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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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(Mark One)

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

For the quarterly period ended September 30, 2007.

OR



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

For the transition period from  to
.

Commission file number: 333-133895



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AFFINION
GROUP, INC.

(Exact name of Registrant as specified in its charter)



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|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Delaware                                                       |  | 16-1732152                             
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. employer Identification number)

100 Connecticut Avenue

Norwalk, CT 06850

(Address, including zip code, of principal executive
offices)

(203) 956-1000

(Registrants telephone number, including area code)



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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  x    No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer. See definition of accelerated filer and large
accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ̈Accelerated filer ̈Non-accelerated filer  x

Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈No  x

The number of shares outstanding of the
registrants common stock, $0.01 par value, as of November 13, 2007 was 100.



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##### Table of Contents

TABLE OF CONTENTS



|                              |  |                                                                                                                           |  |     
|----------------------------- |  | ------------------------------------------------------------------------------------------------------------------------- |  | ----
|                              |  |                                                                                                                           |  | Page
|Part I. FINANCIAL INFORMATION |  | 1                                                                                                                        
|                              |  |                                                                                                                          
|Item 1.                       |  | Financial Statements                                                                                                      |  | 1   
|                              |  |                                                                                                                          
|                              |  | Unaudited Condensed Consolidated Balance Sheets as of September 30, 2007 and December 31, 2006                            |  | 1   
|                              |  |                                                                                                                          
|                              |  | Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2007 and 2006 |  | 2   
|                              |  |                                                                                                                          
|                              |  | Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2007 and 2006           |  | 3   
|                              |  |                                                                                                                          
|                              |  | Notes to Unaudited Condensed Consolidated Financial Statements                                                            |  | 4   
|                              |  |                                                                                                                          
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                     |  | 24  
|                              |  |                                                                                                                          
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                                                                |  | 43  
|                              |  |                                                                                                                          
|Item 4.                       |  | Controls and Procedures                                                                                                   |  | 43  
|                              | 
|Part II. OTHER INFORMATION    |  | 44                                                                                                                       
|                              |  |                                                                                                                          
|Item 1.                       |  | Legal Proceedings                                                                                                         |  | 44  
|                              |  |                                                                                                                          
|Item 1A.                      |  | Risk Factors                                                                                                              |  | 44  
|                              |  |                                                                                                                          
|Item 2.                       |  | Unregistered Sales of Equity in Securities and Use of Proceeds                                                            |  | 44  
|                              |  |                                                                                                                          
|Item 3.                       |  | Defaults Upon Senior Securities                                                                                           |  | 44  
|                              |  |                                                                                                                          
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                                                       |  | 44  
|                              |  |                                                                                                                          
|Item 5.                       |  | Other Information                                                                                                         |  | 44  
|                              |  |                                                                                                                          
|Item 6.                       |  | Exhibits                                                                                                                  |  | 49  
|                              | 
|SIGNATURES                    |  |                                                                                                                          



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##### Table of Contents

Part I. FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

AFFINION GROUP, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2007 AND DECEMBER 31, 2006

(In millions, except share amounts)



|                                                                                                                             |  |                   |         |   |                  |   |         |  
|---------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                                             |  | September 30,2007 |         |   | December 31,2006 |  
|Assets                                                                                                                       |  |                   |         |   |                  |   |         |  
|Current assets:                                                                                                              |  |                   |         |   |                  |   |         |  
|Cash and cash equivalents                                                                                                    |  | $                 | 22.5    |   |                  | $ | 84.3    |  
|Restricted cash                                                                                                              |  |                   | 30.1    |   |                  |   | 28.8    |  
|Receivables (net of allowance for doubtful accounts of $1.7 and $2.4, respectively)                                          |  |                   | 69.5    |   |                  |   | 70.7    |  
|Receivables from related parties                                                                                             |  |                   | 12.5    |   |                  |   | 15.5    |  
|Profit-sharing receivables from insurance carriers                                                                           |  |                   | 72.0    |   |                  |   | 59.5    |  
|Prepaid commissions                                                                                                          |  |                   | 59.1    |   |                  |   | 72.5    |  
|Income taxes receivable                                                                                                      |  |                   |        |   |                  |   | 3.2     |  
|Other current assets                                                                                                         |  |                   | 36.9    |   |                  |   | 39.4    |  
|                                                                                                                             |  |                   |         |   |                  |   |         |  
|Total current assets                                                                                                         |  |                   | 302.6   |   |                  |   | 373.9   |  
|Property and equipment, net                                                                                                  |  |                   | 89.7    |   |                  |   | 100.0   |  
|Contract rights and list fees, net                                                                                           |  |                   | 66.7    |   |                  |   | 62.0    |  
|Goodwill                                                                                                                     |  |                   | 301.7   |   |                  |   | 300.0   |  
|Other intangibles, net                                                                                                       |  |                   | 811.9   |   |                  |   | 1,005.5 |  
|Other non-current assets                                                                                                     |  |                   | 48.2    |   |                  |   | 48.1    |  
|                                                                                                                             |  |                   |         |   |                  |   |         |  
|Total assets                                                                                                                 |  | $                 | 1,620.8 |   |                  | $ | 1,889.5 |  
|                                                                                                                             |  |                   |         |   |                  |   |         |  
|Liabilities and Stockholders Equity (Deficit)                                                                               |  |                   |         |   |                  |   |         |  
|Current liabilities:                                                                                                         |  |                   |         |   |                  |   |         |  
|Current portion of long-term debt                                                                                            |  | $                 | 25.2    |   |                  | $ | 50.2    |  
|Accounts payable and accrued expenses                                                                                        |  |                   | 275.9   |   |                  |   | 279.3   |  
|Payables to related parties                                                                                                  |  |                   | 9.1     |   |                  |   | 11.9    |  
|Deferred revenue                                                                                                             |  |                   | 253.6   |   |                  |   | 272.3   |  
|Deferred income taxes                                                                                                        |  |                   | 9.6     |   |                  |   | 11.5    |  
|Income taxes payable                                                                                                         |  |                   | 3.6     |   |                  |   |        |  
|                                                                                                                             |  |                   |         |   |                  |   |         |  
|Total current liabilities                                                                                                    |  |                   | 577.0   |   |                  |   | 625.2   |  
|Long-term debt                                                                                                               |  |                   | 1,308.7 |   |                  |   | 1,358.2 |  
|Deferred income taxes                                                                                                        |  |                   | 6.0     |   |                  |   | 20.2    |  
|Deferred revenue                                                                                                             |  |                   | 42.0    |   |                  |   | 27.7    |  
|Other long-term liabilities                                                                                                  |  |                   | 58.8    |   |                  |   | 44.5    |  
|                                                                                                                             |  |                   |         |   |                  |   |         |  
|Total liabilities                                                                                                            |  |                   | 1,992.5 |   |                  |   | 2,075.8 |  
|                                                                                                                             |  |                   |         |   |                  |   |         |  
|Minority interests                                                                                                           |  |                   | 0.5     |   |                  |   | 0.6     |  
|                                                                                                                             |  |                   |         |   |                  |   |         |  
|Commitments and contingencies (Note 6)                                                                                       |  |                   |         |   |                  |   |         |  
|                                                                                                                             |  |                  
|Stockholders Equity (Deficit):                                                                                              |  |                   |         |   |                  |   |         |  
|Common stock and additional paid-in capital, $0.01 par value, 1,000 shares authorized, and 100 shares issued and outstanding |  |                   | 348.8   |   |                  |   | 380.9   |  
|Accumulated deficit                                                                                                          |  |                   | (732.0  | ) |                  |   | (574.5  | )
|Accumulated other comprehensive income                                                                                       |  |                   | 11.0    |   |                  |   | 6.7     |  
|                                                                                                                             |  |                   |         |   |                  |   |         |  
|Total stockholders equity (deficit)                                                                                         |  |                   | (372.2  | ) |                  |   | (186.9  | )
|                                                                                                                             |  |                   |         |   |                  |   |         |  
|Total liabilities and stockholders equity (deficit)                                                                         |  | $                 | 1,620.8 |   |                  | $ | 1,889.5 |  
|                                                                                                                             |  |                   |         |   |                  |   |         |  

See notes to the unaudited condensed consolidated financial statements.



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AFFINION GROUP, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(In millions)



|                                                |  |                            |       |   |                           |   |       |                    |  |   |                   |   |  |   |         |  
|----------------------------------------------- |  | -------------------------- | ----- | - | ------------------------- | - | ----- | ------------------ |  | - | ----------------- | - |  | - | ------- | -
|                                                |  | For the Three Months Ended |       |   | For the Nine Months Ended |  
|                                                |  | September 30, 2007         |       |   | September 30,2006         |   |       | September 30, 2007 |  |   | September 30,2006 |  
|Net revenues                                    |  | $                          | 330.6 |   |                           | $ | 291.4 |                    |  | $ | 984.4             |   |  | $ | 801.6   |  
|                                                |  |                            |       |   |                           |   |       |                    |  |   |                   |   |  |   |         |  
|Expenses:                                       |  |                            |       |   |                           |   |       |                    |  |   |                   |   |  |   |         |  
|Marketing and commissions                       |  |                            | 149.3 |   |                           |   | 138.6 |                    |  |   | 452.9             |   |  |   | 412.2   |  
|Operating costs                                 |  |                            | 79.6  |   |                           |   | 81.4  |                    |  |   | 251.2             |   |  |   | 238.6   |  
|General and administrative                      |  |                            | 25.9  |   |                           |   | 26.4  |                    |  |   | 89.5              |   |  |   | 81.8    |  
|Depreciation and amortization                   |  |                            | 82.9  |   |                           |   | 106.7 |                    |  |   | 242.1             |   |  |   | 314.9   |  
|                                                |  |                            |       |   |                           |   |       |                    |  |   |                   |   |  |   |         |  
|Total expenses                                  |  |                            | 337.7 |   |                           |   | 353.1 |                    |  |   | 1,035.7           |   |  |   | 1,047.5 |  
|                                                |  |                            |       |   |                           |   |       |                    |  |   |                   |   |  |   |         |  
|Loss from operations                            |  |                            | (7.1  | ) |                           |   | (61.7 | )                  |  |   | (51.3             | ) |  |   | (245.9  | )
|Interest income                                 |  |                            | 0.9   |   |                           |   | 1.4   |                    |  |   | 3.6               |   |  |   | 4.3     |  
|Interest expense                                |  |                            | (38.7 | ) |                           |   | (39.3 | )                  |  |   | (107.7            | ) |  |   | (113.7  | )
|Other expense                                   |  |                            |      |   |                           |   | (0.1  | )                  |  |   |                  |   |  |   | (0.1    | )
|                                                |  |                            |       |   |                           |   |       |                    |  |   |                   |   |  |   |         |  
|Loss before income taxes and minority interests |  |                            | (44.9 | ) |                           |   | (99.7 | )                  |  |   | (155.4            | ) |  |   | (355.4  | )
|Income tax (expense) benefit                    |  |                            | 1.7   |   |                           |   | 1.1   |                    |  |   | (1.0              | ) |  |   | 0.7     |  
|Minority interests, net of tax                  |  |                            | (0.1  | ) |                           |   | (0.1  | )                  |  |   | (0.2              | ) |  |   | (0.3    | )
|                                                |  |                            |       |   |                           |   |       |                    |  |   |                   |   |  |   |         |  
|Net loss                                        |  | $                          | (43.3 | ) |                           | $ | (98.7 | )                  |  | $ | (156.6            | ) |  | $ | (355.0  | )
|                                                |  |                            |       |   |                           |   |       |                    |  |   |                   |   |  |   |         |  

See notes to the unaudited condensed consolidated financial statements.



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AFFINION GROUP, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF

CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(In millions)



|                                                                                |  |                           |        |   |                    |   |        |  
|------------------------------------------------------------------------------- |  | ------------------------- | ------ | - | ------------------ | - | ------ | -
|                                                                                |  | For the Nine Months Ended |       
|                                                                                |  | September 30, 2007        |        |   | September 30, 2006 |  
|Operating Activities                                                            |  |                           |        |   |                    |   |        |  
|Net loss                                                                        |  | $                         | (156.6 | ) |                    | $ | (355.0 | )
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |                           |        |   |                    |   |        |  
|Depreciation and amortization                                                   |  |                           | 242.1  |   |                    |   | 314.9  |  
|Amortization of favorable and unfavorable contracts                             |  |                           | (2.2   | ) |                    |   | 2.6    |  
|Amortization of debt discount and financing costs                               |  |                           | 5.0    |   |                    |   | 14.4   |  
|Unrealized loss (gain) on interest rate swap                                    |  |                           | 2.2    |   |                    |   | (1.5   | )
|Stock-based compensation                                                        |  |                           | 1.8    |   |                    |   | 7.8    |  
|Deferred income taxes                                                           |  |                           | (10.3  | ) |                    |   | (7.5   | )
|Net change in assets and liabilities:                                           |  |                           |        |   |                    |   |        |  
|Restricted cash                                                                 |  |                           | (1.1   | ) |                    |   | (3.4   | )
|Receivables                                                                     |  |                           | 3.0    |   |                    |   | (9.0   | )
|Receivables from related parties                                                |  |                           | 3.1    |   |                    |   | (2.2   | )
|Profit-sharing receivables from insurance carriers                              |  |                           | (12.5  | ) |                    |   | 8.6    |  
|Prepaid commissions                                                             |  |                           | 13.7   |   |                    |   | (41.5  | )
|Other current assets                                                            |  |                           | 3.0    |   |                    |   | 5.5    |  
|Contract rights and list fees                                                   |  |                           | (0.9   | ) |                    |   | (6.9   | )
|Other non-current assets                                                        |  |                           | (5.3   | ) |                    |   | (4.2   | )
|Accounts payable and accrued expenses                                           |  |                           | (10.7  | ) |                    |   | (3.9   | )
|Payables to related parties                                                     |  |                           | (4.9   | ) |                    |   | 1.9    |  
|Deferred revenue                                                                |  |                           | (4.6   | ) |                    |   | 165.2  |  
|Income taxes receivable and payable                                             |  |                           | 7.4    |   |                    |   | (1.0   | )
|Other long-term liabilities                                                     |  |                           | (6.9   | ) |                    |   | (4.3   | )
|Minority interests and other, net                                               |  |                           | (0.2   | ) |                    |   | 0.5    |  
|                                                                                |  |                           |        |   |                    |   |        |  
|Net cash provided by operating activities                                       |  |                           | 65.1   |   |                    |   | 81.0   |  
|                                                                                |  |                           |        |   |                    |   |        |  
|Investing Activities                                                            |  |                           |        |   |                    |   |        |  
|Capital expenditures                                                            |  |                           | (18.6  | ) |                    |   | (18.4  | )
|Acquisition-related payment, net of cash acquired                               |  |                           | (0.8   | ) |                    |   |       |  
|Restricted cash                                                                 |  |                           |       |   |                    |   | 2.1    |  
|                                                                                |  |                           |        |   |                    |   |        |  
|Net cash used in investing activities                                           |  |                           | (19.4  | ) |                    |   | (16.3  | )
|                                                                                |  |                           |        |   |                    |   |        |  
|Financing Activities                                                            |  |                           |        |   |                    |   |        |  
|Principal payments on borrowings                                                |  |                           | (75.1  | ) |                    |   | (444.0 | )
|Proceeds from borrowings                                                        |  |                           |       |   |                    |   | 385.7  |  
|Deferred financing costs                                                        |  |                           |       |   |                    |   | (10.9  | )
|Dividends paid to parent company                                                |  |                           | (32.1  | ) |                    |   |       |  
|Distribution to minority shareholder of a subsidiary                            |  |                           | (0.4   | ) |                    |   |       |  
|                                                                                |  |                           |        |   |                    |   |        |  
|Net cash used in financing activities                                           |  |                           | (107.6 | ) |                    |   | (69.2  | )
|                                                                                |  |                           |        |   |                    |   |        |  
|Effect of changes in exchange rates on cash and cash equivalents                |  |                           | 0.1    |   |                    |   | 2.4    |  
|                                                                                |  |                           |        |   |                    |   |        |  
|Net decrease in cash and cash equivalents                                       |  |                           | (61.8  | ) |                    |   | (2.1   | )
|Cash and cash equivalents, beginning of period                                  |  |                           | 84.3   |   |                    |   | 113.4  |  
|                                                                                |  |                           |        |   |                    |   |        |  
|Cash and cash equivalents, end of period                                        |  | $                         | 22.5   |   |                    | $ | 111.3  |  
|                                                                                |  |                           |        |   |                    |   |        |  
|Supplemental Disclosure of Cash Flow Information:                               |  |                           |        |   |                    |   |        |  
|Interest payments                                                               |  | $                         | 80.5   |   |                    | $ | 83.4   |  
|                                                                                |  |                           |        |   |                    |   |        |  
|Income tax payments                                                             |  | $                         | 4.9    |   |                    | $ | 6.3    |  
|                                                                                |  |                           |        |   |                    |   |        |  

See notes to the unaudited condensed consolidated financial statements.



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AFFINION GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise noted, all dollar amounts are in millions, except per share amounts)

1. BASIS OF PRESENTATION AND BUSINESS DESCRIPTION

Basis of Presentation  On October 17, 2005, Cendant Corporation (Cendant) completed the sale of the Cendant Marketing Services Division (the Predecessor) to Affinion Group, Inc. (the
Company or Affinion), an affiliate of Apollo Management V, L.P. (Apollo), pursuant to a purchase agreement dated July 26, 2005 for approximately $1.8 billion (the Apollo Transactions). The
purchase price consisted of approximately $1.7 billion of cash, net of estimated closing adjustments, plus $125.0 million face value of newly issued preferred stock (fair value of $80.4 million) of Affinion Group Holdings, Inc. (Affinion
Holdings), the Companys parent company, and a warrant (fair value of $16.7 million) that is exercisable into 4,437,170 shares of common stock of Affinion Holdings upon the earlier of four years or the achievement by Apollo of certain
investment return hurdles, and $38.1 million of transaction-related costs. Pursuant to the purchase agreement, Affinion acquired all of the outstanding capital stock and membership interests of the Predecessor, as well as substantially all of the
Predecessors assets and liabilities. On September 21, 2007, the Board of Directors of Affinion Holdings approved a 2.1-for-1 stock split of its common stock. Accordingly, all Affinion Holdings share and Affinion Holdings per share amounts
have been adjusted to reflect the September 2007 stock split.

All references to Cendant refer to Cendant Corporation, which changed its
name to Avis Budget Group in August 2006, and its consolidated subsidiaries, particularly in context of its business and operations prior to, and in connection with, the Companys separation from Cendant.

The Predecessor was a combined reporting entity that was comprised of the assets and liabilities used in managing and operating the marketing services
businesses of Cendant. The entities that comprise the Predecessor included Affinion Group, LLC (formerly known as Cendant Marketing Group, LLC) (AGLLC), Affinion Membership Services Holdings Subsidiary LLC (formerly known as Cendant
Membership Services Holdings Subsidiary LLC), Trilegiant Corporation (Trilegiant), TRL Group, Inc. (TRL Group), Affinion Benefits Group, Inc. (formerly known as Progeny Marketing Innovations Inc.), Affinion Loyalty Group,
Inc. (formerly known as Trilegiant Loyalty Solutions, Inc.) (TLS), Cendant Travel, Inc. (CTI), Affinion International Holdings Limited (formerly known as Cendant International Holdings Limited) (Affinion
International) and related companies. All of the entities that comprised the Predecessor were acquired by Affinion, an affiliate of Apollo, on October 17, 2005.

The accompanying unaudited condensed consolidated financial statements include the accounts and transactions of the Company. In presenting these
unaudited condensed consolidated financial statements, management makes estimates and assumptions that affect reported amounts of assets and liabilities and related disclosures, and disclosure of contingent assets and liabilities, at the date of the
financial statements, and reported amounts of revenues and expenses during the reporting periods. Estimates, by their nature, are based on judgments and available information at the time. As such, actual results could differ from those estimates. In
managements opinion, the unaudited condensed consolidated financial statements contain all normal recurring adjustments necessary for a fair presentation of interim results reported. The results of operations reported for interim periods are
not necessarily indicative of the results of operations for the entire year or any subsequent interim period.

The accompanying unaudited
condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and following the guidance of Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the U.S. Securities
and Exchange Commission (the SEC). As permitted under such rules, certain notes and other financial information normally required by accounting principles generally accepted in the United States of America have been condensed or omitted;
however, the unaudited condensed consolidated financial statements do include such notes and financial information sufficient so as to make the interim information presented not misleading. These unaudited condensed consolidated financial statements
should be read in conjunction with the audited consolidated financial statements and related notes of the Company as of December 31, 2006 and 2005, and for the year ended December 31, 2006 and for the period from October 17, 2005
(commencement of operations) to December 31, 2005, and the combined financial statements of the Predecessor for the period from January 1, 2005 to October 16, 2005 and for the year ended December 31, 2004, included in the
Companys Form 10-K.

Business Description  The Company is a leading global provider of comprehensive marketing
services and loyalty programs to many of the largest and most respected companies in the world. The Company partners with these leading companies to develop customized marketing programs that provide valuable products and services to their end
customers using its creative design and product development capabilities. These products and services enable the Companys marketing partners to strengthen their customer relationships, as well as generate significant incremental revenue,
generally in the form



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of commission payments. The Company has substantial expertise in deploying various types of media, such as direct mail and the Internet, and bundling unique
benefits to offer valuable products and services to the end customers of its marketing partners on a highly targeted basis. The Company provides credit monitoring and identity-theft resolution, accidental death and dismemberment insurance
(AD&D), discount travel services, loyalty programs, various checking account and credit card enhancement services and other products and services.



| |  |  | Affinion North America. Affinion North America comprises the Companys Membership, Insurance and Package, and Loyalty product operations in North
America.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Membership Products. The Company designs, implements and markets membership programs that provide members with access to a variety of discounts and
shop-at-home conveniences in such areas as retail merchandise, travel, automotive and home improvement as well as personal protection benefits and value-added services including credit monitoring and identity-theft resolution services.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Insurance and Package Products. The Company markets AD&D and other insurance programs and designs and provides checking account enhancement programs to
financial institutions.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Loyalty Products. The Company designs, implements and administers points-based loyalty programs for financial, travel, auto and other companies. The Company
also provides enhancement benefits to major financial institutions in connection with their credit and debit card programs.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Affinion International. Affinion International comprises the Companys Membership, Package and Loyalty product operations outside North America. The
Company expects to leverage its current Western European operational platform to expand its range of products and services, develop new affinity partner relationships in various industries and grow its geographical footprint.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Recently Issued Accounting Pronouncements

In June 2006, the FASB issued Statement of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109 (FIN 48), which
clarifies the accounting for uncertainty in income tax positions. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax
return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company
adopted FIN 48 as of January 1, 2007 and increased its tax reserves for uncertain tax positions included in other long-term liabilities by $9.4 million, decreased its long-term deferred income taxes by $7.9 million, decreased its income tax
payable by $0.6 million and increased its January 1, 2007 accumulated deficit by $0.9 million. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. There was no recognition of additional
penalties and interest required as a result of the adoption of FIN 48.

In September 2006, the FASB issued Statement of Financial
Accounting Standards No. 157, Fair Value Measurements (SFAS 157). SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about
fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, with earlier application encouraged. The Company is currently evaluating the potential impact that the adoption
of SFAS 157 will have on its consolidated financial position, results of operations or cash flows.

In February 2007, the FASB issued
Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities  Including an Amendment of FASB Statement No. 115 (SFAS 159). SFAS 159 permits
entities to choose to measure many financial instruments and other items at fair value. The fair value option permits entities to choose to measure eligible items at fair value at specified election dates. Unrealized gains and losses on items for
which the fair value option has been elected would be recognized in earnings at each subsequent reporting date. Generally, the fair value option may be applied instrument by instrument and is irrevocable unless a new election date occurs. SFAS 159
is effective as of the beginning of the first fiscal year that begins after November 15, 2007, with earlier adoption permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided that the entity also
elects to apply the provisions of SFAS 157. The Company is currently evaluating the potential impact that the adoption of SFAS 159 will have on its consolidated financial position, results of operations or cash flows.



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2. INTANGIBLE ASSETS

Intangible assets consisted of:



|                                  |  |                     |         |                         |   |        |                    |  |   |        
|--------------------------------- |  | ------------------- | ------- | ----------------------- | - | ------ | ------------------ |  | - | -------
|                                  |  | September 30, 2007 
|                                  |  | GrossCarryingAmount |         | AccumulatedAmortization |   |        | Net CarryingAmount
|Amortizable intangible assets:    |  |                     |         |                         |   |        |                    |  |   |        
|Member relationships              |  | $                   | 761.4   |                         | $ | (357.7 | )                  |  | $ | 403.7  
|Affinity relationships            |  |                     | 581.4   |                         |   | (232.1 | )                  |  |   | 349.3  
|Proprietary databases and systems |  |                     | 54.2    |                         |   | (34.2  | )                  |  |   | 20.0   
|Trademarks and tradenames         |  |                     | 25.8    |                         |   | (3.4   | )                  |  |   | 22.4   
|Patents and technology            |  |                     | 25.0    |                         |   | (8.5   | )                  |  |   | 16.5   
|                                  |  |                     |         |                         |   |        |                    |  |   |        
|                                  |  | $                   | 1,447.8 |                         | $ | (635.9 | )                  |  | $ | 811.9  
|                                  |  |                     |         |                         |   |        |                    |  |   |        
|                                  | 
|                                  |  | December 31, 2006  
|                                  |  | GrossCarryingAmount |         | AccumulatedAmortization |   |        | Net CarryingAmount
|Amortizable intangible assets:    |  |                     |         |                         |   |        |                    |  |   |        
|Member relationships              |  | $                   | 761.1   |                         | $ | (242.9 | )                  |  | $ | 518.2  
|Affinity relationships            |  |                     | 576.0   |                         |   | (161.7 | )                  |  |   | 414.3  
|Proprietary databases and systems |  |                     | 52.0    |                         |   | (20.9  | )                  |  |   | 31.1   
|Trademarks and tradenames         |  |                     | 25.5    |                         |   | (2.1   | )                  |  |   | 23.4   
|Patents and technology            |  |                     | 25.0    |                         |   | (6.5   | )                  |  |   | 18.5   
|                                  |  |                     |         |                         |   |        |                    |  |   |        
|                                  |  | $                   | 1,439.6 |                         | $ | (434.1 | )                  |  | $ | 1,005.5
|                                  |  |                     |         |                         |   |        |                    |  |   |        

Amortization expense relating to intangible assets was as follows:



|                                  |  |                            |      |                   |                           |      |                    |  |                   |       |  |   |      
|--------------------------------- |  | -------------------------- | ---- | ----------------- | ------------------------- | ---- | ------------------ |  | ----------------- | ----- |  | - | -----
|                                  |  | For the Three Months Ended |      |                   | For the Nine Months Ended
|                                  |  | September 30, 2007         |      | September 30,2006 |                           |      | September 30, 2007 |  | September 30,2006
|Member relationships              |  | $                          | 38.2 |                   | $                         | 52.5 |                    |  | $                 | 114.7 |  | $ | 158.1
|Affinity relationships            |  |                            | 23.0 |                   |                           | 39.7 |                    |  |                   | 68.6  |  |   | 107.3
|Proprietary databases and systems |  |                            | 4.5  |                   |                           | 4.4  |                    |  |                   | 13.3  |  |   | 13.0 
|Trademarks and tradenames         |  |                            | 0.5  |                   |                           | 0.5  |                    |  |                   | 1.3   |  |   | 1.3  
|Patents and technology            |  |                            | 0.6  |                   |                           | (0.7 | )                  |  |                   | 1.9   |  |   | 4.8  
|                                  |  |                            |      |                   |                           |      |                    |  |                   |       |  |   |      
|                                  |  | $                          | 66.8 |                   | $                         | 96.4 |                    |  | $                 | 199.8 |  | $ | 284.5
|                                  |  |                            |      |                   |                           |      |                    |  |                   |       |  |   |      

Based on the Companys amortizable intangible assets as of September 30, 2007, the
Company expects the related amortization expense for 2007 and the four succeeding fiscal years to be $254.1 million in 2007, $195.2 million in 2008, $144.8 million in 2009, $120.2 million in 2010 and $103.8 million in 2011.

Goodwill attributed to each of the Companys reporting segments is as follows:



|                               |  |                    |       |                  |   |      
|------------------------------ |  | ------------------ | ----- | ---------------- | - | -----
|                               |  | September 30, 2007 |       | December 31,2006
|Membership products            |  | $                  | 231.1 |                  | $ | 231.1
|Insurance and package products |  |                    | 58.3  |                  |   | 58.3 
|International products         |  |                    | 12.3  |                  |   | 10.6 
|                               |  |                    |       |                  |   |      
|                               |  | $                  | 301.7 |                  | $ | 300.0
|                               |  |                    |       |                  |   |      

The changes in the Companys carrying amount of goodwill in 2007 are due to changes in
foreign currency exchange rates.



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3. CONTRACT RENEWAL RIGHTS AND LIST FEES

Contract rights and list fees consisted of:



|                |  |                     |      |                         |   |       |                   |  |                     |      |                         |   |      |                   |   |      |   |  |   |     
|--------------- |  | ------------------- | ---- | ----------------------- | - | ----- | ----------------- |  | ------------------- | ---- | ----------------------- | - | ---- | ----------------- | - | ---- | - |  | - | ----
|                |  | September 30, 2007  |      | December 31, 2006      
|                |  | GrossCarryingAmount |      | AccumulatedAmortization |   |       | NetCarryingAmount |  | GrossCarryingAmount |      | AccumulatedAmortization |   |      | NetCarryingAmount
|Contract rights |  | $                   | 72.0 |                         | $ | (15.3 | )                 |  | $                   | 56.7 |                         | $ | 54.7 |                   | $ | (1.8 | ) |  | $ | 52.9
|List fees       |  |                     | 12.8 |                         |   | (2.8  | )                 |  |                     | 10.0 |                         |   | 10.3 |                   |   | (1.2 | ) |  |   | 9.1 
|                |  |                     |      |                         |   |       |                   |  |                     |      |                         |   |      |                   |   |      |   |  |   |     
|                |  | $                   | 84.8 |                         | $ | (18.1 | )                 |  | $                   | 66.7 |                         | $ | 65.0 |                   | $ | (3.0 | ) |  | $ | 62.0
|                |  |                     |      |                         |   |       |                   |  |                     |      |                         |   |      |                   |   |      |   |  |   |     

Amortization expense for the three and nine months ended September 30, 2007 was $6.1 million
and $14.9 million, respectively, of which $0.5 million and $1.6 million, respectively, is included in marketing expense and $5.6 million and $13.3 million, respectively, is included in depreciation and amortization expense in the unaudited condensed
consolidated statement of operations. Amortization expense for the three and nine months ended September 30, 2006 was $0.5 million and $1.3 million, respectively, of which $0.3 million and $0.8 million, respectively, is included in marketing
expense and $0.2 million and $0.5 million, respectively, is included in depreciation and amortization expense in the unaudited condensed consolidated statement of operations. Based on the Companys contract rights and list fees as of
September 30, 2007, the Company expects the related amortization expense for 2007 and the four succeeding years to be approximately $20.1 million in 2007, $20.3 million in 2008, $16.4 million in 2009, $12.0 million in 2010 and $9.4 million in
2011.

4. LONG-TERM DEBT

Long-term
debt consisted of:



|                                                                                                                                                 |  |                   |         |   |                  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                                                                 |  | September 30,2007 |         |   | December 31,2006 |  
|Term loan due 2012                                                                                                                               |  | $                 | 680.0   |   |                  | $ | 755.0   |  
|101/8% senior notes due 2013, net of unamortized discount of $1.7 and $2.0, respectively, with an effective interest rate of 10.285%             |  |                   | 302.3   |   |                  |   | 302.0   |  
|111/2% senior subordinated notes due 2015, net of unamortized discount of $4.3 and $4.7, respectively, with an effective interest rate of 11.75% |  |                   | 351.2   |   |                  |   | 350.8   |  
|Capital lease obligations                                                                                                                        |  |                   | 0.4     |   |                  |   | 0.6     |  
|                                                                                                                                                 |  |                   |         |   |                  |   |         |  
|Total debt                                                                                                                                       |  |                   | 1,333.9 |   |                  |   | 1,408.4 |  
|Less: current portion of long-term debt                                                                                                          |  |                   | (25.2   | ) |                  |   | (50.2   | )
|                                                                                                                                                 |  |                   |         |   |                  |   |         |  
|Long-term debt                                                                                                                                   |  | $                 | 1,308.7 |   |                  | $ | 1,358.2 |  
|                                                                                                                                                 |  |                   |         |   |                  |   |         |  

On October 17, 2005, the Company entered into a senior secured credit facility
(Affinion Credit Facility). The Affinion Credit Facility is comprised of a term loan that initially totaled $860.0 million due in 2012 and a $100.0 million revolving credit facility terminating in 2011. The revolving credit facility
includes letter of credit and swingline sub-facilities.

The Affinion Credit Facility is secured by all of the outstanding stock of the
Company held by Affinion Holdings and substantially all of the assets of the Company, subject to certain exceptions. Through September 30, 2007, the Company made eight voluntary principal prepayments of the term loan aggregating $180.0 million
and, therefore, all of the Companys mandatory quarterly repayment obligations have been satisfied. The Affinion Credit Facility permits the Company to obtain additional borrowing capacity up to the greater of $175.0 million and an amount equal
to Adjusted EBITDA, as set forth in the agreement governing the Affinion Credit Facility, for the most recent four-quarter period. Effective January 4, 2007, the Affinion Credit Facility was amended to decrease the interest rate on the term
loan facility by 25 basis points, initially, and to provide for an additional 25 basis point decrease if the corporate family rating of Affinion Group reached B1 or higher by Moodys and B+ or higher by S&P. The amendment also modified the
definition of change of control. The revolving credit facility carries a commitment fee of 0.5% on the unused amount. As of September 30, 2007 and December 31, 2006, no borrowings were outstanding under the revolving credit facility. As of
September 30, 2007, the Company has $98.5 million available for borrowing under the Affinion Credit Facility.

On October 17, 2005, the Company issued senior notes (Senior Notes), with a face value of $270.0 million, for net proceeds of $266.4 million. The Senior Notes bear interest at 101/8% per annum, payable semi-annually on April 15 and October 15 of each year. The Senior Notes mature on October 15, 2013. The Senior Notes
are senior unsecured obligations and rank equally in right of payment with the Companys existing and future senior obligations and senior to the Companys



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existing and future senior subordinated indebtedness. As discussed in Note 10Guarantor/Non-Guarantor Supplemental Financial Information, the Senior
Notes are guaranteed by certain subsidiaries of the Company. The Senior Notes contain restrictive covenants related primarily to the Companys ability to distribute dividends, redeem or repurchase capital stock, sell assets, issue additional
debt or merge with or acquire other companies.

On May 3, 2006, the Company
issued an additional $34.0 million aggregate principal amount of 101/8% senior notes due 2013 (the Senior Notes). These Senior Notes were
issued as additional notes under the Senior Notes indenture dated October 17, 2005 and, together with the $270.0 million of Senior Notes originally issued under such indenture, are treated as a single class for all purposes under the indenture,
including, without limitation, waivers, amendments, redemptions and offers to purchase.

On April 26, 2006, the Company issued $355.5 million aggregate principal amount of 111/2% senior subordinated notes
due October 15, 2015 (the Senior Subordinated Notes). The interest on the Senior Subordinated Notes is payable semi-annually. The Senior Subordinated Notes are unsecured obligations of the Company and rank junior in right of payment
to the Companys existing and future senior obligations and senior to the Companys future subordinated obligations. The Senior Subordinated Notes are guaranteed by the same subsidiaries of the Company that guarantee the Affinion Credit
Facility and the Senior Notes as discussed in Note 10Guarantor/Non-Guarantor Supplemental Financial Information. The Senior Subordinated Notes contain restrictive covenants related primarily to the Companys ability to distribute
dividends, redeem or repurchase capital stock, sell assets, issue additional debt or merge with or acquire other companies.

On September 13, 2006, the Company completed a registered exchange offer and exchanged all of
the then outstanding 101/8% Senior Notes due 2013 and all of the then outstanding 111/2% Senior Subordinated Notes due 2015 into a like amount of 101/8% Senior Notes due 2013 and 111/2% Senior Subordinated Notes due 2015, respectively, that have been registered under the Securities Act of 1933, as amended.

Through September 30, 2007, the Company had made eight voluntary principal prepayments of the term loan under the Affinion Credit
Facility aggregating $180.0 million. Additionally, we made a $25.0 million principal prepayment on November 13, 2007 and we may elect to make additional prepayments if it is beneficial to do so.

As of September 30, 2007, the Company is in compliance with various covenants contained in the Affinion Credit Facility and the indentures that
govern the Senior Notes and the Senior Subordinated Notes. Based on managements expectations of the Companys ability to voluntarily prepay principal during the next twelve months under its term loan, $25.0 million of the term loan has
been classified as current portion of long-term debt on the September 30, 2007 unaudited condensed consolidated balance sheet.

5. INCOME TAXES

The Companys effective income tax rates for the three and nine months ended September 30, 2007 were 4.1% and (0.6)%,
respectively. These rates differ from the U.S. federal statutory rate of 35% primarily due to the effects of certain state income taxes, foreign taxes and valuation allowances required with respect to the increase in certain net deferred tax assets.

The Companys effective income tax rates for the three and nine months ended September 30, 2006 were 1.1% and 0.2%,
respectively. These rates differ from the U.S. federal statutory rate of 35% primarily due to the effects of certain state income taxes, foreign taxes and valuation allowances required with respect to the increase in certain net deferred tax assets.
Additionally, with respect to the nine months ended September 30, 2006, valuation allowances relating to certain state net deferred tax assets of approximately $1.5 million were reversed in the first quarter of 2006.

The Company adopted FIN 48 as of January 1, 2007 and increased its tax reserves for uncertain tax positions included in other long-term liabilities
by $9.4 million, decreased its long-term deferred income taxes by $7.9 million, decreased its income taxes payable by $0.6 million and increased its January 1, 2007 accumulated deficit by $0.9 million. The Company recognizes interest and
penalties related to uncertain tax positions in income tax expense. There was no recognition of additional penalties and interest required as a result of the adoption of FIN 48.

The Companys income tax returns are periodically examined by various tax authorities. In connection with these examinations, certain tax
authorities, including the Internal Revenue Service, may raise issues and impose additional assessments. The Company regularly evaluates the likelihood of additional assessments resulting from these examinations and establishes liabilities, through
the provision for income taxes, for potential amounts that may result therefrom. The recognition of uncertain tax benefits are not expected to have a material impact on the Companys effective tax rate or results of operations. Tax years which
are open to domestic examination include Federal, state and local. For significant foreign jurisdictions, tax years in Germany and the United Kingdom remain open. The period for which both domestic and foreign tax years are open is based on local
laws for each jurisdiction which have not been extended beyond applicable statutes. The Company does not believe that it is reasonably possible that the total amount of unrecognized tax benefits will change significantly within the next 12 months.
Any income tax liabilities or refunds relating to periods prior to October 17, 2005 are the responsibility of Cendant.



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6. COMMITMENTS AND CONTINGENCIES

Litigation

The Company is involved in claims, legal proceedings and governmental inquiries
related to employment matters, contract disputes, business practices, trademark and copyright infringement claims and other commercial matters.

The Company is also a party to a number of lawsuits which were brought against it or its affiliates, each of which alleges to be a class action in nature and each of which alleges that the Company violated certain federal or state consumer
protection statutes (certain of which are described below). The Company intends to vigorously defend itself against these lawsuits.

On
August 9, 2005, a class action suit (the August 2005 Suit) was filed against Trilegiant in the U.S. District Court for the Northern District of California, San Francisco Division. The claim asserts violations of the Electronic Funds
Transfer Act and various California consumer protection statutes. The suit seeks unspecified actual damages, statutory damages, attorneys fees, costs and injunctive relief.

On January 28, 2005, a class action complaint (the January 2005 Suit) was filed against The Bon, Inc., FACS Group, Inc., and Trilegiant
in the Superior Court of Washington, Spokane County. The claim asserts violations of various consumer protection statutes. The Company filed a motion to compel arbitration, which was denied by the court. The Company appealed the courts
decision, and the case has been stayed until the appellate court has ruled on the motion to compel arbitration.

On November 12, 2002,
a class action complaint (the November 2002 Class Action) was filed against Sears, Roebuck & Co., Sears National Bank, Cendant Membership Services, Inc., and Allstate Insurance Company in the Circuit Court of Alabama for Greene
County alleging, among other things, breach of contract, unjust enrichment, breach of duty of good faith and fair dealing and violations of the Illinois consumer fraud and deceptive practices act. The case was removed to the U.S. District Court for
the Northern District of Alabama but was remanded to the Circuit Court of Alabama for Greene County. The Company has filed a motion to compel arbitration, which is still pending.

On November 15, 2001, a class action complaint (the 2001 Class Action) was filed in Madison County, Illinois against Trilegiant alleging
violations of state consumer protection statutes in connection with the sale of certain membership programs. Motions to dismiss were denied and certification of a class of consumers has been granted; the exact size of the certified class is not
known at this time.

The Company believes that the amount accrued for the above matters is adequate, and the reasonably possible loss
beyond the amounts accrued, while not estimatable, will not have a material adverse effect on its financial condition, results of operations, or cash flows based on information currently available. However, litigation is inherently unpredictable
and, although the Company believes that accruals are adequate and it intends to vigorously defend itself against such matters, unfavorable resolution could occur, which could have a material adverse effect on financial condition, results of
operations or cash flows.

Subject to certain limitations, Cendant has agreed to indemnify the Company for actual losses, damages,
liabilities, claims, costs and expenses and taxes incurred in connection with certain of the matters described above. Cendants indemnification obligations have been assumed by Wyndham and Realogy as successors to various segments of
Cendants business. See Note 8  Related Party Transactions for a summary of the terms of the indemnification agreements.

Surety Bonds and
Letters of Credit

In the ordinary course of business, the Company is required to provide surety bonds to various state authorities
in order to operate its membership, insurance and travel agency programs. Cendant had previously guaranteed the surety bonds issued on behalf of the Predecessor. As of September 30, 2007, the Company provided guarantees for surety bonds
totaling approximately $10.9 million and issued letters of credit totaling $1.8 million.

7. STOCK-BASED COMPENSATION

In connection with the closing of the Apollo Transactions on October 17, 2005, Affinion Holdings adopted the 2005 Stock Incentive Plan (the
Plan). The Plan authorizes the Board of Directors (the Board) to grant non-qualified, non-assignable stock options and rights to purchase shares of Affinion Holdings common stock to directors and employees of, and



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consultants to, Affinion Holdings and its subsidiaries. Options granted under the Plan have an exercise price no less than the fair market value of a share
of the underlying common stock on the date of grant. Stock awards have a purchase price determined by the Board. The Board was authorized to grant up to 4.3 million shares of its common stock under the Plan over a ten year period. In January
2007, the Board adopted an amendment to the Plan increasing the number of shares issuable under the Plan to 4.9 million shares. As of September 30, 2007, there were 0.2 million shares available for future grants.

Stock Options

Stock options
granted to employees during the nine months ended September 30, 2007 are comprised of three tranches with the following terms:



|               |  |           |                       |           |   |                         |  |   |                     
|-------------- |  | --------- | --------------------- | --------- | - | ----------------------- |  | - | --------------------
|               |  | Tranche A |                       | Tranche B |   | Tranche C              
|Exercise Price |  | $         | 4.80                  |           | $ | 4.80                    |  | $ | 4.80                
|Vesting        |  |           | Ratably over 5 years* |           |   | Ratably after 8 years** |  |   | 100% after 8 years**
|Term of option |  |           | 10 years              |           |   | 10 years                |  |   | 10 years            

---

|* | In the event of a sale of the Company, vesting for tranche A occurs 18 months after the date of sale.
|- | -----------------------------------------------------------------------------------------------------

|** | Tranche B and C vesting would be accelerated upon specified realized returns to Apollo.
|-- | ---------------------------------------------------------------------------------------

The fair value of each option award during the nine months ended September 30, 2007 is estimated on the date of grant using the Black-Scholes option-pricing model based on the assumptions noted in the following
table. Expected volatilities are based on historical volatilities of comparable companies. The expected term of the options granted represents the period of time that options are expected to be outstanding.



|                         |  |           |   |  |           |   |  |           |  
|------------------------ |  | --------- | - |  | --------- | - |  | --------- | -
|                         |  | Tranche A |   |  | Tranche B |   |  | Tranche C |  
|Expected volatility      |  | 43        | % |  | 47        | % |  | 48        | %
|Expected life (in years) |  | 6.50      |   |  | 8.43      |   |  | 8.72      |  
|Risk-free interest rate  |  | 4.40      | % |  | 4.46      | % |  | 4.46      | %
|Dividend yield           |  |          | % |  |          | % |  |          | %

A summary of option activity relating to options granted to employees is presented below (number of options in
thousands):



|                                                    |  |           |       |   |           |   |       |           |  |   |                   |   |  |   |     
|--------------------------------------------------- |  | --------- | ----- | - | --------- | - | ----- | --------- |  | - | ----------------- | - |  | - | ----
|                                                    |  | Tranche A |       |   | Tranche B |   |       | Tranche C |  |   | Board ofDirectors
|Outstanding at January 1, 2007                      |  |           | 2,059 |   |           |   | 1,029 |           |  |   | 1,029             |   |  |   | 276 
|Granted                                             |  |           | 29    |   |           |   | 15    |           |  |   | 15                |   |  |   |    
|Exercised                                           |  |           |      |   |           |   |      |           |  |   |                  |   |  |   |    
|Forfeited or expired                                |  |           | (42   | ) |           |   | (21   | )         |  |   | (21               | ) |  |   |    
|                                                    |  |           |       |   |           |   |       |           |  |   |                   |   |  |   |     
|Outstanding at March 31, 2007                       |  |           | 2,046 |   |           |   | 1,023 |           |  |   | 1,023             |   |  |   | 276 
|Granted                                             |  |           | 103   |   |           |   | 51    |           |  |   | 51                |   |  |   |    
|Exercised                                           |  |           |      |   |           |   |      |           |  |   |                  |   |  |   |    
|Forfeited or expired                                |  |           | (7    | ) |           |   | (3    | )         |  |   | (3                | ) |  |   |    
|                                                    |  |           |       |   |           |   |       |           |  |   |                   |   |  |   |     
|Outstanding at June 30, 2007                        |  |           | 2,142 |   |           |   | 1,071 |           |  |   | 1,071             |   |  |   | 276 
|Granted                                             |  |           |      |   |           |   |      |           |  |   |                  |   |  |   |    
|Exercised                                           |  |           |      |   |           |   |      |           |  |   |                  |   |  |   |    
|Forfeited or expired                                |  |           | (7    | ) |           |   | (5    | )         |  |   | (5                | ) |  |   |    
|                                                    |  |           |       |   |           |   |       |           |  |   |                   |   |  |   |     
|Outstanding at September 30, 2007                   |  |           | 2,135 |   |           |   | 1,066 |           |  |   | 1,066             |   |  |   | 276 
|                                                    |  |           |       |   |           |   |       |           |  |   |                   |   |  |   |     
|Vested or expected to vest at September 30, 2007    |  |           | 2,135 |   |           |   | 1,066 |           |  |   | 1,066             |   |  |   | 276 
|                                                    |  |           |       |   |           |   |       |           |  |   |                   |   |  |   |     
|Exercisable at September 30, 2007                   |  |           | 347   |   |           |   |      |           |  |   |                  |   |  |   | 276 
|                                                    |  |           |       |   |           |   |       |           |  |   |                   |   |  |   |     
|Weighted average remaining contractual term (years) |  |           | 8.3   |   |           |   | 8.3   |           |  |   | 8.3               |   |  |   | 8.9 
|Weighted average grant date fair value per option   |  | $         | 2.38  |   |           | $ | 2.84  |           |  | $ | 2.91              |   |  | $ | 2.63

Based on the estimated fair values of options granted, stock-based compensation expense for the
three and nine months ended September 30, 2007 totaled $0.5 million and $1.3 million, respectively. Based on the estimated fair value of options



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granted, stock-based compensation expense for the three and nine months ended September 30, 2006 totaled $0.7 million and $1.5 million, respectively. As
of September 30, 2007, there was $8.1 million of unrecognized compensation cost related to the remaining vesting period of options granted under the Plan. This cost will be recorded in future periods as stock-based compensation expense over a
weighted average period of approximately 2.3 years.

In January 2007, Affinion Holdings declared a special dividend on its common stock. As
a result of the special dividend, in accordance with the Affinion Group Holdings Inc. 2005 Stock Incentive Plan, Affinion Holdings modified the outstanding stock options to make the option holders whole. The modifications were effected through a
distribution to option holders of $5.2 million and an adjustment of the exercise price of the then outstanding options to $1.43. The distribution to option holders was recognized by the Company as compensation expense in the first quarter of
2007.

Restricted Stock

In connection with the Apollo Transactions, the Chief Executive Officer was granted 105,000 shares of restricted stock of Affinion Holdings at a purchase price of $0.01 per share. This award was scheduled to vest 100% after five years of
service or earlier upon a change of control of Affinion Holdings. In March 2007, the Board accelerated the vesting date to April 2, 2007. The fair value of this award was estimated to be $0.5 million, based upon the grant date fair value per
common share of Affinion Holdings of $4.76 and the remaining unamortized compensation expense was recognized in general and administrative expense as stock-based compensation expense in the first quarter of 2007.

In January 2007, the Board granted 21,000 shares of restricted stock of Affinion Holdings with a purchase price of $0.01 per share to the Companys
Chief Financial Officer. This award vests 100% upon the earlier of three years of service or a change in control of Affinion Holdings. The fair value of the award is estimated to be $0.2 million, based upon the estimated fair value per share of
common stock of Affinion Holdings, and is being amortized on a straight-line basis to general and administrative expense over the service period.

In May 2007, the Board granted 42,000 shares of restricted stock of Affinion Holdings with a purchase price of $0.01 per share to Affinion Internationals Chief Financial Officer. This award vests 100% upon the earlier of three years
of service or a change in control of Affinion Holdings. The fair value of the award is estimated to be $0.4 million, based upon the estimated fair value per share of common stock of Affinion Holdings, and is being amortized on a straight-line basis
to general and administrative expense over the service period.

A summary of restricted stock activity is presented below (number of shares
of restricted stock in thousands):



|                                                             |  |                           |   |  |                                      |     
|------------------------------------------------------------ |  | ------------------------- | - |  | ------------------------------------ | ----
|                                                             |  | Number ofRestrictedShares |   |  | Weighted AverageGrant Date FairValue
|Outstanding restricted unvested awards at January 1, 2007    |  | 105                       |   |  | $                                    | 4.76
|Granted                                                      |  | 21                        |   |  |                                      | 9.52
|Vested                                                       |  | (105                      | ) |  |                                      | 4.76
|Forfeited                                                    |  |                          |   |  |                                      |    
|                                                             |  |                           |   |  |                                      |     
|Outstanding restricted unvested awards at March 31, 2007     |  | 21                        |   |  |                                      | 9.52
|Granted                                                      |  | 42                        |   |  |                                      | 9.52
|Vested                                                       |  |                          |   |  |                                      |    
|Forfeited                                                    |  |                          |   |  |                                      |    
|                                                             |  |                           |   |  |                                      |     
|Outstanding restricted unvested awards at June 30, 2007      |  | 63                        |   |  |                                      | 9.52
|Granted                                                      |  |                          |   |  |                                      |    
|Vested                                                       |  |                          |   |  |                                      |    
|Forfeited                                                    |  |                          |   |  |                                      |    
|                                                             |  |                           |   |  |                                      |     
|Outstanding restricted unvested awards at September 30, 2007 |  | 63                        |   |  | $                                    | 9.52
|                                                             |  |                           |   |  |                                      |     
|Weighted average remaining contractual term (in years)       |  | 2.5                       |   |  |                                      |     

Based on the estimated fair values of restricted stock granted, stock-based compensation expense
for the three and nine months ended September 30, 2007 totaled $0.1 million and $0.5 million, respectively. Based on the estimated fair values of restricted stock granted, stock-based compensation expense for the three and nine months ended
September 30, 2006 totaled less than $0.1 million and $0.1 million, respectively. As of September 30, 2007, there was $0.5 million of unrecognized compensation cost related to the remaining vesting period of restricted stock granted under
the Plan. This cost will be recorded in future periods as stock-based compensation expense over a weighted average period of approximately 1.3 years.



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8. RELATED PARTY TRANSACTIONS

Post-Closing Relationships with Cendant

Cendant has agreed to indemnify the Company, Affinion Holdings and the
Companys affiliates (collectively the indemnified parties) for breaches of representations, warranties and covenants made by Cendant, as well as for other specified matters, certain of which are described below. Affinion Holdings
and the Company have agreed to indemnify Cendant for breaches of representations, warranties and covenants made in the purchase agreement, as well as for certain other specified matters. Generally, all parties indemnification obligations with
respect to breaches of representations and warranties (except with respect to the matters described below) (i) are subject to a $0.1 million occurrence threshold, (ii) are not effective until the aggregate amount of losses suffered by the
indemnified party exceeds $15.0 million (and then only for the amount of losses exceeding $15.0 million) and (iii) are limited to $275.1 million of recovery. Generally, subject to certain exceptions of greater duration, the parties
indemnification obligations with respect to representations and warranties survived until April 15, 2007 with indemnification obligations related to covenants surviving until the applicable covenant has been fully performed.

In connection with the purchase agreement, Cendant agreed to specific indemnification obligations with respect to the matters described below.

Excluded Litigation. Cendant has agreed to fully indemnify the indemnified parties with respect to any pending or future
litigation, arbitration, or other proceeding relating to accounting irregularities in the former CUC International, Inc. announced on April 15, 1998.

Certain Litigation and Compliance with Law Matters. Cendant has agreed to indemnify the indemnified parties up to specified amounts for: (a) breaches of its representations and warranties with respect to
legal proceedings that (1) occur after the date of the purchase agreement, (2) relate to facts and circumstances related to the business of AGLLC or Affinion International and (3) constitute a breach or violation of its compliance
with law representations and warranties, (b) breaches of its representations and warranties with respect to compliance with laws to the extent related to the business of AGLLC or Affinion International and (c) the August 2005 Suit and the
January 2002 Class Action (as defined in the Companys Form 10-K for the year ended December 31, 2006).

Cendant, Affinion
Holdings and the Company have agreed that losses up to $15.0 million incurred with respect to these matters will be borne solely by the Company and losses in excess of $15.0 million will be shared by the parties in accordance with agreed upon
allocations. The Company has the right at all times to control litigation related to shared losses and Cendant has consultation rights with respect to such litigation.

Other Litigation. Cendant has agreed to indemnify the Company for specified amounts with respect to losses incurred in connection with the 2001 Class Action. Until September 30, 2006, Cendant had the right
to control and settle this litigation, subject to certain consultation and other specified limitations. Subsequent to September 30, 2006, the Company has the right to control and settle this litigation, subject to certain consultation and other
specified limitations.

The Company will retain all liability with respect to the November 2002 Class Action and will not be indemnified by
Cendant for losses related thereto.

As publicly announced, as part of a plan to split into four independent companies, Cendant has
(i) distributed the equity interests it previously held in its hospitality services business (Wyndham) and its real estate services business (Realogy) to Cendant stockholders and (ii) sold its travel services
business (Travelport) to a third party. Cendant continues as a publicly traded company which owns the vehicle rental business (Avis/Budget, together with Wyndham and Realogy, the Cendant Entities). Subject to
certain exceptions, Wyndham and Realogy have agreed to share Cendants contingent and other liabilities (including its indemnity obligations to the Company described above and other liabilities to the Company in connection with the Apollo
Transactions) in specified percentages. If any Cendant Entity defaults in its payment, when due, of any such liabilities, the remaining Cendant Entities are required to pay an equal portion of the amounts in default.

In connection with the Apollo Transactions, the Company entered into a master transition services agreement with certain subsidiaries of Cendant,
pursuant to which the Cendant subsidiaries will provide certain services to the Company at cost for different periods of time generally not exceeding two years from the closing of the Apollo Transactions. These services include financial systems
support, treasury function services, information technology and telecommunications services, including help desk services. The expense for such services was $0.3 million and $1.0 million for the three and nine months ended September 30, 2007,
respectively, and $0.8 million and $2.5 million for the three and nine months ended September 30, 2006, respectively, and is included in operating costs in the accompanying unaudited condensed consolidated statements of operations.



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The Company also entered into agreements pursuant to which the Company will continue to have cost-sharing
arrangements with Cendant and/or its subsidiaries relating to office space and customer contact centers. These agreements have expiration dates and financial terms that are generally consistent with the terms of the related intercompany arrangements
prior to the Apollo Transactions. The expense incurred for such services was $0.3 million and $0.9 million for the three and nine months ended September 30, 2006, respectively, and is included in operating costs in the accompanying unaudited
condensed consolidated statements of operations. There was no expense incurred for the three and nine months ended September 30, 2007. The revenue earned for such services was $0.4 million and $0.9 million for the three and nine months ended
September 30, 2007, respectively, and $0.7 million and $1.3 million for the three and nine months ended September 30, 2006, respectively, and is included in net revenues in the accompanying unaudited condensed consolidated statements of
operations.

In connection with the Apollo Transactions, the Company granted to Cendant a non-exclusive license to its portfolio of patents
relating to online award redemption programs through December 31, 2006. The license included the exclusive right to enforce patents against third parties within the field of i) online sales, marketing and distribution of travel services and
products and ii) servicing certain airlines. Cendant paid royalty fees for the exclusive right totaling $11.25 million, payable in five quarterly installments of $2.25 million that began in November 2005 and ended in November 2006. The total amount
included in net revenues in the accompanying unaudited condensed consolidated statements of operations for such services, net of purchase accounting related to the Apollo Transactions, reflects a revenue reduction of $2.5 million and revenue of $2.2
million for the three and nine months ended September 30, 2006, respectively. There were no such revenues earned in 2007.

Historically, the Company had arrangements with Cendant and its subsidiaries relating to, among other things, the marketing of certain membership programs and related data management, administration of loyalty and rewards programs,
operations support (travel agency support and software licensing) and profit sharing arrangements related to the marketing of certain insurance programs. In connection with the Apollo Transactions, these agreements were terminated and the Company
entered into new agreements with Cendant and its subsidiaries that require the parties to provide services similar to those provided prior to the Apollo Transactions. The revenue earned for such services was less than $0.1 million and $0.1 million
for the three and nine months ended September 30, 2006, respectively, and is included in net revenues in the accompanying unaudited condensed consolidated statements of operations. There were no revenues earned for the three and nine months
ended September 30, 2007. The expense incurred for such services was $0.1 million and $0.3 million for the three and nine months ended September 30, 2007, respectively, and $0.2 million and $0.4 million for the three and nine months ended
September 30, 2006, respectively, and is included in operating costs in the accompanying unaudited condensed consolidated statements of operations.

The new marketing agreements permit the Company to continue to solicit customers of certain Cendant subsidiaries for the Companys membership programs through various direct marketing methods. The marketing
agreements generally provide for a minimum amount of marketing volume or a specified quantity of customer data to be allotted to the relevant party. The payment terms of the marketing agreements provide for either (1) a fee for each call
transferred, (2) a bounty payment for each user that enrolls in one of the Companys membership programs, or (3) a percentage of net membership revenues. These agreements generally expire in December 2010 and are generally terminable
by the applicable Cendant party following December 31, 2007, upon six months written notice to the Company. In the event that a Cendant subsidiary terminates an agreement prior to December 31, 2010, then the Cendant subsidiary is required
to pay a termination fee based on the projected marketing revenues that would have been generated from such agreement had the marketing agreement been in place through December 31, 2010. The expense incurred for such services was $3.8 million
and $8.9 million for the three and nine months ended September 30, 2007, respectively, and $3.8 million and $8.9 million for the three and nine months ended September 30, 2006, respectively, and is included in marketing and commissions in
the accompanying unaudited condensed consolidated statements of operations.

Under the loyalty and rewards program administration
agreements, the Company will continue to administer loyalty programs for certain Cendant subsidiaries. The agreements provide for the Company to earn fees for the following services: an initial fee to implement a new loyalty program, a program
administration fee, a redemption fee related to redeemed rewards and a booking fee related to travel bookings by loyalty program members. The loyalty and reward program agreements expire on December 31, 2009. The total amounts included in net
revenues in the accompanying unaudited condensed consolidated statements of operations for such services was $2.9 million and $8.8 million for the three and nine months ended September 30, 2007, respectively, and $2.9 million and $8.5 million
for the three and nine months ended September 30, 2006, respectively. In connection with these agreements, the Company formed Affinion Loyalty, LLC (Loyalty), a special-purpose, bankruptcy-remote subsidiary which is a wholly-owned
subsidiary of TLS. Pursuant to the loyalty agreements, TLS has provided a copy of the object code, source code and related documentation of certain of its intellectual property to Loyalty under a non-exclusive limited license. Loyalty entered into
an escrow agreement relating to such intellectual property with Cendant and its affiliates in connection with the parties entering into the loyalty and reward



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agreements. Loyalty sub-licenses such intellectual property to Cendant on a non-exclusive basis but will only provide access to such intellectual property
either directly or indirectly through the escrow agent in the event that TLS (1) becomes bankrupt or insolvent, (2) commits a material, uncured breach of a loyalty and reward agreement, or (3) transfers or assigns its intellectual
property in such a way as to prevent it from performing its obligations under any agreement relating to Cendants loyalty and rewards programs. Upon access to the escrowed materials, Cendant will be able to use the escrowed materials for a
limited term and for only those purposes for which TLS was using it to provide the services under the loyalty and reward agreements prior to the release of the escrowed materials to Cendant.

The Company entered into a platform services agreement with Travel Distribution Services Group, Inc. (TDS), a subsidiary of Cendant, under
which, through June 30, 2007, TDS reimbursed the Company for each travel booking fee placed utilizing a third partys travel service platform in excess of a specified threshold plus reimbursed the Company for platform license fees paid to
the third party in excess of a specified threshold. In addition, the Company has the option to use the to-be-developed Orbitz travel membership club platform, if and when developed by TDS, to obtain services related to such platform for the
Companys travel membership clubs by paying TDS a fee per itinerary. The agreement will expire on December 31, 2010 if the Company elects to use such platform by December 31, 2007. However, it will expire on December 31, 2007 if
TDS has not developed such platform or the Company has elected not to use such platform by such date. There was no expense reimbursement for such services for the three months ended September 30, 2007 and the expense reimbursement was $0.4
million for the nine months ended September 30, 2007 and was $0.3 million and $0.6 million for the three and nine months ended September 30, 2006, respectively, and is included in operating costs in the accompanying unaudited condensed
consolidated statements of operations.

The Company entered into a fulfillment and supplier relations services agreement with TDS to use
the TDS travel agent tool for booking multiple packages such as airfare and hotel. Pursuant to this agreement, the Company pays TDS a flat fee each year during the term of the agreement and the Company earns referral fees based on the number of
travel-related segments booked. The agreement will expire on December 31, 2010. The revenue earned for such services was $0.1 million and $0.4 million for the three and nine months ended September 30, 2007, respectively, and less than $0.1
million and $0.1 million for the three and nine months ended September 30, 2006, respectively, and is included in net revenues in the accompanying unaudited condensed consolidated statements of operations for such services. The expense incurred
for such services was $0.6 million and $1.7 million for the three and nine months ended September 30, 2007, respectively, and $0.5 million and $1.4 million for the three and nine months ended September 30, 2006, respectively, and is
included in operating costs in the accompanying unaudited condensed consolidated statements of operations.

The Company entered into an
agreement pursuant to which it agreed to exclusively use the global distribution system (GDS), an on-line booking system, of Galileo, then a subsidiary of Cendant, to make air, hotel or car rental bookings. Pursuant to this agreement,
the Company will pay Galileo a flat fee that decreases each year during the term of the agreement and Galileo will pay the Company a fee per travel booking. The agreement will expire on December 31, 2011, subject to automatic one year renewal
periods, unless either party elects upon six months prior written notice not to renew the agreement. The revenue earned for such services was $0.5 million and $1.7 million for the three and nine months ended September 30, 2007,
respectively, and $0.6 million and $2.1 million for the three and nine months ended September 30, 2006, respectively, and is included in net revenues in the accompanying unaudited condensed consolidated statements of operations. The expense
incurred for such services was $0.8 million and $2.3 million for the three and nine months ended September 30, 2007, respectively, and $0.8 million and $2.5 million for the three and nine months ended September 30, 2006, respectively, and
is included in operating costs in the accompanying unaudited condensed consolidated statements of operations.

The Company entered into an
agreement which identifies Avis and Budget (each a former subsidiary of Cendant) as the primary preferred providers of car rental services to its customers (subject to certain exceptions). The Company will receive commissions and royalty fees on
certain qualifying rentals. The agreement will expire on December 31, 2007, subject to automatic one year renewal periods, unless either party elects upon thirty days prior written notice not to renew the agreement. The total amount
included in net revenues in the accompanying unaudited condensed consolidated statements of operations for such services was $0.4 million and $1.2 million for the three and nine months ended September 30, 2007, respectively, and $0.5 million
and $1.5 million for the three and nine months ended September 30, 2006, respectively.

Affinion International entered into an
agreement pursuant to which it agreed to continue to use RCI Europe as its exclusive provider of travel services for the benefit of Affinion International members in the U.K., Germany, Switzerland, Austria, Italy, Belgium, Luxembourg, Ireland and
the Netherlands. Pursuant to this agreement, RCI will have a right of first refusal to offer travel services in other countries where Affinion International members are located. Affinion International will indemnify RCI in the event its profit
margin under this arrangement falls below 1.31%. The agreement will expire ten years from its effective date of October 17, 2005, subject to either partys right to terminate the agreement on or after the third anniversary of its effective
date, upon one years prior written notice or at any time in certain other specified



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circumstances (either in whole or in part). The expense for such services was $1.7 million and $4.7 million for the three and nine months ended
September 30, 2007, respectively, and $1.5 million and $4.0 million for the three and nine months ended September 30, 2006, respectively, and is included in operating costs in the accompanying unaudited condensed consolidated statements of
operations.

The Company entered into agreements pursuant to which it had profit-sharing arrangements with Fairtide Insurance Limited
(Fairtide), a subsidiary of Cendant. AIH and certain of the Companys subsidiaries market certain insurance programs and Fairtide provided reinsurance for the related insurance policies provided by a third-party insurer. Those
agreements have been terminated effective November 1, 2007 and Fairtide will have no further liability for any claims made under those insurance policies on or after November 1, 2007. The total amount included in net revenues in the
accompanying unaudited condensed consolidated statements of operations for such services was less than $0.1 million and $0.2 million for the three and nine months ended September 30, 2007, respectively, and $0.1 million and $0.3 million for the
three and nine months ended September 30, 2006, respectively.

The Company earns referral fees for hotel stays and travel packages.
The amount included in net revenues in the accompanying unaudited condensed consolidated statements of operations for such services was $0.4 million and $0.8 million for the three and nine months ended September 30, 2007, respectively, and $0.3
million and $0.6 million for the three and nine months ended September 30, 2006, respectively.

Apollo Agreements

On October 17, 2005, Apollo entered into a consulting agreement with the Company for the provision of certain structuring and advisory services. The
consulting agreement will also allow Apollo and its affiliates to provide certain advisory services for a period of twelve years or until Apollo owns less than 5% of the beneficial economic interests of the Company, whichever is earlier. The
agreement may be terminated earlier by mutual consent. The Company is required to pay Apollo an annual fee of $2.0 million for these services commencing in 2006. The amounts expensed related to this consulting agreement were $0.5 million and $1.5
million for the three and nine months ended September 30, 2007 and $0.5 million and $1.5 million for the three and nine months ended September 30, 2006 and are included in general and administrative expenses in the accompanying unaudited
condensed consolidated statement of operations. If a transaction is consummated involving a change of control or an initial public offering, then, in lieu of the annual consulting fee and subject to certain qualifications, Apollo may elect to
receive a lump sum payment equal to the present value of all consulting fees payable through the end of the term of the consulting agreement.

In addition, the Company will be required to pay Apollo a transaction fee if it engages in any merger, acquisition or similar transaction. The Company will also indemnify Apollo and its affiliates and their directors, officers and
representatives for potential losses relating to the services to be provided under the consulting agreement.

In July 2006, Apollo acquired
one of the Companys vendors, SOURCECORP Incorporated, that provides document and information services to the Company. The fees incurred for these services for the three and nine months ended September 30, 2007 were $0.2 million and $0.8
million, respectively, and are included in operating expenses in the accompanying unaudited condensed consolidated statements of operations.



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9. SEGMENT INFORMATION

Management evaluates the operating results of each of its reportable segments based upon revenue and Segment EBITDA, which is defined as income from operations before depreciation and amortization. The
presentation of Segment EBITDA may not be comparable to similarly titled measures used by other companies.

The Segment EBITDA of the
Companys four operating segments does not include general corporate expenses. General corporate expenses include costs and expenses that are of a general corporate nature or managed on a corporate basis, including primarily stock-based
compensation expense and consulting fees paid to Apollo. In accordance with SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, general corporate expenses have been excluded from the presentation of
the Segment EBITDA for the Companys four operating segments because they are not reported to the chief operating decision maker for purposes of allocating resources among operating segments or assessing operating segment performance. The
accounting policies of the reporting segments are the same as those described in Note 2  Summary of Significant Accounting Policies in the Companys Form 10-K for the year ended December 31, 2006.

Net Revenues



|                                                                              |  |                            |       |   |                           |   |        |                    |  |   |                    |   |  |   |        |  
|----------------------------------------------------------------------------- |  | -------------------------- | ----- | - | ------------------------- | - | ------ | ------------------ |  | - | ------------------ | - |  | - | ------ | -
|                                                                              |  | For the Three Months Ended |       |   | For the Nine Months Ended |  
|                                                                              |  | September 30,2007          |       |   | September 30,2006         |   |        | September 30,2007  |  |   | September 30,2006  |  
|Affinion North America                                                        |  |                            |       |   |                           |   |        |                    |  |   |                    |   |  |   |        |  
|Membership products                                                           |  | $                          | 172.6 |   |                           | $ | 145.7  |                    |  | $ | 515.1              |   |  | $ | 371.6  |  
|Insurance and package products                                                |  |                            | 89.3  |   |                           |   | 89.4   |                    |  |   | 275.9              |   |  |   | 269.3  |  
|Loyalty products                                                              |  |                            | 14.4  |   |                           |   | 16.1   |                    |  |   | 40.6               |   |  |   | 51.4   |  
|Eliminations                                                                  |  |                            | (1.3  | ) |                           |   | (1.8   | )                  |  |   | (3.7               | ) |  |   | (5.1   | )
|                                                                              |  |                            |       |   |                           |   |        |                    |  |   |                    |   |  |   |        |  
|Total North America                                                           |  |                            | 275.0 |   |                           |   | 249.4  |                    |  |   | 827.9              |   |  |   | 687.2  |  
|Affinion International products                                               |  |                            | 55.6  |   |                           |   | 42.0   |                    |  |   | 156.5              |   |  |   | 114.4  |  
|                                                                              |  |                            |       |   |                           |   |        |                    |  |   |                    |   |  |   |        |  
|                                                                              |  | $                          | 330.6 |   |                           | $ | 291.4  |                    |  | $ | 984.4              |   |  | $ | 801.6  |  
|                                                                              |  |                            |       |   |                           |   |        |                    |  |   |                    |   |  |   |        |  
|                                                                              |  |                            |       |  
|Segment EBITDA                                                                |  |                            |       |   |                           |   |        |                    |  |   |                    |   |  |   |        |  
|                                                                              |  |                           
|                                                                              |  | For the Three Months Ended |       |   | For the Nine Months Ended |  
|                                                                              |  | September 30, 2007         |       |   | September 30, 2006        |   |        | September 30, 2007 |  |   | September 30, 2006 |  
|Affinion North America                                                        |  |                            |       |   |                           |   |        |                    |  |   |                    |   |  |   |        |  
|Membership products                                                           |  | $                          | 30.2  |   |                           | $ | 11.3   |                    |  | $ | 68.2               |   |  | $ | (25.0  | )
|Insurance and package products                                                |  |                            | 34.5  |   |                           |   | 31.0   |                    |  |   | 105.4              |   |  |   | 83.9   |  
|Loyalty products                                                              |  |                            | 5.0   |   |                           |   | 2.5    |                    |  |   | 11.3               |   |  |   | 12.9   |  
|                                                                              |  |                            |       |   |                           |   |        |                    |  |   |                    |   |  |   |        |  
|Total North America                                                           |  |                            | 69.7  |   |                           |   | 44.8   |                    |  |   | 184.9              |   |  |   | 71.8   |  
|Affinion International products                                               |  |                            | 6.7   |   |                           |   | 1.4    |                    |  |   | 14.8               |   |  |   | 0.3    |  
|                                                                              |  |                            |       |   |                           |   |        |                    |  |   |                    |   |  |   |        |  
|Total products                                                                |  |                            | 76.4  |   |                           |   | 46.2   |                    |  |   | 199.7              |   |  |   | 72.1   |  
|Corporate                                                                     |  |                            | (0.6  | ) |                           |   | (1.2   | )                  |  |   | (8.9               | ) |  |   | (3.1   | )
|                                                                              |  |                            |       |   |                           |   |        |                    |  |   |                    |   |  |   |        |  
|                                                                              |  | $                          | 75.8  |   |                           | $ | 45.0   |                    |  | $ | 190.8              |   |  | $ | 69.0   |  
|                                                                              |  |                            |       |   |                           |   |        |                    |  |   |                    |   |  |   |        |  
|Provided below is a reconciliation of Segment EBITDA to loss from operations: |  |                            |       |   |                           |   |        |                    |  |   |                    |   |  |   |        |  
|                                                                              |  |                           
|                                                                              |  | For the Three Months Ended |       |   | For the Nine Months Ended |  
|                                                                              |  | September 30, 2007         |       |   | September 30, 2006        |   |        | September 30, 2007 |  |   | September 30, 2006 |  
|Segment EBITDA                                                                |  | $                          | 75.8  |   |                           | $ | 45.0   |                    |  | $ | 190.8              |   |  | $ | 69.0   |  
|Depreciation and amortization                                                 |  |                            | (82.9 | ) |                           |   | (106.7 | )                  |  |   | (242.1             | ) |  |   | (314.9 | )
|                                                                              |  |                            |       |   |                           |   |        |                    |  |   |                    |   |  |   |        |  
|Loss from operations                                                          |  | $                          | (7.1  | ) |                           | $ | (61.7  | )                  |  | $ | (51.3              | ) |  | $ | (245.9 | )
|                                                                              |  |                            |       |   |                           |   |        |                    |  |   |                    |   |  |   |        |  



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##### Table of Contents

10. GUARANTOR/NON-GUARANTOR SUPPLEMENTAL FINANCIAL INFORMATION

The following supplemental condensed consolidating financial information presents the results of the Company, on an unconsolidated basis, under the column
Parent Company, and the results of the combined guarantor subsidiaries and the combined non-guarantor subsidiaries as defined in the indentures governing the Senior Notes and Senior Subordinated Notes. The guarantees are full and
unconditional and joint and several obligations of each of the guarantor subsidiaries, all of which are 100% owned by the Company. There are no significant restrictions on the ability of the Company to obtain funds from any of its guarantor
subsidiaries by dividends or loan. The supplemental financial information has been presented in lieu of separate financial statements of the guarantors as such separate financial statements are not considered meaningful.

UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET

AS OF SEPTEMBER 30, 2007

(In millions)



|                                                     |  |               |         |   |                       |   |         |                            |  |              |       |  |              |          |   |  |   |         |  
|---------------------------------------------------- |  | ------------- | ------- | - | --------------------- | - | ------- | -------------------------- |  | ------------ | ----- |  | ------------ | -------- | - |  | - | ------- | -
|                                                     |  | ParentCompany |         |   | GuarantorSubsidiaries |   |         | Non- GuarantorSubsidiaries |  | Eliminations |       |  | Consolidated |         
|Assets                                               |  |               |         |   |                       |   |         |                            |  |              |       |  |              |          |   |  |   |         |  
|Current assets:                                      |  |               |         |   |                       |   |         |                            |  |              |       |  |              |          |   |  |   |         |  
|Cash and cash equivalents                            |  | $             |        |   |                       | $ | 7.5     |                            |  | $            | 15.0  |  | $            |         |   |  | $ | 22.5    |  
|Restricted cash                                      |  |               |        |   |                       |   | 25.8    |                            |  |              | 4.3   |  |              |         |   |  |   | 30.1    |  
|Receivables, net                                     |  |               |        |   |                       |   | 37.3    |                            |  |              | 32.2  |  |              |         |   |  |   | 69.5    |  
|Receivables from related parties                     |  |               | 0.1     |   |                       |   | 12.1    |                            |  |              | 0.3   |  |              |         |   |  |   | 12.5    |  
|Profit-sharing receivables from insurance carriers   |  |               |        |   |                       |   | 72.0    |                            |  |              |      |  |              |         |   |  |   | 72.0    |  
|Prepaid commissions                                  |  |               |        |   |                       |   | 49.3    |                            |  |              | 9.8   |  |              |         |   |  |   | 59.1    |  
|Other current assets                                 |  |               | 3.5     |   |                       |   | 16.3    |                            |  |              | 17.1  |  |              |         |   |  |   | 36.9    |  
|                                                     |  |               |         |   |                       |   |         |                            |  |              |       |  |              |          |   |  |   |         |  
|Total current assets                                 |  |               | 3.6     |   |                       |   | 220.3   |                            |  |              | 78.7  |  |              |         |   |  |   | 302.6   |  
|Property and equipment, net                          |  |               | 0.4     |   |                       |   | 80.2    |                            |  |              | 9.1   |  |              |         |   |  |   | 89.7    |  
|Contract rights and list fees, net                   |  |               |        |   |                       |   | 11.1    |                            |  |              | 55.6  |  |              |         |   |  |   | 66.7    |  
|Goodwill                                             |  |               |        |   |                       |   | 289.5   |                            |  |              | 12.2  |  |              |         |   |  |   | 301.7   |  
|Other intangibles, net                               |  |               |        |   |                       |   | 741.7   |                            |  |              | 70.2  |  |              |         |   |  |   | 811.9   |  
|Deferred income taxes                                |  |               | 8.2     |   |                       |   | (8.2    | )                          |  |              |      |  |              |         |   |  |   |        |  
|Investment in subsidiaries                           |  |               | 1,341.1 |   |                       |   |        |                            |  |              |      |  |              | (1,341.1 | ) |  |   |        |  
|Intercompany receivables                             |  |               |        |   |                       |   | 358.7   |                            |  |              |      |  |              | (358.7   | ) |  |   |        |  
|Intercompany loan                                    |  |               | 6.3     |   |                       |   |        |                            |  |              |      |  |              | (6.3     | ) |  |   |        |  
|Other non-current assets                             |  |               | 30.6    |   |                       |   | 12.2    |                            |  |              | 5.4   |  |              |         |   |  |   | 48.2    |  
|                                                     |  |               |         |   |                       |   |         |                            |  |              |       |  |              |          |   |  |   |         |  
|Total assets                                         |  | $             | 1,390.2 |   |                       | $ | 1,705.5 |                            |  | $            | 231.2 |  | $            | (1,706.1 | ) |  | $ | 1,620.8 |  
|                                                     |  |               |         |   |                       |   |         |                            |  |              |       |  |              |          |   |  |   |         |  
|Liabilities and Stockholders Equity (Deficit)       |  |               |         |   |                       |   |         |                            |  |              |       |  |              |          |   |  |   |         |  
|Current liabilities:                                 |  |               |         |   |                       |   |         |                            |  |              |       |  |              |          |   |  |   |         |  
|Current portion of long-term debt                    |  | $             | 25.0    |   |                       | $ | 0.2     |                            |  | $            |      |  | $            |         |   |  | $ | 25.2    |  
|Accounts payable and accrued expenses                |  |               | 67.6    |   |                       |   | 143.4   |                            |  |              | 64.9  |  |              |         |   |  |   | 275.9   |  
|Payables to related parties                          |  |               | 3.6     |   |                       |   | 5.5     |                            |  |              |      |  |              |         |   |  |   | 9.1     |  
|Deferred revenue                                     |  |               |        |   |                       |   | 222.1   |                            |  |              | 31.5  |  |              |         |   |  |   | 253.6   |  
|Deferred income taxes                                |  |               |        |   |                       |   | 8.8     |                            |  |              | 0.8   |  |              |         |   |  |   | 9.6     |  
|Income taxes payable                                 |  |               |        |   |                       |   | 2.3     |                            |  |              | 1.3   |  |              |         |   |  |   | 3.6     |  
|                                                     |  |               |         |   |                       |   |         |                            |  |              |       |  |              |          |   |  |   |         |  
|Total current liabilities                            |  |               | 96.2    |   |                       |   | 382.3   |                            |  |              | 98.5  |  |              |         |   |  |   | 577.0   |  
|Long-term debt                                       |  |               | 1,308.5 |   |                       |   | 0.2     |                            |  |              |      |  |              |         |   |  |   | 1,308.7 |  
|Deferred income taxes                                |  |               |        |   |                       |   | (9.5    | )                          |  |              | 15.5  |  |              |         |   |  |   | 6.0     |  
|Deferred revenue                                     |  |               |        |   |                       |   | 30.5    |                            |  |              | 11.5  |  |              |         |   |  |   | 42.0    |  
|Intercompany payables                                |  |               | 357.2   |   |                       |   |        |                            |  |              | 1.5   |  |              | (358.7   | ) |  |   |        |  
|Intercompany loan                                    |  |               |        |   |                       |   |        |                            |  |              | 6.3   |  |              | (6.3     | ) |  |   |        |  
|Other long-term liabilities                          |  |               | 11.0    |   |                       |   | 13.0    |                            |  |              | 34.8  |  |              |         |   |  |   | 58.8    |  
|                                                     |  |               |         |   |                       |   |         |                            |  |              |       |  |              |          |   |  |   |         |  
|Total liabilities                                    |  |               | 1,772.9 |   |                       |   | 416.5   |                            |  |              | 168.1 |  |              | (365.0   | ) |  |   | 1,992.5 |  
|Minority interests                                   |  |               |        |   |                       |   |        |                            |  |              | 0.5   |  |              |         |   |  |   | 0.5     |  
|Stockholders equity (deficit)                       |  |               | (382.7  | ) |                       |   | 1,289.0 |                            |  |              | 62.6  |  |              | (1,341.1 | ) |  |   | (372.2  | )
|                                                     |  |               |         |   |                       |   |         |                            |  |              |       |  |              |          |   |  |   |         |  
|Total liabilities and stockholders equity (deficit) |  | $             | 1,390.2 |   |                       | $ | 1,705.5 |                            |  | $            | 231.2 |  | $            | (1,706.1 | ) |  | $ | 1,620.8 |  
|                                                     |  |               |         |   |                       |   |         |                            |  |              |       |  |              |          |   |  |   |         |  



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UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 2006

(In
millions)



|                                                     |  |               |         |   |                       |   |         |                            |  |              |       |  |              |          |   |  |   |         |  
|---------------------------------------------------- |  | ------------- | ------- | - | --------------------- | - | ------- | -------------------------- |  | ------------ | ----- |  | ------------ | -------- | - |  | - | ------- | -
|                                                     |  | ParentCompany |         |   | GuarantorSubsidiaries |   |         | Non- GuarantorSubsidiaries |  | Eliminations |       |  | Consolidated |         
|Assets                                               |  |               |         |   |                       |   |         |                            |  |              |       |  |              |          |   |  |   |         |  
|Current assets:                                      |  |               |         |   |                       |   |         |                            |  |              |       |  |              |          |   |  |   |         |  
|Cash and cash equivalents                            |  | $             |        |   |                       | $ | 59.6    |                            |  | $            | 24.7  |  | $            |         |   |  | $ | 84.3    |  
|Restricted cash                                      |  |               |        |   |                       |   | 24.7    |                            |  |              | 4.1   |  |              |         |   |  |   | 28.8    |  
|Receivables, net                                     |  |               |        |   |                       |   | 40.1    |                            |  |              | 30.6  |  |              |         |   |  |   | 70.7    |  
|Receivables from related parties                     |  |               | 0.1     |   |                       |   | 15.1    |                            |  |              | 0.4   |  |              | (0.1     | ) |  |   | 15.5    |  
|Profit-sharing receivables from insurance carriers   |  |               |        |   |                       |   | 59.5    |                            |  |              |      |  |              |         |   |  |   | 59.5    |  
|Prepaid commissions                                  |  |               |        |   |                       |   | 64.6    |                            |  |              | 7.9   |  |              |         |   |  |   | 72.5    |  
|Income tax receivable                                |  |               |        |   |                       |   | 0.7     |                            |  |              | 2.5   |  |              |         |   |  |   | 3.2     |  
|Other current assets                                 |  |               | 0.1     |   |                       |   | 24.4    |                            |  |              | 14.9  |  |              |         |   |  |   | 39.4    |  
|                                                     |  |               |         |   |                       |   |         |                            |  |              |       |  |              |          |   |  |   |         |  
|Total current assets                                 |  |               | 0.2     |   |                       |   | 288.7   |                            |  |              | 85.1  |  |              | (0.1     | ) |  |   | 373.9   |  
|Property and equipment, net                          |  |               |        |   |                       |   | 88.6    |                            |  |              | 11.4  |  |              |         |   |  |   | 100.0   |  
|Contract rights and list fees, net                   |  |               |        |   |                       |   | 10.6    |                            |  |              | 51.4  |  |              |         |   |  |   | 62.0    |  
|Goodwill                                             |  |               |        |   |                       |   | 289.4   |                            |  |              | 10.6  |  |              |         |   |  |   | 300.0   |  
|Other intangibles, net                               |  |               |        |   |                       |   | 925.6   |                            |  |              | 79.9  |  |              |         |   |  |   | 1,005.5 |  
|Investment in subsidiaries                           |  |               | 1,385.3 |   |                       |   |        |                            |  |              |      |  |              | (1,385.3 | ) |  |   |        |  
|Intercompany receivables                             |  |               |        |   |                       |   | 202.4   |                            |  |              |      |  |              | (202.4   | ) |  |   |        |  
|Intercompany loan                                    |  |               | 16.0    |   |                       |   |        |                            |  |              |      |  |              | (16.0    | ) |  |   |        |  
|Other non-current assets                             |  |               | 35.1    |   |                       |   | 7.9     |                            |  |              | 5.1   |  |              |         |   |  |   | 48.1    |  
|                                                     |  |               |         |   |                       |   |         |                            |  |              |       |  |              |          |   |  |   |         |  
|Total assets                                         |  | $             | 1,436.6 |   |                       | $ | 1,813.2 |                            |  | $            | 243.5 |  | $            | (1,603.8 | ) |  | $ | 1,889.5 |  
|                                                     |  |               |         |   |                       |   |         |                            |  |              |       |  |              |          |   |  |   |         |  
|Liabilities and Stockholders Equity (Deficit)       |  |               |         |   |                       |   |         |                            |  |              |       |  |              |          |   |  |   |         |  
|Current liabilities:                                 |  |               |         |   |                       |   |         |                            |  |              |       |  |              |          |   |  |   |         |  
|Current portion of long-term debt                    |  | $             | 50.0    |   |                       | $ | 0.2     |                            |  | $            |      |  | $            |         |   |  | $ | 50.2    |  
|Accounts payable and accrued expenses                |  |               | 22.6    |   |                       |   | 201.5   |                            |  |              | 55.3  |  |              | (0.1     | ) |  |   | 279.3   |  
|Payables to related parties                          |  |               | 2.0     |   |                       |   | 4.3     |                            |  |              | 5.6   |  |              |         |   |  |   | 11.9    |  
|Deferred revenue                                     |  |               |        |   |                       |   | 250.8   |                            |  |              | 21.5  |  |              |         |   |  |   | 272.3   |  
|Deferred income taxes                                |  |               |        |   |                       |   | 9.7     |                            |  |              | 1.8   |  |              |         |   |  |   | 11.5    |  
|                                                     |  |               |         |   |                       |   |         |                            |  |              |       |  |              |          |   |  |   |         |  
|Total current liabilities                            |  |               | 74.6    |   |                       |   | 466.5   |                            |  |              | 84.2  |  |              | (0.1     | ) |  |   | 625.2   |  
|Long-term debt                                       |  |               | 1,357.8 |   |                       |   | 0.4     |                            |  |              |      |  |              |         |   |  |   | 1,358.2 |  
|Deferred income taxes                                |  |               |        |   |                       |   | (2.0    | )                          |  |              | 22.2  |  |              |         |   |  |   | 20.2    |  
|Deferred revenue                                     |  |               |        |   |                       |   | 20.6    |                            |  |              | 7.1   |  |              |         |   |  |   | 27.7    |  
|Intercompany payables                                |  |               | 197.4   |   |                       |   |        |                            |  |              | 5.0   |  |              | (202.4   | ) |  |   |        |  
|Intercompany loans                                   |  |               |        |   |                       |   |        |                            |  |              | 16.0  |  |              | (16.0    | ) |  |   |        |  
|Other long-term liabilities                          |  |               |        |   |                       |   | 12.8    |                            |  |              | 31.7  |  |              |         |   |  |   | 44.5    |  
|                                                     |  |               |         |   |                       |   |         |                            |  |              |       |  |              |          |   |  |   |         |  
|Total liabilities                                    |  |               | 1,629.8 |   |                       |   | 498.3   |                            |  |              | 166.2 |  |              | (218.5   | ) |  |   | 2,075.8 |  
|Minority interests                                   |  |               |        |   |                       |   |        |                            |  |              | 0.6   |  |              |         |   |  |   | 0.6     |  
|Stockholders equity (deficit)                       |  |               | (193.2  | ) |                       |   | 1,314.9 |                            |  |              | 76.7  |  |              | (1,385.3 | ) |  |   | (186.9  | )
|                                                     |  |               |         |   |                       |   |         |                            |  |              |       |  |              |          |   |  |   |         |  
|Total liabilities and stockholders equity (deficit) |  | $             | 1,436.6 |   |                       | $ | 1,813.2 |                            |  | $            | 243.5 |  | $            | (1,603.8 | ) |  | $ | 1,889.5 |  
|                                                     |  |               |         |   |                       |   |         |                            |  |              |       |  |              |          |   |  |   |         |  



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UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007

(In millions)



|                                                         |  |               |       |   |                       |   |       |                            |  |   |              |   |  |              |      |   |  |   |       |  
|-------------------------------------------------------- |  | ------------- | ----- | - | --------------------- | - | ----- | -------------------------- |  | - | ------------ | - |  | ------------ | ---- | - |  | - | ----- | -
|                                                         |  | ParentCompany |       |   | GuarantorSubsidiaries |   |       | Non- GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |     
|Net revenues                                             |  | $             |      |   |                       | $ | 275.1 |                            |  | $ | 55.5         |   |  | $            |     |   |  | $ | 330.6 |  
|                                                         |  |               |       |   |                       |   |       |                            |  |   |              |   |  |              |      |   |  |   |       |  
|Expenses:                                                |  |               |       |   |                       |   |       |                            |  |   |              |   |  |              |      |   |  |   |       |  
|Marketing and commissions                                |  |               |      |   |                       |   | 130.3 |                            |  |   | 19.0         |   |  |              |     |   |  |   | 149.3 |  
|Operating costs                                          |  |               |      |   |                       |   | 53.5  |                            |  |   | 26.1         |   |  |              |     |   |  |   | 79.6  |  
|General and administrative                               |  |               | 0.6   |   |                       |   | 21.5  |                            |  |   | 3.8          |   |  |              |     |   |  |   | 25.9  |  
|Depreciation and amortization                            |  |               |      |   |                       |   | 70.6  |                            |  |   | 12.3         |   |  |              |     |   |  |   | 82.9  |  
|                                                         |  |               |       |   |                       |   |       |                            |  |   |              |   |  |              |      |   |  |   |       |  
|Total expenses                                           |  |               | 0.6   |   |                       |   | 275.9 |                            |  |   | 61.2         |   |  |              |     |   |  |   | 337.7 |  
|                                                         |  |               |       |   |                       |   |       |                            |  |   |              |   |  |              |      |   |  |   |       |  
|Loss from operations                                     |  |               | (0.6  | ) |                       |   | (0.8  | )                          |  |   | (5.7         | ) |  |              |     |   |  |   | (7.1  | )
|Equity in income (loss) of subsidiaries                  |  |               | (5.7  | ) |                       |   |      |                            |  |   |             |   |  |              | 5.7  |   |  |   |      |  
|Interest income                                          |  |               |      |   |                       |   | 0.6   |                            |  |   | 0.3          |   |  |              |     |   |  |   | 0.9   |  
|Interest income  intercompany                           |  |               | 0.3   |   |                       |   |      |                            |  |   |             |   |  |              | (0.3 | ) |  |   |      |  
|Interest expense                                         |  |               | (37.2 | ) |                       |   |      |                            |  |   | (1.5         | ) |  |              |     |   |  |   | (38.7 | )
|Interest expense  intercompany                          |  |               |      |   |                       |   |      |                            |  |   | (0.3         | ) |  |              | 0.3  |   |  |   |      |  
|Corporate allocations                                    |  |               |      |   |                       |   | 0.9   |                            |  |   | (0.9         | ) |  |              |     |   |  |   |      |  
|                                                         |  |               |       |   |                       |   |       |                            |  |   |              |   |  |              |      |   |  |   |       |  
|Income (loss) before income taxes and minority interests |  |               | (43.2 | ) |                       |   | 0.7   |                            |  |   | (8.1         | ) |  |              | 5.7  |   |  |   | (44.9 | )
|Income tax (expense) benefit                             |  |               | (0.1  | ) |                       |   | (1.0  | )                          |  |   | 2.8          |   |  |              |     |   |  |   | 1.7   |  
|Minority interests, net of tax                           |  |               |      |   |                       |   |      |                            |  |   | (0.1         | ) |  |              |     |   |  |   | (0.1  | )
|                                                         |  |               |       |   |                       |   |       |                            |  |   |              |   |  |              |      |   |  |   |       |  
|Net loss                                                 |  | $             | (43.3 | ) |                       | $ | (0.3  | )                          |  | $ | (5.4         | ) |  | $            | 5.7  |   |  | $ | (43.3 | )
|                                                         |  |               |       |   |                       |   |       |                            |  |   |              |   |  |              |      |   |  |   |       |  



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UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007

(In millions)



|                                                                                                                      |  |               |        |   |                       |   |       |                            |  |   |              |   |  |              |      |   |  |   |         |  
|--------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------ | - | --------------------- | - | ----- | -------------------------- |  | - | ------------ | - |  | ------------ | ---- | - |  | - | ------- | -
|                                                                                                                      |  | ParentCompany |        |   | GuarantorSubsidiaries |   |       | Non- GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |     
|Net revenues                                                                                                          |  | $             |       |   |                       | $ | 828.0 |                            |  | $ | 156.4        |   |  | $            |     |   |  | $ | 984.4   |  
|                                                                                                                      |  |               |        |   |                       |   |       |                            |  |   |              |   |  |              |      |   |  |   |         |  
|Expenses:                                                                                                             |  |               |        |   |                       |   |       |                            |  |   |              |   |  |              |      |   |  |   |         |  
|Marketing and commissions                                                                                             |  |               |       |   |                       |   | 401.0 |                            |  |   | 51.9         |   |  |              |     |   |  |   | 452.9   |  
|Operating costs                                                                                                       |  |               |       |   |                       |   | 174.4 |                            |  |   | 76.8         |   |  |              |     |   |  |   | 251.2   |  
|General and administrative                                                                                            |  |               | 8.9    |   |                       |   | 67.6  |                            |  |   | 13.0         |   |  |              |     |   |  |   | 89.5    |  
|Depreciation and amortization                                                                                         |  |               |       |   |                       |   | 210.7 |                            |  |   | 31.4         |   |  |              |     |   |  |   | 242.1   |  
|                                                                                                                      |  |               |        |   |                       |   |       |                            |  |   |              |   |  |              |      |   |  |   |         |  
|Total expenses                                                                                                        |  |               | 8.9    |   |                       |   | 853.7 |                            |  |   | 173.1        |   |  |              |     |   |  |   | 1,035.7 |  
|                                                                                                                      |  |               |        |   |                       |   |       |                            |  |   |              |   |  |              |      |   |  |   |         |  
|Loss from operations                                                                                                  |  |               | (8.9   | ) |                       |   | (25.7 | )                          |  |   | (16.7        | ) |  |              |     |   |  |   | (51.3   | )
|Equity in income (loss) of subsidiaries                                                                               |  |               | (44.4  | ) |                       |   |      |                            |  |   |             |   |  |              | 44.4 |   |  |   |        |  
|Interest income                                                                                                       |  |               |       |   |                       |   | 2.9   |                            |  |   | 0.7          |   |  |              |     |   |  |   | 3.6     |  
|Interest income  intercompany                                                                                        |  |               | 0.8    |   |                       |   |      |                            |  |   |             |   |  |              | (0.8 | ) |  |   |        |  
|Interest expense                                                                                                      |  |               | (104.1 | ) |                       |   | (0.1  | )                          |  |   | (3.5         | ) |  |              |     |   |  |   | (107.7  | )
|Interest expense  intercompany                                                                                       |  |               |       |   |                       |   |      |                            |  |   | (0.8         | ) |  |              | 0.8  |   |  |   |        |  
|Corporate allocations                                                                                                 |  |               |       |   |                       |   | 2.6   |                            |  |   | (2.6         | ) |  |              |     |   |  |   |        |  
|                                                                                                                      |  |               |        |   |                       |   |       |                            |  |   |              |   |  |              |      |   |  |   |         |  
|Income (loss) before income taxes and minority interests                                                              |  |               | (156.6 | ) |                       |   | (20.3 | )                          |  |   | (22.9        | ) |  |              | 44.4 |   |  |   | (155.4  | )
|Income tax (expense) benefit                                                                                          |  |               |       |   |                       |   | (6.0  | )                          |  |   | 5.0          |   |  |              |     |   |  |   | (1.0    | )
|Minority interests, net of tax                                                                                        |  |               |       |   |                       |   |      |                            |  |   | (0.2         | ) |  |              |     |   |  |   | (0.2    | )
|                                                                                                                      |  |               |        |   |                       |   |       |                            |  |   |              |   |  |              |      |   |  |   |         |  
|Net loss                                                                                                              |  | $             | (156.6 | ) |                       | $ | (26.3 | )                          |  | $ | (18.1        | ) |  | $            | 44.4 |   |  | $ | (156.6  | )
|                                                                                                                      |  |               |        |   |                       |   |       |                            |  |   |              |   |  |              |      |   |  |   |         |  
|                                                                                                                     
|UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2006 (In millions) | 
|                                                                                                                      |  |               |        |   |                      
|                                                                                                                      |  | ParentCompany |        |   | GuarantorSubsidiaries |   |       | Non- GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |     
|Net revenues                                                                                                          |  | $             |       |   |                       | $ | 249.4 |                            |  | $ | 42.0         |   |  | $            |     |   |  | $ | 291.4   |  
|                                                                                                                      |  |               |        |   |                       |   |       |                            |  |   |              |   |  |              |      |   |  |   |         |  
|Expenses:                                                                                                             |  |               |        |   |                       |   |       |                            |  |   |              |   |  |              |      |   |  |   |         |  
|Marketing and commissions                                                                                             |  |               |       |   |                       |   | 124.3 |                            |  |   | 14.3         |   |  |              |     |   |  |   | 138.6   |  
|Operating costs                                                                                                       |  |               |       |   |                       |   | 58.8  |                            |  |   | 22.6         |   |  |              |     |   |  |   | 81.4    |  
|General and administrative                                                                                            |  |               | 1.2    |   |                       |   | 21.5  |                            |  |   | 3.7          |   |  |              |     |   |  |   | 26.4    |  
|Depreciation and amortization                                                                                         |  |               |       |   |                       |   | 99.4  |                            |  |   | 7.3          |   |  |              |     |   |  |   | 106.7   |  
|                                                                                                                      |  |               |        |   |                       |   |       |                            |  |   |              |   |  |              |      |   |  |   |         |  
|Total expenses                                                                                                        |  |               | 1.2    |   |                       |   | 304.0 |                            |  |   | 47.9         |   |  |              |     |   |  |   | 353.1   |  
|                                                                                                                      |  |               |        |   |                       |   |       |                            |  |   |              |   |  |              |      |   |  |   |         |  
|Loss from operations                                                                                                  |  |               | (1.2   | ) |                       |   | (54.6 | )                          |  |   | (5.9         | ) |  |              |     |   |  |   | (61.7   | )
|Equity in income (loss) of subsidiaries                                                                               |  |               | (62.8  | ) |                       |   |      |                            |  |   |             |   |  |              | 62.8 |   |  |   |        |  
|Interest income                                                                                                       |  |               | 0.1    |   |                       |   | 1.1   |                            |  |   | 0.2          |   |  |              |     |   |  |   | 1.4     |  
|Interest expense                                                                                                      |  |               | (39.2  | ) |                       |   |      |                            |  |   | (0.1         | ) |  |              |     |   |  |   | (39.3   | )
|Other expense                                                                                                         |  |               |       |   |                       |   | (0.1  | )                          |  |   |             |   |  |              |     |   |  |   | (0.1    | )
|                                                                                                                      |  |               |        |   |                       |   |       |                            |  |   |              |   |  |              |      |   |  |   |         |  
|Loss before income taxes and minority interests                                                                       |  |               | (103.1 | ) |                       |   | (53.6 | )                          |  |   | (5.8         | ) |  |              | 62.8 |   |  |   | (99.7   | )
|Income tax (expense) benefit                                                                                          |  |               | 4.4    |   |                       |   | (5.2  | )                          |  |   | 1.9          |   |  |              |     |   |  |   | 1.1     |  
|Minority interests, net of tax                                                                                        |  |               |       |   |                       |   |      |                            |  |   | (0.1         | ) |  |              |     |   |  |   | (0.1    | )
|                                                                                                                      |  |               |        |   |                       |   |       |                            |  |   |              |   |  |              |      |   |  |   |         |  
|Net loss                                                                                                              |  | $             | (98.7  | ) |                       | $ | (58.8 | )                          |  | $ | (4.0         | ) |  | $            | 62.8 |   |  | $ | (98.7   | )
|                                                                                                                      |  |               |        |   |                       |   |       |                            |  |   |              |   |  |              |      |   |  |   |         |  



20



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UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006

(In millions)



|                                                |  |               |        |   |                       |   |        |                            |  |   |              |   |              |   |       |  |   |         |  
|----------------------------------------------- |  | ------------- | ------ | - | --------------------- | - | ------ | -------------------------- |  | - | ------------ | - | ------------ | - | ----- |  | - | ------- | -
|                                                |  | ParentCompany |        |   | GuarantorSubsidiaries |   |        | Non- GuarantorSubsidiaries |  |   | Eliminations |   | Consolidated |  
|Net revenues                                    |  | $             |       |   |                       | $ | 687.2  |                            |  | $ | 114.4        |   |              | $ |      |  | $ | 801.6   |  
|                                                |  |               |        |   |                       |   |        |                            |  |   |              |   |              |   |       |  |   |         |  
|Expenses:                                       |  |               |        |   |                       |   |        |                            |  |   |              |   |              |   |       |  |   |         |  
|Marketing and commissions                       |  |               |       |   |                       |   | 377.3  |                            |  |   | 34.9         |   |              |   |      |  |   | 412.2   |  
|Operating costs                                 |  |               |       |   |                       |   | 170.9  |                            |  |   | 67.7         |   |              |   |      |  |   | 238.6   |  
|General and administrative                      |  |               | 3.1    |   |                       |   | 67.2   |                            |  |   | 11.5         |   |              |   |      |  |   | 81.8    |  
|Depreciation and amortization                   |  |               |       |   |                       |   | 293.4  |                            |  |   | 21.5         |   |              |   |      |  |   | 314.9   |  
|                                                |  |               |        |   |                       |   |        |                            |  |   |              |   |              |   |       |  |   |         |  
|Total expenses                                  |  |               | 3.1    |   |                       |   | 908.8  |                            |  |   | 135.6        |   |              |   |      |  |   | 1,047.5 |  
|                                                |  |               |        |   |                       |   |        |                            |  |   |              |   |              |   |       |  |   |         |  
|Loss from operations                            |  |               | (3.1   | ) |                       |   | (221.6 | )                          |  |   | (21.2        | ) |              |   |      |  |   | (245.9  | )
|Equity in income (loss) of subsidiaries         |  |               | (256.3 | ) |                       |   |       |                            |  |   |             |   |              |   | 256.3 |  |   |        |  
|Interest income                                 |  |               | 0.3    |   |                       |   | 3.1    |                            |  |   | 0.9          |   |              |   |      |  |   | 4.3     |  
|Interest expense                                |  |               | (113.1 | ) |                       |   |       |                            |  |   | (0.6         | ) |              |   |      |  |   | (113.7  | )
|Other expense                                   |  |               |       |   |                       |   | (0.1   | )                          |  |   |             |   |              |   |      |  |   | (0.1    | )
|                                                |  |               |        |   |                       |   |        |                            |  |   |              |   |              |   |       |  |   |         |  
|Loss before income taxes and minority interests |  |               | (372.2 | ) |                       |   | (218.6 | )                          |  |   | (20.9        | ) |              |   | 256.3 |  |   | (355.4  | )
|Income tax (expense) benefit                    |  |               | 17.2   |   |                       |   | (22.5  | )                          |  |   | 6.0          |   |              |   |      |  |   | 0.7     |  
|Minority interests, net of tax                  |  |               |       |   |                       |   |       |                            |  |   | (0.3         | ) |              |   |      |  |   | (0.3    | )
|                                                |  |               |        |   |                       |   |        |                            |  |   |              |   |              |   |       |  |   |         |  
|Net loss                                        |  | $             | (355.0 | ) |                       | $ | (241.1 | )                          |  | $ | (15.2        | ) |              | $ | 256.3 |  | $ | (355.0  | )
|                                                |  |               |        |   |                       |   |        |                            |  |   |              |   |              |   |       |  |   |         |  



21



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UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007

(In millions)



|                                                                                          |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |       |   |  |   |        |  
|----------------------------------------------------------------------------------------- |  | ------------- | ------ | - | --------------------- | - | ------ | -------------------------- |  | - | ------------ | - |  | ------------ | ----- | - |  | - | ------ | -
|                                                                                          |  | ParentCompany |        |   | GuarantorSubsidiaries |   |        | Non- GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |      
|Operating Activities                                                                      |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |       |   |  |   |        |  
|Net loss                                                                                  |  | $             | (156.6 | ) |                       | $ | (26.3  | )                          |  | $ | (18.1        | ) |  | $            | 44.4  |   |  | $ | (156.6 | )
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |       |   |  |   |        |  
|Depreciation and amortization                                                             |  |               |       |   |                       |   | 210.7  |                            |  |   | 31.4         |   |  |              |      |   |  |   | 242.1  |  
|Amortization of favorable and unfavorable contracts                                       |  |               |       |   |                       |   | (1.7   | )                          |  |   | (0.5         | ) |  |              |      |   |  |   | (2.2   | )
|Amortization of debt discount and financing costs                                         |  |               | 5.0    |   |                       |   |       |                            |  |   |             |   |  |              |      |   |  |   | 5.0    |  
|Unrealized gain on interest rate swap                                                     |  |               | 2.2    |   |                       |   |       |                            |  |   |             |   |  |              |      |   |  |   | 2.2    |  
|Stock-based compensation                                                                  |  |               | 1.8    |   |                       |   |       |                            |  |   |             |   |  |              |      |   |  |   | 1.8    |  
|Equity in income (loss) of subsidiaries                                                   |  |               | 44.4   |   |                       |   |       |                            |  |   |             |   |  |              | (44.4 | ) |  |   |       |  
|Deferred income taxes                                                                     |  |               | (0.3   | ) |                       |   | (0.2   | )                          |  |   | (9.8         | ) |  |              |      |   |  |   | (10.3  | )
|Net change in assets and liabilities:                                                     |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |       |   |  |   |        |  
|Restricted cash                                                                           |  |               |       |   |                       |   | (1.1   | )                          |  |   |             |   |  |              |      |   |  |   | (1.1   | )
|Receivables                                                                               |  |               |       |   |                       |   | 2.8    |                            |  |   | 0.2          |   |  |              |      |   |  |   | 3.0    |  
|Receivables from related parties                                                          |  |               |       |   |                       |   | 3.0    |                            |  |   | 0.1          |   |  |              |      |   |  |   | 3.1    |  
|Profit-sharing receivables from insurance carriers                                        |  |               |       |   |                       |   | (12.5  | )                          |  |   |             |   |  |              |      |   |  |   | (12.5  | )
|Prepaid commissions                                                                       |  |               |       |   |                       |   | 15.3   |                            |  |   | (1.6         | ) |  |              |      |   |  |   | 13.7   |  
|Other current assets                                                                      |  |               | (3.4   | ) |                       |   | 7.8    |                            |  |   | (1.4         | ) |  |              |      |   |  |   | 3.0    |  
|Contract rights and list fees                                                             |  |               |       |   |                       |   | (0.9   | )                          |  |   |             |   |  |              |      |   |  |   | (0.9   | )
|Other non-current assets                                                                  |  |               | (0.9   | ) |                       |   | (4.3   | )                          |  |   | (0.1         | ) |  |              |      |   |  |   | (5.3   | )
|Intercompany receivables and payables                                                     |  |               | 159.8  |   |                       |   | (156.3 | )                          |  |   | (3.5         | ) |  |              |      |   |  |   |       |  
|Accounts payable and accrued expenses                                                     |  |               | 44.9   |   |                       |   | (58.2  | )                          |  |   | 2.6          |   |  |              |      |   |  |   | (10.7  | )
|Payables to related parties                                                               |  |               | (0.1   | ) |                       |   | 1.1    |                            |  |   | (5.9         | ) |  |              |      |   |  |   | (4.9   | )
|Deferred revenue                                                                          |  |               |       |   |                       |   | (18.7  | )                          |  |   | 14.1         |   |  |              |      |   |  |   | (4.6   | )
|Income taxes receivable and payable                                                       |  |               | 0.6    |   |                       |   | 3.0    |                            |  |   | 3.8          |   |  |              |      |   |  |   | 7.4    |  
|Other long-term liabilities                                                               |  |               | 0.3    |   |                       |   | 1.1    |                            |  |   | (8.3         | ) |  |              |      |   |  |   | (6.9   | )
|Minority interests and other, net                                                         |  |               | (0.4   | ) |                       |   | 0.5    |                            |  |   | (0.3         | ) |  |              |      |   |  |   | (0.2   | )
|                                                                                          |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |       |   |  |   |        |  
|Net cash provided by (used in) operating activities                                       |  |               | 97.3   |   |                       |   | (34.9  | )                          |  |   | 2.7          |   |  |              |      |   |  |   | 65.1   |  
|                                                                                          |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |       |   |  |   |        |  
|Investing Activities                                                                      |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |       |   |  |   |        |  
|Capital expenditures                                                                      |  |               | (0.2   | ) |                       |   | (16.3  | )                          |  |   | (2.1         | ) |  |              |      |   |  |   | (18.6  | )
|Acquisition-related payments, net of cash                                                 |  |               |       |   |                       |   | (0.8   | )                          |  |   |             |   |  |              |      |   |  |   | (0.8   | )
|Restricted cash                                                                           |  |               |       |   |                       |   |       |                            |  |   |             |   |  |              |      |   |  |   |       |  
|                                                                                          |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |       |   |  |   |        |  
|Net cash used in investing activities                                                     |  |               | (0.2   | ) |                       |   | (17.1  | )                          |  |   | (2.1         | ) |  |              |      |   |  |   | (19.4  | )
|                                                                                          |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |       |   |  |   |        |  
|Financing Activities                                                                      |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |       |   |  |   |        |  
|Principal payments on borrowings                                                          |  |               | (75.0  | ) |                       |   | (0.1   | )                          |  |   |             |   |  |              |      |   |  |   | (75.1  | )
|Intercompany loan                                                                         |  |               | 10.0   |   |                       |   |       |                            |  |   | (10.0        | ) |  |              |      |   |  |   |       |  
|Dividends paid to parent company                                                          |  |               | (32.1  | ) |                       |   |       |                            |  |   |             |   |  |              |      |   |  |   | (32.1  | )
|Distribution to minority shareholder of a subsidiary                                      |  |               |       |   |                       |   |       |                            |  |   | (0.4         | ) |  |              |      |   |  |   | (0.4   | )
|                                                                                          |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |       |   |  |   |        |  
|Net cash used in financing activities                                                     |  |               | (97.1  | ) |                       |   | (0.1   | )                          |  |   | (10.4        | ) |  |              |      |   |  |   | (107.6 | )
|                                                                                          |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |       |   |  |   |        |  
|Effect of changes in exchange rates on cash and cash equivalents                          |  |               |       |   |                       |   |       |                            |  |   | 0.1          |   |  |              |      |   |  |   | 0.1    |  
|                                                                                          |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |       |   |  |   |        |  
|Net decrease in cash and cash equivalents                                                 |  |               |       |   |                       |   | (52.1  | )                          |  |   | (9.7         | ) |  |              |      |   |  |   | (61.8  | )
|Cash and cash equivalents, beginning of period                                            |  |               |       |   |                       |   | 59.6   |                            |  |   | 24.7         |   |  |              |      |   |  |   | 84.3   |  
|                                                                                          |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |       |   |  |   |        |  
|Cash and cash equivalents, end of period                                                  |  | $             |       |   |                       | $ | 7.5    |                            |  | $ | 15.0         |   |  | $            |      |   |  | $ | 22.5   |  
|                                                                                          |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |       |   |  |   |        |  



22



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##### Table of Contents

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006

(In millions)



|                                                                                |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |        |   |  |   |        |  
|------------------------------------------------------------------------------- |  | ------------- | ------ | - | --------------------- | - | ------ | -------------------------- |  | - | ------------ | - |  | ------------ | ------ | - |  | - | ------ | -
|                                                                                |  | ParentCompany |        |   | GuarantorSubsidiaries |   |        | Non- GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |       
|Operating Activities                                                            |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |        |   |  |   |        |  
|Net loss                                                                        |  | $             | (355.0 | ) |                       | $ | (241.1 | )                          |  | $ | (15.2        | ) |  | $            | 256.3  |   |  | $ | (355.0 | )
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |        |   |  |   |        |  
|Depreciation and amortization                                                   |  |               |       |   |                       |   | 293.4  |                            |  |   | 21.5         |   |  |              |       |   |  |   | 314.9  |  
|Amortization of favorable and unfavorable contracts                             |  |               |       |   |                       |   | 3.1    |                            |  |   | (0.5         | ) |  |              |       |   |  |   | 2.6    |  
|Amortization of debt discount and financing costs                               |  |               | 14.4   |   |                       |   |       |                            |  |   |             |   |  |              |       |   |  |   | 14.4   |  
|Unrealized gain on interest rate swap                                           |  |               | (1.5   | ) |                       |   |       |                            |  |   |             |   |  |              |       |   |  |   | (1.5   | )
|Stock-based compensation                                                        |  |               | 7.8    |   |                       |   |       |                            |  |   |             |   |  |              |       |   |  |   | 7.8    |  
|Equity in income (loss) of subsidiaries                                         |  |               | 256.3  |   |                       |   |       |                            |  |   |             |   |  |              | (256.3 | ) |  |   |       |  
|Deferred income taxes                                                           |  |               | (0.2   | ) |                       |   | 3.6    |                            |  |   | (10.9        | ) |  |              |       |   |  |   | (7.5   | )
|Net change in assets and liabilities:                                           |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |        |   |  |   |        |  
|Restricted cash                                                                 |  |               |       |   |                       |   | (3.3   | )                          |  |   | (0.1         | ) |  |              |       |   |  |   | (3.4   | )
|Receivables                                                                     |  |               |       |   |                       |   | (4.9   | )                          |  |   | (4.1         | ) |  |              |       |   |  |   | (9.0   | )
|Receivables from related parties                                                |  |               |       |   |                       |   | (2.2   | )                          |  |   |             |   |  |              |       |   |  |   | (2.2   | )
|Profit-sharing receivables from insurance carriers                              |  |               |       |   |                       |   | 8.6    |                            |  |   |             |   |  |              |       |   |  |   | 8.6    |  
|Prepaid commissions                                                             |  |               |       |   |                       |   | (38.1  | )                          |  |   | (3.4         | ) |  |              |       |   |  |   | (41.5  | )
|Other current assets                                                            |  |               | (0.5   | ) |                       |   | 3.9    |                            |  |   | 2.1          |   |  |              |       |   |  |   | 5.5    |  
|Contract rights and list fees                                                   |  |               |       |   |                       |   | (6.9   | )                          |  |   |             |   |  |              |       |   |  |   | (6.9   | )
|Other non-current assets                                                        |  |               |       |   |                       |   | (2.8   | )                          |  |   | (1.4         | ) |  |              |       |   |  |   | (4.2   | )
|Intercompany receivables and payables                                           |  |               | 110.3  |   |                       |   | (111.7 | )                          |  |   | 1.4          |   |  |              |       |   |  |   |       |  
|Accounts payable and accrued expenses                                           |  |               | 10.7   |   |                       |   | (17.9  | )                          |  |   | 3.3          |   |  |              |       |   |  |   | (3.9   | )
|Payables to related parties                                                     |  |               |       |   |                       |   | 1.8    |                            |  |   | 0.1          |   |  |              |       |   |  |   | 1.9    |  
|Deferred revenue                                                                |  |               |       |   |                       |   | 151.9  |                            |  |   | 13.3         |   |  |              |       |   |  |   | 165.2  |  
|Income taxes receivable and payable                                             |  |               |       |   |                       |   | 0.4    |                            |  |   | (1.4         | ) |  |              |       |   |  |   | (1.0   | )
|Other long-term liabilities                                                     |  |               |       |   |                       |   | (3.5   | )                          |  |   | (0.8         | ) |  |              |       |   |  |   | (4.3   | )
|Minority interests and other, net                                               |  |               |       |   |                       |   | 0.4    |                            |  |   | 0.1          |   |  |              |       |   |  |   | 0.5    |  
|                                                                                |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |        |   |  |   |        |  
|Net cash provided by operating activities                                       |  |               | 42.3   |   |                       |   | 34.7   |                            |  |   | 4.0          |   |  |              |       |   |  |   | 81.0   |  
|                                                                                |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |        |   |  |   |        |  
|Investing Activities                                                            |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |        |   |  |   |        |  
|Capital expenditures                                                            |  |               |       |   |                       |   | (17.4  | )                          |  |   | (1.0         | ) |  |              |       |   |  |   | (18.4  | )
|Restricted cash                                                                 |  |               |       |   |                       |   |       |                            |  |   | 2.1          |   |  |              |       |   |  |   | 2.1    |  
|                                                                                |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |        |   |  |   |        |  
|Net cash provided by (used in) investing activities                             |  |               |       |   |                       |   | (17.4  | )                          |  |   | 1.1          |   |  |              |       |   |  |   | (16.3  | )
|                                                                                |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |        |   |  |   |        |  
|Financing Activities                                                            |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |        |   |  |   |        |  
|Principal payments on borrowings                                                |  |               | (443.6 | ) |                       |   | (0.4   | )                          |  |   |             |   |  |              |       |   |  |   | (444.0 | )
|Proceeds from borrowings                                                        |  |               | 385.7  |   |                       |   |       |                            |  |   |             |   |  |              |       |   |  |   | 385.7  |  
|Deferred financing costs                                                        |  |               | (10.9  | ) |                       |   |       |                            |  |   |             |   |  |              |       |   |  |   | (10.9  | )
|                                                                                |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |        |   |  |   |        |  
|Net cash used in financing activities                                           |  |               | (68.8  | ) |                       |   | (0.4   | )                          |  |   |             |   |  |              |       |   |  |   | (69.2  | )
|                                                                                |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |        |   |  |   |        |  
|Effect of changes in exchange rates on cash and cash equivalents                |  |               |       |   |                       |   |       |                            |  |   | 2.4          |   |  |              |       |   |  |   | 2.4    |  
|                                                                                |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |        |   |  |   |        |  
|Net increase (decrease) in cash and cash equivalents                            |  |               | (26.5  | ) |                       |   | 16.9   |                            |  |   | 7.5          |   |  |              |       |   |  |   | (2.1   | )
|Cash and cash equivalents, beginning of period                                  |  |               | 27.3   |   |                       |   | 66.1   |                            |  |   | 20.0         |   |  |              |       |   |  |   | 113.4  |  
|                                                                                |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |        |   |  |   |        |  
|Cash and cash equivalents, end of period                                        |  | $             | 0.8    |   |                       | $ | 83.0   |                            |  | $ | 27.5         |   |  | $            |       |   |  | $ | 111.3  |  
|                                                                                |  |               |        |   |                       |   |        |                            |  |   |              |   |  |              |        |   |  |   |        |  



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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

This Report is prepared by Affinion Group, Inc. Unless otherwise indicated or the context otherwise requires, in this Report all references to
Affinion, the Company, we, our and us refer to Affinion Group, Inc. and its subsidiaries on a consolidated basis after giving effect to the consummation of the Transactions (as discussed
under The Transactions below), but for periods prior to the consummation of the transactions, refer to the historical operations of the Predecessor.

The following discussion and analysis of our results of operations and financial condition should be read in conjunction with our audited consolidated financial statements as of December 31, 2006 and 2005, and
for the year ended December 31, 2006 and for the period from October 17, 2005 (commencement of operations) to December 31, 2005 and the Predecessors combined financial statements for the period from January 1, 2005 to
October 16, 2005 and for the year ended December 31, 2004 included in our Annual Report on Form 10-K and with the unaudited condensed consolidated financial statements and related notes thereto presented in this Quarterly Report on Form
10-Q.

Disclosure Regarding Forward-Looking Statements

Our disclosure and analysis in this Form 10-Q may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, Section 21E of the
Securities Exchange Act of 1934, as amended, or the Exchange Act, and the Private Securities Litigation Reform Act of 1995, that are subject to risks and uncertainties. Forward-looking statements give our current expectations and projections
relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements may
include words such as anticipate, estimate, expect, project, intend, plan, believe and other words and terms of similar meaning in connection with any discussion of
the timing or nature of future operating or financial performance or other events. All statements other than statements of historical facts included in this Form 10-Q that address activities, events or developments that we expect, believe or
anticipate will or may occur in the future are forward-looking statements.

These forward-looking statements are largely based on our
expectations and beliefs concerning future events, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors relating to our
operations and business environment, all of which are difficult to predict and many of which are beyond our control.

Although we believe
our estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, managements assumptions about future events may prove to be inaccurate.
Management cautions all readers that the forward-looking statements contained in this Form 10-Q are not guarantees of future performance, and we cannot assure any reader that those statements will be realized or the forward-looking events and
circumstances will occur. Actual results may differ materially from those anticipated or implied in the forward-looking statements due to the factors listed under Item 1A. Risk Factors in our Form 10-K and the Managements
Discussion and Analysis of Financial Condition and Results of Operations section of this Quarterly Report on Form 10-Q. All forward-looking statements speak only as of the date of this Form 10-Q. We do not intend to publicly update or revise
any forward-looking statements as a result of new information, future events or otherwise, except as required by law. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

Introduction

Managements discussion and
analysis of financial condition and results of operations (MD&A) is provided as a supplement to the unaudited condensed consolidated financial statements and the related notes thereto included elsewhere herein to help provide an
understanding of our financial condition, results of our operations and changes in our financial condition. The MD&A is organized as follows:



| |  |  | Overview. This section provides a general description of our business and operating segments, as well as recent developments that we believe are important in
understanding our results of operations and financial condition and in anticipating future trends.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Results of operations. This section provides an analysis of our results of operations for the three and nine months ended September 30, 2007 and 2006.
This analysis is presented on both a consolidated basis and on an operating segment basis.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Financial condition, liquidity and capital resources. This section provides an analysis of our cash flows for the nine months ended September 30, 2007
and 2006 and our financial condition as of September 30, 2007, as well as a discussion of our liquidity and capital resources.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| |  |  | Critical accounting policies. This section discusses certain significant accounting policies considered to be important to our financial condition and
results of operations and which require significant judgment and estimates on the part of management in their application. In addition, we refer you to our audited consolidated financial statements as of December 31, 2006 and 2005, and for the
year ended December 31, 2006 and for the period from October 17, 2005 (commencement of operations) to December 31, 2005, and the Predecessors combined financial statements for the periods from January 1, 2005 to
October 16, 2005, and for the year ended December 31, 2004 included in our Form 10-K for a summary of our significant accounting policies.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Overview

Description of Business

We are a leading global provider of comprehensive marketing services and loyalty programs to many of the largest and most respected companies in the
world. We partner with these leading companies to develop customized marketing programs that provide valuable products and services to their end customers using our creative design and product development capabilities. These products and services
enable our marketing partners to strengthen their customer relationships, as well as generate significant incremental revenue, generally in the form of commission payments paid by us. We have substantial expertise in deploying various types of
media, such as direct mail and the Internet, and bundling unique benefits to offer valuable products and services to the end customers of our marketing partners on a highly targeted basis. We provide credit monitoring and identity-theft resolution,
accidental death and dismemberment insurance (AD&D), discount travel services, loyalty programs, various checking account and credit card enhancement services and other products and services. We believe we are a market leader in each
of our product areas and that our portfolio of products and services is the broadest in the industry. Our scale, combined with our nearly 35 years of experience, unique proprietary database, proven marketing techniques and strong marketing partner
relationships, position us to perform well and grow in a variety of market conditions.

As of September 30, 2007 we had approximately
70 million members and end customers worldwide.

We organize our business into two operating units:



| |  |  | Affinion North America. Affinion North America comprises our Membership, Insurance and Package, and Loyalty product operations in North America
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Membership Products. We design, implement and market membership programs that provide members with access to a variety of discounts and shop-at-home
conveniences in such areas as retail merchandise, travel, automotive and home improvement as well as personal protection benefits and value-added services including credit monitoring and identity-theft resolution services.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Insurance and Package Products. We market AD&D and other insurance programs and design and provide checking account enhancement programs to financial
institutions.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Loyalty Products. We design, implement and administer points-based loyalty programs and manage loyalty points for financial, travel, auto and other
companies. We also provide enhancement benefits to major financial institutions in connection with their credit and debit card programs.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Affinion International. Affinion International comprises our Membership, Package and Loyalty product operations outside North America. We expect to leverage
our current Western European operational platform to expand our range of products and services, develop new affinity partner relationships in various industries and grow our geographical footprint.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We offer all of our products and services through both retail and wholesale arrangements, although on a wholesale basis, currently we primarily provide
services and benefits derived from our credit card registration, credit monitoring and identity theft resolution products. In our retail arrangements, we incur marketing expenses to acquire new customers for our subscription-based membership,
insurance and package enhancement products with the objective of building highly profitable and predictable recurring future revenue streams and cash flows. More recently, the Company has entered into other retail relationships with new and existing
affinity partners, including arrangements where the affinity partner offers the Companys membership programs at point of sale locations to their customers and the Company receives a membership fee and generally pays the affinity partner
related commission expense. For our membership and package enhancement products, these marketing costs are expensed when the campaign is launched, while in our insurance products these costs were capitalized and amortized over 12 years in proportion
to the revenue expected to be earned from those campaigns through the date of the Transactions. For periods following the closing of the Transactions, we have changed our accounting policy so that these insurance marketing costs are expensed when
the costs are incurred as the campaign is launched, similar to our accounting for the marketing costs associated with our membership and package products. This change will eliminate the historical differences between our actual cash marketing spend
and the marketing costs expensed in a period.

Our membership programs are offered under a variety of terms and conditions. Members are
usually offered incentives (e.g. free credit reports or other premiums) and one to three month risk-free trial periods to encourage them to use the benefits of membership before they are billed. We do not recognize any revenue during the trial
period and expense the cost of all incentives and program benefits and servicing costs as incurred.



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##### Table of Contents

Customers of our membership programs typically pay their membership fees either annually or monthly. Our
membership products may have significant timing differences between the receipt of membership fees for annual members and revenue recognition. Historically, memberships were offered primarily under full money back terms whereby a member could
receive a full refund upon cancellation at any time during the current membership term. These revenues are recognized upon completion of the membership term when they are no longer refundable. Depending on the length of the trial period, this
revenue may not be recognized for up to 16 months after the related marketing spend is incurred and expensed. Currently, annual memberships are primarily offered under pro-rata arrangements in which the member is entitled to a prorated refund for
the unused portion of their membership term. This allows us to recognize revenue ratably over the annual membership term. In late 2003, we began to expand the types of memberships that we offer to include memberships under monthly payment programs.
In the first nine months of 2007, approximately 61% of our new member enrollments were in monthly payment programs. Revenue is recognized monthly under both annual pro rata and monthly memberships, allowing for a better matching of revenues and
related servicing and benefit costs when compared to annual full money back memberships. Memberships remain under the billing terms in which they were originated. As we replace annual memberships with monthly memberships we receive less cash at the
beginning of the membership term and, therefore, have lower deferred revenue resulting in temporarily higher Segment EBITDA (as discussed under Financial Condition, Liquidity and Capital ResourcesReconciliation of Non-GAAP
Financial Measures to GAAP Financial Measures below) than cash flows from operations. We believe that once monthly memberships, as a percentage of all members within the membership base, reach a constant level, Segment EBITDA and cash flows
from operations will be more closely aligned.

We generally utilize the brand names, customer contacts and billing vehicles (credit or
debit card, checking account, mortgage or other type of billing arrangement) of our affinity partners in our marketing campaigns. We usually compensate our affinity partners either through commissions based on revenues we receive from members (which
we expense in proportion to the revenue we recognize) or up-front marketing payments, commonly referred to as bounties (which we expense when incurred). The commission rates which we pay to our affinity partners differ depending on the arrangement
we have with the particular affinity partner and the type of media we utilize for a given marketing campaign. For example, marketing campaigns utilizing direct mail and online channels generally have lower commission rates than other marketing
channels which we use. As a result of recent changes in affinity partner arrangements and a higher percentage of our new customers being acquired through the direct mail and online media, our membership commission rates for the past five years have
consistently decreased as a percentage of revenue.

We serve as an agent and third-party administrator for the marketing of AD&D and
our other insurance products. Free trial periods and incentives are generally not offered with our insurance programs. Insurance program participants typically pay their insurance premiums either monthly or quarterly. Insurance revenues are
recognized ratably over the insurance period and there are no significant differences between cash flows and related revenue recognition. We earn revenue in the form of commissions collected on behalf of the insurance carriers and participate in
profit-sharing relationships with the carriers that underwrite the insurance policies that we market. Our estimated share of profits from these arrangements is reflected as profit-sharing receivables from insurance carriers on the accompanying
unaudited condensed consolidated balance sheets and any changes in estimated profit sharing are periodically recorded as an adjustment to net revenue. Revenue from insurance programs is reported net of insurance costs in the accompanying unaudited
condensed consolidated statements of operations.

In our wholesale arrangements, we provide products and services as well as customer
service and fulfillment related to such products and services supporting our affinity partners programs that they offer to their customers. Our affinity partners are typically responsible for customer acquisition, retention, and collection and
generally pay us one-time implementation fees and on-going monthly service fees based on the number of members enrolled in their programs. Implementation fees are recognized ratably over the contract period while service fees are recognized in the
month earned. Wholesale revenues also include revenues from transactional activities associated with our programs such as the sales of additional credit reports and discount shopping and travel purchases by members. The revenues from such
transactional activities are recognized in the month earned.

We have made significant progress in increasing the flexibility of our
business model by transitioning our operations from a highly fixed-cost structure to a more variable-cost structure by combining similar functions and processes, consolidating facilities and outsourcing a significant portion of our call center and
other back-office processing. This added flexibility should better enable us to redeploy our marketing expenditures globally across our operations to maximize returns.



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##### Table of Contents

Factors Affecting Results of Operations and Financial Condition

Competitive Environment

As a leader
in the affinity direct marketing industry, we compete with many other organizations, including certain of our affinity partners, to obtain a share of the customers business. As affinity direct marketers, we derive our leads from customer
contacts, which our competitors seek access to, and we must generate sufficient earnings per lead for our affinity partners to compete effectively for access to their customer contacts.

We compete with companies of varying size, financial strength and availability of resources. Our competitors include marketing solutions providers,
financial institutions, insurance companies, consumer goods companies, internet companies and others, as well as direct marketers offering similar programs. Some of our competitors are larger than we are, with more resources, financial and
otherwise.

We expect this competitive environment to continue in the foreseeable future.

Financial Industry Trends

Historically, financial institutions have represented a significant majority of our affinity partner base. In the past few years, a number of our existing financial institution affinity partners have been acquired by, or merged with, other
financial institutions. Several recent examples include Bank of America Corporation and MBNA Corp., JPMorgan Chase & Co. and Bank One Corporation, and Washington Mutual, Inc. and Providian Financial. As we generally have relationships with
either the acquirer, the target or, as in most cases, both the acquirer and the target, this industry consolidation has not, to date, had a material long-term impact on either our marketing opportunities or our margins, but has created delays in new
program launches while the merging institutions focus on consolidating their internal operations.

In certain circumstances, our financial
affinity partners have sought to source and market their own in-house programs, most notably programs that are analogous to our credit card registration, credit monitoring and identity-theft resolution services. As we have sought to maintain our
market share and to continue these programs with our partners, in some circumstances, we have shifted from a retail marketing arrangement to a wholesale arrangement, which has lower net revenue, but unlike our retail arrangement, has no related
commission expense. As a result, we have experienced a revenue reduction in our membership business. This trend has also caused some reductions in our profit margins, most notably in the in-bound telemarketing channel.

Internationally, our package products have been primarily offered by some of the largest financial institutions in Europe. As these banks attempt to
increase their own net revenues and margins, we have experienced significant price reductions when our agreements come up for renewal from what we had previously been able to charge these institutions for our programs. We expect this pricing
pressure on our international package offerings to continue in the future.

Regulatory Environment

We are subject to federal and state regulation as well as regulation by foreign authorities in other jurisdictions. Certain regulations that govern our
operations include: federal, state and foreign marketing laws; federal, state and foreign privacy laws; and federal, state and foreign insurance and consumer protection regulations. Federal regulations are primarily enforced by the Federal Trade
Commission and the Federal Communications Commission. State regulations are primarily enforced by individual state attorneys general. Foreign regulations are enforced by a number of regulatory bodies in the relevant jurisdictions.

These regulations primarily impact the means we use to market our programs, which can reduce the acceptance rates of our solicitation efforts, and impact
our ability to obtain updated information from our members and end-customers. In our insurance products, these regulations limit our ability to implement pricing changes.

We incur significant costs to ensure compliance with these regulations; however, we are party to lawsuits, including class action lawsuits, and state attorney general investigations involving our business practices
which also increase our costs of doing business.

Seasonality

Historically, seasonality has not had a significant impact on our business. Our revenues are more affected by the timing of marketing programs which can
change from year to year depending on the opportunities available and pursued.



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##### Table of Contents

Business History

General. Our business started with our North American membership products in 1973. Over a decade later we expanded our business to include North American insurance and package products. In 1988, we acquired a
loyalty and enhancement programs business and in the early 1990s, we expanded our membership and package products internationally. During these periods, the various products within the combined financial statements operated independently and were
subject to certain non-compete agreements between them which limited their access to new channels, affinity partners, products and markets.

In 2004, we terminated the non-compete agreements described above and streamlined our organizational structure to integrate these historically separately managed product lines. Accordingly, our North American membership, insurance, package
and loyalty products came under common management beginning in the first quarter of 2004 and the North American management team assumed responsibility for our international products in late 2004 and oversight of the travel agency in the first
quarter of 2005.

Integration and the 2005 Reorganization. In February 2004, we began integrating the North American membership,
insurance and package product operations. The organizational structures supporting these product lines were realigned to combine departments and eliminate redundant functions. We reorganized the sales forces to be more aligned with the needs of our
affinity partners and have a unified and comprehensive approach to the North American market. We also combined our marketing and procurement functions to take advantage of the larger scale of the combined businesses. During 2004 and continuing in
2005, as part of this initial integration effort, we incurred approximately $7.4 million of severance and other restructuring costs recorded primarily in general and administrative expense on the combined statements of operations. These severance
and other restructuring costs have resulted in approximately $9.7 million of annual ongoing cost savings, a portion of which was realized in 2004, with the majority realized in 2005.

In 2005, we developed reorganization plans for our international and North American travel agency operations based on our successful earlier integration
efforts, including facility consolidation, outsourcing of our call centers and other back office functions, as well as eliminating redundant functions and centralizing oversight for common processes (the 2005 Reorganization). During
2005, we incurred $8.1 million of costs as part of the 2005 Reorganization and, during 2006, we incurred an additional $2.1 million of costs as part of the 2005 Reorganization recorded primarily in general and administrative expense on the unaudited
condensed consolidated statement of operations. As a result, we have generated approximately $11.0 million of annual cost savings, a portion of which was realized in 2005 with the majority realized in 2006. We anticipate no offsetting increases in
expenses or decreases in revenues at this time as a result of these initiatives.

The Transactions

On October 17, 2005, Cendant Corporation (Cendant) completed the sale of the Cendant Marketing Services Division (the
Predecessor) to Affinion Group, Inc. (the Company or Affinion), an affiliate of Apollo Management V, L.P. (Apollo), pursuant to a purchase agreement dated July 26, 2005 for approximately $1.8
billion (together with the related financings, the Transactions). The purchase price consisted of approximately $1.7 billion of cash, net of estimated closing adjustments, plus $125.0 million face value of 125,000 shares of newly issued
preferred stock (then fair value of $80.4 million) of Affinion Group Holdings, Inc. (Affinion Holdings), our parent company, and a warrant (then fair value of $16.7 million) that is exercisable for 4,437,170 shares of common stock of
Affinion Holdings, subject to customary anti-dilution adjustments and $38.1 million of transaction-related costs.

The warrant was
exercisable on or after October 17, 2009 (or earlier, if Apollo achieved certain returns on its investment or if a dividend or distribution was paid on Affinion Holdings common stock). As a result of a special dividend on its common stock
distributed by Affinion Holdings in January 2007, the warrant became exercisable at an exercise price of $10.38 per share. The warrant will expire 30 days after notice is received by the warrant holders from Affinion Holdings that Apollo and its
affiliates have received certain specified investment returns.

The preferred stock entitles its holder to receive dividends of
8.5% per annum (payable, at Affinion Holdings option, either in cash or in kind) and ranks senior to shares of all other classes or series of stock with respect to rights upon a liquidation or sale of Affinion Holdings at a price of the
then-current face amount, plus any accrued and unpaid dividends. The preferred stock is redeemable at Affinion Holdings option at any time, subject to the applicable terms of our debt instruments and applicable laws. In conjunction with a
special dividend on its common stock distributed by Affinion Holdings in January 2007, Affinion Holdings also redeemed 95,107 shares of its preferred stock at its initial face amount plus accrued and unpaid dividends. Immediately following the
redemption, 29,893 shares of preferred stock with a face amount of $33.3 million, representing an initial face amount of $29.9 million plus accrued and unpaid dividends of $3.4 million, were outstanding.



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##### Table of Contents

On October 14, 2005, the Predecessor acquired all of the outstanding shares of common stock of TRL
Group, Inc. (TRL Group) not owned by the Predecessor for approximately $15.7 million and the credit agreement provided by Cendant to TRL Group was terminated. Pursuant to the purchase agreement, we acquired all of the outstanding capital
stock and membership interests of the Predecessor, as well as substantially all of the Predecessors assets and liabilities. Certain assets and liabilities of the Predecessor were retained by Cendant pursuant to the purchase agreement.

As part of the Transactions, we made a special tax election referred to as a 338(h)(10) election with respect to the
Predecessor. Under the 338(h)(10) election, the companies constituting the Predecessor were deemed to have sold and repurchased their assets at fair market value. By adjusting the tax basis in such assets to fair market value for U.S. federal income
tax purposes, the aggregate amount of our tax deductions for depreciation and amortization will increase, which will reduce our cash taxes in the future and thus further enhance our free cash flow generation.

Results of Operations

Supplemental Data

The following table provides data for selected business segments.



|                                                                                |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|------------------------------------------------------------------------------- |  | ------------------------------- | ------ | - | ------------------------------ | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                                |  | Three Months EndedSeptember 30, |        |   | Nine Months EndedSeptember 30, |  
|                                                                                |  | 2007                            |        |   | 2006                           |   |        | 2007 |  |   | 2006   |  
|Affinion North America                                                          |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Membership Products:                                                            |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Retail                                                                          |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Average Members(1)(000s)                                                       |  |                                 | 8,011  |   |                                |   | 9,023  |      |  |   | 8,262  |   |  |   | 9,248  |  
|% Monthly Members                                                               |  |                                 | 34.8   | % |                                |   | 36.1   | %    |  |   | 36.2   | % |  |   | 34.3   | %
|% Annual Members                                                                |  |                                 | 65.2   | % |                                |   | 63.9   | %    |  |   | 63.8   | % |  |   | 65.7   | %
|Annualized Net Revenue Per Average Member (2)                                   |  | $                               | 74.39  |   |                                | $ | 69.44  |      |  | $ | 71.31  |   |  | $ | 66.83  |  
|Wholesale                                                                       |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Average Members(1)(000s)                                                       |  |                                 | 3,543  |   |                                |   | 3,969  |      |  |   | 3,652  |   |  |   | 3,948  |  
|Portion for service formerly retail and other (000s)(3)                        |  |                                 | 2,307  |   |                                |   | 2,109  |      |  |   | 2,228  |   |  |   | 2,018  |  
|Retail including wholesale formerly retail and other (000s)                    |  |                                 | 10,318 |   |                                |   | 11,132 |      |  |   | 10,490 |   |  |   | 11,266 |  
|Global Membership Products:                                                     |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Retail                                                                          |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Average Members(1)(4)(000s)                                                    |  |                                 | 8,236  |   |                                |   | 9,138  |      |  |   | 8,472  |   |  |   | 9,324  |  
|Annualized Net Revenue Per Average Member(2)                                    |  | $                               | 75.42  |   |                                | $ | 69.73  |      |  | $ | 72.32  |   |  | $ | 66.98  |  
|Average Retail Members including wholesale formerly retail and other (4)(000s) |  |                                 | 10,543 |   |                                |   | 11,247 |      |  |   | 10,700 |   |  |   | 11,342 |  
|Insurance and Package Products:                                                 |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Insurance                                                                       |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Average Basic Insured(1)(000s)                                                 |  |                                 | 25,535 |   |                                |   | 27,523 |      |  |   | 26,078 |   |  |   | 27,916 |  
|Average Supplemental Insured (000s)                                            |  |                                 | 5,053  |   |                                |   | 5,337  |      |  |   | 5,134  |   |  |   | 5,332  |  
|Annualized Net Revenue Per Supplemental Insured(2)                              |  | $                               | 51.49  |   |                                | $ | 48.29  |      |  | $ | 52.27  |   |  | $ | 47.58  |  
|Package                                                                         |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Average Members(1)(000s)                                                       |  |                                 | 6,020  |   |                                |   | 6,763  |      |  |   | 6,226  |   |  |   | 6,943  |  
|Annualized Net Revenue Per Average Member (2)                                   |  | $                               | 13.53  |   |                                | $ | 13.28  |      |  | $ | 13.56  |   |  | $ | 13.53  |  
|Affinion International                                                          |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|International Products:                                                         |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Package                                                                         |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Average Members(1)(000s)                                                       |  |                                 | 16,365 |   |                                |   | 15,874 |      |  |   | 16,433 |   |  |   | 16,900 |  
|Annualized Net Revenue Per Average Package Member (2)                           |  | $                               | 8.52   |   |                                | $ | 7.23   |      |  | $ | 8.07   |   |  | $ | 6.79   |  
|Other Retail Membership                                                         |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Average Members(1)(000s)                                                       |  |                                 | 1,900  |   |                                |   | 2,338  |      |  |   | 2,221  |   |  |   | 2,336  |  
|Annualized Net Revenue Per Average Member (2)                                   |  | $                               | 31.79  |   |                                | $ | 21.12  |      |  | $ | 25.25  |   |  | $ | 20.98  |  
|New Retail Membership                                                           |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Average Members (1)(000s)                                                      |  |                                 | 225    |   |                                |   | 115    |      |  |   | 210    |   |  |   | 76     |  
|Annualized Net Revenue Per Average Member (2)                                   |  | $                               | 111.95 |   |                                | $ | 91.94  |      |  | $ | 112.15 |   |  | $ | 84.78  |  

---

|(1) | Average Members and Average Basic Insured for the period are each calculated by
determining the average members or insureds, as applicable, for each month (adding the number of members or insureds, as applicable, at the beginning
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



29



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##### Table of Contents

| | of the month with the number of members or insureds, as applicable, at the end of the month and dividing that total by two) for each of the months in the
period and then averaging that result for the period (i.e. quarter or year-to-date). A members or insureds, as applicable, count is removed in the period in which the member or insured, as applicable, has cancelled.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Annualized Net Revenue Per Average Member and Annualized Net Revenue Per
Supplemental Insured are each calculated by taking the revenues as reported for the period (i.e. quarter or year-to-date) and dividing it by the average members or insureds, as applicable, for the period. Quarterly periods are then multiplied by
four to annualize this amount for comparative purposes. Upon cancellation of a member or an insured, as applicable, the members or insureds, as applicable, revenues are no longer recognized in the calculation.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Certain programs historically offered as retail arrangements are currently offered
as wholesale arrangements where the Company receives lower annualized price points and pays no related commission expense. Additionally, more recently, the Company has entered into other relationships with new and existing affinity partners,
including arrangements where the affinity partner offers the Companys membership programs at point of sale retail locations to their customers and the Company receives lower annualized price points and pays no related commission expense.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Includes International Operations New Retail Average Members.
|--- | -------------------------------------------------------------

In late 2002, our membership operations changed its strategic focus to overall profitability and generating
higher revenue from each member rather than the size of our member base. This has resulted in lower average members, partially offset by higher average revenues per member at lower commission rates and lower variable cost and higher contribution per
member. Following a competitive analysis of the marketplace, we recognized that our products were priced below similar products offered in the marketplace. Additionally, we recognized that there were opportunities to further optimize marketing
campaigns that had the effect of acquiring less members but nonetheless such members were more profitable in the aggregate. By raising prices and marketing more efficiently, we were able to increase our revenues even though less aggregate members
joined our programs. For example, 100 consumers joining a product with a $100 annual fee is likely to generate more revenue than 120 consumers joining a product with a $75 annual fee. Accordingly, by increasing the prices for our products and
engaging in marketing campaigns that were designed to achieve a greater return on marketing investment, we may be able to increase our revenues even though the aggregate number of members in our base declined.

Wholesale members include members where we typically receive a monthly service fee to support programs offered by our affinity partners. Certain programs
historically offered as retail arrangements are currently offered as wholesale arrangements where the Company receives lower annualized price points and pays no related commission expense. Additionally, more recently, the Company has entered into
other relationships with new and existing affinity partners, including arrangements where the affinity partner offers the Companys membership programs at point of sale retail locations to their customers and the Company receives lower
annualized price points and pays no related commission expense.

Basic insureds typically receive $1,000 of AD&D coverage at no cost to
the consumer since the affinity partner pays the cost of this coverage. Supplemental insureds are customers who have elected to pay premiums for higher levels of coverage. Average supplemental members have decreased primarily due to reductions in
new marketing spend. Average annualized net revenue per insured has increased primarily due to the introduction of higher priced programs and higher levels of AD&D insurance coverage.

Domestic package members have declined primarily due to certain client terminations, some of which were at lower prices than the net revenue per average
member.

Segment EBITDA

Segment
EBITDA consists of income from operations before depreciation and amortization. Segment EBITDA is the measure management uses to evaluate segment performance and we present Segment EBITDA to enhance your understanding of our operating performance.
We use Segment EBITDA as one criterion for evaluating our performance relative to that of our peers. We believe that Segment EBITDA is an operating performance measure, and not a liquidity measure, that provides investors and analysts with a measure
of operating results unaffected by differences in capital structures, capital investment cycles and ages of related assets among otherwise comparable companies. However, Segment EBITDA is not a measurement of financial performance under U.S. GAAP,
and Segment EBITDA may not be comparable to similarly titled measures of other companies. You should not consider Segment EBITDA as an alternative to operating or net income determined in accordance with U.S. GAAP, as an indicator of operating
performance or as an alternative to cash flows from operating activities determined in accordance with U.S. GAAP, or as an indicator of cash flows, or as a measure of liquidity.



30



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##### Table of Contents

Three Months Ended September 30, 2007 Compared to Three Months Ended September 30, 2006

The following table summarizes our consolidated results of operations for the three months ended September 30, 2007 and 2006:



|                                                |  |                                    |       |   |                                    |   |       |                                             |  |   |                         |   |  |   |      |  
|----------------------------------------------- |  | ---------------------------------- | ----- | - | ---------------------------------- | - | ----- | ------------------------------------------- |  | - | ----------------------- | - |  | - | ---- | -
|                                                |  | Three MonthsEndedSeptember 30,2007 |       |   | Three MonthsEndedSeptember 30,2006 |   |       | Increase(Decrease)Related to theTransaction |  |   | Increase(Decrease)Other |  
|                                                |  | (in millions)                      |      
|Net revenues                                    |  | $                                  | 330.6 |   |                                    | $ | 291.4 |                                             |  | $ | 41.7                    |   |  | $ | (2.5 | )
|                                                |  |                                    |       |   |                                    |   |       |                                             |  |   |                         |   |  |   |      |  
|Expenses:                                       |  |                                    |       |   |                                    |   |       |                                             |  |   |                         |   |  |   |      |  
|Marketing and commissions                       |  |                                    | 149.3 |   |                                    |   | 138.6 |                                             |  |   | 10.4                    |   |  |   | 0.3  |  
|Operating costs                                 |  |                                    | 79.6  |   |                                    |   | 81.4  |                                             |  |   | 6.8                     |   |  |   | (8.6 | )
|General and administrative                      |  |                                    | 25.9  |   |                                    |   | 26.4  |                                             |  |   | (2.4                    | ) |  |   | 1.9  |  
|Depreciation and amortization                   |  |                                    | 82.9  |   |                                    |   | 106.7 |                                             |  |   | (29.6                   | ) |  |   | 5.8  |  
|                                                |  |                                    |       |   |                                    |   |       |                                             |  |   |                         |   |  |   |      |  
|Total expenses                                  |  |                                    | 337.7 |   |                                    |   | 353.1 |                                             |  |   | (14.8                   | ) |  |   | (0.6 | )
|                                                |  |                                    |       |   |                                    |   |       |                                             |  |   |                         |   |  |   |      |  
|Loss from operations                            |  |                                    | (7.1  | ) |                                    |   | (61.7 | )                                           |  |   | 56.5                    |   |  |   | (1.9 | )
|Interest income                                 |  |                                    | 0.9   |   |                                    |   | 1.4   |                                             |  |   |                        |   |  |   | (0.5 | )
|Interest expense                                |  |                                    | (38.7 | ) |                                    |   | (39.3 | )                                           |  |   |                        |   |  |   | 0.6  |  
|Other expense                                   |  |                                    |      |   |                                    |   | (0.1  | )                                           |  |   |                        |   |  |   | 0.1  |  
|                                                |  |                                    |       |   |                                    |   |       |                                             |  |   |                         |   |  |   |      |  
|Loss before income taxes and minority interests |  |                                    | (44.9 | ) |                                    |   | (99.7 | )                                           |  |   | 56.5                    |   |  |   | (1.7 | )
|Income tax (expense) benefit                    |  |                                    | 1.7   |   |                                    |   | 1.1   |                                             |  |   | (1.2                    | ) |  |   | 1.8  |  
|Minority interests, net of tax                  |  |                                    | (0.1  | ) |                                    |   | (0.1  | )                                           |  |   |                        |   |  |   |     |  
|                                                |  |                                    |       |   |                                    |   |       |                                             |  |   |                         |   |  |   |      |  
|Net loss                                        |  | $                                  | (43.3 | ) |                                    | $ | (98.7 | )                                           |  | $ | 55.3                    |   |  | $ | 0.1  |  
|                                                |  |                                    |       |   |                                    |   |       |                                             |  |   |                         |   |  |   |      |  

Overview of Operating Results for the Three Months Ended September 30, 2007

The following is an overview of major changes affecting our operating results for the three months ended September 30, 2007.

Purchase accounting adjustments made in the Transactions had a significant impact on our results of operations for the three months ended
September 30, 2007 as compared to September 30, 2006. These entries, which are non-cash in nature, increased net revenues by $41.7 million and reduced loss from operations by $56.5 million. The effect of purchase accounting adjustments
related to deferred revenue for the three months ended September 30, 2007 as compared to September 30, 2006 increased net revenues by $37.0 million, marketing and commissions expense by $10.4 million and operating costs by $5.3 million. In
addition, the absence in 2007 of amortization of an asset from a favorable contract recorded in September 2006 increased net revenues by $4.7 million, while lower amortization of unfavorable contracts increased operating costs by $1.5 million. We
recorded $29.6 million less depreciation and amortization expense for the three months ended September 30, 2007 which positively affected results of operations.

Three Months Ended September 30, 2007 Compared to Three Months Ended September 30, 2006

The following section provides an overview of our consolidated results of operations for the three months ended September 30, 2007 as compared to the three months ended September 30, 2006. Calculated percentages are based on
amounts as reported which, for the three months ended September 30, 2007 and 2006, reflect the impact of purchase accounting.

Net
Revenues. During the three months ended September 30, 2007, we reported net revenues of $330.6 million, an increase of $39.2 million, or 13.5%, as compared to net revenues of $291.4 million in the comparable 2006 period. Approximately $37.0
million of the increase was due to an adjustment to deferred revenue related to the Transactions in 2005. Deferred revenue was originally written down as part of purchase accounting. The majority of the negative impact of this adjustment has been
recognized in 2005 and 2006, and such impact will decline in future periods. In addition, net revenues increased by $4.7 million from the absence in 2007 of amortization related to an asset recorded in purchase accounting for a favorable contract.
Net revenues excluding the impact of the Transactions decreased $2.5 million primarily due to decreases in Membership products of $7.4 million and Loyalty products of $6.7 million partially offset by increases in International products of $11.3
million. Membership products decreased due to lower retail member volumes which were partially offset by higher average revenues per retail member and higher wholesale revenues from programs that were formerly retail. Loyalty products net revenues
decreased due to the absence in 2007 of royalty revenue from a patent license agreement which expired in December 2006 and contract terminations.



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##### Table of Contents

International products net revenues increased primarily due to new program introductions for our new
retail offerings, growth in the package business and a favorable impact due to the weaker U.S dollar.

Marketing and Commissions
Expense. Marketing and commissions expense increased by $10.7 million, or 7.7%, to $149.3 million for the three months ended September 30, 2007 from $138.6 million for the three months ended September 30, 2006. Approximately $10.4
million of the increase was the result of higher commission expense related to the recording of non-cash purchase accounting adjustments to prepaid commissions related to deferred revenues. Excluding the impact of the Transactions, marketing and
commissions expense was $0.3 million higher primarily due to higher global marketing spend substantially offset by lower commissions.

Operating Costs. Operating costs decreased by $1.8 million, or 2.2%, to $79.6 million for the three months ended September 30, 2007 from $81.4 million for the three months ended September 30, 2006. Operating costs increased
as a result of the Transactions by $6.8 million, primarily related to an adjustment for a liability recorded in purchase accounting to service our members (for which no revenue will be recognized in the future) as a result of the Transactions of
$5.3 million and lower amortization related to a non-cash purchase accounting adjustment of unfavorable contracts which increased operating costs by $1.5 million. Excluding the impact of the Transactions, operating costs were $8.6 million lower than
2006, primarily due to lower product and servicing costs due to a lower member and client base, and improvements in contact center operations.

General and Administrative Expense. General and administrative expense decreased by $0.5 million, or 1.9%, to $25.9 million for the three months ended September 30, 2007 from $26.4 million for the three months ended
September 30, 2006 primarily due to the absence in 2007 of a $2.4 million charge for accrued management retention bonuses in 2006 related to the Transactions, partially offset by higher general and administrative costs not related to the
Transactions of $1.9 million primarily due to increases in other general expenses.

Depreciation and Amortization Expense.
Depreciation and amortization expense decreased by $23.8 million for the three months ended September 30, 2007 to $82.9 million from $106.7 million for the three months ended September 30, 2006, primarily from recording higher amortization
expense in 2006 on the fair value of intangible assets resulting from the Transactions as the majority of the intangibles are amortized on an accelerated basis. This amortization expense is based upon an allocation of values to intangible assets and
is being amortized over lives ranging from 3 years to 15 years. This decrease was partially offset by an increase in the amortization of contract rights acquired subsequent to the date of the Transactions.

Interest Expense. Interest expense decreased by $0.6 million to $38.7 million for the three months ended September 30, 2007 from $39.3
million for the three months ended September 30, 2006, primarily due to lower net cash interest expense of $2.0 million, principally the result of prepayments made on our term loan throughout 2006 and 2007, along with a more favorable impact of
approximately $0.5 million on the interest rate swap in 2007 as compared to 2006. These benefits were partially offset by higher deferred financing costs of $0.5 million and interest accretion of $1.4 million from contract rights purchased in
December 2006.

Income Tax Benefit. Income tax benefit increased by $0.6 million for the three months ended September 30, 2007
as compared to the three months ended September 30, 2006 primarily due to the movement in foreign deferred tax assets partially offset by an increase in current state tax liabilities.



32



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##### Table of Contents

Operating Segment Results

Net revenues and Segment EBITDA by operating segment are as follows:



|                                |  |                                  |       |   |                    |   |       |                                              |  |                         |      |  |      |       |   |      |   |       |                                              |  |                         |        |   |  |   |      |  |   |      |  
|------------------------------- |  | -------------------------------- | ----- | - | ------------------ | - | ----- | -------------------------------------------- |  | ----------------------- | ---- |  | ---- | ----- | - | ---- | - | ----- | -------------------------------------------- |  | ----------------------- | ------ | - |  | - | ---- |  | - | ---- | -
|                                |  | Three Months Ended September 30, |      
|                                |  | Net Revenues                     |       |   | Segment EBITDA (1) |  
|                                |  | 2007                             |       |   | 2006               |   |       | Increase(Decrease)Related to theTransactions |  | OtherIncrease(Decrease) |      |  | 2007 |       |   | 2006 |   |       | Increase(Decrease)Related to theTransactions |  | OtherIncrease(Decrease) |       
|                                |  | (in millions)                    |      
|Affinion North America          |  |                                  |       |   |                    |   |       |                                              |  |                         |      |  |      |       |   |      |   |       |                                              |  |                         |        |   |  |   |      |  |   |      |  
|Membership products             |  | $                                | 172.6 |   |                    | $ | 145.7 |                                              |  | $                       | 34.3 |  | $    | (7.4  | ) |      | $ | 30.2  |                                              |  | $                       | 11.3   |   |  | $ | 21.1 |  | $ | (2.2 | )
|Insurance and package products  |  |                                  | 89.3  |   |                    |   | 89.4  |                                              |  |                         | 0.1  |  |      | (0.2  | ) |      |   | 34.5  |                                              |  |                         | 31.0   |   |  |   | 0.1  |  |   | 3.4  |  
|Loyalty products                |  |                                  | 14.4  |   |                    |   | 16.1  |                                              |  |                         | 5.0  |  |      | (6.7  | ) |      |   | 5.0   |                                              |  |                         | 2.5    |   |  |   | 5.0  |  |   | (2.5 | )
|Eliminations                    |  |                                  | (1.3  | ) |                    |   | (1.8  | )                                            |  |                         |     |  |      | 0.5   |   |      |   |      |                                              |  |                         |       |   |  |   |     |  |   |     |  
|                                |  |                                  |       |   |                    |   |       |                                              |  |                         |      |  |      |       |   |      |   |       |                                              |  |                         |        |   |  |   |      |  |   |      |  
|Total North America             |  |                                  | 275.0 |   |                    |   | 249.4 |                                              |  |                         | 39.4 |  |      | (13.8 | ) |      |   | 69.7  |                                              |  |                         | 44.8   |   |  |   | 26.2 |  |   | (1.3 | )
|Affinion International products |  |                                  | 55.6  |   |                    |   | 42.0  |                                              |  |                         | 2.3  |  |      | 11.3  |   |      |   | 6.7   |                                              |  |                         | 1.4    |   |  |   | 0.7  |  |   | 4.6  |  
|                                |  |                                  |       |   |                    |   |       |                                              |  |                         |      |  |      |       |   |      |   |       |                                              |  |                         |        |   |  |   |      |  |   |      |  
|Total products                  |  |                                  | 330.6 |   |                    |   | 291.4 |                                              |  |                         | 41.7 |  |      | (2.5  | ) |      |   | 76.4  |                                              |  |                         | 46.2   |   |  |   | 26.9 |  |   | 3.3  |  
|Corporate                       |  |                                  |      |   |                    |   |      |                                              |  |                         |     |  |      |      |   |      |   | (0.6  | )                                            |  |                         | (1.2   | ) |  |   |     |  |   | 0.6  |  
|                                |  |                                  |       |   |                    |   |       |                                              |  |                         |      |  |      |       |   |      |   |       |                                              |  |                         |        |   |  |   |      |  |   |      |  
|Total                           |  | $                                | 330.6 |   |                    | $ | 291.4 |                                              |  | $                       | 41.7 |  | $    | (2.5  | ) |      |   | 75.8  |                                              |  |                         | 45.0   |   |  |   | 26.9 |  |   | 3.9  |  
|                                |  |                                  |       |   |                    |   |       |                                              |  |                         |      |  |      |       |   |      |   |       |                                              |  |                         |        |   |  |   |      |  |   |      |  
|Depreciation and amortization   |  |                                  |       |   |                    |   |       |                                              |  |                         |      |  |      |       |   |      |   | (82.9 | )                                            |  |                         | (106.7 | ) |  |   | 29.6 |  |   | (5.8 | )
|                                |  |                                  |       |   |                    |   |       |                                              |  |                         |      |  |      |       |   |      |   |       |                                              |  |                         |        |   |  |   |      |  |   |      |  
|Loss from operations            |  |                                  |       |   |                    |   |       |                                              |  |                         |      |  |      |       |   |      | $ | (7.1  | )                                            |  | $                       | (61.7  | ) |  | $ | 56.5 |  | $ | (1.9 | )
|                                |  |                                  |       |   |                    |   |       |                                              |  |                         |      |  |      |       |   |      |   |       |                                              |  |                         |        |   |  |   |      |  |   |      |  

---

|(1) | See Segment EBITDA above and Note 9 to the unaudited condensed consolidated
financial statements for a discussion of Segment EBITDA and a reconciliation of Segment EBITDA to loss from operations.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Affinion North America

Membership Products. Membership products net revenues increased by $26.9 million, or 18.5%,
to $172.6 million for the three months ended September 30, 2007 as compared to $145.7 million for the three months ended September 30, 2006. The increase was primarily attributable to a $34.3 million adjustment related to deferred revenue
recorded in purchase accounting from the Transactions. Excluding the effects of the Transactions, net revenues decreased $7.4 million primarily due to lower retail member volumes, partially offset by higher average revenues per retail member and
higher wholesale revenues from programs that were formerly retail.

Segment EBITDA increased by $18.9 million for the three months ended
September 30, 2007 as compared to the three months ended September 30, 2006. Segment EBITDA related to the Transactions for the three months ended September 30, 2007 was positively affected by a $19.9 million deferred revenue
adjustment recorded in purchase accounting, net of increased prepaid commissions and the amortization of the liability to service our members (for which no revenue will be recognized in the future) recorded in purchase accounting. Segment EBITDA for
2007 increased by $2.4 million from the absence in 2007 of management retention bonuses recorded in 2006 while decreasing $1.2 million from the effect of a non-cash purchase accounting adjustment for unfavorable contracts. Excluding the effects of
the Transactions, Segment EBITDA decreased by $2.2 million primarily due to lower net revenues of $7.4 million and higher marketing spend, substantially offset by lower commissions, product benefit and servicing costs of $7.2 million, including
approximately $3.4 million due to lower product and servicing costs associated with a lower membership base and improvements in contact center operations. Segment EBITDA declined due to increased general and administrative costs of approximately
$2.1 million primarily as a result of centralizing certain overhead functions and increases in other general expenses.

Insurance and
Package Products. Insurance and package products reported net revenues of $89.3 million for the three months ended September 30, 2007, relatively unchanged as compared to $89.4 million for the three months ended September 30, 2006.
Package revenue declined approximately $0.6 million, principally due to lower Package members and was substantially offset by an increase in Insurance revenue of approximately $0.3 million, principally due to the continued increase in net revenue
per supplemental insured. In addition, net revenues as a result of the Transactions increased $0.1 million due to a non-cash deferred revenue adjustment recorded in purchase accounting.



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Excluding the effects of the Transactions, Segment EBITDA increased by $3.4 million for the three months
ended September 30, 2007 as compared to the three months ended September 30, 2006. The increase in Segment EBITDA was primarily due to the timing of marketing spend as compared to the prior period along with an increase of $0.1 million
from a deferred revenue adjustment as mentioned above.

Loyalty Products. Revenues from Loyalty products decreased by $1.7 million,
or 10.6%, for the three months ended September 30, 2007 to $14.4 million as compared to $16.1 million for the three months ended September 30, 2006. Excluding the effects of the Transactions, net revenues decreased $6.7 million, primarily
due to the absence in 2007 of royalty revenue of $2.3 million received from the licensing of patents to Cendant in 2006 and $6.9 million due to contract terminations, including a one-time termination fee of $3.8 million, partially offset by
increased revenue of $2.5 million, primarily from new programs and growth from existing programs. Net revenues related to the Transactions increased $5.0 million due to the absence in 2007 of a non-cash $4.7 million purchase accounting
adjustment for a favorable contract recorded in 2006, and a deferred revenue adjustment recorded in purchase accounting.

Segment EBITDA
increased by $2.5 million for the three months ended September 30, 2007 as compared to the three months ended September 30, 2006. Excluding the effects of the Transactions, Segment EBITDA decreased by $2.5 million primarily from the
absence in 2007 of $2.3 million of royalties received from the licensing of patents to Cendant in 2006. Growth from new and existing programs combined with lower operating and general and administrative costs effectively offset the impact of
contract terminations noted above. Segment EBITDA related to the Transactions increased $5.0 million from the effect of the absence of the favorable contract and deferred revenue adjustments described above.

Affinion International

International
Products. International products net revenues increased by $13.6 million, or 32.4%, to $55.6 million for the three months ended September 30, 2007 as compared to $42.0 million for the three months ended September 30, 2006. Net revenues
excluding the results of the Transactions increased $11.3 million, primarily due to higher revenues of $3.1 million from new program introductions for our new retail offerings, $3.7 million from growth in our package business, and a $4.0
million impact from the weakening of the U.S. dollar. Net revenues also increased $2.3 million from a non-cash deferred revenue adjustment recorded in purchase accounting as a result of the Transactions.

Segment EBITDA increased by $5.3 million for the three months ended September 30, 2007 as compared to the three months ended September 30,
2006. Excluding the effect of the Transactions, Segment EBITDA increased $4.6 million, primarily as a result of growth in our package programs, and the effect of new retail program introductions net of higher marketing spend. In addition, Segment
EBITDA increased $0.7 million as a result of purchase accounting adjustments primarily related to a deferred revenue adjustment, net of commissions, and the amortization of the service liability to service our members (for which no revenue will be
recognized in the future) as a result of the Transactions.

Nine Months Ended September 30, 2007 Compared to Nine Months Ended
September 30, 2006

The following table summarizes our consolidated results of operations for the nine months ended September 30, 2007 and
2006:



|                                                |  |                                    |         |   |                                    |   |         |                                              |  |   |                         |   |  |   |       |  
|----------------------------------------------- |  | ---------------------------------- | ------- | - | ---------------------------------- | - | ------- | -------------------------------------------- |  | - | ----------------------- | - |  | - | ----- | -
|                                                |  | Nine MonthsEndedSeptember 30, 2007 |         |   | Nine MonthsEndedSeptember 30, 2006 |   |         | Increase(Decrease)Related to theTransactions |  |   | Increase(Decrease)Other |  
|                                                |  | (in millions)                      |        
|Net revenues                                    |  | $                                  | 984.4   |   |                                    | $ | 801.6   |                                              |  | $ | 179.2                   |   |  | $ | 3.6   |  
|                                                |  |                                    |         |   |                                    |   |         |                                              |  |   |                         |   |  |   |       |  
|Expenses:                                       |  |                                    |         |   |                                    |   |         |                                              |  |   |                         |   |  |   |       |  
|Marketing and commissions                       |  |                                    | 452.9   |   |                                    |   | 412.2   |                                              |  |   | 43.5                    |   |  |   | (2.8  | )
|Operating costs                                 |  |                                    | 251.2   |   |                                    |   | 238.6   |                                              |  |   | 29.9                    |   |  |   | (17.3 | )
|General and administrative                      |  |                                    | 89.5    |   |                                    |   | 81.8    |                                              |  |   | (10.1                   | ) |  |   | 17.8  |  
|Depreciation and amortization                   |  |                                    | 242.1   |   |                                    |   | 314.9   |                                              |  |   | (84.4                   | ) |  |   | 11.6  |  
|                                                |  |                                    |         |   |                                    |   |         |                                              |  |   |                         |   |  |   |       |  
|Total expenses                                  |  |                                    | 1,035.7 |   |                                    |   | 1,047.5 |                                              |  |   | (21.1                   | ) |  |   | 9.3   |  
|                                                |  |                                    |         |   |                                    |   |         |                                              |  |   |                         |   |  |   |       |  
|Loss from operations                            |  |                                    | (51.3   | ) |                                    |   | (245.9  | )                                            |  |   | 200.3                   |   |  |   | (5.7  | )
|Interest income                                 |  |                                    | 3.6     |   |                                    |   | 4.3     |                                              |  |   |                        |   |  |   | (0.7  | )
|Interest expense                                |  |                                    | (107.7  | ) |                                    |   | (113.7  | )                                            |  |   |                        |   |  |   | 6.0   |  
|Other expense                                   |  |                                    |        |   |                                    |   | (0.1    | )                                            |  |   |                        |   |  |   | 0.1   |  
|                                                |  |                                    |         |   |                                    |   |         |                                              |  |   |                         |   |  |   |       |  
|Loss before income taxes and minority interests |  |                                    | (155.4  | ) |                                    |   | (355.4  | )                                            |  |   | 200.3                   |   |  |   | (0.3  | )
|Income tax (expense) benefit                    |  |                                    | (1.0    | ) |                                    |   | 0.7     |                                              |  |   | (3.4                    | ) |  |   | 1.7   |  
|Minority interests, net of tax                  |  |                                    | (0.2    | ) |                                    |   | (0.3    | )                                            |  |   |                        |   |  |   | 0.1   |  
|                                                |  |                                    |         |   |                                    |   |         |                                              |  |   |                         |   |  |   |       |  
|Net loss                                        |  | $                                  | (156.6  | ) |                                    | $ | (355.0  | )                                            |  | $ | 196.9                   |   |  | $ | 1.5   |  
|                                                |  |                                    |         |   |                                    |   |         |                                              |  |   |                         |   |  |   |       |  



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Overview of Operating Results for the Nine Months Ended September 30, 2007

The following is an overview of major changes affecting our operating results for the nine months ended September 30, 2007.

Purchase accounting adjustments made in the Transactions had a significant impact on our results of operations for the nine months ended
September 30, 2007 as compared to September 30, 2006. These entries, which are non-cash in nature, increased net revenues by $179.2 million and reduced loss from operations by $200.3 million. The effect of purchase accounting adjustments
related to deferred revenue for the nine months ended September 30, 2007 as compared to September 30, 2006 increased net revenues by $174.5 million, marketing and commissions expense by $43.5 million and operating costs by $30.0 million.
In addition, the absence in 2007 of amortization of an asset from a favorable contract recorded in September 2006 increased net revenues by $4.7 million, while lower amortization of unfavorable contracts decreased operating costs by $0.1 million. We
recorded $84.4 million less depreciation and amortization expense for the nine months ended September 30, 2007 which positively affected results of operations.

Nine Months Ended September 30, 2007 Compared to Nine Months Ended September 30, 2006

The following section provides an overview of our consolidated results of operations for the nine months ended September 30, 2007 as compared to the nine months ended September 30, 2006.

Net Revenues. During the nine months ended September 30, 2007, we reported net revenues of $984.4 million, an increase of $182.8 million, or
22.8%, as compared to net revenues of $801.6 million in the comparable 2006 period. Approximately $174.5 million of the increase was due to an adjustment in deferred revenue related to the Transactions in 2005. Deferred revenue was originally
written down as part of purchase accounting. The majority of the negative impact of this adjustment has been recognized in 2005 and 2006, and such impact will decline in future periods. In addition, net revenues increased by $4.7 million from the
absence in 2007 of amortization related to an asset recorded in purchase accounting for a favorable contract. Net revenues excluding the impact of the Transactions increased $3.6 million, primarily due to increased International products net revenue
of $29.7 million and Insurance and package products net revenue of $6.1 million, partially offset by lower Loyalty products and Membership products net revenues of $16.7 million and $16.9 million, respectively. International products net revenues
increased primarily due to new retail and other retail program introductions, growth in the package business and a favorable impact due to the weaker U.S. dollar. Insurance and package products net revenues increased due to the continued increase in
net revenue per supplemental insured and lower cost of insurance, partially offset by lower Package revenues primarily due to lower Package members. Loyalty products net revenues decreased primarily due to the absence in 2007 of royalty revenue from
the licensing of a patent agreement which expired in December 2006 and contract terminations. Membership products net revenues decreased from lower member volumes which were partially offset by higher average revenues per retail member and higher
wholesale revenues from programs that were formerly retail.

Marketing and Commissions Expense. Marketing and commissions expense
increased by $40.7 million, or 9.9%, to $452.9 million for the nine months ended September 30, 2007 from $412.2 million for the nine months ended September 30, 2006. Marketing and commissions expense increased approximately $43.5 million
as a result of higher commission expense from recording non-cash purchase accounting adjustments to prepaid commissions related to deferred revenue. Excluding the impact of the Transactions, marketing and commissions expense was $2.8 million lower,
primarily due to lower commissions, offset by an increase in costs from the effect of the weaker U.S. dollar.

Operating Costs.
Operating costs increased by $12.6 million, or 5.3%, to $251.2 million for the nine months ended September 30, 2007 from $238.6 million for the nine months ended September 30, 2006. Operating costs increased as a result of the Transactions
by $29.9 million, related to an adjustment for a liability recorded in purchase accounting to service our members (for which no revenue will be recognized in the future) as a result of the Transactions of $30.0 million and amortization related to a
non-cash purchase accounting adjustment of unfavorable contracts which reduced operating costs by $0.1 million. Excluding the impact of the Transactions, operating costs were $17.3 million lower than 2006, primarily due to lower product and
servicing costs due to a lower member and client base and improvements in contact center operations, partially offset by an increase in costs from the effect of the weaker U.S. dollar.



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##### Table of Contents

General and Administrative Expense. General and administrative expense increased by $7.7 million,
or 9.4%, to $89.5 million for the nine months ended September 30, 2007 from $81.8 million for the nine months ended September 30, 2006. Excluding the impact of the Transactions, general and administrative costs were $17.8 million higher in
2007 primarily due to a dividend payment to option holders in the first quarter of 2007 and increases in other general expenses. Partially offsetting these increases was the absence of a $10.1 million charge in 2007 related to accrued management
retention bonuses in 2006 related to the Transactions.

Depreciation and Amortization Expense. Depreciation and amortization expense
decreased by $72.8 million for the nine months ended September 30, 2007 to $242.1 million from $314.9 million for the nine months ended September 30, 2006, primarily from recording higher amortization expense in 2006 on the fair value of
intangible assets resulting from the Transactions as the majority of the intangibles are amortized on an accelerated basis. This amortization expense is based upon an allocation of values to intangible assets and is being amortized over lives
ranging from 3 years to 15 years. This decrease was partially offset by an increase in the amortization of contract rights acquired subsequent to the date of the Transactions.

Interest Expense. Interest expense decreased by $6.0 million to $107.7 million for the nine months ended September 30, 2007 from $113.7
million for the nine months ended September 30, 2006, primarily due to lower deferred financing costs of approximately $9.5 million in 2007 primarily as a result of accelerated expense in 2006 from the bridge loan refinancing along with lower
net cash interest expense of approximately $3.9 million, primarily the result of prepayments made on our term loan throughout 2006 and 2007. These benefits were partially offset by a less favorable impact of approximately $3.2 million on the
interest rate swap in 2007 as compared to 2006 and interest accretion of $3.4 million in 2007 from contract rights purchased in December 2006.

Income Tax Expense. Income tax expense increased by $1.7 million for the nine months ended September 30, 2007 as compared to the nine months ended September 30, 2006 primarily due to the movement in valuation allowances
established against deferred tax assets and an increase in current state and foreign tax liabilities.

Operating Segment Results

Net revenues and Segment EBITDA by operating segment are as follows:



|                                |  |                                 |       |   |                    |   |       |                                              |  |                         |       |  |      |       |   |      |   |        |                                              |  |                         |        |   |  |   |       |  |   |       |  
|------------------------------- |  | ------------------------------- | ----- | - | ------------------ | - | ----- | -------------------------------------------- |  | ----------------------- | ----- |  | ---- | ----- | - | ---- | - | ------ | -------------------------------------------- |  | ----------------------- | ------ | - |  | - | ----- |  | - | ----- | -
|                                |  | Nine Months Ended September 30, |      
|                                |  | Net Revenues                    |       |   | Segment EBITDA (1) |  
|                                |  | 2007                            |       |   | 2006               |   |       | Increase(Decrease)Related to theTransactions |  | OtherIncrease(Decrease) |       |  | 2007 |       |   | 2006 |   |        | Increase(Decrease)Related to theTransactions |  | OtherIncrease(Decrease) |       
|                                |  | (in millions)                   |      
|Affinion North America          |  |                                 |       |   |                    |   |       |                                              |  |                         |       |  |      |       |   |      |   |        |                                              |  |                         |        |   |  |   |       |  |   |       |  
|Membership products             |  | $                               | 515.1 |   |                    | $ | 371.6 |                                              |  | $                       | 160.4 |  | $    | (16.9 | ) |      | $ | 68.2   |                                              |  | $                       | (25.0  | ) |  | $ | 103.5 |  | $ | (10.3 | )
|Insurance and package products  |  |                                 | 275.9 |   |                    |   | 269.3 |                                              |  |                         | 0.5   |  |      | 6.1   |   |      |   | 105.4  |                                              |  |                         | 83.9   |   |  |   | 0.5   |  |   | 21.0  |  
|Loyalty products                |  |                                 | 40.6  |   |                    |   | 51.4  |                                              |  |                         | 5.9   |  |      | (16.7 | ) |      |   | 11.3   |                                              |  |                         | 12.9   |   |  |   | 5.9   |  |   | (7.5  | )
|Eliminations                    |  |                                 | (3.7  | ) |                    |   | (5.1  | )                                            |  |                         |      |  |      | 1.4   |   |      |   |       |                                              |  |                         |       |   |  |   |      |  |   |      |  
|                                |  |                                 |       |   |                    |   |       |                                              |  |                         |       |  |      |       |   |      |   |        |                                              |  |                         |        |   |  |   |       |  |   |       |  
|Total North America             |  |                                 | 827.9 |   |                    |   | 687.2 |                                              |  |                         | 166.8 |  |      | (26.1 | ) |      |   | 184.9  |                                              |  |                         | 71.8   |   |  |   | 109.9 |  |   | 3.2   |  
|Affinion International products |  |                                 | 156.5 |   |                    |   | 114.4 |                                              |  |                         | 12.4  |  |      | 29.7  |   |      |   | 14.8   |                                              |  |                         | 0.3    |   |  |   | 6.0   |  |   | 8.5   |  
|                                |  |                                 |       |   |                    |   |       |                                              |  |                         |       |  |      |       |   |      |   |        |                                              |  |                         |        |   |  |   |       |  |   |       |  
|Total products                  |  |                                 | 984.4 |   |                    |   | 801.6 |                                              |  |                         | 179.2 |  |      | 3.6   |   |      |   | 199.7  |                                              |  |                         | 72.1   |   |  |   | 115.9 |  |   | 11.7  |  
|Corporate                       |  |                                 |      |   |                    |   |      |                                              |  |                         |      |  |      |      |   |      |   | (8.9   | )                                            |  |                         | (3.1   | ) |  |   |      |  |   | (5.8  | )
|                                |  |                                 |       |   |                    |   |       |                                              |  |                         |       |  |      |       |   |      |   |        |                                              |  |                         |        |   |  |   |       |  |   |       |  
|Total                           |  | $                               | 984.4 |   |                    | $ | 801.6 |                                              |  | $                       | 179.2 |  | $    | 3.6   |   |      |   | 190.8  |                                              |  |                         | 69.0   |   |  |   | 115.9 |  |   | 5.9   |  
|                                |  |                                 |       |   |                    |   |       |                                              |  |                         |       |  |      |       |   |      |   |        |                                              |  |                         |        |   |  |   |       |  |   |       |  
|Depreciation and amortization   |  |                                 |       |   |                    |   |       |                                              |  |                         |       |  |      |       |   |      |   | (242.1 | )                                            |  |                         | (314.9 | ) |  |   | 84.4  |  |   | (11.6 | )
|                                |  |                                 |       |   |                    |   |       |                                              |  |                         |       |  |      |       |   |      |   |        |                                              |  |                         |        |   |  |   |       |  |   |       |  
|Loss from operations            |  |                                 |       |   |                    |   |       |                                              |  |                         |       |  |      |       |   |      | $ | (51.3  | )                                            |  | $                       | (245.9 | ) |  | $ | 200.3 |  | $ | (5.7  | )
|                                |  |                                 |       |   |                    |   |       |                                              |  |                         |       |  |      |       |   |      |   |        |                                              |  |                         |        |   |  |   |       |  |   |       |  

---

|(1) | See Segment EBITDA above and Note 9 to the unaudited condensed consolidated
financial statements for a discussion of Segment EBITDA and a reconciliation of Segment EBITDA to loss from operations.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Affinion North America

Membership Products. Membership products net revenues increased by $143.5 million, or 38.6%, to $515.1 million for the nine months ended September 30, 2007 as compared to $371.6 million for the nine months
ended September 30, 2006. The increase was primarily attributable to a $160.4 million adjustment related to deferred revenue recorded in purchase accounting from the Transactions. Excluding the effects of the Transactions, net revenues
decreased $16.9 million primarily due to lower retail member volumes, partially offset by higher average revenues per retail member and higher wholesale revenues from programs that were formerly retail.

Segment EBITDA increased by $93.2 million for the nine months ended September 30, 2007 as compared to the nine months ended September 30, 2006.
Segment EBITDA related to the Transactions for the nine months ended September 30, 2007 was positively affected by a $93.4 million deferred revenue adjustment recorded in purchase accounting, net of increased prepaid commissions and the
amortization of the liability to service our members (for which no revenue will be recognized in the future) recorded in purchase accounting. Segment EBITDA for 2007 also increased by $10.1 million from the absence in 2007 of management retention
bonuses recorded in 2006. Excluding the effects of the Transactions, Segment EBITDA decreased by $10.3 million primarily due to the impact of lower net revenues of $16.9 million, which was more than offset by lower commissions and product benefit
and servicing costs of $17.4 million, including approximately $8.8 million due to lower product and servicing costs associated with a lower membership base and improvements in contact center operations. Segment EBITDA declined due to increased
general and administrative costs of $10.9 million, primarily as a result of centralizing certain overhead functions and increases in other general expenses.

Insurance and Package Products. Insurance and package products net revenues increased $6.6 million, or 2.5%, to $275.9 million for the nine months ended September 30, 2007 as compared to $269.3 million for
the nine months ended September 30, 2006, primarily due to an increase in Insurance revenue of $10.5 million, as a result of the lower cost of insurance and the continued increase in net revenue per supplemental insured, partially offset by a
reduction in Package revenue of $4.6 million, primarily due to lower Package members. In addition, net revenues as a result of the Transactions increased $0.5 million due to a non-cash deferred revenue adjustment recorded in purchase accounting.

Excluding the effects of the Transactions, Segment EBITDA increased by $21.0 million for the nine months ended September 30, 2007 as
compared to the nine months ended September 30, 2006. The impact of the increase in net revenues, net of higher commissions and lower marketing costs and the benefit of centralizing certain overhead functions, increased Segment EBITDA by $18.2
million. Additionally, Segment EBITDA increased by $2.8 million due to lower product, servicing and employee expenses. Segment EBITDA related to the Transactions increased $0.5 million from a deferred revenue adjustment described above.

Loyalty Products. Revenues from Loyalty products decreased by $10.8 million, or 21.0%, for the nine months ended September 30, 2007 to
$40.6 million as compared to $51.4 million for the nine months ended September 30, 2006. Excluding the effects of the Transactions, net revenues decreased $16.7 million, primarily due to the absence in 2007 of royalty revenue of $7.0 million
received from the licensing of patents in 2006 and $15.8 million due to contract terminations, including a one-time termination fee of $3.8 million, partially offset by $6.1 million of new programs and growth from existing programs. Net revenues
related to the Transactions also increased $5.9 million due to the absence in 2007 of a purchase accounting adjustment recorded for a favorable contract in 2006 for $4.7 million and a $1.2 million deferred revenue adjustment recorded in purchase
accounting.

Segment EBITDA decreased by $1.6 million for the nine months ended September 30, 2007 as compared to the nine months
ended September 30, 2006. Excluding the effects of the Transactions, Segment EBITDA decreased by $7.5 million primarily from the absence in 2007 of $7.0 million of royalties received from the licensing of patents in 2006. Growth from new and
existing programs, combined with lower operating and general and administrative costs, primarily offset the impact of contract terminations noted above. Segment EBITDA related to the Transactions increased $5.9 million from the effect of the
favorable contract adjustment and the deferred revenue adjustment described above.

Affinion International

International Products. International products net revenues increased by $42.1 million, or 36.8%, to $156.5 million for the nine months ended
September 30, 2007 as compared to $114.4 million for the nine months ended September 30, 2006. Net revenues excluding the results of the Transactions increased $29.7 million, primarily due to higher revenues of $11.2 million from new
program introductions for our new retail offerings, $6.7 million from growth in our package business, and $11.9 million from the weakening of the U.S. dollar. Net revenues also increased $12.4 million from a non-cash deferred revenue adjustment
recorded in purchase accounting as a result of the Transactions.



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##### Table of Contents

Segment EBITDA increased by $14.5 million for the nine months ended September 30, 2007 as compared
to the nine months ended September 30, 2006. Excluding the effect of the Transactions, Segment EBITDA increased $8.5 million primarily as a result of new retail program introductions and growth in our package business. In addition, Segment
EBITDA increased $6.0 million as a result of purchase accounting adjustments primarily related to a deferred revenue adjustment, net of commissions, and the amortization of the service liability to service our members (for which no revenue will be
recognized in the future) as a result of the Transactions.

Corporate.

For the nine months ended September 30, 2007, corporate costs increased by $5.8 million as compared to the nine months ended September 30, 2006 primarily due to a dividend payment to option holders in the
first quarter of 2007.

Financial Condition, Liquidity and Capital Resources

Financial Condition  September 30, 2007 and December 31, 2006



|                                     |  |                   |         |   |                  |   |         |                    |  |   |        |  
|------------------------------------ |  | ----------------- | ------- | - | ---------------- | - | ------- | ------------------ |  | - | ------ | -
|                                     |  | September 30,2007 |         |   | December 31,2006 |   |         | Increase(Decrease) | 
|                                     |  | (in millions)     |        
|Total assets                         |  | $                 | 1,620.8 |   |                  | $ | 1,889.5 |                    |  | $ | (268.7 | )
|Total liabilities                    |  |                   | 1,992.5 |   |                  |   | 2,075.8 |                    |  |   | (83.3  | )
|Total stockholders equity (deficit) |  |                   | (372.2  | ) |                  |   | (186.9  | )                  |  |   | (185.3 | )

Total assets decreased $268.7 million due to (i) a net decrease in intangible assets of
$193.6 million, principally due to amortization expense of $199.8 million (substantially all of the intangible assets were acquired as a result of the Transactions  see Notes 1 and 2 to our unaudited condensed consolidated financial
statements), (ii) a decrease of $61.8 million in cash and cash equivalents (see Liquidity and Capital ResourcesCash Flows) , (iii) a decrease of $13.4 million in prepaid commissions resulting from a decrease in deferred
revenue, and (iv) a net decrease in property and equipment of $10.3 million due to depreciation expense for the period in excess of capital expenditures. These decreases were partially offset by (i) an increase in profit-sharing
receivables from insurance carriers of $12.5 million due to the timing of receipts from the insurance carriers, and (ii) an increase in contract rights and list fees of $4.7 million due to an increase in the cost of acquired contract rights in
excess of amortization expense of $14.5 million for the period.

Total liabilities decreased $83.3 million primarily due to (i) a
decrease in debt of $74.5 million primarily as a result of $75.0 million of voluntary prepayments on our term loan, (ii) a decrease in non-current deferred income taxes of $14.2 million principally due to the January 1, 2007
implementation of FIN 48 and (iii) a decrease in payables to related parties of $2.8 million due to the timing of certain payments. These decreases were partially offset by a $14.3 million increase in other long-term liabilities principally due
to an increase in the cost of acquired contract rights.

Total stockholders equity (deficit) decreased by $185.3 million primarily
due to a net loss of $156.6 million, dividend payments to the Companys parent of $32.1 million and an increase in the January 1, 2007 accumulated deficit of $0.9 million related to the adoption of FIN 48, partially offset by a
favorable currency effect of $4.3 million.

Liquidity and Capital Resources

Our primary sources of liquidity on both a short-term and long-term basis are cash on hand and cash generated through operating and financing activities.
Our primary cash needs are for working capital, capital expenditures and general corporate purposes, and to service the indebtedness incurred in connection with the Transactions. We believe that, based on our current operations and anticipated
growth, our cash on hand, cash flows from operating activities and borrowing availability under our revolving credit facility will be sufficient to meet our liquidity needs for the next twelve months and in the foreseeable future.

Cash Flows  Nine Months Ended September 30, 2007 and 2006

At September 30, 2007, we had $22.5 million of cash and cash equivalents on hand, a decrease of $88.8 million from $111.3 million at September 30, 2006. The following table summarizes our cash flows and
compares changes in our cash and cash equivalents on hand to the same period in the prior year.



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|                                        |  |                    |        |   |                    |   |       |        |  |   |       |  
|--------------------------------------- |  | ------------------ | ------ | - | ------------------ | - | ----- | ------ |  | - | ----- | -
|                                        |  | Nine Months Ended  |       
|                                        |  | September 30, 2007 |        |   | September 30, 2006 |   |       | Change | 
|                                        |  | (in millions)      |       
|Cash provided by (used in):             |  |                    |        |   |                    |   |       |        |  |   |       |  
|Operating activities                    |  | $                  | 65.1   |   |                    | $ | 81.0  |        |  | $ | (15.9 | )
|Investing activities                    |  |                    | (19.4  | ) |                    |   | (16.3 | )      |  |   | (3.1  | )
|Financing activities                    |  |                    | (107.6 | ) |                    |   | (69.2 | )      |  |   | (38.4 | )
|Effect of exchange rate changes         |  |                    | 0.1    |   |                    |   | 2.4   |        |  |   | (2.3  | )
|                                        |  |                    |        |   |                    |   |       |        |  |   |       |  
|Net change in cash and cash equivalents |  | $                  | (61.8  | ) |                    | $ | (2.1  | )      |  | $ | (59.7 | )
|                                        |  |                    |        |   |                    |   |       |        |  |   |       |  

Operating Activities

During the nine months ended September 30, 2007, we generated $15.9 million less cash in operating activities than during the nine months ended
September 30, 2006. Segment EBITDA, excluding the non-cash impacts of purchase accounting, increased by $5.9 million for the nine months ended September 30, 2007 as compared to the nine months ended September 30, 2006 (see
Results of Operations). As monthly memberships begin to reach a stable level as a percentage of all active members within the membership base, the change in deferred revenue net of prepaid commissions (before purchase accounting impacts)
has significantly decreased resulting in increased cash flow from operations of approximately $32.0 million for the nine months ended September 30, 2007 compared to the nine months ended September 30, 2006. This increase in cash flow was
more than offset by the receipt of profit-sharing receivables from insurance carriers of $21.6 million and a $3.8 million contract termination payment during the first nine months of 2006 that did not recur in 2007, the payment of costs associated
with the dividend paid to equity holders in the first quarter of 2007, payments of $5.6 million in 2007 relating to settlement of the AG matter and $4.8 million of payments to state taxing authorities in 2007 relating to unclaimed property.

Investing Activities

We used $3.1 million more cash in investing activities during the nine months ended September 30, 2007 as compared to the same period in 2006. Our restricted cash requirements were $2.1 million more in 2007 as compared to 2006 and we
also expended $0.8 million for acquisition-related payments in 2007. Capital expenditures were $18.6 million and $18.4 million for the nine months ended September 30, 2007 and 2006, respectively.

Financing Activities

We used $38.4 million more cash in financing activities during the nine months ended
September 30, 2007 as compared to the same period in 2006. During the nine months ended September 30, 2007, we made $75.0 million of voluntary prepayments of the term loan and paid dividends to our parent of $32.1 million. In addition,
during 2007, one of our majority-owned consolidated subsidiaries made a distribution to its minority shareholder of $0.4 million. During the nine months ended September 30, 2006, we made $60.0 million of voluntary prepayments of the term loan.
In addition, we issued $355.5 million of our 11 1/2% Senior Subordinated Notes and an additional $34.0 million
of our 10 1/8% Senior Notes. Substantially all of the proceeds from the two debt offerings, net of $10.9 million
of financing costs, was used to repay our bridge loan plus accrued interest. At September 30, 2007, we have $98.5 million available under the revolving credit facility (after giving effect to the issuance of $1.5 million of letters of
credit). See Note 4 to the unaudited condensed consolidated financial statements.

Credit Facilities and Long-Term Debt

Following the completion of the Transactions we became a highly leveraged company, having incurred substantial debt. As of
September 30, 2007, we had $1,333.9 million in indebtedness. Payments required to service this indebtedness have substantially increased our liquidity requirements as compared to prior years.

As part of the Transactions, we (a) issued $270.0 million principal amount of 10 1/8% senior notes due October 15, 2013 (the senior notes) ($266.4 million net of discount),
(b) entered into our new senior secured credit facilities consisting of a term loan facility in the principal amount of $860.0 million (which amount does not reflect the $180.0 million in principal prepayments that we made through
September 30, 2007) and a revolving credit facility in an aggregate amount of up to $100.0 million and (c) entered into a senior subordinated bridge loan facility in the principal amount of $383.6 million. At September 30, 2007, we
had $302.3 million outstanding under the senior notes (net of premiums and discounts), $680.0 million outstanding under the term loan facility, $351.2 million outstanding under the senior subordinated notes (net of discounts) and $98.5 million
available under the revolving credit facility (after giving effect to the issuance of $1.5 million of letters of credit).



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Any borrowings under the revolving credit facility are available to fund our working capital
requirements, capital expenditures and for other general corporate purposes. The senior secured credit facility also generally requires us to prepay borrowings under the term loan with proceeds from asset dispositions, excess cash flow beginning in
July 2006 and the net cash proceeds from certain debt issued in the future. The remaining balance of the term loan is due and payable in full in 2012. The revolving credit facility is available until 2011. The term loan provides, at our option, for
interest rates of a) adjusted LIBOR plus 2.50% or b) the higher of i) Credit Suisse, Cayman Island Branchs prime rate and ii) the Federal Funds Effective Rate plus 0.5% (ABR), in each case plus 1.50%. The revolving credit facility
provides, at our option, for interest rates of adjusted LIBOR plus 2.75% or ABR, plus 1.75% subject to downward adjustment based on our senior secured bank leverage ratio, as set forth in the agreement governing the revolving credit facility.
Effective January 4, 2007, the senior secured credit facility was amended to decrease the interest rate on the term loan facility by 25 basis points, initially, and to provide for an additional 25 basis point decrease if the corporate family
rating of Affinion Group reached B1 or higher by Moodys and B+ or higher by S&P. The amendment also modified the definition of change of control.

Our senior subordinated bridge loan facility has since been refinanced with the proceeds from the
offering of senior subordinated notes (as defined below) and additional senior notes. On April 26, 2006 we issued $355.5 million aggregate principal amount of 11 1/2% senior subordinated notes due October 15, 2015 (the senior subordinated notes) and applied the gross proceeds of $350.5 million to repay $349.5 million of
outstanding borrowings under our senior subordinated loan facility, plus accrued interest, and used cash on hand to pay fees and expenses associated with such issuance. The interest on our senior subordinated notes is payable semi-annually. We may
redeem some or all of the senior subordinated notes at any time on or after October 15, 2010 at the redemption prices (generally at a premium) set forth in the agreement governing the senior subordinated notes. In addition, on or before
October 15, 2008, we may redeem up to 35% of the aggregate principal amount of our senior subordinated notes with the net proceeds of certain equity offerings, provided that at least 65% of the aggregate principal amount of our senior
subordinated notes initially issued remain outstanding immediately after such redemption. The senior subordinated notes are unsecured obligations. The senior subordinated notes are guaranteed by the same subsidiaries that guarantee our $960.0
million senior secured credit facility and senior notes. The senior subordinated notes contain restrictive covenants related primarily to our ability to distribute dividends, redeem or repurchase capital stock, sell assets, issue additional debt or
merge with or acquire other companies. As of September 30, 2007, the aggregate amount principal amount outstanding of our senior subordinated notes was $355.5 million.

On October 17, 2005, we issued $270.0 million aggregate principal amount of 10 1/8% senior notes and applied the gross proceeds of $266.4 million to finance a portion of the Transactions. On
May 3, 2006, we issued an additional $34.0 million aggregate principal amount of 10 1/8% senior notes
and applied the gross proceeds, together with cash on hand, to repay the then remaining outstanding borrowings under our bridge loan facility. The interest on our 10 1/8% senior notes is payable semi-annually. We may redeem some or all of the 10 1/8% senior notes at any time on or after October 15, 2009 at the redemption prices (generally at a premium) set forth in the indenture governing the 10 1/8% senior notes. In addition, on or before October 15, 2008, we may redeem up to 35% of the aggregate principal
amount of our 10 1/8% senior notes with the net proceeds of certain equity offerings, provided that at
least 65% of the aggregate principal amount of our 10 1/8% senior notes initially issued remain outstanding
immediately after such redemption. The 10 1/8% senior notes are unsecured obligations. The 10 1/8% senior notes are guaranteed by the same subsidiaries that guarantee our $960.0 million senior secured credit
facility and our 11 1/2% senior subordinated notes. The 101/8% senior notes contain restrictive
covenants related primarily to our ability to distribute dividends, redeem or repurchase capital stock, sell assets, issue additional debt or merge with or acquire other companies.

On May 3, 2006, we issued an additional $34.0
million aggregate principal amount of senior notes at a premium and applied the proceeds, together with cash on hand, to repay the remaining $34.1 million of outstanding borrowings under our senior subordinated bridge loan facility, plus accrued
interest, and to pay fees and expenses associated with such issuance. These senior notes were issued as additional notes under the senior notes indenture dated October 17, 2005, and, together with the $270.0 million of senior notes originally
issued under such indenture, are treated as a single class for all purposes under the indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. As of September 30, 2007, the aggregate principal amount
outstanding of our senior notes was $304.0 million.

Covenant Compliance

Our credit facility and the indentures that govern our senior notes and our senior subordinated notes contain various restrictive covenants. They prohibit
us from prepaying indebtedness that is junior to such debt (subject to certain exceptions). Our credit facility requires us to maintain a specified minimum interest coverage ratio and a maximum consolidated leverage ratio. The interest coverage
ratio as defined in the credit facility (Adjusted EBITDA, as defined, to interest expense, as defined) must be greater than 1.55 to 1.0 at September 30, 2007. The consolidated leverage ratio as defined in the credit facility (total debt, as
defined, to Adjusted EBITDA, as defined) must be less than 6.50 to 1.0 at September 30, 2007. In addition, our credit facility, among other things, restricts our ability to incur indebtedness or liens, make investments or declare or pay any
dividends. The indenture governing the senior notes and the indenture governing the senior subordinated notes, among other things: (a) limit our ability and the ability of our subsidiaries to incur additional indebtedness, incur liens,



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pay dividends or make certain other restricted payments and enter into certain transactions with affiliates; (b) place restrictions on the ability of
certain of our subsidiaries to pay dividends or make certain payments to us; and (c) place restrictions on our ability and the ability of our subsidiaries to merge or consolidate with any other person or sell, assign, transfer, convey or
otherwise dispose of all or substantially all of our assets. However, all of these covenants are subject to significant exceptions.

We
have the ability to incur additional debt, subject to limitations imposed by our credit facility, senior notes indenture, and senior subordinated notes indenture. Under our indentures governing the senior notes and the senior subordinated notes, in
addition to specified permitted indebtedness, we will be able to incur additional indebtedness as long as on a pro forma basis our fixed charge coverage ratio (the ratio of Adjusted EBITDA to consolidated fixed charges) is at least 2.0 to 1.0. As
discussed above, since the Transactions, our cash flow has allowed us to make eight voluntary principal prepayments of the term loan through September 30, 2007 aggregating $180.0 million. Additionally, we made a $25.0 million principal
prepayment on November 13, 2007 and we may elect to make additional prepayments if it is beneficial to do so.

Based on
managements expectations of our ability to voluntarily prepay principal during the next twelve months under its term loan, $25.0 million of the term loan has been classified as current portion of long-term debt on the September 30, 2007
unaudited condensed consolidated balance sheet.

Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures

Adjusted EBITDA consists of income from operations before depreciation and amortization further adjusted to exclude non-cash and unusual items and other
adjustments permitted in our debt agreements to test the permissibility of certain types of transactions, including debt incurrence. We believe that the inclusion of Adjusted EBITDA is appropriate as a liquidity measure. Adjusted EBITDA is not a
measurement of liquidity or financial performance under U.S. GAAP and Adjusted EBITDA may not be comparable to similarly titled measures of other companies. You should not consider Adjusted EBITDA as an alternative to cash flows from operating
activities determined in accordance with U.S. GAAP, as an indicator of cash flows, as a measure of liquidity, as an alternative to operating or net income determined in accordance with U.S. GAAP or as an indicator of operating performance.

Set forth below is a reconciliation of our consolidated net cash provided by operating activities for the twelve months ended
September 30, 2007 to Adjusted EBITDA.



|                                                                                          |  |                                          |       |  
|----------------------------------------------------------------------------------------- |  | ---------------------------------------- | ----- | -
|                                                                                          |  | Twelve MonthsEndedSeptember 30, 2007 (a) |      
|                                                                                          |  | (in millions)                            |      
|Net cash provided by operating activities                                                 |  | $                                        | 82.4  |  
|Interest expense, net                                                                     |  |                                          | 137.8 |  
|Income tax expense                                                                        |  |                                          | 8.0   |  
|Amortization of favorable and unfavorable contracts                                       |  |                                          | 1.7   |  
|Amortization of debt discount and financing costs                                         |  |                                          | (6.5  | )
|Unrealized loss on interest rate swap                                                     |  |                                          | (2.0  | )
|Deferred income taxes                                                                     |  |                                          | (0.6  | )
|Changes in assets and liabilities                                                         |  |                                          | 27.5  |  
|Effect of the Transactions, reorganizations, certain legal costs and net cost savings (b) |  |                                          | 11.7  |  
|Other, net (c)                                                                            |  |                                          | 9.7   |  
|                                                                                          |  |                                          |       |  
|Adjusted EBITDA                                                                           |  | $                                        | 269.7 |  
|                                                                                          |  |                                          |       |  

---

|(a) | Represents consolidated
financial data for the year ended December 31, 2006, minus consolidated financial data for the nine months ended September 30, 2006, plus consolidated financial data for the nine months ended September 30, 2007.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Eliminates the effect of
the Transactions, prior business reorganizations, non-recurring revenue and gains, legal expenses for certain legal matters and certain severance costs.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | Eliminates the stock-based compensation incurred in connection with the January
2007 special dividend declared by Affinion Group Holdings, Inc., non-recurring Sarbanes-Oxley implementation costs, a $2 million annual consulting fee paid to Apollo and certain other costs.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Set forth below is a reconciliation of our consolidated net loss for the twelve months ended
September 30, 2007 to Adjusted EBITDA as required by our senior secured credit facility agreement, the indenture governing our senior notes and the indenture governing our senior subordinated notes.



|                                                                                     |  |                                      |        |  
|------------------------------------------------------------------------------------ |  | ------------------------------------ | ------ | -
|                                                                                     |  | Twelve MonthsEndedSeptember 30, 2007 |       
|                                                                                     |  | (in millions)                        |       
|Net loss                                                                             |  | $                                    | (239.8 | )
|Interest expense, net                                                                |  |                                      | 137.8  |  
|Income tax expense                                                                   |  |                                      | 8.0    |  
|Minority interests, net of tax                                                       |  |                                      | 0.2    |  
|Other (income) expense, net                                                          |  |                                      | (0.1   | )
|Depreciation and amortization                                                        |  |                                      | 324.0  |  
|Effect of the Transactions, reorganizations and non-recurring revenues and gains (a) |  |                                      | 7.1    |  
|Certain legal costs (b)                                                              |  |                                      | 2.0    |  
|Net cost savings (c)                                                                 |  |                                      | 2.9    |  
|Goodwill impairment (d)                                                              |  |                                      | 15.5   |  
|Other, net (e)                                                                       |  |                                      | 12.1   |  
|                                                                                     |  |                                      |        |  
|Adjusted EBITDA                                                                      |  | $                                    | 269.7  |  
|                                                                                     |  |                                      |        |  
|Interest coverage ratio (f)                                                          |  |                                      | 2.03   |  
|Consolidated leverage ratio (g)                                                      |  |                                      | 4.88   |  
|Fixed charge coverage ratio (h)                                                      |  |                                      | 2.04   |  

---

|(a) | Effect of the Transactions, reorganizations and non-recurring revenues and
gainseliminates the effects of the Transactions, prior business reorganizations and non-recurring revenues and gains.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Certain legal costsrepresents legal costs for certain litigation matters.
|--- | --------------------------------------------------------------------------

|(c) | Net cost savingsrepresents the elimination of costs associated with
severance incurred.
|--- | ----------------------------------------------------------------------------------------

|(d) | Goodwill impairmentrepresents the 2006 goodwill impairment charge recorded
to goodwill ascribed to the loyalty products business.
|--- | ----------------------------------------------------------------------------------------------------------------------------------

|(e) | Other, netrepresents: (i) net changes in other reserves, (ii) the
elimination of stock-based compensation expense, and (iii) consulting fees paid to Apollo.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------

|(f) | The interest coverage ratio is defined in our senior secured credit facility
(Adjusted EBITDA, as defined, to interest expense, as defined). The interest coverage ratio must be greater than 1.55 to 1.0 at September 30, 2007.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(g) | The consolidated leverage ratio is defined in our senior secured credit facility
(total debt, as defined, to Adjusted EBITDA, as defined). The consolidated leverage ratio must be less than 6.50 to 1.0 at September 30, 2007.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(h) | The fixed charge coverage ratio is defined in the indentures governing the senior
notes and the senior subordinated notes (Consolidated Cash Flows, as defined, which is equivalent to Adjusted EBITDA (as defined in the Affinion Credit Facility), to fixed charges, as defined).
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Critical Accounting Policies

In presenting
our unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, we are required to make estimates and assumptions that affect the amounts reported therein. We
believe that the estimates, assumptions and judgments involved in the accounting policies related to revenue recognition, accounting for marketing costs, valuation of goodwill and intangible assets, and valuation of tax assets and liabilities could
potentially affect our reported results and as such, we consider these to be our critical accounting policies. Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain, as they pertain to
future events. However, certain events outside our control cannot be predicted and, as such, they cannot be contemplated in evaluating such estimates and assumptions. We believe that the estimates and assumptions used when preparing our unaudited
condensed consolidated financial statements were the most appropriate at the time. In addition, we refer you to our audited consolidated financial statements as of December 31, 2006 and 2005, and for the year ended December 31, 2006 and
for the period from October 17, 2005 (commencement of operations) to December 31, 2005, and the Predecessors combined financial statements for the periods from January 1, 2005 to October 16, 2005, and for the year ended
December 31, 2004 included in our Form 10-K for a summary of our significant accounting policies.



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|Item 3. | Quantitative and Qualitative Disclosures about Market Risk.
|------- | -----------------------------------------------------------

Following is a description of our risk management policies.

Interest Rate Swap

We entered into an interest swap as of December 14, 2005. This swap converts a notional amount of our floating rate credit facility into a fixed rate
obligation. The notional amount of the swap was $250.0 million at September 30, 2007 and reduces in accordance with a contractual amortization schedule through December 31, 2010 when the swap terminates. The purpose of the swap is to
maintain our fixed/variable ratio within policy guidelines. The interest rate swap is recorded at fair value either as a non-current asset or a non-current liability. The swap is not designated as a hedging instrument and therefore changes in the
fair value are recognized currently in earnings in the accompanying unaudited condensed consolidated statements of operations.

The
following table provides information about our financial instruments that are sensitive to changes in interest rates. The table presents principal cash flows and related weighted-average interest rates by expected maturity for our long-term debt as
of September 30, 2007.



|                                         |  |               |       |   |      |   |       |      |  |   |       |   |  |       |   |  |                    |   |  |       |       |                                |  |   |       |  |   |      
|---------------------------------------- |  | ------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | - |  | ----- | - |  | ------------------ | - |  | ----- | ----- | ------------------------------ |  | - | ----- |  | - | -----
|                                         |  | (in millions)
|                                         |  | 2007          |       |   | 2008 |   |       | 2009 |  |   | 2010  |   |  | 2011  |   |  | 2012 andThereafter |   |  | Total |       | Fair Value AtSeptember 30,2007
|Fixed rate debt                          |  | $             | 0.1   |   |      | $ | 0.2   |      |  | $ | 0.1   |   |  |      |   |  |                   |   |  | $     | 659.5 |                                |  | $ | 659.9 |  | $ | 694.4
|Average interest rate                    |  |               | 11.08 | % |      |   | 11.08 | %    |  |   | 11.08 | % |  | 11.08 | % |  | 11.08              | % |  |       | 11.08 | %                              |  |   |       |  |   |      
|Variable rate debt                       |  | $             | 25.0  |   |      |   |      |      |  |   |      |   |  |      |   |  |                   |   |  | $     | 655.0 |                                |  | $ | 680.0 |  | $ | 680.0
|Average interest rate (a)                |  |               | 8.00  | % |      |   | 8.00  | %    |  |   | 8.00  | % |  | 8.00  | % |  | 8.00               | % |  |       | 8.00  | %                              |  |   |       |  |   |      
|Variable to fixed-interest rate swap (b) |  |               |       |   |      |   |       |      |  |   |       |   |  |       |   |  |                    |   |  |       |       |                                |  |   |       |  | $ | 1.2  
|Average pay rate                         |  |               | 4.83  | % |      |   | 4.86  | %    |  |   | 4.93  | % |  | 4.97  | % |  |                    |   |  |       |       |                                |  |   |       |  |   |      
|Average receive rate                     |  |               | 5.20  | % |      |   | 4.48  | %    |  |   | 4.45  | % |  | 4.79  | % |  |                    |   |  |       |       |                                |  |   |       |  |   |      

---

|(a) | Average interest rate is based on rates in effect at September 30, 2007.
|--- | ------------------------------------------------------------------------

|(b) | The fair value of the interest rate swap is included in other non-current
liabilities at September 30, 2007.
|--- | ------------------------------------------------------------------------------------------------------------

We do not use derivatives for trading or speculative purposes.

Credit Risk and Exposure

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of receivables, profit-sharing receivables from insurance carriers and prepaid commissions. We manage such risk by evaluating the financial
position and creditworthiness of such counterparties. As of September 30, 2007, there were no significant concentrations of credit risk. Receivables and profit-sharing receivables from insurance carriers are from various marketing, insurance
and business partners and we maintain an allowance for losses, based upon expected collectibility. Commission advances are periodically evaluated as to recovery.



|Item 4. | Controls and Procedures.
|------- | ------------------------

Evaluation of
Disclosure Control and Procedures. We, under the direction of the Chief Executive Officer and the Chief Financial Officer, have established disclosure controls and procedures (Disclosure Controls) that are designed to ensure that
information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SECs rules and
forms. The Disclosure Controls are also intended to ensure that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosures.

Our management, including the Chief Executive Officer and Chief Financial Officer, does not expect that
our Disclosure Controls or our internal controls over financial reporting (Internal Controls) will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not
absolute, assurance



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that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been
detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because
of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Notwithstanding the foregoing, our disclosure controls and procedures are designed to provide reasonable assurance of
achieving their objectives.

As of September 30, 2007, an evaluation was performed under the supervision and with the participation of
our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of
1934. Based upon their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that as of September 30, 2007, our disclosure controls and procedures are effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting. There have not been any changes in our internal control over financial reporting that
occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

Part II. OTHER INFORMATION



|Item 1. | Legal Proceedings.
|------- | ------------------

There have been no material changes from the
legal proceedings previously disclosed in our Form 10-K for the year ended December 31, 2006.



|Item 1a. | Risk Factors
|-------- | ------------

There have been no material changes from the risk
factors previously disclosed in our Form 10-K for the year ended December 31, 2006.



|Item 2. | Unregistered Sales of Equity in Securities and Use of Proceeds.
|------- | ---------------------------------------------------------------

None.



|Item 3. | Defaults Upon Senior Securities.
|------- | --------------------------------

None.



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

None.



|Item 5. | Other Information.
|------- | ------------------

Employment Agreements

Effective November 9, 2007, we and Affinion Group Holdings, Inc. (Holdings) entered into amended and restated employment agreements with
each of the following officers: Messrs. Nathaniel J. Lipman, Thomas A. Williams, Robert G. Rooney, Thomas J. Rusin and Todd H. Siegel. The amended and restated employment agreements supersede each such officers current employment agreement and
are intended to comply with the requirements of the final regulations promulgated under Section 409A of the Internal Revenue Code of 1986, as amended. In this section, all references to we, our and us refer
collectively to Affinion Group, Inc. and Affinion Group Holdings, Inc. The material terms of the amended and restated employment agreements are described below.

Nathaniel J. Lipman. Under his amended and restated employment agreement, Mr. Lipman continues to serve as our Chairman of the Board, President and Chief Executive Officer. The initial term of the new
employment agreement is from November 9, 2007 through October 17, 2010. After the initial term, the agreement is subject to automatic one-year renewals



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unless either party provides at least 90 days prior written notice to the other party of its intent not to renew the agreement. Effective
October 1, 2007, Mr. Lipmans annual base salary is $585,000, subject to annual review and increases. Mr. Lipman is also eligible for an annual target bonus of 125% of his base salary, subject to the attainment of performance
goals established by our compensation committee under our annual incentive plan. For fiscal year 2008, his annual target bonus will be 150% of his annual base salary.

If Mr. Lipmans employment is terminated by us without cause (including, for purposes of his entitlements under the amended and restated employment agreement only, the termination of his
employment upon the expiration of the employment term due to our timely nonrenewal of the agreement) or he terminates his employment with us for good reason (each as defined in the agreement), we will pay Mr. Lipman, as severance
pay, an amount equal to 200% of the aggregate amount of his annual base salary and target bonus, payable in eight quarterly installments commencing on the date of termination. If Mr. Lipmans employment is terminated due to his death or
disability, he will be entitled to a lump sum payment equal to 100% of his base salary. Under his prior employment, Mr. Lipman was not entitled to a severance payment if we timely exercised our right not to renew the employment term.

Thomas A. Williams. Under his amended and restated employment agreement, Mr. Williams continues to serve as an Executive Vice
President and our Chief Financial Officer. The initial term of the new agreement is from November 9, 2007 through January 1, 2010. After the initial term, the new agreement is subject to automatic one-year renewals unless either party
provides at least 90 days prior written notice to the other party of its intent not to renew the agreement. Mr. Williams annual base salary is $350,000, subject to annual review and increases. Mr. Williams is also eligible for
an annual target bonus of 100% of his base salary, subject to the attainment of performance goals established by our compensation committee under our annual incentive plan.

If Mr. Williams employment is terminated by us without cause (including, for purposes of his entitlements under the amended and
restated employment agreement only, the termination of his employment upon the expiration of the employment term due to our timely nonrenewal of the agreement) or he terminates his employment with us for good reason (each as defined in
the agreement), we will pay Mr. Williams, as severance pay, the sum of 100% of his annual base salary and his target bonus, payable in six quarterly installments commencing on the date of termination. If Mr. Williams employment is
terminated due to his death or disability, he will be entitled to a lump sum payment equal to 100% of his base salary. Under his prior employment, Mr. Williams was not entitled to a severance payment if we timely exercised our right not to
renew the employment term. Mr. Williams remains obligated to repay his sign-on bonus if his employment terminates under certain circumstances prior to December 31, 2007.

Robert G. Rooney. Under his amended and restated employment agreement, Mr. Rooney continues to serve as an Executive Vice President and our Chief
Operating Officer. The initial term of the agreement is from November 9, 2007 through June 15, 2010. After the initial term, the employment agreement is subject to automatic one-year renewals unless either party provides at least 90
days prior written notice to the other party of its intent not to renew the agreement. Mr. Rooneys annual base salary is $334,750, subject to annual review and increases. Mr. Rooney is eligible to receive an annual target bonus
of 100% of his base salary for 2007, subject to the attainment of performance goals established by our compensation committee under our annual incentive plan.

If Mr. Rooneys employment is terminated by us without cause (including, for purposes of his entitlements under the amended and restated employment agreement only, the termination of his
employment upon the expiration of the employment term due to our timely nonrenewal of the agreement) or he terminates his employment with us for good reason (each as defined in the agreement), we will pay Mr. Rooney, as severance
pay, the sum of 100% of his annual base salary and his target bonus, payable in six quarterly installments commencing on the date of termination (payment was in a lump sum under the prior agreement). If Mr. Rooneys employment is
terminated due to his death or disability, he will be entitled to a lump sum payment equal to 100% of his base salary. Under his prior employment agreement, Mr. Rooney was not entitled to any severance payment if we timely exercised our right
not to renew the employment term or if his employment was terminated due to his death or disability.

Thomas J. Rusin. Under his
amended and restated employment agreement, Mr. Rusin continues to serve as our President and Chief Executive Officer, North America. The initial term of the agreement is November 9, 2007 through June 1, 2010. After the initial term,
the agreement is subject to automatic one-year renewals unless either party provides at least 90 days prior written notice to the other party of its intent not to renew the agreement. Mr. Rusins annual base salary is $290,000,
subject to annual review and increases. Mr. Rusin is also eligible for an annual target bonus of 100% of his base salary, subject to the attainment of performance goals established by our compensation committee under our annual incentive plan.



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If Mr. Rusins employment is terminated by us without cause (including, for
purposes of his entitlements under the amended and restated employment agreement only, the termination of his employment upon the expiration of the employment term due to our timely nonrenewal of the agreement) or he terminates his employment with
us for good reason (each as defined in the agreement), we will pay Mr. Rusin, as severance pay, the sum of 100% of his annual base salary and his target bonus, payable in six quarterly installments commencing on the date of
termination (payment was in a lump sum under the prior agreement). If Mr. Rusins employment is terminated due to his death or disability, he will be entitled to a lump sum payment equal to 100% of his base salary. Under his prior
employment agreement, Mr. Rusin was not entitled to any severance payment if we timely exercised our right not to renew the employment term.

Todd H. Siegel. Under his amended and restated employment agreement, Mr. Siegel continues to serve as an Executive Vice President and our General Counsel. The initial term of the new agreement is November 9 through
June 1, 2010. After the initial term, the agreement is subject to automatic one-year renewals unless either party provides at least 90 days prior written notice to the other party of its intent not to renew the agreement.
Mr. Siegels annual base salary is $275,000, subject to annual review and increases. Mr. Siegel is also eligible for an annual target bonus of 100% of his base salary, subject to the attainment of performance goals established by our
compensation committee under our annual incentive plan.

If Mr. Siegels employment is terminated by us without cause
(including, for purposes of his entitlements under the amended and restated employment agreement only, the termination of his employment upon the expiration of the employment term due to our timely nonrenewal of the agreement) or he terminates his
employment with us for good reason (each as defined in the agreement), we will pay Mr. Siegel, as severance pay, the sum of 100% of his annual base salary and his target bonus, payable in six quarterly installments commencing on the
date of termination (payment was in a lump sum under the prior agreement). If Mr. Siegels employment is terminated due to his death or disability, he will be entitled to a lump sum payment equal to 100% of his base salary. Under his prior
employment agreement, Mr. Siegel was not entitled to any severance payment if we timely exercised our right not to renew the employment term.

Restrictive Covenants. Each of the officers is subject to restrictive covenants contained in their amended and restated employment agreements, which are identical to covenants to which they are subject in their capacity as
shareholders under the Management Investor Rights Agreement. Each officer is prohibited from soliciting our employees, customers, suppliers, and licensees for three (3) years following his or her termination of employment and prohibited from
competing with us and our affiliates for two (2) years following termination of employment. Each officer is also subject to post-termination nondisclosure obligations relating to confidential company information. The officers are only entitled
to receive the above described severance payments so long as they comply with these restrictive covenants.

The amended and restated
employment agreements described above have been filed as exhibits to this Form 10-Q.

2007 Stock Award Plan

Effective November 9, 2007, the board of directors of Holdings adopted the 2007 Stock Award Plan. Below is a description of the material features and
provisions of the plan.



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Administration. The compensation committee of Holdings board of directors administers the
2007 Stock Award Plan. The compensation committee of Holdings board of directors has full discretion to administer and interpret the 2007 Stock Award Plan and to adopt such rules, regulations and procedures as it deems necessary or advisable.
The compensation committee of Holdings board of directors has the authority to determine the terms and conditions of any agreements evidencing any awards granted under the 2007 Stock Award Plan, including, among other things, the time or times
at which the awards may be exercised and whether and under what circumstances an award may be exercised.

Eligibility. Employees,
directors, officers, advisors or consultants of Holdings and those of its affiliates are eligible to participate in the 2007 Stock Award Plan. The compensation committee of Holdings board of directors has the sole and complete authority to
determine who will be granted an award under the 2007 Stock Award Plan, however it may delegate such authority to one or more officers.

Number of Shares Authorized. The 2007 Stock Award Plan provides for an aggregate of 10,000,000 shares of Holdings common stock to be available for awards. No participant may be granted awards of options and stock appreciation rights
with respect to more than 2,500,000 shares of Holdings common stock in any one year. No more than 2,500,000 shares of Holdings common stock may be awarded under the 2007 Stock Award Plan to any participant during any single year with respect to
performance compensation awards in any one performance period or to the extent such performance compensation awards are paid in other than in shares of Holdings common stock, an amount no greater than the fair market value of 2,500,000 shares of
such Holdings common stock. The maximum amount payable pursuant to a cash bonus for an individual employee or officer under the 2007 Stock Award Plan for any single year during a performance period is $15,000,000. If any award is forfeited or if any
option terminates, expires or lapses without being exercised, shares of Holdings common stock subject to such award will again be made available for future grant. Shares that are used to pay the exercise price of an option or that are withheld to
satisfy the participants tax withholding obligation will not be available for re-grant under the 2007 Stock Award Plan. If there is any change in Holdings corporate capitalization, the compensation committee, in its sole discretion, may
make substitutions or adjustments to the number of shares reserved for issuance under the 2007 Stock Award Plan, the number of shares covered by awards then outstanding under the 2007 Stock Award Plan, the limitations on awards under the 2007 Stock
Award Plan, the exercise price of outstanding options and such other equitable substitution or adjustments as it may determine appropriate.

The 2007 Stock Award Plan has a term of ten years and no further awards may be granted under the 2007 Stock Award Plan after that date.

Awards Available for Grant. The compensation committee of Holdings board of directors may grant awards of non-qualified stock options, incentive (qualified) stock options, stock appreciation rights, restricted stock awards,
restricted stock units, stock bonus awards, performance compensation awards (including cash bonus awards) or any combination of the foregoing.

Options. The compensation committee of Holdings board of directors is authorized to grant options to purchase shares of Holdings common stock that are either qualified, meaning they are intended to satisfy the
requirements of Section 422 of the Internal Revenue Code for incentive stock options, or non-qualified, meaning they are not intended to satisfy the requirements of Section 422 of the Code. Options granted under the 2007 Stock
Award Plan will be subject to the terms and conditions established by the compensation committee. Under the terms of the 2007 Stock Award Plan, unless the compensation committee of Holdings board of directors determines otherwise in the case
of an option substituted for another option in connection with a corporate transaction, the exercise price of the options will not be less than the fair market value of Holdings common stock at the time of grant. Options granted under the 2007 Stock
Award Plan will be subject to such terms, including the exercise price and the conditions and timing of exercise, as may be determined by the compensation committee of Holdings board of directors and specified in the applicable award
agreement. The maximum term of an option granted under the 2007 Stock Award Plan will be ten years from the date of grant (or five years in the case of a qualified option granted to a 10% stockholder). Payment in respect of the exercise of an option
may be made in cash or by check, by surrender of unrestricted shares (at their fair market value on the date of exercise) that have been held by the participant for any period deemed necessary by Holdings accountants to avoid an additional
compensation charge or have been purchased on the open market, or the compensation committee may, in its discretion and to the extent permitted by law, allow such payment to be made through a broker-assisted cashless exercise mechanism, a net
exercise method, or by such other method as the compensation committee may determine to be appropriate.

Stock Appreciation Rights.
The compensation committee of Holdings board of directors is authorized to award stock appreciation rights (or SARs) under the 2007 Stock Award Plan. SARs will be subject to the terms and conditions established by the compensation committee.
An SAR is a contractual right that allows a participant to receive, either in the form of cash, shares or any combination of cash and shares, the appreciation, if any, in the value of a share over a certain period of time. An option granted under
the 2007 Stock Award Plan may include SARs and SARs may also be awarded to a participant



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independent of the grant of an option. SARs granted in connection with an option shall be subject to terms similar to the option corresponding to such SARs.
The terms of the SARs shall be subject to terms established by the compensation committee of Holdings board of directors and reflected in the award agreement.

Restricted Stock. The compensation committee of Holdings board of directors is authorized to award restricted stock under the 2007 Stock Award Plan. Awards of restricted stock will be subject to the terms
and conditions established by the compensation committee of Holdings board of directors. Restricted stock is common stock that generally is non-transferable and is subject to other restrictions determined by the compensation committee of
Holdings board of directors for a specified period. Unless the compensation committee of Holdings board of directors determines otherwise or specifies otherwise in an award agreement, if a participant terminates employment or services
during the restricted period, then the participant will forfeit any unvested restricted stock.

Restricted Stock Unit Awards. The
compensation committee of Holdings board of directors is authorized to award restricted stock unit awards. Awards of restricted stock units will be subject to the terms and conditions established by the compensation committee. Unless the
compensation committee of Holdings board of directors determines otherwise or specifies otherwise in an award agreement, if the participant terminates employment or services during the period of time over which all or a portion of the units
are to be earned, then the participant will forfeit any unvested units. At the election of the compensation committee of Holdings board of directors, the participant will receive a number of shares of common stock equal to the number of units
earned or an amount in cash equal to the fair market value of that number of shares at the expiration of the period over which the units are to be earned or at a later date selected by the compensation committee.

Stock Bonus Awards. The compensation committee of Holdings board of directors is authorized to grant awards of unrestricted shares of
Holdings common stock or other awards denominated in common stock, either alone or in tandem with other awards, under such terms and conditions as the compensation committee of Holdings board of directors may determine.

Performance Compensation Awards. The compensation committee of Holdings board of directors may grant any award under the 2007 Stock Award
Plan in the form of a performance compensation award by conditioning the vesting of the award on the satisfaction of certain performance goals. The compensation committee of Holdings board of directors may establish these performance goals
with reference to one or more of the following:



| |  |  | net earnings or net income (before or after taxes);
| | - |  | ---------------------------------------------------



| |  |  | basic or diluted earnings per share (before or after taxes);
| | - |  | ------------------------------------------------------------



| |  |  | net revenue or net revenue growth;
| | - |  | ----------------------------------



| |  |  | gross profit or gross profit growth;
| | - |  | ------------------------------------



| |  |  | operating profit (before or after taxes);
| | - |  | -----------------------------------------



| |  |  | return measures (including, but not limited to, return on assets, capital, invested capital, equity or sales);
| | - |  | --------------------------------------------------------------------------------------------------------------



| |  |  | cash flow (including, but not limited to, operating cash flow, free cash flow and cash flow return on capital);
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | earnings before or after taxes, interest, depreciation, and amortization;
| | - |  | -------------------------------------------------------------------------



| |  |  | gross or operating margins;
| | - |  | ---------------------------



| |  |  | productivity ratios;
| | - |  | --------------------



| |  |  | share price (including, but not limited to, growth measures and total stockholder return);
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | expense targets;
| | - |  | ----------------



| |  |  | margins;
| | - |  | --------



| |  |  | operating efficiency;
| | - |  | ---------------------



| |  |  | objective measures of customer satisfaction;
| | - |  | --------------------------------------------



| |  |  | working capital targets;
| | - |  | ------------------------



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| |  |  | measures of economic value added;
| | - |  | ---------------------------------



| |  |  | inventory control;
| | - |  | ------------------



| |  |  | enterprise value;
| | - |  | -----------------



| |  |  | sales;
| | - |  | ------



| |  |  | debt levels and net debt;
| | - |  | -------------------------



| |  |  | client retention;
| | - |  | -----------------



| |  |  | employee retention;
| | - |  | -------------------



| |  |  | timely completion of new product rollouts;
| | - |  | ------------------------------------------



| |  |  | timely launch of new facilities;
| | - |  | --------------------------------



| |  |  | objective measures of personal targets, goals or completion of projects; or
| | - |  | ---------------------------------------------------------------------------



| |  |  | any combination of the foregoing.
| | - |  | ---------------------------------

Transferability. Each award may be exercised during the participants lifetime only by the participant or, if permissible under applicable law, by the participants guardian or legal representative and may not be otherwise
transferred or encumbered by a participant other than by will or by the laws of descent and distribution. The compensation committee of Holdings board of directors, however, may permit awards to be transferred to family members, a trust for
the benefit of such family members, a partnership or limited liability company whose partners or stockholders are the participant and his or her family members, or any other transferee approved by it.

Amendment. The 2007 Stock Award Plan has a term of ten years. Holdings board of directors may amend, suspend or terminate the 2007 Stock
Award Plan at any time; however, stockholder approval to amend the 2007 Stock Award Plan may be necessary if the 2007 Stock Award Plan document or law so requires. No amendment, suspension or termination will impair the rights of any participant or
recipient of any award without the consent of the participant or recipient.

Change in Control. In the event of a change in control
(as defined in the 2007 Stock Award Plan), the compensation committee of Holdings board of directors may determine, in its sole and absolute discretion, that outstanding options and equity awards (other than performance compensation awards)
issued under the 2007 Stock Award Plan become fully vested and may vest performance compensation awards based on the level of attainment of the specified performance goals. The compensation committee of Holdings board of directors may cancel
outstanding awards and pay the value of such awards to participants in connection with a change in control.

The 2007 Stock Award Plan has
been filed as Exhibit 10.6 to this Form 10-Q.



|Item 6. | Exhibits.
|------- | ---------



|              |  |                                                                                                                                             
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                 
|10.1*         |  | Employment agreement, dated as of November 9, 2007, by and among Affinion Group Holdings, Inc., Affinion Group Inc. and Nathaniel J. Lipman.
|              | 
|10.2*         |  | Employment agreement, dated as of November 9, 2007, by and among Affinion Group Holdings, Inc., Affinion Group Inc. and Thomas A. Williams. 
|              | 
|10.3*         |  | Employment agreement, dated as of November 9, 2007, by and among Affinion Group Holdings, Inc., Affinion Group Inc. and Robert Rooney.      
|              | 
|10.4*         |  | Employment agreement, dated as of November 9, 2007, by and among Affinion Group Holdings, Inc., Affinion Group Inc. and Thomas Rusin.       
|              | 
|10.5*         |  | Employment agreement, dated as of November 9, 2007, by and among Affinion Group Holdings, Inc., Affinion Group Inc. and Todd Siegel.        
|              | 
|10.6*         |  | Form of Affinion Group Holdings, Inc. 2007 Stock Award Plan.                                                                                
|              | 
|10.7*         |  | Form of Nonqualified Stock Option Agreement pursuant to Affinion Group Holdings, Inc.s 2007 Stock Award Plan.                              
|              | 
|31.1*         |  | Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a).                                                       



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|              |  |                                                                                      
|------------- |  | -------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                          
|31.2*         |  | Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a).
|              | 
|32.1*         |  | Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.     
|              | 
|32.2*         |  | Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.     

---

|* | Filed herewith.
|- | ---------------



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SIGNATURES

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



|                        |  |                      |  |                                                     
|----------------------- |  | -------------------- |  | ----------------------------------------------------
|                        |  | AFFINION GROUP, INC.
|                        |  |                     
|Date: November 13, 2007 |  | By:                  |  | /s/ Thomas A. Williams                              
|                        |  |                      |  | Thomas A. Williams                                  
|                        |  |                      |  | Executive Vice President and Chief Financial Officer