DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION

9 Months Ended

Sep. 30, 2013

DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION

DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION

(2) DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION

The reportable segments are strategic business units that offer different products and services.  They are managed separately because each business requires different technology, management expertise and marketing strategies.

Due to the sale, in the first quarter of 2013, of the Company’s remaining non-RV publications operated in the Membership Services — Media segment, the Company made a change in its reportable segments by consolidating the Membership Services — Media segment with the Membership Services segment.  The remaining publication and show operating units share common management with and cater to the same RV customer base as the Membership Services segment.  Accordingly, the Company has two reportable segments: (i) Membership Services, and (ii) Retail.

The change in disclosure of reportable segment information reflects the manner in which the Company is currently managing its operations as the Company no longer evaluates them as separate businesses.  The Company recast the disclosure of historical results into the new business segments for all prior periods included in this report.  While this financial data reflects the change in the Company’s reportable segments described above, the Company has not in any way revised or restated its historical financial statements for any period.

The Membership Services segment operates the Good Sam Club and the Coast to Coast Club and assorted products and services, publications and shows for RV owners, campers and outdoor vacationers.  The President’s Club was merged into the Good Sam Club on January 1, 2012, the Golf Card Club was sold on March 1, 2012, and the seven remaining outdoor powersports magazine titles, two powersports shows and two conferences were sold in March 2013, as described in more detail in Note 3 — Statements of Cash Flows.  The Retail segment sells specialty retail merchandise and services for RV owners primarily through retail supercenters and mail order catalogs. The Company evaluates performance based on profit or loss from operations before income taxes and unusual items because it believes that such measure is useful in evaluating the income and expenses of each segment that are controllable by management of that segment.  In addition, segment profit as presented herein excludes intercompany fees by which interest expense attributable to the Company’s 11.5% senior secured notes due 2016 (the “Senior Secured Notes”) is allocated to such segments as management evaluates the performance of its lines of business before such allocation and this interest expense is evaluated on a consolidated level.

The Company does not allocate income taxes or unusual items to segments.  Financial information by reportable business segment is summarized as follows (in thousands):

	Membership
	Services			Retail			Combined
THREE MONTHS ENDED SEPTEMBER 30, 2013
Revenues from external customers	$	46,457		$	102,463		$	148,920
Depreciation and amortization	504			1,866			2,370
Loss on sale of property and equipment	(1		)	(94		)	(95		)
Interest income	562			—			562
Interest expense	26			526			552
Segment operating profit	16,770			4,368			21,138
THREE MONTHS ENDED SEPTEMBER 30, 2012
Revenues from external customers	$	44,254		$	95,359		$	139,613
Depreciation and amortization	1,046			1,822			2,868
Gain (loss) on sale of property and equipment	1			(3		)	(2		)
Interest income	641			—			641
Interest expense	25			643			668
Segment operating profit	14,724			3,230			17,954
NINE MONTHS ENDED SEPTEMBER 30, 2013
Revenues from external customers	146,350			273,479			419,829
Depreciation and amortization	1,656			5,530			7,186
Gain (loss) on sale of property and equipment	1,833			(105		)	1,728
Interest income	1,746			—			1,746
Interest expense	89			1,641			1,730
Segment operating profit	55,552			7,609			63,161
NINE MONTHS ENDED SEPTEMBER 30, 2012
Revenues from external customers	140,661			255,344			396,005
Depreciation and amortization	2,965			5,259			8,224
Gain (loss) on sale of property and equipment	1,302			(45		)	1,257
Interest income	1,977			—			1,977
Interest expense	25			1,896			1,921
Segment operating profit	47,839			5,902			53,741

The following is a reconciliation of operating profit for reportable segments to the Company’s consolidated income before taxes for the three months and nine months ended September 30, 2013 and 2012 (in thousands):

	THREE MONTHS ENDED						NINE MONTHS ENDED
	9/30/2013			9/30/2012			9/30/2013			9/30/2012
Income Before Income Taxes
Total operating profit for reportable segments	$	21,138		$	17,954		$	63,161		$	53,741
Unallocated G & A expense	(3,490		)	(4,020		)	(9,864		)	(10,779		)
Unallocated depreciation and amortization expense	(750		)	(923		)	(2,145		)	(2,399		)
Unallocated gain on derivative instrument	—			1,259			—			3,448
Unallocated loss on debt repayment	—			—			—			(440		)
Elimination of intercompany interest income	(365		)	(426		)	(1,149		)	(1,326		)
Unallocated interest expense, net of intercompany elimination	(9,206		)	(10,523		)	(27,592		)	(31,631		)
Income before income taxes	$	7,327		$	3,321		$	22,411		$	10,614

The following is a reconciliation of assets of reportable segments to the Company’s consolidated total assets as of September 30, 2013 and December 31, 2012 (in thousands):

	9/30/2013			12/31/2012
Membership Services segment	$	310,317		$	297,012
Retail segment	119,550			101,047
Total assets for reportable segments	429,867			398,059
Intangible assets not allocated to segments	7,885			8,851
Corporate unallocated assets	8,755			8,625
Elimination of intersegment receivable	(182,775		)	(185,174		)
Total assets	$	263,732		$	230,361