  | $ | 1.08  | 
|                                            |  |                             |       |      |  |      |       |  |  |   |       | 

NOTE 6  RECEIVABLES

Contracts Receivable

The components of contracts receivable as of June 30, 2002 and 2001, are
summarized as follows (dollars in thousands):

|                                |  |   |          |   |      |   |        |   | 
|------------------------------- |  | - | -------- | - | ---- | - | ------ | - | 
|                                |  |   | June 30,
|                                |  |   |         
|                                |  |   | 2002     |   | 2001
|                                |  |   |          |   |     
|Contracts receivable            |  |   |          |   |      |   |        |  
|                               
|                               
|                               
|                               
|Memberships/undivided interests |  | $ | 11,747   |   |      | $ | 9,803  |  
|                               
|                               
|                               
|                               
|Lots                            |  |   |          |  |      |   |        | 9 | 
|                                |  |   |          |   |      |   |        |  
|                                |  |   | 11,747   |   |      |   | 9,812  |  
|                               
|                               
|                               
|                               
|Allowance for doubtful accounts |  |   | (2,188   | ) |      |   | (2,289 | )
|                               
|                               
|                               
|                               
|                                |  |   | 9,559    |   |      |   | 7,523  |  
|                               
|                               
|                               
|                               
|Interest receivable             |  |   | 79       |   |      |   | 65     |  
|                                |  |   |          |   |      |   |        |  
|                                |  | $ | 9,638    |   |      | $ | 7,588  |  
|                                |  |   |          |   |      |   |        |  

Contracts Receivable

Contracts receivable bear interest at rates ranging generally from 5% to 19.5%,
with a weighted average stated rate of 14% at June 30, 2002 and 2001.

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At June 30, 2002, scheduled future receipts on contracts receivable are as
follows (dollars in thousands):

|           |       |   |                     |        | 
|---------- | ----- | - | ------------------- | ------ | 
|           |       |   | Memberships and    
|           |       |   | Undivided Interests
|           |       |   |                    
|2003       |       | $ | 2,063               |       
|          
|          
|          
|          
|2004       |       |   | 3,907               |       
|          
|          
|          
|          
|2005       |       |   | 3,446               |       
|          
|          
|          
|          
|2006       |       |   | 1,838               |       
|          
|          
|          
|          
|2007       |       |   | 470                 |       
|          
|          
|          
|          
|Thereafter |       |   | 102                 |       
|           |       |   |                     |       
|           | Total |   | $                   | 11,826 | 
|           |       |   |                     |       

The largest percentage of campground members (approximately 32%) reside in
California and, as of June 30, 2002, contracts receivable from members who
purchased memberships in California totaled approximately $4.4 million. A
large percentage of members (approximately 27%) also reside in Washington and
Oregon and, as of June 30, 2002, contracts receivable from members who
purchased memberships in Washington and Oregon totaled $2.8 million and $1.1
million, respectively.

Allowance for Doubtful Accounts

In fiscal 2002 and 2000, the Company reduced the allowance for doubtful
accounts on the contracts receivable by $400,000 and $251,000, respectively.
These adjustments were made because the Company experienced lower contract
losses than anticipated in these years.

The allowance for doubtful accounts is an estimate of anticipated losses and is
determined based on historical cancellation rates and other factors deemed
relevant to the analysis. The Company believes the allowance is adequate.
However, the allowance and the rate at which the Company provides for losses on
its contracts receivable could be increased or decreased in the future based on
the Companys actual collection experience.

Allowance for Interest Discount

Amortization of the allowance for interest discount totaled $98,000 for the
year ended June 30, 2000, which increased interest income. This allowance was
fully amortized at June 30, 2000.

Allowance for Collection Costs

Amortization of the allowance for collection costs totaled $98,000 for the year
ended June 30, 2000, which decreased general and administrative expense. This
allowance was fully amortized at June 30, 2000.

Valuation Allowance

Amortization of the valuation allowance totaled $33,000 for the year ended June
30, 2000, which increased interest income. This allowance was fully amortized
at June 30, 2000.

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NOTE 7  CAMPGROUND PROPERTIES

Campground properties consisted of the following as of June 30, 2002 and 2001
(dollars in thousands):

|                                                                       |  |          |         |      |  |   |         |  
|---------------------------------------------------------------------- |  | -------- | ------- | ---- |  | - | ------- | -
|                                                                       |  | June 30,
|                                                                       |  |         
|                                                                       |  | 2002     |         | 2001
|                                                                       |  |          |         |     
|Assets held for sale                                                   |  | $        | 5,402   |      |  | $ | 5,530   |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Campground land at campgrounds where right-to-use
memberships are sold |  |          | 18,603  |      |  |   | 18,603  |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Campground land at campgrounds where undivided
interests were sold     |  |          | 2,093   |      |  |   | 2,093   |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Property and equipment                                                 |  |          | 46,035  |      |  |   | 41,344  |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Construction in progress                                               |  |          | 684     |      |  |   | 1,194   |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Accumulated depreciation                                               |  |          | (24,177 | )    |  |   | (21,573 | )
|                                                                       |  |          |         |      |  |   |         |  
|                                                                       |  | $        | 48,640  |      |  | $ | 47,191  |  
|                                                                       |  |          |         |      |  |   |         |  

NOTE 8  DEFERRED REVENUE AND MEMBERSHIP ORIGINATION COSTS

Deferred revenue was comprised of the following as of June 30, 2002 and 2001
(dollars in thousands):

|                            |  |          |        |      |  |   |        | 
|--------------------------- |  | -------- | ------ | ---- |  | - | ------ | 
|                            |  | June 30,
|                            |  |         
|                            |  | 2002     |        | 2001
|                            |  |          |        |     
|Campground membership sales |  | $        | 41,393 |      |  | $ | 30,175 | 
|                           
|                           
|                           
|                           
|Campground membership dues  |  |          | 15,436 |      |  |   | 15,466 | 
|                           
|                           
|                           
|                           
|Other                       |  |          | 2,367  |      |  |   | 2,185  | 
|                            |  |          |        |      |  |   |        | 
|                            |  | $        | 59,196 |      |  | $ | 47,826 | 
|                            |  |          |        |      |  |   |        | 

Components of the change in deferred membership origination costs and deferred
membership sales revenue are as follows (dollars in thousands):

|                                                         |                                      |   |                              |         |      |   |        |        |   |   |        |        |  
|-------------------------------------------------------- | ------------------------------------ | - | ---------------------------- | ------- | ---- | - | ------ | ------ | - | - | ------ | ------ | -
|                                                         |                                      |   | For the years ended June 30,
|                                                         |                                      |   |                             
|                                                         |                                      |   | 2002                         |         | 2001 |   | 2000  
|                                                         |                                      |   |                              |         |      |   |       
|Deferred membership origination costs,
beginning of year |                                      | $ | 8,916                        |         |      | $ | 5,177  |        |   | $ | 2,065  |       
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Deferred                             |   |                              | 7,656   |      |   |        | 5,880  |   |   |        | 4,110  |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Recognized                           |   |                              | (4,222  | )    |   |        | (2,141 | ) |   |        | (998   | )
|                                                         |                                      |   |                              |         |      |   |        |        |   |   |        |       
|                                                         | Increase in deferral                 |   |                              | 3,434   |      |   |        | 3,739  |   |   |        | 3,112  |  
|                                                         |                                      |   |                              |         |      |   |        |        |   |   |        |       
|Deferred membership origination costs,
end of year       |                                      |   | 12,350                       |         |      |   | 8,916  |        |   | $ | 5,177  |       
|                                                         |                                      |   |                              |         |      |   |        |        |   |   |        |       
|Deferred membership sales revenue,
beginning of year     |                                      |   | 30,175                       |         |      |   | 16,812 |        |   | $ | 8,464  |       
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Membership contracts originated      |   |                              | 27,434  |      |   |        | 22,903 |   |   |        | 13,912 |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Less provision for doubtful accounts |   |                              | (967    | )    |   |        | (781   | ) |   |        | (709   | )
|                                                         |                                      |   |                              |         |      |   |        |        |   |   |        |       
|                                                         | Membership contracts originated, net |   |                              | 26,467  |      |   |        | 22,122 |   |   |        | 13,203 |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Membership revenue recognized        |   |                              | (15,249 | )    |   |        | (8,759 | ) |   |        | (4,855 | )
|                                                         |                                      |   |                              |         |      |   |        |        |   |   |        |       
|                                                         | Increase in deferral                 |   |                              | 11,218  |      |   |        | 13,363 |   |   |        | 8,348  |  
|                                                        
|                                                        
|                                                        
|                                                        
|Deferred membership sales revenue,
end of year           |                                      | $ | 41,393                       |         |      | $ | 30,175 |        |   | $ | 16,812 |       
|                                                         |                                      |   |                              |         |      |   |        |        |   |   |        |       

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NOTE 9  LONG-TERM DEBT

Line of Credit with Union Bank

On July 1, 2001, the Company established a $15.0 million revolving, secured
line of credit (Line of Credit) with Union Bank of California, N.A. (Union
Bank). Borrowings under the Line of Credit carry an interest rate of prime
minus 0.75%. The Company may borrow, repay and reborrow under the Line of
Credit from time to time, provided, however, that for at least one day during
each twelve-month period, the principal amount outstanding under the Line of
Credit must be not more than $5.0 million. All borrowings under the Line of
Credit will mature on
July 1, 2003. The Company anticipates using the Line of Credit for general
working capital purposes, although it is permitted under the terms of the Line
of Credit to use up to $5.0 million for acquisitions from time to time. The
Company currently has no borrowings outstanding under the Line of Credit.

The Companys ability to borrow under the Line of Credit for working capital
purposes is subject to continued compliance by the Company with the financial
covenants and other requirements of the Line of Credit, including certain
covenants respecting minimum tangible net worth, minimum adjusted EBITDA (as
defined) and minimum total debt to adjusted EBITDA. The Line of Credit
prohibits the Company from borrowing from other sources.

The Company has granted liens on substantially all of its assets, other than
its real estate, to secure its obligations under the Line of Credit. In
addition, the Companys principal subsidiaries have guaranteed the Companys
obligations under the Line of Credit and have granted liens on substantially
all of their assets, other than their real estate, to secure their guarantees.

Credit Agreement with Foothill

Through the normal course of operations, in March 2001, the Company repaid all
outstanding borrowings under the Credit Agreement (as amended, the Credit
Agreement) between the Company and Foothill Capital Corporation (Foothill),
and it terminated the Credit Agreement on June 30, 2001. During the periods
presented, borrowings under the Credit Agreement accrued interest at prime plus
..25% per annum, subject to a minimum interest rate of 7% per annum.

NOTE 10  INCOME TAXES

The Company and its subsidiaries have entered into tax sharing agreements,
pursuant to which they file federal income tax returns on a consolidated basis
and allocate tax benefits and liabilities as provided in the agreements. The
agreements provide generally that a subsidiary will reimburse or be reimbursed
by the Company in an amount equal to 100% of any tax amounts that would have
been due or refundable, calculated as if the subsidiary were a stand-alone
taxpayer.

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The differences, expressed as a percentage of pretax income, between statutory
and effective federal income tax rates are as follows:

|                                 |  |                              |      |      |  |      |      |   |  |  |        |   
|-------------------------------- |  | ---------------------------- | ---- | ---- |  | ---- | ---- | - |  |  | ------ | --
|                                 |  | For the years ended June 30,
|                                 |  |                             
|                                 |  | 2002                         |      | 2001 |  | 2000
|                                 |  |                              |      |      |  |     
|Federal statutory tax rate       |  |                              | 34.0 | %    |  |      | 34.0 | % |  |  | 34.0   | % 
|                                
|                                
|                                
|                                
|Provision for state income taxes |  |                              | 2.4  |      |  |      | 1.1  |   |  |  | 5.3    |   
|                                
|                                
|                                
|                                
|Other                            |  |                              | .3   |      |  |      | (1.6 | ) |  |  | (2.2   | ) 
|                                
|                                
|                                
|                                
|Change in deferred tax valuation |  |                              |     |      |  |      |     |   |  |  | (106.5 | ) 
|                                 |  |                              |      |      |  |      |      |   |  |  |        |   
|                                 |  |                              | 36.7 | %    |  |      | 33.5 | % |  |  | (69.4  | %)
|                                 |  |                              |      |      |  |      |      |   |  |  |        |   

At June 30, 2002, the Company had fully utilized all net operating tax loss
carryforwards (NOLs) originating in prior years. At June 30, 2002, the
Company had an alternative minimum tax credit carryforward of approximately
$1.7 million available to offset regular corporate income tax in excess of the
alternative minimum tax in future years.

The components of deferred income taxes as of June 30, 2002 and 2001, were as
follows (dollars in thousands):

|                                         |  |      |        |      |  |   |        |  
|---------------------------------------- |  | ---- | ------ | ---- |  | - | ------ | -
|                                         |  | 2002 |        | 2001
|                                         |  |      |        |     
|Deferred
Tax Assets  Federal            |  |      |        |      |  |   |        |  
|                                        
|                                        
|                                        
|                                        
|Net operating loss carryforwards (NOLs)  |  | $    | 0      |      |  | $ | 2,675  |  
|                                        
|                                        
|                                        
|                                        
|Membership sales                         |  |      | 9,874  |      |  |   | 7,228  |  
|                                        
|                                        
|                                        
|                                        
|Alternative minimum tax credit carryover |  |      | 1,692  |      |  |   | 1,868  |  
|                                        
|                                        
|                                        
|                                        
|Accrued liabilities                      |  |      | 1,179  |      |  |   | 1,719  |  
|                                        
|                                        
|                                        
|                                        
|Restructuring costs                      |  |      | 1,338  |      |  |   | 1,338  |  
|                                        
|                                        
|                                        
|                                        
|Deferred revenue                         |  |      | 455    |      |  |   | 450    |  
|                                        
|                                        
|                                        
|                                        
|Receivables                              |  |      | 841    |      |  |   | 842    |  
|                                        
|                                        
|                                        
|                                        
|Other                                    |  |      | 181    |      |  |   | 235    |  
|                                         |  |      |        |      |  |   |        |  
|                                         |  |      | 15,560 |      |  |   | 16,355 |  
|                                         |  |      |        |      |  |   |        |  
|Deferred
Tax Liabilities  Federal       |  |      |        |      |  |   |        |  
|                                        
|                                        
|                                        
|                                        
|Property basis differences               |  |      | (6,268 | )    |  |   | (6,032 | )
|                                        
|                                        
|                                        
|                                        
|Installment Sales                        |  |      | (3,355 | )    |  |   | (2,603 | )
|                                         |  |      |        |      |  |   |        |  
|                                         |  |      | (9,623 | )    |  |   | (8,635 | )
|                                         |  |      |        |      |  |   |        |  
|Deferred Tax Asset  State               |  |      | 465    |      |  |   | 160    |  
|                                         |  |      |        |      |  |   |        |  
|Net deferred tax assets                  |  | $    | 6,402  |      |  | $ | 7,880  |  
|                                         |  |      |        |      |  |   |        |  

The Company periodically assesses the realizability of its deferred tax assets
and considers whether it is more likely than not that the tax benefits will be
realized. At June 30, 2000, the Company reversed the remaining valuation
allowance because management believed it was more likely than not that the
Company would generate sufficient taxable income during the carryforward period
to realize the net deferred tax assets. In fiscal 2001 and 2002, the Company
generated sufficient taxable income to fully realize these tax benefits.

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NOTE 11  COMMITMENTS AND CONTINGENCIES

Commitments

Lease Commitments

The Company leases equipment and facilities under noncancelable operating
leases with terms in excess of one year. At June 30, 2002, the Companys
future obligations under noncancelable operating leases were as follows
(dollars in thousands):

|            |  |        |     | 
|----------- |  | ------ | --- | 
|Year ending |  |        |     | 
|June 30,    |  | Amount
|            |  |       
|2003        |  | $      | 517 | 
|           
|           
|           
|           
|2004        |  |        | 413 | 
|           
|           
|           
|           
|2005        |  |        | 413 | 
|           
|           
|           
|           
|2006        |  |        | 399 | 
|           
|           
|           
|           
|2007        |  |        | 388 | 

Accrued Construction Costs

At June 30, 2001, the Company had a recorded liability of $1.9 million for
amounts necessary to complete improvements at a resort not related to the
campground operations in accordance with disclosures made to lot purchasers at
the resort pursuant to a registration with the U.S. Department of Housing and
Urban Development (HUD). In fiscal 2002, the Company sold the remaining
lots, roadways and related areas at the resort associated with such liability
and withdrew its HUD registration. As a result, the Company reduced the $1.9
million liability for accrued construction costs to $500,000 and reclassified
the remaining liability as a reserve for the contingent liability. The
decrease in the liability was classified as a reduction of general and
administrative expenses in the accompanying consolidated statement of
operations.

Contingencies

General Liability Insurance

From July 1, 1998 through June 30, 2002, the Company had insurance covering
general liability losses up to an annual limit of $27.0 million, with no
self-insured deductible. Prior to this date, the Companys insurance covered
general liability losses up to an annual limit of $26.8 million, but required
the Company to pay the first $250,000 per occurrence, with an annual aggregate
exposure of $2.0 million. The Company has provided a liability for estimated
claims related to uninsured general liability risks based on actuarial
estimates. As of June 30, 2002 and 2001, the Companys recorded liability for
estimated losses related to uninsured general liability claims totaled $567,000
and $577,000, respectively, which is included in other liabilities in the
accompanying consolidated balance sheets.

Employee Health Insurance

The Company has employee benefit plans that are funded primarily through
employer and employee contributions (see Note 15).

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Workers Compensation Insurance

From July 1, 1998 through June 30, 2002, the Company had insurance covering
workers compensation claims with no self-insured deductible. Prior to this
date, the Companys insurance program required the Company to pay up to
$250,000 per occurrence and to deposit funds with the insurance company to pay
claims in excess of the estimated claims covered by the amounts originally paid
by the Company. These deposits were generally expensed in the years the
deposits were made because the Company anticipated that the deposits would be
used to cover claims. In fiscal 2001, the Company increased its reserves for workers'
compensation claims by $160,000 because the Company estimated that it would be required to
pay additional amounts in future periods to cover claims not covered by the deposits originally made
by the Company.

Environmental Issues

Certain environmental issues may exist at some of the Companys campgrounds
concerning underground storage tanks, sewage treatment plants and septic
systems, and waste disposal. Management has reviewed these issues and believes
that they will not have a material adverse impact on the Companys operations
or financial position.

Litigation

The Company is involved in certain claims and litigation arising in the normal
course of business. Management believes that the eventual outcome of these
claims and litigation will not have a material adverse impact on the Companys
operations or financial position.

NOTE 12  SHAREHOLDERS EQUITY

The Company had shares of Common Stock outstanding as follows:

|              |             |  |           |            |  
|------------- | ----------- |  | --------- | ---------- | -
|June 30, 1999 |             |  | 8,096,128 |           
|             
|             
|             
|             
|              | Issuances   |  |           | 74,364     |  
|             
|             
|             
|             
|              | Repurchases |  |           | (189,900   | )
|              |             |  |           |           
|June 30, 2000 |             |  | 7,980,592 |           
|             
|             
|             
|             
|              | Issuances   |  |           | 210,031    |  
|             
|             
|             
|             
|              | Repurchases |  |           | (23,500    | )
|              |             |  |           |           
|June 30, 2001 |             |  | 8,167,123 |           
|             
|             
|             
|             
|              | Issuances   |  |           | 27,869     |  
|             
|             
|             
|             
|              | Repurchases |  |           | (1,277,376 | )
|              |             |  |           |           
|June 30, 2002 |             |  | 6,917,616 |           
|              |             |  |           |           

Transfer of Common Stock is subject to restrictions designed to avoid an
ownership change within the meaning of Section 382 of the Internal Revenue
Code of 1986, as amended (the Code). Such restrictions are set forth in
Article IX of the Companys Restated Certificate of Incorporation. Article IX
generally restricts, until June 30, 2011 (or earlier in certain events), direct
or indirect transfer of Common Stock that would without the approval of the
Board of Directors of the Company (i) increase to more than 4.75% the
percentage ownership of Common Stock of any person who at any time during the
preceding three-year period did not own more than 4.75% of the Common Stock,
(ii) increase the percentage of Common Stock owned by any person that during
the preceding three-year period owned more than 4.75% of the Common Stock, or
by any group of persons treated as a 5 Percent Shareholder (as defined in the
Code but substituting 4.75% for 5 Percent), or (iii) cause an ownership
change of the Company. Article IX provides that any direct or indirect
transfer of Common Stock in violation of Article IX is void ab initioas to the
purported transferee, and the purported transferee will not be recognized as
the owner of shares acquired in violation of Article IX for any purpose,
including

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for purposes of voting and receiving dividends or other distributions in
respect of Common Stock. Any shares purportedly acquired in violation of
Article IX will be transferred to a trustee who will be required to sell them.

The Company has granted stock options to the Companys CEO and other key
employees and non-employee directors (see Note 14).

On May 30, 2002, the Company completed a tender offer and purchased 1,144,876
shares of its common stock for $8.41 per share. The shares are being held as
treasury stock.

NOTE 13  DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair values of the Companys financial instruments as of June 30,
2002 and 2001, as well as their carrying amounts as reported in the
accompanying consolidated balance sheets, are as follows (dollars in
thousands):

|                          |  |                 |        |               |  |                 |        |            |  |   |        |   |  |   |       | 
|------------------------- |  | --------------- | ------ | ------------- |  | --------------- | ------ | ---------- |  | - | ------ | - |  | - | ----- | 
|                          |  | June 30, 2002   |        | June 30, 2001
|                          |  |                 |        |              
|                          |  | Carrying Amount |        | Fair Value    |  | Carrying Amount |        | Fair Value
|                          |  |                 |        |               |  |                 |        |           
|Financial Assets:         |  |                 |        |               |  |                 |        |            |  |   |        |   |  |   |       | 
|                         
|                         
|                         
|                         
|Cash and cash equivalents |  | $               | 4,275  |               |  | $               | 4,275  |            |  | $ | 9,016  |   |  | $ | 9,016 | 
|Marketable securities     |  |                 | 5,343  |               |  |                 | 5,353  |            |  |   |       |   |  |   |      | 
|                         
|                         
|                         
|                         
|Restricted cash           |  |                 | 646    |               |  |                 | 646    |            |  |   | 646    |   |  |   | 646   | 
|                         
|                         
|                         
|                         
|Contracts receivable      |  |                 | 11,826 |               |  |                 |        |            |  |   | 9,877  |   |  |   |       | 
|                         
|                         
|                         
|                         
|Less: allowances          |  |                 | (2,188 | )             |  |                 |        |            |  |   | (2,289 | ) |  |   |       | 
|                          |  |                 |        |               |  |                 |        |            |  |   |        |   |  |   |       | 
|                          |  |                 | 9,638  |               |  |                 | 10,400 |            |  |   | 7,588  |   |  |   | 7,775 | 

The following methods and assumptions were used to estimate the fair value of
each class of the Companys financial instruments as of June 30, 2002 and 2001,
for which it is practical to estimate that value.

Cash and Cash Equivalents and Restricted Cash

The carrying amount approximates fair value because of the short maturity of
these instruments.

Marketable Securities

The fair value of marketable securities is the carrying value of the Companys
marketable securities plus unrealized gains and less unrealized losses.

Contracts Receivable

The fair value of contracts receivable was estimated by discounting the future
cash flows using the current rates at which the Company estimates a similar
loan portfolio would be purchased by a willing third party, after considering
risk factors regarding collectibility and future collection costs.

Significant estimates and present value calculations were used by the Company
for purposes of this disclosure. Changes in assumptions or estimation
methodologies may have a material effect

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on these estimated fair values. Additionally, lack of uniform valuation
methodologies introduces a greater degree of subjectivity to these estimated
values.

The Company did not have any financial instruments as of the balance sheet
dates presented that were held for trading purposes.

NOTE 14  STOCK OPTIONS AND WARRANTS

Stock Options

CEO Options

At their annual meeting in November 1996, the shareholders of the Company
approved the grant to the Companys CEO of options to purchase 664,495 shares
of Common Stock at $0.69 per share. These options are 100% vested and are
exercisable for a period of ten years while the CEO is in the employ of the
Company, subject to certain exceptions. As of the date of this report, 444,927
of these options have been exercised.

1991 Employee Plan

Effective December 31, 1991, the Company adopted the 1991 Employee Stock
Incentive Plan (the 1991 Employee Plan) to enable the Company and its
subsidiaries to attract, retain and motivate their officers, employees and
directors. The Company has granted options to acquire shares of Common Stock
(Options) under the 1991 Employee Plan, which are either (i) incentive stock
options (ISOs), which have certain tax benefits and restrictions, or (ii)
non-qualified stock options (Non-qualified Options), which do not have any
tax benefits and have few restrictions. The exercise price of the Options
granted under the 1991 Employee Plan was equal to the fair market value of the
Common Stock on the date of grant. The Options granted under the 1991 Employee
Plan may be exercised in accordance with their terms, although Thousand Trails
may not issue any shares of Common Stock pursuant to any award after December
30, 2011.

The Company reserved 291,780 shares of Common Stock for issuance under the 1991
Employee Plan. At June 30, 2002, options for 156,081 shares were outstanding
under the 1991 Employee Plan and options for 135,699 shares had been exercised.
All outstanding options under the 1991 Employee Plan are fully vested and have
a term of ten years from the date of grant.

1993 Employee Plan

On December 2, 1993, the Company adopted the 1993 Stock Option and Restricted
Stock Purchase Plan (the 1993 Employee Plan) in order to enable the Company
and it subsidiaries to attract, retain and motivate their officers and
employees. Awards under the 1993 Employee Plan are restricted to (i) awards of
the right to purchase shares of Common Stock (Stock Awards), or (ii) awards
of Options, which may be either ISOs or Non-qualified Options. The purchase
price for any Stock Awards and the exercise price for any Non-qualified Options
may be less than the fair market value of the Common Stock on the date of
grant. The exercise price of any ISOs may not be less than the fair market
value of the Common Stock on the date of grant.

The Company reserved 285,919 shares of Common Stock for issuance under the 1993
Employee Plan. As of June 30, 2002, options for 120,419 shares were
outstanding under the 1993 Employee Plan and options for 163,000 shares had
been exercised. All outstanding options

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under the 1993 Employee Plan are fully vested and have a term of ten years from
the date of grant.

1999 Employee Plan

On November 18, 1999, the Company adopted the 1999 Stock Option and Restricted
Stock Purchase Plan (the 1999 Employee Plan) in order to enable the Company
and it subsidiaries to attract, retain, and motivate their officers, employees
and directors. Awards under the 1999 Employee Plan are restricted to (i) Stock
Awards, or (ii) awards of Options, which may be either ISOs or Non-qualified
Options. The purchase price for any Stock Awards and the exercise price for
any Non-qualified Options may be less than the fair market value of the Common
Stock on the date of grant. The exercise price of any ISOs may not be less
than the fair market value of the Common Stock on the date of grant.

The Company reserved 140,000 shares of Common Stock for issuance under the 1999
Employee Plan. As of June 30, 2002, options for 122,500 shares were
outstanding under the 1999 Employee Plan, and options for 2,500 shares had been
exercised. The options have a term of 10 years from the date of grant. All of
the outstanding options vest at the rate of 33 1/3% per year commencing one
year from the date of grant, except for 12,500 which are fully vested.

2001 Employee Plan

On September 17, 2001, the Company adopted the 2001 Stock Option and Restricted
Stock Purchase Plan (the 2001 Employee Plan). The 2001 Employee Plan was
created in order to enable the Company and its subsidiaries to attract, retain,
and motivate their officers, employees and directors. Awards under the 2001
Employee Plan are restricted to (i) Stock Awards, or (ii) awards of Options,
which may be either ISOs or Non-qualified Options. The purchase price for any
Stock Awards and the exercise price for any Non-qualified Options may be less
than the fair market value of the Common Stock on the date of grant. The
exercise price of any ISOs may not be less than the fair market value of the
Common Stock on the date of grant.

The Company reserved 650,000 shares of Common Stock for issuance under the 2001
Employee Plan. At June 30, 2002, options for 625,000 shares were outstanding
under the 2001 Employee Plan, and no options had been exercised. The options
have a term of 10 years from the date of grant. All of the outstanding options
vest at the rate of 33 1/3% per year, commencing one year from the date of
grant.

Director Plan

On December 2, 1993, the Company adopted the 1993 Director Stock Option Plan
(the Director Plan), which provides for the grant of Non-qualified Options to
non-employee directors of the Company. The Company reserved 50,000 shares of
Common Stock for issuance under the Director Plan. As of June 30, 2002,
options for 39,000 shares were outstanding under the Director Plan, all of
which were vested, and options for 11,000 shares had been exercised. The
options have a term of ten years from the date of grant.

The Director Plan was a formula plan, pursuant to which each non-employee
director automatically received a grant of Non-qualified Options to purchase
5,000 shares of Common Stock on the day immediately after each annual meeting
of the shareholders at which directors are elected, beginning with the annual
meeting held in December 1993. The exercise price of each Non-qualified Option
is equal to the fair market value on the date of grant of such Option as
determined under the Director Plan. Generally, the Director Plan specifies
that such fair market

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value is the average trading price of the Common Stock during the period
beginning 45 days before the date of grant and ending 15 days before the date
of grant.

SFAS No. 123 Disclosures

SFAS No. 123 defines a fair value method of accounting for employee stock
options which provides for compensation cost to be charged to results of
operations at the grant date. The Company has adopted the disclosure-only
provisions of SFAS No. 123 and follows the accounting treatment prescribed by
Accounting Pronouncement Bulletin Opinion No. 25 (APB 25) in accounting for
stock options issued to its employees and directors. Accordingly, no
compensation cost was recognized in connection with the grant of options during
the periods presented. Had compensation cost for the stock options issued been
based on the fair value of the options at the grant dates, consistent with SFAS
No. 123, the Companys net income and net income per diluted share for the
years ended June 30, 2002, 2001 and 2000, would have been $8.0 million or $.94
per diluted share, $4.2 million or $.49 per diluted share and $9.2 million or
$1.08 per diluted share, respectively.

Pro forma results under SFAS No. 123 for the years presented are not likely to
be representative of future pro forma results because, for example, additional
awards may be made in future years.

Set forth below is a summary of awards of stock options made by the Company
during the years ended June 30, 2002, 2001 and 2000, and awards outstanding as
of the end of those years:

|                                        |  |        |           |       |  |          |      |       |  |        |          |          |  |   |      |  |  |          |         |   |  |   |      | 
|--------------------------------------- |  | ------ | --------- | ----- |  | -------- | ---- | ----- |  | ------ | -------- | -------- |  | - | ---- |  |  | -------- | ------- | - |  | - | ---- | 
|                                        |  | 2002   |           | 2001  |  | 2000    
|                                        |  |        |           |       |  |         
|                                        |  |        |           |       |  | Weighted |      |       |  |        |          | Weighted |  |   |      |  |  | Weighted
|                                        |  |        |           |       |  | Average  |      |       |  |        |          | Average  |  |   |      |  |  | Average 
|                                        |  |        |           |       |  | Exercise |      |       |  |        |          | Exercise |  |   |      |  |  | Exercise
|                                        |  | Shares |           | Price |  | Shares   |      | Price |  | Shares |          | Price   
|                                        |  |        |           |       |  |          |      |       |  |        |          |         
|Options outstanding,
beginning of year  |  |        | 604,268   |       |  | $        | 1.50 |       |  |        | 756,768  |          |  | $ | 1.07 |  |  |          | 831,268 |   |  | $ | 1.05 | 
|                                       
|                                       
|                                       
|                                       
|Options granted                         |  |        | 700,000   |       |  | $        | 5.93 |       |  |        | 50,000   |          |  | $ | 4.75 |  |  |          |        |   |  |   |     | 
|                                       
|                                       
|                                       
|                                       
|Options cancelled                       |  |        |          |       |  |          |     |       |  |        |         |          |  |   |     |  |  |          | (2,500  | ) |  | $ | 4.25 | 
|                                       
|                                       
|                                       
|                                       
|Options exercised                       |  |        | (21,700   | )     |  | $        | 2.59 |       |  |        | (202,500 | )        |  | $ | .69  |  |  |          | (72,000 | ) |  | $ | .72  | 
|                                        |  |        |           |       |  |          |      |       |  |        |          |          |  |   |      |  |  |          |         |   |  |   |      | 
|Options outstanding,
end of year        |  |        | 1,282,568 |       |  | $        | 3.90 |       |  |        | 604,268  |          |  | $ | 1.50 |  |  |          | 756,768 |   |  | $ | 1.07 | 
|                                        |  |        |           |       |  |          |      |       |  |        |          |          |  |   |      |  |  |          |         |   |  |   |      | 
|Options
exercisable, end of
year        |  |        | 559,235   |       |  | $        | 1.32 |       |  |        | 560,101  |          |  | $ | 1.25 |  |  |          | 738,435 |   |  | $ | .99  | 
|                                        |  |        |           |       |  |          |      |       |  |        |          |          |  |   |      |  |  |          |         |   |  |   |      | 
|Shares available
for grant, end of
year |  |        | 42,500    |       |  |          | n/a  |       |  |        | 92,500   |          |  |   | n/a  |  |  |          | 142,500 |   |  |   | n/a  | 
|                                        |  |        |           |       |  |          |      |       |  |        |          |          |  |   |      |  |  |          |         |   |  |   |      | 

The weighted-average fair value of stock options granted during the years ended
June 30, 2002 and 2001 was $ 1.64 and $1.81, respectively. No options were
granted during the year ended June 30, 2000. For the years ended June 30, 2002
and 2001, the value of each option grant was estimated as of the date of grant
using the Black-Scholes option pricing model with the following
weightedaverage assumptions: (1) a risk-free interest rate of 3.3% and 4.28%,
respectively, (2) an expected life of three years and four years, respectively,
and (3) expected volatility of 35% and 41.46%, respectively.

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The following table summarizes information about the Companys stock options
outstanding as of June 30, 2002:

|                |             |            |           |                     |         |                     |  |            |      |             |      |          |         |  |         |          |      |   |      |  |  | 
|--------------- | ----------- | ---------- | --------- | ------------------- | ------- | ------------------- |  | ---------- | ---- | ----------- | ---- | -------- | ------- |  | ------- | -------- | ---- | - | ---- |  |  | 
|                |             |            |           | Options Outstanding |         | Options Exercisable
|                |             |            |           |                     |         |                    
|                |             |            |           |                     |         |                     |  | Weighted   |      | Weighted    |      |          |         |  |         | Weighted
|                |             |            |           | Number              |         | Average             |  | Average    |      | Number      |      | Average 
|                |             |            |           | Outstanding         |         | Remaining           |  | Exercise   |      | Exercisable |      | Exercise
|Range of Prices |             | at 6/30/02 |           | Contractual Life    |         | Price               |  | at 6/30/02 |      | Price      
|                |             |            |           |                     |         |                     |  |            |      |            
|Option Plans:   |             |            |           |                     |         |                     |  |            |      |             |      |          |         |  |         |          |      |   |      | 
|               
|               
|               
|               
|                | $.59-$1.08  |            |           |                     | 247,000 |                     |  | 3.86 years |      | $           | .77  |          |         |  | 247,000 |          |      | $ | .77  | 
|               
|               
|               
|               
|                | $3.71-$4.25 |            |           |                     | 68,500  |                     |  | 6.44 years |      | $           | 4.09 |          |         |  | 68,500  |          |      | $ | 4.09 | 
|               
|               
|               
|               
|                | $4.75       |            |           |                     | 47,500  |                     |  | 8.46 years |      | $           | 4.75 |          |         |  | 24,167  |          |      | $ | 4.75 | 
|               
|               
|               
|               
|                | $5.93$5.95 |            |           |                     | 700,000 |                     |  | 9.27 years |      | $           | 5.93 |          |         |  |        |          |      |   |     | 
|               
|               
|               
|               
|CEO Options:    |             |            |           |                     |         |                     |  |            |      |             |      |          |         |  |         |          |      |   |      | 
|               
|               
|               
|               
|                | $.69        |            |           |                     | 219,568 |                     |  | 4.08 years |      | $           | .69  |          |         |  | 219,568 |          |      | $ | .69  | 
|                |             |            |           |                     |         |                     |  |            |      |             |      |          |         |  |         |          |      |   |      | 
|                |             |            | 1,282,568 |                     |         | 7.16 years          |  | $          | 3.90 |             |      |          | 559,235 |  |         | $        | 1.32 |  
|                |             |            |           |                     |         |                     |  |            |      |             |      |          |         |  |         |          |      |   |      | 

NOTE 15  EMPLOYEE BENEFIT PLANS

Flexible Benefits Plan Trust Fund

Effective July 1, 1992, the Company established a trust (the Trust) to fund
the Companys employee benefit plans (collectively, the Plans). The Plans
include the Companys medical plan, dental plan, disability plan, life
insurance plan, and accidental death and dismemberment plan and any other
employee welfare benefit plan permissible under Section 3(1) of the Employee
Retirement Income Security Act of 1974. The Company has adopted a flexible
benefits plan established pursuant to Section 125 of the Code to furnish
eligible employees with a choice of receiving cash or certain statutory taxable
or non-taxable benefits under the plan.

The medical and dental benefits provided to the Companys employees under the
Plans are funded primarily through employer and employee contributions to the
Trust. In addition, the Company has purchased stop loss insurance which
protects the Plans against claims in excess of set policy amounts. The Company
has provided a liability for estimated claims of $391,000 and $709,000 at June
30, 2002 and 2001, respectively, which is included in other liabilities in the
accompanying consolidated balance sheets. This liability is based on actuarial
estimates of amounts needed to fund expected claims, as well as premium
payments and administrative costs of the Plans.

The Company from time-to-time makes contributions to the Trust, which are
irrevocable. Trust assets may not revert to or inure to the benefit of the
Company. Neither the Company nor the trustee is responsible for the adequacy
of the Trust.

Employee Savings Trust

Effective July 1, 1994, the Company adopted the Thousand Trails, Inc. Employees
Savings Trust (the 401(k) Plan) for the purpose of establishing a
contributory employee savings plan exempt under Section 401(k) of the Code. An
eligible employee participating in this plan may contribute up to 50% of his or
her annual salary, subject to certain limitations. In addition, the Company
may make discretionary matching contributions as determined annually by the
Company. The Company made matching contributions totaling approximately
$170,000 for the year ended
June 30, 2002, and has committed to make matching contributions for the
calendar year ending

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December 31, 2002, in an amount equal to 45% of the voluntary contributions
made by each participant, up to 4% of the participants annual compensation (or
a maximum of 1.8% of the participants annual compensation).

Non-Qualified Deferred Compensation Plan

Effective April 23, 1998, the Company established the Thousand Trails, Inc.
Non-Qualified Deferred Compensation Plan (the Non-Qualified Plan) for the
purpose of establishing a deferred compensation plan for certain highly
compensated employees of the Company. An eligible employee participating in
this plan may contribute up to 10% of his or her annual salary subject to
certain limitations. In addition, the Company may make discretionary matching
contributions determined solely at the discretion of the Company. The Company
made matching contributions of approximately $16,000 for the year ended June
30, 2002, and has committed to make matching contributions for the calendar
year ending December 31, 2002, in an amount equal to 45% of the combined
voluntary contributions to the Non-Qualified Plan and 401(k) Plan made by each
participant, up to 4% of the participants annual compensation (or a maximum of
1.8% of the participants annual compensation).

Employee Stock Purchase Plan

Effective August 1, 1999, the Company adopted the Thousand Trails, Inc.
Employee Stock Purchase Plan (the Stock Purchase Plan) to give employees and
non-employee directors of the Company an opportunity to purchase Common Stock
through payroll deductions. Under the terms of the Stock Purchase Plan,
participants may defer between 1% and 10% of their annual compensation, which
is used to purchase shares of Common Stock on a semi-annual basis. The
purchase price paid by participants is 85% of the closing price of the Common
Stock as reported by the American Stock Exchange on the date of purchase. The
Company pays the other 15% of the purchase price, plus commissions, and the
other costs of administering the Stock Purchase Plan. During the years ended
June 30, 2002 and 2001, employees purchased 6,169 and 7,531 shares of Common
Stock. Pursuant to APB No. 25, the Company did not record any expense in
connection with this plan.

NOTE 16  SEGMENT REPORTING

The Company has three reportable segments: campgrounds, RPI, and Trails
Management. The campground segment generates a majority of the Companys
operating revenues. Each segment is differentiated by the products or services
it offers.

The campground segment consists of 59 membership-based campgrounds in 17 states
and British Columbia, Canada. Operations within the campground segment include
(i) the sale of memberships entitling the member to use campground facilities,
(ii) the sale of undivided interests related to fee simple sales of interests
in campground facilities and (iii) net revenues earned from operations at the
campgrounds.

RPI sells memberships that allow members to use any of the approximately 280
recreational facilities participating in RPIs reciprocal use system, subject
to certain limitations. Operating revenue consists of annual membership fees
paid by members.

Trails Management manages 240 public campgrounds for the U.S. Forest Service
and other entities. Operating revenue consists of the campsite usage fees paid
by customers staying at the public campgrounds.

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The Company evaluates performance based upon the income before income taxes for
each business segment. Identifiable assets are those assets used exclusively
in the operations of each business segment.

|                                  |  |                          |        |     |  |            |       |           |  |              |       |           |  |   |        |   |  |   |        | 
|--------------------------------- |  | ------------------------ | ------ | --- |  | ---------- | ----- | --------- |  | ------------ | ----- | --------- |  | - | ------ | - |  | - | ------ | 
|                                  |  | Year ended June 30, 2002
|                                  |  |                         
|                                  |  |                          |        |     |  |            |       |           |  | Trails       |       | Corporate |  |   |        |  
|                                  |  | Campgrounds              |        | RPI |  | Management |       | and Other |  | Consolidated
|                                  |  |                          |        |     |  |            |       |           |  |             
|Operating revenues                |  | $                        | 58,361 |     |  | $          | 3,584 |           |  | $            | 4,419 |           |  | $ | 97     |   |  | $ | 66,461 | 
|                                 
|                                 
|                                 
|                                 
|Membership sales
revenue          |  |                          | 16,616 |     |  |            |      |           |  |              |      |           |  |   |       |   |  |   | 16,616 | 
|                                 
|                                 
|                                 
|                                 
|Income (loss)
before income taxes |  |                          | 15,400 |     |  |            | 1,855 |           |  |              | (63   | )         |  |   | (4,047 | ) |  |   | 13,145 | 
|                                 
|                                 
|                                 
|                                 
|Identifiable assets               |  |                          | 72,699 |     |  |            | 236   |           |  |              | 225   |           |  |   | 19,080 |   |  |   | 92,240 | 
|                                 
|                                 
|                                 
|                                 
|Depreciation expense              |  |                          | 2,700  |     |  |            | 4     |           |  |              | 61    |           |  |   | 232    |   |  |   | 2,997  | 
|                                 
|                                 
|                                 
|                                 
|Capital expenditures              |  |                          | 2,947  |     |  |            |      |           |  |              | 32    |           |  |   | 1,936  |   |  |   | 4,915  | 

|                                  |  |                          |        |     |  |            |       |           |  |              |       |           |  |   |        |   |  |   |        | 
|--------------------------------- |  | ------------------------ | ------ | --- |  | ---------- | ----- | --------- |  | ------------ | ----- | --------- |  | - | ------ | - |  | - | ------ | 
|                                  |  | Year ended June 30, 2001
|                                  |  |                         
|                                  |  |                          |        |     |  |            |       |           |  | Trails       |       | Corporate |  |   |        |  
|                                  |  | Campgrounds              |        | RPI |  | Management |       | and Other |  | Consolidated
|                                  |  |                          |        |     |  |            |       |           |  |             
|Operating revenues                |  | $                        | 57,929 |     |  | $          | 3,713 |           |  | $            | 3,082 |           |  | $ | 168    |   |  | $ | 64,892 | 
|                                 
|                                 
|                                 
|                                 
|Membership sales
revenue          |  |                          | 9,540  |     |  |            |      |           |  |              |      |           |  |   |       |   |  |   | 9,540  | 
|                                 
|                                 
|                                 
|                                 
|Income (loss)
before income taxes |  |                          | 11,676 |     |  |            | 1,893 |           |  |              | (250  | )         |  |   | (6,890 | ) |  |   | 6,429  | 
|                                 
|                                 
|                                 
|                                 
|Identifiable assets               |  |                          | 65,563 |     |  |            | 193   |           |  |              | 272   |           |  |   | 17,921 |   |  |   | 83,949 | 
|                                 
|                                 
|                                 
|                                 
|Depreciation expense              |  |                          | 2,550  |     |  |            | 8     |           |  |              | 25    |           |  |   | 120    |   |  |   | 2,703  | 
|                                 
|                                 
|                                 
|                                 
|Capital expenditures              |  |                          | 2,339  |     |  |            |      |           |  |              | 225   |           |  |   | 689    |   |  |   | 3,253  | 

|                                  |  |                          |        |     |  |            |       |           |  |              |       |           |  |   |        |   |  |   |        | 
|--------------------------------- |  | ------------------------ | ------ | --- |  | ---------- | ----- | --------- |  | ------------ | ----- | --------- |  | - | ------ | - |  | - | ------ | 
|                                  |  | Year ended June 30, 2000
|                                  |  |                         
|                                  |  |                          |        |     |  |            |       |           |  | Trails       |       | Corporate |  |   |        |  
|                                  |  | Campgrounds              |        | RPI |  | Management |       | and Other |  | Consolidated
|                                  |  |                          |        |     |  |            |       |           |  |             
|Operating revenues                |  | $                        | 54,226 |     |  | $          | 3,706 |           |  | $            | 2,508 |           |  | $ | 374    |   |  | $ | 60,814 | 
|                                 
|                                 
|                                 
|                                 
|Membership sales
revenue          |  |                          | 5,564  |     |  |            |      |           |  |              |      |           |  |   |       |   |  |   | 5,564  | 
|                                 
|                                 
|                                 
|                                 
|Income (loss)
before income taxes |  |                          | 11,009 |     |  |            | 1,862 |           |  |              | (37   | )         |  |   | (7,376 | ) |  |   | 5,458  | 
|                                 
|                                 
|                                 
|                                 
|Identifiable assets               |  |                          | 61,780 |     |  |            | 242   |           |  |              | 312   |           |  |   | 12,181 |   |  |   | 74,515 | 
|                                 
|                                 
|                                 
|                                 
|Depreciation expense              |  |                          | 2,456  |     |  |            | 10    |           |  |              | 17    |           |  |   | 179    |   |  |   | 2,662  | 
|                                 
|                                 
|                                 
|                                 
|Capital expenditures              |  |                          | 1,289  |     |  |            |      |           |  |              | 11    |           |  |   | 22     |   |  |   | 1,322  | 

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NOTE 17  INDEMNIFICATION ARRANGEMENTS

Under its By-laws, the Company must indemnify its present and former directors
and officers for the damages and expenses that they incur in connection with
threatened or pending actions, suits or proceedings arising because of their
status as directors and officers, provided that they acted in good faith and in
a manner that they reasonably believed to be in or not opposed to the best
interest of the Company (or with respect to any criminal action or proceeding,
provided that they had no reasonable cause to believe that their conduct was
unlawful). In connection with this indemnification obligation, the Company has
entered into indemnification agreements with its directors and officers.

The Company must advance funds to these individuals to enable them to defend
any such threatened or pending action, suit or proceeding. The Company cannot
release such funds, however, until it receives an undertaking by or on behalf
of the requesting individual to repay the amount if a court of competent
jurisdiction ultimately determines that such individual is not entitled to
indemnification.

NOTE 18  SELECTED QUARTERLY FINANCIAL DATA

The following table summarizes the unaudited consolidated quarterly results of
operations for fiscal 2002 and 2001 (dollars in thousands, except per share
amounts):

|                                               |  |         |        |         |  |         |        |         |  |   |        |  |  |   |        | 
|---------------------------------------------- |  | ------- | ------ | ------- |  | ------- | ------ | ------- |  | - | ------ |  |  | - | ------ | 
|                                               |  | First   |        | Second  |  | Third   |        | Fourth 
|                                               |  | Quarter |        | Quarter |  | Quarter |        | Quarter
|                                               |  |         |        |         |  |         |        |        
|Fiscal 2002                                    |  |         |        |         |  |         |        |         |  |   |        |  |  |   |        | 
|                                              
|                                              
|                                              
|                                              
|Total revenues                                 |  | $       | 25,935 |         |  | $       | 19,311 |         |  | $ | 19,733 |  |  | $ | 23,806 | 
|                                              
|                                              
|                                              
|                                              
|Total expenses (before taxes)                  |  |         | 22,620 |         |  |         | 16,676 |         |  |   | 16,455 |  |  |   | 19,889 | 
|                                              
|                                              
|                                              
|                                              
|Net income                                     |  |         | 2,153  |         |  |         | 1,711  |         |  |   | 2,165  |  |  |   | 2,297  | 
|                                              
|                                              
|                                              
|                                              
|Net income per share  basic                   |  |         | .26    |         |  |         | .21    |         |  |   | .27    |  |  |   | .30    | 
|                                              
|                                              
|                                              
|                                              
|Net income per share  diluted                 |  |         | .25    |         |  |         | .20    |         |  |   | .25    |  |  |   | .27    | 
|                                              
|                                              
|                                              
|                                              
|Shares used to calculate net income per share: |  |         |        |         |  |         |        |         |  |   |        |  |  |   |        | 
|                                              
|                                              
|                                              
|                                              
|Basic                                          |  |         | 8,171  |         |  |         | 8,155  |         |  |   | 8,062  |  |  |   | 7,660  | 
|                                              
|                                              
|                                              
|                                              
|Diluted                                        |  |         | 8,619  |         |  |         | 8,597  |         |  |   | 8,699  |  |  |   | 8,426  | 
|                                              
|                                              
|                                              
|                                              
|Fiscal 2001                                    |  |         |        |         |  |         |        |         |  |   |        |  |  |   |        | 
|                                              
|                                              
|                                              
|                                              
|Total revenues                                 |  | $       | 23,310 |         |  | $       | 17,084 |         |  | $ | 17,347 |  |  | $ | 21,655 | 
|                                              
|                                              
|                                              
|                                              
|Total expenses (before taxes)                  |  |         | 20,848 |         |  |         | 15,582 |         |  |   | 15,464 |  |  |   | 21,073 | 
|                                              
|                                              
|                                              
|                                              
|Net income                                     |  |         | 1,470  |         |  |         | 909    |         |  |   | 1,167  |  |  |   | 730    | 
|                                              
|                                              
|                                              
|                                              
|Net income per share  basic                   |  |         | .18    |         |  |         | .11    |         |  |   | .14    |  |  |   | .09    | 
|                                              
|                                              
|                                              
|                                              
|Net income per share  diluted                 |  |         | .17    |         |  |         | .11    |         |  |   | .13    |  |  |   | .09    | 
|                                              
|                                              
|                                              
|                                              
|Shares used to calculate net income per share: |  |         |        |         |  |         |        |         |  |   |        |  |  |   |        | 
|                                              
|                                              
|                                              
|                                              
|Basic                                          |  |         | 8,010  |         |  |         | 8,084  |         |  |   | 8,166  |  |  |   | 8,167  | 
|                                              
|                                              
|                                              
|                                              
|Diluted                                        |  |         | 8,570  |         |  |         | 8,585  |         |  |   | 8,602  |  |  |   | 8,610  | 

The Companys operations are highly seasonal. The Company receives the
majority of the dues revenue from its members during the winter, which are
recognized as income ratably during the year. However, the Company incurs a
higher level of operating expenses during the summer. In addition, a majority
of the Companys sales and marketing efforts occur during the summer.

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Schedule II

Thousand Trails, Inc. and Subsidiaries
Valuation and Qualifying Accounts
(Dollars in thousands)

|                                 |  |       |         |           |  |            |       |            |  |      |       |  |  |           |       |         |  |   |       | 
|-------------------------------- |  | ----- | ------- | --------- |  | ---------- | ----- | ---------- |  | ---- | ----- |  |  | --------- | ----- | ------- |  | - | ----- | 
|                                 |  |       |         |           |  | Balance at |       |            |  |      |       |  |  |           |       | Balance
|Valuation and qualifying         |  | Year  |         | beginning |  |            |       |            |  |      |       |  |  | at end of
|accounts deducted from assets    |  | ended |         | of year   |  | Additions  |       | Deductions |  | year
|                                 |  |       |         |           |  |            |       |            |  |     
|Allowance for doubtful accounts  |  |       | 6/30/02 |           |  | $          | 2,289 |            |  | $    | 954   |  |  | $         | 1,055 | (a)     |  | $ | 2,188 | 
|                                
|                                
|                                
|                                
|                                 |  |       | 6/30/01 |           |  |            | 1,928 |            |  |      | 781   |  |  |           | 420   |         |  |   | 2,289 | 
|                                
|                                
|                                
|                                
|                                 |  |       | 6/30/00 |           |  |            | 1,027 |            |  |      | 2,664 |  |  |           | 1,763 | (a)     |  |   | 1,928 | 
|                                
|                                
|                                
|                                
|Allowance for uncollectible      |  |       | 6/30/02 |           |  |            | 2,475 |            |  |      | 2,894 |  |  |           | 3,158 |         |  |   | 2,212 | 
|                                
|                                
|                                
|                                
|dues receivable                  |  |       | 6/30/01 |           |  |            | 2,344 |            |  |      | 2,684 |  |  |           | 2,553 |         |  |   | 2,475 | 
|                                
|                                
|                                
|                                
|                                 |  |       | 6/30/00 |           |  |            | 2,599 |            |  |      | 3,138 |  |  |           | 3,393 |         |  |   | 2,344 | 
|                                
|                                
|                                
|                                
|Allowance for interest discount, |  |       | 6/30/02 |           |  |            |      |            |  |      |      |  |  |           |      |         |  |   |      | 
|                                
|                                
|                                
|                                
|collection costs and valuation   |  |       | 6/30/01 |           |  |            |      |            |  |      |      |  |  |           |      |         |  |   |      | 
|                                
|                                
|                                
|                                
|discount                         |  |       | 6/30/00 |           |  |            | 229   |            |  |      |      |  |  |           | 229   |         |  |   |      | 
|                                
|                                
|                                
|                                
|Deferred tax valuation allowance |  |       | 6/30/02 |           |  |            |      |            |  |      |      |  |  |           |      |         |  |   |      | 
|                                
|                                
|                                
|                                
|                                 |  |       | 6/30/01 |           |  |            |      |            |  |      |      |  |  |           |      |         |  |   |      | 
|                                
|                                
|                                
|                                
|                                 |  |       | 6/30/00 |           |  |            | 5,807 |            |  |      |      |  |  |           | 5,807 | (b)     |  |   |      | 



---

|a |  | Includes a reduction in the allowance for doubtful accounts of $400 and
$251 in fiscal 2002 and fiscal 2000, respectively.
|- |  | --------------------------------------------------------------------------------------------------------------------------
| 
| 
| 
| 
|b |  | Represents the reversal of a deferred tax valuation allowance in fiscal
2000.                                             

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

As previously reported, on May, 16, 2002, the Company dismissed Arthur Andersen
LLP as its independent auditor and appointed Grant Thornton LLP as its
independent auditor for the fiscal year ended June 30, 2002.

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Part III




Item 10. Directors and Executive Officers of the Registrant

The information required by this item will be included under the captions
Proposal I  Election of Directors, Board of Directors, Executive
Officers, and Section 16(a) Beneficial Ownership Reporting Compliance in the
Registrants definitive Proxy Statement for the Registrants 2002 Annual
Meeting of Stockholders, which will be filed with the SEC pursuant to
Regulation 14A, and is hereby incorporated by reference.




Item 11. Executive Compensation

The information required by this item will be included under the caption
Executive Compensation in the Registrants definitive Proxy Statement for the
Registrants 2002 Annual Meeting of Stockholders, which will be filed with the
SEC pursuant to Regulation 14A, and is hereby incorporated by reference.




Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item will be included under the caption
Security Ownership in the Registrants definitive Proxy Statement for the
Registrants 2002 Annual Meeting of Stockholders, which will be filed with the
SEC pursuant to Regulation 14A, and is hereby incorporated by reference.




Item 13. Certain Relationships and Related Transactions

The information required by this item will be included under the caption
Certain Transactions in the Registrants definitive Proxy Statement for the
Registrants 2002 Annual Meeting of Stockholders, which will be filed with the
SEC pursuant to Regulation 14A, and is hereby incorporated by reference.




Item 14. Controls and Procedures

Not applicable

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Part IV




Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K



|(a) |  | Financial Statements
|--- |  | --------------------
|   

The following documents are filed as part of this Report:



|    |  | Reports of Independent Certified Public Accountants for the years ended
June 30, 2002, 2001 and 2000.
|--- |  | -----------------------------------------------------------------------------------------------------
|   
|    |  | Consolidated Balance Sheets as of June 30, 2002 and 2001.                                            
|   
|    |  | Consolidated Statements of Operations for the years ended June 30, 2002,
2001 and 2000.              
|   
|    |  | Consolidated Statements of Shareholders Equity for the years ended June
30, 2002, 2001 and 2000.    
|   
|    |  | Consolidated Statements of Cash Flows for the years ended June 30, 2002,
2001 and 2000.              
|   
|    |  | Notes to Consolidated Financial Statements.                                                          
|   
|    |  | Schedule II  Valuation and Qualifying Accounts.                                                     
|   
|(b) |  | Reports on Form 8-K                                                                                  

During the quarter ended, June 30, 2002, the Company filed the following
Current Reports on Form 8-K:

On May 1, 2002, the Company filed a Current Report on Form 8-K reporting that
it had issued a press release announcing its financial results for the third
quarter of fiscal 2002, which ended March 31, 2002.

On May 16, 2002, the Company filed a Current Report on Form 8-K reporting that
it had dismissed Arthur Andersen LLP as its independent auditor and appointed
Grant Thornton LLP as its independent auditor for the fiscal year ended June
30, 2002.

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|(c) |  | Exhibits
|--- |  | --------

The following documents are filed or incorporated by reference as exhibits to
this report:

|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                            
|Number  |  | Description                                                                                                                                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
|2.1     |  | Agreement and Plan of Merger, dated as of October 1, 1996, between
the Company and USTrails, Inc. (predecessor in interest to the
Company) (incorporated by reference to the proxy
statement/prospectus filed with the SEC on October 3, 1996 as part
of the Registration Statement on Form S-4, Registration Statement
No. 333-13339, File No. 1-14645 (the S-4 Registration
Statement).
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
|       
|       
|       
|       
|3.1     |  | Restated Certificate of Incorporation of the Company (incorporated
by reference to the proxy statement/prospectus filed with the SEC
on October 3, 1996 as part of the S-4 Registration Statement).                                                                                                                                                                                        
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
|       
|       
|       
|       
|3.2     |  | Amended and Restated By-laws of the Company (incorporated by
reference to Exhibit 3.2 to the Form 8-B Filed by the Company with
the SEC on
November 27, 1996, File No. 1-14645).                                                                                                                                                                                                           
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
|       
|       
|       
|       
|10.1    |  | Loan Agreement, dated as of July 1, 2001, between the Company and
Union Bank of California, N. A. (incorporated by reference to Exhibit 10.1 to the Company's annual report on Form 10-K for the year ended June 30, 2001, File No. 1-14645).                                                                                                                                              
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
|       
|       
|       
|       
|10.2    |  | First Amendment dated April 26, 2002, to the Loan Agreement
between the Company and Union Bank of California, N.A.
(incorporated by reference to Exhibit 10.1 to the Companys
Quarterly Report on Form 10-Q for the quarter ended
March 31, 2002, File No. 1-14645).                                                                                                                      
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
|       
|       
|       
|       
|10.3    |  | The Companys 1991 Employee Stock Incentive Plan (incorporated by
reference to Exhibit 10.40 to the Companys Annual Report on Form
10-K for the year ended June 30, 1992, File No. 1-14645).                                                                                                                                                                                              
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
|       
|       
|       
|       
|10.4    |  | Amendment No. 1 to the Companys 1991 Employee Stock Incentive
Plan (incorporated by reference to Exhibit 10.8 to the Companys
Quarterly Report on Form 10-Q for the quarter ended September 30,
1996, File No. 1-14645).                                                                                                                                                                 
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
|       
|       
|       
|       
|10.5    |  | The Companys 1993 Stock Option and Restricted Stock Purchase Plan
(incorporated by reference to Exhibit 10.22 to the Companys
Registration Statement No. 33-73284 of Form S-2, originally filed
with SEC on December 22, 1993, File No. 1-14645).                                                                                                                                        
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
|       
|       
|       
|       
|10.6    |  | Amendment No. 1 to the Companys 1993 Stock Option and Restricted
Stock Purchase Plan (incorporated by reference to Exhibit 10.9 to
the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996, File No. 1-14645).                                                                                                                                               
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
|       
|       
|       
|       
|10.7    |  | The Companys 1993 Director Stock Option Plan (incorporated by
reference to Exhibit 10.23 to the Companys Registration Statement
No. 33-73284 of Form S-2, originally filed with the SEC on
December 22, 1993, File No. 1-14645).                                                                                                                                                         

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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Number  |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|       
|       
|       
|10.8    |  | Amendment No. 1 to the Companys 1993 Director Stock Option Plan
(incorporated by reference to Exhibit 10.10 to the Companys
Quarterly Report on Form 10-Q for the quarter ended September 30,
1996, File No. 1-14645).                                                                                                                                                                                                                                                                                                                                      
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|       
|       
|       
|10.9    |  | The Companys 1999 Stock Option and Restricted Stock Purchase Plan
(incorporated by reference to Exhibit 10.12 to the Companys
Annual Report on Form 10-K for the year ended June 30, 2000, File
No. 1-14645).                                                                                                                                                                                                                                                                                                                                               
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|       
|       
|       
|10.10   |  | The Companys 2001 Stock Option and Restricted Stock Purchase Plan
(incorporated by reference to the Companys definitive proxy
statement filed with the SEC on September 26, 2001, File No.
1-14645).                                                                                                                                                                                                                                                                                                                                                        
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|       
|       
|       
|10.11   |  | Stock Option Agreement, dated as of August 1, 1996 between the
Company and William J. Shaw (incorporated by reference to Exhibit
10.26 to the Form 8-B filed by the Company with the SEC on
November 27, 1996, File No. 1-14645).                                                                                                                                                                                                                                                                                                                             
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|       
|       
|       
|10.12   |  | Assumptions of Obligations, dated as of November 20, 1996, by the
Company assuming the obligations of USTrails Inc. 1991 Employee
Stock Incentive Plan, as amended; the USTrails Inc. 1993 Stock
Option and Restricted Stock Purchase Plan, as amended; the
USTrails Inc. 1993 Director Stock Option plan, as amended; and the
Stock Option Agreement, dated as of August 1, 1996, between
USTrails and William J. Shaw (incorporated by reference to Exhibit
10.27 to the Form 8-B filed by the Company with the SEC on
November 27, 1996, File No. 1-14645).
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|       
|       
|       
|10.13   |  | Employment Agreement dated as of May 11, 1995, between the Company
and William J. Shaw, and related Standby Letter of Credit, dated
September 22, 1995, issued by the Bank of California, N.A., for
the benefit of Mr. Shaw, and Letter, dated September 20, 1995,
from the Wyatt Company, regarding Mr. Shaws Employment Agreement
(incorporated by reference to Exhibit 10.25 to the Companys
Annual Report on Form 10-K for the year ended June 30, 1995, File
No. 1-14645).                                                                             
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|       
|       
|       
|10.14   |  | Letter dated June 29, 1996, from William J. Shaw to the Company,
regarding Mr. Shaws election to receive the Enterprise Bonus
payable under his Employment Agreement, and Letter, dated July 8,
1996, from Deloitte & Touché LLP, regarding the computation of the
amount of the Enterprise Bonus payable to Mr. Shaw under his
Employment Agreement (incorporated by reference to Exhibit 10.30
to the Companys Annual Report on Form 10-K for the year ended
June 30, 1996, File No. 1-14645).                                                            
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|       
|       
|       
|10.15   |  | Amendment dated as of December 10, 1998 to the Employment
Agreement between the Company and William J. Shaw (incorporated by
reference to Exhibit 10.1 to the Companys Quarterly Report on
Form 10-Q for the quarter ended December 31, 1998, File No.
1-14645.)                                                                                                                                                                                                                                                                                             

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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Number  |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|       
|       
|       
|10.16   |  | Amended and Restated Employment Agreement, dated as of September 10,
1992, among the Company, NACO, RPI, and William F. Dawson
(incorporated by reference to Exhibit 10.49 to the Companys Annual
Report on Form 10-K for the year ended June 30, 1993, File No.
1-14645), and Letter, dated December 1, 1995, from RPI to William F.
Dawson, regarding certain compensation arrangements (incorporated by
reference to Exhibit 10.4 to the Companys Quarterly Report on Form
10-Q for the quarter ended December 31, 1995, File
No. 1-14645).                                                                                              
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|       
|       
|       
|10.17   |  | Amended and Restated Employment Agreement, dated as of December 2,
1992, among the Company, NACO, and Walter B. Jaccard (incorporated
by reference to Exhibit 10.1 to the Companys Quarterly Report on
Form 10-Q for the quarter ended December 31, 1992, File No.
1-14645), and amendment dated November 15, 1994 (incorporated by
reference to Exhibit 10.30 to the Companys Annual Report on Form
10-K for the year ended June 30, 1995, File No. 1-14645), and
amendment dated December 7, 1995 (incorporated by reference to
Exhibit 10.1 to the Companys Quarterly Report for the quarter ended
December 31, 1995, File No. 1-14645).
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|       
|       
|       
|10.18   |  | Employment Agreement, dated as of August 31, 1995, between the
Company and R. Gerald Gelinas (incorporated by reference to Exhibit
10.32 to the Companys Annual Report on Form 10-K for the year ended
June 30, 1995, File No. 1-14645).                                                                                                                                                                                                                                                                                                                                                                                                     
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|       
|       
|       
|10.19   |  | Employment Agreement, dated as of October 15, 1999, between the
Company and Bryan D. Reed (incorporated by reference to Exhibit 10.1
to the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999, File No. 1-14645).                                                                                                                                                                                                                                                                                                                                                                                              
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|       
|       
|       
|10.20   |  | Indemnification Agreement, dated as of February 18, 1992, between
the Company and Andrew Boas (incorporated by reference to Exhibit
10.23 to the Companys Annual Report on Form 10-K for the year ended
June 30, 1992, File No. 1-14645), and schedule of substantially
identical Indemnification Agreements (incorporated by reference to
Exhibit 10.33 to the Companys Annual Report on Form 10-K for the
year ended June 30, 1995, File No. 1-14645).                                                                                                                                                                                    
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|       
|       
|       
|10.21   |  | Indemnification Agreement, dated as of September 1, 1995, between
Trails and William J. Shaw, and schedule of substantially identical
Indemnification Agreements (incorporated by reference to Exhibit
10.36 to the Companys Annual Report on Form 10-K for the year ended
June 30, 1996, File No. 1-14645).                                                                                                                                                                                                                                                                                                                                 
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|       
|       
|       
|10.22   |  | Indemnification Agreement, dated as of September 1, 1995, between
NACO and William J. Shaw, and schedule of substantially identical
Indemnification Agreements (incorporated by reference to Exhibit
10.37 to the Companys Annual Report on Form 10-K for the year ended
June 30, 1996, File No. 1-14645).                                                                                                                                                                                                                                                                                                                                   
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|       
|       
|       
|10.23   |  | Indemnification Agreement, dated as of May 8, 1991, between the
Company and Donald W. Hair, and schedule of substantially identical
Indemnification Agreements (incorporated by reference to Exhibit
10.38 to the Companys Annual Report on Form 10-K for the year ended
June 30, 1996, File No. 1-14645).                                                                                                                                                                                                                                                                                                                                   

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|        |  |                                                                                                                                                                                                                                                                                                                                                          
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                          
|Number  |  | Description                                                                                                                                                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                          
|       
|       
|       
|       
|10.24   |  | Indemnification Agreement, dated as of November 20, 1996, between
the Company and William J. Shaw, and schedule of substantially
identical Indemnification Agreements (incorporated by reference to
Exhibit 10.39 to the Companys Registration Statement No. 333-19357
on Form S-1, Originally filed with the SEC on January 7, 1997, File
No. 1-14645).
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                          
|       
|       
|       
|       
|10.25   |  | Indemnification Agreement, dated as of October 15, 1999, between the
Company and Bryan D. Reed (incorporated by reference to Exhibit 10.2
to the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999, File No. 1-14645).                                                                                                    
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                          
|       
|       
|       
|       
|10.26   |  | Indemnification Agreement, dated as of July 11, 2002, between the
Company and Arthur H. Baer.                                                                                                                                                                                                                                                            
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                          
|       
|       
|       
|       
|10.27   |  | Trust Agreement, dated as of July 22, 1992, establishing the
Companys Flexible Benefits Plant Trust Fund (incorporated by
reference to Exhibit 10.45 to the Companys Annual Report on Form
10-K for the year ended June 30, 1992, File No. 1-14645).                                                                                                   
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                          
|       
|       
|       
|       
|10.28   |  | Adoption Agreement dated as of July 1, 2002, between the Company and
Fidelity Management Trust Company, as trustee, establishing the
Thousand Trails, Inc. Employee Savings Trust, and the Fidelity Basic
Plan Document.                                                                                                                                 
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                          
|       
|       
|       
|       
|10.29   |  | Agreement for the Thousand Trails, Inc. Non-Qualified Deferred
Compensation Plan, effective April 23, 1998 (incorporated by
reference to Exhibit 10.56 to the Companys Annual Report on Form
10-K for the year ended June 30, 1998, File No. 1-14645).                                                                                                  
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                          
|       
|       
|       
|       
|10.30   |  | Agreement for the Thousand Trails, Inc. Employee Stock Purchase
Plan, effective as of August 1, 1999 (incorporated by reference to
Exhibit 4.1 to the Companys Registration Statement on Form S-8,
filed with the SEC on July 22, 1999).                                                                                                                
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                          
|       
|       
|       
|       
|10.31   |  | Tax Allocation Agreement, dated as of September 10, 1992, between
the Company and RPI (incorporated by reference to Exhibit 99.6 to
the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993, File No. 1-14645).                                                                                                             
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                          
|       
|       
|       
|       
|10.32   |  | Tax Allocation Agreement, dated as of July 1, 1991, between the
Company and NACO (incorporated by reference to Exhibit 10.44 to the
Companys Annual Report on Form 10-K for the year ended June 30,
1994, File No. 1-14645).                                                                                                                            
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                          
|       
|       
|       
|       
|10.33   |  | Tax Allocation Agreement, dated as of July 1, 1991, between the
Company and Wilderness Management (incorporated by reference to
Exhibit 10.46 to the Companys Annual Report on Form 10-K for the
year ended June 30, 1994, File No. 1-14645).                                                                                                           
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                          
|       
|       
|       
|       
|10.34   |  | Stockholder Agreement dated as of April 5, 1999, between the Company
and Carl Marks Management Company, L.P et. al. (incorporated by
reference to Exhibit 10.1 to the Companys Quarterly Report on Form
10-Q for the quarter ended March 31, 1999, File
No. 1-14645).                                                                                   

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|        |  |                                                                                                                                                                           
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                           
|Number  |  | Description                                                                                                                                                               
|        |  |                                                                                                                                                                           
|       
|       
|       
|       
|10.35   |  | Sample form of current Membership Contract.                                                                                                                               
|       
|       
|       
|       
|        |  |                                                                                                                                                                           
|       
|       
|       
|       
|11.1    |  | Statement re: Computation of Per Share Earnings.                                                                                                                          
|       
|       
|       
|       
|        |  |                                                                                                                                                                           
|       
|       
|       
|       
|22.1    |  | Subsidiaries of the Registrant (incorporated by reference to Exhibit
22.1 to the Companys Annual Report on Form 10-K for the year ended
June 30, 2001, File No. 1-14645).
|       
|       
|       
|       
|        |  |                                                                                                                                                                           
|       
|       
|       
|       
|23.1    |  | Consent of Grant Thornton LLP.                                                                                                                                            

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

|                         |  |                                   |  |                                                                              
|------------------------ |  | --------------------------------- |  | -----------------------------------------------------------------------------
|                         |  | Thousand Trails, Inc.(Registrant)
|                        
|                        
|                        
|                        
|                         |  |                                   |  |                                                                              
|                        
|                        
|                        
|                        
|Date: September 27, 2002 |  | By:                               |  | /s/ William J. Shaw                                                          
|                         |  |                                   |  |                                                                              
|                         |  |                                   |  | William J. Shaw
Chairman of the Board, President,
and Chief Executive Officer
|                        
|                        
|                        
|                        
|                         |  |                                   |  |                                                                              
|                        
|                        
|                        
|                        
|Date: September 27, 2002 |  | By:                               |  | /s/ Bryan D. Reed                                                            
|                         |  |                                   |  |                                                                              
|                         |  |                                   |  | Bryan D. Reed
Chief Financial and Accounting Officer                         

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:

|                                        |  |                       |  |                   
|--------------------------------------- |  | --------------------- |  | ------------------
|Signature                               |  | Title                 |  | Date              
|                                        |  |                       |  |                   
|                                        |  |                       |  |                   
|                                       
|                                       
|                                       
|                                       
|/s/ Arthur H. Baer                      |  | Director              |  | September 27, 2002
|                                        |  |                       |  |                   
|Arthur H. Baer                          |  |                       |  |                   
|                                       
|                                       
|                                       
|                                       
|                                        |  |                       |  |                   
|                                       
|                                       
|                                       
|                                       
|/s/ Andrew M. Boas                      |  | Director              |  | September 27, 2002
|                                        |  |                       |  |                   
|Andrew M. Boas                          |  |                       |  |                   
|                                       
|                                       
|                                       
|                                       
|                                        |  |                       |  |                   
|                                       
|                                       
|                                       
|                                       
|/s/William P. Kovacs                    |  | Director              |  | September 27, 2002
|                                        |  |                       |  |                   
|William P. Kovacs                       |  |                       |  |                   
|                                       
|                                       
|                                       
|                                       
|                                        |  |                       |  |                   
|/s/Donald R. Leopold

Donald R. Leopold |  | Director              |  | September 27, 2002
|                                        |  |                       |  |                   
|/s/H. Sean Mathis

H. Sean Mathis       |  | Director              |  | September 27, 2002
|                                        |  |                       |  |                   
|/s/Douglas K. Nelson

Douglas K. Nelson |  | Director              |  | September 27, 2002
|                                        |  |                       |  |                   
|                                       
|                                       
|                                       
|                                       
|/s/William J. Shaw

William J. Shaw     |  | Chairman of
the Board |  | September 27, 2002

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CERTIFICATIONS

I, William J. Shaw, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of Thousand Trails, Inc.                                                                                                                                                                                                                                                
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report.
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report.                   

|                         |  |     |  |                                        
|------------------------ |  | --- |  | ---------------------------------------
|Date: September 27, 2002 |  | By: |  | /s/ William J. Shaw                    
|                         |  |     |  |                                        
|                         |  |     |  | William J. Shaw
Chief Executive Officer

I, Bryan D. Reed, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of Thousand Trails, Inc.                                                                                                                                                                                                                                                
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report.
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report.                   

|                         |  |     |  |                                                     
|------------------------ |  | --- |  | ----------------------------------------------------
|Date: September 27, 2002 |  | By: |  | /s/ Bryan D. Reed                                   
|                         |  |     |  |                                                     
|                         |  |     |  | Bryan D. Reed
Chief Financial and Accounting Officer

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Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.

Each of the undersigned certifies with respect to this annual report on Form
10-K that, to his knowledge:



|1. |  | the annual report fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, and                              
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | the information contained in the annual report fairly presents, in all
material respects, the financial condition and results of operations of
the issuer.

|                         |  |     |  |                                                     
|------------------------ |  | --- |  | ----------------------------------------------------
|Date: September 27, 2002 |  | By: |  | /s/ William J. Shaw                                 
|                         |  |     |  |                                                     
|                         |  |     |  | William J. Shaw
Chief Executive Officer             
|                        
|                        
|                        
|                        
|                         |  |     |  |                                                     
|                        
|                        
|                        
|                        
|Date: September 27, 2002 |  | By: |  | /s/ Bryan D. Reed                                   
|                         |  |     |  |                                                     
|                         |  |     |  | Bryan D. Reed
Chief Financial and Accounting Officer

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INDEX TO THE EXHIBITS

|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                            
|Number  |  | Description                                                                                                                                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
|2.1     |  | Agreement and Plan of Merger, dated as of October 1, 1996, between
the Company and USTrails, Inc. (predecessor in interest to the
Company) (incorporated by reference to the proxy
statement/prospectus filed with the SEC on October 3, 1996 as part
of the Registration Statement on Form S-4, Registration Statement
No. 333-13339, File No. 1-14645 (the S-4 Registration
Statement).
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
|       
|       
|       
|       
|3.1     |  | Restated Certificate of Incorporation of the Company (incorporated
by reference to the proxy statement/prospectus filed with the SEC
on October 3, 1996 as part of the S-4 Registration Statement).                                                                                                                                                                                        
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
|       
|       
|       
|       
|3.2     |  | Amended and Restated By-laws of the Company (incorporated by
reference to Exhibit 3.2 to the Form 8-B Filed by the Company with
the SEC on
November 27, 1996, File No. 1-14645).                                                                                                                                                                                                           
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
|       
|       
|       
|       
|10.1    |  | Loan Agreement, dated as of July 1, 2001, between the Company and
Union Bank of California, N. A. (incorporated by reference to Exhibit 10.1 to the Company's
annual report on Form 10-K for the year ended June 30, 2001, File No. 1-14645).                                                                                                                                              
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
|       
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|10.2    |  | First Amendment dated April 26, 2002, to the Loan Agreement
between the Company and Union Bank of California, N.A.
(incorporated by reference to Exhibit 10.1 to the Companys
Quarterly Report on Form 10-Q for the quarter ended
March 31, 2002, File No. 1-14645).                                                                                                                      
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|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
|       
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|10.3    |  | The Companys 1991 Employee Stock Incentive Plan (incorporated by
reference to Exhibit 10.40 to the Companys Annual Report on Form
10-K for the year ended June 30, 1992, File No. 1-14645).                                                                                                                                                                                              
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|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
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|10.4    |  | Amendment No. 1 to the Companys 1991 Employee Stock Incentive
Plan (incorporated by reference to Exhibit 10.8 to the Companys
Quarterly Report on Form 10-Q for the quarter ended September 30,
1996, File No. 1-14645).                                                                                                                                                                 
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|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
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|10.5    |  | The Companys 1993 Stock Option and Restricted Stock Purchase Plan
(incorporated by reference to Exhibit 10.22 to the Companys
Registration Statement No. 33-73284 of Form S-2, originally filed
with SEC on December 22, 1993, File No. 1-14645).                                                                                                                                        
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|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
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|10.6    |  | Amendment No. 1 to the Companys 1993 Stock Option and Restricted
Stock Purchase Plan (incorporated by reference to Exhibit 10.9 to
the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996, File No. 1-14645).                                                                                                                                               
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|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
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|10.7    |  | The Companys 1993 Director Stock Option Plan (incorporated by
reference to Exhibit 10.23 to the Companys Registration Statement
No. 33-73284 of Form S-2, originally filed with the SEC on
December 22, 1993, File No. 1-14645).                                                                                                                                                         

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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Number  |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|       
|       
|       
|10.8    |  | Amendment No. 1 to the Companys 1993 Director Stock Option Plan
(incorporated by reference to Exhibit 10.10 to the Companys
Quarterly Report on Form 10-Q for the quarter ended September 30,
1996, File No. 1-14645).                                                                                                                                                                                                                                                                                                                                      
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
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|       
|10.9    |  | The Companys 1999 Stock Option and Restricted Stock Purchase Plan
(incorporated by reference to Exhibit 10.12 to the Companys
Annual Report on Form 10-K for the year ended June 30, 2000, File
No. 1-14645).                                                                                                                                                                                                                                                                                                                                               
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|       
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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
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|       
|10.10   |  | The Companys 2001 Stock Option and Restricted Stock Purchase Plan
(incorporated by reference to the Companys definitive proxy
statement filed with the SEC on September 26, 2001, File No.
1-14645).                                                                                                                                                                                                                                                                                                                                                        
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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
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|10.11   |  | Stock Option Agreement, dated as of August 1, 1996 between the
Company and William J. Shaw (incorporated by reference to Exhibit
10.26 to the Form 8-B filed by the Company with the SEC on
November 27, 1996, File No. 1-14645).                                                                                                                                                                                                                                                                                                                             
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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
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|10.12   |  | Assumptions of Obligations, dated as of November 20, 1996, by the
Company assuming the obligations of USTrails Inc. 1991 Employee
Stock Incentive Plan, as amended; the USTrails Inc. 1993 Stock
Option and Restricted Stock Purchase Plan, as amended; the
USTrails Inc. 1993 Director Stock Option plan, as amended; and the
Stock Option Agreement, dated as of August 1, 1996, between
USTrails and William J. Shaw (incorporated by reference to Exhibit
10.27 to the Form 8-B filed by the Company with the SEC on
November 27, 1996, File No. 1-14645).
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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|       
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|10.13   |  | Employment Agreement dated as of May 11, 1995, between the Company
and William J. Shaw, and related Standby Letter of Credit, dated
September 22, 1995, issued by the Bank of California, N.A., for
the benefit of Mr. Shaw, and Letter, dated September 20, 1995,
from the Wyatt Company, regarding Mr. Shaws Employment Agreement
(incorporated by reference to Exhibit 10.25 to the Companys
Annual Report on Form 10-K for the year ended June 30, 1995, File
No. 1-14645).                                                                             
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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
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|10.14   |  | Letter dated June 29, 1996, from William J. Shaw to the Company,
regarding Mr. Shaws election to receive the Enterprise Bonus
payable under his Employment Agreement, and Letter, dated July 8,
1996, from Deloitte & Touché LLP, regarding the computation of the
amount of the Enterprise Bonus payable to Mr. Shaw under his
Employment Agreement (incorporated by reference to Exhibit 10.30
to the Companys Annual Report on Form 10-K for the year ended
June 30, 1996, File No. 1-14645).                                                            
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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
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|10.15   |  | Amendment dated as of December 10, 1998 to the Employment
Agreement between the Company and William J. Shaw (incorporated by
reference to Exhibit 10.1 to the Companys Quarterly Report on
Form 10-Q for the quarter ended December 31, 1998, File No.
1-14645.).                                                                                                                                                                                                                                                                                            

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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Number  |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
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|       
|       
|10.16   |  | Amended and Restated Employment Agreement, dated as of September 10,
1992, among the Company, NACO, RPI, and William F. Dawson
(incorporated by reference to Exhibit 10.49 to the Companys Annual
Report on Form 10-K for the year ended June 30, 1993, File No.
1-14645), and Letter, dated December 1, 1995, from RPI to William F.
Dawson, regarding certain compensation arrangements (incorporated by
reference to Exhibit 10.4 to the Companys Quarterly Report on Form
10-Q for the quarter ended December 31, 1995, File
No. 1-14645).                                                                                              
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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
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|10.17   |  | Amended and Restated Employment Agreement, dated as of December 2,
1992, among the Company, NACO, and Walter B. Jaccard (incorporated
by reference to Exhibit 10.1 to the Companys Quarterly Report on
Form 10-Q for the quarter ended December 31, 1992, File No.
1-14645), and amendment dated November 15, 1994 (incorporated by
reference to Exhibit 10.30 to the Companys Annual Report on Form
10-K for the year ended June 30, 1995, File No. 1-14645), and
amendment dated December 7, 1995 (incorporated by reference to
Exhibit 10.1 to the Companys Quarterly Report for the quarter ended
December 31, 1995, File No. 1-14645).
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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
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|10.18   |  | Employment Agreement, dated as of August 31, 1995, between the
Company and R. Gerald Gelinas (incorporated by reference to Exhibit
10.32 to the Companys Annual Report on Form 10-K for the year ended
June 30, 1995, File No. 1-14645).                                                                                                                                                                                                                                                                                                                                                                                                     
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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
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|10.19   |  | Employment Agreement, dated as of October 15, 1999, between the
Company and Bryan D. Reed (incorporated by reference to Exhibit 10.1
to the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999, File No. 1-14645).                                                                                                                                                                                                                                                                                                                                                                                              
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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
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|10.20   |  | Indemnification Agreement, dated as of February 18, 1992, between
the Company and Andrew Boas (incorporated by reference to Exhibit
10.23 to the Companys Annual Report on Form 10-K for the year ended
June 30, 1992, File No. 1-14645), and schedule of substantially
identical Indemnification Agreements (incorporated by reference to
Exhibit 10.33 to the Companys Annual Report on Form 10-K for the
year ended June 30, 1995, File No. 1-14645).                                                                                                                                                                                    
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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
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|10.21   |  | Indemnification Agreement, dated as of September 1, 1995, between
Trails and William J. Shaw, and schedule of substantially identical
Indemnification Agreements (incorporated by reference to Exhibit
10.36 to the Companys Annual Report on Form 10-K for the year ended
June 30, 1996, File No. 1-14645).                                                                                                                                                                                                                                                                                                                                 
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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
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|10.22   |  | Indemnification Agreement, dated as of September 1, 1995, between
NACO and William J. Shaw, and schedule of substantially identical
Indemnification Agreements (incorporated by reference to Exhibit
10.37 to the Companys Annual Report on Form 10-K for the year ended
June 30, 1996, File No. 1-14645).                                                                                                                                                                                                                                                                                                                                   
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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
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|10.23   |  | Indemnification Agreement, dated as of May 8, 1991, between the
Company and Donald W. Hair, and schedule of substantially identical
Indemnification Agreements (incorporated by reference to Exhibit
10.38 to the Companys Annual Report on Form 10-K for the year ended
June 30, 1996, File No. 1-14645).                                                                                                                                                                                                                                                                                                                                   

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|        |  |                                                                                                                                                                                                                                                                                                                                                          
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                          
|Number  |  | Description                                                                                                                                                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                          
|       
|       
|       
|       
|10.24   |  | Indemnification Agreement, dated as of November 20, 1996, between
the Company and William J. Shaw, and schedule of substantially
identical Indemnification Agreements (incorporated by reference to
Exhibit 10.39 to the Companys Registration Statement No. 333-19357
on Form S-1, Originally filed with the SEC on January 7, 1997, File
No. 1-14645).
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|        |  |                                                                                                                                                                                                                                                                                                                                                          
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|10.25   |  | Indemnification Agreement, dated as of October 15, 1999, between the
Company and Bryan D. Reed (incorporated by reference to Exhibit 10.2
to the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999, File No. 1-14645).                                                                                                    
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|        |  |                                                                                                                                                                                                                                                                                                                                                          
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|10.26   |  | Indemnification Agreement, dated as of July 11, 2002, between the
Company and Arthur H. Baer.                                                                                                                                                                                                                                                            
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|        |  |                                                                                                                                                                                                                                                                                                                                                          
|       
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|10.27   |  | Trust Agreement, dated as of July 22, 1992, establishing the
Companys Flexible Benefits Plant Trust Fund (incorporated by
reference to Exhibit 10.45 to the Companys Annual Report on Form
10-K for the year ended June 30, 1992, File No. 1-14645).                                                                                                   
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|        |  |                                                                                                                                                                                                                                                                                                                                                          
|       
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|10.28   |  | Adoption Agreement dated as of July 1, 2002, between the Company and
Fidelity Management Trust Company, as trustee, establishing the
Thousand Trails, Inc. Employee Savings Trust, and the Fidelity Basic
Plan Document.                                                                                                                                 
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|       
|        |  |                                                                                                                                                                                                                                                                                                                                                          
|       
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|10.29   |  | Agreement for the Thousand Trails, Inc. Non-Qualified Deferred
Compensation Plan, effective April 23, 1998 (incorporated by
reference to Exhibit 10.56 to the Companys Annual Report on Form
10-K for the year ended June 30, 1998, File No. 1-14645).                                                                                                  
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|        |  |                                                                                                                                                                                                                                                                                                                                                          
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|10.30   |  | Agreement for the Thousand Trails, Inc. Employee Stock Purchase
Plan, effective as of August 1, 1999 (incorporated by reference to
Exhibit 4.1 to the Companys Registration Statement on Form S-8,
filed with the SEC on July 22, 1999).                                                                                                                
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|        |  |                                                                                                                                                                                                                                                                                                                                                          
|       
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|10.31   |  | Tax Allocation Agreement, dated as of September 10, 1992, between
the Company and RPI (incorporated by reference to Exhibit 99.6 to
the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993, File No. 1-14645).                                                                                                             
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|        |  |                                                                                                                                                                                                                                                                                                                                                          
|       
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|10.32   |  | Tax Allocation Agreement, dated as of July 1, 1991, between the
Company and NACO (incorporated by reference to Exhibit 10.44 to the
Companys Annual Report on Form 10-K for the year ended June 30,
1994, File No. 1-14645).                                                                                                                            
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|        |  |                                                                                                                                                                                                                                                                                                                                                          
|       
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|10.33   |  | Tax Allocation Agreement, dated as of July 1, 1991, between the
Company and Wilderness Management (incorporated by reference to
Exhibit 10.46 to the Companys Annual Report on Form 10-K for the
year ended June 30, 1994, File No. 1-14645).                                                                                                           
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|        |  |                                                                                                                                                                                                                                                                                                                                                          
|       
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|10.34   |  | Stockholder Agreement dated as of April 5, 1999, between the Company
and Carl Marks Management Company, L.P et. al. (incorporated by
reference to Exhibit 10.1 to the Companys Quarterly Report on Form
10-Q for the quarter ended March 31, 1999, File
No. 1-14645).                                                                                   

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|        |  |                                                                                                                                                                           
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                           
|Number  |  | Description                                                                                                                                                               
|        |  |                                                                                                                                                                           
|       
|       
|       
|       
|10.35   |  | Sample form of current Membership Contract.                                                                                                                               
|       
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|        |  |                                                                                                                                                                           
|       
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|11.1    |  | Statement re: Computation of Per Share Earnings.                                                                                                                          
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|        |  |                                                                                                                                                                           
|       
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|22.1    |  | Subsidiaries of the Registrant (incorporated by reference to Exhibit
22.1 to the Companys Annual Report on Form 10-K for the year ended
June 30, 2001, File No. 1-14645).
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|        |  |                                                                                                                                                                           
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|23.1    |  | Consent of Grant Thornton LLP.                                                                                                                                            

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