DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION

6 Months Ended

Jun. 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 new reportable segments will be (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 JUNE 30, 2013
Revenues from external customers	$	51,418	$	105,523		$	156,941
Depreciation and amortization	522		1,854			2,376
Loss on sale of assets or businesses	—		(11		)	(11		)
Interest income	582		—			582
Interest expense	30		562			592
Segment profit	17,919		6,383			24,302

THREE MONTHS ENDED JUNE 30, 2012
Revenues from external customers	$	47,391	$	98,943		$	146,334
Depreciation and amortization	933		1,594			2,527
Gain (loss) on sale of assets or businesses	770		(26		)	744
Interest income	659		—			659
Interest expense	—		648			648
Segment profit	15,322		5,582			20,904

SIX MONTHS ENDED JUNE 30, 2013
Revenues from external customers	$	99,893	$	171,016		$	270,909
Depreciation and amortization	1,152		3,664			4,816
Gain (loss) on sale of assets or businesses	1,834		(11		)	1,823
Interest income	1,184		—			1,184
Interest expense	63		1,115			1,178
Segment profit	38,782		3,241			42,023

SIX MONTHS ENDED JUNE 30, 2012
Revenues from external customers	$	96,407	$	159,985		$	256,392
Depreciation and amortization	1,919		3,437			5,356
Gain (loss) on sale of assets or businesses	1,301		(42		)	1,259
Interest income	1,336		—			1,336
Interest expense	—		1,253			1,253
Segment profit	33,115		2,672			35,787

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

	THREE MONTHS ENDED						SIX MONTHS ENDED
	6/30/2013			6/30/2012			6/30/2013			6/30/2012

Income Before Income Taxes
Total operating profit for reportable segments	$	24,302		$	20,904		$	42,023		$	35,787
Unallocated G & A expense	(3,359		)	(3,153		)	(6,374		)	(6,759		)
Unallocated depreciation and amortization expense	(703		)	(829		)	(1,395		)	(1,476		)
Unallocated gain on derivative instrument	—			1,199			—			2,189
Unallocated loss on debt repayment	—			—			—			(440		)
Elimination of intercompany interest income	(385		)	(441		)	(784		)	(900		)
Unallocated interest expense, net of intercompany elimination	(9,195		)	(10,495		)	(18,386		)	(21,108		)
Income before income taxes	$	10,660		$	7,185		$	15,084		$	7,293

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

	6/30/2013			12/31/2012
Membership Services segment	$	291,214		$	297,012
Retail segment	127,127			101,047
Total assets for reportable segments	418,341			398,059
Intangible assets not allocated to segments	8,268			8,851
Corporate unallocated assets	8,389			8,625
Elimination of intersegment receivable	(183,670		)	(185,174		)
Total assets	$	251,328		$	230,361

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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+ Details

GOOD SAM ENTERPRISES, LLC 10-Q