910560--3/20/2007--AFFINITY_GROUP

related topics

{debt, indebtedness, cash}

{personnel, key, retain}

{cost, regulation, environmental}

{gas, price, oil}

{condition, economic, financial}

{regulation, government, change}

{customer, product, revenue}

Our substantial indebtedness could adversely affect our financial health. Despite current indebtedness levels and restrictive covenants, we still may be able to incur substantially more debt in the future. Our operations are substantially restricted by the terms of the AGI Senior Notes and our Senior Credit Facility which could adversely affect us and increase our credit risk. To service our indebtedness, we will require a significant amount of cash, the availability of which depends on many factors beyond our control. We may not have the ability to raise the funds necessary to repurchase the AGI Senior Notes upon a change of control. We depend on our ability to attract and retain active members. We depend on our relationships with our marketing partners and a disruption of these relationships or of our marketing partners operations could have an adverse effect on our business and results of operations. We face significant competition for disposable income spent on leisure merchandise and activities. Our business could be adversely affected by deteriorating general economic conditions. The interests of our principal shareholder may conflict with the interests of holders of the debt instruments. We are subject to varying degrees of federal, state and local regulations which may affect our operations. Increase in paper costs, postage costs and shipping costs may have an adverse impact on our future financial results. If we are unable to retain senior executives and attract and retain other qualified employees, our business might be adversely affected.

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910560--3/20/2007--AFFINITY_GROUP_INC