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

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2000

OR

For the transition period from                to                

Commission File Number 333-26389

AFFINITY GROUP HOLDING, INC.
(Exact name of registrant as specified in its charter)

SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT: NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT:

11% Senior Notes Due 2007

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

    Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

DOCUMENTS INCORPORATED BY REFERENCE: Documents Referenced on Exhibit Index

PART I

ITEM 1: BUSINESS

General

    Except where the context indicates otherwise, the term "Company", or "AGHI" means Affinity Group Holding, Inc. and its predecessors and subsidiaries but excludes the operations of Affinity Insurance Group ("AINS"), and Affinity Bank ("AB"), which are classified as discontinued operations.

    The Company is a member-based direct marketing organization with complimentary retail outlets across the country. The Company's club members form a receptive audience to which it sells products, services, merchandise and publications targeted to the recreational interests of club members. The Company's three principal lines of business are (i) club memberships and related products, services and club magazines, (ii) specialty retail merchandise distributed primarily through retail supercenters, mail order catalogs and the internet, and (iii) subscription magazines and other publications including directories. The Company's affinity groups are principally comprised of recreational vehicle owners, campers, outdoor recreationists and, to a lesser extent, golfers. See Footnote 12 in the Notes to Consolidated Financial Statements for financial information about the Company's segments.

    At December 31, 2000, there were approximately 1.8 million dues paying members enrolled in the Company's clubs, remaining level with 1999. The paid circulation per issue of the Company's general circulation magazines is estimated at approximately 847,000 with an aggregate readership estimated at 5.6 million at December 31, 2000. The Company believes its club members have favorable demographic characteristics and comparatively high renewal rates. Total revenues of the Company were $405.1 million for the year ended December 31, 2000, compared to $386.7 million for the year ended December 31, 1999, representing a 4.8% increase.

Business Strategy

    The Company's business strategy is to increase (i) the enrollment of its clubs through internal growth and acquisitions, (ii) the sales of its products and services to club members through improving its distribution channels and by developing and enhancing its product and service offerings, and (iii) the circulation of its publications by introducing new magazines and acquiring publications which are complementary to the Company's recreational market niche. The Company also seeks to realize operational efficiencies through the integration of acquired businesses.

Enhance Club Membership Enrollment

    The Company seeks to increase the number of its club members through maximizing renewals by establishing an optimal mix of channels for soliciting new members and re-acquiring inactive members including, but not limited to, our internet presence through RV.Net. Management believes that the participation levels and renewal rates of club members reflect the benefits derived from membership. In order to maintain high participation rates in its clubs, the Company continuously evaluates member satisfaction and actively responds to changing member preferences through the enhancement or introduction of new membership benefits including products and services. The Company also uses alternative channels for acquiring club members. This is achieved through the use of two separate call centers, promotion in the publication titles it owns, through the national network of Camping World Supercenters, mail order catalogs and the internet.

Acquire and Develop Other Affinity Groups

    The Company believes that the experience it has accumulated in managing its existing recreational affinity groups is applicable to the management of other recreational interest organizations. As a result,

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the Company conducts ongoing evaluations for developing or acquiring affinity groups for which it can build membership enrollment and to which it can market products and services.

Increase Sales of Products and Services

    The Company seeks to increase the sale of its products and services due to their profitability and the favorable impact such programs have on club membership growth and retention. Management believes that a substantial opportunity exists to market its products and services through the national network of Camping World supercenters and mail order catalogs. A significant percentage of Good Sam Club members currently subscribe to one or more of its products and services, such as the emergency road service program and the extended vehicle warranty program. Management also believes that the Good Sam Club members who are not currently President's Club members represent a focused group of customers to which it will market Camping World's RV accessory merchandise. The Company regularly studies the feasibility of introducing new products and services.

Improve Operating Performance

    The Company seeks to achieve operating efficiencies by selectively acquiring and developing recreational affinity groups which enable the Company to increase membership enrollment and to realize cost savings. The Company also seeks to enhance its importance with third party providers of products and services by maintaining high membership enrollment levels in such programs, thereby increasing the fees it receives from such vendors.

Expand Niche Recreational Publications

    The Company seeks to expand its presence as a dominant publisher in select recreational niches through the introduction of new magazine formats and the acquisition of other publications in its market or in complementary recreational market niches. Publications in complementary niches may also provide the Company with the opportunity to launch new membership clubs, to market its products and services to members of new clubs and to develop other products and services which meet the special needs of such members. The Company believes overall circulation of its magazines is an important factor in determining the amount of revenues it can obtain from advertisers.

RV Industry

    The use of recreational vehicles ("RVs") and the demand for club memberships and related products and services may be influenced by a number of factors including general economic conditions, the availability and price of propane and gasoline, and the total number of RVs. The Company believes that both the installed base of RVs and the type of RV owned (full service vehicles excluding van conversions) are the most important factors affecting the demand for its membership clubs, merchandise, products and services. Based on the most recent survey conducted in 1997 by the National Survey of the RV Consumer of the University of Michigan (the "Survey"), the number of households owning RVs is projected to increase from 8.4 million in 1995 to approximately 9.0 million in 2000. The Survey also indicates that the percentage of households owning RVs during this period will rise slightly from 9.7% to 9.9%.

    According to the Survey, the average RV owner is 49 years old. RV ownership also increases with age reaching its highest percentage level among those 55 to 64 years old. Households in this age group are projected to increase from 12.3 million in 1995 to 20.7 million in 2010. RV ownership also is concentrated in the western United States, an area in which the population growth rate is expected to be greater than the national average through 2005. The Survey also indicates that RV ownership is associated with higher than average annual household income which among RV owners was approximately $47,000 per annum as compared to the national average of $37,000 per annum.

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    The average age and annual household income of the Company's club members in 2000 were 57 years and $53,200, respectively, based on member survey data compiled by the Company. The Company believes that the demographic profile of its typical club member, coupled with a demographic trend towards an aging population will have a favorable impact on RV ownership and the demand for club memberships and related products and services.

Membership Clubs

    The Company operates the Good Sam Club, Coast to Coast Club, and Camping World's President's Club for RV owners, campers and outdoor vacationers, and the Golf Card Club for golf enthusiasts. The membership clubs form a receptive audience to which the Company markets its products and services.

    The following table sets forth the number of members at December 31, 2000, annual membership dues and average annual renewal rates during the period of 1996 to 2000 for each club:

(1)

Includes multi-year and lifetime members.

(2)

For a single member, subject to special discounts and promotions.

(3)

Excludes members having lifetime memberships.

    In addition to regular memberships, the Company also sells multi-year memberships. Management believes that multi-year memberships provide several advantages, including the up-front receipt of dues in cash, reduced membership costs and a strengthened member commitment.

    Beginning in 1992, the Company began selling lifetime memberships for the Good Sam Club. As of December 31, 2000, the average price for a lifetime membership was $330 with 114,825 members registered. Based on an actuarial analysis of the lifetime members, the Company expects the average length of a lifetime membership to be 18 years.

Good Sam Club

    The Good Sam Club, founded in 1966, is a membership organization for owners of recreation vehicles. The Good Sam Club is the largest RV club in North America with approximately 950,000 member families and over 1,900 local chapters as of December 31, 2000. The average renewal rate for Good Sam Club members was approximately 72% during the period 1996 through 2000. The Company has focused on selling higher margin multi-year memberships which, among other advantages, reduces the cost of membership renewal. At December 31, 2000, the average length of time for participation in the Good Sam Club was over 6 years with most club members purchasing annual memberships.

    Membership fees range from $12 to $25, subject to the term and type (acquisition or renewal). The benefits of club memberships include: discounts for overnight stays at over 1,700 participating RV parks and campgrounds; discounts on the purchase of supplies and accessories for recreation vehicles at over 100 RV service centers; a free annual subscription to Highways, the club's regular news magazine; discounts on other Company publications; trip routing and mail-forwarding; and access to products and services developed for club members. Based on typical usage patterns, the Company estimates that Good Sam Club members realize estimated annual savings from discounts of $157.

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    The Good Sam Club establishes quality standards for RV parks and campgrounds participating in its discount program. Campgrounds and parks participating in the Good Sam program benefit from increased occupancy and sales of camping related products. The Company believes it has established considerable penetration of those for-profit RV parks and campgrounds which meet its quality standards for participation in the discount program.

    The following table lists the number of club members and RV parks and campgrounds from 1996 through 2000 at which discounts for members were available at December 31st of the respective year:

(1)

A member consists of a household.

Coast to Coast

    The Coast to Coast Club operates the largest reciprocal use network of private RV resorts in North America. The Company offers a series of membership benefits depending upon pricing and program type under the Coast to Coast name. Members of Coast to Coast belong to a private RV resort owned and operated by parties unrelated to the Company. Club members may use most of the participating resorts in the Coast to Coast network subject to availability. At December 31, 2000, there were approximately 178,000 member families in the Coast to Coast club. Approximately 400 private RV resorts nationwide participated in the Coast to Coast reciprocal use programs, representing approximately 75% of those resorts in the US. These private resorts are designed primarily for RV owners, but typically provide camping or lodging facilities, comprised of RVs, cabins and condominiums. For an initial membership fee plus annual maintenance fees, both paid by the customer to the resort, the private resorts provide an RV site with water, sanitary and electrical hook-ups and recreational amenities, such as swimming, tennis or fishing, or proximity to theme parks or other recreational activities. The Company has established quality criteria for resorts to join and remain in the Coast to Coast networks.

    For standard annual renewal dues from $79.95 for a single year membership to $159.95 for a multiple-year membership, Coast to Coast Club members receive the following benefits: discounts for overnight stays at participating resorts, hotels and campgrounds; an annual subscription to Coast to Coast Magazine; the Coast to Coast Directory providing information on the participating resorts; discounts on other Company publications, access to discount travel services; trip routing; and access to products and services developed for club members. Coast to Coast Resort Club members also have the right to use, subject to availability, the lodging facilities at 360 participating resorts at a discounted rate.

    The Company believes that resorts participating in the Coast to Coast networks view access to reciprocating member resorts as an incentive for their customers to join their resort. Because a majority of members of Coast to Coast clubs own RVs, access to participating resorts throughout North America can be an important complement to local resort membership. During 2000, Coast to Coast members utilized approximately 700,000 nightly stays under the reciprocal use program. Based on typical use patterns, the Company estimates that Coast to Coast members realize estimated annual savings from these discounts of over $200 from discounted overnight stay accommodations at participating resorts. The average annual renewal rate for members of the Coast to Coast clubs after the initial one-year membership (which is generally paid by the member resort not the club member) was approximately 76% during the period 1996 through 2000.

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    The following table sets forth the number of members in Coast to Coast Club and resorts participating in the reciprocal use program at December 31st of the respective year:

    Membership in the Coast to Coast Club declined 8.5% from 1999 to 2000, and 31% from 1996 to 2000. The decreasing trend in membership is due to the high cost of marketing which curtails initial membership sales at participating resorts, and an aging member base. Three major resort systems that either experienced bankruptcy or left the Coast system in the past four years have directly impacted the Coast to Coast membership enrollment.

President's Club

    Camping World's President's Club program, which was established in 1986, has grown to 581,700 members. President's Club memberships may initially be obtained for one, two or three years at a cost of $20, $35 or $50, respectively. The average life (including renewals) of club membership is three years and approximately 80% of club members are enrolled for one year. President's Club members receive a 10% discount on the purchase of all of Camping World's merchandise and installation fees and also receive special mailings, including newsletters and flyers offering selected products and services at special prices.

    The following table lists the number of President's Club members and number of retail stores at year end for 1996 through 2000 for the respective year:

(1)

Includes supercenters and one 1,800 square foot retail showroom located within the Bakersfield, California distribution center.

Golf Card Club

    The Golf Card Club, founded in 1974, had approximately 93,900 members at December 31, 2000. The major attraction for membership is the financial savings which members receive when playing at one of approximately 3,300 participating golf courses located throughout the US and Canada. The annual membership fee varies with the length and type (single or double) of membership. The Company believes that the participating golf courses providing playing privileges to club members represent the largest number of golf courses participating in a discount program in North America. None of the participating golf courses are owned or operated by the Company.

    Members of the Golf Card Club receive the following benefits: (i) two rounds annually of free or discounted golf at approximately 3,300 affiliated golf courses, (ii) discounted vacation packages at over 250 "Stay and Play" resorts, (iii) one-year National Car Rental Emerald Club membership, (iv) annual subscription to Golf Traveler magazine, published six times per year, and (v) Annual Directory of Affiliated Courses and Resorts, (vi) One-year Great American Traveler membership (hotel discount card), (vii) access to 130 local Grasshopper Clubs for fun tournament and social activities, (viii) opportunity to play in one of 35 Member-Guest Tournaments, and (ix) chance to test (and keep) select golf products.

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    Daily-fee, semi-private and privately-owned golf courses participate in the Golf Card program. The program is attractive to participating courses because it builds traffic and fills empty tee times during off-peak hours. Members also purchase other merchandise or services when exercising their playing privileges. In this manner, the Golf Card members tend to provide incremental revenue to the golf courses. Based on surveys conducted by the Company, members realize savings on green fees, ranging from $150 to $250 annually, which significantly exceed the cost of membership.

    The standard annual membership fee is $75 for a single membership and $110 for a double membership. Multi-year memberships range from a single two-year for $129 to a five-year double of $479. The average renewal rate for Golf Card Club members at December 31, 2000 was approximately 62% for the period 1996 to 2000, with a renewal rate of 67% for 2000, unchanged from 1999.

    The following table lists the number of Golf Card members, participating golf courses and "Stay and Play" resorts at December 31st of each year in this period:

(1)

A single membership counts as one member and a double membership as two members.

    The decline in membership reflects increased competition and abandonment of the Partner-Free acquisition strategy. A complete market repositioning of the club within the last two years included a new marketing strategy, new benefits, and staff and cost restructuring, all expected to address competitive challenges and stabilize the membership file.

Membership Products and Services

    The Company's 1.8 million club members form a receptive audience to which it sells products and services targeted to the recreational interests of its club members. The Company promotes products and services which either address special needs arising in the activities of the club members or appeal generally to persons with the demographic characteristics of club members. The two most established products are the emergency road service and the vehicle insurance program. Most of the Company's products and services are provided by third parties who pay the Company a marketing fee, except for emergency road service ("ERS") and extended warranty programs where the Company pays third party administrators to administer the programs.

Emergency Road Service (ERS)

    The Company promotes various road service products to its existing membership programs, as well as to non-club members. The ERS products provide towing and roadside assistance for an annual subscriber dues range from $69.95 to $99.95. The Company developed the ERS program initially for Good Sam Club members in 1984 as an enhancement to their club membership. Currently 24% of the general Good Sam Club membership is enrolled in the Good Sam ERS program, up 1% from the prior year. The Company believes it is important to target the diversified market niches with identifiable products that offer a range of benefits. The Company currently markets these products through direct mail, advertising in publications, campground directories, space ads, internet and telemarketing. The

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table below sets forth the total enrollment in the various ERS programs as of December 31, for each year indicated:

    For the third year in a row, enrollment in the various ERS programs has grown through promotional and marketing efforts which have attracted new members and improved renewal rates. Combined enrollment in the programs has increased 9,900 members or approximately 3% over 1999. The Company acquired the RRR RV ERS program from a competitor in August 1997 and acquired Camping World's RoadCare program in conjunction with the acquisition of Camping World.

Vehicle Insurance Programs

    The Company has two vehicle insurance programs, Vehicle Insurance Program ("VIP") and Motor Vehicle Program ("MVP"), to facilitate the availability of cost-effective vehicle insurance suitable to the demographic characteristics and vehicle usage patterns of its various club members. At December 31, 2000, the VIP program had approximately 189,600 members which represented a 16.7% and 3.0% penetration, respectively, of the Good Sam Club and Coast to Coast clubs. During the period 1996 to 2000, the average annual renewal rate of members participating in the VIP program was approximately 91.0%.

    The Company acquired the Motor Vehicle Program ("MVP") in conjunction with the acquisition of Camping World. This program, marketed to President's Club members, had 43,651 policies outstanding as of December 31, 2000. The MVP policies generated $54.0 million of written premiums during 2000 from which the company recognized $2.5 million of marketing fee revenue.

    The Company's marketing fee is based on the amount of written premiums and the profitability of the program. The insurance providers assume all claim risks.

    The table below sets forth the number of policies in force for the VIP and MVP programs, the dollar amount of written premiums by the insurance providers, and the marketing fees generated as of December 31 of each year indicated:

    Management believes the recent declines in policies in force and premiums written are due to several factors. The RV industry and auto insurance markets have become increasingly competitive and has led to comparison shopping by consumers and lower rates by competitors. In addition, beginning in 1998 VIP's underwriter restricted the policy renewals for many New Jersey residents due to unfavorable claims experience.

Other Products and Services

    Other products and services marketed to club members include credit cards, vehicle financing, supplemental health and life insurance, financial services and extended vehicle warranties. Most of these services are provided to club members by third parties who pay the Company a marketing fee.

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    The RV financing program is administered by Ganis Credit Corporation ("Ganis"). The number of Ganis RV loans to the Company's club members decreased by 43.3% from 1999 to 2000 primarily due to an unfavorable increase in interest rates.

    During 1996, the Company introduced its extended vehicle warranty program. The Company earned marketing fees of approximately $5.7 million in 2000, a 2.4% increase over 1999. This increase is attributable to the renewal of annual contracts first sold in 1999. This program, which had 19,383 policies in force as of December 31, 2000, promotes the product through direct mail marketing channels, Company magazine print ads and retail kiosks in Camping World stores.

    In addition, the Company is evaluating other products and services that club members may find attractive. When introducing new products and services, the Company concentrates on products and services provided by third parties, which it can market without significant capital investment by the Company, and for which it receives a marketing fee from the service provider based on sales volume. The Company seeks to utilize the purchasing power of its club members to obtain products and services at attractive prices.

Publications

    The Company produces and distributes a variety of publications for select markets in the recreation and leisure industry, including general circulation periodicals, club magazines, directories, and RV industry trade magazines. Revenues are recognized from the sale of advertising, subscriptions and direct sales of some of the publications. The Company believes that the focused audience of each publication is an important factor in attracting advertisers.

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    The following chart sets forth the circulation and frequency of the Company's publications:

(1)

Paid circulation.

(2)

Includes sales and free distribution.

(3)

Trade publication distributed to industry-specific groups.

(4)

Distribution to RV outlets, including campgrounds and dealerships.

(5)

Discontinued in 2001.

(6)

Circulation is limited to club members and the price is included in the annual membership fee.

(7)

Only one magazine is issued when two members are from the same household.

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General Circulation Magazines

    American Rider, introduced in November 1993, is targeted to owners and operators of Harley-Davidson motorcycles.

    ATV Sport was introduced May 1998 and targets recreational and racing sport quad riders.

    Bowhunting World is the archery equipment authority which provides information on new equipment reviews and maintenance techniques, and features articles which discuss ethical hunting, hunting rights, and pertinent legislative issues.

    MotorHome is a monthly periodical for owners and prospective buyers of motorhomes which has been published since 1968 with a paid circulation of approximately 147,000 in 2000. MotorHome features articles on subjects such as product tests, travel and tourist attractions.

    Rider is a monthly magazine for motorcycle touring enthusiasts and has been published since 1974. Each issue focuses on motorcycles, personalities, technical subjects, travel notes and other features of interest to this recreational affinity group.

    Snow Week is the central source of information for the competition and high-performance snowmobiling market segment. The publication provides timely, year-round stories on racing, performance enhancing products, technical assistance, new product introductions, and industry general information.

    SnowGoer is designed for the sport's highly active participants and provides detailed equipment and product critiques and maintenance tips.

    Trailer Life, initially published in 1941, is the leading consumer magazine for the RV industry with a paid circulation of approximately 281,000 in 2000. Trailer Life features articles on subjects including product tests, travel and tourist attractions.

    Watercraft World is targeted to avid personal watercraft enthusiasts and provides detailed critiques of watercraft, in-depth gear and accessory evaluations, technical tips and racing information.

Controlled Circulation Magazines—Business

    The Company publishes the following trade magazines:

    Archery Business is the leading trade publication for archery dealers and presents a mix of industry news and trends, product reviews and sales tips designed to improve financial performance of archery product dealers.

    Campground Management is the leading trade magazine for the campground industry.

    Power Sports Business is an industry trade magazine introduced in January 1998 which combines previously issued Snowmobile Business and Watercraft Business with a motorcycle and ATV business section. Distribution is to dealers servicing these industries, which in numerous cases have combined operations to service more than one of these segments.

    RV Business is the leading trade magazine covering industry news and trends for RV dealers, manufacturers, suppliers, associations and others.

Controlled Circulation Magazines—Consumer

    ATV Magazine's first issue was published in October 1995. The publication is designed to reach large numbers of active ATV owners with comprehensive product information during the peak periods when equipment is purchased. ATV Sport magazine debuted in 1998.

    Cruising Rider was introduced in March 1998 and targets cruiser motorcycle owners and buyers.

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    PWC Magazine is the complete guide for the personal watercraft owner and provides reviews of personal watercraft, gear and accessories as well as information on maintenance procedures, safety tips and travel destinations. PWC Magazine was first published in January 1995.

    Snowmobile magazine delivers broad-based editorial and snowmobile-related information to its audience of active snowmobile enthusiasts. The publication includes reviews of new machines, clothing and accessories, and articles on responsible riding practices, snowmobiling vacation destinations and special events, and serves as the front-end medium for all snowmobile-related product promotions.

Annual Publications

    Trailer Life Campground/ RV Park & Services Directory, initially published in 1972, is an annually updated directory which provides information on and ratings for approximately 12,250 public and private campgrounds, and 1,330 RV service centers, including over 900 tourist attractions in North America along with color maps of the areas covered. In 2000, approximately 304,000 directories were distributed. The publication features Good Sam Parks that offer discounts on overnight camping fees for the Company's club members. This directory is sold by direct mail to Good Sam Club members, at RV dealerships and in bookstores. In 2000, the Company began issuing a version of the directory on cd-rom.

    Woodall Campground Directory, initially published in 1948, is an annual consumer directory offered in both national and regional editions. In 2000, approximately 336,000 directories were distributed. The Woodall directory is primarily distributed through book stores.

    Woodall Tenting Directory is an annual directory providing information on both government and privately-owned campgrounds and the outdoor activities and attractions that are available near them. In 2000, approximately 43,000 directories were distributed, primarily through newsstands.

    Woodall Go & Rent... Rent & Go is an annual catalog providing information on where to find on-site lodging and cabin rentals at RV Parks & Campgrounds and "Over-the-Road" RV Rentals, as well as fully equipped campsites throughout the U.S.A. and Canada. This book features "turn-key" camping experiences for those who want to try camping, rent a cabin, or a fully-equipped campsite. In 2000, approximately 93,000 catalogs were distributed.

Club or Trade Magazines and Books

    Each of the Company's membership clubs has its own publication which provides information on club activities and events, feature stories and other articles. The Company publishes Highways for the Good Sam Club, Coast to Coast Magazine for the Coast to Coast clubs, The Golf Traveler for the Golf Card Club, and RV View for Camping World's President's Club. The Company also periodically publishes books targeted for its club membership which address the RV lifestyle.

Retail

    Camping World is a national specialty retailer of merchandise and services for RV owners. The 29 Camping World retail supercenters, which are located in 18 states, accounted for approximately 64% of the merchandise revenues for the year ended December 31, 2000 while approximately 22% were derived from catalog and internet sales and approximately 14% were derived from fees or non-merchandise revenues.

    The Company believes that Camping World's leading position in the RV accessory industry results from a high level of name recognition, an effective triple channel distribution strategy and a commitment to offer a broad selection of specialized RV products and services at competitive prices combined with technical assistance and on-site installation. Camping World's supercenters offer over 8,000 SKUs, approximately 80% of which are not regularly available in general merchandise stores. In

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addition, general merchandise stores do not provide installation or repair services for RV products, which are available at Camping World's supercenters. Products sold by Camping World include specialty-sized refrigerators, housewares and other appliances, bedding and furniture, generators and hydraulic leveling systems, awnings, folding boats, chairs, ladders, cleaning and maintenance, bicycles, hitch-towing, sanitation, automotive electronics and lifestyle products. Further, kiosks have been installed at numerous locations to market such products and services as vehicle insurance, extended warranty and emergency road service. In March 2000, the Company began selling recreational vehicles through the establishment of Camping World RV Sales, Inc. ("CWRV"), which acquired the assets of a RV dealership in San Antonio, Texas. This dealership was subsequently relocated to the Camping World retail location in New Braunfels, Texas. Camping World supercenters are strategically located in areas where many RV owners live or in proximity to destinations frequented by RV users. Camping World's supercenters are designed to provide one-stop shopping by combining broad product selection, technical assistance and on-site installation services.

    Camping World sources its products from approximately 800 vendors. Camping World attends regional, national and international trade shows to determine the products it will offer. The purchasing activities of Camping World are focused on RV parts and accessories, electronics, housewares, hardware, automotive, crafts, clothing, home furnishings, gifts, camping and sporting goods. Camping World has developed an automated "plan-o-gram" system to provide merchandising plans to each supercenter and a minimum/maximum inventory system for its operations to improve fulfillment rates on key items. Camping World believes that the volume of merchandise it purchases and its ability to buy direct from manufacturers together with the utilization of its transportation fleet and contract carriers enables Camping World to obtain merchandise at costs which compare favorably to local RV dealers and retailers. Camping World does not enter into material long-term contracts or commitments with its vendors.

Mail Order Operations and Internet

    Camping World initiated its mail order operations in 1967. Camping World currently has a proprietary mailing list of approximately 2.5 million RV owners, all of whom have made a purchase or requested a catalog from Camping World within the prior 60 months. Camping World maintains a database of these names, which includes information such as order frequency, size of order, date of most recent order and type of merchandise purchased. Camping World analyzes its database to determine those customers most likely to order from Camping World's catalogs. As a result, Camping World is able to target catalog mailings more effectively than direct marketers of catalogs offering general merchandise. Camping World continually expands its proprietary mailing list through in-store subscriptions and requests for catalogs in response to advertisements in regional publications directed to RV owners. In addition, Camping World rents mailing lists of RV owners from third parties.

    During 2000, Camping World distributed 13.3 million catalogs, of which 11.4 million were mailed in 14 separate mailings, and the remaining 1.9 million catalogs were distributed in supercenters, at campgrounds, and as package inserts. In 2000, Camping World processed approximately 497,000 catalog orders at an average net order size of $95, excluding postage and handling charges. The average net order size increased 5.1% from the prior year. Camping World distributes eight high-quality, full-color catalogs each year: the master, a spring, fall, holiday, two sale editions and two prospecting catalogs. Camping World also distributes specialty catalogs directed to targeted customers in order to develop market niches.

    The Company maintains twenty-six internet web sites, which are accessible through "RV.net," and are experiencing significant growth. In 2000, the Company's club operations commenced a low-cost marketing strategy, e-mail membership acquisition campaigns. Members added under these new programs represented approximately 5.4% of all new members. E-mail acquisition campaigns and internet online revenues total approximately $6.5 million in 2000.

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Marketing

    Marketing of club memberships and related products and services is through direct mail, e-mail, inserts, ride-alongs, space advertisements, promotional events and telemarketing. Direct response marketing efforts account for approximately 62% of new enrollments with the remaining 38% derived from other sources. The Company uses a variety of commercially available mailing lists of RV owners in its direct mail efforts. Currently, the most widely used list databases are provided by three commercial list compilers, and direct response lists are from RV industry participants, RV consumer surveys, and proprietary in-house lists.

    The Publications segment solicits advertisements through its internal sales force and by paying commissions to advertising agencies and independent contractors who place advertisements. Many advertisers are repeat customers with whom the Company has long standing relationships.

    The Merchandise segment solicits customers through mail order catalogs, direct mail retail flyers, advertisements in national and regional industry publications, vendor co-op advertising programs, promotional events, President's Club direct mailings and personal solicitations and referrals. Camping World's principal marketing strategy is to capitalize on its broad name recognition among RV owners.

    The Internet is proving to be a significant, low-cost source for new club members, subscriptions and other ancillary product sales. The Company's twenty-six web pages, which are accessible through "RV.net," are experiencing tremendous growth, and are currently averaging 480,000 hits daily, including 20,000 unique visitors per day.

Operations

Member Services and Publications

    The Company's member service operations are located in Denver, Colorado and Bowling Green, Kentucky. The primary focus of member services is to handle information requests from club members through the Company's toll-free telephone number. Member service representatives take orders and market products and services to existing and potential club members in response to telephone inquiries. The Company expects to increase sales through better management of its member service operations coupled with greater efficiency in its telemarketing efforts. Camping World's mail order operations, located at its headquarters in Bowling Green, Kentucky, offer toll-free customer service seven days a week, 24 hours a day. Camping World has established a sales training program for its customer service personnel and also provides experienced technical advisors to answer specific questions by telephone. Orders are usually processed and shipped within 24 hours of receipt. On average, these member service operations process approximately 7,250 telephone calls daily.

    Fulfillment operations involve the processing of orders and checks principally received by mail. Certain fulfillment operations are performed by third parties. The Company's publication operations develop the layout for publications and outsource printing to third parties.

Retail

    Camping World's supercenters generally range in size from approximately 12,000 to 59,000 square feet. Approximately 40% of each supercenter is devoted to a retail sales floor, a customer service area, and a technical information counter; 40% is comprised of the installation facility which contains 4 to 16 drive-through installation bays; and 20% is allocated to office and warehouse space. Large parking areas provide sufficient space and facilitate maneuvering of RVs. By combining broad product selection, technical assistance and installation and repair services, Camping World's supercenters provide one-stop shopping for RV owners. Camping World maintains toll-free telephone numbers for customers to schedule installation and repair appointments. All supercenters are open seven days a week.

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    Camping World intends to continue the controlled, limited expansion of its supercenter store network. Camping World's expansion strategy is based on a comprehensive process that analyzes the sales trends and travel patterns of existing and potential customers as well as the sales patterns of RV vehicles. Camping World researches the travel routes used by RV owners and the location of camping areas in order to ensure the convenient location of its supercenters. Sales of new RVs together with analysis of demographic data derived from its customer database and mail order shipments and RV ownership lists from other sources are used to identify high concentrations of RV owners. Once an area has been identified, Camping World surveys its customers to select specific locations for a new supercenter. Camping World credits this detailed analytical approach to the fact that it has closed only one store since inception.

Information Support Services

    The Company utilizes integrated computer systems to support its membership club and publishing operations. Comprehensive information on each member, including a profile of the purchasing activities of members, is available to customer service representatives when responding to member requests, and when sales representatives market the Company's products and services. The Company employs publishing software for publication makeup and content and for advertising to support its publications operations. An area-wide network facilitates communication within and between the Company's offices. The Company also utilizes information technology, including list segmentation and merge and purge programs, to select prospects for direct mail solicitations and other direct marketing efforts.

    Camping World's management information systems and electronic data processing systems consist of an extensive range of retail, mail order, financial and merchandising systems, including purchasing, inventory distribution and control, sales reporting, accounts payable and merchandise management. Camping World's management information system includes point-of-sale registers that are equipped with bar code readers in each supercenter. These registers are polled nightly by a central computer. With this point-of-sale information and the information from Camping World's on-line distribution centers, Camping World compiles comprehensive data, including detailed sales volume and inventory information by product, merchandise transfers and receipts, special orders, supply orders and returns of product purchases to vendors. In conjunction with its nightly polling, Camping World's central computer sends price changes to registers at the point of sale. The registers capture President's Club member numbers and associated sales and references to specific promotional campaigns. Management monitors the performance of each supercenter and mail order operation to evaluate inventory levels, determine markdowns and analyze gross profit margins by product.

    Camping World's catalog operations also utilize a computerized management system allowing on-line desktop access to information which previously required manual retrieval. Screen prompts which provide product, promotional, and revenue potential information have allowed Camping World to maintain high service levels during seasonal sales peaks. The installation of an automatic call distribution switch with scheduling software has facilitated more effective management of customer inquiries and reduced set-up time for call processing.

Regulation

    The Company's operations are subject to varying degrees of federal, state and local regulation. Specifically, the Company's outbound telemarketing, direct mail, and emergency road service programs, as well as certain services provided by third parties, including insurance, RV Financing, and extended warranty, are currently subject to certain regulation and may be subjected to increased scrutiny in the future. The Company does not believe that such federal, state and local regulations currently have a material impact on its operations. However, new regulatory efforts impacting the Company's operations may be proposed from time to time in the future at the federal, state and local level. There can be no

14

assurance that such regulatory efforts will not have a material adverse effect on the Company's ability to operate its businesses or on its results of operations.

Competition

    In general, the Company's membership clubs, retail and catalog operations and publications compete with numerous organizations in the recreation industry for disposable income spent on leisure activities. By offering significant membership benefits at a reasonable cost and actively marketing to club members, the Company believes that it has been able to maintain a loyal following for its membership organizations as evidenced by such clubs' high renewal rates. The products and services marketed by the Company compete with similar products and services offered by other providers. However, management believes that it is able to use the large volume of purchases by its club members to secure attractive pricing for the products and services marketed by the Company.

Employees

    As of December 31, 2000, the Company had 1,437 full-time and 171 part-time or seasonal employees, including 7 executives, 967 employees in retail operations, 384 employees in administrative and club operations, 200 employees in publishing and advertising sales, 11 employees in resort services and 39 employees in marketing. No employees are covered by a collective bargaining agreement. The Company believes that its employee relations are good.

Trademarks and Copyrights

    The Company owns a variety of registered trademarks and service marks for the names of its clubs, magazines and other publications. The Company also owns the copyrights to certain articles in its publications. The Company believes that its trademark and copyrights have significant value and are important to its marketing efforts.

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ITEM 2: PROPERTIES

    The table below sets forth certain information concerning the Company's properties. The leased properties generally provide for fixed monthly rentals with annual escalation clauses.

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    The Company also leases a research facility of approximately 8,000 square feet on 60 acres in Wisconsin, a body shop of 10,500 square feet on approximately 0.7 acres in Denver, Colorado, and other miscellaneous office equipment. In addition, the Company acquired 12.439 acres of unimproved land adjacent to the New Braunfels, Texas Camping World Supercenter in 2000.

ITEM 3: LEGAL PROCEEDINGS

    From time to time, the Company is involved in litigation arising in the normal course of business operations. None of such current litigation is expected, individually or in the aggregate, to have a material adverse effect on the Company.

    In January 1998, certain of the Company's subsidiaries were sued in California state court in connection with the termination by Camp Coast to Coast, Inc. of the participation by the plaintiffs in the Camp Coast to Coast reciprocal use program for RV resorts. In October 2000, the trial court entered judgment in favor of the Company's subsidiaries and subsequently awarded them a total of $3.88 million for their legal fees and costs. The plaintiffs have appealed the judgment in favor of the Company's subsidiaries as well as the award of attorney fees. Both appeals are currently pending.

ITEM 4: SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS

    None.

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PART II

ITEM 5: MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    Not Applicable

ITEM 6: SELECTED FINANCIAL DATA

    The selected financial data of the Company for each of the five years ended December 31 are derived from the audited consolidated financial statements of the Company. The selected financial data of the Company should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Company's Consolidated Financial Statements and the notes thereto included elsewhere herein.

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(1)

Restated to give effect to the reclassifications of NAFE, AINS and AB as discontinued operations. Excludes net current assets or (liabilities) of discontinued operations in the amount of ($129,596), ($32,237), and ($11,985), for 1998, 1997, and 1996, respectively.

(2)

Deferred revenues represent cash received by the Company in advance of the recognition of revenues in accordance with generally accepted accounting principles. Deferred revenues primarily reflect club membership dues, annual ERS fees, advances on third party credit card fee revenues and publication subscriptions. These revenues are recognized at the time the goods or services are provided or over the membership period, which averages approximately 18 months.

ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    The following tables set forth the components of the statements of operations for the years ended December 31, 2000, 1999, and 1998 as a percentage of total revenues, and the comparison of those components from period to period. The following discussion is based on the Company's Consolidated Financial Statements included elsewhere herein. The Company's revenues are derived principally from membership services, including club membership dues and marketing fees paid to the Company for services provided by third parties, from publications, including subscriptions and advertising, and from retail sales. The Company sold Affinity Insurance Group, Inc. ("AINS") and Affinity Bank ("AB") in the fourth quarter of 1998 and 1999, respectively; both were acquired in 1995. The "Management's Discussion and Analysis of Financial Condition and Results of Operations" discussion below excludes the operations of AINS and AB, since they have been classified as discontinued operations.

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AFFINITY GROUP HOLDING, INC. AND SUBSIDIARIES

TABLE FOR PERCENTAGE COMPARISONS OF TOTAL REVENUES
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

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Year Ended December 31, 2000 Compared with Year Ended December 31, 1999

Revenues

    Revenues of $405.1 million for 2000 increased by approximately $18.4 million or 4.8% from the comparable period in 1999.

    Membership services revenues for 2000 of $121.4 million increased by approximately $1.0 million or 0.8% compared to $120.4 million for 1999. This revenue increase is largely attributable to $1.2 million in additional emergency road service revenue as a result of increased enrollment and $0.9 million in increased member event revenue, partially offset by a $0.7 million decrease in membership services revenue, relating primarily to reduced revenue for its golf membership club from declining enrollment, and a net $0.4 million decrease in ancillary product revenue, primarily relating to the fee income recognized on RV financing and insurance products.

    Publications revenues for 2000 of $68.5 million increased by $7.0 million or 11.3% from $61.5 million for 1999. This is attributable to a $2.5 million revenue increase related to the new cd-rom version of the Trailer Life Campground/RV Park and Services Directory and a new customized road atlas, revenues of $2.5 million associated with motorcycle titles acquired through the acquisition of Thunder Press ("TPI") in January 2000, and a net $2.0 million increase in advertising revenue throughout the publications.

    Retail revenue for 2000 of $215.2 million increased $10.4 million or 5.1% over 1999. This increase consisted of revenues of $7.5 million related to the March 2000 asset acquisition by Camping World RV Sales, Inc. ("CWRV") of Traveltown Texas, Inc., a recreational vehicle ("RV") dealership in San Antonio, Texas that was subsequently moved to the Camping World retail location in New Braunfels, Texas, and a $2.9 million or 1.4% increase in Camping World merchandise sales. The increase in Camping World merchandise sales is primarily attributable to a net $0.8 million increase in retail showroom sales, which includes a $3.9 million increase related to the addition of one new store that was partially offset by a $3.1 million or 2.3% decrease in same store sales over 1999. In addition, mail order sales increased $1.4 million and installation fees and other supplies and services increased $0.7 million.

Costs Applicable to Revenues

    Costs applicable to revenues totaled $266.9 million in 2000, an increase of $17.2 million or 6.9% over 1999.

    Membership services costs and expenses increased by approximately $4.3 million or 5.9% to $77.6 million for 2000 compared to $73.3 million in 1999. This increase was due to a $2.2 million increase in Coast to Coast Club expenses, primarily legal defense costs and an increase in member acquisition marketing expenses, a $1.5 million increase in Camping World RV Resource Center costs and President's Club promotional expenses, $1.1 million of increased expenses for program enhancements related to RVSEARCH, an internet website developed to list new and used recreational vehicles for sale by both dealers and private parties, partially offset by reduced expenses of $0.5 million for the extended vehicle warranty program.

    Publication costs and expenses of $46.3 million for 2000 increased $5.4 million or 13.2% compared to 1999. This increase was primarily due to increased directory expenses related to the new products sold, and the newly acquired operations of TPI.

    Retail costs applicable to revenues increased $7.5 million or 5.5% to $143.0 million due to a $6.0 million increase associated with CWRV, and a $1.5 million increase in merchandise costs which was primarily attributable to the 1.1% increase in merchandise sales. The retail gross profit margin increased by $2.9 million, to 33.5% in 2000 from 33.8% in 1999.

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Operating Expenses

    Selling, general and administrative expenses of $85.5 million for 2000 were $4.8 million or 6.0% over 1999. This increase was the result of a $5.8 million increase in wage and related benefits, $1.3 million in additional expenses relating to CWRV, $1.0 million increase in retail selling, general and administrative expenses associated with an additional store in 2000, and an increase of $0.6 million in other selling, general and administrative expenses, partially offset by a $3.0 million decrease in deferred executive compensation, and reduced Y2K computer conversion expenses of $0.9 million. Depreciation and amortization expenses of $16.9 million were $0.7 million higher than in 1999. This variance was principally associated with an increase in depreciation expense attributable to increased capital expenditures in 1999.

Income from Operations

    Income from operations of $35.7 million for 2000 decreased by $4.4 million or 10.9% compared to 1999. Increased operating expenses of $5.5 million and reduced gross profit from membership services of $3.4 million were partially offset by increased gross profit for the retail operations and publications operations of $2.9 million and $1.6 million, respectively.

Non-Operating Items

    Net non-operating items for 2000 were $27.7 million compared to approximately $29.7 million for 1999. This $2.0 million decrease was the result of a $1.2 million reduction in other non-operating items over 1999, related to a 1999 one-time expense associated with the reorganization of certain publications and club activities, and a $0.8 million decrease in net interest expense as a result of increased income on notes from affiliates partially offset by higher interest expense on outstanding indebtedness due to a rise in interest rates.

Income from Continuing Operations Before Income Taxes, Extraordinary Item and Cumulative Effect of Accounting Change

    Income from continuing operations before income taxes, extraordinary item and cumulative effect of accounting change in 2000 was $8.0 million compared to $10.3 million for 1999. This decrease was due to the decreases in income from operations reflected above partially offset by lower net non-operating expenses.

Income Taxes

    Income taxes for 2000 of $4.7 million decreased $0.9 million from 1999. The effective income tax rates are higher than statutory rates due primarily to the amortization of non-deductible goodwill.

Income from Continuing Operations

    Income from continuing operations for 2000 was $3.3 million compared to $4.7 million for 1999. This decrease was due to the decrease in income from operations that was only partially offset by reduced non-operating expenses.

Net Income (Loss)

    The net income for 2000 was $3.3 million compared with $6.5 million for 1999. This $3.2 million unfavorable variance resulted from a decrease of $1.4 million in income from continuing operations for 2000 over 1999, and the $1.8 million income recognized in 1999 associated with the discontinued operations of Affinity Bank.

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Year Ended December 31, 1999 Compared with Year Ended December 31, 1998

Revenues

    Revenues of $386.7 million for 1999 increased by approximately $23.2 million or 6.4% from the comparable period in 1998.

    Membership services revenues for 1999 of $120.4 million increased by approximately $4.1 million or 3.5% compared to $116.3 million for 1998. This revenue increase is largely attributable to a $4.7 million increase in fee income recognized on vehicle insurance products, a $2.4 million increase in marketing fee income generated from increased sales of health and life insurance premiums as well as a revised contract with the third party administrator, $1.0 million in additional Good Sam emergency road service revenue as a result of increased enrollment, and $0.9 million in increased member event revenue. These increases were partially offset by a $4.9 million revenue decrease from the extended vehicle warranty program. Our underwriting partner eliminated multi-year extended vehicle warranty contracts, thus limiting sales to annual renewable contracts.

    Publications revenues for 1999 of $61.6 million increased 2.0% from $60.4 million for 1998. This increase was primarily due to an increase in advertising revenue in the RV-related publications partially offset by reduced advertising revenue in the snow-related publications as a result of unseasonably mild winter weather.

    Retail revenue for 1999 of $204.7 million increased $17.9 million or 9.6% over 1998. This increase was principally attributable to a $13.6 million increase in retail showroom sales, representing a 5.5% same store growth over 1998, and a $4.3 million increase in mail order sales.

Costs Applicable to Revenues

    Costs applicable to revenues totaled $249.7 million in 1999, an increase of $10.3 million or 4.3% over 1998.

    Membership services costs and expenses increased by approximately $1.8 million or 2.6% to $73.3 million for 1999 compared to $71.5 million in 1998. This increase was due to a $2.0 million increase in membership services costs primarily associated with increased marketing of the Good Sam Club and President's Club memberships, a $1.3 million increase in marketing and administration costs as a result of the contract renewal with the health and life insurance third party administrator, a $1.0 million increase in emergency road service claims costs, and a $0.8 million increase for member events due to increases in attendance and the number of events. These expense increases were partially offset by a $1.8 million reduction in general operating expenses and a $1.5 million reduction associated with the decline in sales of extended warranty policies.

    Publication costs and expenses of $40.9 million for 1999 decreased $1.8 million or 4.2% compared to 1998. This decrease was primarily due to making Roads to Adventure an annual title instead of a quarterly publication, reduced expenses related to lower circulation in the snow-related publications, and lower Woodall production costs as a result of a change in contracted production facilities.

    Retail costs applicable to revenues increased $10.2 million or 8.2% to $135.5 million. The increase in retail costs was primarily attributable to the 9.6% increase in merchandise sales. The gross profit margin increased by $7.7 million, from 32.9% in 1998 to 33.8% in 1999. The primary reasons for the improved margin were a result of reduced competitive pressure and a series of substantial cost reduction negotiations.

Operating Expenses

    Selling, general and administrative expenses of $80.7 million for 1999 were $7.4 million or 10.2% over 1998. This increase was the result of a $4.8 million increase in deferred executive compensation,

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$4.5 million increase in retail selling, general and administrative expenses associated with new store openings and other variable expenses related to increased sales, partially offset by a $1.9 million decrease in consulting, legal and professional fees. Depreciation and amortization expenses of $16.2 million were $1.3 million higher than in 1998. This variance was principally due to the depreciation of assets associated with the new retail stores, the merchandising and distribution system, and the acquisition of the Ventura, California corporate facility in the fourth quarter of 1998.

Income from Operations

    Income from operations of $40.1 million for 1999 increased by $4.1 million or 11.5% compared to 1998. Increased gross profit from the CWI retail operations of $7.8 million, and from publications of $3.0 million and membership services of $2.2 million, were partially offset by increased operating expenses of $8.9 million.

Non-Operating Items

    Net non-operating items for 1999 were $29.8 million compared to approximately $29.4 million for 1998. This $0.4 million increase was the result of a $3.3 million decrease in net interest expense due to lower effective interest rates, more than offset by a $3.7 million increase in other non-operating items over 1998. In 1999 the Company recognized one-time expenses of $1.2 million associated with the reorganization of certain publications and club activities compared to the gain recognized on a condemnation award in 1998.

Income from Continuing Operations Before Income Taxes, Extraordinary Item and Cumulative Effect of Accounting Change

    Income from continuing operations before income taxes, extraordinary item and cumulative effect of accounting change in 1999 was $10.3 million compared to $6.6 million for 1998. This increase was due to the increases in income from operations reflected above partially offset by higher net non-operating expenses.

Income Taxes

    Income taxes for 1999 of $5.6 million increased $1.2 million from 1998. The effective income tax rates are higher than statutory rates due primarily to the amortization of non-deductible goodwill.

Income from Continuing Operations

    Income from continuing operations for 1999 was $4.7 million compared to $2.2 million for 1998. This increase was due to the increase in income from operations, combined with increased non-operating expenses.

Discontinued Operations

    As further described in Note 15 in the Consolidated Financial Statements, the Company adopted a plan to sell the stock of AINS and AB in the fourth quarter of 1998. Aggregate losses of $2.0 million, net of taxes, were recognized in 1998 from the disposition of AINS and the planned disposition of AB. The Company completed the sale of AB in 1999 following regulatory approval resulting in a $1.8 million gain, net of tax.

Extraordinary Item

    The Company refinanced the $120.0 million, 11.5%, AGI Senior Subordinated Notes in December 1998 and incurred a write-off of unamortized financing costs of $3.0 million and a

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redemption premium of $5.2 million. The income tax benefit related to this refinancing totaled $3.1 million.

Net Income (Loss)

    The net income for 1999 was $6.5 million compared to a net loss of $5.0 million for 1998. This $11.5 million favorable variance resulted from an increase of $2.5 million in income from continuing operations in 1999 over 1998, and the $5.1 million non-recurring loss recorded in 1998 on the early extinguishment of debt related to the refinance of the $120.0 million, 11.5%, senior subordinated notes. Additionally, the income/(loss) recognized in 1999 versus 1998 of $1.8 million and $(2.0) million, respectively, associated with the discontinued operations of Affinity Insurance Group, Inc. and Affinity Bank, and the cumulative net expense of an accounting change of $0.1 million recognized in 1998 account for the balance of the increase.

Liquidity and Capital Resources

    AGHI is a holding company whose primary assets are the capital stock of AGI and Affinity Group Thrift Holding Corporation ("AGTHC"). AGI, and its subsidiaries, provide the operating cash flow necessary to service its debt as well as that of AGHI. The sale of AB, AGTHC's sole and wholly-owned subsidiary, was completed on September 30, 1999 when the stock of AB was sold to Affinity Bank Holdings LLC, an affiliate which has been subsequently merged into Affinity Bank Holdings, Inc. ("ABH"), and has been reclassified as discontinued in the accompanying financial statements.

    The Company has two primary debt obligations. On April 2, 1997, AGHI issued a total of $130.0 million of 11.0% senior notes maturing on April 1, 2007 ("AGHI Senior Notes"). On November 13, 1998, AGI entered into a $200.0 million revolving credit and term loan facility ("AGI Revolving Credit and Term Loan Facility") consisting of two term loans ("Term A" and"Term B") aggregating $130.0 million and a revolving credit facility of $70.0 million. The interest on borrowings under the AGI Revolving Credit and Term Loan Facility is at variable rates based on the ratio of total cash flow to outstanding indebtedness (as defined). Interest rates float with prime and the London Interbank Offered Rates ("LIBOR"), plus an applicable margin ranging from 1.625% to 3.625% over the stated rates. As of December 31, 2000, the average interest rates on the term loans and revolving credit facility were 9.87% and 9.35%, respectively, and permitted borrowings under the undrawn revolving line were $31.1 million. AGI also pays a commitment fee of 0.5% per annum on the unused amount of the revolving credit line. The term loans have quarterly scheduled payments of $2.65 million in 2001. The revolving credit facility matures on December 31, 2004, and the Term A and Term B loans mature on December 31, 2004 and June 30, 2006, respectively. The AGI Revolving Credit and Term Loan Facility is secured by virtually all the assets and a pledge of the stock of AGI.

    The AGI Revolving Credit and Term Loan Facility allows for, among other things, the distribution of payments by AGI to AGHI to service the semi-annual interest due on the AGHI Senior Notes and the annual amounts due under the Camping World Management Incentive Agreements. Such distributions are subject to AGI's compliance with certain restrictive covenants, including, but not limited to, an interest coverage ratio, fixed charge coverage ratio, minimum operating cash flow, and limitations on capital expenditures and total indebtedness. Effective December 31, 2000, the Company amended the AGI Revolving Credit and Term Loan Facility to ensure compliance with certain of its restrictive covenants, principally minimum operating cash flow, as defined, and the total leverage covenant. In addition, among other things, the Amendment provided for an interest rate increase on the revolver and term loans equal to 0.5% per annum and prohibits the distribution by its wholly-owned subsidiary, AGI, of any excess cash flow, as defined, until total leverage is less than 4.75 to 1. The Company generated $8.9 million of excess cash flow in 2000. Under the terms of the Amendment, AGI will prepay in the first quarter of 2001, on a pro-rata basis, in inverse order of maturity, the term loans equal to 100% of the excess cash flow.

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    Effective November 1, 1998, AGI entered into an interest rate floor and cap transaction agreement ("AGI Interest Rate Collar") at no cost. The notional amount of the AGI Interest Rate Collar is $75.0 million with a cap rate of 6.0% and a floor rate of 5.585% over the three-month LIBOR index. The floating rate is adjusted quarterly and was 6.759% at December 31, 2000. This facility has a maturity date of November 1, 2001. The AGI Interest Rate Collar protects the Company against a rise in the LIBOR base rate over 6% on $75.0 million of the AGI Revolving Credit and Term Loan Facility.

    The AGHI indenture pursuant to which the AGHI Senior Notes were issued contains certain restrictive covenants relating to, but not limited to, mergers, changes in the nature of the business, acquisitions, additional indebtedness, sale of assets, investments, and the payment of dividends subject to certain limitations and minimum operating covenants. The Company was in compliance with all debt covenants at December 31, 2000.

    During 2000, payments under the terms of several phantom stock agreements totaled $1.6 million. Additional phantom stock payments of $0.4 million are scheduled to be made over the next twelve months.

    Capital expenditures for 2000 totaled $9.4 million compared to capital expenditures of $12.0 million in 1999. Capital expenditures are anticipated to be approximately $6.0 million for 2001, primarily for Camping World supercenter equipment and property improvements, continued enhancements to membership marketing databases, computer hardware upgrades and replacements, and computer software upgrades and enhancements.

    During the fourth quarter of 1998, the Company's Board of Directors adopted a plan to sell the stock of AB, subject to regulatory approval, to an affiliate of the Company at its net book value, which in the opinion of management approximates market value. As a result, the operations of AB are classified as a discontinued operation in the accompanying financial statements. The Company received regulatory approval to sell AB and subsequently closed the transaction on September 30, 1999. In consideration for the stock of AB, AGTHC received 17,100 shares of Series A Preferred stock of the purchaser, ABH, valued at $18,631,000. In the fourth quarter of 1999, AGTHC agreed to convert and exchange the preferred stock for a Capital Note. The Capital Note principal balance was equal to the preference amount of the preferred stock as of the conversion date and accrues interest at the rate of 11% per annum until maturity on October 1, 2014. On October 31, 2000, AGTHC sold, at face value, a $1.5 million participation in the Capital Note to an affiliate of Mr. Adams, the Company's Chairman. In addition, AGTHC, although required to be consolidated with the Company, is recognized as an "unrestricted" or non-guarantying subsidiary under the terms of the AGHI Senior Notes.

    Management believes that funds generated by operations together with available borrowings under its revolving credit line will be sufficient to satisfy the Company's operating cash needs, debt obligations and capital requirements of its existing operations during the next twelve months.

Factors Affecting Future Performance

    Although increases in operating costs could adversely affect the Company's operations, management does not believe that inflation has had a material effect on operating profit during the past several years. However, fuel shortages and substantial increases in propane and gasoline costs could have a significant impact on the Company's travel-related membership services and publications revenues. Historically such events have caused declines in advertisements but have not significantly affected club membership enrollment. The Company is unable to predict at what point fluctuating fuel prices may begin to adversely impact revenues or cash flow. The Company believes it will be able to partially offset any cost increases with price increases to its members and certain cost reducing measures.

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Seasonality

    The Company's cash flow is highest in the second half of the year due to the seasonal nature of the retail segment and membership renewals of the Coast to Coast clubs in the fourth quarter.

ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

    The Company is exposed to market risks relating to fluctuations in interest rates. The Company's objective of financial risk management is to minimize the negative impact of interest rate fluctuations on the Company's earnings and cash flows.

    Interest rate risk is managed through the use of an interest rate collar contract. This contract is entered into with a financial institution thereby minimizing risk of credit loss. See Note 5 in the Notes to Consolidated Financial Statements for a more complete description of the Company's interest rate collar.

    The following analysis presents the sensitivity to the earnings of the Company if these changes occurred at December 31, 2000. The range of changes chosen for this analysis reflects the Company's view of changes which are reasonably possible over a one-year period. These forward-looking disclosures are selective in nature and only address the potential impacts from financial instruments. They do not include other potential effects which could impact the Company's business as a result of these interest rate fluctuations.

Interest Rate Sensitivity Analysis

    At December 31, 2000, the Company had debt, excluding capital leases, totaling $285.3 million and an interest rate collar contract with a notional value of $75.0 million. The interest rate collar contract limits LIBOR fluctuations to interest rate changes from 5.585% to 6.0%. As of December 31, 2000, the LIBOR rate on the interest rate collar contract was 6.759%.

    At December 31, 2000, the Company had $142.2 million of variable rate debt and $143.1 million of fixed rate debt. Holding other variables constant (such as debt levels), the earnings and cash flow impact of a one-percentage point increase in interest rates would have an unfavorable impact of approximately $0.7 million. The earnings and cash flow impact of a one-percentage point decrease in interest rates would have a favorable impact of approximately $1.4 million, holding other variables constant.

Credit Risk

    The Company is exposed to credit risk on accounts receivable. The Company provides credit to customers in the ordinary course of business and performs ongoing credit evaluations. Concentrations of credit risk with respect to trade receivables are limited due to the number of customers comprising the Company's customer base. The Company currently believes its allowance for doubtful accounts is sufficient to cover customer credit risks.

Disclosure Regarding Forward Looking Statements

    This filing contains statements that are "forward looking statements," and includes, among other things, discussions of the Company's business strategy and expectations concerning market position, future operations, margins, profitability, liquidity and capital resources, as well as statements concerning the integrations of acquired operations and the achievement of financial benefits and operational efficiencies in connection with acquisitions. Forward looking statements are included in "Business—General," "Business—Business Strategy," "Business—RV Industry," "Business—Operations," "Business—Competition," "Legal Proceedings," and in"Management's Discussion and Analysis of Financial Condition and Results of Operations." Although the Company believes that the expectations

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reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of such plans or strategies, number of acquisitions and projected or anticipated benefits from acquisitions made by or to be made by the Company, or projections involving anticipated revenues, expenses, earnings, levels of capital expenditures or other aspects of operating results. All phases of the operations of the Company are subject to a number of uncertainties, risks and other influences, including consumer spending, fuel prices, general economic conditions, regulatory changes and competition, many of which are outside the control of the Company, any one of which, or a combination of which, could materially affect the results of the Company's operations and whether the forward looking statements made by the Company ultimately prove to be accurate.

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ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

Index to Financial Statements

    All other financial statement schedules not listed have been omitted since the required information is included in the consolidated financial statements, the notes thereto, is not applicable, or not required.

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

Board of Directors
Affinity Group Holding, Inc. and Subsidiaries:

    We have audited the accompanying consolidated balance sheets of Affinity Group Holding, Inc. (a Delaware corporation and wholly-owned subsidiary of AGI Holding Corp.) and Subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of operations, stockholder's deficit, and cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

    In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Affinity Group Holding, Inc. and Subsidiaries as of December 31, 2000 and 1999, and the results of its operations and its cash flows for the three years then ended in conformity with accounting principles generally accepted in the United States.

ARTHUR ANDERSEN LLP

Los Angeles, California
March 1, 2001

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AFFINITY GROUP HOLDING, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2000 AND 1999 (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

See notes to consolidated financial statements.

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AFFINITY GROUP HOLDING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 (IN THOUSANDS)