10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2012.

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

AFFINION GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	16-1732152
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

6 High Ridge Park

Stamford, CT 06905

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

(203) 956-1000

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x  (Do not check if a smaller reporting company)	Smaller reporting company	¨

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 October 31, 2012 was 100.

TABLE OF CONTENTS

	Page
Part I. FINANCIAL INFORMATION
Item 1.		1
Financial Statements		1
Unaudited Condensed Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011		1
Unaudited Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2012 and 2011		2
Unaudited Condensed Consolidated Statements of Changes in Deficit for the Nine Months Ended September  30, 2012 and Year Ended December 31, 2011		3
Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September  30, 2012 and 2011		4
Notes to Unaudited Condensed Consolidated Financial Statements		6
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations		35
Item 3.
Quantitative and Qualitative Disclosures about Market Risk		56
Item 4.
Controls and Procedures		57
Part II. OTHER INFORMATION		58
Item 1.
Legal Proceedings		58
Item 1A.
Risk Factors		58
Item 2.
Unregistered Sales of Equity in Securities and Use of Proceeds		60
Item 3.
Defaults Upon Senior Securities		60
Item 4.
Mine Safety Disclosure		61
Item 5.
Other Information		61
Item 6.
Exhibits		61
SIGNATURES		S-1

i

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AFFINION GROUP, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2012 AND DECEMBER 31, 2011

(In millions, except share amounts)

	September 30, 2012			December 31, 2011
Assets
Current assets:
Cash and cash equivalents	$	56.5		$	86.3
Restricted cash		35.6			30.4
Receivables (net of allowance for doubtful accounts of $3.6 and $2.4, respectively)		147.5			126.8
Receivables from related parties		0.1			0.8
Profit-sharing receivables from insurance carriers		88.9			74.0
Prepaid commissions		43.5			52.6
Income taxes receivable		3.9			2.1
Other current assets		83.2			68.1
Total current assets		459.2			441.1
Property and equipment, net		134.3			134.7
Contract rights and list fees, net		23.0			22.5
Goodwill		597.9			627.5
Other intangibles, net		234.5			351.2
Other non-current assets		62.1			74.0
Total assets	$	1,511.0		$	1,651.0
Liabilities and Deficit
Current liabilities:
Current portion of long-term debt	$	11.8		$	11.9
Accounts payable and accrued expenses		407.6			398.1
Payables to related parties		40.4			35.3
Deferred revenue		124.1			152.5
Income taxes payable		4.2			3.4
Total current liabilities		588.1			601.2
Long-term debt		1,914.5			1,922.5
Deferred income taxes		70.9			67.5
Deferred revenue		15.2			17.8
Other long-term liabilities		38.7			53.7
Total liabilities		2,627.4			2,662.7
Commitments and contingencies (Note 7)
Deficit
Common stock and additional paid-in capital, $0.01 par value, 1,000 shares authorized, and 100 shares issued and outstanding		102.6			139.6
Accumulated deficit		(1,226.0	)		(1,157.5	)
Accumulated other comprehensive income		5.5			5.2
Total Affinion Group, Inc. deficit		(1,117.9	)		(1,012.7	)
Non-controlling interest in subsidiary		1.5			1.0
Total deficit		(1,116.4	)		(1,011.7	)
Total liabilities and deficit	$	1,511.0		$	1,651.0

See accompanying notes to the unaudited condensed consolidated financial statements.

1

AFFINION GROUP, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

(In millions)

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
Net revenues	$	370.6		$	394.7		$	1,130.0		$	1,148.7
Expenses:
Cost of revenues, exclusive of depreciation and amortization shown separately below:
Marketing and commissions		142.5			168.7			448.1			472.5
Operating costs		110.8			116.0			344.2			333.2
General and administrative		33.3			39.6			99.4			137.0
Impairment of goodwill and other long-lived assets		—			—			39.7			—
Facility exit costs		(0.9	)		2.9			(0.9	)		4.2
Depreciation and amortization		48.5			60.4			147.6			183.3
Total expenses		334.2			387.6			1,078.1			1,130.2
Income from operations		36.4			7.1			51.9			18.5
Interest income		0.2			0.1			0.7			0.9
Interest expense		(37.0	)		(36.5	)		(111.5	)		(111.2	)
Other income (expense), net		0.1			0.1			(0.2	)		—
Loss before income taxes and non-controlling interest		(0.3	)		(29.2	)		(59.1	)		(91.8	)
Income tax expense		(1.9	)		(3.9	)		(8.9	)		(8.6	)
Net loss		(2.2	)		(33.1	)		(68.0	)		(100.4	)
Less: net income attributable to non-controlling interest		(0.1	)		(0.2	)		(0.5	)		(0.7	)
Net loss attributable to Affinion Group, Inc.	$	(2.3	)	$	(33.3	)	$	(68.5	)	$	(101.1	)
Net loss	$	(2.2	)	$	(33.1	)	$	(68.0	)	$	(100.4	)
Currency translation adjustment, net of tax		2.0			(3.9	)		0.3			(0.2	)
Comprehensive loss		(0.2	)		(37.0	)		(67.7	)		(100.6	)
Less: comprehensive income attributable to non-controlling interest		(0.2	)		(0.1	)		(0.5	)		(0.6	)
Comprehensive loss attributable to Affinion Group, Inc.	$	(0.4	)	$	(37.1	)	$	(68.2	)	$	(101.2	)

See accompanying notes to the unaudited condensed consolidated financial statements.

2

AFFINION GROUP, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN DEFICIT

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012 AND YEAR ENDED DECEMBER 31, 2011

(In millions)

	Affinion Group, Inc. Deficit
	Common Stock and Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)		Non- Controlling Interest		Total Deficit
Balance, January 1, 2012	$	139.6		$	(1,157.5	)	$	5.2	$	1.0	$	(1,011.7	)
Net income (loss)					(68.5	)				0.5		(68.0	)
Currency translation adjustment, net of tax								0.3				0.3
Return of capital		(37.0	)									(37.0	)
Balance, September 30, 2012	$	102.6		$	(1,226.0	)	$	5.5	$	1.5	$	(1,116.4	)

	Affinion Group, Inc. Deficit
	Common Stock and Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Non- Controlling Interest			Total Deficit
Balance, January 1, 2011	$	172.1		$	(1,047.8	)	$	9.5		$	1.3		$	(864.9	)
Net income (loss)					(109.7	)					0.9			(108.8	)
Currency translation adjustment, net of tax								(4.3	)		(0.2	)		(4.5	)
Dividend paid to non-controlling interest											(1.0	)		(1.0	)
Return of capital		(323.2	)											(323.2	)
Capital contribution		290.7												290.7
Balance, December 31, 2011	$	139.6		$	(1,157.5	)	$	5.2		$	1.0		$	(1,011.7	)

See accompanying notes to the unaudited condensed consolidated financial statements.

3

AFFINION GROUP, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

(In millions)

	For the Nine Months Ended
	September 30, 2012			September 30, 2011
Operating Activities
Net loss	$	(68.0	)	$	(100.4	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		147.6			183.3
Amortization of debt discount and financing costs		6.3			6.2
Unrealized (gain) loss on interest rate swaps		1.2			(4.3	)
Impairment of goodwill and other long-lived assets		39.7			—
Impairment of equity investment		1.0			—
Adjustment to liability for additional consideration based on earn-out		(14.6	)		—
Facility exit costs		(0.9	)		4.2
Share-based compensation		8.8			8.5
Deferred income taxes		3.9			3.8
Payment received for assumption of loyalty points program liability		—			4.8
Net change in assets and liabilities:
Restricted cash		(5.2	)		2.1
Receivables		(19.6	)		(31.5	)
Receivables from related parties		0.7			0.4
Profit-sharing receivables from insurance carriers		(14.9	)		(18.2	)
Prepaid commissions		9.4			4.1
Other current assets		(14.2	)		12.6
Contract rights and list fees		(0.7	)		(2.7	)
Other non-current assets		4.7			8.1
Accounts payable and accrued expenses		6.3			4.1
Payables to related parties		(3.6	)		(6.8	)
Deferred revenue		(32.5	)		(10.0	)
Income taxes receivable and payable		(1.1	)		5.5
Other long-term liabilities		0.6			(7.9	)
Other, net		(0.1	)		—
Net cash provided by operating activities		54.8			65.9
Investing Activities
Capital expenditures		(38.2	)		(39.0	)
Restricted cash		0.2			1.1
Acquisition-related payments, net of cash acquired		(1.2	)		(32.9	)
Cash acquired in Webloyalty acquisition		—			26.1
Other investing activity		—			0.2
Net cash used in investing activities		(39.2	)		(44.5	)
Financing Activities
Proceeds from issuance of term loan		—			250.0
Principal payments on borrowings		(8.8	)		(8.8	)
Financing costs		—			(5.8	)
Repurchase of employee equity award of a subsidiary		—			(3.5	)
Return of capital to parent company		(37.0	)		(323.2	)
Receivables from and payables to parent company		—			15.3
Distribution to non-controlling interest of a subsidiary		—			(1.1	)
Net cash used in financing activities		(45.8	)		(77.1	)
Effect of changes in exchange rates on cash and cash equivalents		0.4			0.1

4

	For the Nine Months Ended
	September 30, 2012			September 30, 2011
Net decrease in cash and cash equivalents		(29.8	)		(55.6	)
Cash and cash equivalents, beginning of period		86.3			121.1
Cash and cash equivalents, end of period	$	56.5		$	65.5
Supplemental Disclosure of Cash Flow Information:
Interest payments	$	92.5		$	91.9
Income tax payments, net of refunds	$	6.9		$	2.9
Non-cash investing and financing activities:
Accrued capital expenditures	$	1.5		$	1.8
Contribution of Affinion Holdings equity instruments used for Webloyalty acquisition	$	—		$	290.7
Property and equipment acquired under capital lease	$	—		$	0.9
Property and equipment acquired under new facility operating lease	$	—		$	2.6

See accompanying notes to the unaudited condensed consolidated financial statements.

5

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”), a wholly-owned subsidiary of Affinion Group Holdings, Inc. (“Affinion Holdings”) and an affiliate of Apollo Global Management, LLC (“Apollo”), pursuant to a purchase agreement dated July 26, 2005 for approximately $1.8 billion (the “Apollo Transactions”).

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

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 such estimate is made. 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, 2011 and 2010, and for the years ended December 31, 2011, 2010 and 2009, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 filed with the SEC on March 1, 2012 (the “Form 10-K”).

Business Description—The Company provides comprehensive customer engagement and loyalty solutions that enhance or extend the relationship of millions of consumers with many of the largest companies in the world. The Company partners with these companies to develop and market programs that provide services to their end-customers using its expertise in customer engagement, creative design and product development. The Company refers to the companies that it works with to provide customer engagement and loyalty solutions as its marketing partners. The Company refers to subscribers or members as those consumers to whom it provides services directly and has a contractual relationship. The Company refers to end-customers as those consumers that it services on behalf of a third party, such as one of its marketing partners, with whom it has a contractual relationship.

The Company has substantial expertise in deploying various forms of customer engagement communications, such as direct mail, inbound and outbound telephony and the Internet, and in bundling unique benefits to offer products and services to the customers of its marketing partners on a highly targeted basis.

The Company designs programs that provide a diversity of benefits, based on end-customers’ needs and interests, with a particular focus on programs offering lifestyle and protection benefits and programs which offer savings on purchases. For instance, the Company provides credit monitoring and identity-theft resolution, accidental death and dismemberment insurance (“AD&D”), discount travel services, loyalty points programs, various checking account and credit card enhancement services and other products and services.

• Affinion North America. Affinion North America is comprised of the Company’s Membership, Insurance and Package, and Loyalty customer engagement businesses in North America.

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

6

• 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 provides its clients with solutions that meet the most popular redemption options desired by their program points holders, including travel, gift cards, and merchandise. The Company also provides enhancement benefits to major financial institutions in connection with their credit and debit card programs. In addition, the Company provides and manages turnkey travel services that are sold on a private label basis to provide its clients’ customers with direct access to the Company’s proprietary travel platform.

• Affinion International. Affinion International is comprised of the Company’s Membership, Package and Loyalty customer engagement businesses outside North America. The Company expects to leverage its current international operational platform to expand its range of products and services, develop new marketing partner relationships in various industries and grow its geographical footprint.

Recently Adopted Accounting Pronouncements

In June 2011, the FASB issued new guidance that gives an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total for comprehensive income. The entity is also required to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statements(s) where the components of net income and the components of other comprehensive income are presented. The guidance is to be applied retrospectively, for fiscal periods and interim periods within those years, beginning after December 15, 2011 and early adoption is permitted. In December 2011, the FASB issued new guidance deferring the changes in the June 2011 relating to presentation of classification adjustments. The Company elected to present the total of comprehensive income, the components of net income and the components of other comprehensive income in a single continuous statement of comprehensive income. The Company’s adoption of the new guidance, other than that related to presentation of reclassification adjustments, as of January 1, 2012 did not have a material impact on its consolidated financial position, results of operations and cash flows.

In July 2012, the FASB issued new guidance that amended previous guidance on testing indefinite-lived intangible assets, other than goodwill, for impairment. Under the new guidance, an entity testing an indefinite-lived intangible asset for impairment has the option of performing a qualitative assessment before calculating the fair value of the asset. It does not revise the requirements to test indefinite-lived intangible assets annually for impairment and between annual tests if there is a change in events or circumstances. The new guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of the new guidance is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

2. ACQUISITIONS

On January 14, 2011, the Company and Affinion Holdings entered into, and consummated, an Agreement and Plan of Merger that resulted in the acquisition of Webloyalty Holdings, Inc. (“Webloyalty”) by the Company. In accordance with the Agreement and Plan of Merger, on January 14, 2011, the Company acquired all of the capital stock of Webloyalty, and the interest of security holders of Webloyalty immediately prior to the Merger were converted into Affinion Holdings’ securities, as follows: (i) the shares of common stock of Webloyalty were converted into shares of Affinion Holdings’ common stock, (ii) options to purchase shares of Webloyalty’s common stock granted under Webloyalty’s equity plans, whether vested or unvested, were converted into options to purchase shares of Affinion Holdings’ common stock, (iii) warrants to purchase shares of Webloyalty’s common stock were converted into warrants to purchase Affinion Holdings’ common stock and (iv) awards of restricted shares of Webloyalty’s common stock (to the extent unvested) were converted into awards of restricted shares of Affinion Holdings’ common stock. In connection with the acquisition, Affinion Holdings contributed to the Company (i) approximately 25.1 million shares of Affinion Holdings’ common stock valued at $283.0 million, (ii) options to purchase approximately 1.2 million shares of Affinion Holdings’ common stock valued at $6.2 million, of which $6.0 million was attributed to pre-acquisition service, and (iii) warrants to purchase approximately 0.5 million shares of Affinion Holdings’ common stock valued at $1.7 million, all of which was attributed to pre-acquisition service, which the Company issued as consideration to acquire Webloyalty.

Webloyalty is a leading online marketing services company that provides, designs and administers online subscription loyalty solutions that offer valuable discounts, services and benefits for its subscribers and provides its clients with programs that enhance their relationships with their customers. The Company believes that the Company’s and Webloyalty’s product suites are highly complementary, allowing for a relatively seamless integration of benefits, as well as the opportunity to leverage the individual services and features to build a better, stronger offer for the consumer and thereby enhance the value proposition for the Company’s affinity marketing partners. Additionally, the significant scale of the Company’s marketing operations will benefit substantially through the integration of the innovative technologies Webloyalty has created in improving the design and targeting of offers. Also, Webloyalty has a strong presence in certain European markets where the Company seeks to expand its operations and accelerate its rate of growth.

7

In connection with the Webloyalty acquisition, Webloyalty and its domestic subsidiaries have become guarantors under the Company’s senior secured credit facility and the indentures governing the Company’s 7.875% senior notes and 11   ¹/₂% senior subordinated notes (see Note 5—Long-term Debt).

The Company has allocated the Webloyalty purchase price of $290.7 million among the assets acquired and liabilities assumed as follows (in millions):

Cash	$	26.1
Accounts receivable		4.2
Other current assets		11.3
Property and equipment		5.2
Intangible assets		116.1
Goodwill		195.6
Other assets		0.2
Accounts payable and accrued liabilities		(56.5	)
Deferred income tax		(1.3	)
Income taxes payable		(0.7	)
Other current liabilities		(1.7	)
Non-current deferred income taxes		(6.7	)
Other long-term liabilities		(1.1	)
Consideration transferred	$	290.7

The intangible assets are comprised principally of member relationships ($90.0 million) and patents and technology ($17.0 million), which are being depreciated on an accelerated basis over weighted-average useful lives of seven and nine years, respectively. The goodwill, which is not expected to be deductible for income tax purposes, has been allocated to the Membership Products segment ($150.9 million) and the International Products segment ($44.7 million). As of September 30, 2011, the Company had incurred $3.9 million of acquisition costs, of which $1.5 million was recognized during the nine months ended September 30, 2011 and included in general and administrative expense in the unaudited condensed consolidated statement of comprehensive income. There were no such costs incurred during the three months ended September 30, 2011 or the three and nine months ended September 30, 2012.

On July 14, 2011, the Company and Affinion Holdings entered into an Agreement and Plan of Merger to acquire Prospectiv Direct, Inc. (“Prospectiv”), an online performance marketer and operator of a daily deal website. On August 1, 2011, the merger was consummated and, as a result, the Company acquired all of the capital stock of Prospectiv for an initial cash purchase price of $31.8 million. If Prospectiv achieves certain performance targets over the 30 month period that commenced on July 1, 2011, the former equity holders will be entitled to additional consideration in the form of an earn-out of up to $45.0 million and certain members of Prospectiv’s management will be entitled to receive additional compensation related to their continued employment of up to $10.0 million. Such additional consideration and compensation will be settled in some combination of cash and shares of Affinion Holdings’ common stock. As of the acquisition date, the liability for the additional consideration to be paid in connection with the earn-out was estimated to be $24.1 million, which was recorded at its fair value at the acquisition date of $14.4 million. As of the acquisition date, the purchase price, consisting of the cash paid at closing and the estimated fair value of the earn-out as of the acquisition date, was estimated at $46.2 million. The Company has allocated the purchase price of $46.2 million among the assets acquired and liabilities assumed as follows (in millions):

Cash	$	2.4
Accounts receivable		3.0
Other current assets		0.5
Property and equipment		0.5
Intangible assets		12.3
Goodwill		31.5
Accounts payable and accrued liabilities		(4.0	)
Consideration transferred	$	46.2

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The intangible assets are comprised principally of trademarks and tradenames ($6.3 million), proprietary databases and systems ($2.8 million) and patents and technology ($2.5 million), which are being depreciated on a straight-line basis over weighted-average useful lives of ten, four and five years, respectively. The goodwill, which is not expected to be deductible for income tax purposes, has been allocated to the Membership Products segment. As of September 30, 2011, the Company had incurred $0.5 million of acquisition costs, all of which was recognized during the three and nine months ended September 30, 2011 and has been included in general and administrative expense in the unaudited condensed consolidated statement of operations. During the three and nine months ended September 30, 2012, there were no costs incurred by the Company related to the acquisition of Prospectiv.

In late March of 2012, Prospectiv implemented a reduction in force and revised its growth plans for 2012 and 2013. Based on these revised growth plans, the Company has concluded that it does not expect to pay any additional consideration in the form of an earn-out or additional compensation based on achievement of performance targets. Accordingly, during the three months ended March 31, 2012, the Company reversed certain accruals for additional consideration recorded as part of the Prospectiv acquisition and additional compensation as the Company will not be able to achieve the growth originally planned for these years due to market conditions. The reduction of these accruals recorded during the first quarter of 2012 reduced general and administrative expense for the nine months ended September 30, 2012 by $14.6 million and $1.1 million, respectively. In addition, during the three months ended September 30, 2012, the Company entered into a settlement agreement with the former equity holders of Prospectiv which resulted in a $0.7 million reduction of the initial purchase price and released the Company from any future claims for additional consideration and for future compensation based on achievement of the performance targets. The reduction in the initial purchase price was included in general and administrative expenses in the accompanying statements of comprehensive income for the three and nine months ended September 30, 2012.

The Company concluded that the revisions made to the Prospectiv forecast, as well as other marketplace events, represented an indication of potential impairment of Prospectiv’s goodwill and intangible assets. As a result, during the three months ended June 30, 2012, the Company performed an interim impairment test of the goodwill for Prospectiv which is a separate reporting unit within the Membership Products reporting segment, as of April 1, 2012. Based on the impairment test, which used projected discounted cash flows to determine the fair value of Prospectiv and the implied fair value of the goodwill ascribed to Prospectiv, the Company recorded an impairment loss during the three months ended June 30, 2012 of $39.7 million, representing all of the goodwill ascribed to Prospectiv at the date of acquisition ($31.5 million) and a portion of the intangible assets of Prospectiv ($8.2 million). The impairment loss related to the goodwill and intangible assets of Prospectiv has been reflected as Impairment of goodwill and other long-lived assets in the unaudited condensed consolidated statement of comprehensive income for the nine months ended September 30, 2012.

3. INTANGIBLE ASSETS

Intangible assets consisted of:

	September 30, 2012
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(in millions)
Amortizable intangible assets:
Member relationships	$	935.9	$	(889.4	)	$	46.5
Affinity relationships		644.5		(491.9	)		152.6
Proprietary databases and systems		61.6		(56.8	)		4.8
Trademarks and tradenames		30.8		(13.7	)		17.1
Patents and technology		48.3		(35.4	)		12.9
Covenants not to compete		2.1		(1.5	)		0.6
	$	1,723.2	$	(1,488.7	)	$	234.5
	December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(in millions)
Amortizable intangible assets:
Member relationships	$	934.7	$	(821.3	)	$	113.4
Affinity relationships		643.0		(457.1	)		185.9
Proprietary databases and systems		62.6		(55.8	)		6.8
Trademarks and tradenames		36.0		(11.8	)		24.2
Patents and technology		49.5		(29.5	)		20.0
Covenants not to compete		2.2		(1.3	)		0.9
	$	1,728.0	$	(1,376.8	)	$	351.2

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Foreign currency translation resulted in an increase in intangible assets and accumulated amortization of $2.8 million and $2.2 million, respectively, from December 31, 2011 to September 30, 2012.

Amortization expense relating to intangible assets was as follows:

	For the Three Months Ended				For the Nine Months Ended
	September 30, 2012		September 30, 2011		September 30, 2012		September 30, 2011
	(in millions)
Member relationships	$	21.4	$	29.8	$	67.3	$	95.4
Affinity relationships		11.1		12.9		33.5		37.0
Proprietary databases and systems		0.3		0.5		0.9		1.4
Trademarks and tradenames		0.5		0.7		1.8		1.8
Patents and technology		1.7		2.7		5.9		9.5
Covenants not to compete		0.1		0.1		0.3		0.3
	$	35.1	$	46.7	$	109.7	$	145.4

Based on the Company’s amortizable intangible assets as of September 30, 2012, the Company expects the related amortization expense for fiscal year 2012 and the four succeeding fiscal years to be approximately $132.0 million in 2012, $69.0 million in 2013, $57.8 million in 2014, $39.3 million in 2015 and $10.6 million in 2016.

At January 1, 2012 and September 30, 2012, the Company had gross goodwill of $643.0 million and $644.9 million, respectively, and accumulated impairment losses of $15.5 million and $47.0 million, respectively. The accumulated impairment losses represent the $15.5 million impairment loss recognized in 2006 impairing all of the goodwill assigned to the Loyalty Products segment related to the Apollo Transactions and the $31.5 million impairment loss recognized during the three months ended June 30, 2012 (as described below), impairing all of the goodwill assigned to the Membership Products segment related to the Prospectiv acquisition. The changes in the Company’s carrying amount of goodwill for the year ended December 31, 2011 and the nine months ended September 30, 2012 are as follows:

	Balance at January 1, 2011		Acquisition			Currency Translation			Balance at December 31, 2011		Impairment			Currency Translation		Balance at September 30, 2012
	(in millions)
Membership products	$	231.1	$	182.4		$	—		$	413.5	$	(31.5	)	$	—	$	382.0
Insurance and package products		58.3		—			—			58.3		—			—		58.3
Loyalty products		82.2		(0.5	)		—			81.7		—			—		81.7
International products		31.1		45.3			(2.4	)		74.0		—			1.9		75.9
Total	$	402.7	$	227.2		$	(2.4	)	$	627.5	$	(31.5	)	$	1.9	$	597.9

In late March of 2012, Prospectiv implemented a reduction in force and revised its growth plans for 2012 and 2013. The Company concluded that the revisions made to the Prospectiv forecast, as well as other marketplace events, represented an indication of potential impairment of Prospectiv’s goodwill and intangible assets. As a result, during the three months ended June 30, 2012, the Company performed an interim impairment test of the goodwill for Prospectiv, which is a separate reporting unit within the Membership Products reporting segment. Based on the interim impairment test, which used discounted cash flows to determine the fair value of Prospectiv and the implied fair value of the goodwill ascribed to Prospectiv, the Company recorded an impairment loss during the three months ended June 30, 2012 of $31.5 million, representing all of the goodwill ascribed to Prospectiv at the date of acquisition. During the three months ended June 30, 2012, the Company also performed an impairment test related to the intangible assets of Prospectiv and, based on the impairment test, recorded an impairment loss related to the Prospectiv intangible assets of $8.2 million, related to proprietary databases and systems ($1.0 million), trademarks and tradenames ($5.4 million) and patents and technology ($1.8 million). The impairment loss related to the goodwill and intangible assets of Prospectiv has been reflected as Impairment of goodwill and other long-lived assets in the unaudited condensed consolidated statement of comprehensive income for the nine months ended September 30, 2012.

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4. CONTRACT RIGHTS AND LIST FEES, NET

Contract rights and list fees consisted of:

	September 30, 2012							December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(in millions)
Contract rights	$	61.4	$	(60.3	)	$	1.1	$	58.7	$	(57.3	)	$	1.4
List fees		44.5		(22.6	)		21.9		39.6		(18.5	)		21.1
	$	105.9	$	(82.9	)	$	23.0	$	98.3	$	(75.8	)	$	22.5

Amortization expense for the three and nine months ended September 30, 2012 was $1.6 million and $4.5 million, respectively, of which $1.5 million and $4.2 million, respectively, is included in marketing expense and $0.1 million and $0.3 million, respectively, is included in depreciation and amortization expense in the unaudited condensed consolidated statements of comprehensive income. Amortization expense for the three and nine months ended September 30, 2011 was $3.0 million and $9.1 million, respectively, of which $1.2 million and $3.7 million, respectively, is included in marketing expense and $1.8 million and $5.4 million, respectively, is included in depreciation and amortization expense in the unaudited condensed consolidated statements of comprehensive income. Based on the Company’s contract rights and list fees as of September 30, 2012, the Company expects the related amortization expense for fiscal year 2012 and the four succeeding fiscal years to be approximately $6.0 million in 2012, $5.7 million in 2013, $4.7 million in 2014, $3.7 million in 2015 and $2.6 million in 2016.

5. LONG-TERM DEBT

Long-term debt consisted of:

	September 30, 2012			December 31, 2011
	(in millions)
Term loan due 2016	$	1,098.7		$	1,107.2
7.875% senior notes due 2018, net of unamortized discount of $2.7 and $3.1, respectively, with an effective interest rate of 8.00%		472.3			471.9
11  1/2% senior subordinated notes due 2015, net of unamortized discount of $1.6 and $2.0, respectively, with an effective interest rate of 11.75%		353.9			353.5
Capital lease obligations		1.4			1.8
Total debt		1,926.3			1,934.4
Less: current portion of long-term debt		(11.8	)		(11.9	)
Long-term debt	$	1,914.5		$	1,922.5

On April 9, 2010, the Company, as Borrower, and Affinion Holdings, as guarantor, entered into a $1.0 billion amended and restated senior secured credit facility with its lenders (“Affinion Credit Facility”). The Affinion Credit Facility initially consisted of a five-year $125.0 million revolving credit facility and an $875.0 million term loan facility. On December 13, 2010, the Company, as Borrower and Affinion Holdings, as a guarantor, entered into an agreement with two of its lenders which resulted in an increase in the revolving credit facility to $160.0 million, with a further increase to $165.0 million upon the satisfaction of certain conditions. These conditions were satisfied in January 2011. On February 11, 2011, the Company obtained incremental term loans in an aggregate principal amount of $250.0 million under the Company’s amended and restated senior secured credit facility. The revolving credit facility includes a letter of credit subfacility and a swingline loan subfacility. The term loan facility matures in October 2016. However the term loan facility will mature on the date that is 91 days prior to the maturity of the Senior Subordinated Notes (defined below) unless, prior to that date, (a) the maturity for the Senior Subordinated Notes is extended to a date that is at least 91 days after the maturity of the term loan facility or (b) the obligations under the Senior Subordinated Notes are (i) repaid in full or (ii) refinanced, replaced or defeased in full with new loans and/or debt securities with maturity dates occurring after the maturity date of the term loan facility. The term loan facility provides for quarterly amortization payments totaling 1% per annum, with the balance payable upon the final maturity date. The term loan facility also requires mandatory prepayments of the outstanding term loans based on excess cash flow (as defined), if any, and the proceeds from certain specified transactions. The interest rates with respect to term loans and revolving loans under the Affinion Credit Facility are based on, at the Company’s option, (a) the higher of (i) adjusted LIBOR and

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(ii) 1.50%, in each case plus 3.50%, or (b) the highest of (i) Bank of America, N.A.’s prime rate, (ii) the Federal Funds Effective Rate plus 0.5% and (iii) 2.50% (“ABR”), in each case plus 2.50%. The effective interest rate on the term loan during the nine months ended September 30, 2012 and 2011 was 5% per annum. The Company’s obligations under the credit facility are, and the Company’s obligations under any interest rate protection or other hedging arrangements entered into with a lender or any of its affiliates will be, guaranteed by Affinion Holdings and by each of the Company’s existing and subsequently acquired or organized domestic subsidiaries, subject to certain exceptions. The credit facility is secured to the extent legally permissible by substantially all the assets of (i) Affinion Holdings, which consists of a pledge of all the Company’s capital stock and (ii) the Company and the subsidiary guarantors, including but not limited to: (a) a pledge of substantially all capital stock held by the Company or any subsidiary guarantor and (b) security interests in substantially all tangible and intangible assets of the Company and each subsidiary guarantor, subject to certain exceptions. The credit facility also contains financial, affirmative and negative covenants. The negative covenants in the Company’s credit facility include, among other things, limitations (all of which are subject to certain exceptions) on the Company’s (and in certain cases, Affinion Holdings’) ability to declare dividends and make other distributions, redeem or repurchase the Company’s capital stock; prepay, redeem or repurchase certain of the Company’s subordinated indebtedness; make loans or investments (including acquisitions); incur additional indebtedness (subject to certain exceptions); enter into agreements that would restrict the ability of the Company’s subsidiaries to pay dividends; merge or enter into acquisitions; sell assets; and enter into transactions with affiliates. The credit facility also requires the Company to comply with financial maintenance covenants with a maximum ratio of total debt to EBITDA (as defined) and a minimum ratio of EBITDA to cash interest expense.

As of September 30, 2012 and December 31, 2011, there were no outstanding borrowings under the revolving credit facility. Borrowings and repayments under the revolving credit facility were $50.0 million and $50.0 million, respectively, during the nine months ended September 30, 2012. Borrowings and repayments under the revolving credit facility were $50.0 million and $50.0 million, respectively, during the nine months ended September 30, 2011. As of September 30, 2012, the Company had $158.1 million available for borrowing under the Affinion Credit Facility after giving effect to the issuance of $6.9 million of letters of credit issued under the Affinion Credit Facility.

On November 19, 2010, the Company completed a private offering of $475.0 million aggregate principal amount of 7.875% Senior Notes due 2018 (“2010 Senior Notes”). The 2010 Senior Notes bear interest at 7.875% per annum payable semi-annually on June 15 and December 15 of each year, commencing on June 15, 2011. The 2010 Senior Notes will mature on December 15, 2018. The 2010 Senior Notes are redeemable at the Company’s option prior to maturity. The indenture governing the 2010 Senior Notes contains negative covenants which restrict the ability of the Company and its restricted subsidiaries to engage in certain transactions and also contains customary events of default. The Company’s obligations under the 2010 Senior Notes are jointly and severally and fully and unconditionally guaranteed on a senior secured basis by each of the Company’s existing and future domestic subsidiaries that guarantee the Company’s indebtedness under the Affinion Credit Facility. The 2010 Senior Notes and guarantees thereof are senior unsecured obligations of the Company and rank equally with all of the Company’s and the guarantors’ existing and future senior indebtedness and senior to the Company’s and the guarantors’ existing and future subordinated indebtedness. The 2010 Senior Notes are therefore effectively subordinated to the Company’s and the guarantors’ existing and future secured indebtedness, including the Company’s obligations under the Affinion Credit Facility, to the extent of the value of the collateral securing such indebtedness. The 2010 Senior Notes are structurally subordinated to all indebtedness and other obligations of each of the Company’s existing and future subsidiaries that are not guarantors. On August 24, 2011, pursuant to the registration rights agreement entered into in connection with the issuance of the 2010 Senior Notes, the Company completed a registered exchange offer and exchanged all of the then-outstanding 2010 Senior Notes for a like principal amount of 2010 Senior Notes that have been registered under the Securities Act of 1933, as amended (the “Securities Act”). The Company used substantially all of the net proceeds of the offering of the 2010 Senior Notes to finance the purchase of the previously outstanding senior notes issued in 2005, 2006 and 2009.

On April 26, 2006, the Company issued $355.5 million aggregate principal amount of 11 ¹/₂% senior subordinated notes due October 15, 2015 (the “Senior Subordinated Notes”). The Senior Subordinated Notes bear interest at 11 ¹/₂% per annum, payable semi-annually, on April 15 and October 15 of each year. The Senior Subordinated Notes mature on October 15, 2015. The Senior Subordinated Notes are guaranteed by the same subsidiaries of the Company that guarantee the Affinion Credit Facility and the 2010 Senior Notes as discussed in Note 12—Guarantor/Non-Guarantor Supplemental Financial Information. On September 13, 2006, the Company completed a registered exchange offer and exchanged all of the then-outstanding 11 ¹/₂% Senior Subordinated Notes due 2015 for a like principal amount of 11 ¹/₂% Senior Subordinated Notes due 2015 that have been registered under the Securities Act.

The Affinion Credit Facility and the indentures governing the 2010 Senior Notes and the Senior Subordinated Notes each contain restrictive covenants related primarily to the Company’s ability to distribute dividends to its parent, redeem or repurchase capital stock, sell assets, issue additional debt or merge with or acquire other companies. The Company and its subsidiaries may pay dividends of up to $35.0 million in the aggregate provided that no default or event of default has occurred or is continuing, or would result from the dividend. Payment of additional dividends requires the satisfaction of various conditions, including meeting defined leverage ratios and a defined fixed charge coverage ratio, and the total dividend paid cannot exceed a calculated amount of defined available free cash flow. The covenants in the Affinion Credit Facility also require compliance with a consolidated leverage ratio and an interest coverage ratio. During the nine months ended September 30, 2012 and 2011, the Company paid cash dividends to its parent company, Affinion Holdings, of $37.0 million and $323.2 million, respectively.

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As of September 30, 2012, the Company was in compliance with all financial covenants contained in the Affinion Credit Facility and the indentures governing the 2010 Senior Notes and the Senior Subordinated Notes.

On October 5, 2010, Affinion Holdings issued $325.0 million aggregate principal amount of 11.625% senior notes due November 15, 2015 (the “Affinion Holdings Senior Notes”). Any failure by Affinion Holdings to pay principal of, or interest on, the Affinion Holdings Senior Notes would constitute an event of default under the Affinion Credit Facility, giving the lenders under the Affinion Credit Facility the right to accelerate the repayment of all borrowings thereunder, which acceleration would also give rise to an event of default under the indentures governing the 2010 Senior Notes and Senior Subordinated Notes. As a holding company with no significant assets other than the ownership of 100% of the Company’s common stock, Affinion Holdings depends on the Company’s cash flows to make cash interest payments on the Affinion Holdings Senior Notes.

6. INCOME TAXES

The Company is included as a member of Affinion Holdings’ consolidated federal income tax return and as a member of certain of Affinion Holdings’ unitary or combined state income tax returns. Income taxes are presented in the Company’s consolidated financial statements using the asset and liability approach based on the separate return method for the consolidated group. Under this method, current and deferred tax expense or benefit for the period is determined for the Company and its subsidiaries as a separate group on a standalone basis. Deferred tax assets and liabilities are calculated based upon the temporary differences between the financial statements and income tax bases of assets and liabilities using currently enacted tax rates. Deferred tax assets are recorded net of a valuation allowance when, based on the weight of available evidence, it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. Decreases to the valuation allowance are recorded as reductions to the income tax provision, while increases to the valuation allowance result in additional income tax provision. The realization of deferred tax assets is primarily dependent on estimated future taxable income. As of September 30, 2012 and 2011, the Company has recorded a full valuation allowance for its U.S. federal net deferred tax assets. As of September 30, 2012 and 2011, the Company has also recorded valuation allowances against the deferred tax assets related to certain state and foreign tax jurisdictions.

The Company’s effective income tax rates for the three and nine months ended September 30, 2012 were (717.9)% and (14.9)%, respectively. The Company’s effective income tax rates for the three and nine months ended September 30, 2011 were (13.3)% and (9.3)%, respectively. The difference in the effective tax rates for the three months ended September 30, 2012 and 2011 is primarily a result of the decrease in loss before income taxes and non-controlling interest from $29.2 million for the three months ended September 30, 2011 to $0.3 million for the three months ended September 30, 2012 and a decrease in the income tax provision from $3.9 million for the three months ended September 30, 2011 to $1.9 million for the three months ended September 30, 2012. The difference in the effective tax rates for the nine months ended September 30, 2012 and 2011 is primarily a result of the decrease in loss before income taxes and non-controlling interest from $91.8 million for the nine months ended September 30, 2011 to $59.1 million for the nine months ended September 30, 2012 and an increase in the income tax provision from $8.6 million for the nine months ended September 30, 2011 to $8.9 million for the nine months ended September 30, 2012. The Company’s tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amount of income it earns in those jurisdictions. It is also affected by discrete items that may occur in any given year, but are not consistent from year to year. In addition to state and foreign income taxes and related foreign tax credits, the requirement to maintain valuation allowances had the most significant impact on the difference between the Company’s effective tax rate and the statutory U.S. federal income tax rate of 35%.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. The Company recognized less than $0.1 million and $0.2 million, respectively, of interest related to uncertain tax positions arising in the three and nine months ended September 30, 2012. The interest has been included in income tax expense for the current period. The Company’s gross unrecognized tax benefits for the nine months ended September 30, 2012 decreased by $2.7 million as a result of tax positions taken during the current period.

The Company’s income tax returns are periodically examined by various tax authorities. In connection with these and future 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. Federal, state and local jurisdictions are subject to examination by the taxing authorities for all open years as prescribed by applicable statute. For significant foreign jurisdictions, tax years in Germany and the United Kingdom remain open. No income tax waivers have been executed that would extend the period subject to examination beyond the period prescribed by statute. 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 as discussed in Note 9—Related Party Transactions.

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7. COMMITMENTS AND CONTINGENCIES

Litigation

In the ordinary course of business, the Company is involved in claims, governmental inquiries and legal proceedings related to employment matters, contract disputes, business practices, trademark and copyright infringement claims and other commercial matters. The Company is also a party to lawsuits which were brought against it and its affiliates and which purport to be a class action in nature and allege that the Company violated certain federal or state consumer protection statutes (as described below). The Company intends to vigorously defend itself against such lawsuits.

On June 17, 2010, a class action complaint was filed against the Company and Trilegiant Corporation (“Trilegiant”) in the United States District Court for the District of Connecticut. The complaint asserts various causes of action on behalf of a putative nationwide class and a California-only subclass in connection with the sale by Trilegiant of its membership programs, including claims under the Electronic Communications Privacy Act, the Connecticut Unfair Trade Practices Act, the Racketeer Influenced Corrupt Organizations Act, the California Consumers Legal Remedies Act, the California Unfair Competition Law, the California False Advertising Law, and for unjust enrichment. On September 29, 2010, the Company filed a motion to compel arbitration of all of the claims asserted in this lawsuit. On February 24, 2011, the court denied the Company’s motion. On March 28, 2011, the Company and Trilegiant filed a notice of appeal in the United States Court of Appeals for the Second Circuit, appealing the district court’s denial of their motion to compel arbitration. On September 7, 2012, the Second Circuit affirmed the decision of the District Court denying arbitration. While that issue was on appeal, the matter proceeded in the district court. There was written discovery and depositions. Previously, the court had set a briefing schedule on class certification that called for the completion of class certification briefing on May 18, 2012. However, on March 28, 2012, the court suspended the briefing schedule on the motion due to the filing of two other overlapping class actions in the United States District Court for the District of Connecticut. The first of those cases was filed on March 6, 2012, against the Company, Trilegiant, Chase Bank USA, N.A., Bank of America, N.A., Capital One Financial Corp., Citigroup, Inc., Citibank, N.A., Apollo Global Management, LLC, 1-800-Flowers.Com, Inc., United Online, Inc., Memory Lane, Inc., Classmates Int’l, Inc., FTD Group, Inc., Days Inn Worldwide, Inc., Wyndham Worldwide Corp., People Finderspro, Inc., Beckett Media LLC, Buy.com, Inc., Raukuten USA, Inc., IAC/InteractiveCorp., and Shoebuy.com, Inc. The second of those cases was filed on March 25, 2012, against the same defendants as well as Adaptive Marketing, LLC, Vertrue, Inc., Webloyalty.com, Inc., and Wells Fargo & Co. These two cases assert similar claims as the claims asserted in the earlier-filed lawsuit in connection with the sale by Trilegiant of its membership programs. On April 26, 2012, the court consolidated these three cases. The court also set an initial status conference for May 17, 2012. At that status conference, the court ordered that Plaintiffs file a consolidated amended complaint to combine the claims in the three previously separate lawsuits. The court also struck the class certification briefing schedule that had been set previously. On September 7, 2012, the Plaintiffs filed a consolidated amended complaint asserting substantially the same legal claims. The consolidated amended complaint added Priceline, Orbitz, Chase Paymentech, Hotwire, and TigerDirect as Defendants and added three new Plaintiffs; it also dropped Webloyalty and Rakuten as Defendants. Defendants have until November 9, 2012 to respond to the consolidated amended complaint.

On November 10, 2010, a class action complaint was filed against the Company, Trilegiant, 1-800-Flowers.com, and Chase Bank USA, N.A. in the United States District Court for the Eastern District of New York. The complaint asserts various causes of action on behalf of several putative nationwide classes that largely overlap with one another. The claims asserted are in connection with the sale by Trilegiant of its membership programs, including claims under the Electronic Communications Privacy Act, Connecticut Unfair Trade Practices Act, and New York’s General Business Law. On April 6, 2011, the Company and Trilegiant filed a motion to compel individual (non-class) arbitration of the plaintiff’s claims. The Company’s co-defendant, 1-800-Flowers.com, joined in the motion to compel arbitration, and co-defendant Chase Bank filed a motion to stay the case against it pending arbitration, or alternatively to dismiss. The Company does not know when the court will issue a ruling on these motions. On December 23, 2011, the plaintiff sought to dismiss the Company, Trilegiant, and 1-800-Flowers without prejudice. On January 4, 2012, the Company and Trilegiant objected to that dismissal (and 1-800-Flowers joined in that objection), seeking among other things dismissal with prejudice. Plaintiff responded to that objection on January 13, 2012, and we do not know when the court will enter a decision. Also, on January 13, 2012, the plaintiff sought to dismiss Chase without prejudice. On January 17, 2012, Chase filed an objection to the plaintiff’s dismissal request. That issue is currently being considered by the court. The Company does not know when the court will rule on that issue.

On July 13, 2011, a class action lawsuit was filed against Affinion Group, LLC (“AGLLC”), Trilegiant, Apollo Global Management LLC, and Chase Bank USA, N.A., in the United States District Court for the District of Arizona. The complaint asserted similar causes of action as are asserted in the Connecticut litigation on behalf of putative nationwide classes in connection with the sale by Trilegiant of its membership programs. On October 18, 2011, Trilegiant, AGLLC, and Apollo filed a motion to stay, to which the plaintiff never responded. On November 1, 2011, Trilegiant and AGLLC filed a motion to compel arbitration, and Apollo joined in that motion and also sought dismissal. On December 15, 2011, the plaintiff sought to dismiss the action without prejudice, and on December 21, 2011, Trilegiant, Affinion, and Apollo filed a brief urging the court to dismiss the action with prejudice. On January 17, 2012, Chase filed a motion to transfer this case to the Eastern District of New York (“EDNY”). On or about February 29, 2012, the case was dismissed without prejudice. The same lead plaintiff’s law firm also filed a substantially similar class action

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lawsuit against the same defendants as well as Avis Rent A Car System, LLC, Avis Budget Car Rental LLC, Avis Budget Group, Inc., and Bank of America, N.A. in the United States District Court for the District of Oregon, Portland Division, on July 14, 2011. On December 27, 2011, Plaintiff filed a notice of voluntary dismissal without prejudice, and the case was terminated by the court on January 6, 2012. On August 4, 2011, those same lawyers filed another substantially similar class action lawsuit against the same defendants sued in the Arizona lawsuit in the United States District Court for the Southern District of Ohio. On December 23, 2011, the plaintiff filed a notice of voluntary dismissal as to Trilegiant, AGLLC, and Apollo. On February 10, 2012, the court entered an order dismissing the lawsuit in its entirety without prejudice. On August 8, 2011, those same lawyers filed a substantially similar class action lawsuit against AGLLC, Trilegiant Corporation, Apollo Global Management, LLC, and American Express Company in the United States District Court for the Southern District of New York. On December 5, 2011, the court granted American Express’s motion to compel arbitration. On December 14, 2011, the plaintiff filed a notice of voluntary dismissal as to Trilegiant, AGLLC, and Apollo, and the case was closed by the court on the same day. Finally, on October 25, 2011, these same lawyers filed a substantially similar class action lawsuit against AGLLC, Trilegiant, Apollo Global Management, LLC, IAC/InterActiveCorp., Shoebuy.com, and Chase Bank USA, N.A. in the United States District Court for the Central District of California. On December 14, 2011, the plaintiff filed a notice of voluntary dismissal as to all of the defendants except Chase, and the case was terminated by the court on or about February 21, 2012. On October 6, 2011, the plaintiffs in the preceding class action cases (other than the class action cases that were filed in the United States District Court for the District of Connecticut on March 6, 2012 and March 25, 2012, respectively) filed a motion under 28 U.S.C. § 1407 with the Judicial Panel on Multidistrict Litigation (“JPML”) seeking coordinated pretrial proceedings of those class action cases with the case that was filed on June 17, 2010 in the United States Court for the District of Connecticut. (The plaintiffs later sought to include within the proposed consolidated action the case they filed on October 25, 2011 (discussed above)). Plaintiffs in those actions argued that the factual allegations in the cases raised common issues that made pretrial transfer appropriate; they sought transfer and consolidation of the cases to the United States District Court for the District of Connecticut. All of the defendants opposed that motion. On December 9, 2011, the JPML entered an order denying consolidation and transfer of these cases.

On June 25, 2010, a class action lawsuit was filed against Webloyalty and one of its clients in the United States District Court for the Southern District of California alleging, among other things, violations of the Electronic Fund Transfer Act and Electronic Communications Privacy Act, unjust enrichment, fraud, civil theft, negligent misrepresentation, fraud, California Consumers Legal Remedies Act violations, false advertising and California Consumer Business Practice violations. This lawsuit relates to Webloyalty’s alleged conduct occurring on and after October 1, 2008. On February 17, 2011, Webloyalty filed a motion to dismiss the amended complaint in this lawsuit. On April 12, 2011, the Court granted Webloyalty’s motion and dismissed all claims against the defendants. On May 10, 2011, plaintiff filed a notice appealing the dismissal to the United States Court of Appeals for the Ninth Circuit. Plaintiff filed its opening appeals brief with the Ninth Circuit on October 17, 2011, and defendants filed their respective answering briefs on December 23, 2011. Plaintiff filed its reply brief on January 23, 2012. No date for oral argument on plaintiff’s appeal has been set.

On August 27, 2010, another substantially similar class action lawsuit was filed against Webloyalty, one of its former clients and one of the credit card associations in the United States District Court for the District of Connecticut alleging, among other things, violations of the Electronic Fund Transfer Act, Electronic Communications Privacy Act, unjust enrichment, civil theft, negligent misrepresentation, fraud and Connecticut Unfair Trade Practices Act violations. This lawsuit relates to Webloyalty’s alleged conduct occurring on and after October 1, 2008. On December 23, 2010, Webloyalty filed a motion to dismiss this lawsuit, which had since been amended in its entirety. The court has not yet scheduled a hearing or ruled on Webloyalty’s motion.

On June 7, 2012, another class action lawsuit was filed in the U.S. District Court for the Southern District of California against Webloyalty that was factually similar to the foregoing California and Connecticut actions. The action claims that Webloyalty engaged in unlawful business practices in violation of Cal. Bus. & Prof. Code § 17200, et seq. and in violation of the Connecticut Unfair Trade

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Practices Act. Both claims are based on allegations that in connection with enrollment and billing of the plaintiff, Webloyalty charged plaintiff’s credit or debit card using information obtained through a data pass process and without obtaining directly from plaintiff his full account number, name, address, and contact information, as purportedly required under Restore Online Shoppers’ Confidence Act. On September 25, 2012, Webloyalty filed a motion to dismiss the complaint in its entirety. Webloyalty also sought judicial notice of the enrollment page and related enrollment and account documents. Plaintiff’s oppositions are due on November 26, 2012 and Webloyalty’s replies are due on December 17, 2012. A hearing on Webloyalty’s motions is scheduled for January 14, 2013.

The Company and Trilegiant are also a party to lawsuits arising out of the inquiries made by the state attorneys general.

On October 14, 2010, the Company and Trilegiant filed a declaratory relief action against the State of South Carolina, in the Court of Common Pleas of South Carolina for the County of Richland, Fifth Judicial Circuit, seeking a declaratory judgment that their marketing practices comply with South Carolina law. The Company and Trilegiant also seek a declaratory judgment that the State may not appoint private counsel to bring an action against the Company and Trilegiant on the State’s behalf. The State has filed a motion to dismiss both requests for declaratory judgment. On December 17, 2010, the State of South Carolina appointed private counsel and filed a civil action against the Company and Trilegiant, in the Court of Common Pleas of South Carolina for the County of Spartanburg, Seventh Judicial Circuit, under the South Carolina Unfair Trade Practices Act, seeking civil penalties, restitution and an injunction. On December 31, 2010, the State filed its First Amended Complaint naming the Company, Trilegiant, and certain current and former officers as defendants. Also on December 31, 2010, the State filed its Notice of Motion and Motion for a Temporary Injunction. The Company and Trilegiant are attempting to resolve the matter through settlement but no assurance is made that a settlement will be reached. The courts in both actions have yet to rule on any pending motion and have stayed litigation while the parties continue their good faith efforts to settle.

On November 24, 2010, the State of Iowa filed an action against the Company, Trilegiant, and the Company’s Chief Executive Officer, in the Iowa District Court for Polk County. This action was superseded by an action filed on March 11, 2011. The superseding action does not name the Company’s Chief Executive Officer and alleges violations of Iowa’s Buying Club Law, and seeks injunctive relief as well as monetary relief. Subsequently the case has been dismissed without prejudice on the state’s own motion. The Company is attempting to resolve the matter through settlement but no assurance is made that a settlement will be reached.

Other Contingencies

From time to time, the Company receives inquiries from federal and state agencies which may include the Federal Trade Commission, the Federal Communications Commission, the Consumer Financial Protection Bureau, state attorneys general and other state regulatory agencies, including state insurance regulators. The Company responds to these matters and requests for documents, some of which may lead to further investigations and proceedings.

Between December 2008 and February 2011, the Company and Webloyalty received inquiries from numerous state attorneys general relating to the marketing of their membership programs and their compliance with consumer protection statutes. The Company and Webloyalty have responded to the states’ request for documents and information and are in active discussions with such states regarding their investigations and the resolution of these matters. Settlement of such matters may include payment by the Company and Webloyalty to the states, restitution to consumers and injunctive relief.

In that regard, in August 2010, the Company entered into a voluntary Assurance of Discontinuance with the New York Attorney General’s Office. Pursuant to that settlement, the Company agreed to cease in New York its online marketing practices relating to the acquisition of consumers’ credit or debit card account numbers automatically from its retailer or merchant marketing partners when a consumer enrolls in one of the Company’s programs after making a purchase through one of such partners’ web sites as previously agreed to with the U.S. Senate Committee on Commerce, Science and Transportation on January 6, 2010. Additionally, the Company agreed, among other things, with the New York Attorney General’s Office to cease in New York “live check” marketing whereby a consumer enrolls in a program or service by endorsing and cashing a check. As part of such settlement, the Company paid $3.0 million in fees, costs, and penalties and approximately $1.8 million as restitution to New York consumers in addition to refund claims. As of September 13, 2010, Webloyalty also entered into a similar settlement agreement with the New York Attorney General’s Office. Pursuant to that settlement, Webloyalty agreed to pay $5.2 million in costs, fines and penalties, establish a restitution program for certain New York residents that joined a Webloyalty membership program between October 1, 2008 and January 13, 2010 and submitted a valid claim form, and implement changes to Webloyalty’s marketing of its membership programs. All costs, fines and penalties relating to the settlement were paid by Webloyalty in October 2010. Restitution to New York consumers in the amount of $2.6 million was paid in the second quarter of 2011.

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From time to time Affinion International receives inquiries from the Financial Services Authority in the United Kingdom (the “FSA”) regarding its products. Resolution of an inquiry may include insignificant changes to its business practices, monetary fines and/or restitution.

The Company believes that the amount accrued for the above litigation and contingencies matters is adequate, and the reasonably possible loss beyond the amounts accrued will not have a material effect on its unaudited condensed consolidated financial statements, taken as a whole, 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 effect on the Company’s unaudited condensed consolidated financial statements, taken as a whole.

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. As of September 30, 2012, the Company provided guarantees for surety bonds totaling approximately $12.0 million and issued letters of credit and performance bonds totaling $9.6 million.

8. 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 “2005 Plan”). The 2005 Plan authorizes the Board of Directors (the “Board”) of Affinion Holdings to grant non-qualified, non-assignable stock options and rights to purchase shares of Affinion Holdings’ common stock to directors and employees of, and consultants to, Affinion Holdings and its subsidiaries. Options granted under the 2005 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 4.9 million shares of Affinion Holdings’ common stock under the 2005 Plan over a ten year period. As discussed below, no additional grants may be made under Affinion Holdings’ 2005 Plan on or after November 7, 2007, the effective date of the 2007 Plan, as defined below.

In November 2007, Affinion Holdings adopted the 2007 Stock Award Plan (the “2007 Plan”). The 2007 Plan authorizes the Board to grant awards of non-qualified stock options, incentive 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 these awards to directors and employees of, and consultants to, Affinion Holdings and its subsidiaries. Unless otherwise determined by the Board of Directors, options granted under the 2007 Plan will 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 10.0 million shares of Affinion Holdings’ common stock under the 2007 Plan over a ten year period. As of September 30, 2012, there were 5.0 million shares available under the 2007 Plan for future grants.

In connection with the acquisition of Webloyalty in January 2011, the Company assumed the webloyalty.com, inc. Incentive Stock Option Plan (the “webloyalty.com ISO Plan”), the webloyalty.com, inc. Non-Qualified Stock Option Plan (the “webloyalty.com NQ Plan”) and the Webloyalty Holdings, Inc. 2005 Equity Award Plan (the “Webloyalty 2005 Plan”). The webloyalty.com ISO Plan, adopted by Webloyalty’s board of directors in February 1999, authorized Webloyalty’s board of directors to grant awards of incentive stock options to directors and employees of, and consultants to, Webloyalty. Unless otherwise determined by Webloyalty’s board of directors, options granted under the webloyalty.com ISO Plan were to have an exercise price no less than the fair market value of a share of the underlying common stock on the date of grant. The Webloyalty board of directors was authorized to grant shares of Webloyalty’s common stock under the webloyalty.com ISO Plan over a ten year period. During the three and nine months ended September 30, 2012, 0.1 million options to acquire shares of Affinion Holdings’ common stock were exercised at an exercise price of $0.98. As of September 30, 2012, there were no outstanding options under the webloyalty.com ISO Plan. No additional grants may be made under the webloyalty.com ISO Plan.

The webloyalty.com NQ Plan, adopted by Webloyalty’s board of directors in February 1999, as amended and restated in February 2004, authorized Webloyalty’s board of directors to grant awards of stock options to directors and employees of, and consultants to, Webloyalty. The Webloyalty board of directors was authorized to grant shares of Webloyalty’s common stock under the webloyalty.com NQ Plan over a ten year period. As of September 30, 2012, there were no outstanding options under the webloyalty.com NQ Plan. No additional grants may be made under the webloyalty.com NQ Plan.

The Webloyalty 2005 Plan, adopted by Webloyalty’s board of directors in May 2005, authorized Webloyalty’s board of directors to grant awards of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock,

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restricted stock units, stock bonuses and performance compensation awards or any combination of these awards to directors and employees of, and consultants to, Webloyalty. Unless otherwise determined by Webloyalty’s board of directors, incentive stock options granted under the Webloyalty 2005 Plan were to have an exercise price no less than the fair market value of a share of the underlying common stock on the date of grant and nonqualified stock options granted under the Webloyalty 2005 Plan were to have an exercise price no less than the par value of a share of Webloyalty’s common stock on the date of grant. The Webloyalty board of directors was authorized to grant shares of Webloyalty’s common stock under the Webloyalty 2005 Plan over a ten year period. As of September 30, 2012, after conversion of the outstanding options under the Webloyalty 2005 Plan into options to acquire shares of Affinion Holdings’ common stock, there were options to acquire 0.6 million shares of Affinion Holdings’ common stock at exercise prices ranging from $3.33 to $12.95. Substantially all of the outstanding options were vested as of September 30, 2012 and expire between May 2015 and September 2018.

For employee stock awards, the Company recognizes compensation expense, net of estimated forfeitures, over the requisite service period, which is the period during which the employee is required to provide services in exchange for the award. The Company has elected to recognize compensation cost for awards with only a service condition and have a graded vesting schedule on a straight-line basis over the requisite service period for the entire award.

Stock Options

During the three and nine months ended September 30, 2012 and 2011, there were no stock options granted to employees from the 2005 Plan. All options previously granted were granted with an exercise price equal to the estimated fair market value of a share of the underlying common stock on the date of grant. Stock options granted to employees from the 2005 Plan are comprised of three tranches with the following terms:

	Tranche A	Tranche B	Tranche C
Vesting	Ratably over 5 years*	100% 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.

During the nine months ended September 30, 2012, 0.5 million stock options were granted to employees from the 2007 Plan. There were no stock options granted to employees during the three months ended September 30, 2012. During the three and nine months ended September 30, 2011, 0.3 million and 2.8 million stock options, respectively, were granted to employees from the 2007 Plan. The options granted to employees during the nine months ended September 30, 2012 were granted with an exercise price of $8.16, equal to the estimated fair market value of a share of the underlying common stock on the date of grant. The options granted to employees during the three and nine months ended September 30, 2011 were granted with an exercise price of $9.16, equal to the estimated fair market value of a share of the underlying common stock on the date of grant.

The stock options granted to employees from the 2007 Plan have the following terms:

Vesting period	Ratably over 4 years
Option term	10 years

During the three and nine months ended September 30, 2012, there were no stock options granted to members of the Board of Directors. During the nine months ended September 30, 2011, there were 0.1 million stock options granted to members of the Board of Directors from the 2007 Plan with an exercise price of $9.16, equal to the estimated fair market value of a share of the underlying common stock on the date of grant. During the three months ended September 30, 2011, there were no stock options granted to members of the Board of Directors. Generally, options granted to members of the Board of Directors fully vest on the date of grant and have an option term of 10 years.

The fair value of each option award from the 2007 Plan during the nine months ended September 30, 2011 and 2012 was 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, and is based on the average of the requisite service period and the contractual term of the option.

	2012			2011
Expected volatility		50.0	%		44.0	%
Expected life (in years)		5.89-6.25			4.92-6.08
Risk-free interest rate		1.15	%		2.03-2.37	%
Dividend yield		—	%		—	%

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A summary of option activity for the nine months ended September 30, 2012 is presented below (number of options in thousands):

	2005 Plan – Grants to Employees- Tranche A			2005 Plan – Grants to Employees- Tranche B			2005 Plan – Grants to Employees- Tranche C			Grants to Board of Directors		2007 Plan – Grants to Employees
Outstanding options at January 1, 2012		1,558			767			767			423		3,850
Granted		—			—			—			—		495
Exercised		—			—			—			—		—
Forfeited or expired		(138	)		(78	)		(78	)		—		(730	)
Outstanding options at September 30, 2012		1,420			689			689			423		3,615
Vested or expected to vest at September 30, 2012		1,420			689			689			423		3,615
Exercisable options at September 30, 2012		1,420			—			—			423		1,459
Weighted average remaining contractual term (in years)		3.2			3.2			3.2			5.1		8.0
Weighted average grant date fair value per option granted in 2012	$	—		$	—		$	—		$	—	$	3.97
Weighted average exercise price of exercisable options at September 30, 2012	$	1.59		$	—		$	—		$	5.29	$	12.17
Weighted average exercise price of outstanding options at September 30, 2012	$	1.59		$	1.59		$	1.59		$	5.29	$	10.67

Based on the estimated fair values of options granted, stock-based compensation expense for the three and nine months ended September 30, 2012 totaled $1.4 million and $3.8 million, respectively. Based on the estimated fair values of options granted, stock-based compensation expense for the three and nine months ended September 30, 2011 totaled $0.8 million and $4.3 million, respectively. In addition, in connection with dividends paid by Affinion Holdings to its common stock holders during the three months ended March 31, 2011, Affinion Holdings made payments to holders of options to purchase shares of Affinion Holdings’ common stock of $13.7 million, which has been recognized by the Company as compensation expense during the nine months ended September 30, 2011. As of September 30, 2012, there was $8.5 million of unrecognized compensation cost related to unvested stock options, which will be recognized over a weighted average period of approximately 1.2 years.

Restricted Stock Units

On January 13, 2010, the Board’s Compensation Committee approved the Amended and Restated 2010 Retention Award Program (the “2010 RAP”), which provides for awards of restricted stock units (“RSUs”) under the 2007 Stock Award Plan and granted approximately 942,000 RSUs to key employees. The RSUs initially awarded under the 2010 RAP had an aggregate cash election dollar value of approximately $9.9 million and were subject to time-based vesting conditions that ran through approximately the first quarter of 2012. Generally, the number of RSUs awarded to each participant was equal to the quotient of (i) the aggregate cash election dollar value of RSUs awarded to such participant (the “Dollar Award Value”) multiplied by 1.2, divided by (ii) $12.63 (i.e. the value per share of Affinion Holdings’ common stock as of December 31, 2009). Upon vesting of the RSUs, participants could settle the RSUs in shares of common stock or elect to receive cash in lieu of shares of common stock upon any of the four vesting dates for such RSUs in an amount equal to one-fourth of the Dollar Award Value. During 2010 and 2011, the Board issued additional grants totaling 159,000 RSUs to key employees under substantially the same terms. Due to the ability of the participants to settle their awards in cash, the Company accounted for these RSUs as a liability award.

On March 30, 2012, the Board’s Compensation Committee approved the 2012 Retention Award Program (the “2012 RAP”), which provides for awards of RSUs under the 2007 Stock Award Plan. During the three and nine months ended September 30, 2012, the Company granted approximately 0.1 million and 1.3 million RSUs, respectively, to key employees. The RSUs awarded under the 2012 RAP have an aggregate cash election dollar value of approximately $10.3 million and are subject to time-based vesting conditions that run through approximately the first quarter of 2014. Generally, the number of RSUs awarded to each participant is equal to the quotient of (i) the Dollar Award Value, divided by (ii) $8.16, the value per share of Affinion Holdings’ common stock as of the grant date. Upon vesting of the RSUs, participants are able to settle the RSUs in shares of common stock or elect to receive cash in lieu of shares of common stock upon any of the three vesting dates for such RSUs. Due to the ability of the participants to settle their awards in cash, the Company accounts for these RSUs as a liability award.

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A summary of restricted stock unit activity for the nine months ended September 30, 2012 is presented below (number of restricted stock units in thousands):

	Number of Restricted Stock Units			Weighted Average Grant Date Fair Value
Outstanding restricted unvested awards at January 1, 2012		292		$	11.82
Granted		1,265			8.16
Vested		(199	)		12.20
Forfeited		(129	)		10.03
Outstanding restricted unvested awards at September 30, 2012		1,229		$	8.18
Weighted average remaining contractual term (in years)		0.9

Based on the estimated fair value of the restricted stock units granted, stock-based compensation expense for the three and nine months ended September 30, 2012 was $1.2 million and $5.0 million, respectively. Based on the estimated fair value of the restricted stock units granted, stock-based compensation expense for the three and nine months ended September 30, 2011 was $1.4 million and $4.1 million, respectively. In addition, in connection with dividends paid by Affinion Holdings to its common stock holders during the three months ended March 31, 2011, Affinion Holdings authorized payments to holders of unvested restricted stock units to be paid as the restricted stock units vest, resulting in the recognition of additional stock-based compensation expense of $2.1 million during the nine months ended September 30, 2011. As of September 30, 2012, there was $7.9 million of unrecognized compensation cost related to the remaining vesting period of restricted stock units granted under the 2007 Plan. This cost will be recorded in future periods as stock-based compensation expense over a weighted average period of approximately 0.7 years.

9. 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 pending 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 Holdings Limited (“Affinion International”) and (3) constitute a breach or violation of its compliance with law representations and warranties and (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.

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.

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Prior to 2009, Cendant (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 re-named 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. Wyndham held a portion of the preferred stock issued in connection with the Apollo Transactions until the preferred stock was redeemed in 2011 and a portion of the warrants issued in connection with the Apollo Transactions, until the warrants expired in 2011, while Realogy was subsequently acquired by an affiliate of Apollo. Therefore, for the three and nine months ended September 30, 2012, only Realogy remains a related party.

The Company 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. There was no revenue earned for such services for the three and nine months ended September 30, 2012 and 2011. The Company incurred expenses of $0.3 million and $0.9 million, respectively, for the three and nine months ended September 30, 2011, which is included in operating expenses in the accompanying unaudited condensed consolidated statement of comprehensive income. There were no expenses incurred with a related party during the three and nine months ended September 30, 2012.

Certain 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 expired in December 2010, subject to automatic one year renewal periods, 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 terminated an agreement prior to December 31, 2010, the Cendant subsidiary was 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. During 2010, a supplemental agreement was entered into which had the effect of extending the remaining marketing agreements to December 31, 2012. The expense incurred for such services was $0.6 million and $1.6 million, respectively, for the three and nine months ended September 30, 2011, which is included in marketing and commissions in the accompanying unaudited condensed consolidated statement of comprehensive income. There were no expenses incurred with a related party during the three and nine months ended September 30, 2012.

Under the loyalty and rewards program administration agreements, the Company continues to administer loyalty programs for certain Cendant subsidiaries. The agreements provided 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 initial loyalty and reward program agreements expired on December 31, 2009. A termination notice has been received related to one of the programs and administration of that program ceased during 2010. The contract to administer the other program was renewed for a three year term. The total amounts included in net revenues in the accompanying unaudited condensed consolidated statement of comprehensive income for such services was $0.5 million and $1.5 million, respectively, for the three and nine months ended September 30, 2011. There was no revenue recognized from a related party during the three and nine months ended September 30, 2012. 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 Affinion Loyalty Group, Inc. (“ALG”). Pursuant to the loyalty agreements, ALG 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 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 ALG (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 ALG was using it to provide the services under the loyalty and reward agreements prior to the release of the escrowed materials to Cendant.

21

The Company earns referral fees from Wyndham for hotel stays and travel packages. The amount included in net revenues in the accompanying unaudited condensed consolidated statement of comprehensive income for such services was $0.2 million and $0.8 million for the three and nine months ended September 30, 2011. There was no revenue recognized from a related party during the three and nine months ended September 30, 2012.

Other 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 allows 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 could be terminated earlier by mutual consent. The Company was required to pay Apollo an annual fee of $2.0 million for these services commencing in 2006. On January 14, 2011, the Company and Apollo entered into an Amended and Restated Consulting Agreement (“Consulting Agreement”), pursuant to which Apollo and its affiliates will continue to provide Affinion with certain advisory services on substantially the same terms as the previous consulting agreement, except that the annual fee paid by Affinion increased to $2.6 million from $2.0 million, commencing January 1, 2012, with an additional one-time fee of $0.6 million which was paid in January 2011 in respect of calendar year 2011. The amounts expensed related to this consulting agreement were $0.7 million for each of the three months ended September 30, 2012 and 2011 and $2.0 million for each of the nine months ended September 30, 2012 and 2011, which are included in general and administrative expenses in the accompanying unaudited condensed consolidated statement of comprehensive income. 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 were $0.2 million and $0.3 million, respectively, for the three months ended September 30, 2012 and 2011 and $0.6 million and $0.9 million, respectively, for the nine months ended September 30, 2012 and 2011, which is included in cost of revenues in the accompanying unaudited condensed consolidated statements of comprehensive income.

During each of the three months ended September 30, 2012 and 2011, the Company purchased $1.2 million of gift cards and during the nine months ended September 30, 2012 and 2011, the Company purchased $3.2 million and $3.0 million, respectively, of gift cards from AMC Entertainment, Inc., a company owned by an affiliate of Apollo. The cost of the gift cards, which were utilized primarily for loyalty program fulfillment, is included as a contra-revenue in the consolidated statements of comprehensive income.

On January 28, 2010, the Company acquired an ownership interest of approximately 5%, subsequently reduced to 2.7%, in Alclear Holdings, LLC (“Alclear”) for $1.0 million. A family member of one of the Company’s directors controls and partially funded Alclear and serves as its chief executive officer. The Company provides support services to Alclear and recognized revenue of $0.3 million for each of the three months ended September 30, 2012 and 2011 and recognized revenue of $0.8 million and $0.9 million, respectively, for the nine months ended September 30, 2012 and 2011.

On January 14, 2011, in connection with the acquisition of Webloyalty, Mr. Richard J. Fernandes received warrants to purchases shares of Affinion Holdings’ common stock that were exercisable, in whole or in part, at any time between January 14, 2011 and May 12, 2012. The warrants expired on May 12, 2012 without being exercised.

On January 18, 2011, the Company declared and paid a dividend of approximately $123.4 million to Affinion Holdings. Affinion Holdings used cash on hand and the proceeds of the cash dividend to (i) redeem a portion of its outstanding preferred stock for approximately $41.2 million, (ii) pay a cash dividend to its stockholders (including holders of restricted stock units) of approximately $115.4 million, (iii) pay a one-time cash bonus to its option holders of approximately $9.6 million and (iv) pay additional amounts for transaction fees and expenses.

On February 11, 2011, the Company obtained incremental term loans in an aggregate principal amount of $250.0 million under the Company’s amended and restated senior secured credit facility. The Company used the proceeds of the incremental term loans (a) for working capital and other corporate purposes, (b) to fund future strategic initiatives and (c) to pay a dividend to Affinion

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Holdings of $199.8 million, to be used (i) to pay a dividend to Affinion Holdings’ shareholders (including holders of restricted stock units) and pay a one-time cash bonus to holders of certain options totaling $133.4 million, (ii) to fund the redemption of all of Affinion Holdings’ preferred stock for approximately $5.4 million, (iii) for general corporate purposes, (iv) for near-term interest payments of Affinion Holdings and (v) for certain other purposes.

On April 9, 2012, the Company declared, and on April 10, 2012, the Company paid a dividend of $37.0 million to Affinion Holdings, utilizing available cash on hand. Affinion Holdings expects to utilize the proceeds of the dividend to make future interest payments on its senior notes.

10. FINANCIAL INSTRUMENTS, DERIVATIVES AND FAIR VALUE MEASURES

Interest Rate Swaps

In January 2008, the Company entered into an interest rate swap effective February 21, 2008. This swap converted a notional amount of the Company’s floating rate debt into a fixed rate obligation. The notional amount of the swap for the period from February 23, 2010 to February 22, 2011, the swap termination date, was $598.6 million.

In January 2009, the Company entered into an interest rate swap effective February 21, 2011. The swap had a notional amount of $500.0 million and terminated on October 17, 2012. Under the swap, the Company had agreed to pay a fixed rate of interest of 2.985%, payable on a quarterly basis with the first interest payment due on May 21, 2011, in exchange for receiving floating payments based on a three-month LIBOR on the notional amount for each applicable period.

All outstanding interest rate swaps were recorded at fair value. The changes in the fair value of the swaps, which were not designated as hedging instruments, are included in interest expense in the accompanying unaudited condensed consolidated statements of comprehensive income. For the three and nine months ended September 30, 2012, the Company recorded interest expense, representing realized and unrealized gains and losses, of $0.2 million and $1.2 million, respectively, related to the interest rate swaps. For the three and nine months ended September 30, 2011, the Company recorded interest income (expense), representing realized and unrealized gains and losses, of $0.5 million and $(2.2) million, respectively, related to the interest rate swaps.

As a matter of policy, the Company does not use derivatives for trading or speculative purposes.

The following table provides information about the Company’s 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 the Company’s long-term debt as of September 30, 2012:

	2012			2013			2014			2015			2016			2017 and Thereafter			Total		Fair Value At September 30, 2012
							(in millions)
Fixed rate debt	$	0.1		$	0.5		$	0.4		$	355.8		$	0.1		$	475.0		$	831.9	$	685.7
Average interest rate		9.43	%		9.43	%		9.43	%		9.43	%		7.88	%		7.88	%
Variable rate debt	$	2.8		$	11.2		$	11.3		$	11.2		$	1,062.2					$	1,098.7	$	1,010.8
Average interest rate(a)		5.00	%		5.00	%		5.00	%		5.00	%		5.00	%
Variable to fixed interest rate swap(b)																					$	2.1
Average pay rate		2.99	%
Average receive rate		0.32	%

(a) Average interest rate is based on rates in effect at September 30, 2012.

(b) The fair value of the interest rate swaps is included in accounts payables and accrued expenses at September 30, 2012. The fair value has been determined after consideration of interest rate yield curves and the creditworthiness of the parties to the interest rate swaps.

Foreign Currency Forward Contracts

In August 2010, the Company entered into a foreign currency forward contract under which the Company agreed to sell GBP 3.5 million and receive $5.5 million thirty days after the contract date. In September 2010, and in each subsequent month, upon settlement, the Company entered into a new thirty day forward contract. In April 2011, the Company entered into a foreign currency forward contract under which the Company agreed to sell GBP 4.3 million and receive $7.2 million thirty days after the contract date. In May 2011, and in each subsequent month, upon settlement, the Company entered into a new thirty day forward contract. In May

23

2012, the Company entered into a foreign currency forward contract under which the Company agreed to sell EUR 7.7 million and receive $9.5 million thirty days after the contract date. In June 2012, and in each subsequent month, upon settlement, the Company entered into a new thirty day forward contract. During the three and nine months ended September 30, 2012, the Company recognized a realized loss on the forward contracts of $0.8 million and $0.9 million, respectively, and during the three and nine months ended September 30, 2011, the Company recognized a realized gain on the forward contracts of $0.3 million and $0.2 million, respectively. As of September 30, 2012, the Company had a de minimis unrealized loss on the foreign currency forward contracts.

Credit Risk and Exposure

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of receivables, profit-sharing receivables from insurance carriers, prepaid commissions and interest rate swaps. The Company manages such risk by evaluating the financial position and creditworthiness of such counterparties. As of September 30, 2012 and December 31, 2011, approximately $74.9 million and $62.8 million, respectively, of the profit-sharing receivable was due from one insurance carrier. Receivables and profit-sharing receivables from insurance carriers are from various marketing, insurance and business partners and the Company maintains an allowance for losses, based upon expected collectability. Commission advances are periodically evaluated as to recovery.

Fair Value

The Company determines the fair value of financial instruments as follows:

a. Cash and Cash Equivalents, Restricted Cash, Receivables, Profit-Sharing Receivables from Insurance Carriers and Accounts Payable—Carrying amounts approximate fair value at September 30, 2012 and December 31, 2011 due to the short-term maturities of these assets and liabilities.

b. Long-Term Debt—The Company’s estimated fair value of its long-term fixed-rate debt at September 30, 2012 and December 31, 2011 is based upon available information for debt having similar terms and risks. The fair value of the publicly-traded debt is the published market price per unit multiplied by the number of units held or issued without consideration of transaction costs. The fair value of the non-publicly-traded debt, substantially all of which is variable-rate debt, is based on third party indicative valuations and estimates prepared by the Company after consideration of the creditworthiness of the counterparties.

c. Interest Rate Swap—At September 30, 2012 and December 31, 2011, the Company’s estimated fair value of its interest rate swap is based upon available market information. The fair value of the interest rate swap is based on significant other observable inputs, adjusted for contract restrictions and other terms specific to the interest rate swap. The Company primarily uses the income approach, which uses valuation techniques to convert future amounts to a single present amount. The fair value has been determined after consideration of interest rate yield curves and the creditworthiness of the parties to the interest rate swap. The counterparty to the interest rate swap is a major financial institution. The Company does not expect any losses from non-performance by the counterparty.

d. Foreign Currency Forward Contracts—At September 30, 2012 and December 31, 2011, the Company’s estimated fair value of its foreign currency forward contracts is based upon available market information. The fair value of the foreign currency forward contracts is based on significant other observable inputs, adjusted for contract restrictions and other terms specific to the foreign currency forward contracts. The fair value has been determined after consideration of foreign currency exchange rates and the creditworthiness of the parties to the foreign currency forward contracts. The counterparty to the foreign currency forward contracts is a major financial institution. The Company does not expect any losses from non-performance by the counterparty.

Current accounting guidance establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, giving the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. Level 1 inputs to a fair value measurement are quoted market prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.

24

The fair values of certain financial instruments as of September 30, 2012, are shown in the table below:

	Fair Value Measurements at September 30, 2012
	Fair Value at September 30, 2012			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	(in millions)
Interest rate swap (included in accounts payable and accrued expenses)	$	(2.1	)		—	$	(2.1	)		—

The following table summarizes assets measured at fair value using Level 3 inputs on a nonrecurring basis subsequent to initial recognition:

	Fair Value Measurements at September 30, 2012
	Fair Value at September 30, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Impairment Losses Nine Months Ended September 30, 2012
	(in millions)
Goodwill		—		—		—		—	$	(31.5	)
Intangible assets		—		—		—		—		(8.2	)
Equity investment	$	0.7		—		—	$	0.7		(1.0	)

The fair values of certain financial instruments as of December 31, 2011 are shown in the table below:

	Fair Value Measurements at December 31, 2011
	Fair Value at December 31, 2011			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	(in millions)
Interest rate swap (included in accounts payable and accrued expenses)	$	(10.4	)		—	$	(10.4	)		—

11. SEGMENT INFORMATION

Management evaluates the operating results of each of its reportable segments based upon several factors, of which the primary factors are revenue and “Segment EBITDA,” which the Company defines 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 reportable 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. General corporate expenses have been excluded from the presentation of the Segment EBITDA for the Company’s four reportable 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 reportable 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, 2011.

Net Revenues

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
	(in millions)
Affinion North America
Membership products	$	167.9		$	197.3		$	545.3		$	575.5
Insurance and package products		90.0			87.2			251.2			260.1
Loyalty products		37.2			34.8			113.0			102.3
Eliminations		(0.4	)		(0.9	)		(1.7	)		(2.6	)
Total North America		294.7			318.4			907.8			935.3
Affinion International
International products		75.9			76.3			222.2			213.4
	$	370.6		$	394.7		$	1,130.0		$	1,148.7

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Segment EBITDA

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
	(in millions)
Affinion North America
Membership products	$	33.5		$	24.7		$	110.4		$	91.0
Insurance and package products		31.5			27.9			82.0			82.1
Loyalty products		13.5			10.9			38.1			32.0
Total North America		78.5			63.5			230.5			205.1
Affinion International
International products		9.3			9.6			20.5			23.3
Total products		87.8			73.1			251.0			228.4
Corporate		(2.9	)		(5.6	)		(11.8	)		(26.6	)
Impairment of goodwill and other long-lived assets		—			—			(39.7	)		—
	$	84.9		$	67.5		$	199.5		$	201.8

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
	(in millions)
Segment EBITDA	$	84.9		$	67.5		$	199.5		$	201.8
Depreciation and amortization		(48.5	)		(60.4	)		(147.6	)		(183.3	)
Income from operations	$	36.4		$	7.1		$	51.9		$	18.5

12. GUARANTOR/NON-GUARANTOR SUPPLEMENTAL FINANCIAL INFORMATION

The following supplemental condensed consolidating financial information presents, in separate columns, the condensed consolidating balance sheets as of September 30, 2012 and December 31, 2011, and the related condensed consolidating statements of comprehensive income for the three and nine month periods ended September 30, 2012 and 2011 and the related condensed consolidating statements of cash flows for the nine month periods ended September 30, 2012 and 2011 for (i) the Company (Affinion Group, Inc.) on a parent-only basis, with its investment in subsidiaries recorded under the equity method, (ii) the Guarantor Subsidiaries on a combined basis, (iii) the Non-Guarantor Subsidiaries on a combined basis and (iv) the Company on a consolidated basis. 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.

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UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET

AS OF SEPTEMBER 30, 2012

(In millions)

	Affinion Group, Inc.			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	26.6		$	4.4	$	25.5	$	—		$	56.5
Restricted cash		—			27.9		7.7		—			35.6
Receivables, net		2.7			104.9		39.9		—			147.5
Receivables from related parties		—			0.1		—		—			0.1
Profit-sharing receivables from insurance carriers		—			88.2		0.7		—			88.9
Prepaid commissions		—			39.1		4.4		—			43.5
Income taxes receivable		—			0.9		3.0		—			3.9
Intercompany interest receivable		0.5			—		—		(0.5	)		—
Other current assets		7.9			40.2		35.1		—			83.2
Total current assets		37.7			305.7		116.3		(0.5	)		459.2
Property and equipment, net		9.1			98.1		27.1		—			134.3
Contract rights and list fees, net		—			23.0		—		—			23.0
Goodwill		—			522.0		75.9		—			597.9
Other intangibles, net		—			190.1		44.4		—			234.5
Investment in subsidiaries		2,192.5			77.1		—		(2,269.6	)		—
Intercompany loan receivables		49.3			21.4		—		(70.7	)		—
Intercompany receivables		—			1,366.2		—		(1,366.2	)		—
Other non-current assets		30.2			25.5		6.4		—			62.1
Total assets	$	2,318.8		$	2,629.1	$	270.1	$	(3,707.0	)	$	1,511.0
Liabilities and Deficit
Current liabilities:
Current portion of long-term debt	$	11.2		$	0.6	$	—	$	—		$	11.8
Accounts payable and accrued expenses		113.5			198.1		96.0		—			407.6
Payables to related parties		40.3			0.1		—		—			40.4
Intercompany interest payable		—			—		0.5		(0.5	)		—
Deferred revenue		—			99.1		25.0		—			124.1
Income taxes payable		0.8			0.2		3.2		—			4.2
Total current liabilities		165.8			298.1		124.7		(0.5	)		588.1
Long-term debt		1,913.7			0.8		—		—			1,914.5
Deferred income taxes		—			62.9		8.0		—			70.9
Deferred revenue		—			6.7		8.5		—			15.2
Intercompany loan payable		—			—		70.7		(70.7	)		—
Intercompany payables		1,354.5			—		11.7		(1,366.2	)		—
Other long-term liabilities		2.7			34.5		1.5		—			38.7
Total liabilities		3,436.7			403.0		225.1		(1,437.4	)		2,627.4
Affinion Group, Inc. deficit		(1,117.9	)		2,226.1		43.5		(2,269.6	)		(1,117.9	)
Non-controlling interest in subsidiary		—			—		1.5		—			1.5
Total deficit		(1,117.9	)		2,226.1		45.0		(2,269.6	)		(1,116.4	)
Total liabilities and deficit	$	2,318.8		$	2,629.1	$	270.1	$	(3,707.0	)	$	1,511.0

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UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 2011

(In millions)

	Affinion Group, Inc.			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	57.2		$	2.8	$	26.3	$	—		$	86.3
Restricted cash		—			22.6		7.8		—			30.4
Receivables, net		1.6			87.6		37.6		—			126.8
Receivables from related parties		—			0.6		0.2		—			0.8
Profit-sharing receivables from insurance carriers		—			73.3		0.7		—			74.0
Prepaid commissions		—			47.7		4.9		—			52.6
Income taxes receivable		—			0.7		1.4		—			2.1
Intercompany loans receivable		16.0			—		—		(16.0	)		—
Other current assets		4.7			33.7		29.7		—			68.1
Total current assets		79.5			269.0		108.6		(16.0	)		441.1
Property and equipment, net		9.1			102.0		23.6		—			134.7
Contract rights and list fees, net		—			22.5		—		—			22.5
Goodwill		—			553.5		74.0		—			627.5
Other intangibles, net		—			295.1		56.1		—			351.2
Investment in subsidiaries		2,127.0			77.1		—		(2,204.1	)		—
Intercompany loan receivable		31.4			—		—		(31.4	)		—
Intercompany receivables		—			1,222.2		—		(1,222.2	)		—
Other non-current assets		35.4			28.2		10.4		—			74.0
Total assets	$	2,282.4		$	2,569.6	$	272.7	$	(3,473.7	)	$	1,651.0
Liabilities and Deficit
Current liabilities:
Current portion of long-term debt	$	11.2		$	0.7	$	—	$	—		$	11.9
Accounts payable and accrued expenses		99.0			213.9		85.2		—			398.1
Payables to related parties		34.7			0.4		0.2		—			35.3
Intercompany loans payable		—			—		16.0		(16.0	)		—
Deferred revenue		—			123.2		29.3		—			152.5
Income taxes payable		1.0			0.7		1.7		—			3.4
Total current liabilities		145.9			338.9		132.4		(16.0	)		601.2
Long-term debt		1,921.4			1.1		—		—			1,922.5
Deferred income taxes		—			54.8		12.7		—			67.5
Deferred revenue		—			9.6		8.2		—			17.8
Intercompany loan payable		—			—		31.4		(31.4	)		—
Intercompany payables		1,210.7			—		11.5		(1,222.2	)		—
Other long-term liabilities		17.1			34.7		1.9		—			53.7
Total liabilities		3,295.1			439.1		198.1		(1,269.6	)		2,662.7
Affinion Group, Inc. deficit		(1,012.7	)		2,130.5		73.6		(2,204.1	)		(1,012.7	)
Non-controlling interest in subsidiary		—			—		1.0		—			1.0
Total deficit		(1,012.7	)		2,130.5		74.6		(2,204.1	)		(1,011.7	)
Total liabilities and deficit	$	2,282.4		$	2,569.6	$	272.7	$	(3,473.7	)	$	1,651.0

28

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2012

(In millions)

	Affinion Group, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net revenues	$	—		$	294.7		$	75.9		$	—		$	370.6
Expenses:
Cost of revenues, exclusive of depreciation and amortization shown separately below:
Marketing and commissions		—			116.3			26.2			—			142.5
Operating costs		—			77.5			33.3			—			110.8
General and administrative		7.8			15.8			9.7			—			33.3
Facility exit costs		—			(0.9	)		—			—			(0.9	)
Depreciation and amortization		0.4			38.3			9.8			—			48.5
Total expenses		8.2			247.0			79.0			—			334.2
Loss from operations		(8.2	)		47.7			(3.1	)		—			36.4
Interest income		—			0.2			—			—			0.2
Interest expense		(36.5	)		(0.4	)		(0.1	)		—			(37.0	)
Interest income (expense)—intercompany		0.4			—			(0.4	)		—			—
Other income, net		—			—			0.1			—			0.1
Loss before income taxes and non-controlling interest		(44.3	)		47.5			(3.5	)		—			(0.3	)
Income tax expense		(0.4	)		(1.1	)		(0.4	)		—			(1.9	)
		(44.7	)		46.4			(3.9	)		—			(2.2	)
Equity in income of subsidiaries		42.4			—			—			(42.4	)		—
Net loss		(2.3	)		46.4			(3.9	)		(42.4	)		(2.2	)
Less: net income attributable to non-controlling interest		—			—			(0.1	)		—			(0.1	)
Net loss attributable to Affinion Group, Inc.	$	(2.3	)	$	46.4		$	(4.0	)	$	(42.4	)	$	(2.3	)

29

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012

(In millions)

	Affinion Group, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net revenues	$	—		$	907.8		$	222.2		$	—		$	1,130.0
Expenses:
Cost of revenues, exclusive of depreciation and amortization shown separately below:
Marketing and commissions		—			363.2			84.9			—			448.1
Operating costs		—			246.2			98.0			—			344.2
General and administrative		23.1			49.9			26.4			—			99.4
Impairment of goodwill and other long-lived assets		—			39.7			—			—			39.7
Facility exit costs		—			(0.9	)		—			—			(0.9	)
Depreciation and amortization		0.9			118.8			27.9			—			147.6
Total expenses		24.0			816.9			237.2			—			1,078.1
Income (loss) from operations		(24.0	)		90.9			(15.0	)		—			51.9
Interest income		—			0.6			0.1			—			0.7
Interest expense		(109.7	)		(1.1	)		(0.7	)		—			(111.5	)
Interest income (expense)—intercompany		0.9			—			(0.9	)		—			—
Other income (expense), net		—			0.2			(0.4	)		—			(0.2	)
Income (loss) before income taxes and non-controlling interest		(132.8	)		90.6			(16.9	)		—			(59.1	)
Income tax expense		(1.3	)		(6.4	)		(1.2	)		—			(8.9	)
		(134.1	)		84.2			(18.1	)		—			(68.0	)
Equity in income of subsidiaries		65.6			—			—			(65.6	)		—
Net income (loss)		(68.5	)		84.2			(18.1	)		(65.6	)		(68.0	)
Less: net income attributable to non-controlling interest		—			—			(0.5	)		—			(0.5	)
Net income (loss) attributable to Affinion Group, Inc.	$	(68.5	)	$	84.2		$	(18.6	)	$	(65.6	)	$	(68.5	)

30

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2011

(In millions)

	Affinion Group, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net revenues	$	—		$	318.4		$	76.3		$	—		$	394.7
Expenses:
Cost of revenues, exclusive of depreciation and amortization shown separately below:
Marketing and commissions		—			139.6			29.1			—			168.7
Operating costs		—			83.0			33.0			—			116.0
General and administrative		11.4			21.1			7.1			—			39.6
Facility exit costs		—			2.9			—			—			2.9
Depreciation and amortization		0.3			49.7			10.4			—			60.4
Total expenses		11.7			296.3			79.6			—			387.6
Income (loss) from operations		(11.7	)		22.1			(3.3	)		—			7.1
Interest income		—			0.1			—			—			0.1
Interest expense		(35.8	)		(0.3	)		(0.4	)		—			(36.5	)
Interest income (expense)—intercompany		0.3			—			(0.3	)		—			—
Other income, net		—			0.1			—			—			0.1
Income (loss) before income taxes and non-controlling interest		(47.2	)		22.0			(4.0	)		—			(29.2	)
Income tax benefit (expense)		(0.3	)		(2.1	)		(1.5	)		—			(3.9	)
		(47.5	)		19.9			(5.5	)		—			(33.1	)
Equity in income of subsidiaries		14.2			—			—			(14.2	)		—
Net income (loss)		(33.3	)		19.9			(5.5	)		(14.2	)		(33.1	)
Less: net income attributable to non-controlling interest		—			—			(0.2	)		—			(0.2	)
Net income (loss) attributable to Affinion Group, Inc.	$	(33.3	)	$	19.9		$	(5.7	)	$	(14.2	)	$	(33.3	)

31

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011

(In millions)

	Affinion Group, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net revenues	$	—		$	935.3		$	213.4		$	—		$	1,148.7
Expenses:
Cost of revenues, exclusive of depreciation and amortization shown separately below:
Marketing and commissions		—			394.1			78.4			—			472.5
Operating costs		—			238.6			94.6			—			333.2
General and administrative		41.5			71.0			24.5			—			137.0
Facility exit costs		—			4.2			—			—			4.2
Depreciation and amortization		0.9			152.4			30.0			—			183.3
Total expenses		42.4			860.3			227.5			—			1,130.2
Income (loss) from operations		(42.4	)		75.0			(14.1	)		—			18.5
Interest income		0.3			0.4			0.2			—			0.9
Interest expense		(109.2	)		(0.6	)		(1.4	)		—			(111.2	)
Interest income (expense)—intercompany		0.9			—			(0.9	)		—			—
Income (loss) before income taxes and non-controlling interest		(150.4	)		74.8			(16.2	)		—			(91.8	)
Income tax benefit (expense)		(1.6	)		(6.8	)		(0.2	)		—			(8.6	)
		(152.0	)		68.0			(16.4	)		—			(100.4	)
Equity in income of subsidiaries		50.9			—			—			(50.9	)		—
Net income (loss)		(101.1	)		68.0			(16.4	)		(50.9	)		(100.4	)
Less: net income attributable to non-controlling interest		—			—			(0.7	)		—			(0.7	)
Net income (loss) attributable to Affinion Group, Inc.	$	(101.1	)	$	68.0		$	(17.1	)	$	(50.9	)	$	(101.1	)

32

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012

(In millions)

	Affinion Group, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating Activities
Net loss	$	(68.5	)	$	84.2		$	(18.1	)	$	(65.6	)	$	(68.0	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		0.9			118.8			27.9			—			147.6
Amortization of debt discount and financing costs		6.3			—			—			—			6.3
Unrealized loss on interest rate swap		1.2			—			—			—			1.2
Impairment of goodwill and other long-lived assets		—			39.7			—			—			39.7
Impairment of equity investment		—			—			1.0			—			1.0
Adjustment to liability for additional consideration based on earn-out		(14.6	)		—			—			—			(14.6	)
Facility exit costs		—			(0.9	)		—			—			(0.9	)
Share-based compensation		8.8			—			—			—			8.8
Equity in income (loss) of subsidiaries		(65.6	)		—			—			65.6			—
Deferred income taxes		0.3			5.7			(2.1	)		—			3.9
Net change in assets and liabilities:											—
Restricted cash		—			(5.3	)		0.1			—			(5.2	)
Receivables		(1.0	)		(17.3	)		(1.3	)		—			(19.6	)
Receivables from related parties		(0.4	)		0.5			0.6			—			0.7
Profit-sharing receivables from insurance carriers		—			(15.0	)		0.1			—			(14.9	)
Prepaid commissions		—			8.7			0.7			—			9.4
Other current assets		(3.2	)		(6.6	)		(4.4	)		—			(14.2	)
Contract rights and list fees		—			(0.7	)		—			—			(0.7	)
Other non-current assets		(0.7	)		5.1			0.3			—			4.7
Accounts payable and accrued expenses		13.6			(13.6	)		6.3			—			6.3
Payables to related parties		(2.7	)		(0.8	)		(0.1	)		—			(3.6	)
Deferred revenue		—			(26.9	)		(5.6	)		—			(32.5	)
Income taxes receivable and payable		(0.3	)		(0.6	)		(0.2	)		—			(1.1	)
Other long-term liabilities		0.3			0.6			(0.3	)		—			0.6
Other, net		(0.3	)		(0.3	)		0.5			—			(0.1	)
Net cash provided by (used in) operating activities		(125.9	)		175.3			5.4			—			54.8
Investing Activities
Capital expenditures		(1.1	)		(20.2	)		(16.9	)		—			(38.2	)
Restricted cash		—			—			0.2			—			0.2
Acquisition-related payment, net of cash acquired		—			—			(1.2	)		—			(1.2	)
Net cash used in investing activities		(1.1	)		(20.2	)		(17.9	)		—			(39.2	)
Financing Activities
Principal payments on borrowings		(8.4	)		(0.4	)		—			—			(8.8	)
Return of capital to parent company		(37.0	)		—			—			—			(37.0	)
Intercompany loan		(1.5	)		(9.6	)		11.1			—			—
Intercompany receivables and payables		143.3			(143.5	)		0.2			—			—
Net cash provided by (used in) financing activities		96.4			(153.5	)		11.3			—			(45.8	)
Effect of changes in exchange rates on cash and cash equivalents		—			—			0.4			—			0.4
Net increase (decrease) in cash and cash equivalents		(30.6	)		1.6			(0.8	)		—			(29.8	)
Cash and cash equivalents, beginning of period		57.2			2.8			26.3			—			86.3
Cash and cash equivalents, end of period	$	26.6		$	4.4		$	25.5		$	—		$	56.5

33

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011

(In millions)

	Affinion Group, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating Activities
Net loss	$	(101.1	)	$	68.0		$	(16.4	)	$	(50.9	)	$	(100.4	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		0.9			152.4			30.0			—			183.3
Amortization of debt discount and financing costs		6.2			—			—			—			6.2
Unrealized gain on interest rate swaps		(4.3	)		—			—			—			(4.3	)
Facility exit costs		—			4.2			—			—			4.2
Share-based compensation		8.5			—			—			—			8.5
Equity in (income) loss of subsidiaries		(50.9	)		—			—			50.9			—
Deferred income taxes		0.3			6.0			(2.5	)		—			3.8
Payment received for assumption of loyalty points program liability		—			4.8			—			—			4.8
Net change in assets and liabilities:
Restricted cash		3.4			(1.0	)		(0.3	)		—			2.1
Receivables		0.1			(39.5	)		7.9			—			(31.5	)
Receivables from related parties		(0.9	)		0.4			0.9			—			0.4
Profit-sharing receivables from insurance carriers		—			(18.8	)		0.6			—			(18.2	)
Prepaid commissions		—			3.2			0.9			—			4.1
Other current assets		(0.4	)		5.7			7.3			—			12.6
Contract rights and list fees		—			(2.7	)		—			—			(2.7	)
Other non-current assets		0.5			7.0			0.6			—			8.1
Accounts payable and accrued expenses		22.7			2.4			(21.0	)		—			4.1
Payables to related parties		(5.1	)		(0.6	)		(1.1	)		—			(6.8	)
Deferred revenue		(0.1	)		(13.2	)		3.3			—			(10.0	)
Income taxes receivable and payable		(0.1	)		0.3			5.3			—			5.5
Other long-term liabilities		2.5			(3.5	)		(6.9	)		—			(7.9	)
Other, net		(0.7	)		0.1			0.6			—			—
Net cash provided by (used in) operating activities		(118.5	)		175.2			9.2			—			65.9
Investing Activities
Capital expenditures		(2.8	)		(28.0	)		(8.2	)		—			(39.0	)
Restricted cash		—			—			1.1			—			1.1
Acquisition-related payment, net of cash acquired		(31.8	)		2.4			(3.5	)		—			(32.9	)
Cash acquired in Webloyalty acquisition		—			10.4			15.7			—			26.1
Other investing activity		—			0.2			—			—			0.2
Net cash provided by (used in) investing activities		(34.6	)		(14.9	)		5.0			—			(44.5	)
Financing Activities
Proceeds from issuance of term loan		250.0			—			—			—			250.0
Principal payments on borrowings		(8.4	)		(0.4	)		—			—			(8.8	)
Financing costs		(5.8	)		—			—			—			(5.8	)
Repurchase of employee equity award of a subsidiary		—			—			(3.5	)		—			(3.5	)
Return of capital to parent company		(323.2	)		—			—			—			(323.2	)
Intercompany loan		(3.6	)		—			3.6			—			—
Intercompany receivables and payables		156.8			(159.3	)		2.5			—			—
Receivables from and payables to parent company		15.3			—			—			—			15.3
Distribution to non-controlling interest of a subsidiary		—			—			(1.1	)		—			(1.1	)
Net cash provided by (used in) financing activities		81.1			(159.7	)		1.5			—			(77.1	)
Effect of changes in exchange rates on cash and cash equivalents		—			—			0.1			—			0.1
Net increase (decrease) in cash and cash equivalents		(72.0	)		0.6			15.8			—			(55.6	)
Cash and cash equivalents, beginning of period		104.8			3.2			13.1			—			121.1
Cash and cash equivalents, end of period	$	32.8		$	3.8		$	28.9		$	—		$	65.5

34

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q (this “Form 10-Q”) is prepared by Affinion Group, Inc. Unless otherwise indicated or the context otherwise requires, in this Form 10-Q all references to “Affinion,” the “Company,” “we,” “our” and “us” refer to Affinion Group, Inc. and its subsidiaries on a consolidated basis; and all references to “Affinion Holdings” refer to Affinion Group Holdings, Inc., the parent company of Affinion Group, Inc.

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, 2011 and 2010, and for the years ended December 31, 2011, 2010 and 2009, included in our Annual Report on Form 10-K for the year ended December 31, 2011 (the “Form 10-K”) and with the unaudited condensed consolidated financial statements and related notes thereto presented in this 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, as amended and supplemented by “Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012, and this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section, or MD&A. 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

The 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, 2012 and 2011. 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, 2012 and 2011 and our financial condition as of September 30, 2012, as well as a discussion of our liquidity and capital resources.

• 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

35

management in their application. In addition, we refer you to our audited consolidated financial statements as of December 31, 2011 and 2010, and for the years ended December 31, 2011, 2010 and 2009, included in the Form 10-K for a summary of our significant accounting policies.

Overview

Description of Business

We are a global leader in the designing, marketing and servicing of comprehensive customer engagement and loyalty solutions that enhance and extend the relationship of millions of consumers with many of the largest and most respected companies in the world. We partner with these leading companies to develop and market programs that provide valuable services to their end-customers using our expertise in customer engagement, product development, creative design and data-driven targeted marketing. These programs and services enable the companies we partner with to generate significant, high-margin incremental revenue, as well as strengthen and enhance the loyalty of their customer relationships, which can lead to increased acquisition of new customers, longer retention of existing customers, improved customer satisfaction rates, and greater use of other services provided by such companies. We refer to the leading companies that we work with to provide customer engagement and loyalty solutions as our marketing partners. We refer to subscribers or members as those consumers to whom we provide services directly and have a contractual relationship. We refer to end-customers as those consumers that we service on behalf of a third party, such as one of our marketing partners, with whom we have a contractual relationship.

We utilize our substantial expertise in a variety of direct engagement media, such as direct mail, inbound and outbound telephony, point-of-sale marketing, direct response radio and television and the Internet to market valuable products and services to the customers of our marketing partners on a highly targeted basis.

We design customer engagement and loyalty solutions with an attractive suite of benefits that we believe are likely to interest and engage consumers based on their needs and interests, with a particular focus on programs offering lifestyle and protection benefits and programs which offer considerable savings. For example, we provide credit monitoring and identity-theft resolution, accidental death and dismemberment insurance (“AD&D”), discount travel services, loyalty points programs, various checking account and credit card enhancement services, as well as other products and services.

We believe our portfolio of the products and services that are embedded in our engagement solutions is the broadest in the industry. Our scale, combined with the industry’s largest proprietary database, proven marketing techniques and strong marketing partner relationships developed over our nearly 40 year history, position us to deliver consistent results in a variety of market conditions.

As of December 31, 2011, we had approximately 71.9 million subscribers and end-customers enrolled in our membership, insurance and package programs worldwide and approximately 127 million customers who received credit or debit card enhancement services or loyalty points-based management services.

We organize our business into two operating units:

• Affinion North America. Affinion North America comprises our Membership, Insurance and Package, and Loyalty customer engagement businesses in North America.

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

• Insurance and Package Products. We market AD&D and other insurance programs and design and provide checking account enhancement programs to financial institutions. These programs allow financial institutions to bundle valuable discounts, protection and other benefits with a standard checking account and offer these packages to customers for an additional monthly fee.

• Loyalty Products. We design, implement and administer points-based loyalty programs and, as of December 31, 2011, managed programs representing an aggregate estimated redemption value of approximately $4.7 billion for financial, travel, auto and other companies. We provide our clients with solutions that meet the most popular redemption options desired by their program points holders, including travel, gift cards and merchandise, and, in 2011, we facilitated over $2 billion in redemption volume. We also provide enhancement benefits to major financial institutions in connection with their credit and debit card programs. In addition, we provide and manage turnkey travel services that are sold on a private label basis to provide our clients’ customers with direct access to our proprietary travel platform.

• Affinion International. Affinion International comprises our Membership, Package and Loyalty customer engagement businesses outside North America. We expect to leverage our current international operational platform to expand our range of products and services, develop new marketing partner relationships in various industries and grow our geographical footprint.

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We offer 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 the majority of 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. For our membership, insurance and package enhancement products, these marketing costs are expensed when the costs are incurred as the campaign is launched.

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.

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 were recognized upon completion of the membership term when they were no longer refundable. Depending on the length of the trial period, this revenue may not have been 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. During both the nine months ended September 30, 2012 and the year ended December 31, 2011, in excess of 95% of our domestic new member and end-customer 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 generally remain under the billing terms in which they were originated.

We generally utilize the brand names and customer contacts of our marketing partners in our marketing campaigns. We usually compensate our marketing 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). In addition, during 2009, as we saw subscriber pay-through rates in our North America Membership Products line begin to drop below historical averages, we began to enter into arrangements with certain marketing partners which we believe offer better utilization of our marketing spend. Under these arrangements, we pay our marketing partners advance commissions which provide the potential for recovery from the marketing partners if certain targets are not achieved. These payments are capitalized and amortized over the expected life of the acquired members. The commission rates that we pay to our marketing partners differ depending on the arrangement we have with the particular marketing partner and the type of media we utilize for a given marketing campaign.

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 audited 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 consolidated statements of comprehensive income.

In our wholesale arrangements, we provide products and services as well as customer service and fulfillment related to such products and services supporting our marketing partners’ programs that they offer to their customers. Our marketing 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 monthly 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.

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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 better enables us to redeploy our marketing expenditures globally across our operations to maximize returns.

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 marketing 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 marketing 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.

Acquisitions

On January 14, 2011, the Company and Affinion Holdings entered into, and consummated, an Agreement and Plan of Merger that resulted in the acquisition of Webloyalty Holdings, Inc. and its subsidiaries (“Webloyalty”) for $290.7 million. Webloyalty is a leading online marketing services company. Webloyalty provides, designs, and administers online subscription loyalty solutions that offer valuable discounts, services and benefits for its subscribers and provides its clients with programs that enhance their relationship with their customers. In addition to its domestic services, Webloyalty operates in several countries in Europe.

The Webloyalty acquisition is consistent with our long-standing business strategy in several respects: the acquisition enhances our operations in attractive international markets, including France and the U.K.; it provides us with a technology platform that expands the range of its marketing media, particularly in online channels; and it provides additional economies of scale in the management of our combined product portfolio.

On July 14, 2011, the Company and Affinion Holdings entered into an Agreement and Plan of Merger to acquire Prospectiv Direct, Inc. (“Prospectiv”), an online performance marketer and operator of a daily deal website. On August 1, 2011, the merger was consummated and, as a result, the Company acquired all of the capital stock of Prospectiv for an initial cash purchase price of $31.8 million. If Prospectiv achieves certain performance targets over the 30 month period that commenced on July 1, 2011, the former equity holders will be entitled to additional consideration in the form of an earn-out of up to $45.0 million and certain members of Prospectiv’s management will be entitled to receive additional compensation related to their continued employment of up to $10.0 million. Such additional consideration and compensation will be settled in some combination of cash and shares of Affinion Holdings’ common stock.

In late March of 2012, Prospectiv implemented a reduction in force and revised its growth plans for 2012 and 2013. Based on these revised growth plans, the Company has concluded that it does not expect to pay any additional consideration in the form of an earn-out or additional compensation based on achievement of performance targets. Accordingly, during the three months ended March 31, 2012, the Company reversed certain accruals for additional consideration recorded as part of the Prospectiv acquisition and additional compensation as the Company will not be able to achieve the growth originally planned for these years due to market conditions. The reduction of these accruals during the three months ended March 31, 2012 reduced general and administrative expense for the nine months ended September 30, 2012 by $14.6 million and $1.1 million, respectively. In addition, during the three months ended September 30, 2012, the Company entered into a settlement agreement with the former equity holders of Prospectiv which resulted in a $0.7 million reduction of the initial purchase price and released the Company from any future claims for additional consideration and for future compensation based on achievement of the performance targets. The reduction in the initial purchase price was included in general and administrative expenses in the accompanying statements of comprehensive income for the three and nine months ended September 30, 2012.

The Company concluded that the revisions made to the Prospectiv forecast as well as other marketplace events, represented an indication of potential impairment of Prospectiv’s goodwill and intangible assets. As a result, during the three months ended June 30, 2012, the Company performed an interim impairment test of the goodwill for Prospectiv, which is a separate reporting unit within the Membership Products reporting segment, as of April 1, 2012. Based on the interim impairment test, the Company recorded an impairment loss during the three months ended June 30, 2012 of $31.5 million, representing all of the goodwill ascribed to Prospectiv at the date of acquisition. During the three months ended June 30, 2012, the Company also performed an impairment test related to the intangible assets of Prospectiv as of April 1, 2012 and, based on the impairment test, recorded an impairment loss related to the Prospectiv intangible assets of $8.2 million.

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Financial Industry Trends

Historically, financial institutions have represented a significant majority of our marketing partner base. In the past few years, a number of our existing financial institution marketing partners have been acquired by, or merged with, other financial institutions. Several relatively recent examples include Bank of America Corporation and Countrywide Financial Corp., JPMorgan Chase & Co. and Washington Mutual, Inc. and Wells Fargo & Co. and Wachovia Corporation. 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 marketing 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 marketing 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. Partially as a result of this trend, we have experienced a revenue reduction in our membership business.

Additionally, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) mandates the most wide-ranging overhaul of financial industry regulation in decades. Dodd-Frank was signed into law on July 21, 2010. Dodd-Frank provides a regulatory framework and requires that regulators draft, review and approve, and implement numerous regulations and conduct studies that are likely to lead to more regulations. As part of this, Dodd-Frank created the Consumer Financial Protection Bureau (the “CFPB”) that became operational on July 21, 2011, and has been given authority to regulate all consumer financial products sold by banks and non-bank companies. These new and contemplated regulations could impose additional reporting, supervisory, and regulatory requirements on our financial institution marketing partners that could adversely affect our business, financial condition and results of operations. In addition, even an inadvertent failure of our financial institution marketing partners to comply with these laws and regulations, as well as rapidly evolving social expectations of corporate fairness could adversely affect our business or our reputation. Some of our marketing partners have become involved in governmental inquiries relating to our products or marketing practices, which have resulted in some of our marketing partners terminating their contracts with us, ceasing to facilitate payment processing or ceasing marketing our services to their members or end-consumers, and there can be no assurances that this trend will not continue. In addition, we may be subject to indemnification obligations under our marketing agreements, all of which could have a material adverse impact on our business. Partially as a result of this uncertain regulatory environment, we have experienced slower growth in our domestic membership customer base and domestic membership revenues, and we anticipate that this trend may continue in the near future.

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 laws and regulations that govern our operations include: federal, state and foreign marketing and consumer protection laws and regulations; federal, state and foreign privacy and data protection laws and regulations; and federal, state and foreign insurance and insurance mediation laws and regulations. Federal regulations are primarily enforced by the Federal Trade Commission, the Federal Communications Commission and the CFPB. 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 information from our members and end-customers. For our insurance products, these regulations limit our ability to implement pricing changes. In addition, new and contemplated regulations enacted by, or settlement agreements or consent orders with, the CFPB could impose additional reporting, supervisory and regulatory requirements on, as well as result in inquiries of, us and our marketing partners that could delay marketing campaigns with certain marketing partners, impact the services and products we provide to consumers, and adversely affect our business, financial condition and results of operations.

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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. See Note 7 to our unaudited condensed consolidated financial statements in “Item 1. Financial Statements.”

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.

Results of Operations

Supplemental Data

We manage our business using a portfolio approach, meaning that we allocate and reallocate our marketing investments in the ongoing pursuit of the highest and best available returns, allocating our resources to whichever products, geographies and programs offer the best opportunities. With the globalization of our clients, the continued evolution of our programs and services and the ongoing refinement and execution of our marketing allocation strategy, we have developed the following table that we believe captures the way we look at the businesses (subscriber and insured amounts in thousands except per average subscriber and insured amounts).

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Global Average Subscribers, excluding Basic Insureds		42,998		48,837		44,138		48,407
Annualized Net Revenue Per Global Average Subscriber, excluding Basic Insureds(1)	$	30.73	$	28.97	$	30.44	$	28.64
Global Membership Subscribers
Average Global Retail Subscribers(2)		10,298		11,318		10,706		11,377
Annualized Net Revenue Per Global Average Subscriber(1)	$	79.77	$	79.80	$	79.81	$	79.61
Global Package Subscribers and Wholesale
Average Global Package Subscribers and Wholesale(2)		28,584		33,250		29,262		32,720
Annualized Net Revenue per Global Average Package Subscriber(1)	$	7.34	$	7.13	$	7.61	$	6.64
Global Insureds
Average Supplemental Insureds(2)		4,116		4,269		4,170		4,310
Annualized Net Revenue Per Supplemental Insured(1)	$	70.46	$	64.32	$	63.84	$	61.08
Global Average Subscribers, including Basic Insureds		64,873		71,190		66,229		70,779

(1) Annualized Net Revenue Per Global Average Subscriber and Annualized Net Revenue Per Supplemental Insured are each calculated by taking the revenues as reported for the period and dividing it by the average subscribers 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 subscriber or an insured, as applicable, the subscriber’s or insured’s, as applicable, revenues are no longer recognized in the calculation.

(2) Average Global Subscribers and Average Supplemental Insureds for the period are each calculated by determining the average subscribers or insureds, as applicable, for each month (adding the number of subscribers or insureds, as applicable, at the beginning of the month with the number of subscribers 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. A subscriber’s or insured’s, as applicable, account is added or removed in the period in which the subscriber or insured, as applicable, has joined or cancelled.

Wholesale members include end-customers where we typically receive a monthly service fee to support programs offered by our marketing partners. Certain programs historically offered as retail arrangements have switched to wholesale arrangements with lower annualized price points and no commission expense.

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Basic insureds typically receive $1,000 of AD&D coverage at no cost to the consumer since the marketing partner pays the cost of this coverage. Supplemental insureds are customers who have elected to pay premiums for higher levels of coverage.

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 accounting principles generally accepted in the United States (“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.

Three Months Ended September 30, 2012 Compared to Three Months Ended September 30, 2011

The following table summarizes our consolidated results of operations for the three months ended September 30, 2012 and 2011:

	Three Months Ended September 30, 2012			Three Months Ended September 30, 2011			Increase (Decrease)
Net revenues	$	370.6		$	394.7		$	(24.1	)
Expenses:
Cost of revenues, exclusive of depreciation and amortization shown separately below:
Marketing and commissions		142.5			168.7			(26.2	)
Operating costs		110.8			116.0			(5.2	)
General and administrative		33.3			39.6			(6.3	)
Impairment of goodwill and other long-lived assets		—			—			—
Facility exit costs		(0.9	)		2.9			(3.8	)
Depreciation and amortization		48.5			60.4			(11.9	)
Total expenses		334.2			387.6			(53.4	)
Income from operations		36.4			7.1			29.3
Interest income		0.2			0.1			0.1
Interest expense		(37.0	)		(36.5	)		(0.5	)
Other income, net		0.1			0.1			—
Income (loss) before income taxes and non-controlling interest		(0.3	)		(29.2	)		28.9
Income tax expense		(1.9	)		(3.9	)		2.0
Net loss		(2.2	)		(33.1	)		30.9
Less: net income attributable to non-controlling interest		(0.1	)		(0.2	)		0.1
Net loss attributable to Affinion Group, Inc.	$	(2.3	)	$	(33.3	)	$	31.0

Summary of Operating Results for the Three Months Ended September 30, 2012

The following is a summary of changes affecting our operating results for the three months ended September 30, 2012.

Net revenues decreased $24.1 million, or 6.1%, for the three months ended September 30, 2012 as compared to the same period of the prior year. Net revenues in our North American units decreased $23.7 million primarily from lower retail revenues from a decline in volumes in our Membership business which was partially offset by growth from existing clients in our Loyalty business and higher revenue in our Insurance and Package business from a lower cost of insurance. International segment net revenues decreased by $0.4 million as higher retail revenue was more than offset by lower package revenues and an unfavorable currency impact from the stronger U.S. dollar.

Segment EBITDA increased $17.4 million as the impact of the lower net revenues was more than offset by lower marketing and commissions and lower operating and general and administrative costs.

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Three Months Ended September 30, 2012 Compared to Three Months Ended September 30, 2011

The following section provides an overview of our consolidated results of operations for the three months ended September 30, 2012 as compared to the three months ended September 30, 2011.

Net Revenues. During the three months ended September 30, 2012 we reported net revenues of $370.6 million, a decrease of $24.1 million, or 6.1%, as compared to net revenues of $394.7 million in the comparable period of 2011. Net revenues of our Membership Products decreased $29.4 million primarily due to a decline in retail member volumes related to the regulatory challenges facing large financial institution marketing partners with respect to new marketing campaign launches and from the continued, but anticipated, attrition of the domestic member base of Webloyalty, which more than offset higher average revenue per average retail member. Insurance and Package revenues increased $2.8 million primarily due to a lower cost of insurance from lower claims experience. Loyalty Products net revenues increased $2.4 million which was primarily attributable to increased revenues from existing client programs. International Products net revenues decreased $0.4 million as higher retail revenue in our online channel was more than offset by lower package revenue and an unfavorable currency impact of $6.0 million as a result of the stronger U.S. dollar.

Marketing and Commissions Expense. Marketing and commissions expense decreased by $26.2 million, or 15.5%, to $142.5 million for the three months ended September 30, 2012 from $168.7 million for the three months ended September 30, 2011. Marketing and commissions expense decreased primarily in our Membership business due to fewer marketing opportunities with our large financial institution marketing partners.

Operating Costs. Operating costs decreased by $5.2 million, or 4.5%, to $110.8 million for the three months ended September 30, 2012 from $116.0 million for the three months ended September 30, 2011. Operating costs decreased primarily due to lower employee related costs and the impact of the stronger U.S. dollar.

General and Administrative Expense. General and administrative expense decreased by $6.3 million, or 15.9%, to $33.3 million for the three months ended September 30, 2012 from $39.6 million for the three months ended September 30, 2011 primarily due to lower employee related costs and lower costs associated with certain legal matters.

Facility Exit Costs. During the three months ended September 30, 2011, we recorded facility exit costs in the amount of $2.9 million associated with the lease on a Webloyalty facility. These costs represent the present value of future lease payments and other expenses related to the facility through the expiration of the lease, net of any estimated sublease income. The cost estimates were reduced by $0.9 million during the three months ended September 30, 2012 to reflect additional expected future sublease income on the lease.

Depreciation and Amortization Expense. Depreciation and amortization expense decreased by $11.9 million for the three months ended September 30, 2012 to $48.5 million from $60.4 million for the three months ended September 30, 2011, primarily from recording $6.8 million less amortization expense in 2012 as compared to 2011 related to intangible assets acquired in the Webloyalty acquisition, principally member relationships, and lower amortization of $2.8 million on the intangible assets acquired in connection with the Company’s acquisition of the Cendant Marketing Services Division (the “Apollo Transactions”) as the majority of those 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.

Interest Expense. Interest expense increased by $0.5 million, or 1.4%, to $37.0 million for the three months ended September 30, 2012 from $36.5 million for the three months ended September 30, 2011, primarily due to a $0.7 million less favorable impact of an interest rate swap in 2012 as compared to 2011.

Income Tax Expense. Income tax expense decreased by $2.0 million for the three months ended September 30, 2012 as compared to the three months ended September 30, 2011, primarily due to a decrease in the current state and foreign tax liabilities and deferred federal and state tax liabilities for the three months ended September 30, 2012, partially offset by an increase in deferred foreign tax liabilities for the same period.

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Our effective income tax rates for the three months ended September 30, 2012 and 2011 were (717.9)% and (13.3)%, respectively. The difference in the effective tax rates for the three months ended September 30, 2012 and 2011 is primarily a result of the decrease in loss before income taxes and non-controlling interest from $29.2 million for the three months ended September 30, 2011 to $0.3 million for the three months ended September 30, 2012 and a decrease in income tax expense from $3.9 million for the three months ended September 30, 2011 to $1.9 million for the three months ended September 30, 2012. Our tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amount of income we earn in those jurisdictions. It is also affected by discrete items that may occur in any given year, but are not consistent from year to year. In addition to state and foreign income taxes and related foreign tax credits, the requirement to maintain valuation allowances had the most significant impact on the difference between the Company’s effective tax rate and the statutory U.S. federal income tax rate of 35%.

Operating Segment Results

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

	Three Months Ended September 30,
	Net Revenues									Segment EBITDA(1)
	2012			2011			Increase (Decrease)			2012			2011			Increase (Decrease)
	(in millions)
Affinion North America
Membership Products	$	167.9		$	197.3		$	(29.4	)	$	33.5		$	24.7		$	8.8
Insurance and Package Products		90.0			87.2			2.8			31.5			27.9			3.6
Loyalty Products		37.2			34.8			2.4			13.5			10.9			2.6
Eliminations		(0.4	)		(0.9	)		0.5			—			—			—
Total North America		294.7			318.4			(23.7	)		78.5			63.5			15.0
Affinion International
International Products		75.9			76.3			(0.4	)		9.3			9.6			(0.3	)
Total products		370.6			394.7			(24.1	)		87.8			73.1			14.7
Corporate		—			—			—			(2.9	)		(5.6	)		2.7
Total	$	370.6		$	394.7		$	(24.1	)		84.9			67.5			17.4
Depreciation and amortization											(48.5	)		(60.4	)		11.9
Income (loss) from operations										$	36.4		$	7.1		$	29.3

(1) See Segment EBITDA above and Note 11 to the unaudited condensed consolidated financial statements for a discussion of Segment EBITDA and a reconciliation of Segment EBITDA to income from operations.

Affinion North America

Membership Products. Membership Products net revenues decreased by $29.4 million, or 14.9%, to $167.9 million for the three months ended September 30, 2012 as compared to $197.3 million for the three months ended September 30, 2011. Net revenues decreased primarily due to a decline in retail member volumes related to the regulatory challenges facing large financial institution marketing partners with respect to new marketing campaign launches and from the continued, but anticipated, attrition of the domestic member base of Webloyalty, which more than offset higher average revenue per average retail member.

Segment EBITDA increased by $8.8 million, or 35.6%, for the three months ended September 30, 2012 as compared to the three months ended September 30, 2011. Segment EBITDA increased as the impact of the lower net revenues of $29.4 million was more than offset by lower marketing and commissions of $24.6 million and lower operating and general and administrative costs which totaled $9.8 million. The lower marketing and commissions were primarily the result of fewer marketing opportunities with our large financial institution marketing partners. The lower operating and general and administrative costs were primarily due to lower employee related costs and lower costs associated with certain legal matters In addition, facility exit costs decreased $3.8 million primarily from the absence in 2012 of a charge associated with the lease on a Webloyalty facility.

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Insurance and Package Products. Insurance and Package Products net revenues increased by $2.8 million, or 3.2%, to $90.0 million for the three months ended September 30, 2012 as compared to $87.2 million for the three months ended September 30, 2011. Insurance revenue increased approximately $3.7 million primarily from a lower cost of insurance from lower claims experience. Package revenue decreased approximately $0.9 million primarily from lower fee-based revenue from our NetGain product.

Segment EBITDA increased by $3.6 million, or 12.9%, for the three months ended September 30, 2012 as compared to the three months ended September 30, 2011, primarily due to the higher insurance net revenues.

Loyalty Products. Revenues from Loyalty Products increased by $2.4 million, or 6.9%, for the three months ended September 30, 2012 to $37.2 million as compared to $34.8 million for the three months ended September 30, 2011 primarily due to growth from existing clients.

Segment EBITDA increased by $2.6 million, or 23.9%, for the three months ended September 30, 2012 as compared to the three months ended September 30, 2011 primarily due to the higher net revenue.

Affinion International

International Products. International Products net revenues decreased by $0.4 million, or 0.5%, to $75.9 million for the three months ended September 30, 2012 as compared to $76.3 million for the three months ended September 30, 2011. An increase of $5.6 million from higher retail revenue in our online channel was more than offset by lower package revenue and the unfavorable impact of the stronger U.S. dollar, which resulted in a decline of $6.0 million.

Segment EBITDA decreased by $0.3 million, or 3.1%, for the three months ended September 30, 2012 as compared to the three months ended September 30, 2011 as the higher revenue was offset by costs associated with increased investments in new markets.

Corporate

Corporate costs decreased by $2.7 million for the three months ended September 30, 2012 compared to the three months ended September 30, 2011 primarily from a favorable impact in foreign exchange on intercompany borrowings in 2012 as compared to 2011.

Nine Months Ended September 30, 2012 Compared to Nine Months Ended September 30, 2011

The following table summarizes our consolidated results of operations for the nine months ended September 30, 2012 and 2011:

	Nine Months Ended September 30, 2012			Nine Months Ended September 30, 2011		Increase (Decrease)
Net revenues	$	1,130.0		$	1,148.7	$	(18.7	)
Expenses:
Cost of revenues, exclusive of depreciation and amortization shown separately below:
Marketing and commissions		448.1			472.5		(24.4	)
Operating costs		344.2			333.2		11.0
General and administrative		99.4			137.0		(37.6	)
Impairment of goodwill and other long-lived assets		39.7			—		39.7
Facility exit costs		(0.9	)		4.2		(5.1	)

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	Nine Months Ended September 30, 2012			Nine Months Ended September 30, 2011			Increase (Decrease)
Depreciation and amortization		147.6			183.3			(35.7	)
Total expenses		1,078.1			1,130.2			(52.1	)
Income from operations		51.9			18.5			33.4
Interest income		0.7			0.9			(0.2	)
Interest expense		(111.5	)		(111.2	)		(0.3	)
Other income, net		(0.2	)		—			(0.2	)
Income (loss) before income taxes and non-controlling interest		(59.1	)		(91.8	)		32.7
Income tax expense		(8.9	)		(8.6	)		(0.3	)
Net loss		(68.0	)		(100.4	)		32.4
Less: net income attributable to non-controlling interest		(0.5	)		(0.7	)		0.2
Net loss attributable to Affinion Group, Inc.	$	(68.5	)	$	(101.1	)	$	32.6

Summary of Operating Results for the Nine Months Ended September 30, 2012

The following is a summary of changes affecting our operating results for the nine months ended September 30, 2012.

Net revenues decreased $18.7 million, or 1.6%, for the nine months ended September 30, 2012 as compared to the same period of the prior year. Net revenues in our North American units decreased $27.5 million primarily from lower retail revenues from a decline in volumes in our Membership business which more than offset higher net revenues from the acquisition of Prospectiv, and lower insurance revenue primarily from of the absence in 2012 of a one-time payment from an insurance provider in our Insurance and Package business. These decreases were partially offset by growth from existing clients in our Loyalty business. International segment net revenues increased by $8.8 million, primarily from higher retail revenue partially offset by lower package revenue and an unfavorable currency impact from the stronger U.S. dollar.

Segment EBITDA decreased $2.3 million, primarily due to an impairment charge of $39.7 million of goodwill and certain other intangible assets that were acquired in the August 1, 2011 acquisition of Prospectiv. Excluding this charge, Segment EBITDA increased $37.4 million as the lower marketing and commissions and lower general and administrative costs more than offset the effect of the lower net revenues and higher operating costs.

Nine Months Ended September 30, 2012 Compared to Nine Months Ended September 30, 2011

The following section provides an overview of our consolidated results of operations for the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011.

Net Revenues. During the nine months ended September 30, 2012 we reported net revenues of $1,130.0 million, a decrease of $18.7 million, or 1.6%, as compared to net revenues of $1,148.7 million in the comparable period in 2011. Net revenues of our Membership Products decreased $30.2 million as lower revenues from lower retail member volumes, primarily from the continued, but anticipated, attrition of the domestic member base of Webloyalty and the regulatory challenges facing large financial institution marketing partners with respect to new marketing campaign launches more than offset the higher revenues from higher average revenue per average retail member, higher revenues from the Prospectiv acquisition and higher volumes in wholesale arrangements. Insurance and Package net revenues decreased $8.9 million primarily due to the absence in 2012 of a one-time payment from an insurance provider along with lower package revenue. Loyalty Products net revenues increased $10.7 million primarily due to increased revenues from existing clients and new client programs. International Products net revenues increased $8.8 million primarily from higher retail revenue in our online channel partially offset by lower package revenue and an unfavorable currency impact of $13.2 million as a result of the stronger U.S. dollar.

Marketing and Commissions Expense. Marketing and commissions expense decreased by $24.4 million, or 5.2%, to $448.1 million for the nine months ended September 30, 2012 from $472.5 million for the nine months ended September 30, 2011. Marketing and commissions expense decreased in our Membership business primarily from fewer marketing opportunities with our large financial institution marketing partners and was partially offset by increases in our International business primarily due to increased spending in our retail channel.

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Operating Costs. Operating costs increased by $11.0 million, or 3.3%, to $344.2 million for the nine months ended September 30, 2012 from $333.2 million for the nine months ended September 30, 2011. Operating costs increased primarily due to higher fulfillment costs in our identity theft protection programs in our Membership business, revenue growth in client programs in our Loyalty business and additional investments in new markets in our international business which was partially offset by lower costs related to the stronger U.S. dollar.

General and Administrative Expense. General and administrative expense decreased by $37.6 million, or 27.4%, to $99.4 million for the nine months ended September 30, 2012 from $137.0 million for the nine months ended September 30, 2011 primarily from the absence in 2012 of a special cash distribution of $14.8 million to option holders in connection with dividends paid by Affinion Holdings to stockholders in January 2011 and February 2011 and the reversal of a liability of $14.6 million in connection with anticipated earn-out payments originally recorded in 2011 for the Prospectiv acquisition. In addition, we experienced lower employee related costs and lower costs associated with certain legal matters which were partially offset by higher costs from investments in new markets.

Impairment of Goodwill and Other Long-Lived Assets. An impairment charge for goodwill and certain intangible assets in the amount of $39.7 million related to our 2011 Prospectiv acquisition was recorded in the nine months ended September 30, 2012, primarily the result of lower projected future cash flows and other negative marketplace events in the daily deals business. The impairment charge includes $31.5 million related to all of the goodwill for Prospectiv and $8.2 million related to certain intangible assets ascribed in the August 1, 2011 acquisition, primarily tradenames and technology.

Facility Exit Costs. During the nine months ended September 30, 2011, we recorded facility exit costs in the amount of $4.2 million associated with the lease on a Webloyalty facility. These costs represent the present value of future lease payments and other expenses related to the facility through the expiration of the lease, net of any estimated sublease income. The cost estimates were reduced by $0.9 million during the nine months ended September 30, 2012 to reflect additional expected future sublease income on the lease.

Depreciation and Amortization Expense. Depreciation and amortization expense decreased by $35.7 million for the nine months ended September 30, 2012 to $147.6 million from $183.3 million for the nine months ended September 30, 2011, primarily from recording $23.7 million less amortization expense in 2012 as compared to 2011 related to intangible assets acquired in the Webloyalty acquisition, principally member relationships, and lower amortization of $8.4 million on the intangible assets acquired in connection with the Company’s acquisition of the Cendant Marketing Services Division (the “Apollo Transactions”) as the majority of those 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.

Interest Expense. Interest expense increased by $0.3 million, or 0.3%, to $111.5 million for the nine months ended September 30, 2012 from $111.2 million for the nine months ended September 30, 2011, primarily from higher interest accrued on our term loan.

Income Tax Expense. Income tax expense increased by $0.3 million for the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011, primarily due to an increase in the current foreign tax liabilities and deferred federal and foreign tax liabilities for the nine months ended September 30, 2012, partially offset by a decrease in the current and deferred state tax liabilities for the same period.

Our effective income tax rates for the nine months ended September 30, 2012 and 2011 were (14.9)% and (9.3)%, respectively. The difference in the effective tax rates for the nine months ended September 30, 2012 and 2011 is primarily a result of the decrease in loss before income taxes and non-controlling interest from $91.8 million for the nine months ended September 30, 2011 to $59.1 million for the nine months ended September 30, 2012 and an increase in income tax expense from $8.6 million for the nine months ended September 30, 2011 to $8.9 million for the nine months ended September 30, 2012. Our tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amount of income we earn in those jurisdictions. It is also affected by discrete items that may occur in any given year, but are not consistent from year to year. In addition to state and foreign income taxes and related foreign tax credits, the requirement to maintain valuation allowances had the most significant impact on the difference between the Company’s effective tax rate and the statutory U.S. federal income tax rate of 35%.

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Operating Segment Results

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

	Nine Months Ended September 30,
	Net Revenues									Segment EBITDA(1)
	2012			2011			Increase (Decrease)			2012			2011			Increase (Decrease)
	(in millions)
Affinion North America
Membership Products	$	545.3		$	575.5			(30.2	)	$	110.4		$	91.0		$	19.4
Insurance and Package Products		251.2			260.1			(8.9	)		82.0			82.1			(0.1	)
Loyalty Products		113.0			102.3			10.7			38.1			32.0			6.1
Eliminations		(1.7	)		(2.6	)		0.9			—			—			—
Total North America		907.8			935.3			(27.5	)		230.5			205.1			25.4
Affinion International
International Products		222.2			213.4			8.8			20.5			23.3			(2.8	)
Total products		1,130.0			1,148.7			(18.7	)		251.0			228.4			22.6
Corporate		—			—			—			(11.8	)		(26.6	)		14.8
Impairment of goodwill and other long-lived assets		—			—			—			(39.7	)		—			(39.7	)
Total	$	1,130.0			1,148.7			(18.7	)		199.5			201.8			(2.3	)
Depreciation and amortization											(147.6	)		(183.3	)		35.7
Income from operations										$	51.9		$	18.5		$	33.4

(1) See Segment EBITDA above and Note 11 to the unaudited condensed consolidated financial statements for a discussion of Segment EBITDA and a reconciliation of Segment EBITDA to income from operations.

Affinion North America

Membership Products. Membership Products net revenues decreased by $30.2 million, or 5.2%, to $545.3 million for the nine months ended September 30, 2012 as compared to $575.5 million for the nine months ended September 30, 2011. Net revenues decreased primarily due to lower retail member volumes, primarily from the continued, but anticipated, attrition of the domestic member base of Webloyalty and the regulatory challenges facing large financial institution marketing partners with respect to new marketing campaign launches, which more than offset the higher revenues from higher average revenue per average retail member, revenues from the Prospectiv acquisition and higher volumes in wholesale arrangements.

Segment EBITDA increased by $19.4 million, or 21.3%, for the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011. Segment EBITDA increased as the impact of the lower net revenues of $30.2 million was more than offset by lower marketing and commissions of $28.8 million and lower general and administrative costs of $21.5 million. The lower marketing and commissions was primarily due to the allocation of marketing spend to other business segments and fewer marketing opportunities with our large financial institution marketing partners. The lower general and administrative costs were primarily the result of the reversal of a liability of $14.6 million in connection with previously anticipated earn-out payments originally recorded in 2011 related to the Prospectiv acquisition, and lower costs associated with certain legal matters. Higher operating costs of $5.8 million, primarily due to increased costs associated with our identity theft programs, were substantially offset by lower facility exit costs of $5.1 million principally due to the absence in 2012 of a charge recorded in 2011 related to costs associated with leases on certain Webloyalty facilities.

Insurance and Package Products. Insurance and Package Products net revenues decreased by $8.9 million, or 3.4%, to $251.2 million for the nine months ended September 30, 2012 as compared to $260.1 million for the nine months ended September 30, 2011. Insurance revenue decreased approximately $5.7 million primarily from the absence in 2012 of a one-time payment from an insurance provider in the first quarter of 2011, partially offset by an increase in the average revenue per supplemental insured. Package revenue declined approximately $3.2 million primarily from lower fee-based revenue from our NetGain product.

Segment EBITDA decreased by $0.1 million for the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011, as the lower net revenues were substantially offset by lower marketing and commissions, and lower operating and general and administrative costs.

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Loyalty Products. Revenues from Loyalty Products increased by $10.7 million, or 10.5%, for the nine months ended September 30, 2012 to $113.0 million as compared to $102.3 million for the nine months ended September 30, 2011 primarily due to growth from existing clients and new client programs.

Segment EBITDA increased by $6.1 million, or 19.1%, for the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011, as the higher net revenue was partially offset by higher product and servicing costs.

Affinion International

International Products. International Products net revenues increased by $8.8 million, or 4.1%, to $222.2 million for the nine months ended September 30, 2012 as compared to $213.4 million for the nine months ended September 30, 2011. Net revenues increased as higher retail revenue in our online channel increased by $22.0 million, which was partially offset by lower package revenue and the unfavorable impact of the stronger U.S. dollar, which resulted in a decline of $13.2 million.

Segment EBITDA decreased by $2.8 million, or 12.0%, for the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011 as the positive impact of the higher revenue was more than offset by higher marketing and commissions from increased spending in our retail channel and higher costs associated with increased investments in new markets.

Corporate

Corporate costs decreased by $14.8 million for the nine months ended September 30, 2012 compared to the nine months ended September 30, 2011, primarily due to the absence in 2012 of a charge related to cash distributions made to option holders in connection with dividends paid by Affinion Holdings to its common stockholders in January and February of 2011.

Impairment of Goodwill and Other Long-Lived Assets

An impairment charge for goodwill and certain intangible assets in the amount of $39.7 million related to our 2011 Prospectiv acquisition was recorded during the nine months ended September 30, 2012, primarily the result of lower projected future cash flows and other negative marketplace events in the daily deals business. The impairment charge includes $31.5 million related to all of the goodwill for Prospectiv and $8.2 million related to certain intangible assets acquired in the Prospectiv acquisition, primarily tradenames and technology.

Financial Condition, Liquidity and Capital Resources

Financial Condition—September 30, 2012 and December 31, 2011

	September 30, 2012			December 31, 2011			Increase (Decrease)
	(in millions)
Total assets	$	1,511.0		$	1,651.0		$	(140.0	)
Total liabilities		2,627.4			2,662.7			(35.3	)
Total deficit		(1,116.4	)		(1,011.7	)		(104.7	)

Total assets decreased by $140.0 million principally due to (i) a decrease in other intangibles, net of $116.7 million, principally due to amortization expense of $109.7 million and an $8.2 million impairment of intangible assets acquired in the Prospectiv acquisition, (ii) a decrease in cash of $29.8 million (see “—Liquidity and Capital Resources—Cash Flows”), and (iii) a decrease in goodwill of $29.6 million, principally related to a $31.5 million impairment of the goodwill established in connection with the Prospectiv acquisition. These decreases were partially offset by an increase in receivables of $20.7 million, principally due to the timing of payments from clients for loyalty services, including payments for gift cards utilized for loyalty program fulfillment, and the impact of seasonality of travel services.

Total liabilities decreased by $35.3 million, primarily due to a decrease in deferred revenue of $31.0 million due to the continuing shift of the membership base to monthly memberships, and a decrease in other long-term liabilities of $15.0 million, principally due to the release of the earn-out liability established in connection with the Prospectiv acquisition.

Total deficit increased by $104.7 million, principally due to a net loss attributable to the Company of $68.5 million and a return of capital to the Company’s parent of $37.0 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 to service our indebtedness and for working capital, capital

48

expenditures and general corporate purposes. Many of the Company’s significant costs are variable in nature, including marketing and commissions. The Company has a great degree of flexibility in the amount and timing of marketing expenditures and focuses its marketing expenditures on its most profitable marketing opportunities. Commissions correspond directly with revenue generated and have been decreasing as a percentage of revenue over the last several years. 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, including quarterly amortization payments on our term loan facility under our $1.3 billion amended and restated senior secured credit facility. The term loan facility also requires mandatory prepayments based on excess cash flows as defined in our amended and restated senior secured credit facility.

Affinion Group, Inc. is a holding company, with no direct operations and no significant assets other than the direct and indirect ownership of its subsidiaries. Because we conduct our operations through our subsidiaries, our cash flows and our ability to service our indebtedness is dependent upon cash dividends and distributions or other transfers from our subsidiaries. Payments to us by our subsidiaries are contingent upon our subsidiaries’ earnings, but are not limited by our debt agreements, including our senior secured credit facility and the indentures governing our 7.875% senior notes and our senior subordinated notes.

Although we historically have a working capital deficit, a major factor included in this deficit is deferred revenue resulting from the cash collected from annual memberships which is deferred until the appropriate refund period has concluded. In spite of our historical working capital deficit, we have been able to operate effectively primarily due to our substantial cash flows from operations and our available revolving credit facility. However, as the membership base continues to shift away from memberships billed annually to memberships billed monthly, it will have a negative effect on our operating cash flow. We anticipate that our working capital deficit will continue for the foreseeable future.

On January 18, 2011, utilizing available cash on hand, the Company paid a dividend of approximately $123.4 million to Affinion Holdings. Affinion Holdings utilized the proceeds of the dividend and available cash on hand to (i) redeem approximately $41.2 million liquidation preference of Affinion Holdings’ outstanding preferred stock, (ii) pay a dividend to Affinion Holdings’ stockholders (including holders of restricted stock units) of $1.35 per share (approximately $115.4 million in the aggregate), (iii) pay a one-time cash bonus to Affinion Holdings’ option holders of approximately $9.6 million and (iv) pay additional amounts for transaction fees and expenses.

On February 11, 2011, utilizing borrowings under the term loan facility, the Company paid a dividend of approximately $199.8 million to Affinion Holdings, and expects to use the balance of the proceeds for working capital and other corporate purposes and to fund future strategic initiatives. Affinion Holdings utilized the proceeds of the dividend to (i) redeem approximately $5.4 million liquidation preference of Affinion Holdings’ outstanding preferred stock, (ii) pay a dividend to Affinion Holdings’ stockholders (including holders of restricted stock units) of $1.50 per share (approximately $128.2 million in the aggregate), (iii) pay a one-time cash bonus to certain of Affinion Holdings’ option holders of approximately $5.2 million and (iv) pay additional amounts for transaction fees and expenses.

On April 9, 2012, the Company declared, and on April 10, 2012, the Company paid a dividend of $37.0 million to Affinion Holdings, utilizing available cash on hand. Affinion Holdings expects to utilize the proceeds of the dividend to make future interest payments on its senior notes.

Cash Flows—Nine Months Ended September 30, 2012 and 2011

At September 30, 2012, we had $56.5 million of cash and cash equivalents on hand, a decrease of $9.0 million from $65.5 million at September 30, 2011. 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.

	Nine Months Ended September 30,
	2012			2011			Change
	(in millions)
Cash provided by (used in):
Operating activities	$	54.8		$	65.9		$	(11.1	)
Investing activities		(39.2	)		(44.5	)		5.3
Financing activities		(45.8	)		(77.1	)		31.3
Effect of exchange rate changes		0.4			0.1			0.3
Net change in cash and cash equivalents	$	(29.8	)	$	(55.6	)	$	25.8

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Operating Activities

During the nine months ended September 30, 2012, we generated $11.1 million less cash from operating activities than during the nine months ended September 30, 2011. Segment EBITDA decreased by $2.3 million for the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011 (see “—Results of Operations”). During the nine months ended September 30, 2012, other current assets generated cash flows that were $26.8 million less favorable than the cash flows during the nine months ended September 30, 2011 due to higher gift card inventories and prepaid computer maintenance expenses in 2012. In addition, deferred revenue generated cash flows during the nine months ended September 30, 2012 that were $22.5 million less favorable due to the continued shift from annual memberships to monthly memberships, as well the continued growth in online joins. This unfavorability was partially offset by increased cash flows in 2012 from accounts receivable due to the timing of receipts, including the impact of new loyalty program clients and growth in loyalty programs with existing clients, and continued growth in the domestic travel business.

Investing Activities

We used $5.3 million less cash in investing activities during the nine months ended September 30, 2012 as compared to the same period in 2011. During the nine months ended September 30, 2012, we used $38.2 million for capital expenditures and $1.2 million for acquisition-related payments. During the nine months ended September 30, 2011, we acquired $26.1 million of cash as a result of our non-cash acquisition of Webloyalty and used $39.0 million for capital expenditures and $32.9 million for acquisition-related payments.

Financing Activities

We used $31.31 million less cash in financing activities during the nine months ended September 30, 2012 as compared to the same period in 2011. During the nine months ended September 30, 2012, we paid dividends to our parent company of $37.0 million and made principal payments on borrowings of $8.8 million. During the nine months ended September 30, 2011, we borrowed an additional $250.0 million under the term loan facility under our senior secured credit facility, made principal payments on our debt of $8.8 million and incurred financing costs of $5.8 million. In addition, during the nine months ended September 30, 2011, we paid dividends of $323.2 million to our parent company.

Credit Facilities and Long-Term Debt

As a result of the Apollo Transactions, we became a highly leveraged company, and we have incurred additional indebtedness and refinancing indebtedness since the Apollo Transactions. As of September 30, 2012, we had approximately $1.9 billion in indebtedness. Payments required to service this indebtedness have substantially increased our liquidity requirements as compared to prior years.

As part of the Apollo Transactions, we issued senior notes, entered into a senior subordinated bridge loan facility and entered into our senior secured credit facility, consisting of a term loan facility in the principal amount of $860.0 million (which amount does not reflect the $231.0 million in principal prepayments that we made prior to amendment and restatement of the senior secured credit facility in April 2010) and a revolving credit facility in an aggregate amount of up to $100.0 million.

On April 26, 2006, we issued $355.5 million aggregate principal amount of 111/₂% 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 including as part of refinancing our senior subordinated bridge loan facility, 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 the redemption prices (generally at a premium) set forth in the indenture governing the senior subordinated notes. The senior subordinated notes are unsecured obligations. The senior subordinated notes are guaranteed by the same subsidiaries that guarantee our senior secured credit facility and our 7.875% senior notes. The senior subordinated notes contain restrictive covenants related primarily to our ability to distribute dividends to our parent, redeem or repurchase capital stock, sell assets, issue additional debt or merge with or acquire other companies.

On April 9, 2010, the Company, as Borrower, and Affinion Holdings, as guarantor, entered into a $1.0 billion amended and restated senior secured credit facility with its lenders, amending our senior secured credit facility. We refer to the amended and restated senior secured credit facility, as amended from time to time, including by the Incremental Assumption Agreements (as defined below) as “our senior secured credit facility”. Our senior secured credit facility initially consisted of a five-year $125.0 million revolving credit facility and an $875.0 million term loan facility.

On November 19, 2010, the Company completed a private offering of $475.0 million aggregate principal amount of 7.875% senior notes due 2018 (the “7.875% senior notes”) providing net proceeds of $471.5 million. The 7.875% senior notes bear interest at 7.875% per annum payable semi-annually on June 15 and December 15 of each year, commencing on June 15, 2011. The 7.875%

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senior notes will mature on December 15, 2018. The 7.875% senior notes are redeemable at the Company’s option prior to maturity. The indenture governing the 7.875% senior notes contains negative covenants which restrict the ability of the Company and its restricted subsidiaries to engage in certain transactions and also contains customary events of default. The Company’s obligations under the 7.875% senior notes are jointly and severally and fully and unconditionally guaranteed on a senior secured basis by each of the Company’s existing and future domestic subsidiaries that guarantee the Company’s indebtedness under its senior secured credit facility. The 7.875% senior notes and guarantees thereof are senior unsecured obligations of the Company and rank equally with all of the Company’s and the guarantors’ existing and future senior indebtedness and senior to the Company’s and the guarantors’ existing and future subordinated indebtedness. The 7.875% senior notes are effectively subordinated to the Company’s and the guarantors’ existing and future secured indebtedness, including the Company’s obligations under its senior secured credit facility, to the extent of the value of the collateral securing such indebtedness. The 7.875% senior notes are structurally subordinated to all indebtedness and other obligations of each of the Company’s existing and future subsidiaries that are not guarantors. On August 24, 2011, pursuant to the registration rights agreement entered into in connection with the issuance of the 7.875% senior notes, the Company completed a registered exchange offer and exchanged all of the then-outstanding 7.875% senior notes into a like principal amount of 7.875% senior notes that have been registered under the Securities Act. The Company used substantially all of the net proceeds of the offering of the 7.875% senior notes to finance the purchase of all of then-outstanding senior notes that were previously issued in 2005, 2006 and 2009.

On December 13, 2010, the Company, as borrower, Affinion Holdings and certain of the Company’s subsidiaries entered into an Incremental Assumption Agreement with two of its lenders (the “Revolver Incremental Assumption Agreement,” and together with the Term Loan Incremental Assumption Agreement, the “Incremental Assumption Agreements”) which resulted in an increase in the revolving credit facility from $125.0 million to $160.0 million, with a further increase to $165.0 million upon the satisfaction of certain conditions. These conditions were satisfied in January 2011 and the revolving credit facility was increased to $165.0 million. On February 11, 2011, the Company, as borrower, and Affinion Holdings, and certain of the Company’s subsidiaries entered into, and simultaneously closed under, the Term Loan Incremental Assumption Agreement, which resulted in an increase in the term loan facility from $875.0 million to $1.125 billion.

The revolving credit facility includes a letter of credit subfacility and a swingline loan subfacility. The term loan facility matures in October 2016. However, the term loan facility will mature on the date that is 91 days prior to the maturity of the senior subordinated notes unless, prior to that date, (a) the maturity for our senior subordinated notes is extended to a date that is at least 91 days after the maturity of the term loan facility or (b) the obligations under our senior subordinated notes are (i) repaid in full or (ii) refinanced, replaced or defeased in full with new loans and/or debt securities with maturity dates occurring after the maturity date of the term loan. The term loan facility provides for quarterly amortization payments totaling 1% per annum, with the balance payable upon the final maturity date. The term loan facility also requires mandatory prepayments of the outstanding term loans based on excess cash flow (as defined), if any, and the proceeds from certain specified transactions. The interest rates with respect to the term loan facility and the revolving loans under the credit facility are based on, at our option, (a) the higher of (i) adjusted LIBOR and (ii) 1.50%, in each case plus 3.50%, or (b) the highest of (i) Bank of America, N.A.’s prime rate, (ii) the Federal Funds Effective Rate plus 0.5% and (iii) 2.50%, in each case plus 2.50%. The effective interest rate on the term loan for the nine months ended September 30, 2012 and the year ended December 31, 2011 was 5% per annum. Our obligations under our senior secured credit facility are, and our obligations under any interest rate protection or other hedging arrangements entered into with a lender or any of its affiliates will be, guaranteed by Affinion Holdings and by each of our existing and subsequently acquired or organized domestic subsidiaries, subject to certain exceptions. Our senior secured credit facility is secured to the extent legally permissible by substantially all the assets of (i) Affinion Holdings, which consists of a pledge of all our capital stock and (ii) us and the subsidiary guarantors, including but not limited to: (a) a pledge of substantially all capital stock held by us or any subsidiary guarantor and (b) security interests in substantially all tangible and intangible assets of us and each subsidiary guarantor, subject to certain exceptions. Our senior secured credit facility also contains financial, affirmative and negative covenants. The negative covenants in our senior secured credit facility include, among other things, limitations (all of which are subject to certain exceptions) on our (and in certain cases, Affinion Holdings’) ability to declare dividends and make other distributions, redeem or repurchase our capital stock; prepay, redeem or repurchase certain of our subordinated indebtedness; make loans or investments (including acquisitions); incur additional indebtedness (subject to certain exceptions); enter into agreements that would restrict the ability of our subsidiaries to pay dividends; merge or enter into acquisitions; sell our assets; and enter into transactions with our affiliates. The credit facility also requires us to comply with financial maintenance covenants with a maximum ratio of total debt to EBITDA (as defined in our senior secured credit facility) and a minimum ratio of EBITDA to cash interest expense. The April 2010 proceeds of the term loan under our senior secured credit facility were utilized to repay the outstanding balance of the then existing senior secured term loan, including accrued interest, of $629.7 million and pay fees and expenses of approximately $27.0 million. The remaining proceeds are available for working capital and other general corporate purposes, including permitted acquisitions and investments. Any borrowings under the revolving credit facility are available to fund Affinion’s working capital requirements, capital expenditures and for other general corporate purposes.

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In January 2011, utilizing available cash on hand, the Company paid a dividend of approximately $123.4 million to Affinion Holdings. Affinion Holdings utilized the proceeds of the dividend and available cash on hand to (i) redeem Affinion Holdings’ outstanding preferred stock with a liquidation preference of approximately $41.2 million, (ii) pay a dividend to Affinion Holdings’ stockholders (including holders of restricted stock units) of $1.35 per share (approximately $115.4 million in the aggregate), (iii) pay a one-time cash bonus to Affinion Holdings’ option holders of approximately $9.6 million and (iv) pay additional amounts for transaction fees and expenses.

In February 2011, the Company used a portion of the Incremental Term Loans to pay a dividend of approximately $199.8 million to Affinion Holdings, and expects to use the balance of the proceeds for working capital and other corporate purposes and to fund future strategic initiatives. Affinion Holdings used the proceeds of the dividend to (i) redeem Affinion Holdings’ outstanding preferred stock with a liquidation preference of approximately $5.4 million, (ii) pay a dividend to Affinion Holdings’ stockholders (including holders of restricted stock units) of $1.50 per share (approximately $128.2 million in the aggregate), (iii) pay a one-time cash bonus to certain of Affinion Holdings’ option holders of approximately $5.2 million and (iv) pay additional amounts for transaction fees and expenses.

At September 30, 2012, the Company had $1,098.7 million outstanding under the term loan facility, $475.0 million ($472.3 million net of discount) outstanding under the 7.875% senior notes and $355.5 million ($353.9 million net of discount) outstanding under the senior subordinated notes. At September 30, 2012, there were no outstanding borrowings under the revolving credit facility and the Company had $158.1 million available under the revolving credit facility after giving effect to the issuance of $6.9 million of letters of credit issued under the revolving credit facility.

Covenant Compliance

Our senior secured credit facility and the indentures that govern our 7.875% 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 senior secured 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 our senior secured credit facility (Adjusted EBITDA, as defined, to interest expense, as defined) must be greater than 1.85 to 1.0 at September 30, 2012. The consolidated leverage ratio as defined in our senior secured credit facility (total debt, as defined, to Adjusted EBITDA, as defined) must be less than 5.75 to 1.0 at September 30, 2012. In addition, our senior secured credit facility, among other things, restricts our ability to incur indebtedness or liens, make investments or declare or pay any dividends to our parent. The indentures governing the 7.875% senior notes and the senior subordinated notes, among other things: (a) limit our ability and the ability of our subsidiaries to incur additional indebtedness, incur liens, pay dividends or make certain other restricted payments and enter into certain transactions with affiliates; (b) limit our ability to enter into agreements that would restrict the ability 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. As of September 30, 2012, the Company was in compliance with the restrictive covenants under its debt agreements and expects to be in compliance over the next twelve months. Compliance with the maintenance covenants under its debt agreements over the next twelve months may be achieved in part through debt reduction, asset divestiture, cost reduction initiatives, waiver or amendment of certain covenants or other actions or combination of actions deemed appropriate by the Company.

We have the ability to incur additional debt, subject to limitations imposed by our senior secured credit facility and the indentures governing our 7.875% senior notes and senior subordinated notes. Under the indentures governing our 7.875% senior notes and our 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.

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, 2012 to Adjusted EBITDA.

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	Twelve Months Ended September 30, 2012(a)
	(in millions)
Net cash provided by operating activities	$	95.9
Interest expense, net		147.8
Income tax expense		5.5
Amortization of favorable and unfavorable contracts		0.3
Amortization of debt discount and financing costs		(8.4	)
Unrealized loss on interest rate swap		(8.0	)
Deferred income taxes		(2.4	)
Payment received for assumption of loyalty points program liability		0.1
Changes in assets and liabilities		87.6
Effect of the Apollo Transactions, reorganizations, certain legal costs and net cost savings(b)		22.5
Other, net(c)		16.2
Adjusted EBITDA, excluding pro forma adjustments(d)		357.1
Effect of the pro forma adjustments(e)		7.5
Adjusted EBITDA, including pro forma adjustments(f)	$	364.6

(a) Represents consolidated financial data for the year ended December 31, 2011, minus consolidated financial data for the nine months ended September 30, 2011, plus consolidated financial data for the nine months ended September 30, 2012.

(b) Eliminates the effect of the Apollo Transactions and legal costs for certain legal matters and costs associated with severance incurred.

(c) Eliminates (i) net changes in certain reserves, (ii) foreign currency gains and losses related to unusual, non-recurring intercompany transactions, (iii) the loss from an investment accounted for under the equity method, (iv) costs associated with certain strategic and corporate development activities and (v) consulting fees paid to Apollo.

(d) Adjusted EBITDA, excluding pro forma adjustments, does not give pro forma effect to the projected annualized benefits of restructurings and other cost savings initiatives in connection with the Webloyalty and Prospectiv acquisitions. However, we do make such accretive pro forma adjustments as if such restructurings and cost savings initiatives had occurred on October 1, 2011 in calculating the Adjusted EBITDA under the amended and restated senior secured credit facility and the indentures governing our 7.875% senior notes and senior subordinated notes.

(e) Gives effect to the projected annualized benefits of restructurings and other cost savings initiatives in connection with the Webloyalty and Prospectiv acquisitions as if such restructurings and cost savings initiatives had occurred on October 1, 2011.

(f) Adjusted EBITDA, including pro forma adjustments, gives pro forma effect to the adjustments discussed in (e) above.

Set forth below is a reconciliation of our consolidated net loss attributable to Affinion Group, Inc. for the twelve months ended September 30, 2012 to Adjusted EBITDA as required by our credit facility and the indentures governing our 7.875% senior notes and senior subordinated notes.

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	Twelve Months Ended September 30, 2012(a)
	(in millions)
Net loss attributable to Affinion Group, Inc.	$	(77.1	)
Interest expense, net		147.8
Income tax expense		5.5
Non-controlling interest		0.7
Depreciation and amortization		203.0
Effect of the Apollo Transactions, reorganizations and non-recurring revenues and gains(b)		(0.6	)
Certain legal costs(c)		8.9
Net cost savings(d)		14.2
Other, net(e)		54.7
Adjusted EBITDA, excluding pro forma adjustments(f)		357.1
Effect of the pro forma adjustments(g)		7.5
Adjusted EBITDA, including pro forma adjustments(h)	$	364.6
Interest coverage ratio(i)		2.39
Consolidated leverage ratio(j)		5.17
Fixed charge coverage ratio(k)		2.40

(a) Represents consolidated financial data for the year ended December 31, 2011, minus consolidated financial data for the nine months ended September 30, 2011, plus consolidated financial data for the nine months ended September 30, 2012.

(b) Eliminates the effect of the Apollo Transactions.

(c) Represents the elimination of legal costs for certain legal matters.

(d) Represents the elimination of costs associated with severance incurred.

(e) Eliminates (i) net changes in certain reserves, (ii) share-based compensation expense, including payments to option holders, (iii) foreign currency gains and losses related to unusual, non-recurring intercompany transactions, (iv) the loss from an investment accounted for under the equity method, (v) costs associated with certain strategic and corporate development activities, (vi) consulting fees paid to Apollo, (vii) facility exit costs and (viii) the impairment charge related to the goodwill and certain intangible assets of Prospectiv.

(f) Adjusted EBITDA, excluding pro forma adjustments, does not give pro forma effect to the projected annualized benefits of restructurings and other cost savings initiatives in connection with the Webloyalty and Prospectiv acquisitions. However, we do make such accretive pro forma adjustments as if such restructurings and cost savings initiatives had occurred on October 1, 2011 in calculating the Adjusted EBITDA under the amended and restated senior secured credit facility and the indentures governing our 7.875% senior notes and senior subordinated notes.

(g) Gives effect to the projected annualized benefits of restructurings and other cost savings initiatives in connection with the Webloyalty and Prospectiv acquisitions as if such restructurings and cost savings initiatives had occurred on October 1, 2011.

(h) Adjusted EBITDA, including pro forma adjustments, gives pro forma effect to the adjustments discussed in (g) above.

(i) The interest coverage ratio is defined in our amended and restated senior secured credit facility (Adjusted EBITDA, as defined, to interest expense, as defined). The interest coverage ratio must be greater than 1.85 to 1.0 at September 30, 2012.

(j) The consolidated leverage ratio is defined in our amended and restated senior secured credit facility (total debt, as defined, to Adjusted EBITDA, as defined). The consolidated leverage ratio must be less than 5.75 to 1.0 at September 30, 2012.

(k) The fixed charge coverage ratio is defined in the indentures governing our 7.875% senior notes and our senior subordinated notes (consolidated cash flows, as defined, which is equivalent to Adjusted EBITDA (as defined in our amended and restated senior secured credit facility) to fixed charges, as defined). The calculation of fixed charges excludes the amortization of deferred financing costs associated with the amendment and restatement of our credit facility on April 9, 2010.

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Affinion Group Holdings, Inc.’s Dependence on Us to Service its Obligations

On October 5, 2010, Affinion Holdings issued $325.0 million aggregate principal amount of 11.625% senior notes due November 15, 2015 (the “Affinion Holdings senior notes”), and applied the gross proceeds, together with cash distributions from the Company, to repay the Affinion Holdings Loan Agreement (as defined below) in full, to pay the related fees and expenses and for general corporate purposes. The interest on the Affinion Holdings senior notes is payable semi-annually. Affinion Holdings may redeem some or all of its senior notes at the redemption prices (generally at a premium) set forth in the indenture governing the Affinion Holdings senior notes. The Affinion Holdings senior notes are unsecured obligations and are not guaranteed by the Company or any of its subsidiaries. The Affinion Holdings senior notes contain restrictive covenants related primarily to Affinion Holdings’ ability to distribute dividends to Affinion Holdings’ stockholders, redeem or repurchase capital stock, sell assets, issue additional debt or merge with or acquire other companies. As a holding company with no significant assets other than the ownership of 100% of our common stock, Affinion Holdings will depend on our cash flows to make cash interest payments on the Affinion Holdings senior notes.

As described above, we expect that Affinion Holdings will rely on distributions from us in order to pay cash amounts due in respect of the Affinion Holdings senior notes. However, our ability to make distributions to Affinion Holdings is restricted by covenants contained in our amended and restated senior secured credit facility and the indentures governing our 7.875% senior notes and our senior subordinated notes and by Delaware law. To the extent we make distributions to Affinion Holdings, the amount of cash available to us to pay principal of, and interest on, our outstanding debt, including our amended and restated senior secured credit facility, our 7.875% senior notes and our senior subordinated notes, will be reduced, and we would have less cash available for other purposes, which could negatively impact our financial condition, our results of operations and our ability to maintain or expand our business. A failure to pay principal of, or interest on, our debt, including our amended and restated senior secured credit facility, our 7.875% senior notes and our senior subordinated notes, would constitute an event of default under the applicable debt agreements, giving the holders of that debt the right to accelerate its maturity. In addition, to the extent we are not able to make distributions to Affinion Holdings because of the restrictions in our debt agreements or otherwise, then Affinion Holdings may not have sufficient cash on hand to service its obligations under the Affinion Holdings senior notes. Any failure by Affinion Holdings to pay principal of, or interest on, the Affinion Holdings senior notes would constitute an event of default under our amended and restated senior secured credit facility, giving the lenders thereunder the right to accelerate the repayment of all borrowings thereunder, which acceleration would also give rise to an event of default under our 7.875% senior notes and senior subordinated notes. If any of our debt is accelerated, we may not have sufficient cash available to repay it in full and we may be unable to refinance such debt on satisfactory terms or at all.

Debt Repurchases

We or our affiliates have, in the past, and may, from time to time in the future, purchase any of our or Affinion Holdings’ indebtedness. Any such future purchases may be made through open market or privately negotiated transactions with third parties or pursuant to one or more tender or exchange offers or otherwise, upon such terms and at such prices as we or any such affiliates may determine.

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, stock-based compensation, valuation of goodwill and intangible assets, valuation of interest rate swaps 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. Significant estimates include accounting for profit sharing receivables from insurance carriers, accruals and income tax valuation allowances, litigation accruals, the estimated fair value of stock based compensation, estimated fair values of assets and liabilities acquired in business combinations and estimated fair values of financial instruments. In addition, we refer you to our audited consolidated financial statements as of December 31, 2011 and 2010, and for the years ended December 31, 2011, 2010 and 2009, 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.

Interest Rate Swap

In January 2009, the Company entered into an interest rate swap effective February 21, 2011. The swap had a notional amount of $500.0 million and terminated on October 17, 2012. Under the swap, the Company had agreed to pay a fixed rate of interest of 2.985%, payable on a quarterly basis with the first interest payment due on May 21, 2011, in exchange for receiving floating payments based on a three-month LIBOR on the notional amount for each applicable period.

The interest rate swap was recorded at fair value, either as an asset or liability. The change in the fair value of the swap, which was not designated as a hedging instrument, is included in interest expense in the accompanying unaudited condensed consolidated statements of comprehensive income. For the three months ended September 30, 2012 and 2011, the Company recorded interest income (expense), representing realized and unrealized gains and losses, of $(0.2) million and $0.5 million, respectively, related to the interest rate swap and for the nine months ended September 30, 2012 and 2011, the Company recorded interest expense, representing realized and unrealized gains and losses, of $1.2 million and $2.2 million, respectively, related to the interest rate swap.

The following table provides information about the Company’s 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 the Company’s long-term debt as of September 30, 2012 (dollars are in millions unless otherwise indicated):

	2012			2013			2014			2015			2016			2017 and Thereafter			Total		Fair Value At September 30, 2012
Fixed rate debt	$	0.1		$	0.5		$	0.4		$	355.8		$	0.1		$	475.0		$	831.9	$	685.7
Average interest rate		9.43	%		9.43	%		9.43	%		9.43	%		7.88	%		7.88	%
Variable rate debt	$	2.8		$	11.2		$	11.3		$	11.2		$	1,062.2					$	1,098.7	$	1,010.8
Average interest rate(a)		5.00	%		5.00	%		5.00	%		5.00	%		5.00	%
Variable to fixed interest rate swaps(b)																					$	2.1
Average pay rate		2.99	%
Average receive rate		0.32	%

(a) Average interest rate is based on rates in effect at September 30, 2012.

(b) The fair value of the interest rate swap is included in accounts payable and accrued expenses at September 30, 2012. The fair value has been determined after consideration of the interest rate yield curve and the creditworthiness of the counterparty to the interest rate swap.

We do not use derivative instruments for trading or speculative purposes.

Foreign Currency Forward Contracts

In August 2010, the Company entered into a foreign currency forward contract under which the Company agreed to sell GBP 3.5 million and receive $5.5 million thirty days after the contract date. In September 2010, and in each subsequent month, upon settlement, the Company entered into a new thirty day forward contract. In April 2011, the Company entered into a foreign currency forward contract under which the Company agreed to sell GBP 4.3 million and receive $7.2 million thirty days after the contract date. In May 2011, and in each subsequent month, upon settlement, the Company entered into a new thirty day forward contract. In May 2012, the Company entered into a foreign currency forward contract under which the Company agreed to sell EUR 7.7 million and receive $9.5 million thirty days after the contract date. In June 2012, and in each subsequent month, upon settlement, the Company entered into a new thirty day forward contract. During the three and nine months ended September 30, 2012, the Company recognized a realized loss on the forward contracts of $0.8 million and $0.9 million, respectively, and during the three and nine months ended September 30, 2011, the Company recognized a realized gain on the forward contracts of $0.3 million and $0.2 million, respectively. As of September 30, 2012, the Company had a de minimis unrealized loss on the foreign currency forward contracts. We generally do not utilize foreign currency forward contracts as we do not consider our foreign currency risk to be material, although the Company continues to evaluate its foreign currency exposures in light of the current volatility in the foreign currency markets.

At September 30, 2012, the Company’s estimated fair value of Affinion’s foreign currency forward contracts is based upon available market information. The fair value of the foreign currency forward contracts is based on significant other observable inputs, adjusted for contract restrictions and other terms specific to the foreign currency forward contracts. The fair value has been determined after consideration of foreign currency exchange rates and the creditworthiness of the party to the foreign currency forward contracts. The counterparty to the foreign currency forward contracts is a major financial institution. The Company does not expect any losses from non-performance by this counterparty.

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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, 2012, approximately $74.9 million of the profit-sharing receivable was due from one insurance carrier. 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 collectability. Commission advances are periodically evaluated as to recovery.

Item 4. Controls and Procedures.

Evaluation of Disclosure Control and Procedures. The Company, under the direction of the Chief Executive Officer and the Chief Financial Officer, has 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 the Company’s 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 errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance 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, 2012, an evaluation was performed under the supervision and with the participation of the Company’s 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, 2012, the Company’s 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 the Company’s 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.

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PART II. OTHER INFORMATION

Item 1. Legal Proceeding.

Information required by this Item is contained in Note 7 to our unaudited condensed consolidated financial statements within Part I of this Form 10-Q.

Item 1A. Risk Factors

The following risk factors supplement and/or update the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2011, and in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012.

We derive a substantial amount of our revenue from the members and end-customers we obtain through only a few of our marketing partners. If one or more of our agreements with our marketing partners were to be terminated or expire, or one or more of our marketing partners were to reduce the marketing of our services, we would lose access to prospective members and end-customers and could lose sources of revenue.

We derive a substantial amount of our net revenue from the customers we obtain through only a few of our marketing partners. In 2011, we derived approximately 46.6% of our net revenues from members and end-customers we obtained through the 10 largest marketing partners of our more than 5,570 marketing partners.

Many of our key marketing partner relationships are governed by agreements that may be terminated at any time without cause by our marketing partners upon notice of as few as 90 days without penalty. Some of our agreements may be terminated at any time by our marketing partners upon notice of as few as 30 days without penalty. Our marketing partners are not subject to minimum marketing commitments that are material, individually or in the aggregate. Moreover, under many of these agreements, our marketing partners may cease or reduce their marketing of our services without terminating or breaching our agreements. Further, in the ordinary course of business, at any given time, one or more of our contracts with key marketing partners may be selected for bidding through a request for proposal process. As a result of the regulatory supervisory audits and inquiries of certain of our large financial institution marketing partners, certain partners have terminated their agreements with us or ceased marketing our services to, or ceased billing, their consumers. The loss of such marketing partners or the cessation of their marketing of our services or a decline in their businesses could have a material adverse effect on our future revenue from existing services of which such marketing partner’s customers are customers of ours and could adversely affect our ability to further market new or existing services through such marketing partner to prospective customers. There can be no assurance that more of our or other marketing partners will not terminate their relationship with us, cease or reduce their marketing of our services or suffer a decline in their business. If other marketing partners terminate or do not renew their relationships with us and we are required to cease providing our services to, or cease billing, their customers, then we could lose significant sources of revenue and there can be no assurances that we will be able to replace such lost revenue, which could have a material adverse effect on our revenues and profitability.

Our typical membership products agreements with marketing partners provide that after termination of the contract we may continue to provide our services to existing members under the same economic arrangements that existed before termination. However, in some cases, our marketing partners have, and others may in the future, nonetheless violate their contractual obligations and cease facilitating the billing of such existing members. Under certain of our insurance products agreements, however, marketing partners may require us to cease providing services to existing customers after time periods ranging from 90 days to five years after termination of the agreement. Also, under agreements with our marketing partners for which we market under a wholesale arrangement and have not incurred any marketing expenditures, our marketing partners generally may require us to cease providing services to existing customers upon termination of the wholesale arrangement. Further, marketing partners under certain agreements also may require us to cease providing services to their customers under existing arrangements if the contract is terminated for material breach by us or due to a change in the law or regulations. If one or more of these marketing partners were to terminate our agreements with them, and require us to cease providing our services to, or cease billing, their customers, then we could lose significant sources of revenue and there can be no assurances that we will be able to replace such lost revenue, which could have a material adverse effect on our revenues and profitability.

Our business is increasingly subject to U.S. and foreign government regulation, which could impede our ability to market our programs and services and reduce our profitability.

We market our programs and services through various distribution media, including direct mail, point-of-sale marketing, telemarketing, online marketing and other methods. These media are regulated by state, federal and foreign laws and we believe that these media will be subject to increasing regulation, particularly in the area of consumer privacy. Such regulation may limit our ability to solicit or sign up new customers or to offer products or services to existing customers.

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Our U.S. membership and insurance products are subject to extensive regulation and oversight by the Federal Trade Commission (the “FTC”), the Federal Communications Commission (the “FCC”), state attorneys general and other state regulatory agencies, including state insurance regulators. Our marketing partners are subject to various federal and state consumer protection laws designed to ensure that consumers are protected from unfair and deceptive marketing practices. Moreover, our financial institution marketing partners are subject to oversight by the Office of the Comptroller of the Currency (the “OCC”), Federal Deposit Insurance Corporation and Consumer Financial Protection Bureau (the “CFPB”) as described below. Pursuant to such oversight, the financial institutions may be required to oversee their service providers, vendors or products sold to customers of such financial institutions. Our programs and services involve the use of non-public personal information that is subject to federal consumer privacy laws, such as the Financial Modernization Act of 1999, also known as the Gramm-Leach-Bliley Act, and various state laws governing consumer privacy, such as California’s SB 1, SB 1386 and others. Additionally, telemarketing related to our programs and services is subject to federal and state telemarketing regulations, including the FTC’s Telemarketing Sales Rule, the FCC’s Telephone Consumer Protection Act and related regulations, as well as various state telemarketing laws and regulations. Furthermore, our insurance products are subject to various state laws and regulations governing the business of insurance, including, without limitation, laws and regulations governing the administration, underwriting, marketing, solicitation or sale of insurance programs. Additional federal or state laws, including subsequent amendments to existing laws, could impede our ability to market our programs and services and reduce our revenues and profitability.

Similarly our operations in the European Economic Area are also often subject to strict regulation. These laws include, in particular, restrictions on our insurance intermediary activities as a regulated financial service requiring prior authorization and adherence to various rules on management and controls, documentation, complaints handling, financial promotions and the contracting process with consumers. In addition our marketing operations are subject to regulation including data protection legislation requiring notification and obtaining consent for marketing and also advertising rules regarding the content of marketing messages. “Distance selling” information and cancellation rules must also be followed when we contract with consumers at a distance including via post, phone or website. In the latter case, electronic commerce rules also come into play. Some of our products in the U.K. also involve the provision of services classified as consumer credit and therefore require additional licenses to be applied for and maintained. Additionally, individuals in the U.K. and other European countries have rights to prevent direct marketing to them by telephone, fax or email. Recent additions to the regulatory landscape to which we are subject in the European Economic Area include restrictions on what are considered to be unfair or misleading commercial practices and new general rules on providing services involving information and basic complaint handling rules to be followed. While many of these rules are based on European Directives, different jurisdictions have varying implementation and enforcement approaches which can be difficult to navigate. New rules or changes in existing ones at a European or Member State level in countries where we operate could restrict our current practices and the loss of required authorization or licenses would severely inhibit our service offerings.

In addition, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) mandates the most wide-ranging overhaul of financial industry regulation in decades. Dodd-Frank was signed into law on July 21, 2010. Dodd-Frank provides a regulatory framework and requires that regulators draft, review and approve, and implement numerous regulations and conduct studies that are likely to lead to more regulations. As part of this, Dodd-Frank created the CFPB that became operational on July 21, 2011, and has been given authority to regulate all consumer financial products sold by banks and non-bank companies.

The overall impact of these regulations on us and our clients is difficult to estimate, in part because certain regulations need to be adopted by the CFPB with respect to consumer financial products and services and in part because regulations that have been adopted have only recently taken effect. These new and contemplated regulations and supervisory audits and inquiries could impose additional reporting, supervisory and regulatory requirements on, as well as result in inquiries of, us and our marketing partners that could delay or cease marketing campaigns with certain marketing partners or otherwise adversely affect our business, financial condition and results of operations. In addition, the CFPB or other bank oversight federal agency such as the OCC have issued and may continue to issue rulings or findings or enter into a settlement or consent order with one or more of our financial institution marketing partners that relates to the products or services we provide to such financial institution, which could adversely affect our marketing with that marketing partner or require changes to our products or services to consumers and could have a material adverse affect on our business, financial condition and results of operation. Moreover, other financial institutions may view such existing or future rulings, findings, settlements or consent orders as imposing a standard they will comply with. As a result, certain financial institution marketing partners have, and others could, delay or cease marketing with us, terminate their agreements with us, require us to cease providing services to members or end-consumers, or require changes to our products or services to consumers that could have a material adverse affect on our business, financial condition and results of operations. In addition, even an inadvertent failure to comply with these laws and regulations, as well as rapidly evolving expected standards, could adversely affect our business or our reputation.

Compliance with these federal, state and foreign regulations is generally our responsibility, and we could be subject to a variety of enforcement and/or private actions for any failure to comply with such regulations. Any changes to such regulations could materially increase our compliance costs. The risk of our noncompliance with any rules and regulations enforced by a federal or state

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consumer protection authority or an enforcement agency in a foreign jurisdiction may subject us or our management to fines or various forms of civil or criminal prosecution, any of which could impede our ability to market our programs and services and reduce our revenues and profitability. Certain types of noncompliance may also result in giving our marketing partners the right to terminate certain of our contracts. Also, the media often publicizes perceived noncompliance with consumer protection regulations and violations of notions of fair dealing with customers, and our industry is susceptible to peremptory charges by the media and others of regulatory noncompliance and unfair dealing.

Our marketing partners are subject to a wide variety of federal, state and foreign laws and regulations, including banking, insurance and privacy laws and supervisory audits and inquiries. Changes in the laws or regulations applicable to our marketing partners or the failure of our marketing partners to comply with such laws and regulations or the outcome of supervisory audits and inquiries have resulted in some of our financial institution marketing partners terminating, and may cause others to in the future to terminate, their contracts with us, to cease facilitating payment processing or to cease marketing our services to their members or end-consumers, all of which could have a material adverse impact on our business.

Consumer complaints with respect to our industry have resulted and may result in state and federal regulatory and other investigations. On December 29, 2010, the Restore Online Shoppers’ Confidence Act was enacted. The legislation prohibits Online Data-pass Marketing and requires additional disclosure relating to the online marketing of, and billing for, membership programs in the online post-transaction environment. Several states have passed similar laws restricting Online Data-pass Marketing. Since the Company had ceased Online Data-pass Marketing in January 2010, more than eleven months prior to the enactment of such legislation, we do not expect such legislation to have a material adverse effect on our business.

Over the past several years, there has also been proposed legislation in several states that may interfere with our marketing practices. For example, over the past several years many states have proposed legislation that would allow customers to limit the amount of unsolicited direct mail they receive. To date, we are not aware of any state that has actually passed legislation that would create a “Do-Not-Mail” registry or which would otherwise allow customers to restrict the amount of unsolicited direct mail that they receive. We believe there are three states that are currently considering some form of “Do-Not-Mail” legislation. Additionally, several bills have been proposed in Congress that could restrict the collection and dissemination of personal information for marketing purposes. If such legislation is passed in one or more states or by Congress, it could impede our ability to market our programs and services and reduce our revenues and profitability.

We are subject to legal actions and governmental investigations that could require us to incur significant expenses and, if resolved adversely to us, could impede our ability to market our programs and services, result in a loss of members and end-customers, reduce revenues and profitability and damage our reputation.

We are involved in claims, legal proceedings and state and federal governmental inquiries related to employment matters, contract disputes, business and marketing practices, trademark and copyright infringement claims and other commercial matters. Additionally, certain of our marketing partners have become, and others may become, involved in legal proceedings or governmental inquiries relating to our products or marketing practices. As a result, we may be subject to indemnification obligations under our marketing agreements. While we cannot predict the outcome of pending suits, claims, investigations and inquiries, the cost of responding to and defending such suits, as well as the ultimate resolution of any of these matters, could require us to incur significant expenses and, if resolved adversely to us, could impede our ability to market our programs and services, result in a loss of members and end-customers, reduce revenues and profitability and damage our reputation. There can be no assurance that our accruals for legal actions or investigations will be sufficient to satisfy all related claims and expenses.

Between December 2008 and December 2011, the Company received inquiries from numerous state attorneys general relating to the marketing of its membership programs and its compliance with consumer protection statutes. The Company responded to the states’ request for documents and information and is in active discussions with such states regarding its investigations and the resolution of these matters. Settlement of such matters may include payment by the Company of the costs of the states’ investigation, restitution to consumers and injunctive relief.

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

None.

Item 3. Defaults Upon Senior Securities.

None.

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Item 4. Mine Safety Disclosure.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit Number	Description
10.1*	Amendment to Employment Agreement, dated as of September 20, 2012, among Affinion Group Holdings, Inc., Affinion Group, Inc. and Richard J. Fernandes
10.2*	Amendment to Employment Agreement, dated as of September 25, 2012, among Affinion Group Holdings, Inc., Affinion Group, Inc. and Nathaniel J. Lipman
10.3*	Amendment to Employment Agreement, dated as of September 20, 2012, among Affinion Group Holdings, Inc., Affinion Group, Inc. and Todd H. Siegel
10.4*	Amendment to Employment Agreement, dated as of September 20, 2012, among Affinion Group Holdings, Inc., Affinion Group, Inc. and Steven E. Upshaw
10.5*	Employment Agreement, dated as of September 20, 2012, among Affinion Group Holdings, Inc., Affinion Group, Inc. and Mark G. Gibbens
31.1*	Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a).
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.
101.INS XBRL†	Instance Document
101.SCH XBRL†	Taxonomy Extension Schema
101.CAL XBRL†	Taxonomy Extension Calculation Linkbase
101.DEF XBRL†	Taxonomy Extension Definition Linkbase
101.LAB XBRL†	Taxonomy Extension Label Linkbase
101.PRE XBRL†	Taxonomy Extension Presentation Linkbase

* Filed herewith.

** Furnished herewith.

† Pursuant to applicable securities laws and regulations, the Company is deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and is not subject to liability under any anti-fraud provisions of the federal securities laws as long as the Company has made a good faith attempt to comply with the submission requirements and promptly amends the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. Users of this data are advised that, pursuant to Rule 406T, these interactive data files are deemed not filed and otherwise are not subject to liability.

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SIGNATURES

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

	AFFINION GROUP, INC.
Date: November 1, 2012	By:	/S/    MARK G. GIBBENS
		Mark G. Gibbens
		Executive Vice President and Chief Financial Officer

S-1

EXHIBIT INDEX

Exhibit Number	Description
10.1*	Amendment to Employment Agreement, dated as of September 20, 2012, among Affinion Group Holdings, Inc., Affinion Group, Inc. and Richard J. Fernandes
10.2*	Amendment to Employment Agreement, dated as of September 25, 2012, among Affinion Group Holdings, Inc., Affinion Group, Inc. and Nathaniel J. Lipman
10.3*	Amendment to Employment Agreement, dated as of September 20, 2012, among Affinion Group Holdings, Inc., Affinion Group, Inc. and Todd H. Siegel
10.4*	Amendment to Employment Agreement, dated as of September 20, 2012, among Affinion Group Holdings, Inc., Affinion Group, Inc. and Steven E. Upshaw
10.5*	Employment Agreement, dated as of September 20, 2012, among Affinion Group Holdings, Inc., Affinion Group, Inc. and Mark G. Gibbens
31.1*	Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a).
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.
101.INS XBRL†	Instance Document
101.SCH XBRL†	Taxonomy Extension Schema
101.CAL XBRL†	Taxonomy Extension Calculation Linkbase
101.DEF XBRL†	Taxonomy Extension Definition Linkbase
101.LAB XBRL†	Taxonomy Extension Label Linkbase
101.PRE XBRL†	Taxonomy Extension Presentation Linkbase

* Filed herewith.

** Furnished herewith.

† Pursuant to applicable securities laws and regulations, the Company is deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and is not subject to liability under any anti-fraud provisions of the federal securities laws as long as the Company has made a good faith attempt to comply with the submission requirements and promptly amends the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. Users of this data are advised that, pursuant to Rule 406T, these interactive data files are deemed not filed and otherwise are not subject to liability.

EX-10.1

Exhibit 10.1

AMENDMENT TO EMPLOYMENT AGREEMENT

This AMENDMENT (“Amendment”), by and among AFFINION GROUP HOLDINGS, INC., a Delaware corporation (the “Company”), AFFINION GROUP, INC., a Delaware corporation and wholly-owned subsidiary of the Company (“Affinion”), and RICHARD FERNANDES (“Executive”) (collectively, the “Parties”) is made as of September 20, 2012.

WHEREAS, the Company, Affinion and Executive previously entered into an Employment Agreement, dated as of January 14, 2011 (the “Employment Agreement”), pursuant to which Executive serves President of the Company and Affinion and as Chief Executive Officer of Affinion International Limited;

WHEREAS, the Company intends to employ a new Chief Financial Officer;

WHEREAS, in connection therewith, the Company desires to adjust its management structure;

WHEREAS, in connection with such restructuring, the Employment Agreement will be modified as set forth herein; and

WHEREAS, capitalized terms used but not otherwise defined in this Amendment shall have the meanings ascribed to such terms in the Employment Agreement.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants, understandings, representations, warranties, undertakings and promises hereinafter set forth, intending to be legally bound thereby, the Parties agree as follows:

1. The first sentence of Section 2(a) of the Employment Agreement shall be deleted in its entirety and replaced with the following:

“During the Employment Period, Executive shall serve as Chief Executive Officer – Global Retail Services and Co-President of Affinion.”

2. Section 3(b) of the Employment Agreement is hereby amended by deleting the words “President of the Company and Affinion or as Chief Executive Officer of Affinion International Limited” and inserting the words “Chief Executive Officer – Global Retail Services and Co-President of Affinion” in clause (iv) thereof.

3. This Amendment shall become effective at such time as the Company enters into a definitive employment agreement with a new Chief Financial Officer.

4. The Employment Agreement, as amended by the terms of this Amendment, will supersede the prior terms of the Employment Agreement.

5. This Amendment will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflicting provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the laws of any jurisdiction other than the State of Delaware to be applied. In furtherance of

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the foregoing, the internal law of the State of Delaware will control the interpretation and construction of this Amendment, even if under such jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply.

6. This Amendment may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

[SIGNATURE PAGE FOLLOWS]

2

IN WITNESS WHEREOF, the Parties have executed this Amendment as of the date first written above.

AFFINION GROUP HOLDINGS, INC.
By:	/s/ Sloane Levy
Name:	Sloane Levy
Title:	Executive Vice President, General Counsel
AFFINION GROUP, INC.
By:	/s/ Sloane Levy
Name:	Sloane Levy
Title:	Executive Vice President, General Counsel
RICHARD FERNANDES
By:	/s/ Richard J. Fernandes

EX-10.2

Exhibit 10.2

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT by and among AFFINION GROUP HOLDINGS, INC., a Delaware corporation (the “Company”), AFFINION GROUP, INC., a Delaware corporation and wholly-owned subsidiary of the Company (“Affinion”, together with the “Company,” the “Companies”) and NATHANIEL J. LIPMAN (“Executive”) (collectively the “Parties”) is made as of September 25, 2012 (the “Effective Date”).

WHEREAS, Executive is currently employed by the Companies pursuant to an employment agreement dated as of November 9, 2007 (the “Prior Employment Agreement”);

WHEREAS, the Companies and Executive have agreed that Executive will no longer serve as Chief Executive Officer of the Companies but will serve as Chairman of the Boards of Directors of the Companies;

WHEREAS, in connection with the change in Executive’s role with the Companies, the Parties desire to enter into this employment agreement (the “Agreement”), which Agreement shall supersede the Prior Employment Agreement effective as of the Effective Date; and

WHEREAS, Executive desires to accept employment on the terms hereinafter set forth in this Agreement.

NOW THEREFORE, in consideration of the premises and of the mutual covenants, understandings, representations, warranties, undertakings and promises hereinafter set forth, intending to be legally bound thereby, the Parties agree as follows:

Section 1. Employment Period.

Subject to earlier termination in accordance with Section 3 of this Agreement, Executive shall be employed by the Companies for a period commencing on the Effective Date and ending on December 31, 2013 (the “Employment Period”); provided, however, that the Employment Period shall automatically be renewed for successive one (1) year periods thereafter unless either the Company or Executive gives at least ninety (90) days’ written notice of its intention not to renew the Employment Period. Upon Executive’s termination of employment with the Company for any reason, Executive shall immediately resign all positions with the Companies or any of their respective subsidiaries or affiliates, including any position as a member of the Company’s Board of Directors (the “Board”) and as a member of the Board of Directors of Affinion (the “Affinion Board”).

Section 2. Terms of Employment.

(a) Position. During the Employment Period, Executive shall serve as Chairman of the Board and the Affinion Board. During the Employment Period, the Company will nominate Executive for election by stockholders as a member of the Board and will use commercially reasonable efforts to cause the Executive to be so elected. In performing his duties hereunder, Executive shall report directly to the Board. If reasonably requested by the Board, Executive hereby agrees to serve (without additional compensation) as an officer and director of any member of the “Affinion Group” (as defined in Section 5(a) below).

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(b) Duties. During the Employment Period, Executive shall be primarily responsible for the Company’s management and affairs as directed by the Board, and have such other, responsibilities, duties and authority that are customary for his position, subject at all times to the control of the Board, and shall perform such services as customarily are provided by an executive of a corporation with his position and such other services consistent with his position, as shall be assigned to him from time to time by the Board. Executive agrees to devote all of his business time to the business and affairs of the Company and to use Executive’s commercially reasonable efforts to perform faithfully, effectively and efficiently his responsibilities and obligations hereunder. Notwithstanding the foregoing, nothing herein shall prohibit Executive from (i) serving on civic or charitable boards or committees and (ii) managing personal investments, so long as such activities do not materially interfere with the performance of Executive’s responsibilities hereunder.

(c) Compensation.

(i) Base Salary. During the Employment Period, Executive shall receive an initial annual base salary in an amount equal to $1,020,000.00, less all applicable withholdings, which shall be paid in accordance with the customary payroll practices of the Company (as in effect from time to time, the “Annual Base Salary”). The Annual Base Salary shall be subject to annual review and increases, and the Annual Base Salary shall not be reduced without Executive’s consent, unless the reduction is related to a broader compensation reduction that is not limited to Executive and does not exceed 10% of his Annual Base Salary.

(ii) Bonuses. During the Employment Period, the Company shall establish a bonus plan for each fiscal year of the Company (each, the “Plan”) pursuant to which Executive will be eligible to receive an annual bonus (the “Bonus”). The Compensation Committee of the Board will administer the Plan and at such time as the Company becomes subject to Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) establish in advance performance objectives for each year in accordance with Section 162(m) of the Code. In the event that the Company achieves the target established in the Plan based on actual performance, Executive shall be eligible to receive a Bonus in an amount equal to 175% of Executive’s Annual Base Salary (“Target Bonus”). Subject to Section 4, Executive will be entitled to receive the Bonus only upon the Company’s achievement of the specified performance objectives and if Executive is employed on the last day of the applicable fiscal year. The Bonus shall become payable in the following fiscal year on or before March 15 provided that the Compensation Committee certifies that the Company has achieved the applicable performance objectives and determines the amount of the bonus that shall be paid to each executive entitled to receive a bonus for the applicable fiscal year. Notwithstanding any of the foregoing to the contrary, Executive shall not be eligible to receive a Bonus for any fiscal year of the Company commencing after December 31, 2012.

(iii) Equity Awards. The Company has previously granted Executive restricted stock units (“RSUs”) pursuant to the Affinion Group Holdings, Inc. 2007 Stock Award Plan and Restricted Stock Unit Agreement dated as of April 25, 2012. Executive acknowledges and agrees that the portion of his RSUs that are scheduled to vest on April 7,

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2014 shall be forfeited effective immediately. Executive shall continue to vest in the portion of his RSUs that are scheduled to vest on April 8, 2013 and August 22, 2013 (the “2013 RSUs”), respectively, subject to Executive’s continued service with the Company on each applicable vesting date; provided, however, that in the event that Executive’s service is terminated by the Company without Cause (as defined below) or Executive resigns for Good Reason (as defined below) prior to April 8, 2013 or August 22, 2013, then Executive shall continue to vest in any then unvested 2013 RSUs as though Executive’s employment continued through the applicable vesting date.

(iv) Benefits. During the Employment Period, Executive shall be eligible to participate in all retirement, compensation and employee benefit plans, practices, policies and programs provided by the Companies to the extent applicable generally to other senior executives of the Companies (except severance plans, policies, practices, or programs) subject to the eligibility criteria set forth therein, as such may be amended or terminated from time to time.

(v) Expenses. During the Employment Period, Executive shall be entitled to receive reimbursement for all reasonable business expenses incurred by Executive in performance of his duties hereunder provided that Executive provides all necessary documentation in accordance with the Companies’ policies.

Section 3. Termination of Employment.

(a) Death or Disability. Executive’s employment shall terminate automatically upon Executive’s death. If Executive becomes subject to a “Disability” (as defined below) during the Employment Period, the Company may give Executive written notice in accordance with Sections 3(g) and 10(g) of its intention to terminate Executive’s employment. For purposes of this Agreement, “Disability” means (i) Executive’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) Executive is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident or health plan covering employees of the Companies.

(b) Cause. Executive’s employment may be terminated at any time by the Company for “Cause” (as defined below). For purposes of this Agreement, “Cause” shall mean Executive’s (i) conviction of a felony or a crime of moral turpitude; (ii) conduct that constitutes fraud or embezzlement; (iii) willful misconduct or willful gross neglect; (iv) continued willful failure to substantially perform his duties hereunder; or (v) a material breach by Executive of this Agreement; provided that in the event of a termination pursuant to clause (iv) or (v), to the extent such failure to perform duties or material breach is subject to cure, the Company shall have notified Executive in writing describing such failure to perform duties or material breach and Executive shall have failed to cure such failure to perform or breach within 30 days after his receipt of such written notice.

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(c) Termination Without Cause. The Company may terminate Executive’s employment hereunder without Cause at any time.

(d) Good Reason. Executive’s employment may be terminated at any time by Executive for Good Reason upon 60 days’ prior written notice following the occurrence of the event giving rise to the termination for Good Reason. For purposes of this Agreement, “Good Reason” means voluntary resignation after any of the following actions taken by the Companies without Executive’s consent: (i) failure of the Company to use its commercially reasonable efforts to cause Executive to continue to be elected as a member of the Board; (ii) any material failure of the Companies to fulfill their obligations under this Agreement, (iii) a material and adverse change to, or a material reduction of, Executive’s duties and responsibilities to the Companies, (iv) a reduction in Executive’s Annual Base Salary (excluding any diminution related to a broader compensation reduction that is not limited to Executive specifically and that is not more than 10% in the aggregate or any diminution to which Executive consented) or (v) the relocation of Executive’s primary office to a location more than 35 miles from the prior location; provided that any such event shall not constitute Good Reason unless and until Executive shall have provided the Companies with notice thereof no later than 60 days following the occurrence of such event and the Companies shall have failed to remedy such event within 30 days of receipt of such notice.

(e) Voluntary Termination. Executive’s employment may be terminated at any time by Executive without Good Reason upon 90 days’ prior written notice.

(f) Termination as a Result of Non-Renewal of the Employment Period by the Company. The expiration of the Employment Period, and the termination of Executive’s employment upon the date of such expiration, on account of the Company giving notice to Executive of its desire not to extend the Employment Period in accordance with Section 1, shall be treated for purposes of this Agreement as a termination without Cause pursuant to Section 4(a).

(g) Notice of Termination. Any termination by the Company for Cause or without Cause, or by Executive for Good Reason or without Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 10(g). For purposes of this Agreement, a “Notice of Termination” means a written notice that (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated and (iii) if the “Date of Termination” (as defined below) is other than the date of receipt of such notice, specifies the termination date. The failure by Executive, or the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Good Reason or Cause shall not waive any right of Executive, or the Company hereunder or preclude Executive, or the Company from asserting such fact or circumstance in enforcing Executive’s, or the Company’s rights hereunder.

(h) Date of Termination. “Date of Termination” means (i) if Executive’s employment is terminated by the Company for Cause, without Cause or by reason of Disability, or by Executive for Good Reason or without Good Reason, the date of receipt of the Notice of Termination (in the case of a termination with or without Good Reason, provided such Date of Termination is in

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accordance with Section 3(d) or Section 3(e)) or any later date specified therein pursuant to Section 3(g), as the case may be, (ii) if Executive’s employment is terminated by reason of death, the date of death, and (iii) the expiration of the Employment Period, and the termination of Executive’s employment upon the date of such expiration, on account of the Company giving notice to Executive of its desire not to extend the Employment Period in accordance with Section 3(f).

Section 4. Obligations of the Company upon Termination.

(a) With Good Reason; Without Cause. If during the Employment Period, the Company shall terminate Executive’s employment without Cause or Executive shall terminate his employment for Good Reason, then the Company will provide Executive with the following payments and/or benefits:

(i) The Company shall pay to Executive as soon as reasonably practicable but no later than sixty (60) days following the Date of Termination in a lump sum to the extent not previously paid, (A) the Annual Base Salary through the Date of Termination, and (B) the Bonus earned for any fiscal year ended prior to the year in which the Date of Termination occurs, provided that Executive was employed on the last day of such fiscal year (“Accrued Obligations”); and

(ii) In the event that Executive’s employment is terminated on or prior to December 31, 2013, the Company shall continue to pay Executive the amount of the Annual Base Salary Executive would have received from the Date of Termination through December 31, 2013, such payments to be paid monthly during the period commencing on the Date of Termination and ending on December 31, 2013 on the last day of the month (the “Severance Payments”). In the event that Executive’s employment after December 31, 2013, the Companies shall have no further obligation to Executive.

(b) Death or Disability. If Executive’s employment shall be terminated by reason of the Executive’s death or Disability, then the Company will provide Executive with the following severance payments and/or benefits: the Company shall pay Executive or his legal representatives (i) the Accrued Obligations; (ii) a lump sum equal to one times Executive’s Annual Base Salary; and (iii) the continuation of death or Disability benefits thereafter in accordance with the terms of such plans of the Companies then in effect (the payments and benefits described in clauses (ii) and (iii), the “Severance Benefits”). Thereafter, the Companies shall have no further obligation to Executive or his legal representatives.

(c) Cause; Other than for Good Reason. If Executive’s employment shall be terminated by the Company for Cause or by Executive without Good Reason, then the Companies shall have no further obligations to Executive other than for payment of the Accrued Obligations and any indemnification rights he may have pursuant to Section 9.

(d) Separation Agreement and General Release. The Company’s obligations to make payments under Sections 4(a)(ii) or 4(b) are conditioned on Executive’s or his legal representative’s executing a separation agreement and general release of claims against the Companies and their respective affiliates (and their respective officers and directors) in a form

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substantially similar to that attached hereto as Exhibit A, subject to changes as maybe warranted to be made to such release to preserve the intent thereof for changes in applicable laws; provided, that, if Executive should fail to execute (or revokes) such release within 60 days following the Date of Termination, the Company shall not have any obligation to provide the Severance Payments or Severance Benefits contemplated under this Section 4. The Severance Payments or Severance Benefits, as the case may be, shall be paid in full or begin to be paid, as the case may be, on the first payroll period occurring after Executive executes such release and Executive does not revoke such release within seven (7) days after executing such release; provided, further, that, if the Date of Termination occurs within the last sixty (60) days of any calendar year, then any Severance Payments that are otherwise payable during such sixty (60) day period shall be accumulated and paid, as the case may be, on the first payroll period occurring in the calendar year following the Date of Termination subject to Executive’s (or his legal representative’s) executing and not revoking such separation agreement and release.

(e) Notwithstanding the foregoing, if all or any portion of the payments and/or benefits due under this Section 4 are determined to be “nonqualified deferred compensation” subject to Section 409A of the Code, and the Company determines that Executive is a “specified employee” as defined in Section 409A(a)(2)(B)(i) of the Code and the final regulations promulgated thereunder (the “Treasury Regulations”) and other guidance issued thereunder, then such payments and/or benefits (or portion thereof) shall commence no earlier than the first day of the seventh month following Executive’s termination of employment (with the first such payment being a lump sum equal to the aggregate payments and/or benefits Executive would have received during such six-month period if no such payment delay had been imposed). For purposes of this Section 4(e), “termination of employment” shall mean Executive’s “separation from service”, as defined in Section 1.409A-1(h) of the Treasury Regulations, including the default presumptions thereunder.

Section 5. Restrictive Covenants.

(a) Non-Solicitation. During the Employment Period and ending on the third anniversary of the Executive’s termination of employment with the Company for any reason, Executive shall not directly or indirectly through another person or entity (i) induce or attempt to induce any employee of the Companies and their respective affiliates (collectively, the “Affinion Group”) to leave the employ of the Affinion Group, or in any way interfere with the relationship between the Affinion Group, on the one hand, and any employee thereof, on the other hand, (ii) hire any person who was an employee of the Affinion Group or (iii) induce or attempt to induce any customer, supplier, licensee or other business relation of the Affinion Group to cease doing business with the Affinion Group, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation, on the one hand, and the Affinion Group, on the other hand.

(b) Non-Competition. Executive acknowledges that, in the course of his employment with the Affinion Group, Executive has become familiar, or will become familiar, with the Affinion Group’s “Confidential Information” and that such Executive’s services have been and will be of special, unique and extraordinary value to the Affinion Group. Therefore, Executive agrees that, during the Employment Period and ending on the second anniversary of Executive’s termination of employment with the Company for any reason (the “Non-Compete Period”),

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Executive shall not, directly or indirectly, engage in any business that markets, provides, administers or makes available affinity-based membership programs, affinity-based insurance programs, benefit packages as an enhancement to financial institutions or other customer accounts or loyalty-based programs (whether as of the date hereof or during the Non-Compete Period), anywhere in the world in which the Affinion Group is doing business. For purposes of this Section 5(b), the phrase “directly or indirectly, engage in” shall include any direct or indirect ownership or profit participation interest in such enterprise, whether as an owner, stockholder, partner, joint venturer or otherwise, and shall include any direct or indirect participation in such enterprise as an employee, consultant, licensor of technology or otherwise; provided, however, that nothing in this Section 5(b) shall prohibit Executive from being a passive owner of not more than 5% of the outstanding stock of any class of a corporation which is publicly traded, so long as Executive has no active participation in the business of such corporation.

(c) Non-Disclosure; Non-Use of Confidential Information. Executive shall not disclose or use at any time, either during his employment with the Companies or at any time thereafter, any Confidential Information of which Executive is or becomes aware, whether or not such information is developed by him, except to the extent that such disclosure or use is directly related to and required by Executive’s performance in good faith of duties assigned to Executive by the Company. Executive will take all appropriate steps to safeguard Confidential Information in his possession and to protect it against disclosure, misuse, espionage, loss and theft. Executive shall deliver to the Company at the termination of his employment with the Company, or at any time the Company may request, all memoranda, notes, plans, records, reports, computer tapes and software and other documents and data (and copies thereof) relating to the Confidential Information or the “Work Product” (as defined in Section 5(e)(ii)) of the business of the Affinion Group that Executive may then possess or have under his control.

(d) Proprietary Rights. Executive recognizes that the Affinion Group possesses a proprietary interest in all Confidential Information and Work Product and has the exclusive right and privilege to use, protect by copyright, patent or trademark, or otherwise exploit the processes, ideas and concepts described therein to the exclusion of Executive, except as otherwise agreed between the Affinion Group and Executive in writing. Executive expressly agrees that any Work Product made or developed by Executive or his agents during the course of Executive’s employment, including any Work Product which is based on or arises out of Work Product, shall be the property of and inure to the exclusive benefit of the Affinion Group. Executive further agrees that all Work Product developed by Executive (whether or not able to be protected by copyright, patent or trademark) during the course of his employment with the Companies, or involving the use of the time, materials or other resources of the Affinion Group, shall be promptly disclosed to the Affinion Group and shall become the exclusive property of the Affinion Group, and Executive shall execute and deliver any and all documents necessary or appropriate to implement the foregoing.

(e) Certain Definitions.

(i) As used herein, the term “Confidential Information” means information that is not generally known to the public (but for purposes of clarity, Confidential Information shall never exclude any such information that becomes known to the public because of Executive’s unauthorized disclosure) and that is used, developed or obtained by the

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Affinion Group in connection with its business, including, but not limited to, information, observations and data obtained by Executive while employed by the Affinion Group or any predecessors thereof (including those obtained prior to the date of the Prior Employment Agreement) concerning (A) the business or affairs of the Affinion Group (or such predecessors), (B) products or services, (C) fees, costs and pricing structures, (D) designs, (E) analyses, (F) drawings, photographs and reports, (G) computer software, including operating systems, applications and program listings, (H) flow charts, manuals and documentation, (I) databases, (J) accounting and business methods, (K) inventions, devices, new developments, methods and processes, whether patentable or unpatentable and whether or not reduced to practice, (L) customers and clients and customer or client lists, (M) other copyrightable works, (N) all production methods, processes, technology and trade secrets, and (O) all similar and related information in whatever form. Confidential Information will not include any information that has been published in a form generally available to the public (except as a result of Executive’s unauthorized disclosure) prior to the date Executive proposes to disclose or use such information. Confidential Information will not be deemed to have been published or otherwise disclosed merely because individual portions of the information have been separately published, but only if all material features comprising such information have been published in combination.

(ii) As used herein, the term “Work Product” means all inventions, innovations, improvements, technical information, systems, software developments, methods, designs, analyses, drawings, reports, service marks, trademarks, trade names, logos and all similar or related information (whether patentable or unpatentable) that relates to the Affinion Group’s actual or anticipated business, research and development or existing or future products or services and that are conceived, developed or made by Executive (whether or not during usual business hours and whether or not alone or in conjunction with any other person) while employed by the Companies (including those conceived, developed or made prior to the date of the Prior Employment Agreement) together with all patent applications, letters patent, trademark, trade name and service mark applications or registrations, copyrights and reissues thereof that may be granted for or upon any of the foregoing.

Section 6. Non-Disparagement.

During the period commencing on the Effective Date and continuing until the third anniversary of the Executive’s termination of employment for any reason, neither Executive nor his agents, on the one hand, nor the Companies formally, or their respective senior executives or board of directors, on the other hand, shall directly or indirectly issue or communicate any public statement, or statement likely to become public, that maligns, denigrates or disparages the other (including, in the case of communications by Executive or his agents, any of the Companies’ officers, directors or employees). The foregoing shall not be violated by truthful responses to legal process or governmental inquiry or by private statements to any of the Companies’ officers, directors or employees; provided, that in the case of Executive, such statements are made in the course of carrying out his duties pursuant to this Agreement.

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Section 7. Severance Payments.

In addition to the foregoing, and not in any way in limitation of any right or remedy otherwise available to the Affinion Group, if Executive violates Section 5 or Section 6 hereof, any Severance Payments then or thereafter due from the Company to Executive shall be terminated immediately and the Company’s obligation to pay and Executive’s right to receive such Severance Payments shall terminate and be of no further force or effect.

Section 8. Executive’s Representations, Warranties and Covenants.

(a) Executive hereby represents and warrants to the Companies that:

(i) Executive has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and this Agreement has been duly executed by Executive;

(ii) the execution, delivery and performance of this Agreement by Executive does not and will not, with or without notice or the passage of time, conflict with, breach, violate or cause a default under any agreement, contract or instrument to which Executive is a party or any judgment, order or decree to which Executive is subject;

(iii) Executive is not a party to or bound by any employment agreement, consulting agreement, non-compete agreement, fee for services agreement, confidentiality agreement or similar agreement with any other person;

(iv) upon the execution and delivery of this Agreement by the Companies and Executive, this Agreement will be a legal, valid and binding obligation of Executive, enforceable in accordance with its terms;

(v) Executive understands that the Companies will rely upon the accuracy and truth of the representations and warranties of Executive set forth herein and Executive consents to such reliance; and

(vi) as of the date of execution of this Agreement, Executive is not in breach of any of its terms, including having committed any acts that would form the basis for a Cause termination if such act had occurred after the Effective Date.

(b) The Companies hereby represent and warrant to Executive that:

(i) the Companies have all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and this Agreement has been duly executed by the Companies;

(ii) the execution, delivery and performance of this Agreement by the Companies does not and will not, with or without notice or the passage of time, conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Companies are a party or any judgment, order or decree to which the Companies are subject;

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(iii) upon the execution and delivery of this Agreement by the Companies and Executive, this Agreement will be a legal, valid and binding obligation of the Companies, enforceable in accordance with its terms; and

(iv) the Companies understand that Executive will rely upon the accuracy and truth of the representations and warranties of the Companies set forth herein and the Companies consent to such reliance.

Section 9. Indemnification.

The Company shall secure directors’ and officers’ liability insurance for the benefit of Executive on terms at least equal to those applicable to the other directors and officers of the Company (which insurance, for Executive, shall provide for advancement of defense costs) and shall indemnify Executive to the maximum extent permitted under the General Corporate Law of Delaware.

Section 10. General Provisions.

(a) Severability. It is the desire and intent of the Parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable under any present or future law, and if the rights and obligations of any party under this Agreement will not be materially and adversely affected thereby, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction; furthermore, in lieu of such invalid or unenforceable provision there will be added automatically as a part of this Agreement, a legal, valid and enforceable provision as similar in terms to such invalid or unenforceable provision as may be possible. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

(b) Entire Agreement and Effectiveness. Executive hereby acknowledges and agrees that the Prior Employment Agreement shall terminate as of immediately prior to the Effective Date, Executive shall have no further rights thereunder and the Companies shall have no further obligations thereunder. Effective as of the Effective Date, this Agreement embodies the complete agreement and understanding among the Parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the Parties, written or oral, which may have related to the subject matter hereof in any way (including, without limitation, the Prior Employment Agreement, any other employment, severance or change-in-control agreement or understanding but excluding the Management Investor Rights Agreement dated October 17, 2005 and any stock options or equity awards granted under any equity compensation plans maintained by the Company).

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(c) Successors and Assigns.

(i) This Agreement is personal to Executive and without the prior written consent of the Companies shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives.

(ii) This Agreement shall inure to the benefit of and be binding upon the Companies and their respective successors and assigns. The Companies will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Companies to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Companies would be required to perform it if no such succession had taken place. As used in this Agreement, “Companies” shall mean the Companies as hereinbefore defined and any successor to their business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law, or otherwise.

(d) Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

(e) Enforcement.

(i) Arbitration. Except for disputes arising under Sections 5 and 6 of this Agreement (including, without limitation, any claim for injunctive relief), any controversy, dispute or claim arising out of or relating to this Agreement, or its interpretation, application, implementation, breach or enforcement which the Parties are unable to resolve by mutual agreement, shall be settled by submission by either Executive or the Companies of the controversy, claim or dispute to binding arbitration in New York (unless the Parties agree in writing to a different location), before a single arbitrator in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association then in effect. In any such arbitration proceeding the Parties agree to provide all discovery deemed necessary by the arbitrator. The decision and award made by the arbitrator shall be final, binding and conclusive on all Parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof. Each party shall bear its or his costs and expenses in any such arbitration and one-half of the arbitrator’s fees and costs; provided, however, that the arbitrator shall have the discretion to award the prevailing party reimbursement of its or his reasonable attorney’s fees and costs.

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(ii) Remedies. All remedies hereunder are cumulative, are in addition to any other remedies provided for by law and may, to the extent permitted by law, be exercised concurrently or separately, and the exercise of any one remedy shall not be deemed to be an election of such remedy or to preclude the exercise of any other remedy.

(iii) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

(f) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the Companies and Executive and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall be construed as a waiver of such provisions or affect the validity, binding effect or enforceability of this Agreement or any provision hereof.

(g) Notices. Any notice provided for in this Agreement must be in writing and must be either personally delivered, transmitted via telecopier, mailed by first class mail (postage prepaid and return receipt requested) or sent by reputable overnight courier service (charges prepaid) to the recipient at the address below indicated or at such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder and received when delivered personally, when received if transmitted via telecopier, five days after deposit in the U.S. mail and one day after deposit for overnight delivery with a reputable overnight courier service.

If to the Companies, to:

Affinion Group Holdings, Inc.

6 High Ridge Park

Stamford, CT 06905

Facsimile: (203) 956-1021

Attention: General Counsel

with a copy (which shall not constitute notice) to:

Akin Gump Strauss Hauer & Feld LLP

One Bryant Park

New York, NY 10036

Facsimile: (212) 872-1002

Attention: Adam Weinstein, Esq.

If to Executive, to:

Executive’s home address most recently on file with the Company.

(h) Withholdings Taxes. The Company may withhold from any amounts payable under this Agreement such federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.

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(i) Survival of Representations, Warranties and Agreements. All representations, warranties and agreements contained herein shall survive the consummation of the transactions contemplated hereby indefinitely.

(j) Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. All references to a “Section” in this Agreement are to a section of the Agreement unless otherwise noted.

(k) Construction. Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Agreement shall be deemed to be the language chosen by the Parties to express their mutual intent, and no rule of strict construction shall be applied against any party.

(l) Code Section 409A. If any payments of compensation or benefits due to Executive hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, such payments or other benefits shall be deferred if deferral will make such payment or other benefits compliant with Section 409A of the Code; otherwise, such payment or other benefits shall be restructured, to the extent possible, in a manner, determined by the Company and reasonably acceptable to Executive, that does not cause such an accelerated or additional tax. In no event will the Companies, their executives, directors, officers, agents or representatives have any liability for this Agreement’s failure to be exempt from or comply with Code Section 409A and such parties do not guarantee such compliance. Executive shall have no legally binding right to any distribution or payment made to him in error.

(m) Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first written above.

AFFINION GROUP HOLDINGS, INC.
By:	/s/ Todd H. Siegel
	Name:	Todd H. Siegel
	Title:	Chief Executive Officer
AFFINION GROUP, INC.
By:	/s/ Todd H. Siegel
	Name:	Todd H. Siegel
	Title:	Chief Executive Officer
NATHANIEL J. LIPMAN
By:	/s/ Nathaniel J. Lipman

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EXHIBIT A

GENERAL RELEASE

1. Termination of Employment. Nathaniel J. Lipman (“Executive”) acknowledges that his last day of employment with Affinion Group Holdings, Inc. (together with Affinion Group, Inc., the “Company”) is                      (the “Termination Date”).

2. Full Release. For the consideration set forth in the Employment Agreement, by and between the Company and Executive, dated as of September [    ], 2012 (the “Employment Agreement”) and for other fair and valuable consideration therefore, Executive, for himself, his heirs, executors, administrators, successors and assigns (hereinafter collectively referred to as the “Releasors”), hereby fully releases and discharges the Company, its parents, subsidiaries, affiliates, insurers, successors, and assigns, and their respective officers, directors, officers, employees, and agents (all such persons, firms, corporations and entities being deemed beneficiaries hereof and are referred to herein as the “Company Entities”) from any and all actions, causes of action, claims, obligations, costs, losses, liabilities, damages and demands of whatsoever character, whether or not known, suspected or claimed, which the Releasors have, from the beginning of time through the date of this General Release, against the Company Entities arising out of or in any way related to Executive’s employment or termination of his employment; provided, however, that this shall not be a release with respect to any amounts and benefits owed to Executive pursuant to the Employment Agreement upon termination of employment, employee benefit plans of the Company, or Executive’s right to indemnification and directors and officers insurance as provided in Section 9 of the Employment Agreement.

3. Waiver of Rights Under Other Statutes. Executive understands that this General Release waives all claims and rights Executive may have under certain federal, state and local statutory and regulatory laws, as each may be amended from time to time, including but not limited to, the Age Discrimination in Employment Act (including the Older Workers Benefit Protection Act) (“ADEA”), Title VII of the Civil Rights Act; the Employee Retirement Income Security Act of 1974; the Equal Pay Act; the Rehabilitation Act of 1973; the Americans with Disabilities Act; the Worker Adjustment and Retraining Notification Act; the Connecticut Fair Employment Practices Act; and all other statutes, regulations, common law, and other laws in any and all jurisdictions (including, but not limited to, Connecticut) that in any way relate to Executive’s employment or the termination of his employment.

4. Informed and Voluntary Signature. No promise or inducement has been made other than those set forth in this General Release. This General Release is executed by Executive without reliance on any representation by Company or any of its agents. Executive states that that he is fully competent to manage his business affairs and understands that he may be waiving legal rights by signing this General Release. Executive hereby acknowledges that he has carefully read this General Release and has had the opportunity to thoroughly discuss the terms of this General Release with legal counsel of his choosing. Executive hereby acknowledges that he fully understands the terms of this General Release and its final and binding effect and that he affixes his signature hereto voluntarily and of his own free will.

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5. Waiver of Rights Under the Age Discrimination Act. Executive understands that this General Release, and the release contained herein, waives all of his claims and rights under the ADEA. The waiver of Executive’s rights under the ADEA does not extend to claims or rights that might arise after the date this General Release is executed. The monies to be paid to Executive are in addition to any sums to which Executive would be entitled without signing this General Release. For a period of seven (7) days following execution of this General Release, Executive may revoke the terms of this General Release by a written document received by the General Counsel of the Company no later than 11:59 p.m. of the seventh day following Executive’s execution of this General Release. This General Release will not be effective until said revocation period has expired. Executive acknowledges that he has been given up to [21/45]¹ days to decide whether to sign this General Release. Executive has been advised to consult with an attorney prior to executing this General Release and has been given a full and fair opportunity to do so.

6. Miscellaneous.

(a) This General Release shall be governed in all respects by the laws of the State of Connecticut without regard to the principles of conflict of law.

(b) In the event that any one or more of the provisions of this General Release is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby. Moreover, if any one or more of the provisions contained in this General Release is held to be excessively broad as to duration, scope, activity or subject, such provisions will be construed by limiting and reducing them so as to be enforceable to the maximum extent compatible with applicable law.

(c) This General Release may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(d) The paragraph headings used in this General Release are included solely for convenience and shall not affect or be used in connection with the interpretation of this General Release.

(e) This General Release and the Employment Agreement represent the entire agreement between the parties with respect to the subject matter hereto and may not be amended except in a writing signed by the Company and Executive. If any dispute should arise under this General Release, it shall be settled in accordance with the terms of the Employment Agreement.

(f) This General Release shall be binding on the executors, heirs, administrators, successors and assigns of Executive and the successors and assigns of Company and shall inure to the benefit of the respective executors, heirs, administrators, successors and assigns of the Company Entities and the Releasors.

¹  Insert 45 days in the event of a layoff of two or more employees.

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IN WITNESS WHEREOF, the Parties hereto have executed this General Release on this      day of                 .

AFFINION GROUP HOLDINGS, INC.
By:
	Name:
	Title:
AFFINION GROUP, INC.
By:
	Name:
	Title:
NATHANIEL J. LIPMAN
Signature:

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EX-10.3

Exhibit 10.3

AMENDMENT TO EMPLOYMENT AGREEMENT

This AMENDMENT (“Amendment”), by and among AFFINION GROUP HOLDINGS, INC., a Delaware corporation (the “Company”), AFFINION GROUP, INC., a Delaware corporation and wholly-owned subsidiary of the Company (“Affinion”), and TODD SIEGEL (“Executive”) (collectively, the “Parties”) is made as of September 20, 2012.

WHEREAS, the Company, Affinion and Executive previously entered into an Employment Agreement, dated as of November 9, 2007 (the “Employment Agreement”), pursuant to which Executive serves Executive Vice President and Chief Financial Officer of the Company;

WHEREAS, the Company intends to employ a new Chief Financial Officer;

WHEREAS, in connection therewith, the Company desires to adjust its management structure;

WHEREAS, in connection with such restructuring, the Employment Agreement will be modified as set forth herein; and

WHEREAS, capitalized terms used but not otherwise defined in this Amendment shall have the meanings ascribed to such terms in the Employment Agreement.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants, understandings, representations, warranties, undertakings and promises hereinafter set forth, intending to be legally bound thereby, the Parties agree as follows:

1. Section 2(a) of the Employment Agreement shall be deleted in its entirety and replaced with the following:

“Position. During the Employment Period, Executive shall serve as Chief Executive Officer of the Company. In performing his duties hereunder, Executive shall report directly to the Board. If reasonably requested by the Board, Executive hereby agrees to serve (without additional compensation) as an officer and director of any member of the “Affinion Group” (as defined in Section 5(a) below).”

2. The amount of Executive’s Annual Base Salary in Section 2(c)(i) is hereby increased to $600,000.00.

3. The amount of Executive’s Target Bonus in Section 2(c)(ii) is hereby increased to 150% of Executive’s Annual Base Salary.

4. Section 3(b) of the Employment Agreement is hereby amended by deleting the second sentence thereof in its entirety and inserting the following in its place:

“For purposes of this Agreement, “Cause” shall mean Executive’s (i) conviction of a felony or a crime of moral turpitude; (ii) conduct that constitutes fraud or embezzlement; (iii) willful misconduct or willful gross neglect; (iv) continued willful failure to

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substantially perform his duties as Chief Executive Officer; or (v) a material breach by Executive of this Agreement; provided that in the event of a termination pursuant to clause (iv) or (v), to the extent such failure to perform duties or material breach is subject to cure, the Company shall have notified Executive in writing describing such failure to perform duties or material breach and Executive shall have failed to cure such failure to perform or breach within 30 days after his receipt of such written notice.”

5. Section 4(a)(ii) of the Employment Agreement is hereby amended by deleting the words “100% of” and inserting the words “two times”.

6. Section 10(g) of the Employment Agreement is hereby amended by deleting the word “President” and inserting the words “General Counsel”.

7. This Amendment shall become effective at such time as the Company enters into a definitive employment agreement with a new Chief Financial Officer.

8. The Employment Agreement, as amended by the terms of this Amendment, will supersede the prior terms of the Employment Agreement.

9. This Amendment will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflicting provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the laws of any jurisdiction other than the State of Delaware to be applied. In furtherance of the foregoing, the internal law of the State of Delaware will control the interpretation and construction of this Amendment, even if under such jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply.

10. This Amendment may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Parties have executed this Amendment as of the date first written above.

AFFINION GROUP HOLDINGS, INC.
By:	/s/ Sloane Levy
Name:	Sloane Levy
Title:	Executive Vice President, General Counsel
AFFINION GROUP, INC.
By:	/s/ Sloane Levy
Name:	Sloane Levy
Title:	Executive Vice President, General Counsel
TODD SIEGEL
By:	/s/ Todd H. Siegel

EX-10.4

Exhibit 10.4

AMENDMENT TO EMPLOYMENT AGREEMENT

This AMENDMENT (“Amendment”), by and among AFFINION GROUP HOLDINGS, INC., a Delaware corporation (the “Company”), AFFINION GROUP, INC., a Delaware corporation and wholly-owned subsidiary of the Company (“Affinion”), and STEVEN UPSHAW (“Executive”) (collectively, the “Parties”) is made as of September 20, 2012.

WHEREAS, the Company, Affinion and Executive previously entered into an Employment Agreement, dated as of January 15, 2010 (the “Employment Agreement”), pursuant to which Executive serves President of Affinion and Chief Executive Officer of Affinion International Limited;

WHEREAS, the Company intends to employ a new Chief Financial Officer;

WHEREAS, in connection therewith, the Company desires to adjust its management structure;

WHEREAS, in connection with such restructuring, the Employment Agreement will be modified as set forth herein; and

WHEREAS, capitalized terms used but not otherwise defined in this Amendment shall have the meanings ascribed to such terms in the Employment Agreement.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants, understandings, representations, warranties, undertakings and promises hereinafter set forth, intending to be legally bound thereby, the Parties agree as follows:

1. Section 2(a) of the Employment Agreement shall be deleted in its entirety and replaced with the following:

“Position. During the Employment Period, Executive shall serve as Chief Executive Officer of Global Financial Services and Co-President of Affinion and will perform such duties and exercise such supervision with regard to the business of the Companies as are associated with such positions, including such duties as may be prescribed from time to time by the Chief Executive Officer of the Company. Executive shall report directly to the Chief Executive Officer of the Company. If reasonably requested by the Board, Executive hereby agrees to serve (without additional compensation) as an officer and director of any member of the “Affinion Group” (as defined in Section 5(a) below).”

2. The amount of Executive’s Annual Base Salary in Section 2(c)(i) is hereby increased to $475,000.00.

3. Section 3(b) of the Employment Agreement is hereby amended by deleting the words “Executive Vice President and President of Affinion or Chief Executive Officer of AIL” and inserting the words “Chief Executive Officer of Global Financial Services and Co-President of Affinion” in clause (iv) thereof.

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4. This Amendment shall become effective at such time as the Company enters into a definitive employment agreement with a new Chief Financial Officer.

5. The Employment Agreement, as amended by the terms of this Amendment, will supersede the prior terms of the Employment Agreement.

6. This Amendment will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflicting provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the laws of any jurisdiction other than the State of Delaware to be applied. In furtherance of the foregoing, the internal law of the State of Delaware will control the interpretation and construction of this Amendment, even if under such jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply.

7. This Amendment may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Parties have executed this Amendment as of the date first written above.

AFFINION GROUP HOLDINGS, INC.
By:	/s/ Sloane Levy
Name:	Sloane Levy
Title:	Executive Vice President, General Counsel
AFFINION GROUP, INC.
By:	/s/ Sloane Levy
Name:	Sloane Levy
Title:	Executive Vice President, General Counsel
STEVEN UPSHAW
By:	/s/ Steve E. Upshaw

EX-10.5

Exhibit 10.5

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT by and among AFFINION GROUP HOLDINGS, INC., a Delaware corporation (the “Company”), AFFINION GROUP, INC., a Delaware corporation and wholly-owned subsidiary of the Company (“Affinion”, together with the “Company,” the “Companies”), and MARK GIBBENS (“Executive”) (collectively the “Parties”) is made as of September 20, 2012 (the “Effective Date”).

WHEREAS, the Companies desire to employ Executive pursuant to the terms, provisions and conditions set forth in this employment agreement (the “Agreement”); and

WHEREAS, Executive desires to accept his employment on such terms, provisions and conditions set forth in this Agreement.

NOW THEREFORE, in consideration of the premises and of the mutual covenants, understandings, representations, warranties, undertakings and promises hereinafter set forth, intending to be legally bound thereby, the Parties agree as follows:

Section 1. Employment Period. Subject to earlier termination in accordance with Section 3 of this Agreement, Executive shall be employed by the Companies for a period commencing on October 1, 2012 (the “Start Date”) and ending on the first anniversary of the Start Date (the “Employment Period”); provided, however, that the Employment Period shall automatically be renewed for successive one (1) year periods thereafter unless either the Company or Executive gives at least ninety (90) days’ written notice of its intention not to renew the Employment Period. Upon Executive’s termination of employment with the Company for any reason, Executive shall, at the request of the Company, immediately resign all positions with the Companies or any of their respective subsidiaries or affiliates, including any position as a member of any of the Companies’ Board of Directors.

Section 2. Terms of Employment.

(a) Position. During the Employment Period, Executive shall serve as Executive Vice President and Chief Financial Officer of the Company and will perform such duties and exercise such supervision with regard to the business of the Company as are associated with such positions, including being responsible for the general financial matters of the Company and its subsidiaries and such other duties as may be prescribed from time to time by the Chief Executive Officer of the Company reasonably consistent with such positions. Executive shall report directly to the Chief Executive Officer of the Company. If reasonably requested by the Company’s Board of Directors (the “Board”), Executive hereby agrees to serve (without additional compensation) as an officer and director of any member of the “Affinion Group” (as defined in Section 5(a) below).

(b) Duties. During the Employment Period, Executive shall have such responsibilities, duties, and authority that are customary for his positions, subject at all times to the control of the Board, and shall perform such services as customarily are provided by an executive of a corporation with his positions and such other services consistent with his positions, as shall be assigned to him from time to time by the Board.

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Executive agrees to devote all of his business time to the business and affairs of the Companies and to use Executive’s commercially reasonable efforts to perform faithfully, effectively and efficiently his responsibilities and obligations hereunder. Notwithstanding the foregoing, nothing herein shall prohibit Executive from (i) serving on civic or charitable boards or committees and (ii) managing personal investments, so long as such activities do not materially interfere with the performance of Executive’s responsibilities hereunder. In addition, subject to the approval of the Chief Executive Officer and General Counsel of the Company in their sole discretion, if Executive is requested to join the board of directors of another private, or public company or investment fund (an “Entity”) and will be able to perform his duties hereunder despite the effort required for such board position, Executive may serve as a board member of said Entity.

(c) Compensation.

(i) Base Salary. During the Employment Period, Executive shall receive an initial annual base salary in an amount equal to Four Hundred Thousand Dollars ($400,000), less all applicable withholdings, which shall be paid in accordance with the customary payroll practices of the Company (as in effect from time to time, the “Annual Base Salary”). The Annual Base Salary shall be subject to annual review and increases, and the Annual Base Salary shall not be reduced without Executive’s consent, unless the reduction is related to a broader compensation reduction that is not limited to Executive and does not exceed 10% of his Annual Base Salary. For purposes of this Agreement, the definition of Annual Base Salary shall include all such increases, if any.

(ii) Bonuses. During the Employment Period, the Company shall establish a bonus plan for each fiscal year of the Company (each, the “Plan”) pursuant to which Executive will be eligible to receive an annual bonus (the “Bonus”). The Compensation Committee of the Board will administer the Plan and at such time as the Company becomes subject to Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), establish in advance performance objectives for each year in accordance with Section 162(m) of the Code. In the event that the Company achieves the target established in the Plan based on actual performance, Executive shall be eligible to receive a Bonus in an amount equal to 100% of Executive’s Annual Base Salary (“Target Bonus”). Subject to Section 4, Executive will be entitled to receive the Bonus only upon the Company’s achievement of the specified performance objectives and if Executive is employed on the last day of the applicable fiscal year. The Bonus shall become payable in the following fiscal year on or before March 15 provided that the Compensation Committee certifies that the Company has achieved the applicable performance objectives and determines the amount of the bonus that shall be paid to each executive entitled to receive a bonus for the applicable fiscal year.

(iii) Signing Bonus. In addition, the Company shall pay to Executive a one-time signing bonus of One Hundred Thousand Dollars ($100,000) (the “Signing Bonus”). The Signing Bonus shall be paid by the Company to Executive upon the completion of ninety (90) days of employment following the Start Date;

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provided, however, that in the event that Executive’s employment is terminated by the Company for Cause (as defined below) or by Executive other than for Good Reason (as defined below) prior to the date that is eighteen (18) months following the Start Date, Executive shall promptly repay the full amount of the Signing Bonus to the Company.

(iv) Benefits. During the Employment Period, Executive shall be eligible to participate in all retirement, compensation and employee benefit plans, practices, policies and programs provided by the Companies to the extent applicable generally to other senior executives of the Companies (except severance plans, policies, practices, or programs) subject to the eligibility criteria set forth therein, as such may be amended or terminated from time to time.

(v) Expenses. During the Employment Period, Executive shall be entitled to receive reimbursement for all reasonable business expenses incurred by Executive in performance of his duties hereunder provided that Executive provides all necessary documentation in accordance with the Companies’ policies.

(vi) Car Allowance. During the Employment Period, Executive shall be eligible to receive a monthly car allowance equal to $1,445.00, subject to applicable taxes, in accordance with the Companies’ policy.

(vii) Equity Awards. During the Employment Period, Executive will be eligible to receive equity awards under the Affinion Group Holdings, Inc. 2007 Stock Award Plan, as amended (the “Plan”), or such other equity plan of the Companies as in effect from time to time, which will be determined by the Board (or its designee), in its sole discretion, and communicated to you under separate cover. As soon as practicable following the Start Date and subject to the approval of the Compensation Committee of the Company, Executive will be granted an option to purchase 200,000 shares of common stock under the Plan with a per share exercise price equal to the fair market value per share of common stock on the grant date.

(viii) Relocation. The Company will reimburse Executive for reasonable costs incurred in connection with his relocation to the Stamford, Connecticut area, including (A) temporary lodging, to the extent reasonably necessary, through December 31, 2012, subject to Executive’s continued employment with the Company through such date, (B) reasonable costs incurred in connection with the sale of Executive’s existing home, including brokerage and legal costs, (C) reasonable costs incurred in connection with the closing of a home purchase by Executive in the Stamford, Connecticut area, and (D) shipment (but excluding storage) of Executive’s personal effects, in each case, upon reasonable substantiation. In addition, Executive will be eligible to receive a relocation allowance equal to $15,000, on a grossed-up basis, towards any additional expenses incurred in connection with Executive’s relocation. Executive’s relocation to the Stamford, Connecticut area must occur within twelve (12) months following the Effective Date. The Company will reimburse expenses

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associated with Executive’s relocation from Paris up to a maximum amount of €50,000, less the amount of any expenses reimbursed by Executive’s previous employer.

Section 3. Termination of Employment.

(a) Death or Disability. Executive’s employment shall terminate automatically upon Executive’s death. If Executive becomes subject to a “Disability” (as defined below) during the Employment Period, the Company may give Executive written notice in accordance with Sections 3(g) and 10(g) of its intention to terminate Executive’s employment. For purposes of this Agreement, “Disability” means (i) Executive’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) Executive is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident or health plan covering employees of the Companies.

(b) Cause. Executive’s employment may be terminated at any time by the Company for “Cause” (as defined below). For purposes of this Agreement, “Cause” shall mean Executive’s (i) conviction of a felony or a crime of moral turpitude; (ii) conduct that constitutes fraud or embezzlement; (iii) willful misconduct or willful gross neglect; (iv) continued willful failure to substantially perform his duties as Executive Vice President and Chief Financial Officer; or (v) a material breach by Executive of this Agreement; provided that in the event of a termination pursuant to clause (iv) or (v), to the extent such failure to perform duties or material breach is subject to cure, the Company shall have notified Executive in writing describing such failure to perform duties or material breach and Executive shall have failed to cure such failure to perform or breach within 30 days after his receipt of such written notice.

(c) Termination Without Cause. The Company may terminate Executive’s employment hereunder without Cause at any time.

(d) Good Reason. Executive’s employment may be terminated at any time by Executive for Good Reason upon 60 days’ prior written notice following the occurrence of the event giving rise to the termination for Good Reason. For purposes of this Agreement, “Good Reason” means voluntary resignation after any of the following actions taken by the Companies without Executive’s consent: (i) any material failure of the Companies to fulfill their obligations under this Agreement, (ii) a material and adverse change to, or a material reduction of, Executive’s duties and responsibilities to the Companies, (iii) a reduction in Executive’s Annual Base Salary or Target Bonus (excluding any diminution related to a broader compensation reduction that is not limited to Executive specifically and that is not more than 10% in the aggregate or any diminution to which Executive consented) or (iv) the relocation of Executive’s primary office to a location more than 35 miles from the prior location; provided that any such event shall not constitute Good Reason unless and until Executive shall have provided the

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Companies with notice thereof no later than 60 days following the occurrence of such event and the Companies shall have failed to remedy such event within 30 days of receipt of such notice.

(e) Voluntary Termination. Executive’s employment may be terminated at any time by Executive without Good Reason upon 90 days’ prior written notice.

(f) Termination as a Result of Non-Renewal of the Employment Period by the Company. The expiration of the Employment Period, and the termination of Executive’s employment upon the date of such expiration, on account of the Company giving notice to Executive of its desire not to extend the Employment Period in accordance with Section 1, shall be treated for purposes of this Agreement as a termination without Cause pursuant to Section 4(a).

(g) Notice of Termination. Any termination by the Company for Cause or without Cause, or by Executive for Good Reason or without Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 10(g). For purposes of this Agreement, a “Notice of Termination” means a written notice that (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated and (iii) if the “Date of Termination” (as defined below) is other than the date of receipt of such notice, specifies the termination date. The failure by Executive or the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Good Reason or Cause shall not waive any right of Executive or the Company hereunder or preclude Executive or the Company from asserting such fact or circumstance in enforcing Executive’s or the Company’s rights hereunder.

(h) Date of Termination. “Date of Termination” means (i) if Executive’s employment is terminated by the Company for Cause, without Cause or by reason of Disability, or by Executive for Good Reason or without Good Reason, the date of receipt of the Notice of Termination (in the case of a termination with or without Good Reason, provided such Date of Termination is in accordance with Section 3(d) or Section 3(e)) or any later date specified therein pursuant to Section 3(g), as the case may be, (ii) if Executive’s employment is terminated by reason of death, the date of death, and (iii) the expiration of the Employment Period, and the termination of Executive’s employment upon the date of such expiration, on account of the Company giving notice to Executive of its desire not to extend the Employment Period in accordance with Section 3(f).

Section 4. Obligations of the Company upon Termination.

(a) With Good Reason; Without Cause. If during the Employment Period, the Company shall terminate Executive’s employment without Cause or Executive shall terminate his employment for Good Reason, then the Company will provide Executive with the following payments and/or benefits:

(i) The Company shall pay to Executive as soon as reasonably practicable but no later than sixty (60) days following the Date of Termination in a lump sum to the extent not previously paid, (A) the Annual Base Salary through the Date of Termination, and (B) the Bonus earned for any fiscal year ended prior to the year in which the Date of Termination occurs, provided that Executive was employed on the last day of such fiscal year (“Accrued Obligations”); and

(ii) The Company will pay Executive, an amount equal to 100% of the sum of (A) Executive’s Annual Base Salary and (B) Executive’s Target Bonus (the “Severance Payments”) such amounts to be paid on a monthly basis over a twenty-four (24) month period.

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(b) Death or Disability. If Executive’s employment shall be terminated by reason of the Executive’s death or Disability, then the Company will provide Executive with the following severance payments and/or benefits: the Company shall pay Executive or his legal representatives (i) the Accrued Obligations; (ii) a lump sum equal to 100% of Executive’s Annual Base Salary; and (iii) the continuation of death or Disability benefits thereafter in accordance with the terms of such plans of the Companies then in effect (the payments and benefits described in clauses (ii) and (iii), the “Severance Benefits”). Thereafter, the Companies shall have no further obligation to Executive or his legal representatives.

(c) Cause; Other than for Good Reason. If Executive’s employment shall be terminated by the Company for Cause or by Executive without Good Reason, then the Companies shall have no further obligations to Executive other than for payment of the Accrued Obligations and any indemnification rights he may have pursuant to Section 9.

(d) Separation Agreement and General Release. The Company’s obligations to make payments under Sections 4(a)(ii) or 4(b) are conditioned on Executive’s or his legal representative’s executing a separation agreement and general release of claims against the Companies and their respective affiliates (and their respective officers and directors) in a form substantially similar to that attached hereto as Exhibit A, subject to changes as maybe warranted to be made to such release to preserve the intent thereof for changes in applicable laws; provided, that, if Executive should fail to execute (or revokes) such release within sixty (60) days following the Date of Termination, the Company shall not have any obligation to provide the Severance Payments or Severance Benefits contemplated under this Section 4. The Severance Payments or Severance Benefits, as the case may be, shall be paid in full or begin to be paid, as the case may be, on the first payroll period occurring after Executive executes such release and Executive does not revoke such release within seven (7) days after executing such release; provided, further, that, if the Date of Termination occurs within the last sixty (60) days of any calendar year, then any Severance Payments that are otherwise payable during such sixty (60) day period shall be accumulated and paid, as the case may be, on the first payroll period occurring in the calendar year following the Date of Termination subject to Executive’s (or his legal representative’s) executing and not revoking such separation agreement and release.

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(e) Notwithstanding the foregoing, if all or any portion of the payments and/or benefits due under this Section 4 are determined to be “nonqualified deferred compensation” subject to Section 409A of the Code, and the Company determines that Executive is a “specified employee” as defined in Section 409A(a)(2)(B)(i) of the Code and the final regulations promulgated thereunder (the “Treasury Regulations”) and other guidance issued thereunder, then such payments and/or benefits (or portion thereof) shall commence no earlier than the first day of the seventh month following Executive’s termination of employment (with the first such payment being a lump sum equal to the aggregate payments and/or benefits Executive would have received during such six-month period if no such payment delay had been imposed). For purposes of this Section 4(e), “termination of employment” shall mean Executive’s “separation from service”, as defined in Section 1.409A-1(h) of the Treasury Regulations, including the default presumptions thereunder.

Section 5. Restrictive Covenants.

(a) Non-Solicitation. During the Employment Period and ending on the third anniversary of the Executive’s termination of employment with the Company for any reason, Executive shall not directly or indirectly through another person or entity (i) induce or attempt to induce any employee of the Companies and their respective affiliates (collectively, the “Affinion Group”) to leave the employ of the Affinion Group, or in any way interfere with the relationship between the Affinion Group, on the one hand, and any employee thereof, on the other hand, (ii) hire any person who was an employee of the Affinion Group or (iii) induce or attempt to induce any customer, supplier, licensee or other business relation of the Affinion Group to cease doing business with the Affinion Group, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation, on the one hand, and the Affinion Group, on the other hand.

(b) Non-Competition. Executive acknowledges that, in the course of his employment with the Affinion Group, Executive has become familiar, or will become familiar, with the Affinion Group’s “Confidential Information” and that such Executive’s services have been and will be of special, unique and extraordinary value to the Affinion Group. Therefore, Executive agrees that, during the Employment Period and ending on the second anniversary of Executive’s termination of employment with the Company for any reason (the “Non-Compete Period”), Executive shall not, directly or indirectly, engage in any business that markets, provides, administers or makes available affinity-based membership programs, affinity-based insurance programs, benefit packages as an enhancement to financial institutions or other customer accounts or loyalty-based programs(whether as of the date hereof or during the Non-Compete Period), anywhere in the world in which the Affinion Group is doing business. For purposes of this Section 5(b), the phrase “directly or indirectly, engage in” shall include any direct or indirect ownership or profit participation interest in such enterprise, whether as an owner, stockholder, partner, joint venturer or otherwise, and shall include any direct or indirect participation in such enterprise as an employee, consultant, licensor of technology or otherwise; provided, however, that nothing in this Section 5(b) shall prohibit Executive from being a passive owner of not more than 5% of the outstanding stock of any class of a corporation which is publicly traded, so long as Executive has no active participation in the business of such corporation.

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(c) Non-Disclosure; Non-Use of Confidential Information. Executive shall not disclose or use at any time, either during his employment with the Companies or at any time thereafter, any Confidential Information of which Executive is or becomes aware, whether or not such information is developed by him, except to the extent that such disclosure or use is directly related to and required by Executive’s performance in good faith of duties assigned to Executive by the Company or as required by law or legal process. Executive will take all appropriate steps to safeguard Confidential Information in his possession and to protect it against disclosure, misuse, espionage, loss and theft. Executive shall deliver to the Company at the termination of his employment with the Company, or at any time the Company may request, all memoranda, notes, plans, records, reports, computer tapes and software and other documents and data (and copies thereof) relating to the Confidential Information or the “Work Product” (as defined in Section 5(e)(ii)) of the business of the Affinion Group that Executive may then possess or have under his control.

(d) Proprietary Rights. Executive recognizes that the Affinion Group possesses a proprietary interest in all Confidential Information and Work Product and has the exclusive right and privilege to use, protect by copyright, patent or trademark, or otherwise exploit the processes, ideas and concepts described therein to the exclusion of Executive, except as otherwise agreed between the Affinion Group and Executive in writing. Executive expressly agrees that any Work Product made or developed by Executive or his agents during the course of Executive’s employment, including any Work Product which is based on or arises out of Work Product, shall be the property of and inure to the exclusive benefit of the Affinion Group. Executive further agrees that all Work Product developed by Executive (whether or not able to be protected by copyright, patent or trademark) during the course of his employment with the Companies, or involving the use of the time, materials or other resources of the Affinion Group, shall be promptly disclosed to the Affinion Group and shall become the exclusive property of the Affinion Group, and Executive shall execute and deliver any and all documents necessary or appropriate to implement the foregoing.

(e) Certain Definitions.

(i) As used herein, the term “Confidential Information” means information that is not generally known to the public (but for purposes of clarity, Confidential Information shall never exclude any such information that become known to the public because of Executive’s unauthorized disclosure) and that is used, developed or obtained by the Affinion Group in connection with its business, including, but not limited to, information, observations and data obtained by Executive while employed by the Affinion Group or any predecessors thereof concerning (A) the business or affairs of the Affinion Group, (B) products or services, (C) fees, costs and pricing structures, (D) designs, (E) analyses, (F) drawings, photographs and reports, (G) computer software, including operating systems, applications and program listings, (H) flow charts, manuals and

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documentation, (I) databases, (J) accounting and business methods, (K) inventions, devices, new developments, methods and processes, whether patentable or unpatentable and whether or not reduced to practice, (L) customers and clients and customer or client lists, (M) other copyrightable works, (N) all production methods, processes, technology and trade secrets, and (O) all similar and related information in whatever form. Confidential Information will not include any information that has been published in a form generally available to the public (except as a result of Executive’s unauthorized disclosure) prior to the date Executive proposes to disclose or use such information. Confidential Information will not be deemed to have been published or otherwise disclosed merely because individual portions of the information have been separately published, but only if all material features comprising such information have been published in combination.

(ii) As used herein, the term “Work Product” means all inventions, innovations, improvements, technical information, systems, software developments, methods, designs, analyses, drawings, reports, service marks, trademarks, trade names, logos and all similar or related information (whether patentable or unpatentable) that relates to the Affinion Group’s actual or anticipated business, research and development or existing or future products or services and that are conceived, developed or made by Executive (whether or not during usual business hours and whether or not alone or in conjunction with any other person) while employed by the Companies together with all patent applications, letters patent, trademark, trade name and service mark applications or registrations, copyrights and reissues thereof that may be granted for or upon any of the foregoing.

Section 6. Non-Disparagement. During the period commencing on the Effective Date and continuing until the third anniversary of the Executive’s termination of employment for any reason, neither Executive nor his agents, on the one hand, nor the Companies formally, or their respective senior executives or board of directors, on the other hand, shall directly or indirectly issue or communicate any public statement, or statement likely to become public, that maligns, denigrates or disparages the other (including, in the case of communications by Executive or his agents, any of the Companies’ officers, directors or employees). The foregoing shall not be violated by truthful responses to legal process or governmental inquiry or by private statements to any of the Companies’ officers, directors or employees; provided, that in the case of Executive, such statements are made in the course of carrying out his duties pursuant to this Agreement.

Section 7. Severance Payments. In addition to the foregoing, and not in any way in limitation of any right or remedy otherwise available to the Affinion Group, if Executive violates Section 5 or Section 6 hereof, any Severance Payments then or thereafter due from the Company to Executive shall be terminated immediately and the Company’s obligation to pay and Executive’s right to receive such Severance Payments shall terminate and be of no further force or effect.

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Section 8. Executive’s Representations, Warranties and Covenants.

(a) Executive hereby represents and warrants to the Companies that:

(i) Executive has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and this Agreement has been duly executed by Executive;

(ii) the execution, delivery and performance of this Agreement by Executive does not and will not, with or without notice or the passage of time, conflict with, breach, violate or cause a default under any agreement, contract or instrument to which Executive is a party or any judgment, order or decree to which Executive is subject;

(iii) Executive is not a party to or bound by any employment agreement, consulting agreement, non-compete agreement, fee for services agreement, confidentiality agreement or similar agreement with any other person, except as with respect to Executive’s termination of employment with Alcatel-Lucent and/or its subsidiaries;

(iv) upon the execution and delivery of this Agreement by the Companies and Executive, this Agreement will be a legal, valid and binding obligation of Executive, enforceable in accordance with its terms;

(v) Executive understands that the Companies will rely upon the accuracy and truth of the representations and warranties of Executive set forth herein and Executive consents to such reliance; and

(vi) as of the date of execution of this Agreement, Executive is not in breach of any of its terms, including having committed any acts that would form the basis for a Cause termination if such act had occurred after the Effective Date.

(b) The Companies hereby represent and warrant to Executive that:

(i) the Companies have all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and this Agreement has been duly executed by the Companies;

(ii) the execution, delivery and performance of this Agreement by the Companies does not and will not, with or without notice or the passage of time, conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Companies are a party or any judgment, order or decree to which the Companies are subject;

(iii) upon the execution and delivery of this Agreement by the Companies and Executive, this Agreement will be a legal, valid and binding obligation of the Companies, enforceable in accordance with its terms; and

(iv) the Companies understand that Executive will rely upon the accuracy and truth of the representations and warranties of the Companies set forth herein and the Companies consent to such reliance.

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Section 9. Indemnification. The Company shall secure directors’ and officers’ liability insurance for the benefit of Executive on terms at least equal to those applicable to the other directors and officers of the Company (which insurance, for Executive, shall provide for advancement of defense costs) and shall indemnify Executive to the maximum extent permitted under the General Corporate Law of Delaware.

Section 10. General Provisions.

(a) Severability. It is the desire and intent of the Parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable under any present or future law, and if the rights and obligations of any party under this Agreement will not be materially and adversely affected thereby, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction; furthermore, in lieu of such invalid or unenforceable provision there will be added automatically as a part of this Agreement, a legal, valid and enforceable provision as similar in terms to such invalid or unenforceable provision as may be possible. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

(b) Entire Agreement and Effectiveness. Effective as of the Effective Date, this Agreement embodies the complete agreement and understanding among the Parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the Parties, written or oral, which may have related to the subject matter hereof in any way (but excluding the Management Investor Rights Agreement, dated as of October 17, 2005, and any stock options or equity awards granted under any equity compensation plans maintained by the Company or any affiliate).

(c) Successors and Assigns.

(i) This Agreement is personal to Executive and without the prior written consent of the Companies shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives.

(ii) This Agreement shall inure to the benefit of and be binding upon the Companies and their respective successors and assigns. The Companies will

11

require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Companies to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Companies would be required to perform it if no such succession had taken place. As used in this Agreement, “Companies” shall mean the Companies as hereinbefore defined and any successor to their business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law, or otherwise.

(d) Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

(e) Enforcement.

(i) Arbitration. Except for disputes arising under Sections 5 and 6 of this Agreement (including, without limitation, any claim for injunctive relief), any controversy, dispute or claim arising out of or relating to this Agreement, or its interpretation, application, implementation, breach or enforcement which the Parties are unable to resolve by mutual agreement, shall be settled by submission by either Executive or the Companies of the controversy, claim or dispute to binding arbitration in New York (unless the Parties agree in writing to a different location), before a single arbitrator in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association then in effect. In any such arbitration proceeding the Parties agree to provide all discovery deemed necessary by the arbitrator. The decision and award made by the arbitrator shall be final, binding and conclusive on all Parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof. Each party shall bear its or his costs and expenses in any such arbitration and one-half of the arbitrator’s fees and costs; provided, however, that the arbitrator shall have the discretion to award the prevailing party reimbursement of its or his reasonable attorney’s fees and costs.

(ii) Remedies. All remedies hereunder are cumulative, are in addition to any other remedies provided for by law and may, to the extent permitted by law, be exercised concurrently or separately, and the exercise of any one remedy shall not be deemed to be an election of such remedy or to preclude the exercise of any other remedy.

12

(iii) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

(f) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the Companies and Executive and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall be construed as a waiver of such provisions or affect the validity, binding effect or enforceability of this Agreement or any provision hereof.

(g) Notices. Any notice provided for in this Agreement must be in writing and must be either personally delivered, transmitted via telecopier, mailed by first class mail (postage prepaid and return receipt requested) or sent by reputable overnight courier service (charges prepaid) to the recipient at the address below indicated or at such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder and received when delivered personally, when received if transmitted via telecopier, five days after deposit in the U.S. mail and one day after deposit for overnight delivery with a reputable overnight courier service.

If to the Companies, to:

Affinion Group Holdings, Inc.

6 High Ridge Park

Stamford, CT 06905

Facsimile: (203) 956-1021

Attention: General Counsel

with a copy (which shall not constitute notice) to:

Akin Gump Strauss Hauer & Feld LLP

One Bryant Park

New York, NY 10036

Facsimile: (212) 872-1002

Attention: Adam Weinstein, Esq.

If to Executive, to:

Executive’s home address most recently on file with the Company.

(h) Withholdings Taxes. The Company may withhold from any amounts payable under this Agreement such federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.

(i) Survival of Representations, Warranties and Agreements. All representations, warranties and agreements contained herein shall survive the consummation of the transactions contemplated hereby indefinitely.

13

(j) Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. All references to a “Section” in this Agreement are to a section of the Agreement unless otherwise noted.

(k) Construction. Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Agreement shall be deemed to be the language chosen by the Parties to express their mutual intent, and no rule of strict construction shall be applied against any party.

(l) Code Section 409A. If any payments of compensation or benefits due to Executive hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, such payments or other benefits shall be deferred if deferral will make such payment or other benefits compliant with Section 409A of the Code; otherwise, such payment or other benefits shall be restructured, to the extent possible, in a manner, determined by the Company and reasonably acceptable to Executive, that does not cause such an accelerated or additional tax. In no event will the Companies, their executives, directors, officers, agents or representatives have any liability for this Agreement’s failure to be exempt from or comply with Code Section 409A and such parties do not guarantee such compliance. Executive shall have no legally binding right to any distribution or payment made to him in error.

(m) Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

[SIGNATURE PAGE FOLLOWS]

14

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first written above.

AFFINION GROUP HOLDINGS, INC.
By:	/s/ Todd H. Siegel
	Name:	Todd H. Siegel
	Title:	Chief Executive Officer
AFFINION GROUP, INC.
By:	/s/ Todd H. Siegel
	Name:	Todd H. Siegel
	Title:	Chief Executive Officer
MARK GIBBENS
Signature:	/s/ Mark G. Gibbens

[Signature Page to Employment Agreement - Gibbens]

EXHIBIT A

GENERAL RELEASE

1. Termination of Employment. Mark Gibbens (“Executive”) acknowledges that his last day of employment with Affinion Group Holdings, Inc. (together with Affinion Group, Inc., the “Company”) is                      (the “Termination Date”).

2. Full Release. For the consideration set forth in the Employment Agreement, by and between the Company and Executive, dated as of             , 201     (the “Employment Agreement”) and for other fair and valuable consideration therefor, Executive, for herself, his heirs, executors, administrators, successors and assigns (hereinafter collectively referred to as the “Releasors”), hereby fully releases and discharges the Company, its parents, subsidiaries, affiliates, insurers, successors, and assigns, and their respective officers, directors, officers, employees, and agents (all such persons, firms, corporations and entities being deemed beneficiaries hereof and are referred to herein as the “Company Entities”) from any and all actions, causes of action, claims, obligations, costs, losses, liabilities, damages and demands of whatsoever character, whether or not known, suspected or claimed, which the Releasors have, from the beginning of time through the date of this General Release, against the Company Entities arising out of or in any way related to Executive’s employment or termination of his employment; provided, however, that this shall not be a release with respect to any amounts and benefits owed to Executive pursuant to the Employment Agreement upon termination of employment, vested and accrued amounts under employee benefit plans of the Company, or Executive’s right to indemnification and directors and officers insurance as provided in Section 9 of the Employment Agreement.

3. Waiver of Rights Under Other Statutes. Executive understands that this General Release waives all claims and rights Executive may have under certain federal, state and local statutory and regulatory laws, as each may be amended from time to time, including but not limited to, the Age Discrimination in Employment Act (including the Older Workers Benefit Protection Act) (“ADEA”), Title VII of the Civil Rights Act; the Employee Retirement Income Security Act of 1974; the Equal Pay Act; the Rehabilitation Act of 1973; the Americans with Disabilities Act; the Worker Adjustment and Retraining Notification Act; the Connecticut Fair Employment Practices Act; and all other statutes, regulations, common law, and other laws in any and all jurisdictions (including, but not limited to, Connecticut) that in any way relate to Executive’s employment or the termination of his employment.

4. Informed and Voluntary Signature. No promise or inducement has been made other than those set forth in this General Release. This General Release is executed by Executive without reliance on any representation by Company or any of its agents. Executive states that that he is fully competent to manage his business affairs and understands that he may be waiving legal rights by signing this General Release. Executive hereby acknowledges that he has carefully read this General Release and has had the opportunity to thoroughly discuss the terms of this General Release with legal counsel of his choosing. Executive hereby acknowledges that he fully understands the terms of this General Release and its final and binding effect and that he affixes his signature hereto voluntarily and of his own free will.

5. Waiver of Rights Under the Age Discrimination Act. Executive understands that this General Release, and the release contained herein, waives all of his claims and rights under the ADEA. The waiver of Executive’s rights under the ADEA does not extend to claims or rights that might arise after the date this General Release is executed. The monies to be paid to Executive are in addition to any sums to which Executive would be entitled without signing this General Release. For a period of seven (7) days following execution of this General Release, Executive may revoke the terms of this General Release by a written document received by the General Counsel of the Company no later than 11:59 p.m. of the seventh day following Executive’s execution of this General Release. This General Release will not be effective until said revocation period has expired. Executive acknowledges that he has been given up to [21/45]¹ days to decide whether to sign this General Release. Executive has been advised to consult with an attorney prior to executing this General Release and has been given a full and fair opportunity to do so.

6. Miscellaneous.

(a) This General Release shall be governed in all respects by the laws of the State of Connecticut without regard to the principles of conflict of law.

(b) In the event that any one or more of the provisions of this General Release is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby. Moreover, if any one or more of the provisions contained in this General Release is held to be excessively broad as to duration, scope, activity or subject, such provisions will be construed by limiting and reducing them so as to be enforceable to the maximum extent compatible with applicable law.

(c) This General Release may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(d) The paragraph headings used in this General Release are included solely for convenience and shall not affect or be used in connection with the interpretation of this General Release.

(e) This General Release and the Employment Agreement represent the entire agreement between the parties with respect to the subject matter hereof and may not be amended except in a writing signed by the Company and Executive. If any dispute should arise under this General Release, it shall be settled in accordance with the terms of the Employment Agreement.

(f) This General Release shall be binding on the executors, heirs, administrators, successors and assigns of Executive and the successors and assigns of Company and shall inure to the benefit of the respective executors, heirs, administrators, successors and assigns of the Company Entities and the Releasors.

¹  Insert 45 days in the event of a layoff of two or more employees.

IN WITNESS WHEREOF, the Parties hereto have executed this General Release on this      day of                     .

AFFINION GROUP HOLDINGS, INC.
By:
	Name:
	Title:
AFFINION GROUP, INC.
By:
	Name:
	Title:
MARK GIBBENS
Signature:

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a)

I, Todd H. Siegel, certify that:

1. I have reviewed this report on Form 10-Q of Affinion Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 1, 2012

/s/ Todd H. Siegel

Todd H. Siegel

Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a)

I, Mark G. Gibbens, certify that:

1. I have reviewed this report on Form 10-Q of Affinion Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 1, 2012

/s/ Mark G. Gibbens

Mark G. Gibbens

Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Affinion Group, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), I, Todd H. Siegel, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(i) the Form 10-Q fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

(ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 1, 2012

/s/ Todd H. Siegel

Todd H. Siegel

Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Affinion Group, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), I, Mark G. Gibbens, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(i) the Form 10-Q fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

(ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 1, 2012

/s/ Mark G. Gibbens

Mark G. Gibbens

Executive Vice President and Chief Financial Officer

XML

Long-Term Debt (Additional Information) (Detail) (USD $) In Millions, unless otherwise specified	1 Months Ended			9 Months Ended					9 Months Ended								1 Months Ended	9 Months Ended
	Apr. 09, 2012	Feb. 11, 2011	Jan. 18, 2011	Sep. 30, 2012	Sep. 30, 2011	May 12, 2012	Dec. 31, 2011	Apr. 09, 2010	Sep. 30, 2012 7.875% senior notes due 2018 [Member]	Dec. 31, 2011 7.875% senior notes due 2018 [Member]	Jan. 14, 2011 7.875% senior notes due 2018 [Member]	Nov. 19, 2010 7.875% senior notes due 2018 [Member]	Sep. 30, 2012 11 1/2% senior subordinated notes due 2015 [Member]	Dec. 31, 2011 11 1/2% senior subordinated notes due 2015 [Member]	Jan. 14, 2011 11 1/2% senior subordinated notes due 2015 [Member]	Apr. 26, 2006 11 1/2% senior subordinated notes due 2015 [Member]	Feb. 11, 2011 Term Loan Facility [Member]	Sep. 30, 2012 Term Loan Facility [Member]	Apr. 09, 2010 Term Loan Facility [Member]	Oct. 05, 2010 11.625% senior notes due 2015 [Member]	Apr. 09, 2010 Revolving Credit Facility
Line of Credit Facility [Line Items]
Secured credit facility with lenders								$ 1,000.0											$ 875.0		$ 125.0
Line of credit term duration				5 years
Increase in the revolving credit facility				160.0
Line of credit facility increase additional borrowings on condition satisfaction				165.0
Aggregate principal amount of incremental term loans		250.0															250.0
Maturity date of term loan facility																		October 2016.
Maturity period of term loan facility																		91 days
Description of the Term Loan Maturity Period																		mature on the date that is 91 days prior to the maturity of the Senior Subordinated Notes (defined below) unless, prior to that date, (a) the maturity for the Senior Subordinated Notes is extended to a date that is at least 91 days after the maturity of the term loan facility or (b) the obligations under the Senior Subordinated Notes are (i) repaid in full or (ii) refinanced, replaced or defeased in full with new loans and/or debt securities with maturity dates occurring after the maturity date of the term loan facility
Debt instrument amortization percentage				1.00%
Interest Rate																		1.50%
Additional interest rate																		3.50%
Addition to Federal Funds Effective Rate																		0.50%
ABR Rate																		2.50%
Addition to ABR Rate																		2.50%
Effective interest rate on term loan									8.00%	8.00%			11.75%	11.75%				5.00%
Borrowings under revolving credit facility				50.0	50.0
Repayments under revolving credit facility				50.0	50.0
Available for borrowings under revolving credit facility				158.1
Letters of credit issued				6.9
Outstanding borrowings				0			0
Aggregate principal amount of notes issued												475.0				355.5				325.0
Interest rate of notes									7.875%		7.875%	7.875%			11.50%	11.50%
Maturity date of notes				Oct. 15, 2015					Dec. 15, 2018
Dividends						35.0
Cash dividends paid	$ 37.0	$ 199.8	$ 123.4	$ 37.0	$ 323.2
Percentage of ownership				100.00%

XML

Guarantor/Non-Guarantor Supplemental financial Information - Schedule of Condensed Consolidating Balance Sheet (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Dec. 31, 2010
Condensed Financial Statements, Captions [Line Items]
Cash and cash equivalents	$ 56.5	$ 86.3	$ 65.5	$ 121.1
Restricted cash	35.6	30.4
Receivables, net	147.5	126.8
Receivables from related parties	0.1	0.8
Profit-sharing receivables from insurance carriers	88.9	74.0
Prepaid commissions	43.5	52.6
Income taxes receivable	3.9	2.1
Other current assets	83.2	68.1
Total current assets	459.2	441.1
Property and equipment, net	134.3	134.7
Contract rights and list fees, net	23.0	22.5
Goodwill	597.9	627.5		402.7
Other intangibles, net	234.5	351.2
Other non-current assets	62.1	74.0
Total assets	1,511.0	1,651.0
Current liabilities:
Current portion of long-term debt	11.8	11.9
Accounts payable and accrued expenses	407.6	398.1
Payables to related parties	40.4	35.3
Deferred revenue	124.1	152.5
Income taxes payable	4.2	3.4
Total current liabilities	588.1	601.2
Long-term debt	1,914.5	1,922.5
Deferred income taxes	70.9	67.5
Deferred revenue	15.2	17.8
Other long-term liabilities	38.7	53.7
Total liabilities	2,627.4	2,662.7
Affinion Group, Inc. deficit	(1,117.9)	(1,012.7)
Non-controlling interest in subsidiary	1.5	1.0
Total deficit	(1,116.4)	(1,011.7)		(864.9)
Total liabilities and deficit	1,511.0	1,651.0
Affinion Group, Inc [Member]
Condensed Financial Statements, Captions [Line Items]
Cash and cash equivalents	26.6	57.2	32.8	104.8
Receivables, net	2.7	1.6
Intercompany interest receivable	0.5	16.0
Other current assets	7.9	4.7
Total current assets	37.7	79.5
Property and equipment, net	9.1	9.1
Investment in subsidiaries	2,192.5	2,127.0
Intercompany loan receivable	49.3	31.4
Other non-current assets	30.2	35.4
Total assets	2,318.8	2,282.4
Current liabilities:
Current portion of long-term debt	11.2	11.2
Accounts payable and accrued expenses	113.5	99.0
Payables to related parties	40.3	34.7
Income taxes payable	0.8	1.0
Total current liabilities	165.8	145.9
Long-term debt	1,913.7	1,921.4
Intercompany payables	1,354.5	1,210.7
Other long-term liabilities	2.7	17.1
Total liabilities	3,436.7	3,295.1
Affinion Group, Inc. deficit	(1,117.9)	(1,012.7)
Total deficit	(1,117.9)	(1,012.7)
Total liabilities and deficit	2,318.8	2,282.4
Guarantor Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Cash and cash equivalents	4.4	2.8	3.8	3.2
Restricted cash	27.9	22.6
Receivables, net	104.9	87.6
Receivables from related parties	0.1	0.6
Profit-sharing receivables from insurance carriers	88.2	73.3
Prepaid commissions	39.1	47.7
Income taxes receivable	0.9	0.7
Other current assets	40.2	33.7
Total current assets	305.7	269.0
Property and equipment, net	98.1	102.0
Contract rights and list fees, net	23.0	22.5
Goodwill	522.0	553.5
Other intangibles, net	190.1	295.1
Investment in subsidiaries	77.1	77.1
Intercompany loan receivable	21.4
Intercompany receivables	1,366.2	1,222.2
Other non-current assets	25.5	28.2
Total assets	2,629.1	2,569.6
Current liabilities:
Current portion of long-term debt	0.6	0.7
Accounts payable and accrued expenses	198.1	213.9
Payables to related parties	0.1	0.4
Deferred revenue	99.1	123.2
Income taxes payable	0.2	0.7
Total current liabilities	298.1	338.9
Long-term debt	0.8	1.1
Deferred income taxes	62.9	54.8
Deferred revenue	6.7	9.6
Other long-term liabilities	34.5	34.7
Total liabilities	403.0	439.1
Affinion Group, Inc. deficit	2,226.1	2,130.5
Total deficit	2,226.1	2,130.5
Total liabilities and deficit	2,629.1	2,569.6
Non-Guarantor Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Cash and cash equivalents	25.5	26.3	28.9	13.1
Restricted cash	7.7	7.8
Receivables, net	39.9	37.6
Receivables from related parties		0.2
Profit-sharing receivables from insurance carriers	0.7	0.7
Prepaid commissions	4.4	4.9
Income taxes receivable	3.0	1.4
Other current assets	35.1	29.7
Total current assets	116.3	108.6
Property and equipment, net	27.1	23.6
Goodwill	75.9	74.0
Other intangibles, net	44.4	56.1
Other non-current assets	6.4	10.4
Total assets	270.1	272.7
Current liabilities:
Accounts payable and accrued expenses	96.0	85.2
Payables to related parties		0.2
Intercompany interest payable	0.5	16.0
Deferred revenue	25.0	29.3
Income taxes payable	3.2	1.7
Total current liabilities	124.7	132.4
Deferred income taxes	8.0	12.7
Deferred revenue	8.5	8.2
Intercompany loan payable	70.7	31.4
Intercompany payables	11.7	11.5
Other long-term liabilities	1.5	1.9
Total liabilities	225.1	198.1
Affinion Group, Inc. deficit	43.5	73.6
Non-controlling interest in subsidiary	1.5	1.0
Total deficit	45.0	74.6
Total liabilities and deficit	270.1	272.7
Eliminations [Member]
Condensed Financial Statements, Captions [Line Items]
Intercompany interest receivable	(0.5)	(16.0)
Total current assets	(0.5)	(16.0)
Investment in subsidiaries	(2,269.6)	(2,204.1)
Intercompany loan receivable	(70.7)	(31.4)
Intercompany receivables	(1,366.2)	(1,222.2)
Total assets	(3,707.0)	(3,473.7)
Current liabilities:
Intercompany interest payable	(0.5)	(16.0)
Total current liabilities	(0.5)	(16.0)
Intercompany loan payable	(70.7)	(31.4)
Intercompany payables	(1,366.2)	(1,222.2)
Total liabilities	(1,437.4)	(1,269.6)
Affinion Group, Inc. deficit	(2,269.6)	(2,204.1)
Total deficit	(2,269.6)	(2,204.1)
Total liabilities and deficit	$ (3,707.0)	$ (3,473.7)

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Financial Instruments, Derivatives and Fair Value Measures - Additional Information (Detail) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended				3 Months Ended		9 Months Ended					3 Months Ended		9 Months Ended
	Sep. 30, 2012 USD ($)	Sep. 30, 2011 USD ($)	Sep. 30, 2012 USD ($)	Sep. 30, 2011 USD ($)	May 31, 2012 USD ($)	May 01, 2012 EUR (€)	Sep. 30, 2012 Interest Rate Swap [Member] USD ($)	Sep. 30, 2011 Interest Rate Swap [Member] USD ($)	Sep. 30, 2012 Interest Rate Swap [Member] USD ($)	Sep. 30, 2011 Interest Rate Swap [Member] USD ($)	Feb. 21, 2012 Interest Rate Swap [Member] USD ($)	May 21, 2011 Interest Rate Swap [Member]	Feb. 22, 2011 Interest Rate Swap [Member] USD ($)	Sep. 30, 2012 Foreign Exchange Forward [Member] USD ($)	Sep. 30, 2011 Foreign Exchange Forward [Member] USD ($)	Sep. 30, 2012 Foreign Exchange Forward [Member] USD ($)	Sep. 30, 2011 Foreign Exchange Forward [Member] USD ($)	Apr. 30, 2011 Foreign Exchange Forward [Member] USD ($)	Apr. 01, 2011 Foreign Exchange Forward [Member] GBP (£)	Aug. 31, 2010 Foreign Exchange Forward [Member] USD ($)	Aug. 01, 2010 Foreign Exchange Forward [Member] GBP (£)	Sep. 30, 2012 Credit Risk Contract [Member] USD ($)	Dec. 31, 2011 Credit Risk Contract [Member] USD ($)
Derivative Instruments, Gain (Loss) [Line Items]
Notional amount of swap											$ 500.0		$ 598.6
Fixed interest rate of derivatives												2.985%
Interest expense	37.0	36.5	111.5	111.2			0.2	0.5	1.2	(2.2)
Notional amount of foreign currency derivative sale contracts					9.5	7.7												7.2	4.3	5.5	3.5
Derivative contract period																30 days
Foreign currency contracts, realized gain (loss)														0.8	0.3	0.9	0.2
Profit sharing receivables due from insurance carrier																						$ 74.9	$ 62.8

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Guarantor/Non-Guarantor Supplemental financial Information - Schedule of Condensed Consolidating Statement of Operations (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended			9 Months Ended		12 Months Ended
	Sep. 30, 2012	Jun. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Condensed Financial Statements, Captions [Line Items]
Net revenues	$ 370.6		$ 394.7	$ 1,130.0	$ 1,148.7
Expenses:
Marketing and commissions	142.5		168.7	448.1	472.5
Operating costs	110.8		116.0	344.2	333.2
General and administrative	33.3		39.6	99.4	137.0
Impairment of goodwill and other long-lived assets		39.7		39.7
Facility exit costs	(0.9)		2.9	(0.9)	4.2
Depreciation and amortization	48.5		60.4	147.6	183.3
Total expenses	334.2		387.6	1,078.1	1,130.2
Income (loss) from operations	36.4		7.1	51.9	18.5
Interest income	0.2		0.1	0.7	0.9
Interest expense	(37.0)		(36.5)	(111.5)	(111.2)
Other income (expense), net	0.1		0.1	(0.2)
Income (loss) before income taxes and non-controlling interest	(0.3)		(29.2)	(59.1)	(91.8)
Income tax benefit (expense)	(1.9)		(3.9)	(8.9)	(8.6)
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest, Total	(2.2)		(33.1)	(68.0)	(100.4)
Net income (loss)	(2.2)		(33.1)	(68.0)	(100.4)	(108.8)
Less: net income attributable to non-controlling interest	(0.1)		(0.2)	(0.5)	(0.7)
Net income (loss) attributable to Affinion Group, Inc.	(2.3)		(33.3)	(68.5)	(101.1)
Affinion Group, Inc [Member]
Expenses:
General and administrative	7.8		11.4	23.1	41.5
Depreciation and amortization	0.4		0.3	0.9	0.9
Total expenses	8.2		11.7	24.0	42.4
Income (loss) from operations	(8.2)		(11.7)	(24.0)	(42.4)
Interest income					0.3
Interest expense	(36.5)		(35.8)	(109.7)	(109.2)
Interest income (expense)-intercompany	0.4		0.3	0.9	0.9
Income (loss) before income taxes and non-controlling interest	(44.3)		(47.2)	(132.8)	(150.4)
Income tax benefit (expense)	(0.4)		(0.3)	(1.3)	(1.6)
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest, Total	(44.7)		(47.5)	(134.1)	(152.0)
Equity in income of subsidiaries	42.4		14.2	65.6	50.9
Net income (loss)	(2.3)		(33.3)	(68.5)	(101.1)
Net income (loss) attributable to Affinion Group, Inc.	(2.3)		(33.3)	(68.5)	(101.1)
Guarantor Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Net revenues	294.7		318.4	907.8	935.3
Expenses:
Marketing and commissions	116.3		139.6	363.2	394.1
Operating costs	77.5		83.0	246.2	238.6
General and administrative	15.8		21.1	49.9	71.0
Impairment of goodwill and other long-lived assets				39.7
Facility exit costs	(0.9)		2.9	(0.9)	4.2
Depreciation and amortization	38.3		49.7	118.8	152.4
Total expenses	247.0		296.3	816.9	860.3
Income (loss) from operations	47.7		22.1	90.9	75.0
Interest income	0.2		0.1	0.6	0.4
Interest expense	(0.4)		(0.3)	(1.1)	(0.6)
Other income (expense), net			0.1	0.2
Income (loss) before income taxes and non-controlling interest	47.5		22.0	90.6	74.8
Income tax benefit (expense)	(1.1)		(2.1)	(6.4)	(6.8)
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest, Total	46.4		19.9	84.2	68.0
Net income (loss)	46.4		19.9	84.2	68.0
Net income (loss) attributable to Affinion Group, Inc.	46.4		19.9	84.2	68.0
Non-Guarantor Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Net revenues	75.9		76.3	222.2	213.4
Expenses:
Marketing and commissions	26.2		29.1	84.9	78.4
Operating costs	33.3		33.0	98.0	94.6
General and administrative	9.7		7.1	26.4	24.5
Depreciation and amortization	9.8		10.4	27.9	30.0
Total expenses	79.0		79.6	237.2	227.5
Income (loss) from operations	(3.1)		(3.3)	(15.0)	(14.1)
Interest income				0.1	0.2
Interest expense	(0.1)		(0.4)	(0.7)	(1.4)
Interest income (expense)-intercompany	(0.4)		(0.3)	(0.9)	(0.9)
Other income (expense), net	0.1			(0.4)
Income (loss) before income taxes and non-controlling interest	(3.5)		(4.0)	(16.9)	(16.2)
Income tax benefit (expense)	(0.4)		(1.5)	(1.2)	(0.2)
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest, Total	(3.9)		(5.5)	(18.1)	(16.4)
Net income (loss)	(3.9)		(5.5)	(18.1)	(16.4)
Less: net income attributable to non-controlling interest	(0.1)		(0.2)	(0.5)	(0.7)
Net income (loss) attributable to Affinion Group, Inc.	(4.0)		(5.7)	(18.6)	(17.1)
Eliminations [Member]
Expenses:
Equity in income of subsidiaries	(42.4)		(14.2)	(65.6)	(50.9)
Net income (loss)	(42.4)		(14.2)	(65.6)	(50.9)
Net income (loss) attributable to Affinion Group, Inc.	$ (42.4)		$ (14.2)	$ (65.6)	$ (50.9)

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Summary of Restricted Stock Unit Activity (Detail) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Restricted Stock Units, Granted		100,000
Outstanding restricted unvested awards at January 1, 2012	$ 11.82
Weighted Average Grant Date Fair Value, Granted	$ 8.16
Weighted Average Grant Date Fair Value, Vested	$ 12.20
Weighted Average Grant Date Fair Value, Forfeited	$ 10.03
Outstanding restricted unvested awards at September 30, 2012	$ 8.18
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding restricted unvested awards at January 1, 2012	292
Number of Restricted Stock Units, Granted	1,265
Number of Restricted Stock Units, Vested	(199)
Number of Restricted Stock Units, Forfeited	(129)
Outstanding restricted unvested awards at September 30, 2012	1,229
Weighted average remaining contractual term (in years)	10 months 24 days

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Intangible Assets - Amortization Expense Relating to Intangible Assets (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Finite-Lived Intangible Assets [Line Items]
For the Nine Mon September 30, 2012 ns)	$ 35.1	$ 46.7	$ 109.7	$ 145.4
Member relationships [Member]
Finite-Lived Intangible Assets [Line Items]
For the Nine Mon September 30, 2012 ns)	21.4	29.8	67.3	95.4
Affinity relationships [Member]
Finite-Lived Intangible Assets [Line Items]
For the Nine Mon September 30, 2012 ns)	11.1	12.9	33.5	37.0
Proprietary databases and systems [Member]
Finite-Lived Intangible Assets [Line Items]
For the Nine Mon September 30, 2012 ns)	0.3	0.5	0.9	1.4
Trademarks and tradenames [Member]
Finite-Lived Intangible Assets [Line Items]
For the Nine Mon September 30, 2012 ns)	0.5	0.7	1.8	1.8
Patents and technology [Member]
Finite-Lived Intangible Assets [Line Items]
For the Nine Mon September 30, 2012 ns)	1.7	2.7	5.9	9.5
Covenants not to compete [Member]
Finite-Lived Intangible Assets [Line Items]
For the Nine Mon September 30, 2012 ns)	$ 0.1	$ 0.1	$ 0.3	$ 0.3

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FINANCIAL INSTRUMENTS, DERIVATIVES AND FAIR VALUE MEASURES (Tables)

9 Months Ended

Sep. 30, 2012

Principal Cash Flows and Related Weighted-Average Interest Rates by Expected Maturity

The following table provides information about the Company’s 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 the Company’s long-term debt as of September 30, 2012:

	2012			2013			2014			2015			2016			2017 and Thereafter			Total		Fair Value At September 30, 2012
							(in millions)
Fixed rate debt	$	0.1		$	0.5		$	0.4		$	355.8		$	0.1		$	475.0		$	831.9	$	685.7
Average interest rate		9.43	%		9.43	%		9.43	%		9.43	%		7.88	%		7.88	%
Variable rate debt	$	2.8		$	11.2		$	11.3		$	11.2		$	1,062.2					$	1,098.7	$	1,010.8
Average interest rate(a)		5.00	%		5.00	%		5.00	%		5.00	%		5.00	%
Variable to fixed interest rate swap(b)																					$	2.1
Average pay rate		2.99	%
Average receive rate		0.32	%

(a) Average interest rate is based on rates in effect at September 30, 2012.

(b) The fair value of the interest rate swaps is included in accounts payables and accrued expenses at September 30, 2012. The fair value has been determined after consideration of interest rate yield curves and the creditworthiness of the parties to the interest rate swaps.

Schedule of Fair Value Measured on Recurring and Nonrecurring Basis

The fair values of certain financial instruments as of September 30, 2012, are shown in the table below:

	Fair Value Measurements at September 30, 2012
	Fair Value at September 30, 2012			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	(in millions)
Interest rate swap (included in accounts payable and accrued expenses)	$	(2.1	)		—	$	(2.1	)		—

The following table summarizes assets measured at fair value using Level 3 inputs on a nonrecurring basis subsequent to initial recognition:

	Fair Value Measurements at September 30, 2012
	Fair Value at September 30, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Impairment Losses Nine Months Ended September 30, 2012
	(in millions)
Goodwill		—		—		—		—	$	(31.5	)
Intangible assets		—		—		—		—		(8.2	)
Equity investment	$	0.7		—		—	$	0.7		(1.0	)

The fair values of certain financial instruments as of December 31, 2011 are shown in the table below:

	Fair Value Measurements at December 31, 2011
	Fair Value at December 31, 2011			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	(in millions)
Interest rate swap (included in accounts payable and accrued expenses)	$	(10.4	)		—	$	(10.4	)		—

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Schedule of Fair Value Measured on Recurring Basis (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended	9 Months Ended									9 Months Ended
	Jun. 30, 2012	Sep. 30, 2012	Sep. 30, 2012 Fair Value, Measurements, Recurring [Member]	Dec. 31, 2011 Fair Value, Measurements, Recurring [Member]	Sep. 30, 2012 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 1 [Member]	Dec. 31, 2011 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 1 [Member]	Sep. 30, 2012 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 2 [Member]	Dec. 31, 2011 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 2 [Member]	Sep. 30, 2012 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 3 [Member]	Dec. 31, 2011 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 3 [Member]	Sep. 30, 2012 Fair Value, Measurements, Nonrecurring [Member]	Sep. 30, 2012 Fair Value, Measurements, Nonrecurring [Member] Fair Value, Inputs, Level 1 [Member]	Sep. 30, 2012 Fair Value, Measurements, Nonrecurring [Member] Fair Value, Inputs, Level 2 [Member]	Sep. 30, 2012 Fair Value, Measurements, Nonrecurring [Member] Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap (included in accounts payable and accrued expenses)			$ (2.1)	$ (10.4)			$ (2.1)	$ (10.4)
Goodwill	31.5	31.5
Intangible assets		8.2
Equity investment		$ 1.0									$ 0.7			$ 0.7

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Stock-Based Compensation - Additional information (Detail) (USD $) In Millions, except Share data, unless otherwise specified	9 Months Ended		9 Months Ended	3 Months Ended		9 Months Ended		1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended			1 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		1 Months Ended	9 Months Ended
	Sep. 30, 2011 Y	Sep. 30, 2012	Sep. 30, 2012 Tranche A [Member]	Sep. 30, 2012 Stock Options [Member]	Sep. 30, 2011 Stock Options [Member]	Sep. 30, 2012 Stock Options [Member]	Sep. 30, 2011 Stock Options [Member]	Jan. 13, 2010 Restricted Stock Units (RSUs) [Member]	Sep. 30, 2012 Restricted Stock Units (RSUs) [Member]	Sep. 30, 2011 Restricted Stock Units (RSUs) [Member]	Sep. 30, 2012 Restricted Stock Units (RSUs) [Member] Multiplier	Sep. 30, 2011 Restricted Stock Units (RSUs) [Member]	Dec. 31, 2011 Restricted Stock Units (RSUs) [Member]	Dec. 31, 2010 Restricted Stock Units (RSUs) [Member]	Dec. 31, 2009 Restricted Stock Units (RSUs) [Member]	Oct. 17, 2005 2005 Plan [Member]	Nov. 30, 2007 2007 Plan [Member]	Sep. 30, 2012 2007 Plan [Member]	Sep. 30, 2011 2007 Plan [Member]	Sep. 30, 2012 2007 Plan [Member] Y	Sep. 30, 2011 2007 Plan [Member]	Sep. 30, 2012 2007 Plan [Member] Employees [Member]	Sep. 30, 2011 2007 Plan [Member] Employees [Member]	Sep. 30, 2012 2007 Plan [Member] Employees [Member]	Sep. 30, 2011 2007 Plan [Member] Employees [Member]	Jan. 13, 2010 2007 Plan [Member] Restricted Stock Units (RSUs) [Member]	Sep. 30, 2012 Webloyalty.com ISO Plan [Memeber]	Sep. 30, 2012 Webloyalty 2005 Plan [Member]	Sep. 30, 2012 Board Of Directors [Memeber] Y	Sep. 30, 2012 Webloyalty.com NQ Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Authorized shares granted																4,900,000	10,000,000
Maximum authorized period for grant of shares																10 years	10 years			10 years							10 years	10 years
Shares available for future grants																		5,000,000		5,000,000
Exercisable options																		1,459,000		1,459,000							100,000	600,000
Exercise price of shares acquired																		$ 12.17		$ 12.17							$ 0.98
Number of option outstanding																		3,615,000		3,615,000							0			0
Options granted to members of the Board of Directors fully vest	10																			10									10
Range of Exercise price, Minimum																												$ 3.33
Range of Exercise price, Maximum																												$ 12.95
Period vesting for tranche A			18 months
Number of stock options granted	100,000										1,265									495,000		0	300,000	500,000	2,800,000
Exercise price of the shares granted	$ 9.16																	$ 8.16	$ 9.16	$ 8.16	$ 9.16
Stock-based compensation expense				$ 1.4	$ 0.8	$ 3.8	$ 4.3		$ 1.2	$ 1.4	$ 5.0	$ 4.1
Stock option plan expense							13.7
Share-based compensation, nonvested awards, total compensation cost not yet recognized		8.5
Share-based compensation, nonvested awards, total compensation cost not yet recognized, period for recognition						1 year 2 months 12 days					8 months 12 days
Number of Restricted Stock Units, Granted									100,000		1,300,000		159,000	159,000												942,000
Aggregate value of Restricted Stock Units								9.9			10.3
RSUs awarded to each participant											1.2
Value per share of parent company									$ 8.16		$ 8.16				$ 12.63
Restricted stock expense												2.1
Employee service Share-based compensation, nonvested awards, total compensation cost not yet recognized									$ 7.9		$ 7.9

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Long-Term Debt (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Debt Instrument [Line Items]
Total Debt	$ 1,926.3	$ 1,934.4
Less: current portion of long-term debt	11.8	11.9
Long-term debt	1,914.5	1,922.5
7.875% senior notes due 2018 [Member]
Debt Instrument [Line Items]
Total Debt	472.3	471.9
11 1/2% senior subordinated notes due 2015 [Member]
Debt Instrument [Line Items]
Total Debt	353.9	353.5
Capital Lease Obligations [Member]
Debt Instrument [Line Items]
Total Debt	1.4	1.8
Term Loan Facility [Member]
Debt Instrument [Line Items]
Total Debt	$ 1,098.7	$ 1,107.2

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Segment Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Net revenues	$ 370.6	$ 394.7	$ 1,130.0	$ 1,148.7
Impairment of goodwill and long-lived assets			(39.7)
Operating income loss before depreciation and amortization	84.9	67.5	199.5	201.8
Segment EBITDA	84.9	67.5	199.5	201.8
Depreciation and amortization	(48.5)	(60.4)	(147.6)	(183.3)
Income from operations	36.4	7.1	51.9	18.5
EBITDA [Member]
Operating income loss before depreciation and amortization	87.8	73.1	251.0	228.4
Segment EBITDA	87.8	73.1	251.0	228.4
Corporate [Member]
Operating income loss before depreciation and amortization	(2.9)	(5.6)	(11.8)	(26.6)
Segment EBITDA	(2.9)	(5.6)	(11.8)	(26.6)
International products [Member]
Net revenues	75.9	76.3	222.2	213.4
Affinion North America [Member]
Net revenues	294.7	318.4	907.8	935.3
Affinion North America [Member] | EBITDA [Member]
Operating income loss before depreciation and amortization	78.5	63.5	230.5	205.1
Segment EBITDA	78.5	63.5	230.5	205.1
Affinion North America [Member] | Membership products [Member]
Net revenues	167.9	197.3	545.3	575.5
Affinion North America [Member] | Membership products [Member] | EBITDA [Member]
Operating income loss before depreciation and amortization	33.5	24.7	110.4	91.0
Segment EBITDA	33.5	24.7	110.4	91.0
Affinion North America [Member] | Insurance and package products [Member]
Net revenues	90.0	87.2	251.2	260.1
Affinion North America [Member] | Insurance and package products [Member] | EBITDA [Member]
Operating income loss before depreciation and amortization	31.5	27.9	82.0	82.1
Segment EBITDA	31.5	27.9	82.0	82.1
Affinion North America [Member] | Loyalty products [Member]
Net revenues	37.2	34.8	113.0	102.3
Affinion North America [Member] | Loyalty products [Member] | EBITDA [Member]
Operating income loss before depreciation and amortization	13.5	10.9	38.1	32.0
Segment EBITDA	13.5	10.9	38.1	32.0
Affinion North America [Member] | Geographical Intersegment, Eliminations [Member]
Net revenues	(0.4)	(0.9)	(1.7)	(2.6)
Affinion International [Member] | International products [Member] | EBITDA [Member]
Operating income loss before depreciation and amortization	9.3	9.6	20.5	23.3
Segment EBITDA	$ 9.3	$ 9.6	$ 20.5	$ 23.3

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Related Party Transactions - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	1 Months Ended				3 Months Ended		9 Months Ended		0 Months Ended	3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended
	Apr. 09, 2012	Feb. 11, 2011	Jan. 18, 2011	Dec. 31, 2010	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Jan. 14, 2011 Affinion Group Inc [Member]	Sep. 30, 2012 Cendant [Member]	Sep. 30, 2011 Cendant [Member]	Sep. 30, 2012 Cendant [Member]	Sep. 30, 2011 Cendant [Member]	Sep. 30, 2012 Cendant Subsidiaries [Member]	Sep. 30, 2011 Cendant Subsidiaries [Member]	Sep. 30, 2012 Cendant Subsidiaries [Member]	Sep. 30, 2011 Cendant Subsidiaries [Member]	Sep. 30, 2012 Wyndham [Member]	Sep. 30, 2011 Wyndham [Member]	Sep. 30, 2012 Wyndham [Member]	Sep. 30, 2011 Wyndham [Member]	Sep. 30, 2012 Apollo [Member]	Sep. 30, 2011 Apollo [Member]	Sep. 30, 2012 Apollo [Member]	Sep. 30, 2011 Apollo [Member]	Sep. 30, 2012 AMC Entertainment, Inc. [Member]	Sep. 30, 2011 AMC Entertainment, Inc. [Member]	Sep. 30, 2012 AMC Entertainment, Inc. [Member]	Sep. 30, 2011 AMC Entertainment, Inc. [Member]	Sep. 30, 2012 Alclear [Member]	Sep. 30, 2011 Alclear [Member]	Sep. 30, 2012 Alclear [Member]	Sep. 30, 2011 Alclear [Member]	Sep. 30, 2012 Sourcecorp Incorporated [Member]	Sep. 30, 2011 Sourcecorp Incorporated [Member]	Sep. 30, 2012 Sourcecorp Incorporated [Member]	Sep. 30, 2011 Sourcecorp Incorporated [Member]
Related Party Transaction [Line Items]
Indemnification obligation occurrence threshold					$ 0.1		$ 0.1
Aggregate amount of losses							15.0
Indemnification obligation, recovery limit							275.1
Loss agreed for Indemnification									15.0
Loss agreed for Indemnification, Maximum limit									15.0
Revenue earned for service										0		0		0	0.5	0	1.5	0	0.2	0	0.8									0.3	0.3	0.8	0.9
Expenses incurred, included in the operating expenses					110.8	116.0	344.2	333.2			0.3		0.9
Marketing and commissions					142.5	168.7	448.1	472.5		0	0.6	0	1.6
Contract period to administer the other program							3 years
Period of advisory services							12 years
Beneficial economic interest							5.00%
Annual fees paid for consulting				2
Annual fees paid for consulting revised							2.6
Additional one time fees for consulting								0.6
General and administrative					33.3	39.6	99.4	137.0														0.7	0.7	2.0	2.0
Fees incurred																																		0.2	0.3	0.6	0.9
Cost of gift cards purchased																										1.2	1.2	3.2	3.0
Cost method investment percentage																																5.00%
Revised cost method investment percentage																																2.70%
Cash dividends paid	37.0	199.8	123.4				37.0	323.2
Cash dividend			115.4
Outstanding preferred stock, redeemed		5.4	41.2
One-time cash bonus paid		133.4	9.6
Aggregate principal amount of incremental term loans		$ 250.0

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INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2012

INTANGIBLE ASSETS

3. INTANGIBLE ASSETS

Intangible assets consisted of:

	September 30, 2012
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(in millions)
Amortizable intangible assets:
Member relationships	$	935.9	$	(889.4	)	$	46.5
Affinity relationships		644.5		(491.9	)		152.6
Proprietary databases and systems		61.6		(56.8	)		4.8
Trademarks and tradenames		30.8		(13.7	)		17.1
Patents and technology		48.3		(35.4	)		12.9
Covenants not to compete		2.1		(1.5	)		0.6
	$	1,723.2	$	(1,488.7	)	$	234.5
	December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(in millions)
Amortizable intangible assets:
Member relationships	$	934.7	$	(821.3	)	$	113.4
Affinity relationships		643.0		(457.1	)		185.9
Proprietary databases and systems		62.6		(55.8	)		6.8
Trademarks and tradenames		36.0		(11.8	)		24.2
Patents and technology		49.5		(29.5	)		20.0
Covenants not to compete		2.2		(1.3	)		0.9
	$	1,728.0	$	(1,376.8	)	$	351.2

Foreign currency translation resulted in an increase in intangible assets and accumulated amortization of $2.8 million and $2.2 million, respectively, from December 31, 2011 to September 30, 2012.

Amortization expense relating to intangible assets was as follows:

	For the Three Months Ended				For the Nine Months Ended
	September 30, 2012		September 30, 2011		September 30, 2012		September 30, 2011
	(in millions)
Member relationships	$	21.4	$	29.8	$	67.3	$	95.4
Affinity relationships		11.1		12.9		33.5		37.0
Proprietary databases and systems		0.3		0.5		0.9		1.4
Trademarks and tradenames		0.5		0.7		1.8		1.8
Patents and technology		1.7		2.7		5.9		9.5
Covenants not to compete		0.1		0.1		0.3		0.3
	$	35.1	$	46.7	$	109.7	$	145.4

Based on the Company’s amortizable intangible assets as of September 30, 2012, the Company expects the related amortization expense for fiscal year 2012 and the four succeeding fiscal years to be approximately $132.0 million in 2012, $69.0 million in 2013, $57.8 million in 2014, $39.3 million in 2015 and $10.6 million in 2016.

At January 1, 2012 and September 30, 2012, the Company had gross goodwill of $643.0 million and $644.9 million, respectively, and accumulated impairment losses of $15.5 million and $47.0 million, respectively. The accumulated impairment losses represent the $15.5 million impairment loss recognized in 2006 impairing all of the goodwill assigned to the Loyalty Products segment related to the Apollo Transactions and the $31.5 million impairment loss recognized during the three months ended June 30, 2012 (as described below), impairing all of the goodwill assigned to the Membership Products segment related to the Prospectiv acquisition. The changes in the Company’s carrying amount of goodwill for the year ended December 31, 2011 and the nine months ended September 30, 2012 are as follows:

	Balance at January 1, 2011		Acquisition			Currency Translation			Balance at December 31, 2011		Impairment			Currency Translation		Balance at September 30, 2012
	(in millions)
Membership products	$	231.1	$	182.4		$	—		$	413.5	$	(31.5	)	$	—	$	382.0
Insurance and package products		58.3		—			—			58.3		—			—		58.3
Loyalty products		82.2		(0.5	)		—			81.7		—			—		81.7
International products		31.1		45.3			(2.4	)		74.0		—			1.9		75.9
Total	$	402.7	$	227.2		$	(2.4	)	$	627.5	$	(31.5	)	$	1.9	$	597.9

In late March of 2012, Prospectiv implemented a reduction in force and revised its growth plans for 2012 and 2013. The Company concluded that the revisions made to the Prospectiv forecast, as well as other marketplace events, represented an indication of potential impairment of Prospectiv’s goodwill and intangible assets. As a result, during the three months ended June 30, 2012, the Company performed an interim impairment test of the goodwill for Prospectiv, which is a separate reporting unit within the Membership Products reporting segment. Based on the interim impairment test, which used discounted cash flows to determine the fair value of Prospectiv and the implied fair value of the goodwill ascribed to Prospectiv, the Company recorded an impairment loss during the three months ended June 30, 2012 of $31.5 million, representing all of the goodwill ascribed to Prospectiv at the date of acquisition. During the three months ended June 30, 2012, the Company also performed an impairment test related to the intangible assets of Prospectiv and, based on the impairment test, recorded an impairment loss related to the Prospectiv intangible assets of $8.2 million, related to proprietary databases and systems ($1.0 million), trademarks and tradenames ($5.4 million) and patents and technology ($1.8 million). The impairment loss related to the goodwill and intangible assets of Prospectiv has been reflected as Impairment of goodwill and other long-lived assets in the unaudited condensed consolidated statement of comprehensive income for the nine months ended September 30, 2012.

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Stock Options Granted to Employees (Detail)	9 Months Ended	1 Months Ended	9 Months Ended			1 Months Ended	9 Months Ended
	Sep. 30, 2011 Y	Oct. 17, 2005 2005 Plan [Member]	Sep. 30, 2012 2005 Plan [Member] Tranche A [Member] Y	Sep. 30, 2012 2005 Plan [Member] Tranche B [Member] Y	Sep. 30, 2012 2005 Plan [Member] Tranche C [Member] Y	Nov. 30, 2007 2007 Plan [Member]	Sep. 30, 2012 2007 Plan [Member] Y
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Term of option			10	10	10
Maximum authorized period for grant of shares		10 years				10 years	10 years
Vesting, Period			Ratably over 5 years	100% after 8 years	100% after 8 years		Ratably over 4 years
Vesting, rate				100.00%	100.00%
Term of option	10						10

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Acquisitions - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended	9 Months Ended			3 Months Ended			9 Months Ended				1 Months Ended			3 Months Ended	9 Months Ended			1 Months Ended
	Jun. 30, 2012	Sep. 30, 2012	Sep. 30, 2011	Jan. 14, 2011	Jun. 30, 2012 Patents and technology [Member]	Jun. 30, 2012 Trademarks and tradenames [Member]	Jun. 30, 2012 Proprietary databases and systems [Member]	Sep. 30, 2012 Membership products [Member]	Jan. 14, 2011 Membership products [Member]	Jan. 14, 2011 International products [Member]	Jan. 14, 2011 Webloyalty [Member]	Jan. 14, 2011 Webloyalty [Member] Member relationships [Member]	Jan. 14, 2011 Webloyalty [Member] Patents and technology [Member]	Jul. 31, 2011 Prospectiv [Member]	Sep. 30, 2012 Prospectiv [Member]	Sep. 30, 2012 Prospectiv [Member]	Sep. 30, 2011 Prospectiv [Member]	Aug. 01, 2011 Prospectiv [Member]	Aug. 01, 2011 Prospectiv [Member] Patents and technology [Member]	Aug. 01, 2011 Prospectiv [Member] Trademarks and tradenames [Member]	Aug. 01, 2011 Prospectiv [Member] Proprietary databases and systems [Member]	Sep. 30, 2012 7.875% senior notes due 2018 [Member]	Jan. 14, 2011 7.875% senior notes due 2018 [Member]	Nov. 19, 2010 7.875% senior notes due 2018 [Member]	Jan. 14, 2011 11 1/2% senior subordinated notes due 2015 [Member]	Apr. 26, 2006 11 1/2% senior subordinated notes due 2015 [Member]
Finite-Lived Intangible Assets [Line Items]
Shares contributed in connection with acquisition				25.1
Shares of common stock				$ 283.0
Options to purchase shares				1.2
Options to purchase shares of common stock				6.2
Cost attributed to pre-acquisition service				6.0
Warrants to purchase shares				0.5
Warrants to purchase shares common stock				1.7
Interest rate of notes																						7.875%	7.875%	7.875%	11.50%	11.50%
Price consideration											290.7							46.2
Intangible assets acquired												90.0	17.0						2.5	6.3	2.8
Weighted average useful life of intangible assets												7 years	9 years						5 years	10 years	4 years
Goodwill allocated to the Membership Products segment									150.9
Goodwill allocated to International Products segment										44.7
Acquisition costs incurred			0.5														3.9
General and administrative expense			1.5
Cash purchase price																		31.8
Maximum period of performance target																		30 months
Additional consideration																		45.0
Additional compensation																		10.0
Liability for additional consideration														24.1	0.7
Additional consideration, fair value																		14.4
Reduction in general and administrative expenses															14.6	1.1
Impairment of goodwill and other long-lived assets	39.7	39.7
Impairment loss representing goodwill	31.5	31.5						31.5
Impairment loss related to the Prospectiv intangibles	$ 8.2				$ 1.8	$ 5.4	$ 1.0

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Basis of Presentation and Business Description - Additional Information (Detail) (Cendant Marketing Services Division, USD $) In Billions, unless otherwise specified	Oct. 17, 2005
Cendant Marketing Services Division
Business Acquisition [Line Items]
Sale pursuant to a purchase agreement	$ 1.8

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Guarantor/Non-Guarantor Supplemental financial Information - Schedule of Condensed Consolidating Statement of Cash Flows (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended		12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Operating Activities
Net loss	$ (68.0)	$ (100.4)	$ (108.8)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	147.6	183.3
Amortization of debt discount and financing costs	6.3	6.2
Unrealized gain on interest rate swaps	1.2	(4.3)
Impairment of goodwill and other long-lived assets	39.7
Impairment of equity investment	1.0
Adjustment to liability for additional consideration based on earn-out	(14.6)
Facility exit costs	(0.9)	4.2
Share-based compensation	8.8	8.5
Deferred income taxes	3.9	3.8
Payment received for assumption of loyalty points program liability		4.8
Net change in assets and liabilities:
Restricted cash	(5.2)	2.1
Receivables	(19.6)	(31.5)
Receivables from related parties	0.7	0.4
Profit-sharing receivables from insurance carriers	(14.9)	(18.2)
Prepaid commissions	9.4	4.1
Other current assets	(14.2)	12.6
Contract rights and list fees	(0.7)	(2.7)
Other non-current assets	4.7	8.1
Accounts payable and accrued expenses	6.3	4.1
Payables to related parties	(3.6)	(6.8)
Deferred revenue	(32.5)	(10.0)
Income taxes receivable and payable	(1.1)	5.5
Other long-term liabilities	0.6	(7.9)
Other, net	(0.1)
Net cash provided by operating activities	54.8	65.9
Investing Activities
Capital expenditures	(38.2)	(39.0)
Restricted cash	0.2	1.1
Acquisition-related payment, net of cash acquired	(1.2)	(32.9)
Cash acquired in Webloyalty acquisition		26.1
Other investing activity		0.2
Net cash used in investing activities	(39.2)	(44.5)
Financing Activities
Proceeds from issuance of term loan		250.0
Principal payments on borrowings	(8.8)	(8.8)
Financing costs		(5.8)
Repurchase of employee equity award of a subsidiary		(3.5)
Return of capital to parent company	(37.0)	(323.2)
Receivables from and payables to parent company		15.3
Distribution to non-controlling interest of a subsidiary		(1.1)
Net cash used in financing activities	(45.8)	(77.1)
Effect of changes in exchange rates on cash and cash equivalents	0.4	0.1
Net increase (decrease) in cash and cash equivalents	(29.8)	(55.6)
Cash and cash equivalents, beginning of period	86.3	121.1	121.1
Cash and cash equivalents, end of period	56.5	65.5	86.3
Affinion Group, Inc [Member]
Operating Activities
Net loss	(68.5)	(101.1)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	0.9	0.9
Amortization of debt discount and financing costs	6.3	6.2
Unrealized gain on interest rate swaps	1.2	(4.3)
Adjustment to liability for additional consideration based on earn-out	(14.6)
Share-based compensation	8.8	8.5
Equity in (income) loss of subsidiaries	(65.6)	(50.9)
Deferred income taxes	0.3	0.3
Net change in assets and liabilities:
Restricted cash		3.4
Receivables	(1.0)	0.1
Receivables from related parties	(0.4)	(0.9)
Other current assets	(3.2)	(0.4)
Other non-current assets	(0.7)	0.5
Accounts payable and accrued expenses	13.6	22.7
Payables to related parties	(2.7)	(5.1)
Deferred revenue		(0.1)
Income taxes receivable and payable	(0.3)	(0.1)
Other long-term liabilities	0.3	2.5
Other, net	(0.3)	(0.7)
Net cash provided by operating activities	(125.9)	(118.5)
Investing Activities
Capital expenditures	(1.1)	(2.8)
Acquisition-related payment, net of cash acquired		(31.8)
Net cash used in investing activities	(1.1)	(34.6)
Financing Activities
Proceeds from issuance of term loan		250.0
Principal payments on borrowings	(8.4)	(8.4)
Financing costs		(5.8)
Return of capital to parent company	(37.0)	(323.2)
Intercompany loan	(1.5)	(3.6)
Intercompany receivables and payables	143.3	156.8
Receivables from and payables to parent company		15.3
Net cash used in financing activities	96.4	81.1
Net increase (decrease) in cash and cash equivalents	(30.6)	(72.0)
Cash and cash equivalents, beginning of period	57.2	104.8	104.8
Cash and cash equivalents, end of period	26.6	32.8
Guarantor Subsidiaries [Member]
Operating Activities
Net loss	84.2	68.0
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	118.8	152.4
Impairment of goodwill and other long-lived assets	39.7
Facility exit costs	(0.9)	4.2
Deferred income taxes	5.7	6.0
Payment received for assumption of loyalty points program liability		4.8
Net change in assets and liabilities:
Restricted cash	(5.3)	(1.0)
Receivables	(17.3)	(39.5)
Receivables from related parties	0.5	0.4
Profit-sharing receivables from insurance carriers	(15.0)	(18.8)
Prepaid commissions	8.7	3.2
Other current assets	(6.6)	5.7
Contract rights and list fees	(0.7)	(2.7)
Other non-current assets	5.1	7.0
Accounts payable and accrued expenses	(13.6)	2.4
Payables to related parties	(0.8)	(0.6)
Deferred revenue	(26.9)	(13.2)
Income taxes receivable and payable	(0.6)	0.3
Other long-term liabilities	0.6	(3.5)
Other, net	(0.3)	0.1
Net cash provided by operating activities	175.3	175.2
Investing Activities
Capital expenditures	(20.2)	(28.0)
Acquisition-related payment, net of cash acquired		2.4
Cash acquired in Webloyalty acquisition		10.4
Other investing activity		0.2
Net cash used in investing activities	(20.2)	(14.9)
Financing Activities
Principal payments on borrowings	(0.4)	(0.4)
Intercompany loan	(9.6)
Intercompany receivables and payables	(143.5)	(159.3)
Net cash used in financing activities	(153.5)	(159.7)
Net increase (decrease) in cash and cash equivalents	1.6	0.6
Cash and cash equivalents, beginning of period	2.8	3.2	3.2
Cash and cash equivalents, end of period	4.4	3.8
Non-Guarantor Subsidiaries [Member]
Operating Activities
Net loss	(18.1)	(16.4)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	27.9	30.0
Impairment of equity investment	1.0
Deferred income taxes	(2.1)	(2.5)
Net change in assets and liabilities:
Restricted cash	0.1	(0.3)
Receivables	(1.3)	7.9
Receivables from related parties	0.6	0.9
Profit-sharing receivables from insurance carriers	0.1	0.6
Prepaid commissions	0.7	0.9
Other current assets	(4.4)	7.3
Other non-current assets	0.3	0.6
Accounts payable and accrued expenses	6.3	(21.0)
Payables to related parties	(0.1)	(1.1)
Deferred revenue	(5.6)	3.3
Income taxes receivable and payable	(0.2)	5.3
Other long-term liabilities	(0.3)	(6.9)
Other, net	0.5	0.6
Net cash provided by operating activities	5.4	9.2
Investing Activities
Capital expenditures	(16.9)	(8.2)
Restricted cash	0.2	1.1
Acquisition-related payment, net of cash acquired	(1.2)	(3.5)
Cash acquired in Webloyalty acquisition		15.7
Net cash used in investing activities	(17.9)	5.0
Financing Activities
Repurchase of employee equity award of a subsidiary		(3.5)
Intercompany loan	11.1	3.6
Intercompany receivables and payables	0.2	2.5
Distribution to non-controlling interest of a subsidiary		(1.1)
Net cash used in financing activities	11.3	1.5
Effect of changes in exchange rates on cash and cash equivalents	0.4	0.1
Net increase (decrease) in cash and cash equivalents	(0.8)	15.8
Cash and cash equivalents, beginning of period	26.3	13.1	13.1
Cash and cash equivalents, end of period	25.5	28.9
Eliminations [Member]
Operating Activities
Net loss	(65.6)	(50.9)
Adjustments to reconcile net loss to net cash provided by operating activities:
Equity in (income) loss of subsidiaries	$ 65.6	$ 50.9

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Schedule of Fair Value Option Award (Detail)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	50.00%	44.00%
Risk-free interest rate	1.15%
Dividend yield
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life (in years)	5 years 10 months 21 days	4 years 11 months 1 day
Risk-free interest rate		2.03%
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life (in years)	6 years 3 months	6 years 29 days
Risk-free interest rate		2.37%

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Acquisitions - Assumed Assets and Liabilities Acquired (Detail) (USD $) In Millions, unless otherwise specified	Jan. 14, 2011 Webloyalty [Member]	Aug. 01, 2011 Prospectiv [Member]
Business Acquisition [Line Items]
Cash	$ 26.1	$ 2.4
Accounts receivable	4.2	3.0
Other current assets	11.3	0.5
Property and equipment	5.2	0.5
Intangible assets	116.1	12.3
Goodwill	195.6	31.5
Other assets	0.2
Accounts payable and accrued liabilities	(56.5)	(4.0)
Deferred income tax	(1.3)
Income taxes payable	(0.7)
Other current liabilities	(1.7)
Non-current deferred income taxes	(6.7)
Other long-term liabilities	(1.1)
Consideration transferred	$ 290.7	$ 46.2

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Intangible Assets - Amortizable Intangible Assets (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 1,723.2	$ 1,728.0
Accumulated Amortization	(1,488.7)	(1,376.8)
Net Carrying Amount	234.5	351.2
Member relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	935.9	934.7
Accumulated Amortization	(889.4)	(821.3)
Net Carrying Amount	46.5	113.4
Affinity relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	644.5	643.0
Accumulated Amortization	(491.9)	(457.1)
Net Carrying Amount	152.6	185.9
Proprietary databases and systems [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	61.6	62.6
Accumulated Amortization	(56.8)	(55.8)
Net Carrying Amount	4.8	6.8
Trademarks and tradenames [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	30.8	36.0
Accumulated Amortization	(13.7)	(11.8)
Net Carrying Amount	17.1	24.2
Patents and technology [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	48.3	49.5
Accumulated Amortization	(35.4)	(29.5)
Net Carrying Amount	12.9	20.0
Covenants not to compete [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	2.1	2.2
Accumulated Amortization	(1.5)	(1.3)
Net Carrying Amount	$ 0.6	$ 0.9

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ACQUISITIONS

9 Months Ended

Sep. 30, 2012

ACQUISITIONS

2. ACQUISITIONS

On January 14, 2011, the Company and Affinion Holdings entered into, and consummated, an Agreement and Plan of Merger that resulted in the acquisition of Webloyalty Holdings, Inc. (“Webloyalty”) by the Company. In accordance with the Agreement and Plan of Merger, on January 14, 2011, the Company acquired all of the capital stock of Webloyalty, and the interest of security holders of Webloyalty immediately prior to the Merger were converted into Affinion Holdings’ securities, as follows: (i) the shares of common stock of Webloyalty were converted into shares of Affinion Holdings’ common stock, (ii) options to purchase shares of Webloyalty’s common stock granted under Webloyalty’s equity plans, whether vested or unvested, were converted into options to purchase shares of Affinion Holdings’ common stock, (iii) warrants to purchase shares of Webloyalty’s common stock were converted into warrants to purchase Affinion Holdings’ common stock and (iv) awards of restricted shares of Webloyalty’s common stock (to the extent unvested) were converted into awards of restricted shares of Affinion Holdings’ common stock. In connection with the acquisition, Affinion Holdings contributed to the Company (i) approximately 25.1 million shares of Affinion Holdings’ common stock valued at $283.0 million, (ii) options to purchase approximately 1.2 million shares of Affinion Holdings’ common stock valued at $6.2 million, of which $6.0 million was attributed to pre-acquisition service, and (iii) warrants to purchase approximately 0.5 million shares of Affinion Holdings’ common stock valued at $1.7 million, all of which was attributed to pre-acquisition service, which the Company issued as consideration to acquire Webloyalty.

Webloyalty is a leading online marketing services company that provides, designs and administers online subscription loyalty solutions that offer valuable discounts, services and benefits for its subscribers and provides its clients with programs that enhance their relationships with their customers. The Company believes that the Company’s and Webloyalty’s product suites are highly complementary, allowing for a relatively seamless integration of benefits, as well as the opportunity to leverage the individual services and features to build a better, stronger offer for the consumer and thereby enhance the value proposition for the Company’s affinity marketing partners. Additionally, the significant scale of the Company’s marketing operations will benefit substantially through the integration of the innovative technologies Webloyalty has created in improving the design and targeting of offers. Also, Webloyalty has a strong presence in certain European markets where the Company seeks to expand its operations and accelerate its rate of growth.

In connection with the Webloyalty acquisition, Webloyalty and its domestic subsidiaries have become guarantors under the Company’s senior secured credit facility and the indentures governing the Company’s 7.875% senior notes and 11   ¹/₂% senior subordinated notes (see Note 5—Long-term Debt).

The Company has allocated the Webloyalty purchase price of $290.7 million among the assets acquired and liabilities assumed as follows (in millions):

Cash	$	26.1
Accounts receivable		4.2
Other current assets		11.3
Property and equipment		5.2
Intangible assets		116.1
Goodwill		195.6
Other assets		0.2
Accounts payable and accrued liabilities		(56.5	)
Deferred income tax		(1.3	)
Income taxes payable		(0.7	)
Other current liabilities		(1.7	)
Non-current deferred income taxes		(6.7	)
Other long-term liabilities		(1.1	)
Consideration transferred	$	290.7

The intangible assets are comprised principally of member relationships ($90.0 million) and patents and technology ($17.0 million), which are being depreciated on an accelerated basis over weighted-average useful lives of seven and nine years, respectively. The goodwill, which is not expected to be deductible for income tax purposes, has been allocated to the Membership Products segment ($150.9 million) and the International Products segment ($44.7 million). As of September 30, 2011, the Company had incurred $3.9 million of acquisition costs, of which $1.5 million was recognized during the nine months ended September 30, 2011 and included in general and administrative expense in the unaudited condensed consolidated statement of comprehensive income. There were no such costs incurred during the three months ended September 30, 2011 or the three and nine months ended September 30, 2012.

On July 14, 2011, the Company and Affinion Holdings entered into an Agreement and Plan of Merger to acquire Prospectiv Direct, Inc. (“Prospectiv”), an online performance marketer and operator of a daily deal website. On August 1, 2011, the merger was consummated and, as a result, the Company acquired all of the capital stock of Prospectiv for an initial cash purchase price of $31.8 million. If Prospectiv achieves certain performance targets over the 30 month period that commenced on July 1, 2011, the former equity holders will be entitled to additional consideration in the form of an earn-out of up to $45.0 million and certain members of Prospectiv’s management will be entitled to receive additional compensation related to their continued employment of up to $10.0 million. Such additional consideration and compensation will be settled in some combination of cash and shares of Affinion Holdings’ common stock. As of the acquisition date, the liability for the additional consideration to be paid in connection with the earn-out was estimated to be $24.1 million, which was recorded at its fair value at the acquisition date of $14.4 million. As of the acquisition date, the purchase price, consisting of the cash paid at closing and the estimated fair value of the earn-out as of the acquisition date, was estimated at $46.2 million. The Company has allocated the purchase price of $46.2 million among the assets acquired and liabilities assumed as follows (in millions):

Cash	$	2.4
Accounts receivable		3.0
Other current assets		0.5
Property and equipment		0.5
Intangible assets		12.3
Goodwill		31.5
Accounts payable and accrued liabilities		(4.0	)
Consideration transferred	$	46.2

The intangible assets are comprised principally of trademarks and tradenames ($6.3 million), proprietary databases and systems ($2.8 million) and patents and technology ($2.5 million), which are being depreciated on a straight-line basis over weighted-average useful lives of ten, four and five years, respectively. The goodwill, which is not expected to be deductible for income tax purposes, has been allocated to the Membership Products segment. As of September 30, 2011, the Company had incurred $0.5 million of acquisition costs, all of which was recognized during the three and nine months ended September 30, 2011 and has been included in general and administrative expense in the unaudited condensed consolidated statement of operations. During the three and nine months ended September 30, 2012, there were no costs incurred by the Company related to the acquisition of Prospectiv.

In late March of 2012, Prospectiv implemented a reduction in force and revised its growth plans for 2012 and 2013. Based on these revised growth plans, the Company has concluded that it does not expect to pay any additional consideration in the form of an earn-out or additional compensation based on achievement of performance targets. Accordingly, during the three months ended March 31, 2012, the Company reversed certain accruals for additional consideration recorded as part of the Prospectiv acquisition and additional compensation as the Company will not be able to achieve the growth originally planned for these years due to market conditions. The reduction of these accruals recorded during the first quarter of 2012 reduced general and administrative expense for the nine months ended September 30, 2012 by $14.6 million and $1.1 million, respectively. In addition, during the three months ended September 30, 2012, the Company entered into a settlement agreement with the former equity holders of Prospectiv which resulted in a $0.7 million reduction of the initial purchase price and released the Company from any future claims for additional consideration and for future compensation based on achievement of the performance targets. The reduction in the initial purchase price was included in general and administrative expenses in the accompanying statements of comprehensive income for the three and nine months ended September 30, 2012.

The Company concluded that the revisions made to the Prospectiv forecast, as well as other marketplace events, represented an indication of potential impairment of Prospectiv’s goodwill and intangible assets. As a result, during the three months ended June 30, 2012, the Company performed an interim impairment test of the goodwill for Prospectiv which is a separate reporting unit within the Membership Products reporting segment, as of April 1, 2012. Based on the impairment test, which used projected discounted cash flows to determine the fair value of Prospectiv and the implied fair value of the goodwill ascribed to Prospectiv, the Company recorded an impairment loss during the three months ended June 30, 2012 of $39.7 million, representing all of the goodwill ascribed to Prospectiv at the date of acquisition ($31.5 million) and a portion of the intangible assets of Prospectiv ($8.2 million). The impairment loss related to the goodwill and intangible assets of Prospectiv has been reflected as Impairment of goodwill and other long-lived assets in the unaudited condensed consolidated statement of comprehensive income for the nine months ended September 30, 2012.

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Intangible Assets - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended	9 Months Ended
	Jun. 30, 2012	Sep. 30, 2012	Dec. 31, 2011
Finite-Lived Intangible Assets [Line Items]
Decrease in intangible assets		$ 2.8
Accumulated amortization		2.2
Expected amortization expense in 2012		132.0
Expected amortization expense in 2013		69.0
Expected amortization expense in 2014		57.8
Expected amortization expense in 2015		39.3
Expected amortization expense in 2016		10.6
Goodwill, gross		644.9	643.0
Accumulated impairment loss		47.0	15.5
Impairment loss representing goodwill	31.5	31.5
Impairment loss related to the Prospectiv intangibles	8.2
Loyalty products [Member]
Finite-Lived Intangible Assets [Line Items]
Accumulated impairment loss			15.5
Membership products [Member]
Finite-Lived Intangible Assets [Line Items]
Accumulated impairment loss	31.5
Impairment loss representing goodwill		31.5
Proprietary databases and systems [Member]
Finite-Lived Intangible Assets [Line Items]
Impairment loss related to the Prospectiv intangibles	1.0
Trademarks and tradenames [Member]
Finite-Lived Intangible Assets [Line Items]
Impairment loss related to the Prospectiv intangibles	5.4
Patents and technology [Member]
Finite-Lived Intangible Assets [Line Items]
Impairment loss related to the Prospectiv intangibles	$ 1.8

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Income Taxes (Additional Information) (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Effective tax rate	(717.90%)	(13.30%)	(14.90%)	(9.30%)
Changes in loss before income taxes and non-controlling interest	$ 0.3	$ 29.2	$ 59.1	$ 91.8
Income tax expense	1.9	3.9	8.9	8.6
Difference between the effective income tax rate and domestic federal statutory income tax rate			35.00%
Decrease in uncertain tax positions	0.1		0.2
Unrecognized tax benefits, Gross			$ 2.7
Unrecognized tax benefits, Maturity Period			12 months

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Guarantor/Non-Guarantor Supplemental Financial Information - Additional Information (Detail)	Sep. 30, 2012
Percentage of ownership	100.00%

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Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 56.5	$ 86.3
Restricted cash	35.6	30.4
Receivables (net of allowance for doubtful accounts of $3.6 and $2.4, respectively)	147.5	126.8
Receivables from related parties	0.1	0.8
Profit-sharing receivables from insurance carriers	88.9	74.0
Prepaid commissions	43.5	52.6
Income taxes receivable	3.9	2.1
Other current assets	83.2	68.1
Total current assets	459.2	441.1
Property and equipment, net	134.3	134.7
Contract rights and list fees, net	23.0	22.5
Goodwill	597.9	627.5
Other intangibles, net	234.5	351.2
Other non-current assets	62.1	74.0
Total assets	1,511.0	1,651.0
Current liabilities:
Current portion of long-term debt	11.8	11.9
Accounts payable and accrued expenses	407.6	398.1
Payables to related parties	40.4	35.3
Deferred revenue	124.1	152.5
Income taxes payable	4.2	3.4
Total current liabilities	588.1	601.2
Long-term debt	1,914.5	1,922.5
Deferred income taxes	70.9	67.5
Deferred revenue	15.2	17.8
Other long-term liabilities	38.7	53.7
Total liabilities	2,627.4	2,662.7
Commitments and contingencies (Note 7)
Deficit
Common stock and additional paid-in capital, $0.01 par value, 1,000 shares authorized, and 100 shares issued and outstanding	102.6	139.6
Accumulated deficit	(1,226.0)	(1,157.5)
Accumulated other comprehensive income	5.5	5.2
Total Affinion Group, Inc. deficit	(1,117.9)	(1,012.7)
Non-controlling interest in subsidiary	1.5	1.0
Total deficit	(1,116.4)	(1,011.7)
Total liabilities and deficit	$ 1,511.0	$ 1,651.0

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Summary of Option Activity (Detail) (USD $)	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2012 2007 Plan [Member]	Sep. 30, 2012 Tranche A [Member] 2005 Plan [Member]	Sep. 30, 2012 Tranche B [Member] 2005 Plan [Member]	Sep. 30, 2012 Tranche C [Member] 2005 Plan [Member]	Sep. 30, 2012 Grants To Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted	100,000	495,000
Exercised
Forfeited or expired		(730,000)	(138,000)	(78,000)	(78,000)
Outstanding options at September 30, 2012		3,615,000	1,420,000	689,000	689,000	423,000
Vested or expected to vest at September 30, 2012		3,615,000	1,420,000	689,000	689,000	423,000
Exercisable options at September 30, 2012		1,459,000	1,420,000			423,000
Weighted average remaining contractual term (in years)		8 years	3 years 2 months 12 days	3 years 2 months 12 days	3 years 2 months 12 days	5 years 1 month 6 days
Weighted average grant date fair value per option granted in 2012		$ 3.97	$ 0.00
Weighted average exercise price of exercisable options at September 30, 2012		$ 12.17	$ 1.59			$ 5.29
Weighted average exercise price of outstanding options at September 30, 2012		$ 10.67	$ 1.59	$ 1.59	$ 1.59	$ 5.29

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Operating Activities
Net loss	$ (68.0)	$ (100.4)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	147.6	183.3
Amortization of debt discount and financing costs	6.3	6.2
Unrealized (gain) loss on interest rate swaps	1.2	(4.3)
Impairment of goodwill and other long-lived assets	39.7
Impairment of equity investment	1.0
Adjustment to liability for additional consideration based on earn-out	(14.6)
Facility exit costs	(0.9)	4.2
Share-based compensation	8.8	8.5
Deferred income taxes	3.9	3.8
Payment received for assumption of loyalty points program liability		4.8
Net change in assets and liabilities:
Restricted cash	(5.2)	2.1
Receivables	(19.6)	(31.5)
Receivables from related parties	0.7	0.4
Profit-sharing receivables from insurance carriers	(14.9)	(18.2)
Prepaid commissions	9.4	4.1
Other current assets	(14.2)	12.6
Contract rights and list fees	(0.7)	(2.7)
Other non-current assets	4.7	8.1
Accounts payable and accrued expenses	6.3	4.1
Payables to related parties	(3.6)	(6.8)
Deferred revenue	(32.5)	(10.0)
Income taxes receivable and payable	(1.1)	5.5
Other long-term liabilities	0.6	(7.9)
Other, net	(0.1)
Net cash provided by operating activities	54.8	65.9
Investing Activities
Capital expenditures	(38.2)	(39.0)
Restricted cash	0.2	1.1
Acquisition-related payments, net of cash acquired	(1.2)	(32.9)
Cash acquired in Webloyalty acquisition		26.1
Other investing activity		0.2
Net cash used in investing activities	(39.2)	(44.5)
Financing Activities
Proceeds from issuance of term loan		250.0
Principal payments on borrowings	(8.8)	(8.8)
Financing costs		(5.8)
Repurchase of employee equity award of a subsidiary		(3.5)
Return of capital to parent company	(37.0)	(323.2)
Receivables from and payables to parent company		15.3
Distribution to non-controlling interest of a subsidiary		(1.1)
Net cash used in financing activities	(45.8)	(77.1)
Effect of changes in exchange rates on cash and cash equivalents	0.4	0.1
Net decrease in cash and cash equivalents	(29.8)	(55.6)
Cash and cash equivalents, beginning of period	86.3	121.1
Cash and cash equivalents, end of period	56.5	65.5
Supplemental Disclosure of Cash Flow Information:
Interest payments	92.5	91.9
Income tax payments, net of refunds	6.9	2.9
Non-cash investing and financing activities:
Accrued capital expenditures	1.5	1.8
Contribution of Affinion Holdings equity instruments used for Webloyalty acquisition		290.7
Property and equipment acquired under capital lease		0.9
Property and equipment acquired under new facility operating lease		$ 2.6

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Contract Rights and List Fees, Net (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Finite-Lived Intangible Assets [Line Items]
Dec Gross Carrying Amount ns)	$ 105.9	$ 98.3
ember 31, 2011 Accumulated Amortization	(82.9)	(75.8)
Net Carrying Amount	23.0	22.5
Contract rights [Member]
Finite-Lived Intangible Assets [Line Items]
Dec Gross Carrying Amount ns)	61.4	58.7
ember 31, 2011 Accumulated Amortization	(60.3)	(57.3)
Net Carrying Amount	1.1	1.4
List fees [Member]
Finite-Lived Intangible Assets [Line Items]
Dec Gross Carrying Amount ns)	44.5	39.6
ember 31, 2011 Accumulated Amortization	(22.6)	(18.5)
Net Carrying Amount	$ 21.9	$ 21.1

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CONTRACT RIGHTS AND LIST FEES, NET (Tables)

9 Months Ended

Sep. 30, 2012

Contract Rights and List Fees, Net

Contract rights and list fees consisted of:

	September 30, 2012							December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(in millions)
Contract rights	$	61.4	$	(60.3	)	$	1.1	$	58.7	$	(57.3	)	$	1.4
List fees		44.5		(22.6	)		21.9		39.6		(18.5	)		21.1
	$	105.9	$	(82.9	)	$	23.0	$	98.3	$	(75.8	)	$	22.5

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Contract Rights and List Fees, Net - Additional information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 35.1	$ 46.7	$ 109.7	$ 145.4
Marketing and commissions	142.5	168.7	448.1	472.5
Depreciation and amortization expense	48.5	60.4	147.6	183.3
Expected amortization in 2012	6.0		6.0
Expected amortization in 2013	5.7		5.7
Expected amortization in 2014	4.7		4.7
Expected amortization in 2015	3.7		3.7
Expected amortization in 2016	2.6		2.6
Amortization [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization expense	1.6	3.0	4.5	9.1
Marketing and commissions	1.5	1.2	4.2	3.7
Depreciation and amortization expense	$ 0.1	$ 1.8	$ 0.3	$ 5.4

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STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Fair Value Option Award

The expected term of the options granted represents the period of time that options are expected to be outstanding, and is based on the average of the requisite service period and the contractual term of the option.

	2012			2011
Expected volatility		50.0	%		44.0	%
Expected life (in years)		5.89-6.25			4.92-6.08
Risk-free interest rate		1.15	%		2.03-2.37	%
Dividend yield		—	%		—	%

Summary of Option Activity

A summary of option activity for the nine months ended September 30, 2012 is presented below (number of options in thousands):

	2005 Plan – Grants to Employees- Tranche A			2005 Plan – Grants to Employees- Tranche B			2005 Plan – Grants to Employees- Tranche C			Grants to Board of Directors		2007 Plan – Grants to Employees
Outstanding options at January 1, 2012		1,558			767			767			423		3,850
Granted		—			—			—			—		495
Exercised		—			—			—			—		—
Forfeited or expired		(138	)		(78	)		(78	)		—		(730	)
Outstanding options at September 30, 2012		1,420			689			689			423		3,615
Vested or expected to vest at September 30, 2012		1,420			689			689			423		3,615
Exercisable options at September 30, 2012		1,420			—			—			423		1,459
Weighted average remaining contractual term (in years)		3.2			3.2			3.2			5.1		8.0
Weighted average grant date fair value per option granted in 2012	$	—		$	—		$	—		$	—	$	3.97
Weighted average exercise price of exercisable options at September 30, 2012	$	1.59		$	—		$	—		$	5.29	$	12.17
Weighted average exercise price of outstanding options at September 30, 2012	$	1.59		$	1.59		$	1.59		$	5.29	$	10.67

Summary of Restricted Stock Unit Activity

A summary of restricted stock unit activity for the nine months ended September 30, 2012 is presented below (number of restricted stock units in thousands):

	Number of Restricted Stock Units			Weighted Average Grant Date Fair Value
Outstanding restricted unvested awards at January 1, 2012		292		$	11.82
Granted		1,265			8.16
Vested		(199	)		12.20
Forfeited		(129	)		10.03
Outstanding restricted unvested awards at September 30, 2012		1,229		$	8.18
Weighted average remaining contractual term (in years)		0.9

2007 Plan [Member]

Stock Options Granted to Employees

The stock options granted to employees from the 2007 Plan have the following terms:

Vesting period	Ratably over 4 years
Option term	10 years

2005 Plan [Member]

Stock Options Granted to Employees

no stock options granted to employees from the 2005 Plan. All options previously granted were granted with an exercise price equal to the estimated fair market value of a share of the underlying common stock on the date of grant. Stock options granted to employees from the 2005 Plan are comprised of three tranches with the following terms:

	Tranche A	Tranche B	Tranche C
Vesting	Ratably over 5 years*	100% 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.

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BASIS OF PRESENTATION AND BUSINESS DESCRIPTION

9 Months Ended

Sep. 30, 2012

BASIS OF PRESENTATION AND BUSINESS DESCRIPTION

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”), a wholly-owned subsidiary of Affinion Group Holdings, Inc. (“Affinion Holdings”) and an affiliate of Apollo Global Management, LLC (“Apollo”), pursuant to a purchase agreement dated July 26, 2005 for approximately $1.8 billion (the “Apollo Transactions”).

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

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 such estimate is made. 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, 2011 and 2010, and for the years ended December 31, 2011, 2010 and 2009, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 filed with the SEC on March 1, 2012 (the “Form 10-K”).

Business Description—The Company provides comprehensive customer engagement and loyalty solutions that enhance or extend the relationship of millions of consumers with many of the largest companies in the world. The Company partners with these companies to develop and market programs that provide services to their end-customers using its expertise in customer engagement, creative design and product development. The Company refers to the companies that it works with to provide customer engagement and loyalty solutions as its marketing partners. The Company refers to subscribers or members as those consumers to whom it provides services directly and has a contractual relationship. The Company refers to end-customers as those consumers that it services on behalf of a third party, such as one of its marketing partners, with whom it has a contractual relationship.

The Company has substantial expertise in deploying various forms of customer engagement communications, such as direct mail, inbound and outbound telephony and the Internet, and in bundling unique benefits to offer products and services to the customers of its marketing partners on a highly targeted basis.

The Company designs programs that provide a diversity of benefits, based on end-customers’ needs and interests, with a particular focus on programs offering lifestyle and protection benefits and programs which offer savings on purchases. For instance, the Company provides credit monitoring and identity-theft resolution, accidental death and dismemberment insurance (“AD&D”), discount travel services, loyalty points programs, various checking account and credit card enhancement services and other products and services.

• Affinion North America. Affinion North America is comprised of the Company’s Membership, Insurance and Package, and Loyalty customer engagement businesses in North America.

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

• 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 provides its clients with solutions that meet the most popular redemption options desired by their program points holders, including travel, gift cards, and merchandise. The Company also provides enhancement benefits to major financial institutions in connection with their credit and debit card programs. In addition, the Company provides and manages turnkey travel services that are sold on a private label basis to provide its clients’ customers with direct access to the Company’s proprietary travel platform.

• Affinion International. Affinion International is comprised of the Company’s Membership, Package and Loyalty customer engagement businesses outside North America. The Company expects to leverage its current international operational platform to expand its range of products and services, develop new marketing partner relationships in various industries and grow its geographical footprint.

Recently Adopted Accounting Pronouncements

In June 2011, the FASB issued new guidance that gives an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total for comprehensive income. The entity is also required to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statements(s) where the components of net income and the components of other comprehensive income are presented. The guidance is to be applied retrospectively, for fiscal periods and interim periods within those years, beginning after December 15, 2011 and early adoption is permitted. In December 2011, the FASB issued new guidance deferring the changes in the June 2011 relating to presentation of classification adjustments. The Company elected to present the total of comprehensive income, the components of net income and the components of other comprehensive income in a single continuous statement of comprehensive income. The Company’s adoption of the new guidance, other than that related to presentation of reclassification adjustments, as of January 1, 2012 did not have a material impact on its consolidated financial position, results of operations and cash flows.

In July 2012, the FASB issued new guidance that amended previous guidance on testing indefinite-lived intangible assets, other than goodwill, for impairment. Under the new guidance, an entity testing an indefinite-lived intangible asset for impairment has the option of performing a qualitative assessment before calculating the fair value of the asset. It does not revise the requirements to test indefinite-lived intangible assets annually for impairment and between annual tests if there is a change in events or circumstances. The new guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of the new guidance is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Millions, except Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Receivables, allowance for doubtful accounts	$ 3.6	$ 2.4
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	1,000	1,000
Common stock, shares issued	100	100
Common stock, shares outstanding	100	100

XML

SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2012

SEGMENT INFORMATION

11. SEGMENT INFORMATION

Management evaluates the operating results of each of its reportable segments based upon several factors, of which the primary factors are revenue and “Segment EBITDA,” which the Company defines 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 reportable 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. General corporate expenses have been excluded from the presentation of the Segment EBITDA for the Company’s four reportable 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 reportable 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, 2011.

Net Revenues

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
	(in millions)
Affinion North America
Membership products	$	167.9		$	197.3		$	545.3		$	575.5
Insurance and package products		90.0			87.2			251.2			260.1
Loyalty products		37.2			34.8			113.0			102.3
Eliminations		(0.4	)		(0.9	)		(1.7	)		(2.6	)
Total North America		294.7			318.4			907.8			935.3
Affinion International
International products		75.9			76.3			222.2			213.4
	$	370.6		$	394.7		$	1,130.0		$	1,148.7

Segment EBITDA

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
	(in millions)
Affinion North America
Membership products	$	33.5		$	24.7		$	110.4		$	91.0
Insurance and package products		31.5			27.9			82.0			82.1
Loyalty products		13.5			10.9			38.1			32.0
Total North America		78.5			63.5			230.5			205.1
Affinion International
International products		9.3			9.6			20.5			23.3
Total products		87.8			73.1			251.0			228.4
Corporate		(2.9	)		(5.6	)		(11.8	)		(26.6	)
Impairment of goodwill and other long-lived assets		—			—			(39.7	)		—
	$	84.9		$	67.5		$	199.5		$	201.8

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
	(in millions)
Segment EBITDA	$	84.9		$	67.5		$	199.5		$	201.8
Depreciation and amortization		(48.5	)		(60.4	)		(147.6	)		(183.3	)
Income from operations	$	36.4		$	7.1		$	51.9		$	18.5

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Oct. 31, 2012
Entity Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Trading Symbol	AGI
Entity Registrant Name	AFFINION GROUP, INC.
Entity Central Index Key	0001361394
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		100

XML

GUARANTOR/NON-GUARANTOR SUPPLEMENTAL FINANCIAL INFORMATION

9 Months Ended

Sep. 30, 2012

GUARANTOR/NON-GUARANTOR SUPPLEMENTAL FINANCIAL INFORMATION

12. GUARANTOR/NON-GUARANTOR SUPPLEMENTAL FINANCIAL INFORMATION

The following supplemental condensed consolidating financial information presents, in separate columns, the condensed consolidating balance sheets as of September 30, 2012 and December 31, 2011, and the related condensed consolidating statements of comprehensive income for the three and nine month periods ended September 30, 2012 and 2011 and the related condensed consolidating statements of cash flows for the nine month periods ended September 30, 2012 and 2011 for (i) the Company (Affinion Group, Inc.) on a parent-only basis, with its investment in subsidiaries recorded under the equity method, (ii) the Guarantor Subsidiaries on a combined basis, (iii) the Non-Guarantor Subsidiaries on a combined basis and (iv) the Company on a consolidated basis. 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, 2012

(In millions)

	Affinion Group, Inc.			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	26.6		$	4.4	$	25.5	$	—		$	56.5
Restricted cash		—			27.9		7.7		—			35.6
Receivables, net		2.7			104.9		39.9		—			147.5
Receivables from related parties		—			0.1		—		—			0.1
Profit-sharing receivables from insurance carriers		—			88.2		0.7		—			88.9
Prepaid commissions		—			39.1		4.4		—			43.5
Income taxes receivable		—			0.9		3.0		—			3.9
Intercompany interest receivable		0.5			—		—		(0.5	)		—
Other current assets		7.9			40.2		35.1		—			83.2
Total current assets		37.7			305.7		116.3		(0.5	)		459.2
Property and equipment, net		9.1			98.1		27.1		—			134.3
Contract rights and list fees, net		—			23.0		—		—			23.0
Goodwill		—			522.0		75.9		—			597.9
Other intangibles, net		—			190.1		44.4		—			234.5
Investment in subsidiaries		2,192.5			77.1		—		(2,269.6	)		—
Intercompany loan receivables		49.3			21.4		—		(70.7	)		—
Intercompany receivables		—			1,366.2		—		(1,366.2	)		—
Other non-current assets		30.2			25.5		6.4		—			62.1
Total assets	$	2,318.8		$	2,629.1	$	270.1	$	(3,707.0	)	$	1,511.0
Liabilities and Deficit
Current liabilities:
Current portion of long-term debt	$	11.2		$	0.6	$	—	$	—		$	11.8
Accounts payable and accrued expenses		113.5			198.1		96.0		—			407.6
Payables to related parties		40.3			0.1		—		—			40.4
Intercompany interest payable		—			—		0.5		(0.5	)		—
Deferred revenue		—			99.1		25.0		—			124.1
Income taxes payable		0.8			0.2		3.2		—			4.2
Total current liabilities		165.8			298.1		124.7		(0.5	)		588.1
Long-term debt		1,913.7			0.8		—		—			1,914.5
Deferred income taxes		—			62.9		8.0		—			70.9
Deferred revenue		—			6.7		8.5		—			15.2
Intercompany loan payable		—			—		70.7		(70.7	)		—
Intercompany payables		1,354.5			—		11.7		(1,366.2	)		—
Other long-term liabilities		2.7			34.5		1.5		—			38.7
Total liabilities		3,436.7			403.0		225.1		(1,437.4	)		2,627.4
Affinion Group, Inc. deficit		(1,117.9	)		2,226.1		43.5		(2,269.6	)		(1,117.9	)
Non-controlling interest in subsidiary		—			—		1.5		—			1.5
Total deficit		(1,117.9	)		2,226.1		45.0		(2,269.6	)		(1,116.4	)
Total liabilities and deficit	$	2,318.8		$	2,629.1	$	270.1	$	(3,707.0	)	$	1,511.0

UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 2011

(In millions)

	Affinion Group, Inc.			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	57.2		$	2.8	$	26.3	$	—		$	86.3
Restricted cash		—			22.6		7.8		—			30.4
Receivables, net		1.6			87.6		37.6		—			126.8
Receivables from related parties		—			0.6		0.2		—			0.8
Profit-sharing receivables from insurance carriers		—			73.3		0.7		—			74.0
Prepaid commissions		—			47.7		4.9		—			52.6
Income taxes receivable		—			0.7		1.4		—			2.1
Intercompany loans receivable		16.0			—		—		(16.0	)		—
Other current assets		4.7			33.7		29.7		—			68.1
Total current assets		79.5			269.0		108.6		(16.0	)		441.1
Property and equipment, net		9.1			102.0		23.6		—			134.7
Contract rights and list fees, net		—			22.5		—		—			22.5
Goodwill		—			553.5		74.0		—			627.5
Other intangibles, net		—			295.1		56.1		—			351.2
Investment in subsidiaries		2,127.0			77.1		—		(2,204.1	)		—
Intercompany loan receivable		31.4			—		—		(31.4	)		—
Intercompany receivables		—			1,222.2		—		(1,222.2	)		—
Other non-current assets		35.4			28.2		10.4		—			74.0
Total assets	$	2,282.4		$	2,569.6	$	272.7	$	(3,473.7	)	$	1,651.0
Liabilities and Deficit
Current liabilities:
Current portion of long-term debt	$	11.2		$	0.7	$	—	$	—		$	11.9
Accounts payable and accrued expenses		99.0			213.9		85.2		—			398.1
Payables to related parties		34.7			0.4		0.2		—			35.3
Intercompany loans payable		—			—		16.0		(16.0	)		—
Deferred revenue		—			123.2		29.3		—			152.5
Income taxes payable		1.0			0.7		1.7		—			3.4
Total current liabilities		145.9			338.9		132.4		(16.0	)		601.2
Long-term debt		1,921.4			1.1		—		—			1,922.5
Deferred income taxes		—			54.8		12.7		—			67.5
Deferred revenue		—			9.6		8.2		—			17.8
Intercompany loan payable		—			—		31.4		(31.4	)		—
Intercompany payables		1,210.7			—		11.5		(1,222.2	)		—
Other long-term liabilities		17.1			34.7		1.9		—			53.7
Total liabilities		3,295.1			439.1		198.1		(1,269.6	)		2,662.7
Affinion Group, Inc. deficit		(1,012.7	)		2,130.5		73.6		(2,204.1	)		(1,012.7	)
Non-controlling interest in subsidiary		—			—		1.0		—			1.0
Total deficit		(1,012.7	)		2,130.5		74.6		(2,204.1	)		(1,011.7	)
Total liabilities and deficit	$	2,282.4		$	2,569.6	$	272.7	$	(3,473.7	)	$	1,651.0

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2012

(In millions)

	Affinion Group, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net revenues	$	—		$	294.7		$	75.9		$	—		$	370.6
Expenses:
Cost of revenues, exclusive of depreciation and amortization shown separately below:
Marketing and commissions		—			116.3			26.2			—			142.5
Operating costs		—			77.5			33.3			—			110.8
General and administrative		7.8			15.8			9.7			—			33.3
Facility exit costs		—			(0.9	)		—			—			(0.9	)
Depreciation and amortization		0.4			38.3			9.8			—			48.5
Total expenses		8.2			247.0			79.0			—			334.2
Loss from operations		(8.2	)		47.7			(3.1	)		—			36.4
Interest income		—			0.2			—			—			0.2
Interest expense		(36.5	)		(0.4	)		(0.1	)		—			(37.0	)
Interest income (expense)—intercompany		0.4			—			(0.4	)		—			—
Other income, net		—			—			0.1			—			0.1
Loss before income taxes and non-controlling interest		(44.3	)		47.5			(3.5	)		—			(0.3	)
Income tax expense		(0.4	)		(1.1	)		(0.4	)		—			(1.9	)
		(44.7	)		46.4			(3.9	)		—			(2.2	)
Equity in income of subsidiaries		42.4			—			—			(42.4	)		—
Net loss		(2.3	)		46.4			(3.9	)		(42.4	)		(2.2	)
Less: net income attributable to non-controlling interest		—			—			(0.1	)		—			(0.1	)
Net loss attributable to Affinion Group, Inc.	$	(2.3	)	$	46.4		$	(4.0	)	$	(42.4	)	$	(2.3	)

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012

(In millions)

	Affinion Group, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net revenues	$	—		$	907.8		$	222.2		$	—		$	1,130.0
Expenses:
Cost of revenues, exclusive of depreciation and amortization shown separately below:
Marketing and commissions		—			363.2			84.9			—			448.1
Operating costs		—			246.2			98.0			—			344.2
General and administrative		23.1			49.9			26.4			—			99.4
Impairment of goodwill and other long-lived assets		—			39.7			—			—			39.7
Facility exit costs		—			(0.9	)		—			—			(0.9	)
Depreciation and amortization		0.9			118.8			27.9			—			147.6
Total expenses		24.0			816.9			237.2			—			1,078.1
Income (loss) from operations		(24.0	)		90.9			(15.0	)		—			51.9
Interest income		—			0.6			0.1			—			0.7
Interest expense		(109.7	)		(1.1	)		(0.7	)		—			(111.5	)
Interest income (expense)—intercompany		0.9			—			(0.9	)		—			—
Other income (expense), net		—			0.2			(0.4	)		—			(0.2	)
Income (loss) before income taxes and non-controlling interest		(132.8	)		90.6			(16.9	)		—			(59.1	)
Income tax expense		(1.3	)		(6.4	)		(1.2	)		—			(8.9	)
		(134.1	)		84.2			(18.1	)		—			(68.0	)
Equity in income of subsidiaries		65.6			—			—			(65.6	)		—
Net income (loss)		(68.5	)		84.2			(18.1	)		(65.6	)		(68.0	)
Less: net income attributable to non-controlling interest		—			—			(0.5	)		—			(0.5	)
Net income (loss) attributable to Affinion Group, Inc.	$	(68.5	)	$	84.2		$	(18.6	)	$	(65.6	)	$	(68.5	)

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2011

(In millions)

	Affinion Group, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net revenues	$	—		$	318.4		$	76.3		$	—		$	394.7
Expenses:
Cost of revenues, exclusive of depreciation and amortization shown separately below:
Marketing and commissions		—			139.6			29.1			—			168.7
Operating costs		—			83.0			33.0			—			116.0
General and administrative		11.4			21.1			7.1			—			39.6
Facility exit costs		—			2.9			—			—			2.9
Depreciation and amortization		0.3			49.7			10.4			—			60.4
Total expenses		11.7			296.3			79.6			—			387.6
Income (loss) from operations		(11.7	)		22.1			(3.3	)		—			7.1
Interest income		—			0.1			—			—			0.1
Interest expense		(35.8	)		(0.3	)		(0.4	)		—			(36.5	)
Interest income (expense)—intercompany		0.3			—			(0.3	)		—			—
Other income, net		—			0.1			—			—			0.1
Income (loss) before income taxes and non-controlling interest		(47.2	)		22.0			(4.0	)		—			(29.2	)
Income tax benefit (expense)		(0.3	)		(2.1	)		(1.5	)		—			(3.9	)
		(47.5	)		19.9			(5.5	)		—			(33.1	)
Equity in income of subsidiaries		14.2			—			—			(14.2	)		—
Net income (loss)		(33.3	)		19.9			(5.5	)		(14.2	)		(33.1	)
Less: net income attributable to non-controlling interest		—			—			(0.2	)		—			(0.2	)
Net income (loss) attributable to Affinion Group, Inc.	$	(33.3	)	$	19.9		$	(5.7	)	$	(14.2	)	$	(33.3	)

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011

(In millions)

	Affinion Group, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net revenues	$	—		$	935.3		$	213.4		$	—		$	1,148.7
Expenses:
Cost of revenues, exclusive of depreciation and amortization shown separately below:
Marketing and commissions		—			394.1			78.4			—			472.5
Operating costs		—			238.6			94.6			—			333.2
General and administrative		41.5			71.0			24.5			—			137.0
Facility exit costs		—			4.2			—			—			4.2
Depreciation and amortization		0.9			152.4			30.0			—			183.3
Total expenses		42.4			860.3			227.5			—			1,130.2
Income (loss) from operations		(42.4	)		75.0			(14.1	)		—			18.5
Interest income		0.3			0.4			0.2			—			0.9
Interest expense		(109.2	)		(0.6	)		(1.4	)		—			(111.2	)
Interest income (expense)—intercompany		0.9			—			(0.9	)		—			—
Income (loss) before income taxes and non-controlling interest		(150.4	)		74.8			(16.2	)		—			(91.8	)
Income tax benefit (expense)		(1.6	)		(6.8	)		(0.2	)		—			(8.6	)
		(152.0	)		68.0			(16.4	)		—			(100.4	)
Equity in income of subsidiaries		50.9			—			—			(50.9	)		—
Net income (loss)		(101.1	)		68.0			(16.4	)		(50.9	)		(100.4	)
Less: net income attributable to non-controlling interest		—			—			(0.7	)		—			(0.7	)
Net income (loss) attributable to Affinion Group, Inc.	$	(101.1	)	$	68.0		$	(17.1	)	$	(50.9	)	$	(101.1	)

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012

(In millions)

	Affinion Group, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating Activities
Net loss	$	(68.5	)	$	84.2		$	(18.1	)	$	(65.6	)	$	(68.0	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		0.9			118.8			27.9			—			147.6
Amortization of debt discount and financing costs		6.3			—			—			—			6.3
Unrealized loss on interest rate swap		1.2			—			—			—			1.2
Impairment of goodwill and other long-lived assets		—			39.7			—			—			39.7
Impairment of equity investment		—			—			1.0			—			1.0
Adjustment to liability for additional consideration based on earn-out		(14.6	)		—			—			—			(14.6	)
Facility exit costs		—			(0.9	)		—			—			(0.9	)
Share-based compensation		8.8			—			—			—			8.8
Equity in income (loss) of subsidiaries		(65.6	)		—			—			65.6			—
Deferred income taxes		0.3			5.7			(2.1	)		—			3.9
Net change in assets and liabilities:											—
Restricted cash		—			(5.3	)		0.1			—			(5.2	)
Receivables		(1.0	)		(17.3	)		(1.3	)		—			(19.6	)
Receivables from related parties		(0.4	)		0.5			0.6			—			0.7
Profit-sharing receivables from insurance carriers		—			(15.0	)		0.1			—			(14.9	)
Prepaid commissions		—			8.7			0.7			—			9.4
Other current assets		(3.2	)		(6.6	)		(4.4	)		—			(14.2	)
Contract rights and list fees		—			(0.7	)		—			—			(0.7	)
Other non-current assets		(0.7	)		5.1			0.3			—			4.7
Accounts payable and accrued expenses		13.6			(13.6	)		6.3			—			6.3
Payables to related parties		(2.7	)		(0.8	)		(0.1	)		—			(3.6	)
Deferred revenue		—			(26.9	)		(5.6	)		—			(32.5	)
Income taxes receivable and payable		(0.3	)		(0.6	)		(0.2	)		—			(1.1	)
Other long-term liabilities		0.3			0.6			(0.3	)		—			0.6
Other, net		(0.3	)		(0.3	)		0.5			—			(0.1	)
Net cash provided by (used in) operating activities		(125.9	)		175.3			5.4			—			54.8
Investing Activities
Capital expenditures		(1.1	)		(20.2	)		(16.9	)		—			(38.2	)
Restricted cash		—			—			0.2			—			0.2
Acquisition-related payment, net of cash acquired		—			—			(1.2	)		—			(1.2	)
Net cash used in investing activities		(1.1	)		(20.2	)		(17.9	)		—			(39.2	)
Financing Activities
Principal payments on borrowings		(8.4	)		(0.4	)		—			—			(8.8	)
Return of capital to parent company		(37.0	)		—			—			—			(37.0	)
Intercompany loan		(1.5	)		(9.6	)		11.1			—			—
Intercompany receivables and payables		143.3			(143.5	)		0.2			—			—
Net cash provided by (used in) financing activities		96.4			(153.5	)		11.3			—			(45.8	)
Effect of changes in exchange rates on cash and cash equivalents		—			—			0.4			—			0.4
Net increase (decrease) in cash and cash equivalents		(30.6	)		1.6			(0.8	)		—			(29.8	)
Cash and cash equivalents, beginning of period		57.2			2.8			26.3			—			86.3
Cash and cash equivalents, end of period	$	26.6		$	4.4		$	25.5		$	—		$	56.5

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011

(In millions)

	Affinion Group, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating Activities
Net loss	$	(101.1	)	$	68.0		$	(16.4	)	$	(50.9	)	$	(100.4	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		0.9			152.4			30.0			—			183.3
Amortization of debt discount and financing costs		6.2			—			—			—			6.2
Unrealized gain on interest rate swaps		(4.3	)		—			—			—			(4.3	)
Facility exit costs		—			4.2			—			—			4.2
Share-based compensation		8.5			—			—			—			8.5
Equity in (income) loss of subsidiaries		(50.9	)		—			—			50.9			—
Deferred income taxes		0.3			6.0			(2.5	)		—			3.8
Payment received for assumption of loyalty points program liability		—			4.8			—			—			4.8
Net change in assets and liabilities:
Restricted cash		3.4			(1.0	)		(0.3	)		—			2.1
Receivables		0.1			(39.5	)		7.9			—			(31.5	)
Receivables from related parties		(0.9	)		0.4			0.9			—			0.4
Profit-sharing receivables from insurance carriers		—			(18.8	)		0.6			—			(18.2	)
Prepaid commissions		—			3.2			0.9			—			4.1
Other current assets		(0.4	)		5.7			7.3			—			12.6
Contract rights and list fees		—			(2.7	)		—			—			(2.7	)
Other non-current assets		0.5			7.0			0.6			—			8.1
Accounts payable and accrued expenses		22.7			2.4			(21.0	)		—			4.1
Payables to related parties		(5.1	)		(0.6	)		(1.1	)		—			(6.8	)
Deferred revenue		(0.1	)		(13.2	)		3.3			—			(10.0	)
Income taxes receivable and payable		(0.1	)		0.3			5.3			—			5.5
Other long-term liabilities		2.5			(3.5	)		(6.9	)		—			(7.9	)
Other, net		(0.7	)		0.1			0.6			—			—
Net cash provided by (used in) operating activities		(118.5	)		175.2			9.2			—			65.9
Investing Activities
Capital expenditures		(2.8	)		(28.0	)		(8.2	)		—			(39.0	)
Restricted cash		—			—			1.1			—			1.1
Acquisition-related payment, net of cash acquired		(31.8	)		2.4			(3.5	)		—			(32.9	)
Cash acquired in Webloyalty acquisition		—			10.4			15.7			—			26.1
Other investing activity		—			0.2			—			—			0.2
Net cash provided by (used in) investing activities		(34.6	)		(14.9	)		5.0			—			(44.5	)
Financing Activities
Proceeds from issuance of term loan		250.0			—			—			—			250.0
Principal payments on borrowings		(8.4	)		(0.4	)		—			—			(8.8	)
Financing costs		(5.8	)		—			—			—			(5.8	)
Repurchase of employee equity award of a subsidiary		—			—			(3.5	)		—			(3.5	)
Return of capital to parent company		(323.2	)		—			—			—			(323.2	)
Intercompany loan		(3.6	)		—			3.6			—			—
Intercompany receivables and payables		156.8			(159.3	)		2.5			—			—
Receivables from and payables to parent company		15.3			—			—			—			15.3
Distribution to non-controlling interest of a subsidiary		—			—			(1.1	)		—			(1.1	)
Net cash provided by (used in) financing activities		81.1			(159.7	)		1.5			—			(77.1	)
Effect of changes in exchange rates on cash and cash equivalents		—			—			0.1			—			0.1
Net increase (decrease) in cash and cash equivalents		(72.0	)		0.6			15.8			—			(55.6	)
Cash and cash equivalents, beginning of period		104.8			3.2			13.1			—			121.1
Cash and cash equivalents, end of period	$	32.8		$	3.8		$	28.9		$	—		$	65.5

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Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Net revenues	$ 370.6	$ 394.7	$ 1,130.0	$ 1,148.7
Expenses:
Marketing and commissions	142.5	168.7	448.1	472.5
Operating costs	110.8	116.0	344.2	333.2
General and administrative	33.3	39.6	99.4	137.0
Impairment of goodwill and other long-lived assets			39.7
Facility exit costs	(0.9)	2.9	(0.9)	4.2
Depreciation and amortization	48.5	60.4	147.6	183.3
Total expenses	334.2	387.6	1,078.1	1,130.2
Income from operations	36.4	7.1	51.9	18.5
Interest income	0.2	0.1	0.7	0.9
Interest expense	(37.0)	(36.5)	(111.5)	(111.2)
Other income (expense), net	0.1	0.1	(0.2)
Income (loss) before income taxes and non-controlling interest	(0.3)	(29.2)	(59.1)	(91.8)
Income tax expense	(1.9)	(3.9)	(8.9)	(8.6)
Net income (loss)	(2.2)	(33.1)	(68.0)	(100.4)
Less: net income attributable to non-controlling interest	(0.1)	(0.2)	(0.5)	(0.7)
Net loss attributable to Affinion Group, Inc.	(2.3)	(33.3)	(68.5)	(101.1)
Net loss	(2.2)	(33.1)	(68.0)	(100.4)
Currency translation adjustment, net of tax	2.0	(3.9)	0.3	(0.2)
Comprehensive loss	(0.2)	(37.0)	(67.7)	(100.6)
Less: comprehensive income attributable to non-controlling interest	(0.2)	(0.1)	(0.5)	(0.6)
Comprehensive loss attributable to Affinion Group, Inc.	$ (0.4)	$ (37.1)	$ (68.2)	$ (101.2)

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INCOME TAXES

9 Months Ended

Sep. 30, 2012

INCOME TAXES

6. INCOME TAXES

The Company is included as a member of Affinion Holdings’ consolidated federal income tax return and as a member of certain of Affinion Holdings’ unitary or combined state income tax returns. Income taxes are presented in the Company’s consolidated financial statements using the asset and liability approach based on the separate return method for the consolidated group. Under this method, current and deferred tax expense or benefit for the period is determined for the Company and its subsidiaries as a separate group on a standalone basis. Deferred tax assets and liabilities are calculated based upon the temporary differences between the financial statements and income tax bases of assets and liabilities using currently enacted tax rates. Deferred tax assets are recorded net of a valuation allowance when, based on the weight of available evidence, it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. Decreases to the valuation allowance are recorded as reductions to the income tax provision, while increases to the valuation allowance result in additional income tax provision. The realization of deferred tax assets is primarily dependent on estimated future taxable income. As of September 30, 2012 and 2011, the Company has recorded a full valuation allowance for its U.S. federal net deferred tax assets. As of September 30, 2012 and 2011, the Company has also recorded valuation allowances against the deferred tax assets related to certain state and foreign tax jurisdictions.

The Company’s effective income tax rates for the three and nine months ended September 30, 2012 were (717.9)% and (14.9)%, respectively. The Company’s effective income tax rates for the three and nine months ended September 30, 2011 were (13.3)% and (9.3)%, respectively. The difference in the effective tax rates for the three months ended September 30, 2012 and 2011 is primarily a result of the decrease in loss before income taxes and non-controlling interest from $29.2 million for the three months ended September 30, 2011 to $0.3 million for the three months ended September 30, 2012 and a decrease in the income tax provision from $3.9 million for the three months ended September 30, 2011 to $1.9 million for the three months ended September 30, 2012. The difference in the effective tax rates for the nine months ended September 30, 2012 and 2011 is primarily a result of the decrease in loss before income taxes and non-controlling interest from $91.8 million for the nine months ended September 30, 2011 to $59.1 million for the nine months ended September 30, 2012 and an increase in the income tax provision from $8.6 million for the nine months ended September 30, 2011 to $8.9 million for the nine months ended September 30, 2012. The Company’s tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amount of income it earns in those jurisdictions. It is also affected by discrete items that may occur in any given year, but are not consistent from year to year. In addition to state and foreign income taxes and related foreign tax credits, the requirement to maintain valuation allowances had the most significant impact on the difference between the Company’s effective tax rate and the statutory U.S. federal income tax rate of 35%.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. The Company recognized less than $0.1 million and $0.2 million, respectively, of interest related to uncertain tax positions arising in the three and nine months ended September 30, 2012. The interest has been included in income tax expense for the current period. The Company’s gross unrecognized tax benefits for the nine months ended September 30, 2012 decreased by $2.7 million as a result of tax positions taken during the current period.

The Company’s income tax returns are periodically examined by various tax authorities. In connection with these and future 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. Federal, state and local jurisdictions are subject to examination by the taxing authorities for all open years as prescribed by applicable statute. For significant foreign jurisdictions, tax years in Germany and the United Kingdom remain open. No income tax waivers have been executed that would extend the period subject to examination beyond the period prescribed by statute. 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 as discussed in Note 9—Related Party Transactions.

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LONG-TERM DEBT

9 Months Ended

Sep. 30, 2012

LONG-TERM DEBT

5. LONG-TERM DEBT

Long-term debt consisted of:

	September 30, 2012			December 31, 2011
	(in millions)
Term loan due 2016	$	1,098.7		$	1,107.2
7.875% senior notes due 2018, net of unamortized discount of $2.7 and $3.1, respectively, with an effective interest rate of 8.00%		472.3			471.9
11  1/2% senior subordinated notes due 2015, net of unamortized discount of $1.6 and $2.0, respectively, with an effective interest rate of 11.75%		353.9			353.5
Capital lease obligations		1.4			1.8
Total debt		1,926.3			1,934.4
Less: current portion of long-term debt		(11.8	)		(11.9	)
Long-term debt	$	1,914.5		$	1,922.5

On April 9, 2010, the Company, as Borrower, and Affinion Holdings, as guarantor, entered into a $1.0 billion amended and restated senior secured credit facility with its lenders (“Affinion Credit Facility”). The Affinion Credit Facility initially consisted of a five-year $125.0 million revolving credit facility and an $875.0 million term loan facility. On December 13, 2010, the Company, as Borrower and Affinion Holdings, as a guarantor, entered into an agreement with two of its lenders which resulted in an increase in the revolving credit facility to $160.0 million, with a further increase to $165.0 million upon the satisfaction of certain conditions. These conditions were satisfied in January 2011. On February 11, 2011, the Company obtained incremental term loans in an aggregate principal amount of $250.0 million under the Company’s amended and restated senior secured credit facility. The revolving credit facility includes a letter of credit subfacility and a swingline loan subfacility. The term loan facility matures in October 2016. However the term loan facility will mature on the date that is 91 days prior to the maturity of the Senior Subordinated Notes (defined below) unless, prior to that date, (a) the maturity for the Senior Subordinated Notes is extended to a date that is at least 91 days after the maturity of the term loan facility or (b) the obligations under the Senior Subordinated Notes are (i) repaid in full or (ii) refinanced, replaced or defeased in full with new loans and/or debt securities with maturity dates occurring after the maturity date of the term loan facility. The term loan facility provides for quarterly amortization payments totaling 1% per annum, with the balance payable upon the final maturity date. The term loan facility also requires mandatory prepayments of the outstanding term loans based on excess cash flow (as defined), if any, and the proceeds from certain specified transactions. The interest rates with respect to term loans and revolving loans under the Affinion Credit Facility are based on, at the Company’s option, (a) the higher of (i) adjusted LIBOR and (ii) 1.50%, in each case plus 3.50%, or (b) the highest of (i) Bank of America, N.A.’s prime rate, (ii) the Federal Funds Effective Rate plus 0.5% and (iii) 2.50% (“ABR”), in each case plus 2.50%. The effective interest rate on the term loan during the nine months ended September 30, 2012 and 2011 was 5% per annum. The Company’s obligations under the credit facility are, and the Company’s obligations under any interest rate protection or other hedging arrangements entered into with a lender or any of its affiliates will be, guaranteed by Affinion Holdings and by each of the Company’s existing and subsequently acquired or organized domestic subsidiaries, subject to certain exceptions. The credit facility is secured to the extent legally permissible by substantially all the assets of (i) Affinion Holdings, which consists of a pledge of all the Company’s capital stock and (ii) the Company and the subsidiary guarantors, including but not limited to: (a) a pledge of substantially all capital stock held by the Company or any subsidiary guarantor and (b) security interests in substantially all tangible and intangible assets of the Company and each subsidiary guarantor, subject to certain exceptions. The credit facility also contains financial, affirmative and negative covenants. The negative covenants in the Company’s credit facility include, among other things, limitations (all of which are subject to certain exceptions) on the Company’s (and in certain cases, Affinion Holdings’) ability to declare dividends and make other distributions, redeem or repurchase the Company’s capital stock; prepay, redeem or repurchase certain of the Company’s subordinated indebtedness; make loans or investments (including acquisitions); incur additional indebtedness (subject to certain exceptions); enter into agreements that would restrict the ability of the Company’s subsidiaries to pay dividends; merge or enter into acquisitions; sell assets; and enter into transactions with affiliates. The credit facility also requires the Company to comply with financial maintenance covenants with a maximum ratio of total debt to EBITDA (as defined) and a minimum ratio of EBITDA to cash interest expense.

As of September 30, 2012 and December 31, 2011, there were no outstanding borrowings under the revolving credit facility. Borrowings and repayments under the revolving credit facility were $50.0 million and $50.0 million, respectively, during the nine months ended September 30, 2012. Borrowings and repayments under the revolving credit facility were $50.0 million and $50.0 million, respectively, during the nine months ended September 30, 2011. As of September 30, 2012, the Company had $158.1 million available for borrowing under the Affinion Credit Facility after giving effect to the issuance of $6.9 million of letters of credit issued under the Affinion Credit Facility.

On November 19, 2010, the Company completed a private offering of $475.0 million aggregate principal amount of 7.875% Senior Notes due 2018 (“2010 Senior Notes”). The 2010 Senior Notes bear interest at 7.875% per annum payable semi-annually on June 15 and December 15 of each year, commencing on June 15, 2011. The 2010 Senior Notes will mature on December 15, 2018. The 2010 Senior Notes are redeemable at the Company’s option prior to maturity. The indenture governing the 2010 Senior Notes contains negative covenants which restrict the ability of the Company and its restricted subsidiaries to engage in certain transactions and also contains customary events of default. The Company’s obligations under the 2010 Senior Notes are jointly and severally and fully and unconditionally guaranteed on a senior secured basis by each of the Company’s existing and future domestic subsidiaries that guarantee the Company’s indebtedness under the Affinion Credit Facility. The 2010 Senior Notes and guarantees thereof are senior unsecured obligations of the Company and rank equally with all of the Company’s and the guarantors’ existing and future senior indebtedness and senior to the Company’s and the guarantors’ existing and future subordinated indebtedness. The 2010 Senior Notes are therefore effectively subordinated to the Company’s and the guarantors’ existing and future secured indebtedness, including the Company’s obligations under the Affinion Credit Facility, to the extent of the value of the collateral securing such indebtedness. The 2010 Senior Notes are structurally subordinated to all indebtedness and other obligations of each of the Company’s existing and future subsidiaries that are not guarantors. On August 24, 2011, pursuant to the registration rights agreement entered into in connection with the issuance of the 2010 Senior Notes, the Company completed a registered exchange offer and exchanged all of the then-outstanding 2010 Senior Notes for a like principal amount of 2010 Senior Notes that have been registered under the Securities Act of 1933, as amended (the “Securities Act”). The Company used substantially all of the net proceeds of the offering of the 2010 Senior Notes to finance the purchase of the previously outstanding senior notes issued in 2005, 2006 and 2009.

On April 26, 2006, the Company issued $355.5 million aggregate principal amount of 11 ¹/₂% senior subordinated notes due October 15, 2015 (the “Senior Subordinated Notes”). The Senior Subordinated Notes bear interest at 11 ¹/₂% per annum, payable semi-annually, on April 15 and October 15 of each year. The Senior Subordinated Notes mature on October 15, 2015. The Senior Subordinated Notes are guaranteed by the same subsidiaries of the Company that guarantee the Affinion Credit Facility and the 2010 Senior Notes as discussed in Note 12—Guarantor/Non-Guarantor Supplemental Financial Information. On September 13, 2006, the Company completed a registered exchange offer and exchanged all of the then-outstanding 11 ¹/₂% Senior Subordinated Notes due 2015 for a like principal amount of 11 ¹/₂% Senior Subordinated Notes due 2015 that have been registered under the Securities Act.

The Affinion Credit Facility and the indentures governing the 2010 Senior Notes and the Senior Subordinated Notes each contain restrictive covenants related primarily to the Company’s ability to distribute dividends to its parent, redeem or repurchase capital stock, sell assets, issue additional debt or merge with or acquire other companies. The Company and its subsidiaries may pay dividends of up to $35.0 million in the aggregate provided that no default or event of default has occurred or is continuing, or would result from the dividend. Payment of additional dividends requires the satisfaction of various conditions, including meeting defined leverage ratios and a defined fixed charge coverage ratio, and the total dividend paid cannot exceed a calculated amount of defined available free cash flow. The covenants in the Affinion Credit Facility also require compliance with a consolidated leverage ratio and an interest coverage ratio. During the nine months ended September 30, 2012 and 2011, the Company paid cash dividends to its parent company, Affinion Holdings, of $37.0 million and $323.2 million, respectively.

As of September 30, 2012, the Company was in compliance with all financial covenants contained in the Affinion Credit Facility and the indentures governing the 2010 Senior Notes and the Senior Subordinated Notes.

On October 5, 2010, Affinion Holdings issued $325.0 million aggregate principal amount of 11.625% senior notes due November 15, 2015 (the “Affinion Holdings Senior Notes”). Any failure by Affinion Holdings to pay principal of, or interest on, the Affinion Holdings Senior Notes would constitute an event of default under the Affinion Credit Facility, giving the lenders under the Affinion Credit Facility the right to accelerate the repayment of all borrowings thereunder, which acceleration would also give rise to an event of default under the indentures governing the 2010 Senior Notes and Senior Subordinated Notes. As a holding company with no significant assets other than the ownership of 100% of the Company’s common stock, Affinion Holdings depends on the Company’s cash flows to make cash interest payments on the Affinion Holdings Senior Notes.

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LONG-TERM DEBT (Tables)

9 Months Ended

Sep. 30, 2012

Long-term debt

Long-term debt consisted of:

	September 30, 2012			December 31, 2011
	(in millions)
Term loan due 2016	$	1,098.7		$	1,107.2
7.875% senior notes due 2018, net of unamortized discount of $2.7 and $3.1, respectively, with an effective interest rate of 8.00%		472.3			471.9
11  1/2% senior subordinated notes due 2015, net of unamortized discount of $1.6 and $2.0, respectively, with an effective interest rate of 11.75%		353.9			353.5
Capital lease obligations		1.4			1.8
Total debt		1,926.3			1,934.4
Less: current portion of long-term debt		(11.8	)		(11.9	)
Long-term debt	$	1,914.5		$	1,922.5

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BASIS OF PRESENTATION AND BUSINESS DESCRIPTION (Policies)

9 Months Ended

Sep. 30, 2012

Basis of Presentation

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”), a wholly-owned subsidiary of Affinion Group Holdings, Inc. (“Affinion Holdings”) and an affiliate of Apollo Global Management, LLC (“Apollo”), pursuant to a purchase agreement dated July 26, 2005 for approximately $1.8 billion (the “Apollo Transactions”).

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

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 such estimate is made. 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, 2011 and 2010, and for the years ended December 31, 2011, 2010 and 2009, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 filed with the SEC on March 1, 2012 (the “Form 10-K”).

Business Description

Description—The Company provides comprehensive customer engagement and loyalty solutions that enhance or extend the relationship of millions of consumers with many of the largest companies in the world. The Company partners with these companies to develop and market programs that provide services to their end-customers using its expertise in customer engagement, creative design and product development. The Company refers to the companies that it works with to provide customer engagement and loyalty solutions as its marketing partners. The Company refers to subscribers or members as those consumers to whom it provides services directly and has a contractual relationship. The Company refers to end-customers as those consumers that it services on behalf of a third party, such as one of its marketing partners, with whom it has a contractual relationship.

The Company has substantial expertise in deploying various forms of customer engagement communications, such as direct mail, inbound and outbound telephony and the Internet, and in bundling unique benefits to offer products and services to the customers of its marketing partners on a highly targeted basis.

The Company designs programs that provide a diversity of benefits, based on end-customers’ needs and interests, with a particular focus on programs offering lifestyle and protection benefits and programs which offer savings on purchases. For instance, the Company provides credit monitoring and identity-theft resolution, accidental death and dismemberment insurance (“AD&D”), discount travel services, loyalty points programs, various checking account and credit card enhancement services and other products and services.

• Affinion North America. Affinion North America is comprised of the Company’s Membership, Insurance and Package, and Loyalty customer engagement businesses in North America.

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

• 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 provides its clients with solutions that meet the most popular redemption options desired by their program points holders, including travel, gift cards, and merchandise. The Company also provides enhancement benefits to major financial institutions in connection with their credit and debit card programs. In addition, the Company provides and manages turnkey travel services that are sold on a private label basis to provide its clients’ customers with direct access to the Company’s proprietary travel platform.

• Affinion International. Affinion International is comprised of the Company’s Membership, Package and Loyalty customer engagement businesses outside North America. The Company expects to leverage its current international operational platform to expand its range of products and services, develop new marketing partner relationships in various industries and grow its geographical footprint.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In June 2011, the FASB issued new guidance that gives an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total for comprehensive income. The entity is also required to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statements(s) where the components of net income and the components of other comprehensive income are presented. The guidance is to be applied retrospectively, for fiscal periods and interim periods within those years, beginning after December 15, 2011 and early adoption is permitted. In December 2011, the FASB issued new guidance deferring the changes in the June 2011 relating to presentation of classification adjustments. The Company elected to present the total of comprehensive income, the components of net income and the components of other comprehensive income in a single continuous statement of comprehensive income. The Company’s adoption of the new guidance, other than that related to presentation of reclassification adjustments, as of January 1, 2012 did not have a material impact on its consolidated financial position, results of operations and cash flows.

In July 2012, the FASB issued new guidance that amended previous guidance on testing indefinite-lived intangible assets, other than goodwill, for impairment. Under the new guidance, an entity testing an indefinite-lived intangible asset for impairment has the option of performing a qualitative assessment before calculating the fair value of the asset. It does not revise the requirements to test indefinite-lived intangible assets annually for impairment and between annual tests if there is a change in events or circumstances. The new guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of the new guidance is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2012

RELATED PARTY TRANSACTIONS

9. 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 pending 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 Holdings Limited (“Affinion International”) and (3) constitute a breach or violation of its compliance with law representations and warranties and (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.

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.

Prior to 2009, Cendant (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 re-named 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. Wyndham held a portion of the preferred stock issued in connection with the Apollo Transactions until the preferred stock was redeemed in 2011 and a portion of the warrants issued in connection with the Apollo Transactions, until the warrants expired in 2011, while Realogy was subsequently acquired by an affiliate of Apollo. Therefore, for the three and nine months ended September 30, 2012, only Realogy remains a related party.

The Company 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. There was no revenue earned for such services for the three and nine months ended September 30, 2012 and 2011. The Company incurred expenses of $0.3 million and $0.9 million, respectively, for the three and nine months ended September 30, 2011, which is included in operating expenses in the accompanying unaudited condensed consolidated statement of comprehensive income. There were no expenses incurred with a related party during the three and nine months ended September 30, 2012.

Certain 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 expired in December 2010, subject to automatic one year renewal periods, 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 terminated an agreement prior to December 31, 2010, the Cendant subsidiary was 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. During 2010, a supplemental agreement was entered into which had the effect of extending the remaining marketing agreements to December 31, 2012. The expense incurred for such services was $0.6 million and $1.6 million, respectively, for the three and nine months ended September 30, 2011, which is included in marketing and commissions in the accompanying unaudited condensed consolidated statement of comprehensive income. There were no expenses incurred with a related party during the three and nine months ended September 30, 2012.

Under the loyalty and rewards program administration agreements, the Company continues to administer loyalty programs for certain Cendant subsidiaries. The agreements provided 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 initial loyalty and reward program agreements expired on December 31, 2009. A termination notice has been received related to one of the programs and administration of that program ceased during 2010. The contract to administer the other program was renewed for a three year term. The total amounts included in net revenues in the accompanying unaudited condensed consolidated statement of comprehensive income for such services was $0.5 million and $1.5 million, respectively, for the three and nine months ended September 30, 2011. There was no revenue recognized from a related party during the three and nine months ended September 30, 2012. 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 Affinion Loyalty Group, Inc. (“ALG”). Pursuant to the loyalty agreements, ALG 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 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 ALG (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 ALG 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 earns referral fees from Wyndham for hotel stays and travel packages. The amount included in net revenues in the accompanying unaudited condensed consolidated statement of comprehensive income for such services was $0.2 million and $0.8 million for the three and nine months ended September 30, 2011. There was no revenue recognized from a related party during the three and nine months ended September 30, 2012.

Other 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 allows 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 could be terminated earlier by mutual consent. The Company was required to pay Apollo an annual fee of $2.0 million for these services commencing in 2006. On January 14, 2011, the Company and Apollo entered into an Amended and Restated Consulting Agreement (“Consulting Agreement”), pursuant to which Apollo and its affiliates will continue to provide Affinion with certain advisory services on substantially the same terms as the previous consulting agreement, except that the annual fee paid by Affinion increased to $2.6 million from $2.0 million, commencing January 1, 2012, with an additional one-time fee of $0.6 million which was paid in January 2011 in respect of calendar year 2011. The amounts expensed related to this consulting agreement were $0.7 million for each of the three months ended September 30, 2012 and 2011 and $2.0 million for each of the nine months ended September 30, 2012 and 2011, which are included in general and administrative expenses in the accompanying unaudited condensed consolidated statement of comprehensive income. 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 were $0.2 million and $0.3 million, respectively, for the three months ended September 30, 2012 and 2011 and $0.6 million and $0.9 million, respectively, for the nine months ended September 30, 2012 and 2011, which is included in cost of revenues in the accompanying unaudited condensed consolidated statements of comprehensive income.

During each of the three months ended September 30, 2012 and 2011, the Company purchased $1.2 million of gift cards and during the nine months ended September 30, 2012 and 2011, the Company purchased $3.2 million and $3.0 million, respectively, of gift cards from AMC Entertainment, Inc., a company owned by an affiliate of Apollo. The cost of the gift cards, which were utilized primarily for loyalty program fulfillment, is included as a contra-revenue in the consolidated statements of comprehensive income.

On January 28, 2010, the Company acquired an ownership interest of approximately 5%, subsequently reduced to 2.7%, in Alclear Holdings, LLC (“Alclear”) for $1.0 million. A family member of one of the Company’s directors controls and partially funded Alclear and serves as its chief executive officer. The Company provides support services to Alclear and recognized revenue of $0.3 million for each of the three months ended September 30, 2012 and 2011 and recognized revenue of $0.8 million and $0.9 million, respectively, for the nine months ended September 30, 2012 and 2011.

On January 14, 2011, in connection with the acquisition of Webloyalty, Mr. Richard J. Fernandes received warrants to purchases shares of Affinion Holdings’ common stock that were exercisable, in whole or in part, at any time between January 14, 2011 and May 12, 2012. The warrants expired on May 12, 2012 without being exercised.

On January 18, 2011, the Company declared and paid a dividend of approximately $123.4 million to Affinion Holdings. Affinion Holdings used cash on hand and the proceeds of the cash dividend to (i) redeem a portion of its outstanding preferred stock for approximately $41.2 million, (ii) pay a cash dividend to its stockholders (including holders of restricted stock units) of approximately $115.4 million, (iii) pay a one-time cash bonus to its option holders of approximately $9.6 million and (iv) pay additional amounts for transaction fees and expenses.

On February 11, 2011, the Company obtained incremental term loans in an aggregate principal amount of $250.0 million under the Company’s amended and restated senior secured credit facility. The Company used the proceeds of the incremental term loans (a) for working capital and other corporate purposes, (b) to fund future strategic initiatives and (c) to pay a dividend to Affinion Holdings of $199.8 million, to be used (i) to pay a dividend to Affinion Holdings’ shareholders (including holders of restricted stock units) and pay a one-time cash bonus to holders of certain options totaling $133.4 million, (ii) to fund the redemption of all of Affinion Holdings’ preferred stock for approximately $5.4 million, (iii) for general corporate purposes, (iv) for near-term interest payments of Affinion Holdings and (v) for certain other purposes.

On April 9, 2012, the Company declared, and on April 10, 2012, the Company paid a dividend of $37.0 million to Affinion Holdings, utilizing available cash on hand. Affinion Holdings expects to utilize the proceeds of the dividend to make future interest payments on its senior notes.

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2012

COMMITMENTS AND CONTINGENCIES

7. COMMITMENTS AND CONTINGENCIES

Litigation

In the ordinary course of business, the Company is involved in claims, governmental inquiries and legal proceedings related to employment matters, contract disputes, business practices, trademark and copyright infringement claims and other commercial matters. The Company is also a party to lawsuits which were brought against it and its affiliates and which purport to be a class action in nature and allege that the Company violated certain federal or state consumer protection statutes (as described below). The Company intends to vigorously defend itself against such lawsuits.

On June 17, 2010, a class action complaint was filed against the Company and Trilegiant Corporation (“Trilegiant”) in the United States District Court for the District of Connecticut. The complaint asserts various causes of action on behalf of a putative nationwide class and a California-only subclass in connection with the sale by Trilegiant of its membership programs, including claims under the Electronic Communications Privacy Act, the Connecticut Unfair Trade Practices Act, the Racketeer Influenced Corrupt Organizations Act, the California Consumers Legal Remedies Act, the California Unfair Competition Law, the California False Advertising Law, and for unjust enrichment. On September 29, 2010, the Company filed a motion to compel arbitration of all of the claims asserted in this lawsuit. On February 24, 2011, the court denied the Company’s motion. On March 28, 2011, the Company and Trilegiant filed a notice of appeal in the United States Court of Appeals for the Second Circuit, appealing the district court’s denial of their motion to compel arbitration. On September 7, 2012, the Second Circuit affirmed the decision of the District Court denying arbitration. While that issue was on appeal, the matter proceeded in the district court. There was written discovery and depositions. Previously, the court had set a briefing schedule on class certification that called for the completion of class certification briefing on May 18, 2012. However, on March 28, 2012, the court suspended the briefing schedule on the motion due to the filing of two other overlapping class actions in the United States District Court for the District of Connecticut. The first of those cases was filed on March 6, 2012, against the Company, Trilegiant, Chase Bank USA, N.A., Bank of America, N.A., Capital One Financial Corp., Citigroup, Inc., Citibank, N.A., Apollo Global Management, LLC, 1-800-Flowers.Com, Inc., United Online, Inc., Memory Lane, Inc., Classmates Int’l, Inc., FTD Group, Inc., Days Inn Worldwide, Inc., Wyndham Worldwide Corp., People Finderspro, Inc., Beckett Media LLC, Buy.com, Inc., Raukuten USA, Inc., IAC/InteractiveCorp., and Shoebuy.com, Inc. The second of those cases was filed on March 25, 2012, against the same defendants as well as Adaptive Marketing, LLC, Vertrue, Inc., Webloyalty.com, Inc., and Wells Fargo & Co. These two cases assert similar claims as the claims asserted in the earlier-filed lawsuit in connection with the sale by Trilegiant of its membership programs. On April 26, 2012, the court consolidated these three cases. The court also set an initial status conference for May 17, 2012. At that status conference, the court ordered that Plaintiffs file a consolidated amended complaint to combine the claims in the three previously separate lawsuits. The court also struck the class certification briefing schedule that had been set previously. On September 7, 2012, the Plaintiffs filed a consolidated amended complaint asserting substantially the same legal claims. The consolidated amended complaint added Priceline, Orbitz, Chase Paymentech, Hotwire, and TigerDirect as Defendants and added three new Plaintiffs; it also dropped Webloyalty and Rakuten as Defendants. Defendants have until November 9, 2012 to respond to the consolidated amended complaint.

On November 10, 2010, a class action complaint was filed against the Company, Trilegiant, 1-800-Flowers.com, and Chase Bank USA, N.A. in the United States District Court for the Eastern District of New York. The complaint asserts various causes of action on behalf of several putative nationwide classes that largely overlap with one another. The claims asserted are in connection with the sale by Trilegiant of its membership programs, including claims under the Electronic Communications Privacy Act, Connecticut Unfair Trade Practices Act, and New York’s General Business Law. On April 6, 2011, the Company and Trilegiant filed a motion to compel individual (non-class) arbitration of the plaintiff’s claims. The Company’s co-defendant, 1-800-Flowers.com, joined in the motion to compel arbitration, and co-defendant Chase Bank filed a motion to stay the case against it pending arbitration, or alternatively to dismiss. The Company does not know when the court will issue a ruling on these motions. On December 23, 2011, the plaintiff sought to dismiss the Company, Trilegiant, and 1-800-Flowers without prejudice. On January 4, 2012, the Company and Trilegiant objected to that dismissal (and 1-800-Flowers joined in that objection), seeking among other things dismissal with prejudice. Plaintiff responded to that objection on January 13, 2012, and we do not know when the court will enter a decision. Also, on January 13, 2012, the plaintiff sought to dismiss Chase without prejudice. On January 17, 2012, Chase filed an objection to the plaintiff’s dismissal request. That issue is currently being considered by the court. The Company does not know when the court will rule on that issue.

On July 13, 2011, a class action lawsuit was filed against Affinion Group, LLC (“AGLLC”), Trilegiant, Apollo Global Management LLC, and Chase Bank USA, N.A., in the United States District Court for the District of Arizona. The complaint asserted similar causes of action as are asserted in the Connecticut litigation on behalf of putative nationwide classes in connection with the sale by Trilegiant of its membership programs. On October 18, 2011, Trilegiant, AGLLC, and Apollo filed a motion to stay, to which the plaintiff never responded. On November 1, 2011, Trilegiant and AGLLC filed a motion to compel arbitration, and Apollo joined in that motion and also sought dismissal. On December 15, 2011, the plaintiff sought to dismiss the action without prejudice, and on December 21, 2011, Trilegiant, Affinion, and Apollo filed a brief urging the court to dismiss the action with prejudice. On January 17, 2012, Chase filed a motion to transfer this case to the Eastern District of New York (“EDNY”). On or about February 29, 2012, the case was dismissed without prejudice. The same lead plaintiff’s law firm also filed a substantially similar class action lawsuit against the same defendants as well as Avis Rent A Car System, LLC, Avis Budget Car Rental LLC, Avis Budget Group, Inc., and Bank of America, N.A. in the United States District Court for the District of Oregon, Portland Division, on July 14, 2011. On December 27, 2011, Plaintiff filed a notice of voluntary dismissal without prejudice, and the case was terminated by the court on January 6, 2012. On August 4, 2011, those same lawyers filed another substantially similar class action lawsuit against the same defendants sued in the Arizona lawsuit in the United States District Court for the Southern District of Ohio. On December 23, 2011, the plaintiff filed a notice of voluntary dismissal as to Trilegiant, AGLLC, and Apollo. On February 10, 2012, the court entered an order dismissing the lawsuit in its entirety without prejudice. On August 8, 2011, those same lawyers filed a substantially similar class action lawsuit against AGLLC, Trilegiant Corporation, Apollo Global Management, LLC, and American Express Company in the United States District Court for the Southern District of New York. On December 5, 2011, the court granted American Express’s motion to compel arbitration. On December 14, 2011, the plaintiff filed a notice of voluntary dismissal as to Trilegiant, AGLLC, and Apollo, and the case was closed by the court on the same day. Finally, on October 25, 2011, these same lawyers filed a substantially similar class action lawsuit against AGLLC, Trilegiant, Apollo Global Management, LLC, IAC/InterActiveCorp., Shoebuy.com, and Chase Bank USA, N.A. in the United States District Court for the Central District of California. On December 14, 2011, the plaintiff filed a notice of voluntary dismissal as to all of the defendants except Chase, and the case was terminated by the court on or about February 21, 2012. On October 6, 2011, the plaintiffs in the preceding class action cases (other than the class action cases that were filed in the United States District Court for the District of Connecticut on March 6, 2012 and March 25, 2012, respectively) filed a motion under 28 U.S.C. § 1407 with the Judicial Panel on Multidistrict Litigation (“JPML”) seeking coordinated pretrial proceedings of those class action cases with the case that was filed on June 17, 2010 in the United States Court for the District of Connecticut. (The plaintiffs later sought to include within the proposed consolidated action the case they filed on October 25, 2011 (discussed above)). Plaintiffs in those actions argued that the factual allegations in the cases raised common issues that made pretrial transfer appropriate; they sought transfer and consolidation of the cases to the United States District Court for the District of Connecticut. All of the defendants opposed that motion. On December 9, 2011, the JPML entered an order denying consolidation and transfer of these cases.

On June 25, 2010, a class action lawsuit was filed against Webloyalty and one of its clients in the United States District Court for the Southern District of California alleging, among other things, violations of the Electronic Fund Transfer Act and Electronic Communications Privacy Act, unjust enrichment, fraud, civil theft, negligent misrepresentation, fraud, California Consumers Legal Remedies Act violations, false advertising and California Consumer Business Practice violations. This lawsuit relates to Webloyalty’s alleged conduct occurring on and after October 1, 2008. On February 17, 2011, Webloyalty filed a motion to dismiss the amended complaint in this lawsuit. On April 12, 2011, the Court granted Webloyalty’s motion and dismissed all claims against the defendants. On May 10, 2011, plaintiff filed a notice appealing the dismissal to the United States Court of Appeals for the Ninth Circuit. Plaintiff filed its opening appeals brief with the Ninth Circuit on October 17, 2011, and defendants filed their respective answering briefs on December 23, 2011. Plaintiff filed its reply brief on January 23, 2012. No date for oral argument on plaintiff’s appeal has been set.

On August 27, 2010, another substantially similar class action lawsuit was filed against Webloyalty, one of its former clients and one of the credit card associations in the United States District Court for the District of Connecticut alleging, among other things, violations of the Electronic Fund Transfer Act, Electronic Communications Privacy Act, unjust enrichment, civil theft, negligent misrepresentation, fraud and Connecticut Unfair Trade Practices Act violations. This lawsuit relates to Webloyalty’s alleged conduct occurring on and after October 1, 2008. On December 23, 2010, Webloyalty filed a motion to dismiss this lawsuit, which had since been amended in its entirety. The court has not yet scheduled a hearing or ruled on Webloyalty’s motion.

On June 7, 2012, another class action lawsuit was filed in the U.S. District Court for the Southern District of California against Webloyalty that was factually similar to the foregoing California and Connecticut actions. The action claims that Webloyalty engaged in unlawful business practices in violation of Cal. Bus. & Prof. Code § 17200, et seq. and in violation of the Connecticut Unfair Trade Practices Act. Both claims are based on allegations that in connection with enrollment and billing of the plaintiff, Webloyalty charged plaintiff’s credit or debit card using information obtained through a data pass process and without obtaining directly from plaintiff his full account number, name, address, and contact information, as purportedly required under Restore Online Shoppers’ Confidence Act. On September 25, 2012, Webloyalty filed a motion to dismiss the complaint in its entirety. Webloyalty also sought judicial notice of the enrollment page and related enrollment and account documents. Plaintiff’s oppositions are due on November 26, 2012 and Webloyalty’s replies are due on December 17, 2012. A hearing on Webloyalty’s motions is scheduled for January 14, 2013.

The Company and Trilegiant are also a party to lawsuits arising out of the inquiries made by the state attorneys general.

On October 14, 2010, the Company and Trilegiant filed a declaratory relief action against the State of South Carolina, in the Court of Common Pleas of South Carolina for the County of Richland, Fifth Judicial Circuit, seeking a declaratory judgment that their marketing practices comply with South Carolina law. The Company and Trilegiant also seek a declaratory judgment that the State may not appoint private counsel to bring an action against the Company and Trilegiant on the State’s behalf. The State has filed a motion to dismiss both requests for declaratory judgment. On December 17, 2010, the State of South Carolina appointed private counsel and filed a civil action against the Company and Trilegiant, in the Court of Common Pleas of South Carolina for the County of Spartanburg, Seventh Judicial Circuit, under the South Carolina Unfair Trade Practices Act, seeking civil penalties, restitution and an injunction. On December 31, 2010, the State filed its First Amended Complaint naming the Company, Trilegiant, and certain current and former officers as defendants. Also on December 31, 2010, the State filed its Notice of Motion and Motion for a Temporary Injunction. The Company and Trilegiant are attempting to resolve the matter through settlement but no assurance is made that a settlement will be reached. The courts in both actions have yet to rule on any pending motion and have stayed litigation while the parties continue their good faith efforts to settle.

On November 24, 2010, the State of Iowa filed an action against the Company, Trilegiant, and the Company’s Chief Executive Officer, in the Iowa District Court for Polk County. This action was superseded by an action filed on March 11, 2011. The superseding action does not name the Company’s Chief Executive Officer and alleges violations of Iowa’s Buying Club Law, and seeks injunctive relief as well as monetary relief. Subsequently the case has been dismissed without prejudice on the state’s own motion. The Company is attempting to resolve the matter through settlement but no assurance is made that a settlement will be reached.

Other Contingencies

From time to time, the Company receives inquiries from federal and state agencies which may include the Federal Trade Commission, the Federal Communications Commission, the Consumer Financial Protection Bureau, state attorneys general and other state regulatory agencies, including state insurance regulators. The Company responds to these matters and requests for documents, some of which may lead to further investigations and proceedings.

Between December 2008 and February 2011, the Company and Webloyalty received inquiries from numerous state attorneys general relating to the marketing of their membership programs and their compliance with consumer protection statutes. The Company and Webloyalty have responded to the states’ request for documents and information and are in active discussions with such states regarding their investigations and the resolution of these matters. Settlement of such matters may include payment by the Company and Webloyalty to the states, restitution to consumers and injunctive relief.

In that regard, in August 2010, the Company entered into a voluntary Assurance of Discontinuance with the New York Attorney General’s Office. Pursuant to that settlement, the Company agreed to cease in New York its online marketing practices relating to the acquisition of consumers’ credit or debit card account numbers automatically from its retailer or merchant marketing partners when a consumer enrolls in one of the Company’s programs after making a purchase through one of such partners’ web sites as previously agreed to with the U.S. Senate Committee on Commerce, Science and Transportation on January 6, 2010. Additionally, the Company agreed, among other things, with the New York Attorney General’s Office to cease in New York “live check” marketing whereby a consumer enrolls in a program or service by endorsing and cashing a check. As part of such settlement, the Company paid $3.0 million in fees, costs, and penalties and approximately $1.8 million as restitution to New York consumers in addition to refund claims. As of September 13, 2010, Webloyalty also entered into a similar settlement agreement with the New York Attorney General’s Office. Pursuant to that settlement, Webloyalty agreed to pay $5.2 million in costs, fines and penalties, establish a restitution program for certain New York residents that joined a Webloyalty membership program between October 1, 2008 and January 13, 2010 and submitted a valid claim form, and implement changes to Webloyalty’s marketing of its membership programs. All costs, fines and penalties relating to the settlement were paid by Webloyalty in October 2010. Restitution to New York consumers in the amount of $2.6 million was paid in the second quarter of 2011.

From time to time Affinion International receives inquiries from the Financial Services Authority in the United Kingdom (the “FSA”) regarding its products. Resolution of an inquiry may include insignificant changes to its business practices, monetary fines and/or restitution.

The Company believes that the amount accrued for the above litigation and contingencies matters is adequate, and the reasonably possible loss beyond the amounts accrued will not have a material effect on its unaudited condensed consolidated financial statements, taken as a whole, 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 effect on the Company’s unaudited condensed consolidated financial statements, taken as a whole.

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. As of September 30, 2012, the Company provided guarantees for surety bonds totaling approximately $12.0 million and issued letters of credit and performance bonds totaling $9.6 million.

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STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2012

STOCK-BASED COMPENSATION

8. 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 “2005 Plan”). The 2005 Plan authorizes the Board of Directors (the “Board”) of Affinion Holdings to grant non-qualified, non-assignable stock options and rights to purchase shares of Affinion Holdings’ common stock to directors and employees of, and consultants to, Affinion Holdings and its subsidiaries. Options granted under the 2005 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 4.9 million shares of Affinion Holdings’ common stock under the 2005 Plan over a ten year period. As discussed below, no additional grants may be made under Affinion Holdings’ 2005 Plan on or after November 7, 2007, the effective date of the 2007 Plan, as defined below.

In November 2007, Affinion Holdings adopted the 2007 Stock Award Plan (the “2007 Plan”). The 2007 Plan authorizes the Board to grant awards of non-qualified stock options, incentive 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 these awards to directors and employees of, and consultants to, Affinion Holdings and its subsidiaries. Unless otherwise determined by the Board of Directors, options granted under the 2007 Plan will 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 10.0 million shares of Affinion Holdings’ common stock under the 2007 Plan over a ten year period. As of September 30, 2012, there were 5.0 million shares available under the 2007 Plan for future grants.

In connection with the acquisition of Webloyalty in January 2011, the Company assumed the webloyalty.com, inc. Incentive Stock Option Plan (the “webloyalty.com ISO Plan”), the webloyalty.com, inc. Non-Qualified Stock Option Plan (the “webloyalty.com NQ Plan”) and the Webloyalty Holdings, Inc. 2005 Equity Award Plan (the “Webloyalty 2005 Plan”). The webloyalty.com ISO Plan, adopted by Webloyalty’s board of directors in February 1999, authorized Webloyalty’s board of directors to grant awards of incentive stock options to directors and employees of, and consultants to, Webloyalty. Unless otherwise determined by Webloyalty’s board of directors, options granted under the webloyalty.com ISO Plan were to have an exercise price no less than the fair market value of a share of the underlying common stock on the date of grant. The Webloyalty board of directors was authorized to grant shares of Webloyalty’s common stock under the webloyalty.com ISO Plan over a ten year period. During the three and nine months ended September 30, 2012, 0.1 million options to acquire shares of Affinion Holdings’ common stock were exercised at an exercise price of $0.98. As of September 30, 2012, there were no outstanding options under the webloyalty.com ISO Plan. No additional grants may be made under the webloyalty.com ISO Plan.

The webloyalty.com NQ Plan, adopted by Webloyalty’s board of directors in February 1999, as amended and restated in February 2004, authorized Webloyalty’s board of directors to grant awards of stock options to directors and employees of, and consultants to, Webloyalty. The Webloyalty board of directors was authorized to grant shares of Webloyalty’s common stock under the webloyalty.com NQ Plan over a ten year period. As of September 30, 2012, there were no outstanding options under the webloyalty.com NQ Plan. No additional grants may be made under the webloyalty.com NQ Plan.

The Webloyalty 2005 Plan, adopted by Webloyalty’s board of directors in May 2005, authorized Webloyalty’s board of directors to grant awards of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonuses and performance compensation awards or any combination of these awards to directors and employees of, and consultants to, Webloyalty. Unless otherwise determined by Webloyalty’s board of directors, incentive stock options granted under the Webloyalty 2005 Plan were to have an exercise price no less than the fair market value of a share of the underlying common stock on the date of grant and nonqualified stock options granted under the Webloyalty 2005 Plan were to have an exercise price no less than the par value of a share of Webloyalty’s common stock on the date of grant. The Webloyalty board of directors was authorized to grant shares of Webloyalty’s common stock under the Webloyalty 2005 Plan over a ten year period. As of September 30, 2012, after conversion of the outstanding options under the Webloyalty 2005 Plan into options to acquire shares of Affinion Holdings’ common stock, there were options to acquire 0.6 million shares of Affinion Holdings’ common stock at exercise prices ranging from $3.33 to $12.95. Substantially all of the outstanding options were vested as of September 30, 2012 and expire between May 2015 and September 2018.

For employee stock awards, the Company recognizes compensation expense, net of estimated forfeitures, over the requisite service period, which is the period during which the employee is required to provide services in exchange for the award. The Company has elected to recognize compensation cost for awards with only a service condition and have a graded vesting schedule on a straight-line basis over the requisite service period for the entire award.

Stock Options

During the three and nine months ended September 30, 2012 and 2011, there were no stock options granted to employees from the 2005 Plan. All options previously granted were granted with an exercise price equal to the estimated fair market value of a share of the underlying common stock on the date of grant. Stock options granted to employees from the 2005 Plan are comprised of three tranches with the following terms:

	Tranche A	Tranche B	Tranche C
Vesting	Ratably over 5 years*	100% 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.

During the nine months ended September 30, 2012, 0.5 million stock options were granted to employees from the 2007 Plan. There were no stock options granted to employees during the three months ended September 30, 2012. During the three and nine months ended September 30, 2011, 0.3 million and 2.8 million stock options, respectively, were granted to employees from the 2007 Plan. The options granted to employees during the nine months ended September 30, 2012 were granted with an exercise price of $8.16, equal to the estimated fair market value of a share of the underlying common stock on the date of grant. The options granted to employees during the three and nine months ended September 30, 2011 were granted with an exercise price of $9.16, equal to the estimated fair market value of a share of the underlying common stock on the date of grant.

The stock options granted to employees from the 2007 Plan have the following terms:

Vesting period	Ratably over 4 years
Option term	10 years

During the three and nine months ended September 30, 2012, there were no stock options granted to members of the Board of Directors. During the nine months ended September 30, 2011, there were 0.1 million stock options granted to members of the Board of Directors from the 2007 Plan with an exercise price of $9.16, equal to the estimated fair market value of a share of the underlying common stock on the date of grant. During the three months ended September 30, 2011, there were no stock options granted to members of the Board of Directors. Generally, options granted to members of the Board of Directors fully vest on the date of grant and have an option term of 10 years.

The fair value of each option award from the 2007 Plan during the nine months ended September 30, 2011 and 2012 was 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, and is based on the average of the requisite service period and the contractual term of the option.

	2012			2011
Expected volatility		50.0	%		44.0	%
Expected life (in years)		5.89-6.25			4.92-6.08
Risk-free interest rate		1.15	%		2.03-2.37	%
Dividend yield		—	%		—	%

A summary of option activity for the nine months ended September 30, 2012 is presented below (number of options in thousands):

	2005 Plan – Grants to Employees- Tranche A			2005 Plan – Grants to Employees- Tranche B			2005 Plan – Grants to Employees- Tranche C			Grants to Board of Directors		2007 Plan – Grants to Employees
Outstanding options at January 1, 2012		1,558			767			767			423		3,850
Granted		—			—			—			—		495
Exercised		—			—			—			—		—
Forfeited or expired		(138	)		(78	)		(78	)		—		(730	)
Outstanding options at September 30, 2012		1,420			689			689			423		3,615
Vested or expected to vest at September 30, 2012		1,420			689			689			423		3,615
Exercisable options at September 30, 2012		1,420			—			—			423		1,459
Weighted average remaining contractual term (in years)		3.2			3.2			3.2			5.1		8.0
Weighted average grant date fair value per option granted in 2012	$	—		$	—		$	—		$	—	$	3.97
Weighted average exercise price of exercisable options at September 30, 2012	$	1.59		$	—		$	—		$	5.29	$	12.17
Weighted average exercise price of outstanding options at September 30, 2012	$	1.59		$	1.59		$	1.59		$	5.29	$	10.67

Based on the estimated fair values of options granted, stock-based compensation expense for the three and nine months ended September 30, 2012 totaled $1.4 million and $3.8 million, respectively. Based on the estimated fair values of options granted, stock-based compensation expense for the three and nine months ended September 30, 2011 totaled $0.8 million and $4.3 million, respectively. In addition, in connection with dividends paid by Affinion Holdings to its common stock holders during the three months ended March 31, 2011, Affinion Holdings made payments to holders of options to purchase shares of Affinion Holdings’ common stock of $13.7 million, which has been recognized by the Company as compensation expense during the nine months ended September 30, 2011. As of September 30, 2012, there was $8.5 million of unrecognized compensation cost related to unvested stock options, which will be recognized over a weighted average period of approximately 1.2 years.

Restricted Stock Units

On January 13, 2010, the Board’s Compensation Committee approved the Amended and Restated 2010 Retention Award Program (the “2010 RAP”), which provides for awards of restricted stock units (“RSUs”) under the 2007 Stock Award Plan and granted approximately 942,000 RSUs to key employees. The RSUs initially awarded under the 2010 RAP had an aggregate cash election dollar value of approximately $9.9 million and were subject to time-based vesting conditions that ran through approximately the first quarter of 2012. Generally, the number of RSUs awarded to each participant was equal to the quotient of (i) the aggregate cash election dollar value of RSUs awarded to such participant (the “Dollar Award Value”) multiplied by 1.2, divided by (ii) $12.63 (i.e. the value per share of Affinion Holdings’ common stock as of December 31, 2009). Upon vesting of the RSUs, participants could settle the RSUs in shares of common stock or elect to receive cash in lieu of shares of common stock upon any of the four vesting dates for such RSUs in an amount equal to one-fourth of the Dollar Award Value. During 2010 and 2011, the Board issued additional grants totaling 159,000 RSUs to key employees under substantially the same terms. Due to the ability of the participants to settle their awards in cash, the Company accounted for these RSUs as a liability award.

On March 30, 2012, the Board’s Compensation Committee approved the 2012 Retention Award Program (the “2012 RAP”), which provides for awards of RSUs under the 2007 Stock Award Plan. During the three and nine months ended September 30, 2012, the Company granted approximately 0.1 million and 1.3 million RSUs, respectively, to key employees. The RSUs awarded under the 2012 RAP have an aggregate cash election dollar value of approximately $10.3 million and are subject to time-based vesting conditions that run through approximately the first quarter of 2014. Generally, the number of RSUs awarded to each participant is equal to the quotient of (i) the Dollar Award Value, divided by (ii) $8.16, the value per share of Affinion Holdings’ common stock as of the grant date. Upon vesting of the RSUs, participants are able to settle the RSUs in shares of common stock or elect to receive cash in lieu of shares of common stock upon any of the three vesting dates for such RSUs. Due to the ability of the participants to settle their awards in cash, the Company accounts for these RSUs as a liability award.

A summary of restricted stock unit activity for the nine months ended September 30, 2012 is presented below (number of restricted stock units in thousands):

	Number of Restricted Stock Units			Weighted Average Grant Date Fair Value
Outstanding restricted unvested awards at January 1, 2012		292		$	11.82
Granted		1,265			8.16
Vested		(199	)		12.20
Forfeited		(129	)		10.03
Outstanding restricted unvested awards at September 30, 2012		1,229		$	8.18
Weighted average remaining contractual term (in years)		0.9

Based on the estimated fair value of the restricted stock units granted, stock-based compensation expense for the three and nine months ended September 30, 2012 was $1.2 million and $5.0 million, respectively. Based on the estimated fair value of the restricted stock units granted, stock-based compensation expense for the three and nine months ended September 30, 2011 was $1.4 million and $4.1 million, respectively. In addition, in connection with dividends paid by Affinion Holdings to its common stock holders during the three months ended March 31, 2011, Affinion Holdings authorized payments to holders of unvested restricted stock units to be paid as the restricted stock units vest, resulting in the recognition of additional stock-based compensation expense of $2.1 million during the nine months ended September 30, 2011. As of September 30, 2012, there was $7.9 million of unrecognized compensation cost related to the remaining vesting period of restricted stock units granted under the 2007 Plan. This cost will be recorded in future periods as stock-based compensation expense over a weighted average period of approximately 0.7 years.

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FINANCIAL INSTRUMENTS, DERIVATIVES AND FAIR VALUE MEASURES

9 Months Ended

Sep. 30, 2012

FINANCIAL INSTRUMENTS, DERIVATIVES AND FAIR VALUE MEASURES

10. FINANCIAL INSTRUMENTS, DERIVATIVES AND FAIR VALUE MEASURES

Interest Rate Swaps

In January 2008, the Company entered into an interest rate swap effective February 21, 2008. This swap converted a notional amount of the Company’s floating rate debt into a fixed rate obligation. The notional amount of the swap for the period from February 23, 2010 to February 22, 2011, the swap termination date, was $598.6 million.

In January 2009, the Company entered into an interest rate swap effective February 21, 2011. The swap had a notional amount of $500.0 million and terminated on October 17, 2012. Under the swap, the Company had agreed to pay a fixed rate of interest of 2.985%, payable on a quarterly basis with the first interest payment due on May 21, 2011, in exchange for receiving floating payments based on a three-month LIBOR on the notional amount for each applicable period.

All outstanding interest rate swaps were recorded at fair value. The changes in the fair value of the swaps, which were not designated as hedging instruments, are included in interest expense in the accompanying unaudited condensed consolidated statements of comprehensive income. For the three and nine months ended September 30, 2012, the Company recorded interest expense, representing realized and unrealized gains and losses, of $0.2 million and $1.2 million, respectively, related to the interest rate swaps. For the three and nine months ended September 30, 2011, the Company recorded interest income (expense), representing realized and unrealized gains and losses, of $0.5 million and $(2.2) million, respectively, related to the interest rate swaps.

As a matter of policy, the Company does not use derivatives for trading or speculative purposes.

The following table provides information about the Company’s 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 the Company’s long-term debt as of September 30, 2012:

	2012			2013			2014			2015			2016			2017 and Thereafter			Total		Fair Value At September 30, 2012
							(in millions)
Fixed rate debt	$	0.1		$	0.5		$	0.4		$	355.8		$	0.1		$	475.0		$	831.9	$	685.7
Average interest rate		9.43	%		9.43	%		9.43	%		9.43	%		7.88	%		7.88	%
Variable rate debt	$	2.8		$	11.2		$	11.3		$	11.2		$	1,062.2					$	1,098.7	$	1,010.8
Average interest rate(a)		5.00	%		5.00	%		5.00	%		5.00	%		5.00	%
Variable to fixed interest rate swap(b)																					$	2.1
Average pay rate		2.99	%
Average receive rate		0.32	%

(a) Average interest rate is based on rates in effect at September 30, 2012.

(b) The fair value of the interest rate swaps is included in accounts payables and accrued expenses at September 30, 2012. The fair value has been determined after consideration of interest rate yield curves and the creditworthiness of the parties to the interest rate swaps.

Foreign Currency Forward Contracts

In August 2010, the Company entered into a foreign currency forward contract under which the Company agreed to sell GBP 3.5 million and receive $5.5 million thirty days after the contract date. In September 2010, and in each subsequent month, upon settlement, the Company entered into a new thirty day forward contract. In April 2011, the Company entered into a foreign currency forward contract under which the Company agreed to sell GBP 4.3 million and receive $7.2 million thirty days after the contract date. In May 2011, and in each subsequent month, upon settlement, the Company entered into a new thirty day forward contract. In May 2012, the Company entered into a foreign currency forward contract under which the Company agreed to sell EUR 7.7 million and receive $9.5 million thirty days after the contract date. In June 2012, and in each subsequent month, upon settlement, the Company entered into a new thirty day forward contract. During the three and nine months ended September 30, 2012, the Company recognized a realized loss on the forward contracts of $0.8 million and $0.9 million, respectively, and during the three and nine months ended September 30, 2011, the Company recognized a realized gain on the forward contracts of $0.3 million and $0.2 million, respectively. As of September 30, 2012, the Company had a de minimis unrealized loss on the foreign currency forward contracts.

Credit Risk and Exposure

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of receivables, profit-sharing receivables from insurance carriers, prepaid commissions and interest rate swaps. The Company manages such risk by evaluating the financial position and creditworthiness of such counterparties. As of September 30, 2012 and December 31, 2011, approximately $74.9 million and $62.8 million, respectively, of the profit-sharing receivable was due from one insurance carrier. Receivables and profit-sharing receivables from insurance carriers are from various marketing, insurance and business partners and the Company maintains an allowance for losses, based upon expected collectability. Commission advances are periodically evaluated as to recovery.

Fair Value

The Company determines the fair value of financial instruments as follows:

a. Cash and Cash Equivalents, Restricted Cash, Receivables, Profit-Sharing Receivables from Insurance Carriers and Accounts Payable—Carrying amounts approximate fair value at September 30, 2012 and December 31, 2011 due to the short-term maturities of these assets and liabilities.

b. Long-Term Debt—The Company’s estimated fair value of its long-term fixed-rate debt at September 30, 2012 and December 31, 2011 is based upon available information for debt having similar terms and risks. The fair value of the publicly-traded debt is the published market price per unit multiplied by the number of units held or issued without consideration of transaction costs. The fair value of the non-publicly-traded debt, substantially all of which is variable-rate debt, is based on third party indicative valuations and estimates prepared by the Company after consideration of the creditworthiness of the counterparties.

c. Interest Rate Swap—At September 30, 2012 and December 31, 2011, the Company’s estimated fair value of its interest rate swap is based upon available market information. The fair value of the interest rate swap is based on significant other observable inputs, adjusted for contract restrictions and other terms specific to the interest rate swap. The Company primarily uses the income approach, which uses valuation techniques to convert future amounts to a single present amount. The fair value has been determined after consideration of interest rate yield curves and the creditworthiness of the parties to the interest rate swap. The counterparty to the interest rate swap is a major financial institution. The Company does not expect any losses from non-performance by the counterparty.

d. Foreign Currency Forward Contracts—At September 30, 2012 and December 31, 2011, the Company’s estimated fair value of its foreign currency forward contracts is based upon available market information. The fair value of the foreign currency forward contracts is based on significant other observable inputs, adjusted for contract restrictions and other terms specific to the foreign currency forward contracts. The fair value has been determined after consideration of foreign currency exchange rates and the creditworthiness of the parties to the foreign currency forward contracts. The counterparty to the foreign currency forward contracts is a major financial institution. The Company does not expect any losses from non-performance by the counterparty.

Current accounting guidance establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, giving the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. Level 1 inputs to a fair value measurement are quoted market prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.

The fair values of certain financial instruments as of September 30, 2012, are shown in the table below:

	Fair Value Measurements at September 30, 2012
	Fair Value at September 30, 2012			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	(in millions)
Interest rate swap (included in accounts payable and accrued expenses)	$	(2.1	)		—	$	(2.1	)		—

The following table summarizes assets measured at fair value using Level 3 inputs on a nonrecurring basis subsequent to initial recognition:

	Fair Value Measurements at September 30, 2012
	Fair Value at September 30, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Impairment Losses Nine Months Ended September 30, 2012
	(in millions)
Goodwill		—		—		—		—	$	(31.5	)
Intangible assets		—		—		—		—		(8.2	)
Equity investment	$	0.7		—		—	$	0.7		(1.0	)

The fair values of certain financial instruments as of December 31, 2011 are shown in the table below:

	Fair Value Measurements at December 31, 2011
	Fair Value at December 31, 2011			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	(in millions)
Interest rate swap (included in accounts payable and accrued expenses)	$	(10.4	)		—	$	(10.4	)		—

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Intangible Assets - Carrying Amount of Goodwill (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended	9 Months Ended	12 Months Ended	9 Months Ended	12 Months Ended				12 Months Ended		9 Months Ended	12 Months Ended
	Jun. 30, 2012	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 Membership products [Member]	Dec. 31, 2011 Membership products [Member]	Sep. 30, 2012 Insurance and package products [Member]	Dec. 31, 2011 Insurance and package products [Member]	Dec. 31, 2010 Insurance and package products [Member]	Dec. 31, 2011 Loyalty products [Member]	Sep. 30, 2012 Loyalty products [Member]	Sep. 30, 2012 International products [Member]	Dec. 31, 2011 International products [Member]
Goodwill [Line Items]
Balance at January 1, 2011		$ 627.5	$ 402.7	$ 413.5	$ 231.1	$ 58.3	$ 58.3	$ 58.3	$ 82.2	$ 81.7	$ 74.0	$ 31.1
Impairment	(31.5)	(31.5)		(31.5)
Acquisition			227.2		182.4				(0.5)			45.3
Currency Translation		1.9	(2.4)								1.9	(2.4)
Balance at December 31, 2011 (in millions)		$ 597.9	$ 627.5	$ 382.0	$ 413.5	$ 58.3	$ 58.3	$ 58.3	$ 81.7	$ 81.7	$ 75.9	$ 74.0

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Segment Information - Additional information (Detail)	9 Months Ended
	Sep. 30, 2012 Segment
Number of Reportable Segments	4

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INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2012

Amortizable Intangible Assets

Intangible assets consisted of:

	September 30, 2012
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(in millions)
Amortizable intangible assets:
Member relationships	$	935.9	$	(889.4	)	$	46.5
Affinity relationships		644.5		(491.9	)		152.6
Proprietary databases and systems		61.6		(56.8	)		4.8
Trademarks and tradenames		30.8		(13.7	)		17.1
Patents and technology		48.3		(35.4	)		12.9
Covenants not to compete		2.1		(1.5	)		0.6
	$	1,723.2	$	(1,488.7	)	$	234.5
	December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(in millions)
Amortizable intangible assets:
Member relationships	$	934.7	$	(821.3	)	$	113.4
Affinity relationships		643.0		(457.1	)		185.9
Proprietary databases and systems		62.6		(55.8	)		6.8
Trademarks and tradenames		36.0		(11.8	)		24.2
Patents and technology		49.5		(29.5	)		20.0
Covenants not to compete		2.2		(1.3	)		0.9
	$	1,728.0	$	(1,376.8	)	$	351.2

Amortization Expense Relating to Intangible Assets

Amortization expense relating to intangible assets was as follows:

	For the Three Months Ended				For the Nine Months Ended
	September 30, 2012		September 30, 2011		September 30, 2012		September 30, 2011
	(in millions)
Member relationships	$	21.4	$	29.8	$	67.3	$	95.4
Affinity relationships		11.1		12.9		33.5		37.0
Proprietary databases and systems		0.3		0.5		0.9		1.4
Trademarks and tradenames		0.5		0.7		1.8		1.8
Patents and technology		1.7		2.7		5.9		9.5
Covenants not to compete		0.1		0.1		0.3		0.3
	$	35.1	$	46.7	$	109.7	$	145.4

Carrying Amount of Goodwill

The changes in the Company’s carrying amount of goodwill for the year ended December 31, 2011 and the nine months ended September 30, 2012 are as follows:

	Balance at January 1, 2011		Acquisition			Currency Translation			Balance at December 31, 2011		Impairment			Currency Translation		Balance at September 30, 2012
	(in millions)
Membership products	$	231.1	$	182.4		$	—		$	413.5	$	(31.5	)	$	—	$	382.0
Insurance and package products		58.3		—			—			58.3		—			—		58.3
Loyalty products		82.2		(0.5	)		—			81.7		—			—		81.7
International products		31.1		45.3			(2.4	)		74.0		—			1.9		75.9
Total	$	402.7	$	227.2		$	(2.4	)	$	627.5	$	(31.5	)	$	1.9	$	597.9

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SEGMENT INFORMATION (Tables)

9 Months Ended

Sep. 30, 2012

Segment Information

Net Revenues

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
	(in millions)
Affinion North America
Membership products	$	167.9		$	197.3		$	545.3		$	575.5
Insurance and package products		90.0			87.2			251.2			260.1
Loyalty products		37.2			34.8			113.0			102.3
Eliminations		(0.4	)		(0.9	)		(1.7	)		(2.6	)
Total North America		294.7			318.4			907.8			935.3
Affinion International
International products		75.9			76.3			222.2			213.4
	$	370.6		$	394.7		$	1,130.0		$	1,148.7

Segment EBITDA

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
	(in millions)
Affinion North America
Membership products	$	33.5		$	24.7		$	110.4		$	91.0
Insurance and package products		31.5			27.9			82.0			82.1
Loyalty products		13.5			10.9			38.1			32.0
Total North America		78.5			63.5			230.5			205.1
Affinion International
International products		9.3			9.6			20.5			23.3
Total products		87.8			73.1			251.0			228.4
Corporate		(2.9	)		(5.6	)		(11.8	)		(26.6	)
Impairment of goodwill and other long-lived assets		—			—			(39.7	)		—
	$	84.9		$	67.5		$	199.5		$	201.8

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
	(in millions)
Segment EBITDA	$	84.9		$	67.5		$	199.5		$	201.8
Depreciation and amortization		(48.5	)		(60.4	)		(147.6	)		(183.3	)
Income from operations	$	36.4		$	7.1		$	51.9		$	18.5

XML

Principal Cash and Related Weighted-Average Interest Rates by Expected Maturity (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 Interest Rate Swap [Member]		May 21, 2011 Interest Rate Swap [Member]	Sep. 30, 2012 Year One [Member]	Sep. 30, 2012 Long Term Debt Percentage Bearing Variable Interest Rate [Member]	Sep. 30, 2012 Long Term Debt Percentage Bearing Variable Interest Rate [Member] Year One [Member]		Sep. 30, 2012 Long Term Debt Percentage Bearing Variable Interest Rate [Member] Year Two [Member]		Sep. 30, 2012 Long Term Debt Percentage Bearing Variable Interest Rate [Member] Year Three [Member]		Sep. 30, 2012 Long Term Debt Percentage Bearing Variable Interest Rate [Member] Year Four [Member]		Sep. 30, 2012 Long Term Debt Percentage Bearing Variable Interest Rate [Member] Year Five [Member]		Sep. 30, 2012 Long Term Debt Percentage Bearing Fixed Interest Rate [Member]	Sep. 30, 2012 Long Term Debt Percentage Bearing Fixed Interest Rate [Member] Year One [Member]	Sep. 30, 2012 Long Term Debt Percentage Bearing Fixed Interest Rate [Member] Year Two [Member]	Sep. 30, 2012 Long Term Debt Percentage Bearing Fixed Interest Rate [Member] Year Three [Member]	Sep. 30, 2012 Long Term Debt Percentage Bearing Fixed Interest Rate [Member] Year Four [Member]	Sep. 30, 2012 Long Term Debt Percentage Bearing Fixed Interest Rate [Member] Year Five [Member]	Sep. 30, 2012 Long Term Debt Percentage Bearing Fixed Interest Rate [Member] Year Six [Member]
Long Term Debt Percentage Interest Rate Type [Line Items]
Average interest rate								5.00%	[1]	5.00%	[1]	5.00%	[1]	5.00%	[1]	5.00%	[1]		9.43%	9.43%	9.43%	9.43%	7.88%	7.88%
Variable to fixed interest rate swap(b)			$ 2.1	[2]
Average pay rate					2.985%	2.99%
Average receive rate						0.32%
2012							2.8											0.1
2013							11.2											0.5
2014							11.3											0.4
2015							11.2											355.8
2016							1,062.2											0.1
2017 and Thereafter																		475.0
Total	1,926.3	1,934.4					1,098.7											831.9
Fair Value At September 30, 2012							$ 1,010.8											$ 685.7

[1] Average interest rate is based on rates in effect at September 30, 2012.

[2] The fair value of the interest rate swaps is included in accounts payables and accrued expenses at September 30, 2012. The fair value has been determined after consideration of interest rate yield curves and the creditworthiness of the parties to the interest rate swaps.

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Commitments and Contingencies (Additional Information) (Detail) (USD $) In Millions, unless otherwise specified	1 Months Ended	9 Months Ended
	Aug. 31, 2010	Sep. 30, 2012	Sep. 30, 2011 Webloyalty [Member]	Oct. 31, 2010 Webloyalty [Member]
Fees, costs, and penalties paid	$ 3.0
Restitution		1.8	2.6
Fees, costs, and penalties paid.				5.2
Guarantees for surety bonds		12.0
Letters of credit and performance bonds issued		$ 9.6

XML

Condensed Consolidated Statements of Changes in Deficit (Unaudited) (USD $) In Millions	Total	Common Stock and Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Non-Controlling Interest [Member]
Beginning Balance at Dec. 31, 2010	$ (864.9)	$ 172.1	$ (1,047.8)	$ 9.5	$ 1.3
Net income (loss)	(108.8)		(109.7)		0.9
Currency translation adjustment, net of tax	(4.5)			(4.3)	(0.2)
Dividend paid to non-controlling interest	(1.0)				(1.0)
Return of capital	(323.2)	(323.2)
Capital contribution	290.7	290.7
Ending Balance at Dec. 31, 2011	(1,011.7)	139.6	(1,157.5)	5.2	1.0
Net income (loss)	(68.0)		(68.5)		0.5
Currency translation adjustment, net of tax	0.3			0.3
Return of capital	(37.0)	(37.0)
Ending Balance at Sep. 30, 2012	$ (1,116.4)	$ 102.6	$ (1,226.0)	$ 5.5	$ 1.5

XML

CONTRACT RIGHTS AND LIST FEES, NET

9 Months Ended

Sep. 30, 2012

CONTRACT RIGHTS AND LIST FEES, NET

4. CONTRACT RIGHTS AND LIST FEES, NET

Contract rights and list fees consisted of:

	September 30, 2012							December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(in millions)
Contract rights	$	61.4	$	(60.3	)	$	1.1	$	58.7	$	(57.3	)	$	1.4
List fees		44.5		(22.6	)		21.9		39.6		(18.5	)		21.1
	$	105.9	$	(82.9	)	$	23.0	$	98.3	$	(75.8	)	$	22.5

Amortization expense for the three and nine months ended September 30, 2012 was $1.6 million and $4.5 million, respectively, of which $1.5 million and $4.2 million, respectively, is included in marketing expense and $0.1 million and $0.3 million, respectively, is included in depreciation and amortization expense in the unaudited condensed consolidated statements of comprehensive income. Amortization expense for the three and nine months ended September 30, 2011 was $3.0 million and $9.1 million, respectively, of which $1.2 million and $3.7 million, respectively, is included in marketing expense and $1.8 million and $5.4 million, respectively, is included in depreciation and amortization expense in the unaudited condensed consolidated statements of comprehensive income. Based on the Company’s contract rights and list fees as of September 30, 2012, the Company expects the related amortization expense for fiscal year 2012 and the four succeeding fiscal years to be approximately $6.0 million in 2012, $5.7 million in 2013, $4.7 million in 2014, $3.7 million in 2015 and $2.6 million in 2016.

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GUARANTOR/NON-GUARANTOR SUPPLEMENTAL FINANCIAL INFORMATION (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Condensed Consolidating Balance Sheet

UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET

AS OF SEPTEMBER 30, 2012

(In millions)

	Affinion Group, Inc.			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	26.6		$	4.4	$	25.5	$	—		$	56.5
Restricted cash		—			27.9		7.7		—			35.6
Receivables, net		2.7			104.9		39.9		—			147.5
Receivables from related parties		—			0.1		—		—			0.1
Profit-sharing receivables from insurance carriers		—			88.2		0.7		—			88.9
Prepaid commissions		—			39.1		4.4		—			43.5
Income taxes receivable		—			0.9		3.0		—			3.9
Intercompany interest receivable		0.5			—		—		(0.5	)		—
Other current assets		7.9			40.2		35.1		—			83.2
Total current assets		37.7			305.7		116.3		(0.5	)		459.2
Property and equipment, net		9.1			98.1		27.1		—			134.3
Contract rights and list fees, net		—			23.0		—		—			23.0
Goodwill		—			522.0		75.9		—			597.9
Other intangibles, net		—			190.1		44.4		—			234.5
Investment in subsidiaries		2,192.5			77.1		—		(2,269.6	)		—
Intercompany loan receivables		49.3			21.4		—		(70.7	)		—
Intercompany receivables		—			1,366.2		—		(1,366.2	)		—
Other non-current assets		30.2			25.5		6.4		—			62.1
Total assets	$	2,318.8		$	2,629.1	$	270.1	$	(3,707.0	)	$	1,511.0
Liabilities and Deficit
Current liabilities:
Current portion of long-term debt	$	11.2		$	0.6	$	—	$	—		$	11.8
Accounts payable and accrued expenses		113.5			198.1		96.0		—			407.6
Payables to related parties		40.3			0.1		—		—			40.4
Intercompany interest payable		—			—		0.5		(0.5	)		—
Deferred revenue		—			99.1		25.0		—			124.1
Income taxes payable		0.8			0.2		3.2		—			4.2
Total current liabilities		165.8			298.1		124.7		(0.5	)		588.1
Long-term debt		1,913.7			0.8		—		—			1,914.5
Deferred income taxes		—			62.9		8.0		—			70.9
Deferred revenue		—			6.7		8.5		—			15.2
Intercompany loan payable		—			—		70.7		(70.7	)		—
Intercompany payables		1,354.5			—		11.7		(1,366.2	)		—
Other long-term liabilities		2.7			34.5		1.5		—			38.7
Total liabilities		3,436.7			403.0		225.1		(1,437.4	)		2,627.4
Affinion Group, Inc. deficit		(1,117.9	)		2,226.1		43.5		(2,269.6	)		(1,117.9	)
Non-controlling interest in subsidiary		—			—		1.5		—			1.5
Total deficit		(1,117.9	)		2,226.1		45.0		(2,269.6	)		(1,116.4	)
Total liabilities and deficit	$	2,318.8		$	2,629.1	$	270.1	$	(3,707.0	)	$	1,511.0

UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 2011

(In millions)

	Affinion Group, Inc.			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	57.2		$	2.8	$	26.3	$	—		$	86.3
Restricted cash		—			22.6		7.8		—			30.4
Receivables, net		1.6			87.6		37.6		—			126.8
Receivables from related parties		—			0.6		0.2		—			0.8
Profit-sharing receivables from insurance carriers		—			73.3		0.7		—			74.0
Prepaid commissions		—			47.7		4.9		—			52.6
Income taxes receivable		—			0.7		1.4		—			2.1
Intercompany loans receivable		16.0			—		—		(16.0	)		—
Other current assets		4.7			33.7		29.7		—			68.1
Total current assets		79.5			269.0		108.6		(16.0	)		441.1
Property and equipment, net		9.1			102.0		23.6		—			134.7
Contract rights and list fees, net		—			22.5		—		—			22.5
Goodwill		—			553.5		74.0		—			627.5
Other intangibles, net		—			295.1		56.1		—			351.2
Investment in subsidiaries		2,127.0			77.1		—		(2,204.1	)		—
Intercompany loan receivable		31.4			—		—		(31.4	)		—
Intercompany receivables		—			1,222.2		—		(1,222.2	)		—
Other non-current assets		35.4			28.2		10.4		—			74.0
Total assets	$	2,282.4		$	2,569.6	$	272.7	$	(3,473.7	)	$	1,651.0
Liabilities and Deficit
Current liabilities:
Current portion of long-term debt	$	11.2		$	0.7	$	—	$	—		$	11.9
Accounts payable and accrued expenses		99.0			213.9		85.2		—			398.1
Payables to related parties		34.7			0.4		0.2		—			35.3
Intercompany loans payable		—			—		16.0		(16.0	)		—
Deferred revenue		—			123.2		29.3		—			152.5
Income taxes payable		1.0			0.7		1.7		—			3.4
Total current liabilities		145.9			338.9		132.4		(16.0	)		601.2
Long-term debt		1,921.4			1.1		—		—			1,922.5
Deferred income taxes		—			54.8		12.7		—			67.5
Deferred revenue		—			9.6		8.2		—			17.8
Intercompany loan payable		—			—		31.4		(31.4	)		—
Intercompany payables		1,210.7			—		11.5		(1,222.2	)		—
Other long-term liabilities		17.1			34.7		1.9		—			53.7
Total liabilities		3,295.1			439.1		198.1		(1,269.6	)		2,662.7
Affinion Group, Inc. deficit		(1,012.7	)		2,130.5		73.6		(2,204.1	)		(1,012.7	)
Non-controlling interest in subsidiary		—			—		1.0		—			1.0
Total deficit		(1,012.7	)		2,130.5		74.6		(2,204.1	)		(1,011.7	)
Total liabilities and deficit	$	2,282.4		$	2,569.6	$	272.7	$	(3,473.7	)	$	1,651.0

Schedule of Condensed Consolidating Statement of Operations

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2012

(In millions)

	Affinion Group, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net revenues	$	—		$	294.7		$	75.9		$	—		$	370.6
Expenses:
Cost of revenues, exclusive of depreciation and amortization shown separately below:
Marketing and commissions		—			116.3			26.2			—			142.5
Operating costs		—			77.5			33.3			—			110.8
General and administrative		7.8			15.8			9.7			—			33.3
Facility exit costs		—			(0.9	)		—			—			(0.9	)
Depreciation and amortization		0.4			38.3			9.8			—			48.5
Total expenses		8.2			247.0			79.0			—			334.2
Loss from operations		(8.2	)		47.7			(3.1	)		—			36.4
Interest income		—			0.2			—			—			0.2
Interest expense		(36.5	)		(0.4	)		(0.1	)		—			(37.0	)
Interest income (expense)—intercompany		0.4			—			(0.4	)		—			—
Other income, net		—			—			0.1			—			0.1
Loss before income taxes and non-controlling interest		(44.3	)		47.5			(3.5	)		—			(0.3	)
Income tax expense		(0.4	)		(1.1	)		(0.4	)		—			(1.9	)
		(44.7	)		46.4			(3.9	)		—			(2.2	)
Equity in income of subsidiaries		42.4			—			—			(42.4	)		—
Net loss		(2.3	)		46.4			(3.9	)		(42.4	)		(2.2	)
Less: net income attributable to non-controlling interest		—			—			(0.1	)		—			(0.1	)
Net loss attributable to Affinion Group, Inc.	$	(2.3	)	$	46.4		$	(4.0	)	$	(42.4	)	$	(2.3	)

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012

(In millions)

	Affinion Group, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net revenues	$	—		$	907.8		$	222.2		$	—		$	1,130.0
Expenses:
Cost of revenues, exclusive of depreciation and amortization shown separately below:
Marketing and commissions		—			363.2			84.9			—			448.1
Operating costs		—			246.2			98.0			—			344.2
General and administrative		23.1			49.9			26.4			—			99.4
Impairment of goodwill and other long-lived assets		—			39.7			—			—			39.7
Facility exit costs		—			(0.9	)		—			—			(0.9	)
Depreciation and amortization		0.9			118.8			27.9			—			147.6
Total expenses		24.0			816.9			237.2			—			1,078.1
Income (loss) from operations		(24.0	)		90.9			(15.0	)		—			51.9
Interest income		—			0.6			0.1			—			0.7
Interest expense		(109.7	)		(1.1	)		(0.7	)		—			(111.5	)
Interest income (expense)—intercompany		0.9			—			(0.9	)		—			—
Other income (expense), net		—			0.2			(0.4	)		—			(0.2	)
Income (loss) before income taxes and non-controlling interest		(132.8	)		90.6			(16.9	)		—			(59.1	)
Income tax expense		(1.3	)		(6.4	)		(1.2	)		—			(8.9	)
		(134.1	)		84.2			(18.1	)		—			(68.0	)
Equity in income of subsidiaries		65.6			—			—			(65.6	)		—
Net income (loss)		(68.5	)		84.2			(18.1	)		(65.6	)		(68.0	)
Less: net income attributable to non-controlling interest		—			—			(0.5	)		—			(0.5	)
Net income (loss) attributable to Affinion Group, Inc.	$	(68.5	)	$	84.2		$	(18.6	)	$	(65.6	)	$	(68.5	)

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2011

(In millions)

	Affinion Group, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net revenues	$	—		$	318.4		$	76.3		$	—		$	394.7
Expenses:
Cost of revenues, exclusive of depreciation and amortization shown separately below:
Marketing and commissions		—			139.6			29.1			—			168.7
Operating costs		—			83.0			33.0			—			116.0
General and administrative		11.4			21.1			7.1			—			39.6
Facility exit costs		—			2.9			—			—			2.9
Depreciation and amortization		0.3			49.7			10.4			—			60.4
Total expenses		11.7			296.3			79.6			—			387.6
Income (loss) from operations		(11.7	)		22.1			(3.3	)		—			7.1
Interest income		—			0.1			—			—			0.1
Interest expense		(35.8	)		(0.3	)		(0.4	)		—			(36.5	)
Interest income (expense)—intercompany		0.3			—			(0.3	)		—			—
Other income, net		—			0.1			—			—			0.1
Income (loss) before income taxes and non-controlling interest		(47.2	)		22.0			(4.0	)		—			(29.2	)
Income tax benefit (expense)		(0.3	)		(2.1	)		(1.5	)		—			(3.9	)
		(47.5	)		19.9			(5.5	)		—			(33.1	)
Equity in income of subsidiaries		14.2			—			—			(14.2	)		—
Net income (loss)		(33.3	)		19.9			(5.5	)		(14.2	)		(33.1	)
Less: net income attributable to non-controlling interest		—			—			(0.2	)		—			(0.2	)
Net income (loss) attributable to Affinion Group, Inc.	$	(33.3	)	$	19.9		$	(5.7	)	$	(14.2	)	$	(33.3	)

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011

(In millions)

	Affinion Group, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net revenues	$	—		$	935.3		$	213.4		$	—		$	1,148.7
Expenses:
Cost of revenues, exclusive of depreciation and amortization shown separately below:
Marketing and commissions		—			394.1			78.4			—			472.5
Operating costs		—			238.6			94.6			—			333.2
General and administrative		41.5			71.0			24.5			—			137.0
Facility exit costs		—			4.2			—			—			4.2
Depreciation and amortization		0.9			152.4			30.0			—			183.3
Total expenses		42.4			860.3			227.5			—			1,130.2
Income (loss) from operations		(42.4	)		75.0			(14.1	)		—			18.5
Interest income		0.3			0.4			0.2			—			0.9
Interest expense		(109.2	)		(0.6	)		(1.4	)		—			(111.2	)
Interest income (expense)—intercompany		0.9			—			(0.9	)		—			—
Income (loss) before income taxes and non-controlling interest		(150.4	)		74.8			(16.2	)		—			(91.8	)
Income tax benefit (expense)		(1.6	)		(6.8	)		(0.2	)		—			(8.6	)
		(152.0	)		68.0			(16.4	)		—			(100.4	)
Equity in income of subsidiaries		50.9			—			—			(50.9	)		—
Net income (loss)		(101.1	)		68.0			(16.4	)		(50.9	)		(100.4	)
Less: net income attributable to non-controlling interest		—			—			(0.7	)		—			(0.7	)
Net income (loss) attributable to Affinion Group, Inc.	$	(101.1	)	$	68.0		$	(17.1	)	$	(50.9	)	$	(101.1	)

Schedule of Condensed Consolidating Statement of Cash Flows

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012

(In millions)

	Affinion Group, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating Activities
Net loss	$	(68.5	)	$	84.2		$	(18.1	)	$	(65.6	)	$	(68.0	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		0.9			118.8			27.9			—			147.6
Amortization of debt discount and financing costs		6.3			—			—			—			6.3
Unrealized loss on interest rate swap		1.2			—			—			—			1.2
Impairment of goodwill and other long-lived assets		—			39.7			—			—			39.7
Impairment of equity investment		—			—			1.0			—			1.0
Adjustment to liability for additional consideration based on earn-out		(14.6	)		—			—			—			(14.6	)
Facility exit costs		—			(0.9	)		—			—			(0.9	)
Share-based compensation		8.8			—			—			—			8.8
Equity in income (loss) of subsidiaries		(65.6	)		—			—			65.6			—
Deferred income taxes		0.3			5.7			(2.1	)		—			3.9
Net change in assets and liabilities:											—
Restricted cash		—			(5.3	)		0.1			—			(5.2	)
Receivables		(1.0	)		(17.3	)		(1.3	)		—			(19.6	)
Receivables from related parties		(0.4	)		0.5			0.6			—			0.7
Profit-sharing receivables from insurance carriers		—			(15.0	)		0.1			—			(14.9	)
Prepaid commissions		—			8.7			0.7			—			9.4
Other current assets		(3.2	)		(6.6	)		(4.4	)		—			(14.2	)
Contract rights and list fees		—			(0.7	)		—			—			(0.7	)
Other non-current assets		(0.7	)		5.1			0.3			—			4.7
Accounts payable and accrued expenses		13.6			(13.6	)		6.3			—			6.3
Payables to related parties		(2.7	)		(0.8	)		(0.1	)		—			(3.6	)
Deferred revenue		—			(26.9	)		(5.6	)		—			(32.5	)
Income taxes receivable and payable		(0.3	)		(0.6	)		(0.2	)		—			(1.1	)
Other long-term liabilities		0.3			0.6			(0.3	)		—			0.6
Other, net		(0.3	)		(0.3	)		0.5			—			(0.1	)
Net cash provided by (used in) operating activities		(125.9	)		175.3			5.4			—			54.8
Investing Activities
Capital expenditures		(1.1	)		(20.2	)		(16.9	)		—			(38.2	)
Restricted cash		—			—			0.2			—			0.2
Acquisition-related payment, net of cash acquired		—			—			(1.2	)		—			(1.2	)
Net cash used in investing activities		(1.1	)		(20.2	)		(17.9	)		—			(39.2	)
Financing Activities
Principal payments on borrowings		(8.4	)		(0.4	)		—			—			(8.8	)
Return of capital to parent company		(37.0	)		—			—			—			(37.0	)
Intercompany loan		(1.5	)		(9.6	)		11.1			—			—
Intercompany receivables and payables		143.3			(143.5	)		0.2			—			—
Net cash provided by (used in) financing activities		96.4			(153.5	)		11.3			—			(45.8	)
Effect of changes in exchange rates on cash and cash equivalents		—			—			0.4			—			0.4
Net increase (decrease) in cash and cash equivalents		(30.6	)		1.6			(0.8	)		—			(29.8	)
Cash and cash equivalents, beginning of period		57.2			2.8			26.3			—			86.3
Cash and cash equivalents, end of period	$	26.6		$	4.4		$	25.5		$	—		$	56.5

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011

(In millions)

	Affinion Group, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating Activities
Net loss	$	(101.1	)	$	68.0		$	(16.4	)	$	(50.9	)	$	(100.4	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		0.9			152.4			30.0			—			183.3
Amortization of debt discount and financing costs		6.2			—			—			—			6.2
Unrealized gain on interest rate swaps		(4.3	)		—			—			—			(4.3	)
Facility exit costs		—			4.2			—			—			4.2
Share-based compensation		8.5			—			—			—			8.5
Equity in (income) loss of subsidiaries		(50.9	)		—			—			50.9			—
Deferred income taxes		0.3			6.0			(2.5	)		—			3.8
Payment received for assumption of loyalty points program liability		—			4.8			—			—			4.8
Net change in assets and liabilities:
Restricted cash		3.4			(1.0	)		(0.3	)		—			2.1
Receivables		0.1			(39.5	)		7.9			—			(31.5	)
Receivables from related parties		(0.9	)		0.4			0.9			—			0.4
Profit-sharing receivables from insurance carriers		—			(18.8	)		0.6			—			(18.2	)
Prepaid commissions		—			3.2			0.9			—			4.1
Other current assets		(0.4	)		5.7			7.3			—			12.6
Contract rights and list fees		—			(2.7	)		—			—			(2.7	)
Other non-current assets		0.5			7.0			0.6			—			8.1
Accounts payable and accrued expenses		22.7			2.4			(21.0	)		—			4.1
Payables to related parties		(5.1	)		(0.6	)		(1.1	)		—			(6.8	)
Deferred revenue		(0.1	)		(13.2	)		3.3			—			(10.0	)
Income taxes receivable and payable		(0.1	)		0.3			5.3			—			5.5
Other long-term liabilities		2.5			(3.5	)		(6.9	)		—			(7.9	)
Other, net		(0.7	)		0.1			0.6			—			—
Net cash provided by (used in) operating activities		(118.5	)		175.2			9.2			—			65.9
Investing Activities
Capital expenditures		(2.8	)		(28.0	)		(8.2	)		—			(39.0	)
Restricted cash		—			—			1.1			—			1.1
Acquisition-related payment, net of cash acquired		(31.8	)		2.4			(3.5	)		—			(32.9	)
Cash acquired in Webloyalty acquisition		—			10.4			15.7			—			26.1
Other investing activity		—			0.2			—			—			0.2
Net cash provided by (used in) investing activities		(34.6	)		(14.9	)		5.0			—			(44.5	)
Financing Activities
Proceeds from issuance of term loan		250.0			—			—			—			250.0
Principal payments on borrowings		(8.4	)		(0.4	)		—			—			(8.8	)
Financing costs		(5.8	)		—			—			—			(5.8	)
Repurchase of employee equity award of a subsidiary		—			—			(3.5	)		—			(3.5	)
Return of capital to parent company		(323.2	)		—			—			—			(323.2	)
Intercompany loan		(3.6	)		—			3.6			—			—
Intercompany receivables and payables		156.8			(159.3	)		2.5			—			—
Receivables from and payables to parent company		15.3			—			—			—			15.3
Distribution to non-controlling interest of a subsidiary		—			—			(1.1	)		—			(1.1	)
Net cash provided by (used in) financing activities		81.1			(159.7	)		1.5			—			(77.1	)
Effect of changes in exchange rates on cash and cash equivalents		—			—			0.1			—			0.1
Net increase (decrease) in cash and cash equivalents		(72.0	)		0.6			15.8			—			(55.6	)
Cash and cash equivalents, beginning of period		104.8			3.2			13.1			—			121.1
Cash and cash equivalents, end of period	$	32.8		$	3.8		$	28.9		$	—		$	65.5

XML

Long-Term Debt (Parenthetical) (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
7.875% senior notes due 2018 [Member]
Debt Instrument [Line Items]
Effective interest rate on term loan	8.00%	8.00%
Debt Instruments, unamortized discount	$ 2.7	$ 3.1
11 1/2% senior subordinated notes due 2015 [Member]
Debt Instrument [Line Items]
Effective interest rate on term loan	11.75%	11.75%
Debt Instruments, unamortized discount	$ 1.6	$ 2.0

XML

ACQUISITIONS (Tables)

9 Months Ended

Sep. 30, 2012

Assumed Assets and Liabilities Acquired

The Company has allocated the Webloyalty purchase price of $290.7 million among the assets acquired and liabilities assumed as follows (in millions):

Cash	$	26.1
Accounts receivable		4.2
Other current assets		11.3
Property and equipment		5.2
Intangible assets		116.1
Goodwill		195.6
Other assets		0.2
Accounts payable and accrued liabilities		(56.5	)
Deferred income tax		(1.3	)
Income taxes payable		(0.7	)
Other current liabilities		(1.7	)
Non-current deferred income taxes		(6.7	)
Other long-term liabilities		(1.1	)
Consideration transferred	$	290.7

Cash	$	2.4
Accounts receivable		3.0
Other current assets		0.5
Property and equipment		0.5
Intangible assets		12.3
Goodwill		31.5
Accounts payable and accrued liabilities		(4.0	)
Consideration transferred	$	46.2